Justice Manmohan, while issuing a notice to Delhi Government to respond in a week's time on Centre's plea seeking quashing of the FIR lodged in February on the direction of the previous Arvind Kejriwal government, said the ACB can continue with its investigation into the matter.
However, it will not take any coercive action against those named in the FIR, including officials and the private parties, the court said.
The court direction came as an oral submission was also made by senior advocate Abhishek Manu Singhvi who appeared for private parties and requested that there be no further investigation in the case.
"Issue notice. She (counsel for Delhi Government) is permitted to file counter reply within a week. You (Delhi Government's Anti Corruption Branch) carry on your investigation but no coercive action shall be taken against Union of India and against any of its officials related to it," the court said.
Kejriwal had directed the Anti Corruption branch to register an FIR on the basis of a complaint by four prominent people, including former Cabinet Secretary TSR Subramanian.
The complaint alleged that Moily, former Oil Minister Murli Deora and others had colluded with Ambani to raise the price of natural gas at the cost of the common man. All of them have denied the allegations.
The Kejriwal-led Delhi government had lodged the FIR naming Moily, Mukesh Ambani and others on gas pricing issue and had alleged the Congress-led UPA government "favoured" RIL with an eye on 2014 general elections and BJP maintained "silence" hoping to gain corporate funding for the polls.
Appearing for Centre, Solicitor General Mohan Parasaran sought quashing of the FIR saying Anti-Corruption branch of the Delhi Government has "no powers or jurisdiction to investigate" complaints against the Union Government's decision to fix prices of natural gas.
He said that Delhi government should have approached CBI, as it is an appropriate agency for investigation of such cases.
"How can they (Delhi's Anti Corruption Branch) go before the wrong authority. Let them go before proper forum. Why were they in such a hurry to register the case," he argued.
During the hearing, Singhvi said, "This probe is to humiliate and score a political point. It is a way of saying that look I have brought the high and mighty down. If the investigation is not stopped, it will completely undermine the federal structure in which we will have states filing cross complaints against other states and the Centre."
During the proceedings, the court, which observed that the case was registered on some senior person's direction, said "can the police register the case on anyone's direction".
"Is it that if any politician will ask the police to register the case, they will accordingly file They (police) need to apply their own mind," the court said.
After Delhi Government's counsel Zubeda Begum sought time to reply on the plea, the judge said, "I cannot make the writ petition infructuous as it has a serious law issue."
The court also said how will a sub-inspector understand gas pricing.
During the hearing, the Solicitor General argued that Anti Corruption Branch investigates the role of people only if they are concerned with the Delhi administration.
It has lack of jurisdiction, especially with the fixing of the gas pricing as it falls under the central government, he said, adding that if it happens, then tomorrow any state government can register such cases.
Moily and Ambani have vehemently denied the allegations. Reliance Industries Ltd (RIL) last week had moved the Delhi High Court for quashing of the FIR.
In its petition seeking quashing of the FIR, the Centre argued that by registering the FIR the Delhi government was "seeking to investigate decisions in regard to gas price fixation which falls in the exclusive domain of the central government".
The petition said that public order and police have been specifically excluded from the domain of the legislative assembly of the Delhi Government.
"The Delhi Government lacks any powers of its own in the area of police powers and matters relating to law and order," it said, adding any agency (like the anti-corruption branch) created by the state government cannot have higher powers or purport to seek exercise of any higher powers.
All aspects relating to natural gas are within the exclusive legislative powers of Parliament and consequently executive powers of the Government of India.
It also stated that at the time the complaint was filed, a writ petition filed by CPI leader Gurudas Dasgupta on the said issue was pending before the Supreme Court.
The Union Government, it said, was not going into the merits of the allegation as the issue was pending before the Supreme Court and its petition was seeking to declare that the Anti-Corruption Branch has no jurisdiction in regard to employees/public servants of the central government and to quash the FIR.
The petition said the decision to revise gas prices was taken by the Union Cabinet based on a formula suggested an expert panel headed by Prime Minister's Economic Advisory Council Chairman C Rangarajan.
The new rates, which would be almost double of current price of USD 4.2 per million British thermal unit, will apply to all domestic producers like state-owned ONGC as well as private sector RIL, which makes up for only 15 per cent of the total domestic output.
The decision was to be implemented from April 1 but was deferred following a direction of the Election Commission in view of the Lok Sabha polls.