Supreme Court Stays APTEL Order, Maintains Status Quo on CAG Audit of Delhi Power Companies
The Supreme Court on Friday stayed an order by the Appellate Tribunal for Electricity (APTEL) that had set aside a Delhi Electricity Regulatory Commission (DERC) directive for an intensive audit of power distribution companies (discoms) in the national capital by the Comptroller and Auditor General (CAG).
A Bench of Justices K.V. Viswanathan and Shree Chandrashekhar issued notice on an appeal filed by DERC and posted the matter for further hearing on July 15. The court's status quo order effectively puts on hold the DERC's original direction for a CAG audit.
On April 20, APTEL had quashed the DERC order and directed the Commission to appoint any chartered accountant to conduct a strict and intensive audit of the discoms within three months. The controversy stems from an August 6, 2025 Supreme Court judgment that found state electricity regulatory commissions had failed due to dictation from state governments.
In that judgment, the apex court had directed regulatory commissions to provide a roadmap for liquidating existing regulatory assets within four years from April 1, 2024, later extended by seven years. The court also ordered strict and intensive audits into how discoms continued without recovering regulatory assets.
Following this, DERC decided to have the discoms audited by the CAG. However, APTEL took suo motu cognisance and examined the legality of DERC's action. APTEL noted that the Supreme Court did not mandate that only the CAG conduct the audit; any chartered accountant would suffice.
APTEL also held that a CAG audit was violative of Section 20(3) of the CAG Act, 1971, which requires the President or Governor to be satisfied that the audit involves public interest. The tribunal found no such satisfaction from the Lieutenant Governor in the communications exchanged.
The Supreme Court bench has now directed that the case be placed before the Chief Justice of India for referral to an appropriate bench to examine the scope of the August 6, 2025 judgment in detail.
