Summary
The Court upheld Regulation 18 governing pre-existing city-gas networks lacking Central Government authorisation. Deemed authorisation under Section 16 was subject to Chapter IV, including Section 17, and protected only centrally authorised entities; State permissions did not confer that status. The earlier Adani Gas ruling was overruled. All Regulation 18 criteria required composite consideration, with context-sensitive weight. Adani’s acceptance of restricted authorisation and subsequent unsuccessful bid also barred its inconsistent challenge. The appeals were dismissed with Rs.10 lakh costs payable to the Union.
Issues
- Which pre-existing entities qualified for deemed authorisation under Section 16 of the PNGRB Act.
- Whether Regulation 18 was arbitrary or beyond the Board’s statutory powers and how its criteria should be applied.
- Whether Adani could challenge the excluded areas after accepting authorisation and unsuccessfully bidding for them.
Provisions considered
- Sections 16, proviso, and 17, Petroleum and Natural Gas Regulatory Board Act, 2006Deemed authorisation was conditional on Chapter IV. Only centrally authorised pre-existing entities qualified; others required fresh authorisation under the statutory and regulatory scheme. (¶¶ 10, 58, 66, 72, 75, 76, 77, 78, 79, 84, 85, 86, 89, 90, 127)
- Sections 19 and 61(1); Section 11(c)(ii), (e)(iii), (f)(iv) and (i), Petroleum and Natural Gas Regulatory Board Act, 2006The authorisation functions, regulatory objectives and regulation-making power supported uniform criteria for assessing existing networks. Regulation 18 furthered the Act and was not contradicted by a specific provision. (¶¶ 11, 60, 79, 83, 96, 105, 107, 108, 109, 110, 111, 112)
- Regulations 17 and 18, especially 18(2)(a)–(j), 18(3) and 18(2)(f), PNGRB (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008The distinct regimes reflected prior Central authorisation. All listed evaluation criteria had to be considered together, with appropriate weight and relevant additional factors; the Board could authorise an appropriate geographical area rather than necessarily the entire proposed project. (¶¶ 13, 87, 88, 89, 90, 91, 92, 93, 94, 95, 98, 99, 100, 101, 112, 127)
- Seventh Schedule, List I Entry 53; List II Entry 25; Article 14, Constitution of IndiaThe Constitution Bench’s allocation of legislative competence over natural gas informed the Act’s distinction between authorisations. The composite criteria supplied an objective basis and defeated the facial arbitrariness challenge. (¶¶ 55, 56, 65, 66, 72, 78, 84, 99, 100, 101, 127)
Held
- The proviso to Section 16 could not be read independently of its Chapter IV qualification. Read with Section 17 and the Constitution Bench opinion on Union competence, it saved centrally authorised entities rather than validating State permissions. State NOCs had a supportive local role and did not replace statutory authorisation. The contrary interpretation in Adani Gas, (2019) 3 SCC 641, was overruled. (¶¶ 55, 56, 58, 65, 66, 72, 75, 78, 84, 85, 90, 127)
- Regulation 18 applied to the limited class carrying on activities before the appointed day without Central authorisation. The Act’s objects and Sections 11, 17, 19 and 61 supplied sufficient guidance and authority. Possibility of misuse did not invalidate the regulation; arbitrary application remained open to judicial review in an appropriate case. (¶¶ 83, 86, 89, 90, 91, 92, 93, 94, 100, 101, 102, 105, 108, 109, 110, 111, 112)
- The phrase permitting consideration of criteria could not be reduced to a simple mandatory-versus-directory formula. Regulation 18(3) required all listed factors to be evaluated in totality with their interconnections; relative weight depended on the facts. Additional criteria had to be relevant to the Act’s purposes. Geographical authorisation could be restricted in accordance with the regulation. (¶¶ 94, 95, 96, 97, 98, 99, 100)
- Adani accepted and acted on authorisation excluding the disputed areas, furnished the performance bond, and then participated in their auction. Its unsuccessful bid was followed by the challenge. In that factual setting, the principle against approbating and reprobating precluded its claim despite the protests relied upon. (¶¶ 113, 114, 115, 116, 117, 118, 127)
- The belated reasons challenge failed in the particular circumstances, including acceptance of authorisation and the Board’s disclosure before the High Court. Serious disputes about the areas covered and development achieved were unsuitable for determination in writ proceedings, especially after Adani consciously declined the statutory appeal remedy. The Court upheld exclusion in the overall circumstances without resolving those contested facts afresh. (¶¶ 119, 120, 121, 122, 123, 124, 125, 126, 127)
- The appeals were dismissed, with costs of Rs.10 lakh payable by Adani to the Union of India. (¶ 128)
Result
Appeals dismissed. Regulation 18 upheld and earlier Adani Gas ruling overruled; exclusion of disputed areas sustained. Adani to pay Rs.10 lakh costs to the Union of India.