CAG can audit private companies dealing in natural resources

The Supreme Court on Thursday held that the Comptroller and Auditor General of India (CAG) was empowered to examine the accounts of even private companies if they dealt with natural resources, in a judgement that will have far-reaching consequences.

The apex court said it was imperative to open up the books of accounts of private telecom companies to ascertain how the government and firms were dealing with natural resources, and to ensure that the former received its due share under the agreements.

“When the nation’s wealth, like spectrum, is being dealt with either by the Union, state or its instrumentalities or even the private parties, like service providers, they are accountable to the people and to the Parliament,” a bench of Justices K S Radhakrishnan and Vikramjit Sen said, adding that instances are not rare when executives are hand-in-glove with licence holders.

The court, while directing telecom majors like Bharti Airtel, Vodafone etc to provide all records and documents called for by the CAG, however, clarified that the CAG was not carrying out any statutory audit of the accounts of the service providers.

It said that the CAG would examine all receipts of the firms to ascertain whether the Centre was getting its due share by way of licence fee and spectrum charges as per the revenue sharing arrangement.

A bunch of appeals was filed by the Association of Unified Telecom Service Providers of India and the Cellular Operators Association of India — organisations representing telecom companies, challenging the Delhi High Court’s verdict allowing the CAG to audit revenues of private companies.

The CAG had initiated an audit after sector regulator TRAI found that some telecom operators were allegedly under-reporting income to avoid paying revenue share to the government.