The main legal point established in the judgment is the obligation of telecom service providers to maintain accurate accounts and undergo revenue audits by the Comptroller and Auditor General of India, emphasizing the importance of fiduciary duty, good faith, and public accountability in the telecom industry.

Pradeep Nandrajog, J.

1. It is now well-recognized that post second world war, some believe that influenced by the liberal features of the economic policies of the United States of America, a new economic order and a new kind of State emerged, which promoted the values and ideals of professionalism, scientific and technical expertise, administrative competence and neutrality in governance. The shift was from rowing to steering. The era of liberalization emerged all over the globe; some countries adopted it immediately after the second world war and some slowing and grudgingly, realizing that in the global economy the municipal governance had to be in sync with the current global thinking. Many believe (wrongly in our opinion) that the regulatory regime was the consequences of the new form of governance, shifting from rowing to steering.

2. Even in the pre-liberalization era, two modes of regulation governed important enterprises for most of the twentieth century : (i) regulation of privately owned enterprises was done mainly through company law; and (ii) key industries and utilities were governed through various forms of public ownership, of which the nationalized corporations was the most important. Privatization obviously signalled the decline of the latter.

3. What was the need to create a regulatory regime if there already existed a historic mode of regulation, in the form of company law? Accounts of every company required a mandatory audit by a Chartered Accountant who was not an employee of the company and was answerable to only the Institute of Chartered Accountants.

4. The answer must precede by understanding the problems involved in simply subjecting the privatized utilities to traditional corporate regulation. And one needs to begin by understanding the deficiency in the established role of company law in the regulation of the corporate enterprise.

5. Company law had to answer three questions : (i) What is the proper relationship between legal owners and those who do the daily job of running corporations? The question arose from the most important structural feature of the modern corporation : the separation of ownership from control which has been recognized as a central feature of business life. (ii) What claims, beyond legal ownership, give entitlement to a say in governing corporations? and (iii) What is the appropriate relationship between the corporation and the democratic State?

6. Company law was unable to satisfactorily answer the three questions and thus it was not possible to assimilate all privatized concerns in the prevailing mode of company regulation as per the existing company laws.

7. The reason why company law could not provide cogent answers to the three questions, was that the affairs of the company, as an institution, were treated as affairs concerning the shareholders and the directors (as agents of the company) answerable only to the shareholders. A company was a private entity and entitled to say that its governance was reserved for those with property rights, signified by the legal ownership, in the form of holding in equity. No doubt, with the induction of professional managers on the board of companies there was a decisive shift in the separation of ownership and control. But, what was overlooked by the company law was that the juristic entity of a company, as a distinct personality viz-a-viz its shareholders, failed to recognize that certain privileges were conferred upon the shareholders; the most important of which – privilege of incorporation - was the limited liability, a privilege not granted to other economic actors. Whereas, an individual carrying on business or two or more persons carrying on business as partners were personally liable to the third parties and their personal assets could be seized in settlement of the dues to third parties, it could not be so done against the properties of the shareholders. Company law overlooked that these privileges granted to companies and it