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TMI Blog2019 (2) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 noncompliance 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 noncompliance, 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. Besides depositing the sum of ₹ 2 Crores immediately towards commitment fee, the appellant had thereafter incurred mammoth expenditure after it was succe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the terms and conditions laid down by the Government of Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed date, then such entities were to apply for authorisation under Section 17 of the Act of 2006. The Government of Rajasthan, then on 05.12.2007, intimated the appellant of the press note dated 30.10.2007 and required the appellant to submit the details, as were prescribed in terms of the said press note. Two days thereafter, on 07.12.2007, the appellant submitted the requisite details for the City Gas Distribution Projects of Udaipur and Jaipur. Then, on 11.12.2007, the Government of Rajasthan called upon the appellant to further submit the details to the Board in terms of the press note dated 30.10.2007. In response to the same, the appellant informed the Government of Rajasthan that the said details had already been furnished on 07.12.2007. 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 ult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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 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. 11. For proper appreciation of the issues involved in this case the relevant provisions of the Act of 2006 and the Regulations of 2008 are reproduced hereunder: The Petroleum and Natural Gas Regulatory Board Act, 2006 2. Definitions. In this Act, unless the context otherwise requires, ( (a) ; (b) ; (c) ; (d) authorised entity means an entity (A) registered by the Board under Section 15- (i) to market any notified petroleum, petroleum products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Act: Provided that an entity laying, building, operating or expanding any city or local natural gas distribution network authorised by the Central Government at any time before the appointed day shall furnish the particulars of such activities to the Board within six months from the appointed day. (3) Every application under subsection (1) or subsection (2) shall be made in such form and in such manner and shall be accompanied with such fee as the Board may, by regulations, specify. (4) subject to the provisions of this Act and consistent with the norms and policy guidelines laid down by the Central Government, the Board may either reject or accept and application made to it, subject to such amendments or conditions, if any, as it may think fit. (5) In the case of refusal or conditional acceptance of an application, the Board shall record in writing the grounds for such rejection or conditional acceptance, as the case may be. The Petroleum and Natural Gas Regulatory Board Regulations, 2008: 18. Entity not authorized by the Central Government for laying, building, operating or expanding CGD network before the appointed day. (1) An entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to get the actual physical progress and the financial commitment certified and depending upon the progress achieved, the Board may consider authorizing the entity for the authorized area- (i) as per the geographical area in its DFR, (ii) as per the geographical area actually covered under implementation till the appointed day; or (iii) the geographical area as specified by the Board; (g) in relation to laying, building, operating or expanding the CGD network, it is for the entity to satisfy the Board on the adequacy of its ability to meet the applicable technical standards, specification and safety standards as specified in the relevant regulations for technical standards and specifications, including safety standards and the quality of service standards as specified in regulation 15: (h) assessment of the financial position of the entity in timely and adequately meeting the financial commitments in developing the CGD network project as appraised by a financial institution and an examination of the audited books of accounts of the entity; (i) firm arrangement for supply of natural gas to meet the demand in the authorized area to be covered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material on record. 13. The main issue for consideration in this appeal is whether the Board was justified in rejecting the application filed by the appellant under Section 17 of the Act of 2006 read with Regulation 18 of the Regulations of 2008, after the provisions contained in Section 16 of the Act of 2006 came into force on 12.07.2010 granting deemed authorisation to those entities which had inter alia started laying and building local Natural Gas Distribution Network prior to the appointed date, i.e. 01.10.2007. 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. The appellant asserts that is has completed the following activities in the two proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2010, relates to Authorisation . It puts an embargo to lay, build, operate or expand in City or Local Natural Gas Distribution Network without obtaining authorisation under the Act. The Proviso (ii) of the said section 16 provides for deemed authorisation in case an entity had been laying, building, operating or expanding any City or Local Gas Distribution Network, immediately before the appointed date, which shall be deemed to have such authorisation. In the present case, the appointed date is 01.10.2007 when the Act of 2006 was brought into force, except the provision contained in the Section 16 of the Act of 2006, which came into force on 12.07.2010. 17. The Regulations of 2008 were framed before Section 16 of the Act of 2006 came into force. Regulation 18 of the Regulations of 2008 provides that an entity, not authorised by the Central Government for laying, building, operating or expanding CGD network before the appointed date, shall apply for obtaining an authorisation in the form as in Schedule I and the Board may take into consideration the criteria for considering the application for grant of authorisation in terms specified in clauses (a) to (j) of Regulation 18(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 30th 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 noncompliance 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 noncompliance of clause (d) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion, 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. 24. Accordingly, we allow this appeal to the extent that the order dated 18.05.2011 passed by the Government of Rajasthan and the 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 ..... 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