TMI Blog2012 (6) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 (hereinafter called Network Regulations ); iv) Regulation 7 of the Petroleum and Natural Gas Regulatory Board (Code of Practice for Quality of Service for City or Local Natural Gas Distribution Networks) Regulations, 2010 (hereinafter called Quality Regulations ); v) Scheme for Consumer Welfare Fund 2011; and, vi) alternatively in the event of the Board being held to have power to fix network tariff and compression charges, seeks direction for re-fixing thereof by following principles of natural justice. 2. Notice of the petition was issued. Finding the petition to be entailing a pure question of law as to the power of the Board to fix the rates, as done by the impugned order dated 9th April, 2012, the learned ASG appearing for the respondents stated that no counter affidavit was required to be filed. Further, owing to the urgency expressed, the matter was immediately set down for final hearing. Liberty was also granted to the petitioner to avail the appellate remedy qua the quantum of the rates fixed by the Board. The counsels have been heard. 3. We may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CGD Network under permission, allocation and authorization of the Central Government at the time of enactment of the PNGRB Act in the year 2006 and the said position was recognized by the PNGRB Act also; v) the Board constituted under the PNGRB Act, on 19th March, 2008 notified the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Network) Regulations, 2008 (hereinafter called Exclusivity Regulations ) in exercise of its powers under Section 61 of the PNGRB Act; vi) that the Board vide its letter dated 9th January, 2009, while recognizing the authorization granted to the petitioner by the Central Government, granted Exclusivity to the CGD Network of the petitioner for the National Capital Territory of Delhi, subject to the condition that the petitioner shall submit Network Tariff and Compression Charges for CNG as per the Tariff Regulations for the approval of the Board within 30 days thereof; vii) that though it was the contention of the petitioner that the Board was not empowered to fix prices but the petitioner nevertheless submitted the Network Tariff to the Board; viii) WP(C) No. 9022/2009 was filed by the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring for the respondents has shown the source of or 7. The learned ASG has drawn our attention to:- i) Regulations 3 and 4 of the Exclusivity Regulations making the same applicable to an entity as the petitioner and explaining the rationale for allowing such Exclusivity; ii) the letter dated 9th January, 2009 of the Board to the petitioner granting exclusivity to the petitioner inter alia on the term/condition that the petitioner shall submit the Network Tariff and Compression Charges for CNG as per the Quality Regulations for approval of the Board; iii) on the basis of the above, it is contended that the petitioner having accepted the said term as a condition for obtaining exclusivity is bound by a contractual obligation with the Board and is now estopped from challenging the power of the Board; iv) attention is also invited to the letter dated 11th February, 2009 of the petitioner to the Board accepting the said power of the Board; v) attention is invited to letters dated 25th March, 2009 of the Board and 29th May, 2009 of the petitioner to justify contractual basis for the power of the Board to fix Network Tariff and Compression Charges. It is urged that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down that the action of a delegatee must reasonably relate to the purpose of the enabling legislation; d) Pratap Chandra Mehta v. State Bar Council of Madhya Pradesh (2011) 9 SCC 573 to contend that the powers of the delegatee have to be construed keeping in mind the objects sought to be achieved by the Statute and the power to frame Rules has to be given a wider rather than a restrictive scope so as to render the legislative object achievable; that the legislature provides a general Rule making power to carry out the purpose of the Act and when such a power is given, the Rules framed therein if satisfy the functionality of the object of the enactment are valid. xv) that the quantum of the Network Tariff and the Compression Charges fixed by the Board are not to be gone into these proceedings and, if the Board is found to be entitled to fix the same, are to be subject matter of appeal before the Appellate Authority already preferred by the appellant; and, xvi) that keeping in view the objective of the PNGRB Act, the Regulations permitting the Board to fix the Network Tariff and the Compression Charges and the action of the Board so fixing the Network Tariff and the Compress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the PNGRB Act undoubtedly describes it as, to provide for the establishment of the Board to regulate inter alia marketing and sale of natural gas so as to protect the interests of consumers‟. Regulation of marketing and sale, would generally speaking, include regulation of price. This line of judgments and a discussion thereon can be found in U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association (2004) 5 SCC 430, holding the power of regulation to be all-encompassing. We may notice that the ratio of the said judgment has already been referred to a larger Bench vide West Uttar Pradesh Sugar Mills Association v. State of Uttar Pradesh (2012) 2 SCC 773. Similarly, price fixation is also generally towards protection of interest of consumers. Thus, from a reading of the Preamble to the Act, it definitely follows that the Board constituted thereunder is empowered to fix the price‟. However such an objective, reflected in the Preamble to the statute is not enough and a provision for price fixation has to exist in the body of the statute also. As is obvious from the arguments of the learned ASG as noted above, there is no specific provision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of monitoring prices limits the same to taking corrective measures to prevent restrictive trade practices by the entities. Thus only if the Board finds that the marketeers of gas in a particular area have formed a cartel or are indulging in any other restrictive trade practices, is the Board empowered to monitor prices. Such is not the case of the Board in the present instance. The petitioner even though till date the exclusive marketeer of gas in Delhi, has not been accused of any restrictive trade practice and the power exercised also is not in the name of monitoring price. Another sub-clause of clause (f) of Section 11 confers function on the Board to ensure display of information about Maximum Retail Price. Again, had the intent of the legislature been to confer the power on the Board to fix the Maximum Retail Price, nothing prevented the legislature from providing so expressly. Instead, functions of enforcing retail service obligations and marketing service obligations only have been conferred by the legislature. The definition of retail service obligations and marketing service obligations in Sections 2(zk) and (w) also do not include obligation to sell at the prices fixed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in U.P. Power Corp. Ltd. v. NTPC Ltd. (2009) 6 SCC 235 has held that regulatory provisions are required to be applied having regard to the nature, textual context and situational context of each statute. 13. Coming back to the PNGRB Act, Section 12 thereof while conferring jurisdiction on the Board to entertain complaints and of resolution of disputes also does not mention complaints of sale beyond any retail price as may be fixed by the Board, but only mentions contravention of display of retail price at retail outlets. Similarly, Section 46 of the Act while prescribing punishment for unauthorized activities does not deal with punishment if any for sale beyond the retail price fixed by the Board. Section 52 while prescribing the obligations of entities as the petitioner does not require them to sell gas at the prices fixed by the Board. 14. The aforesaid analysis of the PNGRB Act does not show the Board to have been conferred power to regulate the Maximum Retail Price of gas. In the absence of any provision to the said effect in the Act, the mention in the Preamble to the Act to regulation of marketing and sale of natural gas is to be necessarily read as without the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power cannot be inferred from the rule making power or by referring to the omnibus rule making power. It is also worth mentioning that there is no indication whatsoever in the Act as to the factors which are to govern such price fixation. 18. As far as the reliance by the learned ASG on Section 61(2)(za) is concerned, we are of the view that in the absence of any such power in the Board under the Act, no such power can be conferred by the Board on itself under the guise of making regulations. The Supreme Court recently in Academy of Nutrition Improvement v. Union of India (2011) 8 SCC 274 reiterated that conferment of rule making power by an Act does not enable the rule making authority to make a rule which travels beyond the scope of the enabling Act. 19. That brings us to transportation rate/transportation tariff which undoubtedly finds mention in the Act and to the question whether the Network Tariff and the Compression Charges fixed by the respondent are within the ambit of the said transportation rate. Section 2(zn) of the Act defines transportation rate as:- transportation rate , in relation to common carrier or contract carrier or a city or local natural gas dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as of other marketeers also. The senior counsel for the petitioner contends that though the petitioner at present is the only marketeer of gas with exclusivity rights, in future upon other marketeers coming in the fray, can be compelled by the Board to in its own network, also carry/move the gas of such other marketeers. It is contended that the transportation rate/transportation tariff referred to in the Act is the rate/tariff which such common carrier or a marketeer with own distribution network is to charge from other marketeers of gas. The argument is that the transportation rate/transportation tariff mentioned in the Act is the rate/tariff charged by one entity under the Act from another and not the rate/tariff which the marketeer of gas under the Act is to charge from the consumers. 21. As noticed above, while Section 2(zn) uses the expression transportation rate , Section 22 uses the expression transportation tariff . It was as such enquired from the senior counsel for the petitioner whether there is any difference between rate‟ and tariff‟. The senior counsel for the petitioner has answered the said query by inviting attention to Transmission Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer which was beyond the jurisdiction of the rule making authority cannot make a similar exercise at a subsequent date valid. 23. The word transport and the expression transportation rate/transportation tariff connote the cost of movement from one place to another. The goods which are moved generally are not of the transporter. If the intent of the legislature had been to empower the Board to fix the Maximum Retail Price of gas and further if the legislature had thought that cost of transportation was to be one of the factors to be taken into consideration while fixing the said retail price, the legislature would not have stopped at providing for fixation of such transportation rate only. The provision for fixation, only of transportation rate, clearly connotes that the transportation rate is the rate to be charged by the transporter for the goods of the others. In the present case, the transportation is to be of the gas belonging to another entity by the common carrier or by the marketeer also having own distribution network. We are therefore inclined to accept the contention of the senior counsel for the petitioner that the transportation rate provided for in the Act is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot intended to regulate the trade and commerce of an essential commodity. 27. We thus conclude that the PNGRB Act does not confer any power on the Board to fix/regulate price of gas as has been done vide the impugned order dated 9th April, 2012. Having held so, we do not deem it necessary to deal with the other Regulations impugned in the writ petition and suffice it is to state that any provision therein having the effect of empowering the Board to fix the price or the Network Tariff or Compression Charges for CNG, as long as not Transportation Rate, is beyond the competence of the Board and ultra vires the PNGRB Act and of no avail. 28. As far as the reliance by the learned ASG on PTC India Ltd. is concerned, the same is found to be of no application since in relation to electricity with which that judgment was concerned, there was always a Tariff Policy and further since the Electricity Act, 2003 was also found to be conferring a power on the Commission to determine tariff. 29. Before parting with the matter, we may record that the senior counsel for the petitioner has also cited other judgments on impermissibility of retrospectivity in price fixation and on non complia ..... 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