LexADANI GAS LIMITED versus UNION OF INDIA & ORS.
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A B C D E F G H 1146 SUPREME COURT REPORTS [2021] 13 S.C.R. ADANI GAS LIMITED v. UNION OF INDIA & ORS. (Civil Appeal No(s). 6008-09 of 2021) SEPTEMBER 28, 2021 [UDAY UMESH LALIT, S. RAVINDRA BHAT AND HRISHIKESH ROY, JJ.] Petroleum and Natural Gas Regulatory Board Act, 2006 – ss. 2(d),11,16,17 and 61 – Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 – Regulation 4 and 18 – Laying and maintaining a gas distribution network – Regulation of – PNGRB Act came into effect on 1.10.2007 and mandated authorization by the Petroleum and Natural Gas Regulatory Board for the laying, building, operating or expanding any city or local natural gas distribution network (“CGD activities” and “CGD network”) – On 30.10.2007, the Board issued press note directing entities engaged in CGD activities with or without authorization of the Central Government, to submit relevant details – After submission of details by appellant-AGL, Board restrained its activities and issued direction for obtaining authorization from Central government as per requirement of s. 17 – Board later on granted provisional clearance to appellant to carry out capital works in the Ahmedabad area, including the disputed areas – Section 16, relating to authorization, came into effect on 12.07.2010 – On 04.02.2013 – Board granted provisional authorization to Appellant’s CGD network in Ahmedabad city, excluding disputed areas as appellant lacked authorization from central government – Appellant accepted the grant of authorization on 09.12.2013 – On 1.10.2015, the Board invited bids for development of CGD networks in those disputed areas in Ahmedabad – Appellant submitted its application- cum-bid documents in respect of these areas – The bid was unsuccessful – Feeling aggrieved by the exclusion of these areas from the authorization granted to it – Appellant approached the High Court – After the petition was unsuccessful before the High Court appellant approached Supreme Court and submitted that – (i) It does not require authorization from central government, as by [2021] 13 S.C.R.1146 1146 A B C D E F G H 1147 virtue of s. 16 of the PNGRB Act, it was entitled to be treated as an entity with “deemed authorization” reliance was placed on the case of AGL v. Union of India (2019) 3 SCC 641: – (ii) Regulation 18 (which provides for the requirement of Board’s fresh authorization to the entities that were carrying out CGD activities prior to the coming into effect of PNGRB Act, who were not authorized by central government) gave arbitrary power to the Board in granting authorization and it is ultra-vires to the PNGRB Act – (iii) Exclusion of the disputed areas from authorization was unjustified – Held: (i) Deemed authorization clause under proviso to s. 16 is subjected to other provisions – s. 17 is one such provision, which provides that only entities which were previously authorized by central government could claim deemed authorization – Appellant lacked such authorization, therefore cannot be treated as entity with deemed authorization – Adani gas case was overruled as it did not interpret the law correctly – (ii) All criteria provided under regulation 18 have to be considered, having regard to their inter-linkages – Therefore, the question of picking and choosing one criterion, and ignoring others does not arise and moreover it dependent on the individual facts of the case – This per se does not render the power arbitrary – Remedy of judicial review is always available in case of arbitrariness – Further observed, objective for framing Regulation 18, is compatible to the overall objectives of the PNGRB Act – Regulation 18 is not contraindicated by any specific provision of the Act – The various factors mentioned in it, provide an objective basis for the Board to consider the proper method of granting authorization – Further, as the sectoral regulator, PNGRB is entrusted with the power to frame appropriate regulations to ensure the objectives of the Act, therefore, it is not ultra-vires to Act – (iii) Appellant’s claim is precluded by the principle of approbate- reprobate, as it accepted authorization granted by PNGRB (including exclusion of disputed areas), furnished the performance bond and even participated in the auction for the excluded areas, and only thereafter challenged authorization when its bid was unsuccessful. Dismissing the appeals, the Court
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