AGL filed a writ petition in the Gujarat High Court feeling resentful, challenging the various Regulations under the PNGRB Act and also the grant of authorization to a competitor which is a state-entity – Gujarat Gas. The High Court dismissed AGL’s petition in 2018.
AGL approached the Supreme Court challenging the High Court’s dismissal.
One of the arguments raised on behalf of AGL was that the company had “deemed authorization” as per the proviso to Section 16 of the PNGRB Act since the company was involved in the activity before the said Section was brought into force. Adani Gas Ltd pointed out that the initial proposal for setting-up up the gas pipeline was by the invitation of the Gujarat Government. It was pointed out that before the PNGRB Act came into force in 2006, the Gujarat government gave Adani Gas permission to supply gas in Ahmedabad district. According to AGL, the High Court erred in interpreting that the “deemed authorization” was available only to entities that had the authorization from the Central Government.
In 2013, the company applied for permission as per 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 gas distribution in the entire Ahmedabad district.
The Supreme Court considered the following points:
- The scope of the “deemed authorisation” clause under the provision to Section 16 of the PNGRB Act
- Validity of Regulation 18
- Whether the exclusion of the disputed areas from the authorisation granted to Adani was justified
Answering the points, the Court observed :
- The “deemed authorization” clause under proviso to Section 16 is subject to other provisions of Chapter IV, including Section 17 and, further, that only entities granted authorization by the Central Government, fell in that category. As a sequitur, it is held that entities which had received authorization from States, had to seek authorization under the PNGRB Act, in terms of Section 17(2), and in compliance with the conditions spelt out under the CGD Regulations.
- The role of the State in granting NOC is only supportive or collaborative, in terms of the Central Government’s policy, of 2006, and cannot confer any advantage to any entity, which has to seek and be granted specific authorization in terms of the PNGRB Act on the merits of its application.
The court also held that Adani’s claim is precluded by the principle of approve-disapprove because it accepted the authorization granted by PNGRB (including the exclusion of disputed areas). Moreover, it even participated in the auction for the excluded areas, and only thereafter challenged authorization when its bid was unsuccessful.
The judgment authorised by Justice Bhat stated “In view of the factual discussion, about the background leading to the grant of authorization to Adani, and its acceptance of that authorization, furnishing of performance bond, and proceeding to act upon it, even participating in the auction for the excluded areas there can be no manner of doubt that it acquiesced to the action of the PNGRB, and after having unsuccessfully entered its bid, sought to challenge the authorization. Clearly, this conduct amounts to approbating and reprobating. Adani’s arguments about its lack of knowledge about its true rights, in the opinion of this Court, cannot be countenanced, because it knew and conformed to the procedure under the PNGRB Act, specifically, the requirements of the regulations, and Regulation 18, when it applied and obtained authorization in other areas in the country”.
The Court noted that various issues raised by Adani were factual that were ought to have been disconcerted in a statutory appeal.
The Court submitted that Adani’s arguments about its lack of knowledge about its true rights cannot be faced, as it knew and conformed to the procedure under the PNGRB Act when it applied and obtained authorization in other areas in the country.
With inputs from livelaw.in