CAG can't audit discoms: Delhi HC

Dealing an unexpected blow to the Arvind Kejriwal government, the Delhi high court struck down its decision to get the accounts of power discoms audited by the Comptroller & Auditor General of India. It pointed out that there was a regulator, Delhi Electricity Regulatory Commission, for auditing the accounts of private discoms for tariff determination and CAG could not usurp that role.
A bench of Chief Justices G Rohini and Rajiv Sahai Endlaw observed that the purpose of the CAG audit — to examine if power tariffs were properly determined — was the exclusive domain of DERC. “Thus, the purpose of the audit was not if privatization has served any purpose or whether the terms of the transfer scheme were in the interest of the Delhi government.
The sole purpose purport of the audit is tariff determination,” the bench observed, faulting the process. The pre poll promise that resulted in a formal request to CAG to carry out an audit of discoms in January 2014 was described as a “populist measure“ by the court which questioned the public interest behind the exercise.Since the state government and Delhi assembly have no power to take action on the CAG findings, the court said it “ultimately may serve no purpose“.
“Such populist measures, without considering the ultimate advantage thereof, not only end up being contrary to public interest but also put an unnecessary burden on the courts,“ the bench noted, quashing Delhi government's January 7, 2014 direction for a CAG audit of the three discoms -Tata Power Delhi Distribution Ltd, BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd.
Even as it recognized the constitutional powers of CAG to audit the discoms, the bench faulted the Delhi government for rushing through the audit request instead of inviting objections from the discoms to a CAG audit for tariff. “What emerges is that the discoms were given an opportunity to represent (their point of view) before consultations had taken place between the administrator and CAG and before the terms and conditions of such audit had been agreed upon between CAG and the concerned government,” the court noted, cancelling the audit on this preliminary ground.
In its 139-page verdict, the court also criticized the government for not empowering DERC and instead embarking on “a misguided exercise by issuing a direction to the CAG to audit the accounts of discoms when report of such an audit would not have any sanctity in law for achieving the desired result.” “The direction for audit of discoms by CAG, when the report of CAG cannot impact the tariff, would not also serve any public interest,” the court noted, lamenting that four years were wasted when “what was sought to be achieved could have been achieved by invoking the powers of DERC.”

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