SC allows distribution firms to charge high prices for gas

“The power to fix the tariff has not been given to the Board (PNGRB). In view of that, the Board cannot frame a Regulation which will cover the area pertaining to <g data-gr-id="38">determination</g> of network tariff for a city or local gas distribution network and compression charge for CNG.

“As the entire Regulation centres around the said subject, the said Regulation deserves to be declared ultra vires, and we do so,” a bench comprising Justices Dipak Misra and <g data-gr-id="51">U U</g> Lalit said. The judgement was delivered by dismissing the appeal filed by the PNGRB against the Delhi High Court decision by which the regulator’s order of fixing the prices of CNG and PNG in Delhi and adjoining areas was quashed.

The apex court upheld the High Court’s June 1, 2012 ruling that the Board was not empowered to fix or regulate the maximum retail price at which gas is to be sold by entities such as Indraprastha Gas Ltd, to the consumers. Further, the Board is also not empowered to fix any component of network tariff or compression charge for an entity having its own distribution network, it said. “In the case at hand, 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 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 <g data-gr-id="46">the nature</g> and textual context of the enactment as that <g data-gr-id="45">is</g> 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 conditional one. It has to yield to other provisions of the Act,” the bench said. 

IGL had challenged in the High Court the April 9, <g data-gr-id="49">2012</g> PNGRB order slashing the network tariff and compression charges for CNG it distributed in Delhi and adjoining areas. IGL had also pleaded against the board’s decision to regulate its network tariff and selling price. The board, in its order, had asked IGL to cut down its network tariff by 63 <g data-gr-id="34">per cent</g> with retrospective effect.

It had also asked the company to refund the difference to its customers for the period from April 1, <g data-gr-id="43">2008</g> till the date of issuance of <g data-gr-id="42">order</g> for CNG and piped gas. The regulator had ordered the company to reduce its network tariff by 63 <g data-gr-id="32">per cent</g> to Rs 38.58 per Million British Thermal Units (mmBtu) as against Rs 104.05 per mmBtu sought by the company. It had also cut compression charge for CNG by 59 percent to Rs 2.75 per kg from Rs 6.66 per kg proposed by the company.