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TMI Blog2015 (7) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to be read in the context of the statutory scheme. The regulatory provisions, needless to say, 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 and applying various principles, it is concluded that the Act does not confer any such power on the Board and the expression “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 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 for CNG - appeal dismissed - decided against appellant. - CIVIL APPEAL NO.4910 OF 2015 [Arising out of SLP (Civil) No. 22273 of 2012] - - - Dated:- 1-7-2015 - DIPAK MISRA UDAY UMESH LALIT JJ. J U D G M E N T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The principal contention was that the Board does not have the power to direct the writ petitioner, the respondent no. 1 herein, while charging its consumers, to disclose the network tariff and the compression charges and also to fix the said network tariff 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; 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 the contractual obligation with the Board 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 2(i), (m) and (w) of the Act are all intended to ensure that the consumer is not exploited; that Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iring the petitioner to disclose the network tariff and compression 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:- (a) There is a presumption of validity of subordinate 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 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 postulate that the Power to frame the transportation rate/transportation tariff can only be exercised only when the city network becomes a common carrier or contract carrier. (b) While the city networks get market exclusivity for 3/5 years, they get infrastructure exclusivity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the rate will become applicable after expiry of the 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 regulations for all three categories. (e) The omission of city network in Section 11(e) (ii) is 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 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 Network Tariff or Compression charge for an entity such as the respondent that has its own 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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/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 recovered by respondent as also third party supplier from the respective consumers. (B). The definition of Common Carrier in Section 2(j) and Contract Carrier in Section 2(m) postulate certain conditions and the definition of city or local natural gas 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 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort tariff by the legislature and, therefore, it cannot do 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 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 (t) relate back to Section 22(1) which itself is subject to the other provisions of the Act and, hence, even if Section 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, 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 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 end of the exclusivity period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 of natural gas throughout the country and, therefore, the Board can determine the transportation rate/tariff. If the 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. 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, learned ASG. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 gas distribution network to be used by any third party 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 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 gas transmission and distribution in all cases where gas is transported on common carrier or contract carrier principle. The transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Regulations to that extent are ultra vires. 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 senior counsel that the said provision which provides for Board s function and empowers the Board 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 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. 10. Dr. Jatin Thukral, who has been allowed to intervene, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 remaining period of economic life of the CGD project. 3.20 After the abovementioned adjustments, the reconciliation of which is provided in Annexure-2, the network tariff and compression charge for CNG in respect of the Delhi CGD network of IGL is given in the table below: Sl No. Particulars Network Tariff (Rs/MMBTU) Compression Charge for CNG (Rs./Kg) 1 Submitted by IGL 104.05 6.66 2 As determined by the Board after moderations 38.58 2.75 4. Decision 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 calculations, the applicable network tariff and compression charge for CNG determined by the Board shall be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entities engaged in specified activities relating to petroleum, petroleum products and natural gas and to 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. 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 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 liquefied natural gas terminals. 14. Section 2(i) of the Act on which emphasis has been laid defines city or local natural gas distribution network , relevant part of it reads as under:- 2(i) city or local natural gas distribution network means an interconnected network of gas pipelines and the associated equipment used for tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not refer to a pipeline or transport of natural gas. It is specifically a pipeline network for transport of natural gas to its own consumers. This being the position, as per the dictionary clause, it is pertinent to refer to Section 20 that provides for declaring, laying, building, etc. of common carrier or contract carrier and city or local natural gas distribution 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:- (1) If the Board is of the opinion that it is necessary or expedient, to declare an existing pipeline for transportation of petroleum, petroleum products and natural gas or an existing city or local natural gas distribution network, as a common carrier or contract carrier or to regulate or allow access to such pipeline or network, it may give wide publicity of its intention to do 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 provide the entity owning, the pipeline or network an opportunity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 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 number of years. The objectives by which the Board is to be guided are promoting competition among entities, avoiding 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 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 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 may, after issuing a declaration under section 20, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficiency in performance; (d) the connected infrastructure such as compressors, pumps, metering units, storage and the like connected to the common carriers or contract carriers; (e) 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 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 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 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) of Section 20 which confers the power on the Board to decide the period of exclusivity and the network of a common/contract carrier. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;. 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 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, 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 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 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 The Board shall- (a) protect the interest of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) (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 (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 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 prescribing protection of interest of consumers limits the same to, by fostering fair trade and competition amongst entities engaged in distributing, dealing, transporting, marketing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself as a part of its pipeline as a common carrier or contract carrier and not the consumers. It is submitted by the learned senior counsel appearing for the respondent that a person owning his own carrier, after the exclusivity period may have the potentiality to 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 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 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 submission that the consumer has a right to know. Learned senior counsel would go to the extent of sayin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be slow to adopt a construction which tends to make any part of the statute meaningless or ineffective. Thus, an attempt must always be made to reconcile the relevant provisions so as to advance the remedy intended by the statute. 26. In this context, we may usefully refer to the authority in CIT v. National Taj Traders (1980) 1 SCC 370 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 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., by Lord Davey 1898 AC 735 and proceeded to state thus:- In other words, under the first principle a casus omissus cannot be supplied by the Court except in the case of 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 be construed with reference to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. It must always be borne in mind, as said by Lord Halsbury in Commissioners for Special Purposes of Income Tax v. Pemsel 1891 AC 531, at p. 549 (HL), that it is not competent to any court to proceed upon the assumption that the legislature has made a mistake. The court must proceed on the footing that the legislature intended 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. Spooner (1846-49) 6 Moo PC 1 : 13 ER 582 : 4 MIA 179 : 18 ER 667, aid the legislature s defective phrasing of an Act or add and amend or, by construction, make up deficiencies which are left in the Act. Even where there is a casus omissus, it is, as said by Lord Russell of Killowen in Hansraj Gupta v. Official Liquidators of Dehra Dun-Mussoorie Electric Tramway Co. Ltd. (1932-33) 60 IA 13 : AIR 1933 PC 63 , for others than the courts to remedy the defect. After so stating the Court has referred to the observations made by Lord Diplock in Duport Steels Ltd. (1980) 1 WLR 142 : (1980) 1 All ER 529 (HL) wherein it has been ruled thus: the role of the judiciary is confined to ascertaining from the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncroach upon the domain of the legislature. The authorities cited on doctrine of casus omissus are, therefore, not relevant for the present case. 30. We have referred to the aforesaid passage as the Constitution Bench has given emphasis on primary purpose of construction of statute to ascertain the intention of the legislature, harmonious construction of the various provisions 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 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, 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 think of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality of the foregoing power, such Regulations may provide for all or any of the following matters and the matters have been enumerated thereafter. Mr. Datar has emphasised on Section 61(2)(t), which reads as follows:- (t) the transportations tariffs for common carriers or contract carriers or city or local natural gas distribution network and the manner of determining such tariffs under sub-section (1) of section 22. 34. On a scrutiny of the said provision, we notice that it deals with 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. 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 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:- (e) compression charge for CNG means a charge (excluding statutory taxes and levies) in Rs./Kg for on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but to supplement it. What is permitted is the delegation of ancillary or subordinate legislative functions, or, what is fictionally called, a power to fill up details. 37. In Kunj Behari Lal Butail v. State of H.P . ( 2000) 3 SCC 40 it has been ruled that it is very common for the legislature to provide far a general rule-making power to carry out the purpose of the Act. When such a power is given, it may be permissible to 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 limits prescribed by the parent Act. In State of Karnataka v. H. Ganesh Kamath (1983) 2 SCC 402 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 enabling Act or which is inconsistent therewith or repugnant thereto. 38. In Sukhdev Singh v. Bhagatram Sardar Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us angles, the Court held that:- Statutes delegating the power to make rules follow a standard pattern. The relevant section would first contain a provision granting the power to make rules to the delegate in general terms, by using the words to carry out the provisions of this Act or to carry out the purposes of this Act . This is usually followed by another sub-section enumerating the matters/areas in regard to which specific power is delegated by using the words in particular and 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 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 if the specific enumerated topics in Section 23(1-A) may not empower the Central Government to make the impugned rule (Rule 44-I), making of the rule can be justified with reference to the general power conferred on the Central Government under Section 23(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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