Sangameswara Energy Private Limited,"Sukriti" v. Union of India

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 20-10-2009CORAM:THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIANW.P.No.3565 of 2004Sangameswara Energy Private Limited,"Sukriti", 19/1, 3rd Cross Street,Raja Annamalaipuram,Chennai-600 028.(Cause title amended as per Court order dated 28.4.2009 in WPMP No.552 of 2007) ..Petitionervs.1.Union of India represented by the Secretary, Ministry of Petroleum and Natural Gas, Shastri Bhavan, New Delhi-110 001.2.Gas Linkage Committee, through the Secretary, Ministry of Petroleum and Natural Gas, Shastri Bhavan, New Delhi-110 001.3.GAIL India Limited, through its Chairman and Managing Director, 16, Bhikaji Kama Place, R.K.Puram, New Delhi-110 066. ..RespondentsThis writ petition is filed under Article 226 of theConstitution of India, praying for the issue of a Writ of Certiorari,calling for the records of the second respondent relating to theMinutes of the meeting held on 13.1.2004 and quash the same in so faras it relates to allocation of natural gas to customers from the gasinstallation in Ramnad zone.For Petitioner : Mr.Vijay Narayan, Senior Counsel for Ms. Usha Raman,For Respondents-1&2 : Mr.J.Ravindran, Assistant Solicitor General.For Respondent-3: Mr.J.Srinivasa MohanO R D E RThe petitioner has come up with the present writ petition, https://hcservices.ecourts.gov.in/hcservices/ challenging the decision taken by the Gas Linkage Committee for theallocation of natural gas to a set of consumers.2. I have heard Mr.Vijay Narayan, learned Senior Counsel for thepetitioner, Mr.J.Ravindran, learned Assistant Solicitor General, forrespondents 1 and 2 and Mr.J.Srinivasa Mohan, learned counsel for thethird respondent.3. The third respondent herein issued a notice dated 13.11.2003,inviting applications from interested natural gas consumers, for theallocation of natural gas on fall back basis, from the gasinstallation of ONGC in Ramnad zone. The petitioner, which was in theprocess of setting up a 4 Star Hotel in Chennai and which had anestimated power requirement in the range of 3 to 4 MW, made anapplication on 1.12.2003 in response to the said notice, for theallotment of 30,000-40,000 SCMD of natural gas for generation ofpower continuously for a minimum period of 10 years. 4. It appears that 46 applications were received in response tothe above notice, with a total requirement of 12 MMSCMD, though thenotice indicated only a quantity of 1 MMSCMD (million standard cubicmeters), as available. Therefore, an Internal Departmental Committeewas constituted by the third respondent. In a meeting held on13.1.2004, the said Committee decided to classify all theapplications into 4 categories viz., (i) Category-I comprising ofPublic Sector Enterprises (ii) Category-II comprising of consumerswho intended to set up power plants in Ramnad and wheel it to TNEBfor their captive consumption and (iii) Categories-III and IVcomprising of existing consumers located in places other than Ramnad.After such categorisation, the Committee decided to make allotmentsof specific quantities to the Tamil Nadu Electricity Board and to 4other Companies. Aggrieved by such prioritisation and allotment, thepetitioner has come up with the present writ petition.5. Mr.Vijay Narayan, learned Senior Counsel appearing for thepetitioner assailed the impugned proceedings primarily on the groundthat the classification of all applications into 4 categories, afterthe issue of the tender notice, amounted to changing the rules of thegame, in the course of the event and that the allotment has been madearbitrarily to those who did not even commence their projects inKuttalam zone. It is the contention of the learned Senior Counselthat the whole process is vitiated by arbitrary and mala fideexercise of power and hence liable to be set aside. The learnedSenior Counsel also pointed out that at the time of admission of thewrit petition, an interim order was passed, directing the respondentsto reserve 30,000 SCMD for the petitioner. Therefore, the learnedSenior Counsel contended that the quantity reserved under interimorders of this Court, should be directed to be supplied to thepetitioner. https://hcservices.ecourts.gov.in/hcservices/

6. At the outset, I am unable to accept the contention that onaccount of the classification of the applicants into differentcategories, the original notice inviting tenders got tampered with.There is no dispute about the fact that in response to the tendernotice, 46 applications were received. There is also no dispute aboutthe fact that the total quantity available was indicated in thetender notice, to be 1.0 MMSCMD and that the total quantity appliedfor by the 46 applicants, was 12.0 MMSCMD. Therefore, there was noalternative for the Committee to classify the applications intodifferent categories and prioritise them. Moreover, the Supreme Courtissued a direction in M.C.Mehta vs. Union of India {2002 (4) SCC376}, to the effect that whenever there is lack of adequate supply ofnatural gas, transport sector should receive priority of allotmentand that thereafter, it can be allotted to industries, preferencebeing shown to Public Sector Undertakings and Power Projects.Therefore the classification has been done by the Committee only inaccordance with the above directions. Hence it cannot be contendedthat such categorisation amounted to alteration of the tenderconditions. 7. The contention that allotment has been made in an arbitrarymanner, cannot also be accepted. According to the respondents, theavailable quantity of 1.0 MMSCMD was sought to be distributed, by theimpugned resolution, in the following manner:-Quantity (MMSCMD)1. TNEB, Chennai-0.452. BOC India Ltd., Kolkata -0.023. Coromandel Electric Co. Ltd- 0.044. Arkay Energy Ltd., Chennai-0.055. Arkay Energy Ltd., Chennai-0.308. It is stated in the counter affidavit of the third respondentthat out of the above 5 allottees, 3 are in the private power sectorand 1 is the Tamil Nadu Electricity Board. The remaining allottee wasa manufacturer of Oxygen for medical use. Therefore, the prioritygiven to them, is in tune with the directions issued in M.C.Mehtacase. The Supreme Court expressed its concern in the said case thatpublic health should take precedence over all other considerations.Therefore, the allotment in favour of the manufacturer of Oxygen formedical use, cannot also be said to be arbitrary.9. In any case, the availability of natural gas in Ramnad zone,as in the case of other zones, appears to have dwindled to a greatextent. It is stated in paragraph-7 of the counter affidavit filed in2007 and an additional affidavit now filed at the time of hearing,that the quantity originally estimated by ONGC, as available inRamnad zone in 2003-2004 was 1.75 MMSCMD. Therefore, an allocation of1.884 MMSCMD was made. But the availability of gas under theAdministered Priced Mechanism (APM) has dwindled in Ramnad to 1.1 https://hcservices.ecourts.gov.in/hcservices/ MMSCMD, which is just about 60% of the contracted quantity. Even theMarket Driven Priced (MDP) Gas in Ramnad is only about 0.47 MMSCMD.Therefore, as on date, there is a shortfall of 0.36 MMSCMD even inthe contracted quantity. Hence, the question of the quantity reservedunder interim orders of this Court, being supplied to the writpetitioner, also may not arise. 10. Relying upon a communication dated 20.6.2005 of theGovernment of India, Ministry of Petroleum and Natural Gas, addressedto the third respondent, it was contended by Mr.Vijay Narayan,learned Senior Counsel for the petitioner that the quantity reservedor committed as per Court orders, also deserve priority of treatment.Therefore, the learned Senior Counsel contended that the petitioneralso deserve priority of treatment. A letter dated 13.3.2004, issuedby the third respondent to one of the allottees, indicating thereservation of 30,000 SCMD for the benefit of the petitioner in termsof the interim orders of this Court, was also brought to my notice.11. However, the above communications cannot advance the case ofthe petitioner. Once it is found that the impugned decision to makeallotments in a particular manner cannot be found fault with, thepetitioner would not be entitled to succeed in the main writ petitionmerely on the basis of any interim order that he was in enjoyment.When the third respondent is not able to supply even the contractedquantity, there is no question of issuing a direction to therespondents to rob Peter to pay Paul. 12. The contention that the allotment to two parties, who wereunable to implement the project as per the original agreement, wasarbitrary and vitiated by non-application of mind, cannot beaccepted, since it is pointed out by the respondents that those twoparties were already granted extension of time. Moreover, in respectof one allottee by name Regency Power Corporation, the allotment wasmade only on account of the necessity to transfer their allocationfrom Kuttalam zone to Ramnad zone, due to short supply in Kuttalam.13. In any event, the petitioner has not made any of theallottees, as parties to the writ petition, though the petitioner haschallenged the allocations made in favour of at least 3 of those 5allottees. In such circumstances, the question of setting aside theallotment in their favour, behind their back, does not arise. 14. In view of the above, I find no merit in this writ petitionand hence it is dismissed. No costs. Sd/Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ svnTo1.The Secretary, Union of India, Ministry of Petroleum and Natural Gas, Shastri Bhavan, New Delhi-110 001.2.The Secretary, Gas Linkage Committee, Ministry of Petroleum and Natural Gas, Shastri Bhavan, New Delhi-110 001.3.The Chairman and Managing Director, GAIL India Limited, 16, Bhikaji Kama Place, R.K.Puram, New Delhi-110 066.+1 cc to Mr. J. Srinivasa Mohan, Advocate, SR.No.54916.Order in WP 3565 of 2004bvn(co)ar/26.10.2009.