Adani Gas Limited vs Union Of India

2. The appellant company is registered under the Companies Act, 1956 and is involved in the business of setting up of Natural Gas Distribution Networks within India. The dispute in this petition is with regard to the Gas Distribution Network (for short ‘GDN’) in the cities of Udaipur and Jaipur in the State of Rajasthan. Challenging the order dated 18.05.2011 of the Government of Rajasthan whereby No Objection Certificate (for short ‘NOC’) for laying down of Gas Network pipelines granted in favour of the appellant had been withdrawn (including forfeiture of the commitment fees of Rs. 2 Crore deposited by the appellant), and also the order dated 19.05.2011 of the Board 2 rejecting the application of the appellant for authorisation of its projects in Udaipur and Jaipur, as well as challenging the validity of the Regulation 18 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 (for short ‘Regulations of 2008’), the appellant had filed Writ Petition No. 10028 of 2011 before the Rajasthan High Court, which has been dismissed on 29.04.2015. Aggrieved by the same, this Special Leave Petition has been filed.

3. Brief facts of this case are that on 19.11.2005 the Government of Rajasthan invited parties to submit their bids for laying of Gas Distribution Network in certain cities of Rajasthan, including the said two cities of Udaipur and Jaipur. In response to the same, the appellant submitted its Expression of Interest for the cities of Udaipur and Jaipur. On 20.03.2006, the Government of Rajasthan informed the appellant that it intended to grant NOC to the appellant for undertaking Gas Distribution in the cities of Udaipur and Jaipur, which was to be subject to certain conditions as mentioned in the aforesaid communication dated 20.03.2006. Immediately thereafter on 22.03.2006, the appellant company informed that it agreed to all 3 the terms and conditions laid down by the Government of Rajasthan in its communication dated 20.03.2006 whereby it intended to grant NOC to the appellant. Then, on 24.03.2006, the appellant deposited the commitment fees of Rs. 2 Crore. On 27.03.2006, the Government of Rajasthan granted the NOC to the appellant company for Gas Distribution in the cities of Udaipur and Jaipur. The appellant then started its work of laying down the City Gas Development Network in the said two cities.

5. Then, on 24.07.2007, the appellant wrote to the Ministry of Petroleum and Natural Gas requesting for authorisation of its City Gas Distribution Projects under the Act of 2006 for all its gas projects, including the ones of Udaipur and Jaipur. The Act of 2006 was although notified on 03.04.2006, but came into force with effect from 01.10.2007, which was its appointed date. However, Section 16 of the said Act, relating to ‘Authorisation’, was brought into force only with effect from 15.07.2010.

7. On 19.03.2008, the Petroleum and Natural Gas Regulatory Board Regulations, 2008 were notified. Pursuant thereto, on 31.03.2008 the Board issued a notice to the appellant stating that the appellant did not have the requisite authorisation by the Central Government in terms of the proviso to Section 17(2) of the Act of 2006. The Regulation 18 of the Regulations of 2008 has been challenged by the appellant on the ground of being ultra vires the Act of 2006.

8. The appellant, however, on 28.08.2008 filed an application under Regulation 18 of the Regulations of 2008 for grant of authorisation of 6 city Gas Distribution Network at Udaipur and Jaipur. In response to the same, the Board issued a notice dated 19.11.2008 to the appellant for oral hearing on 05.12.2008 and in the same meeting, the appellant presented the status report as well as the investment made by the appellant, and expressed its commitment to the Board to develop the project and requested the Board to grant authorisation for the two cities of Udaipur and Jaipur. The appellant, in the meantime, continued its development work of laying down the gas pipelines. Then, on 12.07.2010, by a notification of the Government, Section 16 of the Act of 2006 was brought into force. After coming into force of Section 16, the Board, on 29.07.2010, issued notice to the appellant to once again appear before the Board on 04.08.2010 to show cause as to why the application under Regulation 18(1) of the Regulations of 2008 should not be rejected.

9. In the meantime, though no formal orders were passed by the Board, on 28.02.2011, the Government of Rajasthan issued a notice to the appellant stating that the appellant has failed to fulfil the conditions laid down in the communications dated 20.03.2006 and 27.03.2006 issued by the Government of Rajasthan and thus the NOCs were liable to be withdrawn and the commitment amount also 7 liable to be forfeited. To the said notice, the appellant submitted its reply to the Government of Rajasthan on 16.03.2011. Then, by an Order dated 18.05.2011, the Government of Rajasthan withdrew the NOCs granted to the appellant and forfeited the commitment fees of Rs. 2 Crore deposited by the appellant on 24.03.2006. On the very next date i.e. 19.05.2011, by two separate letters, the Board rejected the applications of the appellant for authorisation of projects at Udaipur and Jaipur, on the ground that the physical and financial progress achieved by the appellant did not satisfy the proviso of Regulation 18(2)(d) of the ‘Regulations of 2008’ and even after instructions had been given by the Board vide press note dated 30.10.2007, the appellant had allegedly continued with laying of pipelines, in violation of such directions given by the Board in the said press note.

10. The appellant, then on 01.07.2011, wrote to the Board to bring to its notice that the appellant has deemed authorisation in terms of proviso to Section 16 of the Act of 2006 and the letters of rejection dated 19.05.2011 of the Board to the appellant should be withdrawn. To the said communication, there was no response received by the appellant from the Board. Challenging the order dated 18.05.2011 8 issued by the Government of Rajasthan and the orders dated 19.05.2011 issued by the Board as well as the challenging the vires of Regulation 18 of the ‘Regulations of 2008’, the appellant had filed Writ Petition before the Rajasthan High Court, which was dismissed on 29.04.2015. The same is under challenge in this appeal.

24. Accordingly, we allow this appeal to the extent that the order dated 18.05.2011 passed by the Government of Rajasthan and the 24 order dated 19.05.2011 passed by the Board are quashed. The Board is directed to take a fresh decision in the matter within 4 weeks from today, in the light of the provision of ‘deemed authorisation’ and other observations made hereinabove, after giving opportunity of hearing to the appellant. The appellant is given liberty to file fresh written submissions before the Board within 10 days from today. No orders as to cost.

………………………..J. [ARUN MISHRA] ………………….…….J. [VINEET SARAN] New Delhi 29th January, 2019 25 ITEM NO.1501 COURT NO.5 SECTION XV S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Petition for Special Leave to Appeal (C) No. 21986 of 2015 ADANI GAS LIMITED & ANR. Appellant(s) VERSUS UNION OF INDIA & ORS. Respondent(s) Date : 29-01-2019 This matter was called on for Judgment today.

Hon’ble Mr. Justice Vineet Saran pronounced the non-reportable Judgment of the Bench comprising Hon’ble Mr. Justice Arun Mishra and His Lordship.

Leave granted.

The application(s) for intervention is/are dismissed. 26 The appeal is allowed to the extent indicated in the signed non-reportable Judgment.

Pending interlocutory application(s), if any, is/are disposed of.

(Signed non-reportable Judgment is placed on the file)