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Petroleum and Natural Gas Regulatory Board v. Indraprastha Gas Limited & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 4910 of 2015)Decided 1 Jul 2015
Civil Appeal No. 4910 of 2015
Justice Dipak Misra · Justice Uday Umesh Lalit

Background

The Petroleum and Natural Gas Regulatory Board (PNGRB) issued an order fixing the network tariff and CNG compression charges payable by Indraprastha Gas Limited for Delhi's city gas distribution network, and directed it to disclose and recover these charges separately from consumers. Indraprastha Gas challenged this before the Delhi High Court, arguing the Board had no statutory power to fix such tariffs or dictate how they must be billed. The Delhi High Court agreed and quashed the Board's order, holding the governing Act did not authorise the Board to fix tariffs in this manner; the Board then appealed to the Supreme Court, relying on various provisions of the Act and its own Regulations as the source of that power.

Decision Breakdown

The Supreme Court undertook a detailed analysis of the Petroleum and Natural Gas Regulatory Board Act, 2008, including Sections 11, 22 and 61, and held that while the Board has general regulation-making power to carry out the purposes of the Act, a general rule-making power is "strictly ancillary" and cannot be used to expand the Board's substantive authority beyond what the legislature specifically conferred. The Court found that the Act, read as a whole, does not actually confer on the Board the power to fix network tariff or CNG compression charges: that power was never expressly given by the statute, and the word "subject to" in Section 22 made any such regulatory power conditional on, and subordinate to, the rest of the Act. Because the 2008 Regulations the Board relied on to fix the tariff centred entirely on an area the Board had no statutory power over, the Court declared those Regulations ultra vires (beyond the Board's legal authority) to that extent. The appeal was accordingly dismissed, with no order as to costs, affirming the High Court's quashing of the Board's tariff-fixing order.

Lesson Learnt

A regulatory body's power to make rules or regulations "to carry out the purposes" of its governing law is only ancillary: it cannot be stretched to let the regulator exercise substantive powers, such as fixing prices or charges, that the parent statute never actually granted it; any regulation that goes beyond the law creating the regulator can be struck down as invalid.

Official source (sci.gov.in)View Judgment (PDF)

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