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2015 (7) TMI 1130
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.... Local Natural Gas Distribution Networks and Compression Charge for CNG) Regulations, 2008 (hereinafter referred to as "the Regulations") as far as it is construed to empower the Board to fix the tariff is unsustainable and accordingly as a sequitur the order dated 9.4.2012 to the extent of fixing the maximum retail price or requiring the respondents to disclose the entire tariff and the compression charges to its consumers, is not in consonance with the Petroleum and Natural Gas Regulatory Board Act, 2008 (for brevity "the Act"), and accordingly quashed the same. 2. The facts which are essential to be adumbrated are that the respondent invoked the jurisdiction under Article 226 of the Constitution assailing the order dated 9.4.2012 issued by the Board under Section 22 of the Act determining the network tariff and compression charges for CNG in respect of Delhi City Gas Distribution (CGD) network of the petitioner at Rs. 38.58 per MMBtu and Rs. 2.75 per kg. respectively w.e.f. 01.04.2008 and directing the petitioner therein to recover the said network tariff and compression charges for CNG separately through an invoice, without any premium or discount on a non-discriminatory basis....
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....stent with the Act. 4. The High Court observed that the question for adjudication was basically whether the Act authorises the Board to pass such an order and whether the intention of the legislature is to confer the power of price fixation on the Board. The High Court referred to Section 11 of the Act and came to hold that:- "We thus conclude that 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." And again:- "We thus allow this writ petition to the extent of holding that the Petroleum and Natural Gas Regulatory Board is not empowered to fix or regulate the maximum retail price at which gas is to be sold by entities as the petitioner, to the consumers. We further hold that the Board is also not em....
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....r, for such a conclusion is completely contrary to the definition contained in section 2 (zn). The transportation rate has to be determined even for city networks under sections 22(1), 61(2)(e) and 61(2)(t) and that is the rate which can also be claimed from other gas suppliers but that does not mean that no transportation rate can be determined unless and until the pipeline becomes a common carrier. The High Court has flawed in holding that any provision therein having the effect of empowering the Board to fix the price or the Network Tariff or the Compression Charges for CNG, as long as not transportation rate, is beyond the competence of the Board and ultra vires the Act, and it is because though the Board cannot fix the selling price or monitor the selling price as natural gas has not been notified, yet the Board has the power, and indeed the duty, to fix the network tariff and compression charges (which are nothing but the transportation rate/transportation tariff) under the Act. (d) The High Court has committed gross illegalityin its analysis while stating that the Board is not empowered to fix any component of Network Tariff or Compression Charge for any entity such as the ....
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....f as soon as it is determined. Even if the respondent's contention is accepted, the rate/tariff has to be indicated after the exclusivity period not only for the gas of other entities but also for the gas that is supplied by the authorised entity itself. Section 20(4) mandates the Board to fully protect consumer interest while granting exclusivity to the city network and the consumer interest is protected by the Board determining the transportation tariff being applicable to and being indicated for all the gas transported in the city network, whether it belongs to other entities or to the entity owning and operating the city network. 6. Mr. Harish Salve and Mr. Parag S. Tripathi, learned senior counsels, resisting the submissions raised by Mr. Datar, learned senior counsel for the appellant-Board, have raised the following contentions. (A) As per the schematic intendment of the Act, after the expiry of period of exclusivity under Section 20(4), the Board, if decides, in exercise of the statutory powers under Section 20-22, can declare the network as a common/contract carrier, and then alone, in respect of third party suppliers of gas, who seek to use the excess capacity in the p....
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.... 21(2) which uses the expression 'transportation rate', has three elements, which makes it clear that the transportation rate has relevance only in respect of the rates payable by a third party entity, which is utilizing the excess capacity in the existing pipeline of a common/contract carrier and the Board does not have the power to determine the transport rate. (D). The Board has been empowered by Regulations to determine the exclusivity period under Section 20(4) of any pipeline. The effect of this declaration of exclusivity is that under Sections 20 - 22, during the period of exclusivity, the Board is disabled from declaring such pipeline, whether existing or a new one, as a common/contract carrier; and once a pipeline is declared to be a common carrier/contract carrier, it is required to make available its excess capacity as a part of the open access regime, to any third party supplier of gas. Such a third party may either be an importer or purchaser or a producer of gas seeking to transport its gas using the pipeline of any other entity. Therefore, critical scanning of Section 20 to 22 do not confer any power on the Board to fix the transportation tariff. Section 22(1) make....
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....to Section 11(e). (II) The Board as a regulator has the obligation to ensure that the consumers are not exploited and under Section 20(4) the Board grants monopoly for 25 years with further extension of 10 years at a time and barring unforeseen circumstances, such a network will have exclusive infrastructure monopoly for several decades. Therefore, in the factual matrix, the Board has a duty to ensure that consumer interest is protected during the monopoly period, as mandated under Section 20(4) and that can be done by ensuring the investment by the gas company in the transportation infrastructure of the city network is recovered in a reasonable manner for all the gas transported in the city network over the economic life of the network. It is not the stand of the Board that it does not have the power to monitor the Maximum Retail Price (MRP) however, the transportation rates/tariff would indicate it is the price charged to the consumer so that it does not result in excessive profiteering and under these circumstances, it is the duty of the respondent to reveal the transportation prices to the Board as well as to the consumers. (III) Section 20(4) gives the right to the Board to....
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.... to the end consumers. The Act provides for fair competition by allowing entry to a third party for supplying gas to the end consumers on a non-discriminatory open access basis and in the said process the third party is required to pay transportation tariff to the CGD operator at the rates notified by the Board. The purpose of notification of the said rate is to prevent the CGD operator from putting up any kind of entry barrier in the form of a higher transportation tariff for the third party. (iv) Section 22 of the Act read with Section 20, 21 and 2(zn) of the Act, the Board is empowered to regulate the transportation rate or transportation tariff only for a city or local natural distribution network subject to the provisions as provided in the Act. When such city or local natural gas distribution network is declared as a common carrier or a contract carrier by the Board and it is used by any other entity on common carrier or contract carrier basis, then only as per the provisions of the Act, the Board is only entitled to fix, by regulations, the transportation rate or the transportation tariff which the entity owning and operating as a city or local natural gas distribution net....
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....e power to fix MRP and the distribution entity has a fundamental right to carry on the trade, subject to restriction under Article 19(1)(g) of the Constitution and in the case at hand, the Act, does not confer any power on the Board to fix the MRP, but on the other hand, it expressly provides for the MRP to be fixed by the entity themselves as per Section 2(x) of the Act. Learned senior counsel would contend that once the Board has no jurisdiction/ authority to fix the MRP, it is not entitled to fix any element/ component of the MRP as it would bring an anomalous situation. The submission of the Board that the distribution entity can charge the MRP, but it has the power to regulate the component, that is, the transportation charges is a futile exercise, a brutum fulmen, for the simple reason that however low may be the component of MRP determined by the Board, the authorised entity can virtually ignore the same. It is argued by him that the Board is a creature of the Act and it can only exercise its functions in accordance with and within the four corners of the said Act and it cannot prescribe what it calls network tariff and compression charge under the Regulations, because the s....
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....ed 9.4.2012, which deals with the Network Tariff for City or Local Natural Gas Distribution Network and Compression Charge for CNG in respect of the Delhi CGD Network of Indraprastha Gas Limited (IGL). Clause 1 deals with the Regulatory Framework. Clause 1.1 reads as follows:- "1.1 In terms of Sections 22 of the PNGRB Act, 2006, the Board is entrusted with the responsibility to lay down the transportation tariff for city or local natural gas distribution network. As per the relevant provisions of the PNGRB (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 read with the said statutory provisions, the Board is empowered to determine the Network Tariff and Compression Charge for CNG to be charged by the entity laying, building, operating or expanding City or Local Natural Gas Distribution Network either before the appointed day or on a day subsequent thereto." After so stating, the Board has proceeded to provide the methodology for determination of the network tariff and compression charge for the CGD network which has been stipulated in the Regulation dated 19.3.2008. The relevant part of the order, we may prof....
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.... subsequently." 12. As the factual matrix uncurtains, the issuance of the said order compelled the 1st respondent to approach the High Court seeking its quashment principally on the ground that such a power has not been conferred by the Act and the Board, by framing the resolutions cannot arrogate such power to itself in the absence of the source of power. That was the substratum of challenge before the High Court where the Board failed to support and sustain its order and the 1st respondent succeeded in its assail and the contentions raised before this Court are fundamentally embedded on the said fulcrum. Mr. Datar, learned senior counsel, apart from many a provision, has also commended us to the objects and reasons of the Act to highlight the role of the Board as a regulator. In view of the said submission, we think it apt to refer to the objects and reasons of the Act. It reads as follows:- "An Act to provide for the establishment of Petroleum and Natural Gas Regulatory Board to regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas excluding production of crude oil and natural gas so as to ....
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....ore than one entity pursuant to firm contracts for at least one year as may be declared or authorised by the Board from time to time under sub-section (3) of section 20." 16. The aforesaid definitions basically deal with pipelines and they are regulated under the Act. The dictionary clause speaks of the nature of activity. There is a noticeable difference between common carrier pipeline and contract carrier pipeline on one hand and "a city of local natural gas distribution network" on the other. On a perusal of the definitions of the common carrier and contract carrier, it is demonstrable that they refer to pipelines for transportation of petroleum or petroleum products and natural gas by more than one entity. The definition "city or local gas distribution network" means an interconnected network of gas pipelines and the associated equipment used for transporting natural gas from a bulk supply high pressure transmission main to the medium pressure distribution grid and subsequently to the service pipes supplying natural gas to domestic, industrial or commercial premises and CNG stations situated in a specified geographical area. It deals with specified geographical area. It does ....
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....(5) For the purposes of this section, the Board shall be guided by the objectives of promoting competition among entities, avoiding in fructuous investment, maintaining or increasing supplies or for securing equitable distribution or ensuring adequate availability of petroleum, petroleum products and natural gas throughout the country and follow such principles as the Board may, by regulations, determine in carrying out its functions under this section." On a reading of the aforesaid provision, it is clear as day that the Board has been conferred with the power to declare an existing pipeline for transportation of petroleum, petroleum products and natural gas or an existing city or local natural gas distribution network as a common carrier or contract carrier and regulate or allow access to such pipeline or network. Sub-Section (1) prescribes for giving wide publicity of the Board's intention. Sub-Section (2) stipulates affording of opportunity of hearing to the pipeline or network for fixing terms and conditions subject to which pipeline or network be declared as common carrier or contract carrier. The Board has been authorised, after following due procedure as specified by Regu....
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....ion. Explanation:- For the purposes of this sub-section, "infringement of any right" means doing of any act by any person which interferes with common carrier or contract carrier or causes prejudice to the authorised entity." The aforesaid provision stipulates the right of first use and also prescribes certain conditions. 18. Section 22 on which reliance has been placed deals with transportation tariff. The said provision is reproduced below:- "22. Transportation tariff:- (1) Subject to the provisions of this Act, the Board shall lay down, by regulations, the transportation tariffs for common carriers or contract carriers or city or local natural gas distribution network and the manner of determining such tariffs. (2) For the purposes of sub-section (1), the Board shall be guided by the following, namely:- (a) the factors which may encourage competition, efficiency, economic use of the resources, good performance and optimum investments; (b) safeguard the consumer interest and at the same time recovery of cost of transportation in a reasonable manner; (c) the principles rewarding efficiency in performance; (d) the connected infrastructure such as compressors, pumps, mete....
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....1 SC 1152, this Court was interpreting Section 5 of the Madras General Sales Tax Act, 1939 wherein the Legislature had appended the expression "subject to" and while interpreting the said words, the Court ruled that they are meant to effectuate the intention of law and the correct meaning of the expression is "conditional one". 21. In South India Corporation (P) Ltd. v. Secretary, Board of Revenue, Trivandrum and another AIR 1964 SC 207, the Constitution Bench has ruled that the expression "subject to" in the context convey the idea of a provision yielding place to another provision or other provision to which it was made subject to. In B.S. Vadera and another v. Union of India and others AIR 1969 SC 118, this Court while dealing with the expression "any rule so made shall have effect, subject to provisions of any Act occurring in the proviso to Article 309" ruled that:- "24. It is also significant to note that the proviso to Article 309, clearly lays down that 'any rules so made shall have effect, subject to the provisions of any such Act'. The clear and unambiguous expressions, used in the Constitution, must be given their full and unrestricted meaning, unless hedged-in, by....
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....r prices and take corrective measures to prevent restrictive trade practice by the entities; (iv) secure equitable distribution for petroleum and petroleum products; (v) provide, by regulations, and enforce, retail service obligations for retail outlets and marketing service obligations for entities; (vi) monitor transportation rates and take corrective action to prevent restrictive trade practice by the entities; (g) levy fees and other charges as determined by regulations; (h) maintain a data bank of information on activities relating to petroleum, petroleum products and natural gas; (i) lay down, by regulations, the technical standards and specifications including safety standards in activities relating to petroleum, petroleum products and natural gas, including the construction and operation of pipeline and infrastructure projects related to downstream petroleum and natural gas sector; (j) perform such other functions as may be entrusted to it by the Central Government to carry out the provisions of this Act." Sub-section (e) of Section 11 of the Act is pertinent to appreciate the controversy. It empowers the Board to regulate, by regulations, in ....
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....obligation to sell at the prices fixed by the Board." 23. The aforesaid analysis of the High Court is in consonance with the provision and the expression "subject to" as used in Section 22 for the said provision makes it graphically clear that Section 22 has to yield to Section 11 of the Act which deals with the powers and functions of the Board. Section 11 (e) only uses the words "common carrier" or "contract carrier". Even if one applies the concept of "subject matter", in essentiality it is the "common carrier" and the "contract carrier". The dictionary clause of the said expression conveys a different meaning and it does not include an entity which utilizes the pipelines for its own use. The submission of Mr. Datar is that after exclusivity period is over, the Board has the power also cannot be treated to be correct, for such a power has not been conferred on the Board under Section 11. As is perceptible the provision deals with the entity when it engages itself as a part of its pipeline as a common carrier or contract carrier and not the consumers. It is submitted by the learned senior counsel appearing for the respondent that a person owning his own carrier, after the exclus....
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....grafting on it or introducing in it, under the guise of interpretation, by analogy or implication, something what it thinks to be a general principle of justice and equity. To do so 'would be entrenching upon the preserves of legislature'. In Board of Muslim Wakfs v. Radha Kishan, it has been observed that:- "While it is true that under the guise of judicial interpretation the court cannot supply casus omissus, it is equally true that the courts in construing an Act of Parliament must always try to give effect to the intention of the legislature. In Crawford v. Spooner (1846) 6 Moore PC 1 : 13 ER 562 the Judicial Committee said: "We cannot aid the legislature's defective phrasing of an Act, we cannot add and mend and by construction, make up deficiencies which are left there." To do so would be to usurp the function of the legislation. At the same time, it is well settled that in construing the provisions of statute the courts should be slow to adopt a construction which tends to make any part of the statute meaningless or ineffective. Thus, an attempt must always be made to reconcile the relevant provisions so as to advance the remedy intended by the statute." 26. In this con....
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....ere is no room for the application either of the doctrine of casus omissus or of pressing into service external aids, for in such a case the words used by the Constitution or the statute speak for themselves and it is not the function of the court to add words or expressions merely to suit what the courts think is the supposed intention of the legislature. ..."" 28. In Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 it has been opined thus: "...... that it is not the function of the court to supply the supposed omission, which can only be done by Parliament. In our opinion, legislative surgery is not a judicial option, nor a compulsion, whilst interpreting an Act or a provision in the Act. The observations made by this Court in Nalinakhya Bysack AIR 1953 SC 148 would tend to support the aforesaid views, wherein it has been observed as follows: "9. ... It must always be borne in mind, as said by Lord Halsbury in Commissioners for Special Purposes of Income Tax v. Pemsel 1891 AC 531, at p. 549 (HL), that it is not competent to any court to proceed upon the assumption that the legislature has made a mistake. The court must proceed on the footing t....
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.... no scope for application of doctrine of casus omissus to this case. It is not possible to hold that the legislature has omitted to incorporate something which this Court is trying to supply. The primary purpose of construction of the statute is to ascertain the intention of the legislature and then give effect to that intention. After ascertaining the legislative intention as reflected in the Forty-second Report of the Law Commission and the Report of the JPC, this Court is only harmoniously construing the provisions of Chapter XXXVI along with other relevant provisions of the Criminal Procedure Code to give effect to the legislative intent and to ensure that its interpretation does not lead to any absurdity. It is not possible to say that the legislature has kept a lacuna which we are trying to fill up by judicial interpretative process so as to encroach upon the domain of the legislature. The authorities cited on doctrine of casus omissus are, therefore, not relevant for the present case." 30. We have referred to the aforesaid passage as the Constitution Bench has given emphasis on primary purpose of construction of statute to ascertain the intention of the legislature, harmoni....
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....r decisions of this Court, we are afraid, do not really support the submission of Mr. Datar. By no stretch of imagination, we can conceive that non-conferment of power on the Board, in particular regard, is accidental. The legislative intention is absolutely clear and simple and, in fact, does not call for adoption of any other construction to confer any meaning to the existing words. Thus, the said submission leaves us unimpressed. 33. Having dealt with this facet, it is appropriate to refer to Section 61, which deals with the power of the Board to make Regulations. Sub-section (1) of Section 61 stipulates that the Board may, by notification, make regulations consistent with the Act and the Rules made thereunder to carry out the provisions of the Act. Sub-section (2) of Section 61 stipulates that without prejudice to the generality of the foregoing power, such Regulations may provide for all or any of the following matters and the matters have been enumerated thereafter. Mr. Datar has emphasised on Section 61(2)(t), which reads as follows:- "(t) the transportations tariffs for common carriers or contract carriers or city or local natural gas distribution network and the manner o....
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....delegated authority cannot frame a regulation as that would not be in accord with the statutory provisions nor would it be for the purpose of carrying on the provisions of the Act. In St. Johns Teachers Training Institute v. National Council for Teacher Education (2003) 3 SCC 321 it has been observed that:- "A regulation is a rule or order prescribed by a superior for the management of some business and implies a rule for general course of action. Rules and regulations are all comprised in delegated legislations. The power to make subordinate legislation is derived from the enabling Act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred by the Act. Rules cannot be made to supplant the provisions or the enabling Act but to supplement it. What is permitted is the delegation of ancillary or subordinate legislative functions, or, what is fictionally called, a power to fill up details." 37. In Kunj Behari Lal Butail v. State of H.P. (2000) 3 SCC 40 it has been ruled that it is very common for the legislature to provide far a general rule-making power to carry out the purpose of the Act. When such a power is giv....
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....se of such power is contra-indicated by any specific provision of the enactment bringing such statutory body into existence. In Tata Power Company Limited v. Reliance Energy Limited (2009) 16 SCC659, it has been ruled that save and except for the exercise of regulatory power which is specifically recognized by the statute, it is not open to the regulatory body to exercise a power which is not incorporated in the statute. 42. In this context, it is fruitful to refer to the authority in Academy of Nutrition Improvement v. Union of India (2011) 8 SCC 274. The two-Judge Bench was dealing with the issue of constitutional validity of Prevention of Food Adulteration (Eighth Amendment) Rules, 2005. After discussing at length from various angles, the Court held that:- "Statutes delegating the power to make rules follow a standard pattern. The relevant section would first contain a provision granting the power to make rules to the delegate in general terms, by using the words "to carry out the provisions of this Act" or "to carry out the purposes of this Act". This is usually followed by another sub-section enumerating the matters/areas in regard to which specific power is delegated by usi....