CAG can audit telecom firms in 2G case: HC

New Delhi :  In a landmark judgment, the Delhi High Court on Monday ruled that the Comptroller and Auditor General can audit the accounts of private telecom companies.

The telecom companies, which are being investigated in connection with the 2-G scam for the arbitrary allocation of spectrum at throwaway prices, had challenged the government auditor’s right to examine private entities. The court on Monday rejected their argument.

CAG can audit telecom firms in 2G case: HC

A lawyer representing the CAG said the court had upheld the constitutional rights of the CAG, as private companies deal with public funds.

“The court has ruled that the CAG has rights. Under the Constitution in the CAG Act, the CAG has powers and jurisdiction to audit their accounts. License fee is paid for spectrum and the profit generated by companies is a public resource in which people have stake and right. Since it is public resource and people have right and stake in it, the CAG has right to check whether that income, which goes into public exchequer, is proper or not,” CAG’s lawyer said in New Delhi.

The CAG had in 2010 sought the revenue details of the telecom companies to examine whether they had under-reported their revenues, causing huge losses to the government. The CAG contended that since the companies are in a revenue sharing arrangement with the government, they should be open to an audit.

When the Delhi High Court refused to stop the audit, the telecom companies moved the Supreme Court, which referred the case back to the high court. The telecom companies are now likely to challenge Monday’s ruling.

The Delhi high court has also rejected the telecom companies’ contention that they are private bodies and hence out of the purview of the CAG’s jurisdiction.

The private firms had pleaded that the CAG, under Article 149 of the Constitution, is empowered only to audit the accounts of the Union and of the States as also of such authorities or bodies as may be prescribed by or under any law made by Parliament. Private companies are, therefore, outside the purview of the constitutional scheme, the firms argued. The court has rejected this contention.

The verdict is likely to have a bearing on a case involving Delhi’s power distribution companies, who have challenged an audit of their accounts ordered by the Arvind Kejriwal government. The case will come up in the Delhi High Court on January 22.

The verdict would strengthen the case of the AAP government in Delhi to go in for CAG audit of private power companies.

The Congress party on Monday hailed as a “good sign” the order upholding the constitutional validity of laws empowering the CAG to conduct revenue audits of private telecom firms.

”It is a good sign. It is stretching the definition of accountability and transparency,” party spokesman Sanjay Jha told reporters.

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