The Appellate Tribunal for Electricity (Petroleum and Natural Gas Bench) directed Petroleum and Natural Gas Regulatory Board (‘PNGRB/Board’) for refund of encashed Bank Guarantee amount to HPCL which PNGRB arbitrarily withheld, even after remand back of the order in the previous round of litigation. Further, APTEL interpreted reasonable time contemplated under Regulation 16(a) of the PNGRB (Authorising Entities to Lay, Build, Operate or Expand Petroleum and Petroleum Products Pipelines) Regulations, 2010 (‘Authorizing Regulations’) framed by the Board under the PNGRB Act, 2006 and the manner in which PNGRB is required to function in terms of Regulation 13. The provision laid down in Regulation 16 does not whip a developer with penalty for delay beyond its control. The conduct of PNGRB in imposing penalty was premature and violative of the relevant regulations read with the Act. APTEL observed that the Board has to put in place a robust mechanism of monitoring for effective and meaningful enforcement of Regulation 16.
The case involved HPCL, the Appellant, challenging the Order dated 06.03.2020 passed by the Board, whereby, the Appellant’s request for the refund of encashed Bank Guarantee was rejected by PNGRB. The PNGRB encashed the Appellant’s Bank Guarantee under Regulation 16. The Bank Guarantee which had been invoked was furnished by HPCL in relation to the authorization granted by the Board in favour of HPCL for laying, building, operating or expanding Uran-Chakan-Shikrapur LPG Pipeline (‘UCSPL Pipeline’).
Prior to the proceedings leading up to the decision in Order dated 06.03.2020, HPCL had also challenged the Board’s earlier Order dated 04.06.2016, vide Appeal No. 102 of 2016, wherein, the Hon’ble APTEL set aside the Order dated 04.06.2016, remanding the matter to the Board for taking a fresh decision within a period of four months. Pursuant to the Order passed by the Hon’ble APTEL in Appeal No. 102 of 2016, the Board initiated fresh proceedings on 22.09.2019.
On 08.03.2019, HPCL furnished the details of the status of completion of the project and requested the Board to extend the timeline of the project till August, 2019 and refund the encashed Bank Guarantee. The Board acceded to the request for extension of the project timeline till August, 2019 but refused to return the encashed Bank Guarantee stating that it will consider the prayer with respect to return of the Bank Guarantee after August, 2019. HPCL submitted a fresh letter of request to refund the Bank Guarantee on 03.01.2020 which was declined by the majority Order passed on 06.03.2020, under challenge in the present case.
In the present proceedings, Mr. Matrugupta Mishra, Advocate and Managing Partner, Ritam Legal argued the matter on behalf of HPCL. The Hon’ble APTEL, vide the present order, has observed that the objective of Regulation 16 is not to penalize an entity for delays beyond its control and therefore held that the Bank Guarantee amount becomes refundable when the previous Order dated 04.03.2016 of the Board was set aside by the Hon’ble APTEL’s judgment dated 09.01.2019 in Appeal No. 102 of 2016 and directed the Board to refund the encashed amount.
The complete order can be read here.
By Sanjeev Singh Thakur
