The Supreme Court on Monday will hear Multi Commodity Exchange of India Ltd?s (MCX) allegation that Central Electricity Regulatory Commission (CERC) is trying to deprive it from entering into forward contracts in the power market.

The dispute between CERC and commodity market regulator Forward Markets Commission (FMC) on jurisdiction over forward contracts in the power market will come up for hearing before a Bench headed by Justice G S Shingvi on Monday.

Future or forward contracts are contracts which provide for delivery of goods and payment after a period of eleven days and are regulated under the Foward Contract Regulation Act (FCRA) 1952.

Challenging the CERC?s power to regulate such contracts, MCX said CERC, which is constituted under the Electricity Act 2003, can?t regulate the functioning of another statutory commission?FMC.

MCX, which was a registered exchange under the FCRA, said it was authorised by commodity regulator to launch weekly electricity futures contracts and derivatives and was also notified by the Centre as a ?recognised association?. It said such forward contracts would be governed by the 1952 Act in view of the notification of January 6, 2006 that expressly notified electricity as a commodity under FCRA.

CERC, which deals with spot delivery contracts, had erred in stating that Section 66 of the Electricity Act bestowed on it the power to regulate forward trading in electricity, merely because it required it to endeavour to promote the development of a market (including trading) in power, it added.

According to the petition, CERC?s mandate is only to regulate physical market and forward markets fall outside the physical market development domain. Therefore, CERC?s orders and regulations are ultra vires.?

Furthermore, MCX claimed that CERC was trying to enforce the CERC (Power Market) Regulations 2010 by overreaching the process of law so as to usurp jurisdiction and frustrate MCX from exercising its legally entitled right derived from FMC under the FCRA.

Challenging the Bombay High Court?s interim order thar refused to stay the CERC orders, MCX said its exisiting contracts in electricity can?t be renewed unless the impugned orders were stayed.

?The petitioner?s entire business would come to standstill and huge loss would be caused to the petitioner if the petitioner is not permitted to continue with the work of the commodity exchange in relation to forward contracts in electricity,? the petition stated, adding MCX hjas to launch new contracts for trade and if the same is not done the entire infrastructure and business set up by it would suffer irreparable damage.

MCX said CERC while on one hand accepted FMC?s authority regarding foward contracts, on the other hand it has barred MCX from launching daily and weekly products.

The decision to frame new regulations had come after Power Exchange India Ltd (PXIL), another exhange registered under the CERC, had moved CERC to restrain MCX and Indian Energy Exchange (IEX) from dealing in any manner with electricity forward contracts.

PXIL had also questioned the jurisdiction of commodity market regulator FMC.

CERC after holding that MCX had no power to give directions and regulate the forward trading in electricty had also framed and notified regulations to conduct and regulate derivative trading in electricity. CERC in its order issued on April 28, 2009 and January 11 this year and CERC Power Market Regulations 2010 had held that although the functioning of CERC and FMC required to be harmonised, it directed that the exchange to abide by its directions and regulations.