Supreme Court orders status quo on audit of Delhi discoms

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

A Bench of Justices K.V. Viswanathan and Shree Chandrashekhar issued a notice on the appeal filed by the DERC. The court posted the case for a further hearing on July 15. Meanwhile, the apex court’s status quo order would effectively put on hold the original DERC order to have the Comptroller and Auditor General (CAG) audit the discoms.

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

The controversy over the audit was centered around an August 6, 2025 judgment of the Supreme Court, which held that the ineffective and inefficient functioning of the State electricity regulatory commissions, which acted under the “dictation” of the State governments, had led to regulatory failure.

Road map for liquidation

The apex court had directed regulatory commissions to provide the road map for the liquidation of existing regulatory assets within four years, starting from April 1, 2024. The deadline was later extended by seven years after a plea made by the discoms. The top court had also, at the same time, directed regulatory commissions to undertake strict and intensive audits into how the “distribution companies had continued without recovery of regulatory assets”.

As an aftermath of the apex court judgment, the DERC had decided to have the Delhi discoms audited by the CAG. However, APTEL took suo motu cognisance of the move and decided to examine whether DERC’s action was legally permissible.

In its order on April 20, the appellate tribunal noted that the apex court judgment had not obligated the DERC to entrust the strict and intensive audit to only the CAG. Any chartered accountant would have sufficed.

Besides, the move for a CAG audit of Delhi discoms was violative of Section 20(3) of the CAG (Duties, Powers and Conditions of Service) Act, 1971. The provision made it mandatory that a CAG audit could be done in cases not covered by Parliamentary law only if the President or Governor was satisfied that it “involved public interest”. The APTEL said, in this case, communications exchanged among the CAG, the Delhi government and the DERC demonstrated no such satisfaction from the side of the Lt. Governor.

The tribunal said it could not remain a “mute spectator” while the DERC contravened the law.

The Bench, on Friday, said the case would be put up before the Chief Justice of India for referring it to an appropriate Bench, which would in turn hear the issue in detail and examine the scope of the August 6 judgment.