To audit or not to: The power discom dispute in court

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SummaryYears before AAP govt’s decision, a residents’ group had moved court for CAG audit of power distributors.

Years before AAP govt’s decision, a residents’ group had moved court for CAG audit of power distributors. A look at how that case stands

On January 22, the Delhi High Court will begin hearing the final arguments on a plea seeking a compulsory CAG audit of the capital’s three power distribution companies. This comes just after the high court has ruled that the CAG can audit the accounts of telecom firms, and at a time when the newly elected Delhi government has already announced a CAG audit of the three discoms, triggering objections from the latter.

The plea for having the discoms audited is nearly three years old. It was filed in February 2011 by the United RWAs Joint Action (URJA) that sought, besides the compulsory audit, an investigation by the CBI or a similar agency into allegations of fraudulent practices and manipulation of records by the three discoms — New Delhi Power Ltd (NDPL), BSES Yamuna Power Ltd and BSES Rajdhani Power Ltd.

Incidentally, senior AAP leader Prashant Bhushan is the advocate through which URJA has filed the petition.

When the government last week decided on a CAG audit by six teams, the three discoms said the government could not take such a step when the matter is being heard in court. Chief Minister Arvind Kejriwal’s counter-argument has been that the court has not issued any stay to prevent the government from ordering an audit.

The past three years have seen the parties to the case filing affidavits and counter-affidavits. In November 2013, the court noted that all written pleadings were complete.

The previous Delhi government, whose reply was sought, told the court in November 2011 that it does not have the power to request an audit of the companies as there are no provisions in the Electricity Act 2003 or the Tariff Policy of 2000 to refer the audit of private companies to the CAG.

The government felt, however, that an “occasional CAG audit” may be done, “given the need to carry the conviction of the general public and consumers” with regard to the “authenticity and claims” of the discoms. In March 2012, the government approved a CAG audit of the BSES group of companies after the former had pushed more equity into the company to maintain a 49 per cent shareholding; it informed the court of the decision on March 22.

In its plea, URJA had said the three discoms are substantially financed

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