LexADANI GAS LIMITED versus PETROLEUM AND NATURAL GAS REGULATORY BOARD AND ORS.
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A B C D E F G H 108 SUPREME COURT REPORTS [2020] 8 S.C.R. ADANI GAS LIMITED v. PETROLEUM AND NATURAL GAS REGULATORY BOARD AND ORS. (Civil Appeal No. 3992 of 2019) FEBRUARY 17, 2020 [DR. DHANANJAYA Y CHANDRACHUD AND HEMANT GUPTA, JJ.] Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008: Regulations 5 and 7 – Ninth round of bidding for city or local natural gas distribution networks (CGD) – For the years 2018- 2026 – After opening technical bids, Petroleum and Natural Gas Regulatory Board, by its Note dated 23 July, 2018, in order to bring reasonableness to the bidding parameters introduced a criterion stipulating that 2% of total households in terms of census 2011 data would be regarded as minimum quote and 100% would be regarded as maximum – The Board Note was not notified to the bidders – On opening the financial bid of technically eligible bidders, it was found that for 4 Geographical Areas i.e. GAs. 51, 61, 62 and 72, the bidders having highest composite score, were liable to be disqualified on the ground that they had quoted more than 100% of the total number of households as per 2011 census – Board decided to give them opportunity to explain – Board thereafter accepting the quotes of highest bidders in respect of GAs. 51, 61 and 62 as reasonable issued Letter of Intent (LOI) to them granting authorisation – In case of GA 72, quote of highest bidder was rejected as being unreasonable – The appellant who was sixth highest bidder in GA 51, third highest bidder in GA 61 and second highest bidder in GA 62 challenged grant of authorisation in respect of the three GAs – Second bidder in GA 61 also challenged grant of authorisation in GA 61 – The Chairperson of the Tribunal allowed the appeals while the technical member dismissed the same – Since the Judicial Member of the Tribunal recused himself from the case, the case was transferred to Supreme Court – Held: Regulation 7 stipulates the bidding criteria – There is no condition in Regulation [2020] 8 S.C.R. 108 108 A B C D E F G H 109 7 regarding ceiling or providing for a linkage with the census date of 2011 – A conditionality which was not incorporated in Regulation 7 could not have been introduced by Board Note dated 23 July, 2018 – Hence the Board Note cannot be construed to have laid down absolute norms by which bids quoting below2% or above 100% of the number of households would automatically be rejected as unreasonable – Disqualifying a bidder on the basis of criterion which was not notified would have been arbitrary and would constitute infraction of Art. 14 of the Constitution – The Board Note therefore can be construed as formulation of guideline – Hence the award of authorisation after calling the highest bidders in respect of GAs 51, 61 and 62 to justify their bids in terms of their reasonableness cannot be faulted – There was also no breach of principles of natural justice in calling only the highest bidders to explain reasonableness of their bids as other bidders had no locus to participate in the process. Dismissing the appeals, the Court HELD: 1.1 The Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 (CGD Authorisation Regulations) postulate that bidders must submit both technical and financial bids. The procedure specified in Regulation 5 applies to an invitation by the Board for laying, building, operating or expanding a CGD network. Regulation 5(6) requires the fulfilment of minimum eligibility criteria. For a technical bid to pass muster, the minimum eligibility criteria require the bidder to be qualified both with reference to technical and financial parameters. This is evident from Regulation 5(6) under which the Board is to scrutinise the bids of only those entities which fulfil the minimum eligibility criteria. The minimum eligibility criteria include the technical capability of the bidding entity to (i) lay and build; and (ii) operate and maintain a CGD network. Both of them are defined with reference to qualifying criteria. Besides the technical criteria, the minimum eligibility requirements under Regulation 5(6)(e) incorporate the financial ability to execute the project and to operate and maintain it in the authorised area. The financial criteria are defined with reference to the minimum net-worth of the bidding entit
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