Delhi High Court on Monday is set to deliver a landmark judgement on powers of Comptroller and Auditor General of India (CAG) in auditing the accounts of private companies having revenue sharing with Government.
In 2010, CAG’s move to audit the revenue of telecom companies was challenged by private players in Delhi High Court. This judgment will also have bearing on power companies objection to CAG audit.
During the audit of 2G Scam, CAG sensed irregularities in the accounts of telecom companies, especially in under-invoicing the revenue to Government. Irked by the CAG notice to produce books of accounts, telecom operators approached Delhi High Court. The Court ratified the powers of CAG, citing its powers derived from Constitution of India. At one point the Court also observed that the companies should have no doubt on the powers of CAG if they do business in India.
The telecom companies appealed to Supreme Court on the very next day. The SC also ratified the Delhi HC Order. But the apex court said the final decision of the audit should be conducted after the decision of the case in Delhi High Court, directing the private operators to conduct the case in High Court itself.
According to CAG officers, though telecom companies claim millions of subscribers in advertisements, the figures were very low in the case of revenue sharing. Several private players always under invoice their subscriber base to government, resulting huge revenue loss, said sources.
In the three-year long legal battles, telecom companies objected CAG move tooth and nail. At one point, a very senior lawyer representing private players even told the court: “My lord, don’t allow ultimate powers to CAG. One day this CAG will come to judiciary to audit.” This case was the first of its kind for CAG to engage advocates to represent their arguments in court.
The judgement will be pronounced by the Bench comprising Justices Pradeep Nandrajog and V Kameswar Rao. Apart from the power companies of Delhi, this crucial judgement would also have impact on the CAG’s audit on Mukesh Ambani-led Reliance Industries limited, which is facing irregularities in gas production from KG Basin.