The Centre on Wednesday told the Supreme Court that the Lieutenant Governor (LG) has the power to regulate services in Delhi.
The powers are delegated to the administrator of Delhi and the services can be administered through him, it said.
A bench of Justices A K Sikri and Ashok Bhushan was told by senior advocate C S Sundaram, appearing for the Centre that the powers are delegated to the administrator by the Union of India.
"The LG is entrusted with the powers to consult the Chief Minister or council of ministers if such powers are given by the President under Article 239 of the Constitution," Sundaram said.
He added that it was not for the first time that Delhi and the Centre had governments of different parties, but it was the first time that dispute over the control of services has reached the court.
He also said that there cannot be executive powers without the source of power, and what was said in the S Balakrishna committee report was translated into the GNCTD Act.
Sundaram said that the powers of LG are different from those of a governor, as the discretionary powers are given to the former in the Constitution as well as any other provisions under the law, while the latter is given powers only under the Constitution.
The hearing remained inconclusive and would continue tomorrow.
On October 4, the Delhi government had told the apex court that it wanted its petitions relating to the governance of the national capital be heard soon as it did not want "stalemate to continue in administration".
The Delhi government had told the top court that it wanted to know where it stands with regard to the administration in view of the Constitution bench verdict of the apex court on July 4. The court had then listed the matters for today.
The five-judge bench had on July 4 laid down broad parameters for governance of the national capital, which has witnessed a power struggle between the Centre and the Delhi government since the Aam Aadmi Party came to power in 2014.
In the landmark verdict, it had unanimously held that Delhi cannot be accorded the status of a state but clipped the powers of the Lieutenant Governor (LG), saying he has no "independent decision-making power" and has to act on the aid and advice of the elected government.
On September 19, the Centre had told the apex court that administration of Delhi cannot be left to the Delhi government alone and emphasised that it has an "extraordinary" position by virtue of being the country's capital.
The Centre had told the court that a five-judge constitution bench of the apex court had categorically held that Delhi cannot be accorded the status of a state.
The Centre had said one of the basic issues was that whether the Government of National Capital Territory of Delhi (GNCTD) has the legislative and executive powers so far as 'services' were concerned.
"Delhi has an extraordinary position as it is the capital of the country," it had said.
It said that the national capital houses several institutions of vital importance like Parliament, the Supreme Court and foreign diplomats also resides here.
The Delhi government had earlier told the court that they have executive power to constitute a commission of inquiry.
On July 18, the AAP government had told the apex court that its functioning was "completely paralysed" and it cannot order transfer or posting of officers despite the constitution bench verdict on the national capital's administration.
Chief Minister Arvind Kejriwal had been at loggerheads with incumbent LG Anil Baijal and his predecessor Najeeb Jung.
Kejriwal had accused both of them of preventing the functioning of his government at the behest of the Centre.
(With inputs from agencies.)