Case: ADANI GAS LIMITED  Vs. UNION OF INDIA

may be considered as adequate. Clauses (e) and (f) provide that the entity should have arranged and procured the necessary equipment for erecting the City Gas Distribution network before the appointed date. Clause (g) provides for the entity to satisfy the Board on the adequacy of its ability to meet the applicable technical standards, specifications and safety standards as specified in the relevant Regulations. Clause (h) provides for assessment of financial position of the entity and Clause (i) provides for supply of natural gas to meet the demand in the authorised area to be covered by City Gas Distribution network. The last clause (j) provides for the Board to consider any other relevant criteria based on the examination of the application. All the aforesaid clauses are relevant factors and the one which is put for consideration in the present case is Clause (d), on which ground, the Central Government has primarily rejected the application of the appellant.19. It is noteworthy that the language used in Regulation 18(2) is that ?the Board may take into consideration…………?. As such, the language in which the Regulation has been couched does not make the consideration in the said clauses, including Clause (d), to be mandatory, but no doubt the same would be relevant considerations. On a careful perusal of the order passed by the Board, we find that the application of the appellant has been rejected for reasons mentioned in para 5 of the impugned order dated 19.05.2011, which are extracted hereunder:?5. The committee found that you do not satisfy the conditions laid down under the Regulation 18(1) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations 2008 on account of the following:a) Physical and financial progress achieved by M/s. Adani Gas Limited before the appointed day in the GA of Jaipur does not satisfy the proviso 18(2)(d) of the Regulation 18(1) of Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations 2008;b) Even After clear instructions of PNGRB vide Press Note Dated 30 th October, 2007 to stop all incremental activity M/s. Adani energy Limited had continued with laying of MDPE Pipeline and thus violating the directions of the Board.?20. From the above, it is clear that the application of the appellant has been rejected primarily on the ground of non¬compliance of clause (d) of Regulation 18(2) of the Regulations of 2008. It was incumbent on the Board to take into consideration various factors as specified in clauses (a) to (j) of Regulation 18(2) of the Regulations of 2008, and the same has to be considered in the back drop of the fact that the press note was issued on 30.10.2007 to stop all incremental activities and as such it was necessary to consider whether the appellant could have been faulted for non-compliance of clause (d) of Regulation 18(2), and whether it was a mandatory requirement or merely one of the factors to be considered along with all the other factors. Other relevant aspects as contained in the other clauses have not been adverted to by the Board while deciding the application of the appellant, which were also equally significant. It was necessary to consider whether the appellant is compliant of various other factors as provided in clauses (a) to (j) of Regulation 18(2) of the Regulations of 2008. The non¬ compliance, if any, of clause (d) ought to have been considered in the light of the press note dated 30.10.2007 which required stopping of all incremental activities. 21. The peculiar factual position is that the Act of 2006 had been notified on 03.04.2006 but came into force on 01.10.2007 and the NOC was issued on 27.03.2006, after the Government of Rajasthan had invited open bids on 19.11.2005 for laying of City Gas Distribution network in the cities of Udaipur and Jaipur, in which the appellant had been selected. Besides depositing the sum of Rs. 2 Crores immediately towards commitment fee, the appellant had thereafter incurred mammoth expenditure after it was successful in the bids, which aspect has not been considered by the Board while deciding the application of the appellant. In our considered view, the same should not have normally been over looked. Besides the same, in the factual circumstances of the present case, the provision of ‘deemed authorisation? contained in Proviso (ii) to Section 16 had also been enforced on 12.07.2010 and it was necessary for the Board to have considered whether it was a case where only certain safeguards were required to be observed in view of the ‘deemed authorisation?.22. We are of the firm view that it was also necessary for the Board to have considered all these aspects and thereafter to have decided the application relating to authorisation/conditions to be imposed under the Act, if any, required. Besides this, detailed replies had been submitted by the appellant before the Board, which also ought to have been considered. Further, the requirement under the Act/Regulations is for grant of personal hearing to the appellant before deciding its application and if personal hearing was given, to have discussed the same in the order, which aspect has also been ignored by the Board.23. In view of the aforesaid discussion, we are of the opinion that there was illegality committed by the Board in deciding the application of the appellant while passing the order dated 19.05.2011, and as such the same deserves to be quashed. We also hold that in the aforesaid factual background, the decision of the State Government to revoke the NOC vide order dated 18.05.2011 was also highly unfair and unjust in as much as the reply of the petitioner dated 16.03.2011 in response to the notice dated 26.02.2011 has not been dealt with by the Government of Rajasthan while passing the said impugned order dated 18.05.2011. As such, the same does not stand to reason, which also deserves to be quashed.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. It is not disputed that in pursuance to the Government of Rajasthan having, on 19.11.2005, invited bids for laying of Gas Distribution Network, the appellant had applied for the two cities of Udaipur and Jaipur and after acceptance of its application, the appellant was granted NOC by the Government of Rajasthan on 27.03.2006. It is also not disputed that pursuant thereto, the appellant has laid approximately 75 kms of pipeline in both the cities of Udaipur and Jaipur, and in the process, spent a huge amount of money relying on the NOC granted in its favour for such purpose.From the above, it is clear that the application of the appellant has been rejected primarily on the ground of non¬compliance of clause (d) of Regulation 18(2) of the Regulations of 2008. It was incumbent on the Board to take into consideration various factors as specified in clauses (a) to (j) of Regulation 18(2) of the Regulations of 2008, and the same has to be considered in the back drop of the fact that the press note was issued on 30.10.2007 to stop all incremental activities and as such it was necessary to consider whether the appellant could have been faulted for non-compliance of clause (d) of Regulation 18(2), and whether it was a mandatory requirement or merely one of the factors to be considered along with all the other factors. Other relevant aspects as contained in the other clauses have not been adverted to by the Board while deciding the application of the appellant, which were also equally significant. It was necessary to consider whether the appellant is compliant of various other factors as provided in clauses (a) to (j) of Regulation 18(2) of the Regulations of 2008. The non¬ compliance, if any, of clause (d) ought to have been considered in the light of the press note dated 30.10.2007 which required stopping of all incremental. The peculiar factual position is that the Act of 2006 had been notified on 03.04.2006 but came into force on 01.10.2007 and the NOC was issued on 27.03.2006, after the Government of Rajasthan had invited open bids on 19.11.2005 for laying of City Gas Distribution network in the cities of Udaipur and Jaipur, in which the appellant had been selected. Besides depositing the sum of Rs. 2 Crores immediately towards commitment fee, the appellant had thereafter incurred mammoth expenditure after it was successful in the bids, which aspect has not been considered by the Board while deciding the application of the appellant. In our considered view, the same should not have normally been over looked. Besides the same, in the factual circumstances of the present case, the provision of ‘deemed authorisation? contained in Proviso (ii) to Section 16 had also been enforced on 12.07.2010 and it was necessary for the Board to have considered whether it was a case where only certain safeguards were required to be observed in view of the ‘deemed authorisation?.22. We are of the firm view that it was also necessary for the Board to have considered all these aspects and thereafter to have decided the application relating to authorisation/conditions to be imposed under the Act, if any, required. Besides this, detailed replies had been submitted by the appellant before the Board, which also ought to have been considered. Further, the requirement under the Act/Regulations is for grant of personal hearing to the appellant before deciding its application and if personal hearing was given, to have discussed the same in the order, which aspect has also been ignored by the Board.23. In view of the aforesaid discussion, we are of the opinion that there was illegality committed by the Board in deciding the application of the appellant while passing the order dated 19.05.2011, and as such the same deserves to be quashed. We also hold that in the aforesaid factual background, the decision of the State Government to revoke the NOC vide order dated 18.05.2011 was also highly unfair and unjust in as much as the reply of the petitioner dated 16.03.2011 in response to the notice dated 26.02.2011 has not been dealt with by the Government of Rajasthan while passing the said impugned order dated 18.05.2011. As such, the same does not stand to reason, which also deserves to be quashed.