Association Of Unified Telecom, ... vs Department Of ... on 19 May, 2010

Telecom Disputes Settlement Tribunal

TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL

NEW DELHI

Dated

19th May, 2010

Petition No.139 of 2010

M/s

Cellular Operators Association of India & Ors. ..Petitioners

Vs.

Deptt.of Telecommunication ..Respondent

And

Petition No.141 of 2010

AUSPI

& Ors. ..Petitioners

Vs.

Deptt.of Telecommunication ..Respondent

BEFORE:

HONBLE MR.JUSTICE S.B. SINHA, CHAIRPERSON

HONBLE MR.G.D. GAIHA, MEMBER

HONBLE MR.P.K. RASTOGI, MEMBER

For Petitioner(P.No.139 of 2010)

Mr.C.S.Vaidyanathan, Sr.Advocate

Mr.Gopal Jain, Mr.Kaushik Mishra

Mr.Nitin Mishra, Advocates

For Petitioner (P.No.141 of 2010)

Mr.Ramji Srinivasan, Sr.Advocate

Mr.Mansoor Ali Shoket, Mr.Rahul Dhawan, Advocates

For Respondent

Ms.Maneesha Dhir, Ms.Preeti Dalal, Mr.K.P.S. Kohli, Mr.Chirag Kher, Advocates

ORDER

These

two petitions have been filed by the petitioners herein, inter alia, questioning a notice dated 16.03.2010 issued by the respondent herein. In Petition No.141 of 2010, however, the following additional prayers were made:

(i)

Quashing

the order dated 10.05.2010 seeking audit of telecom companies by the Comptroller & Auditor General seeking information beyond the ambit and scope of UAS license; and also

(ii)

Striking

down Rule 5(b) of the TRAI Service Providers (Maintenance of Books of Accounts and other documents) Rules, 2002 as being ultra vires.

The submissions of Mr.C.S. Vaidyanathan and Mr.Ramji Srinivasan, the learned senior counsel appearing on behalf of the petitioners, in support of the prayers made for an interim order, inter alia, are:

(i)

That

having regard to the provisions of the Comptroller & Auditor-Generals (Duties, Powers & Conditions of Service) Act, 1971 (1971 Act), the Comptroller & Auditor General has no jurisdiction to audit the accounts of the private operators.

(ii)

any event, special auditors having been appointed and process of auditing having been undergone in Petition No.139 of 2010 and which are being undergone in Petition No.141 of 2010, the action on the part of the respondent is not fair and/or arbitrary.

Ms.Maneesha Dhir, learned counsel appearing on behalf of the respondent, on the other hand, would urge that although notice has been issued by the respondent in exercise of its jurisdiction of Clause 22.3 of Unified Access Service License (UASL), the power of the CAG in effect and substance emanates from Rule 5(b) of the Service Providers (Maintenance of Books of Accounts and other documents) Rules, 2002.

It is true that in the impugned notices a reference has been made to clause 22.3 of the license but in our opinion, as the attention of this Tribunal has been drawn to the correct source of power, the action taken by the respondent may not be invalidated only on the ground that no provision of law has been mentioned or a wrong provision has been quoted.

The very fact that in Petition No.141 of 2010, the validity of Rule 5(b) has been questioned, in our opinion, is itself a pointer to the fact that the parties were aware of the application of Rule 5(b) of the Rules.

M/s Vodafone, furthermore in its reply dated 17.03.2010 while expressing its difficulties stated as under:

However, in order to demonstrate our willingness to work with the C&AG to ensure it is able to complete its audit at the earliest possible time, we would like to meet with you to present to you VELs financial and audit systems and processes, the information that is readily available as opposed to information which will take significant time to compile, and to answer any specific questions that you may have.

Even M/s Airtel in its letter dated 22.03.2010 also expressed such difficulties and asked the respondent to seek only the information related to revenue/ AGR of the company and also requested it to seek the specific information/ data so that the same can be provided in a timely manner.

The jurisdiction of the CAG, therefore, was not questioned. It has also not been impleaded as a party to this petition. However, as prayed for we allow the Comptroller & Auditor General as also Union of India to be impleaded as parties to the petition.

In Petition No.141 of 2010, the petitioners have not questioned the validity of Rule 5(b) of the Rules but in fact raised several constitutional issues in regard to validity of the said Act. We may, in this view of the matter, notice the letter dated 15.10.09 issued by M/s Tata which is to the following effect:

In the light of the above, the recent communication of DoT asking us to provide our accounting records for period of three years starting from 2006-07 for an audit by the C&AG is a matter of surprise and concern for us. We submit that a fresh audit so closely on the heels of the special audit by DoT appointed independent auditor is unwarranted and will result in duplication of efforts, time and waste of resources. However, as a good corporate citizen, we have provided to DoT the total cost and breakup of original and current cost, cost and breakup of operational expenses, service wise revenue, and income from other sources for the years 2006-07, 2007-08 and 2008-09 vide our letters dated 1st April 2010 and 12th April 2010 though this information provided to DoT is very sensitive from competitive point of view.

We would also like

to submit that the provisions of the C&AG Act, 1971, which set out the duties and powers of the C&AG pertains only to the audit of accounts of the Union or the States or Government Companies or Corporations. The audit of accounts of private companies such as ours is not a part of duties and powers of the C&AG.

It is therefore

requested that while DoT can call for our books of accounts, the audit of those does not fall with the purview of the C&AG.

Reliance, on the other hand, clearly submitted itself to the jurisdiction of CAG while submitting the required details in its letter dated 31st March, 2010, at para 5 at page 131 of the Paper-book. The impugned letter dated 10.05.2010 was issued by the CAG in the context of the aforementioned development which reads as under:

Kindly

refer to your office letter cited on the above subject extending cooperation in conduct of the audit of revenue share by C&AG. Certain difficulty has been expressed by your Company in providing the books of accounts in physical form as they are being maintained in electronic form in SAP R3. Further, it has been stated that the same could be viewed in the concerned IT Systems which would be made available at your headquarters at DAKC, Navi Mumbai. In this connection it is requested that on 20th May 2010 a presentation may be given covering your business activities, accounting policies, Accounting, billing and financial systems and all other issues relating to revenue share, followed by brief interface meeting with my Audit team which would start the process of audit. The time and venue of the presentation is given in Annexure-I. Shri Subu R. Director(Report) of my office has been nominated as Nodal Officer who would be overseeing and coordinating the Audit

Having heard the learned counsel for the parties, we are prima facie of the opinion that once the source of power is traced to the statutory rules, it may be difficult for this Tribunal to grant any interim relief to the petitioners as the power of CAG is an independent one flowing from a statutory rule and not out of a contract qua contract.

The question is as to whether this Tribunal can declare the said Rules as unconstitutional or beyond the Rule making power of the Central Government by the TRAI Act, 1997 (as amended). Although, the learned counsel for the petitioner have addressed us at great length in regard to the validity of the said rules, we are of the opinion that as rules framed by the Central Government in exercise of its Rule making power under Section 35 of the Act cannot be a subject matter of challenge before us being beyond our jurisdiction and, thus, no relief can be granted to the said effect to the petitioners herein. As we have no jurisdiction to determine the constitutionality and/or validity of the said rules, we are of the opinion, that no interim relief can be granted. The petitioners will be at liberty to question the validity of the said rules and/or other grounds connected therewith before an appropriate forum.

These petitions are, therefore, admitted only on the limited ground of legality or otherwise of the action on the part of the respondent in issuing the impugned notices. The prayer (b) made in Petition No.141 of 2010 is rejected. The prayer for ad-interim order is also declined.

Reply to the petitions may be filed in four weeks. Rejoinder thereto may be filed within two weeks thereafter.

Put up under the heading for Direction on 29.06.2010.

...J

(S.B. Sinha)

Chairperson

(G.D. Gaiha)

Member

(P.K. Rastogi)

Member