Appeal No. 13 Of 2016 & Ia Nos. 25 & 425 Of 2016 & Ia No. 229 Of 2017. Case: Ms. Jay Madhok Energy Private Limited Vs Petroleum & Natural Gas Regulatory Board. APTEL (Appellate Tribunal for Electricity)
| Case Number | Appeal No. 13 Of 2016 & Ia Nos. 25 & 425 Of 2016 & Ia No. 229 Of 2017 |
| Counsel | For Appellant: Mr. Atul Y. Chitale, Sr. Adv. Mr. Vineet Malhotra Mr. Mohit Paul Mr. Vishal Gohri Mr. R.K. Mehta Ms. Tanvi Kakar Ms. Akansha Ghosh Ms. Shruti Sharma Hazarika Mr. Rakesh Dewan Mr. Shubhendu Kaushik Counsel and For Respondents: Ms. Sonali Malhotra, Mr. Sumit Kishore Ms. Aparna Vohra and Mr. Amit Sanduja, Advs. |
| Judges | Mrs. Ranjana P. Desai, Chairperson and Mr. B.N. Talukdar, Technical Member (P&NG) |
| Issue | Petroleum and Natural Gas Regulatory Board Act, 2006 - Section 33 |
| Judgement Date | May 26, 2017 |
| Court | APTEL (Appellate Tribunal for Electricity) |
Order:
Mr. B.N. Talukdar, Technical Member
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In this Appeal filed under Section 33 of the Petroleum and Natural Gas Regulatory Board Act, 2006, the Appellant, M/s Jay Madhok Energy Pvt. Ltd. has challenged the order dated 28.09.2015 passed by the Respondent, the Petroleum and Natural Gas Regulatory Board (the Board).
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The Appellant is a company who started as a trading and distribution company in 1985, later strategically, integrated into oil and gas exploration, production and city gas distribution activities.
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The Respondent, Petroleum and Natural Gas Regulatory Board (the Board) is a statutory body constituted under the provisions of the Petroleum and Natural Gas Regulatory Board Act, 2006 ("PNGRB Act") to regulate "the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas excluding production of crude oil and natural gas so as to protect the interests of consumers and entities engaged in specified activities relating to petroleum, petroleum products and natural gas and to ensure uninterrupted and adequate supply of petroleum, petroleum products and natural gas in all parts of the country and to promote competitive markets and for matters connected therewith or incidental thereto".
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The background of the appeal and the gist thereof as understood from the learned counsel of the Appellant and the documents submitted by the Appellant are as under:-
The Respondent on 23.07.2010, under the provisions of the Petroleum and Natural Gas Regulatory Board (Authorizing entities to lay, build, operate or expand city or local natural gas distribution network) Regulations, 2008 (hereinafter "Authorization Regulations") invited bids for the geographical area of Jalandhar along with 6 other areas for grant of authorization for laying, building and operating etc. for the CGD network in respect of these areas. On 18.02.2011, the Appellant submitted its bids for the geographical areas of Ludhiana, Jallandhar and Kutch (East) and on 06.09.2013, the Appellant was granted the said authorization for the geographical area of Jallandhar. Subsequently, the Appellant was also granted authorization for CGD network of Kutch (East) on 12.03.2015 and for Ludhiana on 25.06.2015. The instant case pertains to the geographical area of Jalandhar.
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As per the Appellant, after receiving the authorization for the geographical area of Jalandhar on 06.09.2013 the Appellant came to know about the pendency of a Public Interest Litigation being Civil Writ Petition No. 13490 of 2008 before the High Court of Punjab and Haryana at Chandigarh involving the issue whether Compressed Natural Gas (CNG) station is a part of CGD network or not. Before the High Court of Punjab and Haryana M/s GAIL GAS took a stand that CNG station is not a part of CGD network whereas the bids of CGD network were invited by the Board on the basis of the fact that CNG stations are an integral part of CGD network. The Scope of Work mentioned in the bid document included CNG station as a part of CGD network.
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On 18.09.2013, when the PIL was listed before the High Court of Punjab and Haryana, the Union of India through Ministry of Petroleum and Natural Gas (MoPNG) filed an affidavit supporting the stand of M/s GAIL GAS that CNG station is not a part of CGD network.
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On 17.09.2013, the Appellant appeared before the High Court of Punjab and Haryana and filed an application for impleadment. But, when the matter was listed on 18.09.2013 before the said court, the application of the Appellant for impleadment was not on record. Thereafter, however, by order dated 18.09.2013 the Appellant was impleaded as party. By the said order, the High Court of Punjab and Haryana had noted that the court would have to consider the question of CNG station as to the scope of the power of the Board keeping in mind the provisions of the PNGRB Act, 2006.
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The Board filed its affidavits on 08.01.2013 and 03.07.2013 before the High Court of Punjab and Haryana stating the implications of non-inclusion of CNG station in the CGD network in this bid for Jalandhar. On 18.12.2013, the Board issued Public Notice wherein it informed all stakeholders that the issue as to whether CNG Stations are an integral part of City or Local Natural Gas Distribution (CGD) network and whether authorization from PNGRB is required for setting up of CNG station is an issue pending consideration and subjudice before the High Court of Punjab and Haryana at Chandigarh.
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As the said dispute was pending before the High Court of Punjab and Haryana, the Appellant wrote several letters to the Board seeking clarity on the said situation however, there was no response from the Board.
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On 01.10.2014, the Board issued a notice to the Appellant to appear before the Board on 30.10.2014 for first hearing. The representative of the Appellant appearing before the Board filed its written submission requesting the Board to take a pragmatic view of the matter and extend the time to the Appellant so that the time for the project runs from the date of final decision of the court. The Appellant also filed its written submission subsequently on 07.11.2014 to the Board pointing out the order of the High Court and also the Board''s own stand that the project would be in doubt if CNG station is not an integral part of the CGD network.
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The Appellant wrote another letter to the Board on 10.03.2015 seeking extension of Zero Date for exclusivity period on the ground that the issue is subjudice and pending consideration in the High Court of Punjab and Haryana in Public Interest Litigation, but there was no response from the Board.
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Thereafter, on March 05, 2015, Govt. of India issued draft guidelines asking for comments from various entities proposing that CNG stations are not part of CGD network and no authorization from PNGRB is required for setting up of CNG station. It was also proposed that CNG station can be set-up by any entity. The Appellant sent a representation on 19.03.2015 to MoPNG stating that the said guidelines may not be approved as they would infringe upon the rights of the parties to whom the Board had already granted authorization. On the same subject, the Appellant also wrote to the Board on 20.03.2015 but without any response.
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The Board issued another letter dated 11.05.2015 to the Appellant directing the Appellant to appear before the Board on 09.06.2015. The Appellant, as a response of this letter wrote to the Board on 02.06.2015 seeking adjournment of the meeting praying that the meeting be held after the decision of the High Court of Punjab and Haryana in Civil Writ Petition No. 13490 of 2008. The Board, however, refused to postpone the meeting and the Appellant accordingly appeared before the Board on 09.06.2015.
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Before the Board, the Appellant again represented that since the issue is still pending consideration before the High Court of Punjab and Haryana, the zero date for exclusivity period may be extended till the final decision of the Government of India and the High Court of Punjab and Haryana. The Board did not deal with the request and directed the Appellant on 07.07.2015 to submit certain documents regarding the physical progress of the CGD network project.
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On 13.07.2015, the Appellant wrote to the Board giving the progress of the project and also categorically stating that the Appellant is waiting for the final decision in regards to exclusion of the CNG from the CGD network since the project involves huge investment which would not be viable if CNG is not a part of the CGD network which has also been admitted by the Board itself. The Appellant did not receive any response to this letter but received the impugned order passed by the Board on 28.09.2015 encashing 25% of the bank guarantee submitted by the Appellant and directing the Appellant to make good the encahsed performance bank guarantee within two weeks of receipt of the letter. Hence the appeal of the Appellant to this Tribunal.
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Since the Petroleum Bench of this Tribunal was not functional at the time of the appeal, the Appellant filed a writ petition before the High Court of Delhi being Writ Petition No. 10336 of 2015. The High Court of Delhi by its order dated 03.11.2015 directed the Board to restrain from taking any precipitative steps in pursuance to the non-replenishment of the bank guarantee by the Appellant and by subsequent order dated 15.12.2015 while disposing of the petition ordered that this Tribunal, upon becoming functional, shall take up the appeal and the interim order shall continue till the final order of this Tribunal.
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We have heard Mr. Vineet Malhotra and Mr. Vishal Gohri, learned counsel appearing for the Appellant. We have perused the written submissions filed by them. Gist of the submissions is as under:-
• The Board failed to appreciate that in Civil Writ Petition No. 13490 of 2008, the issue as to whether CNG station is a part of CGD network is subjudice and pending consideration of the High Court of Punjab and Haryana at Chandigarh.
• The Board failed to appreciate that the Government of India issued draft guidelines wherein it was proposed that CNG stations are not part of CGD network and no authorization is required to set up CNG station and the CNG station can be set up by any entity. The government is yet to finalize the policy.
• The Board failed to appreciate that the bids had been invited on the basis of the fact that CNG stations are an integral part of CGD network. In the bid document, it is provided as under:-
"1.2 SCOPE OF WORK The entities bidding for this work shall be required to lay, build, operate or expand the CGD networks to meet requirement of natural gas in domestic, commercial and industrial segments including Compressed Natural Gas in the vehicular segment in the said geographical area to be authorized and also comply with the relevant regulations. The entities shall be required to carry out the development of...
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