Indraprastha Gas Ltd. vs Petroleum And Natural Gas ...
2012 Latest Caselaw 3673 Del

             *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                          Date of decision: 1st June, 2012
+        W.P.(C) No. 2034/2012 and CM Nos.4370/2012 & 5617/2012

%        INDRAPRASTHA GAS LTD.                              ..... Petitioner
                        Through: Mr. Parag Tripathi, Sr. Advocate with Mr.
                                 Shiv Kumar Pandey, Mr. Tejas, Mr. Niraj
                                 Pathak, Mr. Buddy Ranganathan, Ms.
                                 Bahar Dhawan, Ms. Swati Sharma and
                                 Mr. Nitesh Jain, Advocates.

                                 versus

         PETROLEUM AND NATURAL GAS REGULATORY
         BOARD AND ANR.                   ..... Respondent
                        Through: Mr. A.S. Chandhiok, ASG with Mr. I.S.
                                 Alag, Mr. J.S. Lamba, Mr. Rakesh Dewan
                                 and Mr. Rishabh Bhutani, Advocates for
                                 R-1
                                 Mr. Sachin Datta, CGSC with Mr.
                                 Abhimanyu Kumar, Adv
                                 Mr. B.M. Sehgal, Adv. for Dr. Jatin
                                 Thukral, Intervener

CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW




W.P.(C) No. 2034/2012                                            Page 1 of 35
 RAJIV SAHAI ENDLAW, J.

1. The petition impugns,

i) the order dated 9th April, 2012 of the respondent no. 1

Petroleum and Natural Gas Regulatory Board (hereinafter

called "Board");

ii) 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 (hereinafter called "Tariff

Regulations");

iii) 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 (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 also notice that though the multifarious challenge to various

provisions as aforesaid is made in the writ petition but the counsels, at the

time of arguments, confined their submissions to the entitlement of the

Board to fix the tariff, as done in the impugned order dated 9 th April, 2012

and made their submissions qua the Act and the various Regulations in this

context only. We are therefore proceeding to adjudicate the said aspect

only.

4. The Board, vide the impugned order dated 9th April, 2012 issued in

exercise of powers under Section 22 of the Petroleum and Natural Gas

Regulatory Board Act, 2006 (PNGRB Act) and the Network Regulations

has, a) determined the Network Tariff and Compression Charges for CNG

in respect of Delhi City Gas Distribution (CGD) Network of the petitioner

at ` 38.58 per MMBTU and ` 2.75 per KG respectively w.e.f. 1st April,

2008; b) directed the petitioner 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; c) directed the

petitioner to appropriately reduce the selling price of CNG from the date of

issuance of this order; and, d) left the modalities and time frame for refund

of the differential Network Tariff and the Compression Charges for CNG

recovered by the petitioner w.e.f. 1st April, 2008 in excess from its

consumers to be decided subsequently.

5. The plea/contention of the petitioner is -

i) that it was established in the year 1998 to comply with the direction of the Supreme Court in M.C. Mehta v. Union of India [WP(C) No. 13029/1985)] for introduction of an alternative fuel in the form of CNG to mitigate pollution levels in the City of Delhi;

ii) that it is a Joint Venture Company of GAIL (India) Limited, Bharat Petroleum Corporation Ltd. and the Government of Delhi and has been authorized to supply, sell and distribute Compressed Natural Gas (CNG) for the Automobile Sector as well as Piped Natural Gas (PNG) to the domestic, commercial and industrial consumers in the cities of Delhi, Noida, Greater Noida, Ghaziabad;

iii) towards the said end, the petitioner speedily expanded its network by arranging gas, laying down and building a network of inter- connected pipelines spread all over the city and set up of CNG Station etc., all at a huge cost;

iv) that the petitioner was already operating the 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 petitioner in this Court

challenging the action of the Board of initiating the process of granting authorization to others, by calling tenders for the city of Ghaziabad. The said writ petition was allowed by Division Bench of this Court vide judgment dated 21st January, 2010 reported as 170 (2010) DLT 80 holding that the Board did not have the power to grant authorization in the wake of non-notification of Section 16 of the PNGRB Act. The Board challenged the said judgment by filing SLP(C) 5408/2010 but during the pendency of the said SLP the respondent no.2 Union of India on 12th July, 2010 notified Section 16 w.e.f. 15th July, 2010;

ix) that the Board on 1st September, 2010 in exercise of its powers under Section 61 of the PNGRB Act notified the Quality Regulations (supra) requiring the entities as the petitioner to, in the bills to be raised by them on the consumers inter alia state the Network Tariff and Compression Charges for CNG;

x) that the Supreme Court vide order dated 12 th May, 2011 in the SLP (supra) permitted the Board to deal with the applications for authorization on the conditions mentioned therein;

xi) that upon the intent of the Board to fix tariff, that too from a retrospective date, becoming apparent to the petitioner, the petitioner objected thereto;

xii) that the Board has no power to fix and regulate Network Tariff and Compression Charges.

Reliance is placed on :-

a) Ispat Industries Ltd. vs. Commissioner of Customs, Mumbai (2006) 12 SCC 583 laying down that in the case of conflict between the Act and the Rules, the Act is to prevail;

b) N.C. Dhoundial v. Union of India (2004) 2 SCC 579, Naraindas Indukhya v. The State of Madhya Pradesh (1974) 4 SCC 788, Chhotobhai Jethabhai Patel and Co. v. The Industrial Court, Maharashtra Nagpur Bench, Nagpur (1972) 2 SCC 46 and P. Malaichami v. M. Andi Ambalam 1973 2 SCC 170 all laying down that bodies created under a Statute derive their power from the Statute and have no unlimited jurisdiction.

6. Since the challenge in the petition is to the power of the Board to

direct the petitioner to, while charging its consumers, disclose the Network

Tariff and the Compression Charges and to also fix the said Network Tariff

and Compression Charges, we deem it appropriate to, before noticing the

arguments urged by the senior counsel for the petitioner, record as to how

the learned ASG appearing for the respondents has shown the source of or

justified the said power.

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

petitioner having dealt with the Board, so understanding the

powers of the Board, cannot now be heard otherwise;

vi) attention is invited to "Introduction" and "Statement of

Objects and Reasons" of the PNGRB Act to urge that the

same was enacted to protect the interest of the consumers;

vii) it is similarly pointed out that Sections 2(i), (m), (w) of the

PNGRB Act are all intended to ensure that the consumer is

not exploited;

viii) particular attention is invited to Section 2(zn) of the Act

defining the „transportation rate‟;

ix) on the basis of Section 11(e) it is contended that the Board is

empowered to regulate inter alia the transportation rates;

x) the Rule making provision i.e. Section 61 is shown to be,

„without prejudice to the generality of the powers‟ and thus

not exhaustive; particular attention is invited to Section 61(2)

clauses (n), (t), (za) to show that Board is empowered to make

regulations qua transportation tariff and any other matter

which is required to be or may be specified by Regulations or

in respect of which provision is to be made by Regulations;

xi) it is contended that the writ petition nowhere shows as to how

the Regulations made are inconsistent with the Act;

xii) it is argued that if it were to be held that the Board cannot

control tariff, no purpose would be served in fixing the

transportation cost which the petitioner also admits the Board

to be empowered to;

xiii) it is argued that the Board is not fixing the retail price of CNG

but is only fixing the transportation cost;

xiv) Reliance is placed on:-

a) PTC India Ltd. v. Central Electricity Regulatory

Commission (2010) 4 SCC 603 dealing with the

powers of the Appellate Tribunal constituted under

the Electricity Act, 2003;

b) Maharashtra State Board of Secondary and

Higher Secondary Education v. Paritosh Bhupesh

Kurmarsheth AIR 1984 SC 1543 to contend that in

determining the constitutionality of the Regulations,

the Court should only see whether the Regulations

fall within the scope and ambit of the power

conferred by the Statute on the delegatee, whether

the Regulation is inconsistent with the provision of

the parent Statute and whether the Regulation

infringes any of the fundamental rights or other

restrictions or limitation imposed by the

Constitution;

c) Shri Sitaram Sugar Company Limited v. Union of

India (1990) 3 SCC 223 laying 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 Compression Charges

cannot be interfered with.

8. The crux of the argument of the senior counsel for the petitioner is

that the Act, vide Section 22 thereof empowers the Board to only fix the

transportation tariff; that the transportation rate, as per Section 2(zn) is the

rate to be charged either by a common carrier or a contract carrier of gas

from a person engaged in marketing of gas, for moving the gas. It is argued

that the Act no where empowers/authorizes the Board to fix the price to be

charged by a marketeer of gas from its consumers. We therefore, without

elaborating on the submissions in this regard, first intend to examine the

provisions of the Act in this respect.

9. However before doing so, it is necessary to deal with the contention

of the learned ASG that the impugned order dated 9 th April, 2012 does not

fix the retail price of gas and only fixes the Network Tariff inasmuch as if

that were to be the position, the question would only be, whether the

fixation of Network Tariff and Compression Charges to be charged by the

petitioner from its consumers, does not affect the total price to be charged

by the petitioner. In this regard it may be noted that the impugned order

dated 9th April, 2012 itself requires the petitioner to reflect such Network

Tariff and Compression Charges fixed by the Board "through appropriate

reduction in selling prices" and defers the decision on modalities and time

frame for „refund‟ of differential Network Tariff and Compression Charge

for CNG for the period from 1st April, 2008 till the order dated 9th April,

2012. Had the order dated 9th April, 2012 impugned in this petition not

been of fixation of retail price of gas to be charged by the petitioner from

its consumers, mention of „reduction in sale price‟ and of „refund by the

petitioner of the Network Tariff and Compression Charge for CNG

charged by the petitioner in excess of the rate so fixed by the Board‟ would

not have been made in the impugned order. The argument of the learned

ASG that the Board by fixing the Network Tariff and the Compression

Charges is not fixing the price to be charged by the petitioner from its

consumers, thus cannot be accepted. The question for adjudication then is,

whether the Act authorizes the Board to do so and whether the intent of the

legislature was to confer a power of price fixation on the Board.

10. The Preamble 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 PNGRB Act empowering the Board to

control/regulate or fix the price at which gas is to be sold to the consumer

and which power is being sought to be exercised by the Board. Section 11

of the PNGRB Act, while prescribing the functions which the Board is to

perform, does not state, as it ought to have stated/prescribed, had the

legislature intended the Board to perform the function of

controlling/regulating/fixing the price of natural gas, to perform such

function. What falls for determination is whether the power to

control/regulate/determine price can be deduced from the functions as

described in the following clauses of Section 11 of the Act and which

alone can be said to have closest nexus if any to price regulation/fixation:-

"11. Functions of the Board.- The Board shall-

(a). Protect the interest of consumers by fostering fair trade and competition amongst the entities;

         (e).      regulate, by regulations, -
                   (i)   ..........

(ii) transportation rates for common carrier or contract carrier;

(iii) ..........

(f). in respect of notified petroleum, petroleum products and natural gas-

(i) ...........

(ii) ensure display of information about the maximum retail prices fixed by the entity for consumers at retail outlets;

(iii) monitor prices and take corrective measures to prevent

restrictive trade practice by the entities;

(iv) ..........

(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;

(j) perform such other functions as may be entrusted to it by the Central Government to carry out the provisions of this Act."

11. We are of the opinion that none of the aforesaid clauses can be

construed as prescribing price control/regulation as a function of the

Board. Clause (a) supra while prescribing protection of interest of

consumers limits the same to, by fostering fair trade and competition

amongst entities engaged in distributing, dealing, transporting, marketing

gas. The function of the Board thereunder is of regulating the inter se

relationship of entities under the Act and not to regulate/control the

relationship between the entities under the Act and the consumers.

Similarly, Clause (f) while prescribing function 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 by the Board.

12. That brings us to the question as to whether prices can be

fixed/regulated/controlled and if so, how. Prices are generally governed /

regulated by market forces. Price fixation/regulation/control is essentially a

clog on the freedom of trade and commerce conferred the status of a

fundamental right. However wherever the circumstances so justify, the

same has been treated as a reasonable restriction. However such restriction

on fundamental right has to be by legislative mandate only. The Supreme

Court recently in DLF Universal Ltd. v. Director, Town and Country

Planning Department, Haryana (2010) 14 SCC 1, finding no provision in

the statute (Haryana Development and Regulation of Urban Areas Act,

1975) empowering the Director to fix the sale price, held directions fixing

the sale price to be beyond the limits laid down by the empowering Act

and suffering from lack of power and void. It was observed that an order

which is not within the powers given by the empowering Act, has no legal

legs to stand on and is a nullity. It was further held that a power of

imposing restrictions on profit percentages, time limit on construction and

handing over of such construction does not encompass within itself the

right to exercise power in manner that inhibits terms of contract and

freedom granted therein. Similarly, in O.N.G.C. v. Association of Natural

Gas Consuming Industries of Gujarat AIR 1990 SC 1851 it was observed

that price fixation is a legislative function. Even the seven Judge Bench of

the Supreme Court in Prag Ice & Oil Mills v. Union of India (1978) 3

SCC 459 had observed that unless by the terms of a particular statute, price

fixation is made a quasi-judicial function, it is really legislative in character. The

Supreme Court in Transmission Corporation of Andhra Pradesh Limited v. Sai

Renewable Power (P) Ltd. (2011) 11 SCC 34 also opined that fixation of tariff

is a statutory function, to be performed by a statutory authority in furtherance of

the provisions of the relevant laws; finding the Electricity Act, 2003 to be

requiring the appropriate Commission to determine the tariff, it was held to be

empowered to do so. In contrast, the Board with which we are concerned in the

present case, as aforesaid is not found to have been assigned the function of

fixing the Network Tariff or the Compression Charges as it has purported to do.

The Supreme 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 power to fix the Maximum Retail

Price. Price fixation being a restriction on fundamental right, such a power

cannot be inferred by conjectures and has to be expressly conferred. As

aforesaid no such power/function has been conferred on the Board and the

learned ASG also during the arguments has struggled to dig out such a

power in the Board by seeking to extrapolate different provisions of the

Act.

15. The Supreme Court in DLF Qutab Enclave Complex Educational

Charitable Trust v. State of Haryana (2003) 5 SCC 622 held that a

regulatory Act must be construed having regard to the purpose it seeks to

achieve and a statutory authority cannot ask for something which is not

contemplated under the statute. The statute in that case relating to

regulation of user of land was construed to be not imposing any limitation

prohibiting transfer of land not affecting its user. It would thus be seen that

the powers of regulation under a statute were held to be not unlimited and

a right of regulation was held to be confined to the language of the statute

and not all pervasive. The basic rule of interpretation of statutes that the

Court shall not go beyond the statute unless it is absolutely necessary so to

do and that purposive construction would be resorted to only when literal

interpretation leads to manifest injustice or absurdity, was applied. In our

view the principle applied therein holds good in the facts of the present

case also. Merely because the Board has been conferred with regulatory

powers will not be interpreted to empower the Board to exercise powers

which the statute has not conferred on it.

16. The House of Lords as far back as in Rossi v. Edinburgh

Corporation [1905] A.C. 21 held that provisions in restraint of trade ought

not to be interpreted as by implication extending the restrictions in restraint

of trade further than the legislature has sanctioned. To the same effect is

the dicta of the Supreme Court in Tata Power Company Limited v.

Reliance Energy Limited (2009) 16 SCC 659 where it was held 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 (Electricity

Regulatory Commission in that case) to exercise a power which is not

incorporated in the statute.

17. We are also of the view that in the absence of any provision to the

said effect in the Act, such a 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 distribution network, means such rate for moving each unit of petroleum, petroleum products or natural gas as may be fixed by regulations."

Section 22 titled "Transportation Tariff" is as under:-

"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, metering units, storage and the like connected to the common carriers or contract carriers;

(e) bench-marking against a reference tariff calculated based on cost of service, internal rate of return, net present value or alternate mode of transport;

(f) policy of the Central Government applicable to common carrier, contract carrier and city or local distribution natural gas network."

20. The contention of the senior counsel for the petitioner is that the said

transportation rate/transportation tariff is the rate/tariff which the entity

which has an inter-connected network of gas pipelines and 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 is entitled to charge

from the marketeers of gas. It is urged that the Act contemplates an entity

engaged only in laying down and maintaining such network alone without

being a marketeer of gas and which entity has been described as a contract

carrier. It is further urged that the Act also contemplates a marketeer of gas

which has laid down its own network of gas pipelines and the associated

equipment as the petitioner has done and empowers the Board to compel

such an entity, as the petitioner to, in its own distribution network

carry/move the gas 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 of Andhra Pradesh Ltd. (supra) which

describes tariff as a table or a book or a catalogue of rates. It is further

contended that there is no difference between the two. We may however

notice that PTC India Ltd. (supra) also defines tariff as including within its

ambit fixation of rates.

22. In so far as the contention of the learned ASG of the petitioner,

irrespective of the PNGRB Act, being contractually bound to be governed

by the rates/tariff prescribed by the Board is concerned, the senior counsel

for the petitioner has referred us to Shree Vindhya Paper Mills Ltd. v.

Union of India AIR 1983 Bombay 270 where it was observed that "law is

not determined by conduct of the parties or by their view of it". We even

otherwise are of the opinion that if the Board is not found to be empowered

to regulate the Maximum Retail Price of gas under the statute by which it

has been created, it cannot wrest such a power by imposing the same as a

condition while exercising the other powers vested in it. The Board, under

Section 15 of the PNGRB Act is empowered to register entities desirous

inter alia of marketing natural gas. If the Board is not empowered to

regulate/control price, the Board cannot, while registering entities, impose

a condition that such entities would be bound by the maximum retail price

fixed by the Board. Such a condition if any imposed by the Board would

be void in as much as the Board, being a creature of statute, cannot

perform any act beyond those which it has been authorized to perform. The

petitioner by conduct could not have conferred upon the Board a

jurisdiction which it does not derive under the PNGRB Act. It was held in

S. Sethuraman v. R. Venkataraman (2007) 6 SCC 382 that if jurisdiction

cannot be conferred by consent, it cannot clothe the authority to exercise

the same in an illegal manner. Similarly in A.C. Jose v. Sivan Pillai (1984)

2 SCC 656 it was held that agreement or participation not permissible or

authorized by law cannot estop challenge thereto. Mention may also be

made of Kalidas Dhanjibhai v. State of Bombay AIR 1955 SC 62 where

application for registration under a statute was held to be not coming in the

way of subsequent challenge to the need/requirement for such registration.

The Supreme Court in Lohia Machines Ltd. v. Union of India (1985) 2

SCC 197 also held that acquiescence in an earlier exercise of a rule making

power 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 the rate to be charged by one entity under the

Act from another for transporting/carrying/moving gas of other. The same

can by no stretch of imagination have relevance to Maximum Retail Price

of gas, though the transportation cost so fixed by the Board may have a

bearing on the case of a price to be charged by a marketeer of gas not

having its own distribution network but utilizing the distribution network

of another entity under the Act. This position is fortified from Section

21(2).

24. We may at this stage notice that the Section 2(x) of the Act does

define the „Maximum Retail Price‟ as the "maximum price fixed by an

entity at which the natural gas may be sold to the retail consumers" and

includes in the same all taxes, cess and levies, local or otherwise and

freight or commission payable to the dealers. The same is also indicative of

the maximum retail price being fixed by the entities under the Act

themselves and not by the Board. We had during the hearing enquired as to

whether any of the other provisions of the Act uses the expression

„Maximum Retail Price‟ as has been defined in Section 2(x). We are told

that the only reference thereto is in Section 11 (supra) where the entities

are required to display the maximum retail price. The Apex Court in Dr.

Indramani Pyarelal Gupta v. W.R. Natu AIR 1963 SC 274 held that one

of the tests to determine whether a statutory body is vested with a

particular power is to see whether exercise of such power is contra-

indicated by any specific provision of the enactment bringing such

statutory body into existence. Judged by this test, Section 2(x) providing

for the Maximum Retail Price to be fixed by the entity as the petitioner

itself is contra-indicative of the Board though regulatory in function,

having such a power to fix the Maximum Retail Price.

25. In the context of price fixation, the Supreme Court in Ashoka

Smokeless Coal India (P) Ltd. v. Union of India (2007) 2 SCC 640 held

the Central Government in that case to be forbidden from issuing any

direction which will have an impact over the price ( of coal in that case)

when there was no control over price.

26. We find a Single Judge of the Kerala High Court in Johny Thomas

v. Union of India MANU/KE/0683/2008 also to have concluded that the

PNGRB Act does not deal with petroleum and petroleum products as an

essential commodity and to have been not 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 compliance

of principle of natural justice but in the light of above, need is not felt to

burden this judgment with the same.

30. 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

empowered to fix any component of Network Tariff or Compression

Charge for an entity such as the petitioner having its own distribution

network. The provisions of the Regulations (supra) in so far as construed

by the Board to be so empowering it are held to be bad/illegal.

Accordingly, the order dated 9th April, 2012 to the extent so fixing the

maximum retail price or requiring the petitioner to disclose the Network

Tariff and the Compression Charges to its consumers is struck

down/quashed. Rule is made absolute. We may also record that though we

had not granted any interim stay of the order dated 9th April, 2012 which

came into force immediately but the matter having been taken up

immediately for hearing, the intent was that no coercive/penal steps shall

be taken against the petitioner for non-compliance thereof.

The respondent having co-operated in expeditious disposal of the

matter, no order as to costs.

RAJIV SAHAI ENDLAW, J

ACTING CHIEF JUSTICE

JUNE 1, 2012 M/PP