{"id":87726,"date":"2011-02-07T00:00:00","date_gmt":"2011-02-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/multi-commodity-exchange-of-india-vs-central-electricity-regulatory-on-7-february-2011"},"modified":"2016-07-03T10:40:16","modified_gmt":"2016-07-03T05:10:16","slug":"multi-commodity-exchange-of-india-vs-central-electricity-regulatory-on-7-february-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/multi-commodity-exchange-of-india-vs-central-electricity-regulatory-on-7-february-2011","title":{"rendered":"Multi Commodity Exchange Of India … vs Central Electricity Regulatory … on 7 February, 2011"},"content":{"rendered":"
Bombay High Court<\/div>\n
Multi Commodity Exchange Of India … vs Central Electricity Regulatory … on 7 February, 2011<\/div>\n
Bench: P. B. Majmudar, Anoop V.Mohta<\/div>\n
    KPP                          -1-         W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010\n\n\n\n\n                                                                                                      \n                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY\n\n                        ORDINARY ORIGINAL CIVIL JURISDICTION \n\n\n\n\n                                                                        \n                            WRIT PETITION  NO. 1197 OF 2010\n                                        WITH\n                           NOTICE OF MOTION NO. 100 OF 2010\n\n\n\n\n                                                                       \n    Multi Commodity Exchange  of India Limited                                     )\n    a Company incorporated under the Companies Act, 1956                           )\n    having its registered office at Exchange Square, CTS No.                       )\n    255, Suren Road, Andheri (East), Mumbai-400 093                                )...Petitioner\n\n\n\n\n                                                    \n                     versus     \n    1. Central Electricity Regulatory Commission                                   )\n         having its office at 3rd and 4th floors,                                  )\n                               \n         Chanderlok Building 36, Janpath, New Delhi-110 001                        )\n\n    2.  Forward Markets Commission, having its office at                           )\n         \"Everest\", 3rd Floor, 100 Marine Drive,                                   )\n         Mumbai-400 002                                                            )\n       \n\n\n    3.  Power Exchange of India Limited                                            )\n    \n\n\n\n         having its offices at Exchange Plaza, Bandra-Kurla                        )\n         Complex, Bandra (East), Mumbai-400 051                                    )\n\n    4.  Indian Energy Exchange Limited,                                            )\n\n\n\n\n\n         having its offices at 10th floor, B-Wing,                                 )\n         Statement House, Barakhamba Road,                                         )\n         Connaught Place, New Delhi-110 001                                        )\n\n    5.  Union of India, through Cabinet Secretary,                                 )\n         Rashtrapati Bhavan, New Delhi-110 004                                     )\n\n\n\n\n\n    6.  Ministry of Law and Justice,through its Secretary,                         )\n         4th Floor, A Wing, Shastri Bhavan,                                        )\n         New Delhi-110 001                                                         )..Respondents\n\n    Mr.   N.H.   Seervai,   Senior   Advocate,   with   Mr.   Chirag   S.   Balsara,   Ms.   Gulnar \n    Mistry, Mr. Amit Vyas, Mr. Melvyn Fernandes and Mr. Varun Mamnia, instructed \n    by M\/s. Rajani Associates, for the petitioner.\n\n\n\n\n                                                                        ::: Downloaded on - 09\/06\/2013 16:49:45 :::\n     KPP                           -2-         W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010\n\n\n\n\n                                                                                                       \n    Mr. Aspi Chinoy, Senior Advocate, with Mr. J.J. Bhatt, Senior Advocate and Mr. \n    Arijit Maitra, instructed by Mr. Ratnakar Singh, for respondent No.1.\n\n\n\n\n                                                                         \n    Mr.   Janak   Dwarkadas,   Senior   Advocate,   with   Dr.   Poornima   Advani,   Mr. \n    Himanshu Kode and Mr. Omprakash Jha, instructed by M\/s. The Law Point, for \n    respondent No.2. \n\n    Mr.   Vikas   Singh,   Senior   Advocate,   with   Mr.   V.K.   Ramabhadran,   Ms.   Amnita \n\n\n\n\n                                                                        \n    Narayan   and   Ms.   Jyoti   Maheshwari,   instructed   by   M\/s.   Hemant   Sahai \n    Associates, for respondent No.3. \n\n    Ms. Cynthia Fernandes, instructed by M\/s. RMG Law Associates, for respondent \n\n\n\n\n                                                     \n    No.4.\n                                 \n    Dr.   G.R.   Sharma   with   Mr.   G.   Hariharan,   instructed   by   Dr.   T.C.   Kaushik,   for \n    respondent Nos. 5 and 6. \n\n                                          WITH\n                                \n                              WRIT PETITION NO. 1604 OF 2009\n                                          WITH\n                             NOTICE OF MOTION NO. 71 OF 2010\n                                              \n       \n\n\n    Forward Markets Commission, having its office at                                )\n    \"Everest\", 3rd Floor, 100 Marine Drive,                                         )\n    \n\n\n\n    Mumbai-400 002                                                                  ).. Petitioner\n\n                 versus\n\n\n\n\n\n    1. Central Electricity Regulatory Commission                                    )\n         having its office at 3rd and 4th floors,                                   )\n         Chanderlok Building 36, Janpath, New Delhi-110 001                         )\n\n\n\n\n\n    2.  Multi Commodity Exchange  of India Limited               )\n         a Company incorporated under the Companies Act,1956)\n         having its registered office at Exchange Square, CTS No.)\n         255, Suren Road, Andheri (East), Mumbai-400 093         )\n\n    3.  Power Exchange of India Limited                                             )\n         having its offices at Exchange Plaza, Bandra-Kurla                         )\n         Complex, Bandra (East), Mumbai-400 051                                     )\n\n\n\n\n                                                                         ::: Downloaded on - 09\/06\/2013 16:49:45 :::\n     KPP                              -3-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010\n\n\n\n    4.  Indian Energy Exchange Limited,                                                  )\n\n\n\n\n                                                                                                            \n         having its offices at Barakhamba Road,                                          )\n         Connaught Place, New Delhi-110 001                                              )\n\n\n\n\n                                                                              \n    5.  Union of India, through Cabinet Secretary,                                       )\n         Rashtrapati Bhavan, New Delhi-110 004                                           )\n\n    6.  Ministry of Law and Justice,through its Secretary,                               )\n         4th Floor, A Wing, Shastri Bhavan,                                              )\n\n\n\n\n                                                                             \n         New Delhi-110 001                                                               )..Respondents\n\n\n\n\n                                                          \n    Mr.   Janak   Dwarkadas,   Senior   Advocate,   with   Dr.   Poornima   Advani,   Mr. \n    Himanshu Kode and Mr. Omprakash Jha, instructed by M\/s. The Law Point, for \n    the petitioner. \n                                    \n    Mr. Aspi Chinoy, Senior Advocate, with Mr. J.J. Bhatt, Senior Advocate and Mr. \n    Arijit Maitra, instructed by Mr. Ratnakar Singh, for respondent No.1.\n                                   \n    Mr.   N.H.   Seervai,   Senior   Advocate,   with   Mr.   Chirag   S.   Balsara,   Ms.   Gulnar \n    Mistry, Mr. Amit Vyas, Mr. Melvyn Fernandes and Mr. Varun Mamnia, instructed \n    by M\/s. Rajani Associates, for  respondent No.2.\n       \n\n\n    Mr.Vikas   Singh,   Senior   Advocate,   with   Mr.   V.K.   Ramabhadran,   Ms.Amnita \n    Narayan   and   Ms.   Jyoti   Maheshwari,   instructed   by   M\/s.   Hemant   Sahai \n    \n\n\n\n    Associates, for respondent No.3. \n\n    Ms. Cynthia Fernandes, instructed by M\/s. RMG Law Associates, for respondent \n    No.4.\n\n\n\n\n\n    Dr.   G.R.   Sharma   with   Mr.   G.   Hariharan,   instructed   by   Dr.   T.C.   Kaushik,   for \n    respondent Nos. 5 and 6. \n\n\n\n\n\n                                                                CORAM:  P.B. MAJMUDAR  &\n                                                                                ANOOP V. MOHTA, JJ.\n<\/pre>\n
                                                 Judgment reserved on       : 7th January, 2011
\n                                                 Judgment pronounced on  : 7th February, 2011<\/p>\n
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\n     KPP                          -4-         W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    JUDGMENT:  (Per P.B. Majmudar, J.)<\/p>\n
                  Two   regulatory   authorities   functioning   under   two   different <\/p>\n
    enactments are locked horns and fighting tooth and nail against each other. The <\/p>\n
    regulatory   authority   functioning   under   the   Consumer     Protection   Act   i.e. <\/p>\n
    Forward Market Commission (FMC) claims sole right in the matter of forward <\/p>\n
    contract whereas the authority functioning under the Electricity Act, 2003 i.e. <\/p>\n
    Central Electricity Regulatory Commission (CERC) claims exclusive right in the <\/p>\n
    matter of dealing with the trading activities in connection with the electricity <\/p>\n
    including dealing in forward contract.   In order to comprehend the controversy <\/p>\n
    raised in these two writ petitions, a brief synoptical view of the facts in Writ <\/p>\n
    Petition No.1197 of 2010 may be noticed:\n<\/p>\n
    2.           Multi Commodity Exchange of India (MCX), petitioner herein and <\/p>\n
    Respondent No.2 in Writ Petition No.  1604 of 2009, is a company incorporated <\/p>\n
    under the provisions  of the Companies  Act, 1956 and a Commodity Exchange <\/p>\n
    duly recognised by the Central Government\/Forward Market Commission under <\/p>\n
    the   provisions   of   the   Forward   Contracts   (Regulation)   Act,   1952   (hereinafter <\/p>\n
    referred   to   as   “FCRA”).     The   MCX   has   been   formed   and\/or   constituted   for <\/p>\n
    facilitating   the   on-line   trading,   clearing   and   settlement   operations   for <\/p>\n
    commodity futures contracts across the country.  The MCX started operations in <\/p>\n
    November,   2003   with   the   object   of   establishing,   operating,   regulating, <\/p>\n
    maintaining  and  managing  facilities to  enable   the  members of  the   exchange, <\/p>\n
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\n     KPP                            -5-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    their authorized agents and constituents and other participants to transact, clear <\/p>\n
    and settle the trade of future contracts   in more than 103 commodities\/goods <\/p>\n
    including Electricity   and Natural gas as notified by the Ministry of Consumer <\/p>\n
    Affairs, Food and Public Distribution vide Gazette of India Notification dated 9th <\/p>\n
    January, 2006 and as permitted by Forward Markets Commission.\n<\/p>\n
    3.             The   first   respondent     in   both   these   petitions,   Central   Electricity <\/p>\n
    Regulatory  Commission  (“CERC”),   is  established  by  the    Central  Government <\/p>\n
    under sub-section (1) of Section 3   of the Electricity Regulatory Commissions <\/p>\n
    Act, 1998 and functioning as such before the date of coming into force of the <\/p>\n
    Electricity   Act,   2003.   Section   79   of   the   said   2003   Act   specifies   some   of   the <\/p>\n
    specific functions to be discharged by the Central Commission.\n<\/p>\n
    4.             The second  respondent, Forward Market Commission (FMC) herein <\/p>\n
    and the petitioner in Writ Petition No. 1604 of 2009, was established in 1953 for <\/p>\n
    the purpose of  exercising such functions and discharging such duties as may be <\/p>\n
    assigned to the Commission   by or under the provisions of the FCRA. It is a <\/p>\n
    regulatory authority   which is overseen   by the Ministry of Consumer Affairs, <\/p>\n
    Food and Public Distribution, Govt. of India.\n<\/p>\n
    5.             Then third and fourth respondents are Power Exchanges recognised <\/p>\n
    by the  CERC.\n<\/p>\n
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     KPP                           -6-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    6.            The challenge in both these writ petitions is to the  two orders dated <\/p>\n
    28th  April,   2009   and   11th  January,   2010   passed   by   the   CERC   as   well   as   the <\/p>\n
    Central   Electricity   Regulatory  Commission  (Power   Market)   Regulations,   2010 <\/p>\n
    (hereinafter   referred   to   as   “the   Regulations”)   notified   by   the   CERC   on   20th <\/p>\n
    January, 2010 under Section 66 read with Section 178 (2) (y) of the Electricity <\/p>\n
    Act, 2003 purporting to exercise jurisdiction over forward contracts and futures <\/p>\n
    in electricity.\n<\/p>\n
    7.            On 19th March, 2005, MCX applied to the FMC seeking approval for <\/p>\n
    launching electricity futures contracts. The FMC granted its approval on January <\/p>\n
    07,   2009   to   the   petitioner   to   commence   trading   in   electricity   futures   at   its <\/p>\n
    exchange. MCX accordingly launched  forward trading in  electricity with effect <\/p>\n
    from 8th January, 2009. The third respondent, Power Exchange of India Limited <\/p>\n
    (PXIL)  challenged the electricity futures contracts formulated by the petitioner <\/p>\n
    by its application dated 18th  December, 2008, before the CERC on the ground <\/p>\n
    that   (i)   the   CERC   has   the   exclusive   jurisdiction   over   regularising   electricity <\/p>\n
    including   all   forward   contracts,   futures,   etc.   (ii)   after   the   enactment   of   the <\/p>\n
    Electricity Act, 2003, the MCX and the  FMC have been denuded of jurisdiction <\/p>\n
    over   electricity   and   (iii)     the     MCX   had   commenced   launch   of   trading     in <\/p>\n
    electricity futures contracts   without any approval of CERC and mere approval <\/p>\n
    FMC had no efficacy in the eyes of law.  MCX has raised an objection  about the <\/p>\n
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\n     KPP                          -7-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    maintainability   of   such   an   application   on   the   ground   that   CERC   has   no <\/p>\n
    jurisdiction to entertain such application   as the FMC is a statutory regulatory <\/p>\n
    authority   functioning   under   the     Forward   Market   Act     and   the   same   is   not <\/p>\n
    subjected to the jurisdiction of CERC.   The Commission vide order dated 28 th <\/p>\n
    April, 2009, disposed of the said application by giving certain directions which <\/p>\n
    read thus:\n<\/p>\n
            (a)       FMC exercises jurisdiction over the forward contracts in <\/p>\n
            accordance with the p0rovisions of the 1952 Act as they cannot
\n            be said to be inconsistent with those of the 2003 Act and the two <\/p>\n
            statutes operate in independent fields.\n<\/p><\/blockquote>\n
            (b)       Regulatory oversight to promote development of market
\n            in   power   is   vested   in   this   Commission   as   mandated   under <\/p>\n
            Section 66  of the 2003 Act and, therefore, the orders, guidelines
\n            issued by this Commission and the regulations framed shall be
\n            binding on all concerned.\n<\/p><\/blockquote>\n
            (c)      Power Exchanges approved by this Commission need not
\n            approach   FMC     for   any   approval     for   the   reasons   that   the
\n            contracts traded or to be traded outside the scope of Section 15 <\/p>\n
            of the 1952 Act.\n<\/p><\/blockquote>\n
            (d)      MCX and other commodity exchanges  permitted trading
\n            of forward contracts by FMC at their platform shall be governed <\/p>\n
            by the orders, guidelines, regulations and other prescriptions of
\n            this   Commission   since   they   are   not     inconsistent   with   the
\n            provisions of the 1952 Act.”\n<\/p><\/blockquote>\n
    8.            Being   aggrieved   by   the   aforesaid   order,   MCX   preferred   a   Review <\/p>\n
    Petition being Review Petition No. 115 of 2009 seeking re-consideration  and\/or <\/p>\n
    review and\/or modification of certain observations and findings of the said order <\/p>\n
    dated 28th April, 2009. The review petition has been decided by the Commission <\/p>\n
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\n     KPP                           -8-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    on 11th January, 2010 by which the CERC suo motu reversed the original order <\/p>\n
    and   deleted   crucial   observations   which   expressly   stated   that   there   was   no <\/p>\n
    conflict between the provisions of the FCRA and the Electricity Act.  The CERC <\/p>\n
    held  that the  ground  of review  as stated  in para 5 (c) stood  rejected as not <\/p>\n
    maintainable.   By   the   said   order,   CERC   also   held   that   there   was   a   conflict <\/p>\n
    between the FCRA and the Electricity Act and in view of Sections 174 and 175 of <\/p>\n
    the Electricity Act, the Electricity Act would have an overriding effect.   Further, <\/p>\n
    the Electricity Act was also a later central statute hence the provisions thereof <\/p>\n
    would prevail.  It also held that as there was a conflict between the provisions of <\/p>\n
    the   FCRA   and   the   Electricity   Act,   the   provisions   of   the   Electricity   Act  would <\/p>\n
    prevail.  In the said order, CERC modified the last sentence of paragraph 54 and <\/p>\n
    held   thus : “However, we make it clear that MCX cannot launch such products  <\/p>\n
    without   the   prior   approval   of   this   Commission   in   accordance   with   this  <\/p>\n
    Commission’s guidelines or the statutory regulations”.\n<\/p>\n
    9.            Pursuant to the above order, FMC filed the above petition being Writ <\/p>\n
    Petition No. 1604 of 2009 challenging the validity of the order dated 28th April, <\/p>\n
    2009 as also the review order dated 11th January, 2010 passed by CERC . During <\/p>\n
    the pendency of the petition, CERC issued a public notice  dated 22 nd September,<\/p>\n
    2009,   enclosing   draft   power   market   regulations   seeking <\/p>\n
    comments\/suggestions\/objections on the said draft regulations.   The petitioner <\/p>\n
    recorded   its   comments\/objections   to   the   said   draft   regulations.       The   CERC <\/p>\n
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\n     KPP                          -9-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    thereafter   framed   regulations   viz.   Central   Electricity   Regulatory   Commission <\/p>\n
    (Power Market) Regulations, 2010. The said Regulations are also subject matter <\/p>\n
    of challenge in these writ petitions. The said Regulations were also tendered in <\/p>\n
    the Court. Thereafter the matter has not been listed on the Board.  Again, CERC <\/p>\n
    came   up   with   a   press   release   dated   20 th  January,   2010   notifying   the   said <\/p>\n
    regulations. The petitioners herein challenge the  Regulations on the ground that <\/p>\n
    the   action   of   the   first   respondent   being   wrongful   exercise   of   jurisdiction, <\/p>\n
    arbitrary, capricious, mala fide as well as being discriminatory in nature and <\/p>\n
    violative of the principles of Article 14 of the Constitution.  The said Regulations <\/p>\n
    also seek to deprive the petitioner from entering into forward contracts inspite of <\/p>\n
    being authorised by the second respondent and notified by the Govt. of India as <\/p>\n
    a recognized  association.\n<\/p>\n
    10.           According   to   MCX,   so   far   as   forward   market   in   electricity   is <\/p>\n
    concerned, it is the regulatory authority under the  Forward Market Act which <\/p>\n
    alone is competent to deal with the same and CERC has no right to frame any <\/p>\n
    regulation in this behalf.   The Regulations as notified by CERC   provides for <\/p>\n
    forward and futures contracts relating to electricity to come under the purview <\/p>\n
    of CERC, whereas prior to the notification of the Regulations, the forward and <\/p>\n
    future contracts relating to electricity were under the purview of FMC pursuant <\/p>\n
    to   the   notification   dated   9th  January,   2006   by   the   Union   of   India.   The <\/p>\n
    Regulations framed by CERC are also challenged on the said ground.\n<\/p>\n
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     KPP                         -10-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    11.         Initially after hearing the learned counsel appearing for the parties <\/p>\n
    this Court reserved the matter for judgment.  However, by an order dated  26th <\/p>\n
    November, 2010, this Court subsequently issued notice to the added respondents <\/p>\n
    by passing the following order.\n<\/p>\n
           ”   The   matters   were   heard   and   judgment   was   reserved.\n<\/p><\/blockquote>\n
           Subsequently,   this  Court   while   going   through   the   papers  came
\n           across  the minutes of the meeting of Committee of Secretaries of <\/p>\n
           various   departments   wherein   the   Cabinet   Secretariat   has
\n           ultimately given the following directions.\n<\/p><\/blockquote>\n
           (i)   There  will be no trading  in electricity futures for the time <\/p>\n
           being.  The decision to introduce  electricity futures will be taken
\n           by   the   Central   Government   at   an   appropriate   time   with
\n           concurrence of FMC\/DoCA and CERC\/MoP.\n<\/p><\/blockquote>\n
           (ii)   In view of the decision at (i) above, CERC would omit   the
\n           provisions relating to electricity derivatives from its Power Market
\n           Regulations.\n<\/p><\/blockquote>\n
           (iii) In view of the devision at (i) above, DoCA will de-notify the
\n           electricity under Section  15 of the FCRA.\n<\/p><\/blockquote>\n
           (iv)   DoLA   will   obtain   the   opinion   of   Attorney   General   on   the
\n           question   of   regulatory   jurisdiction   on   electricity   derivatives   in
\n           view of the provisions of the Electricity Act and FCRA. CERC\/MoP
\n           and   DoCA\/FMC   have   already   sent   the   relevant   material
\n           representing   their   viewpoints   to   DoLA   in   this   regard   with <\/p>\n
           reference   to   the     meeting   held   on   25.5.10   in   the   Cabinet
\n           Secretariat. <\/p><\/blockquote>\n
           2.            Learned   Senior   Counsel   Mr.   Dwarkadas   and   Mr.
\n           Seervai   state   that   the   minutes   dated   16th  July,   2010   were   not
\n           properly recorded   to some extent.   Mr. Chinoy, learned senior
\n           counsel appearing for CERC states that CERC is willing to abide
\n           by   the   decision   taken   in   the   meeting   before   the   Cabinet
\n           Secretariat.     Since   the   dispute   is   in   connection   with   two <\/p>\n
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\n     KPP                            -11-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
             departments of the Union of India, we are of the opinion that the <\/p>\n
             Union of India is required to be  added as  party respondents  in
\n             these   matters   and   their   say   is   also   required   to   be   taken   into
\n             consideration while deciding the issue  involved in these matters.\n<\/p>\n
             For the aforesaid purpose, we deem it proper to join (i) Union of
\n             India through Cabinet Secretariat, having its office at Rashtrapati
\n             Bhavan,   New   Delhi   and   (ii)   Secretary,   Ministry   of   Law   and
\n             Justice,   Govt. of India, Shastri Bhavan, New Delhi-110 001, as
\n             party respondent Nos. 5 and 6  respectively.  Leave to amend the <\/p>\n
             petition is granted. Amendment to be carried out forthwith.\n<\/p>\n
             3.              Issue notice to the added respondents  returnable on
\n             10  December, 2010 at 3.00 p.m. before this Bench. We make it
\n                th<\/p>\n
             clear   that   since   the   petitioners   and   respondents   have   already
\n             addressed this Court and concluded their arguments, the Court is <\/p>\n
             now required to hear only the added   respondents in respect of
\n             the issue involved in the matter and regarding minutes dated 16th
\n             July,   2010   and   decision   taken   during   such   meeting   before   the
\n             Cabinet Secretariat.     As the  matter  is pending  since  long,  the <\/p>\n
             added respondents may point out their views on the next date of
\n             hearing.\n<\/p>\n
             4.           Mr.   Janak   Dwarkadas,   learned   senior   counsel <\/p>\n
             appearing   for   FMC,   states   that   a   subsequent   letter   dated   13th
\n             September,   2010   has   been   issued     to   the   Cabinet   Secretary
\n             pointing   out   that   the   aforesaid   minutes     are   not     properly <\/p>\n
             recorded.\n<\/p>\n
             5.         The   petitioner   to   take   steps   to   serve   the   added
\n             respondents so that matters may not be required to be adjourned <\/p>\n
             on the ground that they are not served”.\n<\/p>\n
    12.           Mr.   M.K.   Sharma,   Joint   Secretary   and   Legal   Adviser   in   the <\/p>\n
    Department of Legal Affairs, Ministry of Law and Justice, New Delhi, for and on <\/p>\n
    behalf   of     Law   Secretary,  Ministry   of   Law   and   Justice   and   also  on  behalf  of <\/p>\n
    Cabinet Secretary, Cabinet Secretariat, Rashtrapati Bhawan, New Delhi, initially <\/p>\n
    filed an affidavit on 13th  December, 2010 raising preliminary objections about <\/p>\n
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\n     KPP                           -12-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    the maintainability of the petitions.  The preliminary objections raised in paras <\/p>\n
    (i) to (v) of the said affidavit read thus:\n<\/p>\n
            “(i)       The   Respondent   Nos.   5   and   6   strongly   object   to   the
\n            maintainability  of the present petition because the petitioners in
\n            Petition No. 1640 of 2009 have already pursued remedy (ies)
\n            with   the   Competent   Body   consisting   of   Secretaries   to   the
\n            Government of India from different Ministries.\n<\/p><\/blockquote>\n
            (ii)               I   say   that   in   the   said   constituted   Committee,   the
\n            petitioners hailing  from the  Ministry of Consumer  Affairs and
\n            the   other   side   from   the   Ministry   of   Power   through   their <\/p>\n
            Secretaries   not   only   participated   in   the   proceedings   on
\n            16.07.2010   conducted   by   the   said   Committee   but   also <\/p>\n
            deliberated in the said proceedings  on the subject matter (s), in
\n            question, which proceedings ultimately culminated into certain
\n            decision(s) taken by the said High Power Committee.  I say that
\n            the said Committee constituted and consisting of  Secretaries  of <\/p>\n
            different   Departments\/Ministries   have   given   their   say   and   for
\n            their   Department’s   views,   which   were   duly   considered   with
\n            consensus opinion and accordingly, the said decisions.  In such
\n            an event, I strongly object to the maintainability of the present <\/p>\n
            petition on the ground that the petitioner cannot simply choose
\n            two different forums for the same cause of action or the cause of
\n            action touching the present subject matter(s). Accordingly the <\/p>\n
            present petition deserves to be dismissed in limine.\n<\/p><\/blockquote>\n
            (iii)     I strongly object to the present petition on the ground (s)
\n            that   the   Forward   Market   Commission   is   born   out   of   statute <\/p>\n
            known as Forward Contracting (Regulation) Act, 1952 (FCRA)
\n            and likewise, CERC is born out of Electricity Act 2002.  In other
\n            words,   I   say   that   both   the   statutory   bodies   have   their
\n            birth\/establishment   out   of   the   said   statutes   enacted   by   the
\n            Parliament   and   therefore,   they   are   the   Government   of   India <\/p>\n
            statutory bodies.  Being so, any of their issues in dispute need to
\n            be   adjudicated   upon   by   the   said   Committee   meant   for   the
\n            purpose. <\/p><\/blockquote>\n
            (iv)       I say that the Hon’ble Supreme Court of India in case of
\n            ONGC vs. Collector of Central Excise reported as (2004) Vol. 6
\n            SCC 437 and earlier reported as (1992) 104 CTR (SC) 31 has
\n            categorically laid down the law to the extent that   dispute (s)
\n            between   Department   to   Department   of   the   Government   or <\/p>\n
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\n     KPP                        -13-         W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
           Government of India Undertakings or Enterprises etc. need to be <\/p>\n
           referred or such other matters which are the bone of contention,
\n           need to be resolved by said such Committee.  I say that most of
\n           the Government of India Undertakings or Government of India <\/p>\n
           Enterprises are born out of various statutes enacted by the Act of
\n           Parliament.  As the present aforesaid two statutes are enacted by
\n           the   Parliament   and   the   dispute(s)   are   between   two   statutory
\n           bodies   established   under   the   said   two   Statutes,   the   same
\n           disputes between the such two statutory bodies are the disputes <\/p>\n
           which need to be referred   to for the purpose of adjudication
\n           or\/conciliation   to   the   said   Committee   consisting   of   the
\n           Secretaries   of   the   various   Departments\/Ministries  and   headed
\n           by the Cabinet Secretary, Union of India.\n<\/p>\n
           (v)         I say that   the said two statutory bodies are within the <\/p>\n
           scope   of   Government   of   India   Undertaking   or   Government   of
\n           India Enterprises as they are equally born\/established out of the
\n           said two Statutes, as referred to hereinabove. In such an event
\n           and in view of the said ruling of the Supreme Court of India, the <\/p>\n
           petition(s), in question, need to be dismissed with costs.”\n<\/p>\n
    13.         On   the   next   date   of   hearing   i.e.   20th  December,   2010,   learned <\/p>\n
    counsel  appearing for  respondent Nos. 5 and 6 pointed  out that the Cabinet <\/p>\n
    Secretary   could not go through the affidavit filed by Mr. M.K. Sharma, Joint <\/p>\n
    Secretary and Legal Advisor in the Department of Legal Affairs, Ministry of Law <\/p>\n
    and Justice and that the Cabinet Secretary would like to file a detailed affidavit <\/p>\n
    in this regard. This Court passed the following order on December 20, 2010.\n<\/p>\n
            “A   bitter   dispute   is   going   on   between   two   Regulatory
\n            Authorities functioning under the Union of India, in so far as
\n            one of the writ petition is concerned.   Since we have issued
\n            notices to the respondent Nos. 5 and 6, today learned counsel
\n            appearing for respondent Nos. 5 and 6 states that because of
\n            the   pre-occupation,   the   Cabinet   Secretary   could   not   go
\n            through   the   affidavit   filed   by   Mr.   M.K.   Sharma,   Joint <\/p>\n
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            Secretary   and   Legal   Advisor   in   the   Department   of   Legal <\/p>\n
            Affairs, Ministry of Law and Justice and therefore, he would
\n            like   to   file   detailed   affidavit   in   this   regard.     It   is   very
\n            unfortunate that between the two Departments of Union of <\/p>\n
            India, there is a lack of communication and in our view, such
\n            happening   is   really   disturbing.     Learned   counsel   for
\n            respondent   Nos.   5   and   6   states   that   Cabinet   Secretary   has
\n            called meeting of all the Secretaries to sort out the problem.
\n            However, since the arguments are already heard and with a <\/p>\n
            view to see that the matter is not further delayed and since in
\n            view   of   the   submission   that   the   Cabinet   Secretary   has   not
\n            gone through the reply filed by Mr. M.K. Sharma, we give last
\n            chance to respondent No. 5 to file appropriate reply   if any <\/p>\n
            before   04-01-2011,   with   an   advance   copy   to   the   learned
\n            counsel for the petitioners and the respective respondents. No <\/p>\n
            further   adjournment   will   be   given   in   this   behalf.       The
\n            petitioners or the other contesting respondents may file their
\n            respective rejoinder, if any, before the next date.   Pleadings
\n            should be completed by both the sides before the next date.\n<\/p><\/blockquote>\n
            2.     Stand   over   to   07-01-2011.     On   the   aforesaid   date,   the
\n            Court may consider to proceed with the judgment.”\n<\/p><\/blockquote>\n
    14.         A subsequent affidavit has been filed on behalf of respondent No.5 <\/p>\n
    on 4th January, 2011.  Before we proceed further, it is necessary to incorporate <\/p>\n
    the  averments made in the said affidavit and the same read as under:\n<\/p>\n
           ”   I,   V.P.   Arora,   working   as   Under   Secretary   in   the   Cabinet
\n           Secretariat,   Rashtrapati   Bhavan,   New   Delhi,   aged   about   57
\n           years,   do   hereby   state   and   submit   on   solemn   affirmation   as <\/p>\n
           under:-\n<\/p><\/blockquote>\n
           1.     I say that I have perused relevant records.  I say that I crave
\n           leave of this Hon’ble Court to further add, amend, alter or delete
\n           any   of   the   contents   of   this   affidavit.   I   say   that   I   have   been
\n           authorised to file this affidavit.\n<\/p><\/blockquote>\n
           2.       That this Hon’ble High Court had impleaded the Cabinet
\n           Secretary as Respondent No.5 in both the petitions.\n<\/p><\/blockquote>\n
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     KPP                            -15-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
            3.             That on the last date of hearing, Special   Counsel for
\n            Union   of   India   –   Dr.   G.R.   Sharma   had   informed   this   Hon’ble
\n            High Court that the Cabinet Secretary will be calling a meeting <\/p>\n
            of Secretaries of respective Departments\/Ministries to amicably
\n            settle   the   issue   at   large   in   the   present   writ   petitions   and
\n            accordingly an attempt was made on 29.12.2010 by the Cabinet
\n            Secretary through the Secretary (Co-ordination) of the Cabinet
\n            Secretariat,   New   Delhi   and   had   deliberations   relating   to   the <\/p>\n
            present issues.\n<\/p>\n
            4.         That in the said meeting held on 29.12.2010, an attempt
\n            was   made   to   settle   and   reconcile   the   issues   which   was   not <\/p>\n
            successful.\n<\/p>\n
            5.      That apart from the two statutory bodies i.e. The Central
\n            Electricity   Regulatory   Commission   and   the   Forward   Markets
\n            Commission,   other   private   bodies   are   also   parties   in   the   writ
\n            petition.\n<\/p>\n
            6.            That  I   submit   that   as  the   attempt   at  the   level   of   the
\n            Cabinet   Secretariat   has   not   been   successful,   it   is   respectfully
\n            prayed   that this Hon’ble High Court may be pleased to decide <\/p>\n
            the matter as may be deemed fit and proper in the facts and
\n            circumstances of the case.\n<\/p>\n
            7.     I say that the contents contained in para 2 to 6 are true to
\n            my knowledge and belief”\n<\/p>\n
    15.          On 7th  January, 2011, this Court passed further order which reads <\/p>\n
    thus:\n<\/p>\n
            ”   Initially these matters were heard at length and adjourned
\n            for pronouncing the judgment.   However, subsequently, this
\n            Court felt that considering the important issue involved in the
\n            matter, it would be desirable to hear Union of India through
\n            Cabinet Secretary as well as Ministry of Law and Justice.  On
\n            the   last   date,   Counsel   for   Union   of   India   appeared   and
\n            tendered an affidavit filed by respondent Nos. 5 and 6. At his <\/p>\n
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             instance   the   matter   was   adjourned   till   today.   In   the <\/p>\n
             meanwhile, a further affidavit is filed by respondent No.5.  To
\n             the affidavit filed by respondent No.5, replies have also been
\n             filed by the petitioners  and respondent No.3.\n<\/p><\/blockquote>\n
             2.            It is submitted  on behalf of the Union of India by
\n             the   learned   counsel   Dr.   Sharma   that   the   Cabinet   Secretary
\n             tried to settle the dispute but   in spite of his best efforts he
\n             could not convince the concerned Secretaries for settling the <\/p>\n
             same.   It is requested that in view of the same, the matters
\n             may   now   be   decided   by   this   Court   on   merits.   He   also
\n             submitted  that this matter cannot be sent to the High Power
\n             Committee   as   the   issue   involved   in   the   matter   can   only   be <\/p>\n
             decided by the Court especially when there is a private party
\n             who has also filed the petition.  It is the submission of all the <\/p>\n
             learned counsel appearing in the matter that the issue referred
\n             to in the petitions cannot be sent to High Power Committee as
\n             per the judgment of the Supreme Court in the case of ONGC
\n             and the matter may be decided by this Court one way or the <\/p>\n
             other on merits.   The submissions of the learned counsel are
\n             accordingly recorded. Dr. Sharma further submits that he does
\n             not  want   to   say   anything   further   and   it  is   for   the   Court   to
\n             decide the rival claims in the matter between the petitioners <\/p>\n
             and the concerned respondents.     Now the arguments stand
\n             concluded. Judgment reserved”.\n<\/p><\/blockquote>\n
    16.              In  the case of Oil and Natural Gas Commission vs. CCE1  the Supreme <\/p>\n
    Court  held   that   in   every   case   where     a   dispute   is   between   government <\/p>\n
    departments   and\/or   between   a   Government   department   and   a   public   sector <\/p>\n
    undertaking,   the   matter   should   be   referred   to   the   High   Power   Committee <\/p>\n
    established by the Government pursuant to an order of the Supreme Court dated <\/p>\n
    11th September, 1991 and that it is the duty of every court or tribunal to demand <\/p>\n
    clearance   from   the   Committee   and   that   in   the   absence   of   clearance,   the <\/p>\n
    proceedings must not be proceeded with. In the case of Chief Conservator of <\/p>\n
    1 1995 Supp (4) SCC 541<\/p>\n
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\n     KPP                           -17-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    Forest vs. Collector1 it has been held by the Supreme Court as under:\n<\/p>\n
             “Various   departments     of   the   Government   are   its   limbs  and,
\n             therefore,   they   must   act   in   coordination   and   not   in <\/p>\n
             confrontation.   Filing   of   a   writ   petition   by   one   department
\n             against the other by invoking the extraordinary jurisdiction of
\n             the High Court is not only against the propriety and polity as it
\n             smacks of indiscipline but is also contrary to the basic concept
\n             of law which requires that for suing or being sued, there must <\/p>\n
             be  either  a  natural  or  a  juristic   person.  The   States\/Union of
\n             India   must   evolve   a   mechanism   to   set   at   rest   all   inter-
\n             departmental controversies at the level of the Government and
\n             such   matters   should   not   be   carried   to   a   court   of   law   for <\/p>\n
             resolution of the controversy.  In the case of disputes between
\n             public sector undertakings and Union of India, this Court in Oil <\/p>\n
             and   Natural Gas Commission vs. Collector of Central Excise<\/a>
\n             (1992 Suppl. (2) SCC 432) called upon the Cabinet Secretary
\n             to handle such matters.\n<\/p><\/blockquote>\n
    17.    It is pointed out by the learned counsel appearing for the Union of India <\/p>\n
    that the attempts made by the Cabinet Secretary to solve the dispute have been <\/p>\n
    failed  and in view of the argument of the learned counsel for the Union of India <\/p>\n
    as well as learned counsel appearing for the parties in the matter, the issue in <\/p>\n
    question is required to be decided only by this Court as  the Regulations framed <\/p>\n
    by  CERC is under challenge at the instance of private party, this dispute cannot <\/p>\n
    be sent to High Power Committee.  In view of the said submission, this Court is <\/p>\n
    now   required   to   decide   the   controversy   raised   in   these   petitions   on   its   own <\/p>\n
    merits.\n<\/p>\n
    1 2003 (3) SCC 742<\/p>\n
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    18.      We have heard the learned counsel appearing for the parties, examined <\/p>\n
    the   matter   on   merits   and   also   considered   the   written   submissions   of   the <\/p>\n
    petitioners, CERC and  PXIL.\n<\/p>\n
    19.          Mr. Seervai, the learned counsel for the petitioner in Writ Petition <\/p>\n
    No. 1197 of 2010, submits that the provisions of the FCRA and the Electricity <\/p>\n
    Act   deal with two separate and distinct subjects. The FCRA deals with futures <\/p>\n
    markets and forward contracts in electricity being, in essence, financial contracts <\/p>\n
    which provide for delivery but which may be and, in fact, are often settled by <\/p>\n
    inter alia the payment of differences. The Electricity Act deals with the physical <\/p>\n
    trading and delivery of electricity as a commodity for actual physical use and <\/p>\n
    according to the learned counsel, the spheres of the two enactments are separate <\/p>\n
    and distinct and there is no scope for overlap or conflict. The Electricity Act and <\/p>\n
    the   authorities   established   thereunder   have   been   empowered   to   govern   the <\/p>\n
    various   aspects   of   electricity,   including   generation,   transmission,   distribution <\/p>\n
    and trading.  Mr. Seervai submits that FCRA  conceives of a specialized financial <\/p>\n
    market, rather than a conventional physical one, which operates in the realm of <\/p>\n
    price discovery and price risk management. The option of delivery is available <\/p>\n
    only in respect of residual contracts which remain outstanding on the date of <\/p>\n
    expiry of contract period, but most participants offset their contracts before the <\/p>\n
    date of expiry by entering into opposite contract, thus obviating the need for any <\/p>\n
    delivery.   On the other hand, the Electricity Act deals with the actual physical <\/p>\n
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    delivery and utilization of electricity. Mr. Seervai further submits that “trading”\n<\/p>\n
    under the Electricity Act is limited to the physical market which is clear from the <\/p>\n
    definition under sub-section 71 of Section 2 viz. Purchase of electricity for resale <\/p>\n
    thereof.     The   Electricity   Act   provides   for   and   facilitates   physical   trading   in <\/p>\n
    electricity   between   States   i.e.   Inter-State   as   well   as   within   a   given   State   i.e. <\/p>\n
    intra-State.   The   FCRA   deals   with   all   future   and   forward   contracts   including <\/p>\n
    electricity futures contracts.   Mr. Seervai submits that FCRA has been enacted <\/p>\n
    under Entry 48, List I of the Constitution whereas the Electricity Act is a statute <\/p>\n
    enacted under Entry 38, List III.  The FCRA creates a single statutory authority <\/p>\n
    which   regulates   and   controls   all   forward   contracts,   including   futures,   in   all <\/p>\n
    commodities notified by the Central Government across the territory of India.\n<\/p>\n
    Under Section 15 of the FCRA, the Central Government is empowered to notify <\/p>\n
    goods in respect of which forward contracts may be entered into only through <\/p>\n
    associations   recognised   by   the   Central   Government.     Central   Electricity <\/p>\n
    Regulatory   Commission   (CERC) is concerned with   inter State and not intra <\/p>\n
    State electricity.     He submits that there is no provision in the Electricity Act <\/p>\n
    which can even remotely be said to refer to and\/or deal with forward contracts <\/p>\n
    and futures.  The forward contract is different from ready delivery contract.  In <\/p>\n
    view thereof, therefore, there is no question of conflict   between   FCRA and <\/p>\n
    Electricity Act.  He submits that CERC and Forward Market Commission (FMC) <\/p>\n
    are   both   regulatory   authorities,   governed   by   their   respective   special   statutes, <\/p>\n
    operating within their defined spheres, with distinct statutory functions, powers <\/p>\n
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    and duties.  The impugned Regulations make it clear that the CERC has misused <\/p>\n
    its   power   as   a   regulatory   authority   in   order   to   bring   forward   contracts   in <\/p>\n
    electricity within its jurisdiction.  Section 178 (2) (y) read with Section 66  gives <\/p>\n
    CERC the power to issue regulations.  He submits that the Regulations notified <\/p>\n
    by the CERC seek to deprive the petitioner, Multi Commodity Exchange of India <\/p>\n
    Ltd. (MCX) from entering into forward contracts inspite of being authorised by <\/p>\n
    FMC and notified by the Government of India as a recognized association.  Mr. <\/p>\n
    Seervai   further   submits   that   the   CERC   under   the   guise   of   the   impugned <\/p>\n
    regulations, usurped legislative power not conferred upon it. According to Mr. <\/p>\n
    Seervai,   the   Electricity   Act   does   not   even   remotely   contemplate   a   situation <\/p>\n
    pertaining to financial contracts and the CERC cannot, by the simple expedient <\/p>\n
    of notifying subordinate legislation, traverse beyond the provisions of its parent <\/p>\n
    statute.   Mr. Seervai submits that the impugned Regulations are ex facie ultra <\/p>\n
    vires and void ab initio.  Indisputably, a subordinate legislation must be read in <\/p>\n
    the context of the principal Act.  It is well settled that the power exercised by a <\/p>\n
    delegate must conform to the power granted by its parent statute, there cannot <\/p>\n
    be   any   presumption  in   favour   of   exercise   of   power   or   assumption  of   such   a <\/p>\n
    power in the absence of specific enabling provision in the Electricity Act itself.\n<\/p>\n
    Mr. Seervai further submits that there is not a single provision in the Electricity <\/p>\n
    Act   that   allowed   CERC   to   issue   the   impugned   Regulations     to   regulate   and <\/p>\n
    control a market that it now purporting to do so.  CERC is attempting to do so in <\/p>\n
    the face of a special statute that exclusively bestows that authority on another <\/p>\n
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    regulatory body.  It is submitted that the FCRA is a statute enacted prior in time <\/p>\n
    as that of the Electricity Act. The petitioner is a recognized Association   under <\/p>\n
    the FCRA and is governed by FMC.   Mr. Seervai submits that in the original <\/p>\n
    order, CERC has acknowledged that FCRA governs forward contracts in which <\/p>\n
    rights   and   liabilities   are   transferable,   unless   exempted   by   the   Central <\/p>\n
    Government and  that  the  provisions of  the  FCRA  cover  certain  specific areas <\/p>\n
    which are not covered under any of the provisions of the Electricity Act. It is <\/p>\n
    submitted  that  in  the   subsequent  review   order,  CERC  suo   motu  rewrote   and <\/p>\n
    reversed   the   original   order   dated   28th  April,   2009   and   deleted   crucial <\/p>\n
    observations   which   expressly   stated   that   there   was   no   conflict   between   the <\/p>\n
    provisions   of   the   FCRA   and   the   Electricity   Act   on   the   ground   that   these <\/p>\n
    observations were not relevant or germane to the inquiry.  Mr. Seervai submits <\/p>\n
    that the impugned orders are without jurisdiction inasmuch as the provisions of <\/p>\n
    Section 79 of the Electricity Act do not give CERC any authority to trespass into <\/p>\n
    the   jurisdiction   of   another   unrelated   statutory   regulator   and   interpret   the <\/p>\n
    provisions of the FCRA. In view of the above, the Regulations, in so far as it <\/p>\n
    pertain to futures contract in electricity, issued by the CERC pending disposal of <\/p>\n
    the   writ   petition   filed   by   FMC     are   liable   to   be   quashed   and   set   aside.   Mr. <\/p>\n
    Seervai   submits   that   while   the   original   order   enunciated   a   harmonious <\/p>\n
    construction of the two statutes, the review order placed them in a position of <\/p>\n
    irreconcilable conflict, robbing the FMC entirely of its jurisdiction over forward <\/p>\n
    contracts vis-a-vis-electricity.  He submits that on a comparison of the two orders <\/p>\n
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    it is abundantly clear that the review order is illegal, improper and bad in law, <\/p>\n
    being no more than a motivated attempt to re-write the original order and allow <\/p>\n
    the CERC to usurp power and authority not vested in it or conferred upon it <\/p>\n
    under the Electricity Act.   Mr. Seervai further submits that on perusal of the <\/p>\n
    Regulations,   it   is   clear   that     CERC   has   once   again   misused   its   power   as   a <\/p>\n
    regulatory authority in order to bring forward contracts in electricity within its <\/p>\n
    jurisdiction.     Mr. Seervai finally submits that the futures contracts cannot be <\/p>\n
    dealt with under the Electricity Act as it is in the domain of FCRA and that CERC <\/p>\n
    has no jurisdiction to frame any Regulations in this behalf.\n<\/p>\n
    20.           Mr.   Aspi   Chinoy,   learned   senior   counsel   appearing   for   CERC, <\/p>\n
    submits   that     the   Electricity   Act,   2003   was   enacted   to   consolidate   the   laws <\/p>\n
    relating to generation, transmission, distribution, trading and use of electricity <\/p>\n
    and   generally   for   taking   measures   conducive     to   development   of   electricity <\/p>\n
    industry, promoting competition   therein, protecting interest of consumers and <\/p>\n
    supply  of  electricity to  all  areas,  rationalisation  of     electricity  tariff, ensuring <\/p>\n
    transparent   policies   regarding   subsidies,   promotion   of   efficient   and <\/p>\n
    environmentally   benign   policies,   constitution   of   Central   Electricity   Authority, <\/p>\n
    Regulatory   Commissions   and   establishment   of   Appellate   Tribunal   and   for <\/p>\n
    matters connected therewith or incidental thereto.  The Act makes provisions for <\/p>\n
    every aspect of the matter concerning electricity including, inter alia,  referring <\/p>\n
    for arbitration disputes involving generating companies or transmission licensees <\/p>\n
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\n     KPP                            -23-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    or disputes between licensees and generating companies. The learned counsel <\/p>\n
    further submits that the 2003 Act is a  Special Act and is a complete Code with <\/p>\n
    respect   to   all   matters   concerning   electricity,   including   the   development   of   a <\/p>\n
    market in power.  He submits that Section 66 read with Section 178 (2) (y) of <\/p>\n
    the Act  enables CERC to make regulations for the development of the market in <\/p>\n
    power, including trading.  This necessarily covers all aspects of the market and <\/p>\n
    business\/trading in power and would include both spot and forward contracts <\/p>\n
    for the sale or purchase of electricity.   Mr. Chinoy submits that the concept of <\/p>\n
    trading necessarily covers all forms of business in electricity and includes both <\/p>\n
    spot and forward contracts for sale and purchase of electricity. He submits that <\/p>\n
    CERC is the Central Commission established  by the Central Government under <\/p>\n
    sub-section (1) of Section 3 of the Electricity Regulatory Commissions Act, 1998 <\/p>\n
    and functioning as such before the date of coming into force of the Act of 2003 <\/p>\n
    and as such is the Central Commission for the purpose of the Act in terms of <\/p>\n
    Section 76 thereof.  CERC exercises functions and powers as a regulator in the <\/p>\n
    whole of India in regard to Electricity. Section 79 of the 2003 Act specifies some <\/p>\n
    of   the   specific   functions   to   be   discharged   by   the     CERC.     Sub-section   (j)   of <\/p>\n
    Section 79 of the Electricity Act deals with fixing the trading margin in the inter-\n<\/p>\n
    State   trading   of   electricity,   if   considered   necessary.     In   the   instant   case, <\/p>\n
    electricity is not a good which can be delivered. It is submitted  that the CERC is <\/p>\n
    empowered to take  appropriate measures to regulate  to regulate transactions in <\/p>\n
    power     as   it   thinks   fit.     Mr.   Chinoy   submits   that   the   forward   contracts   in <\/p>\n
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\n     KPP                           -24-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    electricity\/for   the   delivery     of   electricity   are   necessarily   matters   concerning <\/p>\n
    electricity and are within the ambit of Section 55 read with Section 178 (2) (y) <\/p>\n
    of the  Electricity Act.   Mr. Chinoy further  submits that if there is   a  conflict <\/p>\n
    between Union and State Lists, the Union list will prevail but when Parliament <\/p>\n
    has framed two enactments, then the object of the Act is to be seen. Mr. Chinoy <\/p>\n
    submits that the contention that forward contracts for electricity are not within <\/p>\n
    the purview of Electricity Act, is based on a misreading of the nature of forward <\/p>\n
    contracts   under   the   FCRA.   The   learned   counsel   submits   that   the   forward <\/p>\n
    contracts in electricity are necessarily contracts for the delivery   of electricity.\n<\/p>\n
    He submits that  FMC cannot file any proceedings as the writ can only be filed <\/p>\n
    by   Union   of   India   through   the   Ministry   of   Consumer   Affairs.       FMC   is   a <\/p>\n
    department of the Ministry of Consumer Affairs and is not a body corporate.  He <\/p>\n
    submits   that   the   Electricity   Act,   2003   is   an   exhaustive   code   on   all   matters <\/p>\n
    concerning  electricity. He submits that Sections 173 and 174 of the Act of 2003 <\/p>\n
    stipulate   that   the   provisions   of   the   Act   shall     have   effect   notwithstanding <\/p>\n
    anything inconsistent therewith contained in any other law for the time being in <\/p>\n
    force.  He submits that the Electricity Act is a consolidating statute on all matters <\/p>\n
    concerning electricity. Section 66 read  with Section 178 (2) (y) gives CERC the <\/p>\n
    power to legislate and frame the regulation. He submits that Article 246 of the <\/p>\n
    Constitution can never apply to the  instant case as that Article deals only with a <\/p>\n
    conflict between entries pertaining to the Union and the States.  He submits that <\/p>\n
    the forward contracts in electricity\/for the delivery of electricity are necessarily <\/p>\n
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\n     KPP                           -25-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    matters   concerning   electricity   and   within   the   ambit   of   Section   66   read   with <\/p>\n
    Section 178 (2) (y) of the Act of 2003. He submits that all forward contracts are <\/p>\n
    delivery contracts.  It is not a financial contract.  He submits that the impugned <\/p>\n
    Regulations have been made by CERC  under Section 66 read with Section  178 <\/p>\n
    (2) (y) of the Act   of   2003 which have been published under a public notice <\/p>\n
    dated   22nd  September,   2009.     There   is   nothing   unconstitutional     in   the <\/p>\n
    regulations   so   as   to   consider   the   prayer   of   the   petitioner   for   staying     the <\/p>\n
    operation of  the  regulations.   He   submits that the  Regulations deal   with  the <\/p>\n
    creation   of   a   comprehensive   market   structure   and   enabling   the   transaction, <\/p>\n
    execution    and  contracting  of  all  types  of  possible  products  in the  electricity <\/p>\n
    markets. Section 66 of the Act of 2003 mandates the   CERC to promote the <\/p>\n
    development of a market in power.  He submits that in the event of repugnancy <\/p>\n
    between the regulations\/prescriptions made by the FMC and CERC, the CERC’s <\/p>\n
    guidelines\/prescriptions\/regulations will prevail. He submits that the principle <\/p>\n
    of contemporaneo expositio is inapplicable to the instant case as is clear from the <\/p>\n
    judgments to which we shall refer later on.   He submits that the  Regulations <\/p>\n
    have been made by the CERC in exercise of the powers vested in and functions <\/p>\n
    laid down under the provisions of Section 66 read with Section 178 (2) (y) of <\/p>\n
    the Act of 2003 and in compliance with the mandate   of National Electricity <\/p>\n
    Policy notified by the Central Government  under Section 3 of the Electricity Act <\/p>\n
    of 2003.\n<\/p>\n
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     KPP                          -26-         W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    21.          Mr.   Dwarkadas,   learned   senior   counsel   appearing   for   the   FMC, <\/p>\n
    submits that the FMC is a Regulatory authority under the Ministry of Consumer <\/p>\n
    Affairs, Food and Public Distribution, Govt. of India  and has been set up in 1953 <\/p>\n
    under the provisions of the FCRA.   He submits that FMC has filed the above <\/p>\n
    petition being Writ Petition No. 1604 of 2009 challenging the order dated 28 th <\/p>\n
    April, 2009 passed by CERC, modified order dated 11th January, 2010 passed by <\/p>\n
    CERC   and   the   Regulations   notified   by   CERC   on   20th  January,   2010.\n<\/p>\n
    Mr.   Dwarkadas   submits   that   by   passing   the   impugned   orders   and   the <\/p>\n
    regulations,   CERC   has   tried   to   usurp   jurisdiction   over   forward   and   futures <\/p>\n
    market which fall within the exclusive domain of FMC by virtue of the provisions <\/p>\n
    contained in FCRA enacted by Parliament in exercise of the power vested in it by <\/p>\n
    Entry 48 of List-1 in the Seventh Schedule of the Constitution of India which <\/p>\n
    gives power to the Parliament to legislate  on the subject of Stock Exchanges and <\/p>\n
    Futures markets. Mr. Dwarkadas further submits  that FMC vide its letter dated <\/p>\n
    7th  January,   2009   explained   to   the   CERC   that   under   the   FCRA   and   the <\/p>\n
    notification   issued   by   the   Central   Government,   through   the   Ministry   of <\/p>\n
    Consumer   Affairs,   Food   and   Public   Distribution   on   9th  January,   2006   under <\/p>\n
    Section 15 of FCRA, the FMC alone has jurisdiction to regulate forward contracts <\/p>\n
    in electricity.  Spot market and Forward markets in goods can  be regulated by <\/p>\n
    two different regulators. Forward trading in electricity  comes under the purview <\/p>\n
    of FCRA and this does not take away   the jurisdiction of CERC in respect of <\/p>\n
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\n     KPP                             -27-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    regulating spot trading in electricity. He submits that the provisions of FCRA <\/p>\n
    were  analysed  in great  detail  by  the  Supreme  Court in the  case  of  Raghubir  <\/p>\n
    Dayal   Jai   Prakash   and   others   vs.   Union   of   India   and<\/a>   another1  wherein   the <\/p>\n
    Supreme Court quoted the Expert Committee’s report regarding functioning of <\/p>\n
    forward trading.   He submits that the impugned orders of the CERC and the <\/p>\n
    regulations in so far as they relate to forward trading in electricity, therefore, <\/p>\n
    deserve to be quashed. He submits that FMC had granted approval in January, <\/p>\n
    2009   to   MCX,   a   national   level   Multi   Commodity   Exchange,   for   providing   a <\/p>\n
    platform   to   trade   in   electricity   forward   contracts,   following   the   notification <\/p>\n
    issued by the Central Government applying provisions of Section 15 of the FCRA <\/p>\n
    whereby   forward   contracts   in   electricity     could   be   traded   only   through   the <\/p>\n
    members of Associations\/Exchange which have been granted recognition  by the <\/p>\n
    Central Government under Section 6 of the  FCRA. MCX had been recognised by <\/p>\n
    the Central Government vide notification dated 26-09-2003. He submits that in <\/p>\n
    view   of   the   provisions   of   FCRA   and   the   notification   issued   by   the   Central <\/p>\n
    Government,   FMC   alone   has   jurisdiction   to   regulate   forward   contracts   in <\/p>\n
    electricity.  He submits that spot market and forward markets are two separate <\/p>\n
    and   distinct   economic   realms,   the   former   is   concerned   with   transactions <\/p>\n
    involving payment and delivery within the period specified for ready delivery <\/p>\n
    contracts whereas the latter is concerned with financial contracts mostly settled <\/p>\n
    by payment of differences between the contract rate and the settlement rate.  He <\/p>\n
    submits   that   the   futures   market   is   included   in   List   I   of   Schedule   VII   of   the <\/p>\n
    1 (1962) 3 SCR 547<\/p>\n
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\n     KPP                            -28-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    Constitution at Entry No. 48 whereas the electricity is included in List III at entry <\/p>\n
    38.  Spot markets in various commodities, agricultural or mineral are governed <\/p>\n
    by the relevant statutes of the Central or  State Lists.  He submits that as per the <\/p>\n
    allocation   of   Business   Rules,   the   Ministry   of   Power   has   been   allocated   the <\/p>\n
    administration   of   the   Electricity   Act   as   well   as   matters   relating   to     CERC, <\/p>\n
    whereas  the Ministry of Consumer Affairs, Food and Public Distribution has the <\/p>\n
    control of future trading and FMC.  Forward Trading in Electricity comes under <\/p>\n
    the purview of FCRA and this does not take away the jurisdiction of the CERC in <\/p>\n
    respect   of   regulating   spot   trading   in   electricity.   He   submits   that   during   the <\/p>\n
    pendency of the petition, the CERC gave permission   on 31st  August, 2009 to <\/p>\n
    PXIL and IEXL which are power exchanges set up under the  Electricity Act, 2003 <\/p>\n
    to   facilitate   spot   trading   in   electricity,   to   organise   month   ahead   contracts   in <\/p>\n
    electricity   which   are   essentially   forward   contracts   in   the   nature   of   Non <\/p>\n
    Transferable   Specific   Delivery   Contracts.   Neither   PXIL   nor   IEXL   have   been <\/p>\n
    granted certificate of registration by the FMC under Section 14A nor recognition <\/p>\n
    has been granted by the Central Government under Section 6 of the FCRA.  Mr. <\/p>\n
    Dwarkadas further submits that the Regulations notified by the CERC also suffer <\/p>\n
    from other fatal flaws.  It speak of derivatives which include options which are <\/p>\n
    specifically   prohibited   by   the   FCRA.   Mr.   Dwarkadas   further   submits   that   the <\/p>\n
    inclusion of associations and exchanges recognized or registered by FMC in the <\/p>\n
    list of market participants covered by the Regulations is misconceived  because <\/p>\n
    their operations cannot be classified into interstate or intrastate.  Mr. Dwarkadas <\/p>\n
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\n     KPP                           -29-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    submits that the Regulations cannot be allowed to undo the notification under <\/p>\n
    Section   15   of   FCRA   issued   in   January,   2006   introducing   forward   trading   in <\/p>\n
    electricity   through   recognized   exchanges   since   the   law   vests   no   authority   in <\/p>\n
    CERC   to   countermand   orders   issued   by   the   Government   under   a   statutory <\/p>\n
    provision of FCRA.  Mr. Dwarkadas further submits that CERC cannot be said to <\/p>\n
    be   an   expert   body   in   the   field   of   regulation   of   forward   trading   and   risk <\/p>\n
    management.  He submits that the regulations have sought to define terms like <\/p>\n
    “derivative   contracts”,   “exchange”   which   means   a   power  exchange   and   other <\/p>\n
    exchanges, “option position”, “other exchange” for the first time. According to <\/p>\n
    Mr. Dwarkadas, these definitions do not find their place in the parent Act which <\/p>\n
    is   basically   structured   to   cater   to   the   physical   aspect   of   the   market   like <\/p>\n
    generation of electricity, licensing, transmission, distribution of electricity, tariff, <\/p>\n
    etc.   Mr. Dwarkadas submits that since there is no concept of exchange trading <\/p>\n
    in the Electricity Act, the regulations cannot provide such a structure along with <\/p>\n
    fees.   Mr. Dwarkadas   submits that the Regulation in so far as they relate to <\/p>\n
    forward contracts deserve to be struck down because (i) they seek to restrict the <\/p>\n
    forward   market   only   to   inter-state   which   is   neither   feasible   nor   permissible <\/p>\n
    because there has to be one national market in which all traders need to have <\/p>\n
    access   to   the   trading   platform;   (ii)   they   extend   the   scope   of   the   CERC <\/p>\n
    jurisdiction beyond the power exchanges to embrace “other exchanges” already <\/p>\n
    recognised   by   the   Govt.   under   the   statutory   provisions   of   FCRA;   (iii)   they <\/p>\n
    encroach on the Central Government’s role in deciding when forward trading is <\/p>\n
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\n     KPP                           -30-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    to   be   introduced   in   a   particular   commodity.   The   regulations   provide   for <\/p>\n
    deferment of introduction of power trading to a future date to be decided by the <\/p>\n
    CERC; (iv) they bring options within the ambit of CERC when they have been <\/p>\n
    specifically prohibited under   Section 19 of FCRA and (v) the regulations lack <\/p>\n
    the   necessary   vires   because   they   seem   to   derive   their   authority   from   an <\/p>\n
    unsustainable   broad   interpretation   of   Section   66   of   the   Electricity   Act   which <\/p>\n
    provides for the “development of a market (including trading) in power’ by the <\/p>\n
    appropriate Commissions.  Mr. Dwarkadas submits that the interpretation of the <\/p>\n
    Section and the word “trading” is not supported by either the text or the context <\/p>\n
    contained   in   the   Electricity   Act.   Sub-section   71   of   Section   2   defines   trading <\/p>\n
    which means purchase of electricity for resale. This definition has no relevance <\/p>\n
    for forward trading in which “short” and “long” positions are taken by traders <\/p>\n
    based on their perceptions of future trends of prices and these are not connected <\/p>\n
    with   a   prior   purchase   or   a   necessary   resale.   In   view   of   the   aforesaid,   Mr. <\/p>\n
    Dwarkadas submits that the two orders of the CERC and the Regulations in so <\/p>\n
    far as they relate to forward trading in electricity deserve to be quashed.\n<\/p>\n
    22.           Mr. Vikas Singh, the learned counsel appearing for respondent No. 3 <\/p>\n
    in Writ Petition No.   1197 of 2010, has submitted that the petitions are not <\/p>\n
    maintainable.   The   learned   counsel   has   raised   preliminary   objection   to   the <\/p>\n
    maintainability of the writ petitions. He submits that under Section 179 of the <\/p>\n
    Electricity Act, a regulation framed by the CERC is supposed to be laid before the <\/p>\n
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\n     KPP                             -31-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    Parliament   and after the passage of 30 days of   such laying, the regulation is <\/p>\n
    deemed to be approved by the Parliament and as per the Constitution Bench <\/p>\n
    judgment   of   the     Supreme   Court   in   the   case   of  PTC   India   Ltd.   vs.   Central  <\/p>\n
    Electricity Regulatory Commission,<\/a> through Secretary1 the Regulations framed by <\/p>\n
    the CERC  are subordinate legislation and are thus law under Article 13 of the <\/p>\n
    Constitution of India wherein law has been defined to include any ordinance, <\/p>\n
    order,  bye-law,  rules  and  regulation  etc.        He   submits  that  the   FCRA   in  its <\/p>\n
    preamble  states that the same only deals with certain types of forward contracts <\/p>\n
    whereas the Electricity Act which is also by the same legislature i.e. The Union <\/p>\n
    Parliament   in  the   preamble   states   that    it   is  an  “act   to   consolidate   the   laws <\/p>\n
    relating to generation, transmission, distribution, trading and use of electricity <\/p>\n
    and   generally   for   taking     measures   conducive   to   development   of   electricity <\/p>\n
    industry   permitting   competition   therein   protecting   interest   of   consumers   and <\/p>\n
    supply   of   electricity   to   all   areas,   rationalization   of   electricity,   tariff”   etc.   He, <\/p>\n
    therefore,   submits   that   the   Electricity   Act   deals   with   the   entire   subject   of <\/p>\n
    electricity   and   hence  after   the   passing   of  the  said   Act   any  other   Central   Act <\/p>\n
    which could have been dealing with the subject of electricity is denuded of its <\/p>\n
    power to deal with the same.   He submits that Section 3 of the Electricity Act <\/p>\n
    which finds mention in Section 66 of the Electricity Act provides that the Central <\/p>\n
    Government shall from time to time prepare the national electricity policy.   The <\/p>\n
    learned counsel further submits that the notification issued by the Ministry of <\/p>\n
    Consumer Affairs in January, 2006 was contrary to the express provisions of the <\/p>\n
    1 AIR 2010 SC 1338<\/p>\n
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\n     KPP                           -32-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    Electricity   Act   which   Act   was   an   Act   to   consolidate   the   laws   relating   to <\/p>\n
    electricity.     The   learned   Counsel   further   submits   that   on   a   plain   reading   of <\/p>\n
    Article 246 of the Constitution of India, it is clear that the Constitution does not <\/p>\n
    create any primacy of Acts of the Union Parliament under List-1 vis-a-vis other <\/p>\n
    Acts of the Union Parliament under List-III. The said Article is only dealing with <\/p>\n
    a   conflict   between   the   legislation   by   the   Union   Parliament   as   against   the <\/p>\n
    legislation by the State Legislature.   The learned counsel further submits that <\/p>\n
    after the enactment of the Electricity Act, the Central Government was denuded <\/p>\n
    of its power to issue a notification under Section 15 of the FCRA as the entire <\/p>\n
    subject of electricity was taken over in the Electricity Act including trading in <\/p>\n
    electricity   and   development   of   the   market   of   power   in   electricity   including <\/p>\n
    trading.   It is the further submission of the learned counsel that the sale and <\/p>\n
    purchase of electricity in power exchanges is a relatively new development all <\/p>\n
    over   the   world   and   hence   the   Union   Parliament   in   its   wisdom   thought   it <\/p>\n
    appropriate   to   confer   the   power   on   the     various   appropriate   commissions   to <\/p>\n
    decide as to when the market of electricity becomes right for being traded on <\/p>\n
    power exchanges.   Lastly he submits that futures in electricity, whether to be <\/p>\n
    permitted   or   not   and   if   to   be   permitted   under   what   conditions   is   to   be <\/p>\n
    determined by the appropriate commission as a part of its mandate to develop <\/p>\n
    the   market   of   power   including   trading   of   electricity   as   specified   that   is   by <\/p>\n
    regulations   as   per   the     National   Electricity   Policy   formulated   by   the   Central <\/p>\n
    Government under Section 3 of the Electricity Act.   He submits that  the writ <\/p>\n
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\n     KPP                           -33-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    petitions, being devoid of any merits, be rejected with costs.\n<\/p>\n
    23.           It may be noted  that against the interim order dated 15th February, <\/p>\n
    2010, passed in Writ Petition No. 1197 of 2010   and order dated 23 rd  March, <\/p>\n
    2010 in Notice of Motion No. 100 of 2010, by which a Division Bench of this <\/p>\n
    Court refused to grant  reliefs, the MCX preferred a Special Leave Petitions in the <\/p>\n
    Supreme Court of India wherein MCX raised the following principal questions <\/p>\n
    viz. (i) whether forward contract in electricity would be governed by the FCRA <\/p>\n
    in view of the notification dated 9th January, 2006 expressly notifying electricity <\/p>\n
    as a commodity under the FCRA?, (ii) whether the CERC would have jurisdiction <\/p>\n
    for framing regulations in respect of forward contracts in electricity despite no <\/p>\n
    specific power having been given to the CERC under the Electricity Act, 2003?\n<\/p>\n
    (iii) whether the CERC, which is a statutory commission, can interfere with  or <\/p>\n
    regulate   the   working   of   another   statutory   commission   i.e.   FMC   ?   and   (iv) <\/p>\n
    whether in view of the fact that the provisions of the FCRA can he harmonized <\/p>\n
    with the provisions of the  Central Electricity Regulation Act, CERC is justified in <\/p>\n
    giving   direction   in   respect   of   members   of   the   FMC.     The   said   Special   Leave <\/p>\n
    Petitions   came to be dismissed on   5th  April, 2010. The order of the Supreme <\/p>\n
    Court of India reads thus:\n<\/p>\n
              “Heard learned counsel for the parties.  Since the High Court
\n              is seized of the main case as well as interim matter, we do not
\n              find any justification to entertain the petitioner’s prayer. The
\n              Special Leave petition is dismissed. <\/p><\/blockquote>\n
                        We have no doubt that the High Court will take note of <\/p>\n
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\n     KPP                          -34-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
             the   urgency   involved   in   the   matter   and   pass   appropriate <\/p>\n
             order at an early date in accordance with law.”\n<\/p>\n
    24.          This Court is, therefore, now required to consider as to whether the <\/p>\n
    forward contract   is exclusively within the jurisdiction of FMC in view of the <\/p>\n
    notification dated 9th  January, 2006 and whether CERC can deal with futures <\/p>\n
    contract in the matter of electricity in view of the Regulations framed by it. At <\/p>\n
    this stage, the decision of the Supreme Court in the case of  Sarwan Singh v.\n<\/p>\n
    Kasturi Lal1  is required to be taken into consideration. The Supreme Court in <\/p>\n
    para of the said judgment held as under.\n<\/p>\n
           “When two or more laws operate in the same field and each
\n           contains a non-obstante clause stating that its provisions will
\n           override   those   of   any   other   law,   stimulating   and   incisive
\n           problems   of   interpretation   arise.   Since   statutory <\/p>\n
           interpretation   has   no   conventional   protocol,   cases   of   such
\n           conflict   have   to   be   decided   in   reference   to   the   object   and <\/p>\n
           purpose of the laws under consideration”\n<\/p><\/blockquote>\n
    25.          It is required to be noted that both the regulatory authorities are <\/p>\n
    functioning under different statutes and, therefore, neither of them can be said <\/p>\n
    to be subject to the jurisdiction of other.  In our view, CERC has no jurisdiction <\/p>\n
    to give any direction in connection with the decision taken by FMC under the <\/p>\n
    FCRA. As long  as the statutory enactment prevails today, the subject matter of <\/p>\n
    forward contract is regulated under the provisions of FCRA  in connection with <\/p>\n
    the delivery of  goods  and the payment of a price therefor.\n<\/p>\n
    1 (1977) 1 SCC 750<\/p>\n
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\n     KPP                           -35-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    26.           Before we delve into the matter, it is necessary to have the factual <\/p>\n
    matrix in connection with the enactment of  the FCRA and Electricity Act, 2003.\n<\/p>\n
    The   FCRA was enacted on 26th  December, 1952, providing for regulation of <\/p>\n
    certain matters relating to forward contracts, the prohibition of options in goods <\/p>\n
    and for  matters connected   therewith.     Sub-section (b) of Section 2 defines <\/p>\n
    “Commission”   means   the   Forward   Markets   Commission   established   under <\/p>\n
    Section 3. The forward contract means a contract for the delivery of goods and <\/p>\n
    which is not a ready delivery contract. Section 2 (i) deals with “ready delivery <\/p>\n
    contract” and the same reads as under:\n<\/p>\n
              ”   (i)   “ready   delivery   contract”   means     a   contract   which
\n              provides for the delivery of goods and the payment of a price
\n              therefor,   either   immediately   or   within   such   period   not <\/p>\n
              exceeding   eleven   days   after   the   date   of   the   contract   and
\n              subject to such conditions as the Central Government  may, by
\n              notification in the official Gazette, specify in respect of any <\/p>\n
              goods, the period under   such contract not being capable of
\n              extension   by   the   mutual   consent   of   the   parties   thereto   or
\n              otherwise.”\n<\/p><\/blockquote>\n
    Chapter   II   of   FCRA   deals   with   Forward   Market   Commission.       Insofar   as <\/p>\n
    spot\/physical market is concerned, the seller delivers the good immediately and <\/p>\n
    the buyer pays for it on the spot. No conditions are attached to the delivery.  The <\/p>\n
    main  characteristic   of   spot   market   is  that   there   is  immediate   delivery   of   the <\/p>\n
    electricity.     In the case  of  forward  markets, considering  the  volatility of the <\/p>\n
    prices of the spot market, buyers and sellers often agree to the price, quality and <\/p>\n
    quantity of goods in advance of actual delivery and the goods are delivered on a <\/p>\n
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\n     KPP                             -36-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    future date.  These contracts will have a mode and timing of payments as also <\/p>\n
    penalties, if any, for failure to deliver goods or failure to make payment.  Instead <\/p>\n
    of   having   one   to   one   relationship,   many   buyers   and   sellers   may   develop   a <\/p>\n
    market for trading in advance of the delivery. In the electricity sector, long term <\/p>\n
    power   purchase   agreements   are   examples   of   forward   contracts   between <\/p>\n
    generators and distribution companies.   The forward contracts can be traded in <\/p>\n
    a     secondary   market.   The   traders,   including   those   neither   producing   nor <\/p>\n
    consuming the good, can participate in this market.  Parties not willing to take <\/p>\n
    physical   delivery   can   also   participate   in   this   market   by   selling   their   forward <\/p>\n
    contracts. Such markets where contracts are not backed by physical delivery are <\/p>\n
    futures markets.  On the face of it, this market consists of speculators.  However, <\/p>\n
    the market   benefits   from the presence of these speculators as they increase <\/p>\n
    depth   and   liquidity.     It   is   required   to   be   stated     that   the   future   prices   for <\/p>\n
    electricity   traded   on   the   exchanges   make   the   demand   and   supply   to   adjust <\/p>\n
    themselves   to   the   signals   they   provide   and   converge     onto   the   spot   market <\/p>\n
    prices.     In   addition   thereto,   futures   markets   consist   of   stakeholders   who   are <\/p>\n
    beyond   the   physical   market   stakeholders   and   also   participate   in   the   price <\/p>\n
    discovery process making it a highly participative process for providing a better <\/p>\n
    future indication on electricity prices allowing all users of electricity to hedge the <\/p>\n
    risks   in   electricity   prices   through   the   financial   instrument   called   ‘electricity <\/p>\n
    futures’ without fear of providing or taking delivery.\n<\/p>\n
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     KPP                           -37-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    27.        By virtue of Section 15 of the FCRA,   forward contracts can be entered <\/p>\n
    into only in respect of goods notified by the Central Government in the Official <\/p>\n
    Gazette   and   the   said   contracts   in   respect   of   the   goods   so   notified   are <\/p>\n
    mandatorily required to be entered into only by and between  the members of a <\/p>\n
    recognised   association   or   with   any   such   member,   failing   which   a   forward <\/p>\n
    contract even in respect of notified goods would be illegal.   On a notification <\/p>\n
    being   issued   in   respect   of   any   of   the   goods   by   the   Central   Government,   the <\/p>\n
    forward contracts in respect thereof would be regulated under the provisions of <\/p>\n
    FCRA by the regulatory authority being the FCA constituted under Section 3 of <\/p>\n
    the FCRA.   Under Section 15   of the FCRA, the Central Government issued a <\/p>\n
    notification dated 9th January, 2006, whereby electricity was specified as goods <\/p>\n
    in respect of which forward contracts could be entered into.  Pursuant thereto, <\/p>\n
    forward contracts relating to electricity came to be traded on the platform of <\/p>\n
    MCX. Under Section 4 of the FCRA, FMC is required, inter alia, to keep forward <\/p>\n
    markets under observation and to take such action as necessary in relation to <\/p>\n
    forward markets, collect and publish information regarding trading conditions <\/p>\n
    and   to   undertake   inspection   of   the   accounts   and   other   documents   of   a <\/p>\n
    recognized association viz. Associations recognized by the Central Government <\/p>\n
    under  Section 6, which  associations may enter  into contracts with  respect to <\/p>\n
    specified goods or classes of goods. The FCRA is a complete code which provides <\/p>\n
    for setting up the FMC which advises the Central Government in the matter of <\/p>\n
    forward   trading   in   commodities,   registers   every   association   which   organizes <\/p>\n
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\n     KPP                          -38-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    forward  trading   and  approves Rules and  Bye  laws of   Associations  organizing <\/p>\n
    forward trading. FCRA provides for recognition of associations by the Central <\/p>\n
    Government (Ministry of Consumer Affairs, Food and Public Distribution) which <\/p>\n
    may   provide   for   trading   in   futures   in   notified   commodities.     FMC   is   also <\/p>\n
    responsible     for   keeping   forward   market   under   observation,   inspection   of <\/p>\n
    associations or their members and working for improving the organization of <\/p>\n
    markets.     FCRA   provides   emergency   powers   to   the   FMC   and   the   Central <\/p>\n
    Government to suspend trading, suspend members of Association and even to <\/p>\n
    supersede   the   governing   body   of   the   Exchange.       FCRA   also   provides   for <\/p>\n
    penalties for contravention of provisions contained in the Act.\n<\/p>\n
    28.     The Electricity Act, 2003 came to be enacted on 26 th May, 2003 and the <\/p>\n
    same provided for the establishment of CERC to regulate, inter alia, the price of <\/p>\n
    electricity.   The   Electricity   Act   also   provides   for   intra-state   transactions   in <\/p>\n
    contracts   relating   to   electricity   by   State   Electricity   Regulatory   Commissions.\n<\/p>\n
    Under the ambit of the Electricity Act, the regulatory authorities are the CERC <\/p>\n
    and the State Electricity Regulatory Commissions.   Pursuant to Section 14 (c), <\/p>\n
    each of these  authorities has the  power to grant a  license    to any person to <\/p>\n
    undertake trading in electricity as an electricity trader.  Part V of the Electricity <\/p>\n
    Act   provides for both inter-state and intra-state transmission of electricity; the <\/p>\n
    CERC   governs   inter-state   transmission,   while   a   State   Regulatory   Commission <\/p>\n
    would   govern   intra-state     transmission   within   a   given   time.     Section   66 <\/p>\n
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\n     KPP                           -39-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    conceives of a developmental role for the appropriate commission and provides <\/p>\n
    that   it   shall   endeavour   to   promote   the   development   of   a   market   (including <\/p>\n
    trading) in power in such manner as may be specified.   The mandate of the <\/p>\n
    Central   Commission   under   Section   79   is   to,   inter   alia,   regulate   inter   state <\/p>\n
    transmission   of   electricity,   determine   tariff   and   issue   licenses   to   electricity <\/p>\n
    traders with respect to  inter-State  transmission and to  fix trading  margins  in <\/p>\n
    inter-State trading. Under Section 86, the State Commissions are required to, <\/p>\n
    inter   alia,   facilitate   intra-State   transmission   of   electricity,   issue   licenses   to <\/p>\n
    electricity traders with respect to their operations in the State and fix the trading <\/p>\n
    margin in the intra-State trading of electricity.\n<\/p>\n
    29.           On a conjoint reading of the provisions of FCRA and the Electricity <\/p>\n
    Act,   it   is   axiomatic   that   the   Electricity   Act   and   the   authorities   established <\/p>\n
    thereunder have been empowered to govern the various aspects of electricity <\/p>\n
    including generation, transmission, distribution and trading.  It is also clear that <\/p>\n
    the FMC established under the provisions  of FCRA is empowered to govern all <\/p>\n
    futures   and   forward   contracts   including   electricity   futures   contracts   (being   a <\/p>\n
    notified  good under  FCRA). To put it pithily, FMC  and the CERC  have  been <\/p>\n
    established under separate special statutes.\n<\/p>\n
    30.           The following definitions in the Regulations may also be noticed.\n<\/p>\n
            “(f)     “Contract”   means   a   contract   for   or   relating   to   the
\n            purchase or sale of electricity or its related products”\n<\/p>\n
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     KPP                          -40-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
           (k)     “Day ahead contract” means contracts where transaction
\n           occurs on day (T) and delivery of power is on the next day (T
\n           +   1)   and   which   are   scheduled   by   Regional   Load   Despatch <\/p>\n
           Centre or National Load Despatch Centre.\n<\/p>\n
           (o)         “Intraday   contract”\/contingency   contract”   means
\n           contracts where transaction occurs on day (T) after the closure
\n           of  day ahead transaction window and the delivery of power is <\/p>\n
           on   the   same   day   (T)   or   next   day   (T   +   1)   and   which   are
\n           scheduled by Regional Load Despatch Centre or National Load
\n           Despatch Centre.\n<\/p>\n
           (jj)         “Term ahead market” means a market where physical <\/p>\n
           delivery of electricity occurs on a date more than one day ( T
\n           + 2) or more) ahead from the date of transaction (T) and the <\/p>\n
           contracts   in   such   market   can   be   transacted
\n           weekly\/monthly\/yearly or more in advance and have a defined
\n           delivery   period   on   expiry   of   contract   and   is   scheduled   by
\n           Regional   Load   Despatch   Centre   or   National   Load   Despatch <\/p>\n
           Centre.”\n<\/p>\n
    31.         At this stage, the authorities cited at the Bar by the  learned counsel <\/p>\n
    appearing for the parties may be noticed succinctly.\n<\/p>\n
    32.          FCRA is enacted under Entry 48 of List I to the Seventh Schedule  of <\/p>\n
    the Constitution of India i.e.   The Union List.   Mr. Seervai has relied upon the <\/p>\n
    judgment of the Supreme Court in the case of  Waverly Jute   Mills vs. Raymon  <\/p>\n
    and Co. (India)  Private Ltd.1<\/a> to submit that FCRA has been enacted under Entry <\/p>\n
    48 is unquestionable. In this case, the Supreme Court was required to resolve a <\/p>\n
    conflict between Entry 48 of List 1 and Entry 26 of List II. Entry 48 deals with <\/p>\n
    stock exchanges and futures markets whereas Entry 26 deals with   trade and <\/p>\n
    commerce.    The Supreme Court held that trade and commerce would in their <\/p>\n
    1 1963 (3) SCR 209<\/p>\n
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\n     KPP                           -41-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    ordinary   and   accepted   sense   include   forward   contracts,   but   in   a   case   where <\/p>\n
    there are two entries, one general in its character and the other specific, the <\/p>\n
    former must be construed as excluding the latter. It is settled that while reading <\/p>\n
    entries   in   legislative   lists,   the   widest   possible   construction   according   to   the <\/p>\n
    ordinary meaning of the words in the entry must be put upon them. The words <\/p>\n
    employed in the entry are to be interpreted so as to include all ancillary and <\/p>\n
    subsidiary   matters.     Mr.   Seervai   has   also   relied   upon   the   judgment   of   the <\/p>\n
    Supreme Court in the case of  Calcutta Gas Company (Proprietary )Ltd. vs. The <\/p>\n
    State of West Bengal and others1. In this case the Supreme Court was faced with <\/p>\n
    interpreting  the scope of Entries 24 (Industry) and 25 (Gas and Gas Works) in <\/p>\n
    List II of Schedule VII. The appellants in the said case contended that Entry 24 <\/p>\n
    was to be given the widest meaning, so as to include the industry aspect of gas <\/p>\n
    and gas works, leaving other aspects to be covered by Entry 25. The Supreme <\/p>\n
    Court held that if industry in Entry 24   is interpreted to include gas and gas <\/p>\n
    works, entry 25 may become redundant thereby depriving of all its contents.  He <\/p>\n
    submits   that   every   attempt   should   be   made   to   harmonize   the   apparently <\/p>\n
    conflicting entries not only of different lists but also of the same lists and to <\/p>\n
    reject that construction which will rob one of the entries of its entire content and <\/p>\n
    make it nugatory. Mr. Seervai further submitted that the Entry in the Union List-\n<\/p>\n
    I cannot be said to be useless lumber.  In the said case the Supreme Court has <\/p>\n
    held thus:\n<\/p>\n
    1 1962 Supp (3) SCR 1<\/p>\n
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\n     KPP                           -42-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
               “..The rule of construction adopted by that decision for the <\/p>\n
               purpose   of   harmonizing   the   two   apparently   conflicting
\n               entries in the two Lists would equally apply to an apparent
\n               conflict   between   two   entries   in   the   same   List.   Patanjali <\/p>\n
               Sastri,   J.   as   he   then   was,   held   in   State   of   Bombay   v.\n<\/p>\n
               Narothamdas   Jethabai   (1951   S.C.R   51)   that   the   words
\n               “administration   of   justice”   and   “Constitution   and
\n               organization   of   all   Courts”   in   item   One   of   List   II   of   the
\n               Seventh   Schedule   to   the   Government   of   India   Act,   1935 <\/p>\n
               must   be   understood   in   a   restricted   sense   excluding   from
\n               their  scope   “jurisdiction and   powers of   courts”  specifically
\n               dealt with in item 2 of List II.  In the words of the learned
\n               Judge,   if   such   a   construction   was   not   given   “the   wider <\/p>\n
               construction   of   entry   1   would   deprive   entry   2   of   all   its
\n               content   and   reduce   it   to   useless   lumber.”     This   rule   of <\/p>\n
               construction   has   not   been   dissented   from   in   any   of   the
\n               subsequent   decisions   of   this   Court.   It   may,   therefore,   be
\n               taken   as   a   well   settled   rule   of   construction   that   every
\n               attempt   should   be   made   to   harmonize   the   apparently <\/p>\n
               conflicting entries not only of different lists but also of the
\n               same list and to reject that construction which will rob one
\n               of the entries of its entire content and make it nugatory.”\n<\/p>\n
    33.           The legislative entries are useful guides, valuable in ascertaining the <\/p>\n
    scope and ambit of a given statute and may be used to resolve conflicts, real or <\/p>\n
    perceived, between the statutes so as to give effect to both.  In order to buttress <\/p>\n
    the submission to the effect that the legislative entries are important guides to <\/p>\n
    interpretation,   Mr.   Seervai   has     relied   upon   the   observation   of   the   Supreme <\/p>\n
    Court in the case ITC Ltd. vs. Agricultural Produce Market Committee and others1 <\/p>\n
    wherein the Supreme Court has held as under:\n<\/p>\n
            “107.     The   starting   point   in   any   controversy   dealing   with
\n            apparently conflicting legislative  jurisdictions is to see whether
\n            the   conflict   can   be   fairly   reconciled   by   reading   the   entries   to
\n            which the legislations are referable, together and ‘ by interpreting <\/p>\n
    1 (2002) 9 SCC 232<\/p>\n
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\n     KPP                            -43-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
            and, where necessary, modifying the language of the one by that <\/p>\n
            of the other’.  It is only when such resolution is not possible that
\n            the   courts   should   be   called   upon   to   decide   the   question   of
\n            legislative   competence.   This   principle   has   been   stressed   in   a <\/p>\n
            number   of   cases   by   the   Privy   Council,   the   Federal   Court   and
\n            more recently by this Court.”\n<\/p><\/blockquote>\n
    In   view   of   the   above,   the   learned   counsel   for   the   petitioner   submits   that <\/p>\n
    considering the scheme of the two statutes and the entries under which they <\/p>\n
    have   been   enacted,     the   contention   of   the   learned   counsel   for   the   first <\/p>\n
    respondent ought not to be countenanced.\n<\/p>\n
    34.           Mr.   Seervai   submitted   that   the   well-settled   principle   of <\/p>\n
    interpretation of the legislative entries in the three lists of the Seventh Schedule <\/p>\n
    has been enunciated in the judgment of the Supreme Court in the case of ITC <\/p>\n
    Ltd. (supra). The relevant observation of the Supreme Court is as under.\n<\/p>\n
             ”   93.       That   the   legislative   power   of   Parliament   in   certain
\n             areas   is   paramount   under   the   Constitution   is   not   in <\/p>\n
             dispute. …The supremacy of Parliament has been provided for
\n             by the non obstante clause in Article 246 (1) and the words
\n             “subject   to” in Articles 246 (2) and (3).   Therefore, under
\n             Article 246 (1) if any of the entries in the three lists overlap,
\n             the   entry   in   List     1   will   prevail.     Additionally   some   of   the <\/p>\n
             entries in the State List  have been made expressly subject to
\n             the   power   of   Parliament   to   legislate   either   under   List   I   or
\n             under   List   III.   Entries   in   the   lists   of   the   Seventh   Schedule
\n             either under List I or under List III.  Entries in the lists of the
\n             Seventh   Schedule   have   been   liberally   interpreted,
\n             nevertheless courts have been wary of upsetting this balance
\n             by a process  of interpretation so as to deprive any entry of its
\n             content and reduce it to useless lumber..”\n<\/p><\/blockquote>\n
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     KPP                           -44-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    35.           The Supreme Court in the case of Greater Bombay Co-op. Bank Ltd.\n<\/p>\n
    vs. United Yarn Tex (P) Ltd. and others1 has reiterated  the aforesaid observations <\/p>\n
    in the case of ITC  Ltd. (supra) <\/p>\n
    36.           Mr. Seervai submitted that the principle of repugnancy applied only <\/p>\n
    in  the  case  of conflict between legislation enacted by the  Union  and a  State <\/p>\n
    under entries in List III of the Constitution and cannot be applied to conflicts <\/p>\n
    between List I and List III at all, simply because Article 254   refers only to the <\/p>\n
    matters   enumerated   in   the   concurrent   list.   Mr.   Seervai   has   relied   upon   the <\/p>\n
    judgment   of   the   Supreme   Court   in   the   case   of    Ashoka   Marketing   Ltd.   And  <\/p>\n
    another vs. Punjab National Bank and others2. In the said case the Supreme Court <\/p>\n
    was required to decide whether the provisions of the Delhi Rent Control Act, <\/p>\n
    1958 prevailed over those of the Public Premises (Eviction) Act, 1971. In the <\/p>\n
    said   case   the   Supreme   Court   resorted   to   the   general   principles   of   statutory <\/p>\n
    interpretation for the purpose of resolving the conflict between the statutes only <\/p>\n
    due to the fact that both enactments fell under the said legislative list.   In the <\/p>\n
    said case the Supreme Court observed as under.\n<\/p>\n
                “49.     This   means   that   both   the   statutes,   viz.   The   Public
\n                Premises Act and the Rent Control Act, have been enacted by
\n                the same legislature, Parliament, in exercise of the legislative
\n                powers   in   respect   of   the   matters   enumerated   in   the <\/p>\n
    1 (2007) 6 SCC 236
\n    2 (1990) 4 SCC 406<\/p>\n
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\n     KPP                           -45-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
                Concurrent   List.   We   are,   therefore,   unable   to   accept     the <\/p>\n
                contention of the learned Additional Solicitor General that
\n                the Public Premises Act, having been enacted by Parliament
\n                in   exercise   of   legislative   powers   in   respect   of   matters <\/p>\n
                enumerated in the Union List would ipso facto override the
\n                provisions of the Rent Control Act enacted in exercise of the
\n                legislative powers in respect of matters enumerated in the
\n                concurrent list”.\n<\/p><\/blockquote>\n
    Mr. Seervai submits that on the strength of the provisions of Article 246, the <\/p>\n
    FCRA ought to prevail over the provisions of the Electricity Act.\n<\/p>\n
    37.<\/p>\n
                  Mr.   Seervai   then   submitted   that   contemporaneous   documents <\/p>\n
    throwing light on the construction of a statute are admissible external aids to the <\/p>\n
    interpretation   of   such   a   statute.     In   support   of   his   submission,   the   learned <\/p>\n
    counsel has relied upon the decision of the Supreme Court in the case of Desh <\/p>\n
    Bandhu Gupta and Co. and others vs. Delhi Stock Exchange Association Ltd.1   In <\/p>\n
    the<\/a> said case, certain documents issued by the Government simultaneously with <\/p>\n
    a notification under the Securities Contracts (Regulation) Act, 1956 were used <\/p>\n
    as a contemporanea exposition of the notification. In  both cases, using executive <\/p>\n
    documents as a contemporaneous exposition of the Government’s intention, the <\/p>\n
    Supreme Court referred to Crawford on Statutory Construction and stated that <\/p>\n
    contemporaneous   construction   placed   by   administrative   or   executive   officers <\/p>\n
    charged with executing a statute should be shown to be  clearly wrong before it <\/p>\n
    is overturned and that while it is not controlling, it is, nevertheless, entitled to <\/p>\n
    considerable weight and is highly persuasive.  The Supreme Court in the case of <\/p>\n
    1 (1979) 4 SCC 565<\/p>\n
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\n     KPP                           -46-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    K.P. Varghese vs. Income-tax Officer, Ernakulam and<\/a> another1 followed the above <\/p>\n
    dictum and held that this rule of construction by reference to contemporanea <\/p>\n
    expositio is a well established rule for interpreting a statute by reference to the <\/p>\n
    exposition it has received     from contemporary authority, though it must give <\/p>\n
    way where  the language of the statute is plain and unambiguous.\n<\/p>\n
    38.           Mr. Seervai submits that there is a clear distinction between physical <\/p>\n
    markets  and forward markets. The forward markets are markets which are, in a <\/p>\n
    sense, conceptual as they deal with financial aspects of trading in a  commodity.\n<\/p>\n
    The physical markets are engaged in the actual transmission and distribution of <\/p>\n
    electricity. The forward markets and futures provide an opportunity for hedging <\/p>\n
    and stabilising the commodity market against sharp price rises that may occur.\n<\/p>\n
    While forward contracts provide for delivery of the commodity at a future date, <\/p>\n
    less than 1 per cent  of trades of futures contracts actually culminate  in delivery.\n<\/p>\n
    In   short,   a   future   contract   is   not   a   merchandising   contract   but   a   financial <\/p>\n
    contract entered into for the purpose of hedging price risk, and the sheer volume <\/p>\n
    transacted in the futures markets makes it evident that the physical commodity <\/p>\n
    is not, in fact, changing hands.   There exists no urgent necessity for the CERC to <\/p>\n
    exercise jurisdiction over the markets in electricity forward trading.     What is <\/p>\n
    required is, nay, a regulatory body such as the FMC with expertise in forward <\/p>\n
    contracts to oversee the futures markets in electricity.  Mr. Seervai submits that <\/p>\n
    the   two   Acts  operate   in  different  fields and   there  is  no   conflict  between  the <\/p>\n
    1 (1981) 4 SCC 173<\/p>\n
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    provisions thereof.    Even if there is any conflict between the provisions of the <\/p>\n
    two Acts, the FCRA having enacted under Entry 48 of List I of Schedule VII will <\/p>\n
    prevail over the Electricity Act which has been enacted under Entry 38 of List IIII <\/p>\n
    i.e. Concurrent List.     Mr. Seervai submits that in fact even where the CERC <\/p>\n
    attempted to impose  disqualifications in the context of grant of trading licence, <\/p>\n
    the Supreme Court found against  the legality, propriety and constitutionality of <\/p>\n
    the delegated legislation.  In support of his contention, the learned counsel has <\/p>\n
    placed reliance on the judgment of the Supreme Court in the case of  Global  <\/p>\n
    Energy Ltd. and another vs. Central Electricity Regulatory Commission1<\/p>\n
    39.           Controverting   the   submissions   of   Mr.   Seervai,   Mr.   Aspi   Chinoy <\/p>\n
    submits that the Electricity Act   is a consolidating Act   and repeals the Indian <\/p>\n
    Electricity   Act,   1910,   the   Electricity   (Supply)   Act,   1948   and   the   Electricity <\/p>\n
    Regulatory Commissions Act, 1998. Mr. Chinoy submitted  that the  Electricity <\/p>\n
    Act,   2003   is   an   exhaustive   Code   on   all   matters   concerning   electricity.     The <\/p>\n
    learned counsel has placed reliance of the Supreme Court in the case of PTC <\/p>\n
    India Ltd. (supra).  The Supreme Court held thus:\n<\/p>\n
              ” 9.     The 2003 Act is enacted as an exhaustive Code on all <\/p>\n
              matters concerning electricity. It provides for “unbundling” of
\n              SEBs   into   separate   utilities   for   generation,   transmission   and
\n              distribution.   It   repeals   the   Indian   Electricity   Act,   1910,   the
\n              Electricity  (Supply)   Act,  1948   and   the   Electricity   Regulatory
\n              Commissions Act, 1998. The 2003 Act, in furtherance of the
\n              policy envisaged under the Electricity Regulatory Commissions
\n              Act,   1998   (“1998   Act”)   mandated   the   establishment   of     an
\n              independent and transparent regulatory mechanism, and has <\/p>\n
    1 AIR 2009 SC 3194<\/p>\n
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              entrusted wide ranging   responsibilities   with the Regulatory <\/p>\n
              Commissions.   While   the   1998   Act   provided   for   independent
\n              regulation in the area of tariff determination; the 2003 Act has
\n              distanced   the   Government   from   all     forms   of   regulation, <\/p>\n
              namely,   licensing,   tariff   regulation,   specifying   Grid   Code,
\n              facilitating competition through open access, etc .\n<\/p><\/blockquote>\n
    The learned Counsel submits that the Act, therefore, makes provisions for every <\/p>\n
    aspect   of   the   matter   concerning   electricity   including,   inter   alia,   referring   for <\/p>\n
    arbitration   disputes   involving   generating   companies   or   transmission   licenses.\n<\/p>\n
    Sections 173 and 174 of the Act of 2003 stipulate that the provisions of the Act <\/p>\n
    shall have effect notwithstanding anything inconsistent therewith contained in <\/p>\n
    any   other   law   for   the   time   being   in   force.   Mr.   Chinoy   has   relied   upon   the <\/p>\n
    judgment of the Supreme Court in the case of Gujarat Urja Vikas Nigam Limited  <\/p>\n
    vs. Essar Power Ltd.1<\/a> wherein the Supreme Court has held thus:\n<\/p>\n
             “57.  In our opinion, the principle laid down in Section 174 of
\n             the Electricity Act, 2003  is the principal or primary whereas the
\n             principle   laid   down   in   Section   175   is   the   accessory   or
\n             subordinate   to   the   principal.   Hence,   Section   174   will   prevail
\n             over Section 175 in matters where there is any conflict (but no <\/p>\n
             further).\n<\/p><\/blockquote>\n
             58.       In   our   opinion,   Section   174   and   Section   175   of   the
\n             Electricity Act, 2003 can be read harmoniously by utilising the
\n             samanjasya, badha and gunapradhana principles of Mimansa.\n<\/p><\/blockquote>\n
             This can be done by holding that when there is any express or
\n             implied conflict between the  provisions of the  Electricity Act,
\n             2003 and any other Act, then the provisions of the Electricity
\n             Act, 2003 will prevail, but when there is no conflict, express or
\n             implied, both the Acts are to be read together.”\n<\/p><\/blockquote>\n
    1 (2008) 4 SCC 755<\/p>\n
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    40.        Mr. Chinoy further submits that Section 66 read with Section  178(2) <\/p>\n
    (y) of the Act of 2003, clearly enables the CERC to make Regulations for the <\/p>\n
    development of the market in power (including trading). This necessarily covers <\/p>\n
    all aspects of the market and business\/trading in power and would include both <\/p>\n
    spot and forward contracts for the sale or purchase of electricity. The concept of <\/p>\n
    trading  necessarily covers all forms of business in electricity and includes both <\/p>\n
    spot and forward contracts for sale and purchase of electricity.   Section 2 (71) <\/p>\n
    of   the   Act     refers   to   purchase   of   electricity   for   resale   thereof.     This   is   wide <\/p>\n
    enough to cover both spot and forward contracts for electricity.  Mr. Chinoy has <\/p>\n
    referred to the decision of the Supreme Court in the case of Waverly (supra) and <\/p>\n
    submits   that   the   trade   and   commerce   would   in   their   ordinary   and   accepted <\/p>\n
    sense includes forward contracts.  He submits that the market is a place where <\/p>\n
    business   in   the   sale   and   purchase   of   goods   is   carried   on\/transacted.   While <\/p>\n
    relying   on   the   judgment   of   the   Supreme   Court   in   the   case   of  Chimanlal  <\/p>\n
    Premchand vs. The State of Bombay1, Mr. Chinoy submits that  the power under <\/p>\n
    Section 26 of the Bombay Agricultural Produce Markets Act to make rules for a <\/p>\n
    market would include the power to make rules for the regulation of business <\/p>\n
    and conditions of trading in the market area and that included making rules <\/p>\n
    stipulating   that   no   person   could   do   business   in   agricultural   produce   except <\/p>\n
    under a license granted by the Market Committee.\n<\/p>\n
    1 AIR 1960 SC 96<\/p>\n
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    41.     Mr. Chinoy further submits that Article 246 of the Constitution of India <\/p>\n
    provides for the supremacy of Parliamentary legislation over State legislation <\/p>\n
    and   has   no   application   when   considering   which   of   two   Parliamentary <\/p>\n
    Legislations   will   prevail\/override   the   other.     Since   both   the   legislations   are <\/p>\n
    Parliamentary   legislations,     there   is   no   issue   of   constitutional   competence   to <\/p>\n
    enact the Act of 2003 or any of its provisions can arise.  It is well settled that an <\/p>\n
    enactment can be attributed to more than one entry  in the lists. He submits that <\/p>\n
    a  piece  of  legislation need  not necessarily fall  within  the  scope  of one  entry <\/p>\n
    alone, more than one entry may overlap to cover the subject matter of a single <\/p>\n
    piece   of   legislation.    Mr.  Chinoy   submits  that  if   both   Acts  were   special   laws <\/p>\n
    containing   non   obstante   clauses,   the   latter   Act   must   prevail.     The   learned <\/p>\n
    counsel has placed reliance on the judgment of the Supreme Court in the case of <\/p>\n
    Solidaire   India   Limited   vs.     Fairgrowth   Financial   Services   Limited   and   others<\/a> 1 <\/p>\n
    wherein the Supreme Court has held as under:\n<\/p>\n
             “Where   there   are   two   special   statutes,   which   contain   non
\n             obstante clauses the later  statute must prevail. This is because <\/p>\n
             at the time of enactment of the later statute, the Legislature was
\n             aware  of the earlier legislation and its non obstante clause. If
\n             the   Legislature   still   confers   the   later   enactment   with   a   non
\n             obstante   clause   it   means   that   the   Legislature   wanted   that
\n             enactment to prevail.  If the Legislature does not want the later <\/p>\n
             enactment  to  prevail  then it could  and  would provide  in the
\n             later   enactment   that   the   provisions   of   the   earlier   enactment
\n             continue to apply”\n<\/p><\/blockquote>\n
    1 (2001) 3 SC C 71<\/p>\n
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    Relying on the aforesaid, Mr. Chinoy submits  that since both the enactments are <\/p>\n
    Parliamentary legislations, no question of lack of competence arises nor is there <\/p>\n
    any need to read down or interpret entry 38 of List III vis a vis Entry 48 of List 1 <\/p>\n
    as has been submitted by the learned counsel for the petitioners.   The learned <\/p>\n
    counsel reiterates that it is well settled that an  enactment can be attributed to <\/p>\n
    more than one entry in the Lists.  In view thereof, the provisions of the Act of <\/p>\n
    2003   in   so   far   as   they   relate   to     forward   contracts   in   electricity,   could,   in <\/p>\n
    addition to Entry 38 of List III, also be rested on Entry 48 of List I, in so far as <\/p>\n
    provisions   of   the   Act   of   2003   relate   to   forward   contracts.     Mr.   Chinoy   has <\/p>\n
    submitted that time has not reached where electricity can be effectively dealt <\/p>\n
    with in futures contract  at present though in future the position may change.\n<\/p>\n
    42.         Mr. Dwarkadas, Senior Counsel, appearing for FMC, submits that the <\/p>\n
    Supreme Court in the case of Raghubar Dayal Jai Parkash and others vs. Union of  <\/p>\n
    India1<\/a>  scrutinised in great detail the provisions of FCRA wherein the Supreme <\/p>\n
    Court quoted the Expert Committee report to which the bill on Forward Contract <\/p>\n
    Regulation had been referred. The said quotation reads thus:\n<\/p>\n
            “Forward trading involves speculation about the future, but not <\/p>\n
            all   forms   of   forward   trading   could   be   considered   as   either
\n            unnecessary   or   undesirable     for   the   efficient   functioning   of
\n            anything   but   the   most   primitive   economy…   To   the   extent   to
\n            which   forward   trading   enables   producers,   manufacturers   and
\n            traders   to   protect   themselves   against   the   uncertainties   of   the
\n            future,   and   enables   all   the   relevant   factors   whether   actual   or
\n            anticipated, local or international, to exercise their due influence
\n            on prices, it confers a definite boon on the community, because <\/p>\n
    1 AIR 1962 SC 263<\/p>\n
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           to   that   extent,   it   minimises   the   risks   of   production   and <\/p>\n
           distribution   and   makes   for   greater   stability   of   prices   and
\n           supplies….It is therefore necessary to eliminate certain forms of
\n           forward   trading,   and   permit   others   under   carefully   regulated <\/p>\n
           conditions,   in   order   to   ensure   that,   while   producers,
\n           manufacturers and traders will have the facility they need for the
\n           satisfactory conduct of their business, the wider interest of the
\n           community, and particularly, the interest of consumers, will be
\n           adequately  safeguarded  against  any abuse  of  such   facilities  by <\/p>\n
           others.”\n<\/p><\/blockquote>\n
    43.     The status of the FMC as an expert body to ensure the proper regulation <\/p>\n
    of forward contracts in the best interest of the society has been reiterated by the <\/p>\n
    Supreme Court in the cases of (i)  Waverly Jute Mills (supra), (ii) Union of India  <\/p>\n
    and   another   vs.   Rajdhani   Grains   and   Jaggery   Exchange   Ltd.   and   others 1,   and <\/p>\n
    (iii)The   Mahabir   Beopar   Mandal  Ltd.  vs.   The   Forward   Markets  Commission2.<\/a>\n<\/p>\n
    44.      The term “market” has been elaborately defined by the Supreme Court in <\/p>\n
    the   case   of   Waverly   Jute   Mills   (supra).   The   relevant   observations   of   the <\/p>\n
    Supreme Court read thus:\n<\/p>\n
              “9.  Market no doubt ordinarily means a place where business
\n              is being transacted. That was probably all that it meant at a
\n              time   when   trade   was  not  developed   and   when  transactions
\n              took  place  at  specified  places. But  with the  development  of <\/p>\n
              commerce, bargains came to be concluded more often that not
\n              through   correspondence   and   the   connotation   of   the   word
\n              ‘market’   underwent   a   corresponding   expansion.     In   modern
\n              parlance the word ‘market’ has come to mean business as well
\n              as the place where business is carried on. Labour Market for
\n              example, is not a place where labourers are recruited but the
\n              conditions of the business of labour. The word ‘market’ being <\/p>\n
    1 AIR 1975 SC 1218,
\n    2 AIR 1977 SC 1562<\/p>\n
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             thus capable of signifying both business and the place where <\/p>\n
             the business is carried on, the question in what sense it is used
\n             in a particular statute must be decided on a consideration of
\n             the   context   of   that   statute.     Thus   in   Public   Prosecutor   vs. <\/p>\n
             Cheru   Kutti     (AIR   1925   Mad.   1095)   and   Commissioner,
\n             Coimbatore   Municipality   vs.   Chettimar   Vinayagar   Temple
\n             Committee   (   1956   (2)   MLJ   563),   the   question   arose   with
\n             reference to provisions as to licensing by local authorities, and
\n             for that purpose market was interpreted as  meaning a place.\n<\/p><\/blockquote>\n
             We we must examine that the word market means in Entry 48
\n             “Futures Markets” in List 1.  The word ‘futures’ is thus defined
\n             in   Encyclopaedia   Britannica   “contracts   which   consist   of   a
\n             promise to deliver specified qualities of some commodity at a <\/p>\n
             specified future time. The obligation is for a single quantity in
\n             a given month… Futures are thus a form of security, analogous <\/p>\n
             to a bond or promissory note”.   In this sense a market can
\n             have reference only to business and not to any location. In our
\n             opinion,   a   legislation   on   Forward   Contracts   would   be   a
\n             legislation on futures markets.”\n<\/p><\/blockquote>\n
    45.     Referring to the judgment of the Supreme  Court in the case of Gujarat <\/p>\n
    Urja Vikas Nigam Ltd. vs. Essar Power Ltd.1, Mr. Dwarkadas<\/a> submitted that CERC <\/p>\n
    has sought to contend only the third test of Mimansa System (Badha). However, <\/p>\n
    before applying this   test, there are two tests to be applied, as observed in the <\/p>\n
    said case. The principles are as under:\n<\/p>\n
            ”   1.       Where   two   texts     which   are   apparently   conflicting   are
\n            capable  of being reconciled, then by the principle of harmonious
\n            construction   (which   is   called   the   Samanjasya   Principle   in <\/p>\n
            Mimansa) they should be reconciled. <\/p><\/blockquote>\n
            2.       The second situation is a conflict where it is impossible to
\n            reconcile   the   two   conflicting   texts   despite   all   efforts.   In   this
\n            situation, the vikalpa principle applies, which says that whichever
\n            law   is   more   in   consonance   with   reason   and   justice   should   be
\n            preferred. However, conflict should not be readily assumed and
\n            every effort should be made to  reconcile  conflicting  texts. It is <\/p>\n
    1 (2008) 4 SCC 755<\/p>\n
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              only   when   all   efforts   of   reconciliation   fail   that   the   vikalpa <\/p>\n
              principle is to be resorted to.\n<\/p>\n
              3.    There is a third situation of a conflict and this is where there <\/p>\n
              are two conflicting irreconcilable texts but one overrides the other
\n              because of its greater force. This is called a badha in the Mimansa
\n              system (similar to doctrine of ultra vires)<\/p>\n
     46.     Mr. Vikas Singh, learned counsel appearing for respondent No.3 submits <\/p>\n
    that in view of the special enactment under the Electricity Act, it is only the <\/p>\n
    authority   under   the   Electricity   Act   can   deal   with   futures   contract   and   FMC <\/p>\n
    cannot deal with electricity in any manner including  the futures contract.  The <\/p>\n
    learned counsel submits that whenever a central regulation is to be challenged, <\/p>\n
    notice   has   to   go   to   the   Attorney     General   of   India.   In   order   to   buttress   the <\/p>\n
    submission of the learned counsel, he has placed reliance of the Supreme Court <\/p>\n
    of India in the cases of (i) A.C. Sharma vs. Delhi Administration1 and (ii) Basant  <\/p>\n
    Lal vs. State of U.P. And<\/a> another2.  The learned counsel further submits that the <\/p>\n
    preamble in the FCRA is similarly worded to the preamble in the Specific Relief <\/p>\n
    Act in which  Act also it is stated to be concerning certain kinds of specific relief.\n<\/p>\n
    The Supreme Court has held that the Specific Relief Act is not a comprehensive <\/p>\n
    legislation   dealing   with   all   aspects   of   specific   relief.   In   this   connection,   the <\/p>\n
    learned counsel has relied upon the decision of the Supreme Court in the case of <\/p>\n
    Hungerford   Investment   Trust   Limited   (In   voluntary   Liquidation)   vs.   Haridas  <\/p>\n
    Mundhra and others<\/a>3. The learned counsel has also relied upon the decision of <\/p>\n
    1 (1973) 1 SCC 726
\n    2 (1998) 8 SCC 589
\n    3 (1972) 3 SCC 684<\/p>\n
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    the Supreme Court in the case  of PTC India Ltd. (supra) and submitted that the <\/p>\n
    Electricity Act was a comprehensive Act dealing with all aspects of electricity <\/p>\n
    and that development of market of power was an exclusive jurisdiction vested in <\/p>\n
    the regulatory commissions.\n<\/p>\n
    47.    In the case of Firm of Patapchand Nopaji vs. Firm of Kotrike Venkata Setty  <\/p>\n
    and<\/a>   sons   and   others1  ,  the   Supreme   Court   while   dealing   with   the   Bombay <\/p>\n
    Forward Contract Act, 1947, whose provisions were similar to the FCRA, except <\/p>\n
    that under  Section 9   of  the  said   Act option in goods were  banned  only if  a <\/p>\n
    notification   was   issued   by   the   provisional   government   in   the   official   gazette <\/p>\n
    whereas under the FCRA all option in goods are banned, held that if a contract <\/p>\n
    was   not   for   actual   delivery   and   supply   to   bona   fide   purchaser,   then   such <\/p>\n
    contracts are tainted with unlawfulness of their object and are forbidden by the <\/p>\n
    law.   The   learned   counsel   has   also   placed   reliance   on   the   judgment   of   the <\/p>\n
    Supreme   Court   in   the   case   of  Shivnarayan   Kabra   vs.   The   State   of   Madras2 <\/p>\n
    wherein the Supreme Court had noticed the expert committee’s report prior to <\/p>\n
    the enactment of the FCRA and then had the occasion to consider the arguments <\/p>\n
    wherein a defence had been taken that the contract being not for delivery of <\/p>\n
    goods and being speculative in nature was not a forward contract, was pleased <\/p>\n
    to reject the said argument as according to the Supreme Court the FCRA was <\/p>\n
    meant to curb the mischief of speculation and hence any person indulging in <\/p>\n
    1 (1975) 2 SCC 208
\n    2 (1967) 1 SCR 138<\/p>\n
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    such practice which were not resulting in delivery was held to be violating the <\/p>\n
    prohibition under the Act. The learned counsel submits, while relying upon the <\/p>\n
    decision of the Supreme Court in the case of  Ashoka Marketing Ltd. vs. Punjab  <\/p>\n
    National Bank1, that since Electricity Act also is dealing with a large number of <\/p>\n
    subjects which are exclusively in List-I like railways, telegraph under Section 67, <\/p>\n
    159, 160 and 164, the said Act insofar as they relate to such subjects can easily <\/p>\n
    be traced to List-I.  The learned counsel lastly submits that in case of an express <\/p>\n
    or implied conflict, the Electricity Act will prevail. To fortify his argument, the <\/p>\n
    learned counsel has relied upon the decision of Gujarat Urja Vikas Nigam Ltd. vs.  <\/p>\n
    Essar Power Ltd.2.<\/a>\n<\/p>\n
    48.        To  recapitulate, FCRA was enacted in the year 1952. The object of the <\/p>\n
    Act   as   per   the   preamble   is   to   provide   for   the   regulation   of   certain   matters <\/p>\n
    relating to forward contracts, the prohibition of options in goods and for matters <\/p>\n
    connected therewith. It is a complete code providing for setting up of FMC which <\/p>\n
    advises   the   Central   Government     in   the   matter     of   forward   trading   in <\/p>\n
    commodities, registers every Association which organises forward trading and <\/p>\n
    approves Rules and Byelaws of Associations organizing forward trading.   As per <\/p>\n
    the provisions of FCRA, contracts\/agreements are classified into two categories <\/p>\n
    i.e. Ready delivery contract and forward contract.  Ready delivery contract is one <\/p>\n
    which deals with delivery of goods   and full payment of price thereof is made, <\/p>\n
    1 1990 (4) SCC 406
\n    2 (2008) 4 SCC 755<\/p>\n
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    either   immediately   or   within   a   period   of   eleven   days   after   the   date   of   the <\/p>\n
    contract. Forward contract as per the definition under Section 2 (c) is a contract <\/p>\n
    of delivery of goods and which is not a ready delivery contract.   Considering the <\/p>\n
    provisions of the FCRA, in our view, it can be said that a forward contract is one <\/p>\n
    in which it is a contract for delivery of goods which can be realised either wholly <\/p>\n
    or partly by payment of any offsetting contract.\n<\/p>\n
    49.     The CERC while deciding the matter has observed as under in paragraph <\/p>\n
    48 of its original order.\n<\/p>\n
             ” ..When seen in the light of the various provisions of the two
\n             enactments, there does not appear to be any overlapping   or
\n             inconsistency   between   them.   The   two   statutes   can   operate <\/p>\n
             independently   in   the   fields   assigned   to   them   without   any
\n             possibility of collision and without any invasion into the specific
\n             areas covered by the other. For this reason, both the statutes <\/p>\n
             have to be given effect by harmoniously reading together the
\n             provisions of the 1952 Act and the 2003 Act.  Such a conclusion
\n             will be in consonance with the law laid down by the Hon’ble
\n             Supreme Court at para 58 of its judgment in Gujarat Urja Vikas <\/p>\n
             Nigam   Ltd.   (supra).       In   view   of   this   conclusion,   approval
\n             accorded   by   FMC   to   MCZ   for   trading   of   daily   electricity
\n             contracts,   weekly   electricity   contracts   and   monthly   electricity
\n             contracts cannot be faulted and we do not propose to interfere
\n             in the matter.”\n<\/p><\/blockquote>\n
    Thereafter in the review order, substantial changes were made in the original <\/p>\n
    order passed by CERC.\n<\/p>\n
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     KPP                             -58-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    50.            It is no doubt true, as argued by Mr. Chinoy and Mr. Vikas Singh, <\/p>\n
    that   Section   174   of   the   Act   provides   for   overriding     effect   notwithstanding <\/p>\n
    anything inconsistent therewith contained in any other law for the time being in <\/p>\n
    force or in any instrument having effect by virtue of any law other than this Act.\n<\/p>\n
    In   our   view,   in   view   of   the   specific   provisions   in   FCRA,   which   is   a   central <\/p>\n
    legislation enacted earlier in point of time, by which in a notified commodity <\/p>\n
    forward contract can be undertaken only through the machinery under the said <\/p>\n
    Act, the futures contract in electricity cannot be exclusively dealt with by the <\/p>\n
    authority under the FCRA.  Similarly, in view of the specific provisions under the <\/p>\n
    FCRA, CERC also cannot deal with the futures contract on its own and have no <\/p>\n
    power   to   deal   with   the   same   in   the   futures   contract,   unless   appropriate <\/p>\n
    enactment has been made by way of statutory provision regulating the futures <\/p>\n
    contract   giving   powers   only   to   one   authority   out   of   the   aforesaid   two <\/p>\n
    authorities.\n<\/p>\n
    51.      It is  no doubt true that electricity is a special legislation provided for a <\/p>\n
    specific purpose wherein the interest of consumer is also required to be taken <\/p>\n
    into consideration.   In our view, both the enactments operate in the respective <\/p>\n
    fields.  If any futures contract in case of a notified commodity under the FMC  is <\/p>\n
    concerned,   it can be done only through the machinery provided under the FMC.\n<\/p>\n
    Looking  to the special nature of the electricity commodity  and even considering <\/p>\n
    the   controlling   of   prices,   etc.   in   our   view,   the   futures   contract   in   electricity <\/p>\n
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\n     KPP                            -59-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    cannot be exclusively dealt with by FMC.  Similarly, the CERC has no jurisdiction <\/p>\n
    to frame any Regulation in connection with the futures contract in electricity.\n<\/p>\n
    With   a   view   to   harmonise   the   provisions   of   both   the   Acts,   in   our   view,   the <\/p>\n
    futures contract  no doubt is within the domain of FMC. Even if futures contract <\/p>\n
    is to be taken into consideration in the matter   of electricity, the same can be <\/p>\n
    done only in consultation with the CERC.   Each domain is exclusive under the <\/p>\n
    respective statutes. One cannot transgress into another domain.   In our view, <\/p>\n
    CERC cannot be totally taken out of consideration as the physical delivery of  the <\/p>\n
    electricity and electricity derivative products  also form part of various aspects of <\/p>\n
    the electricity market structure under the Electricity Act.\n<\/p>\n
    52.      It is also required to be noted that the CERC under the Electricity Act is <\/p>\n
    required  to promote  development of  market including  trading  in power,  in a <\/p>\n
    specified   manner.     The   CERC   is   assigned   a   duty   to   promote   development   of <\/p>\n
    market in power through the Regulations. The  CERC has, therefore, jurisdiction <\/p>\n
    to  regulate development of market in electricity  in all forms but in view of the <\/p>\n
    specific provisions under the FCRA regarding futures contract, at present it is not <\/p>\n
    possible to hold that the CERC is entitled to even act in the futures contract in <\/p>\n
    view of the  clear provisions in this behalf in the FCRA.  In our view, neither of <\/p>\n
    the   regulatory   authorities   will   have   exclusive   jurisdiction   to   deal   with   in   the <\/p>\n
    futures contract so far as electricity is concerned.     Since statutory duty is cast <\/p>\n
    upon the   CERC under the Electricity Act regarding   market development, the <\/p>\n
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\n     KPP                            -60-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    Commission,   in   our   view,   is   entitled   to   issue   appropriate   guidelines   in <\/p>\n
    connection with regulating the  development of market in electricity.    It is also <\/p>\n
    the duty of the CERC under the Electricity Act to see that the transactions on the <\/p>\n
    exchanges are conducted in a free and fair manner, while keeping the interest of <\/p>\n
    the consumer in mind.   As on today, the Regulations framed by the CERC also <\/p>\n
    cannot   be   given   any   effect   to   as   the   power   to   deal   with   futures   contract   is <\/p>\n
    specifically   dealt   with   by   other   statute   and   in   view   of   the   same,   it   is   not <\/p>\n
    necessary   to   examine   as   to   whether   the   CERC   was   justified   in   exercising <\/p>\n
    jurisdiction on the basis of the application filed by Respondent No.3 before the <\/p>\n
    CERC or not.    As stated above, neither the FMC nor the CERC can exclusively <\/p>\n
    deal with electricity in the matter of futures contract. The CERC cannot act in the <\/p>\n
    futures contract in the   matter   of  electricity  unless  appropriate  enactment  has <\/p>\n
    been made by the Parliament in this behalf.   The Regulations under challenge <\/p>\n
    cannot be given effect to and it will have no effect so far as futures contract in <\/p>\n
    electricity is concerned. In so far as the power of CERC to deal with electricity in <\/p>\n
    the   futures   contract   is   concerned,   as   pointed   our   earlier,   even   the   Cabinet <\/p>\n
    Secretary also asked both the Regulatory authorities not to act further and CERC <\/p>\n
    has been specifically asked not to give effect to the Regulations till the dispute <\/p>\n
    can be sorted out.\n<\/p>\n
    53.       So far as Electricity Act is concerned, it is a special Act which deals with <\/p>\n
    various aspects of electricity including fixation of rates, etc.  However, so far as <\/p>\n
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\n     KPP                           -61-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    futures   contract   is   concerned,   the   CERC   cannot   frame   any   Regulations   in <\/p>\n
    connection with futures contract. Considering the same, the Regulations framed <\/p>\n
    by CERC cannot be given any effect to unless proper enactment is made in this <\/p>\n
    behalf.  After considering the provisions of the  FCRA and Electricity Act and the <\/p>\n
    Regulations framed thereunder and considering the nature of controversy as well <\/p>\n
    as   considering   the   case   laws   cited   by   the   learned   counsel   appearing   for   the <\/p>\n
    parties, in our view, neither of the regulatory authorities will have   exclusive <\/p>\n
    jurisdiction to deal with in the futures contract in electricity independently.  In <\/p>\n
    view   of   the   above,   the   provision   regarding   “term   ahead   market”   in   the <\/p>\n
    Regulations providing for futures contract or term ahead contract beyond eleven <\/p>\n
    days cannot be made applicable, unless proper enactment in this behalf is made <\/p>\n
    by the Parliament.  Till appropriate legislation is enacted  by the Parliament, the <\/p>\n
    Regulations framed by the CERC is held to be not applicable so far as futures <\/p>\n
    contract in electricity is concerned.\n<\/p>\n
    54.       In view of the above, the following order:\n<\/p>\n
    (a)      The   Central   Electricity   Regulatory   Commission   (Power   Market) <\/p>\n
             Regulations,   2010   are   declared   inoperative   hereinafter,   so   far   as   the <\/p>\n
             futures\/forward contracts in electricity is concerned;\n<\/p>\n
    (b)      The orders dated 28th April, 2009 passed in Petition No. 159 of 2008 and <\/p>\n
             11th  January,   2010   passed   in   Review   Petition   No.115   of   2009   are <\/p>\n
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\n     KPP                       -62-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
          quashed and set aside so far as reasoning and directions with regard to <\/p>\n
          futures\/forward contract in electricity;\n<\/p>\n
    (c)   It is further declared that the Petitioner-FMC and authority\/commission <\/p>\n
          under it have no sole and exclusive jurisdiction to regulate and control <\/p>\n
          forward   trading\/futures   contract     in   electricity   and   also   CERC   and <\/p>\n
          authorities\/commission under it.\n<\/p>\n
    (c)   In view of the above, both these Petitions are partly allowed and disposed <\/p>\n
          of accordingly, with no order as to costs.  Rule in each of the petitions is <\/p>\n
          accordingly partly made absolute to the extent indicated above.\n<\/p>\n
    (d)   The  Notices of Motion are also disposed of in view  of disposal  of the <\/p>\n
          petitions. No costs.\n<\/p>\n
                                                                    P. B. MAJMUDAR, J.\n<\/p>\n
                                                                          ANOOP V. MOHTA, J.\n<\/p>\n
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     KPP                          -63-       W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY<\/p>\n
                      ORDINARY ORIGINAL CIVIL JURISDICTION<\/p>\n
                          WRIT PETITION NO. 1197 OF 2010
\n                                      WITH
\n                         NOTICE OF MOTION NO. 100 OF 2010<\/p>\n
    Multi Commodity Exchange of India Ltd.                                      …Petitioner<\/p>\n
                            Vs.\n<\/p>\n
    Central Electricity Regulatory Commission & Ors.                            …Respondents.<\/p>\n
\n\n                                             WITH\n\n\n\n\n                                                 \n                           WRIT PETITION NO. 1604 OF 2009\n                               ig      WITH\n                          NOTICE OF MOTION NO. 71 OF 2010\n                             \n    Forward Markets Commission                                                  ...Petitioner\n                            Vs.\n    Central Electricity Regulatory Commission & Ors.                            ...Respondents.\n       \n    \n\n\n\n                                        J U D G M E N T\n\n\n\n\n\n    Per- Anoop V. Mohta, J.\n\n\n\n<\/pre>\n
                I   have   the   advantage   of   reading   the   judgment   of   my   esteemed <\/p>\n
    brother Justice P. B. Majmudar.   I am in agreement with the conclusions. As <\/p>\n
    important issues, having large ramification, are involved, I would like to address <\/p>\n
    it by additional reasons:-\n<\/p>\n
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     KPP                           -64-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    2             The Constitution of India, Union List I of Schedule VII provides entry <\/p>\n
    48, which deals with “stock exchanges and futures markets”.  Concurrent List III <\/p>\n
    Schedule VII provides entry 38 “Electricity”.   Both the entries are operating in <\/p>\n
    their respective fields without any conflicts.\n<\/p>\n
    3             “Under the Constitution, the subject of “stock exchanges and future <\/p>\n
    markets” is included in the Union List. Consequently,  the State Legislatures are <\/p>\n
    no   longer   competent   to   enact   any   fresh   legislation   with   regard   to   forward <\/p>\n
    markets, and unless Central legislation on this subject is enacted, the resulting <\/p>\n
    lacuna may prevent desirable action being taken, when needed”.\n<\/p>\n
                  “The   FCR   Act   basically   take   into   consideration   “forward   trading, <\/p>\n
    which   normally   plays   a   useful   part   in   tempering   price   fluctuations,   tends   in <\/p>\n
    certain   situations   to   exaggerate   such   fluctuations   to   the   detriment   of   the <\/p>\n
    interests of producers as well as consumers”.\n<\/p>\n
                  “The   main   principle   underlying   these   provisions   is   that   forward <\/p>\n
    contracts should be allowed to be entered into only in accordance with the rules <\/p>\n
    and bye-laws of a recognized association.  The rules and bye-laws will be subject <\/p>\n
    to  the  approval  of  the  Central  Government who  will  also  have  the  power  to <\/p>\n
    make such rules and bye-laws.”\n<\/p>\n
                  “The   regulatory   provisions   of   this   Act   will   be   extended   by <\/p>\n
    notification   to   different   classes   of   goods   and   to   different   areas  as  and   when <\/p>\n
    necessary”.   (Statements   of   objects   and   reasons-   The   Forward   Contract <\/p>\n
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\n     KPP                        -65-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    (Regulation) Act, 1952. (The FCR Act).\n<\/p>\n
    4           The   FCR   Act   deals   with   the   establishment,   operating,   regulating, <\/p>\n
    maintaining and managing facilities to enable the member of exchange, their <\/p>\n
    authorized agents and constituents and other participants, to transact, clear and <\/p>\n
    settle the trade of Futures contracts of a commodity exchange, duly recognized <\/p>\n
    by   the   Central   Government-Forward   Markets   Commission   (FMC).   Under   the <\/p>\n
    FCR   Act   about   103   commodities\/goods   are   covered.   FMC   is   a   regulatory <\/p>\n
    authority, under the FCR Act and MCX (Multi Commodity Exchange   of India <\/p>\n
    Limited) under FMC. The expressions “Forward contract” and “Ready delivery <\/p>\n
    contract” have been amended to check the misuse of ready delivery contracts.\n<\/p>\n
    These authorities\/ commissions have exclusive jurisdiction and control over the <\/p>\n
    trading of futures and forward contracts in all respects, even reconfirmed by the <\/p>\n
    Supreme Court in the Judgments.  ((i) Waverly Jule Mills Co. Ltd. Vs. Raymon  <\/p>\n
    & Co. (India) Pvt. Ltd., (ii) Union of India & Anr. Vs. Rajdhani Grain and  <\/p>\n
    Jaggery Exchange Ltd. & Ors. (iii) The Mahabir Beopar Mandal Ltd. Vs. The  <\/p>\n
    Forward Markets Commission (Supra).\n<\/p>\n
    5           The Electricity Act, 2003 (the Electricity Act) is an exhaustive code <\/p>\n
    in all matters concerning electricity.  The objects and reasons speak for itself.\n<\/p>\n
           “An Act to consolidate the laws relating to generation, transmission,
\n           distribution, trading and use of electricity and generally for taking
\n           measures   conductive   to   development   of   electricity   industry,
\n           promoting   competition   therein,   protecting   interest   of   consumers  <\/p>\n
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\n     KPP                           -66-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
           and supply of electricity to all areas, rationalisation  of electricity  <\/p>\n
           tariff, ensuring transparent policies regarding subsidies, promotion
\n           of   efficient   and   environmentally   benign   policies,   constitution   of
\n           Central   Electricity   Authority,   Regulatory   Commissions   and  <\/p>\n
           establishment   of   Appellate   Tribunal   and   for   matters   connected
\n           therewith or incidental thereto.”\n<\/p><\/blockquote>\n
    6             It   provides   for;   a   National   electricity   and   tariff   policy   and   plan, <\/p>\n
    generation   of   electricity,   licensee,   transmission   of   electricity   (inter-State <\/p>\n
    transmission,   Regional   Transmission,   Distribution   of   electricity   consumer <\/p>\n
    protection, tariff regulations and its determination and development of power <\/p>\n
    market.     It   also   provides   for   Central   Electricity   Authority,   Regulatory <\/p>\n
    Commissions, its  powers  and  functions and  an  Appellate  Tribunal. There  are <\/p>\n
    other   protective   clauses   and   miscellaneous   provisions   which   empowers <\/p>\n
    authorities\/ commissions to make rules and regulations.\n<\/p>\n
    7             The Apex Court in (PTC India  Ltd. Vs. Secy. CERC, AIR 2010 SC  <\/p>\n
    1338=(2010) 4 SCC 603) elaborated the same in following words:-\n<\/p>\n
           “17.      The 2003 Act is enacted as an exhaustive code on all matters
\n                    concerning electricity.   It provides for “unbundling” of SEBs
\n                    into   separate   utilities   for   generation,   transmission   and
\n                    distribution.     It   repeals   the   Electricity   Act,   1910;   the  <\/p>\n
                    Electricity (Supply) Act, 1948 and the Electricity Regulatory
\n                    Commissions Act, 1998.  The 2003 Act, in furtherence of the
\n                    policy envisaged under the Electricity Regulatory Commissions
\n                    Act, 1998 (the 1998 Act), mandated the establishment of an
\n                    independent and transparent regulatory mechanism, and has
\n                    entrusted   wide-ranging   responsibilities   with   the   Regulatory
\n                    Commissions.   While the 1998 Act provided for independent
\n                    regulation in the area of tariff determination; the 2003 Act
\n                    has distanced the Government from all forms of regulation,  <\/p>\n
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\n     KPP                       -67-            W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
                namely,   licensing,   tariff   regulation,   specifying   Grid   Code,  <\/p>\n
                facilitating competition through open access, etc. <\/p>\n<\/blockquote>\n
          18.   Section 3 of the 2003 Act requires the Central Government, in  <\/p>\n
                consultation with the State Governments and the Authority,
\n                to   prepare   the   National   Electricity   Policy   as   well   as   tariff
\n                policy for development of the power system based on optimum
\n                utilization   of   resources.   The   Central   and   the   State  <\/p>\n
                Governments are also vested with rule-making powers under
\n                Sections 176 and 180 respectively, while the “Authority” has
\n                been defined under Section 2(6) as regulation-making power
\n                under   Section   177.   On   the   other   hand,   the   Regulatory
\n                Commissions are vested with the power to frame policy, in the  <\/p>\n
                form of regulations, under various provisions of the 2003 Act.
\n                However,   the   Regulatory   Commissions   are   empowered   to  <\/p>\n
                frame   policy,   in   the   form   of   regulations,   as   guided   by   the
\n                general policy framed by the Central Government. They are to
\n                be guided by the National Electricity Policy, the tariff policy  <\/p>\n
                as well as the National Electricity Plan in terms of Sections
\n                79(4) and 86(4) after the 2003 Act (see also Section 66).\n<\/p><\/blockquote>\n
          26.     The term “tariff” is not defined in the 2003 Act. The term
\n                “tariff” includes within its ambit not only the fixation of rates  <\/p>\n
                but also the rules and regulations relating to it. If one reads
\n                Section 61 with Section 62 of the 2003 Act, it becomes clear  <\/p>\n
                that the appropriate Commission shall determine the actual
\n                tariff in accordance with the provisions of the Act, including
\n                the   terms   and   conditions   which   may   be   specified   by   the
\n                appropriate   Commission   under   Section   61   of   the   said   Act.\n<\/p><\/blockquote>\n
                Under the 2003 Act, if one reads Section 62 with Section 64,
\n                it   becomes   clear   that   although   tariff   fixation   like   price
\n                fixation is legislative in character, the same under the Act is
\n                made appealable vide Section 111.  These provisions, namely,
\n                Sections 61, 62 and 64 indicate the dual nature of functions
\n                performed   by   the   Regulatory   Commissions,   viz,   decision-\n<\/p><\/blockquote>\n
                making   and   specifying   terms   and   conditions   for   tariff
\n                determination.\n<\/p><\/blockquote>\n
          28.   The   2003   Act   contemplates   three   kinds   of   delegated
\n                legislation.   Firstly,   under   Section   176,   the   Central
\n                Government   is   empowered   to   make   rules   to   carry   out   the
\n                provisions of the Act. Correspondingly, the State Governments
\n                are   also   given   powers   under   Section   180   to   make   rules.  <\/p><\/blockquote>\n
                Secondly,   under   Section   177,   the   Central   Authority   is   also  <\/p>\n
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\n     KPP                          -68-         W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
                  empowered to make regulations consistent with the Act and  <\/p>\n
                  the rules to carry out the provisions of the Act. Thirdly, under
\n                  Section 178, the Central Commission  can make regulations
\n                  consistent   with   the   Act   and   the   rules   to   carry   out   the  <\/p>\n
                  provisions   of   the   Act.   SERCs   have   a   corresponding   power
\n                  under   Section   181.   The   rules   and   regulations   have   to   be
\n                  placed  before  Parliament and  the  State  Legislatures,  as the
\n                  case may be, under Section 179 and 182. The Parliament has  <\/p>\n
                  the power to modify the rules\/ regulations. This power is not
\n                  conferred upon the State Legislatures. A holistic reading of the
\n                  2003 Act leads to the conclusion that regulations can be made
\n                  as long as two conditions are satisfied, namely, that they are
\n                  consistent with the Act and that they are made for carrying  <\/p>\n
                  out the provisions of the Act.”\n<\/p>\n
    8           The Central Electricity Regulatory Commission (CERC) is a creation <\/p>\n
    of Electricity Act. The Power Exchange of India Limited (PXI), recognized by <\/p>\n
    CERC,  has set  up under  the Electricity  Act.   Same  is the  position of   Indian <\/p>\n
    Energy Exchange (IEX).\n<\/p>\n
    9           The   concept   “trading”   is   defined   under   Section   2(71)   of   the <\/p>\n
    Electricity Act as under:-\n<\/p>\n
           “2(70)      “trading” means purchase of electricity for resale thereof
\n           and the expression “trade” shall be construed accordingly.”\n<\/p>\n
    The meaning of “trading” as per-\n<\/p>\n
                BLACK’S LAW DICTIONARY, EIGTH EDITION-\n<\/p><\/blockquote>\n
           “The   business   of   buying   and   selling,   esp.   of   commodities   and
\n           securities. [Cases: Commodity Futures Trading Regulation; Securities
\n           Regulation, C.J.S. Securities Regulation].\n<\/p><\/blockquote>\n
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     KPP                            -69-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
                  THE OXFORD ENGLISH DICTIONARY, VOL. XI- T-U<\/p>\n
            “The action of the verb TRADE in various senses; esp. the carrying
\n            on of trade; buying and selling; commerce, trade, traffic.”\n<\/p>\n
                  Section 66 provides for development of power market as under:\n<\/p>\n
            “66. Development   of   market.-  The   Appropriate   Commission
\n                 shall   endeavour   to   promote   the   development   of   a   market <\/p>\n
                 (including   trading)   in   power   in   such   manner   as   may   be
\n                 specified   and   shall   be   guided   by   the   National   Electricity  <\/p>\n
                 Policy referred to in section 3 in this regard.”\n<\/p>\n
                  Section 178 empowers the CERC to make regulations consists with <\/p>\n
    and   for   carrying   out   the   purpose   of   the   Electricity   Act.     Relevant   clause   is <\/p>\n
    178(y)-\n<\/p>\n
            “178(y)   the   manner   by   which   development   of   market   in   power
\n            including trading specified under Section 66;\n<\/p><\/blockquote>\n
                  The regulation 2010 in question is the offshoot of this Section. <\/p>\n
    10            In   my   view,   the   development   of   power   market   nowhere <\/p>\n
    contemplates   speculative   business\/   market   in   electricity.       The   concept <\/p>\n
    “development   of   power   market”   may   cover   all   related   and   relevant   steps <\/p>\n
    including   trading   and   all   types   of   contracts   for   the   electricity   development.\n<\/p>\n
    Therefore,   CERC   through   its  regulations  is   not   specifically   empowered   to   do <\/p>\n
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\n     KPP                            -70-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    speculative trading and\/or forward trading or future contract, independently, by <\/p>\n
    overlooking   the   mandate   of   FCR   Act.    The   FMC   and  MCX  are   also   not  in  a <\/p>\n
    position to do the same business exclusively, by overlooking the Electricity Act <\/p>\n
    and its authorities.\n<\/p>\n
    11             The Ministry of Consumer Affairs, Food and Public Distribution, vide <\/p>\n
    Gazette by Notification dated 9th January, 2006 by invoking  Sections 15 and 16 <\/p>\n
    of  the FCR Act has covered “Electricity” and “Natural Gas”.  FMC has by order of <\/p>\n
    January, 2009 permitted MCX to have trading of electricity in future\/forward <\/p>\n
    market.   This was probably in  view  of  national  and  international   developing <\/p>\n
    market   of   electricity.     Therefore,   the   conflict   so   far   as   the   trade   of   Futures <\/p>\n
    contract in electricity.\n<\/p>\n
    12             The respective entries of the Constitution of India and the Acts based <\/p>\n
    upon   it   need   to   keep   in   mind,   while   considering   development   of   power\/ <\/p>\n
    electricity market in  India  and\/or  for facilitating  permission  of  investment in <\/p>\n
    electricity sector and for protecting the interest of the consumers.  The mandate <\/p>\n
    of Electricity Act needs to be noted while dealing with the marketing and\/or <\/p>\n
    trading in electricity.  When it comes to futures contracts or forward market, the <\/p>\n
    provisions of Sections 14, 15 and 81 of FCR Act which govern the field by its <\/p>\n
    rules and regulations and authorities also just cannot be overlooked.  The power <\/p>\n
    market in electricity developing and is at evolving stage which needs clear and <\/p>\n
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\n     KPP                          -71-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    unqualified   rules,   regulations   and   controlling   authorities   in   view   of   specific <\/p>\n
    provisions of the Electricity Act, that itself is not sufficient to permit FMC and <\/p>\n
    MCX   to   do   business   of   futures   contract   in   electricity   exclusively.     All <\/p>\n
    commodities\/goods are storable.   The electricity is not storable goods, except <\/p>\n
    produced by Hydro-Projects. There cannot be any comparison of electricity as <\/p>\n
    goods   with   the   other   goods\/commodities.     This   typical   characteristic   of <\/p>\n
    electricity as goods, goes to the root of the matter.  The Electricity Act deals with <\/p>\n
    and covers all aspect of electricity rights from an establishment of projects of <\/p>\n
    electricity, manufacturing, process, production, supply, distribution, tariff, rate <\/p>\n
    of electricity and its regulations. The CERC controls and deals with such issues in <\/p>\n
    the respective States.  The Electricity Act basically permits\/provides the trading <\/p>\n
    and supply of electricity as goods for actual physical use.\n<\/p>\n
    13            The FCR Act deals with futures market and forward contracts in all <\/p>\n
    goods which in essence are financial contracts for delivery of goods, which may <\/p>\n
    or may not be physical and\/or may settle by the payment of differewnces. Any <\/p>\n
    market\/ trading basically means physical delivery of the goods but the FCR Act <\/p>\n
    also provides specialized financial market to permit the traders to do business in <\/p>\n
    the realm of price discovery and price risk management.\n<\/p>\n
    14            The futures market is a centralized place for buyers and sellers, who <\/p>\n
    could be speculators, from around the nation and\/or around the World, who <\/p>\n
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\n     KPP                           -72-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    enters   into   futures   contracts.     Such   contracts   provides   for   the   quality,   the <\/p>\n
    quantity, the fixed  price  and the date of delivery.   The spot\/  cash market is <\/p>\n
    different than future market.  The profits and losses of future contracts based on <\/p>\n
    the   daily   movements   in   the   market   of   the   commodity.   The   concepts   and <\/p>\n
    importance   of   “margin”,   “leverage”,   “hedging”,   “price   discovery”   and   “risk <\/p>\n
    reduction” are well known in the field.   Various factors have a major effect on <\/p>\n
    supply and demand and price of a commodity.  The future markets always quite <\/p>\n
    risky,   complex   and   volatile.     All   above   elements   are   essential   of   any   future <\/p>\n
    contract   and   need   to   be   governed   and   controlled   by   regulatory <\/p>\n
    authority\/commission, which in India at present constituted under FCR Act only.\n<\/p>\n
    No   such   power   or   authority   is   available   under   the   Electricity   Act   and\/or <\/p>\n
    provided in any other such statute to the CERC or other authority at present.\n<\/p>\n
    15            Such   future   trading   or   future   markets   of   electricity   which   non-\n<\/p>\n
    storable   goods,   cannot   be   permitted   without   expertized   body   or   statute   or <\/p>\n
    regulator   under   the   guise   of   nation   power   policy   or   global   market   for <\/p>\n
    development of electricity. The electricity falls within the ambit of “commodity <\/p>\n
    features”.     The   maintaining   of   update   index   like   other   commodity   is   also <\/p>\n
    important factor.  It is only the exchange decides whether the future contract is <\/p>\n
    cash settled or settlement is delivery based.\n<\/p>\n
    16            The Electricity Act nowhere permits the CERC to use and\/or suspend <\/p>\n
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\n     KPP                           -73-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    the control and\/or delegate and\/or handover the charges\/control of electricity <\/p>\n
    to FMC or to other associations under the FCR Act, considering the speciality of <\/p>\n
    electricity as a non-storable goods.  No other authorities even under the FCR Act <\/p>\n
    can   have   exclusive   and   independent   control   and   authority   to   trade   in   the <\/p>\n
    electricity in futures market\/ forward market.  No other authority\/ commission <\/p>\n
    is entitled to challenge and control the trading power of CERC by any modes in <\/p>\n
    any   markets,   but   this   can   be   subject   to   appropriate   rules\/regulations   as <\/p>\n
    contemplated   under   Section   178   (2)   of   the   Electricity   Act   based   upon   the <\/p>\n
    desirable   and   workable   electricity   power   policy.     Mere   notification   and\/or <\/p>\n
    approval under Sections 15\/16 of the FCR Act itself is not sufficient to empower <\/p>\n
    the   authorities\/   commission   to   do   the   future   markets   of   electricity   under   its <\/p>\n
    existing rules and regulations.\n<\/p>\n
    17            Any   electricity   market\/   trading   covers   and   means   availability   of <\/p>\n
    electricity,   electricity   producers,   Central,   State,   private   projects\/sectors, <\/p>\n
    suppliers, distributors, transmitters and transporters from one place to another, <\/p>\n
    from one State to other State and\/or within a State considering the demand and <\/p>\n
    supply   for   the   consumers.     The   demand   and   supply   of   electricity,   the   price <\/p>\n
    and\/or tariff of electricity at all levels\/ stages need to be under the strict control <\/p>\n
    of the CERC and its authorities.\n<\/p>\n
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     KPP                            -74-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    18              The business of future market in any exchange is always based upon <\/p>\n
    the national level.   The speculations in electricity trading as contemplated and <\/p>\n
    understood in futures market or forward market may create complications and <\/p>\n
    problems, because of various market factors.  The fixed forward price and fixed <\/p>\n
    forward quantity and the date of delivery are the basic elements of any such <\/p>\n
    contract\/   trading.     The   price   uncertainty   always   impact   on   the   certainty   of <\/p>\n
    supply\/ price.  The interest of the supplier, the manufacturer and the consumers <\/p>\n
    and traders need to be considered in all respect, at all the stages.  Therefore, it is <\/p>\n
    necessary   to   have   an   efficient   and   a   harmonized   system   in   the   country   for <\/p>\n
    futures trading in electricity.  There is central system in futures market for other <\/p>\n
    goods under the FCR Act. In contrast to that, there is only State based controlled <\/p>\n
    systems in  electricity under the Electricity Act.  The domestic and international <\/p>\n
    trade business and taxes at various stages also play an important role in futures <\/p>\n
    market.\n<\/p>\n
    19              MCX has been permitted by order of January, 2009 by the FMC to <\/p>\n
    trade   daily   electricity   contracts,   weekly   electricity   contracts   and   monthly <\/p>\n
    electricity contracts also raises doubts.  The notification dated 9th January, 2006 <\/p>\n
    is also of no assistance. The transactions\/contracts where physical delivery of <\/p>\n
    goods   “spot   market”   takes   place,   the   same   will   not   fall   within   the   ambit   of <\/p>\n
    forward contract.  Such contract falls within the exclusive jurisdiction of CERC.\n<\/p>\n
    However, in view of the specialized goods and its requirement of infrastructure, <\/p>\n
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\n     KPP                             -75-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    technical expertise\/tariff\/price, fixation in the interest of consumers at large, the <\/p>\n
    CERC, cannot be permitted to transgress its jurisdiction by venturing into futures <\/p>\n
    market, forward contracts and\/or derivative as contemplated and covered under <\/p>\n
    the FCR Act, in the guise of trading and developing the market of electricity.\n<\/p>\n
    The   orders  and   guidelines therefore,  issued   by the   CERC   in  questions  are   in <\/p>\n
    conflicts   with   the   provisions   of   FCR   Act   in   so   far   as   the   business   in   futures <\/p>\n
    contract and forward market. Any such future  contract or forward market of <\/p>\n
    electricity falls within the scope and Sections of 15 and 16 of the FCR Act, the <\/p>\n
    Power  Exchange  of India  Limited  (PXI) and  Indian Energy Exchange  Limited <\/p>\n
    (IEX) therefore, also cannot be permitted to the future trading, even though it is <\/p>\n
    approved by the CERC.  Merely because Electricity Act also deals with subjects <\/p>\n
    like railway, telegraph, telephone that itself is not sufficient to do futures trading <\/p>\n
    in electricity.   Any trading of power on PXI\/IEX where delivery and payment is <\/p>\n
    made   beyond   11  days,   falls  within  the   ambit  of   forward   contracts.     But  any <\/p>\n
    contract having fixed delivery period, fixed parties and certain price stands on <\/p>\n
    different footing.\n<\/p>\n
    20             Furthermore,   apart   from   knowledge   of   law,   engineering,   finance, <\/p>\n
    commerce,   economics   and   management   and   various   factual   and   technical <\/p>\n
    details are required even for commission and also to the appropriate appellate <\/p>\n
    body to deal with the various aspects of tariff and electricity.   The availability <\/p>\n
    and\/or non-availability of transmission facility, generation facility at sale point <\/p>\n
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\n     KPP                           -76-         W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    and\/or   availability   of   demand   or   electricity   at   the   point   of   purchase,   the <\/p>\n
    wheeling facilities, all these are important aspects which are necessary while <\/p>\n
    dealing with the trading in electricity.  The notification issued under Section 15 <\/p>\n
    of the FCR Act, itself is not under challenge, but in view of above, it is difficult <\/p>\n
    and not practicable and feasible for FMC and MCX to deal with the physical <\/p>\n
    delivery of the electricity.   To say that there would not be necessary to have <\/p>\n
    physical   delivery   in   every   matter   is   not   contemplated   under   FCR   Act   and <\/p>\n
    regulations   made   thereunder.     The   speculative   trading   in   electricity,   in   the <\/p>\n
    circumstances, is impracticable and impermissible.\n<\/p>\n
    21            The concept of “trading and development of power or electricity”\n<\/p>\n
    nowhere contemplates the speculative trading, but still the provisions of FCR Act <\/p>\n
    and   its   regulations   with   regard   to   the   futures   contract   or   forward   contract <\/p>\n
    cannot   be   taken   away,   under   the   existing   provisions   of   law.     CERC     also <\/p>\n
    therefore, cannot be permitted to do the same nature of trading, exclusively by <\/p>\n
    running parallel exchanges. I am not inclined to accept that for futures contract\/ <\/p>\n
    forward contract of electricity is taken out and placed under the jurisdiction of <\/p>\n
    regulatory   commission   under   the   Electricity   Act,   though   inter   State   trade, <\/p>\n
    licensee is also permitted to do intra-State trading without permission\/ licence <\/p>\n
    from the State Commission to do intra-State trading.     The requirement and <\/p>\n
    necessity   as   contemplated   under   FCR   Act   and   rules   and   regulations   made <\/p>\n
    thereunder, are again just cannot be overlooked for permitting the CERC for <\/p>\n
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\n     KPP                           -77-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    trading   in   futures\/   forward   contracts.     There   is   no   question   of   which   entry <\/p>\n
    and\/or schedule should prevail and\/or conflict of two entries, but the point is a <\/p>\n
    practical     and   a   feasible   deal   of   the   electricity   in   future\/forward   markets <\/p>\n
    exclusively  under   one   authority\/commission.    We   need   to   read   and  consider <\/p>\n
    both these Acts together and find out a solution by appropriate rules, regulations <\/p>\n
    and\/or amendment, if market available to permit futures trading in electricity, <\/p>\n
    though in wider sense, trading covers trade and commerce including spot and <\/p>\n
    forward contract for sale and purchase of electricity. The point is, who should <\/p>\n
    control and regulate such contracts\/ trading protecting the interest of consumer, <\/p>\n
    specially when at present in India power markets is not yet fully developed.\n<\/p>\n
    22            The CERC cannot be permitted to have regulations under Section 66 <\/p>\n
    and 178(2)(y) by virtue of Section 174 of the Electricity Act, to prevail over the <\/p>\n
    provisions of Section 14-A and 15 of the forward contracts in such fashion with <\/p>\n
    regard   to   the   futures   contracts\/   forward   contracts.     The   Supreme   Court <\/p>\n
    Judgment in   Gujarat Urja Vikas Nigam Limited (supra)  no way assist the <\/p>\n
    CERC to prevail over different and distinct provisions of FCR Act. In the present <\/p>\n
    circumstances, though the Electricity falls within ambit of commodities \/goods <\/p>\n
    in   FCR   Act,   by   notification   in   the   year   2006,   which   was   definitely   after <\/p>\n
    Electricity Act of 2003, the conflict therefore, definitely needs to be resolved by <\/p>\n
    appropriate laws and regulations.  In view of the above, the grant of approval in <\/p>\n
    January, 2002 by the FMC to MCX permitting to trade in Electricity forward <\/p>\n
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\n     KPP                           -78-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    contracts based upon notification of January, 2006 is by itself not sufficient.\n<\/p>\n
    23            The domain and jurisdiction of respective authorities\/ commission is <\/p>\n
    totally different and distinct in every aspect.  CERC is a statutory authority being <\/p>\n
    constituted under the Electricity Act, cannot be provided that the power beyond <\/p>\n
    the   statutes   permitting   to   do   futures,   forward,   derivative   contracts   which   is <\/p>\n
    admittedly a domain  jurisdiction of authorities\/commission under the FCR Act.\n<\/p>\n
    It is difficult to go beyond for both these authorities to cross and\/or interfere <\/p>\n
    with the powers, functions and duties as provided under their parents statute, <\/p>\n
    unless relevant provisions including Section 18 and 27 of the FCR Act and also <\/p>\n
    of Electricity Act are invoked.\n<\/p>\n
    24            There   is   no   question   of   giving   any   overriding   effect   in   case   of <\/p>\n
    statutory conflicts, as it is impracticable, uncontrollable and it will not be in the <\/p>\n
    interest of consumers to permit any of the authorities to do forward future and <\/p>\n
    derivative   market   in   electricity   in   the   present   scenario   without   proper   and <\/p>\n
    effective revised national power policy and\/or guidelines and laws under the <\/p>\n
    supervision of expert bodies.  Apart from the conflict, it is difficult to control and <\/p>\n
    regulate   forward   market   of   electricity   excluding   respective   authorities   under <\/p>\n
    both Acts.\n<\/p>\n
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     KPP                          -79-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
    25            In   the   present   case,   as   it   is   a   question   of   interpretation   of <\/p>\n
    constitutional entries and the provisions of the central Acts, the authorities or <\/p>\n
    departments could not have resolved the issues\/conflicts.\n<\/p>\n
    26            The power and the jurisdiction of these statutory tribunals are quite <\/p>\n
    limited   and   normally   governed   by   their   own   rules   and   regulations.     These <\/p>\n
    tribunals are not the Court having jurisdiction to decide complicated question of <\/p>\n
    law and\/or the conflict of laws, based upon the constitutional entries and the <\/p>\n
    related enactments.   Therefore, the CERC and\/or even the Appellate authority <\/p>\n
    under the Electricity Act have no jurisdiction to decide the validity of regulations <\/p>\n
    framed by CERC under Section 178 of the Act.   It is subject to challenge by <\/p>\n
    invoking judicial power under Article 226 of the Constitution of India.   (PTC  <\/p>\n
    India  Ltd. Vs. Secy. CERC, (Supra).\n<\/p>\n
    To conclude:-\n<\/p>\n
            (a)     The Electricity Act deals with in every respect including trading <\/p>\n
                    in electricity.    The  electricity  is a  non-storable  goods, except <\/p>\n
                    produced   by   hydro-projects.     The   trading   of   electricity   falls <\/p>\n
                    within the concept of commodity trading. Therefore, it may or <\/p>\n
                    may not physically available all the time, unless generated on <\/p>\n
                    the   day   and\/or   the   date   of   delivery.   This   distinguishes <\/p>\n
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\n     KPP                       -80-           W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
                electricity as a goods from other commodities as contemplated <\/p>\n
                under the FCR Act, which at present deals exclusively with all <\/p>\n
                aspect of futures\/ forward contracts.\n<\/p><\/blockquote>\n
          (b)   In   view   of   the   reasonings   earlier   recorded,   it   will   not   be <\/p>\n
                possible either for FMC or MCX to control and regulate   the <\/p>\n
                mandatory requirements of electricity, at various stages, which <\/p>\n
                are well within the exclusive domain and control of the CERC <\/p>\n
                and\/or   authorities\/commissions.     It   will   create   more <\/p>\n
                complications   than   solving   it,   unless   an   experts   body <\/p>\n
                constituted and specialized rules and regulations are framed.\n<\/p><\/blockquote>\n
                Both   authorities\/commissions   cannot   deal   in   futures\/forward <\/p>\n
                contract in electricity excluding other and\/or independently. <\/p><\/blockquote>\n
          (c)   It is  not  only  question  of  resolving  the  conflict between two <\/p>\n
                entries and\/or mandates of the respective specialized Act, but <\/p>\n
                actual   and   physical   workable   solution   to   permit   and\/or   to <\/p>\n
                allow either authorities\/ commissions\/ exchanges to deal with <\/p>\n
                the   electricity   in   the   futures\/   forward   market.     Both <\/p>\n
                authorities\/ commissions under the respective Acts may not be <\/p>\n
                in   a   position   to   control   and   regulate   the   futures   contract   in <\/p>\n
                electricity   exclusively,   unless   those   Acts   and   regulations   are <\/p>\n
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\n     KPP                       -81-          W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010<\/p>\n
                amended \/revised and re-framed. Both cannot have exclusive <\/p>\n
                jurisdiction as claimed in the present scenario in India.\n<\/p>\n
          (d)   It   is   clarified   that   the   Union   of   India   and\/or   the   concerned <\/p>\n
                commission and\/or the regulatory authorities are free to revise <\/p>\n
                and\/or   to   reframe   the   rules   and   the   regulations   and\/or   to <\/p>\n
                amend the concerned statutes to permit the futures\/ forward <\/p>\n
                and derivatives contract in electricity, if so advised.\n<\/p>\n
          (e)   The   regulations   of   CERC   as   notified   on   20   January,   2010, <\/p>\n
                which deals with the aspects of futures contracts or   forward <\/p>\n
                contracts, therefore, are inoperative to that extent only.     The <\/p>\n
                impugned   order  dated  28th  April,  2009  and  order   dated  11th <\/p>\n
                January, 2010 upholding the regulations are also unsustainable <\/p>\n
                to   the   extent   of   reasoning   and   direction   relates   to   forward <\/p>\n
                contracts in electricity.\n<\/p>\n
                                                             (Anoop V. Mohta, J.)<\/p>\n
                                                                     ::: Downloaded on – 09\/06\/2013 16:49:48 :::<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Bombay High Court Multi Commodity Exchange Of India … vs Central Electricity Regulatory … on 7 February, 2011 Bench: P. B. Majmudar, Anoop V.Mohta KPP -1- W.P. NOS. 1197\/2010 & 1604\/2009 ALONG WITH N.M. NOS. 100 & 71\/2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1197 OF […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-87726","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"\nMulti Commodity Exchange Of India ... vs Central Electricity Regulatory ... on 7 February, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/multi-commodity-exchange-of-india-vs-central-electricity-regulatory-on-7-february-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Multi Commodity Exchange Of India ... vs Central Electricity Regulatory ... on 7 February, 2011 - 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