Stating that the Supreme Court's ruling to allow CAG to audit accounts of telecom firms may have 'much wider ramifications' and could be applied to other areas subsequently, Ficci today said the episode raises serious questions on the sanctity of Indian contracts.
The Supreme Court yesterday held that the Comptroller and Auditor General of India (CAG) can audit the account books of private telecom companies that share revenues with the government for using spectrum.
"The episode raises serious questions on the sanctity of Indian contracts. If an external audit is part of the contract it is automatically applicable. Whatever is incorporated ab-initio in the contract, the parties must live with it," Ficci President Sidharth Birla said.
"Subsequent judicial challenge and interpretation creates the possibility of much wider ramifications especially as the government has extensive revenue engagement at all levels of commerce. The application of this pronouncement may get extended to areas that may not have been intended under the subject decision of the Supreme Court," he added.
The court passed the order on a batch of petitions filed by telecom companies' associations, including AUSPI and Cellular Operators Association of India (COAI), challenging the Delhi High Court verdict which had given green signal for CAG audit of the firms' accounts.
