APTEL Dismisses BSES Discoms' Bid to Reword CAG Audit Order, Directs Regulatory Asset Liquidation by 16 June 2026
APTEL rejected BSES Rajdhani and BSES Yamuna's attempt to substitute its reasoned CAG audit ruling and separately pressed DERC to begin regulatory asset liquidation by 16 June 2026.
The Appellate Tribunal for Electricity (APTEL) on 27 May 2026 dismissed two interlocutory applications filed by the two distribution companies operating in the National Capital Territory of Delhi — BSES Rajdhani Power Limited and BSES Yamuna Power Limited. The first application sought to alter the wording of paragraph 39 of APTEL's own order dated 20 April 2026, which had quashed the Lt. Governor of Delhi's approval for a CAG audit of the Delhi Discoms. The Tribunal found the application to be a disguised attempt to set aside a considered ruling rather than correct any clerical slip. The second application, seeking a direction to DERC to liquidate regulatory assets, was disposed of after the Tribunal noted that a separate order of the same date had already fixed 16 June 2026 as the commencement date for that liquidation.
The Two Applications Before the Tribunal
Both applications arose from OP No. 1 of 2025, a suo-moto proceeding initiated by APTEL under Section 121 of the Electricity Act, 2003. The respondents in that proceeding include the Forum of Regulators and a large number of state electricity regulatory commissions and distribution licensees across the country.
IA No. 899 of 2026 was filed for modification. The two Discoms asked APTEL to replace the phrase in paragraph 39 of the 20 April 2026 order — which quashed the Lt. Governor's approval for a CAG audit — with language that would instead quash only DERC's initiation of the audit and its request to the CAG and the Government of NCT of Delhi.
IA No. 1041 of 2026 was filed for directions. The Discoms sought an order directing DERC to begin liquidation of their regulatory assets with carrying cost, in terms of a Supreme Court judgment dated 6 August 2025, and in accordance with a revised carrying cost computation submitted by the Discoms.
The CAG Audit Dispute and What Paragraph 39 Said
In its 20 April 2026 order, APTEL had examined whether DERC could lawfully entrust a strict and intensive audit of the Delhi Discoms to the Comptroller and Auditor General of India. The Tribunal held that doing so was in contravention of Section 20 of the CAG Act. It upheld the Discoms' objection and, in paragraph 39, quashed the approval accorded by the Lt. Governor of Delhi vide communication dated 5 March 2026.
The Discoms' modification application, captioned under Section 120 of the Electricity Act, 2003 read with Section 152 of the Code of Civil Procedure, 1908 and Rule 30 of the APTEL Procedure Rules, 2007, argued that paragraph 39 contained an error or accidental slip. Their prayer was to substitute the passage referring to the Lt. Governor's approval with language directed only at DERC's initiation of the audit process.
APTEL's Reasoning on the Modification Plea
The Tribunal was unsparing. It recorded “utmost dismay” at the wisdom of the Discoms in filing the application. Reading the body of the application and the prayer clause together, APTEL found that what the Discoms actually sought was not correction of any inadvertent error but substitution of the Tribunal's decision with a conclusion formulated by the Discoms themselves.
APTEL explained why paragraph 39 was worded the way it was. The Tribunal said it had been conscious that mere initiation of an audit by DERC would not, by itself, call for interference. The Lt. Governor might or might not have approved such an audit. It was only when the Lt. Governor's approval was communicated on 5 March 2026 that the Tribunal found grounds to take cognizance and pass orders. Had that communication not been brought to its notice, APTEL said it would not have entertained the Discoms' objection at all and would not have passed any order on the point.
The quashing of the Lt. Governor's approval was therefore a “conscious, considered and reasoned decision” of the Tribunal, not an accidental slip. The Tribunal added that it is not for a party to advise or dictate to the bench how its decision ought to be worded. A party dissatisfied with an order has recourse under the Electricity Act, 2003, but cannot seek to set aside an order under the guise of correcting errors.
IA No. 899 of 2026 was dismissed.
The Regulatory Asset Liquidation Dispute
The second application, IA No. 1041 of 2026, concerned the liquidation of regulatory assets. In the 20 April 2026 order, APTEL had rejected DERC's request for an extension of time to commence liquidation from 1 July 2026 and had directed the Commission to begin within three weeks of that order. That three-week period expired on 11 May 2026. As of the hearing on 27 May 2026, liquidation had not begun.
Counsel for the Discoms submitted that DERC was showing recalcitrance and defiance of the Tribunal's directions by delaying the process without cogent reason. APTEL said it found force in that submission.
However, the Tribunal noted that in a separate order of the same date passed in Review Petition No. 8 of 2026 filed by DERC, it had already directed the Commission to begin liquidation of regulatory assets with effect from 16 June 2026. Given that direction, no further orders were required in IA No. 1041 of 2026.
The application was disposed of with liberty to the Discoms to approach APTEL again by way of an appropriate application if DERC does not commence liquidation from 16 June 2026.
Outcome
IA No. 899 of 2026 (modification) was dismissed as misconceived and devoid of merit. IA No. 1041 of 2026 (direction) was disposed of, with the Tribunal recording that DERC has been separately directed to commence regulatory asset liquidation from 16 June 2026, and granting the Discoms liberty to return if that deadline is not met. The order was pronounced in open court on 27 May 2026.