CAG can audit Telecom firms’ accounts

As per the ruling of the Delhi High Court, the Comptroller and Auditor-General (CAG) can audit the accounts of mobile companies on a condition that the audit has to be only an audit relating to the receipts (revenues) and nothing else.

The Association of Unified Telecom Service Providers of India and Cellular operators had argued in its plea to the court that 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 also 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.

What is the issue?

The Association of Unified Telecom Service Providers of India and Cellular petitioners had moved the Court following issuance of three letters to all telecom service providers; one by the Telecom Regulatory Authority of India (TRAI) and the other two by the Director General of Audit, Post & Telecommunications requiring all the telecom firms 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.

What did the Delhi HC say?

Dismissing the writ petitions, the court held that the accounts of the licensees (telecom companies), pertaining 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. However, it directed that the CAG’s audit has to be only an audit pertaining to the receipts and no more and that the CAG would not confuse himself with his extensive all encompassing 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.

What does Article 149 of the Constitution of India say?

Article 149 is about Duties and powers of the Comptroller and Auditor General. It says, the Comptroller and Auditor General shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States and of any other authority or body as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States as were conferred on or exercisable by the Auditor General of India immediately before the commencement of this Constitution in relation to the accounts of the Dominion of India and of the Provinces respectively.