Petroleum and Natural Gas Regulatory Board cannot determine the MRP, and compression charges for CNG with regard to city or local gas distribution network

Supreme Court: While deciding the issue that whether the Petroleum and Natural Gas Regulatory Board (hereinafter the Board) is empowered to regulate/fix the maximum retail price (MRP) of the gas sold by entities like Indraprasth Gas Ltd., and fix network tariff and compression charge for entities having their own distribution network, the Division Bench of Dipak Misra and U.U. Lalit, JJ., held that the Board, as per the legislative scheme, has not been conferred with the power to frame regulations to fix network tariff and compression charges for CNG with regard to a city or local gas distribution network thereby declaring the Natural Gas Regulatory Board (Determination of Network Tariff for City or Local Natural Gas Distribution Networks and Compression Charge for CNG) Regulations, 2008 as ultra vires the Petroleum and Natural Gas Regulatory Board Act, 2008   

The present appeal pertained to the interpretation of the provisions of 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 and the Petroleum and Natural Gas Regulatory Board Act, 2008. The Delhi High Court had earlier held that as per the construction of the 2008 Regulations, the Board does not have the power with respect to fixing of MRP and compression charges. Counsel for the appellant Arvind Datar contended that, the Delhi HC had committed a gross illegality in its finding. Whereas counsel for the respondent Harish Salve argued that, a careful reading of Sections 20 to 22 of the 2008 Act reveals that the Board does not have the authority to regulate the MRP. Appearing for the Union of India, Pinky Anand put forth before the Court that the Legislature never intended to confer the Board with the power to determine the MRP.

The Court upon perusing the contentions and after detailed analysis of the concerned provisions observed that, the Board has the power to determine transportation tariff for common/contract carrier. The Court stated that upon construing Sections 11 and 22 of the 2008 Act, it comes out that the Board has not been given the power to fix the compression charges and MRP, therefore 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. Petroleum and Natural Gas Regulatory Board v. Indraprastha Gas Limited, 2015 SCC OnLine SC 578, decided on 01.07.2015

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