Great Eastern Energy Corporation ... vs Union Of India & Anr
2015 Latest Caselaw 4279 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                         Date of decision: 27th May, 2015

+                         W.P.(C) No.2611/2014

       GREAT EASTERN ENERGY
       CORPORATION LIMITED                      ..... Petitioner
                   Through: Mr. Rajeev K. Virmani, Sr. Adv. with
                            Mr. Aseem Chaturvedi, Adv.

                                   Versus

    UNION OF INDIA & ANR.                     ..... Respondents
                  Through: Mr. Arun Bhardwaj, CGSC with Ms.
                           Neha Garg, Adv. for UOI.
                           Mr. Neeraj Kishan Kaul, ASG with
                           Mr. Saurav Agarwal, Mr. Abhijit
                           Mitra and Mr. Rakesh Diwan, Advs.
                           for PNGRB.
                           Mr. M.K. Pandey and Mr.
                           Chinmayee, Adv. for applicant in CM
                           No.6596/2015.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

CM No.1440/2015 (of petitioner for directions) & CM No.6596/2015 (of Steel Authority of India Limited for impleadment)

1. The writ petition has been filed impugning the order dated 31 st 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 31 st 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. 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 1 st August, 2014

supra.

5. The aforesaid application came up before us on 22 nd 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 28 th

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 7 th

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 1 st 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. 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. 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. 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. 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 1 st

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. 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. 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 Vs. 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. Vs. 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.

RAJIV SAHAI ENDLAW, J.

CHIEF JUSTICE MAY 27, 2015 'bs'