New Delhi [India], July 3 : The Supreme Court on Friday stayed the proposed audit of Delhi power distribution companies by the Comptroller and Auditor General (CAG) of India and directed that status quo be maintained till July 15, when the matter will be heard next.
A bench of Justices KV Viswanathan and Shree Chandrashekhar also issued notice on an appeal filed by the Delhi Electricity Regulatory Commission (DERC) challenging an April order of the Appellate Tribunal for Electricity (APTEL) on the issue of auditing power distribution companies.
The top court stayed the operation of APTEL's order, which had held that DERC could not entrust the audit to the CAG and had instead directed the regulator to appoint an independent Chartered Accountant to conduct the exercise.
Appearing for DERC, Solicitor General Tushar Mehta submitted that the audit contemplated by the Supreme Court's August 6, 2025 judgment had to be completed before any recovery of regulatory assets could be made from electricity consumers. He argued that the audit formed an integral part of the mechanism laid down by the apex court.
Senior advocate Abhishek Manu Singhvi, appearing for the power distribution companies, contended that the issue of audit was distinct from the recovery of regulatory assets and that the present appeals were confined to deciding the authority that should conduct the audit.
After hearing both sides, the bench observed that the submissions required an interpretation of its August 6, 2025 judgment. It listed the matter for hearing on July 15 and directed that it be placed before the Chief Justice of India for assignment to an appropriate bench.
The August 2025 judgment arose from a batch of cases concerning tariff orders issued by DERC between 2011 and 2014. While noting the significant accumulation of regulatory assets across the country, the Supreme Court had held that indefinite deferment of such liabilities distorted tariff-setting and unfairly shifted the burden to future consumers.
The court had directed electricity regulators to maintain cost-reflective tariffs, liquidate accumulated regulatory assets within prescribed timelines and conduct a strict audit into the reasons for their continued accumulation, with APTEL overseeing compliance under Section 121 of the Electricity Act. However, the judgment did not specify which authority should conduct the audit.
Following the judgment, the Lieutenant Governor of Delhi approved a proposal on March 5, 2026, for the audit to be conducted by the CAG. The decision was challenged before APTEL, which set aside the proposal and directed DERC to appoint an independent Chartered Accountant instead.