Appeal No. 216 of 2016 and I.A. No. 466 of 2016. Case: Maharashtra Natural Gas Ltd. Vs Petroleum & Natural Gas Regulatory Board. APTEL (Appellate Tribunal for Electricity)

Case NumberAppeal No. 216 of 2016 and I.A. No. 466 of 2016
CounselFor Appellant: K.K. Rai, Sr. Adv., S.K. Pandey, Anshul Rai and Awanish Kumar, Advs. and For Respondents: Sonali Malhotra, Amit Sanduja and Sumit Kishore, Advs.
JudgesRanjana P. Desai, J. (Chairperson) and B.N. Talukdar, Member (T)
IssueElectricity Law
Judgement DateApril 07, 2017
CourtAPTEL (Appellate Tribunal for Electricity)


Ranjana P. Desai, J. (Chairperson)

  1. The Appellant is a company incorporated under the Companies Act 1956. The Appellant was incorporated on 13/01/2006 to meet the city gas distribution needs of various districts of Maharashtra. The Appellant has got the PNGRB authorization for city gas distribution in Pune and Pimpri-Chinchwad city including adjoining areas of Hinjewadi, Chakan and Talegaon. The Appellant is a joint venture company of two Public Sector Undertakings ("PSUs") namely Bharat Petroleum Corporation Limited ("BPCL") and GAIL (India) Limited.

  2. The Respondent is the Petroleum & Natural Gas Regulatory Board ("the Board") constituted under the Petroleum and Natural Gas Regulatory Board Act, 2006 ("the said Act").

  3. In this appeal the Appellant has challenged order dated 01/12/2015 whereby the Board has encashed 25% of the Performance Bank Guarantee ("bank guarantee") of the Appellant and directed the Appellant to make good the encashed bank guarantee within two weeks of the receipt of the order dated 01/12/2015.

  4. The gist of the facts narrated by the Appellant needs to be stated. On 01/06/2009 the Board accepted the authorization of the Central Government granted to the Appellant for the City Gas Distribution Network ("CGD Network") in the geographical area ("GA") of Pune City including Pimpri Chinchwad and along with adjoining contiguous areas of Hinjewadi, Chakan and Talegaon vide its letter dated 01/06/2009. In the said letter the Board had indicated the milestones which were to be met by the Appellant with regard to CGD project in the abovementioned GAs. Vide letter dated 25/06/2013 the Board asked the Appellant to provide reasons for non-achievement of the project milestones. The Appellant by its letter dated 05/08/2013 gave reasons for the same. The Board issued notice dated 20/12/2013 to the Appellant under Regulation 10 of the PNGRB (Exclusivity for City for Local Natural Gas Distribution Network) Regulations, 2008 ("Exclusivity Regulations"). By the said notice the Appellant was advised to attend the formal hearing before the Board on 08/01/2014 to explain the status of achievement of the project milestones. According to the Appellant the Appellant appeared before the Board on 08/01/2014 and made its submissions with regard to the difficulties faced by it in achieving milestones.

  5. The Board issued a notice on 01/07/2015 under Regulation 16 of the Petroleum and Natural Gas Regulatory Board (Authorising Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations 2008 ("the Authorisation Regulations") asking the Appellant to appear for hearing before the Board on 31/07/2015 to explain the milestones. The Appellant appeared before the Board and again made submissions with regard to difficulties faced by it in achieving milestones.

  6. The Appellant vide letter dated 05/08/2015 forwarded written submissions giving reasons for not achieving the milestones. According to the Appellant vide its letter dated 17/10/2015 the Appellant apprised the Board about the status of the milestones and requested the Board for separate hearing. However, the said hearing was not granted. It is the case of the Appellant that without even discussing the practical difficulties faced by the Appellant in reaching the targets set out by the Board, the Board by the impugned order, encashed 25% of the bank guarantee of the Appellant i.e. Rs. 1,50,00,000/- under Regulation 19(1)(c)(i) of the Authorisation Regulations.

  7. We have heard Mr. Rai, Senior Advocate appearing for the Appellant. We have perused the written submissions filed by him. Gist of the submissions is as under:

    (a) The Board has not exercised its power to encash the bank guarantee judiciously as per the objective of the said Act.

    (b) The Board has not followed the pre-conditions prescribed under the Authorisation Regulations in resorting to encashing of bank guarantee under Regulation 16 of the Authorisation Regulations.

    (c) The Board has not acted like a regulator to promote the city gas distribution business for which it was constituted.

    (d) The Board vide letter dated 25/06/2013 sought Appellant's explanation for not achieving the target which was answered by the Appellant vide its letter dated 05/08/2013. Vide letter dated 20/12/2013 the Appellant was called for hearing under Regulation 10 of the Exclusivity Regulations. The Board vide letter dated 17/01/2014 forwarded the minutes of the meeting dated 08/01/2014 held pursuant to the letter dated 20/12/2013. In...

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