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Home News Power Sector News Tell us why CAG should not audit you, Delhi HC asks private discoms

Tell us why CAG should not audit you, Delhi HC asks private discoms

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Delhi HCEven as the Delhi Electricity Regulatory Commission (DERC) admitted that it does not verify the financial statements furnished by discoms while fixing the tariff for the city, the Delhi High Court on 24-08-2011 asked power distributors to explain why their accounts should not be audited by the Comptroller and Auditor General (CAG). While the counsels for the discoms vehemently argued that they were not amenable to the CAG audit, a division bench of Chief Justice Dipak Misra and Justice Sanjiv Khanna issued notices to NDPL, BSES - Rajdhani and Yamuna - and asked them to submit their replies to the Public Interest Litigation (PIL) filed in this regard within six weeks.

"The question is whether the discoms are amenable to be audited by the CAG; the issue is the jurisdiction of the CAG with respect to the said companies and the same has to be tested on the anvil of the Constitution and the CAG Act...We are not expressing opinion on merits as we issue notice, but a prima facie case for writ is certainly made out," said the bench.

The court is hearing a PIL by the United RWAs Joint Action (URJA), which alleged that the state government succumbed to pressure of the discoms, which wanted a hike in power tariff by faking losses.

Alleging that the losses were manipulated and not real, the RWA has sought an independent audit by the CAG into the discoms' accounts.

As the petition came up for hearing, the court sought a response from the DERC in terms of Clause 5.2 of Delhi Electricity Commission (Terms and Conditions for Determination of Wheeling Tariff and Retail Supply Tariff) Regulations-2007 and any other rule or guidelines in vogue that reflected on the regulator's role in ascertaining the veracity of the accounts of the discoms.

Perusing the affidavit, which extensively dealt with the technicalities of the impugned rule,

the bench sought a one-line response from the DERC's counsel - asking if it had a mechanism of verifying the statement of accounts being submitted by the discoms to it.

Meanwhile, the counsel for the RWAs mentioned a letter written in July last year by the

DERC secretary to the state government, advocating a

CAG audit into the accounts of the discoms.

"What is your response? Do you conduct any kind of investigation into the accounts furnished by the discoms? It can be equated with the case of the Income Tax department ascertaining the financial accounts of an individual despite he or she having submitted one of their own," asked the bench.

To this, the DERC counsel said that the regulator did not audit the accounts as the same was not within the purview of the rule concerned. Buttressing this, senior counsels Abhishek Manu Singhvi and Sandeep Sethi, appearing for the discoms, also referred to an adjudication by the DERC, wherein they had opined that discoms were not amenable to CAG audit, being private companies.

"Now it is clear that you (DERC) don't go into the genuineness of the claims of the discoms... DERC's case is neither here nor there. On one hand, you (discoms) say that you are not amenable to the CAG audit and, on the other hand, their secretary writes a letter to the government asking for a CAG audit. Also, a question is if the government had 49 per cent stake in the discoms, can they assume a character of a private company, not amenable to CAG audit? Is there a prohibition in law against the discoms' accounts being audited by the CAG? Hence, we will have to look into the jurisdictional issues," said the bench.

Source- Indian Express


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