Power of CAG to audit books of accounts of licensee service providers dealing in a public natural resource of 'spectrum

Supreme Court: The bench comprising of K.S. Radhakrishnan and Vikramajit Sen, JJ in the present case discussed the power of CAG to audit books of accounts of licensee service providers dealing in a public natural resource of 'spectrum' and sharing the revenue with the Consolidated Fund of India. They looked into the provisions of Section 16 of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 and Article 149 of the Constitution of India in ruling that since the revenues of the service providers were shared by the Consolidated Fund of India and that the resource in question is one essential to the public at large, the argument that the CAG could just audit a body under the 'State' or a body 'funded by the State' could not stand. For similar reasons, the constitutional validity of Rule 5 of Telecom Regulatory Authority of India Rules, 2000, as challenged in the present case, was also held invalid as the CAG was by law required to keep a check on any and every transaction that affected the funds of the State, irrespective of the Licensor's opinion on the credibility of the records so presented. Therefore, the Court clearly ruled that not only a special auditor appointed by the Department of Telecommunication, but also the CAG, could at his discretion call for an audit of the books of accounts of such service providers, at any instant.
[Association of Unified Tele Services Providers vs. Union of India, Civil Appeal No. 4591 of 2014, decided on 17th April, 2014]

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