Gail (India) Ltd v. Petroleum & Natural Gas Regulatory Board & Anr

RAJIV SAHAI ENDLAW, J. OCTOBER 14, 2015 bs.. (corrected & released on 18th November, 2015)

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 14th October, 2015. + W.P.(C) No.9448/2015 & CM No.22080/2015 (for stay) GAIL (INDIA) LTD. ....Petitioner Through: Mr. Balbir Singh, Sr. Adv. with Mr. Yoginer Handoo, Adv. Versus PETROLEUM & NATURAL GAS REGULATORY BOARD & ANR ..... Respondents Through: Mr. Prashant Bezorruah, Adv. for R-1. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The petition seeks to restrain the respondent No.1 Petroleum and Natural Gas Regulatory Board (PNGRB) from encashing the Performance Bank Guarantee (PBG) No.1501271BGP00289 dated 27th March, 2015 issued by respondent No.2 IDBI Bank Limited (Bank) at the instance of the petitioner in favour of the respondent No.1 PNGRB. 2. It is the case of the petitioner, (i) that pursuant to the competitive bids invited by PNGRB, the petitioner, vide letter dated 25th April, 2012 of PNGRB, was granted authorization for laying, building, operating or expanding the Natural Gas Pipeline from Surat (Gujarat) to Paradip (Odisha) spanning 1500 Kms excluding the spur-lines; (ii) in terms of Regulation 9 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008 (PNGRB Regulations) framed by the PNGRB in exercise of powers under Section 61 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act), the grant of the said authorization was subject to the petitioner achieving a financial closure as per Regulation 10 thereof; (iii) Regulation 10 of the PNGRB Regulations requires the authorised entity to achieve financial closure within a period of 120 days from the date of authorization and if internally financing the project, to within the said 120 days submit "the approval of its Board of Directors for the detailed feasibility report of the project alongwith its financial plan"; (iv) the said period of 120 days, for the petitioner was ending on 30th October, 2012; (v) the Board of Directors of the petitioner in its 303rd Meeting held on 26th October, 2012 approved and accorded the laying and operating of the pipeline aforesaid at an estimated cost of Rs.10281.01 crores and the petitioner, vide its communication dated 30th October, 2012 to PNGRB, informed PNGRB of the same, thus fulfilling the requirement of Regulation 10 supra; (vi) however PNGRB vide its communication dated November, 2012, received by petitioner on or about 19th November, 2012, directed the petitioner to submit a detailed and clear financial closure report; (vii) that though the petitioner submitted a detailed and clear financial closure report on 20th December, 2012 but the PNGRB was not satisfied therewith and asked the petitioner to make an elaborate presentation and which was made by the petitioner on 31st January, 2013; (viii) however PNGRB still, vide communication dated 2nd May, 2013, asked the petitioner to furnish the source of funds in respect of the financial closure; (ix) the petitioner informed PNGRB that it does not take particular project finance but avails Debt of Capex on Company"s balance sheet and requested PNGRB to treat the same as a financial closure but the PNGRB was still not satisfied and asked the petitioner the particulars of the equity sharing by other companies for the purpose of completion of financial closure; (x) the petitioner informed PNGRB that discussions with potential Joint Venture (JV) partners were in progress and no JV agreement had been finalised till then; (xi) the petitioner in the meeting on 10th September, 2013 again attempted to satisfy PNGRB of having achieved the financial closure and further informed that the net worth of the petitioner was Rs.24,000 crores and the projected capital expenditure required for the project aforesaid could be easily financed from its internal generation and external borrowings and that the petitioner was thus fully capable to finance the project; (xii) PNGRB, vide communication dated 8th October, 2013 directed the