Great Eastern Energy Corporation Limited v. Union of India
2015-05-27
G.ROHINI, RAJIV SAHAI ENDLAW
body2015
DigiLaw.ai
JUDGMENT : Rajiv Sahai Endlaw, J. 1. The writ petition has been filed impugning the order dated 31st March, 2014 of the respondent No. 2 Petroleum and Natural Gas Regulatory Board (PNGRB) of imposing penalty of Rupees One Crore on the petitioner under Section 28 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act) with an additional penalty of Rupees Two Lakhs for everyday during which the failure continued/continues after contravention of the first direction, for laying and operating a pipeline for transportation of Coal Bed Methane (CBM) gas without prior permission under Section 16 of the PNGRB Act. It is inter alia the case of the petitioner that the pipelines laid and being operated by it are not a common carrier of gas within the meaning of the PNGRB Act and it was thus not required to take any such permission. 2. Notice of the writ petition was issued and vide order on the application of the petitioner for interim relief it was directed that the respondent No. 2 PNGRB shall not take any coercive action against the petitioner in pursuance to the impugned order dated 31st March, 2014. It was however clarified that though the petitioner shall be entitled to continue supplying gas through the existing pipeline, no incremental activity will be undertaken by the petitioner without appropriate permission for the same from this Court. The petitioner was also directed to deposit a sum of Rupees Fifty Lakhs with the Registrar General of this Court. The said sum of Rupees Fifty Lakhs has been deposited by the petitioner. 3. The petitioner filed CM No. 8446/2014 seeking permission for replacing its old pipelines particularly connecting Well Nos.
The petitioner was also directed to deposit a sum of Rupees Fifty Lakhs with the Registrar General of this Court. The said sum of Rupees Fifty Lakhs has been deposited by the petitioner. 3. The petitioner filed CM No. 8446/2014 seeking permission for replacing its old pipelines particularly connecting Well Nos. W-40 to W-18, W-16 to W-14 and W-25 to Group Gathering Station and to lay fresh pipeline to supply CBM gas to Steel Authority of India Ltd. (SAIL), Baba Structures Ltd. and Baba Strips & Tubes Ltd. The said application was allowed vide detailed order dated 1st August, 2014 and permission, as sought, was given to the petitioner for replacing the existing pipelines and for laying fresh pipelines on the condition, (i) that the petitioner while doing so, shall comply with Regulation 7 of the PNGRB (Technical Standards and Specifications including Safety Standards for Natural Gas Pipelines) Regulations, 2009, and, (ii) that the petitioner, before commissioning the replaced and new pipelines, shall have the same inspected in accordance with the said Regulation 7. The respondent No. 2 PNGRB was also directed to carry out the said inspection within two weeks of the notice given by the petitioner therefor. 4. The petitioner, in or about beginning of September, 2014 filed CM No. 14443/2014 informing that it had, in accordance with the aforesaid direction, laid down the pipeline from Well No. 40 to Well No. 18 and had also got the said pipeline inspected from M/s Inspectorate Griffith India Pvt. Ltd., Kolkata, a 100% subsidiary of M/s Inspectorate International Limited which had been acquired by M/s Bureau Veritas which is an empanelled third party inspection agency with the respondent No. 2 PNGRB and that the said agency had certified that the petitioner had fully complied with Regulation 7 supra and therefore seeking dispensation with the inspection by the respondent No. 2 PNGRB in terms of the order dated 1st August, 2014 supra. 5.
5. The aforesaid application came up before us on 22nd September, 2014, when the counsel for the respondent No. 2 PNGRB handed over a copy of the letter dated 18th September, 2014 of the respondent No. 2 PNGRB to the petitioner with respect to pipeline connecting W-40 to W-18 and W-16 to W-14 and stating that a pipeline connecting the Gas Wells to the Gas Gathering Station for treatment / processing was outside the purview of PNGRB and stated that in terms thereof, no direction, as sought by the petitioner in the application, was necessary. Accordingly, CM No. 14443/2014 was disposed of. 6. CM No. 1440/2015 has been filed by the petitioner in or about January, 2015 stating, (i) that it was vide order dated 1st August, 2014 permitted to replace some existing pipelines and to lay certain fresh pipelines and on the conditions contained therein; (ii) that it had in accordance with the said permission carried out the works of replacement of the old pipelines and laying down of certain fresh pipelines and got the same, as aforesaid, inspected from M/s Inspectorate Griffith India Pvt. Ltd. and filed CM No. 14443/2014 in this Court; (iii) that the respondent No. 2 PNGRB in response thereto, issued the letter dated 18th September, 2014 inter alia to the effect that the pipelines carrying gas from the Gas Wells to the Gas Gathering Station was beyond the jurisdiction of the respondent No. 2 PNGRB and thus no inspection thereof was necessary; (iv) however the issue of inspection of the newly laid pipelines escaped the attention and it was only shortly prior to the filing of the instant application, realised that the newly pipelines were commissioned in October, 2014, without having the same inspected from the respondent No. 2 PNGRB, as was stipulated in the order dated 1st August, 2014; (v) that the default of the petitioner in this regard was bona fide and tendering unconditional and unqualified apology therefor. 7. The aforesaid application came up first before this Court on 28th January, 2015, and thereafter on 13th February, 2015 when the counsel for the respondent No. 2 PNGRB took time to file a response to the application. A reply thereto has been filed.
7. The aforesaid application came up first before this Court on 28th January, 2015, and thereafter on 13th February, 2015 when the counsel for the respondent No. 2 PNGRB took time to file a response to the application. A reply thereto has been filed. The application was thereafter listed on 7th April, 2015, 16th April, 2015, 28th April, 2015, 1st May, 2015 and 6th May, 2015, when the hearing thereof was adjourned for some reason or the other. Finally, arguments were addressed on the application on 14th May, 2015, when we reserved orders. 8. The senior counsel for the petitioner argued that the new pipelines laid in pursuance to the permission granted vide order dated 1st August, 2014, remained to be offered for inspection before commissioning, owing to a bona fide mistake on the part of the officials of the petitioner who assumed that since the respondent No. 2 PNGRB had taken a stand that no inspection was required of the replaced pipelines carrying gas from the Gas Wells to the Gas Gathering Station, no inspection was required of the newly laid pipelines also, carrying gas to the new customers of the petitioner. He again in the Court, on the part of the petitioner, offered unconditional and unequivocal apology. 9. Per contra, the learned ASG appearing on behalf of the respondent No. 2 PNGRB has contended that the default on the part of the petitioner can by no stretch of imagination be said to be small or insignificant to be condoned. It was argued that the same is a huge security lapse exposing a large number of people to danger. The learned ASG has argued that the dispute between the parties is that, while according to the petitioner its pipeline is a dedicated one, according to the respondent No. 2 PNGRB, the pipeline of the petitioner is a common carrier and with respect to which the respondent No. 2 PNGRB can exercise jurisdiction and regulate its operation. The learned ASG has further drawn attention to Regulation 7 supra and contended that the said Regulation 7 requires inspection, not only after the pipeline has been laid but also throughout the work of the laying of the pipeline.
The learned ASG has further drawn attention to Regulation 7 supra and contended that the said Regulation 7 requires inspection, not only after the pipeline has been laid but also throughout the work of the laying of the pipeline. It is contended that the plea of the petitioner that it had got the said pipeline inspected from accredited agency M/s Inspectorate Griffith India Pvt. Ltd. is a fantastic one, inasmuch as admittedly M/s Inspectorate Griffith India Pvt. Ltd. is not an accredited agency and is merely claimed to be a 100% subsidiary of another company which is now stated to have been acquired by an accredited agency of the respondent No. 2 PNGRB. It is also argued that the default is not bona fide and the petitioner intentionally kept the respondent No. 2 PNGRB in the dark about having commissioned the newly laid pipeline supplying gas to a customer of the petitioner. 10. The senior counsel for the petitioner in rejoinder has controverted that Regulation 7 requires the respondent No. 2 PNGRB to be involved in each and every stage of laying of a pipeline. It is contended that the respondent No. 2 PNGRB has never in the past carried out such inspection; rather, the respondent No. 2 PNGRB does not carry out any inspection itself and has appointed accredited agencies for the said purpose. It was yet further emphasized that the respondent No. 2 PNGRB had not insisted on such inspection of the work of laying of pipeline even vis-a-vis replacement of the old pipeline, though ultimately took a decision that a pipeline from Gas Well to Gas Gathering Station is not within its domain. 11. We enquired from the learned ASG appearing for the respondent No. 2 PNGRB, as to why did the respondent No. 2 PNGRB during the hearing of CM No. 8446/2014 supra not insist upon being involved in the entire work of laying of the new pipelines and was satisfied with the condition of inspection prior to commissioning. 12. The learned ASG argued that the conditions imposed on the petitioner in the order dated 1st August, 2014 granting permission for replacement and laying down of new pipeline were two fold. Firstly, to comply with Regulation 7 and secondly to, before commissioning, have the pipeline inspected, again in accordance with Regulation 7.
12. The learned ASG argued that the conditions imposed on the petitioner in the order dated 1st August, 2014 granting permission for replacement and laying down of new pipeline were two fold. Firstly, to comply with Regulation 7 and secondly to, before commissioning, have the pipeline inspected, again in accordance with Regulation 7. It is argued that once it had been ordered that the petitioner shall comply with Regulation 7 which in turn requires inspection at all stages of laying down of the pipeline, the petitioner was bound to offer such inspection. 13. We have yet further enquired from the learned ASG that if the newly laid pipeline poses such a safety hazard as was emphasized, why did the respondent No. 2 PNGRB inspite of knowing that vide order dated 1st August, 2014 permission therefor had been granted, not verify the laying of the pipeline. We have yet further enquired, as to why the respondent No. 2 PNGRB in the last over three months since the filing of this application in January, 2015 and inspite of knowing therefrom that the newly laid pipeline had been commissioned in October, 2014, has not visited the said pipeline to satisfy itself of the safety aspect or not asked this Court to immediately stop the operation thereof. 14. Save for contending that the same cannot benefit the petitioner, who is itself at default, no other answer was forthcoming. 15. We in the circumstances enquired from the learned ASG as to what is the way forward now and that even if it were to be held that the default on the part of the petitioner in not complying with the condition imposed in the order dated 1st August, 2014 is not bona fide, what orders are to be made in the present application. 16. The learned ASG states that since the newly laid pipelines have been commissioned without complying with the conditions subject to which it was permitted to be laid, the newly laid pipelines have to be ordered to be immediately de-commissioned. 17. We also enquired from the learned ASG, as to why the respondent No. 2 PNGRB, at least since January, 2015, has not inspected the said newly laid pipelines. 18. The learned ASG stated that the pipelines are underground and cannot be inspected. 19. We have considered the rival contentions.
17. We also enquired from the learned ASG, as to why the respondent No. 2 PNGRB, at least since January, 2015, has not inspected the said newly laid pipelines. 18. The learned ASG stated that the pipelines are underground and cannot be inspected. 19. We have considered the rival contentions. Though undoubtedly gas is a hazardous substance and can endanger the safety of the persons who not only come in contact therewith but also of persons who may be far away therefrom but the conduct of the respondent No. 2 PNGRB in the present case does not allow us to order the harsh step of de-commissioning of the pipeline which has been operational now for nearly nine months inspite of the flag of ‘danger’ being waived at us. It cannot be lost sight of that the pipeline, de-commissioning whereof is sought, is supplying gas to SAIL, Baba Structures Ltd. and Baba Strips & Tubes Ltd. and it can safely be assumed that de-commissioning of the pipeline and resultant stoppage of supply of gas will affect if not shut down the works of the said customers of the petitioner. 20. The respondent No. 2 PNGRB, during the hearing of CM No. 8446/2014 did not take a stand that it was required to inspect the entire process of laying of pipeline, as has been argued now. In fact, PNGRB did not even file any reply to the said application despite opportunities. All that was said at the time of hearing was that PNGRB was required to satisfy itself of the technical and safety standards, as specified in Regulation 7 supra, of the proposed pipeline. Rather, the counsel for PNGRB, as recorded in the order dated 1st August, 2014, agreed that it will ‘test the replaced / new pipeline laid, before the commissioning thereof’. It was in this context that reference to Regulation 7 was made in the said order. The purport of providing that the petitioner, while laying the pipeline will comply with Regulation 7, was not that PNGRB will be given inspection at each and every stage; inspection was contemplated only before commissioning. 21. We however hasten to add that neither on 1st August, 2014 nor today are we interpreting Regulation 7 supra.
The purport of providing that the petitioner, while laying the pipeline will comply with Regulation 7, was not that PNGRB will be given inspection at each and every stage; inspection was contemplated only before commissioning. 21. We however hasten to add that neither on 1st August, 2014 nor today are we interpreting Regulation 7 supra. All that we say is that neither did the PNGRB on 1st August, 2014 insist on inspection during the process of laying of pipeline nor did we order so. All that was asked and ordered was, inspection before commissioning. 22. The petitioner admits to be in default thereof. However, now that third party interests are involved, withdrawing the permission granted on 1st August, 2014 for such default, without satisfying ourselves that the default is irreversible, does not appear to be just. It cannot also be forgotten that CBM gas is a national resource which may be wasted if we suddenly order de-commissioning of the pipeline. 23. Though the learned ASG argued that the pipeline cannot be inspected without being de-commissioned but is unpalatable to us at least without any expert opinion to this effect. Our common sense tells that such pipelines would be required to be inspected on a regular basis. To us it appears incongruous that for each such inspection, the pipeline would be required to be de-commissioned and dug up for inspection. Our common sense further tells us that the testing of pipelines can only be by allowing whatever they are intended to carry, to run through them and then measuring the pressure at different points. The same, to us it appears, is possible now also. Moreover, today’s technology allows one to look beneath the surface of earth and without any technical experts telling us that for compliance with Regulation 7, the pipe has to be de-commissioned and dug out, we cannot accept the argument. As far as quality and specifications of goods / materials used in laying thereof is concerned, the same is a matter of documents which can be inspected. Neither the officials of PNGRB nor of its inspection agency if any can be expected to remain stationed at the site throughout the time of laying of the pipeline and even if had been informed at the time of laying would have probably satisfied themselves from documents only. 24.
Neither the officials of PNGRB nor of its inspection agency if any can be expected to remain stationed at the site throughout the time of laying of the pipeline and even if had been informed at the time of laying would have probably satisfied themselves from documents only. 24. It was also the contention of the petitioner on 1st August, 2014 and even now that it is also under the audit of Oil Industry Safety Directorate (OISD), who have also satisfied themselves of the safety aspects. 25. We however are neither competent nor intend to give any finding on the technical aspects. All that we say is that till the pipeline is inspected, to whatever extent possible now, by the persons competent to opine thereon, no order for de-commissioning thereof can be made. Technical and safety matters are best left to technical persons and the Courts are to merely act on their report, unless challenged. Unfortunately, the argument of the PNGRB is not based on any such technical / expert opinion. Predictions of dangerousness or use of dangerousness as a cover are themselves hazardous. PNGRB, after showing no concern for safety cannot cry wolf when the petitioner comes forward admitting its lapse. 26. We accordingly direct: (I) The respondent No. 2 PNGRB to either itself or through any of its agencies inspect the newly laid pipelines, to the extent possible, in terms of order dated 1st August, 2014 within one month hereof; (II) The petitioner to facilitate the aforesaid inspection by providing all particulars, documents which may be required and by allowing access and bearing admissible costs; (III) A report be submitted to this Court of the said inspection, including on the aspect of safety and the aspects which remain doubtful owing to the pipelines being inaccessible and the further steps, if any required to be taken for proper inspection of the pipelines, before the next date. 27. List for further consideration on 9th July, 2015. 28. We now take up CM No. 6596/2015 of SAIL for impleadment / intervention in the writ petition.
27. List for further consideration on 9th July, 2015. 28. We now take up CM No. 6596/2015 of SAIL for impleadment / intervention in the writ petition. Impleadment / intervention is sought pleading, (i) that till now the petitioner was the only supplier of natural gas / CBM gas in the region; (ii) that SAIL has entered into agreements with the petitioner for supply of CBM gas which is used as a fuel in the steel making process; (iii) that SAIL supports the decision of PNGRB impugned in this petition because if the subject pipeline is a common carrier as held in the said decision, then PNGRB will be able to fix and control the transportation tariff for the gas transported in the said pipeline and would bring down the tariff being charged by the petitioner from SAIL; (iv) that SAIL thus has a stake in the decision of the instant petition; (v) that petitioner has been arbitrarily increasing the price of the gas; (vi) SAIL is also interested in the matter because the issue pertains to natural resource which has to be made available at reasonable price. 29. We had during the hearing enquired from the counsel for SAIL whether on the aforesaid reasoning all the other customers of the petitioner would also be entitled to seek impleadment or intervene and either supporting or opposing the petitioner and whether such a course of action would be justified and expedient for the decision on the petition. 30. Needless to state that no answer was forthcoming. 31. The petitioner of course opposes the impleadment. 32. We may notice that it is not the case of SAIL that there is any laxity on the part of respondent No. 2 PNGRB in defending its decision (impugned in this petition) or in representing its case before this Court. PNGRB as aforesaid is being represented by the ASG. 33. Merely because of being affected by the outcome of a lis one way or the other does not entitle a person to seek impleadment / intervention therein. The principle laid down as far back as in Moser v. Marsden (1892) 1 Ch 487 that a party who is not directly interested in the issues between the plaintiff and the defendant but is only indirectly or commercially affected cannot be added as a defendant, has been accepted in New Redbank Tea Co.
The principle laid down as far back as in Moser v. Marsden (1892) 1 Ch 487 that a party who is not directly interested in the issues between the plaintiff and the defendant but is only indirectly or commercially affected cannot be added as a defendant, has been accepted in New Redbank Tea Co. Pvt. Ltd. v. Kumkum Mittal (1994) 1 SCC 402 . The outcome of a lis of a Writ Court, particularly with respect to governmental decisions and policies will always affect besides the parties thereto, a large number of other persons as well and if it were to be held that all such persons for this reason alone have a right to impleadment / intervention therein, the decision of such a lis would become virtually impossible. 34. Significantly, the relationship of SAIL with the petitioner is contractual. SAIL, even after entering into contracts with the petitioner neither challenged the rates for supply of gas being demanded by the petitioner nor complained to the PNGRB of the same. It is also not the case of SAIL that the decision of the PNGRB impugned in this petition was pursuant to the matter being brought to the attention of the PNGRB by SAIL. 35. The counsel for SAIL also could not answer as to how SAIL would be able to better defend the decision of PNGRB than PNGRB itself. 36. In these circumstances, we do not find any ground either for impleadment of SAIL as a party to the writ petition or to allow SAIL to intervene in the writ petition. 37. Resultantly, CM No. 6596/2015 is dismissed.