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

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Case Law: Petroleum and Natural Gas Regulatory Board v. Indraprastha Gas Limited, 2015 SCC OnLine SC 578

In a big relief to natural gas distribution companies, the Supreme Court on 1st July, 2015 held that Petroleum and Natural Gas Regulatory Board (PNGRB) has no power to fix or regulate the maximum retail price at which CNG and PNG are to be sold by the firms to its consumers. A bench of Justices Dipak Misra and U U Lalit held that the Board is not empowered to fix the tariff of natural gas and set aside PNGRB order of 2012 directing Indraprastha Gas Limited (IGL), the sole supplier of compressed natural gas in Delhi & NCR, to cut down its network tariff by 63 percent and compression charges by 53 percent. Three year old legal battle between the Board and the distribution companies came to end with the court passed order in favour of IPL which had challenged jurisdiction of PNGRB over fixing tariff rate for natural gas. 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 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.

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