New Delhi, April 17
The Supreme Court today ruled that the Comptroller and Auditor General (CAG) had the right to scrutinise the accounts of private sector telecom companies to ensure that the government got its “due share” under the revenue-sharing agreement for letting them use spectrum, a scarce natural resource.

A Bench comprising Justices KS Radhakrishnan and Vikramajit Sen delivered the verdict while upholding the January 6, 2014 judgment of the Delhi High Court directing the telecom companies to submit their revenue records to the CAG.

Telecom service providers “are bound to provide all records and documents called for by the CAG,” the Bench ruled in its 75-page judgment, dismissing the appeals filed by the Association of Unified Tele Services Providers and others.

“CAG has a duty to examine and satisfy himself that all rules and procedures are being met not only by the government but also the service providers as both are dealing with the natural resources,” the SC clarified.

Legal experts said the ruling would have a bearing on the cases filed by electricity distribution companies challenging the government move to bring them under the CAG scanner.

The revenues of private telecom companies are estimated at over Rs 300,000 crore (Rs 3 trillion) a year. Under the licence agreement, telcos are liable to pay six per of their gross revenue, excluding spectrum charges, as annual fee to the Centre and the exact amount they owed to the government could be determined only through a CAG audit, the HC had explained.

The telecom associations had initiated the litigation by challenging the directives of the telecom regulator, TRAI, and the Director General of Audit of the telecom department on three occasions during January-May 2010 asking the telcos to produce their books of accounts for three years (2006-10) and related documents to the CAG for assessing their revenue.

The HC had, however, clarified that the CAG should restrict himself to auditing “the receipts and no more. The CAG would not confuse himself with his wide all embracing power under Section 14(2) of the CAG Act, 1971 which includes inquiries into aspects like faithfulness, wisdom and economy in expenditures.”