Companies & Sectors
Official audit of discoms 'misguided exercise': Court
 In a setback to the Arvind Kejriwal government, the Delhi High Court on Friday quashed the executive decision to get the books of accounts of the three private power distribution companies (discoms) in the city-capital scrutinised by the Comptroller and Auditor General of India (CAG).
 
A division bench of Chief Justice G. Rohini and Justice R.S. Endlaw said: "There can be no other audit at the instance of state government" as there is already a watchdog, the Delhi Electricity Regulatory Commission (DERC), with powers to audit the accounts of discoms.
 
"All the power of state government relating to electricity now stand vested in DERC," the bench said, slamming Kejriwal's decision to audit the discoms as a "misguided exercise".
 
The high court order came on pleas filed by the three discoms -- Tata Power Delhi Distribution, BSES Rajdhani Power and BSES Yamuna Power -- challenging the Delhi government's January 7, 2014 order to get the CAG to audit their accounts.
 
"The Delhi government, instead of strengthening the DERC, we are constrained to observe, has undertaken a misguided exercise by issuing a direction to the CAG to audit the accounts of the discoms when the report of such audit would not have any sanctity in law for achieving the desired result," the HC verdict reads.
 
"We are unable to decipher anything, which DERC cannot and which CAG can unearth. DERC is neither found to be helpless nor dependent on the balance sheet filed by the discoms," it added.
 
Audit of the discoms under the prevalent legal regime cannot serve the object of bringing down power tariff, "even if were to find that the allegations (of inflating their previous losses) against the discoms to be true", the HC said.
 
The bench said after reenactment of law relating to the power sector and having substituted the powers of the state government with that of the regulator, it was unable to find any purpose which a report of the official auditor will serve under direction of the NCR government.
 
"Once the discoms, before incurring any expenditure above a limit, are required to obtain the prior approval of the DERC, and therefore, once the DERC approves the said expenditure, we fail to see how the CAG can be allowed to arrive at a different conclusion," the bench said in its 139-page judgment.
 
The discoms, which supply power to consumers in the capital, argued that they were private companies and hence not in the ambit of such an audit. They alleged that the Delhi government's order was a "political ploy" and was passed with "malice in law" without giving them an opportunity to be heard.
 
A draft report in August after the CAG's audit into their books had reportedly said they inflated their previous losses.
 
The three private firms had come into being in 2002 when the then Delhi government decided to privatise power distribution. Delhi discoms are a 51:49 percent joint venture between the private companies and the Delhi government.
 
The Arvind Kejriwal government had argued that a CAG audit of private discoms was necessary to clarify alleged anomalies in their accounts and that it was not aimed at interfering with their functioning.
 
Reacting to Friday's decision, AAP legislator Saurabh Bhardwaj said the official auditor had already probed the books of these three companies and had found discrepancies.
 
"I think all of you know that CAG audit is already over and it came to be known that the power discoms duped the people of Delhi of around Rs.8,000 crore."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Umesh kaushik

2 years ago

Audits are not fool proof, case in point, Enron, Satyam, Worldcom, and many more. There is a requirement of CAG audit which by and large remains immune to any influence on account of protection provided by Constitution Of India.

Indian businessman's custody extended in UAE
A UAE court has extended an Indian jeweller's custody after he failed to settle the outstanding amount of two dud cheques worth $9.2 million, a media report said on Friday.
 
M.M. Ramachandran, the owner of Dubai's Atlas Jewellery, had issued two cheques to a local bank. The bank later filed a complaint against the businessman after the cheques bounced and he failed to settle the outstanding dues.
 
Police arrested 73-year-old Ramachandran in August this year and he has been in detention since then.
 
On Thursday, Dubai court judge Ahmad Shiha refused to admit a request by Ramachandran's lawyer for an adjournment to settle the case.
 
"This is the third adjournment since September 29. Why has no settlement been reached yet? The decision will be at the end of the hearing," judge Shiha told the lawyer.
 
He ordered the businessman to remain in custody until a ruling is handed out on November 12.
 
However, a member of Ramachandran's defence team said a deal has been reached with an investor who has expressed his willingness to pay the defendant's outstanding amount.
 
Under the UAE law, a cheque bounce case is automatically dropped after the signee pays the cheque's amount or reaches a settlement with the beneficiary.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Is the government in India doing enough for overseas investors to consider India?
The efforts of centre and states, and regulators to bring more transparency, offer better governance, one stop clearance to investment proposals and rationalizing tax structure are quite significant, points out an SBI research note
 
While there is scepticism among overseas investors as to whether the government in India is doing enough to attract investment into Indian shores, SBI (State Bank of India), in a research note feels that many things have been done under reforms and these should not be ignored.
 
In spite of some challenges facing the World Economy, the efforts made by the Governments (Centre and States), and Regulators (RBI) to bring more transparency in system and procedures, good governance, one stop clearance to investment proposals and rationalizing tax structure so far are quite significant, points out the SBI research note.
 
In the banking sector, there is a plan to revamp public sector banks under ‘Indradhanush’. In the insurance sector, FDI (foreign direct investment) limit has been increased to 49%. Social Security Schemes, Jan Dhan to Jan Suraksha, have been added to the finance sector and the achievements are impressive. According to the government, 18.34 crore bank accounts have been opened under PMJDY and 15.98 crore Rupay cards issued; 8.59 crore Suraksha Bima policies, 2.81 crore Jeevan Jyoti Bima Policies and 7.68 lakh Atal Pension Policies have been issued.
 
Under ‘Ease of doing business’ the following proposals have been put in place:
 
(a) New  de-licensing  and  de-regulation  measures  for  reducing  complexity,  and  significantly  increasing speed and transparency. Process of applying for Industrial Licence made online on 24x7 basis through eBiz portal. Validity of Industrial license extended to three years.
 
(b)  Major components of Defence products’ list excluded from industrial licensing.
 
(c) Process of obtaining environmental clearances made online.
 
(d) Digitization and online processing of various activities relating to SEZ Developers and Units introduced in all Zones.
 
(e) Withdrawing excise and customs duty exemptions presently available to goods manufactured and supplied to Ministry of Defence by Ordinance Factory Board and Defence PSUs.
 
(f) Promoting the participation of private sector, particularly SMEs for Defence Manufacturing, Outsourcing and Vendor Development Guidelines for DPSUs and Ordnance Factory Board (OFB) have also been formulated.
 
In the field of communication and information technology, the government’s new policies include:
 
(a) Digital India programme to make technology central to enabling change and transforming the country into a digitally empowered knowledge economy. It includes various schemes worth over Rs1 lakh crore like Digital Locker, e-education, e-health, e-sign and national scholarship portal. BharatNet in 11 states and Next Generation Network (NGN), are a part of Digital India campaign.
 
(b)  MyGov.in implemented as a platform for citizen engagement in Governance, through a “Discuss”, “Do” and “Disseminate” approach. The mobile app for MyGov would bring these features to users on a mobile phone.
 
With an aim to achieve “inclusive growth”, the Smart City Mission promotes integrated city planning, where the Government’s Policies such as Swachh Bharat Mission and Atal Mission for Rejuvenation and Urban Transformation complement each other.
 
Deregulation of diesel prices was announced on 18th October, 2014. The saving in subsidy is available for funding anti-poverty and social sector scheme.
 
RBI has issued 2 banking licenses (Bandhan & IDFC), 11 Payment Bank and 10 Small Finance Bank (SFB) licences. The new banks will help in providing banking facilities to the unbanked sections of the people. The payment banks will reach customers mainly through their mobile phones, the cheapest technology available globally, rather than traditional bank branches.
 
Some of the recommendations of the Expert Committee to Revise and Strengthen the Monetary Policy Framework (Chairman: Dr. Urjit R. Patel) have been implemented including adoption of the new CPI (combined) as the key measure of inflation, explicit recognition of the glide path for disinflation, transition to a bi-monthly monetary policy cycle, progressive reduction in access to overnight liquidity under the LAF at the fixed repo rate and corresponding increase in access to liquidity through term repos and introduction of longer tenor term repos.
 
In order to tackle the NPAs (non-performing assets), RBI has provided a mechanism to bankers to recover bad loans. The RBI has allowed banks to acquire 51% or more stake in companies defaulting after restructuring their loans. Measures announced under the new scheme ‘Strategic Debt Restructuring’ (SDR) include allowing lenders to convert debt into equity within 30 days of review of companies’ accounts. In addition, lenders acquiring shares of listed companies under restructuring would be exempted from making open offers.
 
In conclusion, it is felt that overseas investors would do well to study the reforms in place and start business in right earnest rather than wait for the next set of favourable measures in government policy.
 

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