CNG Judgment

WPPIL/47/2011 cnggasfinalversion
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD WRIT PETITION (PIL) No. 47 of 2011 WITH WRIT PETITION (PIL) No. 54 of 2011 For Approval and Signature: HONOURABLE THE CHIEF JUSTICE MR.BHASKAR BHATTACHARYA AND HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================== =============== Whether Reporters of Local Papers may be 1 allowed to see the judgment ? 2 To be referred to the Reporter or not ?` 3 Whether their Lordships wish to see the fair copy of the judgment ?
Whether this case involves a substantial question 4 of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ?
========================================== =============== WRIT PETITION (PIL) No. 47 of 2011 DHRANGADHRA PRAKRUTI MANDAL THROUGH VICE PRESIDENT Versus UNION OF INDIA THROUGH SECRETARY & ORS. ------------------ ----- ----- ---- ----- ---- ---WRIT PETITION (PIL) No. 54 of 2011 GUJARAT RAJYA AUTORICKSHAW FEDERATION & ORS versus UNION OF INDIA THROUGH SECRETARY & ORS.
WRIPT PETITION (PIL)/47/2011
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========================================== =============== Appearance : WRIT PETITION (PIL) No. 47 of 2011 MR AMIT M PANCHAL for PETITIONER for petitioner MR PS CHAMPANERI, ASST. SOLICITOR GENERAL for RESPONDENT : 1, MR PK JANI, GOVERNMENT PLEADER with MR RASESH RINDANI, ASSISTANT GOVT. PLEADER for RESPONDENT : 2 - 3. MR RITURAJ M MEENA for RESPONDENT : 4, MR UDAY JOSHI with MR. ABHISHEK MEHTA for M/S TRIVEDI & GUPTA for RESPONDENT : 5, 8, MR SUDHIR NANAVATI, SR COUNSEL for MS ANUJA S NANAVATI for RESPONDENT : 6, MR ASPI M KAPADIA for RESPONDENT : 7, 9, MR NEERAJ SONI for RESPONDENT : 10, MS MINOO A SHAH for MR GN SHAH for RESPONDENT : 11, WRIT PETITION (PIL) No. 54 of 2011 MR. ASPI KAPADIA for PETITIONER for petitioner MR PS CHAMPANERI, ASST. SOLICITOR GENERAL for RESPONDENT : 1 MR PK JANI, GOVERNMENT PLEADER with MR RASESH RINDANI, ASSISTANT GOVT. PLEADER for RESPONDENT : 2. ========================================== =============== CORAM : HONOURABLE THE CHIEF JUSTICE MR.BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 25/07/2012
CAV JUDGMENT (Per : HONOURABLE THE CHIEF JUSTICE BHATTACHARYA) 1. MR.BHASKAR
These two Public Interest Litigations were heard analogously as
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the subject-matter of these petitions are, to some extent, similar.
2.
In writ petition No. 47 of 2011 [PIL], the writ-petitioner prayed
for the following relief:
9.
In the premises aforesaid and considering
what is stated above, the petitioner, most humbly and respectfully prays that this Honourable Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, direction or Order: (A) Directing the Government of India to allot additional quota of Natural Gas for domestic and vehicular usage for the benefit of the general public and environment to the State of Gujarat at the APM rate at which rate the Natural Gas is being supplied to the cities of Delhi and Mumbai; (B). Your Lordships may be pleased to direct the Government of India to prioritise and diversify the unutilised Natural Gas from non-priority sector to the CGD for their domestic and vehicular usage, as directed by the Honourable Supreme Court of India in the cases of M. C. Mehta versus Union of India, reported in (2002) 4 SCC 356, which in turn would reduce the pollution and the cost of living; (C). Your Lordships may be pleased to direct the State of Gujarat to take steps to reduce air pollution in the State of Gujarat by converting the private and public vehicles from petrol and diesel to Natural Gas;
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(D).
Your Lordships may be pleased to pass such other and further Order/s, grant such other reliefs as may be deemed just and proper in the facts and circumstances of the present case;
3.
The case made out by the writ-petitioner in this application may
be summed up thus:
3.1
The petition has been filed with the interest of improving and
preserving the environment and the ecology and for the benefit of the residents of the State of Gujarat. The petitioner has resolved to file the present petition with the object of getting more allocation of natural gas to the State of Gujarat at the Administered Price Mechanism (APM) rate of City Gas Distribution (CGD), and at rate on which the natural gas is being supplied to the cities of Delhi and Mumbai. The said action would be in conformity with Article 14 of the Constitution of India as it would lead to the Government of India, and its instrumentalities allocating the National Asset Natural Gas, without meting out any discrimination to the State of Gujarat, vis-a-vis the price. The said action would consequently, reduce the level of environmental/air pollution in the State of Gujarat and also reduce the cost of living of the citizens with more natural gas for the use of the residents in the State of Gujarat, which in turn could also facilitate better supply of domestic LPG gas of which there is an acute shortage.
3.2
The petitioner is a society duly registered under the Societies

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Registration Act, 1980, and is a Mandal, which comprises of members who are public-spirited citizens and are concerned with protecting the wildlife and environment by taking necessary steps in that behalf. The Mandal has been established in the year 1991. The petitioner has taken various steps to protect the eco-system and the Wild Ass Sanctuary of the Little Rann of Kutch. The petitioner had earlier filed Special Civil Application Nos. 8487 of 1996 and 1922 of 2002, wherein this Court had issued directions for the protection and preservation of the eco-system and the Wild Ass Sanctuary. The petitioner has also, in the year 1996, addressed letters to various authorities for the protection and betterment of the eco-system in the Little Rann of Kutch. The petitioner had filed Special Civil Application Nos. 8118 of 2004, 14819 of 2004, MCA No. 1630 of 2004, 447 of 2005, 5532 of 2005 and 15436 of 2008, before this Court seeking compliance of the Environment Protection Act, 1986, and the Rules framed there under, compliance of the Environment Impact Assessment Notification 1994 and the Order of the Court in connected matters in public interest. The petitioner has also preferred Special Leave Petitions in the Supreme Court of India challenging the C.A.V. Judgment and Order passed by this Court in SCA No. 14819 of 2004 and connected matters, preferred by the petitioner and other persons. The petitioner has taken interest in protecting and preserving the environment and ecology in the State of Gujarat and has a locus-standi to file this Public Interest Litigation.
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3.3
The respondent nos. 1 to 4 are discharging public duties by
virtue of their holding public offices and are State within the meaning of Article 12 of the Constitution of India, and are, therefore, amenable to the writ jurisdiction of this Court under Article 226 of the Constitution of India. The respondent Nos. 5 to 11 are Gas/CGD
companies, which distribute and supply Natural Gas in the State of Gujarat and considering the issues involved in this petition, they have, therefore, been impleaded as party respondents.
3.4
By way of this Public Interest Litigation filed under Article
226 of the Constitution of India, the petitioner challenges the arbitrary, high-handed, unreasonable and irrational action of the respondents Nos. 1 to 4 -
[a].
In not taking urgent and advance action to tackle the acute problem of rampant growth of vehicular pollution and toxicity in the air due to increase in the number of vehicles in the State of Gujarat, despite there being various directions passed by the Supreme Court of India in M.C. Mehta versus Union of India & Others, reported in (1991) 2 SCC 353, (1998) 6 SCC 63, (2000) 9 SCC 519, (2001) 3 SCC 756, (2001) 3 SCC 763, (2001) 3 SCC 767, (2002) 4 SCC 356, (2002) 10 SCC 191, with regard to introducing adequate supply of Natural Gas as an alternative fuel in the public transports and in private
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vehicles;
[b].
In not taking adequate steps to allot more Natural Gas under APM to the State of Gujarat at the rate at which the Natural Gas is made available to cities of Delhi and Mumbai and thereby putting the entire burden on the citizens who are residents in the State of Gujarat;
[c].
In not taking steps to identify the priority sectors and allocating the requisite quantities in accordance with the needs of the said sector and diversify unutilized Natural Gas under City Gas Distribution System, to meet with the demand of Natural Gas for vehicular and domestic usage, which would in turn reduce pollution and also bring down the cost of living of the citizens who are residents in the State of Gujarat in compliance with the principles enunciated by the Supreme Court of India in the case of M. C. Mehta versus Union of India & Others, reported in (2002) 4 SCC 356, wherein the Supreme Court of India was pleased to issue the following observations and direction -
Lack of adequate supply of CNG has been a cause of concern and has been referred to in the various orders by this Court from time to time. In the absence of proper response from the governmental authorities, there is no alternative but to issue the
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following directions: The Union of India will give priority to transport sector including private vehicles all over India with regard to allocation of CNG. This means that first the transport sector in Delhi, and in the other air polluted cities in India, CNG will be allocated and made available and it is only thereafter if any CNG is available, that the same can be allocated to the industries, preference being shown to public sector undertakings and power projects.
3.5
It is a known and admitted fact that the number of vehicles
has increased in the State of Gujarat and with the increase of vehicles, air pollution has also increased to an alarming level. The toxicity in the air has increased to a dangerous level and is causing serious health hazards/threats to the residents of the State of Gujarat.
3.6
Various petitions have been filed before the Supreme Court
of India challenging the inaction of the respective authorities in reducing the air pollution caused due to vehicles. The Supreme Court of India in the case of M.C. Mehta versus Union of India & Others, reported in (1991) 2 SCC 353, (1998) 6 SCC 63, (2000) 9 SCC 519, (2001) 3 SCC 756, (2001) 3 SCC 763, (2001) 3 SCC 767, (2002) 4 SCC 356, (2002) 10 SCC 191, has been pleased to pass various directions to the concerned authorities and to the respective State Governments to take steps to ensure reduction of pollution resulting due to emissions from the vehicles and to diversify the allocation of CNG from non-priority sectors to Transport sector in order to reduce pollution.
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3.7
The Supreme Court of India in the case of M.C. Mehta versus
Union of India & Others, reported in (2002) 4 SCC 356, was pleased to observe thus
The precautionary principle was elucidated thus by this Court in Vellore Citizens Welfare Forum Vs. Union of India and Others, (1996) 5 SCC 647, inter alia, as followsThe state government and the statutory authorities must anticipate, prevent and attack the cause of environmental degradation. Where there are threats of serious ad irreversible damage, lack of scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. .... The auto policy must, therefore, focus upon measures to ...Anticipate, prevent and attack... the cause of environmental degradation in this filed. 3.8 The cost of living in Gujarat has also considerably increased
due to the increase of prices of basic necessities. The domestically used LPG also forms a part of these basic necessities, whose price has increased considerably, in the recent past. It is a well-known fact that the supply of LPG has decreased in recent times due to decrease in allotment and there has been a corresponding increase in its demand. If the allotment of Natural Gas is increased by the respondent no.1, it would reduce the burden on the Civil Supplies Department, who does not appear to be in a position to meet and cope with the heavy demand of Natural Gas. The petitioner, therefore, challenges the nonallocation of Low Priced Domestic Gas for CNG and Domestic purpose
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by the respondent No. 1 to the State of Gujarat because the inadequate gas supply to CGD consequentially leads to a higher cost of living. Therefore, the above action visits the citizens and residents in Gujarat State with an additional financial burden, which, in turn increases the per capita cost of living in society. The non-allocation of sufficient Natural Gas for domestic consumption is in violation of Article 21 of the Constitution of India, as cooking fuel has become an important element of everyday life. Due to non-availability of Natural Gas as a cooking medium, the public is compelled to spend more on the LPG cylinders, which being high on demand and low on supply is difficult to obtain, leading to increase in everyday-difficulties for a common man.
3.9
According to the information gathered by the petitioner from
www.infraline.com and other reliable sources, the petitioner has come to know that total production and import of Natural Gas in India is 169.03 Million Standard Cubic Meter per diem (hereinafter referred to as MMSCMD). The Gujarat State is being allotted 63.60 MMSCMD. Out of the said allocation, 16.42 MMSCMD is of Imported Regasified Liquefied Natural Gas (hereinafter referred to as the RLNG). The State of Gujarat has become the highest Natural Gas consuming Industrial hub, as the overall Industrial Environment is conducive for
development, the consumption of Natural Gas by industries is also high, leaving almost nothing for domestic and vehicular consumption, which is in contravention to the observations of the Supreme Court of
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India in the case of M. C. Mehta versus Union of India & Others [supra].
3.10
The allocation, diversification and price fixation of the
Natural Gas is under the absolute control and powers of the Government of India and the State of Gujarat has no power and/or role to play in the said aspect. The Government of India has allocated about 2 MMSCMD of Low Priced Domestic Gas for CGD, to the State of Maharashtra, which caters to over 90% of the demand of CNG and Domestic consumption. Similarly, in the State of Delhi, the
Government of India has allocated 2.5 MMSCMD of Low Priced Domestic Gas to CGD, which caters to around 90% demand of CNG and Domestic segment. In contrast to the above, the State of Gujarat has been allocated less than 0.5 MMSCMD of Low Priced Domestic Gas to CGD, which can only cater to around less than 40% demand of CNG and Domestic segment. The said Low Priced Domestic Gas is allocated to only few cities and therefore, the rest of the cities are forced to use 100% imported RLNG for CNG and Domestic Consumption, which in turn leads to an excessive and incessant price rise of at least 30-40%.
3.11
On a bare perusal of the chart of allotment, it becomes clear
that the Natural Gas allotted to the State of Gujarat is being primarily allotted to Petrochemicals, LPG and Refineries, Power Sector, Fertilizer manufacturing units, Steel companies & similar other companies and
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thereafter, the remaining quota is allotted for CGD and other sectors. The above action compels the general public to use petrol and diesel as a fuel for their vehicles. As fuel can be easily adulterated, the fumes arising out of such adulterated fuel causes more air pollution and spoils the ambient air quality leading to an increase in the Suspended Particulate Matter (SPM) in the air; consequently, it causes to increase environmental pollution, leading to degradation of environment. The usage of such fuels also leads to increase in the cost of living and creates an additional financial burden on the general public. Therefore, Natural Gas is required to be diverted for domestic and vehicular usage at the APM price, which is being allocated to the cities of Delhi and Mumbai, in the interest of the State of Gujarat.
3.12
It is evident that in case the Government of India allocates
even 5% of Low Priced Gas to CGD for domestic customers, (approximately 8.5 MMSCMD), such an allocation would benefit 14 million households. If Government of India allocates 5% more of Low Priced Gas to CGD for CNG purposes, 2.8 million autos or cars can be converted to CNG covering 56 medium sized cities each having more than 5 lac vehicles.
3.13
Therefore, the Government of India needs to give shape to
and implement the Gas Utilization Policy, under which sectoral and consumer-wise priorities are required to be identified by the
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Government of India. The Government of India is required to take steps to identify the priority sectors and to locate the requisite quantities in accordance with the needs of the said sector and diversify unutilized Natural Gas under CGD System to meet with the demand of Natural Gas for vehicular and domestic usage. Such policy would in turn reduce pollution and cost of living, as observed and directed by the Supreme Court of India in various decisions given by it from time to time in the case of M. C. Mehta versus Union of India and others. Hence the application.
4.
The application was dealt with by the respondents by filing
separate affidavits-in-reply. Some of the Respondents have supported the petitioner whereas some have opposed. We propose to indicate in detail the stance taken by various respondents as well as the contentions advanced by their respective learned counsel separately.
5.
Respondent No.1 has filed affidavit-in-reply and has taken up
the following defence:
5.1
The petition is not tenable in facts as well as in law and
hence, the same deserves to be dismissed.
5.2
The indigenously produced natural gas can be broadly
divided, based on pricing mechanism/blocks, into three major categories, namely-
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(i)
Natural gas produced from nominated blocks
which includes APM gas and non-APM gas.
(ii) Natural gas produced from pre-New Exploration Licensing Policy (NELP) blocks
(iii) 5.3 gasified
Natural gas produced from NELP blocks.
The other major gas, which is used in the country, is ReLiquefied Natural Gas (RLNG for short) which is
imported from abroad. Chemically natural gas is predominantly Methane with small but varying proportions of higher carbon fractions.
5.4
APM GAS:-
APM gas is produced from the nominated fields of National Oil Companies (NOCs), viz., Oil & Natural Gas Corporation (ONGC) & Oil India Limited (OIL). The allocation of APM gas is given to priority sectors in accordance with the cabinet decision of May 2005. Accordingly, natural gas at APM rate/prices is being supplied only to the following categories of consumers:a. Power sector consumers b. Fertilizers sector consumers c. Consumers covered under court orders d. Consumers having allocations of less than 0.05 mmscmd.
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5.5
In order to rationalize the allocation of APM gas among
various priority sectors and regions, Government of India had constituted Gas Linkage Committee (GLC) in July 1991 to allocate APM gas. In view of availability of APM gas in the country falling far short of the demand and the production projected to decline further in the future, the Government
wound up the GLC on November 9, 2005. No APM gas has been allocated since then.
5.6
As regards supply of APM gas to Delhi and Mumbai, it
may be stated that Supreme Court in the case of M.C. Mehta v/s UOI has held that the problem of air pollution was extremely serious in Delhi and nine other cities, including Mumbai, necessitating supply of CNG to these cities. Accordingly, APM gas is being supplied to City Gas Distribution (CGD) entities, which provide CNG in inter alia Delhi & Mumbai. In Gujarat also domestic gas is being supplied to Gujarat Gas Company Limited (GGCL) which supplies CNG in Ankleshwar, Bharuch and Surat.
5.7
As regards the allocation of natural gas to Gujarat, it
may be stated that out of total APM allocation of 119.51 million metric standard cubic meters per diem (mmscmd) around 26.7 mmscmd has been allocated to Gujarat. Currently, as things stand, after disbanding GLC, no APM gas is available for allocation, and therefore the request for allocation of APM gas
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cannot be acceded to.
5.8
PRE-NELP GAS: The gas produced from pre-New Exploration Licensing
Policy (NELP) blocks is sold by the Contractor in accordance with the provisions of Production Sharing Contracts executed
between Government and the producers.
5.8.1
From the pre-NELP field of Panna-Mukta-Tapti (PMT),
also, gas has been allocated to GGCL and Gujarat State Petroleum Corporation Limited (GSPCL) for supply to small consumers. At present, no spare gas under pre-NELP block is available for allocation.
5.9
NELP GAS After the advent of New Exploration and Licensing Policy
(NELP) era, the production of indigenous gas had increased substantially. The production from KG-D6 block of RIL-NIKO under NELP was envisaged at a level of 60 MMSCMD. The Empowered Group of Ministers (EGoM) constituted to decide issues relating to commercial utilization of Gas produced under NELP, allocated 63.309 mmscmd on firm basis, and 30 mmscmd on fallback basis, to various priority sectors as below:
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Sector Power Fertilizers CGD Steel Refineries Petrochemicals LPG Captive Power Total
Allocation (mmscmd) Firm Fallback 32.677 12 15.708 ~ 1.222 2.165 4.19 5 6 1.918 2.594 10 63.309 30.165
Total 44.677 15.708 3.387 4.19 11 1.918 2.594 10 93.474
5.10
However, the production from KG D6 field started
declining from March 2010, and by December 2010, it had declined to around 50 mmscmd, which was barely enough to meet the committed/firm allocations to the core sectors in the order of priority determined by EGoM, i.e., Fertilizer, LPG, Power and CGD.
5.11
From KG D6 field under NELP, a quantity of 77, 593
standard cubic meters per diem (scmd) has been allocated to Sabarmati Gas Ltd. for Gandhinagar, Mehsana & Sabarkantha and 49,383 scmd has been allocated to Hindustan Petroleum Corporation Ltd for Ahmedabad. An allocation of 2,00,000 scmd of KG D6 has been made to M/s Adani Energy Ltd., for supply of
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CNG to transport sector in Ahmedabad on provisional basis and this allocation is subject to final status of authorization given to them by PNGRB. Put together, out of a total firm allocation of KG D6 gas of 1.222 mmscmd for CGD sector for the entire country, 0.326 mmscmd has been allocated to Gujarat alone which is around 27% of the total allocation.
5.12
The decline in the production of natural gas from KG D6
has continued and by March 2011, the production had fallen to 48 mmscmd. Therefore, in public interest this Ministry decided to fulfil the firm demand of the core sectors. The supply situation worsened further and in August, 2011, the production has fallen to mere 47 mmscmd, thereby leading to a cut even in the CGD sector, which is one of the core sectors.
5.13
It may be seen from the above that against the firm
allocations of 63.3 mmscmd (of which around 52 mmscmd is for the above mentioned four core sectors), the current production from the KG D6 field has fallen to around 47 mmscmd and is not even sufficient to even meet the firm allocations earlier made by EGoM to the core sectors. As such, no allocation can be made from KG D6 field also.
5.14
The present total availability of natural gas in the
country is around 166.17 million standard cubic meters a day
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(mmscmd); of this the indigenous gas is only 71 mmscmd. The source-wise details of natural gas are as follows: Source ONGC OIL PMT Other J Vs KG D6 (l)Total of Domestic Gas Spot R-LNG RLNG (2) Total of Imported gas Total (1+2) 5.15 Average daily availability (mmscmd) in June 2011 50.78 6.63 11.87 3.39 47.17 119.84 21.2 25.13 46.33 166.17
As submitted above, the non-APM indigenous production
of natural gas in the country consists of production from new fields of nominated blocks, pre-NELP production and production under NELP. At present, the production from KG D6 field is
around 47 mmscmd and is priced at US$4.2/mmbtu. It is single largest indigenously produced natural gas in the country.
Similarly, APM gas is also priced at US$4.2/mmbtu less royalty. In view of this, the argument that APM is cheaper than other gases is not correct. However, the imported RLNG is more expensive. It is also a fact of life that domestic production is much lower than the demand and therefore, will have to be met by imported gas.
5.16
The Government's endeavour is to accord high priority
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to the core sectors in the matter of allocation of gas as reflected in the Gas Utilization Policy. The current overall sector-wise supply (June 2011) of the natural gas (including imported RLNG) is as follows:-
SECTOR
Supply MSCMD) 37.74 61.41 7.9 1.09 7.18
% OF TOTAL SUPPLY 22.7% 37.0% 4.8% 0.7% 4.3%
Fertilisers Power Sector CGD (Domestic+ CNG) Court Mandated Customer Shrinkage for Liquid extraction - LPG etc. Small consumer Having allocation <50,000 CGD Commercial &lndustrial Refineries Petrochemicals Sponge Iron Others Internal Consumption pipeline system Total Supply
5.81 6.07 19.77 5.67 7.01 4.45 2.06 166.17
3.5% 3.7% 11.9% 3.4% 4.2% 2.7% 1.2%
5.17
At present no KG D6 gas is available for allocation. It is
true that natural gas is a clean and efficient fuel and the demand for natural gas is growing rapidly in the country. The gap between demand and supply has to be met through imported RLNG, which is more expensive compared to domestic
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gas. All sectors including the extremely price sensitive sectors such as power and fertilizer also use some imported RLNG to fulfil their requirements of gas. The use of RLNG in the country is set to grow as the domestic demand cannot be met by the domestic gas. As the domestic gas is limited, its allocation is as per a well-defined policy of the Government and as per the broad following priority:-
1.Fertilizer 2.LPG 3. Power 4. CGD 5. Other sectors such as steel, Petrochemicals, Refineries, etc. 5.18 The amount of domestic gas available is distributed
as per the above priority in a rational manner to serve larger public interest. No sector which is not in accordance with this
Gas Utilization Policy can claim overriding priority. Supreme Court in its Judgment dated 7.5.2010 in the RIL & RNRL cases has held that the Government owns the gas till it reaches its ultimate consumer and that Production Sharing Contract (PSC) shall override any other contractual obligation between the Contractor and any other party. Under the provisions of the PSC, commercial utilization of natural gas would be determined in accordance with the Government's Gas Utilization Policy.
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5.19
Government has accorded priority to enhance energy
security of the country. A multi-pronged strategy has been adopted to augment gas supplies and to bridge the gap between supply and demand for the domestic market by intensification of domestic Exploration and Production (E&P) activities, including Coal Bed Methane (CBM), through LNG imports, and new technologies like Underground coal gasification and Natural Gas Hydrate Programme (NGHP). In this context, Government is also trying to ensure import of natural gas through trans-national gas pipelines.
5.20
Government has enacted the Petroleum and Natural Gas
Regulatory Board Act, 2006 which has established the Petroleum and Natural Gas Regulatory Board to regulate, inter alia ,
transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas. The Board, either on the basis of an application or on suo motu basis, forms an opinion that it is necessary or expedient to lay, build, operate or expand a pipeline, it gives wide publicity of its intention to do so and authorizes the entity for the same.
5.21
It is the endeavor of the Government to encourage
supply of Compressed Natural Gas (CNG) to a large number of cities, so as to improve the quality of air and to bring down air pollution. CNG is sold by City Gas Distribution (CGD) Companies,
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which are not Central Public Sectors Undertakings (CPUs). Development of CGD projects in any area depends upon, inter alia , pipeline connectivity, availability of gas and commercial viability of the project and is processed by Petroleum and Natural Gas Regulatory Board (PNGRB for short). However, no
gas is available at present for allocation to CGD sector as sector having higher priority are still short of gas for their requirement.
5.22
The petitioners have failed to establish as to how and
which of the actions of Respondent No. 1 is arbitrary, high handed or unreasonable. In order to attract public as well as private players in city/local natural gas distribution networks throughout the country, the Government of India has enacted the Petroleum and Petroleum and Natural Gas Regulatory Board (PNGRB) Act. PNGRB would undertake inter alia , authorization of city or local natural gas distribution networks.
5.23
The Government has formulated Gas Utilization Policy
in larger public interest. As no indigenous gas is available for allocation, it is not possible to allocate additional indigenous gas to CGD sector in Gujarat. However, RLNG is being increasingly used by the CGD and is available for use. Currently about 46 mmscmd of RLNG is being used in the country by various sectors as the domestic gas is unable to fulfil the demand of all users.
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5.24
This Respondent is fully aware that air quality has
increasingly become an issue of social concern in the backdrop of increasing industrialization and vehicular pollution. In order to control vehicular pollution, Government of India has formulated the Auto Fuel Policy. The policy aims at comprehensively and holistically address the issues of vehicular emissions, vehicular technologies and auto fuel quality in a cost-efficient manner while ensuring the security of fuel supply and supply of CNG is only one of the instruments to reduce air pollution. However, it is the endeavour of this Respondent to encourage supply of CNG to the maximum number of cities.
5.25
The allocation is made by the Respondent No. 1 in
accordance with the Gas Utilization Policy which has been framed keeping in view the larger public interest. It is not for the Petitioners to decide the order of priority or to interfere with the policy of the Respondent No. 1. Like LPG, natural gas is also in short supply and has to be used to derive optimum benefits. The Union of India is fully competent and has powers for taking a policy decision on allocation of natural gas, which falls within Entry no.53 of List I- Union List of VII Schedule of the Constitution of India. Therefore, the question before this Court is to satisfy itself whether this policy decision is arbitrary, unjust, violative of fundamental rights or is dehors the
Constitution or violative of any statutory rights.
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5.26
The Respondent No. 1 is fully competent to take policy
decision in larger public interest. The Petitioners cannot claim allocation of gas as a matter of right and neither can they claim supply of gas at a particular rate or price.
5.27
The overall gas portfolio out of 119.51 mmscmd APM
allocation, 26.7 mmscmd has been allocated to Gujarat. It may also be clarified that after revision of APM price in 2010, the price of APM gas is almost at par with KG D6 gas. Out of the
total firm allocation of 1.222 mmscmd for CGD sector for the entire country, 0.326 mmscmd has been allocated to the CGD sector in Gujarat , which is around 27%.
5.28
The allocation of gas is made in accordance with the
Gas Utilization Policy and it is not for the Petitioner to decide the allocation.
5.29
The Petitioners ought to be concerned with reducing
environmental pollution and not with the supply of cheap gas. RLNG is available in abundance and can be used for vehicles to reduce pollution. As already submitted, all other sectors,
including fertilizers and power, are also using RLNG in some measure, due to short supply of indigenous gas.
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5.30
The
Petitioners
have
failed
to
establish
that
the
allocation of natural gas made by the Respondent No. 1 is not in accordance with the Gas Utilization Policy. On the contrary, the Petitioners are seeking interference of this Court to ignore the order of priority prescribed in the Gas Utilization Policy, which has been broadly discussed in two recent decisions by the Bombay High Court vide order dated 08.7.2011 in Writ Petition No. 3748 of 2011 filed by Welspun Maxsteel Limited and by the Delhi High Court vide order dated 29.9.2011 in Writ Petition No. 3106 of 2011 filed by Essar Steel Limited.
5.31
The petition filed by the petitioners is misconceived and
is totally devoid of merits or substance warranting interference of this Court and may be dismissed outright with costs.
5.32 The respondent No.1 Union of India has filed a supplementary affidavit in reply by which it made the following clarifications of the earlier affidavit:
5.33
With regard to paragraph 7 of earlier Affidavit, it was
clarified that all consumers, irrespective of their end usage of gas but whose total allocation of gas is less than 50,000 SCMD are included in this category.
5.34
The price of CNG is not determined by the Government. CGD
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entities determine the price based on various factors, inter alia, cost of natural gas, trunk transportation tariff, local distribution charges, Compression & dispensing charges, Operating expenses,
Administrative cost, Applicable taxes & duties.
5.35.
In the year 2010-11 the supply of APM gas against allocation
was as follows:
Sectoral Allocation in units in Gujarat state (MMSCMD) Power Fertilizers Steel Others Internal Total Consumption + Shrinkage 10.49* 5.51 3.11 5.62 2.04 26.77 Supply (MMSCMD) in 2010-11 against the allocation 4.709 3.224 0.698 2.540 1.21 12.381 *Includes the allocation of 2.25 mmscmd to Pipavav Power Project, which has not taken off yet. 5.36 It was further clarified that Firm basis allocation is made
where the buyer is obligated to receive a certain quantity of gas & simultaneously seller is obligated to supply a certain quantity of gas through a commercial agreement. In a Fallback allocation, seller will supply gas as and when gas is available with the seller after meeting its firm commitments. For example, this can be on account of additional production beyond the firm allocation or when a buyer(s) is (are) unable to lift the contracted firm allocation(s).
5.37
The firm allocation of KG-D6 gas made to various CGD
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entities by EGoM as mentioned in paragraph affidavit is as below:
15 of the original
__________________________________________________________________ SI No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Name of the Plant Sabarmati Gas Ltd.(Gujarat) HPCL (Gujarat) Adani Energy Ltd.(Gujarat) * Indraprastha Gas Ltd. Avantika Gas Ltd. - for Indore Avantika Gas Ltd. - for Ujjain Mahanagar Gas Ltd. Green Gas Ltd GAIL Gas Ltd Soumya DSM BGL Hydrabad BGL Kakinada Total *subject to PNGRB authorization. Gas allocated mmscmd) 0.078 0.049 0.200 0.309 0.012 0.001 0.370 0.015 0.020 0.020 0.100 0.047 1.222 (in
5.38
An Empowered Group of Ministers (EGoM) for commercial
utilization of natural gas produced from Blocks under New-Exploration & Licensing Policy (NELP) has been formed to decide pricing & allocation of gas produced from NELP blocks. The EGoM had approved the following pricing formula for of KG-D6 gas: Selling price/ (P) = 2.5 + (CP-25)0.15 (in US$/mmbtu), where CP=crude price in US$/barrel, with cap of CP=US$ 60/barrel.
5.39
The selling price comes to US$ 4.2/mmbtu for crude price
greater or equal to US$ 60/barrel. The price basis/ formula is valid for five years from the date of commencement of supply, viz., till March 2014. The prices of other domestic gases such as APM, non-APM are fixed by Government, while some other gas prices are as per
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respective PSC provisions. The price of imported spot RLNG is market determined and vary from cargo to cargo.
5.40
In view of the foregoing submissions made herein above, the
instant petition filed by the petitioners is misconceived and is totally devoid of merits or substance warranting interference of this Court and may be dismissed outright with costs.
6.
The State of Gujarat, the respondent No.2 took the following
defences by filing an affidavit in reply, rather supporting the petitioner; this may be summed up thus:
6.1
In spite of State Government's continuous representation to
the Central Government for last many years to allocate Administered Price Mechanism (APM) gas to the State of Gujarat, no positive response has been received so far. Subsequent to discovery of D-6 gas by M/s.Reliance Company, the State Government also requested Central Government to allocate D-6 Gas, since the State had already developed substantial City Gas Distribution (CGD) network through State owned Company GSPC Gas Limited and various other companies.
6.2
The State Government also considered to frame, a law viz.
Gujarat Motor Vehicles (Use of Fuel) Regulation Bill, 2005 and sent the same for approval of the Central Government. However, Central
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Government has yet not approved the same and neither has it advised the State Government about clauses and the Bill has been returned back to the State Government with a direction that the same may first be passed by the State assembly and then, be sent for Presidential Approval.
6.3
In Gujarat, more than Rs.5000 crore's investment has been
made in gas pipeline infrastructure. Gas grid network of around 2500 km. high-pressure transmission line has already been commissioned. Similarly, 10,000 km. City Gas Distribution (CGD) pipeline network is also functional in the State. Various companies in the public sector, private sector, Joint Venture Company, Cooperative Societies and local bodies have taken innovative steps in establishing this CGD network. The State Government has facilitated all these CGD companies for acquiring Right of Use (RoU) on the concerned land for laying out necessary pipeline network. State Government has also allocated land for setting up necessary infrastructure for CGD network, wherever it was necessary. It is only because of constant and concentrated efforts by the State Government for so many years that this CGD Network has become possible.
6.4
At
present
more
than
8.07 lakhs of domestic
households are connected and provided gas with 24X7 incessant supplies. Similarly, Compressed Natural Gas (CNG) is being provided to 2.6 lakh vehicles daily through 242 CNG outlets scattered across
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the State of Gujarat. Therefore, it cannot be said that the State Govt. has not taken adequate steps for preserving the environment and creating gas grid network. However, in spite of repeated
representations by the Government of Gujarat at various level and before various forums, the State Government has yet not received any positive response in respect of allocation of APM Gas and D-6 Gas, the State's Public Sector Company GSPC Gas Limited is not allocated APM Gas in spite of its large CGD network. 6.5 Domestic PNG connections would replace LPG household
connections. It is pertinent to mention here that for each LPG cylinder provided to the customers, the Government of India is providing subsidy of more than Rs.356 for each cylinder. Similarly, Central Govt. is also bearing subsidy of more than Rs.10 for each one liter of petrol and diesel. Because of the innovative steps taken by the State Govt., so many vehicles, in the State are using gas as fuel, and therefore, the State Government's CGD network has helped the Central Govt. in saving the subsidy amount to the tune of Rs.281 crore per annum for LPG cylinders and Rs.380 Crore per annum towards the subsidy of Petrol and Diesel.
6.6
In absence of APM of D-6 gas, the State Government has to
rely on imported RLNG only. Currently, the CGD Companies in the State, except Gujarat Gas Company, depend on RLNG from M/s. Petronet LNG Limited (PLL) for onward supply of Gas to the customers in residential, commercial and transport segment. The prices of RLNG
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continue to increase every month in terms of the formula agreed between PLL and its supplier. Therefore, prices of gas supply by these Companies have to be increased affecting adversely million of people across the State. All these points have been brought to the notice of the Central Govt. time and again and lastly vide the Chief Ministers letter dated 14-7-2011 addressed to the Prime Minister. The State Govt. is yet to receive a positive response from the Central Govt. in this regard. If APM and D-6 gas are allocated to the State, the price at which the CGD companies supply gas to its customers would reduce substantially.
6.7
The State Government supports the prayers of the petitioner
that APM gas and D-6 Gas should be allocated to the CGD Companies in the State and there should be a regulator for fixing price of the Gas for various types of customers.
7.
The respondent No. 3 has filed affidavit-in-reply to the affidavit
filed on behalf of the Union of India [Respondent No.1] taking up the following defence:
7.1
The Respondent No. 1 has in its Affidavit avoided the main
issues raised in the petition. The Respondent No.1 has not denied that there is discrimination in allocation of gas to the City Gas Distribution (CGD) companies operating in the State of Gujarat. The Respondent No. 1 has only stated that it is no longer possible to undertake any
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allocation of gas under the APM as the Gas Linkage Committee that decided the earlier allocation has since been disbanded.
7.2
The averment made in paragraph
8 of Affidavit of
Respondent No.1, stating that post dismantling of the Gas Linkage Committee, no APM gas has been allocated, is erroneous.
7.2.1
As opposed to the above mentioned averment of
Respondent No.1, Indraprastha Gas Limited ("IGL") in Delhi and NCR regions and Mahanagar Gas Limited ("MGL") in Mumbai (CGD companies promoted by Central PSUs) have been allocated APM gas post dismantling of GLC on November 9, 2005. Furthermore, in June 2011, when supplies from D6 fields were declining, additional gas from APM (0.3 MMSCMD) was allocated to IGL.
7.2.2
It is pertinent to note that as recently as June 2011 (when
production in KG D-6 Fields was declining), it was reported that Respondent No.1 also granted approval to IGL to use unutilized APM allocations for Gurgaon / Faridabad for its own operations. It has also been reported that MGL was recently allocated gas from APM fields on "no cut" basis and MGL has 0.2 MMSCMD of unutilized APM quantities. Thus, in spite of winding up of Gas Linkage Committee, APM gas was allocated by the Respondent No. 1 to IGL, while a critical resource like APM gas is lying unutilized with MGL.
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7.2.3
Furthermore, this clearly proves the arbitrary manner in
which Respondent No.1 has been allocating APM gas to only such CGD companies which are promoted by Central PSUs and discriminating against other CGD companies and in particular those operating in the State of Gujarat.
7.3
The natural gas was and continues to be under the complete
jurisdiction of the Government of India even though the APM as it existed earlier may have been disbanded, it is the Government of India that has the jurisdiction and control over allocation of natural gas resources in India.
7.4
The Respondent No. 1 in its Affidavit did not address the
issue of the grounds for allocation of natural gas by the Government of India and nor did it address the issue of unutilized APM allocation to IGL and MGL, which are promoted by Central PSUs. There has been no rationale or principles formulated by the Government of India in formulating the policy for allocation of APM Gas or D-6 Gas. The Government of India is acting without any clear guidelines or principles in exercising its jurisdiction/authority to allocate natural gas from the APM and D-6 fields. The Respondent No. 1 in its Affidavit has only reiterated the actions that it has undertaken without providing the guiding principles or the basis for the allocation of natural gas undertaken by it, as also, the reason for not considering or evaluating the repeated requests by the Government of Gujarat for allocation of
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APM or KG Basin D6 Field gas to city gas distribution companies in the State of Gujarat.
7.5
The factum of fall in production of D-6 Gas is not linked to
the principles of allocation of gas by the Government of India. It is clear that the fall in production of D-6 Gas is temporary and the operator of the D-6 fields will implement the required technical solutions to ensure increase in output of natural gas from the D-6 gas fields. However, the principles of allocation of gas and the extent of allocation of gas cannot be arbitrary and not based on any known or discernible guidelines.
7.6
The Respondent No. 1 in its Affidavit did not address the
issue of the requirement of allocation of natural gas for CNG purposes in the State of Gujarat. The Supreme Court ruled in M.C. Mehta versus Union of India [(2002)4 SCC 356 ] , that the Respondent No.1 would give priority to transport sector including private vehicles all over India with regard to allocation of natural gas from domestic fields for usage in CNG segment. The Apex Court further said that this meant that first the transport sector in Delhi, and other air polluted cities in India, will be allocated natural gas for CNG segment, and it is only thereafter, if any domestic gas is available, the same can be allocated and made available to the industries, preference being shown to public sector undertakings and power projects.
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7.6.1
In light thereof, non-allocation of gas from domestic
fields, by Respondent No.1, for usage in CNG and PNG segments in State of Gujarat is gross violation of the above mentioned order.
7.7
In Paragraph 9 of its affidavit the Respondent No.1 has
claimed that 26.7 MMSCMD of APM gas has been allocated to the State of Gujarat. No APM gas has been allocated to CGD entities, namely, GSPC Gas Co. Ltd., Adani Gas Limited, and
Sabarmati Gas Ltd. and currently, the requirement of CNG segment is being met through expensive RLNG. The APM gas supplies
to GGCL, only CGD entity in Gujarat apart from GAIL Gas, to have allocation of APM gas have reduced substantially over the years. Against a total allocation to GGCL of approx. 0.45 MMSCMD, whereas the current supplies stand at only 0.2 MMSCMD.
7.8
The averments made by the Respondent No.1 in its Affidavit
are essentially to the effect that since there has been a fall in APM and D-6 Gas production, the Government of India has taken a policy decision to first meet the allocation of the core sectors. Although Respondent No.1 in the said Paragraph 21 states "the amount of domestic gas is distributed as per the above priority in a rational manner to serve larger public interest", it does not provide any specific guidelines or principles that governs such policy for allocation of gas and thereby the statement that such allocation is undertaken in a rational manner stands unsubstantiated.
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7.9
According to the Respondent No. 3, the allocation of
available gas, specifically allocation of gas in the period wherein a shortfall in production from the APM and D-6 Fields is witnessed, has not been done in accordance with any stated policy but by unguided and opaque executive decisions of Government of India. The Affidavit of the Respondent No.1 failed to disclose or provide any such stated policy based on which the executive decision of allocation of available gas has been undertaken by the Government of India.
7.9.1
There are in existence, well developed principles in the
gas industry that would govern a gas distribution company in allocation of available gas during periods of shortfall in availability of gas. No such corresponding principles have been formulated or considered by the Government of India. The Affidavit of Respondent No. 1 merely states that there exists a shortfall in production, however, how the Government of India intended to respond or manage such shortfall in availability has not been accounted for.
7.10
Only a small fraction of natural gas produced in India is
earmarked for usage in CNG & PNG segments. Furthermore, assuming but without admitting that there is a short supply of an essential commodity, then the priority must be given to public health by promoting usage of "eco-friendly" natural gas in CNG & PNG segments, as opposed to the health of the balance sheet of a
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company. To enable industries to cut their losses or make more profit at the cost of public health is not a good sign of governance and this is contrary to the mandate of Article 39(e), 47 and 48-A of the Constitution of India.
7.11
In paragraph
12 of its affidavit, the Respondent No.1 has
claimed that GSPCL and GGCL have been allocated gas from PMT gas fields, according to the respondent No. 3, the current supplies of gas from PMT fields to GGCL & GSPCL are lower compared to the allocations made earlier. It may be noted that there is an uncertainty with regard to the term of supply of PMT gas to GSPCL as indicated below:
Party Allocation made GSPCL GGCL 1.3 MMSCMD (Dec 2006) 2.13 MMSCMD (Apr 2008) Current supplies 0.7 MMSCMD (Sept 2011) 1.45 MMSCMD (Sept 2011)
7.12
In paragraph 15 of its affidavit, the Respondent No. 1 has
stated that the State of Gujarat has been allocated a total of 0.326 MMSCMD of gas from KG D6 field (i.e. 27% of total allocation). In this regard, the following facts are relevant: a. The Empowered Group of Ministers (EGoM) vide
meeting held on May 28, 2008 decided an allocation of
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initial 40 MMSCMD of RIL D6 gas, out of which a maximum of 5 MMSCMD would be made available to CGD projects for supply to PNG to households and CNG to transport sector.
b.
Further, EGoM vide its meeting on March 23, 2009,
decreased the allocation for PNG & CNG to 0.8 MMSCMD and in view of the same, the balance quantity of =4 MMSCMD allocated to power sector companies.
c.
The Respondent No.1 has stated that the total firm
allocation of KG D6 gas to CGD sector is 1.222 MMSCMD for entire country, of which 0.326 MMSCMD has been allocated to Gujarat, i.e. 27%.
d.
Of the 0.326 MMSCMD allocation of KG D6 gas to
Gujarat, 0.20 MMSCMD has been allocated to Adani Gas Limited but the same is on provisional basis and is subject to final status of authorization given to them by PNGRB.
e.
Therefore, not taking into account the allocation of
point 0.2 MMSCMD made to Adani Gas Ltd. the total allocation from KG D6 fields to CGD segment in Gujarat is only about 0.126 MMSCMD, against the current total demand of CGD in Gujarat of 9 MMSCMD.
There is no rationale for the allocation made as the same
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seems to have no relationship with the demand. Thus, the statement being made by the Respondent in paragraph 15 of its affidavit that the State of Gujarat has been allocated a total of 0.326 MMSCMD from KG D-6 basin is erroneous.
f.
Requests for allocation of gas from Gujarat CGDs
were overlooked due to the issue of authorization, which was never a precondition of Empowered Group of Ministers constituted in August 2007 for allocation of gas.
g.
However, with reduction in the output of gas from
RIL's KG D6 fields, supplies to CGD entities in Gujarat as of October 2011 have been reduced to 0 (zero).
7.13
In paragraph
20 of its affidavit, the Respondent No.1 has
claimed that no gas is available at present for allocation to CGD sector as sectors having higher priority are still short of their gas requirement. In this regard, it is relevant to state that out of the total supplies, to the CGD (Domestic + CNG) segment in India of 7.9 MMSCMD, Gujarat CGD companies receive only about 0.126 MMSCMD from KG-D6 fields which is less that 2% of allocation of gas for CGD in India.
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7.14
In paragraph
25 of its Affidavit, the Respondent No.1 has
claimed that no gas is available at present for allocation to CGD sector as sectors having higher priority are still short of their gas requirement. This does not provide any disclosure of the reason as to why Gujarat based CGD companies had been left out earlier, i.e. at the time of making allocation of gas from domestic fields (i.e. APM, PMT & D6 gas) and furthermore, does not provide any rationale as to the principles on which gas is being allocated during this period of shortfall in production.
7.15
In paragraph 28 of its Affidavit Respondent No. 1 has stated
that RLNG is being increasingly used by the CGD segment and is available for use. The CNG & PNG segments are also extremely price sensitive and using R-LNG vis-a-vis domestic gas for the said segments would in turn make the prices of CNG and PNG unaffordable to the masses.
7.16
In paragraph
32 and other parts of its Affidavit, the
Respondent No. 1 has stated that allocation is made in accordance with the Gas Utilization Policy, which has been framed keeping in view the larger public interest. In this regard, it may be mentioned that based on data available with it from various reports in public domain, gas from the domestic fields has been allocated by the Government of India to industries not featuring in the priority order as prescribed by
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the current Gas Utilization Policy
while the representations of the
State of Gujarat for allocation of gas to CGD companies have been overlooked while allocating gas from the domestic fields.
7.17
In paragraph 34 of its Affidavit, the Respondent No. 1 has
stated that "after revision of APM price in 2010, the price of APM gas is almost at par with KG D-6 gas". In this regard the following table that indicates the prevailing gas prices for various gas sources in India should be taken on record:
Source APM(Excluding North est region) Panna Mukta Tapti RIL D6 RLNG-Long Term Agreement RLNG-Spot Cargo
US$/MMBTU 4.20 5.73 5.57 4.20 9.097 Around 17
Rs./'000 scm 8333 11369 11052 8333 18050 33730
(Assuming 1 US$=50 Rs.) (Gas prices are excluding marketing margin, transmission charges, taxes & duties)
7.17.1
Thus, it is clear that even though the price of APM gas
may now be similar to KG D6 gas, it is still more reasonable in pricing than other sources of gas such as RLNG (long term) / Spot RLNG.
7.17.2
Further in paragraph 34 of its affidavit the Respondent
No. 1 has stated that "Out of the total firm allocation of 1.222 mmscmd for CGD sector for the entire country, 0.326 mmscmd has
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been allocated to the CGD sector in Gujarat which is around 27%." In this regard, the answer of the Respondent No.3 is that based on various sources, at present, the demand of natural gas for usage only in CNG & PNG segments in Gujarat is less than 2 MMSCMD. While, the current production of natural gas from the domestic fields in India is around 120 MMSCMD., it can therefore be implied that the natural gas requirement of only the CNG & PNG segments in the State is just over 1.5% of the total natural gas currently being produced. Hence, Government of India should at least allocate such small quantity by applying a pro-rata marginal cut in the supplies to such non-priority / private sector customers in the larger public interest.
7.17.3
In this regard, it is worthwhile to mention that even
though the State of Gujarat was allocated 26.7 MMSCMD of APM gas earlier, however, currently such supplies have been reduced to about 9 MMSCMD. Gujarat Gas Co. Ltd. was not allocated gas from D6 fields owing to its allocation of APM/PMT gas. However, CGD companies promoted by Central PSUs, such as Mahanagar Gas Ltd., Indraprastha Gas Ltd. (M/s GAIL is one of the co-promoters), Sabarmati Gas Ltd. (M/s BPCL is one of the co-promoters) and others were recognized as authorized entities by MoP&NG and allocated D6 gas in spite of some of them having prior allocation of APM / PMT gas (i.e. Mahanagar Gas Ltd. and Indraprastha Gas Ltd.).
7.17.4
In light of the arbitrary stand being taken by the
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Respondent No. 1 in rejecting requests for higher allocation for CGDs in the State of Gujarat on grounds of the Gas Utilization Policy and further allocating gas to entities outside the Gas Utilization Policy itself is highly vague and opaque. Thereby, the increased use of RLNG in view of non-allocation/ curtailment of domestic gas have resulted in higher CNG prices in the State of Gujarat.
7.17.5
This position adopted by Respondent No.1 has resulted in
a lacuna that is prompting abuse of dominant position by certain private sector gas distribution entities. The Government of Gujarat has recently even referred a matter to the Competition Commission of India against Gujarat Gas Co. Ltd. (GGCL) for abnormal increase in CNG prices in Surat, Bharuch & Ankleshwar areas. However, GGCL has claimed that said increase is attributed to higher use of costlier R-LNG in its natural gas portfolio. At present, the matter is before the Competition Commission of India for consideration.
7.17.6
The Government of Gujarat neither has control on
allocation of gas nor prices of CNG being charged by the city gas distribution companies in the State. Hence, Government of Gujarat is left with no other option but to request for adequate allocation of domestic gas to various CGD companies in Gujarat to cater to the CNG & PNG segments.
7.17.7
The CNG prices of HPCL have recently increased from
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41.55 Rs./kg in October 2011 to 50.20 Rs/ kg in November 2011 (21% increase) which is currently the highest in the country, as the supply of gas from RIL's D6 fields has reduced from 0.049 MMSCMD to 0 MMSCMD and HPCL had to cater to the requirement of its CNG stations by utilizing RLNG sourced on spot basis. This has led to lower sales of CNG.
7.17.8
Based on various sources that CGDs in Gujarat have
connected over 8 lacs household customers and sell more than 11 lac kg a day of CNG (i.e. = 1.5 MMSCMD), thereby resulting in subsidy savings to Central Government of approximately Rs. 335 crore per annum on LPG and Diesel. In view of the likely saving, if usage of CNG & PNG were promoted, there would be several advantages namely (i) promotion of environment friendly fuel (ii) competitive price fuel for the masses (iii) lower inflation (iv) lesser subsidy burden on the Central Government.
7.18
In paragraph
36 of its Affidavit, Respondent No.1 has
claimed that RLNG is available in abundance and can be used for vehicles to reduce pollution. In this regard, the Respondent No.1 firmly believe that RLNG is an abundant and viable source for use by vehicles, then on what grounds has it allocated APM and KG D-6 gas to IGL and MGL, the two CGDs which are promoted by Central PSUs.
7.19
In response to paragraph 37 of Affidavit of Respondent No.
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1, wherein it has sought to rely on the cases of Welspun Maxsteel Limited and Essar Steel Limited, it may be mentioned that the allocation to Welspun Maxsteel Limited and Essar Steel Limited are themselves an example of the arbitrary manner in which Respondent No. 1 has been allocating gas from KG D-6 basin since the steel sector had been allocated lower priority than the CGD sector in the Gas Utilization Policy of Respondent No.1.
7.19.1
The case of Welspun Maxsteel Limited, cited by the
Respondent No.1 in paragraph 37 of its affidavit, is not an applicable precedent to this case, as the Welspun case was a challenge by a specific industrial unit whose gas allotment under its individual gas supply agreement had been curtailed in light of the fall in supply of gas from the D-6 gas fields. The court considering the fact that there are provisions of the gas sales agreement that allowed for such curtailment and also the fact that the decision was based on the Gas Utilization Policy merely held that the order curtailing the gas supply to the unit had been issued with due application of mind and was not arbitrary. The present petition however is very different. The issue before this Court in the present petition is not of mere curtailment of gas supply to a particular unit but the manner in which executive action has been undertaken by the Government of India in allocating gas between states and sectors themselves. It is, therefore, erroneous concept to state that the judgment of the Welspun case would govern the present proceedings before this Court.
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7.19.2
Similarly, the case of Essar Steel Limited, cited by the 37 of its affidavit, is again not a
Respondent No. 1 in paragraph
correct precedent to the present proceedings. In the proceedings before this Court, the petitioner is pressing the fact that the manner of allocation of natural gas, even during a period of shortfall, has been arbitrary and not rational. Therefore, the Essar Steel Limited decision is also not a suitable precedent for Respondent No.1 in the present proceedings.
7.20
In light of the facts stated, it is the prayer of the Respondent
No.3, that : i. This Court be pleased to direct the Union of India to allocate additional quota of Natural Gas for domestic and vehicular usage for the benefit of the general public and
environment to the State of Gujarat at the APM rate at which Natural Gas is being supplied to the cities of New Delhi and Mumbai; ii. This Court be pleased to direct the Union of India to prioritize and diversify the unutilized Natural Gas from nonpriority sector to the CGD for their domestic and vehicular usage, as
directed by Supreme Court of India in the case of M. C. Mehta versus Union of India, reported in (2002) 4 SCC 356, which in turn would reduce the pollution and the cost of
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living; iii. This Court be pleased to direct the Union of India to allocate Natural Gas from any other domestic gas field, such as C-Series or North Tapti, for domestic and vehicular usage for the benefit of the general public and environment to the State of Gujarat; iv. This Court be pleased to direct the Union of India to
clearly stipulate the principles based on which APM and NonAPM Domestic gas would be allocated.
8.
The respondent No. 3 the Under Secretary to the Government of
Gujarat has also filed additional affidavit and has taken up the following defence:
8.1
The Respondent No.l has by its own admission submitted in 20 of its Affidavit in Reply that the Government (i.e.
paragraph
Respondent No.l) endeavour is to accord high priority to the core sectors in the matter of allocation of gas as reflected in the Gas Utilization Policy. Further, in paragraph 21 of its Affidavit in Reply
Respondent No.1 has stated that since the domestic gas is limited, its allocation is as per a well defined policy of the Government and following priority : 1] 2] 3] 4] 5] Fertilizer LPG Power CGD Other Sectors such as Steel, Petrochemicals, Refineries,
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etc. 8.1.1 Additionally, the Respondent No. 1 has sought to impress
in the said paragraph 21 that the amount of domestic gas available is distributed in accordance with the above priority in a rational manner to serve larger public interest and that no sector, which is not in accordance with the Gas Utilization Policy, can claim overriding priority.
8.1.2
Further, in paragraph
25 of its Affidavit in Reply, the
Respondent No. l highlighted that although it is Respondent No. l's endeavour to encourage supply of Compressed Natural Gas (CNG) to a large number of cities, so as to improve the quality of air and to bring down pollution, the same has not been possible as no gas is available for allocation to CGD sector as sectors having priority are still short of their gas requirement. Even in paragraph 28 of its
Affidavit in Reply the Respondent No.l has stressed on its inability to allocate additional indigenous gas to CGD sector in Gujarat.
8.2
Further to the aforesaid, it may be brought to the notice of
this court that contrary to its above stated submissions, Respondent No. l has also supplied gas from domestic fields to industries not featuring in the list prescribed by the current Gas Utilization Policy or priority order referred to in paragraph 21 of the Affidavit in Reply of respondent No.l.
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8.2.1
Herein below, a non-exhaustive list has been provided
enlisting industries that have been allocated gas from the domestic fields along with the quantities supplied to them, by the Respondent No. 1 in breach of the Gas Utilization Policy or priority order referred to in Paragraph 21 of the Affidavit in Reply of respondent No. l. The said list as shown in Table 1 below is based upon data available from various reports in public domain:
TABLE-1 Name of the Entity 1. ONGCL Return 3. IPCL, Baroda 5. IPCL, Gandhar 7. Heavy Water Plant 9. VMC 11. IOCL, Mathura Refinery 13. Gujarat Glass-K 15. Vedeocon Narmada Electronics Ltd. 17. Maruti Udyog 19. Agra Industries Cluster 21. Gujarat Borosil 23. Guj. Guard 25. Atmiya Chem 27. Pragati Glass 29. Haldyn Glass 31. N. Glass 33. Crys. Glaze 35. GACL-Dahej 37. Prestige Glass 39. Nahar Colours Quantity Name of the Entity (MMSCMD) 1.355 0.435 0.484 0.129 0.081 0.850 0.056 0.050 0.002 1.100 0.042 0.061 0.003 0.045 0.031 0.029 0.003 0.033 0.006 0.018 2. Supreme Glaze 4. Spire Ceramics 6. Sapna Chem 8. BPCL, Mumbai 10. HPCL, Mumbai 12. Mahanagar Gas Ltd. 14. Vikram Ispat 16. Prem Chemco 18. Essar Steel Limited 20. H.R. Johnson 22. Chennai Petroleum Corpn. Ltd. 24. MMS Steel 26. R. Ceramics 28. Boss Profile 30. Henkel Spic 32. Sun Chem 34. Chemplast Sanmar 36. K Chlorites 38. Naycer (I) Ltd. 40. Welspun Maxsteel Ltd. 0.019 0.090 0.026 0.026 0.006 0.011 0.016 0.031 0.016 0.0003 Quantity (MMSCMD) 0.007 0.002 0.005 0.097 0.003 0.919 0.419 0.005
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8.2.2
The gas produced from PMT fields has been sold to
various customers, of which many of them are Power and Fertilizer sector customers. However, some customers such as Arvind Ltd., Gujarat Fluorochemicals Ltd., United Phosphorus and RIL have also been allocated PMT Gas although such customers / segments do not feature in the priority list referred to in paragraph 21 of the Affidavit in Reply of Respondent No.1.
8.2.3
Thus, on one hand while the representations of the State gas to CGD companies have been
of Gujarat for allocation of
overlooked while allocating gas from the domestic fields , on the other hand, industries not featuring in the priority order, have been allocated gas from domestic fields.
8.3
The EGOM met on 28.05.2008 and 27.10.2009 for deciding,
inter alia, allocation of gas to CGD segment from RIL D6 fields. Subsequently, vide MoPNG correspondence dated 13.05.2009, 0.8 MMSCMD of gas was allocated on firm basis to CGDs for supply to PNG and CNG segments from RIL D6 fields. Details of the said allocation to entities is given in the table below:
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Sr. No. 1. 2. 3. 4. 5. 6. 7.
Entity Indraprastha Gas Ltd. (IGL) Mahanagar Gas Ltd. (MGL) Sabarmati Gas Ltd. Green Gas Ltd. Aavantika Gas Ltd. Aavantika Gas Ltd. HPCL Total
City NCT of Delhi Mumbai, Navi Mumbai, Mira-Bhayander and Thane Gandhinagar, Mehsana and Sabarkantha Agra Indore Ujjain Ahmedabad
Gas Allocation (SCMD) 308,642 370,370 77,593 15,062 12,346 1,235 49,383 834,631
8.3.1
Further, with regard to gas allocations made to CGD
companies, it may be highlighted that as reported in Infraline Newsletter dated December 19,2011, CGD companies in other States meet most of their requirement from gas allocated from domestic fields, unlike Gujarat CGDs.
8.3.2
The CGD companies like IGL and MGL (co-owned by
Central PSUs) have been recently allocated gas from APM fields to make up for non-supply of gas from RIL's D6 fields. Moreover, unutilized APM gas quantities allocated for Gurgaon, Faridabad and Ghaziabad in NCR region have been diverted to IGL for supply of gas in Delhi to take care of shortfall in supplies from RIL's D6 fields. Similarly, gas from APM fields has been allocated to MGL on 'no-cut' basis to make up for shortfall due to non supply from D6 fields.
8.3.3
In view of the same, in spite of recent curtailment / non-
supply of gas from D6 fields for CGD segment, the said CGD
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companies (i.e. IGL and MGL) are not materially affected by such shortfall.
8.4
In wake of such non-allocation of gas from domestic fields,
Gujarat CGD companies are striving for requirement of gas and their dependence on imported LNG is becoming an area of concern, especially for their downstream CNG and PNG segment customers. In fact, in spite of Gujarat being ranked amongst one of the best in terms of CGD infrastructure (i.e. having highest number CNG stations as well as domestic connections) the gas consumption (vis--vis other CGD companies) is low owing to non viability of selling imported RLNG in CNG/PNG segment / non-availability of domestically produced gas. At this juncture, the following table may be referred to for details:
State Wise existing CNG, Domestic PNG, Industrial and Commercial PNG Infrastructure
State
CNG ConsumDomestic Station ption PNG during connection 2010-11 (MMSCMD)
Consumption during 201011 (MMSC MD) 0.000 0.030 0.415 0.000 0.000 0.200
Industrial PNG Connection
Consumpti on during 2010-11 (MMSCMD)
Commer cial PNG connecti on
Consumption during 2010-11 (MMSCMD)
Andhra Pradesh Assam Gujarat Haryana Madhya Pradesh Maharashtra
14 0 258 6 11 164
0.046 0.000 0.941 0.006 0.001 1.339
732 23162 842565 1939 26 531473
0 354 3130 11 23 44
0.000 0.479 6.636 0.002 0.025 0.206
0 689 12790 22 0 1335
0.000 0.009 0.108 0.000 0.000 0.100
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New Delhi 239 Rajasthan 2 Tripura Uttar Pradesh Total 2 28 724
2.368 0.000 0.007 0.253 4.961
246662 25 8472 13874 1,668,930
0.099 0.000 0.016 0.006 0.766
141 5 36 208 3,952
0.202 0.000 0.020 0.035 7.605
551 0 169 22 15,578
0.068 0.000 0.003 0.000 0.288
(Source: Infralilne Newsletter dated December 29, 2011)
8.4.1
Based on the consumption data available for the year 2011,
the dependence of Gujarat CGD companies on imported R-LNG was much higher than IGL and MGL, which is shown as per the table below : Dependence on R-LNG Sr. NO. 1. 2. 3. Entity Gujarat CGD Companies Indraprastha Gas Ltd. Mahanagar Gas Ltd. Dependence on R-LNG 69.06 % 17.17 % 5.55 %
(Source: Based on data available in Infraline Newsletter dated December 29, 2011)
8.4.2
Further, with reduction in the allocated supplies from D6
fields to SGL and HPCL to 0 (Zero) in October 2011, CNG prices levied by these companies in last 2-3 months have increased by up to 2530%, along with increased dependence of these CGD companies on imported RLNG. Sabarmati Gas Ltd. revised its CNG prices from Rs 40.25 a kg to Rs 47 a kg with effect from 16.12.2011; while HPCL revised its CNG prices from Rs 41.55 a kg to Rs 50.20 a kg with effect
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from November 1, 2011.
8.4.3
Even though, the requirement of natural gas from
domestic fields in State of Gujarat is an alarming concern, the Respondent No. l has not only indicated unwillingness to address the same but has discriminated against Gujarat based CGD companies vis--vis the CGD companies owned by Central PSUs in the matter of allocation of natural gas. This action of Respondent No. l is clearly in violation of Article 14 of the Constitution of India.
8.4.4
Further, at this instance it
may
be noted
that the
respondent No. l has not only discriminated between CGDs promoted by Central PSUs and other CGDs, but also among Gujarat based
CGDs. The Respondent No. l, in paragraph 15 of its Affidavit in Reply, has submitted that allocation of 2,00,000 scmd gas from KG D6 has been made to Adani Gas Ltd. (erstwhile Adani Energy Ltd.), however, even though gas was allocated to Adani Gas Ltd. (subject to authorization from PNGRB), from KG D6, the other CGDs, namely, GSPC Gas Co. Ltd. and Charotar Gas Ltd. were denied the same, though they also could have been allocated gas on same principles. The basis of this denial is not only irrational but also arbitrary and is in violation of Article 14 of the Constitution of India.
8.5
A perusal of the above stated facts makes it abundantly
clear that Respondent No. l has supplied gas from domestic fields to
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industries in breach of the Gas Utilization Policy and has discriminated against Gujarat based CGDs. Therefore, it is evident that there is a marked inconsistency in actions of Respondent No. 1 vis--vis assertions made by it in its Affidavit in Reply. The gross breach of Gas Utilization Policy and discrimination against Gujarat based CGDs has been committed even though the air quality has become an issue of social concern in the backdrop of increasing
industrialization and vehicular pollution', a fact to which Respondent No. l has admitted in paragraph 28 of its Affidavit in
Reply. The said instance clearly reflects the unreasonableness, high handedness and arbitrariness deeply embedded in the actions of Respondent No. l.
8.6
The Respondent No.3, does not in any manner, seek to
decide the priority order of allocation of natural gas. However, it is highly inequitable on the part of the Respondent No. l to suggest (paragraph 36 of Respondent No. l's Affidavit in Reply) that if the concern is to reduce "environmental pollution, efforts directed gas. must be
to procure RLNG, rather than making a demand for cheap
8.7
It is the fundamental right of every resident of State of
Gujarat to be treated with equality before law as envisaged under Article 14 of the Constitution of India in matters of allocation of domestic / indigenous gas, which, consequently, upholds their
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fundamental right of enjoying a proper and healthy environment to enable them to lead a quality life.
8.8
However it is abundantly clear, in view of the aforesaid,
that the Respondent No. l has facilitated the interest of the industries, at the cost of public health of residents of State of Gujarat and has acted in violation of, inter alia, the constitutional mandate as prescribed under Article 14, Article 21, Article 47and Article 48-A of the Constitution of India, the "Precautionary principle" recognized by the Apex Court in Vellore Citizen's Welfare Forum v. Union of India and the Gas Utilization Policy.
9.
Gujarat Pollution Control Board, the respondent No.4, filed affidavit-in-reply thereby making out the following
separate stance.
9.1
On bare reading of the petition, it appears that the petitioner
has essentially raised issues regarding allotment of more natural gas to the State of Gujarat for distribution under city gas distribution [CGD] system and for vehicles at the rate of administered price mechanism [APM], the rate at which natural gas is supplied to other cities. The petitioner has further sought direction against Government of India to allot additional quota of natural gas for domestic and vehicular usage for the benefit of public and environment to the State of Gujarat at the [APM] rate. Further, he has prayed against Union of
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India to prioritize and diversify the unutilized natural gas from nonpriority sector to the CGD for their domestic and vehicular usage. Finally, the petitioner has prayed for a direction against the State of Gujarat to convert all private and public vehicles running on petrol and diesel to natural gas.
9.2
The respondent Board is a statutory body formed under the
relevant provisions of Water [Prevention and Control of Pollution], Act, 1974. According to all the three Acts, i.e. Environment Protection Act, 1986, Water [Prevention of Control of Pollution] Act, 1974 and Air [Prevention and Control] Act, 1981, the respondent board is duty bound to check all the industrial discharge and monitor the same. The petitioner has essentially raised the issue that all the vehicles running on petrol and diesel should be converted into CNG vehicles to control the pollution levels. The board has notified the emission standard for automobile vide its notification dated December 20, 1984 under the provisions of the Air [Prevention and Control of Pollution] Act, 1981 under Section 17[1][G] of the Act. So far as the pollution levels of vehicles plying on the road is concerned, the answering respondent board has no jurisdiction over the same and it is the Regional Transport Office who has been empowered under Section 190 of the Motor Vehicles Act to monitor noise and air pollution of the vehicles plying on the road.
9.2.1
Hence, it is only the Regional Transport Office who can monitor
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and take corrective measures as per Section 190[2] of the Motor Vehicles Act on all the vehicles plying on the road. So far as the issue of distribution of compressed natural gas between the State and the Centre and the issue of fixing of price of compressed natural gas is concerned, it does not fall within the purview of the respondent Board and hence, requires no comments.
10.
Respondent No. 5 GAIL [India] Ltd. has filed affidavit-in-reply in
the matter and has raised up the following defence:
10.1
The
writ-petition
does
not
contain
any
contentions/allegations against respondent No.5 nor are there any reliefs prayed for against respondent No.5, as a result of which the captioned writ petition is not maintainable against respondent
No.5 and accordingly, deserves to be rejected qua respondent No.5.
10.2
The respondent No.5
is a company incorporated and
registered under provisions of the Companies Act, 1956 and is a Government of India Undertaking. Respondent No.5 is engaged in the activity of transportation and distribution of natural gas to various places as a nominee of Government of India.
10.3
The writ petition pertains to allotment of additional quota of
natural gas for domestic and vehicular usage for the benefit of general public and environment to the State of Gujarat at the
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Administered Price Mechanism (APM) rate, at which the natural gas is supplied to the cities of Delhi and Mumbai as well as for direction to the Government of India to prioritise and diversify unutilized natural gas from non-priority sector to City Gas Distribution (CGD) for domestic and vehicular usage as well as for a direction against the State of Gujarat to take steps to reduce air pollution in the State by converting private and public vehicles from petrol and diesel to natural gas. Thus, no reliefs whatsoever are prayed for against respondent No.5.
10.4
The allocation of gas at APM rate to any sector including
CGD is not assigned to respondent No.5. The Ministry of Petroleum and Natural Gas as a representative of the Government of India directly makes allocation of natural gas at APM rate. Hence, respondent No.5 is not authorized to allocate natural gas at APM rate. The allocation of natural gas at APM rate to respective CGD companies, situated in Mumbai and Delhi, is done by the aforesaid Ministry and in accordance with the Ministry's directive, natural gas at APM rate is directly distributed by such CGD companies for domestic and vehicular usage for benefit of general public.
10.5
The aforesaid Ministry in future, if directs respondent No.5 to
supply natural gas at APM rate for CGD purposes after making such allocation, respondent No.5 or its subsidiary may carry out necessary procedure.
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11. The respondent
No.6, Gujarat Gas Company Limited, filed a
separate affidavit-in-reply and its contention may be summed up thus:
11.1
The Petitioner has filed the present petition in the nature of a
Public Interest Litigation raising issues regarding allotment of more Natural Gas to the State of Gujarat for distribution under City Gas Distribution (CGD) system and for vehicles at the rate of Administered Price Mechanism (APM) at which Natural Gas is being supplied to cities of Delhi and Mumbai. The Petitioner has, inter-alia, prayed for a direction to the Government of India to prioritize and diversify the unutilized natural Gas from non-priority sector to CGD for domestic and vehicular usage.
11.2
According to the contents of paragraph 3 of the petition, the
petitioner has joined respondent Nos.5 to 11 because they are GAS/CGD companies, which distribute and supply Natural Gas in the State of Gujarat. The respondent No.6 is a public limited company engaged in the business of Natural Gas Distribution Company in India having its operations spread across various districts of Gujarat viz. Bharuch, Ankleshwar and Surat. Respondent No.6 has a wide network of underground pipelines through which Piped Natural Gas is supplied to Residential, Commercial and Industrial Consumers. Respondent No.6 supplies compressed natural gas (CNG) to CNG Stations in the
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cities of Bharuch, Ankleshwar and Surat, which provide CNG to the motor vehicles. The Respondent No.6 is not a necessary party for adjudication of the issues involved in the petition. No averments made or contentions raised in the petition are directed against Respondent No.6. Therefore, the respondent NO.6 may be deleted as a party respondent from the present proceedings.
12.
So far as the affidavit affirmed by the respondent No.7,
the
GSPC Gas Company Limited is concerned, the same may be summed up thus:
12.1
The GSPC GAS is a local distribution company (LDC) engaged
in the sale of natural gas in the form of Piped Natural Gas (PNG) and Compressed Natural Gas (CNG). PNG is supplied to the households in Gujarat through City Gas Distribution Networks, for cooking purposes. CNG is used in vehicles as fuel. GSPC GAS is sourcing this Natural Gas (R-LNG) from its parent Company M/s. Gujarat State Petroleum Corporation Ltd., Gandhinagar.
12.2
The GSPC GAS has taken the initiative for greater utilization
of natural gas as fuel and has laid extensive networks of pipelines for distribution of gas in different cities, towns and villages of Gujarat. City Gas Distribution Networks are also laid in various cities of the State of Gujarat. Natural gas is a clean fuel. GSPC GAS is also supplying CNG through CNG stations spread across Gujarat for CNG driven vehicles. The Supreme Court in case of M.C. Mehta has
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directed the State Governments to promote usage of CNG as fuel for vehicles as a measure to reduce pollution.
12.3 Union
As stated by the petitioner in the petition, it is true that the Government is not allocating APM (Administered Price
Mechanism) gas or the KG D-6 gas (gas obtained from KrishnaGodavari Basin under Production Sharing Contract with the Union of India) to GSPC GAS. The price of the APM Gas and the KG D6 gas is almost half as that of R-LNG (Regasified Liquified Natural Gas) that is imported. At present, two LNG receiving and re-gasification terminals are operational in India. One is Petronet LNG Limited at Dahej and the other is Shell Hazira LNG Terminal at Hazira. APM gas and KG D6 gas is being allotted by the Union Government to the other companies, whereas GSPC GAS is deprived of the same. On account of non allocation of APM and KG D6 gas, GSPC GAS is forced to buy the more expensive R-LNG for supplying PNG/CNG to the end consumers. In addition to the efforts taken by the GSPC GAS in providing CNG to the end users and CNG vehicles, the Company is also contributing largely towards reducing LPG/Petrol/Diesel Subsidy Burden of the Central Government.
12.4
The GSPC GAS supports the petition in its plea to direct the
Government of India to allocate cheaper gas (APM & KG D6) to GSPC GAS in the State of Gujarat.
13.
In addition to the earlier affidavit affirmed on 6th July 2011,

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the respondent No.7, GSPC Gas Co. Ltd., has also filed another affidavit-in-reply affirmed on 5th September 2011, taking up the following defence:
13.1
The Respondent No.7 is a company incorporated under the
Companies Act, 1956 having its registered office at 2nd Floor, Block15, Udyog Bhavan, Sector-11, Gandhinagar-382 010 and is
undertaking the business as a local distribution company (LDC) engaged in the sale of natural gas in the form of Piped Natural Gas (PNG) and Compressed Natural Gas (CNG). One of its main objectives as stated in its Memorandum of Association is to provide piped natural gas (PNG) to household and industrial consumers and compressed Natural gas (CNG) for use in automobile.
13.2
The Government of India had opened natural gas industry to
participation by entities other than those owned by the Government of India. The State Government of Gujarat, to enable the development of natural gas availability, promoted the Gujarat State Petroleum Corporation (GSPC) in early 1990. GSPC has since its incorporation expanded its operations and has been instrumental in the
development and growth of the natural gas industry in the State of Gujarat.
13.3
GSPC Gas Company Limited is state-owned company with
GSPC as the primary sponsor and Gujarat State Petronet Limited
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(GSPL), a subsidiary of GSPC as the other major equity owner. This Respondent was incorporated in 1999 as the Gujarat State Fuel Management Company Limited and was initially only engaged in providing a range of commercial, technical and legal advisory services in the area of fuel management. In December 2005, the Company's name was changed to GSPC Gas Company Limited and it initiated operations in the city gas distribution business in 2006-07. This Respondent has, pursuant to the regulations of the PNGRB under the PNGRB Act, applied to the PNGRB for authorization of its network under the PNGRB Act in accordance with the provisions thereof.
13.4
The Respondent No. 7 has made substantial investments
in laying down extensive networks of pipelines for distribution of gas in different cities, towns and villages of Gujarat. As on March 31, 2011, the Respondent No. 7 owns, operates, maintains and manages gas distribution network of approximately 365 kms. of steel pipeline and approximately 4,143 kms. of polyethylene pipeline spread across Vapi, Valsad, Billimora, Navsari, Hazira, Halol, Khambhat, Nadiad, Gandhinagar, Surendranagar, Rajkot, Morbi and Thangadh in Gujarat. PNG is supplied to households in Gujarat for cooking purposes, through the City Gas Distribution Networks. As on March 31, 2011, the Respondent No. 7 is also having 113 CNG stations in 78 cities/ towns aggregating to a total of 248 CNG Stations in Gujarat which supply CNG for use in vehicles. The growth of the city gas distribution networks has resulted in drastic reduction of air pollution in the cities
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in which such networks are established and this is a fact that has been verified by the Bhure Lal Committee established by the Supreme Court of India for monitoring air pollution levels in critically polluted cities.
13.5
The Respondent No. 7 has invested an aggregate of
Rs.1,219 crore (as on March 31, 2011) in the development of its city gas distribution network. The initiative to establish city gas
distribution networks in the State of Gujarat was undertaken without any support of the Union of India and the Union of India has not provided any assistance in this regard.
13.6
The Respondent No. 7 does not have its own source of gas as
it does not either undertake gas production activities nor does it import LNG. This Respondent is completely dependent upon its gas suppliers to fulfill all the demand for its consumers of its city gas distribution business, including piped natural gas (PNG) as well as compressed natural gas (CNG).
13.7
Presently the Respondent no. 7 obtains its entire supply of
natural gas from Gujarat State Petroleum Corporation Limited (GSPCL), which is its sole supplier of natural gas. The price of natural gas at which this Respondent obtains its gas supply from GSPCL determines the price at which it is able to supply gas to PNG and CNG segment within its area of operations. The price of gas at which
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GSPCL supplies is itself dependent upon GSPCL's own sources of natural gas, which according to the information available with this Respondent is predominantly imported Liquefied Natural Gas (LNG). GSPCL has not received any allocation of domestic natural gas under the Administered Price Mechanism (APM gas). To the knowledge of this respondent, till 2007, GSPCL was being allocated around 2 MMSCMD of gas from the Panna-Mukta-Tapti (PMT) gas fields which was reduced to 1 MMSCMD from the year 2008. The current available quantity from PMT i.e. 0.75 MMSCMD is being provided for SMEs across the State of Gujarat. The domestic gas produced in India is produced mainly by ONGC, RIL and other entities that have entered into Production Sharing Contracts pursuant to the NELP bid rounds with the Government of India.
13.8
In spite of several representations by GSPC Gas and GSPC
to Ministry of Petroleum and Natural Gas, Government of India, GSPC Gas and other city gas distribution companies in the State of Gujarat, except GGCL and Central PSU promoted/ co-promoted companies like GAIL (for Vadodara only), Sabarmati Gas Ltd. and HPCL, have not been allocated any gas from domestic fields, APM or KG Basin D6 field.
13.9
The discovery of the KG Basin-D6 Block according to the of India's declarations was likely to commence
Government
production from July 2008 at an initial estimated production of 40
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MMSCMD, with a projected plateau rate of production at 80 MMSCMD, which would double the domestic gas production in India. The Government of India constituted an Empowered Group of Minsters (EgoM) on 13th August 2007 to examine and decide the issue of gas pricing and commercial utilization of gas under New Exploration and Licensing Policy. The EgoM was chaired by the Minister for External Affairs Shri Pranab Mukherjee, and comprised Minister of Power Shri Sushilkumar Shinde, Minister of Chemicals & Fertilizers & Minister of Steel Shri Ram Vilas Paswan, Minister of Finance Shri P.Chidambaram, Minister of Law and Justice Shri H.R. Bharadwaj, Minister of Petroleum and Natural Gas Shri Murli Deora, Minister of Corporate Affairs Shri Prem Chand Gupta and Shri Montek Singh Ahluwalia, Deputy Chairman, Planning Commission.
13.10
The EgoM/ MoPNG did not consider gas demand of CGDs
in Gujarat (except SGL and HPCL) at the time of allocation of gas from KG Basin D6 fields. 13.11 The EGoM has determined that out of the production of
the first 40 MMSCMD from RIL's KG D6 field, gas would be sold to the following priority sectors: (i) Existing gas based urea plants so as to enable full capacity utilization, (ii) existing gas based LPG plants (3 MMSCMD), (iii) existing gas based power plants lying idle/underutilized and likely to be commissioned during 2008-09 and liquid fuel plants, which are now running on liquid fuel and could switch to natural gas (18 mmscmd); (iv) City gas Distribution Projects for supply
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of piped natural gas to households and compressed natural gas to transport sector (5mmscmd) and (v) any quantity after supplying to the above categories, to be given to category (iii) above.
13.12
This distribution has also been stated by Ministry of
Petroleum and Natural Gas before the Standing Committee on Petroleum & Natural Gas (2008-09) of Fourteenth Lok Sabha and is stated in the 24th Report of the Standing Committee on Petroleum & Natural Gas. It should be noted that the response of the Ministry of Petroleum and Natural Gas,Government of India is seeking to present the decision of the EGoM as the response to the Recommendations of the 16tn Report Standing Committee on Petroleum and Natural gas on Supply, Distribution and Marketing of Natural Gas Including CNG and LNG". This, however, does not meet the criteria of fair exercise of powers as required under the Constitution of India and is an arbitrary exercise of power.
13.13
There has been no rationale or principles formulated by
the Government of India in formulating the policy for allocation of APM Gas or D-6 Gas. The Allocation policy for APM Gas and D-6 Gas provides for allocation of APM Gas for city gas distribution for the cities of Mumbai and New Delhi but does not provide for any allocation to several cities in Gujarat, which have a developed CGD network, including the city of Ahmadabad. Since there is almost a 50% difference in price between the APM Gas or D-6 Gas prices and
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prices of gas from re-gassified LNG, the price of natural gas provided through the city gas distribution network in the cities of Mumbai and New Delhi is much lower and more stable than any other city gas distribution network. This is because the price of R-LNG is linked to the price of imported LNG, which is based on the price at which each cargo of LNG is received and is liable to change every month, if not more frequently.
13.14
The Government of India is acting without any clear
guidelines or principles in exercising its jurisdiction/authority to allocate APM gas and D-6 sourced natural gas. This is in violation of the provisions of the Constitution of India and established law by the Supreme Court of India.
13.15.
Furthermore, even when there is an allocation of APM
Gas/D-6 Gas made by the Government of India, it has been of little relevance. This is because, to the best of the understanding of this respondent, the Government of India does not ensure the due enforcement of the allocation. Even through Adani Gas Limited (Respondent No. 8 in this present matter before this Court) has been allocated D-6 field gas, it has not received any volumes of gas pursuant to the allocation and no action has been undertaken by the Government of India to ensure such allotment. This is abdication of functions by Government of India and is arbitrary and
unconstitutional.
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13.16
In light of the importance of city gas distribution networks
and their growth over the past five years, there is an urgent need for the Government of India to develop a clear uniform policy which sets out clear criteria in relation to the distribution and allocation of APM Gas and D-6 gas. The development of city gas distribution networks enable substitution of consumption of petrol, diesel and LPGs which are subsidized by the Government of India. The growth of city gas distribution network enables reduction of the total subsidy bill of the Government of India. In view of this, it is therefore also in the Government of India's direct interest to support the same. In fact, as pointed out in the letter (dated 10lh March 2010) from the Hon'ble Minister of State Civil Aviation, Cottage Industries, Salt Industries, Industries, Mines, Minerals, Planning, Finance, Energy and
Petrochemicals, Government of Gujarat, just the 248 CNG stations in the State of Gujarat, which sell around 11 lac kg of CNG, are saving the Government of India subsidy to the tune of Rs. 58 crores per annum. (Source: as per Diesel & LPG under-recovery data published by PPAC on August 17, 2011).
13.17
The policy framework developed by the Government of
India in relation to the city gas distribution business since 2006 is found within the Petroleum and Natural Gas Regulatory Board Act, 2006, and the Policy for Development of Natural Gas Pipelines and City or Local Natural Gas Distribution Networks, 2006.
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13.18.
The Government of India also approves the pricing of gas
under the Production Sharing Contracts it enters into with various entities.
13.19
In so far as Government obligation and rights with regard
to fixation of price are concerned, the same are regulated under Art 21.6 of the PSC. Article 21.6.2 makes provision for valuation of the natural gas. Clause (a) prescribes zero value in respect of gas flared with approval of the Government or sale to the Government pursuant to Art. 21.4.5. In respect of the remaining, gas can be sold by the contractor at a value which is "arm's length sale" as defined under Art. 1.8. The formula on which price is to be determined is to be approved by the Government as prescribed under Art. 21.6.3. The Government has not been given free hand to approve any price. Such approval is subject to prevailing policy if any, including any linkage with traded liquid fuels. The Government is empowered to delegate its functions to a Regulatory Authority also. It will, thus be seen that the value at which the gas can be sold or disposed of by the contractor is subject to approval by the Government.
13.20
Article 6 of the PSC deals with Constitution and role of the
Managing Committee. In so far as the Government's role in Managing Committee is concerned, it may be seen that the Chairman and Deputy Chairman of the Management Committee are essentially the
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government representatives (Art.6.4). All matters requiring approval of the Management Committee are to be approved by unanimous vote. In cases where unanimity is not achieved, within reasonable period, the decision of the Management Committee is to be approved by the majority participating interest of 70% or more with
Government having a positive vote in favour of the decision (Art.6.13).
13.20.1
In addition, Art.6.7 also provides that the Management
Committee shall not take any decision without obtaining prior approval of the Government where such approval is required under the contract or applicable law.
13.21
Furthermore, the affidavit filed by the Union of India
before the High Court of Judicature at Bombay in the matter of Reliance Industries Limited v. Reliance Natural Resources Limited and Union of India also summarizes the powers of the Government of India under the Production Sharing Contracts in relation to determination of prices and utilization of gas. The Union of India in spite of having certain powers and jurisdiction over natural gas allocation and having sufficient rights under various PSCs to approve allotment and price of natural gas governed by the relevant PSCs has been exercising these powers only in a highly limited manner and further has exercised its powers over the distribution of natural gas and rights under the PSCs
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in an arbitrary manner without any clear guiding principles as would appear from the following table below for data on gas prices prevalent currently in India as in August 2011:
Source APM Panna Mukta Tapti RIL D6 LNG-Long Agreement Term
US $/mmbtu 4.20 5.73 5.57 4.20 8.625
Rs./mscm 7500 10232 9946 7500 15402
LNG- Spot Cargo
Around 15
26786
13.21.1
As is evident from the price table itself, the impact of
allocation of APM and Non-APM domestic gas to a city gas distribution entity would be drastic and would immediately impact the price at which end consumers in the city gas distribution areas receive gas (both PNG and CNG). City Gas Distribution companies that necessarily have to be dependent upon LNG as their main source would be providing gas within the city distribution network area at much higher costs.
13.21.2
It should be noted that the issue being raised is not
pricing but the arbitrary and opaque manner in which Union of India is allocating APM and Non-APM domestic gas. The arbitrary and opaque manner in which the Union of India has been exercising its discretion
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in relation to allocation of natural gas becomes evident when one considers the manner in which the EGoM determined the allocation of natural gas from KG Basin D-6 fields for city gas distribution networks.
13.22
The EGoM vide meeting held on May 28, 2008 decided
that out of the initially expected production of 40 MMSCMD of KG Basin D6 field gas, a maximum of 5 MMSCMD would be made available to CGD projects for supply to PNG to households and CNG to transport sector. The EGoM did not hear relevant parties or the affected state governments or the business entities or consumer groups or the members of the public and nor did it provide any data or principles based on which such determination was undertaken. 13.23 Then a little less than a year from its initial decision the
EGoM vide its meeting on March 23, 2009, drastically and again unilaterally decreased allocation to for PNG & CNG to 0.8 MMSCMD. In view of the same, the balance quantity of 4 MMSCMD was allocated to other consumers.
13.24
In taking such a drastic revision in the publically
announced allocation, the EGoM did not hear the affected parties, did not request any submissions from city gas distribution networks or consumers or the state pollution control boards. The EGoM did not follow the principles of natural justice and unilaterally and highly adversely affected the interests of entire sections of general public,
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businesses and state governments without so much as providing valid discernable principles. This is in violation of applicable norms of natural justice, applicable law and Constitution of India. 13.25 After the decision of the EGoM on March 23, 2009, the
Ministry of Petroleum and Natural Gas, Government of India on 13.05.2009, allocated gas quantities of only 0.8 MMSCMD on firm basis to CGDs for supply to PNG and CNG segments. The details of said entities are given below:
Entity Indraprastha Gas Ltd. Mahangar Ltd. City NCT of Delhi 308642 Gas Mumbai, Mumbai, Bhayander Thane Gas Ghandhinagar, Mehsana Sabarkantha Agra Gas Indore 12346 Gas Ujjain 1235 Ahmedabad 49383 834631 Navi Mira & 370370 & 77593 15062 Gas Allocation (SCMD)
Sabarmati Ltd.
Green Gas Ltd. Aavantika Ltd. Avantika Ltd. HPCL Total
13.26
There is no discernable basis or principles in accordance
with which the Ministry of Petroleum and Natural Gas, Government of India arrived at this allocation. No grounds for such allocation are discernable nor provided. This is in violation of applicable norms of natural justice, applicable law and Constitution of India.
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13.27
Thereafter, the Ministry of Petroleum and Natural Gas,
Government of India on 19.01.2010, allocated 0.387 MMSCMD of gas on firm Basis to the entities listed below for sale to PNG & CNG segments:
SI. Entity No . Bhagyanagar 1 Gas Ltd. 2 Saumya DSM 3 GAIL Gas Ltd. 4 GAIL Gas Ltd. 5 GAIL Gas Ltd. 6 GAIL Gas Ltd.
City
Gas allocation (SCMD) 47000 20000 5000 5000 5000 5000 200000 100000 387000
Kakinada Mathura Kota Meerut Dewas Sonipat
7 Adani Energy Ltd. Ahmedaba d 8 Bhagyanagar Gas Ltd. Total Hyderabad
13.28
Again, there is no discernable criteria or basis or
principles in accordance with which the Ministry of Petroleum and Natural Gas, Government of India arrived at this allocation. No grounds for such allocation are discernable nor provided. This is in violation of applicable norms of natural justice, applicable law and Constitution of India.
13.29
Even though the Respondent No. 7 is a major City Gas
Distribution Company having operations in a number of cities in the State of Gujarat, it was not allocated any of the APM/KG Basin D-6 field gas. The Union of India has discriminated against this Respondent and has acted against the interests of the public and
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consumers of the city gas network of the Respondent No. 7. Allocation of quantities of APM/KG Basin D-6 field gas would enable the Respondent No. 7 to supply CNG within its areas of operation at lower rates and even make them comparable to prices in Mumbai or New Delhi, based on the volume allocated. 13.30 Neither the decision of EGoM nor the decisions of Ministry
of Petroleum and Natural Gas, Government of India in relation to the allocation of gas from the KG Basin-D6 field was based on any discernable guidelines or criteria.
13.31
The exclusion of the Respondent No. 7 from the list of city
gas distribution entities to whom KG Basin-D6 field has been allotted is arbitrary, bad in law and against public interest.
13.32
The manner in which Union of India, is allocating APM and
Non APM Domestic gas is arbitrary, not based on any discernable rational criteria. Furthermore, the allocation itself is of limited value as it does not result in actual supply of gas.
13.33
The Union of India has failed to exercise its authority and
powers in a transparent and fair manner and has violated the provisions of Article 14 and Article 19 and Article 21 of the Constitution of India as well as the Directive Principles of State Policy.
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13.34
The Hon'ble Supreme Court of India in the case of
Ramana Dayaram Shetty v. International Airport Authiroity Of India & Ors (AIR 1979 SC 1628 -paragraph 10, 12) has stipulated as follows:
"This Court accepted the rule as valid and applicable in India in A.S. Ahluwalia v. Punjab MANU/SC/0363/1974 : (1975) ILLJ 228 SC and in subsequent decision given in Sukhdev v. Bhagatram MANU/SC/0667/1975 : (1975) ILLJ 399 SC Mathew. J., quoted the above-referred observations of Mr. Justice Frankfurter with approval. It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes not difference whether the exercise of the power involves affection of some right or denial of some privilege.........The power or discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory."
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13.35
The actions of the Union of India in relation to allocation
of APM and KG Basin D-6 Field natural gas are in violation of the above principles and are not based on any discernable valid principles and are unreasonable and completely discriminatory to PSUs that are not controlled by the Central Government and against public interest.
13.36
The Union of India cannot take the stand that it cannot
exercise its powers and contractual rights under the PSCs in a manner so as to enable wider distribution of APM/ KG Basin D-6 Field gas for city gas distribution networks because of financial constraints or capacity constraints. Physical or financial constraints cannot
exonerate the Government from discharging its duties in accordance with applicable law and norms.
13.37
The Supreme Court of India in the case of Municipal
Council, Ratlam v. Vardichan (1980) 4 SCC 162 has held that a government authority cannot extricate itself from its responsibility. It clearly held that the argument that financial inability validly exonerates the government from statutory liability has no juridical basis. In paragraph 12 of the judgment it is stated: "12. The statutory setting being thus plain, the municipality cannot extricate itself from its responsibility. Its plea is not that the facts are wrong but that the law is not right because the municipal funds being insufficient it cannot carry out the duties
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under Section 123 of the Act. This 'alibi' made us issue notice to the State which is now represented by counsel, Shri Gambhir, before us. The plea of the municipality that notwithstanding the public nuisance financial inability validly exonerates it from statutory liability has no juridical basis...." 13.37.1 that: "19 Before us the major endeavour of the municipal council was to persuade us to be pragmatic and not to force impracticable orders on it since it had no wherewithal to execute the order. Of course, we agree that law is realistic and not idealistic and what cannot be performed under given circumstances cannot be prescribed as a norm to be carried out. From that angle it may well be that while upholding the order of the Magistrate, we may be inclined to tailor the direction to make it workable. But first things first and we cannot consent to a value judgment where people's health is a low priority. Nevertheless, we are willing to revise the order into a workable formula the implementation of which would be watch-dogged by the court." The Supreme Court in Paragraph 19 further clearly held
13.38
The unilateral reduction made by the Government of India
in the total allocation of natural gas from KG Basin-D 6 field from the earlier announced 5 mmscmd to only 0.8 mmscmd is not only arbitrary and bad in law but is also in breach of the principles of promissory estoppel.
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13.39
Furthermore, the Union of India did not allocate any gas
from the KG Basin D-6 to a number of city gas distribution entities but only to a specific entities for which no selection process or criteria was announced. Furthermore, allocating within a group of similar entities (i.e. city gas distribution companies) without there having been any announcement or prior notice at the time of announcement of the overall allotment of 5 mmscmd to the sector, that only a limited number of such entities would be allotted gas is not only arbitrary and bad in law but is also a breach of the doctrine of promissory estoppel.
13.40
The initial announcement by the EGoM of 5 mmscmd
overall allocation to the city gas distribution sector had resulted in a clear policy indication from the Union of India created a legitimate expectation of fair allotment of gas within city gas distribution companies and this Respondent had altered its position based thereon. 13.41 In W.J. Alan & Co. Ltd. X. El. Nasr Export And Import Co.
[1972] 2 All 127 it had been held by Lord Denning that : "alteration of position" only means that he (the promisee) must have been led to act differently from what he would otherwise have done And if you study the cases in which the doctrine has been applied, you will see that all that is required is that the one should have acted on the belief induced by the other party." The Supreme Court of India adopted Lord Denning's judgment into Indian law in the case of Motilal Padampat Sugar Mills Co. Ltd v. State of
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Uttar Pradesh & Othrs (1979) 2 SCC 409, and further held that the doctrine of promissory estoppel may be applied against the State even in its governmental, public or sovereign capacity where it is necessary to prevent fraud or manifest injustice. It was also held that in order to invoke the doctrine of promissory estoppel it is not necessary to show that the relevant person suffered detriment as a result of acting in reliance on the promise, but the fact that injustice could occur if the promisor were to receded from his promise is a necessary ingredient to the invocation of the doctrine of promissory estoppel (Paragraph 50 of the judgement). It has been held by the Hon'ble Supreme Court that It would be correct to say that in order to invoke the doctrine of promissory estoppel it is enough to show that the promise has acting in reliance of the promise, altered his position and it is not necessary for him to further show that he has acted to his detriment (Paragraph 51).
13.42
The Union of India and the Ministry of Petroleum and
Natural Gas falls within the jurisdiction of this Court to be made subject of a writ of mandamus and be directed to formulate a clear natural gas allocation policy and be directed to allot natural gas in accordance with applicable legal principles.
13.43
The High Court of Andhra Pradesh in the case of APSRTC
Mushirabad, Hyderabad v Transport Commissioner. Government of Andhra Pradesh (2000 (2) ALT 465 ; MANU/AP/0193/2000) has held that:
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"14. The writ of mandamus is a valuable and essential Constitutional remedy in the administration of justice. It is a command directing any person, Corporation, inferior Court or Government requiring them to perform a particular thing specified in the order which relatable to his office and which is in the nature of public duty. The said duty may be one imposed by the Constitution, statute, common law or the Rules or orders having the force of law. (See : Guruswami v. State of Mysore, MANU / SC / 0006 / 1954 : [1955] 1 SCR 305. State of Mysore v. Chandrasekhara AIR 1965 SC 532 and Bihar Co-operative Society v. Siphai, MANU/SC/0060/1977 : [1978] 1 SCR 375. Therefore, the existence of a legal right in the petitioner and corresponding legal duty on the respondent are condition precedent for issuing a writ of mandamus. It is no doubt true that the mandamus would lie against a public servant or the Government to compel the Government or its officers to carry out the mandate which the Legislature has given and if the Court finds that the mandate is not carried out or is being violated the Court will compel them to obey the mandate. It is normally issued only when an officer or authority by compulsion of statute is required to perform a duty and which despite demand in writing has not been performed. This Court is entitled to issue prerogative writ including the writ of mandamus under Article 226 of the Constitution of India or pass an order or direction for enforcement of Constitutional right or any legal right and performance of legal duty." 13.44 In light of the above arguments and existing case law the
Respondent No. 7 prayed that:
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1.
This Court should direct the Union of India
to allocate to the Answering Respondent supply of natural gas from the KG Basin D-6 gas field.
2.
This Court should direct the Union of India
to allocate to the Answering Respondent supply of natural gas from any other domestic gas field, such as C-Series or North Tapti.
3.
This Court should direct that the Union of India
clearly stipulate the principles based on which APM and Non-APM Domestic gas would be allocated.
4.
This Court should hold that the doctrine of
promissory estoppel is applicable on the Union of India and the arbitrary non-allocation of KG Basin D-6 field gas is a breach of the doctrine of promissory estoppel and if the Union of India is not able to allocate the domestic natural gas, the Respondent No. 7 should be compensated to the extent of the failure of the Union of India to allocate the same to the extent of the difference in price of D-6 price and RLNG. The Respondent No. 7 undertakes that it shall create a specific fund from the compensation it receives, which fund shall be used to subsidize the price of CNG at its CNG outlets till such time as the benefit of the compensation has been passed to the consumers.
14.
Similarly, separate affidavit-in-reply was filed by the respondent
No.8, Adani Gas Limited, which may be summarized thus:
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14.1 The respondent No.8 Company is in the business of city gas distribution with an objective of providing piped natural gas to household, industrial and commercial consumers and compressed natural gas for use in automobiles.
14.2
As
per
Environment
Pollution
(Prevention
&
Control)
Authority (EPCA) Reports, Ahmedabad was found to be one of the most polluted cities in the country in 2003-04. Accordingly, the EPCA appointed by the Supreme Court of India directed the Govt. of Gujarat to take appropriate actions to curb the increasing pollution levels in the city. Acting on the directions of EPCA, Govt. of Gujarat formulated an Air Action Plan under which the CNG program was developed for city of Ahmedabad. 14.3 by GoG. 14.4 Respondent No.8 company initiated the development of NOC was issued to respondent No.8 Company on 21.04.2003
infrastructure to meet the fuel needs of transport, industrial, commercial and domestic customers pursuant to grant of NOC granted by the Govt. of Gujarat, infrastructure was developed as per the directions of EPCA. Till date the respondent No.8 company has spent more than Rs.600 crore for setting up 167 kms of steel pipeline network and 48 nos. of CNG stations to provide CNG conveniently in
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Ahmedabad.
Respondent
No.8
is
continuously
upgrading
and
expanding its infrastructure to make CNG easily available to users. Because of the use of CNG as fuel in automobiles supplied by the respondent No.8 company, there is a decrease in the level of air pollution and Ahmedabad has today become one of the cleanest cities in the country. 14.5 Respondent no.8 company sells 90% of Compressed Natural
Gas (CNG) & 100% of Piped Natural Gas (PNG) in Ahmedabad. Respondent No.11 fulfills about 10% of CNG requirement in Ahmedabad. Total requirement of Compressed Natural Gas (CNG) by respondent NO.8 for Ahmedabad is in excess of six lacs (600,000) SCMD. 14.6 In the past, based on the similar directions of EPCA, CNG
infrastructure was developed in Delhi, Mumbai, Lucknow, Kanpur, Agra etc. Govt. of India has allocated low cost gas to these cities for encouraging use of CNG in these cities. The Supreme Court vide its Order dated 05.04.2002 had directed Government of India to give priority in allocation of gas for CNG purpose. The respondent No.8 company has on several occasions made requests to Government of India to provide such low cost gas for city gas distribution. Because of the various efforts by the respondent No.8, provisional allocation of 200,000 SCMD gas from the KG D-6 fields of M/s Reliance Industries Limited was made by Government of India (GoI) vide letter dated 19.01.2010. Although respondent No.8 had requested for 4,25,000
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SCMD based on the current CNG supplies in Ahmedabad, allocation, that too, provisional was made only for 200,000 SCMD to the respondent No.8. 14.7 Despite the above referred allocation of gas, although
smaller quantity than required, the same has also not been supplied to respondent No.8. Despite several efforts/representations by respondent No.8, there is no supply of the allocated gas to the respondent No.8. At the same time, respondent No.11 Company (a Central Public Sector Undertaking) was allocated and was supplied low priced gas. It is pertinent to note that respondent No.11 company has limited infrastructure in Ahmedabad and supplied only 10% of CNG in Ahmedabad city. 14.8 As far as the procurement of natural gas is concerned, the
respondent No.8 company neither produces nor imports the same but is dependent on its supplier for fulfilling its requirements of natural gas. The respondent No.8 company procures natural gas at market price from Gujarat State Petroleum Corporation Ltd. The price at which the goods are sold by Gujarat State Petroleum Corporation Ltd. to the respondent No.8 company is dependent on the price at which the same is imported by Gujarat State Petroleum Corporation Ltd. 14.9 The price of gas (RLNG Long Term & Spot RLNG) procured by
the respondent no.8 from Gujarat State Petroleum Corporation Ltd. is substantially higher than the low cost gas (APM, KG D-6, Panna Mukta, Tapti) allocated by Government of India and therefore, the end user
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price of CNG is much higher in Ahmedabad compared to that in Delhi & Mumbai. 14.10 The Respondent No. 8 made the following submissions for
consideration by this Court:
a.
The Orders dated 04.05.2002 annexed at Annexure3 issued by the Supreme Court directing Govt. of India to give priority in allocation of gas for CNG purpose.
b.
Like Delhi, Mumbai, Lucknow, Kanpur, Agra etc. CNG infrastructure in Ahmedabad has also been
developed on directions of EPCA.
c.
Delhi, Mumbai and other cities have been provided with APM/ low cost gas by Government of India to encourage CNG usage and curb pollution in these cities. In Ahmedabad, Government of India has allocated low price gas only to respondent No.11 company (Central Public Sector Undertaking) which contributes only 10% of total CNG sales in
Ahmedabad city whereas respondent No.8 company is contributing 90% of CNG and 100% of PNG sales in Ahmedabad without receipt of any low price gas from Govt. of India. Despite purchase price
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difference between respondent No.8 & 11, CNG sale price in Ahmedabad city is almost same as
respondent No.11 is selling CNG at 40.40 rupees per Kg while respondent No.8 is selling CNG 40.50 rupees per kg. Respondent No.11, being Central Public Sector Undertaking is enjoying very good profit margin.
d.
Government of India has allocated 200,000 SCMD low cost gas to respondent No.8 vide its letter 19.01.2010 (Annexure 5) and the same is not being supplied to respondent No.8.
e.
To take adequate steps for allocation and supply of sufficient quantity of low priced natural gas Six Lacs (600,000/-) SCMD by Government of India to the respondent discrimination. No.8 company without any
14.11
The respondent No.8 has put the aforesaid facts on record
by way of present affidavit in reply, although the captioned petition seeks no relief against the respondent No.8.
15.
The respondent No. 9, Sabarmati Gas Limited also filed a
separate affidavit and its views are as follows:
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15.1
The Respondent No. 9 is a company incorporated under the
Companies Act, 1956 having its registered office at Plot No.907. Sector-21, Gandhinagar-382021 and is undertaking the business as a city gas distribution company engaged in the sale of natural gas in the form of Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) to domestic customers, industrial customers, commercial customers as well as to CNG Stations in Gandhinagar, Sabarkantha and Mehsana districts of the State of Gujarat.
15.2
The Respondent No. 9 is a joint venture company between
Gujarat State Petroleum Corporation Limited ("GSPCL") and Bharat Petroleum Corporation Limited ("BPCL"). GSPCL is a company owned by the State Government of Gujarat. BPCL is a company owned by the Government of India.
15.3
The Respondent No. 9 has, pursuant to the regulations of
the PNGRB under the PNGRB Act, obtained the authorization of its network under the PNGRB Act in accordance with the provisions thereof.
15.4
The Respondent No. 9 has made substantial investments
in laying down extensive networks of pipelines for distribution of gas in Gandhinagar, Sabarkaniha and Mehsana districts of Gujarat. The Respondent No.9 owns, operates, maintains and manages gas distribution network spread across the districts of Gandhinagar, Sabarkantha and Mehsana in Gujarat having, as of March 31, 2011, a
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customer base of approximately 159 industrial establishments, 220 commercial and non-commercial establishments, 16 CNG filling stations and 44,886 households. Piped Natural Gas (PNG) is supplied to approximately 44,886 households by the Respondent No.9 for cooking purposes, through its City Gas Distribution Networks. As on March 31, 2011, the Respondent No. 9 is also having 16 CNG stations in Gujarat which supply CNG for use in vehicles. The growth of the city gas distribution networks has resulted in drastic reduction of air pollution in the cities in which such networks are established.
15.5
The Respondent No. 9 does not have its own source of gas as
it does not either undertake gas production activities nor does it import LNG. The above Respondent is completely dependent upon its gas suppliers to fulfill all the demand for its consumers of its city gas distribution business including piped natural gas (PNG) as well as compressed natural gas (CNG).
15.6
Presently, the Respondent No. 9 obtains its entire supply of
natural gas from Gujarat State Petroleum Corporation Limited (GSPCL), Bharat Petroleum Corporation Limited as well as the supply from RIL and N1KO from their KG Basin D-6 gas field ("D-6"). The nonAPM natural gas, which the Respondent obtains from GSPCL and BPCL, affects the price at which it is able to supply gas to PNG and CNG segment within its area of operations.
15.7
The Respondent No. 9 has been allocated 77,593 SCMD of
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natural gas from D-6 vide the letter of MOPNG dated May 13, 2009. However, such allocation of D-6 gas to the Respondent No. 9 accounts for only approximately 10% of total gas requirements of the Respondent No. 9. Pursuant to such allocation, the above Respondent has been writing to the MPNG to increase the allocation from D-6 in view of the increase in the demand from the areas that the Respondent No. 9 caters to.
15.8
The projected demand for the Financial Year 2011-12 by the
Respondent No. 9 among its various consumer base is as follows: (a). For Domestic/household consumers the average
yearly demand projection for Financial Year 2011-12 is 27,292 scmd; (b). For Industrial consumers the average yearly
demand projection for Financial Year 2011-12 is 7,04,295 scmd; (c).For CNG the average yearly demand projection for Financial Year 2011-12 is 1,55,000 scmd; and (d). For commercial consumers the average yearly demand projection for Financial Year 2011-12 is 5,050 scmd .
15.9
Presently, there is a 50% shortfall in supply of natural gas
that is being faced by the Respondent No. 9 and such shortfall is being met by sourcing gas on a spot basis at the rate of ll-
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14USD/mmbtu as against 4.2USD/mmbtu of allocated gas price. This affects the Respondent No. 9 as well as all of its consumers particularly the CNG and domestic consumers.
15.10.
Further, the estimated demand (requirement) of gas by
the Respondent No. 9 during a period of next five financial years as submitted by the Respondent No. 9 to PNGRB is as under:
Sector CGD (CNG) CGD (Domestic)
2012-13 2013-14 2014-15 2 lacs 2.5 lacs 3 lacs SCMD SCMD SCMD 0.36 lacs 0.47 lacs 0.58 lacs SCMD SCMD SCMD 8 lacs SCMD
2015-16 2016-17 3.6 lacs 4.35 lacs SCMD SCMD
CGD 7.3 lacs (Industrial+ SCMD Commercial ) Total 9.66 lacs SCMD
0.69 lacs 0.80 lacs SCMD SCMD 8.8 lacs 9.7 lacs 10.6 lacs SCMD SCMD SCMD
10.97 lacs SCMD
12.38 lacs SCMD
13.99 lacs SCMD
15.75 lacs SCMD
15.10.1
It may be noted here, that even though the MOPNG has
allocated 1,50,000 SCMD of D-6 gas to the Respondent No. 9 on Fall Back basis to enable it to meet the demand of Industrial and Commercial customers, RIL and NIKO have not signed GSA for the same. As such, the Respondent No. 9 is not receiving any gas allocated to it for catering to the demand from Industrial and Commercial customers.
15.10.2
It is clear from the above that the Respondent No. 9 is in
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acute shortage of allocation from the D-6 gas.
15.11
The domestic gas produced in India is produced mainly by
ONGC, RIL and other entities that have entered into Production Sharing Contracts pursuant to the NELP bid rounds with the Government of India. The discovery of the KG Basin -D6 Block according to the Government of India's declarations was likely to commence production from July 2008 at an initial estimated production of 40 MMSCMD, with a projected plateau rate of production at 80 MMSCMD, which would double the domestic gas production in India. The Government of India constituted an Empowered Group of Ministers ("EGoM") on 13ih August 2007 to examine and decide the issue of gas pricing and commercial utilization of gas under New Exploration and Licensing Policy. The EGoM was chaired by the Minister for External Affairs Shri Pranab Mukherjee, and comprised of Minister of Power Shri Sushilkumar Shinde, Minister of Chemicals & Fertilizers and Minister of Steel Shri Ram Vilas Paswan, Minister of Finance Shri P. Chidambaram, Minister of Law & Justice Shri H.R. Bharadwaj, Minister of Petroleum and Natural Gas Shri Murli Deora, Minister of Corporate Affairs Shri Prem Chand Gupta and Shri Montek Singh Ahluwalia, Deputy Chairman, Planning Commission.
15.12
The EGoM has determined that out of the production of the
first 40 mmscmd from RIL's KG D6 field, gas would be sold to the following priority sectors: (i) Existing gas based urea plants so as to
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enable full capacity utilization, (ii) existing gas based LPG plants (3mmscmd), (iii) existing gas based power plants lying idle/underutilized and likely to be commissioned during 2008-09 and liquid fuel plants, which are now running on liquid fuel and could switch to natural gas (18 mmscmd); (iv) City gas Distribution Projects for supply of piped natural gas to households and compressed natural gas to transport sector (5 mmscmd) and (v) any quantity after supplying to the above categories, to be given to category (iii) above.
15.13
This distribution has also been stated by Ministry of
Petroleum and Natural Gas before the Standing Committee on Petroleum & Natural Gas (2008-09) of Fourteenth Lok Sabha and is stated in the 24th Report of the Standing Committee on Petroleum & Natural Gas.
15.14
It should be noted that the response of the Ministry of
Petroleum and Natural Gas, Government of India is seeking to present the decision of the EGoM as the response to the Recommendations of the 16th Report of the Standing Committee on Petroleum and Natural gas on 'Supply, Distribution and Marketing of Natural Gas Including CNG and LNG". This however, does not meet the criteria of fair exercise of powers as required under the Constitution of India and is an arbitrary exercise of power.
15.15
There has been no rationale or principles formulated by the
Government of India in formulating the policy for allocation of APM
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Gas or D-6 Gas. The Allocation policy for APM Gas and D-6 Gas provides for allocation of APM Gas for city gas distribution for the cities of Mumbai and New Delhi but does not provide for any allocation to several cities in Gujarat, which have a developed CGD network, including the city of Ahmadabad. Since there is almost a 50% difference in price between the APM Gas or D-6 Gas prices and prices of gas from regassified LNG, the price of natural gas provided through the city gas distribution network in the cities of Mumbai and New Delhi is much lower and more stable than any other city gas distribution network. This is because the price of R-LNG is linked to the price of imported LNG, which is based on the price at which each cargo of LNG is received and is liable to change every month, if not more frequently.
15.16
In light of the importance of city gas distribution networks
and their growth over the past five years, there is an urgent need for the Government of India to develop a clear uniform policy, which sets out clear criteria in relation to the distribution and allocation of APM Gas and D-6 gas. The development of city gas distribution networks enable substitution of consumption of petrol, diesel and LPGs, which are subsidized by the Government of India. The growth of city gas distribution network enables reduction of the total subsidy bill of the Government of India. In view of this, it is therefore also in the Government of India's direct interest to support the same. In fact, as pointed out in the letter (dated 10,h March 2010) from the Hon'ble
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Minister of State Civil Aviation, Cottage Industries, Salt Industries, Industries, Mines, Minerals, Planning, Finance, Energy and
Petrochemicals, Government of Gujarat, just the 248 CNG stations in the State of Gujarat, which sell around 1 1 lac kg of CNG, are helping in saving the Government of India subsidy to the tune of Rs. 58 crore per annum. (Source: as per Diesel & LPG under-recovery data published by PPAC on August 17, 2011).
15.17
The policy framework developed by the Government of India
in relation to the city gas distribution business since 2006 is found within the Petroleum and Natural Gas Regulatory Board Act, 2006, and the Policy for Development of Natural Gas Pipelines and City or Local Natural Gas Distribution Networks, 2006.
15.18
The Government of India also approves the pricing of gas
under the Production Sharing Contracts it enters into with various entities.
15.19
The Union of India in spite of having certain powers and
jurisdiction over natural gas allocation and having sufficient rights under various PSCs to approve allotment and price of natural gas governed by the relevant PSCs has been exercising these powers only in a highly limited manner and further has exercised its powers over the distribution of natural gas and rights under the PSCs in an arbitrary manner without any clear guiding principles as would appear from the Table below for data on gas prices prevalent currently in
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India as in August 2011: Source APM Panna Mukta Tapti RIL D6 LNG-Long Term Agreement. LNG-Spot Cargo US$/mmbtu 4.20 5.73 5.57 4.20 8.625 Around 15 Rs./mscm 7500 10232 9946 7500 15402 26786
(Source: Company sources) (All prices are excluding taxes, duties, royalty, marketing margin & transmission cost)
15.20
As is evident from the price table itself, the impact of
allocation of APM and Non-APM domestic gas to a city gas distribution entity would be drastic and would immediately affect the price at which the end consumers in the city gas distribution areas receive gas (both PNG and CNG). City Gas Distribution companies that necessarily have to be dependent upon LNG as their main source would be providing gas within the city distribution network area at much higher costs.
15.21
The issue that is being raised is not one relating to pricing
but to the arbitrary and opaque manner in which Union of India is allocating APM and Non-APM domestic gas. The arbitrary and opaque manner in which the Union of India has been exercising its discretion in relation to allocation of natural gas becomes evident when one considers the manner in which the EGoM determined the allocation of
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natural gas from KG Basin D-6 fields for city gas distribution networks.
15.22
The EGoM vide meeting held on May 28, 2008 decided
that out of the initially expected production of 40 MMSCMD of KG Basin D6 field gas, a maximum of 5 MMSCMD would be made available to CGD projects for supply to PNG to households and CNG to transport sector. The EGoM did not hear relevant parties or affected state governments or business entities or consumer groups or members of the public and nor did it provide any data or principles based on which such determination was undertaken.
15.23
Then a little less than a year from its initial decision the
EGoM vide its meeting on March 23, 2009, drastically and again unilaterally decreased allocation to for PNG & CNG to 0.8 MMSCMD. In view of the same, the balance quantity of 4 MMSCMD was allocated to other consumers.
15.24
In taking such a drastic revision in the publicly announced
allocation, the EGoM did not hear the affected parties, did not ask for any submissions from city gas distribution networks or consumers or the state pollution control boards. The EGoM did not follow the principles of natural justice and unilaterally and adversely affected the interests of entire sections of general public, businesses and state
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governments without so much as providing valid discernable principles. This is in violation of applicable norms of natural justice, applicable law and Constitution of India.
15.25
After the decision of the EGoM on March 23, 2009, the
Ministry of Petroleum and Natural Gas, Government of India on 13.05.2009, allocated gas quantities of only 0.8 MMSCMD on firm basis to CGDs for supply to PNG and CNG segments. The details of said entities are given below:
Entity Indraprastha Gas Ltd. Mahanagar Gas Ltd. Sabarmati (being the Gas
City NCT of Delhi Mumbai, Navi
Gas (SCMD) Mumbai,
Allocation 308,642 370,370 77,593
Mira Bhayander & Thane Ltd Gandhinagar, Mehsana &
Answering Sabarkantha Agra Indore Ujjain Ahmedabad Total 15,062 12,346 1,235 49,383 834,631
Respondent) Green Gas Ltd. Aavantika Gas Ltd Aavantika Gas Ltd HPCL
15.26 There is no discernable criterion or basis or principle in accordance with which the Ministry of Petroleum and Natural Gas, Government of India arrived at this allocation. No grounds for such allocation are discernable or provided. This is in violation of applicable norms of natural justice, applicable law and Constitution of India.
15.27
Thereafter, the Ministry of Petroleum and Natural Gas,
Government of India on 19.01.2010, allocated 0.387 MMSCMD of
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gas on firm basis to the entities listed below for sale to PNG & CNG segments. Sl. No. 1 2 3 4 6 7 8 Entity Bhagyanagar Gas Ltd. Saumya DSM GAIL Gas Ltd. GAIL Gas Ltd. GAIL Gas Ltd. GAIL Gas Ltd. Adani Energy Ltd. Bhagyanagar Gas Ltd. Total City Kakinada Malhura Kota Meerut Dewas Sonipat Ahmedabad Hyderabad Gas allocation (SCMD) 47,000 20,000 5,000 5,000 5,000 5,000 200,000 100,000 387,000
15.28
Again, there is no a discernable criterion or basis or
principle in accordance with which the Ministry of Petroleum and Natural Gas, Government of India, arrived at this allocation. No ground for such allocation is discernable or provided. This is in violation of applicable norms of natural justice, applicable law and Constitution of India.
15.29
Even though this Respondent is a major city gas
distribution company, having operations in three major districts of the State of Gujarat, it was not allocated any further APM/KG Basin D-6 field gas than the initial 77,593 SCMD. The Union of India has discriminated against this Respondent and has acted against the interests of the public and consumers of the city gas network of the Answering Respondent. Allocation of further quantities of APM/KG Basin D-6 field gas would enable this Respondent to supply CNG within its areas of operation at lower rates and even make them
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comparable to prices in Mumbai or New Delhi, based on the volume allocated.
15.30
Neither the decision of EGoM nor the decisions of Ministry
of Petroleum and Natural Gas, Government of India, in relation to the allocation of gas from the KG Basin-D6 field were based on any discernable guidelines or criteria.
15.31
The Union of India has failed to exercise its authority and
powers, in a transparent and fair manner and has violated the provisions of Article 14, Article 19 and Article 21 of the Constitution of India as well as the Directive Principles of State Policy.
15.32
The Supreme Court of India in the case of Ramana
Dayaram Shetty v. International Airport Authority Of India & Ors (AIR 1979 SC 1628 paragraph 10, 12) has stipulated as follows:
"This Court accepted the rule as valid and applicable in India in A.S. Ahluwalia v. Punjab MANU/SC/0363/1974 : (1975) ILLJ 228 SC and in subsequent decision given in Sukhdev v. Bhagatram MANU/SC/0667/1975 : (1975) ILLJ 399 SC Mathew. J., quoted the above-referred observations of Mr. Justice Frankfurter with approval...... It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be
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free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes not difference whether the exercise of the power involves affection of some right or denial of some privilege.........The power or discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory."
15.33
The actions of the Union of India in relation to allocation of
APM and KG Basin D-6 Field natural gas are in violation of the above principles, are not based on any discernable valid principles, and are unreasonable and discriminatory to PSUs that are not controlled by the Central Government and against public interest.
15.34
The Union of India cannot take the stand that it cannot
exercise its powers and contractual rights under the PSCs in a manner so as to enable wider distribution of APM/ KG Basin D-6 Field gas for city gas distribution networks because of financial constraints or capacity constraints. Physical or financial constraints cannot
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exonerate the Government from discharging its duties in accordance with applicable law and norms.
15.35
The Supreme Court of India in the case of Municipal
Council, Ratlam v. Vardichan (1980) 4 SCC 162 has held that a government authority cannot extricate itself from its responsibility. It clearly held the argument that financial inability validly exonerates the government from statutory liability has no juridical basis. In Paragraph 12 of the judgment it is stated: "12. The statutory setting being thus plain, the municipality cannot extricate itself from its responsibility. Its plea is not that the facts are wrong but that the law is not right because the municipal funds being insufficient it cannot carry out the duties under Section 123 of the Act. This 'alibi' made us issue notice to the State which is now represented by counsel, Shri Gambhir, before us. The plea of the municipality that notwithstanding the public nuisance financial inability validly exonerates it from statutory liability has no juridical basis...."
15.35.1 that:
The Supreme Court in Paragraph 19 further clearly held
"19. Before us the major endeavour of the municipal council was to persuade us to be pragmatic and not to force impracticable orders on it since it had no wherewithal to execute the order. Of course, we agree
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that law is realistic and not idealistic and what cannot be performed under given circumstances cannot be prescribed as a norm to be carried out. From that angle it may well be that while upholding the order of the Magistrate, we may be inclined to tailor the direction to make it workable. But first things first and we cannot consent to a value judgment where people's health is a low priority. Nevertheless, we are willing to revise the order into a workable formula the implementation of which would be watch-dogged by the court."
15.36
The unilateral reduction made by the Government of India in
the total allocation of natural gas from KG Basin-D 6 field from the earlier announced 5 mmscmd to only 0.8 mmscmd is not only arbitrary and bad in law but is also in breach of the principles of promissory estoppel. 15.37 The initial announcement by the EGoM of 5 mmscmd
overall allocation to the city gas distribution sector had resulted in a clear policy indication from the Union of India created a legitimate expectation of fair allotment of gas within city gas distribution companies and the Respondent No.9 had altered its position based thereon. 15.38 Furthermore, there had been an unexplained drop in
production of gas from D-6 fields that has resulted in reduction of supplies by around 10% of the allocation and there is a likelihood of further reduction. The unilateral reduction in supplies without any
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prior notice is not only arbitrary and bad in law but is also in breach of the principles of promissory estoppel. Although the D-6 fields are operated by a consortium of private companies namely Reliance and Niko, they are performing public functions and the Government of India has sufficient powers and rights under the relevant productionsharing contract to monitor and control the operations. The Government of India has failed to duly exercise its rights under the production sharing contract governing the operations of D-6 gas fields and allowed unilateral reduction in allocated supplies without prior notice or adequate reason. 15.39 Not only the Government of India, but also the operating
consortium of Reliance and Niko in relation to the operation and implementation of the Production Sharing Contract governing the KG Basin D-6 gas field are subject to the writ-jurisdiction of this Hon'ble Court and can be asked to explain the reasons for the unilateral drop in production and the consequent manner in which the reductions in the allocated quantities are being imposed on the various entities. 15.40 The Supreme Court of India in Binni Limited and Anr. v.
V. Sadasivan and Ors. (2005) 6 SCC 657, has held that there is a difference between public duties and contractual duties. It was held that a Writ of Mandamus can be issued even against a private authority, but only in respect of the public functions being discharged by the said authority. A writ court can by its decision direct a private authority to correct or enforce discharge of public functions. The Court
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held that a body is performing a "public function" when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest. The Supreme Court held that private bodies, exercise public function when they intervene or participate in social or economic affairs of public interest (emphasis added). 15.41 The Supreme Court stated: "However, such private
authority must be discharging a public function and that the decision sought to be corrected or enforced must be in discharge of a public function. The role of the State expanded enormously and attempts have been made to create various agencies to perform the governmental functions. Several corporations and companies have also been formed by the government to run industries and to carry on trading activities. These have come to be known as Public Sector Undertakings. However, in the interpretation given to Article 12 of the Constitution, this Court took the view that many of these companies and corporations could come within the sweep of Article 12 of the Constitution. At the same time, there are private bodies also which may be discharging public functions. It is difficult to draw a line between the public functions and private functions when it is being discharged by a purely private authority. A body is performing a "public function" when it seeks to achieve some collective benefit for
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the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest." 15.42 In Andi Mukta Sadguru Shree Muktajee Vandas
Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani & Ors AIR 1989 SC 1607, a writ of mandamus was sought against a trust registered under Public Trust Act that undertook the
management of a college. The writ jurisdiction of the courts was challenged on the grounds that a trust managing a college is not a "state entity" and therefore, not subject to writ jurisdiction. The Supreme Court held as follows: "If the rights are purely of a private character no mandamus can issue. If the management of the college is a purely a private body with no public duty mandamus will absent and the not lie. These are two has no other equally exceptions to Mandamus. But once these are party convenient remedy, mandamus cannot be denied." 15.42.1 The Supreme Court then examined whether the trust was
purely a private body and held as follows: "it has to be appreciated that the appellant-trust was managing the alfiliated college to which public money is paid as Government aid. Public money paid as government aid plays a major role in the control, maintenance and working of educational
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institutions. The aided institutions like government institutions discharge public function by way of imparting education to students. Their activities are closely supervised by the University authorities." 15.43 The Supreme Court held that the power and scope of
Article 226, is much wider than the English law relating to issuance of writs (which is limited to only authorities created by statute and whose powers and duties are defined by statute). Under Article 226 writs can be issued to a 'any person or authority". It can be issued "for the enforcement of any or the fundamental rights and for any other purpose". The Supreme Court held that: "The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words "Any person or authority'" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature ol the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied."
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15.44
The of
Supreme Professor
Court De
quoted Smith (in
with
approval Review
the of
commentary
Judicial
Administrative Act, 4th Ed, p.540): "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract." 15.45 The same stand was reiterated by the Supreme Court in
K. Krishnamacharyulu v. Sri Venkateswara Hindu College of Engineering (1997) 3 SCC 571 when it held: "In view of the long line of decisions of this Court holding that when there is an interest created by the Government in an Institution to impart education, which is a fundamental right of the citizens, the teachers who teach the education gets an element of public interest in the performance of their duties. As a consequence, the element of public interest requires to regulate the conditions of service of those employees on par with Government employees.... We are of the view that the State has obligation to provide facilities and opportunities to the people to avail of the right to education. The private institutions cater to the needs of the educational opportunities. The teacher duly appointed to a post in the private institution also is entitled to seek enforcement of the orders issued by the Government.... When an element of public interest is created and the institution is catering to that element, the teacher, the
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arm of the institution is also entitled to avail of the remedy provided under Article 226; the jurisdiction part is very wide 15.46 Similarly in VST Industries v. VST Industries Workers'
Union and Anr. (2001) 1 SCC 298, it was held that: "it is noticed that not all the activities of the private bodies are subject to private law, e.g., the activities by private bodies may be governed by the standards of public when its decisions are subject to duties conferred by statute or when by virtue of the function it is performing or possible its dominant position in the market, it is under an implied duty to act in the public interest (emphasis added). By way of illustration, it is noticed that a private company selected to run a prison although motivated by commercial profit should be regarded, at least in relation to some of its activities, as subject to public law because of the nature of the function it is performing. This is because the prisoners, for whose custody and care it is responsible, are in the prison in consequence of an order of the court, and the purpose and nature of their detention is a matter of publicconcern and interest. After detailed discussion, the learned authors have summarized the position with the following propositions: (1). The test of a whether a body is performing a public function, and is hence amenable to judicial review, may not depend upon the source of its power or whether the body is ostensibly a "public" or a "private" body.
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(2).
The principles of judicial review prima facie govern the activities of bodies performing public functions.
(3)
However, not all decisions taken by bodies in the course of their public functions are the subject matter of judicial review. In the following two situations judicial review will not normally be appropriate even though the body may be performing a public function
(a). Where some other branch of the law more appropriately governs the dispute between the parties. In such a case, that branch of the law and its remedies should and normally will be applied; and (b). Where there is a contract between the litigants. In such a case the express or implied terms of the agreement should normally govern the matter. This reflects the normal approach of English law, namely, that the terms of a contract will normally govern the transaction, or other relationship between the parties, rather than the general law. Thus, where a special method of resolving disputes (such as arbitration or resolution by private or domestic tribunals) has been agreed upon by the parties (expressly or by necessary implication), that regime, and not judicial review, will normally govern the dispute." 15.47 From the above it is clear that: (i) the Government of
India having entered into the Production Sharing Contract governing
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the operation of the KG Basin D-6 gas field with sufficient rights to regulate the allocation of gas and monitoring of operation and management of the gas field; (ii) The Government of India having allocated gas from the KG Basin D-6 gas field; and (iii) the operating consortium of Reliance and Niko that are operating the KG Basin D-6 gas field are dealing with allocation and sale of national property, i.e. its gas resources, and are, therefore. required to adhere to applicable law and principles of natural justice and cannot act in an arbitrary and opaque manner and further will be bound by principles of promissory estoppel and will be subject to the writ jurisdiction of this Court. 15.48 The Government of India, having initially allocated a
specific amount of natural gas from the KG Basin D-6 to the Respondent No.9, is governed by the principles of promissory estoppel and would be bound to compensate the Respondent No.9 of the increased costs that it faces in light of the unilateral and arbitrary reduction in quantities of gas being supplied from the KG Basin D-6 gas field. 15.49 In W.J. Alan & Co. Ltd. X. El. Nasr Export And Import
Co. [1972] 2 All 127 it had been held by Lord Denning that: "......alteration of position" only means that he (the promisee) must have been led to act differently from what he would otherwise have done. And if you study the cases in which the doctrine has been applied, you will see that all that is required is that the one should have acted on the belief induced by the
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other party." The Hon'ble Supreme Court of India adopted Lord Denning's judgment into Indian law in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh & Othrs (1979)2SCC4C9, and further held that the doctrine of
promissory estoppel may be applied against the State even in its governmental, public or sovereign capacity where it is necessary to prevent fraud or manilcst injustice . It was also held that in order to invoke the doctrine ol promissory estoppel it is not necessary to show that the relevant person suffered detriment as a result of acting in reliance on the promise, but the fact that injustice could occur il the promisor were to receded from his promise is a necessary ingredient to the invocation of the doctrine of promissory estoppel (Paragraph 50 of the judgment). It has been held by the Supreme Court that It would be correct to say that in order to invoke the doctrine of promissory estoppel it is enough to show that the promise has acting in reliance of the promise, altered his position and it is not necessary for him to further show that he has acted to his detriment (Paragraph 51) 15.50 The Union of India and the Ministry of Petroleum and Natural
Gas falls within the jurisdiction of this Court to be made subject of a writ of mandamus and be directed to formulate a clear natural gas allocation policy and be directed to allot natural gas in accordance with applicable legal principles.
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15.51
The
High Court of Andhra Pradesh in the case of
APSRTC Mushirabad, Hyderabad v. Transport Commissioner, Government of Andhra Pradesh (2000) (2) ALT 465;
MANU/AP/0193/2000) has held that: "14.The writ of mandamus is a valuable and essential Constitutional remedy in the administration of justice. It is a command directing any person, Corporation, inferior Court or Government requiring them to perform a particular thing specified in the order which relatable to his office and which is in the nature of public duty. The said duty may be one imposed by the Constitution, statute, common law or the Rules or orders having the force of law. (See : Guruswami v. State ol Mysore, MANU/SC/0006/1954 : [1955]1SCR305 , State of Mysore v. Chandrasekhara AIR 1965 SC 532 and Bihar Cooperative Society v. Siphai, MANU/SC/0060/1977 : [1978]1SCR375 . Therefore, the existence of a legal right in the petitioner and corresponding legal duty on the respondent are condition precedent for issuing a writ of mandamus. It is no doubt true that the mandamus would lie against a public servant or the Government to compel the Government or its officers to carry out the mandate which the Legislature has given and if the Court finds that the mandate is not carried out or is being violated the Court will compel them to obey the mandate. It is normally issued only when an officer or authority by compulsion of statute is required to perform a duty and which despite demand in writing has not been performed. This Court is entitled to issue prerogative writ including the writ of mandamus under Article 226 of the Constitution of India or pass an order or direction for
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enforcement of Constitutional right or any legal right and performance of legal duty." 15.52 In light of the above arguments and existing case law, the
Respondent No.9 prays and submits that: 1. This Court be pleased to direct the Union of India to further allocate to the Answering Respondent supply of natural gas from the KG Basin D-6 gas field for each financial year to the extent of estimates/projections as stated in paragraph 5 of the Affidavit. 2. This Court be pleased to direct the Union of India to allocate to the Answering Respondent supply of natural gas from any other domestic gas field, such as C-Series or North Tapti. 3.This Court be pleased to direct that the Union of India clearly stipulate the principles based on which APM and Non-APM Domestic gas would be allocated. 4.This Court be pleased to direct the operating
consortium of Reliance Industries and Niko Resources to provide reasons for the fall in production, the manner in which gas is being allocated among the entities to whom Government of India had allocated D-6 gas and their intended plan to overcome the fall i n production and reinstate the supply of gas from the D-6 fields.
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5.This Court be pleased to hold that the doctrine of promissory estoppel is applicable on the Union of India and the operators of the D-6 gas fields , namely, Reliance and Niko, and the arbitrary reduction in supply of natural gas against volumes of allotted KG Basin D-6 field gas is a breach of the doctrine of promissory estoppel and if the Union of India, Reliance and Niko are not able to allocate the further domestic natural gas, the Respondent No.9 should be compensated to the extent of the failure of the Union of India to allocate the same to the extent of the difference in price of D-6 price and RLNG. The
Respondent No.9 undertakes that it shall create a specific fund from the compensation it receives, which shall be used to subsidize the price of CNG at its CNG outlets till such time as the benefit of the compensation has been passed to the consumers.
16.
The respondent No.10, Charotar Gas Sahakari Mandali Limited,
has also filed its affidavit in reply taking out the following defence.
16.1
Charotar Gas Sahkari Mandali Ltd. (for short the CGSML") is
registered co-operative Mandali under the Gujarat Co-Operative Act, 1961 vide registration No.3276/24-6-1999. The CGSML is established on 24.06.1999 for carrying out exercise to supply natural gas for domestic, commercial and industrial purpose at doorstep of consumer
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situated in Anand, Kheda and Ahmedabad District. It is proud to be the first co-operative sector in the country distributing piped natural gas for domestic, commercial and industrial purpose presently having network in Anand city and other neighboring villages like Bakrol, Gana, Kanjari, Karamsad, Mogri, Vallabh Vidhyanagar and Vitthal Udhyognagar and having 12,600 domestic customers, 350
commercial customers and 105 industrial customers. It is noteworthy that this respondent is carrying out entire activity with an objective of keeping possible thin profit-margin and to facilitate the people as same is an initiative of a cooperative society in line of successful cooperative movement for milk federation. The daily total consumption for all this unit/connection is about 90,000 standard cubic meters.
16.2
From year 1999 to year 2004, the supplier of natural gas to
the CGSML was Interlink Petroleum Limited through upstream MS pipe network from Bavla to Bakrol. Interlink Petroleum Limited had production-sharing contract with Ministry of Petroleum and Natural Gas. In the year 2004, the supply of gas has been stopped due to water logging in the well. Hence, thereafter, the respondent No. 10 entered into the contract with Gujarat State Petroleum Corporation limited (for short "GSPC"). Since 2004, this respondent is receiving gas from GSPC through transportation by Gujarat State Petronet Limited. There was no CNG station between Ahmedabad and Vadodara, therefore, the CGSML installed CNG station at 11-GIDC, Vitthal Udyognagar in February 2008. The said is a joint venture under
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the franchise with GSPC Gas Co. Ltd.
16.3
CGSML has signed an MoU with GSPC at Global Investors
Meet, Vibrant Gujarat 2009 on 3rd July 2008 with a proposal to expand the network of the development projects to the extent of Rs. 13.00 Crore. As a part of this MOU, laying of 15 Kms. M.S.Pipe line from village Gana to National Highway at village Vaghasi is under Final stage of commissioning for supply of natural gas to Bal Amul plant and surrounding industries & villages on National Highway No 8 and further development of MDPE Network.
16.4
This respondent has entered into agreement with GSPC on
1st January 2009 for sale-purchase of gas wherein it is mentioned that CGSML will be entitled to have 85,000 standard cubic meter of gas per diem with permission of 10% variation in said allotment. It is further provided, inter alia, that for overdrawn quantity, the CGSML shall pay 'Spot Gas Price' which is more than normal rate. In fact, even as on today, the CGSML is in need of 1,07,000 standard cubic meter of gas per diem and this figure may rise much more than this. But the quantity mentioned in the agreement is restricted by the GSPC under excuse of paucity of quantity/stock. This respondent has bright chances for expansion of the establishment of gas supply network but quantity crunch is one of major factors with which the CGSML has to be satisfied with presently available infrastructure. Availability of more allocation of gas will be helpful to this respondent
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to satisfy the requirement of more consumers at reasonable rates.
17.
The
respondent
No.11,
Hindustan
Petroleum
Corporation
Limited also filed their affidavit in reply, taking up the following defence:
17.1
The Respondent Corporation is a Public Sector Undertaking
engaged in Refining of Crude Oil and marketing, sale and distribution of petroleum products throughout India. In addition to marketing, distribution and sale of other petroleum products HPCL is also engaged in the business of sale of Compressed Natural Gas (CNG) by establishing CNG stations. The sourcing of Natural Gas is done from Reliance Industries Limited., (RIL) GSPC Gas Co. Ltd., GAIL Gas Co. Ltd., Gujarat Gas Co. Ltd. etc..
17.2
In the State of Gujarat, it is operating a number of CNG
stations to meet the requirements of vehicular traffic. The functioning of the said stations are as under :-
Facilities for supply of Ahmedabad city.
CNG to Motoring vehicle within
a)
A 3 k.m. long Feeder Cross Line is put up from HPCL's Tap off point at Valad Village on the Baroda-Kalol Pipeline which is connected to a mother station at Nana Chiloda, Naroda, Ahmedabad. The Tap off point is installed with a metering unit for measuring the actual quantity of gas
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supplied to the Mother Station. b) On receipt of Natural Gas through the pipeline the said gas is Compressed by compressors to make Compressed Natural Gas (CNG). Thereafter the same is distributed as under:CNG gas is filled in mobile cascades at the Mother Station at Nana Chiloda, Naroda, Ahmedabad and sent to the daughter booster stations (Retail Outlets) stored in stationary cascades for supply to motoring vehicles. The CNG Mother Station acts as the main location for all operations, accounting and monitoring of all activities carried out at Mother Stations and daughter stations. The Daughter Booster Stations are provided with booster, compressors, stationary cascades for storing CNG for a short period which may be dispensed directly to the vehicles. The CNG machinery at daughter stations are maintained by the mother station. 17.3 As per the letter dated 13/5/2009 under ref. No. L-12014/16/08 issued by the Ministry of Petroleum & Natural Gas Govt. of India, HPCL is allotted 49383 SCMD of Natural Gas from Reliance Industries Limited's KG D6 Basin Field under the Gas Sales Purchase Agreement entered into with M/s. Reliance Industries Limited. The CNG is being procured by HPCL from RIL since October, 2009.
17.4
Due
to
continuous
increase
in
demand
on
CNG
in
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Ahmedabad city, it has continuously taking up with MOP&NG for increase in allocation from 49383 SCMD by at least 16000 SCMD. Besides, RIL is not able to supply full allocated quantity of 49383 SCMD at a number of occasions on account of lower production in the KG D6 Basin Field. Therefore, HPCL is constrained to purchase SPOT gas of 0-22000 SCMD from GSPC Gas Co Ltd and/or GAIL Gas Ltd at a substantially higher price than the price of KG D6 Gas, to meet the demands of the Motoring Public within Ahmedabad city.
17.5
Apart from the above, the respondent No.11 is also selling
CNG to motoring vehicles through other Retail Outlets as submitted below.
A)
Ahmedabad Retail Regional Office : Respondent is supplying CNG through its 10 nos of Retail outlets situated outside the city of Ahmedabad by procuring CNG from GSPC Gas Co Ltd. The sale of CNG for the period 2010/11 is 6071 MT through these 10 nos of Retail Outlets.
B)
Vadodara Retail Regional Office: Respondent No.11 is supplying CNG to motoring vehicles through its 22 nos of Retail Outlets under Vadodara Retail Region. During the financial year 2010/11, Respondent has procured 6865 MT of CNG from GSPC Gas Co Ltd, GAIL Gas Ltd, Gujarat Gas Co Ltd etc for supplying
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through above said 22 nos of retail outlets.
C)
Rajkot Retail Regional Office: Respondent No.11 is supplying CNG to motoring vehicles through its 8 nos of Retail outlets under Rajkot Retail Region. During the financial year 2010/11, the respondent No.11 has procured 4372 MT of CNG from GSPC Gas Co. Ltd. for supplying through above said 8 nos of Retail Outlets.
17.6
The number of vehicles using CNG has increased in the State
of Gujarat. HPCL has accordingly proposed to expand and setup more CNG stations. Thus, there is a need of additional requirement of Natural Gas.
17.7
HPCL does not have its own source of production of Natural
Gas but supply to motoring vehicles made on allotment of Natural Gas by Ministry of Petrolum and Natural Gas and also by procuring additional requirement from various companies as and when required. It is submitted that the distribution and supply of CNG Gas to the motoring vehicle customers is being done as mentioned in detail as above.
18.
The petitioner has filed the affidavit in rejoinder to the affidavit
in reply filed on behalf of the respondent no.1 and has taken up the
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following stance:
18.1
The claim of the respondent no.1 that the petition is not
tenable in facts as well as in law is unfounded and bad in law in view of the principle enunciated by the Supreme Court of India in S. P. Gupta v. Union of India (1981) Supp SCC 87 where the Court authoritatively defined Public Interest Litigations in the Indian context and held that it would relax rules of locus standi and entertain cases by third persons if the petition was in public interest by public spirited individuals. The Court held: It may now be taken as well established that where a legal wrong or legal injury is caused to a person or to a determinate class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law , any member of the public can maintain an application for an appropriate direction, order or writ in the High Court under Article 226. and whenever there is a public wrong or a public injury caused by an act or omission of the State or a public authority which is contrary to the Constitution of the law, any member of the public action bona fide and having sufficient interest can maintain an action for redressal of such public wrong or public injury. The strict rule of standing which insists that only a person who has suffered a specific legal injury can maintain an action for judicial redressal is relaxed and a broad rule is evolved
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which gives standing to any member of the public who is not a mere busybody or a meddlesome interloper but one who has sufficient interest in the proceeding.
18.2
The present petition is not motivated by any other
consideration other than pure public interest and is filed pro bono publico; further, probity in governance through this petition is a sine qua non for an efficient system of administration. Furthermore, the international tendency is suggestive of this trend. In Australia, for protecting environment, the Australian High Court, through its decision in Oshlack v. Richmond River Council, reported in (1998) 193 CLR 72, has diluted the principle of aggrieved person and expanded locus in public interest litigations following the decision of the United States Supreme Court in Brown v. Board of Education, reported in 347 US 483. The aforementioned decisions of various Superior Courts from around the world have been relied upon by the Supreme Court of India while delimitating the horizon of locus in public interest litigations in its decision in the case of State of Uttaranchal v. Balwant Singh Chaufal, reported in (2010) 3 SCC 402.
18.3
The fact stated in paragraph 9 (page 249) of the Affidavit in
Reply on behalf of the respondent No. 1 that the problem of pollution being extremely serious in Delhi and nine other cities, APM gas was allocated to CGD entities for those cities is not denied. In response to
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the said averment, the petitioner relied upon the observations made by the Supreme Court of India in the case of M.C. Mehta v. Union of India & Ors., reported in (2002) 4 SCC 356 which were illustrative and cannot be construed to be exhaustive in nature; thereby, including within its purview, the mushrooming of pollution in any and all cities of India from the date of delivery of judgment. No APM gas has been allocated to CGD entities in Gujarat, namely, GSPC Gas Co. Ltd., Adani Gas Limited, Charotar Gas Sahakari Mandali Ltd. and Sabarmati Gas Ltd. and hence, supply of CNG segment is being met through expensive RLNG.
18.4
The decision of the Supreme Court of India in M. C. Mehta v.
Union of India &Ors., reported in (2002) 4 SCC 356 read with the decision of that Court of India in Reliance Natural Resources Limited v. Reliance Industries Limited, reported in (2010) 7 SCC 1 read in consonance with Article 141 of the Constitution of India expressly invalidates the respondents reliance on the decisions of the Bombay High Court and Delhi High Court in Writ Petition No. 3738 of 2011 and Writ Petition No. 3106 of 2011 respectively in paragraph 37 of the Affidavit in Reply by respondent No. 1.
18.5
The plea of the Government that CNG is in short-supply, and
that it is unable to supply adequate quantity is incorrect, and this is clearly a deliberate attempt to frustrate the orders passed by the Supreme Court of India in the case of M. C. Mehta v. Union of India &
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Ors., reported in (2002) 4 SCC 356. The indigenous produce is far in excess of what is supplied for domestic consumption and to the transport sector. It is only a small fraction of CNG produced in India, which is earmarked for non-industrial use, whereas an overwhelming quantity is allocated to industries. The Gujarat has become the highest Natural Gas consuming industrial hub, as the overall industrial environment is conducive for development, the consumption of Natural Gas is high, thereby, leaving negligible quantity of Natural Gas for domestic and vehicular consumption. Therefore, the
Government, in not prioritizing and diversifying the unutilized Natural Gas from non-priority sectors to the CGD for its domestic and vehicular usage, is in contravention of the directions issued by the Supreme Court of India in the case of M. C. Mehta (Supra).
18.6
United States Supreme Court in the case of Illinois Central
Railroad Co. v. People of the State of Illinois, reported in 146 US 387 originally enunciated the principles of Public Trust which came to be accepted and elaborated by the Supreme Court of India in the case of M. C. Mehta v. Kamal Nath, reported in (1997) 1 SCC 399 where the Court observed that The Public Trust Doctrine primarily rests on the principles that certain resources like air, sea, waters and the forests have such a great importance to the people as a whole that it would be wholly unjust to make them as subject
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of private ownership. The said resources being a gift of nature., they should be made State freely is a available trustee of to all everyone natural irrespective of the status of lifeThe resources which are by nature meant for public use and enjoyment, public at large is beneficiary of the sea-shore, running waters, airs, forests and ecologically fragile lands.
18.7
Certain
principles
were
vocalized
in
the
Stockholm
Conference of 1972, giving broad parameters and guidelines for the purposes of sustaining humanity and its environment and Principle 11 of the Declaration was appreciated and incorporated in Indian jurisprudence by the Supreme Court of India through its decision in the case of Essar Oil Ltd. v. Halar Utkarsh Samiti, reported in (2004) 2 SCC 392, where the Court reiterated the importance of maintaining a balance between economic development on the one hand and environment protection on the other.
18.8
Around the world, there has been a contemporary trend of
the concept that rights to a healthy environment and to sustainable development are fundamental human rights implicit in the right to life. The Supreme Court of India was one of the first few Courts to develop the concept of right to healthy environment as part of the right to life under Article 21 of the Constitution of India through its
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decision in the case of Bandhua Mukti Morcha v. Union of India, reported in (1984) 3 SCC 161, which was reiterated by the Court in the case of Andhra Pradesh Pollution Control board v. M. V. Nayudu, reported in (2001) 2 SCC 62.
18.9
Vide the 42nd Constitutional Amendment, Article 48-A was
inserted in the Constitution in Part IV stipulating a mandate on the State to protect the environment. The most vital necessities, namely, air, water and soil, having regard to right to life under Article 21 cannot be permitted to be misused and polluted so as to reduce the quality of life of others. The approach of the Supreme Court of India has been liberal towards ensuring social justice and protecting human rights and in the case of M. C. Mehta v. Union of India, reported in (1987) 4 SCC 463 the Court held that life, public health and ecology has priority over unemployment and loss of revenue.
18.10
Supreme Court of India in the case of Dr. B. L. Wadhera v.
Union of India, reported in (1996) 2 SCC 594, has categorically stated that the citizens have the constitutional as well as statutory right under the Air (Prevention and Control of Pollution) Act, 1981 to live in a clean city.
18.11
In the case of Delhi Transport Department, Re, reported in
(1998) 9 SCC 250, the Supreme Court of India, while showing concern for the air pollution in Delhi held that precautionary principle which
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is a part of the concept of sustainable development has to be followed for controlling pollution. The Court also held that there existed a constitutional mandate to control and curb air pollution.
18.12
Under the precautionary principle as vocalized by the
Supreme Court of India in the case of Vellore Citizens Welfare Forum v. Union of India, reported in (1996) 5 SCC 647, it cannot be gainsaid that permission to use automobiles has environmental implication and thus any auto policy framed by the government must therefore necessarily conform to the constitutional principles as well as overriding statutory duties cast upon the Government under the Environment (Protection) Act, 1986.
18.13
Assuming without admitting that there is a short supply of an
essential commodity, the priority must be given to public health, as opposed to the health of the balance sheet of a private company. To enable the industries to cut their losses or make more profit at the cost of public health is not a good sign of governance and this is contrary to the mandate of Article 39(e), 47 and 48-A of the Constitution of India.
18.14
It has been made clear that in our constitutional set-up, the
orders of the Supreme Court could not be nullified or modified or in way modified by any administrative decision of the Government.
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18.15
In India, the concern for environmental protection has not
only been raised to the status of fundamental law of the land but it is also wedded with human rights approach and it is now well established that it is the basic human right of every individual to live in a pollution free environment with full human dignity.
18.16
Supreme Court of India in the case of Olga Tellis v. Bombay
Municipal Corporation, reported in (1985) 3 SCC 545 enunciated that
"Life", as observed by Field, J. in Munn v. Illinois, (1877) 94 U.S. 113, means something more than mere animal existence and the inhibition against the deprivation of life extends to all those limits and faculties by which life is enjoyed. This observation was quoted with approval by this Court in Kharak Singh v. The State of U.P., [1964] 1 S.C.R. 332. 18.16.1 The abovementioned principle has been upheld,
appreciated and reiterated recently by the Supreme Court of India in the case of Consumer Education and Research Centre & Ors. v. Union of India & Ors., reported in (1995) 3 SCC 42.
18.17
In the premises aforesaid and considering the judgments of
the Supreme Court of India and various other Courts around the world and after considering the facts and circumstances of the case, this Court under its prerogative powers under Article 226 of the
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Constitution of India may be pleased to grant the reliefs prayed for by the petitioner in the petition and direct the respondent No. 1 to give priority to the transport sector, including private vehicles in the State of Gujarat with regard to the allocation of CNG and the said direction would be in conformity with the directions issued by the Supreme Court of India in the case of M. C. Mehta (Supra).
19.
In the other writ petition, i.e. WP [PIL] No. 54 of 2011 filed by
the Gujarat Rajya Auto Rickshaw Federation and others, they have prayed for the following reliefs:
(A)
to direct the Union of India to consider and allocate APM
gas and / or KG D6 gas to the Local Distribution Companies operating in the State of Gujarat in adequate quantities ; (B) to direct the Union of India and / or the State of Gujarat to
take appropriate measures to regulate the pricing of the CNG sold by LDCs so that the benefit of the lower pricing of APM gas and KG D-6 gas percolates to the end consumers; (C) pending the hearing and final disposal of this Special Civil
Application, to direct the Central Government to consider the issue of allocation of APM gas and / or KG D6 gas to the LDCs operating in Gujarat and to allocate the said gas to the LDCs operating in Gujarat ; (D) pending the hearing and final disposal of this Special Civil
Application, to direct the Union of India and / or the State of
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Gujarat to take appropriate measures to regulate the pricing of the CNG sold by LDCs so that the benefit of the lower pricing of APM gas and KG D-6 gas percolates to the end consumers; (E) to grant such other and further reliefs as this Honble
Court deems fit and proper in the facts and circumstances of the case; (F) to award costs of this petition.
20. thus:
The case made out by these petitioners may be summed up
20.1
The Petition is filed in the general interest of the autorikshaw
owners and operators of the State of Gujarat and in the interest of public at large.
20.2
The
petitioner
no.1
is
registered
Association
of
Autorickshaw Owners of the State of Gujarat, registered under the provisions of the Trade Unions Act, 1926. The petitioner No. 2 is the Chairman of the Federation. The petitioner No. 3 is the General
Secretary of the Federation. The Federation is formed for protecting the interest and the welfare of the members of the Federation. The Association was registered on 19.12.2005 bearing Registration No. G 6461.
20.3
The federation had decided to file a public interest litigation
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in view of the fact that the prices of CNG are frequently increased and the same is adversely affecting the autorikshaw owners and operators.
20.4
The petitioners by this petition intends to bring to the notice
of this Court, the inaction or apathy on the part of the Union of India of not allocating APM (Administered Price Mechanism) gas or gas from the KG D6 fields to the Local Distribution Companies (hereinafter referred to as the LDCs) operating in the State of Gujarat which sell CNG (Compressed Natural Gas). The APM gas and the gas from KG D6 fields allocated through Empowered Group of Ministers of the Union of India, is priced much lower than other gas that is currently available in the market. On account of non- allocation of such APM gas or KG D6 field gas to the LDCs in Gujarat, the LDCs are forced to buy R-LNG (Regasified Liquid Natural Gas) i.e. imported from outside India. The prices of such R-LNG are usually double than the price of APM gas or gas from KG D6 fields. The result is that the price of CNG in Gujarat is much higher than that of CNG sold in other parts of India. The LDCs are mainly engaged in sale of CNG for use in vehicles and for supply and sale of PNG (Piped Natural Gas) for domestic and commercial establishments in various cities. The table giving the price of gas of KG D6 fields, APM and R-LNG is given below : Description Basic Price ($/mmbtu) Marketing mar ($/mmbtu) Gas Price (Rs/mmbtu) KG D 6 4.205 0.135 199.64 APM 4.2 0.11 198.2 4 RLNG 8.19 0.20 386.22
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Basic Gas Price (Rs/SCM)
6.62
6.57
12.80
20.5
The second aspect of this Public Interest Litigation is that
at present many LDCs which are being allocated APM gas or KG D-6 gas at a cheap rate, do not pass on the price benefit to the end customers and retain the benefit for themselves. The petitioner also seeks appropriate directions to the respondents for taking appropriate measures to regulate the pricing of the CNG sold by LDCs so that the benefit of the lower pricing of APM gas or KG D-6 fields gas percolates to the end consumers.
20.6
Introduction to APM gas, KG D-6 gas, NELP (New
Exploration and Licensing Policy) and R-LNG (Regassified Liquid Natural Gas imported into India) :
20.6.1
Prior to the New Exploration and Licensing Policy (for
short NELP) adopted by the Government of India in the year 199798, the exploration blocks were allotted to ONGC and Oil India Limited (OIL) on nomination basis by the Government of India. The
Government of India had therefore power to ask the said companies to sell gas to priority sectors at a lower price than the market price. Prior to the year 1987, the gas prices were fixed by ONGC and OIL. The gas prices, thereafter, were fixed by the Central Government w.e.f. 30.01.1987. The allocation of the gas was also done by the
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Government to the priority sectors. This gas i.e. allotted by the Government is known as APM gas (Administrated Price Mechanism). Currently, the price of APM gas is given below :
Customers Gas Price Outside North East INR 7666.67/MSCM (including Royalty) North East INR 4600/MSCM (including Royalty)
Gas Price ($/MMBTU) 4.2* 2.52
The Sector wise allocation of APM Gas in India is as indicated in the table below : APM Gas Allocation in India Sr. No. 1 2 3 4 5 Name of Sector Power Sector Fertilizer Sector Refinery Sector City Gas Distribution Sector Other Sectors TOTAL Approximate Qty. in MMSCMD 21.69 18.42 3.06 (CGD) 2.43 6.38 51.98
APM gas has been allocated to following CGD companies: Entity Indraprastha State Gas (Delhi & NCR) Approximate in MMSCMD 2.70 1.70 0.46 4.665
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Qty.
Ltd. Mahanagar Gas Ltd. Maharashtra CGDs of GAIL India Ltd. TOTAL
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20.6.2
Companies like Indraprastha Gas Limited, secured APM
gas from Ministry of Petroleum and Natural Gas, Government of India (MoPNG) for expanding their gas distribution network in NOIDA including Greater NOIDA, Gurgaon and Faridabad in the year 2004-05. However, during the same time frame Adani Gas Limited (erstwhile Gujarat Adani Energy Limited) which begun CGD operations in Ahmedabad during 2004-05 was not allotted any APM gas in spite of Ahmedabad being in the list of 16 cities identified by the Bhure Lal Committee.
20.6.3
In order to accelerate the exploration activities in the
country, the Government of India with Directorate General of Hydrocarbons (DGH) as a nodal agency introduced NELP in the year 1997-98 and started allocation of exploration blocks under NELP to National Oil Companies (NOCs) as well as other private companies and foreign companies through a transparent and international bidding process. Till date, nine licensing rounds have been held under NELP.
20.6.4
Producing Sharing Contracts (PSCs) are signed by the
Government with the awardee companies under NELP, which stipulates sharing of profit petroleum with Government and other terms for carrying out exploration and development activities. Block KG-DWN-98/3 (KG-D6) located in the Krishna-Godavari Basin was
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awarded to the consortium of Reliance Industries Limited (90%) and NIKO Resources Limited, Canada (10%) in June, 2000 during NELP I round of bidding. Gas produced from this block is referred to herein as KG D-6 gas. Producing Sharing Contracts as well as the Oil Fields (Regulation & Development) Act, 1948 have provisions for optimal exploitation of hydrocarbon resources of the country including provisions of penalty for unfinished work.
20.6.5
Apart from the domestic gas, which is produced, by ONGC
and Oil India Limited from blocks awarded under nomination basis and the blocks awarded to different companies under the NELP, for meeting the demand of gas, additional gas is imported into India by way of LNG i.e. (Liquified Natural Gas). After the import, the LNG has to be regasified at the regasification terminal. After the LNG is regasified, the same is known as R-LNG (Regasified Liquid Natural Gas). Currently, two LNG receiving and re-gasification terminals are operational in India, namely, Petronet LNG Limited (for short PLL) at Dahej (10.0 MMTPA) and Shell Hazira LNG Terminal (for short HLPL) (3.7 MMTPA) at Hazira. PLL is the first Indian company to begin the import of LNG from Qatar in 2004. PLL signed a contract with RasGAs, Qatar in July, 1999 for import of 5 MMTPA LNG for a period of 25 years. As per the contract, the supply of 5 MMTPA LNG commenced in 2004 at a pricing formula based on JCC Crude Oil. Further, another 2.5 MMTPA LNG is procured by PLL from RasGas supplies from October, 2009 and its price is also linked to JCC prices. For sale of R-LNG, PLL
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has entered into an independent Gas Sale Purchase Agreements (GSPA) with GAIL India Limited (GAIL), Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) (collectively known as PLL Offtakers). These PLL Offtakers in turn sell such RLNG to various customers across India, including Gujarat. HLPL has a merchant
terminal at Hazira and LNG sourced on Spot basis from international markets is brought at such terminal based on market requirement. The approximate price of RLNG (ex-terminal) * * from PLL, Dahej = 7 8 $/MMBTU from HLPL, Hazira = 10 12 $/MMBTU
In addition to the above, LNG is also being sourced on spot basis from international markets by PLL, HLPL and other marketers like GAIL and Gujarat State Petroleum Corporation Limited.
20.7
Bhure Lal Committee was appointed by the Supreme
Court of India for making report on pollution in the country. Bhure Lal Committee made its report wherein it was shown that Respirable Suspended Particulate Matter (RSPM) levels in 16 cities of India, namely Agra, Ahmedabad, Kanpur, Solapur, Lucknow, Jharia,
Bangalore, Chennai, Hyderabad, Mumbai, Varanasi, Faridabad, Patna, Jodhpur, Pune and Kolkata are alarming. The report observed that air pollution is a serious problem and measures were required to be taken immediately. The report of the Bhure Lal Committee was put before the Supreme Court of India in Writ Petition (Civil) No. 13029 of 1985 in
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the case of M C Mehta Vs. Union of India. The Supreme Court of India had also issued notices to the State of Gujarat and other States and directed them to draw a plan for lowering the rate of RSPM level in the aforesaid cities. As per the recommendations of the Bhure Lal Committee and the policy of the Central Government, CNG is to be promoted as the clean environment fuel for the transportation sector. Bhure Lal Committee had recommended usage of CNG for
transportation sector for 16 cities for control of pollution. Ahmedabad was amongst the said 16 cities. The Supreme Court had issued directions to the respective Governments for mandatory conversion of public transport system to CNG. In Gujarat, the conversion to CNG was based on its own initiative.
20.8
The Empowered Group of Ministers (for short EGoM)
have held meetings on various dates for deciding, inter alia, allocation of gas to CGD segments (City Gas Distribution) from RIL KG D-6. In the meeting held on 28.05.2008, the EGoM had decided that maximum of 5 MMSCMD gas would be made available to CGD projects for supply of PNG to households and CNG to transport sector from RIL KG D-6. However, in the meeting held on 23.03.2009, it was decided that supply to CGD sector would commence when the total supply of RIL KG D6 fields would reach 35 mmscmd, which was likely by July 2009. The EGoM have held a view that the total requirement of CGD entities for natural gas for PNG and CNG by July 2009 might be only around 1 mmscmd. Hence, the EGOM took a view that the balance
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quantity of around 4 mmscmd would be unutilized and the same would be supplied to the power sector.
20.9
It is to be noted there is no clarity on estimation
methodology applied for deriving total requirement of natural gas for PNG & CNG segment or how such total requirement of entities would be 1 MMSCMD by July 2009.
20.10 Table below :
The CNG Prices in Delhi and Mumbai are given in the
Name of the entity Indraprastha Gas limited (IGL) Mahanagar Gas Ltd (MGL) 20.11
Name of cities NCT of Delhi Mumbai
Price of CNG (Rs per kg) 29.00 31.47
Source of Natural Gas APM + KG D6 APM+ KG D6
The company-wise sale price of CNG in various cities of
Gujarat is given below : Name of cities Operating in Varies cities in Gujarat Surat, Bharuch & Ankleswar Ahmedabad and Vadodara Vadodara Price of CNG (Rs per kg) 34.45 35.25 37.16 35.25
Name of LDC GSPC Gas Company Ltd Gujarat Gas Company Ltd (GGCL) Adani Gas Ltd (AGL) GAIL
Primary Source of Natural Gas RLNG Domestic gas and RLNG RLNG RLNG
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20.12
As can be seen from the aforesaid tables, the sale
price of CNG in the cities of Gujarat is much higher than the price in Delhi and Mumbai. The same is on account of allocation of APM gas and KG D6 fields gas to the LDCs operating in the cities of Delhi and Mumbai.
20.13
The table giving the allocation of KG D6 gas to various
LDCs is given below : Name of LDC State KG D6 gas allocation on (Firm basis) In MMSCMD 0.309 0.370 0.078 0.015 0.013 0.049 0.834
Indraprastha Gas limited (IGL) Mahanagar Gas Ltd (MGL) Sabarmati Gas Limited (Stake of BPCL) Green Gas Ltd Avantika Gas Ltd HPCL Total 20.14
Delhi Maharashtr a Gujarat U.P. M.P. Gujarat
The petitioners had approached their advocate to file this
petition as a public Interest litigation as the autorikshaw owners and operators were adversely affected by frequent rise of CNG prices. The some of the facts pleaded in this petition were to the knowledge of the said advocate and some of the facts were sourced by the advocate of the petitioners who has filed this petition.
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20.15
The petitioners have made several representations in
respect of the subject matter of this petition to various authorities. Petitioners have written letters dated 26.11.2010 and 02.02.2011 to the Chief Minister of Gujarat. Petitioners have written letter dated 02.02.2011 to the Mr. Saurabhbhai Patel, Minister of Energy, Gujarat Government. Petitioners have also written letter dated 21.02.2011 to the Home Minster, Gujarat Government. Despite various
representations, no action is taken by any of the authorities.
20.16
The present petition is filed on the following amongst other
grounds :
20.16.1
One of the major issue under contention here is that
demand of CGD entities authorized or promoted by Central PSUs was only considered, thereby leaving out entities in Gujarat who were still awaiting authorization under PNGRB Act. CGD entities promoted by Central PSUs received authorizations from MoPNG , while non Central PSU entities like Adani Gas Limited, Gujarat Gas Company Limited and GSPC Gas Co. Ltd. had to apply to PNGRB for their extensive networks spread across the State.
20.16.2
Government of India has also allocated gas from KG
D6 fields to CGD companies promoted by Central PSUs even in areas where network is yet to be developed. On the other hand, Gujarat which has a network of CNG stations that creates countrys only CNG
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corridor was left out owing to pending authorization under PNGRB Act.
20.16.3 was no
Prior to the PNGRB Act being brought into force there legislation nor any legal requirement for obtaining
authorization by any entity or any person for laying, building, operating any gas pipeline or local gas distribution network. CGDs in Gujarat took the initiative of developing distribution networks across the State to pass on the benefits of natural gas to the masses.
20.16.4
Such rigidity shown by the Central Government in
allocation of Indias natural resources has led to a situation wherein the masses in Gujarat are facing the brunt of increasing RLNG prices which are affected even by global events like civil unrest in Middle East countries or natural calamities worldwide.
20.16.5
Currently, in Gujarat, the requirement of gas for CNG
purposes is 1.5 MMSCMD.
20.17
The petitioners submit that the Central Government has
not been allocating APM gas or gas from KG D6 fields to LDCs which do not have authorization of the Central Government. The petitioners submit that Petroleum and Natural Gas Regulatory Board Act, 2006 (for short PNGRB Act) was enacted by the Central Government and was brought into force on 01.10.2007, except for notification of
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Section 16. Section 16 was subsequently brought into force from 15.07.2010. The petitioners submit that the provisions of the PNGRB Act require any entity to obtain authorization if it intended to lay, build, operate or expand a common carrier or a contract carrier or a city or local gas distribution network. Section 16 of the PNGRB Act provides for granting authorization to an entity. Prior to the PNGRB Act being brought into force there was no legislation nor any legal requirement for obtaining any authorization by any entity or any person for laying, building, operating any gas pipeline or local gas distribution network. No policy was framed by the Central
Government in its executive power to require any person to obtain authorization/licence of the Central Government before laying any gas pipeline or local gas distribution network.
20.17.1
Indraprastha Gas Limited and Voice of India (Non
Government Organisation) had filed Writ Petition (C) No. 9022 of 2009 & Writ Petition (C) No. 8415 of 2009 respectively in the High Court of Delhi against the Petroleum and Natural Gas Regulatory Board (for short PNGRB) and Union of India, for a relief that PNGRB has no right to grant any authorization and restrain any entity from laying, building and operating any gas pipeline or local gas distribution network, in view of the fact that Section16 had not been brought into force. The said contention was accepted by the High Court of Delhi and the petitions were allowed by its common order dated 21.01.2010. The petitioners therefore submit that requirement
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to obtain authorization only arises after 15.07.2010 when Section 16 has been brought into force and not there before. Section 16 also provides that an entity laying, building, operating or expanding any gas pipeline or a natural gas distribution network immediately before the appointed day shall be deemed to have authorization, subject to the provisions of that chapter. Many LDCs operating in Gujarat have deemed authorization under section 16.
20.17.2
The LDCs operating in Gujarat and elsewhere have
filed applications to the PNGRB for authorization. Such applications are pending on account of an interim order dated 15.03.2010 of the Honble Supreme Court passed in Special Leave Petition (Civil) No. 5408 of 2010 and other allied matters filed against the aforesaid order of the Delhi High Court. The interim order dated 15.03.2010 of the Supreme Court is reproduced below :
The Board may process all pending applications and may not pass final orders.
20.17.3
It is to be noted that section 16 was notified and
brought into force on 15.07.2010, after the order of the Delhi High Court dated 21.01.2010 and the interim order dated 15.03.2010 of the Honble Supreme Court. Interlocutory Applications have been filed in the Honble Supreme Court to vacate/modify its interim order in view of the fact that section 16 now has been brought into force. The
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said Interlocutory Applications are pending. The Honble Supreme Court has fixed the main matters for final disposal on 05.05.2011.
20.17.4
The Central Government is not allotting APM gas or
gas from KG D6 fields to LDC which do not have authorization given by the Central Government. The said action of the Central Government is unreasonable and arbitrary and contrary to the general public interest. Non authorization should not be a criteria for allocation of gas to companies who have developed CGD networks without any enforcement or compulsion from the Government and have done so purely for the benefit of masses.
20.18
Though in the meeting of EGoM dated 28.05.2008, it was
decided that out of initial 40 MMSCMD, a maximum of 5 MMSCMD would be allocated to CGD projects and PNG, only 0.87 MMSCMD gas (including gas allocated by EGoM to CGDs who are yet to start operation) from KG D-6 is allocated by the Central Government to the said sector. The gas requirement of CGD projects in Gujarat have gone up substantially in the recent times. The said sector genuinely requires greater allocation of APM gas or KG D-6 gas. The said sector is being neglected by the government. Despite having decided to allocate 5 MMSCMD to CGD projects, the government has failed to do so.
20.18.1
It may also be noted that sectors like Steel have also
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been allocated gas by the EGOM from KG D6 fields in spite of the fact that such companies are in a better position than CGD companies to pay for gas at higher prices. While companies in CGD segment require gas that is more stable and reasonably priced as the masses are affected by prices charged by CGD companies.
20.18.2
For using CNG for transport, a conversion kit needs to
be installed in the vehicle. Thousands of Auto Rickshaw owners made substantial investments in such conversion kits assuming CNG prices would remain competitive and stable. Apart from its environmental impact, it was also expected that CNG would be an affordable fuel for the common man.
20.18.3
However, non allocation of gas from any domestic
sources and continuous increase in price of RLNG, is forcing the CGD companies in Gujarat to increase gas prices for domestic, commercial and transport segment on a regular basis and the same is in turn adversely affecting the common man. Increase in cost of public transport coupled with increase in price of domestic PNG is burdening the common man with costs which would have been avoided had these CGD companies been allocated APM or KG D6 fields gas. The higher price of CNG and the frequent increase in its price is also adversely affecting the autorikshaw owners and operators. Their profit margins are getting squeezed. The autorikshaw owners and operators form the economically lower strata of the society. Their
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interest is required to be protected by this Honble Court by appropriate intervention. The subject matter of this petition also concerns and affects the common man. This petition is therefore filed as a Public Interest Litigation.
20.19
The Central Government or the State Government needs
to frame an appropriate policy or pass enact appropriate law to regulate the pricing of the CNG sold by the LDCs. At present it is happening that though a particular LDC may be in a position to market CNG cheaply on account of allocation of APM gas or KG D-6 field gas, the LDC does not pass the benefit to the customer and retains the benefit for itself. The same defeats and frustrates the very object and purpose of allocation of APM gas or KG D-6 gas at a cheaper rate. Suitable directions are required to be given by this Honble Court in larger public interest to the Central Government and/or the State Government to takes appropriate measures to regulate the pricing of the CNG sold by LDCs so that the benefit of the lower pricing of APM gas or KG D-6 gas percolates to the end consumers.
21.
The said application was separately contested by the Union of
India, respondent no.1 and its contentions may be summed up thus:
21.1
It appears that the petitioner no.1 is an Association of
Rickshaw Owners and registered under the provisions of the Trade
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Union Act, and the petitioner nos. 2 and 3 are its office bearers. The petitioners or the members of the petitioner federation are the end users and the facts stated in paragraph no.3 ventilate their
grievances leading to filing of the Public Interest Litigation in view of the fact that the prices of CNG are frequently increased and the same is adversely affecting the rickshaws owners/operators, whereas the prayers made in the petition are different in nature as if the petitioners intend to ventilate the grievances of local distribution companies operating in the State of Gujarat in the matter of consideration and allegations of APM Gas and/or KGD6 Gas and to take appropriate measures to regulate the pricing of CNG sold by local distribution companies. Therefore, it is apparent that the petitioner federation of rickshaw owner intend to canvass the cause of the local distribution companies apparently. The petition is affirmed by Shri Dharmendra B. Brahmbhatt, the petitioner No. 2 and the affidavit sworn in the petition is produced herein below:I Mr. Dharmendra B. Brahmbhatt, Petitioner No.2 herein do hereby on solemn oath and affirmation state that what is stated in paragraph no.1.0, 11.0, 13.0 and 15.0 is true to my knowledge and what is stated in paragraph nos. 2.1 to 2.3, 3.0 to 10.0, 12.0 and 13.0 is stated on information and belief and I believe the same to be true.- Deponent. 21.2 The aforesaid affidavit itself speaks that the entire
controversy raised in the petition by the petitioner is based on the information and belief. However, the source of such information has
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not been disclosed. It is also pertinent to note that the prayer clause in the petition is contained in paragraph no.12. There is no paragraph No.13.0 and 15.0 in the writ petition. It is, therefore, apparent that the petitioners have filed the public interst litigation and the statements made in paragraph No.3 of the petition is also on information and belief as if the petitioners are ventilating the cause and grievance other than what has been stated in paragraph no.3 of the petition and, therefore, apparently the petition filed by the petitioners is espousing the cause of others in the guise of public interest litigation.
21.3
APM gas is produced from nominated fields of National Oil
Companies (NOCs), viz., Oil & Natural Gas Corporation (ONGC) & Oil India Limited (OIL). The allocation of APM gas is given to priority sectors in accordance with the cabinet decision of May, 2005. APM gas is being supplied only to the following categories of consumers at APM prices:a. Power sector consumers. b. Fertilizers sector consumers. c. Consumers covered under court orders. d. Consumers having allocations of less than 0.05 mmscmd. 21.4 In order to rationalize the allocation of APM gas among
various priority sectors and regions, Government of India had constituted Gas Linkage Committee (GLC) in July, 1991 to allocate APM gas. In view of availability of APM gas in the country falling far
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short of the demand and the production projected to decline further in the future, no useful role of the GLC for making gas allocations was envisaged and, as a result, the Government wound up the GLC on November 09, 2005. No APM gas has been allocated since then. It was decided that any new gas available is to be supplied to consumers under purely commercial arrangements between the suppliers and producers outside the ambit of allocations made by the GLC.
21.5
As regards the supply of APM gas to Delhi and Mumbai, it
may be stated that Supreme Court in the case of M.C. Mehta Vs. UOI has held that the problem of air pollution was extremely serious in Delhi and nine others cities, including Mumbai, necessitating supply of CNG to these cities. Accordingly, APM gas is being supplied to City Gas Distribution (CGD) entities, which provide CNG in inter-alia Delhi and Mumbai. In Gujarat, APM gas of (0.159+1.69) mmscmd is being supplied to Gujarat Gas Company Limited (GGCL), which supplies CNG in Ankleshwar, Bharuch and Surat.
21.6
As regards the allocation of natural gas to Gujarat, it may be
stated that out of total APM allocation of 119.51 mmscmd around 24.5 mmscmd has been allocated to Gujarat. Currently, as things stand, no APM gas is available for allocation and therefore, the request for allocation of APM gas cannot be acceded to.
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21.7
After the advent of New Exploration and Licensing Policy
(NELP) era, the production of indigenous gas had increased substantially. The production from KG-D6 Block of RIL-NIKO under NELP was envisaged at level of 60 mmscmd. The Empowered Group of Ministers (EgoM) constituted to decide issues relating to
commercial utilization of Gas produced under NELP, allocated 63.309 mmscmd on firm basis and 30 mmscmd on fallback basis to various priority sectors as stated below:Allocation (mmscmd) Sectors Power Fertilizers CGD Steel Refineries LPG Captive Power Firm 32.677 15.708 1.222 4.19 5 2.594 10 6 Fallback 12 -2.165 Total 44.677 15.708 3.387 4.19 11 1.918 2.594 10
Petrochemicals 1.918
Total 63.309 30.165 93.474 21.7.1 However, the production from KG D6 field started declining from March 2010, and by December, 2010, it had declined to around 50 mmscmd, which was barely enough to meet the already committed firm allocations to the core sectors in the order of priority determined by EgoM i.e., Fertilizer, LPG, Power and CGD and in this order.
21.8
From KG D6 field under NELP, a quantity of 77,593 standard
cubic meters a day (scmd) has been allocated to Sabarmati Gas Ltd.
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for Gandhinagar, Mehsana and Sabarkantha and 49,383 scmd has been allocated to Hindustan Petroleum Corporation Ltd for
Ahmedabad. An allocation of 2,00,000 scmd of KG D6 has been made to M/s. Adani Energy Ltd., for supply of CNG to transport sector in Ahmedabad on provisional basis & the allocation is subject to final status of authorization given to them by PNGRB. Put together, out of a total firm allocation of KG D6 gas of 1.22 mmscmd for CGD sector for the entire country, 0.326 mmscmd has been allocated to Gujarat alone which is around 27% of the total allocation.
21.9
The decline in the production of natural gas from KG D6 has
continued and by March, 2011, the production had fallen to 48 mmscmd. Therefore, in public interest this Ministry decided to fulfil the firm demand of the core sectors viz., Fertilizer, LPG, Power and CGD in that priority. The supply situation worsened further and in November, 2011, the production has fallen to mere 40.8 mmscmd, thereby leading to a cut even in the CGD sector, which is one of the core sector.
21.10
It may be seen from the above that against the firm
allocations of 63.3 mmscmd (of which around 52 mmscmd is for the above mentioned core sectors), the production from the KG D6 field has fallen to around 40.8 mmscmd and is not even sufficient to even meet the firm allocations made by EgoM earlier to the core sectors. As such, no allocation can be made from KG D6 field also.
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21.11
The present total availability of natural gas in the country is
around 166.17 million standard cubic meters per day (mmscmd). Of this, the indigenous gas is only 71 mmscmd. The source-wise details are as follows:
Source ONGC OIL PMT Other JVs KG D6 (1)Total of Domestic Gas Spot R-LNG RLNG (2)Total of Imported gas Total
Average daily availability (mmscmd) in June 2011 50.78 6.63 11.87 3.39 47.17 70.96 21.2 25.13 46.33 166.17
21.12
The Government's endeavour is to accord highest priority to
core sectors in the matter of allocation of gas reflected in the Gas Utilization Policy. The current overall sector-wise supply of the natural gas (including imported RLNG) is as follows:-
Sector Fertilizers Power Sector CGD (Domestic CNG)
Supply (mmscmd) 37.74 61.41 7.9
% of Total supply 22.7% 37.0% 4.8% 0.7%
Court Mandated Customer 1.09
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Shrinkage for Liquid 7.18 extraction LPG etc. Small consumer Having 5.81 allocation <50,000 CGD Commercial Industrial Refineries Petrochemicals Sponge Iron Others & 6.07 19.77 5.67 7.01 4.45
4.3% 3.5% 3.7% 11.9% 3.4% 4.2% 2.7% 1.2%
Internal Consumption- 2.06 pipeline system Total Supply 166.17
21.13
At present no gas is available for allocation and even sectors
such as Power are stranded without any gas. It is true that natural gas is a clean and efficient fuel and the demand for natural gas is growing rapidly in the country. The gap between demand and supply has to be met through imported RLNG, which is more expensive compared to domestic gas. All sectors including the extremely sensitive sectors such as power and fertilizer use imported RLNG to fulfill their requirements of gas. The use of RLNG in the country is set to grow as the domestic demand cannot be met by the domestic gas. As the domestic gas is limited, its allocation is as per well defined policy of the Government and as per the broad following priority:1) Fertilizer 2) LPG 3) Power 4) CGD 5) Other sectors such as steel, Petrochemicals, Refineries,
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etc. 21.13.1 The amount of domestic gas available is distributed as
per the above priority in a rational manner to serve larger public interest. No sector can claim overriding priority which is not in accordance with this Gas Utilization Policy.
21.14
The Government has accorded priority to enhance energy
security of the country. A multi-pronged strategy has been adopted to augment gas supplies and to bridge the gap between supply & demand for the domestic market by intensification of domestic E&P activities, including Coal Bed Methane (CBM), through LNG imports, and new technologies like Underground coal gasification and Natural Gas Hydrate Programme (NGHP). In this context, Government is also trying to ensure import of natural gas through transnational gas pipelines. Present import of natural gas is being pursued from Iran through IPI Gas Pipeline Project and from Turkmenistan through TAPI Gas Pipeline Project.
21.15
The Government has enacted Petroleum and Natural Gas
Regulatory Board Act, 2006 to provide for establishment of Petroleum and Natural Gas Regulatory Board to and regulate, sale of inter alia,
transportation,
distribution,
marketing
petroleum,
petroleum products and natural gas. The Board, either on basis of an application or on suo motu basis, forms an opinion that it is necessary
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or expedient to lay, build, operate or expand a pipeline, it gives wide publicity of its intention to do so and authorizes the entity for the same.
21.16
Supreme Court in the case of Directorate of Film Festivals
and others v/s Gaurav Ashwin Jain and others reported in (2007) 4 SCC 737 has held that-
16. The scope of judicial review of governmental policy is now well defined. Court do not and cannot act appellate authorities examining the correctness, suitability and appropriateness of the neither policy, nor are courts advisers to the executive on the matters of policy which the executive is entitled to formulate. The scope of Judicial review when examining the policy of the Government is to check whether it violates the fundamental rights of the citizens is supposed to the provisions of the Constitution or opposed to any statutory provision for manifestly arbitrary. Courts cannot interfere with policy either on the ground that it is erroneous or on the ground that a better, fairer or wiser alternative is available. Legality of the policy and not the wisdom or soundness of the policies is subject of judicial review. 21.17 The petitioners have failed to establish as to how and which
of the actions of Respondent No.1 is arbitrary, high handed or unreasonable. This Respondent is fully aware that air quality has increasingly become an issue of social concern in the backdrop of increasing industrialization and vehicular pollution. In order to control vehicular pollution, Government of India has formulated the Auto Fuel Policy. The Policy aims to comprehensively and holistically address the
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issue of vehicular emissions, vehicular technologies and auto fuel quality in a cost-efficient manner while ensuring the security of fuel supply. It is endeavour of this Respondent to encourage supply of CNG to the maximum number of cities. In order to attract public as well as private players in city/local natural gas distribution networks
throughout the country, the Government of India has enacted 'The Petroleum and Petroleum and Natural Gas Regulatory Board (PNGRB) Act, PNGRB would undertake inter alia, authorization of city or local natural gas distribution networks.
21.18
As already submitted, Government has formulated Gas
Utilization Policy in larger public interest. However, as already submitted, no indigenous gas is available for allocation. As such, it is not possible to allocate gas to CGD sector in Gujarat. However,
RLNG is being increasingly used by the CGD sector and there is no bar in using this gas.
21.19
This Respondent is fully competent to take policy decision in
larger public interest. The Petitioners cannot claim allocation of gas as a mater of right and neither can they claim for supply of gas at a particular rate or cost.
21.20
In the overall gas portfolio out of 119.51 mmscmd APM
allocation, 26.5 mmscmd has been allocated to Gujarat. It may also be clarified that after revision of APM price in 2010, the price of APM
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gas is almost at par with KG D6 gas. Out of the total firm allocation of 1.222 mmscmd for CGD sector for the entire country, 0.326 mmscmd has been allocated to CGD sector in Gujarat, which is around 27%. It is further submitted that the allocation of gas is made in accordance with the Gas Utilization Policy and it is not for the Petitioner to decide the allocation.
21.21
The facts stated in Paragraph No.6
in the form of
representation made to the Chief Minister of State of Gujarat, is with regard to the representation being made for decreasing the tax and VAT and excise duty charge on CNG by the State of Gujarat and against frequent price rise by M/s. Adani Gas Limited.
21.22
The indigenously produced natural gas can be divided,
based on pricing mechanism, into three major categories, namely-
(i)
Administered
Price
Mechanism
(APM)
gas
from
nominated blocks. (ii) Natural gas produced from pre-NELP blocks (iii) Natural gas produced from NELP blocks 21.23 The other gas which flow into the country is the imported
Regasified Liquefied Natural Gas (RLNG for short) from abroad. All gases are chemically predominantly Methane with small but varying proportions of higher carbon fractions.
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21.24
The gas produced from pre-NELP blocks is sold by the
Contractors in accordance with the provisions of Production Sharing Contracts agreed between Government and the producers.
21.25
From pre-NELP field of Panna-Mukta-Tapti
(PMT),
2.13
mmscmd has been allocated to GGCL and 0.9 mmscmd has been allocated to Gujarat State Petroleum Corporation Limited (GSPCL) for supply to small consumers. At present, no spare gas under pre-NELP block is available for allocation.
21.26
The non-APM indigenous production of natural gas in the
country consists of new production from nominated fields, pre-NELP production and production under NELP. At present production from KG D6 field is around 40.8 mmscmd and is priced at US$4.2/mmbtu. It is single largest indigenously produced natural gas in the country. The price of APM gas has been revised to US$4.2/mmbtu less royalty. In view of this, the argument that APM is cheaper than other gas is not correct. However, the imported RLNG is much more expensive but it is a fact of life that domestic production is much lower than the demand and will have to be met by imported gas.
21.27
It is endeavor of the Government to encourage supply of
Compressed Natural Gas (CNG) to a large number of cities, so as to improve the quality of air and to bring down air pollution. CNG is sold by City Gas Distribution (CGD) Companies ,which are not Central
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Public Sectors Undertakings (CPUs). Development of CGD projects in any area depends upon pipeline connectivity, availability of gas and commercial viability of the project and is processed by Petroleum and Natural Gas Regulatory Board (PNGRB for short). However, as submitted in the background note, no gas is available at present for allocation.
21.28
The petitioners have failed to establish that the allocation of
natural gas made by this Respondent is not in accordance with the Gas utilization Policy. On the contrary, the Petitioners are seeking interference of this Court to ignore the order of priority prescribed in the Gas Utilization Policy, which has been broadly upheld in two
recent decisions by the Bombay High Court vide order dated 08.07.2011 in Writ Petition No.3748 of 2011 filed by Welspun Maxsteel Limited and by the Delhi High Court vide order dated 29.09.2011 in Writ Petition No.3106 of 2011 filed by Essar Steel Ltd.
21.29
Government has formulated Gas Utilization Policy in
larger public interest. However, as already submitted that no indigenous gas is available for allocation. As such, it is not possible to allocate gas to CGD sector in Gujarat. However, RLNG is being increasingly used by the CGD sector and there is no bar in using this gas. This Respondent is fully aware that air quality has increasingly become an issue of social concern in the backdrop of increasing industrialization and vehicular pollution. In order to control vehicular
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pollution, the Govt. of India has formulated the Auto Fuel Policy. The policy aims to comprehensively and holistically address the issue of vehicular emissions, vehicular technologies and auto fuel quality in a cost-efficient manner while ensuring the security of fuel supply. It is endeavour of this Respondent to encourage supply of CNG to the maximum number of cities.
21.30
The allocation is made by this Respondent in accordance
with the Gas Utilization Policy which has been framed keeping in view larger public interest. It is not for the Petitioners to decide the order of priority or to interfere with the policy of this respondent. Like LPG,
natural gas is also in short supply and has to be used to give optimum benefit. Union of India is fully competent and has powers for taking a policy decision on allocation of natural gas, which is falling within
Entry No.53 of List I-Union List of VII Schedule of the Constitution of India. Therefore, the question for the decision of this Court is to satisfy itself whether this policy decision is arbitrary, unjust, violative of fundamental rights or is dehors the Constitution or violative of any statutory rights.
21.31
The Petitioners ought to be concerned with reducing
environmental pollution and not with the supply of cheap gas. RLNG is available in abundance and can be used for vehicles to reduce pollution. As already submitted, all other sectors, including fertilizers and powers are using RLNG due to short supply of indigenous gas.
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21.32
In view of what is stated hereinabove, it is apparent that the
Petitioners have failed to establish that the allocation of natural gas made by this Respondent is not in accordance with the Gas Utilization Policy.
22.
A separate affidavit was also filed by the respondent No. 2, the
State of Gujarat to the affidavit in reply filed on behalf of the respondent no.1 and has taken up the following contentions:
22.1
The averment made in Paragraph 6 of Affidavit-in-Reply of
Respondent No. l, stating that post dismantling of the Gas Linkage Committee, no APM gas has been allocated, is erroneous.
22.2
As opposed to the above mentioned averment of
respondent No.l, Indraprastha Gas Limited ("IGL") in Delhi and NCR regions and Mahanagar Gas Limited (MGL ) in Mumbai (CGD companies promoted by Central PSUs) have been allocated APM gas post dismantling of GLC on November 9, 2005. Furthermore it has been reported that in June 2011, when supplies from D6 fields were declining, additional gas from APM (0.3 MMSCMD) was allocated to IGL.
22.3
It is pertinent to note that as recently as June 2011 (when
production in KG D-6 Fields was declining), it was reported that
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Respondent No. 1 also granted approval to IGL to use unutilized APM allocations for Gurgaon / Faridabad for its own operations. It has also been reported that MGL was recently allocated gas from APM fields on "no cut" basis and MGL has 0.2 MMSCMD of unutilized APM quantities. Thus, in spite of winding up of Gas Linkage Committee. APM gas was allocated by the Respondent No. 1 to IGL, while a critical resource like APM gas is lying unutilized with MGL.
22.4
Furthermore, the above facts clearly prove the arbitrary
manner in which Respondent No. l has been allocating APM gas to only such CGD companies which are promoted by Central PSUs and discriminating against other CGD companies and in particular those operating in the State of Gujarat. The said issue of discrimination, which is inter alia, a core issue raised in the petition of Petitioner No.l, has not been addressed by the Respondent No. l. The Respondent No. l has not denied that there is discrimination in allocation of gas to the City Gas Distribution (CGD) companies operating in the State of Gujarat. The Respondent No. 1 has only stated that it is no longer possible to undertake any allocation of gas under the APM as the Gas Linkage Committee that decided the earlier allocation has been disbanded since November 2005.
22.5
Further, the natural gas was and continues to be under
the complete jurisdiction of the Government of India even though the GLC as it existed earlier may have been disbanded, it is the
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Government of India that has the jurisdiction and control over allocation of natural gas resources in India.
22.6
The Respondent No. l in Paragraph 7 of its Affidavit-in-Reply
has indicated that in view of air pollution being extremely serious in Delhi and nine other cities, APM gas was allocated to CGD entities for those cities .The Supreme Court ruled in M.C. Mehta versus Union of India [(2002)4 SCC 356] that the Respondent No. l will give priority to transport sector including private vehicles all over India with regard to allocation of natural gas from domestic fields for usage in CNG segment. The Apex Court further said that this meant that first the transport sector in Delhi, and other air polluted cities in India, will be allocated natural gas for CNG segment, and it is only thereafter if any domestic gas is available, the same can be allocated and made available to the industries, preference being shown to public sector undertakings and power projects. Thus, non allocation of gas from domestic fields, by Respondent No. 1 for usage in CNG and PNG segments in State of Gujarat is in gross violation of the above mentioned order.
22.7
In Paragraph 8 of its Affidavit-in-Reply the Respondent No. 1
has claimed that 24.5 MMSCMD of APM gas has been allocated to the State of Gujarat but in fact no APM gas has been allocated to CGD entities namely GSPC Gas Co. Ltd.. Adani Gas Limited, and Sabarmati Gas Ltd. and currently the requirement of CNG segment is being met
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through expensive RLNG. Against a total allocation to GGCL of approximately 0.45 MMSCMD the current supplies stand at around 0.2 MMSCMD only.
22.8
In Paragraph 10 of its Affidavit-in-Reply, the Respondent No.
1 has stated that the State of Gujarat has been allocated a total of 0.326 MMSCMD of gas from KG D6 field (i.e. 27% of total allocation). In this regard the version of the Respondent No.2 is that: [a]. The Empowered Group of Ministers (EGoM) vide meeting held on May 28, 2008 decided an allocation of initial 40 MMSCMD of RIL D6 gas, out of which a maximum of 5 MMSCMD would be made available to CGD projects for supply to PNG to households and CNG to transport sector.
[b].
Further, EGoM vide its meeting on March 23, 2009, decreased the allocation for PNG and CNG to 0.8 MMSCMD and in view of the same, the balance quantity of 4 MMSCMD was allocated to power sector companies.
[c].
The respondent No.2 has stated that the total firm allocation of KG D6 gas to CGD sector is 1.222 MMSCMD for entire country, of which 0.326 MMSCMD has been allocated to Gujarat, i.e. 27%.
[d].
However, of the 0.326 MMSCMD allocation of KG D6 gas to
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Gujarat, 0.20 MMSCMD has been allocated to Adani Gas Limited but the same is on provisional basis and is subject to final status of authorization given to them by PNGRB.
[e].
Therefore not taking into account the allocation of 0.2 MMSCMD made to Adani Gas Ltd. the total allocation from KG D6 fields to CGD segment in Gujarat is only about 0.126 MMSCMD against the current total demand of CGD in Gujarat of 9 MMSCMD. Thus, the statement being made by the Respondent No. 1 in Paragraph 10 of its Affidavit-in- Reply that the State of Gujarat has been allocated a total of 0.326 MMSCMD from KG D-6 basin is erroneous.
[f].
However, with reduction in the output of gas from RIL's KG D6 fields, supplies to CGD entities in Gujarat as of October 2011 have been reduced to 0 (zero).
22.9
Requests for allocation of gas from Gujarat CGDs were
overlooked due to the issue of authorization which was never a precondition of Empowered Group of Ministers constituted in August 2007 for allocation of gas .There is no rationale for the allocation made as the same seems to have no relationship with the demand. Further, as reflected in Paragraph 10 of respondent No. l s Affidavitin-Reply, gas has been allocated from KG D6 fields to Sabarmati Gas Ltd., Hindustan Petroleum Corporation Limited and Adani Energy Ltd.
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it is unclear why other Gujarat bases CGDs namely GSPC Gas Co. Ltd. and Charotar Gas Ltd. were denied the same, though they also could have been allocated gas on same principles. The basis of this denial is not rationally based, is arbitrary and in violation of Article 14 of the Constitution of India.
22.10
In Paragraph 13 of Respondent
No.l's Affidavit-in-Reply, it
has been stated that only 71 mmscmd of indigenous gas is available in the country. However, it may be noted that the said figure is an erroneous one as the Total Domestic Gas available is 119.84 mmscmd and the said figure stands authenticated by the table provided by Respondent No.l in the said Paragraph 13 itself.
22.11
Respondent No.l has supplied gas from domestic fields to
industries not featuring in the priority order as prescribed by the current Gas Utilization Policy.
22.12
In wake of non-allocation of gas from domestic fields,
Gujarat CGD companies are striving for requirement of gas and their dependence on imported LNG is becoming an area of concern, especially for their downstream CNG and PNG segment customers. In fact, in spite of Gujarat being ranked amongst one of the best in terms of CGD infrastructure (i.e. having highest number CNG stations as well as domestic connections) the gas consumption (vis--vis other CGD companies) is low owing to non viability of selling imported RLNG
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in CNG/PNG segment / non-availability of domestically produced gas. The table below would justify the above facts: State Wise existing CNG Infrastructure
State Andhra Pradesh Assam Gujarat Haryana Madhya Pradesh Maharashtra New Delhi Rajasthan Tripura Uttar Pradesh Total
CNG Station Consumption during 2010-11 (MMSCMD) 14 0 258 6 11 164 239 2 2 28 724 0.046 0.000 0.941 0.006 0.001 1.339 2.368 0.000 0.007 0.253 4.961
(source: Infralilne Newsletter dated December 29, 2011) 22.13 Based on the consumption data available for the Year
2010-11, the dependence of Gujarat CGD companies on imported RLNG was much higher than IGL and MGL, which is shown in the table below :
Sr. No. 1 2 3
Entity Gujarat CGD companies Indraprastha Gas Ltd. Mahanagar Gas Ltd.
Dependence on R-LNG 69.06 % 17.17% 5.55%
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22.14
Further, with reduction in the allocated supplies from D6
fields to SGL and HPCL to 0 (Zero) in October 2011: CNG prices levied by these companies in last 2-3 months have increased by up to 2530%, along with increased dependence of these CGD companies on imported RLNG. Sabarmati Gas Ltd. revised its CNG prices from Rs 40.25 per kg to Rs 47 per kg with effect from 16.12.2011, while HPCL revised its CNG prices from Rs 41.55 per kg to Rs 50.20 per kg with effect from 01.11.11 (copy of the press release in this regard is enclosed at Annexure B . )
22.15
Although Respondent No.l in the Paragraph 15 states "the
amount of domestic gas is distributed as per the above priority in a rational manner to serve larger public interest", it does not provide any specific guidelines or principles that governs such policy for allocation of gas and thereby the statement that such allocation is undertaken in a rational manner stands unsubstantiated. Also, as provided in Paragraph 8 herein even though respondent No.l is allocating domestic gas to non-priority sectors it is insisting that no sectors can claim overriding priority. The said factum clearly establishes the high-handedness innate in the actions of Respondent No. 1. 22.16 The allocation of available gas, specifically allocation of gas in the period wherein a shortfall in production from the APM and D-6 Fields is witnessed, has not been done as per any stated policy but by unguided and opaque executive decisions of Government of India.
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The Affidavit-in-Reply of the Respondent No. 1 fails to submit or provide any such stated policy based on which the executive decision of allocation of available gas has been undertaken by the Government of India.
22.17
alludes to the decision of Apex Court in the case of Directorate of Film Festivals and others versus Gaurav Ashwin Jain and others (2007) 4 SCC 737 with a view to discussing scope of judicial review of government policy. The said case law as opposed to ousting this Court of its jurisdiction, bestows it with the same. It is the objective of Respondent No.2 to demonstrate by virtue of its Affidavit-in-Reply that Respondent No. l has not only acted arbitrarily but has violated the fundamental rights of the citizens residing in State of Gujarat vis--vis citizens residing in other states by meting out a treatment which is in violation of "equality before law" as envisaged under Article 14 of the Constitution of India in matters of allocation of domestic / indigenous gas, which consequently impinges upon their fundamental right of enjoying a proper and healthy environment to enable them to lead a quality life.
22.18
Thus, this matter does not by any stretch of imagination
pertain to deliberating upon the wisdom and soundness of policies of Respondent No. l with respect to allocation of domestic gas but it intends to enquire into the legality of such policies.
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22.19
is trying to impress upon this Court that it has the deepest concerns for improving the air quality, which it recognizes as an issue of social concern in the backdrop of industrial and vehicular pollution. However, as already demonstrated Respondent No. l has supplied gas from domestic fields to industries, in breach of the Gas Utilization Policy. This clearly, reflects a marked inconsistency in actions of Respondent No. 1 vis--vis assertions made by it in its Affidavit- inReply.
22.20
has stated that "after revision of APM price in 2010, the price of APM gas is almost at par with KG D-6 gas". In this regard the following table indicates the prevailing gas prices for various gas sources in India should be taken on record:
Source APM (excluding North east region) Panna Mukta Tapti RIL D6 RLNG-Long Term Agreement
US$ / MMBTU 4.20 5.73 5.57 4.20 9.097
Rs./'000scm 8333 11369 11052 8333 18050
RLNG-Spot Cargo Around 17 33730 (Assuming 1 US$ = 50 Rs. (gas prices are excluding marketing margin, transmission charges, taxes and duties.)
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22.20.1
Thus, it is clear that even though the price of APM gas
may now be similar to KG D6 gas, it is still more reasonable in pricing than other sources of gas such as RLNG (long term)/ Spot RLNG.
22.21
Further in Paragraph 21 of its affidavit-in-reply the
respondent No.1 has stated that Out of the total firm allocation of 1.222 mmscmd for CGD sector for the entire country, 0.326 mmscmd has been allocated to the CGD sector in Gujarat which is around 27%. In this regard, based on various sources, at present, the
demand of natural gas for usage only in CNG & PNG segments in Gujarat is less than 2 MMSCMD. While, the current production of natural gas from the domestic fields in India is around 120 MMSCMD. It can therefore be implied that the natural gas requirement of only the CNG & PNG segments in the State is just over 1.5% of the total natural gas currently being produced. Hence, it is suggested that Government of India should at least allocate such small quantity by applying a pro-rata marginal cut in the supplies to such non-priority / private sector customers in the larger public interest.
22.22
In Paragraph 28 of its Affidavit-in-Reply, the Respondent No. l
has stressed on its inability to allocate additional indigenous gas to CGD sector in Gujarat. However, CGD companies in other States meet most of their requirement from gas allocated from domestic fields, unlike Gujarat CGDs. The Respondent No. l has admitted in Paragraph
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28 of its Affidavit-in-Reply that "air quality has become an issue of social concern in the backdrop of increasing industrialization and vehicular pollution. However, as submitted in Paragraph 8 of this Affidavit-in-Reply of Respondent No.2, Respondent No. l has supplied gas from domestic fields to industries, in breach of the Gas Utilization Policy. This clearly shows that there is a marked inconsistency in actions of Respondent No. 1 vis--vis assertions made by it in its Affidavit-in-Reply. unreasonableness, The high said instance and clearly reflects the
handedness
arbitrariness
deeply
embedded in the actions of Respondent No. l.
22.23
In Paragraph 29 of its Affidavit-in-Reply Respondent No. 1
has stated that RLNG is being increasingly used by the CGD segment and is available for use. The CNG & PNG segments are extremely price sensitive and using R-LNG vis--vis domestic gas for the said segments would in turn make the prices of CNG and PNG unaffordable to the masses.
22.24
Further, in response to Paragraph 29 of Affidavit-in-Reply
of Respondent No. 1 wherein it has sought to rely on the cases of Welspun Maxsteel Limited and Essar Steel Limited, the allocation to Welspun Maxsteel Limited and Essar Steel Limited are themselves an example of the arbitrary manner in which Respondent No. 1 has been allocating gas from KG D-6 basin since the steel sector had been allocated lower priority than the CGD sector in the Gas Utilization
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Policy of Respondent No. l.
22.25
In Paragraph 30 and other parts of its Affidavit-in-Reply the
Respondent No. 1 has stated that allocation is made in accordance with the Gas Utilization Policy, which has been framed keeping in view the larger public interest.
22.26
As demonstrated herein above in Paragraph 8 of the
Affidavit-in-Reply, gas from the domestic fields has been allocated by the Government of India to industries not featuring in the priority order as prescribed by the current Gas Utilization Policy while the representations of the State of Gujarat for allocation of gas to CGD companies have been overlooked while allocating gas from the domestic fields. 22.27 The Respondent No.2 humbly submits that it does not in
any manner seek to decide the priority order of allocation of natural gas. However, it is highly inequitable of Respondent No. l to suggest (Paragraph 31 of Respondent No. 1's Affidavit- in- Reply) that if the concern is to reduce environmental pollution, efforts must be directed to procure RLNG rather than making a demand for cheap gas.
22.28
In Paragraph 31 of its Affidavit-in-Reply, the Respondent No. l
has claimed that RLNG is available in abundance and can be used for vehicles to reduce pollution. In this regard the Respondent No.2 humbly submits that if Respondent No. l firmly believed that RLNG is
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an abundant and viable source for use by vehicles, then on what grounds it has allocated APM and KG D-6 gas to IGL and MGL, the two CGDs which are promoted by Central PSUs. Therefore, it is highly inequitable of Respondent No. 1, while displaying blatant bias towards Central PSU promoted CGDs to suggest that efforts must be directed to procure RLNG, rather than making a demand for cheap gas if a concern for reduction of environmental pollution in State of Gujarat is to be addressed.
22.29
The Government of Gujarat neither has control on allocation
of gas nor prices of CNG being charged by the city gas distribution companies in the State. Hence, Government of Gujarat would once again request for adequate allocation of domestic gas to various CGD companies in Gujarat to cater to the CNG & PNG segments.
22.30
Further it is submitted that, based on various sources
that, CGDs in Gujarat have connected over 8 lakhs household customers and sold more than 11 lakh kg per day of CNG (i.e. 1.5 MMSCMD), thereby resulting in subsidy savings to Central
Government of approximately Rs. 440 crore per annum on LPG and Diesel (as per PPAC data on under-recovery of petroleum Products published on 16th January, 2012). In view of the likely saving, if usage of CNG & PNG is promoted there would be several advantages namely (i) promotion of environment friendly fuel (ii) competitive price fuel for the masses (iii) lower inflation (iv) lesser subsidy burden on the
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Central Government.
22.31
In light of the facts stated, issues raised, arguments
advanced and case laws cited, the Respondent No.2. prayed that:
[ i ]. This Court should direct the Union of India to allocate additional quota of Natural Gas for domestic and vehicular usage for the benefit of the general public and
environment to the State of Gujarat at the APM rate at which Natural Gas is being supplied to the cities of New Delhi and Mumbai: [ii ] This Court should direct the Union of India to prioritize and diversify the unutilized Natural Gas from non-priority sector to the CGD for their domestic and vehicular usage, as directed by Hon'ble Supreme Court of India in the case of M. C. Mehta versus Union of India, reported in (2002) 4 SCC 356, which in turn would reduce the pollution and the cost of living; [iii] This Court should direct the Union of India to allocate Natural Gas from any other domestic gas field, such as CSeries or North Tapti, for domestic and vehicular / usage for the benefit of the general public and environment to the State of Gujarat.
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[iv]
This Court should direct that the Union of India to clearly stipulate the principles based on which APM and Non-APM gas were allocated.
23.
On consideration of the above pleadings and submissions of the
concerned parties in these two writ-applications, the first question that arises for consideration before us is, whether this Court within the scope of Article 226 of the Constitution of India can grant relief to the petitioners as claimed in the applications.
24.
As pointed out earlier, it is the contention of the Union of India,
the respondent no.1, that within the narrow scope of Article 226 of the Constitution of India, a High Court cannot ask the Union of India to alter its policy decision taken by it in exercise of its executive powers.
25.
The scope of judicial review of governmental policy is now well
defined. The courts do not and cannot act as appellate authorities examining the correctness, suitability and appropriateness of a policy. The Courts cannot lose sight of the fact that they are not advisors to the executives on the matters of policy, which the executives are entitled to formulate. The scope of judicial review, when examining a policy of the Government, is to scrutinize whether it violates the fundamental rights of the citizens or is opposed to the provisions of the Constitution of India or to any statutory provisions or is manifestly
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arbitrary. The Writ-Courts cannot interfere with the policy either on the ground that it is erroneous or that a better, fairer or wiser alternative policy is available. The legality of the policy and not wisdom or soundness of the policy is the subject of judicial review [vide: Asif Hameed v. State of Jandk, reported in [1989] Supp. [2] SCC 364; Shri Sitaram Sugar Co. Ltd., v. Union of India, reported in [1990] 3 SCC 223; Khoday Distilleries v. State of Karnataka, reported in
[1996] 10 SCC 304; Balko Employees Union v. Union of India, reported in [2002] 2 SCC 333; State of Orissa v. Gopinath Dash, reported in [2005] 13 SCC 495 and; Akhil Bharat Goseva Sangh v. State of Andhra Pradesh, reported in [2006] 4 SCC 164.)
26.
In addition to the aforesaid principle, we may add that the Writ-
Court is also entitled to examine whether the impugned policy decision is opposed to any directions given by the Supreme Court of India in the exercise of its powers under Article 141 of the Constitution of India.
27.
Bearing in mind the aforesaid principle, we now propose to
consider the facts of the present case.
28.
The first and foremost attack of the petitioners on the policy
adopted by the Union of India is that it has violated the principles laid down by the Supreme Court of India in various guidelines given in the case of M.C. Mehta v. Union of India and others [supra].
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29.
We, therefore, first propose to consider the various directions
given by the Supreme Court in the above cases:
30.
The Supreme Court in the case of M.C. Mehta v. Union of India,
reported in [2002] 4 SCC 356, gave the following directions upon the Union of India:
1. The Union of India will give priority to transport sector including private vehicles all over India with regard to the allocation of CNG. This means that first the transport sector in Delhi, and in the other air polluted cities of India, CNG will be allocated and made available and it is only thereafter if any CNG is available, that the same can be allocated to the industries, preference being shown to public sector undertakings and power projects. 2. I.A. of the Union of India for extension of time to run diesel buses is dismissed with costs of Rs. 20,000/-(Twenty Thousand only). It is made clear, and it is obvious in our constitutional setup, that orders and directions of this Court cannot be nullified or modified or in any way altered by any administrative decision of the Central or the State Governments. The administrative decision to continue to ply diesel buses is, therefore, clearly in violation of this Court's orders. 3. Those persons who have placed orders with the bus manufacturers, and have not taken delivery of the same shall do so within two weeks from today, failing which their permits shall stand automatically cancelled.
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4. As owners of diesel buses have continued to ply diesel buses beyond 31st January, 2002, contrary to this Court's orders, for the disobedience of the said orders, the Director of Transport, Delhi, will collect from them costs at the rate of Rs. 500/- per bus per day increasing to Rs. 1,000/- per day after30 days of operation of the diesel buses with effect from tomorrow and the same shall be deposited in this Court by the Director of Transport by the 10th day of every month. 5. The NCT of Delhi shall phase out 800 diesel buses per month starting from 1st May, 2002. Till all the diesel buses are replaced the bus owners who continue to ply the diesel buses shall pay as per direction No. 4 hereinabove. 6. For implementing these directions, the Union of India and all governmental authorities, including IGL shall:a. Allocate and make available 16.1 lakh Kg. per day (2
mmscmd) of CNG in the NCT of Delhi by 30th June, 2002 for use by the transport sector; b. Increase the above supply of CNG whenever the need
arises; c. Prepare a scheme containing a time schedule for
supply of CNG to the other polluted cities of India and furnish the same to this Court by 8th May, 2002 for its consideration; d. It will be open to the Union of India to supply LPG in
addition to CNG as an alternate fuel or to supply any other
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clean non-adulterable fuel as the Bhure Lal Committee may recommend; 7. The NCT of Delhi had announced a scheme for financing CNG vans, to be run as taxis, for SC/ST. We direct a similar financing scheme be framed by the Union of India jointly with the NCT of Delhi whereby those of the permits of owners of diesel buses are cancelled due to non-conversion to CNG the same should, in the first instance, be allotted to SC/ST and to the other weaker sections of the society. Such a scheme should be prepared and implemented and a compliance report be filed within four weeks. The costs deposited under direction (4) above can be utilised in implementing the proposed scheme.
31.
In the above decision, the following observations of the
Supreme Court in paragraph s 14 to 20 are also important and those are quoted below:
14. The plea of the Government that CNG is in short supply, and that it is unable to supply adequate quantity is incorrect, and this is clearly a deliberate attempt to frustrate the orders passed by this Court. Particulars filed in Court show that as of today no CNG is being imported. The indigenous produce is far in excess of what is supplied to the transport sector. It is only a small fraction of the CNG produced in India which is earmarked for non-industrial use. Overwhelming quantity is allocated to industries, including the power sector. 15. That there is no shortage of CNG is also evident from the
fact that even during the pendency of these proceedings, while on the one hand it was being represented to this Court and the
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Mashelkar Committee that CNG was in short supply, there was an increase in the allocation of the CNG to industries. Even when CNG was not being supplied to the Pragati Power Station in Delhi, as the same has not been commissioned, the CNG earmarked for the power unit instead of being allocated to the transport sector, was diverted to the Industries in the neighbourhood of Delhi. 16. If there is a short supply of an essential
commodity, then the priority must be of public health, as opposed to the health of the balance sheet of a private company. To enable industries to cut their losses, or make more profit at the cost of public health, is not a sign of good governance, and this is contrary to the constitutional mandate of Articles 39(e), 47 and 48A. 17. While the industries get natural gas at the rate of about Rs. 3.55 per KG, a commercial vehicle owner in Delhi has to pay about Rs. 13.11 per KG which is four times more than what the Industry pays. It was contended by Mr. Rohtagi that natural gas is supplied to the IGL at the same price at which it is supplied to the industries. This argument conveniently overlooks the fact that IGL is a government company and, therefore, the sale price which the Government and its company gets on sale of CNG in the transport sector is at least four times more than what it gets from the industries. 18. It is indeed surprising that, ostensibly, with a view to
provide more CNG to the transport sector in Delhi, the allotment of CNG to Maruti Udyog Limited (MUL) has been sought to be cancelled. Normally, it would have been surprising that if there is shortage of an essential commodity, then the
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supply or the sale to the public sector undertaking would be cut, but here, not only is the supply to the PSU being cut, but also at the same time, supply to at least two big business houses has been increased. 19. It would, under the circumstances, not be incorrect to
presume that the proposal to cut supply of CNG to MUL was for some oblique purpose. Why should the Government, which is proposing to dis-invest its share in MUL, take the action of cutting supply of CNG, which would result in increasing its expenses and decreasing its value? It is not as if there has been a pro rata cut of all the Industrial units in and around Delhi, including MUL, with a view to increase supply to the transport sector. The proposed cut appears to be nothing more than an attempt to punish MUL because its Managing Director is a member of the Bhure Lal Committee, which had recommended CNG and, therefore, the Managing Director and this company must suffer. It is clear that there is a desire to benefit private industries at the cost of public health and the public exchequer. A major portion of the CNG goes to Industries, and the government and its undertakings get less than what it would realise from supplying CNG to the transport sector. Such economics is baffling, to say the least. 20. Not only is there no shortage of CNG as far as the transport sector is concerned, but even if there be such a shortage, if crude oil can be imported and supplied to the refineries for manufacture of petrol and diesel, there is no reason why CNG, if need be, cannot be imported so as it ensures less pollution. (Emphasis supplied by us).
32.
At this juncture, it also be relevant to refer to the observations

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made by the Supreme Court of India in the subsequent case of Reliance Natural Resources Ltd. v. Reliance Industries Ltd., reported in [2010] 7 SCC 1, wherein, the following observations at paragraph s152, 218 and 250 are relevant, those are quoted below:
152. Natural gas belongs to the people of India, and vests in the Union of India, to be held for the purposes of the Union. The Constitution of India commands the Government to frame policy to prevent the distribution of such resources in a manner that may be inimical to national development. Ultimately, the residual owners of a company are its shareholders, and they have a right to know what is happening to the company and its assets, including assets by way of contractual rights, so that they can take an informed decision about a proposal that is put up for their consideration. For the past three hundred years of evolution of corporate law, the principal theme has been the protection of those who give their wealth and resources in trust to a company. Managements and Board of Directors of companies have a fiduciary responsibility to the shareholders, and neither the processes nor the substantive objectives of protection of the shareholders can be derogated from. xxx xxx xxx xxx
218. Availability at an attractive price point could potentially induce entities in those sectors to switch to using natural gas. However, because it is also an exhaustible and non-renewable resource, there is an imperative need to conserve it. Such conservation can be achieved by restricting the amount available and also by modulating the price. Because the
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differences in relative abilities to pay varies between different sectors, in conditions of extreme scarcity, it is likely that certain sectors could outbid others and corner the entire available quantities in unregulated markets; and that could lead to a shortage of supply to vulnerable sectors like fertilizers, power, transportation and households. Availability of natural gas to each of those sectors raises thorny questions of equality and quality of life issues. xxx xxx xxx xxx
250. We hold that with respect to the natural resources extracted and exploited from the geographic zones specified in Article 297 the Union may not: [1] transfer title of those resources after their
extraction unless the Union receives just and proper compensation for the same; [2] allow a situation to develop wherein the various
users in different sectors could potentially be deprived of access to such resources; [3] allow the extraction of such resources without a total of domestic current availability, with the requisite of future
clear policy statement of conservation, which takes into account balancing needs those
generations, and also Indias security requirements; [4] allow the extraction and distribution without
periodic evaluation of the current distribution and making an assessment of how greater equity can be achieved,
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as between sectors and also between regions; [5] and allow a contractor or any other agency to extract distribute the resources without the explicit
permission of the Union of India, which permission can be granted only pursuant to a rationally framed utilization policy; and [6] no end user may be given any guarantee for
continued access and of use beyond a period to be specified by the Government. Any contract including a PSC which does not take into its ambit stated principles may itself become vulnerable and fall foul of Article 14 of the Constitution. (Emphasis supplied). 33. So far as the first writ-application being W.P.[PIL] No. 47 of 2011
is concerned, the first prayer made by the writ-petitioner is for a direction upon the Government of India to allot additional quota of natural gas for domestic and vehicular usage for the benefit of general public and environment of the State of Gujarat at APM rate (Administrated Price Mechanism) at which the natural gas is being supplied to the cities of Delhi and Mumbai.
34.
After hearing the learned counsel for the parties and going
through the materials on record, we find that the pollution level of Delhi and Mumbai is of the similar nature of that which is prevailing in the city of Ahmedabad. In such circumstances, we are of the view that
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the prayer of the writ-petitioner that Government of India should be directed to allot quota of natural gas for domestic and vehicular usage at the APM rate at which the natural gas is supplied to the cities of Delhi and Mumbai, must be held to be justified. The fact that it is being supplied to the city of Ahmedabad at higher rate is not in dispute.
35.
Bhure Lal Committee was appointed by the Supreme
Court of India for making report on pollution in the country. Bhure Lal Committee published its report wherein it was shown that Respirable Suspended Particulate Matter (RSPM) levels in 16 cities of India, namely Agra, Ahmedabad, Kanpur, Solapur, Lucknow, Jharia,
Bangalore, Chennai, Hyderabad, Mumbai, Varanasi, Faridabad, Patna, Jodhpur, Pune and Kolkata are alarming. The report observed that air pollution is a serious problem and measures were required to be taken immediately. The report of the Bhure Lal Committee was put before the Supreme Court of India in the case of M C Mehta vs. Union of India [supra]. The Supreme Court of India had also issued notices to the State of Gujarat and other States and directed them to draw a plan for lowering the rate of RSPM level in the aforesaid cities. As per the recommendations of the Bhure Lal Committee and the policy of the Central Government, CNG is to be promoted as the clean environment fuel for the transportation sector. Bhure Lal Committee had
recommended usage of CNG for transportation sector for 16 cities for control of pollution. Ahmedabad was amongst the said 16 cities. The
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Supreme Court had issued directions to the respective Governments for mandatory conversion of public transport system to CNG.
36.
In such circumstances, discrimination of excess allotment at
cheaper rate to Delhi and Mumbai in comparison to that of Ahmedabad definitely violates Article 14 of the Constitution of India. We, therefore, find that in the facts of the present case, the Government of India should be directed to allot natural gas for domestic and vehicular usage at the same rate at which the same is supplied to Delhi and Mumbai. There is no justification of supplying the gas to those two cities at a cheaper rate in comparison to the one at which it is supplied to Ahmedabad when the level of air-pollution is no less than that prevailing in those two cities. There should be, at any rate, the same yardstick for measuring the peril of public health throughout the vulnerable cities of the country.
37.
The second prayer of the above writ-application is for a
direction upon the Government of India to prioritize and diversify unutilized natural gas from non-priority sector to the CGDs for their domestic and vehicular usage as directed by the Supreme Court of India in the case of M.C. Mehta v. Union of India, reported in [2002] 4 SCC 356.
38.
On consideration of the materials on the record, we find that the
policy that has been adopted by the Union of India is not strictly in
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conformity with the above directions of the Supreme Court of India, and the Union of India has violated such norms as it appears from the Chart at paragraph 8.2.1 of this order at page-50. It is apparent that the gas produced from PMT fields has been sold to various customers, of which many of them are the customers of Power or Fertilizer sector. However, some customers, such as, Arvind Limited, Gujarat
Fluorochemicals Ltd., United Phosphorus
and RIL have also been
allocated PMT gas although such customers/segments do not feature in the priority list referred to in Paragraph-21 of the affidavit-in-reply of the respondent no.1.
39.
We, thus, find that the policy adopted by the Union of India is
not in conformity with direction given by the Supreme Court.
40.
We are also convinced that the respondent no.1 has not only
discriminated between CGDs promoted by the Central PSUs and other CGDs but also among Gujarat based CGDs. For instance, the respondent no.1 in paragraph -15 of its affidavit-in-reply has submitted that allocation of 2 Lac MMSCMD gas from KG D6 has been made to Adani Gas Limited. However, even though gas has been allotted to Adani Gas Limited from KG D6, the other CGDs, e.g. GSPC Gas Company Ltd. and Charotar Gas Ltd. were denied the same though they also could have been allocated gas on the same principle.
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41.
In other writ-application, being WP [PIL] No. 54 of 2011, filed by
the Gujarat Rajya Auto Rickshaw Federation and others, they have prayed for a direction upon the Union of India to consider and
allocate APM gas and/or KG D6 gas to the Local Distribution Companies operating in the State of Gujarat in adequate quantities and to direct the Union of India or State of Gujarat to take appropriate measures to regulate the pricing of CNG sold by LDCs so that the benefit of the lower pricing of APM gas and KG D6 gas percolates to the end consumers.
42.
According to the petitioner, the Union of India is not allocating
APM gas or gas from KG D6 fields to the Local Distribution Companies [LDCs] operating in the State of Gujarat which sells CNG. The APM gas and the gas from KG D6 fields allocated through Empowered Group of Ministers of the Union of India is priced much lower than other gas that is currently available in the market. According to this petitioner, because of non-allocation of such APM gas or KG D6 gas to the LDCs in Gujarat, the LDCs in Gujarat are forced to buy Re-gasified Liquid Natural Gas [R-LNG] which is imported from foreign countries. The price of such R-LNG is usually double the price of APM gas or gas from KG D6 fields. This petitioner, thus, complains that for the above
reason the price of CNG in Gujarat is much higher than that of CNG sold in other parts of India. LDCs, according to the petitioner, are
mainly engaged in sale of CNG for use in vehicles and for supply and sale of Piped Natural Gas [PNG] for domestic and commercial
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establishments in various cities.
The following table will show the
difference of price of gas of KG D6, APM and R-LNG.
Description Basic Price ($/mmbtu) Marketing mar ($/mmbtu) Gas Price (Rs/mmbtu) Basic Gas Price (Rs/SCM) 43.
KG D 6 4.205 0.135 199.64 6.62
APM 4.2 0.11 198.24 6.57
RLNG 8.19 0.20 386.22 12.80
The other aspect of this PIL is that at present, many LDCs,
which are being allocated APM gas or KG D-6 gas at a cheap rate, do not pass on the price-benefit to the end customers and retain the benefit for themselves. The petitioner, therefore, prays for
appropriate directions upon the respondents for acting appropriately to regulate the price of the CNG sold by LDCs so that the benefit of the lower price of APM gas or KG D-6 field gas percolates to the end consumers.
44.
The petitioner has pointed out that prior to the New Exploration
and Licensing Policy [NELP] adopted by the Government of India in the year 1997-98, the exploration blocks were allotted to ONGC and Oil India Limited (OIL) on nomination basis by the Government of India. The Government of India had, therefore, power to ask those Companies to sell gas to priority sectors at a lower price than the market price. Prior to the year 1987, the gas prices were fixed by ONGC and OIL. The gas prices thereafter were fixed by the Central Government with effect from 30th January 1987. The allocation of the
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gas was also done by the Government to the priority sectors. Such gas allotted by the Government is known as APM gas (Administrated Price Mechanism). At the time of filing this application, the price of APM gas is given below: Customers Gas Price Outside North East INR 7666.67/MSCM (including Royalty) North East INR 4600/MSCM (including Royalty) Gas Price ($/MMBTU) 4.2* 2.52
45.
At this stage, it will also be relevant to point out the Sector wise
allocation of APM Gas in India, as indicated in the table below : APM Gas Allocation in India Sr. No. 1 2 3 4 5 46. Name of Sector Power Sector Fertilizer Sector Refinery Sector City Gas Distribution Approximate Qty. in MMSCMD 21.69 18.42 3.06 (CGD) 2.43
Sector Other Sectors 6.38 TOTAL 51.98 It is the case of the petitioner that Companies like
Indraprastha Gas Limited secured APM gas from Ministry of Petroleum and Natural Gas, Government of India (MoPNG) for expanding their gas distribution network in NOIDA including Greater NOIDA, Gurgaon and Faridabad in the year 2004-05. However, during the same time frame, Adani Gas Limited (erstwhile Gujarat Adani Energy Limited), which begun CGD operations in Ahmedabad during 2004-05, was not
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allotted any APM gas in spite of the fact that Ahmedabad is in the list of 16 cities identified by the Bhure Lal Committee as polluted ones.
47.
According to the petitioner, in order to accelerate the
exploration activities in the country, the Government of India with Directorate General of Hydrocarbons (DGH) as a nodal agency introduced NELP in the year 1997-98 and started allocation of exploration blocks under NELP to National Oil Companies (NOCs) as well as other private companies and foreign companies through a transparent and international bidding process. Till date, nine licensing rounds have been held under NELP. 48. Regarding the difference of price of CNG prevailing in
Gujarat from those in Delhi and Mumbai may be quoted below:
Name of the entity Indraprastha Gas limited (IGL) Mahanagar Gas Ltd (MGL) 49.
Name of cities NCT of Delhi Mumbai
Price of CNG (Rs per kg) 29.00 31.47
Source of Natural Gas APM + KG D6 APM+ KG D6
The company-wise sale price of CNG in various cities of
Gujarat is given below : Name of cities Operating in Various cities in Gujarat Price of CNG (Rs per kg) 34.45
Name of LDC GSPC Gas Company Ltd
Primary Source of Natural Gas RLNG
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Gujarat Gas Company Ltd (GGCL) Adani Gas Ltd (AGL) GAIL
Surat, Bharuch & Ankleswar Ahmedabad and Vadodara Vadodara
35.25 37.16 35.25
Domestic gas and RLNG RLNG RLNG
50.
From the above chart, it is clear that the sale price of CNG in the
cities of Gujarat is much higher than that in Delhi and Mumbai. According to the petitioner, the reason for such higher price is on account of allocation of APM gas and KG D6 fields gas to the LDCs operating in the cities of Delhi and Mumbai. The table given below will disclose the allocation of KG D6 gas to various LDCs. Name of LDC State KG D6 gas allocation on (Firm basis) In MMSCMD 0.309 0.370 0.078 0.015 0.013 0.049 0.834
Indraprastha Gas limited (IGL) Mahanagar Gas Ltd (MGL) Sabarmati Gas Limited (Stake of BPCL) Green Gas Ltd Avantika Gas Ltd HPCL Total 51.
Delhi Maharashtra Gujarat U.P. M.P. Gujarat
The principal ground taken by the petitioner in this writ-
application is that the demand of CGD entities authorized or promoted by Central PSUs were only considered, thereby leaving out entities in Gujarat who were still awaiting authorization under PNGRB Act. According to the petitioner, CGD entities promoted by Central PSUs received authorizations from MoPNG, while non-Central PSU
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entities like Adani Gas Limited, Gujarat Gas Company Limited and GSPC Gas Co. Ltd. had to apply to PNGRB for their extensive networks spread across the State. The petitioner further contends that the
Government of India has also allocated gas from KG D6 fields to CGD Companies promoted by Central PSUs even in areas where network is yet to be developed, whereas, on the other hand, Gujarat which has a network of CNG stations that creates countrys only CNG corridor was left out owing to pending authorization under PNGRB Act. The
petitioner complains that such rigidity shown by the Central Government in allocation of Indias natural resources has led to a situation wherein the masses in Gujarat are facing the brunt of increasing RLNG prices which are affected even by global events like civil unrest in Middle East countries or natural calamities worldwide. According to the petitioner, the Central Government is not allocating APM gas or gas from KG D6 fields to LDCs which do not have authorization of the Central Government, and such act of the Central Government, according to the petitioner, is arbitrary and contrary to general public interest. According to the petitioner, non-authorization should not be a criterion for allocation of gas to companies who have developed CGD networks without any enforcement or compulsion from the Government and have done so purely for the benefit of masses.
52.
This application has been vehemently opposed by the Union
of India and as pointed out earlier, the defence of the Union of India is
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that out of total APM allocation of 119.51 mmscmd around 24.5 mmscmd has been allocated to Gujarat. It is further the contention of the Union of India that for the time being, no APM gas is available for allocation and therefore, the request for allocation of APM gas cannot be acceded to. The Union of India further contends that the allocation of 2,00,000 scmd of KG D6 has been made to M/s. Adani Energy Ltd., for supply of CNG to transport sector in Ahmedabad on provisional basis and the said allocation is subject to final status of authorization given to them by PNGRB. It further contends that out of a total firm allocation of KG D6 gas of 1.22 mmscmd for CGD sector for the entire country, 0.326 mmscmd has been allocated to Gujarat alone which is around 27% of the total allocation. The Union of India further contends that the petitioner has failed to establish as to how and which action of the respondent No.1 is arbitrary, high handed or unreasonable. According to the respondent No.1, it is lawfully competent to take policy decisions and the petitioners cannot claim allocation of gas as a matter of right and the claim for supply of gas at a particular rate or cost is untenable.
53.
After hearing the learned counsel for the parties and after
taking into consideration the materials on record, so far the second writ-application is concerned, we are conscious that the first and foremost concern of this Court in this public interest litigation is to reduce the environmental pollution. The question of fixation of price or supply of the natural gas at cheaper rate depends on various
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factors and those cannot be the subject matter of judicial scrutiny unless the decision appears to be patently arbitrary. As pointed out by the Supreme Court, the natural gas belongs to the people of India, and vests in the Union of India, to be used for the purpose of Union. If there is a short supply of an essential commodity, then priority must be given to the public health, as opposed to the health of the balance sheet of a private company. To enable the industries to cut off their losses and make more profit at the cost of public health, is not a sign of good governance, and this is contrary to the constitutional mandate of Articles 39(e), 47 and 48-A.
54.
Therefore, in the second writ-application all that this Court can
order is to direct the State Government to compel the owners of the vehicles to use natural gas and, if necessary, even the imported one at the higher prices. The policy to allow the vehicle-owners to run their vehicles, at the cost of public health by permitting them to use other types of fuels than natural gas, which generate more pollution, because the same is cheaper, is violative of Article 21 of the Constitution and cannot be supported.
55.
As done by the Apex Court for the cities of Delhi and Mumbai,
we also propose to pass similar direction upon the State Government to make it compulsory for all the vehicles which are plying within the State to use natural gas instead of other types of fuel because of the
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fact that those create more pollution than the one created by the use of natural gas. Till such direction is implemented, as a condition for the use of other fuels than the natural gas, stringent restriction should be imposed for reducing the pollution by fixing the level of emission to the minimum in accordance with one approved at the international level.
56.
In this writ-application, we cannot pass any direction upon the
Union of India to supply the natural gas to the transport sectors at a cheaper rate because of the fact that R-LNG is also a natural gas and is available in abundance. Therefore, for the sake of public health, the persons owning and plying private motor vehicles should be compelled to use natural gas even at the higher cost. Simply because the cost of running the vehicle would be cheaper, for that reason, a small section of the people who are able to afford the maintenance of a motor car should not be permitted to pollute the environment at the cost of health of the majority of the people who are unable to afford maintenance of a motor car.
57.
Similarly, we find no wrong on the part of the Union of India in
returning the Bill of Gujarat Motor Vehicles (Use of Fuel) Regulation Bill, 2005 as the same should be first passed by the State Assembly and then should be sent for Presidential approval.
58.
The State Government, consequently, is directed to take
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immediate measures for restricting the pollution level by making further stringent provisions for emission of vehicular pollution applicable to the private cars, which are plying on a public road. For the purpose of prevention of wastage of the natural gas, the State Government should consider whether it would impose additional tax upon the consumption of the natural gas for the use of motor vehicles owned by private owners and utilize that additional amount available on such taxation, by selling the natural gas to those who are the owners of public vehicle at a cheaper rate. At the same time, the State Government should also take into consideration the fact that by taking advantage of cheaper price of the natural gas, the owners of the public vehicles do not misuse the same and the end-benefit goes to the ordinary public who avails of public transport facility, and accordingly, the State Government should consider the question of fixing the fare-structure at a reasonable rate. Since the questions of imposition of tax, fixation of rate thereof and that of fare-structure are not within the domain of judiciary, we have merely given suggestion in this Public Interest Litigation for protection of the right of lives of the citizen and it is for the legislature to decide the way in which it would tackle the situation. We, only direct the State to impose restriction on use of other types of fuel than natural gas in running of the vehicles within a reasonable time, which we consider to be one year from today.
59.
Our aforesaid view finds support from the observation of the
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Supreme Court in the case of M.C. Mehta vs. Union of India [supra] as indicated in paragraph 30 of its judgment. In the said
decision, the Supreme Court has specifically pointed out that not only is there no shortage of CNG as far as the transport sector is concerned, but even if there be such a shortage, if crude oil can be imported and supplied to the refineries for manufacture of petrol and diesel, there is no reason why CNG, if need be, cannot be imported so as it ensures less pollution.
60.
As indicated earlier, within the narrow scope of Article 226 of
the Constitution, as pointed out by us above, we, therefore, dispose of these two writ-applications by passing the following directions :-
1.
The Government of India is directed to allot natural gas for domestic and vehicular usage at the same rate to the city of Ahmedabad at which the same is supplied to Delhi and Mumbai to enforce the right of equality.
2.
The respondent no.1 for the same reason is directed not only to discriminate between CGDs promoted by the Central PSUs and other CGDs but also among Gujarat based CGDS in the matter of allocation of natural gas.
3.
State of Gujarat is directed to pass necessary order compelling the owners of all the vehicles having registration in
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the State of Gujarat to use natural gas and, if necessary, even at the higher prices within a shortest possible period, at any rate, not exceeding one year from today for protection of the lives of the citizens living in this State.
4.
For the purpose of prevention of wastage of the natural gas, it is for the State Government to decide whether it would impose additional tax upon the sale of natural gas for the use of private owners of motor vehicle and utilize that additional amount available on such taxation, by selling the natural gas to those who are the owners of public vehicle at a cheaper rate. At the same time, taking into consideration the fact that by taking advantage of cheaper price of the natural gas, those owners of the public vehicles do not misuse the same and the end-benefit goes to the ordinary public who avails of public transport facility, it is for the State Government to decide whether it would fix a fare-structure at a reasonable rate in consultation with the experts as it thinks fit.
5.
So long such restriction to make it compulsory for all the vehicles plying in the State by natural gas instead of other types of fuel is not enforced, necessary order imposing stringent restriction be passed for reducing the pollution by fixing the level of emission to the minimum in accordance with one approved by experts at the international level. Let such
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decision be taken within two months from today. 61. costs. The writ petitions are disposed of accordingly. In the facts and
circumstances of the case, there will be, however, no order as to
[BHASKAR BHATTACHARYA, C.J.]

mathew
[J.B.PARDIWALA. J.]
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WPPIL/47/2011 cnggasfinalversion

WRIPT PETITION (PIL)/47/2011

CAV JUDGMENT (Per : HONOURABLE THE CHIEF JUSTICE BHATTACHARYA) 1. MR.BHASKAR

These two Public Interest Litigations were heard analogously as

WRIPT PETITION (PIL)/47/2011

the subject-matter of these petitions are, to some extent, similar.

In writ petition No. 47 of 2011 [PIL], the writ-petitioner prayed

for the following relief:

In the premises aforesaid and considering

WRIPT PETITION (PIL)/47/2011

The case made out by the writ-petitioner in this application may

The petitioner is a society duly registered under the Societies

WRIPT PETITION (PIL)/47/2011

WRIPT PETITION (PIL)/47/2011

The respondent nos. 1 to 4 are discharging public duties by

By way of this Public Interest Litigation filed under Article

WRIPT PETITION (PIL)/47/2011

WRIPT PETITION (PIL)/47/2011

It is a known and admitted fact that the number of vehicles

Various petitions have been filed before the Supreme Court

WRIPT PETITION (PIL)/47/2011

The Supreme Court of India in the case of M.C. Mehta versus

WRIPT PETITION (PIL)/47/2011

According to the information gathered by the petitioner from

WRIPT PETITION (PIL)/47/2011

The allocation, diversification and price fixation of the

On a bare perusal of the chart of allotment, it becomes clear

WRIPT PETITION (PIL)/47/2011

It is evident that in case the Government of India allocates

Therefore, the Government of India needs to give shape to

WRIPT PETITION (PIL)/47/2011

The application was dealt with by the respondents by filing

Respondent No.1 has filed affidavit-in-reply and has taken up

the following defence:

The petition is not tenable in facts as well as in law and

hence, the same deserves to be dismissed.

The indigenously produced natural gas can be broadly

divided, based on pricing mechanism/blocks, into three major categories, namely-

WRIPT PETITION (PIL)/47/2011

Natural gas produced from nominated blocks

which includes APM gas and non-APM gas.

(iii) 5.3 gasified

Natural gas produced from NELP blocks.

WRIPT PETITION (PIL)/47/2011

In order to rationalize the allocation of APM gas among

As regards supply of APM gas to Delhi and Mumbai, it

As regards the allocation of natural gas to Gujarat, it

WRIPT PETITION (PIL)/47/2011

cannot be acceded to.

PRE-NELP GAS: The gas produced from pre-New Exploration Licensing

between Government and the producers.

From the pre-NELP field of Panna-Mukta-Tapti (PMT),

WRIPT PETITION (PIL)/47/2011

Total 44.677 15.708 3.387 4.19 11 1.918 2.594 10 93.474

However, the production from KG D6 field started

From KG D6 field under NELP, a quantity of 77, 593

WRIPT PETITION (PIL)/47/2011

The decline in the production of natural gas from KG D6

It may be seen from the above that against the firm

The present total availability of natural gas in the

country is around 166.17 million standard cubic meters a day

WRIPT PETITION (PIL)/47/2011

As submitted above, the non-APM indigenous production

The Government's endeavour is to accord high priority