ADANI GAS LIMITED v. UNION OF INDIA & ORS.

A defences to the claim by the “Daily Express” against “Today” newspaper relating to the Bordes claim. I think that what Mr. Montgomery describes as what is sauce for the goose is sauce for the gander has a rather narrower legal manifestation. There is a principle of law of general application that it is not possible to approbate and reprobate. B That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance. C To apply that general doctrine to the present case is, I accept, a novel extension. But, in my judgment, the principle is one of general application and if, as I think, justice so requires, there is no reason why it should not be applied in the present case.” D

57. Both parties also referred me to a number of cases in which the doctrine has been raised in the context of adjudication. In particular, I was referred to PT Building Services Ltd v ROK Build Ltd 2008 EWHC 3434 (TCC), Twintec Ltd v Volkerfitzpatrick Ltd 2014 EWHC 10 (TCC), Rob Purton E t/a Richwood Interiors v Kilker Projects Ltd 2015 EWHC 2624 (TCC), RMP Construction Services Ltd v Chalcroft Ltd 2015 EWHC 3737 (TCC) , and Skymist Holdings Ltd v Grandlane Developments Ltd [2018] EHC 3504 (TCC). Save in relation to the PT Building Services case to which I refer further below, F I have not found these decisions particularly pertinent. That is because they are concerned with challenges to an adjudicator’s jurisdiction on enforcement based, for instance, on whether the underlying construction contract was mis- described by the referring party or on whether the contractual provision relied upon to make the referral existed at all. This G is not such a case.

58. All the same, certain principles arise from the case law taken as a whole: i) The first is that the approbating party must have elected, that is made his choice, clearly and unequivocally;

ADANI GAS LIMITED v. UNION OF INDIA & ORS. 1233 [S. RAVINDRA BHAT, J.]

ii) The second is that it is usual but not necessary for the electing party to have taken a benefit from his election such as where he has taken a benefit under an instrument such as a will; iii) Thirdly, the electing party’s subsequent conduct must be inconsistent with his earlier election or approbation. B

In essence, the doctrine is about preventing inconsistent conduct and ensuring a just outcome.”

116Copy pinpoint116. In this case, Adani applied for authorization, after being asked by the PNGRB, to do so, in 2008. Its application was not decided by the C Board; in the meanwhile, on 12.07.2010, Section 16 came into force. On 18.10.2013, the PNGRB granted authorization to Adani’s CGD network in Ahmedabad city and Dascroi area, excluding 18 CNG stations of HPCL, subject to certain conditions. The disputed area was excluded from this provisional authorization. Adani was asked to furnish the performance bond. By its letter dated 28.10.2013, Adani wrote to D PNGRB, underlining its position that the excluded areas were under its operation, and stating that “In view of the above facts, we are constrained to accept the Terms and Conditions of authorization”. Adani accepted the grant of authorization and furnished its performance bond, by letter dated 31.10.2013. PNGRB replied to Adani’s letter on E 28.11.2013 and stated that its position stood clarified by its previous letter (intimating authorization) of 18.10.2013. Adani furnished its performance bond, on 31.10.2013, after which PNGRB issued the authorization on 28.11.2013. After receiving the authorization, Adani accepted it expressing its protest by letter dated 09.12.2013. Though Adani argues, that acceptance of this authorization was under protest, the material on F record shows that this protest was registered, in terms: (a) After Adani furnished its performance bond, despite knowledge that the disputed areas were excluded; and (b) At the time of acceptance of authorization. G

117Copy pinpoint117. By furnishing the performance bond, and accepting the authorization, Adani acted on the authorization. On 01.10.2015, the Board invited bids for development of CGD networks in those disputed (excluded) areas in Ahmedabad. Adani submitted its application-cum- H

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A bid documents in respect of these areas. The auction was conducted; after Adani realized that it was unsuccessful, it articulated its grievance for exclusion of disputed areas from the authorization granted and approached the High Court, preferring a petition under Article 226 of the Constitution, Adani sought several reliefs; the main relief claimed was the quashing of the grant of authorization to Gujarat Gas, questioning the exclusion of the disputed areas by the earlier authorization dated 28.11.2013, and challenging the vires of Regulation 18. It is a matter of record that PNGRB granted authorization to Adani on 04.12.2012 in respect of the Khurja area, in UP. Given these background circumstances, its argument about lack of knowledge with respect to its rights, is indefensible. Adani accepted and acted on the authorization, by furnishing the performance bond, after which it registered its protest (in respect of excluded areas) with the PNGRB. Even then, it proceeded to act upon the authorization.

118Copy pinpoint118. In view of the factual discussion, about the background leading to the grant of authorization to Adani, and its acceptance of that authorization, furnishing of performance bond, and proceeding to act upon it, even participating in the auction for the excluded areas there can be no manner of doubt that it acquiesced to the action of the PNGRB, and after having unsuccessfully entered its bid, sought to challenge the authorization. Clearly, this conduct amounts to approbating and reprobating. Adani’s arguments about its lack of knowledge about its true rights, in the opinion of this Court, cannot be countenanced, because it knew and conformed to the procedure under the PNGRB Act, specifically, the requirements of the regulations, and Regulation 18, when it applied and obtained authorization in other areas in the country. F

119Copy pinpoint119. During the course of the hearing, Adani had made a two-fold factual argument. One, that PNGRB’s order rejecting its application for authorization was unreasoned and that it became aware of the reasons only in 2016, when the Board filed its counter affidavit in the High Court. Two, that the reasons do not stand up to judicial scrutiny inasmuch as G factually Adani fulfilled the criteria spelt out in Regulation 18 inasmuch as it had completed 25% of works in relation to the pipelines which it had been awarded.

ADANI GAS LIMITED v. UNION OF INDIA & ORS. 1235 [S. RAVINDRA BHAT, J.]

120Copy pinpoint120. So far as the first contention goes, there can be no doubt that an administrative authority is expected to record its reasons for any decision that it takes. In Union of India v. E.G. Namboodiri56, this Court observed in the context of the obligation of every statutory administrative authority or the executive government that such authority had “no license to act arbitrarily.” This Court further held that: “No order of an administrative authority communicating its decision is rendered illegal on the ground of absence of reasons ex facie and it is not open to the Court to interfere with such orders merely on the ground of absence of reasons. C However, it does not mean that the administrative authority is at liberty to pass orders without there being any reasons for the same. In governmental functioning, before any order is issued, the matter is considered at various levels and the reasons and opinion are contained in the comments on the file. The reasons contained in the file enable the competent authority to formulate its opinion. If the order as communicated to the government servant rejecting the representation is not contained in the reasons, the order cannot be held to be bad in law. If such an order is challenged in Court of law, it is not always open to the competent authority to place the reasons before the Court which may have led to the rejection of the representation. It is always open to an administrative authority to produce evidence aliunde before the Court to justify its action.”

121Copy pinpoint121. In the present case, the PNGRB has placed on record its reasons by way of an affidavit. There is nothing to indicate that prior to approaching the Court, Adani had sought the reasons for rejection of its authorization; all evidence points to the fact that after its initial protest, it did not represent further and the authorization granted to it, appears to have been acted upon. It even proceeded to accept the sequitur to the authorisation, i.e., PNGRB’s jurisdiction to auction the disputed area by participating in it. In these circumstances, in the absence of any evidence disclosing that Adani had sought for reasons or even made any attempt to secure them through the RTI Act, its belated complaint that PNGRB’s

56 (1991) 3 SCC 38. H

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A order rejecting the application for authorization is illegal for the reason that it is unreasoned, cannot be countenanced. PNGRB disclosed its reasons for the decision, before the High Court. Therefore, this argument is rejected as insubstantial.

122Copy pinpoint122. On the second aspect, i.e., that Adani fulfilled the stipulations B of 25% development of the areas, there is a serious dispute inasmuch as the PNGRB has argued that the application for authorization did not contain any map which included the disputed area. This is a factual aspect. Adani countered this by stating that the boundaries of Ahmedabad area which was subjected to initial authorization granted by the State C which was held to be untenable [in view of the Constitution Bench decision Special Reference (supra)], included those areas. In the circumstances, this Court cannot proceed on the assumption that the disputed area was in fact included in the Adani’s claim when it applied for authorization to the PNGRB. Adani has argued that it was granted authorization for the entire Ahmedabad District, including the said are as under the policy of the State Government, which could not have been curtailed by relying on a power under the CGD Authorizing Regulations. It was further stated that the fact that the disputed areas were put up for auction on 1.10.2015 with a larger area, showed that the areas were not economically viable on a “standalone” basis, and, consequently the basis for exclusion of the disputed areas from Adani’s authorized area was unfounded. Adani disputed PNGRB’s report dated 18.2.2011 and urged that on the date of inspection, it had an operational network, and it had augmented its network in the said areas of Ahmedabad by undertaking urgent capital works pursuant to PNGRB’s permission dated 11.6.2009. The authorization was also impeached on the ground that for evaluating actual physical progress and the financial commitment under Regulation 18, presence as on the appointed day was required to be seen in the entire Ahmedabad District, and not apart thereof by curtailing the ambit of Section16. It was submitted that PNGRB failed to appreciate that while undertaking development work of any CGD network, including in the Ahmedabad District, initiation of development works began in a linear manner, generally where city gas station was first established for inlet gas, which then extended to whole of the area. Under current PNGRB norms, an authorized entity was given at least 8 years to develop charge areas. Adani submitted that consequently, PNGRB wrongfully

ADANI GAS LIMITED v. UNION OF INDIA & ORS. 1237 [S. RAVINDRA BHAT, J.]

carved out areas out of the Ahmedabad District and tested each such area as per Regulation 18, which was not permissible.

123Copy pinpoint123. PNGRB submitted that the state NOC only spoke of Ahmedabad Zone; in Adani’s application to Board (for grant of authorization), there was no mention of the disputed areas, i.e., Sanand, Dholka and Bavla, and the NOC only spoke of Ahmedabad city. It was urged that clause (j) (iii) of application provided for submission of a map depicting the area proposed to be covered and upon examination, the PNGRB found that the area of distribution network disclosed in the map other than Ahmedabad area, was the area of Chadkhera and Motera. Correspondingly, the DFR submitted by Adani in terms of Clause (j) (iii) C of the application also did not cover the area of Sanand, Bavla and Dholka. Thus, the application submitted under Regulation 18 for grant of authorization did not cover, the annexed map or the DFR, the area of Sanand, Bavla and Dholka. It was also urged that Adani admitted to this fact in its representation dated 16.05.2012under the caption ‘authorization’ detailed the infrastructure set up. This made no reference to Sanand, D Bavla and Dholka. It was stated that the DFR was a constitutional document of a project. And the absence of these areas from DFR, submitted on 09.05.2008 (application date), showed that as on appointed day, Adani had not even conceived a project for laying distribution network in Sanand, Bavla and Dholka, and had thus not applied for an authorization for these areas.

124Copy pinpoint124. PNGRB urged that the record showed that no distribution network was under construction in these areas as on the appointed date, and relied on minutes of hearing dated 27.08.2010; on site verification report dated 18.02.2011; asset block statement filed by Adani which showed that as on 01.10.2007 (appointed date) no construction work was in progress in any of the three disputed areas and CWIP for all three areas ended only on 31.03.2019.

125Copy pinpoint125. The discussion in the preceding paragraphs would reveal that there is a serious dispute about the extent of development which G Adani had undertaken, as on the appointed day. Adani’s reliance on the extent of areas it was given by State authorization, and whether the excluded areas, were part of it, is not a matter which can be settled by this Court. The PNGRB relies on the application form, filed by Adani, when seeking authorization under the CGD Regulations, to say that the H

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A disputed areas were not mentioned and were also not shown in the map. This is a factual aspect. Furthermore, as to the exact nature of development, when the inspection took place in 2011, again, there is a dispute. If one considers the fact that the enactment came into force in 2007, there were many ways in which Adani could have established the exact areas it had developed as on the appointed date, such as the account B of expenditure it had maintained during the relevant years; the raw material procured, the personnel employed for that period, and the periodic progress it had achieved. The materials it furnished together with the inspection report and minutes of meeting were considered by the PNGRB when it granted authorization by excluding the disputed areas. Apart C from the fact that these disputes are not fit to be adjudicated in writ proceedings, this Court is also cognizant of the fact that had Adani wished to agitate these issues, it could well have chosen the remedy of an appeal. Its choice of not preferring an appeal, and approaching the Court two years after the grant of authorization is an important factor that impels this Court to desist from embarking on a factual enquiry. It is relevant to notice here, that appeals against decisions of the PNGRB are provided under Section 33 of the Act before a tribunal57. The period of preferring appeals is 30 days from the date of the decision of the PNGRB (Section 33(2) of the Act). Adani’s conscious choice to not exercise its option to appeal against the PNGRB’s order, to the extent it excluded the disputed areas, is a crucial factor for this Court to refrain from examining the factual assertions made by it.

126Copy pinpoint126. Before concluding, this Court would observe that although the position in law was clarified by the five judge Constitution Bench ruling in Re Special Reference of 2001 as far back as in 2004, and pursuant to the PNGRB Act, the appellant consciously applied for authorization in 2008, later secured temporary authorization to complete certain maintenance works, and was denied authorization in 2013, by initiating the present litigation in 2015, it has in effect stalled the authorization given to Gujarat Gas. Its challenge to Regulation 18 was an instance of speculative litigation which has led to avoidable delay (and the consequential escalation of cost) of the development of the network, in question.

57 The Appellate Tribunal established under Section 110 of the Electricity Act, 2003 H (36 of 2003), by reason of Section 30 of the PNGRB Act.

ADANI GAS LIMITED v. UNION OF INDIA & ORS. 1239 [S. RAVINDRA BHAT, J.]

Conclusion A

127Copy pinpoint127. To sum up, the points of consideration raised are answered as follows: a. On the scope of the “deemed authorisation” clause under the proviso to Section 16 of the PNGRB Act, the decision in Adani B Gas (supra) is held to have laid down the law incorrectly, and is hereby overruled. b. It is held that the “deemed authorization” clause under proviso to Section 16 is subject to other provisions of Chapter IV, including Section 17 and, further, that only entities granted authorization by C the Central Government, fell in that category. As a sequitur, it is held that entities which had received authorization from States, had to seek authorization under the PNGRB Act, in terms of Section 17(2), and in compliance with the conditions spelt out under the CGD Regulations. D c. The role of the State in granting NOC is only supportive or collaborative, in terms of the Central Government’s policy, of 2006, and cannot confer any advantage to any entity, which has to seek and be granted specific authorization in terms of the PNGRB Act on the merits of its application. E d. It is held that Regulation 18 is neither arbitrary, nor ultra vires. The objective underlying Regulation 18, is compatible with the overall objectives of the PNGRB Act. Regulation 18 is not contraindicated by any specific provision of the Act. Further, as a sectoral regulator, PNGRB is entrusted with the power to frame appropriate regulations to ensure the objectives of the Act, and thus the challenge to Regulation 18 cannot succeed. e. It is also held that Adani’s claim is precluded by the principle of approbate-reprobate, as it accepted authorization granted by PNGRB (including exclusion of disputed areas), furnished the performance bond and even participated in the auction for the excluded areas, and only thereafter challenged authorization when its bid was unsuccessful. f.It is held, that exclusion of the disputed areas was justified in the overall facts and circumstances. H

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128Copy pinpoint128. Having regard to the above findings and conclusions, the appeals fail and are dismissed. In the circumstances, Adani shall bear the costs quantified @ ` 10 lakhs, payable to the Union of India.

B Ankit Gyan Appeals dismissed.