Supreme Court Halts Delhi Government's CAG Audit Of Private Discoms

Published 3 July 2026 · local

Supreme Court Halts Delhi Government's CAG Audit Of Private Discoms Published By, Last Updated: July 03, 2026, 17:18 IST The court ordered a status quo

Supreme Court Halts Delhi Government's CAG Audit Of Private Discoms Published By, Last Updated: July 03, 2026, 17:18 IST The court ordered a status quo, saying the legality of the power regulator DERC decision to appoint the CAG gives rise to questions for a judicial determination. Rapid Read During the hearing on Friday, Solicitor General Tushar Mehta, appearing for DERC, submitted that the lieutenant governor had approved the CAG audit in compliance with the procedural requirements identified by APTEL. The Supreme Court on Friday halted a CAG audit ordered by the Delhi government of three private discoms against the backdrop of a staggering Rs 38,500 crore accumulated over the years as Regulatory Assets (RA) to be recovered from consumers. A partial working day bench of Justices KV Viswanathan and Shree Chandrashekhar ordered a status quo, saying the legality of the power regulator Delhi Electricity Regulatory Commission’s (DERC) decision to appoint the CAG gives rise to questions for a judicial determination. In a setback to the BJP-led Delhi government, the top court ordered, “Till further orders, there shall be a stay of the Appellate Tribunal for Electricity (APTEL) direction on appointing any chartered accountant for audit. The CAG shall also not proceed with the audit in the meantime." The top court was hearing the DERC’s plea against an April ruling of the APTEL, which had held that entrusting the audit to the CAG was contrary to the statutory framework and directed the regulator to appoint an independent chartered accountant for the audit.

The bench, while issuing notice to the discoms, said, “The present civil appeal concerns directly the issue whether the action of the DERC in initiating the process of audit of the distribution companies by CAG is legally permissible." The top court said the status quo be maintained till July 15, when the DERC’s plea is taken up for hearing by a regular bench, which had pronounced the verdict last August. At that time, a bench headed by Justice PS Narasimha had directed that the regulatory assets, worth Rs 27,200 crore, be paid within three years to Delhi’s three private discoms. The bench then said that the Regulatory Assets (RAs), essentially deferred revenue gaps to be recovered in future tariffs, have risen sharply, reaching Rs 12,993 crore for BSES Rajdhani Power Ltd (BRPL), Rs 8,419 crore for BSES Yamuna Power Ltd (BYPL) and Rs 5,787 crore for Tata Power Delhi Distribution Ltd (TPDDL) as on March 31, 2024, totalling Rs 27,200 crore. The 2025 verdict came on the petitions filed by three power distribution companies against the DERC’s tariff orders that led to the ballooning of regulatory assets. At present, the RAs stand at Rs 38,500 crore. During the hearing on Friday, Solicitor General Tushar Mehta, appearing for DERC, submitted that the lieutenant governor had approved the CAG audit in compliance with the procedural requirements identified by APTEL. He added that the government’s concern was to prevent consumers from being burdened with recovery of the regulatory assets before an audit established how such liabilities had accumulated.