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CAG can audit telcos; power firms next?

india Updated: Jan 07, 2014 02:28 IST
Delhi HC

In a significant ruling, the Delhi high court on Monday upheld the Telecom Disputes Settlement and Appellate Tribunal's decision and said the Comptroller and Auditor General of India (CAG) can audit the accounts of private telecom operators under relevant provisions of the law.

A bench of justice Pradeep Nandrajog and justice V Kameswar Rao allowed the top accounting body to conduct audit of private telecom companies under the Telecom Regulatory Authority of India (TRAI) Act.

The court rejected separate petitions of Association of Unified Telecom Service Providers (AUSPI) and Cellular Operators Association of India (COAI) filed against the decision of telecom tribunal TDSAT on the issue in 2010.

The high court had reserved its order in November 2013, after conducting marathon hearings on the issue where it took on record submissions of the Centre, CAG and the petitioners - COAI and AUSPI.

Both the associations had argued, in essence, that CAG can't audit private companies. To achieve the purpose of audit, the operators had pointed out that they have already put in place mechanism of special audit as envisaged in the license agreement between department of telecom and the companies.

The firms had claimed they maintain accounts in line with the TRAI rules and can't be forced to furnish financials to CAG.

The CAG had vigorously staked its claim to audit the accounts and sought revenue sharing details from the telecom companies. It had argued that since the companies have a revenue sharing arrangement with the government, they can be subjected to a state audit as well.

The companies had moved Supreme Court after the high court refused to stop the audit and the apex court then referred it back to the high court.

The high court verdict may help the Aam Aadmi Party government which is on course to ordering an audit by the national auditor into the finances of three power distribution companies, a key poll promise.

The auditing of three power distribution companies - BSES Yamuna Power Ltd, BSES Rajdhani Power Ltd and Tata Power Delhi Distribution Ltd - was one of the major poll planks of the AAP, which has alleged fudging of account books by the companies to show losses as a pretext to hike tariff.

(With PTI inputs)