SC rejects Adani's claims for gas distribution in Ahmedabad

In a setback to Adani Gas, the Supreme Court on Tuesday rejected its plea for authorised distribution for supply of natural gas to commercial and industrial units in the areas of Sanand, Bavla and Dholka of Ahmedabad district of Gujarat.

A bench of Justices U U Lalit, S Ravindra Bhat and Hrishikesh Roy upheld the Gujarat High Court’s September 2018 judgment allowing supply of natural gas as a clean and green fuel in the three areas of outer Ahmedabad region by state-run gas distributor Gujarat Gas.

The state company had complained to the regulator accusing Adani of unauthorised expansion of its gas distribution network in these locations.

The top court said that the Petroleum and Natural Gas Regulatory Board is entrusted with the power to frame appropriate regulations and also bring about fairness in the marketplace.

For it, the central government alone was competent under Article 73 of the Constitution to issue such licenses or authorisations, it added.

The court also said the role of the state in granting NoC is only supportive or collaborative, in terms of the central government’s policy of 2006, and cannot confer any advantage to any entity, which has to seek and be granted specific authorisation in terms of the PNGRB Act on the merits of its application.

Rejecting a contention by Adani, the court held that Regulation 18 of the PNGRB (Authorising Entities To Lay, Build, Operate or Expand City or Local Natural gas Distribution Networks) Regulations, 2008 is “neither arbitrary, nor ultra vires” Article 14, 19 (i)(g) of the Constitution of India and Section 16 of the PNGRB Act.

While imposing a cost of Rs 10 lakh on Adani, payable to the central government, the bench also held that Adani’s claim was precluded by the principle of approbate-reprobate, as it accepted authorisation granted by PNGRB (including exclusion of disputed areas), furnished the performance bond and even participated in the auction for the excluded areas, and only thereafter challenged authorisation when its bid was unsuccessful.

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