IN a landmark judgement delivered yesterday, the Delhi High Court held that the CAG is competent to audit private telecom companies.
In an interesting judgement analysing the powers of CAG as well as the need for regulators, the High Court started its judgement with these words,
“It is now well-recognized that post second world war, some believe that influenced by the liberal features of the economic policies of the United States of America, a new economic order and a new kind of State emerged, which promoted the values and ideals of professionalism, scientific and technical expertise, administrative competence and neutrality in governance.The shift was from rowing to steering. The era of liberalization emerged all over the globe; some countries adopted it immediately after the second world war and some slowing and grudgingly, realizing that in the global economy the municipal governance had to be in sync with the current global thinking. Many believe (wrongly in our opinion) that the regulatory regime was the consequences of the new form of governance, shifting from rowing to steering.”
The High Court observed, “The legal position could be stated in simple language as follows : The Constitution (Article 149) mandates the Comptroller and Auditor General to perform such duties and exercise such powers in relation to the accounts of the Union. Accounts would include a record of money received and spent by the Union. Power in relation to the account envisaged under Article 149 would be as prescribed by or under any law made by Parliament which would mean that Parliament can make a law with respect to compiling accounts and auditing the same. While enacting the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971, vide Section 10, the Parliament has prescribed the manner in which power contemplated by Article 149 shall be exercised by the Comptroller and Auditor General in relation to compiling and keeping accounts and vide Section 13 has prescribed the manner in which the expenditure shall be audited and vide Section 16 has prescribed the manner in which the receipts have to be audited.
The Rule, the Section and the constitutional provisions as interpreted by us perfectly fit the critical features of the new emerging regulatory State which has to reconstruct institution on the ruins of the club government requiring displacing the key feature of the club with standardization and formality; the provision of systematic information accessible both to insiders and outsiders and strengthening the control mechanism and public reporting.”
Caveat to CAG : The High Court concluded with a small caveat to the CAG-” In relation to the accounts of the Telecom Service Providers, the audit has to be only an audit pertaining to the receipts and no more. The Comptroller and Auditor General 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. “