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35. The scope of Article 148 vis-à-vis the powers of the CAG came up for consideration before this Court in S.Subramaniam Balaji v. State of Tamil Nadu and others (2013) 9 SCC 659 and this Court held that the CAG is the constitutional functionary appointed under Article 148 of the Constitution and its main role is to audit the income and expenditure of the Government, government bodies and State run corporations and the extent of its duties is listed in the Comptroller and Auditor General (Duties, Powers etc.) Act, 1971. It is stated that functioning of the Government is controlled by the government, laws of the land, legislature and the CAG. CAG has the power to examine the propriety, legality and validity of all expenses incurred by the government and the office of the CAG exercises effective control over the government accounts and expenditure incurred on the schemes only after implementation of the scheme, as a result, the duties of the CAG will arise only after the expenditure has been incurred.

36. In Arvind Gupta v. Union of India and others (2013) 1 SCC 393 this Court, while examining the scope of Articles 149, 150 and 151 of the Constitution, vis-à-vis the reports of the CAG, noticed and pointed out that the CAG’s functions are carried out in the economy’s efficiency and effectiveness with which the government has used its resources and it was pointed out that performance/audit reports prepared under the regulations have to be viewed accordingly. In Arun Kumar Agrawal v. Union of India and others (2013) 7 SCC 1 this Court while interpreting Section 16 of 1971 Act held that the CAG has to satisfy himself that the rules and procedures, designed to secure an effective check on the assessment, collection and proper allocation of revenue are being duly observed and CAG has to examine the decisions which have financial implications, including the propriety of decision making. This Court also noticed that the report of the CAG is required to be submitted to the President, who shall cause them to be laid before each House of Parliament, as provided under Article 151(1) of the Constitution of India. By placing the reports of the CAG in the Parliament, CAG regulates the accountability of the Executive to the Parliament in the field of financial administration, thereby upholding the parliamentary democracy.

60. Shri Paras Kuhad, learned Additional Solicitor General appearing for the appellants, submitted that the Tribunal has completely misapplied various clauses of the licence agreement, especially Clauses 22.3, 22.5 and 22.6 which, according to the learned senior counsel, empower the Department to call for the books of account of the service providers for its audit. Shri Kuhad submitted that the communications dated 16.3.2010 and 10.5.2010 are intended to carry out an audit by the CAG and that the Department has got the legal right to call upon the service providers to make available all the records so that they could be scrutinized by the CAG. CAG, it was pointed out, has got the power under Article 149 of the Constitution read with Section 16 of the Comptroller of Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 and Rule 5 of TRAI Rules, 2002 and the conditions of license to carry on audit of the accounts of the service providers, since the Union of India and the service providers are in agreement for revenue sharing. Shri Kuhad also questioned the finding of the Tribunal that before exercising the powers by the CAG for audit, the department has to form an opinion that the statements and account already submitted were inaccurate and misleading. Shri Kuhad further submitted that the Tribunal has completely misread of the various clauses of UAS License as well as the powers conferred under the 1971 Act.

67. The Tribunal, in our view, has committed a fundamental error in taking the view that the above mentioned communications were issued by the DoT in exercise of the powers conferred under Clauses 22.3 to 22.6, in fact, the communications specifically refer to only Clause 22.3, and not to any other clauses. On the other hand, the Tribunal made specific reference to Clause 22.5 which, in our view, is inapplicable in a case where the audit is sought to be conducted by CAG. The Tribunal has also not properly appreciated the scope of clauses 20.4, 22.5 and 22.6. There are three stages of audit. First, audit is to be conducted by the Licencee under Clause 20.4 through an auditor appointed under Section 224 of the Companies Act. Clause 22.5 empowers the licensor to conduct an audit, if it is found that statements or accounts submitted are inaccurate and misleading. In our view, the opinion to be formed is purely subjective, it need not establish to the satisfaction of the licencee that the statements or accounts are inaccurate and misleading. Further, Clause 22.6 is an independent Clause which has no relationship with Clause 22.5. This is an additional power conferred on the Licensor to conduct special audit. In other words, audit conducted by the licensor or the licencee, has nothing to do with the audit conducted by CAG. If the reasoning of the Tribunal is accepted, then the DOT can always stall an Audit sought to be conducted not only by CAG in exercise of powers conferred under Article 149 of the Constitution read with the 1971 Act and TRAI Rules 2002, but also an audit under clause 22.5 as well as special audit under clause 22.6. Consequently, an audit to be conducted by CAG would not depend upon the “formation of opinion” by the DoT that the statements or accounts submitted to it were inaccurate or misleading, which, in our view, would deprive the statutory and constitutional powers conferred on the CAG to conduct the audit or enquiry or inspection. Tribunal’s order, in our view, is an encroachment upon the constitutional and statutory power conferred on CAG under Articles 148, 149 of the Constitution as well as Section 16 of the 1971 Act read with Rule 5 of the TRAI Rules 2002 and the licensing provisions.