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Adani Gas Limited v. Union of India & Ors.

Civil Appeal · 2021 INSC 558Decided 28 Sept 2021
Civil Appeal arising out of SLP (Civil) Nos. 28192-28193 of 2018
Justice Uday Umesh Lalit · Justice S. Ravindra Bhat · Justice Hrishikesh Roy

Background

Adani Gas had been developing a city gas distribution network in Ahmedabad under the Petroleum and Natural Gas Regulatory Board (PNGRB). When PNGRB finally granted it authorization in 2013, three specific areas (Sanand, Bavla and Dholka) were excluded. Adani accepted the authorization (with the exclusions) without protest, gave a performance bond, and even participated in a later PNGRB auction for those very excluded areas, but lost the bid to Gujarat Gas. Only after losing did Adani go to the Gujarat High Court, challenging both the exclusion and the validity of Regulation 18 of the PNGRB's CGD Regulations, 2008 (under which authorizations are granted). The High Court dismissed its writ petitions, and Adani appealed to the Supreme Court.

Decision Breakdown

The Supreme Court dismissed Adani's appeals. It held that the "deemed authorization" benefit under Section 16 of the PNGRB Act is not automatic: it is subject to the conditions in Chapter IV (including Section 17), so only entities already authorized by the Central Government qualify; a prior ruling to the contrary was expressly overruled. The Court also upheld Regulation 18 as valid, holding it was neither arbitrary nor beyond the PNGRB's rule-making power. Most significantly, the Court invoked the principle of "approbate and reprobate", having accepted the authorization on its excluded terms, furnished a bond, and bid for the excluded areas, Adani could not later turn around and challenge the very process it had accepted and participated in. The Court also noted Adani had a statutory appeal remedy against PNGRB's order which it chose not to use, instead litigating years later. Costs of Rs. 10 lakh were imposed on Adani.

Lesson Learnt

A party that knowingly accepts the terms of a regulatory decision, complies with them, and even competes under that very process cannot later challenge it merely because the outcome went against it: the law does not allow a litigant to "approve and disown" the same decision. Businesses dealing with regulators should raise objections promptly (including through available statutory appeals) rather than waiting to see if things work out first.

Official source (sci.gov.in)View Judgment (PDF)

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