TEAM CODE: 143 A

5th GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2019

BEFORE THE HON’BLE SUPREME COURT OF INDIA

SPECIAL LEAVE PETITION NO. ___ /2019

(UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA)

IN THE COMBINED MATTERS OF

CERC AND Others ……………………………….………PETITIONER / APPELLANT

Versus

SEBI AND Another………………………….……………………….………..RESPONDENT

MEMORIAL FOR APPELLANT / PETITIONER

 5th GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2019

TABLE OF CONTENTS

LIST OF ABBREVIATIONS………………………………………………………………….....I

INDEX OF AUTHORITIES……………………………………………………………………..III

STATEMENT OF JURISDICTION……………………………………………………….…..VIII

STATEMENT OF FACTS……………………………………………………………………….IX

ISSUES RAISED……………………………………………………………………………....XI

SUMMARY OF ARGUMENTS……………………………………………………………….XII

ARGUMENTS ADVANCED…………………………………………………………………….1
ISSUE I………………………………………………………………………………………….1

ISSUE II………………………………………………………………………………………6
ISSUE III………………………………………………………………………………………17
Prayer……………………………………………………………………………………….XIII

MEMORANDUM ON BEHALF OF APPELLANT/ PETITIONER

 LIST OF ABBREVIATIONS

p. Page

v. Versus

ACB/ 3rd Petitioner Association of Commodity Brokers

AIR All India Reporter

BCX Bharat Commodity Exchange

Bom Bombay

CERC Central Electricity Regulatory

Commission/

1ST Plaintiff/ 2ND Respondent

Co. Company

Comp. Company

EOW Economic Offence Wing

EXIL Electricity Exchange of India

Limited

FCRA Forward Contract Regulations Act,

1952

FMC Forward Markets Commission

IA Interlocutory Application

IIA Indian Investors Association

Ltd. Limited

M/s Messrs.

M&A Mergers and Acquisitions

I
MoF Ministry of Finance

NTSD Non- Transferable Specific

Delivery

Ors. Others

Para Paragraph

PMR The Power Market

Regulations,2010

Reg. Regulation

RIL Roth’s India LLP

SC Supreme Court

SCC Supreme Court Reports

SCJ Supreme Court Journal

SCR Supreme Court Reporter

SCRA Securities Contracts (Regulation)

Act, 1956

SCN Show Cause Notice

SEBI Securities Exchange Board of

India/

1stRespondent / 2nd Petitioner

Sec. Section

SFIO Serious Fraud Investigation Office

U/s. Under Section

II
 INDEX OF AUTHORITIES

CASES REFERRED

INDIAN JUDGEMENTS

1. A.C. Sharma vs. Delhi Administration, (1973)1 SCC 726

2. Ashoka Marketing Ltd. vs. Punjab National Bank, 1990 (4) SCC 406

3. Bank of N.S.W. v. The Commonwealth, [1948] HCA 7

4. Basant Lal vs. State of U.P. And another, (1998)8 SCC 589

5. Charanlal Shahu v. U.O.I, 1990 AIR 1480

6. Chern Taong Shang v. Commander

7. Chimanlal Premchand vs. The State of Bombay, AIR 1960 SC 96

8. Gujarat Urja Vikas Nigam Limited v. Essar Power Ltd, (2008) 4 SCC 755

9. Housing Board of Haryana v. Haryana Housing Board Employees Union, AIR 1996
SC 434

10. Hungerford Investment Trust Limited vs. Haridas Mundhra and others, (1972) 3 SCC
684

Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd, AIR 1964 SC 1882
11.

12. Kailash Chandra Mahesh Kumar and Atmaram Agarwalla Vs. The State of Orissa,

III
 LAWS(ORI)-1973-5-14

13. Kanai Lal v. Paramnidh, AIR 1957 SC 907

14. Kerala State Housing Board v. Ramapriya Hotels (p) Ltd.. (1994)5 SCC 672

15. Kharavela Industries Pvt. Ltd. vs. Orissa State Financial AIR 1985 Ori 153

16. Laxmi Khandsari v. State of U.P,1981 AIR 873

17. Lenigh Valley Coal Co. v. Yensavage, 218 FR 547

18. Municipal Committee ; Hoshiarpur v. Punjab SEBI (2010) 13 SCC 216.

19. Padmasundara Rao v. State of T.N., AIR 2002 SC 1334

20. Patapchand Nopaji vs. Firm of Kotrike Venkata Setty and sons and others, (1975) 2
SCC 208

21. PTC India Ltd. 2010 Indlaw SC 169

23. PTC India Ltd. vs. Central Electricity Regulatory Commission, AIR 2010 SC 1338

24. PTC India Ltd. Vs. Secy. CERC, (2010) 4 SCC 603

25. R.K.Mittal v. State of U.P (2012) 2 SCC 232

26. S.D Baijal. Case. (1988)1 SCC 507;

IV
27. Sarwan Singh v. Kasturi Lal (1977), 1 SCC 750 1976

27. Shivnarayan Kabra vs. The State of Madras (1967) 1 SCR 138

Siddeshwari Cotton Mills Pvt. Ltd v. UOI,AIR 1989 SC 1019

28.

29. Solidaire India Limited vs. Fairgrowth Financial Services Limited and others, (2001)
3 SC C 71

State of Bombay v. Ali Gulshan, AIR 1955 SC 810,

30.

31. State of Gujarat v. Salimbhai Abdulgaffar Shaikh, AIR 2003 SC 3224

State of Karnataka v. Kempiah, AIR 1998 SC 3047,

32. Thakur AmarasinghJi v. State of Rajasthan, AIR 1955 SC 504,

Tribhuwan Prakash Nayyar v. UOI, (1969) 3 SCC 9,

33.

34. Umanath Pandey and ors vs. State of UP and anr AIR 2009 SC 2375

35. Umanath Pandey and ors vs. State of UP and anr AIR 2009 SC 2375

36. Union of India and Ors. v. Filip Tiago De Gama of Vedem Vasco De Gama ,AIR
1990 SC 981

37. Union of India v. Cynamide India Ltd., 1987 AIR 1802

Union of India and anr vs. W.N Chadha AIR 1993 SC 1082
38.

39. Waverly Jute Mills vs. Raymon and Co. (India) Private Ltd., 1963 (3) SCR 209

V
 FOREIGN CASES REFERRED

1. Bank of N.S.W. v. The Commonwealth, [1948] HCA 7

BOOKS REFERRED

1. M. P. JAIN & S. N. JAIN, PRINCIPLES OF ADMINISTRATIVE LAW (6TH ED.,

2011).

2. G.P. SINGH, J., PRINCIPLES OF STATUTORY INTERPRETATION (12TH ED.,

LEXIS NEXIS BUTTERSWORTH 2014).

3. CRAWFORD EARL T., THE CONSTRUCTION OF STATUTES (9TH ED.,

PAKISTAN LAW HOUSE, 2014).

4. RAMAIYA, A., COMPANIES ACT, 2013 (18TH ED., LEXIS NEXIS, 2014)

5. SALMOND ON JURISPRUDENCE (12TH ED., UNIVERSAL LAW PUBLISHING

CO., 2010)

STATUTES AND REGULATIONS REFERRED

BHOPAL GAS LEAK DISASTER (PROCESSING OF CLAIMS) ACT, 1985

BOMBAY FORWARD CONTRACT ACT, 1947

ELECTRICITY ACT,2003

ELECTRICITY(AMENDMENT) ACT,2007

ELECTRICITY REGULATORY COMMISSIONS ACT,1998

ELECTRICITY (SUPPLY) ACT, 1948

VI
 FINANCE ACT,2015

FORWARD CONTRACT REGULATIONS ACT,1952

INDIAN ELECTRICITY ACT, 1910

INDIAN PENAL CODE,1860

MAHARASHTRA PROTECTION OF INTRESTS OF DEPOSITORS (IN

FINANCIAL ESTABLISHMENTS),1999

SEBI (BROKERS AND STOCK BROKERS) REGULATIONS,1992

SEBI (INTERMEDIARIES) REGULATIONS, 2008

SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

SECURITIES CONTRACTS (REGULATION) ACT,1956

SPECIFIC RELIEF ACT, 1963

THE POWER MARKET REGULATIONS,2010

ARTICLES REFERRED

The Observer and Guardian vs The United Kingdom, 51/1990/242/319, Counsil of Europe: European
Court of Human Rights, 24th October,1991, available at
https://www.refworld.org/cases,ECHR,3ae6b7234.html.

DICTIONARIES REFERRED

1. Black‟s Law Dictionary 10th Edition

VII
 STATEMENT OF JURISDICTION

The Petitioner/appellant have approached this Hon’ble Supreme Court of India, in the
combined matter of CERC and Ors v. SEBI and Anr., for the Petitioner/appellant in the
Special Leave Petition filed by the petitioner under Art. 136 of the constitution of India,
1950.

All of which is most respectfully submitted

VIII
 STATEMENT OF FACTS

1.The Forward Markets Commission (the “FMC”) had granted approval to the Bharat
Commodity Exchange (BCX) a platform to trade in forward contracts in goods, under
Forward Contract Regulation Act, 1952,(FCRA). Before BCX could announce the launch of
forward contracts in electricity, the Electricity Exchange of India Limited (the “EXIL”),
regulated by the Central Electricity Regulatory Commission (the “CERC”) petitioned to
CERC that the launch of trading in forward contracts in electricity on the platform of BCX
should be halted because such contracts were within the exclusive jurisdiction of CERC.
FMC and BCX were included as respondents, to which FMC contended that they alone
carried the jurisdiction of forward contracts in electricity under FCRA. BCX also filed an
Interlocutory Application before CERC praying to decide the jurisdiction of CERC in respect
of forward contracts in electricity.
2. CERC pronounced its order. FMC filed a writ petition before the Hon’ble High Court of
Bombay, challenging the order of CERC praying that the order should be quashed. While the
Writ Petition was pending before the Hon’ble High Court of Bombay, CERC gave
permission to EXIL for organizing month-ahead contracts in electricity. FMC brought to the
attention of CERC that EXIL is neither registered with FMC. BXC approached CERC. The
petition was disposed and the same was rewritten in the favour of CERC. Power Market
Regulation, 2010 was formulated and defined power, commodity derivative exchanges.
Through the regulation CERC sought to extend its regulatory jurisdiction contracts in
electricity, which would include forward contracts, future contract and options. FMC later
filed a Chamber Summons before the Hon’ble High Court of Bombay, to bring on records the
developments, permissions granted by CERC to electricity exchanges to forward contract.
3. The Hon’ble High Court of Bombay, observed that neither FMC or CERC has exclusive
jurisdiction to deal with the future contracts Aggrieved by the order, FMC and CERC filed
separate leave petition before the Supreme Court of India. Meanwhile FMC received a letter
from Indian Investors Association (IIA) demanded FMC to take action against these EXIL, a
payment default has occurred as a result 900 investors have been aggrieved. A copy of the
letter was sent to Ministry of Finance (MOF), through the directions FMC appointed Roths
India LLP (RIL), through its investigation it found that the platform was used to run a
financial business, and the brokers/members were trading on the EXIL platform without

IX
actual delivery.
4. FMC forwarded a complaint to the Economic Offence Wing (EOW), EOW took
cognizance of criminality, according to the EOW report it found that 200 brokers were
registered members at EXIL. Simultaneously Serious Fraud Investigation Office (SFIO) also
investigation into the EXIL scam.
5. FMC got merged with SEBI. IIA had previously sent letters to FMC demanding SEBI to
take actions against the brokers. SEBI initiated inquiry against the 10 brokers under SEBI
Act, through which a Show Cause Notice was given to 10 brokers to determine their fit and
proper criteria. Under the SFIO report were all 200 brokers who had applied for registration
under SEBI were found to be actively involved. Association of Commodity Brokers (ACB)
requested SEBI to take action against brokers ACB further stated that action initiated by
SEBI against 200 members/brokers is unjust and leads to regulatory uncertainty.
6. EXIL also filed a writ petition against SEBI before the Hon’ble High Court of Bombay,
saying that action initiated by SEBI by invoking FCRA and filing complaint against EXIL,
the order passed by Bombay High Court, was in the favour of SEBI. ACB and EXIL
separately approached the Supreme Court of India, since both appeals are regarding
jurisdiction hence decided to hear them together. Further the pending case on jurisdiction of
CERC and/or SEBI was also clubbed.

X
 ISSUES RAISED

ISSUE I

WHETHER THE FORWARD CONTRACTS IN ELECTRICITY, IS EXCLUSIVELY

WITHIN THE JURISDICTION OF FORWARD MARKET COMMISSION (NOW
MERGED WITH SEBI) OR THE CENTRAL ELECTRICITY REGULATORY
COMMISSION (CERC)?

[I.A] Interpretation of Law

[I.B] Whether forward contracts in electricity can be dealt under the Electricity
Act,2003?

ISSUE II
WHETHER CERC’S ACT OF EXERCISING ITS ADJUDICATION POWER
RIGHTFUL?
[II.A] Whether the CERC which is a statutory commission can prevent another
statutory commission that is FMC from interfering or regulating matters of
trade in electricity?
[II.B] Whether CERC was rightful in framing and implementing The Power
Market Regulations Act,2010?

ISSUE III
WHETHER SEBI WAS RIGHTFUL IN TAKING ACTIONS AGAINST 200
BROKERS/ MEMBERS WITH THE CLAIMED FCRA AND SEBI
REGULATIONS?

XI
 SUMMARY OF ARGUMENTS

ISSUE I

WHETHER THE FORWARD CONTRACTS IN ELECTRICITY, IS EXCLUSIVELY

WITHIN THE JURISDICTION OF FORWARD MARKET COMMISSION (NOW
MERGED WITH SEBI) OR THE CENTRAL ELECTRICITY REGULATORY
COMMISSION (CERC)?
Central Electricity Regulatory Commission ("CERC"), is established by the Central
Government U/S. 3(1) of the Electricity Regulatory Commissions Act, 1998 and functioning
as such before the date of coming into force of the Electricity Act, 2003. The Act makes
provisions for every aspect of the matter concerning electricity. As it is the trade of
electricity, a wide interpretation and since CERC has exclusive jurisdiction of electricity it
has the power to regulate Forward Contract.

ISSUE II
WHETHER CERC’S ACT OF EXERCISING ITS ADJUDICATION POWER
RIGHTFUL?
CERC derives its adjudication power with reference to statute from The Electricity
Regulatory Commissions Act,1998 . U/S.12 the powers of the central commission are stated
which gives CERC all the rights to make regulations for the development of power market.
Further the intent makes it very clear that all matters including generation, transmission,
distribution, trading, and use of electricity will be dealt by Electricity Act,2003.

ISSUE III
WHETHER SEBI WAS RIGHTFUL IN TAKING ACTIONS AGAINST 200
BROKERS/ MEMBERS WITH THE CLAIMED FCRA AND SEBI
REGULATIONS?
The Petitioner 3 (ACB) here contends that the respondent SEBI has taken action against the
200 brokers/members with the claimed FCRA and SEBI regulations wrongfully, as the
respondent here violates the principle audi alteram partem amongst the Natural Justice
principles. Also the petitioner here throws light on the fact that the respondent’s actions are
ultra vires in nature.

XII
 ARGUMENTS ADVANCED

ISSUE I

WHETHER THE FORWARD CONTRACTS IN ELECTRICITY, IS EXCLUSIVELY

WITHIN THE JURISDICTION OF FORWARD MARKET COMMISSION (NOW
MERGED WITH SEBI) OR THE CENTRAL ELECTRICITY REGULATORY
COMMISSION (CERC)?
1. It is humbly submitted by the Petitioner CERC, (hereby referred to as Petitioner 1),
before the Hon‟ble supreme court that the regulatory authority functioning under
the Electricity Act,2003 has the sole right in the matter of „Electricity‟. The
Petitioner would like to submit his submission on this issue in two folds, viz,
[1.A] Interpretation of Law
[1.B] Whether forward contracts in electricity can be dealt under the
Electricity Act,2003?

2. Central Electricity Regulatory Commission ("CERC"), is established by the Central

Government U/S. 3(1) of the Electricity Regulatory Commissions Act, 1998 and
functioning as such before the date of coming into force of the Electricity Act, 2003.
Electricity Act, 2003 was enacted to consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity and generally for taking
measures conducive to development of electricity industry, promoting competition
therein, protecting the interest of consumers and supply of electricity to all areas,
constitution of Central Electricity Authority, Regulatory Commissions and
establishment of Appellate Tribunal and for matters connected therewith or incidental
thereto.
3. The Act makes provisions for every aspect of the matter concerning electricity
including, inter alia, referring for arbitration disputes involving generating
companies or transmission licensees or disputes between licensees and generating
companies.

1
 4. It is humbly submitted before the Hon‟ble Court that the rule of ejusdem generis 1be
taken into consideration in this context. It reflects an attempt to reconcile
incompatibility between the specific and general words. It is essential for the
application of the ejusdem generis rule that enumeration things before the general
words must constitute a category or genus or a family2. It is humbly submitted by
the Petitioner 1 that for the application of the rule of ejusdem generis the court
should consider the intent of the legislature.
5. It is also humbly submitted by the Petitioner that in the present case, under the
Electricity Act, 2003, appropriate government shall endeavor to supply electricity to
all areas including villages and hamlets. Through this we can infer that the
Electricity Act,2003 mandates the duty of providing electricity to all the people. The
aforesaid Act through the word „trade‟ has been defined U/s. 2(71) of the Electricity
Act, 2003 giving a general understanding.
6. U/s. 2(23) defines electricity as electrical energy generated, transmitted, supplied or
traded for any purpose. The simple understanding of trade as defined U/s. 2(71)
cannot be construed as the word defines but through wide interpretation we would
understand a deeper level. U/s. 2(23)(b) explains that electricity can be used for any
purpose except the transmission of a message, from this we can formulate that
electricity trading has the widest meaning. In the cases of Kailaschand
Khusalchand Bakliwal Vs. The State of Maharashtra3, the case of Bank of N.S.W.
4
v. The Commonwealth was referred where the learned Judge observed that “the
words 'trade, commerce and intercourse' are not naturally susceptible of such a
reactionary interpretation. The very manner in which they are combined would
carry, even to a mind unfamiliar with their backgrounds, an intention to include all
forms and variety of inter-State transaction whether by way of commercial dealing
or of personal converse or passage.
7. U/s.2(71) of the Electricity Act 2003, defines trading which means purchase of
electricity for resale. This definition has no relevance for forward trading in which

1
Thakur AmarasinghJi v. State of Rajasthan, AIR 1955 SC 504, State of Karnataka v. Kempiah, AIR 1998 SC
3047, Housing Board of Haryana v. Haryana Housing Board Employees Union, AIR 1996 SC 434, R.K Mittal
v. State of U.P (2012) 2 SCC 232
2
Tribhuwan Prakash Nayyar v. UOI, (1969) 3 SCC 9, Siddeshwari Cotton Mills Pvt. Ltd v. UOI,, AIR 1989 SC
1019, State of Bombay v. Ali Gulshan, AIR 1955 SC 810, Jagdish Chandra Gupta v. Kajaria Traders (India)
Ltd, AIR 1964 SC 1882
3
Kailaschand Khusalchand Bakliwal Vs. The State of Maharashtra, (1977)79BOMLR449
4
Bank of N.S.W. v. The Commonwealth, [1948] HCA 7

2
 "short" and "long" positions are taken by traders based on their perceptions of future
trends of prices and these are not connected with a prior purchase or a necessary
resale. The concept of trading necessarily covers all forms of business in electricity
and includes both spot and forward contracts for sale and purchase of electricity, one
cannot stick to the plain understanding to the word, and has to seek wide
interpretation/understanding of the words. CERC is the Central Commission
established by the Central Government U/s. 3(1) of the Electricity Regulatory
Commissions Act, 1998 and functioning even before the Electricity Act, 2003 came
into force, the Central Commission for the purpose of the Electricity Act in terms of
S. 76 thereof, and exclusively all matters relating to electricity should fall under the
Electricity Act, 2003.The forward contracts in electricity for the delivery of
electricity are exclusively falling under the ambit of S. 55 read with S. 178 (2) (y) of
the Electricity Act. If there is a conflict between Union and State Lists, the Union
list will prevail but when Parliament has framed two enactments, then the object of
the Act is to be seen, U/s.173 and 174 of the Act of 2003, which clearly explains
when there is an inconsistency with any other law regarding the same matter for
electricity, the Electricity Act, 2003, will have an overriding effect.
8. Art. 246 of the Constitution can never apply to the instant case as that Article deals
only with a conflict between entries pertaining to the Union and the States. The
forward contracts in electricity for the delivery of electricity are necessarily matters
concerning electricity and within the ambit of S. 66 read with S. 178 (2) (y) of the
Act of 2003. All forward contracts are delivery contracts. It is not a financial
contract. The impugned Regulations have been made by CERC U/s. 66 read with S.
178 (2) (y) of the Act of 2003, the Regulations deal with the creation of a
comprehensive market structure and enabling the transaction, execution and
contracting of all types of possible contracts in the electricity markets. S. 66 of the
Act of 2003 mandates the CERC to promote the development of the power market.
In the event of repugnancy between the regulations made by the FMC and CERC,
the CERC's guidelines/regulations will prevail as per section 174.The Regulations
have been made by the CERC in exercise of the powers vested in and functions laid
down under the provisions of S. 66 read with S. 178 (2) (y) of the Electricity Act of
2003 hence the rules and regulations framed by CERC are well within the
framework of law.

3
 [1.A] Interpretation of Law
9. The Appellant humbly submits that a statute is an edict of the legislature. 5 Judge
Learned Hand said, "but words must be construed with some imagination of the
purposes which lie behind them" in the case of Lenigh Valley Coal Co. v.
6
Yensavage 218 FR 547. The view was re-iterated in Union of India and Ors. v.
Filip Tiago De Gama of Vedem Vasco De Gama (AIR 1990 SC 981).7 The
conventional way of interpreting the statute is to seek the „intention‟ of its maker.8
Whenever there are circumstances wherein two interpretations can be made of a
provision then the real intent behind legislature is sorted. It is the “duty of the
judicature to act upon the true intention of the legislature- the mens or the sententia
legis9”.
10. It is a well-settled principle that the intention of the Legislature must be found by
reading the statute as a whole. The different provisions in the statute should not be
interpreted in the abstract but should be construed keeping in mind the whole
enactment and the dominant purpose that it may express.10 In the matter of Kanai
Lal v. Paramnidh11, the Supreme Court held that “it must always be borne in mind
that the first and primary rule of construction is that the intention of the legislature
must be found in words used by the Legislature.” Further this petitioner humbly
requests the Hon‟ble court to take into consideration the statement of objective of the
Electricity Act,2003 12 which states that the law relating to generation, transmission,
distribution, trading and use of electricity is contained in The Electricity Act, 2003.
Here, the term „trading‟ if read in compliance with the afore discussed principals of
interpretation of statute, should allow a conclusion to be drawn that Electricity
Act,2003 solely holds jurisdiction of „trading of electricity‟ which in turn is also
inclusive of „forward contracts in electricity‟.

5
Padmasundara Rao v. State of T.N., AIR 2002 SC 1334
6
Lenigh Valley Coal Co. v. Yensavage, 218 FR 547
7
Union of India and Ors. v. Filip Tiago De Gama of Vedem Vasco De Gama ,AIR 1990 SC 981
8
Kerala State Housing Board v. Ramapriya Hotels (p) Ltd.. (1994)5 SCC 672; Chern Taong Shang v.
Commander
S.D Baijal. (1988)1 SCC 507;
9
SALMOND, JURISPRUDENCE 152 (12th ed., 2010); J.P. Bansal v. State of Rajasthan, (2003) 5 SCC 134;
Municipal Committee ; Hoshiarpur v. Punjab SEBI (2010) 13 SCC 216.
10
State of Gujarat v. Salimbhai Abdulgaffar Shaikh, AIR 2003 SC 3224
11
Kanai Lal v. Paramnidh, AIR 1957 SC 907
12
The Electricity (ammendment) Act,2007

4
 [1.B] Whether forward contracts in electricity can be dealt under the
Electricity Act,2003?
11. It is humbly submitted by the petitioner to the Hon‟ble Supreme Court that the
Electricity Act, 2003, regards to the laws relating to generation, transmission,
distribution, trading and use of electricity as contended in Issue I13.Under Electricity
Act ,2003 U/s. 2( 23) defines electricity as electrical energy, as mentioned under
Issue I14, electrical energy should be generated, transmitted, supplied or traded for
any purpose and U/s. 2(23)(b) used for any purpose except the transmission of a
message, can be inferred through the above section that under the Electricity Act
,2003, electricity can be specifically traded unlike the Forward Contract Regulation
Act, 1952. Where there hasn‟t been any explicit mention of electricity as a good
under Section 2(d) of the act.
12. U/s.2(71) of the electricity Act 2003, trade has been defined clearly, as means
purchase of electricity for resale thereof and the expression trade shall be construed
accordingly.
15
13. As mentioned under Sub Issue I.I the wide interpretation of statute is applicable
under the present case, the petitioners humbly submit to the court that the plain
understanding of the word should not only be considered and a narrow interpretation
of the word should not be understood. The word trade has a very deeper
understanding and has many layers to it. The concept of trading covers all aspects of
business in trading for both spot and forward contracts for sale and purchase of
electricity. From the circumstances in the case, Forward Market Commission ( FMC
) has said that CERC has jurisdiction on spot trading in electricity when it has not
been mentioned explicitly in the Electricity Act 2003, FMC has conveniently
accepted the wide interpretation then, but exclusively refrains from accepting that
forward contracts in electricity would also fall under Electricity Act,2003. The
petitioner would state that forward contract are necessarily contracts for the delivery
of electricity any form of contract that is a delivery of electricity would fall under the
Electricity Act, 2003 directly. Electricity Act,2003. U/s 174 of Electricity Act, 2003,
the provisions of the act shall have an overriding effect on any other law for the time
being in force, so any other law which governs the same matter, the Electricity Act,

13
Supra ISSUE I Page 1
14
Supra ISSUE I Page 6
15
Supra ISSUE I.I Page 17

5
 2003, would be superior to that.
14. In the present case, the respondent claims to have exclusive jurisdiction over forward
contracts in electricity but under section 174 electricity act would have an overriding
effect over all the other acts. In the case of Gujarat Urja Vikas Nigam Limited v.
16
Essar Power Ltd. wherein the Supreme Court has held thus: In our opinion, the
principle laid down in S. 174 of the Electricity Act, 2003 is the principal or primary
whereas the principle laid down in Section 175 is the accessory or subordinate to the
principal. In our opinion, S.174 and S.175 of the Electricity Act, 2003 can be read
harmoniously by utilising the samanjasya, badha and gunapradhana principles of
Mimansa. This can be done by holding that when there is any express or implied
conflict between the provisions of the Electricity Act, 2003 and any other Act, then
the provisions of the Electricity Act, 2003 will prevail, but when there is no conflict,
express or implied, both the acts are to be read together. S. 66 read with 178(2)(y) of
the Electricity Act 2003, explains the power given to Appropriate Commission to
promote the development of a market in power including trading in electricity,
matters concerning electricity comes under the ambit of the above-mentioned
sections.
15. The petitioner humbly submits under the case of Multi Commodity Exchange of
India v. Central Electricity Regulation Commission17, held that the Electricity Act
deals with every aspect in electricity including trade. The electricity is a non-storable
good except that produced in hydro projects. The trading of electricity falls within
the concept of commodity trading thus it may or may not physically be available all
the time unless generated on the day and/or the date of delivery. This distinguishes
electricity as a good from other commodities as contemplated under the FCRA
Act,1952 which at present deals exclusively with all aspects of future/forward
contract.

ISSUE II
WHETHER CERC’S ACT OF EXERCISING ITS ADJUDICATION POWER
RIGHTFUL?
16. The Petitioner 1 would like to state that CERC was rightful in exercising the
Adjudication Power delegated to it by the statues. In support of the aforementioned

16
Gujarat Urja Vikas Nigam Limited v. Essar Power Ltd, (2008) 4 SCC 755
17
Multi Commodity Exchange of India v. Central Electricity Regulation Commission, 2011 Indlaw MUM 57

6
 contention this Petitioner humbly submits reference of statute from The Electricity
Regulatory Commissions Act,1998 from which it derives its adjudication powers.
17. U/s.12 , Electricity and Regulation Commission Act, 1998.The Central Commission
shall, for the purposes of any inquiry or proceedings under this Act have the powers
as are vested in a Civil Court under the Code of Civil Procedure, 1908.
18. Moreover, U/s.16 of The Electricity Regulatory Commissions Act,199818, talks
about appeal to high court in certain cases, it is clearly mentioned in clause 1 that
“Any person aggrieved by any decision or order of the Central Commission may file
an appeal to the High Court. It can be construed from the said provision that if FMC
was aggrieved by the decision of CERC it had all the rights to appeal to the High
court and that CERC had all rights to adjudicate the matter U/S.12 of The Electricity
Regulatory Commissions Act, 1998, which clearly mentions the powers of central
commission.

19. In the case of Liversidge v. Anderson 19exclusion can be made through “clearly and
expressly” made Act of the parliament. An Act of Parliament may dispense with the
requirements of fair procedures where they would otherwise be required. In the
interests of administrative efficiency and expedition, the requirements of fairness
have been excluded by statutory provisions which, for example, enable decision
makers to decline to conduct an oral hearing, or to entertain particular kinds of
representations and objections.
20. Subordinate legislation purporting to exclude a hearing or to hold a hearing or
conduct an inquiry is conferred by a statute, a refusal to hold the inquiry may
constitute a denial of natural justice if fairness plainly demands that a hearing be
held. Ex.p Guardian Newspaper Ltd 20
(Written Submissions) in this case Court
held that, an express statutory power to proceed without a hearing will not
necessarily exclude the right to make informal or written representations, similarly,
an express statutory provision excluding a duty to give reasons has been held not to
exclude a duty to disclose the substance of the case so that an applicant for
citizenship could make representation.

18
The Electricity Regulatory Commissions Act,1998
19
Liversidge v. Anderson ,[1941] UKHL 1 (03 November 1941)
20
The Observer and Guardian vs The United Kingdom, 51/1990/242/319, Counsil of Europe: European Court of
Human Rights, 24th October,1991, available at https://www.refworld.org/cases,ECHR,3ae6b7234.html.

7
 21. In a number of cases, the view has been expressed judicially that there is no question
of invocation of natural justice, or hearing the affected party, when legislative action
of an authority is brought under the scrutiny of the Courts.
22. In Rule 29 and 30 of the Defense of India Act,1962 empowers the executive to make
orders for externment for the maintenance of public order. No hearing was necessary
for the purpose of making such Order to direct the removal, detention, externment,
interment and the like of any person, if it is „satisfied‟ that such order was necessary
for the defense or efficient conduct of military operations and maintenance of Public
order.
21
23. Also in Laxmi Khandsari v. State of U.P in this case SC held that notification of
UP Govt. Sugar Cane (Control) Order, 1966 directing that no power-crusher of
Khandsari unit in reserved area of a Sugar mill will work during the period Oct 9 to
Dec 1st , 1980 is legislative in character hence Principle of Natural Justice attracted.
22
In the same manner, Charanlal Shahu v. U.O.I , in this case the constitutionality
of the Bhopal Gas leak disaster (processing of claims) Act, 1985 was involved. The
SC held: “for legislation by parliament no principles of natural justice is attracted,
provided such legislation is within the competence of legislature”.
23
24. In Union of India v. Cynamide India Ltd. SC held that no principles of Natural
Justice had been violated when the Govt. issued a notification fixing the Prices of
certain drugs. The Court reasoned that since the notification showed from a
legislative act and not an administrative one so Principles of Natural Justice would
not apply.

[2.A] Whether the CERC which is a statutory commission can prevent

another statutory commission that is FMC from interfering or regulating
matters of trade in electricity?
25. It is humbly submitted that CERC being a central commission the major functions of
it is to promote competition, efficiency and economy in bulk power markets, improve
the quality of supply, promote investments and advise government on the removal of
institutional barriers to bridge the demand supply gap and thus foster the interests of
consumers. In pursuit of these objectives the Commission mainly aims to improve,

21
Laxmi Khandsari v. State of U.P,1981 AIR 873,
22
Charanlal Shahu v. U.O.I, 1990 AIR 1480
23
Union of India v. Cynamide India Ltd., 1987 AIR 1802

8
 formulate, facilitate, promote and to advise with regard to the with power market.
26. Also the intent of the Electricity Act 2003 clearly mentions that it is an act to
consolidate the laws relating to generation, transmission, distribution, trading and use
of electricity and generally for taking measures conducive to development of
electricity industry, promoting competition therein, protecting the interest of
consumers and supply of electricity to all areas, rationalization of electricity tariff,
ensuring transparent policies regarding subsidies, promotion of efficient and
environmentally benign policies, constitution of Central Electricity Authority,
Regulatory Commissions and establishment of Appellate Tribunal and for matters
connected therewith or incidental thereto.
27. The electricity act 2003 solely deals with all the matters relating to generation,
transmission, distribution, trading and use of electricity, so it can be safely construed
that matters related to forward contracts in electricity would also come under the
ambit of electricity act 2003. As forward contracts is explained in the case of Kailash
24
Chandra Mahesh Kumar and Atmaram Agarwalla Vs. The State of Orissa by
referring to section 2(c) of FCRA -"Forward Contract" means a contract for the
delivery of goods at a future date and which is not a ready delivery contract. As
defined under S2 (71) of electricity act 2003, trading means purchase of electricity for
resale thereof and the expression "trade" shall be construed accordingly by reading
both the sections together.
28. The Act makes provisions for every aspect of the matter concerning electricity
including, inter alia, referring for arbitration disputes involving generating companies
or transmission licensees or disputes between licensees and generating companies.
The 2003 Act is a Special Act and is a complete Code with respect to all matters
concerning electricity, including the development of a market in power. S. 66 read
with S. 178 (2) (y) of the Act enables CERC to make regulations for the development
of the market in power, including trading. This necessarily covers all aspects of the
market and business/trading in power and would include both spot and forward
contracts for the sale or purchase of electricity. The concept of trading necessarily
covers all forms of business in electricity and includes both spot and forward
contracts for sale and purchase of electricity. CERC is the Central Commission
established by the Central Government under sub-s. (1) of S. 3 of the Electricity

24
Kailash Chandra Mahesh Kumar and Atmaram Agarwalla Vs. The State of Orissa, LAWS(ORI)-1973-5-14

9
 Regulatory Commissions Act, 1998 and functioning as such before the date of coming
into force of the Act of 2003 and as such is the Central Commission for the purpose of
the Act in terms of S. 76 thereof. CERC exercises functions and powers as a regulator
in the whole of India in regard to Electricity. S. 79 of the 2003 Act specifies some of
the specific functions to be discharged by the CERC. Sub-section (j) of S. 79 of the
Electricity Act deals with fixing the trading margin in the inter- State trading of
electricity, if considered necessary. It is submitted that the CERC is empowered to
take appropriate measures to regulate transactions in power as it thinks fit. The
forward contracts in electricity/for the delivery of electricity are necessarily matters
concerning electricity and are within the ambit of S. 55 read with S. 178 (2) (y) of the
Electricity Act. If there is a conflict between Union and State Lists, the Union list will
prevail but when Parliament has framed two enactments, then the object of the Act is
to be seen. The contention that forward contracts for electricity are not within the
purview of Electricity Act, is based on a misreading of the nature of forward contracts
under the FCRA. The forward contracts in electricity are necessarily contracts for the
delivery of electricity. FMC cannot file any proceedings as the writ can only be filed
by Union of India through the Ministry of Consumer Affairs. FMC is a department of
the Ministry of Consumer Affairs and is not a body corporate. The Electricity Act,
2003 is an exhaustive code on all matters concerning electricity. Ss. 173 and 174 of
the Act of 2003 stipulate that the provisions of the Act shall have effect
notwithstanding anything inconsistent therewith contained in any other law for the
time being in force. The Electricity Act is a consolidating statute on all matters
concerning electricity. S. 66 read with S. 178 (2) (y) gives CERC the power to
legislate and frame the regulation.
29. In the case of Multi Commodity Exchange of India Limited and another v Central
Electricity Regulatory Commission, New Delhi and others it has been said that “The
Electricity Act deals with in every respect including trading in electricity. The
electricity is a non-storable goods, except produced by hydro-projects. The trading of
electricity falls within the concept of commodity trading. Therefore, it may or may
not physically available all the time, unless generated on the day and/or the date of
delivery. This distinguishes electricity as a goods from other commodities as
contemplated under the FCR Act, which at present deals exclusively with all aspect of
futures/ forward contracts”.

10
 [2.B] Whether CERC was rightful in framing and implementing The
Power Markets Regulations Act,2010?
30. Central Electricity Regulatory Commission ("CERC"), is established by the Central
Government U/s.3 of the Electricity Regulatory Commissions Act, 1998 and
functioning as such before the date of coming into force of the Electricity Act, 2003.
S. 79 of the said 2003 Act specifies some of the specific functions to be discharged by
the Central Commission.
31. By the Regulations as notified by CERC provides for forward and futures contracts
relating to electricity to come under the purview of CERC. Also, there was a conflict
between the FCRA and the Electricity Act and in view of S. 174 and 175 of the
Electricity Act, the Electricity Act would have an overriding effect. Further, the
Electricity Act was also a later central statute hence the provisions thereof would
prevail. It also held that as there was a conflict between the provisions of the FCRA
and the Electricity Act, the provisions of the Electricity Act would prevail. In the said
order, CERC has explicitly said that “BCX and other commodity exchanges which
permitted trading of forward contracts in electricity by FMC at their platform, shall
be governed by the orders, guidelines, regulations and other prescriptions of CERC
since they are not inconsistent with the provisions of FCRA” therefore it can be
interpreted that BCX cannot launch such forward contracts without the prior approval
of this Commission in accordance with this Commission's guidelines or the statutory
regulations.
32. The Regulations deal with the creation of a comprehensive market structure and
enabling the transaction, execution and contracting of all types of possible products in
the electricity markets. S. 66 of the Act of 2003 mandates the CERC to promote the
development of a market in power. In the event of repugnancy between the
regulations/prescriptions made by the FMC and CERC, the CERC's
guidelines/prescriptions/regulations will prevail. The Regulations have been made by
the CERC in exercise of the powers vested in and functions laid down under the
provisions of S. 66 read with S. 178 (2) (y) of the Act of 2003 and in compliance with
the mandate of National Electricity Policy notified by the Central Government under
S. 3 of the Electricity Act of 2003.
33. u/s. 179 of the Electricity Act, a regulation framed by the CERC is supposed to be laid
before the Parliament and after the passage of 30 days of such laying, the regulation is
deemed to be approved by the Parliament and as per the Constitution Bench judgment

11
 of the Supreme Court in the case of PTC India Ltd. vs. Central Electricity
Regulatory Commission25, The Electricity Act deals with the entire subject of
electricity and hence after the passing of the said Act any other Central Act which
could have been dealing with the subject of electricity is denuded of its power to deal
with the same. S. 3 of the Electricity Act which finds mention in S. 66 of the
Electricity Act provides that the Central Government shall from time to time prepare
the national electricity policy. By the Plain reading of Art. 246 of the Constitution of
India, it is clear that the Constitution does not create any primacy of Acts of the Union
Parliament under List-I vis-a-vis other Acts of the Union Parliament under List-III.
The said Article is only dealing with a conflict between the legislation by the Union
Parliament as against the legislation by the State Legislature. After the enactment of
the Electricity Act, the Central Government was denuded of its power to issue a
notification under S. 15 of the FCRA as the entire subject of electricity was taken over
in the Electricity Act.
34. At this stage, the decision of the Supreme Court in the case of Sarwan Singh v.
Kasturi Lal (1977)26 is required to be taken into consideration. The Supreme Court in
para of the said judgment held as under. "When two or more laws operate in the same
field and each contains a non-obstante clause stating that its provisions will override
those of any other law, stimulating and incisive problems of interpretation arise. Since
statutory interpretation has no conventional protocol, cases of such conflict have to be
decided in reference to the object and purpose of the laws under consideration" Since
the intent of the electricity act 2003 is not vague and generalized it can be interpreted
from the judgement that all the matters relating to electricity would fall under the
ambit of the electricity act 2003.
35. The Supreme Court in the case of Waverly Jute Mills vs. Raymon and Co. (India)
Private Ltd. 27can be assessed. In this case, the Supreme Court was required to resolve
a conflict between Entry 48 of List 1 and Entry 26 of List II. Entry 48 deals with stock
exchanges and futures markets whereas Entry 26 deals with trade and commerce. The
Supreme Court held that trade and commerce would in their ordinary and accepted
sense include forward contracts, but in a case where there are two entries, one general
in its character and the other specific, the former must be construed as excluding the

25
PTC India Ltd. vs. Central Electricity Regulatory Commission, AIR 2010 SC 1338
26
Sarwan Singh v. Kasturi Lal (1977), 1 SCC 750 1976
27
Waverly Jute Mills vs. Raymon and Co. (India) Private Ltd., 1963 (3) SCR 209

12
 latter. It is settled that while reading entries in legislative lists, the widest possible
construction according to the ordinary meaning of the words in the entry must be put
upon them. The words employed in the entry are to be interpreted so as to include all
ancillary and subsidiary matters.
36. The Supreme Court in the case of PTC India Ltd. 28. The Supreme Court held thus:
37. The 2003 Act is enacted as an exhaustive Code on all matters concerning electricity.
It provides for "unbundling" of SEBs into separate utilities for generation,
transmission and distribution. It repeals the Indian Electricity Act, 1910, the
Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998.
The 2003 Act, in furtherance of the policy envisaged under the Electricity Regulatory
Commissions Act, 1998 ("1998 Act") mandated the establishment of an independent
and transparent regulatory mechanism, and has entrusted wide ranging responsibilities
with the Regulatory Commissions. While the 1998 Act provided for independent
regulation in the area of tariff determination; the 2003 Act has distanced the
Government from all forms of regulation, namely, licensing, tariff regulation,
specifying Grid Code, facilitating competition through open access, etc.". The Act,
therefore, makes provisions for every aspect of the matter concerning electricity
including, inter alia, referring for arbitration disputes involving generating companies
or transmission licenses. Ss. 173 and 174 of the Act of 2003 stipulate that the
provisions of the Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in force. The judgment of the
Supreme Court in the case of Gujarat Urja Vikas Nigam Limited vs. Essar Power
Ltd. 29 wherein the Supreme Court has held thus:
38. "In our opinion, the principle laid down in S. 174 of the Electricity Act, 2003 is the
principal or primary whereas the principle laid down in S. 175 is the accessory or
subordinate to the principal. Hence, S. 174 will prevail over S. 175 in matters where
there is any conflict. In our opinion, S. 174 and S. 175 of the Electricity Act, 2003 can
be read harmoniously by utilising the samanjasya, badha and gunapradhana
principles of Mimansa. This can be done by holding that when there is any express or
implied conflict between the provisions of the Electricity Act, 2003 and any other
Act, then the provisions of the Electricity Act, 2003 will prevail, but when there is no
conflict, express or implied, both the Acts are to be read together."

28
PTC India Ltd. , 2010 Indlaw SC 169
29
(2008) 4 SCC 755

13
 39. S. 66 read with S. 178(2) (y) of the Act of 2003, clearly enables the CERC to make
Regulations for the development of the market in power (including trading). This
necessarily covers all aspects of the market and business/trading in power and would
include both spot and forward contracts for the sale or purchase of electricity. The
concept of trading necessarily covers all forms of business in electricity and includes
both spot and forward contracts for sale and purchase of electricity. S. 2 (71) of the
Act refers to purchase of electricity for resale thereof. This is wide enough to cover
both spot and forward contracts for electricity
30
40. Chimanlal Premchand vs. The State of Bombay The power U/s. 26 of the
Bombay Agricultural Produce Markets Act,1963 to make rules for a market would
include the power to make rules for the regulation of business and conditions of
trading in the market area and that included making rules stipulating that no person
could do business in agricultural produce except under a license granted by the
Market Committee.
41. Art. 246 of the Constitution of India provides for the supremacy of Parliamentary
legislation over State legislation and has no application when considering which of
two Parliamentary Legislations will prevail/override the other. Since both the
legislations are Parliamentary legislations, there is no issue of constitutional
competence to enact the Act of 2003 or any of its provisions can arise. It is well
settled that an enactment can be attributed to more than one entry in the lists. A piece
of legislation need not necessarily fall within the scope of one entry alone, more than
one entry may overlap to cover the subject matter of a single piece of legislation. If
both Acts were special laws containing non obstante clauses, the latter Act must
prevail. Reliance is placed on the judgment of the Supreme Court in the case of
31
Solidaire India Limited vs. Fairgrowth Financial Services Limited and others
wherein the Supreme Court has held as under: "Where there are two special statutes,
which contain non obstante clauses the later statute must prevail. This is because at
the time of enactment of the later statute, the Legislature was aware of the earlier
legislation and its non obstante clause. If the Legislature still confers the later
enactment with a non obstante clause it means that the Legislature wanted that
enactment to prevail. If the Legislature does not want the later enactment to prevail
then it could and would provide in the later enactment that the provisions of the

30
Chimanlal Premchand vs. The State of Bombay, AIR 1960 SC 96
31
Solidaire India Limited vs. Fairgrowth Financial Services Limited and others ,(2001) 3 SC C 71

14
 earlier enactment continue to apply"
42. Relying on the aforesaid, it is submitted that since both the enactments are
Parliamentary legislations, no question of lack of competence arises nor is there any
need to read down or interpret entry 38 of List III vis a vis Entry 48 of List 1 as has
been submitted by the learned counsel for the petitioners.
43. In view of the special enactment under the Electricity Act, it is only the authority
under the Electricity Act can deal with futures contract and FMC cannot deal with
electricity in any manner including the futures contract. Whenever a central regulation
is to be challenged, notice has to go to the Attorney General of India. In order to
buttress the submission of the learned counsel, he has placed reliance of the Supreme
Court of India in the cases of (i) A.C. Sharma vs. Delhi Administration (1973) 32 and
33
(ii) Basant Lal vs. State of U.P. And another . The preamble in the FCRA is
similarly worded to the preamble in the Specific Relief Act in which Act also it is
stated to be concerning certain kinds of specific relief. The Supreme Court has held
that the Specific Relief Act is not a comprehensive legislation dealing with all aspects
of specific relief. In this connection, the decision of the Supreme Court in the case of
Hungerford Investment Trust Limited vs. Haridas Mundhra and others34can be
relied upon. The decision of the Supreme Court in the case of PTC India Ltd 35. and it
is submitted that the Electricity Act was a comprehensive Act dealing with all aspects
of electricity and that development of market of power was an exclusive jurisdiction
vested in the regulatory commissions.
44. In the case of Firm of Patapchand Nopaji v. Firm of Kotrike Venkata Setty and sons
and others36, the Supreme Court while dealing with the Bombay Forward Contract
Act, 1947, whose provisions were similar to the FCRA, except that U/s. 9 of the said
Act option in goods were banned only if a notification was issued by the provisional
government in the official gazette whereas under the FCRA all option in goods are
banned, held that if a contract was not for actual delivery and supply to bona fide
purchaser, then such contracts are tainted with unlawfulness of their object and are
forbidden by the law.
45. Reliance on the judgment of the Supreme Court in the case of Shivnarayan Kabra vs.

32
A.C. Sharma vs. Delhi Administration, (1973)1 SCC 726
33
Basant Lal vs. State of U.P. And another, (1998)8 SCC 589
34
Hungerford Investment Trust Limited vs. Haridas Mundhra and others, (1972) 3 SCC 684
35
AIR 2010 SC 1338
36
Patapchand Nopaji vs. Firm of Kotrike Venkata Setty and sons and others, (1975) 2 SCC 208

15
 The State of Madras37 wherein the Supreme Court had noticed the expert committee's
report prior to the enactment of the FCRA and then had the occasion to consider the
arguments wherein a defence had been taken that the contract being not for delivery
of goods and being speculative in nature was not a forward contract, was pleased to
reject the said argument as according to the Supreme Court the FCRA was meant to
curb the mischief of speculation and hence any person indulging in such practice
which were not resulting in delivery was held to be violating the prohibition under the
Act.
46. While relying upon the decision of the Supreme Court in the case of Ashoka
Marketing Ltd. vs. Punjab National Bank 38 that since Electricity Act also is dealing
with a large number of subjects which are exclusively in List-I like railways,
telegraph under Section 67, 159, 160 and 164, the said Act insofar as they relate to
such subjects can easily be traced to List-I. In case of an express or implied conflict,
the Electricity Act will prevail. To fortify his argument, it is relied upon the decision
of Gujarat Urja Vikas Nigam Ltd. vs. Essar Power Ltd. 39
47. The 2003 Act contemplates three kinds of delegated legislation. Firstly, under Section
176, the Central Government is empowered to make rules to carry out the provisions
of the Act. correspondingly, the State Governments are also given powers U/s. 180 to
make rules. Secondly, U/s.177, the Central Authority is also empowered to make
regulations consistent with the Act and the rules to carry out the provisions of the Act.
Thirdly, U/s. 178, the Central Commission can make regulations consistent with the
Act and the rules to carry out the provisions of the Act. SERCs have a corresponding
power U/s. 181. The rules and regulations have to be placed before Parliament and
the State Legislatures, as the case may be, U/s. 179 and 182. The Parliament has the
power to modify the rules/ regulations. This power is not conferred upon the State
Legislatures. A holistic reading of the 2003 Act leads to the conclusion that
regulations can be made as long as two conditions are satisfied, namely, that they are
consistent with the Act and that they are made for carrying out the provisions of the
Act.
48. The development of power market nowhere contemplates speculative business/
market in electricity. The concept "development of power market" may cover all

37
Shivnarayan Kabra vs. The State of Madras (1967) 1 SCR 138
38
Ashoka Marketing Ltd. vs. Punjab National Bank, 1990 (4) SCC 406
39
(2008) 4 SCC 755

16
 related and relevant steps including trading and all types of contracts for the
electricity development. Therefore, CERC through its regulations is not specifically
empowered to do speculative trading and/or forward trading or future contract,
independently, by overlooking the mandate of FCR Act.

ISSUE III
WHETHER SEBI WAS RIGHTFUL IN TAKING ACTIONS AGAINST 200
BROKERS/ MEMBERS WITH THE CLAIMED FCRA AND SEBI
REGULATIONS?

49. The Petitioner ACB (hereby referred to as Petitioner 3) contends that actions
initiated by the SEBI against the 200 members/ brokers is unjust and tantamount to
regulatory uncertainty. It further contends that EXIL, its promoters, and its directors
had adopted various tactics such as media publications, etc. to avoids their liability
and to shift it on to the 200 brokers/members.
50. Another contention that this Petitioner would like to put forward is that SEBI by not
granting the registration certificate and directly initiating an investigative enquiry ,
and consequently filing a criminal complaint to the EOW without allowing an
opportunity to hear the brokers/members against whom the allegations of scam has
been made to justify their stance, is forthright violation of natural justice principle of
Audi alterum partem40.
51. The Petitioner 3 would like to bring to the notice of the hon‟ble apex court that the
FMC while it existed did not hold any jurisdiction over spot exchanges or ready
delivery contract which in contrast is under the purview of the Petitioner 1 , i.e
CERC, hence after the merger that took place on September 29, 2015 between the
FMC and SEBI, no delegation of any jurisdiction over spot exchanges as they here
neither inherited by SEBI via the merger nor did they already hold the same.
52. This petitioner also would like to further add onto its contentions against SEBI that
the brokers alleged by the SEBI for the involvement of scam are not under the scope
of the SEBI for it to conduct an enquiry or to file a criminal complaint against them
to the EOW as SEBI has, at the time of initiating all these actions , no jurisdiction
over the brokers, as the status of their applications remains in abeyance and wasn‟t

40
Union of India and anr vs. W.N Chadha AIR 1993 SC 1082, Kharavela Industries Pvt. Ltd. vs. Orissa State
Financial AIR 1985 Ori 153, Umanath Pandey and ors vs. State of UP and anr AIR 2009 SC 2375

17
 granted at that point.
53. In the context of the given circumstances the intent of the merger of FMC with SEBI
was to streamline the regulations and wild speculations in the commodities market.
The brokers were to be brought under the purview of the Finance Act, 2015 and the
amended SEBI regulations and SCRA,1956. Since here FMC has dissolved and
FCRA repealed, it‟s obvious that the brokers are not the part of the same anymore.
Ideally their registration would have associated them to the SEBI after the merger,
but since even before the grant and consequential admission of the brokers, SEBI
initiated criminal proceedings via EOW against them, this Petitioner puts forwards
its humbly articulate it‟s dissent with the actions taken by SEBI against the 200
brokers / members and is completely of ultra vires nature.
54. Further, this petitioner would like to draw the attention of the court to the SEBI
Act,1992.
55. This petitioner would like to humbly submit the statutes of reference, and contend
that the respondent SEBI has contradicted its own provisions.
56. U/s. 15 I- explains for the purpose of adjudicating the matter under inquiry,
reasonable time was not given to the brokers, as provided under this section. U/s.
15A- requires that the entites under the act need to furnish such documents as
mentioned or required.
57. From the abovementioned statutory references, we can draw that under the SEBI
regulations its required that the person subject to enquiry is given an opportunity to
be heard before the initiation of the enquiry by the designated officer for enquiry. In
the given context, no such opportunity has been provided by the SEBI to either the
10 brokers against whom the enquiry was set up or the remaining 190 entities
against whom along with the 10 brokers, criminal complaint was filed.

18
58. Therein, the Petitioner 3 would like to draw the attention of the court to the fact that
SEBI has by not granting just these 10 brokers out of the alleged 200 entities, the
registration certificate, shown grave discrimination and questions the very locus standi of
the procedure of enquiry initiated by the SEBI against these 10 brokers and further contends
the action of SEBI filing a criminal complaint against these brokers to the EOW,Mumbai
and has clearly excluded EXIL from its allegations.
59. Even otherwise, if the respondent claims that it has appointed a designated authority
U/s.24(1) of the SEBI (INTERMEDIARIES) REGULATIONS, 2008, Appointment of
designated authority for enquiry in case of default by an entity who has been granted
certificate.
60. In the given context, the 10 brokers have not been granted the certificate and yet a
designation of authority has been appointed to conduct an investigational enquiry on them.
This action is prima facie ultra vires. Hence its clearly visible that the SEBI has contradicted
its own regulations. Even if it attempts to establish its jurisdiction on the 200 brokers, there
is no escape from the ironical violation that it has done of its own set of regulations.
 5th GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2019

PRAYER

In the light of the issues raised, arguments advanced and authorities cited, the counsel for the
petitioner humbly prays before this Hon’able Court to kindly adjudged and declare:

 Forward contract in electricity is exclusively within the jurisdiction of the Central

Electricity Regulatory Commission (CERC).
 And to uphold, that CERC was rightful in exercising it adjudication power.
 That SEBI was wrongful in taking action against the 200 brokers in light of audi alteram
partem and are ultra vires in nature.
 The costs of the proceedings shall be borne by the respondent.

And pass any other appropriate order as the court may deem fit in the interest of equity,
justice and good conscience.

And for this act of Kindness, the Respondent as in duty bound, shall forever pray.

Respectfully
Submitted Sd/-
Counsel for the Petitioner

MEMORANDUM ON BEHALF OF APPELLANT/ PETITIONER