TaxTMI 
TaxTMI 
2011 (2) TMI 1281
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctioning under the Electricity Act, 2003 i.e., Central Electricity Regulatory Commission (CERC) claims exclusive right in the matter of dealing with the trading activities in connection with the electricity including dealing in forward contract. In order to comprehend the controversy raised in these two writ petitions, a brief synoptical view of the facts in Writ Petition No. 1197 of 2010 may be noticed : 2. Multi Commodity Exchange of India (MCX), petitioner herein and Respondent No. 2 in Writ Petition No. 1604 of 2009, is a company incorporated under the provisions of the Companies Act, 1956 and a Commodity Exchange duly recognised by the Central Government/Forward Market Commission under the provisions of the Forward Contracts (Regulation) Act, 1952 (hereinafter referred to as "FCRA"). The MCX has been formed and/or constituted for facilitating the on-line trading, clearing and settlement operations for commodity futures contracts across the country. The MCX started operations in November, 2003 with the object of establishing, operating, regulating, maintaining and managing facilities to enable the members of the exchange, their authorized agents and constituents and other pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....city Act, 2003, the MCX and the FMC have been denuded of jurisdiction over electricity and (iii) the MCX had commenced launch of trading in electricity futures contracts without any approval of CERC and mere approval FMC had no efficacy in the eyes of law. MCX has raised an objection about the maintainability of such an application on the ground that CERC has no jurisdiction to entertain such application as the FMC is a statutory regulatory authority functioning under the Forward Market Act and the same is not subjected to the jurisdiction of CERC. The Commission vide order dated 28-4-2009, disposed of the said application by giving certain directions which read thus : "(a)FMC exercises jurisdiction over the forward contracts in accordance with the provisions of the 1952 Act as they cannot be said to be inconsistent with those of the 2003 Act and the two statutes operate in independent fields. (b)Regulatory oversight to promote development of market in power is vested in this Commission as mandated under section 66 of the 2003 Act and, therefore, the orders, guidelines issued by this Commission and the regulations framed shall be binding on all concerned. (c) Power Exchang....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egulations, 2010. The said Regulations are also subject matter of challenge in these writ petitions. The said Regulations were also tendered in the Court. Thereafter the matter has not been listed on the Board. Again, CERC came up with a press release dated 20-1-2010 notifying the said regulations. The petitioners herein challenge the Regulations on the ground that the action of the first respondent being wrongful exercise of jurisdiction, arbitrary, capricious, mala fide as well as being discriminatory in nature and violative of the principles of Article 14 of the Constitution. The said Regulations also seek to deprive the petitioner from entering into forward contracts inspite of being authorised by the second respondent and notified by the Government of India as a recognized association. 10. According to MCX, so far as forward market in electricity is concerned, it is the regulatory authority under the Forward Market Act which alone is competent to deal with the same and CERC has no right to frame any regulation in this behalf. The Regulations as notified by CERC provides for forward and futures contracts relating to electricity to come under the purview of CERC, whereas prio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pati Bhavan, New Delhi and (ii) Secretary, Ministry of Law and Justice, Government of India, Shastri Bhavan, New Delhi-110 001, as party respondent Nos. 5 and 6 respectively. Leave to amend the petition is granted. Amendment to be carried out forthwith. 3. Issue notice to the added respondents returnable on 10th December, 2010 at 3.00 p.m. before this Bench. We make it clear that since the petitioners and respondents have already addressed this Court and concluded their arguments, the Court is now required to hear only the added respondents in respect of the issue involved in the matter and regarding minutes dated 16th July, 2010 and decision taken during such meeting before the Cabinet Secretariat. As the matter is pending since long, the added respondents may point out their views on the next date of hearing. 4. Mr. Janak Dwarkadas, learned senior counsel appearing for FMC, states that a subsequent letter dated 13th September, 2010 has been issued to the Cabinet Secretary pointing out that the aforesaid minutes are not properly recorded. 5. The petitioner to take steps to serve the added respondents so that matters may not be required to be adjourned on the ground that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....I say that the Hon'ble Supreme Court of India in case of ONGC v. Collector of Central Excise reported as (2004) Vol. 6 SCC 437 and earlier reported as (1992) 104 CTR (SC) 31 has categorically laid down the law to the extent that dispute(s) between Department to Department of the Government or Government of India Undertakings or Enterprises etc. need to be referred or such other matters which are the bone of contention, need to be resolved by said such Committee. I say that most of the Government of India Undertakings or Government of India Enterprises are born out of various statutes enacted by the Act of Parliament. As the present aforesaid two statutes are enacted by the Parliament and the dispute(s) are between two statutory bodies established under the said two Statutes, the same disputes between the such two statutory bodies are the disputes which need to be referred to for the purpose of adjudication or/conciliation to the said Committee consisting of the Secretaries of the various Departments/Ministries and headed by the Cabinet Secretary, Union of India. (v)I say that the said two statutory bodies are within the scope of Government of India Undertaking or Government of I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....respondent No. 5 on 4-1-2011. Before we proceed further, it is necessary to incorporate the averments made in the said affidavit and the same read as under : "I. V.P. Arora, working as Under Secretary in the Cabinet Secretariat, Rashtrapati Bhavan, New Delhi, aged about 57 years, do hereby state and submit on solemn affirmation as under :- 1. I say that I have perused relevant records. I say that I crave leave of this Hon'ble Court to further add, amend, alter or delete any of the contents of this affidavit. I say that I have been authorised to file this affidavit. 2. That this Hon'ble High Court had impleaded the Cabinet Secretary as Respondent No. 5 in both the petitions. 3. That on the last date of hearing, Special Counsel for Union of India - Dr. G.R. Sharma had informed this Hon'ble High Court that the Cabinet Secretary will be calling a meeting of Secretaries of respective Departments/Ministries to amicably settle the issue at large in the present writ petitions and accordingly an attempt was made on 29-12-2010 by the Cabinet Secretary through the Secretary (Co-ordination) of the Cabinet Secretariat, New Delhi and had deliberations relating to the present issues. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing further and it is for the Court to decide the rival claims in the matter between the petitioners and the concerned respondents. Now the arguments stand concluded. Judgment reserved". 16. In the case of Oil & Natural Gas Commission v. Collector of Central Excise 1995 Supp (4) SCC 541 the Supreme Court held that in every case where a dispute is between government departments and/or between a Government department and a public sector undertaking, the matter should be referred to the High Power Committee established by the Government pursuant to an order of the Supreme Court dated 11th September, 1991 and that it is the duty of every court or tribunal to demand clearance from the Committee and that in the absence of clearance, the proceedings must not be proceeded with. In the case of Chief Conservator of Forests Govt. of A.P. v. Collector [2003] 3 SCC 472 of it has been held by the Supreme Court as under : "Various departments of the Government are its limbs and, therefore, they must act in coordination and not in confrontation. Filing of a writ petition by one department against the other by invoking the extraordinary jurisdiction of the High Court is not only against the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A conceives of a specialized financial market, rather than a conventional physical one, which operates in the realm of price discovery and price risk management. The option of delivery is available only in respect of residual contracts which remain outstanding on the date of expiry of contract period, but most participants offset their contracts before the date of expiry by entering into opposite contract, thus obviating the need for any delivery. On the other hand, the Electricity Act deals with the actual physical delivery and utilization of electricity. Mr. Seervai further submits that "trading" under the Electricity Act is limited to the physical market which is clear from the definition under sub-section 71 of section 2 viz. Purchase of electricity for resale thereof. The Electricity Act provides for and facilitates physical trading in electricity between States i.e., Inter-State as well as within a given State i.e., intra-State. The FCRA deals with all future and forward contracts including electricity futures contracts. Mr. Seervai submits that FCRA has been enacted under Entry 48, List I of the Constitution whereas the Electricity Act is a statute enacted under Entry 38, Li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsence of specific enabling provision in the Electricity Act itself. Mr. Seervai further submits that there is not a single provision in the Electricity Act that allowed CERC to issue the impugned Regulations to regulate and control a market that it now purporting to do so. CERC is attempting to do so in the face of a special statute that exclusively bestows that authority on another regulatory body. It is submitted that the FCRA is a statute enacted prior in time as that of the Electricity Act. The petitioner is a recognized Association under the FCRA and is governed by FMC. Mr. Seervai submits that in the original order, CERC has acknowledged that FCRA governs forward contracts in which rights and liabilities are transferable, unless exempted by the Central Government and that the provisions of the FCRA cover certain specific areas which are not covered under any of the provisions of the Electricity Act. It is submitted that in the subsequent review order, CERC suo motu rewrote and reversed the original order dated 28-4-2009 and deleted crucial observations which expressly stated that there was no conflict between the provisions of the FCRA and the Electricity Act on the ground t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... alia, referring for arbitration disputes involving generating companies or transmission licensees or disputes between licensees and generating companies. The learned counsel further submits that the 2003 Act is a Special Act and is a complete Code with respect to all matters concerning electricity, including the development of a market in power. He submits that section 66 read with section 178(2)(y) of the Act enables CERC to make regulations for the development of the market in power, including trading. This necessarily covers all aspects of the market and business/trading in power and would include both spot and forward contracts for the sale or purchase of electricity. Mr. Chinoy submits that the concept of trading necessarily covers all forms of business in electricity and includes both spot and forward contracts for sale and purchase of electricity. He submits that CERC is the Central Commission established by the Central Government under sub-section (1) of section 3 of the Electricity Regulatory Commissions Act, 1998 and functioning as such before the date of coming into force of the Act of 2003 and as such is the Central Commission for the purpose of the Act in terms of sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icity and within the ambit of section 66 read with section 178(2)(y) of the Act of 2003. He submits that all forward contracts are delivery contracts. It is not a financial contract. He submits that the impugned Regulations have been made by CERC under section 66 read with section 178(2)(y) of the Act of 2003 which have been published under a public notice dated 22nd September, 2009. There is nothing unconstitutional in the regulations so as to consider the prayer of the petitioner for staying the operation of the regulations. He submits that the Regulations deal with the creation of a comprehensive market structure and enabling the transaction, execution and contracting of all types of possible products in the electricity markets. Section 66 of the Act of 2003 mandates the CERC to promote the development of a market in power. He submits that in the event of repugnancy between the regulations/prescriptions made by the FMC and CERC, the CERC's guidelines/prescriptions/regulations will prevail. He submits that the principle of contemporaneo expositio is inapplicable to the instant case as is clear from the judgments to which we shall refer later on. He submits that the Regulations ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to MCX, a national level Multi Commodity Exchange, for providing a platform to trade in electricity forward contracts, following the notification issued by the Central Government applying provisions of section 15 of the FCRA whereby forward contracts in electricity could be traded only through the members of Associations/Exchange which have been granted recognition by the Central Government under section 6 of the FCRA. MCX had been recognised by the Central Government vide notification dated 26-9-2003. He submits that in view of the provisions of FCRA and the notification issued by the Central Government, FMC alone has jurisdiction to regulate forward contracts in electricity. He submits that spot market and forward markets are two separate and distinct economic realms, the former is concerned with transactions involving payment and delivery within the period specified for ready delivery contracts whereas the latter is concerned with financial contracts mostly settled by payment of differences between the contract rate and the settlement rate. He submits that the futures market is included in List I of Schedule VII of the Constitution at Entry No. 48 whereas the electricity is inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the parent Act which is basically structured to cater to the physical aspect of the market like generation of electricity, licensing, transmission, distribution of electricity, tariff, etc. Mr. Dwarkadas submits that since there is no concept of exchange trading in the Electricity Act, the regulations cannot provide such a structure along with fees. Mr. Dwarkadas submits that the Regulation in so far as they relate to forward contracts deserve to be struck down because (i) they seek to restrict the forward market only to inter-state which is neither feasible nor permissible because there has to be one national market in which all traders need to have access to the trading platform; (ii) they extend the scope of the CERC jurisdiction beyond the power exchanges to embrace "other exchanges" already recognised by the Government under the statutory provisions of FCRA; (iii) they encroach on the Central Government's role in deciding when forward trading is to be introduced in a particular commodity. The regulations provide for deferment of introduction of power trading to a future date to be decided by the CERC; (iv) they bring options within the ambit of CERC when they have been specifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upply of electricity to all areas, rationalization of electricity, tariff" etc. He, therefore, submits that the Electricity Act deals with the entire subject of electricity and hence after the passing of the said Act any other Central Act which could have been dealing with the subject of electricity is denuded of its power to deal with the same. He submits that section 3 of the Electricity Act which finds mention in section 66 of the Electricity Act provides that the Central Government shall from time to time prepare the national electricity policy. The learned counsel further submits that the notification issued by the Ministry of Consumer Affairs in January, 2006 was contrary to the express provisions of the Electricity Act which Act was an Act to consolidate the laws relating to electricity. The learned Counsel further submits that on a plain reading of Article 246 of the Constitution of India, it is clear that the Constitution does not create any primacy of Acts of the Union Parliament under List-1 vis-a-vis other Acts of the Union Parliament under List-III. The said Article is only dealing with a conflict between the legislation by the Union Parliament as against the legislati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f members of the FMC. The said Special Leave Petitions came to be dismissed on 5-4-2010. The order of the Supreme Court of India reads thus : "Heard learned counsel for the parties. Since the High Court is seized of the main case as well as interim matter, we do not find any justification to entertain the petitioner's prayer. The Special Leave petition is dismissed. We have no doubt that the High Court will take note of the urgency involved in the matter and pass appropriate order at an early date in accordance with law." 24. This Court is, therefore, now required to consider as to whether the forward contract is exclusively within the jurisdiction of FMC in view of the notification dated 9-1-2006 and whether CERC can deal with futures contract in the matter of electricity in view of the Regulations framed by it. At this stage, the decision of the Supreme Court in the case of Sarwan Singh v. Kasturi Lal [1977] 1 SCC 750 is required to be taken into consideration. The Supreme Court in para of the said judgment held as under. "When two or more laws operate in the same field and each contains a non-obstante clause stating that its provisions will override those of any othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce of actual delivery and the goods are delivered on a future date. These contracts will have a mode and timing of payments as also penalties, if any, for failure to deliver goods or failure to make payment. Instead of having one to one relationship, many buyers and sellers may develop a market for trading in advance of the delivery. In the electricity sector, long term power purchase agreements are examples of forward contracts between generators and distribution companies. The forward contracts can be traded in a secondary market. The traders, including those neither producing nor consuming the good, can participate in this market. Parties not willing to take physical delivery can also participate in this market by selling their forward contracts. Such markets where contracts are not backed by physical delivery are futures markets. On the face of it, this market consists of speculators. However, the market benefits from the presence of these speculators as they increase debt (sic) and liquidity. It is required to be stated that the future prices for electricity traded on the exchanges make the demand and supply to adjust themselves to the signals they provide and converge onto t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r trading in futures in notified commodities. FMC is also responsible for keeping forward market under observation, inspection of associations or their members and working for improving the organization of markets. FCRA provides emergency powers to the FMC and the Central Government to suspend trading, suspend members of Association and even to supersede the governing body of the Exchange. FCRA also provides for penalties for contravention of provisions contained in the Act. 28. The Electricity Act, 2003 came to be enacted on 26-5-2003 and the same provided for the establishment of CERC to regulate, inter alia, the price of electricity. The Electricity Act also provides for intra-state transactions in contracts relating to electricity by State Electricity Regulatory Commissions. Under the ambit of the Electricity Act, the regulatory authorities are the CERC and the State Electricity Regulatory Commissions. Pursuant to section 14(c), each of these authorities has the power to grant a license to any person to undertake trading in electricity as an electricity trader. Part V of the Electricity Act provides for both inter-state and intra-state transmission of electricity; the CERC g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....et can be transacted weekly/monthly/yearly or more in advance and have a defined delivery period on expiry of contract and is scheduled by Regional Load Despatch Centre or National Load Despatch Centre." 31. At this stage, the authorities cited at the Bar by the learned counsel appearing for the parties may be noticed succinctly. 32. FCRA is enacted under Entry 48 of List I to the Seventh Schedule of the Constitution of India i.e., The Union List. Mr. Seervai has relied upon the judgment of the Supreme Court in the case of Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) (P.) Ltd. [1963] 3 SCR 209 to submit that FCRA has been enacted under Entry 48 is unquestionable. In this case, the Supreme Court was required to resolve a conflict between Entry 48 of List 1 and Entry 26 of List II. Entry 48 deals with stock exchanges and futures markets whereas Entry 26 deals with trade and commerce. The Supreme Court held that trade and commerce would in their ordinary and accepted sense include forward contracts, but in a case where there are two entries, one general in its character and the other specific, the former must be construed as excluding the latter. It is settled that while ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the apparently conflicting entries not only of different lists but also of the same list and to reject that construction which will rob one of the entries of its entire content and make it nugatory." 33. The legislative entries are useful guides, valuable in ascertaining the scope and ambit of a given statute and may be used to resolve conflicts, real or perceived, between the statutes so as to give effect to both. In order to buttress the submission to the effect that the legislative entries are important guides to interpretation, Mr. Seervai has relied upon the observation of the Supreme Court in the case I.T.C. Ltd. v. Agricultural Produce Market Committee [2002] 9 SCC 232 wherein the Supreme Court has held as under : "107. The starting point in any controversy dealing with apparently conflicting legislative jurisdictions is to see whether the conflict can be fairly reconciled by reading the entries to which the legislations are referable, together and 'by interpreting and, where necessary, modifying the language of the one by that of the other'. It is only when such resolution is not possible that the courts should be called upon to decide the question of legislative co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....58 prevailed over those of the Public Premises (Eviction) Act, 1971. In the said case the Supreme Court resorted to the general principles of statutory interpretation for the purpose of resolving the conflict between the statutes only due to the fact that both enactments fell under the said legislative list. In the said case the Supreme Court observed as under. "49. This means that both the statutes, viz. The Public Premises Act and the Rent Control Act, have been enacted by the same legislature, Parliament, in exercise of the legislative powers in respect of the matters enumerated in the Concurrent List. We are, therefore, unable to accept the contention of the learned Additional Solicitor General that the Public Premises Act, having been enacted by Parliament in exercise of legislative powers in respect of matters enumerated in the Union List would ipso facto override the provisions of the Rent Control Act enacted in exercise of the legislative powers in respect of matters enumerated in the concurrent list". Mr. Seervai submits that on the strength of the provisions of Article 246, the FCRA ought to prevail over the provisions of the Electricity Act. 37. Mr. Seervai then....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... jurisdiction over the markets in electricity forward trading. What is required is, nay, a regulatory body such as the FMC with expertise in forward contracts to oversee the futures markets in electricity. Mr. Seervai submits that the two Acts operate in different fields and there is no conflict between the provisions thereof. Even if there is any conflict between the provisions of the two Acts, the FCRA having enacted under Entry 48 of List I of Schedule VII will prevail over the Electricity Act which has been enacted under Entry 38 of List IIII i.e., Concurrent List. Mr. Seervai submits that in fact even where the CERC attempted to impose disqualifications in the context of grant of trading licence, the Supreme Court found against the legality, propriety and constitutionality of the delegated legislation. In support of his contention, the learned counsel has placed reliance on the judgment of the Supreme Court in the case of Global Energy Ltd. v. Central Electricity Regulatory Commission AIR 2009 SC 3194. 39. Controverting the submissions of Mr. Seervai, Mr. Aspi Chinoy submits that the Electricity Act is a consolidating Act and repeals the Indian Electricity Act, 1910, the El....
X X X X Extracts X X X X
X X X X Extracts X X X X
....here is any express or implied conflict between the provisions of the Electricity Act, 2003 and any other Act, then the provisions of the Electricity Act, 2003 will prevail, but when there is no conflict, express or implied, both the Acts are to be read together." 40. Mr. Chinoy further submits that section 66 read with section 178(2)(y) of the Act of 2003, clearly enables the CERC to make Regulations for the development of the market in power (including trading). This necessarily covers all aspects of the market and business/trading in power and would include both spot and forward contracts for the sale or purchase of electricity. The concept of trading necessarily covers all forms of business in electricity and includes both spot and forward contracts for sale and purchase of electricity. Section 2(71) of the Act refers to purchase of electricity for resale thereof. This is wide enough to cover both spot and forward contracts for electricity. Mr. Chinoy has referred to the decision of the Supreme Court in the case of Waverly Jute Mills Co. Ltd.'s case (supra) and submits that the trade and commerce would in their ordinary and accepted sense includes forward contracts. He submi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etence arises nor is there any need to read down or interpret entry 38 of List III vis a vis Entry 48 of List 1 as has been submitted by the learned counsel for the petitioners. The learned counsel reiterates that it is well settled that an enactment can be attributed to more than one entry in the Lists. In view thereof, the provisions of the Act of 2003 in so far as they relate to forward contracts in electricity, could, in addition to Entry 38 of List III, also be rested on Entry 48 of List I, in so far as provisions of the Act of 2003 relate to forward contracts. Mr. Chinoy has submitted that time has not reached where electricity can be effectively dealt with in futures contract at present though in future the position may change. 42. Mr. Dwarkadas, Senior Counsel, appearing for FMC, submits that the Supreme Court in the case of Raghu Bar Dayal Jai Parkash's case (supra) scrutinised in great detail the provisions of FCRA wherein the Supreme Court quoted the Expert Committee report to which the bill on Forward Contract Regulation had been referred. The said quotation reads thus : "Forward trading involves speculation about the future, but not all forms of forward trading c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....what sense it is used in a particular statute must be decided on a consideration of the context of that statute. Thus in Public Prosecutor v. Cheru Kutti (AIR 1925 Mad. 1095) and Commissioner, Coimbatore Municipality v. Chettimar Vinayagar Temple Committee (1956 (2) MLJ 563), the question arose with reference to provisions as to licensing by local authorities, and for that purpose market was interpreted as meaning a place. We we must examine that the word market means in Entry 48 "Futures Markets" in List 1. The word 'futures' is thus defined in Encyclopaedia Britannica "contracts which consist of a promise to deliver specified qualities of some commodity at a specified future time. The obligation is for a single quantity in a given month... Futures are thus a form of security, analogous to a bond or promissory note". In this sense a market can have reference only to business and not to any location. In our opinion, a legislation on Forward Contracts would be a legislation on futures markets." 45. Referring to the judgment of the Supreme Court in the case of Gujarat Urja Vikas Nigam Ltd.'s. case (supra) Mr. Dwarkadas submitted that CERC has sought to contend only the third test ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the Supreme Court in the case of PTC India Ltd. (supra) and submitted that the Electricity Act was a comprehensive Act dealing with all aspects of electricity and that development of market of power was an exclusive jurisdiction vested in the regulatory commissions. 47. In the case of Firm of Pratapchand Nopaji v. Firm of Kotrike Venkata Setty & sons [1975] 2 SCC 208, the Supreme Court while dealing with the Bombay Forward Contract Act, 1947, whose provisions were similar to the FCRA, except that under section 9 of the said Act option in goods were banned only if a notification was issued by the provisional government in the official gazette whereas under the FCRA all option in goods are banned, held that if a contract was not for actual delivery and supply to bona fide purchaser, then such contracts are tainted with unlawfulness of their object and are forbidden by the law. The learned counsel has also placed reliance on the judgment of the Supreme Court in the case of Shiv Narayan Kabra v. State of Madras [1967] 1 SCR 138 wherein the Supreme Court had noticed the expert committee's report prior to the enactment of the FCRA and then had the occasion to consider the argumen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the various provisions of the two enactments, there does not appear to be any overlapping or inconsistency between them. The two statutes can operate independently in the fields assigned to them without any possibility of collision and without any invasion into the specific areas covered by the other. For this reason, both the statutes have to be given effect by harmoniously reading together the provisions of the 1952 Act and the 2003 Act. Such a conclusion will be in consonance with the law laid down by the Hon'ble Supreme Court at para 58 of its judgment in Gujarat Urja Vikas Nigam Ltd. (supra). In view of this conclusion, approval accorded by FMC to MCZ for trading of daily electricity contracts, weekly electricity contracts and monthly electricity contracts cannot be faulted and we do not propose to interfere in the matter." Thereafter in the review order, substantial changes were made in the original order passed by CERC. 50. It is no doubt true, as argued by Mr. Chinoy and Mr. Vikas Singh, that section 174 of the Act provides for overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isdiction to regulate development of market in electricity in all forms but in view of the specific provisions under the FCRA regarding futures contract, at present it is not possible to hold that the CERC is entitled to even act in the futures contract in view of the clear provisions in this behalf in the FCRA. In our view, neither of the regulatory authorities will have exclusive jurisdiction to deal with in the futures contract so far as electricity is concerned. Since statutory duty is cast upon the CERC under the Electricity Act regarding market development, the Commission, in our view, is entitled to issue appropriate guidelines in connection with regulating the development of market in electricity. It is also the duty of the CERC under the Electricity Act to see that the transactions on the exchanges are conducted in a free and fair manner, while keeping the interest of the consumer in mind. As on today, the Regulations framed by the CERC also cannot be given any effect to as the power to deal with futures contract is specifically dealt with by other statute and in view of the same, it is not necessary to examine as to whether the CERC was justified in exercising jurisdictio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....09 are quashed and set aside so far as reasoning and directions with regard to futures/forward contract in electricity; (c)It is further declared that the Petitioner-FMC and authority/commission under it have no sole and exclusive jurisdiction to regulate and control forward trading/futures contract in electricity and also CERC and authorities/commission under it. (c)In view of the above, both these Petitions are partly allowed and disposed of accordingly, with no order as to costs. Rule in each of the petitions is accordingly partly made absolute to the extent indicated above. (d)The Notices of Motion are also disposed of in view of disposal of the petitions. No costs. JUDGMENT Anoop V. Mohta, J. - I have the advantage of reading the judgment of my esteemed brother Justice P.B. Majmudar. I am in agreement with the conclusions. As important issues, having large ramification, are involved, I would like to address it by additional reasons :- 2. The Constitution of India, Union List I of Schedule VII provides entry 48, which deals with "stock exchanges and futures markets". Concurrent List III Schedule VII provides entry 38 "Electricity". Both the entries are operati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lectricity. The objects and reasons speak for itself. "An Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conductive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalisation of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto." 6. It provides for; a National electricity and tariff policy and plan, generation of electricity, licensee, transmission of electricity (inter-State transmission, Regional Transmission, Distribution of electricity consumer protection, tariff regulations and its determination and development of power market. It also provides for Central Electricity Authority, Regulatory Commissions, its powers and functions and an Appellate Tribunal. There are other protective clauses and miscellaneous provisions which empowers ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he provisions of the Act, including the terms and conditions which may be specified by the appropriate Commission under section 61 of the said Act. Under the 2003 Act, if one reads section 62 with section 64, it becomes clear that although tariff fixation like price fixation is legislative in character, the same under the Act is made appealable vide section 111. These provisions, namely, Sections 61, 62 and 64 indicate the dual nature of functions performed by the Regulatory Commissions, viz., decision-making and specifying terms and conditions for tariff determination. 28. The 2003 Act contemplates three kinds of delegated legislation. Firstly, under section 176, the Central Government is empowered to make rules to carry out the provisions of the Act. Correspondingly, the State Governments are also given powers under section 180 to make rules. Secondly, under section 177, the Central Authority is also empowered to make regulations consistent with the Act and the rules to carry out the provisions of the Act. Thirdly, under section 178, the Central Commission can make regulations consistent with the Act and the rules to carry out the provisions of the Act. SERCs have a correspond....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... regulations is not specifically empowered to do speculative trading and/or forward trading or future contract, independently, by overlooking the mandate of FCR Act. The FMC and MCX are also not in a position to do the same business exclusively, by overlooking the Electricity Act and its authorities. 11. The Ministry of Consumer Affairs, Food and Public Distribution, vide Gazette by Notification dated 9th January, 2006 by invoking Sections 15 and 16 of the FCR Act has covered "Electricity" and "Natural Gas". FMC has by order of January, 2009 permitted MCX to have trading of electricity in future/forward market. This was probably in view of national and international developing market of electricity. Therefore, the conflict so far as the trade of Futures contract in electricity. 12. The respective entries of the Constitution of India and the Acts based upon it need to keep in mind, while considering development of power/electricity market in India and/or for facilitating permission of investment in electricity sector and for protecting the interest of the consumers. The mandate of Electricity Act needs to be noted while dealing with the marketing and/or trading in electricity.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e elements are essential of any future contract and need to be governed and controlled by regulatory authority/commission, which in India at present constituted under FCR Act only. No such power or authority is available under the Electricity Act and/or provided in any other such statute to the CERC or other authority at present. 15. Such future trading or future markets of electricity which non-storable goods, cannot be permitted without expertized body or statute or regulator under the guise of nation power policy or global market for development of electricity. The electricity falls within the ambit of "commodity features". The maintaining of update index like other commodity is also important factor. It is only the exchange decides whether the future contract is cash settled or settlement is delivery based. 16. The Electricity Act nowhere permits the CERC to use and/or suspend the control and/or delegate and/or handover the charges/control of electricity to FMC or to other associations under the FCR Act, considering the speciality of electricity as a non-storable goods. No other authorities even under the FCR Act can have exclusive and independent control and authority to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s where physical delivery of goods "spot market" takes place, the same will not fall within the ambit of forward contract. Such contract falls within the exclusive jurisdiction of CERC. However, in view of the specialized goods and its requirement of infrastructure, technical expertise/tariff/price, fixation in the interest of consumers at large, the CERC, cannot be permitted to transgress its jurisdiction by venturing into futures market, forward contracts and/or derivative as contemplated and covered under the FCR Act, in the guise of trading and developing the market of electricity. The orders and guidelines therefore, issued by the CERC in questions are in conflicts with the provisions of FCR Act in so far as the business in futures contract and forward market. Any such future contract or forward market of electricity falls within the scope and Sections of 15 and 16 of the FCR Act, the Power Exchange of India Limited (PXI) and Indian Energy Exchange Limited (IEX) therefore, also cannot be permitted to the future trading, even though it is approved by the CERC. Merely because Electricity Act also deals with subjects like railway, telegraph, telephone that itself is not sufficien....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oint is a practical and a feasible deal of the electricity in future/forward markets exclusively under one authority/commission. We need to read and consider both these Acts together and find out a solution by appropriate rules, regulations and/or amendment, if market available to permit futures trading in electricity, though in wider sense, trading covers trade and commerce including spot and forward contract for sale and purchase of electricity. The point is, who should control and regulate such contracts/trading protecting the interest of consumer, specially when at present in India power markets is not yet fully developed. 22. The CERC cannot be permitted to have regulations under section 66 and 178(2)(y) by virtue of section 174 of the Electricity Act, to prevail over the provisions of section 14-A and 15 of the forward contracts in such fashion with regard to the futures contracts/forward contracts. The Supreme Court Judgment in Gujarat Urja Vikas Nigam Ltd.'s case (supra) no way assist the CERC to prevail over different and distinct provisions of FCR Act. In the present circumstances, though the Electricity falls within ambit of commodities/goods in FCR Act, by notificati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Constitution of India. (PTC India Ltd.'s case (supra). To conclude :- (a)The Electricity Act deals with in every respect including trading in electricity. The electricity is a non-storable goods, except produced by hydro-projects. The trading of electricity falls within the concept of commodity trading. Therefore, it may or may not physically available all the time, unless generated on the day and/or the date of delivery. This distinguishes electricity as a goods from other commodities as contemplated under the FCR Act, which at present deals exclusively with all aspect of futures/forward contracts. (b)In view of the reasonings earlier recorded, it will not be possible either for FMC or MCX to control and regulate the mandatory requirements of electricity, at various stages, which are well within the exclusive domain and control of the CERC and/or authorities/commissions. It will create more complications than solving it, unless an experts body constituted and specialized rules and regulations are framed. Both authorities/commissions cannot deal in futures/forward contract in electricity excluding other and/or independently. (c)It is not only question of resolving t....