SC rejects Adani Gas call challenging tender process for supply of PNG and CNG to Ahmedabad


The Supreme Court on Tuesday rejected a plea by Adani Gas Ltd challenging the tendering process for the supply of PNG and CNG to three areas in the Ahmedabad district of Gujarat.

In the bidding process, which was conducted by the Petroleum and Natural Gas Regulatory Board (PNGRB) in 2016, Adani Gas lost to state-owned Gujarat Gas Limited to supply PNG and CNG in the Sanand, Bavla and Dholka regions of the district.

A three-judge bench led by Judge UU Lalit said Regulation 18 is neither arbitrary nor “ultra vires”, as the purpose behind it is consistent with the general objectives of the Office Act. of oil and natural gas regulations.

“Regulation 18 is not contraindicated by any specific provision of the law. In addition, as a sectoral regulator, PNGRB is vested with the power to develop appropriate regulations to guarantee the objectives of the law, and therefore the challenge of Regulation 18 cannot succeed ”the bench also comprising Justices Ravindra Bhat and Hrishikesh Roy said.

The highest court dismissed the appeal filed by Adani against the High Court of Gujarat and also imposed a cost of Rs 10 lakh which would be payable to the Union of India.

The Supreme Court said that the role of the state in granting the Certificate of No Objection (NOC) is only supportive or collaborative, in terms of central government policy from 2006, and cannot confer any benefit on an entity, which must seek and obtain specific authorization within the meaning of the PNGRB law on the basis of its application.

“It is also considered that Adani’s request is excluded by the principle of approval-reprobation, because it accepted the authorization granted by PNGRB (including the exclusion of disputed areas), provided the performance guarantee and even participated in the auction for the excluded areas, and then only contested the authorization when its bid was not successful, ”said the Supreme Court, adding that the exclusion of the contested areas was justified in all the facts and circumstances.

Regarding Adani gas’s argument that, under Article 16 of the PNGRB law, it has the right to be treated as an entity with “presumed authorization”, the Supreme Court said that it does not would apply only to entities that had authorization from central government before the set date.

“It is considered that the clause of” deemed authorization “subject to Article 16 is subject to other provisions of Chapter IV, including Article 17 and, moreover, that only entities authorized by the government central fall into this category.

“As a sequitur, it is considered that the entities which had received the authorization of the States had to apply for an authorization under the PNGRB Act, under the terms of Article 17 (2), and in compliance with the conditions set out in the town gas distribution regulations.

The judiciary stated that the role of the state in the granting of NOCs is only of support or collaboration, in terms of central government policy, of 2006, and cannot confer any benefit on an entity, which must request and obtain specific authorization in terms of the PNGRB law on the merits of its application.

Prior to the entry into force of the PNGRB law in 2006, the government of Gujarat authorized Adani Gas to supply gas to the district of Ahmedabad on condition that the authorization was subject to any laws coming into force in the future.

According to regulation 18 of the PNGRB law, a company must obtain permission from PNGRB to carry out work in an area for which the company does not have authorization from the central government.

In 2013, in accordance with regulation 18 of the PNGRB law, Adani approached PNGRB to seek permission to build gas supply infrastructure throughout the district of Ahmedabad.

However, while granting the permission, the PNGR council excluded the areas of Sanand, Bavla and Dholka from the district.

The regulator later issued a tender for these three areas in 2016, with Gujarat Gas outgoing the winner while the Adani company lost.

Following this loss, Adani Gas approached the High Court of Gujarat and challenged the bidding process as well as the decision of the PNGR Council to exclude these three areas – Sanand, Bavla and Dholka all in him. giving permission for the rest of the district in 2013.

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Posted on: Tuesday, September 28, 2021, 8:55 p.m. IST

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