CAG has right to inspect cellular operators’ accounts: Delhi HC

The Delhi High Court, in a decision that could have wide ramifications, has decreed that the Comptroller and Auditor General of India (CAG) has the remit to audit private telecom companies under the Telecom Regulatory Authority of India (TRAI) Act.

A bench of Justices Pradeep Nandrajog and V Kameswar Rao today rejected separate pleas filed by both telecom representative bodies, the Association of Unified Telecom Service Providers (AUSPI) and the Cellular Operators Association of India (COAI), which represent operators on the CDMA and GSM platform respectively.

The two bodies have long been engaged in a mini cold war; but united to file a petition against inspection of their books by the country's constitutionally-mandated auditor in 2010. Auditing what has generally become known as the '2G scam' relating to arbitrary allocation of spectrum by the government, the CAG also found that mobile operators were under-invoicing revenues, and had sought revenue details.

The telecom companies approached the high court after failing to get a favourable order from the Telecom Disputes Settlement & Appellate Tribunal (TDSAT). The union government argues that spectrum is not sold but licensed, and remains the property of the nation.

The Delhi High Court had reserved its order in November 2013 after conducting long hearings on the issue, where it took on record submissions of the government, the CAG and the petitioners.

Both the associations had argued, in essence, that CAG can't audit private companies.

The telecom companies had argued that they have already put in place a mechanism for special audit as envisaged in the license agreement between Department of Telecommunications (DoT) and the companies; and therefore are not obliged to furnish financial details to the CAG.

The high court's decision was quick to be seen by media commentators as a sort of side-victory for the Aam Admi Party, which now governs Delhi and has asked for an audit of the city-state's three private power distribution companies. The CAG has promised to fast-track the audit of 'discoms'.