Supreme Court Stays CAG Audit Of Delhi Private Discoms

07 Jul 2026 CW Team

The Supreme Court on Friday stayed a Comptroller and Auditor General (CAG) audit ordered by the Delhi government of three private power distribution companies, and directed a status quo on any appointment or recovery measures until a regular bench hears the matter on 15 July. The partial bench of Justices KV Viswanathan and Shree Chandrashekhar questioned the legality of the Delhi Electricity Regulatory Commission (DERC) decision to appoint the CAG.

The bench also stayed an Appellate Tribunal for Electricity (APTEL) direction that had required appointment of an independent chartered accountant for the audit, restraining the CAG from proceeding in the interim. DERC has appealed against an April APTEL ruling that held a CAG audit to be contrary to the statutory framework and directed the regulator to engage a chartered accountant.

The dispute follows government concern over accumulated regulatory assets, which it places at Rs 385 billion (bn). An earlier judgment had assessed the liabilities at Rs 272 bn and directed liquidation within three years. The liabilities were recorded as Rs 129.93 bn for BSES Rajdhani Power Ltd (BRPL), Rs 84.19 bn for BSES Yamuna Power Ltd (BYPL) and Rs 57.87 bn for Tata Power Delhi Distribution Ltd (TPDDL) as on 31 March 2024.

The Solicitor General said the lieutenant governor (LG) had sanctioned the audit and that the government sought to avoid saddling consumers with recovery before an audit established how liabilities arose. Counsel for one distribution company argued that the audit and recovery are distinct and that a roadmap for liquidation runs through to 2031. The Delhi government had directed a strict CAG audit for three months with a provision for extension and said this was the first CAG review of private discoms since privatisation in 2002. The court maintained the status quo and listed the matter for hearing by a regular bench.

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