On Monday, the Delhi High Court dismissed petitions filed by BSES Rajdhani Power Limited and BSES Yamuna Power Limited against the Delhi Government’s proposal to have their affairs audited by the Comptroller and Auditor General of India. The Court held that the June 6 communication was only a show-cause notice, leaving the power distributors free to place their objections before the authorities before any final step is taken.
The Delhi Government had initiated proceedings under Section 20(3) of the CAG Act for a proposed audit of the two discoms. BSES argued that the move ran contrary to earlier judicial and Appellate Tribunal for Electricity directions, and was aimed at reopening settled tariff matters and delaying the liquidation of regulatory assets. It submitted that the Supreme Court’s 2025 directions on regulatory assets required an examination of why those amounts remained unrecovered, rather than a direct audit of the companies.
The Government, however, maintained that an audit was required in the public interest to examine the accumulation of regulatory assets, which ultimately affects consumers through electricity tariffs, as well as concerns relating to financial transactions and possible diversion of funds.
Justice Tejas Karia found that the Apex Court’s direction for a “strict and intensive audit” was broad enough to permit scrutiny of the discom’s records, conduct, accounts and financial position. The Court held that the earlier directions did not bar a CAG audit, provided the statutory process was followed.
Since the impugned notice contained no adverse finding and only invited the companies to respond, the Court dismissed the petitions as premature, while directing the authority to consider BSES’s objections and grant a hearing before taking a final call on the audit.
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