Gujarat High Court
Gujarat State Petroleum Corpn. Ltd. vs The Union Of India (Uoi) And 7 Ors. on 16 May, 2008
Equivalent citations: AIR 2008 (NOC) 2761 (GUJ.) FULL BENCH, 2009 (1) AJHAR (NOC) 33 (GUJ.) FULL BENCH 2009 (1) AKAR (NOC) 50 (GUJ.) FULL BENCH, 2009 (1) AKAR (NOC) 50 (GUJ.) FULL BENCH, 2009 (1) AKAR (NOC) 50 (GUJ.) FULL BENCH 2009 (1) AJHAR (NOC) 33 (GUJ.) FULL BENCH, 2009 (1) AJHAR (NOC) 33 (GUJ.) FULL BENCH
Bench: D.N. Patel, J.C. Upadhyaya
JUDGMENT D.A. Mehta, J.
1. Someone who thinks logically is a nice contrast to the real world. Normally that is what is required of a judge. While adjudicating a lis a judge is expected not to fall prey to over simplified generalisations made on basis of cited, but inapplicable, precedents. The problem of stereotyping is that it makes particular into the general, often leading to wholly misleading conclusions.
2. This group of petitions has been heard by the Larger Bench constituted in compliance with directions issued by the Hon'ble Supreme Court vide order dated 26.02.2008 in Petition(s) for Special Leave to Appeal (Civil) No(s) 21397-21399 of 2007 which reads as under:
Transfer Petition (c) Nos. 513-515 of 2007 and 557-564 of 2007 are taken on Board. These special leave petitions have been filed against the interim order(s) passed by the High Court of Gujarat refusing stay to the petitioners during the pendency of the writ petitions.
Petition(s) for Special Leave to Appeal (Civil) No(s). 21397-21399/2007.
Learned Senior Counsel appearing for the petitioners as well as learned Solicitor General and Additional Solicitor Generals and other respective counsel are agreed for disposal of these special leave petitions in the following terms:
1. We would request the Hon'ble Chief Justice of the Gujarat High Court to constitute a three Judge Bench by 07th March, 2008 and the hearing of the writ petitions shall start from the 10th March, 2008 on day do day basis and dispose them off as expeditiously as possible, without being influenced by any of the observations made in the impugned orders.
2. In case, the petitioners succeed, then the High Court would be at liberty to pass such directions as it may deem fit regarding refund of the amount in accordance with law.
3. All contentions are left open. Ordered accordingly.
Transfer Petition(c) Nos. 513-515 of 2007 have been filed seeking transfer of Special Civil Application No. 18868/2007 pending in the Gujarat High Court to the High Court of Delhi and to be heard along with WP(C) No. 5098 of 2007 pending in the High Court of Delhi on the same point whereas Transfer Petition (C) Nos. 557-564 of 2007 have been filed by the Union of India seeking transfer of writ petitions pending in the Gujarat High Court as well as Delhi High Court to this Court.
In view of the aforesaid order passed by us today in the special leave petitions, transfer petitions seeking transfer of writ petitions pending before the Gujarat High Court have become infructuous and are dismissed as such. Insofar as Civil Petition(s) for Special Leave to Appeal (Civil) No(s). 21397-21399/2007 Writ Petition No. 5098 of 2007 pending before the Delhi High Court is concerned, since we have disposed of the special leave petitions by requesting the Gujarat High Court to dispose of the writ petitions pending before it, we deem it appropriate to transfer the writ petition pending before the High Court of Delhi to the Gujarat High Court and to be heard along with the writ petitions pending before the Gujarat High Court. We order accordingly. We would request the Hon'ble Chief Justice of the High Court of Delhi to direct the Registrar, High Court of Delhi to forthwith transfer the entire record relating to writ petition No. 5098 of 2007 to the Gujarat High Court so as to reach there before 07th March,2008. It is also brought to our notice that one more writ petition bearing No. 4853 of 2007 is pending before the High Court of Madhya Pradesh, Gwalior Bench on the same point. Although the parties are not before us but keeping in view the facts and circumstances of the case and in order to avoid conflicting decisions and further delay in the hearing of the writ petitions before the Gujarat High Court, the same is also transferred to the Gujarat High Court. We would request the Hon'ble Chief Justice of the High Court of Madhya Pradesh to direct the Registrar, High Court of Madhya Pradesh to forthwith transfer the entire record relating to writ petition No. 4853 of 2007 to the Gujarat High Court so as to reach there before 7th March,2008. Since this order has been passed in the absence of the parties, if any of the parties has any objection to transfer of the case Petition(s) for Special Leave to Appeal (Civil) No(s). 21397-21399/2007 from Gwalior to Gujarat, it may move this Court for variation of this order. The special leave petitions and transfer petitions are disposed of in the above terms.
(Praveen Kr. Chawla) (Kanwal Singh) Court Master Court Master The petitions have been accordingly heard on day to day basis.
3. In light of the aforesaid directions of the Apex Court the petitions have been taken up for final hearing and disposal. Rule. The learned Advocates appearing for respective parties are directed to waive service of Rule in this Special Civil Application as also in all cognate matters.
4. The principal challenge in these petitions is Central Government directive issued by way of communication dated 06/03/2007. The said directive reads as under:
S L-11012/1/06-GP-II/Vol.-II Government of India Ministry of Petroleum & Natural Gas Shastri Bhavan, New Delhi March 6, 2007.
To, The Managing Director & CEO, Petronet LNG Ltd.
New Delhi.
Subject : Policy decision as to pooling of RLNG prices.
Sir, The question of prices to be charged for RLNG from different customers has been under consideration of the Government. After considering existing practices and to avoid loading high cost of additional RLNG being made available to the prospective customers, it has been decided, after examination of all aspects, in public interest, that the gas prices being charged on supply of RLNG procured under long term contracts should be on a non-discriminatory basis and uniform pooled prices should be charged from all the existing and new consumers.
2 You are advised accordingly and requested to give effect to the same immediately.
Yours faithfully, Sd/-
(Deepak Ratanpal) Under Secretary to the Govt. of India.
Copy to:
1 Chairman, IOC, New Delhi.
2 C & MD, GAIL, New Delhi.
3 C & MD, BPCL, Mumbai
5. Gujarat State Petroleum Corporation Limited (GSPCL), petitioner of Special Civil Application No. 18868 of 2007, is a Government Company engaged in business of Oil and Gas exploration and also marketing of oil, natural gas and regasified liquefied natural gas (RLNG). GSPCL has entered into contracts on 07.02.2004 to purchase RLNG from various agencies including Gas Authority of India Limited (GAIL), Indian Oil Corporation Limited (IOCL) and Bharat Petroleum Corporation Limited (BPCL). It is an agreed position between the parties that the said contract provided for specified quantities of RLNG at a fixed rate upto 31.12.2008. The case of the petitioners is that by the so called directive dated 06.03.2007 under a purported policy decision Union of India (UOI) is seeking to disturb the concluded contracts by overriding the terms of contract between two private parties.
6. The facts which are not in dispute are that one Ras Gas Agency based at Qatar has agreed to supply liquefied natural gas (LNG) for a period of 25 years under a sale purchase agreement entered into in July, 1999 by Ras Gas with PETRONET LNG,(PETRONET) a Company incorporated under the Companies Act, 1956. Ras Gas and PETRONET entered into a fixed price five years contract for sale of LNG by Ras Gas to PETRONET on 26.09.2003. Under the said contract PETRONET is to receive contracted quantity of LNG which is 5 Million Metric Tonnes Per Annum (MMTPA) and the price of LNG is fixed between 2 to 3 US$ per Million Metric British Thermal Unit (MMBTU).
7. Pursuant to contract with Ras Gas, PETRONET entered into back to back contracts with GAIL, IOCL and BPCL for sale of 5 MMTPA LNG after regasifing the same. In other words, PETRONET after purchasing LNG from Ras Gas converted the same into RLNG before supplying to three Government Companies i.e. GAIL, IOCL and BPCL, who can be described as distributing companies, though at places the parties have described the three distributors as Offtakers. LNG transported (shipped) from Qatar is unloaded at Dahej Port located in South Gujarat at a terminal belonging to PETRONET where LNG is first converted into RLNG and thereafter transmitted through pipeline.
8. At this juncture, it is necessary to take note of the fact that PETRONET is not a Government Company. The said Company is a joint venture involving public and private participation promoted by GAIL, IOCL, BPCL and Oil and Natural Gas Corporation Limited (ONGC). PETRONET was set up in 1998 to import LNG, Build and operate terminals so as to receive, store and undertake regasification of imported LNG. 50% shareholding of PETRONET is in the hands of four promoter corporations while the balance 50% is held by private entities/persons,i.e.public.
9. RLNG received from PETRONET by three distributing companies is sold to some of the petitioners and various other persons. Thus in effect there are three stages or three contracts, the common thread running through all the contracts and at all the stages is that the contracts are for supply of 5 MMTPA of LNG/RLNG upto 31.12.2008 at a fixed price i.e. foreign component of the price is frozen : [i] The first stage or the first contract is between Ras Gas and PETRONET for supply of LNG, [ii] the second stage or the second contract is between PETRONET and the three distributor companies for supply of RLNG, [iii] the third stage or the third contract is between the three distributor companies and their respective customers.
10. The second and third stages involve more than one contract - the total quantity of 5 MMTPA gas remaining constant. The reason is, PETRONET does not have additional capacity at Dahej to either receive, store or regasify quantity of gas exceeding 5 MMTPA.
11. In the aforesaid backdrop of facts the case of the petitioners is that Union of India cannot be permitted to direct one of the contracting parties to modify/rewrite the terms of contracts entered into between the parties, more particularly when contracts at stages 1 and 2 are not being disturbed/modified/rewritten in any manner whatsoever. In other words, if Ras Gas is not entitled to and is not charging anything more than the contracted prices to PETRONET, PETRONET in turn is not entitled to charge anything more than the contracted price to the distribution companies, the distribution companies cannot charge anything more from the petitioners who have direct contracts with the distributor companies. That under the guise of directive from Union of India the distributor companies cannot call upon PETRONET to recover a larger amount from the distributor companies so as to enable the distributor companies to recover such larger amount viz. more than the contracted price, from the petitioners who have contracted with the distributor companies. That the entire exercise is malafide only to artificially reduce cost price of RLNG in hands of one Ratnagiri Gas Power Project Limited (RGPPL).
12. It is an admitted position that a fresh agreement dated 03.07.2007 between Ras Gas and PETRONET, for supply of further 1.5 MMTPA of LNG at the then prevailing price, which approximately comes to 8 to 9 US$ per MMBTU, has been entered into. It is further an accepted position that this entire quantity of LNG i.e. 1.5 MMTPA received by PETRONET is being supplied to RGPPL through the distributor companies. The petitioners therefore contend that to benefit RGPPL the impugned directive dated 06.03.2007 has been issued by Union of India, but the direct consequence of the said communication is escalation in the foreign component of the cost price of RLNG in the hands of the petitioners. That just as RGPPL is to use RLNG for production of electric power even the petitioners are engaged in production of electric power which is being supplied to various consumers of electricity.
13. GSPCL supplies RLNG to Gujarat Paguthan Energy Corporation Limited (Petitioner of SCA No. 23151 of 2007), Essar Power Limited (Petitioner of SCA No. 19045 of 2007) etc. who produce electricity after consuming RLNG and the electricity so produced is sold to Gujarat Urja Vikas Nigam Limited (GUVNL) (Petitioner of SCA No. 23018 of 2007). GUVNL is a Government Corporation involved in transmission and distribution of electric power procured from various sources, including from the aforesaid consumers of RLNG who are customers of GSPCL.
14. Similarly Gujarat State Electricity Corporation Ltd. (GSECL) (petitioner of SCA No. 19048 of 2007) is also receiving RLNG from GAIL under a contract executed on 09.02.2004 and using such RLNG for producing electricity and selling to GUVNL for further transmission and distribution of electric power through four different regional/zonal companies.
15. Gujarat Alkalies and Chemicals Limited (GACL) (Petitioner of Special Civil Application No. 19050 of 2007) has a captive gas based power plant.
16. Gujarat Narmada Valley Fertilizer Company (Petitioner of Special Civil Application No. 19049 of 2007) uses RLNG for manufacturing different chemicals for various uses including manufacture of fertilizers.
17. Gujarat Industries Power Company Limited (Petitioner of Special Civil Application No. 19047 of 2007) is involved in power generation which is sold to GUVNL for being transmitted and distributed.
18. During course of hearing the learned Advocates for the various petitioners have referred to various clauses of the respective agreements entered into by the petitioners with the distributor companies as there is a serious dispute between the parties as to whether the contracts permit, or do not permit, revision of price of RLNG supplied by the distributor companies. However, in light of the view that the Court is inclined to adopt it is not necessary to record the respective contentions as to operation of, import of and the interpretation of various clauses of agreements.
19. There are other petitioners who enter at stage No. 4 viz. who are having contracts to purchase RLNG from GSPCL at a fixed rate upto 31.12.2008. In so far as such petitioners are concerned, it is apparent that the said petitioners have no direct nexus with distributor companies and are thus not directly affected, though there may be an indirect effect of the litigation between the distributor companies on one hand and the petitioners, who are having agreements with the distributor companies. In the circumstances, for the time being it is not necessary to state anything further as regards such petitioners. Suffice it to state that case of such petitioners is that if GSPCL and similarly situated petitioners are affected by the escalation of the cost price it is the fourth stage petitioners who would directly be affected in the event the increased price component is passed over to such petitioners.
20. On behalf of Union of India and other respondents the principal contention raised before the Court is whether Government of India is justified in making a policy decision to ensure that the price of gas charged in relation to RLNG supplied after procuring under long term contracts should be uniform, nondiscriminatory pooled price from all existing and new customers ? In support of the submission attention was invited to historical background in which Ras Gas agreed to supply LNG @ 2 to 3 US$ per MMBTU in 2003 when the agreement was entered into between Ras Gas and PETRONET. The Court was also informed about the global shortage of natural gas and difficulties in procuring the same coupled with the prices of Oil & Petroleum Products in international markets to contend that an action which may be seen disadvantageous vis-a-vis the petitioners at present would ultimately be beneficial to the petitioners in future. That the emphasis of Union of India was to ensure proper growth of power and fertilizer sectors, which are priority sectors, and are facing production deficit at present. It was further submitted that Union of India had taken a policy decision and the High Court should be slow and unwilling to interfere with the policy decision unless and until the Court came to the conclusion that the policy was arbitrary or unreasonable or was detrimental to public interest. That the settled legal position did not permit the Court to strike down a policy decision merely because a better policy could have been framed. It was therefore urged that the petitions deserved to be rejected.
21. Alternatively, it was pleaded that Union of India was well within its right to issue a directive to the Government Companies who were bound by their respective articles of association which permit intervention and issuance of directions. That accordingly the offtakers, each of them having similarly worded articles of association, were bound by the directions issued by the Central Government and were therefore bound to charge and recover enhanced price for RLNG supplied by offtakers. That Government of India was of the opinion that the contract between offtakers and their respective customers permitted enhancement/revision of the price of gas supplied, but if the petitioners were of the opinion that the contract did not permit such revision it was left upto the petitioners to take appropriate steps in accordance with law in light of their respective rights available under the terms of their respective contracts. That the Court would not interfere with terms of the contract and relegate the parties to avail of appropriate legal remedies, inclusive of arbitration, as may be provided by the contracts. Lastly, it was pleaded that there was clause of Force Majure and the effect thereof would have to be worked out by the contracting parties.
22. The contentions raised by various counsels appearing for various petitioners and various respondents have not been individually reproduced and recorded for the simple reason that the basic controversy between the parties is as noted hereinbefore. All the parties put together, through their respective counsels, have cited more than One hundred authorities. Suffice it to state that the Court has taken note of the ratio laid down in the said authorities without finding it necessary to enumerate and list the same and thus burden the judgment. 23. The principal controversy between the parties relates to the decision, termed to be a policy decision, communicated vide letter dated 06.03.2007 by the Union of India :the case of the petitioners being that the so called policy cannot be termed to be a policy considering that the decision is in interest of only one party viz. RGPPL, while the case of the respondents, more particularly Union of India, is that the decision is a policy decision and the Court should not intervene in policy matters.
24. Though a great deal has been said, written and expounded as regards policy, in the context of the controversy brought before the Court the plain meaning of the word 'policy' is required to be recapitulated.
72. Corpus Juris Secundrum.
C.J.S. Principal and Surety - By Francis J. Ludes & Harold J. Gilbert (Page 208) SPOLICY. The word 'policy' is defined as meaning a settled or definite course or method adopted by a government, institution, body, or individual.
As applied to a rule of law, 'policy' refers to its probable effect, tendency, or object, considered with respect to the social or political well-being of a state.
Black's Law Dictionary - Eighth Edition - By Bryan A. Garner (Page 1196) Spolicy. 1. The general principles by which a government is guided in its management of public affairs. See PUBLIC POLICY. 2. A document containing a contract of insurance;
Judicial Dictionary - 13th Edition - By K.J. Aiyar (Page 749) Policy. The word 'policy' according to the Black's Law Dictionary, 16th edn, means the general principle by which a government is guided in its management of public affairs and according to the Concise Oxford Dictionary 8th edn a course of principle of action adopted or proposed by a government [Adarsh Matsyodyog Sahkari Sanstha Ltd. v. M P Rajya Matsya Vikas Ngam 1995 JLJ 682 at 686] A Dictionary of Modern Legal Usage - 2nd Edition - By Bryan A. Garner (Page 670) policy; polity. Policy, by far the more common of these words, means 'a concerted course of action followed to achieve certain ends; a plan.' It is more restricted in sense than polity, which means (1) Sthe principle upon which a government is based; (2) Sthe total governmental organization as based on its goals and policies. Sense (2) is more usual - e.g.: SThe ancient doctrine of the common law, founded on the principles of the feudal system, that a private wrong is merged in a felony, is not applicable to the civil polity of this country. / As to the practicing lawyer, in our polity he is potentially law-writer, law teacher, legislator, or judge. (Roscoe Pound) Webster's Comprehensive Dictionary - Published by Trident International (Page 976) policy 1 Prudence or sagacity in the conduct of affairs. 2 A course of plan of action, especially of administrative action. 3 Any system of management based on self-interest as opposed to equity; finesse in general; artifice. 4 Obs. Political science; government. See Synonyms under POLITY.
Shorter Oxford English Dictionary - Fifth Edition - Vol-II (Page 2267) policy In branch I from Old French policie from Latin politia from Greek politeia citizenship, government, etc., from polites, from polis city, state: cf. POLICE noun. In branch interim injunction from assoc. with Latin politus polished, refined. Cf. Also POLITY.] I 1 An organized and established form of government or administration; a constitution, a polity. Now rare or obsolete. LME. 2 Government; the conduct of public affairs; political science. LME-L18.
3 Political sagacity or diplomacy; prudence or skill in the conduct of public affairs. Also, political cunning. LME.
4 a Prudent or expedient conduct or action; sagacity, shrewdness. Also, cunning, craftiness. LME b A contrivance, a crafty device, a trick. LME-M19.
5 A course of action or principle adopted or proposed by a government, party, individual, etc; any course of action adopted as advantageous or expedient. LME.
25. Thus, it can be summarised that there has to be a settled or definite course/method adopted by a Government in the course of management of public affairs. In other words, the total Governmental organisation as based on its goals and policies reflecting prudence or sagacity in the conduct of affairs, especially of administrative action. However, such conduct has to be the conduct of public affairs guided by prudence based on general principles.
26. Thus,when the word 'policy' is read and applied to the administrative action, viz. conduct of governmental affairs, one has to necessarily bring in the concept of policy being for public good, or public interest. Anything that is done contrary to 'public policy' is a harmful thing, though the concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, one thing is certain that the interest of all the public must be taken into account; but in practice one finds that in many cases what seems to be in contemplation is the interest of only one section of the public, and it may be a small section at that. At this juncture, the Court is required to weigh the interest of the whole community as well as the interest of a considerable section of the community. To put it differently, the Court may be required to strike a balance in express terms between community interest and sectional interest. For this purpose the Court would also be required to apply the test of fairness while evaluating as to whether the decision is in interest of a well defined section of the community and such a classification is reasonable at the anvil of established principles. The following decisions of the Apex Court delivered over a period of two and a half decades aptly lay down the aforesaid concept and the relevant extracts may be usefully reproduced:
(a) Gherulal Parakh v. Mahadeodas Maiya and Ors.
...The doctrine of public policy may be summarized thus: Public policy or the policy of the law is an illusive concept; it has been described as "untrustworthy guide", "variable quality", "uncertain one" "unruly horse", etc; the primary duty of a Court of Law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy; for want of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, just like any other branch of common law, it is governed by precedents; the principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public....
(b) Murlidhar Agarwal and Anr. v. State of Uttar Pradesh and Ors. AND Murlidhar Agarwal and Anr. v. Ram Agyan Singh
30. "Public policy'' has been defined by Winfield as "a principle of judicial legislation or interpretation founded on the current needs of the community''. (See Percy H. Winfield, "Public Policy in English Common Law'', 42 Harvard Law Rev. 76). Now, this would show that the interests of the whole public must be taken into account; but it leads in practice to the paradox that in many cases what seems to be in contemplation is the interest of one section only of the public, and a small section at that. The explanation of the paradox is that the courts must certainly weigh the interests of the whole community as well as the interests of a considerable section of it, such as tenants, for instance, as a class as in this case. If the decision is in their favour, it means no more than that there is nothing in their conduct which is prejudicial to the nation as a whole. Nor is the benefit of the whole community always a more tacit consideration. The courts may have to strike a balance in express terms between community interests and sectional interests. So here we are concerned with the general freedom of contract which everyone possesses as against the principle that this freedom shall not be used to subject a class, to the harassment of suits without valid or reasonable grounds. Though there is considerable support in judicial dicta for the view that courts cannot create new heads of public policy, see Gherulal Parakh v. Mahadeodas Maiya , there is also no lack of judicial authority for the view that the categories of heads of the public policy are not closed and that there remains a broad field within which courts can apply a variable notion of policy as a principle of judicial legislation or interpretation founded on the current needs of the community. See Dennis Lloyd, "Public Policy'', (1953), pp. 112-113.
31. Public policy does not remain static in any given community. It may vary from generation to generation and even in the same generation. Public policy would be almost useless if it were to remain in fixed moulds for all time.
32. If it is variable, if it depends on the welfare of the community at any given time, how are the courts to ascertain it? The judges are more to be trusted as interpreters of the law than as expounders of public policy. However, there is no alternative under our system but to vest this power with judges. The difficulty of discovering what public policy is at any given moment certainly does not absolve the judges from the duty of doing so. In conducting an enquiry, as already stated, judges are not hide bound by precedent. The judges must look beyond the narrow field of past precedents, though this still leaves open the question, in which direction he must cast his gaze. The judges are to base their decision on the opinions of men of world, as distinguished from opinions based on legal learning. In other words, the judges will have to look beyond the jurisprudence and that in so doing, they must consult not their own personal standards or predilections but those of the dominant opinion at a given moment, or what has been termed customary morality. The judges must consider the social consequences of the rule propounded, especially in the light of the factual evidence available as to its probable results. Of course, it is not to be expected that men of the world are to be subpoenaed as expert witnesses in the trial of every action raising a question of public policy. It is not open to the judges to make a sort of referendum or hear evidence or conduct an inquiry as to the prevailing moral concept. Such an extended extra-judicial enquiry is wholly outside the tradition of courts where the tendency is to 'trust the judge to be a typical representative of his day and generation'. Our law-relies, on the implied insight of the judge on such matters. It is the judges themselves, assisted by the bar,who here represent the highest common factor of public sentiment and intelligence. See Percy H. Winfield, "Public Policy in English Common Law'', 42 Harvard Law Rev. 76; and also, Dennis Lloyd, "Public Policy'' (1953), pp. 124-25. No doubt, there is no assurance that judges will interpret the mores of their day more wisely and truly than other men. But this is beside the point. The point is rather that this power must be lodged somewhere and under our Constitution and laws, it has been lodged in the judges and if they have to fulfil their function as judges, it could hardly be lodged elsewhere. See Cardozo. "The Nature of Judicial Process''. pp. 135-136.
(c) Central Inland Water Transport Corporation Ltd. and Anr. v. `Brojo Nath Ganguly and Anr., AND Central Inland Water Transport Corporation Ltd. and Anr. v. Tarun Kanti Sengupta and Anr.
93. The Contract Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition. Public policy, however, is not the policy of a particular government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the courts and similarly where there has been a well-recognized head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from Inventing a new head of public policy. There are two schools of thought - "the narrow view" school and "the broad view" school. According to the former, courts cannot create new heads of public policy whereas the latter countenances judicial law-making in this area. The adherents of "the narrow view" school would not invalidate a contract on the ground of public policy unless that particular ground had been well established by authorities. Hardly ever has the voice of the timorous spoken more clearly and loudly than in these words of Lord Davey in Janson v. Driefontein Consolidated Mines, Limited (1902) AC 484, 500, "Public policy is always an unsafe and treacherous ground for legal decision." That was in the year 1902. Seventy-eight years" earlier, Burrough, J., in Richardson v. Mellish (1824) 2 Bing 229, 252 SC 130 ER 294, 303, and (1824-34) All ER Reprint 258, 266. described public policy as "a very unruly horse, and when once you get astride it you never know where it will carry you." The Master of the Rolls, Lord Denning, however, was not a man to shy away from unmanageable horses and in words which' conjure up before our eyes the picture of the young Alexander the Great Taming Bucephalus, he said in Enderby Town Football Club Ltd. v. Football Association Ltd. (1971) Ch 591, 606, "With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles." Had the timorous always held "the field, not only the doctrine of public policy but even the Common Law or the principles of Equity would never have evolved. Sir William Holdsworth in his "History of English Law", Volume III, page 55, has said:
In fact, a body of law like the common law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to suppress practices which, under ever new disguises, seek to weaken or negative them.
It is thus clear that the principles. governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution.
The following decisions lay down the principles which would permit a Court to enter into the domain of judicial review in respect of disputes relating to contractual obligation, more particularly when the obligation is of a public character.
(d) L.I.C. Of India and Anr. v. Consumer Education and Research Centre and Ors. AIR 1995 SCC 1811:
28. In Kumari Shrilekha Vidyarthi v. State of U.P. , this Court in paragraph 22 pointed out that the private parties are concerned only with their personal interest but the public authority are expected to act for public good and in public interest. The impact of every action is also on public interest. It imposes public law obligation and impress with that character, the contracts made by the State or its instrumentality. "It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to the adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions." In Food Corporation of India v. Kamdhenu Cattle Feed Industries , in para 8, this Court held that "the mere reasonable or legitimate expectation of a citizen may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process." In Sterling Computers Ltd. v. M. and N. Publications Ltd. , it was held that even in commercial contracts where there is a public element, it is necessary that relevant considerations are taken into account and the irrelevant consideration discarded. In Union of India v. Graphic Industries Co. , this Court held that even in contractual matters public authorities have to act fairly; and if they fail to do so approach under Article 226 would always be permissible because that would amount to violation of Article 14 of the Constitution. The ratio in General Assurance Society Ltd. v. Chandumull Jain , relied on by the appellants that tests laid therein to construe the terms of insurance contracts bears no relevance to determine the constitutional conscience of the appellant in fixing the terms and conditions in Table 58 and of their justness and fairness on the touchstone of public element. The arms of the High Court is not shackled with technical rules or of Procedure. The actions of the State, its instrumentality, any public authority or person whose actions bear insignia of public law element or public character are amendable to judicial review and the validity of such an action would be tested on the anvil of Article 14. While exercising the power under Article 226 the Court would be circumspect to adjudicate the disputes arising out of the contract depending on the facts and circumstances in a given case. The distinction between the public law remedy and private law field cannot be demarcated with precision. Each case has to be examined on its own facts and circumstances to find out the nature of the activity or scope and nature of the controversy. The distinction between public law and private law remedy in now narrowed down....
(e) Union of India and Ors. v. Dinesh Engineering Corporation and Anr. :
12. ...There is no doubt that this Court has held in more than one case that where the decision of the authority is in regard to a policy matter, this Court will not ordinarily interfere since these policy matters are taken based on expert knowledge of the persons concerned and Courts are normally not equipped to question the correctness of a policy decision. But then this does not mean that the Courts have to abdicate their right to scrutinise whether the policy in question is formulated keeping in mind all the relevant facts and the said policy can be held to be beyond the pale of discrimination or unreasonableness, bearing in mind the material on record....
...Any decision be it a simple administrative decision or a policy decision, if taken without considering the relevant facts, can only be termed as an arbitrary decision. If it is so then be it a policy decision or otherwise, it will be violative of the mandate of Article 14 of the Constitution.
(f) Bannari Amman Sugars Ltd. v. Commercial Tax Officer and Ors. :
9. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualised than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.
10. Where a particular mode is prescribed for doing an act and there is no impediment in adopting the procedure, the deviation to act in different manner which does not disclose any discernible principle which is reasonable itself shall be labelled as arbitrary. Every State action must be informed by reason and it follows that an act uninformed by reason is per se arbitrary.
17. Reasonableness of restriction is to be determined in an objective manner and from the standpoint of interests of the general public and not from the standpoint of the interests of persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable merely because in a given case, it operates harshly. In determining whether there is any unfairness involved, the nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time enter into the judicial verdict, the reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Canalisation of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. (See Parbhani Transport Coop. Society Ltd. v. RTA, Shree Meenakshi Mills Ltd. v. Union of India, Hari Chand Sarda v. Mizo Distt. Council, Krishan Kakkanth v. Govt. of Kerala and Union of India v. International Trading Co.)
28. On a plain reading of the directive/communication dated 06/03/2007 one may feel that once the subject matter is stated to be a policy decision, the Government having taken a decision after examination of all aspects, in public interest, the Court should not intervene. If one goes by the form of the communication that would be the result. However, it is well established that the Court is required to consider both the form and the substance of a document and the transaction. This is more so in a case where the challenge is to the existence or otherwise of the policy. Hence, even if one permits the Union of India play in joints in the decision making process yet on application of the tests for judicial scrutiny the substance of the decision is not backed by the decision making process.
29. To examine and to appraise the actual decision making process the Court had requested Assistant Solicitor General Mr. Harin Raval to place before the Court the original file and the Court has gone through the said file. On going through the file it becomes apparent that in fact the decision dated 06.03.2007 cannot be termed to be a policy decision. The entire file pertains to :(i) Funding the completion cost for RGPPL;(ii) Restructuring of the project; and (iii) Treatment of the LNG facility. This becomes clear from the Minutes of the Meetings held on 27.02.2007 and 02.03.2007. These two meetings have been held by the Committee formed under the Chairmanship of Secretary (Financial Sector), Ministry of Finance, Government of India, comprising various stock holders of RGPPL following the meeting of the Empowered Group of Ministers (EGOM) held on 22.02.2007. This meeting and the minutes thereof assume importance as the entire case of the respondents, including Union of India, is founded on the meeting held on 22.02.2007 by EGOM. The genesis of the various meetings held by EGOM and Committee(s) of various Secretarial level officers is found in the note dated 24.03.2006 bearing No. L.11012/1/06-GP-II, Government of India, Ministry of Petroleum and Natural Gas. The subject of the note is 'Review of pipeline connectivity to Dabhol Power Project and LNG terminal'. It is an admitted position that RGPPL is the changed name of Dabhol Power Project wherein apart from setting up of power plant one LNG terminal is also being set up for receiving, processing and transmitting imported LNG of atleast 5MMPTA capacity. Therefore, the submission on behalf of the respondents that there is a policy decision to adopt a pooled uniform price of RLNG is factually not borne out from the record.
30. In fact, the file dates prior to March, 2006 as can be seen from the extracts of the Minutes of the Meeting dated 02.09.2004 held by Cabinet Committee on Economic Affairs. The EGOM has been set up and constituted to consider and decide all issues relating to restructuring of the project. The Minutes of the Meeting of the EGOM specifically record that the meeting was held to review the status of Restructuring and Revival of the Dabhol Power Project and the major outstanding issues that needed review at that stage were : [a] completion of the gas pipeline, [b] signing of the gas supply agreement and the power purchase agreement, and [c] funding for the completion of the project. It is only in paragraph No. 7 that incidentally the issue regarding uniform pooled price for all existing and new customers came up. The issue of supply of RLNG to Dabhol Power Project is actually not a part of the restructuring and revival of that project, but is actually only a stop-gap arrangement. This becomes clear from what is recorded in paragraph Nos. 8 and 9 of the Minutes of the Meeting dated 22.02.2007 of the EGOM. It is categorically recorded that:
8 Chairman, RGPPL apprised the EGOM about the completion of Power Block. He stated that Power Block-II that became operational in April, 2006 was presently running around 330 MW due to pre-mature failure in one of the gas turbine and will be restored to 740 MW by end March, 2007. Power Block-III is scheduled to be completed by April, 2007 as against the original schedule of July,2007. It was mentioned that this completion schedule was subject to availability of bridge loan of Rs. 400 crore from MSEDCL by 28.2.2007.
9. It was further stated that the operation of the Power Block required availability of 1.5 mmpta of R-LNG by 31st March, 2007 and the balance 0.6 mmpta R-LNG by November, 2007. Cabinet Secretary informed that the GAIL has assured that the gas pipeline would be operational by March end barring a delay, if at all of maximum 7 to 10 days. This would supply the 1.5 mmpta of R-LNG supplied by PLL. However, since PLL faces a capacity constraint the additional quantity of fuel required will be procured and supplied by PLL as LNG at Dabhol. The LNG facility of RGPPL that would be ready by November, 2007 would be capable of regasifying this quantity. Since 10-15% of the LNG facility can be operational without the breakwater this target was achievable.
31. Thereafter, in paragraph No. 11(b) it is recorded that full plant load operation would require 2.1 MMPTA of gas supply, out of which PETRONET will supply 1.5 MMPTA through pipeline and the remaining 0.6. MMPTA would be procured by PETRONET from other source as LNG consignments and regasified at the LNG facility of RGPPL. In paragraph No. 11(d) it is recorded that efforts would be made to delink the LNG facility and hive it off to another party. Several parties like PETRONET and GAIL have shown interest. The Committee under the Chairmanship of Secretary (Financial Sector), is to explore various scenarios and submit recommendations to be placed before the EGOM. Once again when one reads communication dated 21.02.2007 issued by Director (GP), Government of India, Ministry of Petroleum and Natural Gas it becomes clear that the pooled price of LNG will come into effect from the date of supply of LNG to Dabhol Power Project and this would remain in force till arrangement for sourcing LNG or Natural gas on long term basis is made for Dabhol LNG terminal.
32. Therefore, it is apparent that not only is there no policy decision as regards uniform pooling of price but the decision is in relation to only one entity viz. RGPPL,i.e. Dabhol Power Project, and that too for a limited period as a stop-gap arrangement till the point of time the LNG terminal which is being set up at Dabhol is made operational. The submission on behalf of the petitioners that PETRONET does not have any capacity for receiving and regasification of imported LNG beyond 5+1.5 MMPTA, thus, appears to be well founded. The record itself reveals that PETRONET and/or GAIL is in the process of developing and setting up of LNG terminal at Dabhol with regasification facility being made available by RGPPL. Therefore, the contention on behalf of PETRONET and other respondents that the policy decision is a long term policy decision and is going to be made applicable in future across the board qua existing and the new customers is not borne out by the original file of Union of India. Even if there can be policy for a section of the public, the requirement of public interest not being restricted to interest of whole community, yet one cannot envisage that there could be a 'public policy' for a single entity. For determination of requirement of public good or public interest the oral submission canvassed at the time of hearing that the ultimate end users would be public at large viz. the consumers of the power that may be generated by RGPPL, does not merit acceptance for the simple reason that if the same test is applied to the case of the petitioners, most of them are already producing power, selling the same to the State owned transmission companies and thus there is already a larger section of the community whose interest is already being served.
33. The contention on behalf of the respondents that more than Rs. 10,000/- crores of public monies have been invested in RGPPL and thus involves public interest also does not merit acceptance because if the investments made by all the petitioners are considered possibly the figure would far exceed the sum invested in one project. In fact during course of hearing on behalf of the petitioners one of the counsels had quoted the said figure approximately at a sum of Rs. 25,000 crores and more. The amount of investment in a single project cannot be the criteria for first recording a decision and then labelling the same to be a policy decision. Just as RGPPL has been funded by funds obtained from the public similarly the petitioners have also been funded by amounts received from the public. Hence, this factor would operate as 'no factor', or 'neutral factor'.
34. Reference to Pragati Power Corporation Ltd., on behalf of the respondents in support of the contention that the uniform pooled price is not only restricted to RGPPL but also to others is also not a correct representation of facts. In fact, communication dated 09.03.2007 from PETRONET to the Ministry of Petroleum and Natural Gas itself records that supply of RLNG to Pragati Power Corporation Ltd., can be only from September,2009. Therefore, not only does the file not reveal any consideration of case of Pragati Power Corporation Ltd., in the course of decision making process, but even if one assumes that the same was considered though not recorded, the same becomes irrelevant because all the contracts between the petitioners and their respective suppliers (Offtakers) are operational only till 31.12.2008 and will come up for review at that point of time for the purpose of supply of RLNG and the price to be charged for such supply. Therefore, the reference to Pragati Power Corporation Ltd. is again not a factor which can justify the decision making process, as it was not even considered in such process.
35. It is also necessary to note that at the meeting of EGOM held on 12.10.2006, Ministry of Petroleum and Natural Gas (MOPNG) was asked to examine the issue of making available LNG supply to the project at a fair price and for this purpose MOPNG was urged to take up the issue strongly and to exert more during the scheduled negotiations so that the prices of LNG could be brought down. In relation to the proposal regarding averaging or pooling price MOPNG was urged to tap all possible alternate suppliers as well as potential domestic suppliers like Reliance, ONGC etc. Lastly, note dated 15.11.2006 records that RGPPL project may be sold to a company who can operate the plant on a sustainable basis. Therefore, even if this meeting of EGOM is considered, it is apparent that the entire emphasis is on restructuring and revival of the project and pricing of the gas to be supplied to the said project is not restricted to term contracts or long term contracts as recorded in communication dated 06.03.2007 but the requirement was to explore all possible sources of supply, including domestic suppliers, for the purpose of pooling, if necessary. Therefore also, the action of the respondents in applying the pooled price only to the contracts of the petitioners with the Offtakers in relation to 5 MMPTA RLNG being supplied by PETRONET to Offtakers for onward supply to the petitioners vis-a-vis the contracts in relation to 1.5 MMPTA being supplied by PETRONET to the Offtakers and in turn to RGPPL is not a decision which is based on the deliberations reflected by notings in the file and the minutes of various meetings. In fact the decision appears to be an act of desperation only because of pressure from the Management of RGPPL on the MOPNG. The decision does not satisfy the test of being fair and just; the classification is not reasonable; there is no nexus with the object sought to be achieved, namely public interest-'public good'.
36. As noted hereinbefore, PETRONET is admittedly not a Government Company. The Central Government therefore could not have issued any direction/directive to PETRONET, notwithstanding the endorsement of copy of communication dated 06.03.2007 to the three distribution companies i.e. GAIL, IOCL & BPCL. In fact, on realising this situation, one finds, that the three distribution companies wrote independent separate letters to PETRONET asking PETRONET to raise the contracted price for RLNG supplied by PETRONET. This action, if considered in isolation, cannot have any decisive indication, but when the same is considered in backdrop of the fact that there is no revision in contracted price by Ras Gas qua LNG supplied to PETRONET this factor assumes importance. In fact, PETRONET would have no reason or occasion to revise the price of RLNG supplied by PETRONET to the three distribution companies, considering the contract between PETRONET and the three distribution companies. In no commercial transaction would a purchaser call upon the supplier to revise the price of the product purchased by such purchaser from the seller. The entire exercise is unnatural, contrary to natural conduct of human affairs, and contrary to a prudent commercial transaction. No person would invite his seller to revise the price to his own detriment viz. detriment of the purchaser. The entire exercise, under the cloak of averaging or pooling of prices seeks to subsidise, artificially reduce, the price in hands of RGPPL in relation to RLNG supplied and this is sought to be done by recovering higher amounts from the petitioners having direct nexus with the distributor companies so as to reimburse the distribution companies for the loss that they suffer while supplying RLNG to RGPPL
37. Thus, the decision cannot be upheld, viz. to average or pool prices of two contracts between PETRONET and the Offtakers for supply of 5 MMPTA and between PETRONET and the Offtakers for the supply of 1.5 MMPTA to RGPPL, because there is no policy in fact. The decision is in relation to only one entity and furthermore is, as the file reveals, a stop-gap arrangement. In fact, the record also reveals that the Dahej-Uran Pipeline Project as well as Dabhol-Panvel Pipeline Projects are primarily not meant for transmission of either LNG or RLNG from Dahej to Dabhol but the pipeline is actually laid down for a reverse transmission, from Dabhol to Dahej so as to link the Dabhol LNG terminal with the already existing network from Dahej viz. HBJ pipeline. The reason being : all power producing blocks of RGPPL, even when fully operational, would require only 2.1 MMPTA of RLNG. The rest of processed LNG is to be commercially marketed by RGPPL. Therefore, when one considers the decision making process in context of the infrastructural facilities, that have been set up and are in the process of being set up, it is apparent that the communication of 06.03.2007 conveying so called pooling of price/averaging of price of RLNG cannot be described as a policy decision, cannot be termed to be a public policy, and is actually a 'short term stop-gap arrangement' to benefit one entity.
38. The Court has also considered the subsequent events for the purpose of ascertaining whether any policy as such is in place. The file reveals that as recorded in the Minutes of the Meeting of the EGOM held on 19.03.2007 the decision of EGOM vide paragraph No. 19(e) further establishes that the decision conveyed on 06.03.2007 is only a stop-gap arrangement. Paragraph No. 19(e) reads:
(e) Long term gas tie up, including from Indian sources, would be worked out by MoP&NG within the next 3 months.
39. During course of hearing repeated reference was made to the Force Majure clause appearing in the contracts between the distribution companies and the petitioners, who are the contracting parties. Suffice it to state that as per Minutes of the Meeting held on 17.03.2007 PETRONET had categorically stated that in the event Force Majure clause affected 5 MMPTA RLNG supplies, the cost of gas to RGPPL would be higher with reference to 1.5 MMPTA supplies, but possibly RGPPL may not agree to the same. This gives an indication that in absence of any policy, in the event of there being no reduction of cost in hands of RGPPL, RGPPL itself may not accept RLNG at the contracted price i.e. 1.5 MMPTA contract between Ras Gas and PETRONET and consequently between PETRONET and the three distribution companies.
40. A further contention was raised on behalf of PETRONET and the three distribution companies that they were bound by communication dated 06.03.2007 issued by Union of India and therefore in absence of any relief directly claimed against the said respondents the petitioner, more particularly of SCA No. 18868 of 2007 was wrongly referring to and emphasing the terms of the contract between the parties. The learned Senior Advocate appearing for GSPCL responded to the aforesaid submission by stating that in fact, the respondents were correct in contending that no relief was claimed against respondent Nos. 2 to 5 and the only prayer was to quash and set aside the action of respondent No. 1 directing respondent Nos. 2 to 5 by impugned communication dated 06.03.2007 to pool price of RLNG and charge uniform price from all existing and new customers; however, even though the petitioner had deleted the said respondents, respondent Nos. 2 to 5 approached the Apex Court and got themselves impleaded in the petition as necessary and proper parties. Therefore, the said respondents cannot now make a grievance that they are not necessary parties in the proceedings.
41. The aforesaid submissions have been recorded in detail only for the purpose of emphasing the fact that the issue as to whether the contract between the parties permits, or does not permit, intervention by Union of India and consequently modification of contracted terms is not an issue before the Court and hence, the Court is not required to enter into the finer nuances of the contract.
42. There is one more aspect of the matter. The contract between PETRONET and the three distribution companies, and further contracts between the three distribution companies and the purchaser of RLNG directly from three distribution companies are not contracts simplicitor for supply of fixed quantity of gas during contracted period, but are fixed term contracts at a fixed rate viz. foreign component of the cost price not being variable. This becomes abundantly clear from the fact that Ras Gas and PETRONET have a contract in place since 1999 for supply of LNG for a period of 25 years. The subsequent contract between Ras Gas and PETRONET is executed in 2003 for supply of 5 MMTPA LNG at a fixed rate. Thus in effect Ras Gas is bound under the contract to supply gas over a period of 25 years from 1999, but the rate at which the same is to be supplied will be fixed from time to time, first such fixed rate contract for 5 MMTPA being for a period of five years ending on 31.12.2008. Therefore also the respondents cannot successfully contend that the contract has to be read only as a contract for supply of stipulated quantity, the price being subject to revision from time to time.
43. Therefore, merely because the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to act fairly, to take into account relevant considerations and discard irrelevant considerations. Even while being circumspect, to adjudicate disputes arising out of contract the Court in exercise of powers under Article 226 of the Constitution would examine the facts and circumstances of each case to find out the nature of the controversy bearing in mind that any action which involves element of public law or public character is amenable to judicial review. The present is not a case where the respondents can successfully contend that interests of the country are involved or that the business affects the economy of the country so as to canalise a particular business in favour of a specified individual. The entire action of the State when tested in light of the aforesaid principles does not emerge as an action which is either fair or not arbitrary.
44. To summarise : the original file reveals that there is no policy decision. The decision if any, is only a short term stop-gap arrangement to benefit one entity. The decision is for the benefit of one entity and is not for the public. In other words, no element of public interest or public good is involved in the decision making process. There is no reasonable classification of a defined class of public for whose benefit the decision is taken. There is no nexus with the object sought to be achieved, viz. public interest. The decision cannot be termed to be fair and just. The decision making process has not considered relevant factors and the decision is sought to be supported by averments made in Affidavit-in-Reply (e.g. Reference to Pragati Power Corporation Limited) which are not borne out by the record and which in terms of the tenure of the contracts, both with the affected petitioners and RGPPL would have no nexus. A decision making process cannot be justified on the basis of statements in relation to facts which have not been considered for arriving at the decision and events which are to take place in future.
45. In the view that the Court has adopted and considering the prayers made by GSPCL in Special Civil Application No. 18868 of 2007 the Court is not required to examine and adjudicate as to whether under the contract the petitioner is entitled to dispute modification/revision of the price charged by the distribution companies for RLNG supplied; and consequently, if revised price is charged, whether the petitioner is entitled to seek refund thereof. That issue is left open so as to enable the parties to take recourse to appropriate proceedings in accordance with law. Because even for the other petitioners there is a dispute between the parties as to whether the revised price charged by the distribution companies has been passed over by the recipients or not, and if passed over whether such passing over is subject to outcome of the petitions. These are issues wherein the facts will have to be ascertained and evidence will have to be led, each contract examined individually. Such an exercise cannot be undertaken in these proceedings.
46. In the result, this petition being Special Civil Application No. 18868 of 2007 is allowed and communication dated 06.03.2007 is quashed and set aside. Rule made absolute to the aforesaid extent. There shall be no order as to costs.