A bench of Justices Badar Durrez Ahmed and Ashutosh Kumar issued the direction as it wanted to know how the timber from felled trees and the money charged for permission to cut them, were being utilised.
"When trees are felled in large numbers by the agencies for developmental and commercial projects, timber is available to them in large quantities. The question that arises is what happens to the timber," the bench said and added, "We have to check the trail of timber and the trail of money."
The Delhi government said that some timber is auctioned off and some provided free of cost to crematoriums.
In response to this, the bench said, "It is necessary to know what happens to the funds received from auction of timber and to what extent the free timber is given to crematoriums, by whom and what happens to that" as bereaved families have to pay for the wood at crematoriums.
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"What is of concern is whether each and every tree felled is accounted for in terms of money and timber and whether compensatory afforestation is taking place.
It requested the CAG to carry out an audit on these aspects of the forest department of the Delhi government and other agencies, including the three municipal corporations, the New Delhi Municipal Council, the Cantonment Board, Delhi Metro, Northern Railway and the Public Works Department.
The bench also said that to increase the green cover in the national capital to the desired objective of 25 per cent, "not only the existing forests be preserved and maintained, but areas under encroachment should be reclaimed, trees in non-forest areas should be replenished if cut and further plantation of trees under compensatory afforestation scheme be undertaken".