A Division Bench of the High Court, while allowing the writ petitions of discoms challenging the Delhi government’s decision to get their accounts audited by CAG, 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 the courts.”
The Bench said once by law a regulatory body, Delhi Electricity Regulatory Commission, had been constituted with the powers to audit the accounts of discoms, there could be no other audit at the instance of the government. Setting aside the government’s order of January 7, 2014, the court ruled that the CAG’s audit process carried out so far as well as its draft report would have no bearing any more.
In their writ petitions, Tata Power Delhi Distribution Limited, BSES Rajdhani Power Limited and BSES Yamuna Power Limited had challenged the AAP government’s decision with the contention that they were not the government entities and were beyond the CAG’s jurisdiction in their capacity as private companies. The discoms also raised a plea that the Delhi government had violated the principles of natural justice and failed to give them preliminary hearing. The Court also dismissed a public interest litigation moved by a non-government organisation, United RWAs Joint Action (URJA), which had sought an audit of the discoms’ accounts by the CAG.
The AAP government had ordered CAG audit of the three discoms amid allegations that they had shown inflated expenses. The government argued before the court that the discoms, working as joint venture between private companies and the government in the ratio of 51:49, were discharging public function.
The CAG in its draft report had reportedly indicted the discoms for allegedly inflating dues from consumers to the tune of a whopping Rs. 8,000 crore, besides committing other irregularities, including suppressing knowledge of revenue earnings in August this year. Even though the court disagreed with the discoms’ contention that since they were not State entities, they could not be subjected to CAG audit, it affirmed that what was sought to be achieved by the government could have very well been achieved by invoking the powers of DERC under the Reforms Act and under the terms and conditions of the licence issued to the discoms.
“Audit...for determination of tariff is not expedient in public interest as it is in the sole domain of DERC, which is well empowered to itself conduct the same. The report of CAG of audit of discoms has no place in the regulatory regime brought about by the Electricity Act and the Reforms Act,” said the Bench.
“We, thus, hold that once a specialised body (DERC) constituted by law has been created to determine a particular issue, the said issue is no longer open for adjudication in another fora,” the court added while dismissing the PIL filed by URJA.
The court also held that though the proposal for audit given to the discoms by the Delhi government could not be faulted on the ground of insufficiency of time to represent against it, it was not reasonable as it was given without disclosing the public interest and before finalisation of audit terms and conditions with the CAG.
The CAG in its draft report had reportedly indicted the discoms for allegedly inflating dues from consumers to the tune of a whopping Rs. 8,000 crore