Date : 26/12/ The petitioner Gujarat State Petronet Limited (hereinafter referred to as "GSPL ) has filed the present petition, seeking followi

Transcription

1 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO of 2017 FOR APPROVAL AND SIGNATURE: HONOURABLE MS.JUSTICE BELA M. TRIVEDI Sd/- ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish to see the fair copy of the judgment? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder? YES YES YES YES ========================================================== GUJARAT STATE PETRONET LIMITED...Petitioner(s) Versus M/s.GAIL INDIA LIMITED & 3...Respondent(s) ========================================================== Appearance: MR MIHIR THAKORE, SR. ADVOCATE WITH MR ASPI M KAPADIA, ADVOCATE for the Petitioner(s) No. 1 MR KAMAL TRIVEDI, SR. ADVOCATE WITH,MR MIHIR JOSHI, SR. ADVOCATE WITH MR VISHWAS K SHAH, CAVEATOR for the Respondent(s) No. 1 MR S.I. NANAVATI, SR. ADVOCATE WITH MRS SUMAN KHARE, ADVOCATE for the Respondent(s) No. 2 MR RITURAJ M MEENA, ADVOCATE for the Respondent(s) No. 3 MR DEVANG VYAS, ADVOCATE for the Respondent(s) No. 4 ========================================================== CORAM: HONOURABLE MS.JUSTICE BELA M. TRIVEDI Page 1 of 80 HC-NIC Page 1 of 80 Created On Tue Dec 26 19:30:23 IST 2017

2 Date : 26/12/ The petitioner Gujarat State Petronet Limited (hereinafter referred to as "GSPL ) has filed the present petition, seeking following reliefs as contained in paragraph 19 thereof:- 19. a. To quash and set aside the permission accorded by the respondent No.4 i.e. the Approval Committee in its 76 th meeting held on at Item No as well as any subsequent communication to respondent No.1 and/or respondent No.2 in respect thereto; b. To restrain the respondent Nos.1 and 2 from carrying out any pipeline laying activity in the Dahej SEZ area for transportation of Natural Gas; c. Pending the hearing and final disposal of this petition, to stay the operation, execution and implementation of the permission accorded by the respondent No.4 Page 2 of 80 HC-NIC Page 2 of 80 Created On Tue Dec 26 19:30:23 IST 2017

3 i.e. the Approval Committee in its 76 th meeting held on at Item No ; d. Pending the hearing and final disposal of this petition restrain the respondent Nos.1 and 2 from carrying out any pipeline laying activity in the Dahej SEZ area for transportation of Natural Gas; e. To grant such other and further reliefs as this Hon ble Court deems fit and proper in the facts and circumstances of the case; f. To award costs of this petition. 2. It may be noted that the petition filed on was sought to be circulated on the same day at 2.30 p.m., and the said permission was granted by the Court, considering the urgency in the matter. The Court after hearing the learned Sr. Advocate Mr.Mihir Thakore for the petitioner and the learned Sr. Advocate Mr.Kamal Trivedi appearing on caveat for the respondent No.1 M/s.GAIL India Limited (hereinafter referred to as "M/s.GAIL ), had issued the notices to the Page 3 of 80 HC-NIC Page 3 of 80 Created On Tue Dec 26 19:30:23 IST 2017

4 respondents making them returnable on and granted an ad-interim relief restraining the respondent No.1 M/s.GAIL from laying and connecting the 8 Natural Gas Pipeline by tap off from its existing Dahej-Uran Pipeline (DUPL) for supplying gas to the respondent No.2 ONGC Petrol Additions Limited (hereinafter referred to as "M/s.OPAL ) situated in Special Economic Zone, Dahej (hereinafter referred to as "SEZ, Dahej ) till the next date. The said order is continued till this date. The respondent No.2 M/s.OPAL on filing the Civil Application No of 2017, seeking vacation of the said ad-interim relief, and the parties having completed the pleadings, the Court heard the Special Civil Application for admission at length along with the said Civil Application. FACTUAL MATRIX: 3. The case of the petitioner as stated in the petition is that the petitioner GSPL is a listed public limited company, and is subsidiary of Gujarat State Petroleum Corporation Limited (hereinafter referred to as "GSPC ). The main Page 4 of 80 HC-NIC Page 4 of 80 Created On Tue Dec 26 19:30:23 IST 2017

5 activity of the petitioner is laying of gas pipelines for developing gas grid in the State of Gujarat for transportation of natural gas. On the Special Economic Zones Act, 2005 (hereinafter referred to as "the SEZ Act ) having come into force, the petitioner Company had entered into a Co-Developer Agreement dated (Annexure- A) with the respondent No.3 M/s.DSL, the Developer under the said Act. According to the petitioner, the necessary permission being No.F2/9/2003/EPZ dated (Annexure-B) was accorded by the Government of India, Ministry of Commerce and Industry, Department of Commerce (SEZ Section), which was a permission by Board of Approval under Section 3(12) of the SEZ Act. Initially, the said approval was given for a period of three years, which was subsequently extended as per the letter dated (Annexure-C), and the validity of the said permission and the Co-Developer Agreement was made coterminous with that of the Developer. It is further case of the petitioner that the petitioner has set up gas infrastructure facility, which includes gas pipeline made for Page 5 of 80 HC-NIC Page 5 of 80 Created On Tue Dec 26 19:30:23 IST 2017

6 transmission of natural gas to the units set up in the Dahej SEZ area and accordingly the petitioner is also transmitting gas to the respondent No.2 M/s.OPAL. However, the respondent No.1 M/s.GAIL in violation and in contravention of the provisions contained in the SEZ Act sought permission from the respondent No.4 Approval Committee to lay 8 dia pipeline from its existing Dahej Ural Pipeline to the plant of the respondent No.2 M/s.OPAL for providing facility for transportation of natural gas. The respondent No.4 Approval Committee, Dahej SEZ Limited (hereinafter referred to as "the Approval Committee ), in its meeting held on at Item No , decided to approve the said request of the respondent No.1 (Annexure-D). According to the petitioner, such permission could have been granted by the Board of Approval constituted under Section 8 of the SEZ Act and not by the Approval Committee constituted under Section 13 of the said Act. The petitioner being a Co-Developer had exclusivity to develop infrastructure for transportation of gas and distribution of gas Page 6 of 80 HC-NIC Page 6 of 80 Created On Tue Dec 26 19:30:23 IST 2017

7 within SEZ area in view of the agreement dated entered into with the respondent No.3, DSL. The petitioner, therefore, wrote a letter on (Annexure-E) to the respondent No.3 i.e. the CEO, M/s.DSL, requesting him to reconsider the decision of granting approval to the respondent No.1. The CEO of the respondent No.3, therefore, wrote a letter dated (Annexure-F) to the respondent No.2 M/s.OPAL with a copy marked to the respondent No.1 GAIL stating that the Gujarat State Petroleum Corporation Limited (GSPC), being a Co-Developer, it should obtain No Objection Certificate (hereinafter referred to as "NOC ) from the GSPC. Thereafter, the petitioner wrote a letter dated to the respondent No.1 (Annexure-G), requesting it not to undertake any gas pipeline laying activity without seeking due permission from the Developer M/s.DSL and the Co-Developer GSPL. A similar letter was also written to the respondent no.2 on (Annexure-H). The petitioner apprehending that the respondent No.1 M/s.GAIL would make the Tap off and lay the pipeline for transportation of gas to the respondent No.2, Page 7 of 80 HC-NIC Page 7 of 80 Created On Tue Dec 26 19:30:23 IST 2017

8 filed the present petition on seeking afore-stated reliefs. 4. The respondent No.1 GAIL and the respondent No.2 OPAL filed elaborate affidavits-in-reply raising various contentions, including the preliminary objections as regards the maintainability of the petition and alleging that the petition was filed on with oblique motive and ulterior purpose suppressing material facts to stall the work of the respondent No.1, which was going on in full swing at the site. The alternative remedy of filing suit under Section 23 and of filing arbitration proceedings under Section 42 of the SEZ Act was available to the petitioner. The petition also suffered from the vice of delay and laches, as after issuing letter on , the petition was filed on with oblique motive. 5. It has been contended by the respondent No.1 inter alia that M/s.DSL is a company floated by GIDC and ONGC duly notified by the Ministry of Commerce and Industry, Government of India, as a Developer of Multi Product SEZ at Dahej. On Page 8 of 80 HC-NIC Page 8 of 80 Created On Tue Dec 26 19:30:23 IST 2017

9 , GIDC had approved the proposal of the respondent No.1 for laying 30 dia pipeline Dahej-Hazira Gas Pipeline through GIDC corridor. The Dahej SEZ was notified by the Ministry of Commerce and Industry, Government of India, as a Multi Product SEZ. On an agreement was executed between the DSL and the petitioner, by virtue of which the petitioner became Co- Developer, and was conferred exclusive right with respect to development, operation and maintenance of Gas transmission pipeline and distribution of Gas in SEZ. The respondent No.1 was granted permission on by the Petroleum and Natural Gas Regulatory Board under Regulation 17(1) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to lay, build, operate or expand Natural Gas pipelines) Regulations, 2008 (hereinafter referred to as "the PNGRB Regulations 2008 ) (Annexure-R/1). On a lease deed was executed between the respondent No.2 M/s.OPAL and respondent No.3 M/s.DSL, and clause 4.6 thereof permitted the M/s.OPAL to obtain any service, amenities or facilities, which are not provided by the M/s.DSL Page 9 of 80 HC-NIC Page 9 of 80 Created On Tue Dec 26 19:30:23 IST 2017

10 and the Co-Developer the petitioner (Annexure- R/2). On the petitioner by refused to book additional supply of gas and communicated to M/s.OPAL to look for an alternate arrangement for additional capacity (Annexure- R/3), by which the petitioner had waived its right under the agreement with DSL. 6. The respondent No.1 has further contended that on , the respondent M/s.GAIL had sought permission from the respondent No.3 M/s.DSL for laying 8 dia pipeline by Tap off from the existing respondent s DUPL 30 dia natural gas pipeline to M/s.OPAL across GIDC/SEZ area in existing Right of Use (ROU) of the respondent (Annexure-R/6). Accordingly, on the respondent No.3 had granted, in principle, approval to the respondent No.1 (Annexure-R/7). Thereafter, on the respondent No.4 - Approval Committee in its meeting decided to approve the said request of the respondent No.1 vide Item No On , the Development Commissioner of M/s.DSL wrote a letter to the respondent No.1 and the respondent Page 10 of 80 HC-NIC Page 10 of 80 Created On Tue Dec 26 19:30:23 IST 2017

11 No.2, stating that the Approval Committee in its meeting held on had decided to approve the said request. Despite the said permission and approval granted by the respondent Nos.3 and 4, the respondent No.3 M/s.DSL wrote a letter dated asking the respondent No.1 to seek NOC from the GSPC, who had no locus in the entire matter. The said letter was dispatched on and delivered at 1.30 p.m., on The petitioner, on wrote a letter to the respondent No.1 requesting it to refrain from undertaking any gas pipeline activity without seeking permission from the petitioner and the respondent No.3, though the respondent No.3 had already granted permission as per the letter dated It is also contended that the respondent No.1 already had its natural gas pipeline laid near the respondent No.2 M/s.OPAL s location. Since the respondent No.2 M/s.OPAL required such quantity of natural gas, which the petitioner was not in a position to fulfill, the respondent No.1 GAIL, who was inclined to provide sufficient quantity of gas to OPAL, came into picture. There was no provision Page 11 of 80 HC-NIC Page 11 of 80 Created On Tue Dec 26 19:30:23 IST 2017

12 under the SEZ Act giving exclusivity or monopoly to the petitioner to provide natural gas to the units set up in SEZ. The petitioner and the respondent No.3 had also waived their rights conferred under the agreement in view of the various correspondences and the s that had ensued between the parties. There was a separate and independent natural gas pipeline infrastructure (9 km) existing for the supply of natural gas to one of the units i.e. M/s.Torrent Power Limited, apart from the natural gas pipeline infrastructure of the petitioner and the said unit is not functioning on the basis of natural gas supply and transportation received from the petitioner GSPL. It is also contended that the respondent No.1 is supplying natural gas in liquid form through a pipeline laid and operated by ONGC to ONGC s C-2, C-3 Dahej Plant located in the Dahej SEZ since 2003 and the said pipeline was not installed by the petitioner. There are other various independent pipelines existing, whereby various units are receiving natural gas from different and distinct alternatives other than the petitioner, and Page 12 of 80 HC-NIC Page 12 of 80 Created On Tue Dec 26 19:30:23 IST 2017

13 therefore, the petitioner could not claim exclusivity as claimed in the petition. Further, as per the PNGRB Regulation 2008 an obligation is cast on the respondent No.1 to provide connectivity to the consumers within the tariff zone corridor up to 50 kms from either side of the natural gas pipeline and that the premises of M/s.OPAL is located approximately 25 kms from the existing pipeline of the respondent No.1. The respondent No.1, therefore, had accepted the request of the respondent No.2 M/s.OPAL for transportation of natural gas, for which the commercial arrangements were also entered into. According to this respondent, supply of gas by creating Tap off would not fall within the definition of infrastructure facilities contained in Section 2(p) of the SEZ Act. The facility sought to be provided by the respondent No.1 is relatable to Section 14(1) of the said Act as the respondent No.1 would be supplying gas only to the respondent No.2 M/s.OPAL and not to the entire SEZ, and therefore, there was no necessity to obtain approval from the Board. Lastly, it is contended that the action of the Page 13 of 80 HC-NIC Page 13 of 80 Created On Tue Dec 26 19:30:23 IST 2017

14 petitioner tantamounted to monopolistic and restrictive trade practice, defeating the purpose of SEZ Act and PNGRB Act. 7. The respondent No.2 M/s.OPAL has also filed detailed affidavit-in-reply raising number of issues and placing on record voluminous correspondences that had ensued between the parties through s and letters, to show as to how the petitioner had suppressed material facts from the Court. Mainly it has been contended that the respondent No.2 is a joint venture company promoted by M/s.Oil and Natural Gas Corporation and co-promoted by M/s.GAIL i.e. the respondent No.1, and Gujarat State Petroleum Corporation Ltd. (GSPC). The respondent No.2 OPAL has set up their grass root mega petrochemical project of national importance for manufacturing petrochemical products and other allied products at Dahej SEZ, Gujarat in PCPIR/SEZ with an investment of USD 4.5 billion and in a way, M/s.OPAL Plant is Asia s largest single point Petrochemical complex, and has impacted entire polymer industries of the country Page 14 of 80 HC-NIC Page 14 of 80 Created On Tue Dec 26 19:30:23 IST 2017

15 by providing world class polymer product. The respondent No.2 M/s.OPAL had entered into a lease agreement with the respondent No.3 on (Annexure-R/1). As per Clause 4.5 of the said lease deed the supply of piped gas was to be made by the petitioner GSPL. As per Clause 4.6 of the said lease deed the respondent No.2 M/s.OPAL was free to obtain any service, amenities or facilities, which were not provided by the M/s.DSL or Co-Developer/Service Provider, directly from the concerned third party agencies. Pursuant to the Clause 4.5 of the lease agreement, a Gas Transmission Agreement (hereinafter referred to as "GTA ) dated came to be executed between the respondent No.2 M/s.OPAL and the petitioner GSPL. According to the said agreement, GSPL was a transporter of Gas through its pipeline network to be supplied in the units of SEZ. Thus, the respondent No.2 M/s.OPAL had an option to secure its supply from any third party and could transport to its plant through Pipeline Net Work of GSPL laid in the SEZ. M/s.OPAL could also increase or decrease the quantity of demand for Page 15 of 80 HC-NIC Page 15 of 80 Created On Tue Dec 26 19:30:23 IST 2017

16 the gas as per Clause 5.2 of the GTA. According to the respondent No.2 M/s.OPAL, it had initially demanded CT of 0.5 MMSCMD during the construction and commissioning phase of the plant, however, on the completion of the commissioning of the plant, it had anticipated increase of gas requirement for 100% production of its plant. M/s.OPAL, therefore, in terms of Clause 5.2 of GTA had made a request for the additional booking of transmission capacity to the petitioner through various s, requesting an additional CT of 0.80 MMSCMD for the period from to and additional CT of 0.5 MMSCMD for the period from to at PLL- GSPL connectivity. In response to the said request, the petitioner GSPL refused to confirm additional capacity in their pipeline and advised M/s.OPAL to make alternate arrangement by dated M/s.OPAL had again made a request for additional capacity through subsequent s, however, GSPL had refused to provide the same citing reasons of being overbooked, as per the dated According to the respondent No.2, it had made Page 16 of 80 HC-NIC Page 16 of 80 Created On Tue Dec 26 19:30:23 IST 2017

17 several requests time and again for additional capacity, however, the petitioner had refused to provide the same. Lastly, it was refused by the petitioner as per the dated All the communications through s have been produced on record by the respondent No.2 as Annexure-R/II (colly). 8. Thus, according to the respondent No.2 M/s.OPAL, the petitioner GSPL had failed to provide the transmission capacity as demanded by M/s.OPAL in terms of Clause 5.2 of GTA and thereby had created a situation for the M/s.OPAL either to close down the unit or to explore other source for booking capacity as advised by GSPL to meet with its energy requirement of gas supply. M/s.OPAL, therefore, had identified already existing 30 dia DUPL natural gas pipeline of the respondent No.1 M/s.GAIL, passing from the M/s.OPAL Plant and had decided to procure its additional requirement of gas by booking gas transmission capacity from the said existing DUPL pipeline by laying 8 dia pipeline for 0.25 meters to its plant. According to the respondent Page 17 of 80 HC-NIC Page 17 of 80 Created On Tue Dec 26 19:30:23 IST 2017

18 No.2, the respondent No.1 M/s.GAIL for laying 8 dia pipeline had sought permission from the Development Commissioner of M/s.DSL, vide the letter dated and the respondent No.2 M/s.OPAL had also sought consent from the respondent No.3 DSL, vide its letter dated for laying of 8 dia pipeline. The respondent No.3 DSL vide letter dated also granted, in principle, approval to M/s.GAIL for laying 8 dia pipeline, subject to the conditions mentioned therein. The Development Commissioner also vide the letter dated had intimated the M/s.GAIL about the approval given by the Approval Committee, in its 76 th Approval Committee meeting held on for laying the said pipeline. 9. It is further contended by the respondent No.2 M/s.OPAL that the petitioner GSPL after denying the requisite gas to M/s.OPAL, addressed a letter dated to the respondent No.3 DSL to reconsider its decision granting approval for laying 8 dia pipeline without marking any copy thereof to M/s.OPAL. According to the respondent Page 18 of 80 HC-NIC Page 18 of 80 Created On Tue Dec 26 19:30:23 IST 2017

19 No.2, respondent No.3 DSL all of a sudden issued a letter dated to the M/s.OPAL informing that for laying 8 dia pipeline, it was required to get NOC from GSPC. According to the respondent No.2 though the said letter was dated it was posted on and was received by M/s.OPAL only on , when the work of laying pipeline was almost completed. The respondent No.2 has further alleged that the petitioner GSPL, with mala fide intention had tried to obstruct M/s.OPAL from sourcing its transmission capacity requirement from other alternatives, and after managing with the DSL to issue back-dated letter , GSPL through its letter dated intimated to M/s.GAIL and M/s.OPAL about their not granting NOC for laying of 8 dia pipeline. The said letter dated was received on after the interim relief was granted by the Court in the present petition. The said letter was replied by M/s.OPAL vide its letter dated (Annexure-R/VI). 10.The respondent No.2 has further contended that by Page 19 of 80 HC-NIC Page 19 of 80 Created On Tue Dec 26 19:30:23 IST 2017

20 the GTA Amendment Agreement dated (Annexure-R/VII) executed between the GSPL and M/s.OPAL, the GSPL had committed the capacity of only 0.75 MMSCMD CT to M/s.OPAL for the period from to Thus, according to the respondent No.2 all these material facts were concealed by the petitioner in the petition and had created a mirage urgency for filing the petition at the eleventh hour when almost entire work of laying pipeline was already completed by M/s.GAIL, which had started in the month of October, The respondent No.2 has also alleged other various suppression of material facts as stated in the reply. According to the respondent No.2, the provisions of SEZ Act were misinterpreted by the petitioner and the Approval Committee having validly approved the request of M/s.OPAL and M/s.GAIL, there was no need to obtain any approval from the Board of Approval, the laying of pipeline being not to create infrastructure facility in the SEZ as contemplated in Section 2(p) of the SEZ Act. There was also an arbitration Clause contained in the GTA/Co-Developer Agreement executed between Page 20 of 80 HC-NIC Page 20 of 80 Created On Tue Dec 26 19:30:23 IST 2017

21 the parties, and therefore, alternative remedy being available to the petitioner, the petition deserved to be dismissed. 11. The respondent No.3 has filed affidavit-inreply in cursory manner without dealing with any of the issues raised in the petition or the affidavit-in-rejoinder filed by the other respondents. The petitioner GSPL has filed the affidavit-in-rejoinder to the reply filed by the respondent No.1, supplementary affidavit-inrejoinder to the reply filed by the respondent No.1 and affidavit-in-rejoinder to the additional affidavit-in-reply filed by the respondent No.2 denying the allegations made by the respondent Nos.1 and 2, and further contending inter alia that the petitioner and the respondent No.2 M/s.OPAL had entered into the GTA on , valid for a period of five years, under which the petitioner had undertaken to transport the gas through its pipeline. After the execution of the GTA, the parties thereof have to enter into Capacity Tranche (CT) by way of Amendment Agreements from time to time, whereby the Page 21 of 80 HC-NIC Page 21 of 80 Created On Tue Dec 26 19:30:23 IST 2017

22 specific period, specific quantity, specific entry point and the tariff applicable as per specific zone under the PNGRB Act 2006 is agreed by the parties. The CTs are executed at the request of the shipper i.e. M/s.OPAL in the instant case. If the CTs are on firm basis, it would contain the provision for ship or pay obligation upon the shipper as well as payment of liquidated damages obligation upon the transporter. Accordingly, in the year 2014 M/s.OPAL had entered into a CT-1 with the petitioner for a period of 2½ years and thereafter further CTs were executed based on the request and requirement of M/s.OPAL. The petitioner had always transported the booked capacity under the said CTs to the M/s.OPAL. It is further contended that the M/s.OPAL was in the process of commissioning its plant till January 2017 and the volume of its requirements were fluctuating, and therefore, M/s.OPAL opted for entering into various short-term CTs for specific volume for additional requirements above the 0.5 MMSEMD booked under CT-1. Page 22 of 80 HC-NIC Page 22 of 80 Created On Tue Dec 26 19:30:23 IST 2017

23 12. As regards dated of the petitioner, wherein it was stated to make alternative arrangements, it has been contended by the petitioner that the said statement was made indicating that M/s.OPAL instead of insisting for capacity from PLL-GSPL, Dahej direct entry point, M/s.OPAL may make alternative arrangement to source and deliver gas at some other entry point including the one at GSPL- M/s.GAIL Dahej inter-connect entry point. It may be noted that the Schematic Diagram of arrangement of pipeline connectivity with the PLL, Dahej terminal and M/s.OPAL unit has been annexed as Annexure-D to the said affidavit-inrejoinder, and the same is made part of this order to understand the issue in better manner. Page 23 of 80 HC-NIC Page 23 of 80 Created On Tue Dec 26 19:30:23 IST 2017

24 Page 24 of 80 HC-NIC Page 24 of 80 Created On Tue Dec 26 19:30:23 IST 2017

25 13. According to the petitioner, to overcome the issue of lower pressure at the delivery point, the petitioner GSPL had requested Petronet LNG Ltd (PLL) to provide separate header to GSPL at the PLL, Dahej terminal and accordingly separate header has been provided in September 2017, and therefore, the supply pressure issues are not likely to arise now. It is also stated that the spur-line laid by the petitioner for the supply of gas to M/s.OPAL is capable of transporting 3.4 MMSCMD gas volumes and now the petitioner GSPL is in a position to supply and meet with all the gas volume requirements of M/s.OPAL. While denying the claim of M/s.OPAL that the GSPL had not met with the M/s.OPAL s requirement of gas transportation, it has been stated that during the period from to on a average 1.43 MMSCMD was transported to M/s.OPAL. To meet with the balance requirement, M/s.OPAL used to invite tenders for short term gas supply on delivered basis, and used to enter into Delivered Contracts with the supplier of Gas. Relying upon Clause 4.5 of the land lease Page 25 of 80 HC-NIC Page 25 of 80 Created On Tue Dec 26 19:30:23 IST 2017

26 agreement dated entered into between M/s.OPAL and M/s.DSL, it has been stated that the said clause recognized that M/s.OPAL Unit was required to transport gas through pipeline network of GSPL, the Co-Developer of SEZ. Since there was no failure on the part of the petitioner, and M/s.OPAL can not avail services of a third party for gas transportation. 14. During the course of the arguments it was alleged by the learned Sr. Advocate Mr.Nanavati for the respondent No.2 M/s.OPAL that some mischief was played by the officers of the petitioner and the respondent No.3 in issuing the letter dated addressed to the respondent No.1 M/s.GAIL and the respondent No.2 M/s.OPAL, which was received by the said respondents only on , whereas it was received by the petitioner on , the Court had directed the Company Secretary of the petitioner and the CEO of the respondent No.3 to file their respective affidavits as per the order dated Accordingly, the said affidavits were filed and the CEO of the Page 26 of 80 HC-NIC Page 26 of 80 Created On Tue Dec 26 19:30:23 IST 2017

27 respondent No.3 had also remained personally present on Pertinently, the CEO of the respondent No.3 was not in a position to answer the query of the Court put to him, as to what was the need to issue the letter dated when the DSL had already granted, in principle, approval on and the approval Committee had also granted approval in its meeting held on The said conduct of the CEO has been recorded by the Court in the order dated LEGAL SUBMISSIONS: During the course of lengthy arguments, series of diverse and multifarious submissions were made by the learned Advocates appearing for the parties. The pith and substance of their submissions may be stated as under:- 15. Submissions of learned Sr. Advocate Mr.Mihir Thakore for the petitioner GSPL: 15.1 As regards the preliminary objection raised by the respondents in respect of alternative remedy being available, it has been Page 27 of 80 HC-NIC Page 27 of 80 Created On Tue Dec 26 19:30:23 IST 2017

28 submitted that the Courts have not been designated so far, as contemplated under Section 23 of the SEZ Act. Section 42 of the said Act for deciding disputes by Arbitrator does not apply to the parties as the dispute could not be said to be between two or more entrepreneurs or two or more developers or between an entrepreneurs and a developer. The provisions contained in Section 24 of the PMGRB Act also did not apply as under the said provision, the Petroleum Board has jurisdiction to decide the dispute relating to the matters enlisted in Subsection (2) thereof and the present dispute can not fall within any of the matters contained therein. Even otherwise, existence of alternative remedy could not be said to be an absolute bar against preferring writ petition under Article 226 of the Constitution of India, as held by the Supreme Court in case of Calcutta Discount Co. Ltd. Vs. Income Tax Officer, Companies District and Anr., reported in AIR 1961 SC 372 and in case of Whirlpool Corporation Vs. Registrar o Trade Marks, Mumbai, reported in (1998) 8 SCC 1. Page 28 of 80 HC-NIC Page 28 of 80 Created On Tue Dec 26 19:30:23 IST 2017

29 15.2 As regards suppression of material facts it has been submitted that all the relevant facts for challenging the decision of the approval committee were disclosed in the petition. The GTA entered into between the respondent No.2 and the petitioner was produced by the petitioner upon the observation made by the Court that the GTA should have been filed by the petitioner. Though GTA would throw light on the contractual relationship between the petitioner and the respondent No.2, it was not necessary for deciding the core issue raised by the petitioner in the petition. The communications referred by the respondent Nos.1 and 2 in their respective affidavits-in-reply were not germane or relevant for deciding the issue whether the approval committee s decision was without jurisdiction or ultra vires the provisions of SEZ Act. In this regard, reliance is placed upon the decision of the Supreme Court in case of S.J.S. Business Enterprises (P) Ltd. Vs. State of Bihar and Ors., reported in (2004) 7 SCC As regards the challenge to the impugned Page 29 of 80 HC-NIC Page 29 of 80 Created On Tue Dec 26 19:30:23 IST 2017

30 decision of the Approval Committee, it has been submitted that laying of pipeline for transportation of natural gas by the respondent No.1 in Dahej SEZ area is an infrastructure facility within the meaning of Section 2(p) of the SEZ Act read with the definition of infrastructure under Rule 2(1)(s) of the Special Economic Zones Rules 2006 (hereinafter referred to as "the said Rules ). As per Section 9(2)(d) of the SEZ Act only the Board has the power and jurisdiction to grant approval for providing infrastructure facility within SEZ area. The approval committee did not have any power under Section 14 of SEZ Act to grant such approval. As per Section 3(11), the person intending to provide infrastructure facility has to submit the proposal to the Board of approval after entering into the agreement with the developer and as per Section 3(12), the person having approval of Board of approval and the Central Government for providing infrastructure facilities would be a Co-Developer There is no restriction under the SEZ Page 30 of 80 HC-NIC Page 30 of 80 Created On Tue Dec 26 19:30:23 IST 2017

31 Act in respect of granting exclusivity, and therefore, the exclusive right was granted to the petitioner by the respondent No.3 developer under the Co-Developer agreement, which is supported by the provisions of PNGRB Act. The respondent No.1 did not have unfettered right to lay any pipeline anywhere in India under PNGRB Act, as such right would be subject to the provisions of the SEZ Act, which has overriding effect in the event of any inconsistency between the two Acts. The expression for the time being in force would not only include the present legislations, but would also include future legislations, as interpreted by the Supreme Court in case of Yakub Abdul Razak Memon Vs. State of Maharashtra, reported in (2013) 13 SCC 1 (p. 653) The respondent No.1 being Central Government authorized entity under Regulation No.17 of the PNGRB Regulations 2008 (hereinafter referred to as "the Regulations 2008), the schedule-j thereof does not apply to the respondent No Under the GTA, the petitioner has Page 31 of 80 HC-NIC Page 31 of 80 Created On Tue Dec 26 19:30:23 IST 2017

32 executed various capacity tranches from time to time, according to which the respondent No.2 has the obligation to supply gas at entry point at PLL-Dahej terminal at a particular pressure range, which the respondent No.2 had failed to provide at the said pressure. The meaning of alternative arrangement referred to in the dated was to off take gas at different entry points and the same was understood to be so by the respondent No.2. The additional capacity could also have been booked from Hazira L & T terminal but the same was never sought from that source by the respondent No Denying the allegations of monopolistic and restrictive trade practice, it has been submitted that the petitioner is booking capacity in its pipeline on non-discriminatory basis as per the provision of PNGRB Regulations. However, there were pressure issues due to which the petitioner could not book additional capacity for the respondent No.2. The entities, who had already booked capacities in the petitioner s pipeline were in a position to transport gas Page 32 of 80 HC-NIC Page 32 of 80 Created On Tue Dec 26 19:30:23 IST 2017

33 through their booked capacity and accordingly GSPC, the holding Company of the petitioner was able to supply gas from the petitioner s pipeline to M/s.OPAL. Despite the pressure issues, the petitioner has always supported the respondent No.2 in meeting with its gas requirements As regards the letter of M/s.DSL in respect of NOC requirements, it has been submitted that the respondent No.3 M/s.DSL vide its letter dated had granted, in principle, approval only for the Right Of Use in Dahej SEZ area, and the respondent No.1 was required to obtain permission from the Development Commissioner/Board of Approval. As the Development Commissioner was not authorized to grant permission, it was only the Board of Approval, which was the competent authority for granting permission for laying of pipeline by the respondent No.1. Against the said approval Committee s decision the petitioner had written letter dated to the respondent No.3, and realizing their mistake, the respondent No.3 had vide its letter dated asked the Page 33 of 80 HC-NIC Page 33 of 80 Created On Tue Dec 26 19:30:23 IST 2017

34 respondent No.2 with a copy marked to the respondent No.1 to get the NOC from the petitioner. The judgement of Appellate Tribunal for Electricity in Appeal No.3/2011 relied upon by the respondents was not applicable to the facts of the present case, as the said judgement did not deal with the specific issue of requirement of the Board of Approval for setting up infrastructure in Dahej SEZ. 16. Following submissions were made by the learned Sr. Advocate Mr.Kamal Trivedi and learned Sr. Advocate Mr.Mihir Joshi with learned Advocate Mr.Vishwas Shah for the respondent No.1 M/s.GAIL: Raising the preliminary objection against the maintainability of the petition, it has been submitted that the petitioner has efficacious alternative remedy since the disputes between the petitioner, M/s.OPAL and M/s.GAIL could be resolved in a civil suit to be filed in the Designated Court, or through arbitration under Section 42 of the SEZ Act or by PNGR Board under Section 24 of the PNGRB Act The writ Page 34 of 80 HC-NIC Page 34 of 80 Created On Tue Dec 26 19:30:23 IST 2017

35 Court may not interfere with the contractual matters involving technical aspects. The petitioner has approached this Court with gross delay and laches. The petitioner had sent objections on with regard to the approval granted by the Approval Committee, and the work of laying pipeline had already been undertaken in October-November, 2017, however, the petitioner approached the Court after a long time and that too, seeking hearing on urgent basis at the eleventh hour on The petitioner had not approached the Court with clean hands and had suppressed gas transmission agreement between itself and M/s.OPAL, NOC dated , the in-principle approval granted by the respondent No.3 on and other correspondences. The conduct of the petitioner in trying to promote its holding company GSPC for supply of gas and seeking monopoly for transmission and supply of gas itself dis-entitles the petitioner from claiming any relief. The letter dated issued by the CEO of DSL was received by M/s.GAIL Page 35 of 80 HC-NIC Page 35 of 80 Created On Tue Dec 26 19:30:23 IST 2017

36 on and on the same day, the petitioner wrote a letter dated refusing NOC to M/s.GAIL, though the letter dated was not addressed to the petitioner and though no such NOC was sought by M/s.GAIL or M/s.OPAL from the petitioner, which smacked of mala fide intention of the petitioner The petitioner had waived its rights in the light of the fact that in May 2016 and February 2017 using GSPC pipeline infrastructure, M/s.GAIL had supplied natural gas to M/s.OPAL. There is an independent and separate natural gas pipeline infrastructure (9 km) existing for supply of natural gas to the Torrent Power Limited, apart from the natural gas pipeline infrastructure of the Co-Developer i.e. the petitioner. The respondent GAIL since 2013 is supplying natural gas in liquid form through the pipeline laid and operated by ONGC to ONGC s C-2 C-3 Dahej plant located in the DSL. The respondent No.2 M/s.OPAL is also sourcing natural gas in liquid form (C-2 C-3) through the pipeline laid by M/s.OPAL within Dahej SEZ. The Page 36 of 80 HC-NIC Page 36 of 80 Created On Tue Dec 26 19:30:23 IST 2017

37 dated of the petitioner to M/s.OPAL to make alternative arrangement also established that the petitioner had waived its right of exclusivity There is no inconsistency between the provisions contained in SEZ Act and PNGRB Act and therefore, Section 51 of SEZ Act was not applicable. In this regard reliance is placed on the judgement dated of Appellate Tribunal for Electricity in case of Torrent Energy Ltd. Vs. Dakshin Gujarat Vj Co. Ltd. and Ors., reported in (2014) 8 SCC Pressing into service the PNGRB Regulations 2008 and Clause 1(g) of Schedule-J to the said Regulation, it has been submitted that the respondent No.1 M/s.GAIL has to provide connectivity to the consumers within a tariff zone in a natural gas pipeline and grant of any restrain order against the M/s.GAIL would compel it to violate and contravene the statutory obligation as mandated in the said Regulations. The M/s.GAIL pipeline has pre-existed the DSL and hence, also M/s.GAIL has right to supply gas Page 37 of 80 HC-NIC Page 37 of 80 Created On Tue Dec 26 19:30:23 IST 2017

38 under the PNGRB Act and its Regulations. Supply of gas by M/s.GAIL through its 25 mtr., long pipeline to itself i.e. M/s.OPAL being one of the units in SEZ, and in which M/s.GAIL is one of the major shareholders, cannot be considered to be development, operation and maintenance of gas transmission pipeline infrastructure facility for the entire Dahej SEZ, under Section 2(p) of the said Act or under Rule 2(1)(s) of the said Rules. The said supply of gas is nothing but sale of goods The definition of infrastructure facilities given in Section 2(p) read with Rule 2(1)(s) is exhaustive in nature, inasmuch as Rule 2(1)(s) uses the words means followed by includes with the enumeration of specific/named facilities. Transmission of Gas pipeline is not mentioned therein. Letter dated (Annexure-B) granting approval to the agreement dated conferring exclusivity in favour of the petitioner in the matter of providing gas transmission pipeline infrastructure would not make the said agreement statutory one. Page 38 of 80 HC-NIC Page 38 of 80 Created On Tue Dec 26 19:30:23 IST 2017

39 16.7 The power to grant approval dated by the Approval Committee to M/s.GAIL and communicated by the Development Commissioner vide the communication dated could be traced to Section 14(1)(c) of the SEZ Act, or at the best an administrative decision of the approval committee. Such decision could not be said to be without jurisdiction Alternatively, it has been submitted that the requirement of obtaining NOC from petitioner was beyond the purview of the said Act and once DSL having given the permission, the CEO, DSL had no power to issue letter dated Invoking the principles of interim relief, it has been submitted that the respondent M/s.GAIL has spent huge amount of Rs.20 crore for various works for laying down 25 mtr long pipeline for the purpose of supplying/selling gas to M/s.OPAL and therefore, apart from prima facie case being in favour of M/s.GAIL, balance of convenience is also in favour of M/s.GAIL. Reliance is placed on the decision of the Supreme Court in case of Prabhjot Singh Mand and Ors. Page 39 of 80 HC-NIC Page 39 of 80 Created On Tue Dec 26 19:30:23 IST 2017

40 Vs. Bhagwant Singh and Ors., reported in (2009) 9 SCC 435 and in case of Reliance Natural Resources Ltd. Vs. Reliance Industries Ltd., reported in (2010) 7 SCC The learned Sr. Advocate Mr.S. I. Nanavati for the respondent no.2 M/s.OPAL has made following submissions: The petition was filed by the petitioner concealing material facts and misinterpreting the provisions of the Act and creating imaginary urgency, when almost entire work of laying pipeline was completed by M/s.GAIL which had started in October-November, The material facts not stated in the petition have been highlighted during the course of the submissions and relying upon the various decisions of the Supreme Court the prayer has been made to dismiss the petition on the ground of suppression of material facts alone. To buttress his submission, Mr.Nanavati has placed reliance on the decision of Supreme Court in case of Prestige Lights Ltd. Vs. State Bank of India, reported in (2007) 8 SCC 449, in case of Dalip Page 40 of 80 HC-NIC Page 40 of 80 Created On Tue Dec 26 19:30:23 IST 2017

41 Singh Vs. State of Uttar Pradesh and Ors., reported in (2010) 2 SCC 114 and in case of Bhaskar Laxman Jadhav and Ors. Vs. Karamver Kakasaheb Wagh Education Society and Ors., reported in (2013) 11 SCC In addition to the submissions made on behalf of the respondent No.1, it has been submitted that M/s.OPAL is a joint venture company promoted by ONGC with 49.36% share and co-promoted by M/s.GAIL with 49.21% share and GSPC with 1.43% share, which is parent company of the petitioner GSPL. In response to the request made by M/s.OPAL for transportation of additional supply of gas on firm basis by various s and for a period from to , the petitioner GSPL had refused to supply additional quantity of gas by dated and other s and advised M/s.OPAL to make alternative arrangement of gas supply, citing reasons of capacity being overbooked. The petitioner had created a situation where either M/s.OPAL had to close down its unit or to explore other source of its energy requirement of gas Page 41 of 80 HC-NIC Page 41 of 80 Created On Tue Dec 26 19:30:23 IST 2017

42 supply. According to Mr.Nanavati, the petitioner GSPL with GSPC tried to see that M/s.OPAL had to pay higher transmission cost for M/s.GAIL-GSPL connectivity and for PLL-GSPL connectivity. Submissions were also made to show as to how the petitioner had tried to use monopolistic structure against M/s.OPAL by not confirming the transmission through its network on firm basis Relying upon the decision of the Supreme Court in case of Hardeep Singh Vs. State of Punjab and Ors., reported in (2014) 3 SCC 92, it was sought to be submitted that the words means and includes used in definition clause gives hard and fast definition and no other meaning can be assigned. Hence, the definition of infrastructure facilities as contained in Section 2(p) read with Rule 2(1)(s) is required to be construed strictly. In the instant case, the pipeline is laid by M/s.GAIL to provide gas only to M/s.OPAL and to no other units, and therefore, could not be said to have created infrastructure facility for SEZ As gas is raw-material required for the Page 42 of 80 HC-NIC Page 42 of 80 Created On Tue Dec 26 19:30:23 IST 2017

43 M/s.OPAL s plant, the power to grant approval for import and to monitor the utilization of gas and services or warehousing or trading in SEZ, would be with the Approval Committee under Section 14(a) and (c) of the SEZ Act. Hence, approval granted by the Approval Committee in its meeting held on was within its powers and agenda All manufacturing units arrange a redundant back up system for their raw material supply so that in case of any eventuality, the running plants are not stopped, because any stoppage of gas supply for even five minutes will result into approximately Rs.15 crore loss to M/s.OPAL. The balance of convenience tilts towards the respondent No.2 as it is only M/s.OPAL which is incurring huge financial loss every day. If at all GSPL has any exclusive rights then it is an inter se dispute between GSPL and DSL, to which a non-party to the agreement should not be made to suffer. 18. The learned Advocate Mr.Meena for the respondent No.3 has submitted that the respondent Page 43 of 80 HC-NIC Page 43 of 80 Created On Tue Dec 26 19:30:23 IST 2017

44 No.3 had granted, in-principle approval to the respondent No.1 as per its request as per the letter dated , however, realizing that such approval was likely to result into breach of contract dated entered into by the respondent No.3 with the petitioner, the CEO of the respondent No.3 had written the letter dated to the respondent GAIL and OPAL for obtaining NOC from the petitioner company before the execution of the work at the site. According to him, the petitioner company was given office copy of the said letter dated on , and the letter was dispatched to the respondent Nos.1 and 2 on as 24 th and 26 th were public holidays. PROVISIONS OF SEZ ACT: 19. Before adverting to the submissions made by the learned Advocates for the parties with regard to the provisions contained in SEZ Act and the PNGRB Act, it would be beneficial to reproduce the relevant provisions. Some of the relevant Clauses contained in Section 2 are as under:- Page 44 of 80 HC-NIC Page 44 of 80 Created On Tue Dec 26 19:30:23 IST 2017

45 2. Definition. In this Act, unless the context otherwise requires, (a) xxx (b) Approval Committee means an Approval Committee constituted under sub section (1) of section 13; (c) & (d) xxx (e) "Board means the Board of Approval constituted under sub section (1) of section 8; (f) "Co Developer" means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub section (12) of section 3; (g) Developer means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub section (10) of section 3 and includes an Authority and a Co Developer; (h) to (o) xxx (p) "infrastructure facilities" means industrial, commercial or social infrastructure or other facilities necessary for the development of a Special Economic Zone or such other facilities which may be prescribed; Section 3 pertains to the procedure for making proposal to establish Special Economic Zone. Sub sections (11) and (12) thereof read as under: (11) Any person who, or a State Government which, intends to provide any infrastructure facilities in the identified area referred Page 45 of 80 HC-NIC Page 45 of 80 Created On Tue Dec 26 19:30:23 IST 2017

46 to in sub section (2) to (4), or undertake any authorised operation may, after entering into an agreement with the Developer referred to in sub section (10), make a proposal for the same to the Board for its approval and the provisions of sub section (5) and sub sections (7) to (10) shall, as far as may be, apply to the said proposal made by such person or State Government. (12) Every person or a State Government referred to in sub section (11), whose proposal has been approved by the Board and who, or which, has been granted letter of approval by the Central Government, shall be considered as a Co Developer of the Special Economic Zone. Section 8 pertains to constitution of Board of approval and Section 9 pertains to the duties, powers and functions of Board, the relevant part thereof is reproduced as under: 9. Duties, powers and functions of Board. (1) Subject to the provisions of this Act, the Board shall have the duty to promote and ensure orderly development of the Special Economic Zones. (2) Without prejudice to the generality of the provisions contained in sub section (1), the powers and functions of the Board shall include (a) to (c) xxx (d) granting of approval or rejecting of proposal for providing infrastructure facilities in a Special Economic Zone or modifying such proposals; (e) to (i) xxx The functions of Development Commissioner are enumerated in Section 12. Section 13 pertains to constitution of Approval Committee and Section 14 Page 46 of 80 HC-NIC Page 46 of 80 Created On Tue Dec 26 19:30:23 IST 2017