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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11450 OF 2014

GAIL (INDIA) LTD.                         Appellant(s)                                 VERSUS

PETROLEUM AND NATURAL GAS REGULATORY  BOARD & ORS.     Respondent(s)

J U D G M E N T

KURIAN, J.

1. The main issue raised in this appeal is whether  the denial of access to common carrier capacity on  reasonable endeavor basis to the two pipelines laid  by  the  appellant  to  the  second  respondent,  is  discreminatory  and  amounting  to  Restrictive  Trade  Practices or not.  In the nature of the order we are  required to pass in this case, it is unnecessary to  go in detail to the factual matrix.      2. The issue arises under the Petroleum and Natural  Gas  Regulatory  Board  (Authorising  entities  to  lay,  build,  operate  or  expand  natural  gas  pipeline)  Regulations,  2008  and  Petroleum  and  Natural  Gas  Regulatory Board (Guiding Principles for Declaring or

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Authorising Natural Gas Pipeline as Common Carrier or  Contract Carrier) Regulations, 2009.   

3. In  terms  of  the  Regulations,  the  appellant  published the available common carrier capacity for  the prospective contracting by any third party.    4. On  19.11.2012,  the  appellant  published  an  Expression  of  Interest  for  booking  capacity  by  intrested parties mentioning therein that the common  carrier  capacity  thus  available  is  on  Ship  or  Pay  basis.   

5. Respondent  No.  2,  on  04.05.2013,  expressed  its  desire  to  avail  the  common  carrier  capacity  on  reasonable endeavour basis.    6. Failing to resolve the disputes between ship or  pay and reasonable endeavour basis, Respondent No.2  filed a complaint before the Petroleum and Natural Gas  Regulatory  Board  (in  short,  "the  Board")  on  21.09.2013.   

7. The Board, after elaborate discussions, allowed  the complaint.  We shall extract the relevant portion  as under :-

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" .........

52.  The  respondent's  explanation  does  

not  deserve  any  acceptability  or  

credibility  at  all  because  the  common  

carrier  capacity  has  to  be  non-

discriminatory  reserved  on  'first-cum-

first-serve'  basis  without  making  any  

specific classification for reservation  

of common carrier capacity.

53.The  practice  adopted  by  the  

respondent  on  the  one  hand  reveals  

discrimination towards the customer like  

complainant  and  on  the  other  hand,  

results  in  additional  burden  for  the  

shippers  who  are  not  the  regular  and  

long  standing  customers  of  the  

respondent  and  such  practices  also  

discourage  fair  competition  in  the  

market.   

54.In view  of above,  it would  not be  

appropriate  for  us  to  direct  the  

respondent  for  booking  common  carrier  

capacity  on  reasonable  endeavour  basis  

but  we  hold  that  the  practice  being  

adopted by the respondent, while booking  

common  carrier  capacity,  is  not  only  

discriminatory,  it  also  amounts  to

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restrictive  trade  practice  and  must  

follow the consequence under Section 28  

in the light of the provision of Section  

11 (a) read with Section 12(1)(b)(v) of  

the Petroleum &  Natural Gas Regulatory  

Board Act.   

55.On  giving  careful  consideration  to  

all  the  facts  and  circumstances,  we  

hereby  direct  the  respondent  to  

immediately cease its restrictive trade  

practice of preventing the shippers like  

complainant,  the  access  of  common  

carrier capacity in its common carrier  

pipeline and also impose civil penalty  

of Rs. 1.00 lac under Section 28 of the  

PNGRB Act, 2006, to be deposited within  

a month from today."        

8. Aggrieved,  the  appellant  took  up  the  matter  before  the  Appellate  Tribunal  for  Electricity  (in  short, "Appellate Authority"), leading to the impugned  order  dated  28.11.2014,  by  which  the  Appellate  Authority  dismissed  the  appeal  in  the  following  terms :-

"On giving careful consideration to the  

facts and circumstances of the Appeal,  

including the pleadings and submissions

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made  by  the  parties,  we  are  of  the  

opinion  that  it  has  been  established  

that the Appellant, in the instant case,  

while booking common carrier capacity in  

its  pipeline,  has  acted  in  a  

discriminatory  manner  leading  to  

restrictive trade practices and as such,  

the  Appellant  is  liable  to  pay  the  

penalty  of  Rs.  1  lakh  to  the  Board.  

Thus,  the  Impugned  Order  is  upheld.  

Consequently,  the  Appeal  is  hereby  

dismissed"  

9. Feeling aggrieved by the impugned order passed by  the Appellate Authority, the appellant has preferred  this appeal before us.     

10. Though  the  parties  have  taken  elaborate  contentions both before the Board as well as before  the  Appellate  Authority,  having  extensively  heard  Mr.Tushar Mehta, learned Additional Solicitor General  appearing for the appellant and Mr. Parag Tripathi,  learned  senior  counsel  appearing  for  the  second  respondent, we find that the the following crucial  aspect has not been considered either by the Board or  by the Appellate Authority. The main arguments of the

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learned  counsel  for  the  respondents  rests  on  the  application  of  the  Petroleum  and  Natural  Gas  Regulatory  Board  (Affiliate  Code  of  Conduct  for  Entities  Engaged  in  Marketing  of  Natural  Gas  and  Laying, Building, Operating or Expanding Natural Gas  Pipeline) Reglations, 2008 and without addressing this  issue, the dispute as raised in the complaint cannot  be resolved.  

11. In the facts and circumstances of the case, we  are  of  the  view  that  unless  the  issue,  which  is  formulated below, is addressed, the complaint filed by  the second respondent before the Board should not have  been disposed of.  Therefore, we propose to frame the  following  issue  and  send  the  matter  back  to  the  Board :-

Issue - To what extent, the Petroleum and Natural Gas  Regulatory  Board  (Affiliate  Code  of  Conduct  for  Entities  Engaged  in  Marketing  of  Natural  Gas  and  Laying, Building, Operating or Expanding Natural Gas  Pipeline)  Reglations,  2008  are  applicable  to  the  complainant.  

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12. While addressing this issue, the interplay between  the scheme as per the Act and the regulations will  also be addressed.  

13. We find that the pleadings by both the parties  have  not  been  satisfactory  before  the  original  authority.  Therefore, as requested by the learned  senior counsel appearing for both the sides, we permit  both sides to file additional pleadings before the  Board.  The  complainant  may  file  its  additional  pleadings  within  two  weeks  from  today  and  the  appellant  will  file  its  reply  within  two  weeks  thereafter.  Based on the additional pleadings, we  make it clear, it will be open to the Board to raise  additional issues, if required.   

14. Having  regard  to  the  fact  that  the  original  complaint was filed in the year 2013, we direct the  Board to dispose of the complaint within six months  from  today.   We  also  grant  liberty  to  the  complainant, if so required, to make an application  before  the  Board  for  an  appropriate  interim  order  after completion of the pleadings and in which case,  the Board may dispose of the application within three  months.  

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15.In  that  view  of  the  matter,  we  set  aside  the  impugned  order  passed  by  the  Appellate  Authority  dated 28.11.2014 in Appeal No. 52 of 2014 as also the  original order passed by the Board dated 26.12.2013  in Case No. 68 of 2013.   

16.We make it clear that we have not expressed any  opinion on the merits of the case and it will be open  to  both  the  parties  to  raise  all  available  contentions before the Board at any stage.   

17. With the above observations and directions, the  Civil Appeal is disposed of with no order as to costs.  

.......................J.               [ KURIAN JOSEPH ]  

.......................J.               [ ROHINTON FALI NARIMAN ]  New Delhi; January 13, 2016.