01Facts
The Petitioners (BRPL and BYPL), private distribution companies in Delhi, challenged a notice dated 06.06.2026 issued by the Government of NCT of Delhi (GNCTD) under Section 20(3) of the CAG Act.
¶ 1The notice proposed entrustment of their audit to the Comptroller and Auditor General (CAG) following a Supreme Court judgment in BSES Writs (“RA Judgment”), which directed a “strict and intensive audit” into the accumulation of Regulatory Assets (RA).
¶ 23, 38Previously, in 2015, the Delhi High Court in the URJA Judgment had set aside a similar CAG audit, holding it futile given the DERC's regulatory powers.
¶ 21Meanwhile, the Appellate Tribunal for Electricity (APTEL) had recently quashed a prior attempt at a CAG audit for lack of a hearing and directed the appointment of Chartered Accountants instead.
¶ 33, 40.12The Petitioners argued the new notice was an illegal attempt to bypass APTEL orders and judicial precedents.
¶ 39.102Issues
i.1. Whether the Writ Petition is maintainable given that it challenges a show-cause notice.
¶ 42(i)ii.2. Whether the Impugned Notice mischaracterizes the RA Judgment and violates the orders passed by the APTEL.
¶ 42(ii)iii.3. Whether the Impugned Notice is contrary to the Division Bench decision in the URJA Judgment.
¶ 42(iii)03Law Applied
The Court applied Section 20 of the CAG Act, 1971, which governs the entrustment of audits of authorities or bodies to the CAG, specifically Section 20(3) which mandates a reasonable opportunity for the concerned body to represent its case before entrustment.
¶ 1, 44A writ petition against a show-cause notice is premature as it does not infringe rights or constitute an adverse order.
¶ 46, 47Supreme Court’s directions in the RA Judgment regarding the "strict and intensive audit" of the circumstances surrounding unrecovered regulatory assets.
¶ 49, 52Provisions in the judgment · 8 · Linked ones open on LawLens
Comptroller Auditor-General s (Duties, Powers and Conditions of Service) Act, 1971 Section 19Section 20
Electricity Act, 2003 Section 3Section 14Section 61Section 62Section 86Section 185
04Reasoning
The Court reasoned that the Impugned Notice was merely a procedural step under Section 20(3) of the CAG Act to provide the Petitioners a hearing, and thus did not constitute an adverse final order.
¶ 43It rejected the Petitioners' claim that the RA Judgment only authorized an audit of the DERC (the regulator) and not the companies, noting that the "circumstances" of non-recovery of assets inherently involves the companies’ financial records.
¶ 52, 53Regarding the URJA Judgment, the Court distinguished it on the basis that the current audit is driven by a specific Supreme Court mandate to address "regulatory failure" rather than a general attempt by the State to interfere with tariff-setting.
¶ 62, 63The Court noted that while APTEL had quashed a previous entrustment, the GNCTD was now attempting to cure the procedural defect of "lack of hearing" by issuing this notice, and since the DERC’s appeal against APTEL's orders is pending in the Supreme Court, there was no absolute bar to initiating the Section 20(3) process.
¶ 56, 6505Holding
The Court dismissed the Writ Petition as premature, holding that no cause of action arises from a notice that simply invites representation and schedules a hearing.
¶ 64, 68The Court held that the URJA Judgment did not create a blanket prohibition on CAG audits if undertaken for specific purposes like those in the RA Judgment.
¶ 65The Court directed the competent authority to decide the matter on its merits after the scheduled hearing, without being influenced by the Court's observations.
¶ 66Original Court PDF
Bses Rajdhani Power Limited & Anr.vsGovernment Of Nct Of Delhi & Ors.
Click to open original judgment
Original judgment, available to read, download and summarize on LawLens.in
