High Court reserves verdict on CAGs power to audit telcos books

Written by Kaushal shroff | New Delhi | Updated: Nov 28 2013, 09:37am hrs
The Delhi High Court on Wednesday reserved its judgment on a matter that will determine whether the Comptroller and Auditor General of India (CAG) can audit the revenue-sharing details of telecom operators dating back seven years, beginning 2006-07.

Earlier, in June 2010, the High Court had directed private telecom operators to submit their account books to the national auditor so as to enable the CAG to determine if there was any under-reporting of licence fees by the companies. However, the High Court had restrained the CAG from demanding any additional documents except revenue-sharing details and had further directed it to not disclose the same information to the public or to any third party.

Subsequent to the June 2010 order, telecom firms had moved the Supreme Court against the High Court order. After considering the appeal lodged by members of the GSM lobby, the Cellular Operators Association of India (COAI), the apex court had asked the companies to submit their revenue-sharing details to the CAG, but had barred it from auditing their accounts till the disposal of the matter by the Delhi High Court.

During the arguments in the High Court recently, senior counsel Ramji Srinivasan, on behalf of the telcos, had disputed the jurisdiction of the CAG to go into the accounts of the operators on the ground that they are private companies. He had further argued that there was already an existing mechanism of special audit provided by the licence agreement between the Department of Telecommunications (DoT) and the firms, which is being followed by the telecom operators.

The CAG cannot go into a roving and fishing enquiry against the operators. The companies have been maintaining accounts according to the rules provided under the Trai Act and the audit can only be carried out according to the rules prescribed there in and not by the CAG, the counsel had said.

The counsel on behalf of the DoT, on the other hand, had argued that the CAG had the requisite jurisdiction to audit accounts of telecom operators as per the provisions of the Comptroller and Auditor Generals (Duties, Powers and Conditions of Service) Act.