Supreme Court of India
PETROLEUM & NATURAL GAS REGULATORY BOARDversusINDRAPRASTHA GAS LIMITED & ORS.
- Citation
- 2015 INSC 459
- Decided
- 1 July 2015
- Disposal
- Dismissed
- Bench
- DIPAK MISRA
Holding
The PNGRB is not empowered to fix or regulate the maximum retail price or any component of network tariff/compression charge for entities with their own distribution network, rendering the 2008 Regulations ultra vires.
Summary
The Supreme Court examined whether the Petroleum and Natural Gas Regulatory Board (PNGRB) could, under the PNGRB Act, 2008, fix the maximum retail price of gas and determine network tariff and compression charges for a city or local natural gas distribution network owned by Indraprastha Gas Ltd. The Court held that Section 22’s power to lay down transportation tariffs is conditional, subject to other provisions, particularly Section 11, which limits the Board’s authority to "common carrier" or "contract carrier" and does not extend to entities using pipelines for their own supply. Consequently, the Board lacks statutory power to fix or regulate retail prices or components of network tariff for such entities. The 2008 Regulations framing such powers were therefore declared ultra vires. The appeal by the Board was dismissed, leaving the High Court’s order quashing the Board’s tariff order intact.
Issues considered
- The scope of the PNGRB's power under Section 22 to fix transportation tariffs and whether it extends to maximum retail price and network tariff for city/local gas distribution networks.
- Whether the expression "subject to" in Section 22 makes the Board's power conditional and subordinate to Section 11.
- Whether entities that are not "common carriers" or "contract carriers" fall within the Board's regulatory ambit.
- The validity of the Petroleum and Natural Gas Regulatory Board (Determination of Network Tariff for City or Local Natural Gas Distribution Networks and Compression Charge for CNG) Regulations, 2008.
- The applicability of Section 61(2)(t) in conferring power to fix such tariffs.
Legislation cited
- Code of Criminal Procedure, 1973s. 468
- Petroleum and Natural Gas Regulatory Board Act, 2008s. 11, s. 20, s. 22, s. 61
- Wealth Tax Act, 1957s. 3
Subjects
PNGRBtariff regulationnetwork tariffcompression chargemaximum retail priceultra viresstatutory interpretationsubject to clausecommon carriercontract carriercity gas distribution network
Judgment
[2015] 7 S.C.R. 215
PETROLEUM & NATURAL GAS REGULATORY BOARD A
v.
INDRAPRASTHA GAS LIMITED & ORS.
(Civil Appeal No. 4910 of 2015)
B
JULY01,2015
[DIPAK MISRA AND UDAY UMESH LALIT, JJ.]
Petroleum and Natural Gas Regulatory Board Act,
2008 - ss.20, 22, 61, 11 - Power of the Board - To fix c
transportation tariff of a consumer of natural gas - Held:
Petroleum and Natural Gas Regulatory Board is not
empowered to fix or regulate the maximum retal1 price at
which gas is to be sold by entities to the consumers- Board
is also not empowered to fix any component of network tariff D
or compression charge for an entity having its own distribution
network -Act does not confer any such power on the Board
and expression "subject to" used in s. 22 makes it a
conditional one - It has to yield to other provisions of the Act
- Since the power to fix the tariff has not been given to the E
Board, the Board cannot frame a Regulation which would
cover the area pertaining to determination of network tariff
for city or local gas distribution network and compression
charge for CNG - As the entire Regulation centres around
the said subject, the Regulation is declared ultra vires ~ F
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.
G
Dismissing the appeal, the Court
HELD: 1.1 On a reading of the s.20 of the Petroleum and
Natural Gas Regulatory Board Act, 2008, it is clear that
the Board has been conferred with the power to declare H
215
216 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 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 (4) enables the
B Board to decide on the period of exclusivity to lay, build,
operate or expand a city or local natural gas distribution
network for such number of years. The objectives by
which the Board is to be guided are promoting
competition among entities, avoiding infructuous
C investment, maintaining or increasing supplies or
securing equitable distribution or ensuring adequate
availability of petroleum, etc. Section 21 deals with the
right of first use. The transportation tariff, which finds
place in Section 22(1), commences with the words
0
"subject to the provisions of this Act". The said provision
confers power on the Board to lay down, by regulation,
the transportation tariff for common carriers or contract
carriers or city or local natural gas distribution network
E and the manner of determination of such tariffs. [Paras
16 -19) [243-A-B; 244-G-H; 245-A-B; 247-G-H]
The Commissioner of Wealth Tax, Andhra Pradesh,
Hyderabad v. Trustees of H.E.H. Nizam's Family
(Remainder Wealth Trust),Hyderabad (1977) 3 SCC
F
362: 1977 (3) SCR 735; Ashok Leyland Ltd. v. State
of T.N. and Anr. (2004) 3 SCC 1: 2004 (1) SCR 306;
K.R.C.S. Balakrishna Chetty and Sons & Co. v. The
State of Madras AIR 1961SC1152: 1961 SCR 736;
G South India Corporation (P) Ltd. v. Secretary, Board of
Revenue, Trivandrum and Anr. AIR 1964 SC 207: 1964
SCR 280; B.S. Vadera and another v. Union of India
and Ors. AIR 1969 ~C 118: 1968 SCR 575- referred
to.
H
.. _,f
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 217
INDRAPRASTHA GAS LIMITED
1.2 Sub-section (e) of Section 11 empowers the A
Board to regulate, by regulations, in respect of certain
aspects. Section 11 (e) (ii) confers power on the Board to
determine transport rates for common carrier or contract
carrier. Sub-section (f) of Section 11 allows the Board to
regulate in respect of notified petroleum, petroleum B
products and natural gas and sub-section (e) (iii) of
Section 11 empowers the Board to regulate, by
regulations, access to city or local natural gas
distribution network so as to ensure fair trade and
competition amongst entities' as per pipeline access C
code. [Para 22) [251-G-H; 252-A-B]
1.3 The analysis of the High Court is in consonance
with s.11 and the expression "subject to" as used in
Section 22 for the said provision makes it graphically D
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" E
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 that after exclusivity period is F
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 G
carrier and not the consumers. [Para 23) (253-B-E]
1.4 In the schematic context of the Act and upon
reading the legislative intention and applying the
principle of harmonious construction, inclusion of the H
218 S~REME COURT REPORTS [2015) 7 S.C.R.
A entities which are not "common carriers" or "contract
carriers" would be permissible, is not perceived. They
have deliberately not been included under Section 11 of
the Act by the legislature and the said non-inclusion does
not lead 10any absurdity. It cannot be conceived that
B non-conferment of power on the Board, in particular
regard, i~ 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. [Para 30, 32] [260-A-C;
C 261-C]
Surjit Singh Katra v. Union of India (1991) 2 SCC 87:
1991 (1) SCR 364; CST v. Parson Tools and Plants
(1975) 4 SCC 22; Board of Muslim Wakfs v. Radha
D Kishan (1846) 6 Moore PC 1: 13 ER 562; CIT v.
National Taj Traders (1980) 1 SCC 370; S.P Gupta v.
..Union oflndia (1981) Supp. SCC 87: 1982 SCR 365;
Bharat Aluminium Co. v. Kaiser Aluminium Technical
Servic~$ lnc. (2012) 9 SCC 552: 2012 (12) SCR 327;
E Sarah Mathew v. Institute of Cardio Vascular Diseases
(2014) c2~SCC 62: 2013 (12) SCR 674; Shiv Shakti
Coop. Housing Society (2003) 6 SCC 659:2003 (3)
SCR 7J>_1,,,,Bharat Aluminium (2012) 9 SCC 552: 2012
(12) SCR 327 - referred to.
F
Duport Steels Ltd. (19BO) 1 WLR (1980) 1WLR142-
referre~d to.·
1.5 Sub-section (1) of s.61(1) stipulates that the
G 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
H or any of the following matters and the matters have been
PETROLEUM & NATURAL GAS REGULATORV'BOARD v. 219
INDRAPRASTHA GAS LIMITED
enumerated thereafter. Section 61 (2)(t) deals with A
transportation tariff for "common carrier" and "contract
carrier" or "city or local natural gas distribution network"
and the determination has to be done as per sub-section
(1) of Section 22. In pursuance of the said provision,
Petroleum and Natural Gas Regulatory Board B
(Determination of Network Tariff for City or Local Natural
Gas Distribution Networks and Compression Charge for
CNG) Regulations, 2008 have been framed. [Para 33, 34)
[261-E, G-H; 262-A-B]
c
1.6 The Board has not been conferred such a power
as per Section 11 of the Act That is the legislative intent.
Section 61 enables the Board to frame Regulations to
carry out the purposes of the Act and certain specific
aspects have been mentioned therein. Section 61 has D
to be read in the context of the statutory scheme. If on
reading of the statute in entirety, such a power does not
flow, a 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 E
provisions of the Act. The regulatory provisR>ns, are to
be read and applied keeping in view the nature and
textual context of the enactment as that is the-source of
power. On a scanning of the entire Act arid"'applying F
various principles, it is found that the Act does not confer
any such power on the Board and the e.xpression
"subject to" used in Section 22 makes it a conditional
one. It has to yield to other provisions of the Act The
power to fix the tariff has not been given to the Board. In G
view of that the Board cannot frame a Regulation which
would cover the area pertaining to determination of
network tariff for city or local gas distribution network
and compression charge for CNG. As the entire
Regulation centres around the said subject, the said H
. 220 SUPREME COURT REPORTS [2015] 7 S.C.R.
A Regulation is declared ultra vires. [Paras 43) [267-C-F]
St. Johns Teachers Training Institute v. National Council
for Teacher Education (2003) 3 SCC 321: 2003 (1)
SCR 975 ; Kunj Behari Lal Butail v. State of H.P. (2000)
B 3 SCC 40: 2000 (1) SCR 1054; State of Kamataka v.
H. Ganesh Karnath (1983) 2 SCC 402: 1983 ( 2) SCR
665; Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi (1975) 1 SCC 421: 1975(3) SCR 619;
General Officer Commanding-in-Chief v. Subhash
c Yadav (1988) 2 SCC 351: 1988 (3) SCR 62; State of
T.N. v. P Krishnamurthy (2006) 4 SCC 517: 2006 (3)
SCR 396; Union of India v. Srinivasan (2012) 7 SCC
683: 2012 (6) SCR 34; Dr. lndramani Pyarelal Gupta
v. WR. Natu AIR 1963 SC 274: 1963 SCR 721 ; Tata
D Power Company Limited v. Reliance Energy Limited
(2009) 16 SCC 659: 2009 (9) SCR 625; Academy of
Nutrition Improvement v. Union of India (2011) 8 SCC
274: 2011 (8) SCR 680 - referred to.
E Case Law Reference
1977 (3) SCR 735 referred to. Para 20
2004 (1) SCR 306 referred to. 'Para 20
1961SCR736 referred to. Para 20
F 1964 SCR 280 referred to. Para 21
1968 SCR 575 referred to. Para 21
(1975) 4 sec 22 referred to. Para 25
(1980) 1 sec 370 referred to. Para 26
G 1982 SCR 365 referred to. Para 27
2013 (12) SCR 674 referred to. Para 29
1991 (1) SCR 364 referred to. Para 29
2003 (1) SCR 975 referred to. Para 36
2000 (1) SCR 1054 referred to. Para 37
H
1983 (2) SCR 665 referred to. Para 37
PETROl:..EUM & NATURAL GAS REGULATORY BOARD v. 221
INDRAPRASTHA GAS LIMITED
1975(3) SCR 619 referred to. Para 38 A
1988 (3) SCR 62 referred to. Para 39
2006 (3) SCR 396 -referred to. Para 40
2012 (6) SCR 34 referred to. Para 40
1963 SCR 721 referred to. Para 41 B
2009 (9) SCR 625 referred to. Para 41
2011 (8) SCR 680 referred to. Para 42
CIVILAPPELLATE JURISDICTION : CIVILAPPEAL NO.
4910 of2015 c
From the Judgment and Order dated 01.06.2012 of the
High Court of Delhi in W. P. (C) No. 2034 of 2012
Arvind Datar, Suchindran B. N., Rakesh Dewan, Liz
Mathew for the Appellant. D
Pinky Anand, ASG, Harish N. Salve, Parag Tripathi,
Ashok Panda, K. K. Venugopal, V. Giri, B. A. Ranganathan,
Ruby Singh Ahuja, Deepti Sarin, Neha Gupta, Manik
Karanjawala,Anisha Mitra,Avinash Ganguli (For Karanjawala E
& Co.), Sunita Rani Singh, B. K. Prasad, Debal Banerjee,
Trinath Tadkamalla, Mrinal Ojha, Ridhi Sancpeti, for the
Respondents and Caveator-in-person.
The Judgment of the Court was delivered by F
DIPAK MISRA, J. 1. The present appeal, by special
leave, calls in question the legal defensibility and the tenability
of the judgment and order dated 01.06.2012 passed by the
High Court of Delhi in W.P.(C) No. 2034 of2012 whereby the G
Division Bench has ruled that Petroleum and Natural Gas
Regulatory Board (for short, "the Board") is not empowered to
fix or regulate the maximum retail price at which gas is to be
sold by entities such as lndraprastha Gas Ltd, to the consumers
and further the Board is also not empowered to fix an'y H
222 SUPREME COURT REPORTS [2015] 7 S.C.R.
A component of network tariff or compression charge for an entity
having its own distribution network. On the aforesaid
foundation, the High Court has opined that the provisions of
Petroleum and Natural Gas Regulatory Board (Determination
of Network Tariff for City or Luca! Natural Gas Distribution
B 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
C 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.
D 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
E 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 tlie petitioner therein to recover the
said network tariff and compression charges for CNG
F separatelythrough an invoice, without any premium or discount
on a non-discriminatory basis and to appropriately reduce the
selling price of CNG from the date of issuance of the order.
Be it noted, the Board left the modalities and time frame for
refund of differential network tariff and the compression
G charges for CNG recovered by the petitioner therein w.e.f.
1.4.2008 in excess from its consumers to be decided
subsequently. The said order was criticized on many a ground.
The principal contention was that the Board does not have the
power to direct the writ petitioner, the respondent no. 1 herein,
H while charging its consumers, to disclose the network tariff and
PETROLEUM & NATURAL GAS .REGULATORY BOARD v. 223
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
the compression charges and also to fix the said network tariff A
and compression charges in any particular manner.
3. The said stand was resisted by the learned counsel
for the Board contending, inter alia, that Regulations 3 and 4
of the Regulations apply to the entities like the writ petitioner; B
that the Board has the power to ask the writ petitioner, the
respondent herein, to submit the network tariff and
compression charges for CNG as per the Quality Regulations
for approval of the Board; that the entity having accepted the
said term as a condition for obtaining" exclusivity is bound by C
the contractual obligation with the B~,ard and is now estopped
from challenging the power of the Board; that the objects and
reasons of the Act is to protect interests of the consumers and
regard being had to the statutory context when an action is
taken, no flaw could be found with the same; that Sections D
2(i), (m) and (w) of the Act are all intended to ensure that the
consumer is not exploited; that Section 2(zn) of the Act defines
the transportation rate and in the interpretative expanse, the
order passed by the Board is absolutely defensible; that as
per Section 11(e), the Hoard is empowered to regulate, inter E
alia, the transportation rates; that Section 61 (2), especially,
clauses (n), (t), (za) empower the Board to make regulations
qua transportation tariff and any other matter which is required
to be or may be specified by the Regulations or in respect of F
which provision is to be made by the Regulations; that keeping
in view the objective of the Act, the Regulations permit 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; and that the G
Regulations framed by the Board are consistent 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 H
224 SUPREMECOURT~EPORTS [2015] 7 S.C.R.
A 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 PNGRBAct does not confer any
B power on the Board to fix/regulate price of gas as has
been done vidP the impugned order dated gth 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
C 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 PNGRBAct and of no avail."
D 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
E 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
F 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 91h April, 2012 to the extent
so fixing the maximum retail price or requiring the
petitioner to disclose the network tariff and compression
G charges to its consumers is struck down/quashed."
5. Criticizing the judgment and order passed by the High
Court, Mr. Arvind Datar, learned senior counsel for the
appellant, has raised the following submissions:-
H
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 225
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
(a) There is a presumption of validity of subordinate A
legislation, and as long as the parent Act enables the
framing of regulations they are valid. When section 2(zn),
22(1), 61 (2)(e), 61 (2)(t) of the Act empower the Board to
frame regulations for all three categories, namely,
common carrier, contract carrier and city or local natural B
gas distribution network, the Regulations are valid. The
High Court has incorrectly held that these regulations are
ultra vires the parent Act without referring to any specific
section or provision. That apart, on a reading of the
provisions of the Act it is also noticeable that there is no c
postulate that the power to frame ~tie transportation rate/
transportation tariff can only be exercised only when the
city network becomes a common carrier or contract
carrier.
D
(b) While the city networks get market exclusivity for 3/5
years, they get infrastructure exclusivity for 25 years with
further extension of 10 years at a time and the fixation of
transportation rate/ transportation tariff has to be
determined for the network of pipelines irrespective of E
whether they are common carriers, contract carriers or
city networks. The Act and Regulations contemplate
fixation of transportation rate/transportation tariff even at
the stage of city network. It is quite clear that when the
F
city network becomes a common carrier after the
exdusivity period, the said transportation rate which is
determined at the city network stage itself, would apply
for carrying the gas of other suppliers under section 21 (2).
(c)The High Court has erroneously opined that the G
transportation rate provided for is the rate to be charged
by one entity under the Act from another for transporting/
carrying/moving gas of the other, for such a conclusion
is completely contrary to the definition contained in
H
226 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 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
B unless and until the pipeline becomes a comnion 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
c 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, yetthe Board has the power, and
indeed the duty, to fix the network tariff and compression
D
charges (which are nothing but the transportation rate/
transportation tariff) under the Act.
(d) The High Court has committed gross illegality in its
analysis while stating that the Board is not en:ipowered
E to fix any component of Network Tariff or Compression
Charge for any entity such as the respondent herein
having its own distribution network. It has also faulted in
opining that the provisions of the Regulations insofar as
F
fo
construed by the Board be so empowering it are illegal.
These findings recorded by the Division Bench are
contrary to the provisions of the Act, for the Board can fix
the transportation rate/transportation tariff and the fact
that the rate will become applicable after expiry of the
G period of exclusivity does not make the Regulations
themselves bad or illegal and it is absolutely clear that
source of power comes from the provisions engrafted
under Sections 2(zn), 22(1), 61 (2)(e) and 61 (2)(t) of the
Act as they confer power on the Board to frame
H regulations for all three categories.
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 227
INDRAPRASTHAGAS LIMITED [DIPAK MISRA, J.]
(e) The omission of 'city network' in Section 11 {e)(ii) is A
only accidental, and if the provisions of the Act are read
as a whole, the power of the Board is clear as crystal for
determining the transportation rate/transportation tariff
for all categories. If the contention of the respondents is
accepted, it will amount to rewriting.the provision as B
"transportation rates after city network becomes a
common carrier or contract carrier" .
. ..
(f) The view expressed by the High Court to the extent
that the Board is not empowered to fix any component of c
Network Tariff or Compression charge for an entity such
as the respondent that has its bwn distribution network
is fallacious, for the said findings are not in accord with
to the provisions of the Act, and if the submissions are
accepted, the Regulations will become applicable only D
after the period of exclusivity. The Central Government
had supplied subsidized gas to the authorised entities
to ensure that consumers do not have to pay a high cost
for both piped natural gas (used for domestic purposes)
and compressed natural gas (used for transportation) E
and has made it mandatory for the respondents to
disclose the break up. Quite apart from that, Section
21 (1) that stipulates right of first use afterthe exclusivity
period and Section 21 (2) which provides that other
F
entities are liable to pay minimum transportation rate for
using the common carrier, do not indicate that the Board
has no power to fix the transportation rate/ tariff during
the exclusivity period or that it would apply to only the
gas transported for other entities. The respondent G
company is obliged to indicate the transportation rate/
tariff 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 H
228 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 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
B 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
C 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
D 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
E capacity i11 the pipeline of the network, the Board may fix
the transportation rate, which the 1s1 respondent may
charge from such a third party supplier. The consumers
of natural gas, whether of the first respondent, or of the
third party supplier of gas, does not enter into the scene
F at all and has no role to play whatsoever. The
transportation in question whether by the network while
supplying to its consumers or by a common/contract
carrier in respect of the third party suppliers are the rates
and costs of transportation relevant only to the owner/
G supplier of the gas and the said rate has no meaning or
relevance as far as the consumer, who is the purchaser
of such gas, is concerned, other than the fact that the
transportation expenses would also form a part of the
consolidated final price which would be raised and
H
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 229
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
recovered by respondent as also third party supplier from A
the respective consumers.
(B). The definition of Common Carrier in Section 20) and
Contract Carrier in Section 2(m) postulate certain
conditions and the definition of city or local natural gas B
distribution network in Section 2(i) does not contain the
said crucial twin conditions. That apart, Section11(a)
and Section 11(e) permit the issuance of regulations
which determine access and the transportation rate for
Common Carrier or Contract Carrier, and the said c
provision limits the power of the Board to issue
regulations only in respect of access to the network and
not for the transportation rate for the network and,
therefore, the stand of the appellant that there is an
accidental omission is unacceptable because the D
intention of the legislature is absolutely clear and
unambiguous.
(C). The power·can only be exercised in respect of
common carrier/contract carrier if it is a network in E
respect of which the power is sought to be exercised
and then also as a first step the network must be declared
or authorised as a common carrier or a contract carrier
· withinthe meaning of Sections 20-22; and, therefore, as
far as a network is concerned, there is no right to F
determine transportation rate. Such power is specifically
limited in respect of common/contract carrier under
Section 11 (e)(ii). The very concept of transportation rate
which is defined in Section 2(zn) makes it clear that it is
the rate for moving each unit of petroleum, petroleum G
products or natural gas as may be fixed by the Regulations
and Section 21 (2) which uses the expression
'transportation rate', has three elements, which makes it
clear that the transportation rate has relevance only in
H
230 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 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.
B (0). The Board has been empowered by Regulations to
determine t~e 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 Boar.d is disabled from declaring such
c 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
D 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
the
to fix transportation tariff. Section 22( 1) makes it clear
E that the right to fix transportation tariff is subject to other
conditions of the Act and when the provisions contained
in Sections 20), 2(m), 2(i), 2(zn), 11 (e), 11 (f)(iii), 11 (f)(vi)
and 22(2) are read in a conjoint manner, it is graphically
clear that the Board has not been conferred the power to
F
fix the transport tariff by the legislature and, therefore, it
cannotdo so by a regulation. The reliance by the Board
on Section 61 (2) (q) & (t) is misplaced, for Section 61 (1)
of the 'Act permits the Board to make regulations
G consistent with the Act and the Act which confers power
on the Board to frame the Regulations does not empower
it to do so. That apart, Section 61 deals with the general
regulation making power of the Board in terms of the
Sections specified in the Act; and Section 61 (2)(q) and
H (t) relate back to Section 22(1) which itself is "subject to"
PETROLEUM & NATURAL GAS. REGULATORY BOARD v. 231
INDRAPRASTHAGAS LIMITED [DIPAK MISRA, J.]
the other provisions of the Act and, hence, even if Section A
61(t) is read with Section 22(1), it would not override
Section 11(e) read with Section 2(zn) and 21(2) of the '
Act.
7. In reply to the aforesaid submissions, Mr. Datar, B
learned senior counsel has canvassed the following
propositions:-
(I) The contentions urged by the respondent are
untenable, for the transportation rate has to be determined c
on the basis of voluminous data, which has to be
collected, collated and analyzed and unless the rate is
, fixed even during the five year period, there will be no
; rate available for the common carrier at the eQ_d of the
exclusivity period and it will be absurd to suggest that D
the entire exercise has to begin only after the ci!Y}].~twork
becomes a common carrier. The transportation rate has
to be determined for a network of pipelines under ~ection
2(zn) and is not a separate determination Jor city
networks, common carrier or contact carrier as t~e, object E
of determining the rate is also to determine the rate at
which the cost of transportation is permitted to be
recovered and it has to be done in a reasonable manner
as mandated under Section 22(2)(b). The omission of
"city or local gas distribution network" in Section 11 (e)(ii) F
is clearly accidental because in the Act as. well as
Regulations, three categories viz. common carrier,
contract carrier and city or local gas distribution network
have been used together, and the purpose becomes
manifest on a perusal of Section 61 (2)(e) which G
specifically refers 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 H
232 SUPREME COURT REPORTS [2015] 7 S.C.R.
A extension of 1Oyears 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
B 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
c 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
D
circumstances, it is the duty of the respondent to reveal
the transportation prices to the Board as well as to the
consumers.
(Ill) Section 20(4) gives the right to the Board to grant
E exclusivity to the city or local natural gas distribution
network for such period as the Board may decide and
once it has the power to give exclusivity to a city or local
natural gas distribution network owning entity so that only
it can lay, build and operate such network in a
F
geographical area and under these circumstances it
becomes the duty of the Board and as per the stipulations
under Section 20(4) it has to be done in a transparent
manner protecting the consumer interest. In addition to
G it, the duty is cast on the Board under Section 20(5) to
be guided by the objectives of promoting competition
among the entities, avoiding infructuous investment,
maintaining or increasing supplies or for securing
equitable distribution or ensuring adequate availability
H of natural gas throughout the country and, therefore, the
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 233
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
Board can determine the transportation rate/tariff. If the A
stand of the respondent is accepted, the consumers
would never know the transportation rate, since it is
possible that in many cases there may not be any other
gas supplier who is using the network of pipelines after
the exclusivity period. B
8. Having enumerated the submissions in reply by the
first respondent, we must record the submissions of the second
respondent, that is, Union of India. The following proponements
have been urged by Ms. Pinky Anand, learnedASG. C
(i) There is no legislative intent for allowing the Board to
determine the pricing of gas, i.e. the price which the entity
charges from the ultimate customers. The Act, while
protecting the interests of the consumers, has not o
empowered the Board to fix the price at which the entities
will sell the petroleum products or natural gas to the
consumers, for the MRP is to be fixed by the entity.
(ii)As regards the applicability of transportation tariff E
determined through the Regulations, it is clear from the
provisions of the Act that such transportation tariff is
applicable only in respect of an outside entity that is willing
to use the CGD network and that such tariff is payable by
that entity to CGD network operator. The transportation F
tariff notified through the BoC1rd Regulations is not
applicable for CGD entity when it transports its own gas
for supply to' individual customers.
(iii) The Board is merely authorised to monitor prices G
and is required to ensure fair competition amongst
entities that are supplying CNG or PNG 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 H
234 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 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
B transportation tariff for the third party.
(iv) Section 22 of the Act read with Section 20, 21 and
2(i:n) of the Act, the Board is empowered to regulate the
transportation rate or transportation tariff only for a city
c 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
D 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
network would charge from other entities which use its
E network on common carrier or contract carrier basis for
transporting their gas.
(v) The Board is not empowered to fix the price at which
entities will market or sell the notified petroleum products
F or natural gas. The MRP il? to be fixed by the entity. The
Board shall only monitor the prices and take corrective
measures to prevent restrictive trade practices by the
entities. As regards regulation of the activities of
transmission and distribution of petroleum products and
G natural gas, the Board will oversee access to pipelines
and city or local natural gas distribution networks on non-
discriminatory, common carrier/contract carrier principle
for ensuring a level playing field for all entities. That apart,
the concept of allowing capacity in a city or local natural
H
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 235
INDRAPRASTHAGAS LIMITED [DIPAK MISRA, J.]
gas distribution network to be used by any third party A
entity on non-discriminatory common carrier/contract
carrier principle shall incetivize emergence of
independent marketers of natural gas. Such independent
marketers shall enter into transportation contracts with
the entity, owning and operating the city or local natural B
gas distribution network for transportation of their gas.
This, in turn, will foster fair trade and competition in
marketing amongst entities
(vi) The Board is.entitled to fix the transportation rate for c
gas transmission and distribution in all cases where gas
is transported on common carrier or contract carrier
principle. The transportation rate so fixed by regulator
shall be paid by the third party entities to the entity,-0wning
and operating the city or local natural gas distribution D
network for transporting their gas on common.carri~r/
contract carrier principle. Thus, by observing non-
discriminatory open access to pipelines and city or local
natural gas distribution networks on common carrier/
contract carrier principle at the transportation rates fixed E
by regulations, a level playing field shall be ensured for
all the entities engaged in marketing and sale of natural
gas. In such a market condition, gas-on-gas competition . '
and the inter-fuel competition will lead to emergence of
F
fair trade and competition amongst entities, which in turn,
will protect the interest of consumers. ' 1•
9. Mr. K.K. Venugopal, learned senior counsel appearing
for the intervenor, Central U.P. Gas Ltd., has contended that
the Board does not have the power to fix MRP and the G
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 H
236 SUPREME COURT REPORTS [2015) 7 S.C.R.
A provides for the MRP to be fixed by the entity themselves as
per Section 2(x) of the Ad. 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
B of the Board that the distribution entity qan 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
C 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
0
statute refers to fixation of "transportation tariff/ transportation
rate" but does not mention of 'network tariff or 'compression
charges'. In the absence of any power conferred under the
Act to frame regulations in thatregard, the Regulations clearly
E transgress the enactment and hence, the Regulations to that
extent are ultra vi res. It is urged by him that 'network tariff' is
not the same as 'transportation rate' and the Board cannot
assume such an authority by employing a different analogy.
Placing reliance on Section 11(e)(ii), it is argued by the learned
F senior counsel that the said provision which provides for
Board's function and empowers the Bo'ard to frame
regulations, employs the words 'transportation rates for
common carrier or contract carrier' and they remotely do not
purport to fix rates for 'network tariff' or 'compression charges'
G for city gas distribution network. In addition, it is propounded
by him that reliance on Sections 21 (2) and 22(1) and all other
provisions are absolutely misconceived and the assumption
that the Board as a regulator to look after consumer interests,
cannot travel beyond the statutory limit.
H
PETROLEUM & NATURAL G.A.S REGULATORY BOARD v. 237
INDRAPRASTHAGAS LIMITED [DIPAK MISRA, J.]
10. Dr. Jatin Thukral, who has been allowed to intervene, A
has referred to the background of the Act and on that foundation
has canvassed that "transportation rate" is inseparably related
to open access for every commercial gas distribution entities
to either common carrier or contract carrier or city or local
natural gas distribution regard being had to the manner in which B
the said words hav~ been employed by the legislature in various
provisions of the Act. It is his further submission that Section
61(2)(t) is controlled by sub-section 22(1) which in turn is
guided by Section 22(2) and all the provisions are associated
with common or contract carriers only and by no stretch of C
imagination, it confers any power on the Board to fix
transportation rate, as it is only referable to the rate charged
by one commercial entity from any commercial entity for using
its gas transportation networks. In essence, his submission is D
that the appeal is devoid of merit and deserves to be dismissed.
11. Before we proceed to appreciate the rivalised
contentions raised at the Bar, it is seemly to state that in terms
of Section 22 of the Act, the Board has framed the Regulations.
Placing reliance on the Regulations, the Board has issued the E
order dated 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 lndraprastha Gas Limited (IGL). Clause 1 deals F
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 G
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
H
238 SUPREME COURT REPORTS (2015] 7 S.C.R.
A 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."
B
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
C part of the order, we may profitably reproduce:-
"3.19 As per the provisions of the PNGRB (Determination
of Network Tariff for City or Local Natural Gas Distribution
Networks and Compression Charge for CNG)
D Regulations, 2008 the actual performance with respect
to the capital and operating costs during the previous
review period against the identified parameters shall be
monitored and the variations shall be adjusted in the
calculations on a prospective basis considering the
E remaining period of economic life of the CGD project.
3.20 After the above mentioned adjustments, the
reconciliation of which is provided in Annexure-2, the
network tariff and compression charge for CNG in respect
F of the Delhi CGD network of IGL is given in the table
below:
SI Particulars Network Tariff Compression
No. (Rs.'MlllBTU) ChargeforCNG
(Rs./Kg)
G
1 &Jbmit1ed bv IGL 104.05 6.66
2 /is deterrrinoo by 1he 38.58 2.75
Bocrd after
rroderations
H
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 239
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
4. Decision A
4.1 While the PNGRB (Determination of Network Tariff
for City or Local Natural Gas Distribution Networks and
Compression Charge for CNG) Regulations, 2008 were
notified on 19th March 2008, for the purpose of ease in B
calculations, the applicable network tariff and
compression charge for CNG determined by the Board
shall be applicable from 1st April, 2008. Accordingly, the
Network Tariff and the Compression Charge for CNG in
respect of the Delhi CGD Network of IGL shall be c
Rs.38.58 per MMBTU and Rs.2.75 per KG respectively
with effect from 1st April, 2008.
4.2 As per the provisions of the PNGRB (Authorizing
Entities to Lay, Build Operate or Expand City or Local D
Natural Gas Distribution Networks) Regulations, 200&,
IGL shall recover the Network Tariff and Compression
Charge for CNG separately through an invoice without
any premium of discount on a non-discriminatory basis.
Further, in conformity with the decision conveyed vide E
letter dated 23.5.2011 mentioned in para 2.3 above, the
difference between the Network Tariff and Compression
Charge for CNG submitted by IGL and that determined
by the Board as given in the table above would be '
reflected through appropriate reduction in selling prices F
from the date of issuance of this Order. The modalities
and time frame for refund of differential Network Tariff
and the Compression Charge for CNG for the period
from 01.4.2008 till the date of issuance of this Order shall
be decided and advised by the Board subsequently." G
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 H
240 SUPREME COURT REPORTS [2015) 7 S.C.R.
A 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
B 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
C 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,
D marketing and sale of petroleum, petroleum products and
natural gas excluding production of crude oil and natural
gas so as to protect the interests of consumers and
entities engaged in specified activities relating to
petroleum, petroleum products and natural gas and to
E ensure uninterrupted and adequate supply of petroleum,
petroleum products and natural gas in all parts of the
country and to promote competitive markets and for
matters connected therewith or incidental thereto."
F 13. Bearing the purpose of the Act in mind, we shall refer
to the relevant provisions of the Act. Section 1(4) provides
that the Act applies to refining, processing, storage,
transportation, distribution, marketing and sale of petroleum,
petroleum products and natural gas excluding production of
G crude oil and natural gas. Section 2(d) of the Act defines
authorised entity to mean that any entity registered by the
Board under Section 15 to market any notified petroleum,
petroleum products or natural gas, or to establish and operate
H liquefied natural gas terminals.
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 241
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
14. Section 2(i) of the Act on which emphasis has been A
laid defines "city or local natural gas distribution network",
relevant part of it reads as 1Jnd,er:-
"2(i) "city or local natural gas distribution network" means
an interconnected network of gas pipelines and the s
associated equipment used for transporting natural gas
from a bulk supply high pressure transmission main to
the medium pressure distribution gri~ and subsequently
to the service pipes supplying natural gas to domestic,
industrial or commercial premises and CNG stations C
situated in a specified geographical area."
15. Section 2(j) and 2(m) define 'common carrier' and
'contract carrier' respectively. They read as follows:-
D
"2(j) "common carrier" means such pipelines for
transportation of petroleum, petroleum products and
natural gas by more than one entity as the Board may
declare or authorise from time to time on a
nondiscriminatory open access basis under sub-section E
(3) of section 20, but does not include pipelines laid to
supply-
(i) petroleum products or natural gas to a specific
consumer; or
F
(ii)crude oil;
Explanation~ For the purposes of this clause, a contract
carrier shall be treated as a common carrier, if -
G
{a) such contract carrier has surplus capacity over and
above the firm contracts entered into; or
{b) the firm contract period has expired.
2(m) "contract carrier" means such pipelines for H
242 SUPREME COURT REPORTS [2015] 7 S.C.R.
A transportation of petroleum, petroleum products and
natural gas by more 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."
B
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
C 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
D 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
E 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 not refer to a pipeline or transport of natural gas. It is
F specifically a pipeline network for transport of natural gas to
its own consumers. This being the position, as per the
dictionary clause,I
it is pertinent to refer to Section 20 that
provides for decfaring, laying, building, etc. of common carrier
or contract carrier and city or local natural gas distribution
G network. The said provision is as follows:-
"20 Declaring, laying, building, etc., of common
carrier or contract carrier and city or local natural
gas distribution network:-
H (1) If the Board is of the opinion that it is necessary or
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 243
INDRAPRASTHAGAS LIMITED [DIPAK MISRA, J.]
expedient, to declare an existing pipeline for A
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 or to regulate or allow access to such pipeline or
network, it may give wide publicity of its intention to do B
so and invite objections and suggestions within a
specified time from all persons and entitles likely to be
affected by such decision.
(2) For the purposes of sub-section (1), the Board shall C
provide the entity owning, the pipeline or network an
opportunity of being heard and fix the terms and
conditions subject to which the pipeline or network may
be declared as a common carrier or contract carrier and
pass such orders as it deems fit having regard to the D
public interest, competitive transportation rates and right
of first use.
(3) The Board may, after following the procedure as
specified by regulations under section 19 and sub- E
sections (1) and (2), by notification,-
(a) declare a pipeline or city or local natural gas
distribution network as a common carrier or contract
carrier; or F
(b) authorise an entity to lay, build, operate or expand a
pipeline as a common carrier or contract carrier; or
(c)allow access to common carrier or contract carrier or
city or local natural gas distribution network; or G
(d) authorise an entity to lay, build, operate or expand a
city or local natural gas distribution network.
(4) The Board may decide on the period of exclusivity H
244 SUPREME COURT REPORTS [2015] 7 S.C.R.
A to lay, build, operate or expand a city or local natural gas
distribution network for such number of years as it may
by order, determine in accordance with the principles laid
down by the regulations made by it, in a transparent
manner while fully protecting the consumer interests.
B
(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
c or ensuring adequate availability of petroleum, petroleum
products and natural gas throughoutthe country and follow
such principles as the Board may, by regulations,
determine in carrying out its functions under this section."
D
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
E 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 Bo;:ird's intention. Sub-Section (2) stipulates affording
of opportunity of hearing to the pipeline or network for fixing
F 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 Regulations under Section 19 and under sub-Sections (1)
and (2) by notification to declare a pipeline or city or local natural
G gas distribution network as a common carrier or contract
carrier and do certain acts. Sub-Section (4) enables the Board
to decide on the period of exclusivity to lay, build, operate or
expand a city or local natural gas distribution network for such
H number of years. The objectives by which the Board is to be
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 245
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
guided are promoting competition among entities, avoiding A
infructuous investment, maintaining or increasing supplies or
securing equitable distribution or ensuring adequate availability
of petroleum, etc.
17. Section 21 deals with right of first use, etc. The said B
provision reads as follows:-
"21. Right of first use, etc.:-
(1) The entity laying, building, operating or expanding a
pipeline for transportation of petroleum and petroleum c
products or laying, building, operating or expanding a
city or local natural gas distribution network shall have
right of first use for its own requirement and the remaining
capacity shall be used amongst entities as the Board
D
may, after issuing a declaration under section 20,
determine having regard to the needs of fair competition
in marketing and availability of petroleum and petroleum
products throughout the country: Provided that in case of
an entity engaged in both marketing of natural gas and E
laying, building, operating or expanding a pipeline for
transportation of natural gas on common carrier or
contract carrier basis, the Board shall require such
entities to comply with the affiliate code of conduct as
may be specified by regulations and may require such F
entity to separate the activities of marketing of natural
gas and the transportation including ownership of the
pipeline within such period as may be allowed by the
Board and only within the said period, such entity shall
have right of first use. G
(2) An entity other than an entity authorised to operate
shall pay transportation rate for use of common carrier
.,or contract to the entity operating it as an authorised entity,
H
246 SUPREME COURT REPORTS [2015) 7 S.C.R.
A (3) An entity authorised to lay, build, operate or expand
a pipeline as contract carrier or to lay, build, operate or
expand a city or local natural gas distribution network
shall be entitled to institute proceedings before the Board
to prevent, or to recover damages for, the infringement
B of any right relating to authorization.
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
C 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
0
with transportation tariff. The said provision is reproduced
below:- ,
"22. Transportation tariff:-
E (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.
F
(2) For the purposes of sub-section (1 ), the Board shall
be guided by the following, namely:-
(a) the factors which may encourage competition,
G 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;
H
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 247
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
(c) the principles rewarding efficiency in performance; A
(d) the connected infrastructure such as compressors,
pumps, metering units, storage and the like
connected to the common carriers or contract
carriers; B
(e) benchmarking 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 c
common carrier, contract carrier and city or local
distribution natural gas network."
On a plain reading of the aforesaid, it is manifest that the
Board has the power to provide by Regulations the D
transportation tariff for common carrier or contract carrier or
city or local natural gas distribution network and the manner of
distribution of such tariffs.
19. The question that arises for consideration is whether E
reading of the aforesaid provisions namely, Sections 20 to 22
of the Act, it can be construed that they confer any power on
the Board to fix the transportation tariff of a consumer of natural
gas. We have also referred to sub-Section (4) ofSection20
which confers the power on the Board to c:lecide the period of F
exclusivity and the network of a common/contract carrier.
Section 21, as indicated earlier, deals with the right of first
use. The transportation tariff, which finds place in Section 22( 1),
commences with the words "subject to the provisions of this
Act". The said provision confers power on the Board to lay G
down, by regulation, the transportation tariff for common
carriers or contract carriers or city or local natural gas
distribution network and the manner of determination of such
tariffs.
H
248 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 20. At this stage, it is necessary to appositely understand
the said expression. In The Commissioner of Wealth Tax,
Andhra Pradesh, Hyderabad v. Trustees of H.E.H.
Nizam's Family (Remainder Wealth Trust), Hyderabacf
this Court was dealing with the expression "subject to" in the
B context of the Wealth Tax Act, 1957. Section 3ofthe said Act
imposed the charge of wealth tax subject to other provisions
of the Act. In that context, the Court opined that Section 3 has
to be made expressly subject to Section 21 and it must yield
to that Section insofar as the latter makes a special provision
C for assessment of a trustee of a trust. In Ashok Leyland Ltd.
v. State of T.N. and Another, it has been held that "subject
to" is an expression whereby limitation is expressed. In
K.R.C.S. Balakrishna Chetty and Sons & Co. v. The State
D of Madras 3 , this Court was interpreting Section 5 of Hle
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
E the expression is "conditional one".
21. In South India Corporation (P) Ltd. v.
Secretary, Board of Revenue, Trivandrum and another',
the Constitution Bench has ruled that the expression "subject
F 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 others5, this Court while dealing with the expression "any
rule so made shall have effect, subject to provisions of any Act
G occurring in the proviso to Article 309" ruled that:-
1
(1977) 3 sec 362
2 (2004) 3 sec 1
3 AIR 1961SC1152
4
AIR 1964 SC 207
H 5 AIR 1969 SC 118
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 249
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
"24. It is also significant to note that the proviso to Article A
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 any limitations. The rules, which have to B
be 'subject to the provisions of the Constitution, shall have
effect, 'subject to the provisions of any such Act'. That is,
if the appropriate legislature has passed an Act, under
Article 309, the rules, framed under the proviso, will have
effect,-subject to that Act; but, in the absence of any Act, c
of the appropriate legislature, on the matter, 'in our
opinion, the rules, made by the President, or by such
person as he may direct, are to have full effect, both
prospectively, and, retrospectively. Apart from the
D
limitations, pointed out above, there is none other,
imposed by the proviso to Article 309, regarding the ambit
of the operation of such-rules."
22. Regard being had to the aforesaid interpretation, we
have to scan the anatomy of Section 11 of the Act, for it has E
immense signification. The said provision deals with the
functions and powers of the Board. The said provision is
extracted below:-
"11 Functions and powers of the Board F
The Board shall-
(a) protect the interest of consumers by fostering fair
trade and competition amongst the entities; G
(b) register entities to-
(i) market notified petroleum and petroleum products and,
subject to the contractual obligations of the Central
H
250 SUPREME COURT REPORTS [2015] 7S.C.R.
A Government, natural gas;
(ii) establish and operate liquefied natural gas terminals,
(iii) establish storage facilities for petroleum, petroleum
products or natural has exceeding such capacity as may
B
be specified by regulations;
(c)authorise entities to-
(i) lay, build, operate or expand a common carrier or
C contract carrier;
(ii) lay, build, operate or expand city or local natural gas
distribution network;
(d) declare pipelines as common carrier or contract
D
carrier;
(e) regulate, by regulations,-
(i) access to common carrier or contract carrier so as to
E ensure fair trade and competition amongst entities and
for that purpose specify pipeline access code;
(ii)transportation rates for common carrier or contract
carrier;
F
(iii) access to city or local natural gas distribution network
so as to ensure fair trade and competition amongst
entities as per pipeline access code;
(f) in respect of notified petroleum, petroleum products
G and natural gas-
(i) ensure adequate availability;
(ii) ensure display of information about themaximum retail
H prices fixed by the entity for consumers at retail outlets;
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 251
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
(iii) monitor prices and take corrective measures to A
prevent restrictive trade practice by the entities;
(iv) secure equitable distribution for petroleum and
petroleum products;
B
(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;. c
(g) levy fees and other charges as determined by
regulations;
(h)maintain a data bank of information on activities D
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, E
including the construction and operation of pipeline and
infrastructure projects related to downstream petroleum
and natural gas sector; ·~
0) perform such other functions as may be entrusted to it
F
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 respect of certain aspects. Section 11 (e) G
(ii) confers power on the Board to determine transport rates
for common carrier or contract carrier. Sub-section (f) of
Section 11 allows the Board to regulate in respect of notified
petroleum, petroleum products and natural gas and sub-section H
252 SUPREME COURT REPORTS [2015] 7 S.C.R.
A {e) (iii) of Section 11 empowers the Board to regulate, by
regulations, access to city or local natural gas distribution
network so as to ensure fair trade and competition amongst
entities as per pipeline access code. It is relevant to note here
that the High Court, while appreciating the language employed
B in the said provision has held that:-
"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
c prescribing protection of interest of consumers limits the
same to, by fostering fair trade and competition amo~gst
entities engaged in distributing, dealing, transporting,
.. ·
~ /
marketing gas. The function of the Board thereunder is
of regulating the inter se relationship of entities under
D 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
E entities. Thus only if the Board finds that the marketers
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
F
even though till date the exclusive marketer 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
G 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
H expressly. Instead, functions of enforcing retail service
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 253
INDRAPRASTHA GAS LIMITED [Of PAK MISRA, J .]
obligations and marketing service obligations only have A
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."
B
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 C
(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 D
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 it~elf as a E
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 exclusivity period may have the potentiality to F
enter into business of the "common carrier'' or "contract carrier"
and at that juncture to maintain the competitive prospects,
regard being had to the consumer interest, the Board may
determine the price of the same, but a significant one, that
does not clothe the Board with the power to command the entity G
to put/reflect it as a part of the bill to the consumer. It is urged
that the Board does not have the power to fix the tariff charges
in that regard.
24. Mr. Datar, learned senior counsel would submit that H
254 SUPREME COURT REPORTS (2015] 7 S.C.R.
A when the Board is established under a statute and has the
power to regulate solely because there is no mention of entity
that owns its own pipeline, it is inapposite to say that the Board
cannot determine the price and indicate the cost incurred in
this regard in the bill given to the consumer. It is his further
B submission that the consumer has a right to know. Learned
senior counsel would go to the extent of saying that it is a casus
omissus and, therefore, the court must adopt the principle of
purposive interpretation and it can do so filling up the gap to
have the necessitous fruitful interpretation. Mr. Salve and Mr.
C Tripathi, per contra, would submit that the legislature has
deliberately not done it and, in any case, the Court should not
read such a concept into it. Ms. Pinky Anand, learned ASG
relying on the affidavit filed by the Union of India, would submit
D thatthe legislature has not given the said power to the Board.
It is seemly to state that even if a stand is taken by the Union of
India, in respect of an interpretation of a statutory provision,
that does not mean that the same is the correct interpretation
because it is well settled in law that no one tan speak on behalf
E of the legislature. It is the court which is the final interpreter.
Keeping that in view, we have to scrutinize whether in such a
situation this Court can implant words in the provision, as
canvassed by Mr. Datar.
F 25. In this regard we may, with profit, refer to certain
authorities in the field. In CSTv. Parson Tools and P/ants6,
the Court has held that if the legislature wilfully omits to
incorporate something of an analogous law in a subsequent
statute, or even if there is a casus omissus in a statute, the
G language of which is otherwise plain and unambiguous, the
court is not competent to supply the omission by engrafting 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
H 6
(1975) 4 sec 22
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 255
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
upon the preserves of legislature'. In Board ofMuslim Wakfs A
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 B
Parliament must always try to give effect to the intention
of th~ legislature. In Crawford v. Spooner the Judicial
Committee said: ·
"We cannot aid the legislature's defective phrasing of an c
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 D
·.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." E
26. In this context, we may usefully refer to the authority
in CIT v. National Taj Traders 8 wherein it has been clearly
laid down that two principles of construction i.e. one relating to
casus omissus and the other in regard to reading of the statute . F
as a whole have been well settled. The Court has reproduced
few passages from Maxwell on Interpretation of Statutes at
pages 33 and 47, as has been stated in Canada Sugar
Refining Co. Ltd. v. R. 1 by Lord Davey9 and proceeded to
state thus:-' G
"In other words, under the first principle a casus omissus
cannot be supplied by the Court except in the case of
7 (1846) 6 Moore PC 1 : 13 ER 562
8 (1980) 1 sec 370 H
9
1898 AC 735
256 SUPREME COURT REPORTS [2015] 7 S.C.R.
A clear necessity and when reason for it is found in the four
corners of the statute itself but at the same time a casus
omissus should not be readily inferred and for that
purpose all the parts of a statute or section must be
construed together and every clause of a section should
8 be construed with reference to the context and other
clauses thereof so that the construction to be put on a
particular provision makes a consistent enactment of the
whole statute. This would be more so if literal construction
of a particular clause leads to manifestly absurd or
c anomalous results which could not have been intended
by the Legislature. "An intention to produce an
unreasonable result", said Danckwerts, L.J., in Artemiou
v. Procopiou (19661 QB 878), "is not to be imputed to a
'
statute if there is some other construction available".
D
Where to apply words literally would "defeat the obvious
intention of the legislation and produce a wholly
unreasonable result" we must "do some violence to the
words" and so achieve that obvious intention and produce
E a rational construction. [Per Lord Reid in Luke v. /RC
(1966 AC 557) where at p. 577 he also observed: "this
is not a new problem, though our standard of drafting is
such that it rarely emerges".] In the light of these principles
we will have to construe sub-section (2)(b) with reference
F to the context and other clauses of Section 33-8."
27. In S.P. Gupta v. Union of /ndia 10 , after referring to
various authorities, it has been held:-
"Thus, on a full and complete consideration of the
G decisions classified under the various categories, the
propositions that emerge from the decided cases of this
Court and other foreign courts are as follows:
"Where the language of a statute is clear and
H 1o (1981) Supp. sec 87
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 257
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J .]
unambiguous, there is no room for the application either A
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 B
supposed intention of the legislature .... ""
28. In Bharat Aluminium Co. v. Kaiser Aluminium
Technical Services Inc. 11 it has been opined thus:
c
"...... 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 o
this Court in Nalinakhya Bysack12 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 E
Halsbury in Commissioners for Special Purposes of
Income Tax v. Pemse/1 3 , 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 that the legislature intended F
what it has said. Even if there is some defect in the
phraseology used by the legislature the Court cannot,
as pointed out in Crawford v. Spooner14 , aid the
legislature's defective phrasing of an Act or add and
amend or, by construction, make up deficiencies which G
are left in the Act. Even where there is a casus omissus, ·
11
(2012) 9 sec 552
12 AIR 1953 SC 148
13
1891 AC 531, at p. 549 (HL)
14
(1846-49) 6 Moo PC 1: 13 ER 582: 4 MIA 179: 18 ER 667 H
258 SUPREME COURT REPORTS [2015] 7 S.C.R.
A it is, as said by Lord Russell of Killowen in Hansraj
Gupta v. Official Liquidators of Dehra Dun-Mussoorie
Electric Tramway Co. Ltd. 15 , for others than the courts
to remedy the defect.'"'
B After so stating the Court has referred to the observations
made by Lord Diplock in Duport Steels Ltd. 16 wherein it has
been ruled thus:
"... the role of the judiciary is confined to ascertaining
c from the words that Parliament has approved as
expressing its intention what that intention was, and to
giving effect to it. Where the meaning of the statutory
words is plain and unambiguous it is not for the Judges
to invent fancied ambiguities as an excuse for failing to
o give effect to its plain meaning because they
themselves consider that the consequences of doing
so would be inexpedient, or even unjust or immoral. In
controversial matters such as are involved in industrial
relations there is room for differences of opinion as to
E what is expedient, what is just and what is morally
justifiable. Under our Constitution it is Parliament's
opinion on these matters that is paramount."
(emphasis supplied)
F
29. Recently, in Sarah Mathew v. Institute of Cardio
Vascular Diseases 17, while interpreting Section 468 CrPC,
the Court has opined:-
"lt is argued that a legislative casus omissus cannot be
G supplied by judicial interpretation. It is submitted that to
read Section 468 CrPC to mean that the period of
limitation as period within which a complainVcharge-sheet
15 (1932-33) 60 IA 13 : AIR 1933 PC 63
H 16
(1980) 1 WLR 142: (1980) 1 All ER 529 (HL)
11
(2014) 2 sec s2
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 259
INDRAPRASTHAGAS LIMITED [DIPAK MISRA, J.]
is to be filed, would amount to adding words to Sections A
467 and 468. It is further submitted that if the legislature
has left a lacuna, it is not open to the court to fill it on
some presumed intention of the legislature. Reliance is
placed on Shiv Shakti Coop. Housing Society 18 , Bharat
Aluminium 19 and several other judgments of this Court B
where doctrine of casus omissus is discussed. In our
opinion, there is 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 c
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
D
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 E
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." F
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, harmonious construction of the various provisions G
of the CrPC and for ensuring that the interpretation does not
lead to any absurdity. That apart, the Court has also
categorically observed that it is not a case where it can be
18
(2003) s sec 659 H
19 (2012) 9 sec 552
260 SUPREME COURT REPORTS [2015] 7 S.C.R.
A said that legislature has kept a lacuna which the Court is trying
to fill up by judicial interpretative process so as to encroach
upon the domain of the legislature. In the case at hand, in the
schematic context of the Act and upon reading the legislative
intention and applying the principle of harmonious construction,
B we do not perceive inclusion of the entities which are not
"common carriers" or "contract carriers" would be permissible.
They have deliberately not been included under Section 11 of
the Act by the legislature and the said non~inclusion does not
lead to any absurdity and, therefore, there is no necessity to
C think of any adventure.
31. We must take note of certain situations where the
Court in order to reconcile the relevant provision has supplied
words and the exercise has been done to advance the remedy
D intended by the statute. In Surjit Singh Kalra v. Union of
lndia20 , a three-Judge Bench perceiving the anomaly, held:-
"True it is not permissible to read words in a statute which
are not there, but "where the alternative lies between
E either supplying by implication words which appear to
have been accidentally omitted, or adopting a
construction which deprives certain existing words of all
meaning, it is permissible to supply the words" (Craies
Statute Law, 7th edn., p. 109). Similar are the
F observations in Hameedia Hardware Stores v. B. Mohan
Lal Sowcar2 1 where it was observed that the court
construing a provision should not easily read into it words
which have not been expressly enacted but having regard
to the context in which a provision appears and the object
G of the statute in which the said provision is enacted the
court should construe it in a harmonious way to make it
meaningful. An attempt must always be made so to
reconcile the relevant provisions as to advance the
H 20
(1991) 2 sec 87
21 (1988) 2 sec 513, 524-25
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 261
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
remedy intended by the statute. (See: Sirajul Haq Khan A
v. Sunni Central Board of Waqf2 2.)"
32. We have referred to the aforesaid authority as Mr.
Datar has respectfully urged that omission in Section 11 is
accidental. The test that has been laid down in Surjit Singh B
Katra (supra) and other 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 C
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 D
to Section 61, which deals with the power of the Board to make
Regulations. Sub-section (1) of Section 61 stipulates thatthe
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 E
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:- F
"(t) the transportations tariffs for common carriers or
contract carriers or city or local natural gas distribution
network and the manner of determining such tariffs under
sub-section (1) of section 22." G
34. On a scrutiny of the said provision, we notice that it
deals with transportat,ion tariff for "common carrier" and
"contract carrier" or "city or local natural gas distribution
22
1959 SCF\ 1287 : AIR 1959 SC 198 H
262 SUPREME COURT REPORTS [2015] 7 S.C.R.
A network" and the determination has to be done as per sub-
section (1) of Section 22. Be it noted, in pursuance of the said
provision, regulations, namely, Petroleum and Natural Gas
Regulatory Board (Determination of Network Tariff for City or
Local Natural Gas Distribution Networks and Compression
B Charge for CNG) Regulations, 2008 which we have already
referred to as "the Regulations" have been framed. Emphasis
has been laid on Regulation 2(e) and 2(g), which read as
follows:-
C "(e) "compression charge for CNG" means a charge
(excluding statutory taxes and levies) in Rs./Kg for online
compression of natural gas into compressed natural gas
(hereinafter referred to as CNG) for subsequent
dispensing to consumers in a CNG station.
D
(g) "Network tariff' means the weighted average unit rate
of tariff (excluding statutory taxes and levies) in rupees
per million British Thermal Units (Rs./MMBTU for all the
categories of consumers of natural gas in a CGD
E Network."
35. Regulation 4 reads as follows:-
"4. Determination of network tariff and compression
charge for CNG.
F
The network tariff and compression charge for CNG in
respect of an entity covered clause (a) or clause (b) of
sub-regulation (1) of regulation 3 shall be determined as
per the pro9edure at Schedule A."
G
In addition to the aforesaid there are various Regulations
dealing with the procedure of determination. Mr. Datar, learned
senior counsel, would submit that Section 61 of the Act has to
be read in consonance with the objects and reasons of the Act
H and when the Board has the power to frame regulations to
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 263
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
carry out the purposes of the Act, it has framed the Regulations A
in accordance with the legislation and the High Court has totally
flawed in declaring it as ultra vires.
36. We have already dealt with the purport of Section
11, adverted to the facet how the words "subject to" have to be B
interpreted, functions of the Board, and provisions relating to
exclusivity, definitions of "common carrier" and the "contract
carrier". Section 61 is a provision that enables the Board to
frame Regulations. If on reading of the statute in entirety, such
a power does not flow, a delegated authority cannot frame a C
regulation as that would not be in accord with the statutory
provisions nor would it be for the purpose of carrying on the
provisions oftheAct.ln St. Johns Teachers Training
Institute v. National Council for Teacher Education 23 it has
been observed that:- D
"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 E
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 F
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. 24 it has G
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 given, it may be permissible to
23
(2003) 3 sec 321
24
(2000) 3 sec 40 H
264 SUPREME COURT REPORTS [2015] 7 S.C.R.
A find out the object of the enactment and then see if the rules
framed satisfy the test of having been so framed as to fall within
the scope of such general power confirmed. If rule-making
power is not expressed in such a usual general form then it
shall have to be seen if the rules made are protected by the
B limits prescribed by the parent Act. In State of Karnataka v.
H. Ganesh Kamath 25 it has been stated that it is a well-settled
principle of interpretation of statutes that the 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
C enabling Act or which is inconsistent therewith or repugnant
thereto."
38. In Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi26
D
".... statutory bodies cannot use the power to make rules
and regulations to enlarge the powers beyond the scope
intended by the legislature. Rules and regulations made
by reason of the specific power conferred by the stature
E to make rules and regulations establish the pattern of
conduct to be followed".
39. In General Officer Commanding-in-Chief v.
Subhash Yadav27 , it has been held as follows:-
F
"..... before a rule can have the effect of a statutory
provision, two conditions must be fulfilled, namely, (1) it
must conform to the provisions of the statute under which
it is framed; and (2) it must also come within the scope
G and purview of the rule-making power of the authority
framing the rule. If either of these two conditions is not
fulfilled, the rule so framed would be void."
25
sec 402
(1983) 2
(1975) 1 sec 421
26
H 27 (1988) 2 sec 351
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 265
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
40. Similar view has been expressed in State ofT.N. v. A
P. Krishnamurthy28 and in Union of India v. Srinivasan 29
wherein it has been held that:-
"... If a rule goes beyond the rule-making power conferred
by the statue, the same has to be declared ultra vires. If B
a rule supplants any provision for which power has not
been conferred, it becomes ultra vires. The basic test is
to determine and consider the source of power which is
relatable to the rule. Similarly, a rule must be in accord
with the parent statute as it cannot travel beyond it." C
41. In Dr. lndramani Pyarelal Gupta v. W.R. Natu30 ,
the Court has 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 o
specific provision of the enactment bringing such statutory body
into existence. In Tata Power Company Limited v. Reliance
Energy Limited31 , 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 E
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 lndia32 .
The two-Judge Bench was dealing with the issue of F
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 G
standard pattern. The relevant section would first contain
a provision granting the power to make rules to the
28
(2006) 4 sec s11
29
c2012) 1 sec 683
30
AIR 1963 SC 274
31
(2009) 16 SCC659 H
32
c2011) s sec 214
266 SUPREME COURT REPORTS , [2015] 7 S.C.R.
A delegate in general terms, by using the words "to carry
out the provisions of this Act" or 'lo 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 using the words "in particular and
B without prejudice to the generality of the foregoing power,
such rules may provide for all or any of the following
matters". Interpreting such provisions, this Court in a ,
number of decisions has held that where power is
conferred to make subordinate legislation in general
c terms, the subsequent particularisation of the matters/
topics has to be construed as merely illustrative and not
limiting the scope of the general power. Consequently,
even ifthe specific enumerated topics in Section 23(1-
A) may not empower the Central Government to make
D
the impugned rule (Rule 44-1), making of the rule can be
justified with reference to the general power conferred
on the Central Government under Section 23( 1), provided
the rule does not travel beyond the scope of the Act.
E "But even a general power to make rules or regulations
for carrying out or giving effect to the Act, is strictly ancillary
in nature and cannot enable the authority on whom the
power is conferred to extend the scope of general
operation of the Act. Therefore, such a power 'will not
F
support attempts to widen the purposes of the Act, to
add new and different means to carrying them out, to
depart from or vary its terms'."
Rule 44-1 is not a rule made or required to be made to
G carry out the provisions of the Act, having regard to its
object and scheme. It has nothing to do with curbing of
food adulteration or to suppress any social or economic
mischief."
H On the basis of the aforesaid analysis, the Court opined
PETROLEUM & NATURAL GAS REGULATORY BOARD v. 267
INDRAPRASTHA GAS LIMITED [DIPAK MISRA, J.]
that:- A
"We have already noticed that as at present there is no
material to show that universal salt iodisation will be
injurious to public health (that is to the majority of populace
who do not suffer from iodine deficiency). But we are B
constrained to hold that Rule 44-1 is ultra vires the Act
and therefore, not valid."
43. In the case at hand, the Board has not been conferred
such a power as per Section 11 of the Act. That is the c
legislative intent. Section 61 enables the Board to frame
Regulations to carry out the purposes of the Act and certain
specific aspects have been mentioned therein. Section 61
has to be read in the context of the statutory scheme. The
regulatory provisions, needless to say, are to be read and D
applied keeping in view the nature and textual context of the
enactment as that is the source of power. On a scanning of
the entire Act and applying various principles, we find that the
Act does not confer any such power on the Board and the
expression "subject to" used in Section 22 makes it a E
conditional one. It has to yield to other provisions of the Act.
The power to fix the tariff has not been given to the Board. In
view of that the Board cannot frame a Regulation which will
cover the area pertaining to determination of network tariff for
city or local gas distribution network and compression charge · F
for CNG. As the entire Regulation centres around ~he said
subject, the said Regulation deserves to be declared ultra vires,
and we do so.
44. Ex consequenti, we find no substance in this appeal G
and accordingly the same stands dismissed without any order
as to costs.
Nidhi Jain Appeal dismissed.
H
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