Jolt to Kejriwal as Delhi HC rules CAG can’t audit discoms

  • Soibam Rocky Singh, Hindustan Times, New Delhi
  • Updated: Oct 31, 2015 02:16 IST
A file photo of Delhi high.

The Delhi high court cancelled on Friday an AAP government decision to get the accounts of three private power distribution firms scrutinised by India’s national auditor in a major blow to chief minister Arvind Kejriwal’s push for transparency in deciding electricity tariffs.

Experts say the order is likely to have a wider impact on other cases like the Comptroller and Auditor General of India (CAG)’s authority to examine the revenues of Delhi and Mumbai’s airport operators who have already raised questions.

Calling the government’s decision “misguided”, the judges 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”.

While holding that the CAG had the constitutional authority to audit the power distribution companies, or discoms, the court said the government did not take the decision on the advice of the council of ministers as required under section 20 of the CAG Act.

The government’s proposal for such an examination of the firms was unreasonable as it did not disclose public interest, it added.

Calling it a “temporary setback”, Kejriwal said his government would move the Supreme Court, which last year ruled the CAG had the right to audit private telecom operators that shared revenue with the government for using spectrum.

“I am committed to providing cheap electricity to people of Delhi. Our fight will continue,” the chief minister tweeted.

Tata Power Delhi Distribution Ltd, BSES Yamuna Power and BSES Rajdhani Ltd had challenged the Delhi government’s move on the grounds that they were not government entities and private firms were beyond the jurisdiction of the CAG.

A draft report of the agency’s audit of the three discoms had in August said they inflated previously incurred losses by nearly ` 8,000 crore. The high court’s order will put on hold all audit process against the firms at a time when the CAG is finalising its report.

The bench of chief justice G Rohini and justice RS Endlaw also dismissed a plea from NGO United RWAs Joint Action, or URJA, seeking a CAG audit. “The direction for audit of discoms by CAG, when the report of CAG cannot impact the tariff, would not also serve any public interest,” they said.

The Delhi government had argued a CAG audit was necessary to clear the air over the alleged anomalies and manipulation of their accounts affecting power rates in the city. It had said the appraisal was not aimed at interfering with the functioning of the firms, but was only meant to bring them under public audit.

On being contacted, the national auditor’s spokesperson said, “The CAG doesn’t comment on judicial pronouncements.”

The CAG has audited several public private partnership (PPP) projects, including those of the National Highways Authority of India (December 2014) and Indian Railways (July 2014).

The discoms had also challenged the order of a single-judge bench of the high court that had refused to stall the CAG audit.

The three private firms came into being in 2002 when the Delhi government decided to privatise power distribution. The discoms are a 51:49 per cent joint venture between private companies and the Delhi government.

“We welcome Delhi high court’s judgement,” BSES said in a statement. “Power distribution is a regulated business with in-built checks and balances. The entire process is transparent and scrutinised by DERC on a regular basis.”

The government during the course of the hearing pointed out that assets worth thousands of crores of the erstwhile Delhi Vidyut Board (DVB) were handed over to the discoms in 2002, when power distribution in the city was privatised.

It also contended that the Delhi Electricity Regulatory Commission (DERC) in 2010 wrote a letter to the government for a CAG audit of the distribution firms as it found “large number of anomalies and manipulation of accounts by the discoms to the disadvantage of the people”.

But, commenting on the CAG draft report, the HC said even if the allegations against the discoms were true, the report could not fulfil the objective of bringing down tariff under the prevalent legal regime.

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