Gujarat HC dismisses GSPL plea to restrain GAIL from supplying Natural Gas for OPAL in Dahej SEZ, DB issues notice

Earlier this week, the Gujarat High Court passed an order dismissing the claim of Gujarat State Petronet Limited (GSPL), along with co-developer Dahej SEZ Limited (DSL), to exclusively lay natural gas pipelines by tap off for units of the ONGC Petrol Additions Limited (OPAL) in the Dahej SEZ area.

A day later, a Division Bench of Chief Justice R Subhash Reddy and Justice Vipul M Pancholi issued notice in the appeal filed by GSPL. This Bench has directed that any further work in the area will be subject to further orders of the Court in the matter.

The case has its genesis in a Co-Developer Agreement entered into by GSPL and DSL under the Special Economic Zones (SEZ) Act, 2005, for the transmission of natural gas to units set up in the Dahej SEZ area, including OPAL. The agreement which was entered into for a period of three years from 2009, was further extended in 2012.

In 2017, the Gas Authority of India Limited (GAIL), sought permission from an Approval Committee, constituted under Section 13 of the SEZ Act, to set up facilities to transport natural gas to OPAL. The same was first allowed on principle, following which, formal approval was given in October 2010 by the Committee.

This grant of approval was contested by GSPL on several grounds. According to GSPL, such approval could have been granted only 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.

This, it was contended, was because the impugned activity fell within the purview of activities to provide industrial facilities, under Section 2(p) of the SEZ Act. As per Section 9, it is the Board of Approval that has the power to grant approval for proposals to provide infrastructural facilities in SEZs.

Further, it was contended that GSPL, being a Co-Developer, had exclusive rights to develop infrastructure for transportation and distribution of gas within the SEZ area, in view of the agreement entered into with DSL in July 2009.

Apprehending that GAIL would make the tap off and lay the pipeline for transportation of gas to OPAL, a writ petition had been filed by GSPL before the Gujarat High Court, seeking to restrain GAIL from doing the same.

Senior Advocate Mihir Thakore, briefed by Advocate Aspi Kapadia, appeared for the appellant, GSPL. GAIL was represented by Senior Advocates Kamal B Trivedi and Mihir Joshi, and Advocates Vishwas K Shah, Masoom K Shah, Neha M Shah, Ankita Rajput and Mayank R Chavda. OPAL was represented by Advocates Akshat Khare and Suman Khare, who briefed Senior Advocate Sudhir Nanavati.

After hearing submissions, Justice Bela M Trivedi of the High Court had found that the petition was liable to be dismissed on grounds on maintainability alone. It agreed with GAIL and OPAL that the petitioner-GSPL had not made true and correct disclosure of material facts and further suppressed very relevant and important documents and the correspondences that had ensued between the parties.

Particular reference was made to the email correspondence between GSPL and OPAL, acknowledging that GSPL could not provide for additional capacity in their pipeline as required by OPAL at the time.

The emails also recorded GSPL as allowing ONGC to approach third parties to meet the demand GSPL could not cater to at the time. On its failure to disclose the same, the Court noted that it was not up to GSPL to decide what would be material to the case.

“…it is for the Court and not for the litigant to decide as to which fact is or is not material. It is the obligation of the litigant to state candidly all material facts. It is also well settled legal position that if there is any suppression of material facts on the part of the petitioner or twisted facts have been placed on record by the petitioner, the petition should be dismissed without entering into the merits of the matter.”

Besides, contentions not present in the grounds on which relief was sought in the writ petition were raised for the first time in GSPL’s rejoinder affidavits. The Court emphasised that it would not be proper even to accept such contentions, except in exceptional cases.

“In matters of the nature of high prerogative writs it is not only desirable, but necessary that the petitioner should be precise in putting forward his case, which the opposite party is called upon to meet. It is also but proper that the petitioner should state grounds with sufficient particularity and disclose in the petition all he material and the grounds on which they move the Court for the relief asked.

It would otherwise lead to most undesirable and unsatisfactory results if petitioners are allowed to raise new pleas or grounds by way of supplementary pleas or trot out a plea not at all made out in the petition.”

For these reasons, it was held that,

“…the Court has no hesitation in holding that the petitioner having suppressed material facts from the Court and having made incorrect and inaccurate statements in the petition, the same deserves to be dismissed on the said ground alone.”

The judge further agreed with the case put forth by GAIL and OPAL that the impugned work did not fall under the statutory definition of industrial facilities so as to warrant approval by a Body of Approval constituted under Section 8 of the SEZ Act. In this case, approval from an Approval Committee under Section 13 was sufficient.

The exclusive claim staked by GSPL in its petition was dismissed, observing that neither the Act nor the relevant contractual clauses talk of exclusivity or obligations to third parties.

It also agreed with contentions put forth by the respondents that there was collusion between GSPL and DSL, evident in the sequence of various representations made, to create an imaginary urgency in the matter for filing the petition.

On these grounds, among others, the single judge had dismissed the petition holding that,

“In the afore-stated premises, the petition being devoid of any merits and having been filed suppressing material facts and documents, deserves to be dismissed and is dismissed. Ad-interim relief stands vacated forthwith. Notices stand discharged.”

Subsequently, the Division Bench issued notice in the appeal filed by GSPL, stating in its order,

“Any further works will be subject to further orders in the matter.”

Read Division Bench Order here.

Read Single Judge Order here.