Adani Gas cannot establish city gas distribution networks in Sanand, Bavla, Dholka: Supreme Court

The Supreme Court on Tuesday upheld a Gujarat High Court order which had rejected a plea by Adani Gas Limited seeking authorisation from the Petroleum and Natural Gas Regulatory Board (PNGRB) for establishing and operating city gas distribution (CGD) networks in Gujarat's Sanand, Bavla and Dholka (Adani Gas Limited v. Union of India & Ors)..The top court held that exclusion of the disputed areas was justified in the overall facts and circumstances..The Bench of Justices UU Lalit, Ravindra Bhat and Hrishikesh Roy also upheld the constitutional validity of Regulation 18 of the PNGRB (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008. Regulation 18 deals with entities which were not authorised by the Central government for laying, building, operating or expanding CGD networks till October 1, 2007, when the Centre notified the establishment of the PNGRB."It is held that Regulation 18 is neither arbitrary, nor ultra vires. The objective underlying Regulation 18, is compatible with the overall objectives of the PNGRB Act. Regulation 18 is not contraindicated by any specific provision of the Act. Further, as a sectoral regulator, PNGRB is entrusted with the power to frame appropriate regulations to ensure the objectives of the Act, and thus the challenge to Regulation 18 cannot succeed," the judgment stated..The Court has held that the role of the State in granting a no-objection certificate (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.".Costs of ₹10 lakh were imposed on Adani Gas Limited, which has to be paid to the Union of India..Adani Gas was engaged in laying, expanding and operating gas distribution networks. The PNGRB Act mandates authorization from a board constituted under the Act for such activities. Adani was provisionally allowed to carry certain capital works in the Ahmedabad area, including in the disputed areas of Sanand, Bavla, and Dholka..When Section 16 of the Act, relating to authorization, came into effect in 2010, the board in 2013 granted provisional authorization to Adani’s CGD network in Ahmedabad city and Dascroi area, excluding 18 CNG stations of Hindustan Petroleum Corporation Limited, subject to certain conditions. The disputed areas were excluded from this provisional authorization. Feeling aggrieved by the exclusion of these areas from the authorization granted to it, Adani approached the High Court, preferring a petition under Article 226 of the Constitution, seeking several reliefs..The principal relief claimed was the quashing of the grant of authorization to Gujarat Gas, questioning the exclusion of the disputed areas by the earlier authorization dated 2013, and challenging the vires of Regulation 18 framed by the board under the PNGRB Act. After High Court ruled against Adani, the present appeal was filed in the Supreme Court. .Before the apex court, it was urged that the grant of authorization for Ahmedabad city and denial of authorization for the disputed areas of Sanand, Bavla and Dholka were in the same order dated November 28, 2013. Adani had the choice to accept or reject it.However, the judgment states that "a person taking advantage under an instrument, which both grants a benefit and imposes a burden, cannot take the former without complying with the latter.".The Court further held,"It is also held that Adani’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.".DSK Legal team comprising of Associate Partner, Rimali Batra; Principal Associate, Iti Agarwal and Senior Associate, Mahip Singh Sikarwar appeared for IGL (Intervenors)..[Read Judgment]