Strict adherence to prescribed statutory procedure is mandatory for regulatory cancellation actions; non-compliance invalidates orders even if public interest is involved.

ORDER

1. Civil Appeal Nos. 1880 and 3649 of 2024 under Section 37 of the PETROLEUM AND NATURAL GAS REGULATORY BOARD ACT , 2006 [2006 Act] have been carried by the Petroleum and Natural Gas Regulatory Board [PNGRB] from the common judgment and order dated 28th September, 2022 passed by the Appellate Tribunal for Electricity [APTEL], New Delhi, allowing the appeals [Appeal Nos.161 and 162 of 2022] of the respondent.

2. Civil Appeal Nos. and 1881 and 3650/2024 too are preferred by the PNGRB under Section 37 of the 2006 Act. The common judgment and order dated 13th September, 2023 of the APTEL rejecting applications for review [DFR Nos. 28 and 29/2023] of the PNGRB is under challenge therein.

3. The appeals before the APTEL, at the instance of the respondent, were directed against an order dated 3rd December, 2020 passed by the PNGRB. For the diverse reasons assigned in the common impugned order dated 28th September, 2022, the orders dated 3rd December, 2020 were set aside and the appeals preferred by the respondent allowed.

4. Respondent was granted authorization in respect of Geographical Areas of Ludhiana and Kutch (East) for laying gas pipelines. Such authorisation was cancelled by the PNGRB under Section 23 of the 2006 Act together with forfeiture of Performance Bank Guarantees and imposition of penalty of an amount equivalent to 50% of the Performance Bank Guarantees on account of certain omissions and commissions, as per the conclusions reached during an inquiry.

5. In terms of Section 37 of the 2006 Act, an appeal against an order of the APTEL shall lie to this Court on one or more of the grounds specified in Section 100 , Code of CIVIL PROCEDURE CODE [CPC]. Having regard to the fact that the main appeals are in essence second appeals of the nature contemplated by the CPC, the same can be entertained only upon involvement of a substantial question of law.

6. According to the PNGRB [page B of the paper book], “the question of law of general importance which arises for consideration in the present case is that when there is an admitted case of breach of Regulations by the authorized entity, coupled with concealment of information and submission of doctored documents to the statutory regulator, and the non-performance on the part of the entity is writ large on the face of the record, despite several opportunities to take corrective action having been given to the authorized entity by the statutory regulator, even then the statutory regulator is required to strictly specify and indicate the reasonable time given to the authorized entity to take corrective action and fulfil its obligation and in case of failure to do so, the statutory regulator is precluded from taking any action against the authorized entity, even though the actions of the authorized entity are clearly detrimental to public interest”.

7. Though, the APTEL assigned diverse reasons for upholding the challenge of the respondent to the impugned order dated 3rd December, 2020, not all the reasons assigned were questioned before us in course of hearing on behalf of the PNGRB. The only point argued is in relation to default committed by the respondent to abide by the terms and conditions of and the action initiated authorizations: due show cause notice dated 26th March, 2019 was issued under Section 23 of the 2006 Act as well as under Regulation 16 of the PNGRB (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Network) Regulations, 2008 [2008 Regulations] “on why th