APTEL orders DERC to liquidate discoms dues worth INR 38,500 crore in three weeks
- Litigation
- 4 min read
APTEL orders DERC to liquidate discoms dues worth INR 38,500 crore in three weeks
Delhi discoms including BSES Yamuna Power, BSES Rajdhani Power and Tata Power Delhi Distribution (TPDDL) argued that there was no Supreme Court mandate for CAG audits and highlighted statutory lapses, while DERC argued that CAG audit was in public interest.- Published On Apr 21, 2026 at 05:10 PM IST
The Appellate Tribunal for Electricity (APTEL) has quashed the Delhi Electricity Regulatory Commission's (DERC) approval for a Comptroller and Auditor General (CAG) audit of Delhi discoms, ruling that it violated Section 20(3) of the CAG (Duties, Powers and Conditions of Service) Act, 1971.
In its judgment pronounced by Officiating Chairperson Seema Gupta and Judicial Member Virender Bhat, APTEL also rejected DERC's plea for extending regulatory asset liquidation timelines, directing immediate action amid INR 38,552 crore in pending assets.
Delhi discoms including BSES Yamuna Power, BSES Rajdhani Power and Tata Power Delhi Distribution (TPDDL) argued that there was no Supreme Court mandate for CAG audits and highlighted statutory lapses, while DERC argued that CAG audit was in public interest.
“It is axiomatic that the Hon’ble Supreme Court, while directing the Regulatory Commissions to conduct strict and intensive audit of the discoms vide RA judgement, has nowhere specified that such audit must be entrusted to CAG. Therefore, we do not find any merit in the submissions of the Ld. ASG that audit by CAG flows directly from the directions issued by the Apex Court in this said judgement,” APTEL noted.
The Tribunal found that there was no recorded satisfaction by the Lt. Governor of Delhi that the CAG audit was expedient in public interest, and that the distribution companies were not granted any opportunity of hearing prior to the audit being entrusted to the CAG. The approval process was characterised as having been undertaken in a cavalier manner.
“The extent of the regulatory assets or their liquidation is neither related to nor dependant of the intensive audit of the discoms. It is nowhere observed by the Hon’ble Supreme Court in the said RA Judgement that the outcome of intensive audit of the discoms will have any bearing on the extent of the regulatory assets or the process for their liquidation,” tribunal noted.
“It will also not affect any increase in tariff which will be necessitated for liquidation of regulatory assets of the Discoms. Hence, we do not find it expedient in public interest to entrust the strict & intensive audit of the Delhi Discoms to CAG," tribunal added.
Advt APTEL further held that, even on merits, no public interest justified a wholesale audit of the accounts of the distribution companies by the CAG. The audit directed by the Supreme Court was limited to examination of the circumstances leading to accumulation of regulatory assets, and not a comprehensive financial audit.
APTEL affirmed DERC's power to appoint independent chartered accountants. The Tribunal also upheld its broad Section 121 jurisdiction to intervene against unlawful regulatory actions.
“When this Tribunal finds that DERC in directing audit of the Delhi Discoms has contravened the statutory provisions i.e. Section 20 of the CAG Act, this Tribunal cannot remain a mute spectator. This Tribunal is not expected to endorse each action of the Commission without examining their legality/correctness. That would be against the spirit of engrafting Section 121 in the statute,” said tribunal.
On liquidation, APTEL deprecated DERC's malafide delays despite prior undertakings to the Supreme Court, Delhi High Court, and itself, noting no legal bar to immediate commencement.
"We do not see any cogent and plausible reason which is preventing the Commission to commence the liquidation of regulatory assets. The entire conduct of the Commission in this regard appears to be malafide and needs to be deprecated," tribunal noted. "we find the request of the Commission for extension of time till 1st July, 2026 for commencement of liquidation of regulatory assets totally unreasonable and unacceptable. The request, is therefore, hereby rejected."
This suo motu petition under Section 121 of the Electricity Act, 2003, stems from the Supreme Court's August 6, 2025, RA Judgment, which flagged long-pending regulatory assets as regulatory failure burdening consumers.
The Court mandated APTEL to monitor liquidation trajectories and conduct a strict and intensive audit into asset accumulation circumstances, but APTEL clarified this did not require CAG involvement.
APTEL directed DERC to appoint an independent chartered accountant within one week of April 20, 2026 with audit completion in three months, required liquidation commencement by May 11, 2026 (three weeks from April 20), and set true-up for FY 2023-24 by June 30, 2026.
“We direct the Commission to commence the process of liquidation of regulatory assets as per the RA judgement of the Hon’ble Supreme Court within three weeks from today positively,” noted tribunal.
SKV Law Offices represented TPDDL, with the matter argued by founding partner Shri Venkatesh and supported by partner Ashutosh K. Srivastava, counsel Nihal Bhardwaj and senior associate Aashwyn Singh.