The Delhi High Court has ruled that the Comptroller and Auditor-General (CAG) can audit the accounts of telecom companies with a rider that “the audit has to be only an audit pertaining to the receipts (revenues) and no more.’’

A Division Bench of Justice Pradeep Nandrajog and Justice V.K. Rao on Monday dismissed the plea of the Association of Unified Telecom Service Providers of India and Cellular operators Association of India that under Article 149 of the Constitution, CAG is empowered only to audit the accounts of the Union and of the State governments and such authorities or bodies as may be prescribed by or under any law made by Parliament.

They further argued that if a constitutional provision (Article 149) imposed restrictions on the power of a constitutional authority, no law made by Parliament could widen that power.

Stating that “writ petitions are dismissed,’’ the Bench said that “the audit has to be only an audit pertaining to the receipts and no more. The Comptroller and Auditor General would not confuse himself with his wide all embracing power under Section 14(2) of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971 which includes inquiries into aspects like faithfulness, wisdom and economy in expenditures.’’

Despite the rejection of the plea of the petitioners, the Federation of Indian Chambers of Commerce and Industry (FICCI) continues to insist that “there is no place for CAG interfering into a private company’s books.’’ “… to my mind, there is no place for CAG interfering into a private company’s books, FICCI president Sidharth Birla said at a conference.

The petitioners had moved the Court following issuance of three letters to all telecom service providers; one by the Telecom Regulatory Authority of India and the other two by the Director General of Audit, Post & Telecommunications to all requiring them to produce their books of accounts and other documents having a bearing on the verification of the revenue to the Comptroller and Auditor General of India from 2006-07 onwards.

“…the accounts of the licensees (telecom companies), in relation to the revenue receipts can be said to be the accounts of the Central Government and thus subject to a revenue audit as per Section 16 of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971,’’ the Bench stated.

CAG audit of telcos
Will the Delhi HC order on CAG audit of private telecom firms usher transparency in allocation of natural resources?
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