1. Appeal under Section 33 PNGRB Act against order dismissing complaint regarding unauthorized pipelines laid by customers in CGD area. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 )
Back
APPELLATE TRIBUNAL FOR ELECTRICITY
Virender Bhat, Judicial Member, Bhupinder Singh Bhalla, Technical Member
Sabarmati Gas Limited VERSUS Petroleum and Natural Gas Regulatory Board & Ors
APPEAL No. 515 OF 2023
(A) Petroleum and Natural Gas Regulatory Board Act, 2006 - Sections 2(i), 2(j), 2(m), 2(p), 2(za), 8(4), 11, 16, 17, 20, 25, 33 - Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 - Regulation 3(2)(a), proviso, Regulation 5 - Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008 - Regulation 2(1)(f)(i) and (ii), Regulation 19 - Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Network) Regulations, 2008 - Regulation 5(1), Regulation 6 - Petroleum and Natural Gas Regulatory Board (Guiding Principles for Declaring City or Local Natural Gas Distribution Networks as Common Carrier or Contract Carrier) Regulations, 2019 - Regulation 2(k) - Petroleum and Natural Gas Regulatory Board (Conduct of Business, Receiving and Investigation of Complaints) Regulations, 2007 - Regulation 29 - Petroleum and Natural Gas Regulatory Board (Protection of Consumer Interest in respect of dedicated pipelines for Natural Gas) Guidelines, 2010 - Petroleum and Natural Gas Regulatory Board (Technical Standards and Specifications including Safety Standards for Natural Gas Pipelines) Regulation, 2009 - Natural Gas Pipelines - Dedicated Pipeline - Authorisation - Exclusivity - CGD Network - Off-spec gas - Gas requirement of less than 50,000 SCMD.
(B) Authorization for Dedicated Pipelines - Conjoint reading of Sections 2(j), 11, and 16 of the PNGRB Act along with the NGPL Authorization Regulations indicates that the Board is not required to issue authorization for laying, building, operating or expanding a dedicated pipeline. Regulation 19 of the NGPL Authorization Regulations provides a procedure for acceptance, not authorization, and an entity can lay a dedicated pipeline at its discretion even if the Board advises otherwise. (Paras 42-44)
(C) CGD Authorisation Regulations vs. NGPL Authorisation Regulations - The provisions of CGD Authorisation Regulations must be interpreted in harmony with the NGPL Authorisation Regulations. Concluding that a customer with a dedicated pipeline must still procure gas from the authorized CGD entity would make one regulation subservient to the other and render Regulation 19 of the NGPL Authorisation Regulations redundant. (Para 54)
(D) Off-spec Gas - Gas that does not meet the threshold limits for a CGD network cannot be connected to it. If the authorized CGD entity cannot or refuses to transport off-spec gas, a customer may source it through a separate dedicated pipeline, which falls outside the definition of a CGD Network. (Paras 29, 30, 51-53) (E) Authentication of Orders - The requirement under Section 8(4) of the Act and Regulation 29 of the Conduct of Business Regulations is only for the Board’s Secretary or authorized officer to authenticate orders. A certified copy of the order bearing the signature and stamp of the Secretary is valid; the original order must bear the coram's signatures. (Paras 18-20) (F) Necessary Parties - While a Ministry establishing broader policy is not generally a necessary party to every complaint, a contractual counterparty whose contract may be impacted by the proceedings is a necessary party. However, the failure to join them does not automatically invalidate the decision if the order was also based on other substantive grounds. (Para 21)
Facts of the case:
The Appellant, the authorized entity for a geographical area for a city gas distribution network, filed a complaint alleging that Respondent entities had unlawfully laid natural gas pipelines to off-take gas from ONGC fields, creating an unauthorized CGD network in violation of the Appellant's exclusivity. The Respondent entities, each with a gas requirement of less than 50,000 SCMD, had laid their own pipelines to procure off-spec (wet) gas directly from ONGC, as the Appellant could not transport this gas through its CGD network without purification. The Board dismissed the Appellant's complaint, holding that the pipelines were dedicated in nature, laid for procurement of off-spec gas, and that the Appellant, having refused to accept the off-spec gas, could not later compel the Respondents to cease their arrangement.
Findings of Court:
The pipelines laid by the Respondent entities are dedicated pipelines under Regulation 2(1)(f)(i) of the NGPL Authorisation Regulations, as they transport natural gas to a specific customer for its own consumption, not for resale. No specific authorization is required for these pipelines from the Board. The Respondent entities, despite their gas requirement being less than 50,000 SCMD, are not violating Regulation 3(2)(a) of the CGD Authorisation Regulations because their pipelines are covered under the framework of the NGPL Authorisation Regulations, and a harmonious reading of both regulations is necessary.
Issues: 1. Whether the gas requirement of each Respondent entity is less than 50,000 SCMD? (Ans: Yes) 2. Whether dedicated pipelines require authorization from the Board and must comply with safety standards? (Ans: No specific authorization required; compliance with T4S regulations is required) 3. Whether the pipelines laid by the Respondent entities are dedicated pipelines and whether the prescribed procedure has been followed? (Ans: Yes, they are dedicated pipelines; applications have been accepted by the Board) 4. Whether the pipelines are violating Regulation 3(2)(a) of the CGD Authorisation Regulations? (Ans: No)
Ratio Decidendi: Dedicated pipelines laid by a customer for its own consumption, to transport off-spec gas that cannot be carried through the authorized CGD network, do not require authorization from the PNGRB. Such pipelines fall under the NGPL Authorisation Regulations, not the CGD Authorisation Regulations, and the customer is not required to procure gas from the CGD entity if that entity cannot transport the specific type of gas (off-spec). The CGD exclusivity provisions do not extend to pipelines that are not part of the CGD network.
Result: Appeal dismissed. No order as to costs. (Paras 55-56)
1. Appeal under Section 33 PNGRB Act against order dismissing complaint regarding unauthorized pipelines laid by customers in CGD area. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 )
2. Dispute whether customers' pipelines are dedicated pipelines exempt from authorization or violate exclusivity and CGD regulations. (Para 11 , 12 , 13 , 14 , 15 , 16 )
3. Appeal dismissed; impugned order upheld; no order as to costs. (Para 55 , 56 )
No. Section 8(4) and Regulation 29 allow authentication by Secretary; certified copy bearing Secretary's signature is sufficient; original signed copy is kept in Board's records. (Para 17 , 18 , 19 , 20 )
No. The Ministry sets broader policy and is not a necessary party in every complaint; its presence would not alter the decision. ONGC may be relevant but non-joinder not fatal as Board decided on merits. (Para 21 )
A dedicated pipeline is laid to transport natural gas to a specific customer for its own use, not resale. It is excluded from 'natural gas pipeline' definition. No authorization required; only acceptance procedure under Regulation 19 of NGPL Authorisation Regulations. (Para 25 , 26 , 27 , 28 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 )
Not when the customer has a dedicated pipeline accepted under NGPL Authorisation Regulations. The proviso allows alternate supply until CGD network is ready, and the two regulations must be interpreted harmoniously; otherwise NGPL provisions become redundant. (Para 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 )
JUDGEMENT
PER HON’BLE Mr. BHUPINDER S. BHALLA, TECHNICAL MEMBER (P&NG)
1. The present appeal has been filed by the Appellant under Section 33 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (hereinafter referred to as “PNGRB Act”) challenging the order dated 22.12.2022 of the Petroleum and Natural Gas Regulatory Board (Respondent No. 1) in the matter of SGL v Crystal Ceramics & Ors. (Legal/267/2018) (hereinafter referred to as the “impugned order” disposing off the complaint filed by the Appellant on 05.09.2018. The Appellant has prayed for setting aside the impugned order on several grounds.
Brief facts of the case
2. The Appellant, Sabarmati Gas Limited, is the joint venture company between Bharat Petroleum Corporation Limited and Gujarat State Petroleum Corporation Limited and the authorised entity for the geographical area of Sabarkanta, Mehsana and Gandhinagar District (SGL GA) in the state of Gujarat for establishing city gas distribution project vide Ministry of Petroleum and Natural Gas, Government of India, communication dated 06.12.2005. The Appellant is an entity authorised by the Central Government prior to the appointed date of the PNGRB Act and provisions of section 16 of the PNGRB Act coming into force.
3. The Appellant states that it has laid down the CGD Network infrastructure comprising of 385 KMs of Steel Pipelines and 3800 KMs of MDPE Pipelines, and serves approximately 1,30,000 households, approx. 576 commercial customers and approx. 288 industrial customers located within the SGL GA. The Appellant states that it has made a cumulative investment of approximately Rs. 552 Crores till 31st March 2018 for developing the CGD Network in the SGL GA.
4. Respondent No. 2 to Respondent No. 7 (collectively referred to as “Respondent Entities”) are existing customers of Appellant’s CGD Network and obtaining gas supply from the Appellant.
5. The Appellant states that the Respondent Entities have unlawfully been laying, building, operating and expanding natural gas pipelines without an authorisation from the Respondent No. 1/PNGRB to off-take natural gas from the ONGC gas fields which amounts to creation of a CGD network as defined under section 2 (i) of PNGRB Act in the geographical area of Gandhinagar, Mehsana and Sabarkanta. It alleges that such willful action of the Respondent Entities is in blatant violation of the SGL CGD Authorisation whereby infrastructure exclusivity for the SGL GA is vested with the Appellant under the provisions of the PNGRB Act, Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 (hereinafter referred to as “CGD Authorisation Regulations”), PNGRB CGD Exclusivity Regulations and other applicable laws.
6. The Appellant states that each of the Respondent Entities is having a consumption requirement of less than 50,000 SCMD of natural gas and undertook the laying of their own natural gas pipelines thereby creating an unauthorised CGD Network.
7. It is the case of the Appellant that none of the Respondent Entities have obtained any permission or authorization from the Respondent No. 1 /PNGRB either under section 16 read with section 17 of the PNGRB Act or under Regulation 19(2) of the PNGRB (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008 (hereinafter referred to as "NGPL Authorization Regulations").
8. The Respondent No. 1/ PNGRB held an Open House Discussion on 13.11.2017 for the application of Respondent No. 5 /Advatech Cera tiles and KEI-RSOS Petroleum & Energy Pvt Ltd for laying dedicated pipelines. The Appellant agreed to supply the gas through their network subject to it meeting the quality standard as specified for the CGD network. However, ONGC, from whose field the gas is being sourced, stated that it is not economically viable to sell the off-spec gas in dry condition or quality as desired by the Appellant for the small quanti
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top