The Petroleum and Natural Gas Regulatory Board Act ("Act"), enacted in 2006, established the Petroleum and Natural Gas Regulatory Board ("PNGRB"). The PNGRB regulates the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas excluding production of crude oil and natural gas, to protect the interests of consumers and entities engaged in such activities.

Jurisdiction

The PNGRB's mandate includes the authority to resolve oil and gas disputes. Section 12 of the Act confers upon PNGRB the jurisdiction to (a) adjudicate upon and decide disputes involving refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas; and (b) receive complaints and conduct inquiry/investigation upon contravention of retail and marketing service obligations, display of retail price at retail outlets, terms and conditions subject to which a pipeline has been declared as common carrier or contract carrier or access for other entities has been allowed to a city or local natural gas distribution network, or authorisation has been granted for laying, building, expanding or operating a pipeline as common carrier or contract carrier or for laying, building, expanding or operating a city or local natural gas distribution network, and connected matters.1

Further, Section 13 of the Act gives PNGRB the authority to exercise the same jurisdiction, powers, and authority as are exercisable by a civil court under the Code of Civil Procedure, 1908, in matters relating to petroleum refining, processing, storage, transportation, and distribution; petroleum marketing and sale (including the quality of service and supply security to consumers); and registration or authorisation issued by the PNGRB under Section 15 or Section 19 of the Act. Such powers include but are not limited to summoning and enforcing the attendance of any person and examining him on oath, requisitioning any public record or document, receiving evidence, dismissing or deciding applications ex parte, granting interim relief and reviewing its decisions.2

Settlement of Disputes

Chapter V of the Act read with the Petroleum and Natural Gas Regulatory Board (Conduct of Business, Receiving and Investigation of Complaints) Regulations, 2007 contains provisions governing the settlement of disputes by the PNGRB. If any dispute in relation to the matters specified above arises among entities or between an entity and any other person, such dispute is decided by a Bench consisting of the Member (Legal) and one or more members nominated by the Chairperson of PNGRB.

  1. Filing a complaint: A complaint can be filed before the PNGRB by any person in respect of matters arising out of the provisions of the Act, within 60 days from the date on which the act/conduct constituting a contravention took place. However, the PNGRB does not entertain complaints of individual consumers maintainable before a consumer disputes redressal forum under the Consumer Protection Act, 1986.
  2. Deciding the complaint: The PNGRB has to decide within 30 days whether there is a prima facie case and either conduct enquiry on its own or refer the matter for investigation to an Investigating Officer having jurisdiction.
  3. Reference by Central Government: The Act also empowers the Central Government to make a reference to the PNGRB where it is of the opinion that a matter arising out of the provisions of the Act is required to be investigated. In such a situation, the PNGRB will proceed in the same manner as it would in the case of adjudication of a complaint filed before the PNGRB.
  4. Civil Penalty: In case any complaint is filed before the PNGRB or if the PNGRB is satisfied that any person has contravened a direction issued by the PNGRB under the Act, the PNGRB can impose a civil penalty not exceeding INR 1 crore for each contravention, and in case of a continuing failure, with additional penalty which may extend to INR 10 lakh for every day during which the failure continues. However, in case of a complaint on restrictive trade practice, the amount of civil penalty may extend to five times the unfair gains made by the entity or INR 10 crore, whichever is higher.

Every order made by the Board under the Act is executable in the same manner as if it were a decree of a civil court. The Appellate Tribunal for Electricity, established under the Electricity Act, 2003, has been designated as the appellate authority to hear appeals against the PNGRB's orders. The second appeal lies before the Supreme Court of India.

Arbitration

Arbitration is an exception to the jurisdiction of the PNGRB. Accordingly, if an agreement between the parties provides for the settlement of disputes by arbitration, as is typically the case with revenue sharing contracts (RSCs), then a party will be required to initiate arbitration proceedings. Section 24(1) of the Act is a saving clause, protecting the rights of parties to opt for arbitration by agreement. Once the parties choose arbitration as the mode of dispute resolution, the Arbitration and Conciliation Act, 1996 becomes applicable to such proceedings.

Conciliation and Mediation

In 2019, the Ministry of Petroleum and Natural Gas issued a notification appointing an Expert Committee for Dispute Resolution to undertake conciliation and mediation for the resolution of any dispute or difference between parties arising out of a contract relating to exploration blocks/ fields of India as per the provisions of the Arbitration and Conciliation Act, 1996. The Committee further endeavours that the parties arrive at a settlement agreement within 3 months from the date of the first meeting of the Committee.

Conciliation and mediation of oil and gas disputes will continue to be governed by this notification, since Section 7 read with Entry (xiii) of Schedule II of the Draft Mediation Bill, 2021 (placed by the Ministry of Law and Justice in public domain for seeking feedback and suggestions from all stakeholders) excludes "proceedings before the Petroleum and Natural Gas Regulatory Board, and appeals therefrom before the Appellate Tribunal under the Petroleum and Natural Gas Regulatory Board Act, 2006" from the list of matters fit for mediation under the said Bill.

Judicial review

The remedy of judicial review is available if any action by either the union, the states or a competent governmental authority results in the violation of any rights guaranteed under the Constitution.

Footnotes

1 12. Powers regarding complaints and resolutions of disputes by the Board-

(1) The Board shall have jurisdiction to-

  1. adjudicate upon and decide any dispute or matter arising amongst entities or between an entity and any other person on issues relating to refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas according to the provisions of Chapter V, unless the parties have agreed for arbitration;
  2. receive any complaint from any person and conduct any inquiry and investigation connected with the activities relating to petroleum, petroleum products and natural gas on contravention of-
    1. retail service obligations;
    2. marketing service obligations;
    3. display of retail price at retail outlets;
    4. terms and conditions subject to which a pipeline has been declared as common carrier or contract carrier or access for other entities was allowed to a city or local natural gas distribution network, or authorisation has been granted to an entity for laying, building, expanding or operating a pipeline as common carrier or contract carrier or authorisation has been granted to an entity for laying, building, expanding or operating a city or local natural gas distribution network;
    5. any other provision of this Act or the rules or the regulations or orders made there under.

(2) While deciding a complaint under sub-section (1), the Board may pass such orders and issue such directions as it deems fit or refer the matter for investigation according to the provisions of Chapter V.

2 13. Procedure of the Board-

(1) The Board shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:-

  1. summoning and enforcing the attendance of any person and examining him on oath;
  2. subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any public record or document or a copy of such record or document, from any office and production of such documents;
  3. receiving evidence on affidavits;
  4. issuing commissions for the examination of witnesses or documents;
  5. dismissing an application for default or deciding it, ex parte;
  6. setting aside any order of dismissal of any application for default or any order passed by it, ex parte;
  7. granting interim relief;
  8. reviewing its decision; and
  9. any other matter which may be prescribed.

(2) Every proceeding before the Board shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196, of the Indian Penal Code (45 of 1860) and the Board shall be deemed to be a civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

(3) The Board shall be guided by the principles of natural justice and subject to other provisions of this Act and of any rules made there under, shall have powers to regulate its own procedure including the places at which it shall conduct its business.

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