HC refuses to interfere with Delhi govt notice on CAG audit of BSES Rajdhani, BSES Yamuna

The Delhi High Court on Monday refused to interfere with the Delhi government’s proposal to entrust the audit of BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd to the Comptroller and Auditor General of India (CAG).

A vacation bench of Justice Tejas Karia dismissed a petition by the power distribution companies, stating that their challenge was premature at this stage.

Justice Karia observed that the Delhi government’s June 6 notice, which proposes entrusting the audit of the petitioners to the CAG, has no adverse finding that warrants any interference at this stage, and that it merely gives the power distribution companies an opportunity to submit their representation and appear for a hearing before the authorities.

“The present petition is, therefore, premature. The present petition stands dismissed,” said the judgement.

“The proceedings to be conducted pursuant to the impugned notice under Section 20(3) of the CAG Act shall be decided by the competent authority after affording the petitioners an opportunity of hearing and upon due consideration of all submissions that may be advanced by the petitioners on merits, without being influenced in any manner by the observations made hereinabove,” it further said.

The petitioners contended that the June 6 notice was void ab initio, illegal and contrary to judicial pronouncements, including a Supreme Court judgement, which foreclose such an audit.

The court, however, concluded that the notice “cannot be regarded as adverse” to the petitioners and that it was in furtherance of the statutory requirement of providing an opportunity of being heard before entrustment of audit to the CAG by the lieutenant governor.

It further asserted that there was no “mischaracterisation” of the judicial decisions, and there was no legal impediment preventing the Delhi Electricity Regulatory Commission or the Delhi government from initiating a CAG audit in this case.

It clarified that the Supreme Court’s judgment has no prohibition against the petitioners’ audit nor does it preclude such audit by the CAG as long as it done as per the provisions of the CAG Act.

The Delhi government opposed the petition on the grounds that it was premature.

It also said that the audit of the petitioners was necessary in public interest and in conformity with the directions issued by the Supreme Court, which require a “strict and intensive audit of the circumstances” in which the distribution companies continued without recovering regulatory assets.

An independent audit was essential to verify the petitioners’ true and fair financial position, particularly in view of the likelihood of related-party transactions or diversion of funds, it contended.