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Legal Pulse: SC Judgment could make regulators more difficult to challenge

The Supreme Court has held that the legislative functions of a regulatory commission are beyond the jurisdiction of the quasi-judicial powers of its appellate tribunal and should be dealt with via judicial review.

A five member bench led by Chief Justice K G Balakrishnan dismissed the appeal filed by power trading companies in PTC India Ltd vs Central Electricity Regulatory Commission on 15 March 2010 (Civil Appeal No. 3902 of 2006).

The Apex court held that the Appellate electricity tribunal (APTEL) does not have the jurisdiction to decide on the validity of regulations framed by the Central Electricity Regulatory Commission (CERC), which enjoys the power to fix a cap on trading margins of power companies.

The decision also emphasised that CERC regulation could only be challenged before the High Court in exercise of its writ jurisdiction of judicial review.

One law firm partner told Legally India that even though the Supreme Court interpretation in this case was confined to electricity regulators, it may also have a bearing on other regulators such as the Securities and Exchange Board of India (SEBI) or the Competition Commission of India (CCI) and the powers of their respective appellate tribunals to challenge their regulators' powers.

A host of power trading companies including Tata Power Trading, PTC India and Reliance Energy Trading had applied to the Supreme Court to challenge the CERC regulation which fixed trading margins at 4 paise per Kwh under Section 178 of the Electricity Act, 2003.

"A regulation under Section 178 is made under the authority of delegated legislation and consequently its validity can be tested only in judicial review proceedings before the courts and not by way of appeal before the Appellate Tribunal for Electricity under Section 111 of the said Act," read the judgement.

The power companies had first approached APTEL to set aside the CERC (Fixation of Trading Margin) Regulations 2006, but the tribunal refused to delve into the statutory powers of regulation making of the commission that formed a part of its subordinate legislative function.

Kerala State Electricity Board Officers' Association (KSEBOA) on the power sector website explained that CERC had imposed the cap to check the prices of short-term power and prevent traders from making supernormal profits.

Click here for a copy of the Supreme Court judgment.

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