CAG can examine accounts of private telecom companies: SC


The Supreme Court today has declared a decision against the request of major private telecom companies questioning the Delhi High Court order allowing CAG to examine their accounts. The Supreme Court has upheld the Delhi Court order with minor corrections.

As the telecom companies are utilizing a natural resource, the telecom spectrum waves, it is the prerogative of the government to see to it that it is not losing any revenue due to mismanaged accounts of the private telecom companies, said the Supreme Court. Under the situation, the CAG has the right to “examine” accounts, the right is not for a statutory audit or a special audit, but a mere  examination. The CAG audit has to pertain to revenues and not into aspects such as “wisdom and economy in expenditures”.

Justice KS Radhakrishnan and Vikramjit Sen gave the judgement which can have quite an impact particularly on Airtel, Reliance, Vodafone and Idea companies.

The debate had been raging since 2009, when the Department of Telecom asked CAG to look into the accounts of several private telecom companies on allegations that these companies are hiding revenues to escape from paying taxes to government. The telecom companies formed into an association and approached the Delhi High Court saying that after the spectrum is bought by the companies in open auction, a relook cannot be allowed. The Delhi High Court, early this year, on January 6th gave CAG a blanket authority to look into private telecom companies, saying they are utilizing natural resource – spectrum waves, and the government has the right to ensure it is getting optimum revenue from the exploitation of this natural resource.

Medaram Jathara

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