Government auditor can inspect private telecom companies: Supreme Court

The Supreme Court on Thursday ruled that the national auditor, the Comptroller and Auditor General (CAG), is empowered to audit private telecom companies.

The Delhi High Court had in January this year upheld the validity of laws empowering the national auditor to conduct revenue audits of private telecom firms. Private telecom companies and Cellular Operators Association of India had challenged the Delhi High Court order.

The Centre had argued that in private-public partnership ventures, the revenue generated by the licensees is required to be shared with the Union government in line with the licencing agreements. Telecom companies pay a portion of their revenue as licence fee to the government.

The top court's decision assumes significance after the Delhi High Court had earlier refused to stay the decision of erstwhile Aam Aadmi Party's Delhi government which had asked the national auditor to audit the accounts of the three electricity distribution companies.

The Aam Aadmi Party government had alleged financial irregularities and ordered an audit of the electricity companies books by the national auditor.

Significance of Supreme Court's order

Prashant Bhushan, an Aam Aadmi Party leader and lawyer, said this judgment will have larger impact for sectors which have revenue-sharing with government and for projects with public private participation.

Corporate lawyer HP Ranina said the objective of the Supreme Court decision is that since the government is going to get the revenues, the national auditor has the right to go into the accounts so that there is no loss of revenue to the authorities.

This decision also holds significance for other sectors like mining, oil & gas, and infrastructure where there is revenue sharing with the government, he said.

Mr Ranina added: "It could mean that in future wherever the government's revenue is to be received from the private sector or public-private partnership models the money has to be accounted for and therefore the CAG will want to be into the fact to ascertain the government agencies are getting what is due to them."