TaxTMI 
TaxTMI 
2019 (2) TMI 546
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....ficate (for short 'NOC') for laying down of Gas Network pipelines granted in favour of the appellant had been withdrawn (including forfeiture of the commitment fees of Rs. 2 Crore deposited by the appellant), and also the order dated 19.05.2011 of the Board rejecting the application of the appellant for authorisation of its projects in Udaipur and Jaipur, as well as challenging the validity of the Regulation 18 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 (for short 'Regulations of 2008'), the appellant had filed Writ Petition No. 10028 of 2011 before the Rajasthan High Court, which has been dismissed on 29.04.2015. Aggrieved by the same, this Special Leave Petition has been filed. 3. Brief facts of this case are that on 19.11.2005 the Government of Rajasthan invited parties to submit their bids for laying of Gas Distribution Network in certain cities of Rajasthan, including the said two cities of Udaipur and Jaipur. In response to the same, the appellant submitted its Expression of Interest for the cities of Udaipur and Jaipur. On 20.03.2006, the Govern....
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....tities involved in or proposed to the laying, building, operating or expanding of a City or Local Gas Distribution Network prior to the appointed date, i.e. 01.10.2007, to furnish the particulars of such activities to the Board within six months from the appointed date. It was further provided that in cases where no authorisation was granted to the entities that initiated the specified activities before the appointed date, then such entities were to apply for authorisation under Section 17 of the Act of 2006. The Government of Rajasthan, then on 05.12.2007, intimated the appellant of the press note dated 30.10.2007 and required the appellant to submit the details, as were prescribed in terms of the said press note. Two days thereafter, on 07.12.2007, the appellant submitted the requisite details for the City Gas Distribution Projects of Udaipur and Jaipur. Then, on 11.12.2007, the Government of Rajasthan called upon the appellant to further submit the details to the Board in terms of the press note dated 30.10.2007. In response to the same, the appellant informed the Government of Rajasthan that the said details had already been furnished on 07.12.2007. 7. On 19.03.2008, the Pet....
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....cal and financial progress achieved by the appellant did not satisfy the proviso of Regulation 18(2)(d) of the 'Regulations of 2008' and even after instructions had been given by the Board vide press note dated 30.10.2007, the appellant had allegedly continued with laying of pipelines, in violation of such directions given by the Board in the said press note. 10. The appellant, then on 01.07.2011, wrote to the Board to bring to its notice that the appellant has deemed authorisation in terms of proviso to Section 16 of the Act of 2006 and the letters of rejection dated 19.05.2011 of the Board to the appellant should be withdrawn. To the said communication, there was no response received by the appellant from the Board. Challenging the order dated 18.05.2011 issued by the Government of Rajasthan and the orders dated 19.05.2011 issued by the Board as well as the challenging the vires of Regulation 18 of the 'Regulations of 2008', the appellant had filed Writ Petition before the Rajasthan High Court, which was dismissed on 29.04.2015. The same is under challenge in this appeal. 11. For proper appreciation of the issues involved in this case the relevant provisions of the Act of 2....
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....er this Act: Provided that an entity laying, building, operating or expanding any pipeline as common carrier or contract carrier authorised by the Central Government at any time before the appointed day shall furnish the particulars of such activities to the Board within Six months from the appointed day. (2) An entity which is laying, building, operating or expanding, or which proposes to lay, build, operate or expand, a city or local natural gas distribution network shall apply in writing for obtaining an authorisation under this Act: Provided that an entity laying, building, operating or expanding any city or local natural gas distribution network authorised by the Central Government at any time before the appointed day shall furnish the particulars of such activities to the Board within six months from the appointed day. (3) Every application under subsection (1) or subsection (2) shall be made in such form and in such manner and shall be accompanied with such fee as the Board may, by regulations, specify. (4) subject to the provisions of this Act and consistent with the norms and policy guidelines laid down by the Central Government....
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.... (d) in respect of the actual physical progress made and the financial commitment thereof referred to in clause (c), a physical progress of at least twenty five percent and a financial commitment of at least twenty five percent of the capital expenditure identified for the CGD project as per the DFR immediately before the appointed day may be considered as adequate; (e) the entity should have arranged, by way of acquisition or lease, land for CGS and procured the necessary equipment for erecting the CGS before the appointed day; (f) the Board reserves the right to get the actual physical progress and the financial commitment certified and depending upon the progress achieved, the Board may consider authorizing the entity for the authorized area- (i) as per the geographical area in its DFR, (ii) as per the geographical area actually covered under implementation till the appointed day; or (iii) the geographical area as specified by the Board; (g) in relation to laying, building, operating or expanding the CGD network, it is for the entity to satisfy the Board on the adequacy of its ability to meet the applicable technical....
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....(b) the Board may consider grant of exclusivity on such terms and conditions as specified in the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008; (c) the entity shall abide by the technical standards, specifications including safety standards as specified under relevant regulations for technical standards and specifications, including safety standards; (d) the provisions under regulations 9, 13, 14, 58 [***] and 16 shall apply to the entity." (emphasis supplied) 12. We have heard the learned Counsel for the parties and have perused the material on record. 13. The main issue for consideration in this appeal is whether the Board was justified in rejecting the application filed by the appellant under Section 17 of the Act of 2006 read with Regulation 18 of the Regulations of 2008, after the provisions contained in Section 16 of the Act of 2006 came into force on 12.07.2010 granting deemed authorisation to those entities which had inter alia started laying and building local Natural Gas Distribution Network prior to the appointed date, i.e. 01.10.2007. 14. It is not disput....
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....taining an authorisation under the Act of 2006. However, the entity authorised by the Central Government for such activities would be required to furnish the particulars of such activities to the Board within 6 months from the appointed date. Sub Section 4 of Section 17 empowers the Board either to reject or accept such application, which power has to be exercised consistent with the norms and policy guidelines. Sub Section 5 provides that in case of refusal or conditional acceptance of an application, the Board shall record reasons in writing for such rejection or conditional acceptance. 16. Section 16 of the Act of 2006, which came into force on 12.07.2010, relates to 'Authorisation'. It puts an embargo to lay, build, operate or expand in City or Local Natural Gas Distribution Network without obtaining authorisation under the Act. The Proviso (ii) of the said section 16 provides for 'deemed authorisation' in case an entity had been laying, building, operating or expanding any City or Local Gas Distribution Network, immediately before the appointed date, which shall be deemed to have such authorisation. In the present case, the appointed date is 01.10.2007 when the Act of 2006 ....
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....make the consideration in the said clauses, including Clause (d), to be mandatory, but no doubt the same would be relevant considerations. On a careful perusal of the order passed by the Board, we find that the application of the appellant has been rejected for reasons mentioned in para 5 of the impugned order dated 19.05.2011, which are extracted hereunder: "5. The committee found that you do not satisfy the conditions laid down under the Regulation 18(1) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations 2008 on account of the following: a) Physical and financial progress achieved by M/s. Adani Gas Limited before the appointed day in the GA of Jaipur does not satisfy the proviso 18(2)(d) of the Regulation 18(1) of Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations 2008; b) Even After clear instructions of PNGRB vide Press Note Dated 30th October, 2007 to stop all incremental activity M/s. Adani energy Limited had continued with laying....