The Appellate Tribunal for Electricity (APTEL) has set aside the Delhi Electricity Regulatory Commission’s (DERC) decision to subject Delhi’s power distribution companies (discoms) to a Comptroller and Auditor General (CAG) audit, holding the move to be in violation of statutory requirements under Section 20 of the CAG Act.

The Tribunal found that the Supreme Court’s earlier direction mandating a “strict and intensive audit” of discoms did not specifically require such an audit to be conducted by the CAG. It rejected DERC’s contention that a CAG audit flowed directly from the apex court’s judgment, clarifying that the choice of auditor must still comply with statutory safeguards.

The APTEL held that two mandatory conditions for invoking a CAG audit were not met:

• There was no demonstrated satisfaction of “public interest” by the Lt. Governor, and

• No opportunity of hearing was given to the discoms before initiating the audit.

Ms Seema Gupta, Officiating Chairperson, & Mr. Virender Bhat, Judicial Member, observed that the approval for audit appeared to have been granted mechanically, without proper application of mind to statutory requirements.

“It appears that in pursuance of the directions given by the Hon’ble Supreme Court in RA judgement, the DERC made up its mind to entrust the strict & intensive audit of Delhi Discoms to CAG, unmindful of the requirement under Section 20(3) of the CAG Act, and upon being asked by CAG it sought approval of the Lt. Governor of Delhi for the same in a routine manner just by citing the RA judgement of the Hon’ble Supreme Court and the Lt. Governor too accorded approval for such audit in a very cavalier manner without enquiring whether or not does it involve “public interest”.”

The Tribunal clarified that the Supreme Court’s audit direction was limited to examining the circumstances behind the accumulation of regulatory assets and did not justify a comprehensive probe into the discoms’ financial affairs, noting that such an exercise could instead be undertaken by appointing chartered accountants.

Accordingly, APTEL quashed the approval for the CAG audit and directed DERC to appoint a chartered accountant within one week to conduct the audit, to be completed within three months.

On the issue of delay in recovery of regulatory assets, estimated at over ₹38,552 crore, the Tribunal took a stern view of DERC’s request for extension of time. It held that there was no legal impediment to commencing recovery and criticised the Commission for repeated delays despite prior undertakings before courts. The plea for extension was rejected, and DERC was directed to begin liquidation within three weeks.

“Commission has been delaying the liquidation of regulatory assets for one reason or the other thereby permitting increase in the amount of regulatory assets day by day which would place additional burden upon the end consumers of the electricity in NCT of Delhi. We do not see any cogent and plausible reason which is preventing the Commission to commence the liquidation of regulatory assets. The entire conduct of the Commission in this regard appears to be malafide and needs to be deprecated……In view of the same, we find the request of the Commission for extension of time till 1st July, 2026 for commencement of liquidation of regulatory assets totally unreasonable and unacceptable. The request, is therefore, hereby rejected.”

Appearances

For the Petitioner(s):
Anushree Bardhan, Shikha Ohri (for Applicant No. 1)

For the Respondent(s):

• Respondent No. 1: Poorva Saigal, Shubham Arya, Pallavi Saigal, Reeha Singh, Rishabh Saxena, Harshvardhan Singh, Shirin Gupta
• Respondent No. 2: Vinay Kumar Gupta
• Respondent No. 3: C.K. Rai, Shiva Singh, Anuradha Roy
• Respondent No. 4: Anand K. Ganesan, Swapna Seshadri, Utkarsh Singh, Sneha Singh Baghel
• Respondent No. 5: M.T. George, Dhananjaya Mishra
• Respondent No. 6: Sahil Chandra
• Respondent No. 7: Ravi Kishore
• Respondent No. 8: Rutwik Panda, Anshu Malik
• Respondent No. 9: Gargi Kumar
• Respondent No. 10: Abiha Zaidi
• Respondent No. 11: Pratibhanu Singh Kharola
• Respondent No. 12: Sethu Ramalingam, S. Shivshankari
• Respondent No. 13: Pradeep Misra
• Respondent No. 14: C.K. Rai, Shiva Singh, Anuradha Roy, Vinay Kumar Gupta
• Respondent No. 15: Somanadri Goud Katam
• Respondent No. 16: Shlok Chandra
• Respondent No. 17: Suparna Srivastava
• Respondent No. 18: Mandakini Ghosh
• Respondent No. 19: Gaichangpou Gangmei, Arjun D. Singh, Yimyanger Longkumer, Maitreya Mahaley
• Respondent No. 20: Aishwarya Subramani, Harsha V. Rao, Anand K. Ganesan
• Respondent No. 21: Suriti Chowdhary, Anuj Bhave, Abiha Zaidi, Pritam Raman Giriya
• Respondent No. 22: Mandakini Ghosh
• Respondent No. 23: Anish Roy
• Respondent No. 24: Farrukh Rasheed
• Respondent No. 25: Rohini Prasad
• Respondent No. 26: Sriram Krishna, Anupama Dhurve
• Respondent No. 27: Shri Venkatesh, Suhael Buttan, Nihal Bhardwaj, along with team
• Respondent No. 28: C.K. Rai, Anuradha Roy, Vinay Kumar Gupta, Shiva Singh
• Respondent No. 29: Surabhi Pandey
• Respondent No. 30: Abiha Zaidi, Suriti Chowdhary, Pritam Raman Giriya, Anuj Bhave
• Respondent No. 31: Vishrov Mukerjee, Janmali Gopal, Rao Manikala, Nishtha Kumar, Yashaswi Kant, Pratyush Singh, Damodar Solanki, Priyanka Vyas, Juhi Senguttuvan, Anumeha Smiti, Garima Adlakha, Sai Snigdha Nittala, Snehal Upadhyay
• Respondent No. 32 & 33: Amit Kapur, Anupam Varma, Rahul Kinra, Aditya Gupta, Aditya Ajay, Girdhar Gopal Khattar, Isnain Muzamil, Adamya Ojha, Yash Srivastava, Vaibhav Sharma
• Respondent No. 34–37: Shri Venkatesh and team (including Shryeshth Ramesh Sharma, Kanika Chugh, Ashutosh Kumar Srivastava, Suhael Buttan, Nihal Bhardwaj, Surbhi Kapoor, Adarsh Singh, Siddharth Nigotia, Manu Tiwari, Abhishek Nangia, Mohit Mansharamani, Akash Lamba, Shivam Kumar, Kartikay Trivedi, Aashwyn Singh, Mohit Gupta, Harsh Vardhan, Aniket Kanhaua, Ananya Dutta, Indu Uttara, Priya Dhankar, Vineet Kumar, Tanishka Khatana, Nikunj Bhatnagar, Kunal Veer Chopra, Punyam Bhutani, Vedant Choudhary, Tarang Saraogi, Manav Bhatia, Drishti Rathi)
• Respondent No. 38: S. Vallinayagam