The Comptroller and Auditor General’s decision to audit the private discom companies in Delhi is in reversal of the national auditor’s stand on the issue in 2002 — the first year of power distribution privatisation in Delhi.
The CAG stand then was clear. “Since the company is not a government company as on today, this office cannot appoint the statutory auditor of the company for the period when it was a government company,” the auditor had said.
On a request made by the private power discoms for appointment of auditors for the first financial year from July 4, 2001 to June 30, 2002, the CAG had issued a response on August 22 the same year, taking reference of a Department of Company Affairs letter dated September 15, 1984.
“...If a company ceased to be a government company during the financial year and auditors have not been appointed by the government (now CAG of India) before the date of such cessation, the Company Law Board has no power to appoint auditor for that financial year under Section 619 of the Companies Act, 1956,” the CAG letter read, signed by the then senior administrative officer K L Kapoor.
Writing to the Northwest Delhi Distribution Company Limited, the CAG further clarified: “In case of your company, it was a government company from July 4, 2001 to June 30, 2002 and from July 1, 2002 it is not a government company under Section 617 of the Companies Act, 1956. Since the company is not a government company as on today, this office cannot appoint the statutory auditor of the company for the period when it was a government company.”
Power distribution in Delhi was privatised in 2002. The Arvind Kejriwal-led Delhi government had last week ordered a CAG audit of the finances of the three power distribution companies — BSES Yamuna Power Ltd, BSES Rajdhani Power Ltd and Tata Power Delhi Distribution Ltd.
In his address to the Fifth Legislative Assembly on Monday, Lieutenant-Governor Najeeb Jung said CAG audit of the private companies is being carried out “to ascertain their financial position” and the firms must cooperate with it.
“A CAG audit of electricity companies is being carried out since power distribution was privatised. Licences of those who do not cooperate in the process may be cancelled,” Jung said.