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New Delhi, 6 January
In a major setback to telecom companies, Delhi High Court today held that the Comptroller and Auditor General (CAG) can audit the revenue-sharing details of private firms such as Reliance Communications Ltd, Bharti Airtel, Tata Teleservices and Idea Cellular to check under-reporting of revenue for calculating the licence fee.
This ruling will also strengthen the Arvind Kejriwal-led Delhi government stand that a CAG audit of power distribution companies is necessary.
The High Court Bench of Justices Pradeep Nandrajog and V Kameswar Rao allowed the CAG to conduct revenue audit of the telecom service providers under the Telecom Regulatory Authority of India (Trai) Act.
Vacating the interim stay that directed CAG not to disclose the information to the public or to any third party, the court said that the rule and the section 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 CAG.
Earlier, not only were telecos resisting CAG audit of their account books, the government, too, has been reluctant to let CAG audit the private companies in the telecom sector.
“The Constitution (Article 149) mandates the CAG to perform such duties and exercise such powers in relation to the accounts of the Union which include a record of money received and spent by the Union… We see no scope for an argument to urge any conflict between Rule 5 of the Telecom Regulatory Authority of India, Service Providers (Maintenance of Books of Accounts and other Documents) Rules, 2002 and Section 16 of the 1971 Act for the reason, interpreting the contract, we have already held … that in a very real sense the licensees are the accountant of the Central government with respect to the complete, accurate and honest maintenance of the books as to any transaction(s) involving revenue… under the terms of the licence agreement the licensee has undertaken the accounting responsibility for the Central Government as well as itself,” held the court.
It added that the accounts of the licensees, 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.
“However, 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, 1971 which includes inquiries into aspects like faithfulness, wisdom and economy in expenditures,” said the court. 
Power distribution: The Lieutenant Governor Najeeb Jung today said that if power distribution companies in the Capital do not allow audit of their accounts, their licences will be cancelled.
Mr Jung was addressing the Delhi Assembly. He said the new government would seek suggestions on development.