There can't be CAG audit of discoms as DERC has the power: HC

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In a major blow to the AAP government, the Delhi High Court today said that once a regulatory body, DERC, has been set up with the power to audit accounts of private power distribution companies, there can be no other audit by CAG at the instance of the state government.
A bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw termed the government's decision as "misguided" and 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 court made the observation and passed the order while quashing the Delhi government's January 7, 2014, direction to carry out an audit of the three discoms-- Tata Power Delhi Distribution Ltd (TPDDL), BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd--by Comptroller and Auditor General (CAG) of India.

The Delhi government said it would challenge the verdict in the Supreme Court.
The high court observed, in its judgement, that the government, instead of strengthening the Delhi Electricity Regulatory Commission (DERC), "has undertaken a misguided exercise by issuing a direction to the CAG to audit the accounts of discoms when report of such 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," it said and added that four years had already elapsed in the process when "what was sought to be achieved could have been achieved by invoking powers of DERC.."

"We repeat that all the power of state government relating to electricity now stand vested in Delhi Electricity Regulatory Commission (DERC)... Once by law a regulatory body has been constituted with powers inter alia to have the accounts of the discoms audited, there can be no other audit at instance of state government...
"We are unable to decipher anything which DERC cannot and which CAG can unearth. DERC is neither found to be helpless nor dependent on the balance sheet," the court said while allowing the pleas of the discoms which had challenged the government's January 7, 2014 direction.
"Needless to state all actions undertaken in pursuance to impugned directive (of January 7, 2014) are also rendered inoperative and to no effect," the court said.