{"id":381982,"date":"2026-04-22T18:30:29","date_gmt":"2026-04-22T13:00:29","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=381982"},"modified":"2026-04-22T18:24:57","modified_gmt":"2026-04-22T12:54:57","slug":"aptel-cag-audit-of-delhi-discoms-without-compliance-statutory-provisions-impermissible","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2026\/04\/22\/aptel-cag-audit-of-delhi-discoms-without-compliance-statutory-provisions-impermissible\/","title":{"rendered":"CAG Audit of Delhi DISCOMs Impermissible Without Compliance of Section 20 Conditions; APTEL quashes Lt. Governor’s Approval"},"content":{"rendered":"
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Disclaimer:<\/span> This has been reported after the availability of the order of the Court and not on media reports so as to give an accurate report to our readers.<\/span><\/p>\n

Appellate Tribunal for Electricity (Aptel):<\/span> In a suo motu proceeding under Section 121<\/a>, Electricity Act, 2003<\/a>, (EA) the Division Bench of Seema Gupta, Officiating Chairperson and Virender Bhat, Judicial Member, set aside the approval for entrustment of audit of Delhi DISCOMs to the Comptroller and Auditor General (CAG) of India, holding that the same was in violation of statutory requirements under Section 20<\/a>, Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971<\/a> (CAG Act). The Tribunal further rejected the request of the Delhi Electricity Regulatory Commission (DERC) for extension of time to commence liquidation of regulatory assets and directed initiation of recovery within a fixed timeline.<\/p>\n

Background<\/h3>\n

The Tribunal, in exercise of its suo motu jurisdiction, examined the validity of DERC’s action in initiation of audit of Delhi DISCOMs by CAG against the backdrop of the Supreme Court’s directions in its judgment dated 6 August 2025 (RA judgment). The RA judgment directed existing regulatory assets to be liquidated in a maximum period of four years starting from 1 April 2024, which later on was increased to seven years and also directed the Regulatory Commissions to undertake strict and intensive audit into circumstances of the accumulation of such assets by distribution companies.<\/p>\n

In compliance, DERC initiated steps to entrust the audit of DISCOMs to CAG and obtained approval from the Lt. Governor of Delhi. The DISCOMs objected to such entrustment as being contrary to law. The Tribunal then directed DERC not to proceed with the audit, and it is in this backdrop that the present issue has arisen. DERC also sought extension of time for commencement of liquidation of regulatory assets on account of pendency of true-up exercise.<\/p>\n

Analysis<\/h3>\n

It was observed by the Tribunal that the Supreme Court, while directing audit, had not specified that such audit must be conducted by CAG and therefore the contention that CAG audit flowed directly from the said judgment was untenable.<\/p>\n

Powers and Duties of CAG<\/p>\n

The Tribunal first examined powers and duties of CAG set out in Article 149<\/a>, Constitution of India<\/a> and observed the words “body or authority” in the provision to be of wide amplitude and extend to “private body and authority also” and accordingly these would cover the DISCOMs also. Tribunal then examined the circumstances and extent to which CAG can audit a private body or authority for which it analysed Section 20<\/a>, CAG Act<\/a>, and found that CAG is not competent to audit every private body or authority and such audit is permissible only where —<\/p>\n