2012 (6) TMI 911 - HC - Indian Laws

Court rules PNGRB lacks authority to regulate gas prices beyond transportation rates. Order fixing prices struck down.

The court held that the Petroleum and Natural Gas Regulatory Board (PNGRB) lacked the authority to fix or regulate the maximum retail price of gas or any ... - Issues Involved:1. Validity of the order dated 9th April, 2012 by the Petroleum and Natural Gas Regulatory Board (PNGRB).2. Validity of the Petroleum and Natural Gas Regulatory Board (Determination of Network Tariff for City or Local Natural Gas Distribution Networks and Compression Charge for CNG) Regulations, 2008.3. Validity of Regulation 17(5) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008.4. Validity of 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, 2010.5. Validity of the Scheme for Consumer Welfare Fund 2011.6. Power of the PNGRB to fix network tariff and compression charges.Summary:Issue 1: Validity of the order dated 9th April, 2012 by the PNGRBThe court examined the impugned order dated 9th April, 2012, where the PNGRB determined the Network Tariff and Compression Charges for CNG for the petitioner's Delhi City Gas Distribution Network and directed the petitioner to recover these charges separately through an invoice. The court found that the PNGRB Act does not confer any power on the Board to fix or regulate the maximum retail price at which gas is to be sold by entities to consumers. The court held that the Board is also not empowered to fix any component of Network Tariff or Compression Charge for an entity having its own distribution network. Thus, the order dated 9th April, 2012, to the extent it fixed the maximum retail price or required the petitioner to disclose the Network Tariff and Compression Charges to its consumers, was struck down and quashed.Issue 2: Validity of the Tariff Regulations, 2008The court noted that the PNGRB Act does not specifically provide the Board with the power to fix the price to be charged by a marketeer of gas from its consumers. The court emphasized that price fixation is a legislative function and must be expressly conferred by the statute. Since the PNGRB Act lacks such express provisions, any regulation empowering the Board to fix prices is beyond its competence and ultra vires the Act.Issue 3: Validity of Regulation 17(5) of the Network Regulations, 2008The court did not specifically address Regulation 17(5) in detail but implied that any provision in the regulations that empowers the Board to fix prices or tariffs beyond transportation rates is invalid.Issue 4: Validity of Regulation 7 of the Quality Regulations, 2010Similar to the Network Regulations, the court implied that any provision in the Quality Regulations that empowers the Board to fix prices or tariffs beyond transportation rates is beyond the Board's competence and invalid.Issue 5: Validity of the Scheme for Consumer Welfare Fund 2011The court did not specifically address the Scheme for Consumer Welfare Fund 2011 in detail but focused on the broader issue of the Board's power to fix prices, implying that any related provisions would also be invalid if they overstep the Board's statutory authority.Issue 6: Power of the PNGRB to fix network tariff and compression chargesThe court concluded that the PNGRB does not have the power to fix or regulate the maximum retail price of gas or any component of Network Tariff or Compression Charge for entities with their own distribution networks. The court emphasized that the Board's power is limited to regulating transportation rates for common carriers or contract carriers as provided in the PNGRB Act.Conclusion:The court allowed the writ petition, holding that the PNGRB is not empowered to fix or regulate the maximum retail price of gas or any component of Network Tariff or Compression Charge for entities with their own distribution networks. The provisions of the regulations construed by the Board to empower it to fix prices were held to be illegal and the order dated 9th April, 2012, was struck down to the extent it fixed the maximum retail price or required the petitioner to disclose the Network Tariff and Compression Charges to its consumers.