Supreme Court orders status quo on audit of discoms in Delhi

A bench of Justices KV Viswanathan and Shree Chandrashekhar issued notice on the appeal filed by DERC. File | Photo credit: The Hindu

The Supreme Court on Friday (July 3, 2026) stayed an order passed by the Appellate Tribunal for Electricity (APTEL) quashing the Delhi Electricity Regulatory Commission’s (DERC) direction for the Comptroller and Auditor General to conduct an “intensive” audit of power distribution companies (discoms) in the national capital.

A bench of Justices KV Viswanathan and Shree Chandrashekhar issued notice on the appeal filed by DERC. The court posted the case for further hearing on July 15. Meanwhile, the Supreme Court’s status quo order has effectively stayed DERC’s original order for the Comptroller and Auditor General (CAG) to audit the discoms.

On April 20, APTEL set aside the DERC order and directed the Commission to appoint “any” chartered accountant to conduct a “rigorous and intensive” audit of the discoms in three months.

The controversy surrounding the audit centered around the Supreme Court’s judgment on 6 August 2025, which held that the inefficient and inefficient functioning of the State Electricity Regulatory Commissions, which acted under the “dictation” of the state governments, had led to regulatory failure.

Roadmap for disposal

The Supreme Court directed the regulatory commissions to provide a plan for liquidation of existing regulatory assets within four years, starting April 1, 2024. The deadline was later extended by seven years following a call by discoms. The Supreme Court also simultaneously ordered regulatory commissions to conduct rigorous and intensive audits of how “distribution companies continued without recovery of regulatory assets.”

Following the apex court verdict, DERC decided to have Delhi discoms audited by the CAG. However, APTEL took suo motu cognizance of the move and decided to examine whether DERC’s action was legally permissible.

The Appellate Tribunal, in its order dated April 20, said that the apex court’s judgment does not compel DERC to entrust only the CAG with a rigorous and intensive audit. Any chartered accountant would do.

In addition, the proposal for a CAG audit of Delhi discoms was in violation of Section 20(3) of the CAG (Cuties, Powers and Conditions of Service) Act, 1971. The provision mandated that a CAG audit could be conducted in cases not covered by parliamentary law only if the President or the Governor was satisfied that it was “in public interest”. APTEL said that in this case, the communications exchanged between the CAG, the Delhi government and the DERC did not show any such satisfaction on the part of the Lt. Governor.

The tribunal said it cannot remain a “dumb spectator” while DERC violates the law.

The bench said on Friday that the case will be placed before the Chief Justice of India for referring it to the appropriate committee, which will then discuss the matter in detail and examine the scope of the August 6 judgement.

Published – 03 Jul 2026 23:47 IST