Gautam Adani, chairman, Adani Group
NEW DELHI: The Supreme Court on Tuesday threw out Adani Gas Ltd’s challenge to the decision of the Petroleum and Natural Gas Regulatory Board (PNGRB) to award the city natural gas distribution (CGD) network for Sanand, Bavla and Dholka in Gujarat to Gujarat Gas.
A bench of Justices U U Lalit, S R Bhat and Hrishikesh Roy not only rejected Adani Gas’s appeal against the Gujarat HC order, but also slapped a cost of Rs 10 lakh on it for acting naive about rules and regulations despite taking advantage of the same norms to bag gas distribution network projects in Ahmedabad municipal area.
Adani had challenged the validity of Regulation 18 of the PNGRB (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 as violative of Articles 14 and 19(1)(g) of the Constitution of India, and ultra vires Section 16 of the PNGRB Act, 2006. Adani had also challenged the grant of authorization to Gujarat Gas for laying and maintaining a gas distribution network. Gujarat Gas had succeeded in securing the authorization in an auction held by the PNGRB.
The Board had granted Adani provisional clearance to carry out certain capital works in the Ahmedabad area, including the disputed areas of Sanand, Bavla and Dholka and Adani had submitted an indemnity in favour of the Board. On February 4, 2013, the Board granted provisional authorization to Adani’s CGD network in Ahmedabad city and Daskroi area, excluding 18 CNG stations of Hindustan Petroleum Corporation Ltd. The disputed areas were excluded from this provisional authorization. Under protest, Adani accepted the grant of authorization on December 9, 2013, despite certain areas being excluded.
Adani moved the Gujarat HC seeking quashing of the grant of authorization to Gujarat Gas, questioning the exclusion of the disputed areas, and challenging the vires of Regulation 18 framed by the Board under the PNGRB Act. Adani also contended that by virtue of Section 16 of the PNGRB Act, it was entitled to be treated as an entity with “deemed authorization”. The HC rejected the Adani petition saying it thought it fit not to challenge the validity of Regulation 18, under which it was granted authorisation in respect of Khurja area in Uttar Pradesh.
Dismissing its appeal, the SC said that Adani was barred from challenging the validity and constitutionality of a provision of which it had taken advantage of in getting authorisation for Khurja area. Writing the judgment, Justice Bhat said, “It is a matter of record that PNGRB granted authorization to Adani on February 4, 2012 in respect of the Khurja area. Given these background circumstances, its argument about lack of knowledge with respect to its rights, is indefensible. Adani accepted and acted on the authorization, by furnishing the performance bond, after which it registered its protest (in respect of excluded areas) with the PNGRB. Even then, it proceeded to act upon 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 SC said.
After dismissing Adani's appeal, the SC asked it to pay litigation cost of Rs 10 lakhs to the Union government.