CAG can audit accounts of telecom firms: SC

Stands by Delhi HC order and asks companies to provide all details

The Supreme Court today ruled that the Comptroller and Auditor General of India CAG) can audit the books of private telecom companies which share revenue with the government.

The court thus rejected the appeals of the Association of Unified Telecom Service Providers and Cellular Operators Association  which had challenged the decision of the Delhi high court that approved the role of CAG.

The main argument of the telecom associations was that there was no revenue sharing agreement between the government and them. On the other hand, the government had contended that  the firms were functioning under specific terms of the telecom laws and notifications. Moreover, it argued that the government revenue was related to the profit made by the telecom companies.

Accepting the government stand, the bench comprising Justice K S Radhakrishnan and Justice Vikramajit Sen said CAG can carry out the audit to examine whether the companies are giving proper share of their revenue to the government.

Earlier, the high court had found that according to the licence agreements signed by the  telecom firms, they  had agreed to CAG audit.

The department of telecommunications, which also had appealed to the Supreme Court on some aspects of the high court judgment, had alleged that in one year alone, 2006-2007,  two telecom giants were subjected to special audit and it was found that the exchequer was losing in crores of rupees. There were discrepancies in the revenue and when  the Department of Telecom  asked for data for verification, they refused to cooperate. There was no audit after that because of litigation at various levels and the refusal of the companies to disclose what was  required of them under the TRAI Act.