Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Date of decision: 14 AUGUST, 2024
IN THE MATTER OF:
+ W.P.(C) 15285/2023 & CM APPL. 61267/2023
IMC LIMITED ..... Petitioner
Through: Mr. Ramji Srinivasan, Sr. Advocate
with Mr. Saurav Agarwal, Mr.
Trinath Tadakamalla, Ms. Utsha
Dasgupta, Ms. Nisha Bhatia, Mr.
Samyak Bilala, Mr. Anshuman
Choudhary and Ms. Namrata,
Advocates.
versus
UNION OF INDIA AND ORS. ..... Respondents
Through: Mr. Apoorv Kurup, CGSC with Mr.
Gurjas Singh Narula, Ms. Nidhi
Mittal, Mr. Akhil Hasija, Ms. Aanchal
and Ms. Gauri Goburdhan, Advocates
and Mr. Rudra Paliwal, GP.
Ms. Madhavi Divan, Sr. Advocate
with Mr. Rahul Sagar Sahay, Mr.
Prince Singh, Ms. Sonali Malhotra,
Ms. Sanskriti Bhardwaj, Ms. Harshita
Tomar and Ms. Sakshi Singh,
Advocates for R-2.
Mr. Abhinav Vasisht, Sr. Advocate
with Mr. Prashant Bezboruah and Ms.
Akshita Sachdeva Jaitly, Advocates
for R-3.
+ W.P.(C) 2896/2024 & CM APPLs. 11960/2024, 11961/2024
INDIAN OIL CORPORATION LIMITED ..... Petitioner
Through: Mr. Abhinav Vasisht, Sr. Advocate
with Mr. Prashant Bezboruah and Ms.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 1 of 95
Akshita Sachdeva Jaitly, Advocates.
versus
PETROLEUM AND NATURAL GAS REGULATORY BOARD
..... Respondent
Through: Ms. Madhavi Divan, Sr. Advocate
with Mr. Rahul Sagar Sahay, Mr.
Prince Singh, Ms. Sonali Malhotra,
Ms. Sanskriti Bhardwaj, Ms. Harshita
Tomar and Ms. Sakshi Singh,
Advocates for R-1.
Mr. Ramji Srinivasan, Sr. Advocate
with Mr. Saurav Agarwal, Mr.
Trinath Tadakamalla, Ms. Utsha
Dasgupta, Ms. Nisha Bhatia, Mr.
Samyak Bilala, Mr. Anshuman
Choudhary and Ms. Namrata,
Advocates.
Mr. Apoorv Kurup, CGSC with Mr.
Gurjas Singh Narula, Ms. Nidhi
Mittal, Mr. Akhil Hasija, Ms. Aanchal
and Ms. Gauri Goburdhan, Advocates
and Mr. Rudra Paliwal, GP.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. The present writ petitions raise an important question of law of public
importance as to whether after the enactment of the Petroleum and Natural
Gas Regulatory Board Act, 2006 ( hereinafter referred to as the 'PNGRB
Act'), can entities lay a captive pipeline for transport of its petroleum and
petroleum products without the authorization of the Petroleum and Natural
Gas Regulatory Board ( hereinafter referred to as the 'PNGRB').
2. This judgment disposes of two writ petitions, one filed by IMC
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 2 of 95
Limited ( hereinafter referred to as the 'Petitioner') and the other filed by
Indian Oil Corporation Limited ( hereinafter referred to as the 'IOCL').
3. Since the issues raised in both the writ petitions are common, with the
consent of the parties, the writ petitions are being disposed of vide a
common judgment.
4. The facts of the case as stated by the Petitioner in its writ petition, i.e.,
W.P.(C) 15285/2023, are that the PNGRB issued an application-cum-bid
document for grant of authorization for laying, building, operating or
expanding a pipeline 14 kms. from outside the boundary of Ennore Port to
Manali Industrial Area. The bid document was amended and the length of
the pipeline which was originally fixed at 14 kms. from outside the
boundary of Ennore Port was extended to a point within the Ennore Port and
was extended from 14kms. to 21 kms. The Petitioner submitted its
Expression of Interest to the PNGRB.
5. Material on record indicates that both the Petitioner and the IOCL
sought for authorization from the Board to lay down the said pipeline. The
Petitioner was successful and was given the Letter of Authorization on
18.12.2015 to lay down the said pipeline.
6. It is the case of the Petitioner that in October, 2023, i.e., after about 8
years after the Letter of Authorization was given to the Petitioner, the IOCL
started laying down two multi product petroleum and petroleum products
pipelines of 30" diameters and 10.5 kms. length from KPL Jetty to Vellur
Terminal which is operated by IOCL. The IOCL is also laying down three
pipelines of 24" diameter and 9kms. length from Vellur Terminal to Manali
Industrial Area. All the pipelines are being laid without getting any
authorization from the PNGRB.
7. Material on record indicates that PNGRB vide a communication dated
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 3 of 95
13.12.2023 has directed the IOCL to stop laying these pipelines with
immediate effect since the IOCL has not taken authorization from the
PNGRB for laying down the said pipeline.
8. IMC Limited has approached this Court by filing W.P.(C)
15285/2023 with the following prayers:
“a) transfer to itself the Petition dated 07.11.2023 filed
by the Petitioner under Section 24 and 25 of PNGRB
Act, 2006 before the PNGRB Board/Respondent No. 2
and grant the following reliefs prayed therein:
(i) Direct IOCL to immediately stop the
construction of the Unauthorized Pipelines in
respect of transportation of petroleum and
petroleum product for the route between Ennore
Port and Manali Industrial Area, Tamil Nadu
which was already covered by EPMPL authorized
to the Petitioner by the Hon'ble Board.
(ii) Prohibit IOCL from undertaking construction
of the Unauthorized Pipelines in respect of
transportation of petroleum and petroleum
product for the route between Ennore Port and
Manali Industrial Area, Tamil Nadu which was
already covered by EPMPL authorized to the
Petitioner by the Hon'ble Board.
(iii) Impose a penalty and take any other action as
the this Hon'ble Court deems fit against IOCL for
violating Section 16 of the PNGRB Act, by
constructing the pipeline without authorization of
the PNGRB Board.
(iv) Direct IOCL to compensate the Petitioner
under Section 21(3) of the PNGRB Act for
damages caused to the Petitioner by continuous
infringement of the Petitioner's rights by IOCL's
construction of Unauthorized Pipelines leading to
financial and business losses to the Petitioner.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 4 of 95
OR, in the alternative
b) grant the following protective reliefs to the
Petitioner till the PNGRB is duly constituted by the
Respondent No. 1 and capable of constituting a bench
and adjudicating the Petitioner‟s Petition dated
07.11.2023 under Section 24 and 25 of the PNGRB
Act:
iii) issue appropriate writ or directions to restrain
the Respondent No. 2, PNGRB from granting any
approval or authorization to Respondent No. 3 in
respect of the Unauthorized Pipelines in respect
of transportation of petroleum and petroleum
product between for points the route between Port
and Manali Industrial Area, Tamil Nadu which
was already covered by EM Pipeline authorized
to the Petitioner by the PNGRB.
iv) issue appropriate writ or directions to restrain
(or direct Respondent No. 2 to restrain) IOCL
from undertaking the construction of the
Unauthorized Pipelines in respect of
transportation of petroleum and petroleum
product between for points the route between
Ennore Port and Manali Industrial Area, Tamil
Nadu which was already covered by EM Pipeline
authorized to the Petitioner by the PNGRB.
c) issue appropriate writ or directions to Respondent
No. 1 to immediately take steps for expeditious
appointment of Member (Legal) on the PNGRB Board.
d) pass any other or further orders as this Hon'ble
Court may deem fit and proper in the circumstances of
the case in favour of the Petitioner.”
9. IOCL has approached this Court by filing W.P.(C) 2896/2024 for
setting aside the Communication dated 13.12.2023 issued by PNGRB
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 5 of 95
directing the IOCL to stop laying down the pipelines on the ground that
regulating the laying down of pipelines which are meant for captive use and
for transportation of the products of the IOCL from the jetty to its terminal is
outside the purview of the PNGRB Act, and therefore not within the
jurisdiction of the Board.
10. The transportation of petroleum and petroleum products was governed
by the Petroleum Act, 1934. The Parliament had also enacted Petroleum &
Minerals Pipelines (Acquisition of Right of User in Land) Act, 1962. The
object of the Act was to provide for the acquisition of right of user in land
for laying petroleum pipelines for transport of petroleum and minerals and
for matters connected therewith.
11. In the year 2002, the Ministry of Petroleum and Natural Gas of the
Government of India brought out Guidelines for Laying Petroleum Products
Pipeline (hereinafter referred to as the '2002 Guidelines') on 20.11.2002. In
the said 2002 Guidelines, petroleum products pipelines were categorized in
three compartments; (i) pipelines originating from refineries, whether
coastal or inland upto a distance of 300 kms. from the refinery; (ii) pipelines
dedicated for supplying product to a particular consumer, originating either
from a refinery or from company's terminal; and (iii) pipelines originating
from refineries exceeding 300 kms. in length and pipelines originating from
ports, other than those specified in (i) and (ii) above.
12. The land for these pipelines is acquired under the provisions of
Petroleum Pipelines (Acquisition of Right of User in Land) Act, 1962. This
act remains in force even as of date. The 2002 Guidelines also provided for
the procedure to be followed for acquiring right of user in land for laying
down pipelines under the Petroleum Pipelines (Acquisition of Right of User
in Land) Act, 1962 for pipelines originating from refineries exceeding 300
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 6 of 95
kms. length and pipelines originating from ports other than pipelines
originating from refineries upto a distance of 300 kms. from the refinery and
pipelines dedicated for supplying the product to particular consumer either
from the refinery or the company's terminal. The procedure indicates that the
proposal for laying down a common usage product pipeline could originate
from any single interested party or a joint venture. The Ministry of
Petroleum and Natural Gas would publicize the proposal inviting the
Expression of Interest. The procedure given in the 2002 Guidelines has been
described in the following manner:-
" 3.1 A proposal for laying common usage product
pipeline could originate from any single interested
party or a joint-venture (herein after referred to as
proposer).
3.2 The Ministry of Petroleum and Natural Gas shall
publicize, in such manner as the Ministry may decide,
the proposal inviting expression of interest, within a
period of three months from anyone interested in the
proposal. In case any company is interested in taking
any capacity in the pipeline, it could express its interest
and enter into "take or pay" or any other mutually
agreeable contract with the proposer. The pipeline size
and design would be finalized by the proposer after
taking into consideration all such requests.
3.3 In case, no expression of interest is received from
any industry player within a period of three months of
publicizing the proposal, the proposer would be at
liberty to go ahead with the project.
3.4 The designed pipeline capacity would be at least
25°/o more than the capacity requirement of the
proposer and of those who take capacity Under clause
3.2, as may be decided by the Ministry of Petroleum
and Natural Gas.
3.5 The ownership of the pipeline would be that of the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 7 of 95
proposer or as may be decided by the proposer,
irrespective of whether the other industry player(s)
take pipeline capacity or not.
3.6 The excess capacity; as mentioned in clause 3.4,
would be available for use by anyone, other than the
owner and those taking capacity under clause 3.2, at
the approved tariff, as per the provisions under clause
4, on "common carrier" basis i.e. capacity would be
made available to anyone interested and offering to
pay the tariff. In case such demand exceeds this excess
capacity, the allocation of the excess capacity would be
pro-rated amongst the interested users other than the
owner and those taking capacity under clause 3.2. "
13. The 2002 Guidelines also provided that they will remain in force till
Petroleum Regulatory Board is constituted and after the Board is constituted,
the Right of User and land for laying petroleum product pipelines will be
granted by the Ministry of Petroleum and Natural Gas, subject to the
fulfilment of requirements under the petroleum regulatory law. Clause 6.1
and Clause 6.2 of the 2002 Guidelines reads as under:-
" 6.1 These guidelines will remain in force till the
Petroleum Regulatory Board is constituted.
6.2 After Petroleum Regulatory Board is constituted,
the RoU in land for laying petroleum product pipelines
will be granted by the Ministry of Petroleum & Natural
Gas, subject to fulfillment of requirements under the
petroleum regulatory law. "
14. Pursuant to the 2002 Guidelines, the PNGRB Act was brought into
force. The Preamble and the Statement of Object and Reason of the PNGRB
Act reads as under:-
"An Act to provide for the establishment of Petroleum
and Natural Gas Regulatory Board to regulate the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 8 of 95
refining, processing, storage, transportation,
distribution, marketing and sale of petroleum,
petroleum products and natural gas excluding
production of crude oil and natural gas so as to protect
the interests of consumers and entities engaged in
specified activities relating to petroleum, petroleum
products and natural gas and to ensure uninterrupted
and adequate supply of petroleum, petroleum products
and natural gas in all parts of the country and to
promote competitive markets and for matters
connected therewith or incidental thereto"
" Statement of Objects and Reasons.— Consequent
upon the Government decision for phased dismantling
of Administered Pricing Mechanism and deregulation
of petroleum sector from April 2002, marketing and
pricing of all petroleum products except Public
Distribution System Kerosene and LPG (Domestic)
have been decontrolled with effect from the 1st April,
2002. To prevent exploitation of consumers in the
deregulated scenario, it is proposed to provide for a
regulatory mechanism which would facilitate
uninterrupted and adequate supply of notified
petroleum, petroleum products and natural gas in all
parts of the country, including remote areas at fair
price and to promote competitive markets and access
to common or contract carrier on non-discriminatory
basis by all entities. With respect to such petroleum,
petroleum products and natural gas as may be notified
by the Government from time to time, the Bill also
entails provision of retail service obligations for retail
outlets and marketing service obligations for entities. It
is also proposed to establish the Petroleum and
Natural Gas Regulatory Board under the Bill so as to
ensure that each marketing entity displays for the
information of customers the maximum retail prices for
the notified petroleum and petroleum products and
natural gas, and take steps, in accordance with the
regulations, to prevent restrictive trade practices by
the entities. Provisions have been made in the Bill so
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 9 of 95
as to ensure redressal of grievances and protection of
consumer interest as also resolution of disputes among
entities or between an entity and any other person."
15. It is pertinent to mention at this juncture that though the Statement of
Object and Reason states that the object of the PNGRB is to oversee and
regulate the refining, processing, storage, transportation, distribution,
marketing and sale of petroleum and petroleum products and natural gas, the
PNGRB Act deals only with two types of pipelines which has been defined
as common carrier and contract carrier. The relevant provisions of the
PNGRB Act which are necessary for the adjudication of the issue raised in
the writ petitions read as under:-
" 2. Definitions.
xxx
(d) “authorised entity” means an entity—
(A) registered by the Board under Section 15—
(i) to market any notified petroleum, petroleum
products or natural gas, or
(ii) to establish and operate liquefied natural gas
terminals, or
(B) authorised by the Board under Section 16—
(i) to lay, build, operate or expand a common
carrier or contract carrier, or
(ii) to lay, build, operate or expand a city or local
natural gas distribution network;
xxx
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 10 of 95
(j) “common carrier” means such pipelines for
transportation of petroleum, petroleum products and
natural gas by more than one entity as the Board may
declare or authorise from time to time on a non-
discriminatory open access basis under sub-section (3)
of Section 20, but does not include pipelines laid to
supply—
(i) petroleum products or natural gas to specific
consumer; or
(ii) crude oil;
Explanation.—For the purposes of this clause, a
contract carrier shall be treated as a common
carrier, if—
(i) such contract carrier has surplus capacity over
and above the firm contracts entered into; or
(ii) the firm contract period has expired.
xxx
(m) “contract carrier” means such pipelines for
transportation of petroleum, petroleum products and
natural gas by more than one entity pursuant to firm
contracts for at least one year as may be declared or
authorised by the Board from time to time under sub-
section (3) of Section 20;
xxx
(p) “entity” means a person, association of persons,
firm, company or co-operative society, by whatsoever
name called or referred to, other than a dealer or
distributor, and engaged or intending to be engaged in
refining, processing, storage, transportation,
distribution, marketing, import and export of
petroleum, petroleum products and natural gas
including laying of pipelines for transportation of
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 11 of 95
petroleum, petroleum products and natural gas, or
laying, building, operating or expanding city or local
natural gas distribution network or establishing and
operating a liquefied natural gas terminal;
xxx
11. Functions of the Board .—The Board shall—
(a) protect the interest of consumers by fostering fair
trade and competition amongst the entities;
(b) register entities to—
(i) market notified petroleum and petroleum
products and, subject to the contractual obligations
of the Central Government, natural gas;
(ii) establish and operate liquefied natural gas
terminals;
(iii) establish storage facilities for petroleum,
petroleum products or natural gas exceeding such
capacity as may be specified by regulations;
(c) authorise entities to—
(i) lay, build, operate or expand a common carrier
or contract carrier;
(ii) lay, build, operate or expand city or local
natural gas distribution network;
(d) declare pipelines as common carrier or contract
carrier;
(e) regulate, by regulations,—
(i) access to common carrier or contract carrier so
as to ensure fair trade and competition amongst
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 12 of 95
entities and for that purpose specify pipeline access
code;
(ii) transportation rates for common carrier or
contract carrier;
(iii) access to city or local natural gas distribution
network so as to ensure fair trade and competition
amongst entities as per pipeline access code;
(f) in respect of notified petroleum, petroleum products
and natural gas—
(i) ensure adequate availability;
(ii) ensure display of information about the
maximum retail prices fixed by the entity for
consumers at retail outlets;
(iii) monitor prices and take corrective measures to
prevent restrictive trade practice by the entities;
(iv) secure equitable distribution for petroleum and
petroleum products;
(v) provide, by regulations, and enforce, retail
service obligations for retail outlets and marketing
service obligations for entities;
(vi) monitor transportation rates and take corrective
action to prevent restrictive trade practice by the
entities;
(g) levy fees and other charges as determined by
regulations;
(h) maintain a data bank of information on activities
relating to petroleum, petroleum products and natural
gas;
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 13 of 95
(i) lay down, by regulations, the technical standards
and specifications including safety standards in
activities relating to petroleum, petroleum products
and natural gas, including the construction and
operation of pipeline and infrastructure projects
related to downstream petroleum and natural gas
sector;
(j) perform such other functions as may be entrusted to
it by the Central Government to carry out the
provisions of this Act.
xxx
16 . Authorisation. —No entry shall—
(a) lay, build, operate or expand any pipeline as a
common carrier or contract carrier,
(b) lay, build, operate or expand any city or local
natural gas distribution network, without obtaining
authorisation under this Act:
Provided that an entity,—
(i) laying, building, operating or expanding any
pipeline as common carrier or contract carrier; or
(ii) laying, building, operating or expanding any city
or local natural gas distribution network,
immediately before the appointed day shall be deemed
to have such authorisation subject to the provisions of
this Chapter, but any change in the purpose or usage
shall require separate authorisation granted by the
Board.
xxx
17 . Application for authorisation .—(1) An entity
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 14 of 95
which is laying, building, operating or expanding, or
which proposes to lay, build, operate or expand, a
pipeline as a common carrier or contract carrier shall
apply in writing to the Board for obtaining an
authorisation under this Act:
Provided that an entry laying, building, operating or
expanding any pipeline as common carrier or contract
carrier authorised by the Central Government at any
time before the appointed day shall furnish the
particulars of such activities to the Board within six
months from the appointed day.
(2) An entry which is laying, building, operating or
expanding, or which proposes to lay, build, operate or
expand, a city or local natural gas distribution network
shall apply in writing for obtaining an authorisation
under this Act:
Provided that an entity laying, building, operating or
expanding any city or local natural gas distribution
network authorised by the Central Government at any
time before the appointed day shall furnish the
particulars of such activities to the Board within six
months from the appointed day.
(3) Every application under sub-section (1) or sub-
section (2) shall be made in such form and in such
manner and shall be accompanied with such fee as the
Board may, by regulations, specify.
(4) Subject to the provisions of this Act and consistent
with the norms and policy guidelines laid down by the
Central Government, the Board may either reject or
accept an application made to it, subject to such
amendments or conditions, if any, as it may think fit.
(5) In the case of refusal or conditional acceptance of
an application, the Board shall record in writing the
grounds for such rejection or conditional acceptance,
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 15 of 95
as the case may be.
18. Publicity of application .—When an application for
registration for marketing notified petroleum,
petroleum products and natural gas, or for
establishing and operating a liquefied natural gas
terminal, or for establishing storage facilities for
petroleum, petroleum products or natural gas
exceeding such capacity as may be specified by
regulations, is accepted whether absolutely or subject
to conditions or limitations, the Board shall, as soon as
may be, cause such acceptance to be known to the
public in such form and manner as may be provided by
regulations.
19. Grant of authorisation .—(1) When, either on the
basis of an application for authorisation for laying,
building, operating or expanding a common carrier or
contract carrier or for laying, building, operating or
expanding a city or local natural gas distribution
network is received or on suo motu basis, the Board
forms an opinion that it is necessary or expedient to
lay, build, operate or expand a common carrier or
contract carrier between two specified points, or to lay,
build, operate or expand a city or local natural gas
distribution network in a specified geographic area,
the Board may give wide publicity of its intention to do
so and may invite applications from interested parties
to lay, build operate or expand such pipelines or city
or local natural gas distribution network.
(2) The Board may select an entity in an objective and
transparent manner as specified by regulations for
such activities.
20. Declaring, laying, building, etc., of common
carrier or contract carrier and city or local natural
gas distribution network. —(1) If the Board is of the
opinion that it is necessary or expedient, to declare an
existing pipeline for transportation of petroleum,
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 16 of 95
petroleum products and natural gas or an existing city
or local natural gas distribution network, as a common
carrier or contract carrier or to regulate or allow
access to such pipeline or network, it may give wide
publicity of its intention to do so and invite objections
and suggestions within a specified time from all
persons and entities likely to be affected by such
decision.
(2) For the purposes of sub-section (1), the Board shall
provide the entity owning, the pipeline or network an
opportunity of being heard and fix the terms and
conditions subject to which the pipeline or network
may be declared as a common carrier or contract
carrier and pass such orders as it deems fit having
regard to the public interest, competitive
transportation rates and right of first use.
(3) The Board may, after following the procedure as
specified by regulations under Section 19 and sub-
sections (1) and (2), by notification,—
(a) declare a pipeline or city or local natural gas
distribution network as a common carrier or
contract carrier; or
(b) authorise an entity to lay, build, operate or
expand a pipeline as a common carrier or contract
carrier; or
(c) allow access to common carrier or contract
carrier or city or local natural gas distribution
network; or
(d) authorise an entity to lay, build, operate or
expand a city or local natural gas distribution
network.
(4) The Board may decide on the period of exclusively
to lay, build, operate or expand a city or local natural
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 17 of 95
gas distribution network for such number of years as it
may by order, determine in accordance with the
principles laid down by the regulations made by it, in a
transparent manner while fully protecting the
consumer interests.
(5) For the purposes of this section, the Board shall be
guided by the objectives of promoting competition
among entities, avoiding infructuous investment,
maintaining or increasing supplies or for securing
equitable distribution or ensuring adequate availability
of petroleum, petroleum products and natural gas
throughout the country and follow such principles as
the Board may, by regulations, determine in carrying
out its functions under this section.
21. Right of first use, etc. —(1) The entity laying,
building, operating or expanding a pipeline for
transportation of petroleum and petroleum products or
laying, building, operating or expanding a city or local
natural gas distribution network shall have right of
first use for its own requirement and the remaining
capacity shall be used amongst entities as the Board
may, after issuing a declaration under Section 20,
determine having regard to the needs of fair
competition in marketing and availability of petroleum
and petroleum products throughout the country:
Provided that in case of an entity engaged in both
marketing of natural gas and laying, building,
operating or expanding a pipeline for transportation of
natural gas on common carrier or contract carrier
basis, the Board shall require such entities to comply
with the affiliate code of conduct as may be specified
by regulations and may require such entity to separate
the activities of marketing of natural gas and the
transportation including ownership of the pipeline
within such period as may be allowed by the Board
and only within the said period, such entity shall have
right of first use.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 18 of 95
(2) An entity other than an entity authorised to operate
shall pay transportation rate for use of common
carrier or contract carrier to the entity operating it as
an authorisation entity.
(3) An entity authorised to lay, build, operate or
expand a pipeline as common carrier or contract
carrier or to lay, build, operate or expand a city or
local natural gas distribution network shall be entitled
to institute proceedings before the Board to prevent, or
to recover damages for, the infringement of any right
relating to authorisation.
Explanation.—For the purposes of this sub-section,
“infringement of any right” means doing of any act by
any person which interferes with common carrier or
contract carrier or causes prejudice to the authorised
entity.
xxx
61. Power of Board to make regulations.
xxx
(2) (e) regulating open access to and transportation
rate for the common carrier or contract carrier or city
or local natural gas distribution network and other
matters referred to in clause (e) of Section 11;
xxx
(2)(p) the manner of selection of an entity under sub-
section (2) of Section 19;
xxx
(2)(r) the guiding principles to be followed by the
Board and the objectives for declaring, or authorising
to lay, build, operate or expand a common carrier or
contract carrier for declaring, or authorising to lay,
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 19 of 95
build, operate or expand a city or local natural gas
distribution network, under sub-section (5) of Section
20;"
16. Under the regulation making power, the PNGRB has brought out the
Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay,
Build, Operate or Expand Petroleum or Petroleum Products Pipelines)
Regulations, 2010 (hereinafter referred to as the '2010 Regulations'). The
relevant portion of the said Regulations which are necessary, reads as
under:-
" 2. Definitions.
xxx
(d) “development of petroleum and petroleum product
pipeline” means laying building operating or
expanding a petroleum products pipeline shall be a
period of twenty five years commencing from
(i) the date of grant of authorization to the entity by
the Board in case an entity proposes to lay, build or
expand a petroleum and petroleum products pipeline
on or after the appointed day
(ii) the start-up date of the commencement of
physical activities of laying, building or expanding
the petroleum or expanding a petroleum and
petroleum products pipeline before the appointed ay
and the entity has either an authorization from the
Central Government before the appointed day or an
authorization from the Board under these
regulations:
Provided that at the end of the aforesaid period of
twenty five years, extensions of the period of economic
life may be considered by the Board for a block of ten
year at a time depending on the satisfactory
compliance of the service obligations under these
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 20 of 95
regulations and on such terms and conditions, as it
may deem fit at that point in time.
xxx
(i) “petroleum and petroleum products pipeline”
means any pipeline including a branch or spur lines
for transport of petroleum and petroleum products and
includes all connected infrastructure such as pumps,
metering units, storage facilities at originating,
delivery tap off points or terminal stations and the like
connected to the common carries or contract carriers
including line balancing tanks and tankage required
for unabsorbed interface, essential for operating a
pipeline system but excluding pipelines, which are
dedicated for supply of petroleum products to a
specific consumer which are not for resale:
Provided that the transporter may own, hire outsource
or use on hospitability basis such connected facilities
on non discriminatory basis
xxx
3. Applicability .—These regulations shall apply to an
entity—
(a) which is laying, building, operating or expanding
or which proposes to lay, build, operate or expand a
petroleum and petroleum products pipeline for
transporting one or more petroleum products
including LPG and LNG, or
(b) which proposes or is directed by the Board to
convert a dedicated or contract carrier pipeline for
supply of petroleum products to a specific consumer
into a common or contract carrier petroleum and
petroleum products pipeline as the case may be.
4. Initiation of proposal through expression of
interest route or suo-motu by Board .—(1) An entity
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 21 of 95
desirous of laying, building, operating or expanding a
petroleum and petroleum products pipeline shall
submit an expression of interest to the Board in the
form of an application at Schedule A along with an
application fee as specified under the Petroleum and
Natural Gas Regulatory Board (Levy of fee and Other
Charges) Regulations, 2007 as amended from time by
the Board.
(2) The Board may suo-motu initiate a proposal
inviting entities to participate in the process of
selection for an entity for laying, building, operating or
expanding petroleum and petroleum product pipeline
along any route.
5. Criteria for selection of entity for expression of
interest route .—(1) In case the expression of interest
fulfills the minimum eligibility criteria and the
requirements list out at sub-regulation 6, the Board
shall 10[webhost the same at PNGRB's website giving
wide publicity regarding] receipt of an expression of
interest and commencement of public consultation
period of thirty days.
(2) During the period of public consultation process,
any person, authority or entity may submit in writing to
the Board its views, if any on the expression of interest;
(3) The Board may web-host all comments received to
facilitate possible contracts for capacity booking by
different entities with the entities that may be interested
in the development of petroleum and petroleum
products pipelines so as to facilitate coming up of an
optimum sized petroleum and petroleum products
pipeline through the bidding process as stated in
Regulation 7;
(4) The Board shall, based on the views received within
a period of thirty day after the last day of the public
consultation period decide—
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 22 of 95
(a) not to allow the proposed petroleum and petroleum
products pipelines if, it is convinced that, instead of
laying, building or expanding the proposed petroleum
and petroleum products pipeline, the projected
potential demand could be better met in cost-effective
manner by expansion of an existing pipeline or any
other ground; or
(b) to go ahead with the proposal with or without
modification
Provided that the Board in deciding so shall be guided
by one or more of the following objective, namely:
(i) promoting competition among entities;
(ii) avoiding infructuous investment
(iii) maintaining or increasing supplies or for
securing equitable distribution or ensuring adequate
availability of petroleum products throughout the
country;
(iv) protection of consumer interest;
(v) facilitating rapid development of petroleum and
petroleum products pipeline infrastructure.
(5) The Board may, within the period specified in sub-
regulation (4), 11[webhost], the proposal for the
development of petroleum and petroleum products
pipeline 12[on PNGRB's website] and incite bids for
the same.
(6) The Board shall scrutinize the bids received
response to the advertisement in respect of only those
entities which fulfill the following minimum eligibility
criteria namely:
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 23 of 95
(a) entity has paid the application fee along with the
application-cum-bid as specified for trunk lines as
specified under Regulation 3 of the Petroleum and
Natural Gas Regulatory Board (Levy of Fee and Other
Charges) Regulations, 2007 as amended from time to
time by the Board
(b) entity is technically capable of laying and building
petroleum and petroleum products pipeline as per the
following qualifying criteria, namely:
(i) entity has on its own, either departmentally or
through contractors hired by it, in the past, laid and
built either a hydrocarbon pipeline of a length not
less than three hundred kilometers on a cumulative
basis or a city or local natural gas distribution
network;
(ii) entity has a joint venture with another entity
(with at least eleven per cent, equity holding by that
entity) which in the past has either laid and built a
hydrocarbon pipeline of a length not less than three
hundred kilometers on a cumulative basis or a city
or local natural has distribution network;
(iii) entity intends to lay and build proposed
petroleum, petroleum products pipeline on lump sum
turnkey or project management consultancy basis
through one or more technically competent firms,
which in the past have laid and built a hydrocarbon
pipeline of a length not less than three hundred
kilometers or a city or local natural has distribution
network and the entity shall also enclose a list of
such firms along with aforesaid proof of their
technical competence:
Provided that the entity shall have the freedom to
choose such firms at the time of execution of the
project and the Board reserves the right to cross
verify the credential of the firms included in the list
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 24 of 95
and seek clarifications; or
(iv) entity has an adequate number of technically
qualified personnel with experience in construction
and pre-commissioning of hydrocarbon pipeline to
independently undertake and execute the petroleum
and petroleum products pipeline project on
standalone basis;
Explanation.—The entity shall have at least three
technically qualified personnel on its permanent rolls
having experience of not less than one year in the
following areas namely:
(a) right of way acquisition or clearance securing;
(b) design and execution of hydrocarbon pipeline
project
(c) pre-commissioning including hydra-testing and
restoration and
(d) safety of hydrocarbon pipeline and installations
(c) entity is technically capable of operating and
maintaining petroleum and petroleum products
pipeline as per the following qualifying criteria,
namely:
(i) entity on its own has an experience of at least one
year in operations and maintenance of a petroleum
and petroleum products pipeline of a length not less
than three hundred kilometers on a cumulative
basis;
(ii) entity has joint venture with another entity (with
at least eleven per cent holding of that entity) which
has an experience of at least one year in operations
and maintenance of a petroleum and petroleum
products pipeline.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 25 of 95
(iii) entity intends to operate and maintain the
proposed petroleum, petroleum products pipelines
through an appropriate firms' technical assistance
agreement for a period of at least one year with
another party having experience of at least one year
in operations and maintenance of a petroleum and
petroleum products pipeline; or
(iv) entity has an adequate number of technically
qualified personnel with experience in
commissioning operation and maintenance (O&M)
of petroleum, petroleum products pipeline and also
has a plan to independently undertake the O&M
activities of petroleum, petroleum products pipeline
on a standalone basis
Explanation.—1. In relation to sub-clause (iii),
(a) the entity shall submit in its application-cum-bid
and exhaustive list of proposed firms with whom it
desires to have a technical assistance agreement along
with the proof of relevant experience of such firms and
the entity may choose a firm or more from amongst the
firms in this list for operation and maintenance of the
proposed petroleum and petroleum products pipeline
and the Board reserves the right to cross verify the
credential of the firm of firms included in this list and
seek any clarifications2. In relation to sub-clause (iv),
the entity shall have at least three technically qualified
personnel on its permanent rolls having experience of
not less than one year in the following areas, namely:
(a) commissioning of a hydrocarbon pipeline
(b) operation and maintenance of petroleum and
petroleum products pipelines and petroleum products
installations
(c) commercial and transport management issues
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 26 of 95
including pricing measurement accounting, billing and
collection and
(d) safety of petroleum products infrastructure
(d) the entity has adequate financial strength to execute
the proposed petroleum, petroleum products pipeline
project and operate and maintain the same and shall
meet the following financial criterion to qualify for
bidding for a single petroleum, petroleum products
pipeline, namely:
Range of estimate
pipeline length
including branch
lines (in kilometers)
(#)
Minimum combined
net worth (*) of the
entity along with its
promoters available
for investments in a
single petroleum and
petroleum products
pipeline duly
supported by letter of
comfort from
promoters (in million
of rupees per
kilometer of
estimated pipeline
length)
1,001 and above 7.00
251-1000 6.00
Up to 250 5.00
() combined net worth (equity share capital plus free *
reserves, but excluding revaluation reserves) to be
adequately represented by cash funds, which shall be
available as bridge finance and as promoters equity
contribution in the project as certified by a Chartered
Accountant based on the latest financial position of the
entity and its promoters.
(#) a fraction of the length in two decimals place less
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 27 of 95
than 0.50 kilometer shall be ignore and equal to 0.50
kilometer or more shall be rounded off to next 1
kilometer
(e) the entity, on being declared as a successful bidder
and not being a company registered under the
Companies Act, 1956, shall convert itself into a
company registered under the Companies Act, 1956
(f) the entity shall have a plan for utilization of the
capacity in the proposed petroleum and petroleum
products pipeline
(g) the entity shall furnish a bid bond in the form of
Bank Guarantee along with the submission of the
application-cum-bid under sub-regulation (7) of an
amount determined as per the length of the proposed
petroleum and petroleum products pipeline as per the
applicable category indicated below:
Pipeline Length including branch lines (in
kilometers)(#)
Amount of bid bond (in
million of rupees)
equal to 1,001 or more 150
between 251 and 1000 80
less than or equal to 250 20
(#) a fraction of the length in tow decimals place less
than 0.50 kilometer shall be ignore and equal to 0.50
kilometer or more shall be rounded off to next 1
kilometer.
(h) entity submitting the bid should not have charges
framed under Chapter IX of the Act or have been
punished or imposed any penalty under Section 28;
(i) the entity agrees to build extra capacity in the
petroleum and petroleum products pipeline as per the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 28 of 95
following basis, namely:
(i) the capacity of petroleum and petroleum products
pipeline shall be an aggregate of the following
namely:
(A) capacity requirement of the entity
(B) firmed-up contracted capacity with other entities;
and
(C) at least twenty five per cent of the sum of (A) and
(B) as an extra capacity.
Explanation.—The capacity shall be approved by the
Board as per the basis specified in the relevant
regulations for determining the capacity of petroleum
and petroleum products pipeline.
(ii) the capacity mentioned at item (C) of sub-clause
(i) shall be available for use as common carrier by
an third party on open access and non-
discriminatory basis;
(j) in case the entity submitting the bid does not fulfill
the requirements of any criteria under clauses (a) to
(j), the bid submitted by it shall be summarily rejected
and a communication in this regard shall be sent to it
and the financial bid shall not be opened for that
entity;
(k) the bid bond shall be—(i) encashed if an entity
submitting the bid walks out;
(ii) released in respect of the unsuccessful entity
submitting the bid;
(iii) retained till the specified performance bond is
furnished at the time of authorization by the
successful bidder.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 29 of 95
(7) The application-cum-bid shall be submitted in two
parts in the form as specified in Schedule B in separate
property earmarked and sealed envelopes, namely:
(a) Part I (Technical bid) covering general particulars
of the applicant and technical details of the project
(including minimum eligibility criteria) under sub-
regulation (6);
(b) Part II (Financial bid) covering the details under
Regulation 10.
(8) A time period of one hundred and twenty days shall
be allowed for submission of the application-cum-bid
for grant of authorization for laying, building,
operating or expanding the petroleum and petroleum
products pipeline and any application-cum-bid
received after the notified date and time shall not be
considered. However, the Board may extend the date
for submission of bid as deemed fit.
6. Invitation by Board for laying, building, operating
or expansion of petroleum and petroleum products
pipeline. —The Board may sub-moto by living
interested parties either through submission of
expression of interest (EOI) or through participation in
the process of selection, through an open
advertisement from a view regarding the development
of a petroleum and petroleum products pipeline in a
specific area, region or route, and in such a case, the
procedure as specified in Regulation 5 shall apply.
xxx
17. Entities authorized by the Central Government for
laying, building, operating or expanding petroleum
and petroleum products pipeline before the appointed
day. —(1) The entity shall submit relevant information
along with supporting documents in the form as per
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 30 of 95
Schedule H.
(2) The entity shall abide by the technical standards,
specifications including safety standards as specified
under the relevant regulations.
(3) The Board shall monitor the actual progress made
by the entity in the activities of laying, building or
expanding the petroleum and petroleum products
pipeline on a quarterly basis with reference to the
period of commissioning, the targets specified in the in
the DFR of the project, and the terms and conditions of
the authorization with a view to avoiding any time or
cost over-runs which may adversely affect the
petroleum and petroleum products pipeline tariff:
Provided that in case of any delay in the
commissioning of the petroleum and petroleum
products pipeline or meeting any target beyond that
specified in the authorization, the Board reserves the
right to.—
(a) not consider the additional costs attributable to
the time over-run while fixing the petroleum and
petroleum products pipeline tariff as specified under
clause (5); or
(b) encash the performance bond or bank guarantee,
if any and advise the Central Government for
cancellation of the authorization.
(4) The Board shall approve the petroleum and
petroleum products pipeline tariff to be charged by the
entity based on the methodology as specified under the
relevant regulations on determination of petroleum and
petroleum products pipeline tariff.
(5) The activities of the entity may be subject to such
other regulations as may be applicable as per the
provisions of the Act.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 31 of 95
18. Entity not authorized by the Central Government
for laying, building, operating or expanding
petroleum and petroleum products pipeline before the
appointed day.— (1) An entity laying, building,
operating or expanding petroleum and petroleum
products pipeline at any time before the appointed day
not duly authorized to do so by the Central
Government shall apply immediately for obtaining on
authorization in the from as per Schedule I.
(2) The Board may consider the following criteria
while considering the application for grant of
authorization, namely:
(a) the entity meets the minimum eligibility criteria as
specified in clauses (a) to (e) and (i) of sub-regulation
(6) of Regulation 5 before the appointed date and is
possessing all necessary statutory clearances,
permissions, no objection certificates from the Central
and State Governments and other statutory authorities;
(b) an entity which is not registered under the
Companies Act, 1956 at the time of submitting the
application for grant of authorization shall undertake
to become a company registered under the Company
Act, 1956:
Provided that the Board may exempt an entity to
register under the Companies Act, 1956 on such
conditions as it may deem appropriate;
(c) a satisfactory assessment of the actual physical
progress made and the financial commitment thereof
till immediately before the appointed day in
comparison with the entity's DFR appraised by the
financial institution funding the project. In case the
project has not been funded by any financial
institution, the Board may appraise the DFR. The DFR
of the entity should clearly indicate the specified
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 32 of 95
length, route and capacity of the proposed petroleum
and petroleum products pipeline;
(d) in respect of the actual physical progress made and
the financial commitment thereof referred to in clause
(c), a physical progress of at least twenty five percent
and a financial commitment of at least twenty five
percent of the capital expenditure identified for the
petroleum and petroleum products pipeline project as
per the DFR immediately before the appointed day may
be considered as adequate;
(e) the Board reserves the right to get the actual
physical progress and the financial commitment
certified and depending upon the progress achieved,
the Board may consider authorizing the entity for
laying, building, operating or expanding the petroleum
and petroleum products pipeline.—
(i) as per the route and length as specified in its DFR;
(ii) as per the route or length actually covered under
implementation till the appointed day; or
(iii) as per the route or length specified by the Board;
(f) in relation to laying, building, operating or
expanding the petroleum and petroleum products
pipeline, it is for the entity to satisfy the Board on the
adequacy of its ability to meet the applicable technical
standards, specifications and safety standards as
specified in the relevant regulations for technical
standards and specifications including safety
standards;
(g) assessment of the financial position of the entity in
timely and adequately meeting the financial
commitments in developing the petroleum and products
pipeline project as appraised by a financial institution
and an examination of the audited books of accounts of
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 33 of 95
the entity.
(h) the booking of the capacity in the petroleum and
petroleum products pipeline should be equal to at least
fifty percent of the sum of the own capacity
requirements of the entity and firmed-up contracted
capacity and the agreements in this regard should have
been entered in a transparent manner and based on the
principle of at an arm's length;
(i) the entity shall submit copies of the agreements for
transportation or supplying of petroleum products by
the petroleum and petroleum products pipeline for he
firmed-up contracted capacity specified under clause
(h) to the Board; and
(j) any other criteria considered as relevant by the
Board based on the examination of the application.
(3) The evaluation of the application in terms of the
clauses (a) to (j) of sub-regulation (2) shall be done in
totality considering the composite nature and the inter-
linkages of the criteria.
(4) The Board, after examining the application in terms
of the criteria under sub-regulation (3) and also taking
into account the requirements in other regulations may
form a prima-facie view as to whether the case should
be considered for authorization.
(5) In case of prima-facie consideration, the Board
shall issue a public notice in one notional and one
vernacular daily newspaper (including webhosting)
giving brief details of the project and seek comments
and objections, if any, within thirty days from any
person on the proposal.
(6) The Board, after examining the comments and
objections, if any, under sub-regulation (5), may either
consider or reject the case for grant of authorization
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 34 of 95
for the petroleum and petroleum products pipeline.
(7) In case it is decided to grant authorization, the
same shall be in the form at Schedule D;
(8) In case of rejection of the application, the Board
shall pass a speaking order after giving a reasonable
opportunity to the concerned partly to explain its case
and proceed to select on appropriate entity for the
project in terms of Regulation 6.
(9) in case the entity is selected for grant of
authorization for laying, building, operating or
expanding petroleum and petroleum products
pipeline,—
(a) the petroleum and petroleum products pipeline
tariff shall be determined under the relevant
regulations on determination of petroleum and
petroleum products pipeline tariff;
(b) the entity shall abide by the technical standards,
specifications including safety standards as specified
under relevant regulations for technical standards
and specifications including safety standards;
(c) the Board shall monitor the actual progress
made by the entity in the activities of laying building
or expanding the petroleum and petroleum products
pipeline on a quarterly basis, with reference to the
period of commissioning, the targets specified in the
DFR of the project and the terms and conditions of
the authorization with a avoiding any time or cost
over-runs which may adversely affect the petroleum
and petroleum products pipeline tariff:
Provided that in case of any delay in the
commissioning of the petroleum and petroleum
products pipeline or meeting any target beyond that
specified in the authorization, the Board reserves the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 35 of 95
right to not consider the additional costs attributable
to the time over-run while fixing the petroleum and
petroleum products pipeline tariff as specified under
sub-regulation (a);
(d) the entity shall abide by the provisions under the
relevant Regulations an access code and declaring
petroleum and petroleum products pipelines as
common carrier or contract carrier;
(e) the provisions under Regulations 8, 9, 13, 14, 15
and 16 shall apply to the entity.
19. Provisions relating to dedicated pipelines for
transport of petroleum products .—(1) In respect of
dedicated pipelines existing before the appointed day,
the following provisions shall apply, namely.—
(a) entity having dedicated pipeline to transport
petroleum products to a specific customer before the
appointed day shall submit details of the pipeline
length, route, capacity and customers served along
with the DFR of the project to the Board within sixty
days of notification of these regulations;
(b) Board may web-host details of dedicated pipeline
seeking comments of general public with a view to
ascertain whether such pipeline needs' to be
converted into petroleum and petroleum products
pipeline in public interest;
(c) The Board may, based on the examination of the
comments received, direct the entity to convert such
pipeline into petroleum and petroleum products
pipeline in overall public interest:
Provided that the entity shall be given an
opportunity to present its case;
(d) The entity may also submit its proposal to
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 36 of 95
convert its dedicated pipeline into petroleum and
petroleum products pipeline to the Board along with
the complete details and justifications and the Board
may web-host details of dedicated pipeline seeking
comments of general public with a view to ascertain
whether such pipeline needs to be converted into
petroleum and petroleum products pipeline in public
interest and the Board may, based on the
examination of the comments received and in overall
public interest, issue grant of authorization to the
entity for conversion into a petroleum and petroleum
products pipeline.
(2) In respect of dedicated pipelines proposed to be
laid, built, operated or expanded after the appointed
day, following provisions shall apply, namely.—
(a) the entity proposing to lay, build, operate or
expand a dedicated pipeline to transport petroleum
products to a specific customer and is not for resale
after the appointed day shall submit details on
pipeline length, route. Capacity and details of the
customers served along with the DFR of the project
to the Board at least thirty days before the proposed
commencement of laying and building of the
dedicated pipeline;
(b) Board may web-host details of the proposed
dedicated pipeline seeking comments of general
public with a view to ascertain whether, instead of a
dedicated pipeline, the public interest would be
better served if a petroleum and petroleum products
pipeline is laid, built, operated or expanded;
(c) in case, based on the examination of the
comments received, the Board is of the view that
instead of a dedicated pipeline, petroleum and
petroleum products pipeline would better serve the
public purpose the Board shall advise the entity
appropriately within sixty days of the receipt of the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 37 of 95
information from the entity;
(d) in case, despite receiving the advice from the
Board under clause (c), the entity still wishes to lay,
build, operate or expand a dedicated pipeline, it may
do so:
Provided that simultaneous to the entity building a
dedicated pipeline, the Board may, on suo-motu basis,
decide to issue to expression of interest for laying,
building, operating or expanding petroleum and
petroleum products pipeline:
Provided further that the entity shall not be allowed to
apply to the Board for conversion of its dedicated
pipeline into petroleum and petroleum products
pipeline for a period of five years from the date of the
commissioning of its dedicated pipeline;
(e) the Board may, in respect of a dedicated pipeline
laid, built, operated or expanded after the appointed
day, direct the entity to convert dedicated pipeline into
petroleum, petroleum products pipeline as per the
following procedure, namely:
(i) the Board may web-host details of dedicated
pipeline seeking comments of general public with a
view to ascertain whether such pipeline needs to be
converted into petroleum and petroleum products
pipeline in public interest;
(ii) the Board may, based on the examination of the
comments received, direct the entity to convert such
pipeline into petroleum and petroleum products
pipeline in overall public interest:
Provided that the entity shall be given an
opportunity to present its case.
(3) In case a dedicated pipeline is converted into
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 38 of 95
petroleum and petroleum products pipeline under sub-
regulations (1) to (2), the provisions under the sub-
regulation (9) of Regulation 18 shall apply to such
pipeline."
17. It is pertinent to mention that after the PNGRB invites interested
parties for submitting Expression of Interest to the participation of selection
through an open advertising, the Board tabulates the criteria and compare all
financial bids meeting the eligibility requirement criteria under Regulation 7
of the 2010 Regulations. Necessary bonds to be submitted by the party is
given in Regulation 8 and Regulation 9 which deals with grant of
authorization. The same are not being reproduced as they are not relevant for
the instant case.
18. The endeavour by this Court is to analyse these provisions for coming
to a conclusion as to whether the Board has the power to regulate pipelines
which are being laid/intended to be laid by an entity for transporting its own
petroleum and petroleum products, which are also sometimes referred as
captive pipelines, in common parlance.
19. It is the case of the Petitioner that after the enactment of the PNGRB
Act, transportation is completely regulated by the PNGRB and that IOCL
could not have laid down any pipeline without taking permission or
authorization from the PNGRB. Reliance has been placed on Clause 6.1 and
Clause 6.2 of the 2002 Guidelines to contend that once the PNGRB was
constituted, then the 2002 Guidelines does not survive and the PNGRB
being the Regulator, will have the final say in all matters that are covered
under the PNGRB Act and right of user of land can be given only to a
person who gets the authorization from the PNGRB. It is the case of the
Petitioner that if entities are allowed to operate without the involvement of
the regulator, then the whole object of creating a Regulator would be
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 39 of 95
defeated.
20. It is the case of the Petitioner that the concept of captive pipeline
cannot continue after enactment of the PNGRB Act and captive self use
pipeline has been done away with. It is the case of the Petitioner that a
reading of the Regulations would lead only to one conclusion that even if an
entity would desire to lay down a pipeline for self use, then it has to be a
common carrier which has the capacity to be used by other entities as well.
The argument advanced is that therefore a standalone self use pipeline is no
more contemplated under the PNGRB Act.
21. To buttress this submission, reliance has been placed on Section 20 of
the PNGRB Act to state that the Board has the power to declare any existing
pipeline as a common carrier in a manner as is prescribed under Section 20
of the PNGRB Act. It is contended that Section 20 of the PNGRB Act is a
very strong indicator that after the commencement of the PNGRB Act, only
common carrier and contract carrier pipelines can be laid down by entities
for transportation of petroleum and petroleum products and even the existing
pipelines which were captive pipelines can be converted to a
common/contract carrier in a manner as has been provided for in Section 20
of the PNGRB Act.
22. The learned Counsel for the Petitioner places reliance on Section 21
of the PNGRB Act stating that the effect of Section 21 PNGRB Act is that
the entity laying, building, operating or expanding a pipeline for
transportation of petroleum and petroleum products shall have the right to
first use for its own requirement and the remaining capacity shall be used
amongst entities as the Board may after issuing declaration under Section 20
of the PNGRB Act determine having regard to the needs of the competition
in marketing and availability of petroleum and petroleum products
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 40 of 95
throughout the country. It is, therefore, stated that the effect of Section 21 of
the PNGRB Act is that pipelines can be laid for transportation of petroleum
and petroleum products having provision of carrying petroleum and
petroleum products for more than one entity.
23. The Petitioner also places reliance on Section 2(i) of the 2010
Regulations that a petroleum and petroleum products pipeline means a
pipeline for transportation of petroleum and petroleum products and what is
excluded are only those pipelines which are dedicated for supply of
petroleum products to a specific consumer which are not for re-sale. It is
contended that since IOCL intends to sell the petroleum products which is
transported to the Vellur Terminal for re-sale purposes also, it would
squarely be covered under the new regime warranting authorization from
PNGRB. It is contended that the definition of the petroleum and petroleum
products pipeline includes all pipelines which means any pipeline including
a branch or spur line. It is stated that any kind of pipeline which is used for
transportation of petroleum and petroleum products are covered under the
petroleum products pipeline except those which are dedicated for supply to
specific consumer and that too not for re-sale.
24. It is contended that since the definition of petroleum products pipeline
in 2010 Regulations uses the expression "means and includes" and therefore
the definition of petroleum products pipeline is exceedingly wide and IOCL
could not have laid down its pipeline without getting the authorization of the
PNGRB. It is the contention of the Petitioner that after the PNGRB Act
came into force, every pipeline has to be only a common carrier and even
after a person intends to lay down a pipeline for its own use, it can only have
the right of first use and the entity laying down the pipeline would have to
carry the petroleum product of other entities also in its pipeline as directed
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 41 of 95
by the PNGRB.
25. It is the case of the Petitioner that the self use captive pipelines have
been subsumed under Section 21 and after the lapse of the Guidelines since
the concept of common carrier and contract carrier has been done away
with, there was no need to specify it in the Act that captive carrier has been
done away with. The Petitioner places reliance on a judgment of the Apex
Court in Avishek Goenka v. Union of India & Anr., 2012 (5) SCC 321 , to
contend that something which is permitted is provided under the Act, and
that which has not been specifically stated would be deemed to be excluded.
It is stated that larger interest must be given preference over individual
interest. It is stated that the IOCL in the present case is in violation of
pressing its individual interest over the public interest and IOCL's attempt to
circumvent the bidding procedure by justifying the laying of their pipeline
by stating that the same is for personal use cannot be sustained.
26. It is the case of the Petitioner that the PNGRB Act has been brought
in to protect the interest of the consumers and to promote competitive
markets. It is the contention of the Petitioner that since the Statement of
Object and Reason and the Preamble of the Act provides that the purport is
to increase competition in transportation of the petroleum and petroleum
products, obviously the Legislature intended to do away with the concept of
captive pipelines and, therefore, captive pipelines have not been mentioned
in the PNGRB Act. It is stated that if the captive pipelines continue to exist
even after the introduction of the PNGRB Act and the PNGRB and if
captive pipelines are outside the ambit of the Regulator, then the entire
purpose of the PNGRB Act gets defeated. The purport of the PNGRB Act is
to set up a single Regulator to facilitate uninterrupted supply of petroleum
and petroleum products in all parts of the country at fair price in order to
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 42 of 95
promote competitive market and access to monopolistic infrastructure in the
nature of common carrier / contract carrier on a non-discriminatory basis by
all entities.
27. It is the contention of the Petitioner that the very object of the
PNGRB Act is to bring in common carrier and contract carrier for the
purpose of increasing competition and it would fail if captive pipelines are
permitted to be laid down.
28. It is contended by the Petitioner that the Supreme Court in Adani Gas
Limited v. Union of India, (2022) 5 SCC 210 , recognized that the PNGRB
Act had been specifically enacted to authorize laying down of only
common/contract carrier pipelines which was not provided for under the
Petroleum Rules and the Apex Court explicitly stated that the Parliament
had enacted the PNGRB Act to regulate all activities pertaining to
regulating, refining, transportation, distribution, etc. of petroleum and
petroleum products in a comprehensive manner and that under Section 16
and 17 of the PNGRB Act, the Parliament devised a uniform standard which
was to be followed by entities. It is stated that it was the Parliament's intent
to promote competitiveness in the market through a bidding process and an
entity which is unsuccessful, such as IOCL in the present case, ought not be
allowed to lay their private pipeline as this would defeat the purpose of the
PNGRB Act. The Petitioner by placing reliance on BSNL v. TRAI, (2014)
3 SCC 222 and Prakash Gupta v. SEBI, (2021) 17 SCC 451 , contends that
all kinds of authorization including transportation can only be carried out
with the authorization of the PNGRB. It is, therefore, stated that PNGRB
being a sectoral regulator, has been entrusted with the power to make
appropriate regulations to ensure the objectives of the PNGRB Act.
29. The PNGRB has supported the contentions of the Petitioner. It is
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 43 of 95
contended that PNGRB was established under the PNGRB Act to regulate
the refining, processing, storage, transportation, distribution, marketing and
sale of petroleum, petroleum products and natural gas, excluding production
of crude oil and natural gas, so as to protect the interests of consumers and
entities engaged in specified activities relating to petroleum, petroleum
products and natural gas and to ensure uninterrupted and adequate supply of
petroleum, petroleum products and natural gas in all parts of the country and
to promote competitive markets, to avoid infructuous investments and for
matters connected therewith or incidental thereto.
30. It is stated that PNGRB Act and the Regulations made thereunder do
not recognize the very concept of a "captive pipeline" for transportation of
petroleum and petroleum products and, therefore, under the regulatory
scheme, there cannot be any "captive pipeline" for transportation of
petroleum and petroleum products. Reliance has been placed on PNGRB
(Guiding Principles for Declaring or Authorizing Petroleum and Petroleum
Products Pipelines as Common Carrier or Contract Carrier) Regulations,
2012 (hereinafter referred to as the '2012 Regulations') and the PNGRB
(Authorizing Entities to Lay, Build, Operate or Expand Petroleum and
Petroleum Products Pipelines) Regulations, 2010.
31. It is stated that the sector, broadly, has three divisions - upstream
(from exploration till refinery), mid-stream (transportation), and downstream
(distribution and retail). It is stated that under the regulatory scheme, the
Directorate General of Hydrocarbons is responsible to oversee the upstream
sector, while an independent regulator, i.e., PNGRB, which has been
established and made responsible to oversee the mid-stream and downstream
activities related to petroleum, petroleum products and natural gas.
32. It is stated that t here no question of government or any other body
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 44 of 95
acting as a parallel Regulator as any such interpretation would
fundamentally impair the ability of PNGRB to fulfil its mandate under the
PNGRB Act because the PNGRB Act holistically requires PNGRB to
regulate the field, encourage competition ensure adequate and uninterrupted
supplies to the farthest areas, avoid infructuous investment and ensure
access to the infrastructure on a non-discriminatory basis by all entities and
its mandate extends to all entities defined under Section 2(p) of the PNGRB
Act , whether authorized or unauthorized.
33. It is further contended that the object behind creating PNGRB was to
attract investment in the sector to avoid infructuous investments and to
provide fair competition to the market which will lead to rejection and
rationalization of prices borne by the consumers. The purport of the Act is to
create a network of pipelines to transfer petroleum and petroleum products
across the nation which can be used by everyone and in non-discriminatory
open access basis. It is stated that the purport of the scheme of the PNGRB
Act is that no entity will create a pipeline infrastructure only for its transport
and it has to keep an additional capacity of at least 25% of sum of a)
capacity requirements of the entity; and b) firmed-up contracted capacity
with other entities for use by others on a non-discriminatory open access
basis (common carrier) or for others on firm contracts basis (contract
carrier). It is stated that under the PNGRB Act there are no "captive
pipelines" for transportation of petroleum and petroleum products. It is
contended that the PNGRB Act or the Regulations do not even mention the
term "captive pipelines", which shows clear intention not to recognize the
very concept. It is stated that all pipelines have the potential to be used by
more than one entities/shippers/consumers and the entities cannot
themselves decide whether it should be a common/contract carrier and even
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 45 of 95
in contract carrier, extra capacity is deemed to be "common carrier". It is
stated that there is no contemplation of establishment of captive pipelines, as
the concept itself has been rendered obsolete. It is stated that there is no
parallel regime under which such captive pipelines can be authorised. The
PNGRB Act governs the entire sphere with regard to such downstream
activities.
34. It is the contention of the Petitioner and the PNGRB that the object of
permitting laying down of only common/contract carrier pipelines in future
was to promote competition amongst the entities in order to reduce the costs
of transportation, avoiding infructuous investments and maintaining
increased supplies, to secure equitable distribution and to ensure adequate
availability of petroleum and petroleum products throughout the country. It
is stated that by permitting laying down of captive pipelines will result
increase in infructuous investments.
35. It is stated that in line with the object of the PNGRB Act and the
Regulations, the Board always mandates that additional capacity of at least
25% of sum of a) capacity requirements of the entity; and b) firmed-up
contracted capacity with other entities which has to be built in while
designing and constructing a pipeline (Regulation 5 (6) (i) of the 2010
Regulations, the bid condition stipulates that the entity agrees to build extra
capacity ( at least 25%) in the petroleum and petroleum products pipelines).
36. It is contended by the PNGRB that the concept of captive pipelines
are a dying concept and slowly and slowly the Board is taking steps to
convert existing pipelines into contract carrier. It is further contended that
this intention to bring dedicated pipeline to an end is revealed by the
PNGRB by bringing out the Petrolem and Natural Gas Regulatory Board
(Guiding Principles for Declaring or Authorising Petroleum and Petrol
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 46 of 95
Products Pipelines as Common Carrier or Contract Carrier) Regulations,
2012.
37. Per contra , it is the contention of the IOCL that there is nothing in the
PNGRB Act which prohibits laying down of pipelines where one entity
transports its own goods. The IOCL contends that the very definition of
common carrier shows that these pipelines are for transportation of
petroleum and petroleum products and natural gas by more than one entity.
Emphasis has been laid on the words "more than one entity" to show that the
purport of the PNGRB Act is to regulate those pipelines which are being
used by more than one entity and, therefore, it is contended that the Board
cannot regulate pipelines which are specifically laid by an entity for
transporting its own goods. It is stated that even the definition of contract
carrier shows that contract carrier are those pipelines for transportation of
petroleum and petroleum products by more than one entity pursuant to
contracts entered into for at least one year as may be declared authorized by
the Board from time to time under Section 20(3) of the Act.
38. It is stated that captive and self use pipeline have not been defined
under the PNGRB Act and, therefore, the PNGRB Act and the Board does
not deal with laying down of such pipelines and, therefore, it is outside the
ambit of the Board and the PNGRB Act. It is stated that the entities which
are laying down its own pipelines for transporting its own products do not
require authorization as they are neither contract carriers nor common
carrier. It is contended that the fact that the Board can exercise its powers
under Section 20 and 21 of the PNGRB Act and follow a procedure by
declaring existing pipelines as a common carrier itself postulates that there is
no prohibition in laying down pipeline for transportation of goods and the
Board can in exercise of its jurisdiction under Section 20 of the PNGRB Act
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 47 of 95
decide to declare a pipeline as a common carrier by following the procedure
laid down under Section 20 of the PNGRB Act. It is stated that Section 21 of
the PNGRB Act also does not lead to a conclusion that the concept of
captive pipelines or pipelines for transportation of own goods have been
done away with. After the pipeline is laid, then the Board can exercise its
jurisdiction under Section 20 of the PNGRB Act and in case the Board
exercises its powers under Section 20 of the PNGRB Act, then the right of
first use is not taken away from the entity which has laid down pipeline for
transportation of its own goods. It is contended that this does not mean that
every pipeline has to be a common carrier or contract carrier and even a
party who wants to lay down a pipeline for its own use has to get
authorization from the Board leaving provision for transportation of the
products of other entities. It is contended that even if an entity wants to lay
down its own pipeline, then Regulations 8, 9 and 10 of the 2010 Regulations
will not apply since these Regulations are only for the purpose of common
carrier and contract carrier.
39. The Union of India has supported the contentions of the IOCL. The
contention of the Union of India is that the framework of the Act and the
Regulation is for grant of authorization and laying down common carrier or
contract carrier and the framework for laying down the pipeline under the
PNGRB Act governs or applies only to those pipelines that impacts the
consumers. It is the contention of the Union of India that when an entity
wants to transport its own goods by laying down its own pipeline, then there
is no impact on the consumer. It is stated by the Union of India that Section
2 read with Sections 11 & 16 of the PNGRB Act specifically limits the
authorizing power of the Board to only two types of pipelines, namely:- (i)
common carrier, and (ii) contract carrier. It is stated that throughout the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 48 of 95
legislation, the Parliament has only mentioned these two types of pipelines
for transporting petroleum and petroleum products as being within the
purview of the Board. It is stated that even during discussions on the Bill,
the Group of Ministers had recommended retaining the provision of
„authorization‟ only for the laying of a “common carrier” and a “contract
carrier” pipelines (and city or local gas distribution network pipelines). It is
stated that though the concept of „dedicated‟ pipelines are noted in the
PNGRB Act, they are excluded from the concept of a “common carrier” or
“contract carrier” as per Section 2(j)(i) of the PNGRB Act and are,
therefore, not regulated by the Board.
40. It is further contended that as per Regulation 19 of the 2010
Regulations, an entity can lay a „dedicated‟ pipeline even against the advice
of the Board and if the entity goes against the advice of the Board, it cannot
request for conversion of its pipeline to a common carrier for a period of 5
years. It is stated that the scheme of the PNGRB Act unmistakably points to
the conclusion that the Board has no power to authorise pipelines for
petroleum and petroleum products which do not qualify as a common carrier
or a contract carrier and, therefore, the laying of „captive‟ pipelines also fall
outside the purview of the Board both, on a plain textual reading and on a
survey of the scheme of the PNGRB Act, and therefore, the PNGRB Act
does not require entities to seek authorization/registration of captive
pipelines from or with the Board.
41. Heard learned Counsels for the parties and perused the material on
record.
42. The principal argument of the Petitioner and the PNGRB is that post
the PNGRB Act, the concept of captive pipeline has been done away with
and the entire regime is now oriented towards pipelines which are either
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 49 of 95
common carrier or contract carrier which is meant to be used by more than
one entity.
43. The Petitioner and the Board has placed reliance on the Statement of
Object and Reason to contend that the purport of establishing the Board is to
regulate the processing, distribution, sale of petroleum and petroleum
products and natural gas excluding production of crude oil and natural gas in
order to protect the interests of the consumers and entities engaged in
specified activities of marketing, selling, transporting of petroleum and
petroleum products and those also otherwise involved in the business of
transportation etc. of natural gas. This is to ensure that there is an
uninterrupted supply of petroleum products in the country to avoid
infructuous investments and for matters connected therewith or incidental
thereto.
44. It is stated that the PNGRB Act under which the Board has been
constituted was intended to substitute the erstwhile ad hoc regime and set up
PNGRB as the sole Regulator insofar as the refinery, distribution and sale of
petroleum and petroleum products, natural gas excluding production of
crude oil and natural gas. It is, therefore, contended that no pipeline can be
laid down for transportation without the permission of the PNGRB as
PNGRB is the sole Regulator for transportation or petroleum and petroleum
products excluding crude oil and natural gas. The role of the Government is
limited only to ensure safety of pipelines under the 2002 Guidelines and
there cannot be a parallel regime under which an entity can lay down a
pipeline and that no one can be permitted to lay down a pipeline without the
authorization of the PNGRB. It is contended that any alternate view would
be contrary to the object for which the PNGRB Act was created and brought
and brought into force. Any contrary decision would be contrary to the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 50 of 95
object for which the PNGRB has been created.
45. It is the case of the Petitioner and the PNGRB that under the new
regime, only a common carrier or contract carrier pipeline is used for
carrying the petroleum and petroleum products for more than one entity. To
buttress this argument, the Petitioner has placed reliance on the Petroleum
and Natural Gas Regulatory Board (Guiding Principles for Declaring or
Authorizing Petroleum and Petroleum Products Pipelines as Common
Carrier or Contract Carrier) Regulations, 2012.
46. This Court is unable to accept the submission of the Petitioner and the
PNGRB. No such intention can be gathered from the Act. The PNGRB does
not repeal the Petroleum Act, 1934. Had the intention of the Legislature
been that PNGRB was to be the sole Regulator of all the pipelines, it would
have said so in so many words. Neither the Statement of Object and Reason
nor the Preamble lead to such interpretation that the purpose was to
exclude/prohibit use of any captive pipeline. Even assuming that it was the
intention of the Legislature, this Court while exercising its jurisdiction under
Article 226 of the Constitution of India while interpreting the PNGRB Act
cannot gather such intention and is bound by the text of the Statute.
47. Undoubtedly, Courts can resort to adopt the interpretation of a Statute
by rectifying construction which is one of the tools of interpretation under
the Mischief Rule (Heydon's Principle), but Courts cannot stretch it by
reading something into the Statute which is just not provided for. The Apex
Court in P K Unni v. Nirmala Industries & Ors., ( 1990) 2 SCC 378 , has
observed as under:-
" 15 . The court must indeed proceed on the assumption
that the legislature did not make a mistake and that it
intended to say what it said : See Nalinakhya Bysack v.
Shyam Sunder Haldar [(1953) 1 SCC 167 : 1953 SCR
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 51 of 95
533, 545 : AIR 1953 SC 148] . Assuming there is a
defect or an omission in the words used by the
legislature, the court would not go to its aid to correct
or make up the deficiency. The court cannot add words
to a statute or read words into it which are not there,
especially when the literal reading produces an
intelligible result. No case can be found to authorise
any court to alter a word so as to produce a casus
omissus : Per Lord Halsbury, Mersey Docks and
Harbour Board v. Henderson Brothers [(1888) 13 AC
595, 602 : 4 TLR 703] . “We cannot aid the
legislature's defective phrasing of an Act, we cannot
add and mend, and, by construction, make up
deficiencies which are left there” : Crawford v.
Spooner [(1846) 6 Moore PC 1, 8, 9 : 4 MIA 179] .
16. Where the language of the statute leads to
manifest contradiction of the apparent purpose of the
enactment, the court can, of course, adopt a
construction which will carry out the obvious
intention of the legislature. In doing so “a judge must
not alter the material of which the Act is woven, but
he can and should iron out the creases.” : Per
Denning, L.J., as he then was, Seaford Court Estates
Ltd. v. Asher [(1949) 2 All ER 155, 164] . See the
observation of Sarkar, J. in M. Pentiah v. Muddala
Veeramallappa [(1961) 2 SCR 295, 314 : AIR 1961
SC 1107] .
17 . In the construction of the relevant provisions, we
see no contradiction or ambiguity or defect or
omission. We see no merit in the argument that Article
127 must override Rule 92(2) of Order XXI in respect
of limitation. We view both the provisions as
prescriptive of time for different purposes, and of equal
efficacy and particularity. The maxim generalia
specialibus non derogant has no relevance to their
construction. Nor does the principle in Heydon case
[(1584) 3 Co Rep 7a : 76 ER 637] offer any help on the
point in issue. The mischief which the legislature had
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 52 of 95
set out to remedy by amendment of Article 127 is what
is stated in the objects and reasons clause. That object
was accomplished by prescribing a longer period for
filing an application to set aside a sale in execution of
a decree. Furthermore, as already seen, by amendment
of Rule 92(2) of Order XXI an opportunity was
accorded to the depositor to make good the deficiency
in the deposit made by him due to arithmetical or
clerical mistake on his part. In no other respect did the
legislature evince an intention to extend the period
prescribed for making the deposit. It would perhaps
have been better, more logical, reasonable and
practical, as stated by the Kerala High Court in
Dakshayini v. Madhavan [AIR 1982 Ker 126 : 1981
Ker LT 861] , to enlarge the period for making the
deposit so as to make it identical with that prescribed
for making the application, and such extended period
would have better served the object of the amendment,
namely, ameliorating the plight of the judgment-debtor,
but such are matters exclusively within the domain of
legislation by Parliament and the court cannot
presume deficiency and supply the omission. The
legislature did not do more than what it did. It has, in
our view, accomplished what it had set out to achieve.
No more no less."
(emphasis supplied)
48. Even assuming that the Act is defective inasmuch as it does not in
strict terms prohibits laying down a captive pipeline, it is not permissible for
the Court to repair a defective Act of the Parliament. The Court would
always like to allow intention of a Statute to override the defects in its
wording but the ability to do so is limited by the regularized cannons of
interpretation. The Court may for example prepare an alternative
construction which is less fitted to the words but better fitted to the intention
of the Act but the Courts cannot provide for an alternative construction
which would amount to Legislation for a casus omissus. The Apex Court in
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 53 of 95
Shri Ram Ram Narain Medhi v. State of Bombay, AIR 1959 SC 459, has
observed as under:-
" 10 . It is well settled that these heads of legislation
should not be construed in a narrow and pedantic
sense but should be given a large and liberal
interpretation. As was observed by the Judicial
Committee of the Privy Council in British Coal
Corporation v. King [(1935) AC 500, 518] :
“Indeed, in interpreting a constituent or organic
statute such as the Act, that construction most
beneficial to the widest possible amplitude of its
powers must be adopted.”
11 . The Federal Court also in the United Provinces v.
Atiqa Begum [(1940) FCR 110, 134] pointed out that
none of the items in the Lists is to be read in a narrow
or restricted sense and that each general word should
be held to extend to all ancillary or subsidiary matters
which can fairly and reasonably be said to be
comprehended in it. This Court in Navinchandra
Mafatlal v. CIT [(1955) 1 SCR 829, 836, 837] , also
expressed the same opinion and stated:
“The cardinal rule of interpretation, however, is that
words should be read in their ordinary, natural and
grammatical meaning subject to this rider, that in
construing words in a constitutional enactment
conferring legislative power the most liberal
construction should be put upon words so that the
same may have effect in their widest amplitude.”
(See also Thakur Amar Singhji v. State of Rajasthan
[(1955) 2 SCR 303, 329] .)
xxx
26 . It was vehemently urged before us by learned
counsel for the petitioners that the expression “estate”
aptly applied only to lands held by the various tenure
holders of alienated lands above referred to, and that it
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 54 of 95
could not apply to the holdings of occupants who had
merely a right of occupancy in specific pieces of
unalienated lands. The word “estate” had been defined
in the Bombay Land Revenue Code, 1879 in Section
2(5) to mean:“any interest in lands and the aggregate
of such interests vested in a person or aggregate of
persons capable of holding the same,” and would
prima facie cover not only an interest in alienated
lands but also in unalienated lands. It was however
urged that the expression “estate” should be construed
in a narrower sense having regard to the legislative
history and particularly to the fact that the lands held
by the tenure-holders of alienated lands only had prior
to 1879 been recognized as estates and the holding of
an occupant was not treated as such. The distinction
thus sought to be made between holders of unalienated
lands and holders of alienated lands is not of much
consequence because even in regard to unalienated
lands besides the occupants, there were tenure-holders
called Bhagdars and Narwadars and Khotes who had
interests in lands held by them under those several
tenures which lands were unalienated lands. The
interests which these tenure-holders enjoyed in the
lands held by them were “estates”, and it could not
therefore, be predicated of the expression “estate” that
it could only be used in connection with alienated
lands. If this distinction was, therefore, of no avail, we
have only got to consider if there is any reason why a
narrow interpretation should be put upon the
expression “estate” as suggested by the petitioners.
Reliance was placed by the learned counsel for the
petitioners on a decision of this Court in Hariprasad
Shivshankar Shukla v. A.D. Divikar [(1957) SCR 121,
132] where the word “retrenchment” as defined in
Section 2(oo) and the word “retrenchment” in Section
25-F of the Industrial Disputes Act, 1947, as amended
by Act 43 of 1953 were held to have no wider meaning
than the ordinary accepted connotation of those words
and were held to mean the discharge of surplus labour
or staff by the employer for any reason whatsoever,
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 55 of 95
otherwise than as a punishment inflicted by way of
disciplinary action, and did not include termination of
services of all workmen on a bona fide closure of
industry or on change of ownership or management
thereof. Even though the word “retrenchment” was
defined as meaning the termination of services by an
employer of the workmen for any reason whatsoever,
otherwise than as a punishment inflicted by way of
disciplinary action, which words were capable of
including within their scope the termination of services
of all workmen on a bona fide closure of industry or on
change of ownership or management thereof, the word
“retrenchment” was construed in a narrow sense
because the word “retrenchment” connoted in its
ordinary acceptance that the business itself was being
conducted and a portion of the staff or labour force
was discharged as surplusage. This Court observed in
the course of the judgment at p. 132:
“In the absence of any compelling words to indicate
that the intention was even to include a bona fide
closure of the whole business, it would, we think, be
divorcing the expression altogether from its context
to give it such a wide meaning as is contended for by
learned counsel for the respondent. What is being
defined is retrenchment, and that is the context of
the definition. It is true that an artificial definition
may include a meaning different from or in excess of
the ordinary acceptation of the word which is the
subject of definition; but there must then be
compelling words to show that such a meaning
different from or in excess of the ordinary meaning
is intended. Where, within the framework of the
ordinary acceptation of the word, every single
requirement of the definition clause is fulfilled, it
would be wrong to take the definition as destroying
the essential meaning of the word defined.”
Reliance was also placed on a decision of the Court
of Appeal in England in Re The Vexatious Actions
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 56 of 95
Act, 1896 In re Bernard Boaler [(1915) 1 KB 21]
where the words “legal proceedings” were held not
to include criminal proceedings, in spite of the
words being prima facie capable of including the
same. Kennedy, C.J. expressed his view at p. 32, that
it was impossible to say that the meaning of the
expression “legal proceedings” was in itself and by
itself clear and unambiguous and followed the
dictum of Lord Esher in Rex v. City of London Court
[(1982) 1 QB 273, 290] :
“If the words of an Act admit of two interpretations
then they are not clear; and if one interpretation
leads to an absurdity and the other does not, the
Court will conclude that the legislature did not
intend to lead to an absurdity, and will adopt the
other interpretation.”
Scrutton, J. also expressed the same opinion at p.
41:
“I find general words used in the Act capable of two
meanings, a wider and a narrower one. On the
whole, I think the language is more suited to the
narrower than the wider meaning. The narrower
meaning will affect the liberties of the subject to
some extent; the wider meaning will most seriously
affect the liberties of the subject in a matter, his
personal liberty and safety, which I see no reason in
the Act to believe was in the contemplation of the
legislature. I decline to make this more serious
interference with the liberty of the subject, unless the
legislature uses language clear enough to convince
me that that was its intention, and I think ample
meaning is provided for its words, and ample
remedy is provided for the grievance in respect of
which Parliament was legislating by putting the
narrower construction on the general words it has
used.”
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 57 of 95
49. In Gujarat Steel Tubes Limited & Ors. v. Gujarat Steel Tubes
Mazdoor Sabha & Ors., 1980 (2) SCC 593, the Apex Court has observed as
under:-
" 104 . This long excursion has become important
because, once in a while, social legislation which
requires sharing of social philosophy between
Parliament and the Judiciary, meets with its Waterloo
in the higher courts because the true role of
interpretation shifts from Judge to Judge. We are
clearly of the view that statutory construction which
fulfils the mandate of the statute must find favour with
the Judges, except where the words and the context
rebel against such flexibility. We would prefer to be
liberal rather than lexical when reading the meaning of
industrial legislation which develops from day to day
in the growing economy of India. The necessary
conclusion from this discussion is that the expression
“tribunal” includes, in the statutory setting, an
arbitrator also. Contemporaneous para-legislative
material may legitimately be consulted when a word of
wider import and of marginal obscurity needs to be
interpreted. So viewed, we are not in a “sound-proof
system” and the I.L.O. recommendation accepted by
India and the Objects and Reasons of the amending Act
leave no doubt about the sense, policy and purpose.
Therefore Section 11-A applies to the arbitrator in the
present case and he has the power to examine whether
the punishment imposed in the instant case is
excessive. So has the High Court, if the award suffers
from a fundamental Law."
50. In Union of India & Anr. v. Deoki Nandan Aggarwal, 1992 Supp (1)
SCC 323 , the Apex Court has observed as under:-
" 14 . We are at a loss to understand the reasoning of
the learned Judges in reading down the provisions in
paragraph 2 in force prior to November 1, 1986 as
“more than five years” and as “more than four years”
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 58 of 95
in the same paragraph for the period subsequent to
November 1, 1986. It is not the duty of the court either
to enlarge the scope of the legislation or the intention
of the legislature when the language of the provision is
plain and unambiguous. The court cannot rewrite,
recast or reframe the legislation for the very good
reason that it has no power to legislate. The power to
legislate has not been conferred on the courts. The
court cannot add words to a statute or read words into
it which are not there. Assuming there is a defect or an
omission in the words used by the legislature the court
could not go to its aid to correct or make up the
deficiency. Courts shall decide what the law is and not
what it should be. The court of course adopts a
construction which will carry out the obvious intention
of the legislature but could not legislate itself. But to
invoke judicial activism to set at naught legislative
judgment is subversive of the constitutional harmony
and comity of instrumentalities. Vide P.K. Unni v.
Nirmala Industries [(1990) 2 SCC 378, 383-84 :
(1990) 1 SCR 482, 488] , Mangilal v. Suganchand
Rathi [(1964) 5 SCR 239 : AIR 1965 SC 101] , Sri Ram
Ram Narain Medhi v. State of Bombay [1959 Supp 1
SCR 489 : AIR 1959 SC 459] , Hira Devi (Smt) v.
District Board, Shahjahanpur [(1952) 2 SCC 154 :
1952 SCR 1122, 1131 : AIR 1952 SC 362] ,
Nalinakhya Bysack v. Shyam Sunder Haldar [(1953) 1
SCC 167 : 1953 SCR 533, 545 : AIR 1953 SC 148] ,
Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes
Mazdoor Sabha [(1980) 2 SCC 593 : 1980 SCC (L&S)
197 : (1980) 2 SCR 146] , G. Narayanaswami v. G.
Pannerselvam [(1972) 3 SCC 717 : (1973) 1 SCR 172,
182] , N.S. Vardachari v. G. Vasantha Pai [(1972) 2
SCC 594 : (1973) 1 SCR 886] , Union of India v.
Sankal Chand Himatlal Sheth [(1977) 4 SCC 193 :
1977 SCC (L&S) 435 : (1978) 1 SCR 423] and CST v.
Auriaya Chamber of Commerce, Allahabad [(1986) 3
SCC 50, 55 : 1986 SCC (Tax) 449 : (1986) 2 SCR 430,
438] . Modifying and altering the scheme and applying
it to others who are not otherwise entitled to under the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 59 of 95
scheme, will not also come under the principle of
affirmative action adopted by courts sometimes in
order to avoid discrimination. If we may say so, what
the High Court has done in this case is a clear and
naked usurpation of legislative power."
51. In Kanta Devi v. Union of India, 2003 (4) SCC 753 , the Apex Court
has observed as under:-
" 8. … It is not a case of casus omissus as contended. A
construction which requires for its support addition of
words has to be avoided. The words of a statute never
shared, in interpretation, be added or subtracted from
without almost a necessity. It is contrary to all rules of
construction to read words into a statute unless it is
absolutely necessary to do so. Courts cannot reframe
the words used by the legislature as they have no
power to legislate. A matter which, for the sake of
argument, should have been provided but has not been
provided for in a statute cannot be supplied by the
courts as to do so will be legislation and not
construction. (See Johnson v. Moreton [(1978) 3 All
ER 37 : 1980 AC 37 : (1978) 3 WLR 538 (HL)] and
Baliram Waman Hiray (Dr) v. Justice B. Lentin
[(1988) 4 SCC 419 : 1988 SCC (Cri) 941 : AIR 1988
SC 2267] .) There is no presumption that a casus
omissus exists, and language permitting the courts
should avoid creating a casus omissus where there is
none. Therefore, the conclusion of the Division Bench
in holding that the order of dismissal passed by the
DIG was legal, does not suffer from any infirmity to
warrant interference."
52. Similarly, in Sangeeta Singh v. Union of India & Ors., 2005 (7) SCC
484 , the Apex Court has observed as under:-
" 10 . Two principles of construction — one relating to
casus omissus and the other in regard to reading the
statute as a whole, appear to be well settled. Under the
first principle a casus omissus cannot be supplied by
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 60 of 95
the court except in the case of clear necessity and when
reason for it is found in the four corners of the statute
itself but at the same time a casus omissus should not
be readily inferred and for that purpose all the parts of
a statute or section must be construed together and
every clause of a section should be construed with
reference to the context and other clauses thereof so
that the construction to be put on a particular
provision makes a consistent enactment of the whole
statute. This would be more so if literal construction of
a particular clause leads to manifestly absurd or
anomalous results which could not have been intended
by the legislature. “An intention to produce an
unreasonable result”, said Danckwerts, L.J. in
Artemiou v. Procopiou [(1966) 1 QB 878 : (1965) 3 All
ER 539 : (1965) 3 WLR 1011 (CA)] (All ER p. 544 I)
“is not to be imputed to a statute if there is some other
construction available”. Where to apply words literally
would “defeat the obvious intention of the legislation
and produce a wholly unreasonable result”, we must
“do some violence to the words” and so achieve that
obvious intention and produce a rational construction.
[Per Lord Reid in Luke v. IRC [1963 AC 557 : (1963)
1 All ER 655 : (1963) 2 WLR 559 (HL)] where at AC p.
577 he also observed : (All ER p. 664 I) “This is not a
new problem, though our standard of drafting is such
that it rarely emerges.”]"
53. In PT Rajan v. TPM Sahir & Ors., 2003 (8) SCC 498 , the Apex Court
has observed as under:-
" 50 . The Court cannot, it is trite, supply casus omissus.
Reference in this regard may be made to Baliram
Waman Hiray (Dr) v. Justice B. Lentin [(1988) 4 SCC
419 : 1988 SCC (Cri) 941 : AIR 1988 SC 2267]
wherein it was observed: (SCC p. 443, para 27)
“27. Law must be definite, and certain. If any of the
features of the law can usefully be regarded as
normative, it is such basic postulates as the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 61 of 95
requirement of consistency in judicial decision-
making. It is this requirement of consistency that
gives to the law much of its rigour. At the same time,
there is need for flexibility. Professor H.L.A. Hart
regarded as one of the leading thinkers of our time
observes in his influential book „The Concept of
Law‟, depicting the difficult task of a judge to strike
a balance between certainty and flexibility:
„Where there is obscurity in the language of a
statute, it results in confusion and disorder. No
doubt the courts so frame their judgments as to give
the impression that their decisions are the necessary
consequence of predetermined rules. In very simple
cases it may be so; but in the vast majority of cases
that trouble the courts, neither statute nor
precedents in which the rules are legitimately
contained allow of only one result. In most
important cases there is always a choice. The judge
has to choose between alternative meanings to be
given to the words of a statute or between rival
interpretations of what a precedent amounts to. It is
only the tradition that judges „find‟ and do not
„make‟ law that conceals this, and presents their
decisions as if they were deductions smoothly made
from clear pre-existing rules without intrusion of the
judge's choice.' ”
(See also Kanta Devi v. Union of India [(2003) 4
SCC 753 : 2003 SCC (L&S) 592] .)
51 . In Tarulata Shyam v. CIT [(1977) 3 SCC 305 :
1977 SCC (Tax) 445] it was held that if there be a
casus omissus, the defect can be remedied only by
legislation and not by judicial interpretation."
54. It is also well settled that even assuming that the Petitioner is correct
to state that the Statement of Object and Reason and other circumstances
does indicate that the PNGRB would alone regulate transportation of
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 62 of 95
petroleum and petroleum products, the Preamble and the Statement of
Object and Reason alone cannot be the only guiding factor.
55. It is well settled that the Preamble can be read along with other
portions of the Act to find out the purpose and correct interpretation of the
provisions, which by themselves may have ambiguous meaning. The
Preamble, however, is not a provision of law and does not hold the same
weightage as the actual text that is found within the Statute.
56. In the opinion of this Court, the Preamble and the Statement of Object
and Reason alone cannot lead to a conclusion that the PNGRB was to be
construed as the sole Regulator for regulating of all kinds of pipelines since
the Act only deals with common carrier and contract carrier without there
being any provision in the Act.
57. The Apex Court in Aswini Kumar Ghose & Anr. v. Arabinda Bose &
Anr., 1952 (2) SCC 237 , has observed as under:-
" 32 . As regards the propriety of the reference to the
Statement of Objects and Reasons, it must be
remembered that it seeks only to explain what reasons
induced the mover to introduce the Bill in the House
and what objects he sought to achieve. But those
Objects and Reasons may or may not correspond to the
objective which the majority of members had in view
when they passed it into law. The Bill may have
undergone radical changes during its passage through
the House or Houses, and there is no guarantee that
the reasons which led to its introduction and the
objects thereby sought to be achieved have remained
the same throughout till the Bill emerges from the
House as an Act of the Legislature for they do not form
part of the Bill and are not voted upon by the members.
We, therefore, consider that the Statement of Objects
and Reasons appended to the Bill should be ruled out
as an aid to the construction of a statute."
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 63 of 95
58. In State of West Bengal v. Union of India, AIR 1963 SC 1241 , the
Apex Court held that the Statement of Object and Reason accompanying a
Bill, when introduced in Parliament, cannot be used to determine the true
meaning and effect of the substantive provisions of the Statute and they
cannot be used except for understanding the background and the antecedent
state of affairs leading up to the legislation.
59. The general rule of interpretation is that the language employed is
primarily determining factor to find out the intention of the Legislature. It is
well settled that the first and primary rule of construction is that the
intention of the Legislature, which is found in the words of the Legislature
itself. " If the Legislature did intend that which it has not expressed clearly;
much more, if the Legislature intended something very different; if the
Legislature intended something pretty nearly opposite of what is said, it is
not for the Judges to invent something which do not meet with the words of
the text ." [Refer to:- Crawford v. Spooner (1846-50) 4 Moo IA 179 ].
60. The Apex Court has now categorically held that when the telling
meaning of the Statute used a particular state of affairs, Courts are not
required to guess or suppose the intention and policy underlying the Statute
and the Statement of Object and Reason which accompanies the Bill on the
Floor of the House of the Legislature. It is only when the plain meaning of
the Statute creates an ambiguity or uncertainty, then the Court may rely on
the Statement of Object and Reason for ascertaining the true intention of the
Legislature. [Refer to:- SS Bola & Ors. v. B D Sardana & Ors., 1997 (8)
SCC 522 ] .
61. The reliance placed by the Petitioner on the Petroleum and Natural
Gas Regulatory Board (Guiding Principles for Declaring or Authorizing
Petroleum and Petroleum Products Pipelines as Common Carrier or Contract
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 64 of 95
Carrier) Regulations, 2012, is also misplaced. It is well settled that
Regulations cannot have a wider ambit than the Statute, and the extent of
power delegated to an authority can be gauged only from a statute and not
from the Regulations. In fact, while deciding the power of the PNGRB to fix
or regulate the Maximum Retail Price and whether the PNGRB is
empowered to fix or Maximum Retail Price at which the gas to be sold to
the entities such as Indraprastha Gas Limited to the consumers and as to
whether the PNGRB is empowered to fix any tariff or compression charge
for an entity having its own distribution network, the Apex Court in
Petroleum and Natural Gas Regulatory Board v. Indraprastha Gas Limited &
Ors., 2015 (9) SCC 209 , has held as under:-
" 27 . It is relevant to note here that the High Court,
while appreciating the language employed in the said
Section 11 has held that: (Indraprastha Gas Ltd. case
[2012 SCC OnLine Del 3215] , SCC OnLine Del para
11)
“11. We are of the opinion that none of the aforesaid
clauses can be construed as prescribing price
control/regulation as a function of the Board.
Clause (a) while prescribing protection of interest of
consumers limits the same to, by fostering fair trade
and competition amongst entities engaged in
distributing, dealing, transporting, marketing gas.
The function of the Board thereunder is of
regulating the inter se relationship of entities under
the Act and not to regulate/control the relationship
between the entities under the Act and the
consumers. Similarly, clause (f) while prescribing
function of monitoring prices limits the same to
taking corrective measures to prevent restrictive
trade practices by the entities. Thus, only if the
Board finds that the marketers of gas in a particular
area have formed a cartel or are indulging in any
other restrictive trade practices, is the Board
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 65 of 95
empowered to monitor prices. Such is not the case of
the Board in the present instance. The petitioner
even though till date the exclusive marketer of gas in
Delhi, has not been accused of any restrictive trade
practice and the power exercised also is not in the
name of monitoring price. Another sub-clause of
clause (f) of Section 11 confers function on the
Board to ensure display of information about
maximum retail price. Again, had the intent of the
legislature been to confer the power on the Board to
fix the maximum retail price, nothing prevented the
legislature from providing so expressly. Instead,
functions of enforcing retail service obligations and
marketing service obligations only have been
conferred by the legislature. The definition of retail
service obligations and marketing service
obligations in Sections 2(zk) and (w) also do not
include obligation to sell at the prices fixed by the
Board.”
28 . The aforesaid analysis of the High Court is in
consonance with the provision and the expression
“subject to” as used in Section 22 for the said
provision makes it graphically clear that Section 22
has to yield to Section 11 of the Act which deals with
the powers and functions of the Board. Section 11(e)
only uses the words “common carrier” or “contract
carrier”. Even if one applies the concept of “subject-
matter”, in essentiality it is the “common carrier” and
the “contract carrier”. The dictionary clause of the
said expression conveys a different meaning and it
does not include an entity which utilises the pipelines
for its own use. The submission of Mr Datar is that
after exclusivity period is over, the Board has the
power, also cannot be treated to be correct, for such a
power has not been conferred on the Board under
Section 11. As is perceptible the provision deals with
the entity when it engages itself as a part of its pipeline
as a common carrier or contract carrier and not the
consumers. It is submitted by the learned Senior
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 66 of 95
Counsel appearing for the respondent that a person
owning his own carrier, after the exclusivity period
may have the potentiality to enter into business of the
“common carrier” or “contract carrier” and at that
juncture to maintain the competitive prospects, regard
being had to the consumer interest, the Board may
determine the price of the same, but a significant one,
that does not clothe the Board with the power to
command the entity to put/reflect it as a part of the bill
to the consumer. It is urged that the Board does not
have the power to fix the tariff charges in that regard.
29 . Mr Datar, learned Senior Counsel would submit
that when the Board is established under a statute and
has the power to regulate solely because there is no
mention of entity that owns its own pipeline, it is
inapposite to say that the Board cannot determine the
price and indicate the cost incurred in this regard in
the bill given to the consumer. It is his further
submission that the consumer has a right to know. The
learned Senior Counsel would go to the extent of
saying that it is a casus omissus and, therefore, the
court must adopt the principle of purposive
interpretation and it can do so filling up the gap to
have the necessitous fruitful interpretation. Mr Salve
and Mr Tripathi, per contra, would submit that the
legislature has deliberately not done it and, in any
case, the Court should not read such a concept into it.
Ms Pinky Anand, learned ASG relying on the affidavit
filed by the Union of India, would submit that the
legislature has not given the said power to the Board.
It is seemly to state that even if a stand is taken by the
Union of India, in respect of an interpretation of a
statutory provision, that does not mean that the same is
the correct interpretation because it is well settled in
law that no one can speak on behalf of the legislature.
It is the court which is the final interpreter.
30 . Keeping that in view, we have to scrutinise whether
in such a situation this Court can implant words in the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 67 of 95
provision, as canvassed by Mr Datar. In this regard we
may, with profit, refer to certain authorities in the
field. In CST v. Parson Tools and Plants [(1975) 4
SCC 22 : 1975 SCC (Tax) 185] , the Court has held
that: (SCC p. 28, para 16)
“16. If the legislature wilfully omits to incorporate
something of an analogous law in a subsequent
statute, or even if there is a casus omissus in a
statute, the language of which is otherwise plain and
unambiguous, the court is not competent to supply
the omission by engrafting on it or introducing in it,
under the guise of interpretation, by analogy or
implication, something what it thinks to be a general
principle of justice and equity. To do so „would be
entrenching upon the preserves of legislature‟ [ At
AIR p. 65 in Prem Nath L. Ganesh Dass v. Prem
Nath L. Ram Nath, AIR 1963 Punj 62 : 64 Punj LR
975, per Tek Chand, J.] ….”
31 . In Board of Muslim Wakfs v. Radha Kishan [(1979)
2 SCC 468] , it has been observed that: (SCC p. 481,
para 29)
“29. While it is true that under the guise of judicial
interpretation the court cannot supply casus
omissus, it is equally true that the courts in
construing an Act of Parliament must always try to
give effect to the intention of the legislature. In
Crawford v. Spooner [(1846-49) 6 Moo PC 1 : 13
ER 582 : 4 Moo IA 179 : 18 ER 667] the Judicial
Committee said: (ER p. 585)
„… we cannot aid the legislature's defective
phrasing of the Act, we cannot add, and mend, and,
by construction, make up deficiencies which are left
there.‟
To do so would be to usurp the function of the
legislation. At the same time, it is well settled that in
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 68 of 95
construing the provisions of statute the courts should
be slow to adopt a construction which tends to make
any part of the statute meaningless or ineffective.
Thus, an attempt must always be made to reconcile
the relevant provisions so as to advance the remedy
intended by the statute.”
32 . In this context, we may usefully refer to the
authority in CIT v. National Taj Traders [(1980) 1
SCC 370 : 1980 SCC (Tax) 124] wherein it has been
clearly laid down that two principles of construction
i.e. one relating to casus omissus and the other in
regard to reading of the statute as a whole have been
well settled. The Court has reproduced few passages
from Maxwell on Interpretation of Statutes at pp. 33
and 47, as has been stated in Canada Sugar Refining
Co. Ltd. v. R. [1898 AC 735 (PC)] , by Lord Davey and
proceeded to state thus: (National Taj Traders case
[(1980) 1 SCC 370 : 1980 SCC (Tax) 124] , SCC p.
376, para 10)
“10. … In other words, under the first principle a
casus omissus cannot be supplied by the Court
except in the case of clear necessity and when
reason for it is found in the four corners of the
statute itself but at the same time a casus omissus
should not be readily inferred and for that purpose
all the parts of a statute or section must be
construed together and every clause of a section
should be construed with reference to the context
and other clauses thereof so that the construction to
be put on a particular provision makes a consistent
enactment of the whole statute. This would be more
so if literal construction of a particular clause leads
to manifestly absurd or anomalous results which
could not have been intended by the legislature. „An
intention to produce an unreasonable result‟, said
Danckwerts, L.J., in Artemiou v. Procopiou [(1966)
1 QB 878 : (1965) 3 WLR 1011 : (1965) 3 All ER
539 (CA)] , „is not to be imputed to a statute if there
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 69 of 95
is some other construction available‟. Where to
apply words literally would „defeat the obvious
intention of the legislation and produce a wholly
unreasonable result‟ we must „do some violence to
the words‟ and so achieve that obvious intention and
produce a rational construction. (Per Lord Reid in
Luke v. IRC [1963 AC 557 : (1963) 2 WLR 559 :
(1963) 1 All ER 655 (HL)] where at AC p. 577 he
also observed: „this is not a new problem, though
our standard of drafting is such that it rarely
emerges‟.) In the light of these principles we will
have to construe sub-section (2)(b) with reference to
the context and other clauses of Section 33-B.”
33 . In S.P. Gupta v. Union of India [1981 Supp SCC
87] , after referring to various authorities, it has been
held: (SCC p. 392, para 273)
“273. Thus, on a full and complete consideration of
the decisions classified under the various categories,
the propositions that emerge from the decided cases
of this Court and other foreign courts are as follows:
„(1) Where the language of a statute is clear and
unambiguous, there is no room for the application
either of the doctrine of casus omissus or of pressing
into service external aids, for in such a case the
words used by the Constitution or the statute speak
for themselves and it is not the function of the court
to add words or expressions merely to suit what the
courts think is the supposed intention of the
legislature.‟”
34 . In Bharat Aluminium Co. v. Kaiser Aluminium
Technical Services Inc. [(2012) 9 SCC 552 : (2012) 4
SCC (Civ) 810] it has been opined thus: (SCC pp. 592-
93, para 64)
“64. … that it is not the function of the court to
supply the supposed omission, which can only be
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 70 of 95
done by Parliament. In our opinion, legislative
surgery is not a judicial option, nor a compulsion,
whilst interpreting an Act or a provision in the Act.
The observations made by this Court in Nalinakhya
Bysack [Nalinakhya Bysack v. Shyam Sunder
Haldar, (1953) 1 SCC 167 : AIR 1953 SC 148]
would tend to support the aforesaid views, wherein it
has been observed as follows: (AIR p. 152, para 9)
„9. … It must always be borne in mind, as said by
Lord Halsbury in Commissioners for Special
Purposes of Income Tax v. Pemsel [1891 AC 531 at
p. 549 (HL)] , that it is not competent to any court to
proceed upon the assumption that the legislature has
made a mistake. The court must proceed on the
footing that the legislature intended what it has said.
Even if there is some defect in the phraseology used
by the legislature the Court cannot, as pointed out in
Crawford v. Spooner [(1846-49) 6 Moo PC 1 : 13
ER 582 : 4 Moo IA 179 : 18 ER 667] , aid the
legislature's defective phrasing of an Act or add and
amend or, by construction, make up deficiencies
which are left in the Act. Even where there is a casus
omissus, it is, as said by Lord Russell of Killowen in
Hansraj Gupta v. Official Liquidators [(1932-33) 60
IA 13 : (1933) 37 LW 445 : AIR 1933 PC 63] , for
others than the courts to remedy the defect.‟”
35 . After so stating the Court has referred to the
observations made by Lord Diplock in Duport Steels
Ltd. [Duport Steels Ltd. v. Sirs, (1980) 1 WLR 142 :
(1980) 1 All ER 529 (HL)] wherein it has been ruled
thus: (All ER p. 541h-j)
“… the role of the judiciary is confined to
ascertaining from the words that Parliament has
approved as expressing its intention what that
intention was, and to giving effect to it. Where the
meaning of the statutory words is plain and
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 71 of 95
unambiguous it is not for the Judges to invent
fancied ambiguities as an excuse for failing to give
effect to its plain meaning because they themselves
consider that the consequences of doing so would be
inexpedient, or even unjust or immoral. In
controversial matters such as are involved in
industrial relations there is room for differences of
opinion as to what is expedient, what is just and
what is morally justifiable. Under our Constitution it
is Parliament's opinion on these matters that is
paramount.”
(emphasis supplied)
36 . Recently, in Sarah Mathew v. Institute of Cardio
Vascular Diseases [(2014) 2 SCC 62 : (2014) 1 SCC
(Cri) 721] , while interpreting Section 468 CrPC, the
Court has opined: (SCC p. 99, para 45)
“45. It is argued that a legislative casus omissus
cannot be supplied by judicial interpretation. It is
submitted that to read Section 468 CrPC to mean
that the period of limitation as period within which a
complaint/charge-sheet is to be filed, would amount
to adding words to Sections 467 and 468. It is
further submitted that if the legislature has left a
lacuna, it is not open to the court to fill it on some
presumed intention of the legislature. Reliance is
placed on Shiv Shakti Coop. Housing Society [Shiv
Shakti Coop. Housing Society v. Swaraj Developers,
(2003) 6 SCC 659] , Bharat Aluminium [(2012) 9
SCC 552 : (2012) 4 SCC (Civ) 810] and several
other judgments of this Court where doctrine of
casus omissus is discussed. In our opinion, there is
no scope for application of doctrine of casus
omissus to this case. It is not possible to hold that
the legislature has omitted to incorporate something
which this Court is trying to supply. The primary
purpose of construction of the statute is to ascertain
the intention of the legislature and then give effect to
that intention. After ascertaining the legislative
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 72 of 95
intention as reflected in the Forty-second Report of
the Law Commission and the Report of the JPC, this
Court is only harmoniously construing the
provisions of Chapter XXXVI along with other
relevant provisions of the Criminal Procedure Code
to give effect to the legislative intent and to ensure
that its interpretation does not lead to any absurdity.
It is not possible to say that the legislature has kept
a lacuna which we are trying to fill up by judicial
interpretative process so as to encroach upon the
domain of the legislature. The authorities cited on
doctrine of casus omissus are, therefore, not
relevant for the present case.”
37 . We have referred to the aforesaid passage as the
Constitution Bench [(2014) 2 SCC 62 : (2014) 1 SCC
(Cri) 721] has given emphasis on primary purpose of
construction of statute to ascertain the intention of
the legislature, harmonious construction of the
various provisions of CrPC and for ensuring that the
interpretation does not lead to any absurdity. That
apart, the Court has also categorically observed that it
is not a case where it can be said that the legislature
has kept a lacuna which the Court is trying to fill up
by judicial interpretative process so as to encroach
upon the domain of the legislature. In the case at
hand, in the schematic context of the Act and upon
reading the legislative intention and applying the
principle of harmonious construction, we do not
perceive inclusion of the entities which are not
“common carriers” or “contract carriers” would be
permissible. They have deliberately not been included
under Section 11 of the Act by the legislature and the
said non-inclusion does not lead to any absurdity and,
therefore, there is no necessity to think of any
adventure ."
(emphasis supplied)
62. The Apex Court in Petroleum and Natural Gas Regulatory Board v.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 73 of 95
Indraprastha Gas Limited & Ors., 2015 (9) SCC 209 , has in no uncertain
terms held that this Act was only meant to regulate common carrier and
contract carrier and it cannot be applied to any other pipeline which is not a
common carrier or a contract carrier, and that regulatory provisions are
always subject to the actual text of the Statute.
63. This Court is not persuaded with the attempt of the Petitioner and the
PNGRB to gather from the attendant circumstances to come to a conclusion
that the intention of the Act was to do away with/prohibit entities from
transporting their own petroleum and petroleum products by laying down
their own pipeline which is not discernible from a reading of the PNGRB
Act.
64. Section 16 of the PNGRB Act in no uncertain terms only states that
no entity shall lay, build, operate or expand any pipeline as a common
carrier or a contract carrier. Had the intention of the Legislature been to do
away with/prohibit captive pipeline, it could have simply said that no entity
shall lay, build, operate or expand any pipeline without obtaining
authorization under the PNGRB Act.
65. The fact that the PNGRB Act revolves around the common carrier
and contract carrier, shows that the intention of the Legislature was to
ensure that common carrier and contract carrier do not abuse their
monopolistic position by obtaining undue benefits from other entities which
in turn can have a detrimental impact to the consumers.
66. The purport of giving the PNGRB the control only over contract
carrier and common carrier is to ensure that ultimately the consumer is not
affected by such carriers which have been authorized by the PNGRB to lay
down pipelines. Section 17 of the PNGRB Act once again deals only with
authorization by the PNGRB for an entity laying, building, operating or
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 74 of 95
expanding or which proposes to lay, build, operate or expand a pipeline as a
common carrier or a contract carrier.
67. One of the purposes for which the PNGRB Act was enacted is to
ensure transportation and regular supply of petroleum and petroleum
products to such of those entities who cannot lay down their own pipeline
and get easy access of the products to the pipelines at reasonable costs and
that they are not forced to employ other measures like trucks etc. for
transportation of the petroleum and petroleum products which can be more
expensive and would ultimately affect the consumers. The PNGRB has the
power to declare an existing pipeline for transportation of petroleum and
petroleum products as a common carrier / contract carrier for which
procedure has been laid down under Section 20 of the PNGRB Act indicates
permissibility of laying down captive pipelines. Section 20 of the PNGRB
Act only indicates that if there is an existing captive pipeline on the day on
which the PNGRB exercises its power under Section 20, then it may after
giving adequate notice etc., by following the procedure under Section 20(2)
and 20(3) convert an existing captive pipeline to a common/contract carrier.
68. Both the Petitioner and the Board have attempted to convince this
Court to read into the Act, something which is textually absent. There is no
explicit bar to laying of captive pipelines provided anywhere in the Act. In
the opinion of this Court, a conjoint reading of the definition of „common
carrier‟ and „contract carrier‟ along with the Section 16 makes the intention
of the legislature crystal clear. The Legislature has clearly taken an effort to
specifically include the concept of “more than one entity” as a user base for
pipelines defined as common carrier or contract carrier. Section 16 of the
Act, only requires entities to obtain authorisation from the Board if they
wish to lay a common carrier or a contract carrier.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 75 of 95
69. Section 20 of the PNGRB Act gives power to the PNGRB to declare
any existing pipeline as a common carrier. As stated above, this power is
exercised in terms of the procedure laid down in Section 20 itself. This
Court is of the opinion that the term existing pipeline should be interpreted
to mean that the existing pipeline whether laid before or after the advent of
the PNGRB Act but on the day when the PNGRB chooses to exercise its
power under Section 20. The contention of the learned counsel for the
Petitioner that Section 21 of the PNGRB Act is an indicator that after the
advent of the PNGRB Act, the concept of captive pipelines has been given a
complete go-bye cannot be accepted. Section 21 in fact indicates that if a
person lays down a captive pipeline even after the introduction of the act
then the board can, after the following the procedure under Section 20 of the
PNGRB Act declare it to be a common carrier. However the entity which
has laid down thepipeline will have the right of first use. It does not lead to a
conclusion that even for laying down its own pipeline for transporting its
goods, it must be a contract/common carrier and there cannot be a captive
pipeline.
70. A closer look at the 2010 Regulations reveal that the Board itself is of
the opinion that it does not have any jurisdiction to deal with dedicated
pipelines/captive pipelines. Regulation 19 of the 2010 Regulations deals
with dedicated pipeline for transport of petroleum products. There is no
definition of dedicated pipeline. Even assuming that dedicated pipeline and
captive pipeline are used interchangeably, Regulation 19(2) of the 2010
Regulations deals with such of those dedicated pipelines for transportation
of products only to a specific consumer and not for re-sale. In this case the
IOCL is transporting its own petroleum and petroleum products. Admittedly
the petroleum products which are to be transported in the pipelines laid
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 76 of 95
down by them are also for resale.
71. De hors the PNGRB Act, Regulation 19 read in its entirety does not
expressly state that without the authorization of the PNGRB, an entity
cannot lay down its own pipeline. Regulation, in 19(2)(d) itself makes it
clear that any entity desirous of laying down a dedicated pipeline is free to
ignore any advice or opinion of the PNGRB and if it chooses to ignore the
advice, the only downside is that such entity cannot move an application for
being recognised or authorised as a common carrier for a period of five
years.
72. The contention of the learned Senior Counsel for the Petitioner that
IOCL had participated in the process for grant of authorization for laying
down the petroleum products pipeline from Ennore Port-Manali Industrial
Area, which was instead awarded to the Petitioner. The contention that
establishes that no entity can lay a pipeline without authorisation of the
Board, cannot be accepted. No doubt, the IOCL would have wanted to have
a common carrier possibly as a mode of earning revenue which it could have
earned by transporting petroleum and petroleum products belonging to other
entities, but that by itself does not mean that the IOCL cannot lay down its
own captive pipeline. The fact of the matter is that there is no explicit bar
under either the PNGRB Act, or any of the Rules, which forbids entities
from laying down captive pipelines for their own consumption.
73. This Court at this juncture is not going into the issue regarding the
delay of seven years on the part of the Petitioner to start even laying down
its own pipeline which could be one of the factors, which lead IOCL to take
a decision to start laying down its own pipeline. The contention of the Board
that the Board would be handicapped in not knowing the exact picture
regarding the products which are being supplied/transported in the captive
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 77 of 95
pipelines which will hinder the effective performance of the Board which
according to the Board is super regulator, cannot be accepted. The IOCL is
transporting its own petroleum products from its own jetty to the terminal.
74. At this juncture, it is relevant to refer to the Petroleum and Natural
Gas Regulatory Board (Guiding Principles for Declaring or Authorizing
Petroleum and Petroleum Products Pipelines as Common Carrier or Contract
Carrier) Regulations, 2012. Clauses 3 to 7 and 10 of the said Regulations
read as under:-
" 3. Scope.
These regulations shall apply to an entity-
(a) which proposes to lay, build, operate or expand a
petroleum and petroleum products pipeline and has
been authorized to do so under the relevant regulations
for authorizing entities to lay, build, operate or expand
petroleum and petroleum products pipelines;
(b) which has been laying, building, operating or
expanding petroleum and petroleum products pipeline
before the appointed day and has been authorized
under the relevant regulations for authorizing entities
to lay, build, operate or expand petroleum and
petroleum products pipelines; or
(c) which has been authorized by the Central
Government before the appointed day and accepted by
the Board for laying, building, operating or expanding
petroleum and petroleum products pipeline under the
relevant regulations for authorizing entities to lay,
build, operate or expand petroleum and petroleum
products pipelines.
4. Objectives for declaring petroleum and petroleum
products pipeline as common carrier or contract
carrier.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 78 of 95
(a) Petroleum and Petroleum products Pipelines are
an efficient, economical and safe mode of bulk
transportation of petroleum and petroleum products
from a refinery or an installation to a demand centre
over a particular route. Therefore, consumer interest is
best served by promoting competition, compliance with
environmental and safety statutes and avoiding
infructuous investments by optimum utilization of
infrastructure of petroleum and petroleum products
pipelines.
(b) The concept of allowing capacity in a petroleum
and petroleum products pipeline to be utilized by any
entity on a non-discriminatory basis through contract
carrier or common carrier arrangements with entities
laying, building, operating or expanding petroleum
and petroleum products pipelines shall lead to
development of competitive markets.
5. Contract carrier system for petroleum and
petroleum products pipelines .
(a) A contract carrier system implies that the capacity
in petroleum and petroleum products pipeline, over
and above the entity‟s own requirement, shall be
available to any other entity subject to the latter
entering into a contract for transportation of quantity
of petroleum and petroleum products of a mutually
agreed quality for a period of minimum one year on
such other terms and conditions as may be mutually
agreed subject to the provisions of regulations notified
from time to time under the Act and on payment of
petroleum and petroleum products pipeline tariff as
authorized under the Petroleum and Natural Gas
Regulatory Board (Determination of Petroleum and
Petroleum Products Pipeline Transportation Tariff)
Regulations, 2010.
(b) The contract for transportation of petroleum and
petroleum products in petroleum and petroleum
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 79 of 95
products pipeline shall be independent of the activity of
marketing of petroleum and petroleum products.
6. Common carrier system for petroleum and
petroleum products pipelines.
(a) A common carrier system implies that the capacity
in a petroleum and petroleum products pipeline, over
and above the entity‟s own requirement, shall be
available to an entity subject to the latter entering into
a contract for transporting quantity of petroleum and
petroleum products of a mutually agreed quality for a
period of less than one year, on such other terms and
conditions as may be mutually agreed, and subject to
the provisions of regulations notified from time to time
under the Act and on payment of petroleum and
petroleum products pipeline transportation tariff as
authorized under the Petroleum and Natural Gas
Regulatory Board (Determination of Petroleum and
Petroleum Products Pipeline Transportation Tariff)
Regulations, 2010:
Provided that if the common carrier capacity is not
fully utilized, the entity may contract the same for a
period of one year or more, subject to the stipulation
that in case another entity seeks booking of the same
for a period of less than one year, the request shall
be accommodated after pro-rating the same from the
common carrier capacity already contracted to
other entities for a period of one year or more:
Provided further that pro-rating the common carrier
capacity shall not exceed ten per cent of the total
common carrier capacity.
Explanation- For the purpose of these regulations,
entity laying, building, operating or expanding a
common carrier or contract carrier petroleum and
petroleum products pipeline shall have right of first
use for its own and its affiliates‟ requirement and
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 80 of 95
shall be limited to the right of first use. Such right of
first use shall not be deemed to be preferential
access.
(b) The contract for transportation of petroleum and
petroleum products in a petroleum and petroleum
products pipeline shall be independent of the activity of
marketing of petroleum and petroleum products;
(c) Common carrier capacity available in petroleum
and petroleum products pipeline at any given point in
time shall be allocated to any other entity seeking
booking of the same on a non-discriminatory “first-
come-first-served” basis.
(d) When the extra capacity in a petroleum and
petroleum products pipeline to be provided on a
common carrier basis is less than twenty five percent
of the sum of the capacity requirements of the entity
and the firmed up contracted capacity with other
entities, the same will be made available - (i) on expiry
of firm contracts, or (ii) by way of expansion of
capacity in the petroleum and petroleum products
pipeline:
Provided that when the common carrier capacity is
less than ten percent of the sum of the capacity
requirements of the entity and the firmed up
contracted capacity with other entities, the Board
may on a suo motu basis and after following the due
process of public consultation require an entity to
build extra capacity on such time lines and other
terms and conditions as may be specified by the
Board.
7. General principles for common or contract carrier
capacity.
(a) Entity laying, building, operating or expanding
petroleum and petroleum products pipeline shall
publish the common or contract carrier capacity
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 81 of 95
available in the petroleum and petroleum products
pipeline on its website and follow the procedure
specified in the relevant regulations on access
conditions for petroleum and petroleum products
pipeline.
(b) Entity laying, building, operating or expanding
petroleum and petroleum products pipeline shall
allocate the common or contract carrier capacity
available on a transparent basis by maintaining a
record of the applications received and the basis of
allocation and also publish the information on its
website as per Annexure-1.
xxx
10. Declaring of existing pipeline for transportation
of petroleum and petroleum products as a common or
contract carrier.
(1) If the Board is of the opinion that it is necessary or
expedient to declare an existing pipeline for
transportation of petroleum and petroleum products as
a common or contract carrier,-
a) it may give wide publicity of its intention to do so
by inviting objections and suggestions within a
period of not less than one month from the date of
invitation;
b) the Board shall also provide the entity owning
the petroleum and petroleum products pipeline an
opportunity of being heard within a minimum notice
period of twenty one days from the close of the
invitation for objections and suggestions.
(2) After considering the objections and suggestions
received and after hearing the entity owning the
petroleum and petroleum products pipeline under sub-
regulation (1), the Board may declare the pipeline as a
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 82 of 95
common or contract carrier subject to such terms and
conditions as it may fix.
(3) Notwithstanding anything in sub-regulation (1) and
sub-regulation (2), the entity may, on a suo motu basis,
apply to the Board seeking declaration of a petroleum
and petroleum products pipeline as a common or
contract carrier and the Board after giving an
opportunity of hearing to the entity, shall, within a
period of fifteen days from the receipt of such an
application, declare the relevant petroleum and
petroleum products pipeline as a common or contract
carrier on such terms and conditions as it deems fit. "
75. The Apex Court in PNGRB v. IGL (supra) has dealt with the issue as
to whether regulations can be used to interpret something in the Act which is
not present in Act. The Apex Court in the said judgment has observed as
under:-
" 43 . In addition to the aforesaid there are various
Regulations dealing with the procedure of
determination. Mr Datar, learned Senior Counsel,
would submit that Section 61 of the Act has to be read
in consonance with the Objects and Reasons of the Act
and when the Board has the power to frame
regulations to carry out the purposes of the Act, it has
framed the Regulations in accordance with the
legislation and the High Court has totally flawed in
declaring it as ultra vires.
44 . We have already dealt with the purport of Section
11, adverted to the facet how the words “subject to”
have to be interpreted, functions of the Board, and
provisions relating to exclusivity, definitions of
“common carrier” and the “contract carrier”. Section
61 is a provision that enables the Board to frame
Regulations. If on reading of the statute in entirety,
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 83 of 95
such a power does not flow, a delegated authority
cannot frame a regulation as that would not be in
accord with the statutory provisions nor would it be for
the purpose of carrying on the provisions of the Act.
45 . In St. Johns Teachers Training Institute v. NCTE
[(2003) 3 SCC 321 : 5 SCEC 391] it has been observed
that: (SCC p. 331, para 10)
“10. A regulation is a rule or order prescribed by a
superior for the management of some business and
implies a rule for general course of action. Rules
and regulations are all comprised in delegated
legislations. The power to make subordinate
legislation is derived from the enabling Act and it is
fundamental that the delegate on whom such a
power is conferred has to act within the limits of
authority conferred by the Act. Rules cannot be
made to supplant the provisions or the enabling Act
but to supplement it. What is permitted is the
delegation of ancillary or subordinate legislative
functions, or, what is fictionally called, a power to
fill up details.”
46 . In Kunj Behari Lal Butail v. State of H.P. [(2000) 3
SCC 40] it has been ruled that: (SCC p. 46, para 13)
“13. It is very common for the legislature to provide
for a general rule-making power to carry out the
purpose of the Act. When such a power is given, it
may be permissible to find out the object of the
enactment and then see if the rules framed satisfy the
test of having been so framed as to fall within the
scope of such general power confirmed. If rule-
making power is not expressed in such a usual
general form then it shall have to be seen if the rules
made are protected by the limits prescribed by the
parent Act.”
47 . In State of Karnataka v. H. Ganesh Kamath
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 84 of 95
[(1983) 2 SCC 402 : 1983 SCC (Cri) 514] it has been
stated that: (SCC p. 410, para 7)
“7. … It is a well-settled principle of interpretation
of statutes that the conferment of rule-making
power by an Act does not enable the rule-making
authority to make a rule which travels beyond the
scope of the enabling Act or which is inconsistent
therewith or repugnant thereto .”
48 . In Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi [(1975) 1 SCC 421 : 1975 SCC (L&S)
101] : (SCC p. 433, para 18)
“18. … statutory bodies cannot use the power to
make rules and regulations to enlarge the powers
beyond the scope intended by the legislature. Rules
and regulations made by reason of the specific
power conferred by the statute to make rules and
regulations establish the pattern of conduct to be
followed.”
49 . In General Officer Commanding-in-Chief v.
Subhash Chandra Yadav [(1988) 2 SCC 351 : 1988
SCC (L&S) 542 : (1988) 7 ATC 296] , it has been held
as follows: (SCC p. 357, para 14)
“14. … before a rule can have the effect of a
statutory provision, two conditions must be fulfilled,
namely, (1) it must conform to the provisions of the
statute under which it is framed; and (2) it must also
come within the scope and purview of the rule-
making power of the authority framing the rule. If
either of these two conditions is not fulfilled, the rule
so framed would be void.”
50 . Similar view has been expressed in State of T.N. v.
P. Krishnamurthy [(2006) 4 SCC 517] and in Union of
India v. S. Srinivasan [(2012) 7 SCC 683 : (2012) 2
SCC (L&S) 433] wherein it has been held that: (S.
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 85 of 95
Srinivasan case [(2012) 7 SCC 683 : (2012) 2 SCC
(L&S) 433] , SCC p. 690, para 21)
“21. … If a rule goes beyond the rule-making
power conferred by the statute, the same has to be
declared ultra vires. If a rule supplants any
provision for which power has not been conferred,
it becomes ultra vires. The basic test is to determine
and consider the source of power which is relatable
to the rule. Similarly, a rule must be in accord with
the parent statute as it cannot travel beyond i t.”
51 . In Indramani Pyarelal Gupta v. W.R. Natu [AIR
1963 SC 274] , the Court has held that one of the tests
to determine whether a statutory body is vested with a
particular power is to see whether exercise of such
power is contraindicated by any specific provision of
the enactment bringing such statutory body into
existence. In Tata Power Co. Ltd. v. Reliance Energy
Ltd. [(2009) 16 SCC 659] , it has been ruled that save
and except for the exercise of regulatory power which
is specifically recognised by the statute, it is not open
to the regulatory body to exercise a power which is not
incorporated in the statute.
52 . In this context, it is fruitful to refer to the authority
in Academy of Nutrition Improvement v. Union of India
[(2011) 8 SCC 274] . The two-Judge Bench was
dealing with the issue of constitutional validity of the
Prevention of Food Adulteration (Eighth Amendment)
Rules, 2005. After discussing at length from various
angles, the Court held that: (SCC pp. 296-97, paras
66-67)
“66. Statutes delegating the power to make rules
follow a standard pattern. The relevant section
would first contain a provision granting the power
to make rules to the delegate in general terms, by
using the words „to carry out the provisions of this
Act‟ or „to carry out the purposes of this Act‟. This is
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 86 of 95
usually followed by another sub-section enumerating
the matters/areas in regard to which specific power
is delegated by using the words „in particular and
without prejudice to the generality of the foregoing
power, such rules may provide for all or any of the
following matters‟. Interpreting such provisions, this
Court in a number of decisions has held that where
power is conferred to make subordinate legislation
in general terms, the subsequent particularisation of
the matters/topics has to be construed as merely
illustrative and not limiting the scope of the general
power. Consequently, even if the specific
enumerated topics in Section 23(1-A) may not
empower the Central Government to make the
impugned rule (Rule 44-I), making of the rule can be
justified with reference to the general power
conferred on the Central Government under Section
23(1), provided the rule does not travel beyond the
scope of the Act.
„But even a general power to make rules or
regulations for carrying out or giving effect to the
Act, is strictly ancillary in nature and cannot enable
the authority on whom the power is conferred to
extend the scope of general operation of the Act.
Therefore, such a power “will not support attempts
to widen the purposes of the Act, to add new and
different means to carrying them out, to depart from
or vary its terms”.‟
[See Principles of Statutory Interpretation by Justice
G.P. Singh, 12th Edn., p. 1009 referring to
Shanahan v. Scott [(1957) 96 CLR 245] and Utah
Construction and Engg. (P) Ltd. v. Pataky [1966 AC
629 : (1966) 2 WLR 197 : (1965) 3 All ER 650 (PC)]
.]
67. Rule 44-I is not a rule made or required to be
made to carry out the provisions of the Act, having
regard to its object and scheme. It has nothing to do
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 87 of 95
with curbing of food adulteration or to suppress any
social or economic mischief.”
On the basis of the aforesaid analysis, the Court
opined that: (Academy of Nutrition Improvement
case [(2011) 8 SCC 274] , SCC p. 297, para 68)
“68. We have already noticed that as at present
there is no material to show that universal salt
iodisation will be injurious to public health (that is
to the majority of populace who do not suffer from
iodine deficiency). But we are constrained to hold
that Rule 44-I is ultra vires the Act and therefore,
not valid.”
53 . In the case at hand, the Board has not been
conferred such a power as per Section 11 of the Act.
That is the legislative intent. Section 61 enables the
Board to frame Regulations to carry out the purposes
of the Act and certain specific aspects have been
mentioned therein. Section 61 has to be read in the
context of the statutory scheme. The regulatory
provisions, needless to say, are to be read and applied
keeping in view the nature and textual context of the
enactment as that is the source of power. On a
scanning of the entire Act and applying various
principles, we find that the Act does not confer any
such power on the Board and the expression “subject
to” used in Section 22 makes it a conditional one. It
has to yield to other provisions of the Act. The power
to fix the tariff has not been given to the Board. In view
of that the Board cannot frame a Regulation which will
cover the area pertaining to determination of network
tariff for city or local gas distribution network and
compression charge for CNG. As the entire Regulation
centres around the said subject, the said Regulation
deserves to be declared ultra vires, and we do so."
(emphasis supplied)
76. A perusal of the 2012 Regulations does give an indication that the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 88 of 95
Board had framed these Regulations under Section 61 of the PNGRB Act on
an assumption that all pipelines which are now proposed to be laid, ought to
be contract carrier or common carrier pipelines. These Regulations have
been made in exercise of powers conferred under Section 61 of the PNGRB
Act. Section 61 of the PNGRB Act gives the power to the PNGRB to make
Regulations. A perusal of Section 61(2)(e),(p),(q),(r) of the PNGRB Act
shows that they only give power to the PNGRB to make regulations insofar
as the common/contract carrier are concerned and these regulations cannot
be construed to indicate the scope and ambit of the PNGRB Act that the
PNGRB Act was meant to totally prohibit the laying down of captive
pipelines.
77. As stated above, Section 61 of the PNGRB Act only deals with
common carrier and contract carrier pipelines and not with the captive
pipelines. In case the Legislature is of the opinion that captive pipelines
have to be done away with, then it had to explicitly state so in the Statute.
78. The Petitioner and the Board have been unsuccessful in persuading
this Court to read into the Statute, something which is not present. This
Court cannot read a bar into the statute, as it would amount to supplying the
casus omissus, which is not permissible. A reading of the Statute does not
give an indication that captive pipelines have been done away
with/prohibited.
79. A peculiar situation has arisen before this Court today. The Board
tasked with the Regulation of Downstream movement of Petroleum and
Natural Gas, and the Union of India have taken diametrically opposite
stands. This Court is of the opinion that the interest of the entire industry
relating to the transportation of petroleum and petroleum products would
perhaps be best served if the PNGRB and the Union of India through the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 89 of 95
Ministry of Petroleum and Natural Gas could sit together and identify
exactly what the regulatory board's role is, and examine that if any
amendments are required to the PNGRB Act and / or the Regulations made
thereunder.
80. Though the Petitioner and PNGRB has very strenuously contended
that the object behind dispensing with the captive pipelines in totality is to
avoid infructuous investments which is clear from a reading of Section 20 of
the PNGRB Act. However, as rightly contended by the learned Counsel for
the Union of India that the business consideration for laying down a captive
pipeline is different from the business consideration for laying down a
common/contract carrier pipeline as small entities will not prefer laying
down captive pipelines as they may not be commercially viable. At the same
time, it has also to be ensured that these entities get the benefit of the
common carrier and supply of their products to meet the requirements of the
competitive markets.
81. It is submitted by the Union of India that the laying of a captive
pipeline and a common/contract carrier pipeline are undertaken with
different business objectives. It is stated that while the laying of captive
pipelines is for evacuation and transportation of petroleum and petroleum
products to one‟s own premises, common/ contract pipelines are laid with
the intention of earning (through tariff) from the service of transportation of
petroleum and petroleum products to consumers/ customers. It is stated that
as far as the latter is concerned, as per Regulation 4 of the 2010 Regulations,
laying of petroleum product pipelines is undertaken when either an entity
submits an expression of interest or the Board suo motu initiates a proposal
inviting entities to participate in the process of selection of an entity for
laying, building, operating or expanding petroleum and petroleum products
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 90 of 95
pipeline along any route. In furtherance of the same, an entity proposing to
lay, build or operate a petroleum and petroleum product pipeline through the
expression of interest route has to furnish details such as petroleum products
availability position, potential demand of petroleum products en route the
petroleum and petroleum product pipeline, assessment of total volume for
transportation in the proposed petroleum and petroleum products pipeline,
technical specifications of the project attaching the copy of the DFR, etc. to
the Board.
82. The Union of India submits that while deciding any such application,
the Board has to consider the criteria laid down in Regulation 5(6) of the
2010 Regulations, such as technical capability, financial capability, detailed
feasibility report, etc., and therefore, when a common/ contract carrier
petroleum product pipeline is proposed to be laid, the Board scrutinizes
every proposal, including the feasibility of all such projects, as per the
extensive criteria laid down in the 2010 Regulations.
83. It is further submitted that Section 21 of the PNGRB Act provides an
entity laying a „common carrier‟ pipeline, the right of first use and as per the
2010 Regulations, an entity operating a „common carrier‟ pipeline is only
mandated to provide a minimum of 25% of the total pipeline capacity as a
„common carrier‟. Therefore, up to 75% of the capacity of the pipeline
remains with the entity operating the said pipeline with the right of first use
throughout the entire economic life of the petroleum product pipeline. In
addition, such an entity can also enter into firm contracts i.e., contracts for
more than one year as per the „contract carrier‟ principal defined under the
scheme of the PNGRB Act to enable capacity utilization.
84. The Union of India has further relied on Regulation 5(3) of the 2010
Regulations, to submit that the Board may web-host all comments received
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 91 of 95
to facilitate possible contracts for capacity booking by different entities with
the entities that may be interested in the development of petroleum and
petroleum products pipeline so as to facilitate coming up of an optimum
sized petroleum and petroleum products pipeline through the bidding
process.
85. It is further submitted that the first proviso to Regulation 6(a) of the
2012 Regulations provides that if the common carrier capacity is not fully
utilized, the entity may contract the same for a period of one year or more,
subject to the stipulation that in case another entity seeks booking of the
same for a period of less than one year, the request shall be accommodated
after pro-rating the same from the common carrier capacity already
contracted to other entities for a period of one year or more and that pro-
rating the common carrier capacity shall not exceed ten per cent of the total
common carrier capacity. It is stated that even if the common carrier
capacity is not utilized, an entity is free to enter into firm contracts so that
any such capacity is not underutilized.
86. It is stated that Regulation 6(c) of the 2012 Regulations provides that
common carrier capacity available in petroleum and petroleum products
pipeline at any given point in time shall be allocated to any entity seeking
booking of the same on a non-discriminatory ' first-come-first-serve ' basis
and any entity using the common carrier and contract carrier capacity of a
pipeline is required to pay tariff to the entity operating the said pipeline
infrastructure, which is determined by the Board as per the PNGRB
(Determination of Petroleum and Petroleum Products Pipeline
Transportation Tariff) Regulations, 2010 and based on factors stipulated in
Section 22 of the PNGRB Act. It is stated that an entity proposing to lay,
build, or operate a common/ contract carrier petroleum product pipeline
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 92 of 95
considers the aforementioned factors while determining the feasibility of a
pipeline project.
87. The Union of India submits that, in such circumstances, it is not likely
that keeping captive pipelines outside the purview of the Board may lead to
a situation where all entities would prefer laying such pipelines instead of
common/ contract carrier pipelines and thereby potentially rendering the
purpose of the PNGRB Act nugatory. The Union of India relies on the
judgment passed by the Apex Court in Shiv Shakti Coop. Housing Society,
Nagpur v. Swaraj Developers & Ors., (2003) 6 SCC 659 , the relevant
portion of the judgment reads as under:-
“27. Laws ought to be, and usually are, framed with a
view to such cases as are of frequent rather than such
as are of rare or accidental occurrence; or, in the
language of the civil law, jus constitui oportet in his
quae ut plurimum accidunt, non quae ex inopinato; for,
neque leges neque senatus consulta ita scribi possunt
ut omnis casus qui quandoque in sediriunt
comprehendantur, sed sufficit ea quae plaerumque
accidunt contineri; laws cannot be so worded as to
include every case which may arise, but it is sufficient
if they apply to those things which most frequently
happen…”
88. As rightly contended by the Union of India that an entity which feels
that it has firm contracts for supply of its products and intends to lay down a
pipeline to supply its own products, there is nothing in the PNGRB Act
which stops from doing so and it is the business consideration of that entity,
and therefore, that investment cannot be said to be an infructuous
investment.
89. In any event, if there is a requirement for another pipeline in the same
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 93 of 95
route, the Board can exercise its jurisdiction under Section 20 of the PNGRB
Act and convert the captive pipeline to a common carrier or if the Board is
of the opinion that there are enough entities for whose purpose a pipeline is
required to be laid down, it will follow the 2010 Regulations calling for
expression of interest for laying down its own pipelines.
90. The argument of the Petitioner that while calculating their financials,
the Petitioner had taken into account the requirement of the IOCL and had
made its bid accordingly and, therefore, now the IOCL cannot be permitted
to lay down its own pipeline as it affects its business interests is not relevant
for interpreting the provisions of the PNGRB Act.
91. The Union of India in its written submissions has enumerated list of
several captive pipelines which have been laid down after the enactment of
the PNGRB Act without getting authorization from the Board. The Union of
India is also correct in stating that in some places only captive pipelines are
viable and common/contract carrier pipeline is not viable because nobody is
interested to lay down a pipeline, for example, Paradip-Hyderabad pipeline;
Paradip-Somnathpur Haldia pipeline and Koyali-Ahmednagar Solapur
pipeline laid by IOCL, Ramanmandi-Bahadurgarh pipeline and
Ramanmandi-Bathinda-Sangrur pipeline laid by the HPCL.
92. The Union of India has also given several examples where captive
and common/contract carrier pipelines have been laid side by side and
running parallel for a significant length to same locations from the beginning
to the end after the PNGRB Act has come into force.
93. Though all these are not relevant for interpreting the PNGRB Act but
it does substantiate that the contention of Union of India that the concept of
captive pipelines has not been given a complete go-by after the enactment of
the PNGRB Act is correct. As stated earlier, since the Union of India and the
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 94 of 95
Board are singing different tunes, it is time for both of them to come
together and take a decision which would be in the best interests of the
country, keeping in mind the objectives for which the Board was formed or
suggest any amendments to the existing legislation or regulations framed
thereunder.
94. This Court is of the opinion that there is no authorization required by
the IOCL from the PNGRB for laying down a pipeline for transporting its
petroleum and petroleum products from its own jetty to the terminal.
95. In view of the above, the Communication dated 13.12.2023 issued by
the PNGRB to the IOCL, which is under challenge in W.P.(C) 2896/2024, is
set aside and consequently, the writ petition is allowed. Pending
application(s), if any, stand disposed of.
96. Resultantly, W.P.(C)15285/2023 filed by IMC Limited stands
dismissed along with pending application(s), if any.
SUBRAMONIUM PRASAD, J
AUGUST 14, 2024
hsk
Signature Not Verified
Digitally Signed
By:SHAZAAD ZAKIR
Signing Date:14.08.2024
19:45:52
W.P.(C) 15285/2023 & W.P.(C) 2896/2024 Page 95 of 95