SC seeks reply from discoms on CAG audit

The Supreme Court on Monday sought responses from three private power distribution companies (discoms) in Delhi on petitions filed by various bodies, including the Delhi government, challenging the High Court order that these discoms cannot be audited by the Comptroller and Auditor General (CAG) of India.

A bench headed by Justice J Chelamswar asked the three discoms – Tata Power Delhi Distribution Ltd (TPDDL), BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL) – to file their responses within four weeks and listed the matter for final hearing on March 2. Monday’s notice came three days after the Delhi government moved the apex court to challenge a Delhi High Court verdict that disallowed the CAG audit of power distribution companies in the national capital. 

The Delhi High Court had quashed the CAG audit of the three DISCOMS at a very advanced stage in October 2015, reportedly at a time when CAG was about to finalise the report. A draft report of misappropriation of funds to the tune of Rs 10,000 crore was sent to the Delhi government which was leaked to media but discoms had argued that the “report was just a notice to Delhi government to prove their claims.”

Quashing the January 2014 order of the Delhi government for CAG audit of discoms, Delhi High Court on October 30 last year had trusted the arguments of these companies that they were privately owned and run hence did not come under the purview of CAG audit. 

The High Court also borrowed the arguments of discoms that they are already under the purview of Delhi Electricity Regulatory Commission (DERC) so can’t be forced to face double scrutiny.

The CAG has also challenged the order of Delhi High Court in the Supreme Court on the ground that these companies enjoyed funding of more than Rs 5,000 crore from the Delhi government since their inception on July 1 2002, and therefore required to be audited. 

“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 before the Supreme Court challenging the Delhi High Court order quashing the federal audit of discoms.

“There were huge discrepancies in their (discoms) accounts and the state government’s decision in seeking an audit of their books was not unjustified,” argued the CAG in the petition. The three discoms – Anil Ambani’s ADAG-owned BRPL and BYPL and the TATA-owned NDPL – are joint ventures between the Delhi government and private partner, in which Delhi government has 49 percent share while private partner owns 51 percent stake. A Delhi-based group of NGOs, United RWAs Joint Action (URJA), is also a petitioner in the case.