The Delhi high court on Monday upheld the constitutional validity of laws empowering the Comptroller and Auditor General (CAG) to conduct revenue audits of private telecom firms. A bench of justices Pradeep Nandrajog and V Kameswar Rao dismissed the pleas of Association of Unified Telecom Service Providers and Cellular Operators Association of India, but reminded the CAG to confine its auditing to just “receipts” of telecom firms.
VN Kaul, former CAG, told dna that under section 20 of Duties, Power and Conditions (DPC) of Service Act, CAG can audit any private company which has substantial stake of government in the form of investments or loans. “In my view, the government has substantial financial interest in these (telecom) companies and there is a clear provision in the DPC Act about the audit of such companies,” he said. Kaul said the government has to consult the CAG before deciding to order any such audit.
According to section 20 of the DPC Act of 1971, CAG can audit accounts of any body or authority... if he is of the opinion that such an audit is necessary because a substantial amount has been invested in or advanced to such a body or authority by the central, state government or by the government of a Union territory having a legislative assembly. The president, governor of the state or administrator of the Union territory having a legislative assembly may empower CAG to undertake the audit of the accounts of such body or authority after being satisfied that it is done for public interest and after giving a reasonable opportunity to the concerned body or authority to make representations with regard to the proposal for such an audit.