CAG can audit 'revenue sharing' of private telecom firms: Court

The Delhi High Court Monday permitted the Comptroller and Auditor General of India (CAG) to audit the revenue-sharing details of all the private telecom operators.

A division bench of Justice Pradeep Nandrajog and Justice V.K. Rao, however, said the CAG will not be allowed to venture into aspects like "faithfulness, wisdom and economy in expenditures".

The high court limited the powers of CAG while asking it to audit accounts of the private telecom service providers pertaining only to the receipts of the gross revenue, which was shared with the government.

The CAG in 2010 had decided to audit the accounts of the telecom companies for a period of three years beginning 2006-07 to access the government's share out of the revenues carried by the companies.

After the CAG sought revenue sharing details from the telecom companies, they moved the high court challenging the decision of the auditor.

In a significant verdict, the bench said the rule and the section of Telecom Regulatory Authority of India (TRAI) "fits perfectly into the constitutional scheme of every rupee flowing into the Consolidated Fund of India, by way of revenue, to be audited by the Comptroller and Auditor General of India".

The court direction came on the pleas filed by the Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers (AUSPI), which represent private telecom firms, saying the CAG had no jurisdiction to audit the accounts of private companies.

The CAG had, however, contended that it was duty bound to audit the accounts of the central government and those associated with the central government.

The high court in its 33-page judgment said: "A small caveat by way of reminder to CAG. In relation to the accounts of the Telecom Service Providers, the audit has to be only an audit pertaining to the receipts and no more."

"The CAG 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 which includes inquiries into aspects like faithfulness, wisdom and economy in expenditures," the bench said.

Dismissing the pleas of operators, the bench said: "A synergy between the two (private telecom operators and CAG) would be not only for the benefit of the industry, the economy of the country, the society at large but would go a long way in establishing public confidence in good corporate governance."