In Multi Commodity Exchange in India (MCX) and Forward Market Commission (FMC) v Central Electricity Regulatory Commission (CERC), Forward Markets Commission (FMC), Power Exchange of India Limited (PXIL) & Ors, Bombay High Court recently decided disputes between two regulators that function under different statutes, that had been fighting tooth and nail against each other.
While the FMC, which functions under the Consumer Protection Act, 1986, claimed sole right in matters of forward contracts, the CERC, which functions under the Electricity Act, 2003, claimed the same in matters of trading in electricity, including dealing in forward contract.
The challenge in the two writ petitions was to the validity of two orders passed by the CERC on 28 April 2009 and 11 January 2010, as well as the Central Electricity Regulatory Commission (Power Market) Regulations, 2010, that it notified on 20 January 2010.
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The dispute between the two regulators began in January 2006, when the consumer affairs ministry declared electricity to be a commodity, without consulting the power ministry. This prompted the FMC to allow MCX – a commodity exchange – to trade in electricity futures. The CERC passed an order an order on 28 April 2009 against this move, which prompted FMC and MCX to take it to court.
Holding that “both the enactments operate in the respective field” the Bombay High court said the CERC cannot act and frame regulations in the futures contract for electricity “unless the Parliament makes a fresh enactment in this behalf”. At the same time the FMC must consult its counterpart in the power sector, CERC, before allowing any futures contracts in electricity. It also declared the CERC (Power Market) Regulations, 2010, inoperative, so far as the futures and forward contracts in electricity are concerned.
The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
