Jaishree Thakur, J. - (1.) THE present writ petition has been filed under Article 226 of the Constitution of India challenging the impugned order dated 18.5.2011 whereby the No Objection Certificate (for short 'the NOC') granted to the petitioner has been withdrawn by the State of Rajasthan for laying down gas network pipelines as well as forfeiting the commitment fees deposited by the petitioner. The petitioner has also challenged the validity of the Regulation 18 of the Petroleum and Natural Gas Regulatory Board Regulations, 2008 (for short 'the Regulations, of 2008') being ultra vires the Petroleum and Natural Gas Regulatory Board Regulations Act of 2006 (for short 'Act of 2006').
(2.) A few brief facts are to be noticed to resolve the controversy herein. The petitioner is a company registered under the Companies Act, 1956 and is involved in the business of setting of natural gas distribution networks within India. The Government of Rajasthan invited parties to submit details for laying gas distribution networks in the cities of Udaipur and Jaipur. In response thereto, the petitioner submitted its expression of interest (EOI for short) for undertaking distribution networks in two cities of Rajasthan. After considering the petitioner's EOI, the Government of Rajasthan informed the petitioner that it would issue a No Objection Certificate. Pursuant to the receiving the letter dated 27.3.2006, No objection Certificate dated 27.3.2006, the petitioner deposited a sum of Rupees two crores, i.e., one crore per city as commitment fees and also undertook various steps towards the implementation of the project. In the meantime, the Petroleum and Natural Gas Regulatory Board Act, 2006 (for short 'the Act of 2006') was notified on 3.4.2006. All sections of the Act of 2006 were brought into effect, other than Section 16 of the Act of 2006 which deals with granting of authorisation by the Petroleum and Natural Gas Regulatory Board for laying, building, operating or expanding any pipe -line as a common carrier or contract carrier or any city or local natural gas distribution network. A Press Note was issued on 30.10.2007 calling upon all entities involved in laying, building, operating or expanding of a city or local natural gas distribution network prior to the appointed date, i.e., 1.10.2007 to not to undertake any new or incremental activity without obtaining authorisation. Pursuant to the Press Note, the petitioner submitted details as directed by the Board under Section 17(2) proviso of the Act of 2006. Respondent No. 3 -State of Rajasthan also called upon the petitioner to submit details to the Board in terms of the Press Note dated 30.10.2007. The Board issued a notice dated 31.3.2008 to the petitioner stating that it had examined the information submitted and came to the conclusion that the petitioner did not have any authorization by the Central Government in terms of the Section 17(2) of the Act and barred the petitioner from carrying out any new or incremental activity. The petitioner also submitted an application under Regulation 18(1) of the Regulations of 2008 for authorization for the project at Udaipur and Jaipur. After the application had been submitted under Regulation 18(1) of the Regulations, the Board issued show cause notice to the petitioner to appear before it. Meantime, the State of Rajasthan -respondent No. 3 also issued a show cause notice to the petitioner on 28.2.2011 stating that the petitioner had failed to fulfil the conditions as laid down in the NOC issued and as such the NOC is liable to be withdrawn and commitment fees for both the projects of rupees two crores had to be forfeited. The petitioner submitted reply to the show cause notice on 16.3.2011 by submitting that its application for authorisation was pending before the Board under Regulation 18(1) of the Regulations and that it had already completed approximately 75 kilometers of the pipe -lines network in both the cities. Vide an order dated 18.5.2011, the NOC granted to the petitioner was withdrawn and the commitment amount of rupees two crores was forfeited. On 19.5.2011, the Board rejected the petitioner's application for authorization of the projects at Udaipur and Jaipur on the ground that physical and financial progress in both the projects did not satisfy Regulation 18(2)(d). Aggrieved by the withdrawal of the NOC and forfeiture of the commitment amount of rupees two crores, the petitioner has preferred this writ petition. The petitioner has also laid challenge to the Regulation 18 being contradictory and ultra vires the provisions of the Petroleum and Natural Gas Regulatory Board Act, 2006. It is contended by Mr. M.S. Singhvi learned Senior Counsel for the petitioner that Section 16 which specifies that no entity shall lay, build operate or expand any natural gas distribution network in the city came to be notified only on 12.7.2010. Under the said proviso, it was specified that an entity laying, building, operating or expanding any pipe -line in any city on the appointed day, shall be deemed to have such authorization. In other words, it is contended that the petitioner, on the basis of NOC issued by the State of Rajasthan, would be deemed to have the requisite authorization on the appointed day, i.e., 1.10.2007. It is contended that as per provision under Section 17(2), all that was required of entities was to furnish the details to the Board within six months from the appointed day, which was duly complied with by the petitioner. It is further contended that Regulation 18(2) provides for criteria for the Board to consider at the time of granting authorization. Regulation 18 does not consider those cases which have already been given authorization for laying, building, operating or expanding gas distribution network prior to the appointed day. On the contrary, it imposes substantive conditions which are not provided for under the Act and thus, the Regulations are ultra vires.
(3.) REPLY has been filed by the State of Rajasthan taking a stand that forfeiture of the commitment fees is legal and valid specially as the petitioner had not meted out the conditions as laid down in the NOC. On the other hand, the Board has filed a detailed reply taking the plea of maintainability of the writ petition on the ground that the petitioner, if it was aggrieved against the orders of the Board, should have filed an appeal before the Appellate Tribunal under Section 33 of the Petroleum and Natural Gas Regulatory Board Act, 2006. It is further contended that Regulation 18 is not inconsistent with any of the provisions of the Act of 2006. The Board can recognize and accept only those entities for laying, building, operating or expanding of any city or local natural gas distribution network who have been given such authority by the Central Government. In the present case, the petitioner did not have such authority under Section 17(2) and since it did not meet the criteria as laid down under Regulation 18, its application was rejected. It is further argued that the NOC that has been issued by the State Government is in effect, issued without authority in so far as petroleum and natural gas are not State subjects and that finds reference in the Union State and it has been urged that the State Government had no competence to grant sanction. In the alternative, it is also pleaded that the perusal of the NOC shows that the petitioner was required to obtain sanction and seek further permission and authorization from the Central Government under the Petroleum Laws. The NOC that has been issued was conditional in nature and the petitioner had failed to comply with the terms specified therein. It is argued that under Section 17(4) of the Act, the Board could either accept or reject the application made to it for authorization and since it had failed to complete 25 % of the laying of the pipe line as per regulation 18(2)(d) of the Regulations of 2008, the authorization was declined.;