HC refuses to suspend CAG audit of Delhi discoms

The Delhi High Court Friday refused to suspend the Delhi government's order for a Comptroller and Auditor General (CAG) audit of the national capital's three power discoms' finances since their inception in 2002.

"The prayer for stay of the impugned order is declined," Justice Manmohan said, adding: "CAG will not submit its report till the next date of hearing."

The court also issued notice to the Delhi government and the CAG to file their detailed response to petitions filed by the discoms, which alleged that the audit order was passed by the government with a "predetermined mind".

The three discoms - Tata Power Delhi Distribution ltd, BSES Rajdhani and BSES Yamuna - which supply power to consumers in Delhi, alleged that the Delhi government's order for audit was a political ploy. 

The discoms said audit was a serious issue, and asked the court to look into the legality of the order.

"This is not some election speech where someone (Arvind Kejriwal) can claim to teach the companies a lesson," senior counsel Mukul Rohatgi, appearing for BSES, said. He added that the audit order was passed with "malice in law", without giving the discoms an opportunity to be heard.

Senior counsel Harish Salve, appearing for Tata Power, said the existing rules limit the audit power of the CAG to government companies. He said that under the Electricity Act, the Delhi lieutenant governor should have initiated the audit order, instead of agreeing with the government's decision.

On the other hand, advocate Prashant Bhushan, appearing for the Delhi government, argued that the government had 49 percent share with each of the three discoms. 

He pointed out that all the assets worth thousands of crores of rupees of the erstwhile Delhi Vidyut Board (DVB) were handed over to the discoms in 2002, when power distribution in the capital was privatised.

Bhushan said the Delhi Electricity Regulatory Commission (DERC) in 2010 wrote a letter to the then government relating to "large number of anomalies and manipulation of accounts by the discoms to the disadvantage of the people". 

He said DERC then sought CAG audit of the three discoms from the Delhi government.

"Flimsy excuses should not be allowed to interfere with truth," Bhushan said, adding that the audit of the discoms was necessary to "restore the confidence of the public".

Counsel for the CAG said it had the jurisdiction to conduct the audit of the discoms.

Justice Manmohan said he will have to examine the government's records as companies have alleged "malice in law" and "pre-emptive" decision without hearing them. He posted the matter for March 19.

On Jan 1, lt Governor Najeeb Jung directed the Comptroller and Auditor General (CAG) to undertake the audit of the discoms.

Chief Minister Arvind Kejriwal, soon after assuming office Dec 28, met CAG Shashi Kant Sharma and urged him to audit the three private firms that supply power to the city's residents. He alleged that the discoms were overcharging the consumers.

On Jan 7, the Delhi government ordered an audit of the discoms by the CAG. Being aggrieved by the order, the discoms filed writ petitions before the Delhi High Court.