Case Note & Summary
The dispute concerns allocation of natural gas from the KG D6 fields in the Krishna-Godavari Basin, where a significant reduction in production occurred. The Union Government, through its Ministry of Petroleum and Natural Gas, issued directives modifying the priority order for gas supply, affecting various industrial sectors. The petitioners, Welspun Maxsteel Limited and Ispat Industries Limited, are public limited companies engaged in sponge iron manufacturing, a non-core sector. They challenged the directives as arbitrary and detrimental. On 30 March 2011 and 21 April 2011, the Ministry issued letters to Reliance Industries Ltd. and NIKO (NECO) Ltd., directing that in the event of insufficient production, gas supply should first fully meet firm allocations of core sectors—fertilizers, LPG, power, and CGD (domestic and transport)—and if further shortfall occurs, pro-rata cuts be applied on remaining non-core sectors. This superseded an earlier directive of 12 July 2010 mandating pro-rata cuts on all firm customers. Consequently, Reliance Industries informed the petitioners on 4 May 2011 that from 9 May 2011, gas would be apportioned according to the new directives. The petitioners sought certiorari to quash the directives, alleging violation of the Government's Gas Utilization Policy and earlier EGOM decisions, and mandamus for investigation into extraction and production levels at the KG D6 fields. They contended the directives unfairly discriminated against non-core sectors. The respondent Union justified the modification citing reduced production and the need to prioritize supplies benefiting large numbers of people in larger public interest. During the pendency of the writ petition, the High Court by order dated 9 May 2011 facilitated a meeting and directed the Joint Secretary, Ministry of Petroleum and Natural Gas, to hear the grievances. Hearings were held on 11 May 2011, and the Joint Secretary passed a detailed order on 18 May 2011 overruling the objections and holding that the directives were in furtherance of EGOM's decisions and in larger public interest. The matter then returned to the High Court for final adjudication. The court reserved judgment on 22 June 2011 and pronounced it on 8 July 2011. The provided text does not include the High Court's final decision.
Issue of Consideration
WRIT PETITION NO. 3748 OF 2011
Case Details
2010 LawText (BOM) (07) 191
WRIT PETITION NO. 3748 OF 2011
Mohit S. Shah, C. J., Girish Godbole, J.
Mr. Janak Dwarkadas, Sr. Advocate, Mr. Sharan Jagtiani, Mr. Kunal Vajani, Mr. Ankit Virmani, Mr. H. Vaswani, i/b. M/s. Wadia Ghandy & Co. for petitioners; Mr. Kevin Setalwad a/w. Mr. Jay K. Bhatia for respondent No.1; Mr. Milind Sathe, Sr. Advocate i/b. M/s. A.S. Dayal & Associates for respondent No. 2; Mr. Luckyraj Indorkar a/w. Mr. Ranjit Shetty i/b. M/s. Hariyani & Co. for respondent No.3; Mr. V.R.Dhond a/w. Mr. S.V.Doijode and Ms. Priyanka C. Kothari i/b. Doijode & Associates for Respondent No.4; Mr. Zubin Behramkamdin a/w Ms. Anuradha Agnohotri and Mr. M. P. Bharucha i/b. M/s. Bharucha & Partners for respondent Nos. 5 and 6; Mr. Dhavan i/b. M/s. Bilawala & Co. for respondent No. 7; Mr. Pradeep Rajagopal i/b Ms. Rekha Rajagopal for respondent No. 8; Mr. J.J. Bhat, Sr. Advocate a/w Mr. Vatsal Shah i/b. Naik Naik & Co. for respondent No.9; Mr. Bomi Patel a/w Ms. Prachi Raj Mhatre a/w Mr. Rajesh Dubey i/b. M/s. Bodhanwala & Co. for respondent No.10
Welspun Maxsteel Limited, Ispat Industries Limited
Union of India, Reliance Industries Ltd., NIKO (NECO) Ltd., NTPC Limited, GMR Energy Limited, GMR Vemagiri Power Generation Limited, Konaseema Gas Limited, Ratnagiri Gas & Power Pvt. Ltd., Lanco Kondapalli Power Limited, Fertilizer Association of India
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Nature of Litigation
Writ petition under Article 226 of the Constitution challenging directives issued by the Union of India regarding allocation of natural gas.
Remedy Sought
Petitioners sought certiorari to quash directives dated 30 March 2011 and 21 April 2011, and mandamus for investigation into extraction of natural gas from KG D6 fields.
Filing Reason
Due to reduction in production of natural gas from KG D6 fields, the government modified the priority order for supply, adversely affecting non-core sectors, leading to petitioners facing disproportionate cuts in gas allocation.
Previous Decisions
The Empowered Group of Ministers (EGOM) decisions dated 28 May 2008 and other subsequent decisions; the Joint Secretary, Ministry of Petroleum and Natural Gas passed an order on 18 May 2011 after hearing parties, overruling petitioners' objections and upholding the directives.
Issues
Legality and validity of the directives modifying gas supply priorities
Entitlement to mandamus for investigation into extraction and production levels at KG D6 fields
Submissions/Arguments
Petitioners contended that the impugned directives were arbitrary and adversely affected their interests.
Judgment Excerpts
The impugned directives issued by the respondent No.1 Union of India through its Ministry of Petroleum and Natural Gas are contained in the letters dated 30th March, 2011 and 12th April, 2011 being Exh.A to the writ petition whereby the respondent No. 1 issued directives to the respondent no. 2 Reliance Industries Limited and Respondent No.3 NIKO (NECO) Limited regarding supply of Compressed Natural Gas (CNG); thereby modifying the directions contained in the earlier letter of Ministry of P & NG dated 12th July, 2010.
The Joint Secretary overruled objections of the petitioners and it was held that on account of the shortfall of CNG production in Krishna-Godavari Basin Gas Field No. D6 namely, KG D6 production, the directives contained in the letter dated 30th March, 2011 and 21st April, 2011 were issued in larger public interest.
Procedural History
Petitioners filed writ petition on 6 May 2011 seeking quashing of directives and mandamus for investigation. The court directed a meeting between parties and hearing by Joint Secretary on 11 May 2011. Joint Secretary passed order on 18 May 2011 overruling objections. The writ petition was then heard finally and judgment reserved on 22 June 2011, pronounced on 8 July 2011.
Acts & Sections
- Constitution of India: Article 226
