CAG justifies its role and SC sends notice on audit to Delhi discoms

High court had rejected public audit of private power distribution companies even though govt holds stake in them

GN Staff | January 18, 2016


#supreme court   #delhi high court   #power distribution companies   #discoms   #electricity   #pwoer  

The issue of public auditing of power distribution companies in Delhi has again come to life with the supreme court sending notice to three private companies.

A bench headed by justice J Chelamswar asked the three discoms -- Tata Power Delhi Distribution Ltd (TPDDL), BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd -- to file their responses within four weeks and listed the matter for final hearing on March 2.

The bench was hearing appeals filed by Delhi government, Comptroller and Auditor General (CAG) of India and NGO United RWAs Joint Action (URJA) against the verdict of the Delhi high court and seeking a stay of the order.

The HC in its 2015 order, had termed as "populist" the decision of AAP government to have CAG audit of TPDDL, BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd.

There can be no other audit by CAG at the instance of the state government when regulatory body Delhi Electricity Regulatory Commission (DERC) is already there to audit the accounts of discoms, the high court had said.

"Such populist measures without considering the ultimate advantage thereof, not only end up being contrary to public interest but also put unnecessary burden on courts," it had said.

It had disagreed with government's contention that audit was ordered in public interest to determine the tariff, saying "determination of tariff is in sole domain of DERC which is well empowered to conduct the same or have the same conducted and CAG's audit report on discoms has no place in Regulatory Regime brought about by Electricity Act and the Reforms Act".

The discoms are 51:49% joint venture between the private companies and the Delhi government. The city government had ordered the CAG audit of the three discoms which supply power in Delhi, on grounds including that it has 49% stake in the discoms.

In its contention, the CAG has said that the discoms enjoyed funding of more than Rs 5,000 crore from the Delhi government since their inception on July 1, 2002 and justifyed its stand on auditing their accounts.

"Considering that the discoms enjoyed funding of more than Rs 5,000 crore from the state by way of equity, debt, transferred assets and also receivables, there is a nexus with the consolidated fund of the state, and hence the CAG has a statutory duty to scrutinize the books of accounts of discoms," the CAG said in its petition.

On the Delhi HC order, the CAG said the "high court has fallen into grave error by quashing the audit... on the ground of alleged procedural lapses".

The auditor pointed out that the Arvind Kejriwal government was not the first to order a CAG audit of discoms. The previous government headed by Congress's Sheila Dikshit too had asked the CAG to audit the three discoms.

"It is pertinent to mention herein that the cabinet of Delhi government had already taken a decision as far back as December 27, 2011 to audit the accounts of discoms," the auditor said in its petition. On the DERC, the CAG said the "DERC itself admitted before the HC that it does not have technical expertise or the resources to conduct an effective audit of the accounts of discoms. In such a scenario, it was incumbent upon the CAG to fill this lacuna... and to act in accordance with its constitutional mandate," the petition said.

"The CAG functions as a watchdog for ensuring accountability and probity of the executive and legislature. Any attempt to whittle down the jurisdiction and actions of the CAG runs contrary to the mandate of the Constitution," it said while seeking a stay on the HC order.

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