IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 20-10-2009 CORAM: THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN W.P.No.3565 of 2004 Sangameswara 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) ..Petitioner vs. 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. ..Respondents This writ petition is filed under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, calling for the records of the second respondent relating to the Minutes of the meeting held on 13.1.2004 and quash the same in so far as it relates to allocation of natural gas to customers from the gas installation 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 Mohan O R D E R The 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 the allocation of natural gas to a set of consumers. 2. I have heard Mr.Vijay Narayan, learned Senior Counsel for the petitioner, Mr.J.Ravindran, learned Assistant Solicitor General, for respondents 1 and 2 and Mr.J.Srinivasa Mohan, learned counsel for the third respondent. 3. The third respondent herein issued a notice dated 13.11.2003, inviting applications from interested natural gas consumers, for the allocation of natural gas on fall back basis, from the gas installation of ONGC in Ramnad zone. The petitioner, which was in the process of setting up a 4 Star Hotel in Chennai and which had an estimated power requirement in the range of 3 to 4 MW, made an application on 1.12.2003 in response to the said notice, for the allotment of 30,000-40,000 SCMD of natural gas for generation of power continuously for a minimum period of 10 years. 4. It appears that 46 applications were received in response to the above notice, with a total requirement of 12 MMSCMD, though the notice indicated only a quantity of 1 MMSCMD (million standard cubic meters), as available. Therefore, an Internal Departmental Committee was constituted by the third respondent. In a meeting held on 13.1.2004, the said Committee decided to classify all the applications into 4 categories viz., (i) Category-I comprising of Public Sector Enterprises (ii) Category-II comprising of consumers who intended to set up power plants in Ramnad and wheel it to TNEB for their captive consumption and (iii) Categories-III and IV comprising of existing consumers located in places other than Ramnad. After such categorisation, the Committee decided to make allotments of specific quantities to the Tamil Nadu Electricity Board and to 4 other Companies. Aggrieved by such prioritisation and allotment, the petitioner has come up with the present writ petition. 5. Mr.Vijay Narayan, learned Senior Counsel appearing for the petitioner assailed the impugned proceedings primarily on the ground that the classification of all applications into 4 categories, after the issue of the tender notice, amounted to changing the rules of the game, in the course of the event and that the allotment has been made arbitrarily to those who did not even commence their projects in Kuttalam zone. It is the contention of the learned Senior Counsel that the whole process is vitiated by arbitrary and mala fide exercise of power and hence liable to be set aside. The learned Senior Counsel also pointed out that at the time of admission of the writ petition, an interim order was passed, directing the respondents to reserve 30,000 SCMD for the petitioner. Therefore, the learned Senior Counsel contended that the quantity reserved under interim orders of this Court, should be directed to be supplied to the petitioner. https://hcservices.ecourts.gov.in/hcservices/ 6. At the outset, I am unable to accept the contention that on account of the classification of the applicants into different categories, the original notice inviting tenders got tampered with. There is no dispute about the fact that in response to the tender notice, 46 applications were received. There is also no dispute about the fact that the total quantity available was indicated in the tender notice, to be 1.0 MMSCMD and that the total quantity applied for by the 46 applicants, was 12.0 MMSCMD. Therefore, there was no alternative for the Committee to classify the applications into different categories and prioritise them. Moreover, the Supreme Court issued a direction in M.C.Mehta vs. Union of India {2002 (4) SCC 376}, to the effect that whenever there is lack of adequate supply of natural gas, transport sector should receive priority of allotment and that thereafter, it can be allotted to industries, preference being shown to Public Sector Undertakings and Power Projects. Therefore the classification has been done by the Committee only in accordance with the above directions. Hence it cannot be contended that such categorisation amounted to alteration of the tender conditions. 7. The contention that allotment has been made in an arbitrary manner, cannot also be accepted. According to the respondents, the available quantity of 1.0 MMSCMD was sought to be distributed, by the impugned resolution, in the following manner:- Quantity (MMSCMD) 1. TNEB, Chennai - 0.45 2. BOC India Ltd., Kolkata - 0.02 3. Coromandel Electric Co. Ltd - 0.04 4. Arkay Energy Ltd., Chennai - 0.05 5. Arkay Energy Ltd., Chennai - 0.30 8. It is stated in the counter affidavit of the third respondent that out of the above 5 allottees, 3 are in the private power sector and 1 is the Tamil Nadu Electricity Board. The remaining allottee was a manufacturer of Oxygen for medical use. Therefore, the priority given to them, is in tune with the directions issued in M.C.Mehta case. The Supreme Court expressed its concern in the said case that public health should take precedence over all other considerations. Therefore, the allotment in favour of the manufacturer of Oxygen for medical 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 great extent. It is stated in paragraph-7 of the counter affidavit filed in 2007 and an additional affidavit now filed at the time of hearing, that the quantity originally estimated by ONGC, as available in Ramnad zone in 2003-2004 was 1.75 MMSCMD. Therefore, an allocation of 1.884 MMSCMD was made. But the availability of gas under the Administered 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 the Market 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 in the contracted quantity. Hence, the question of the quantity reserved under interim orders of this Court, being supplied to the writ petitioner, also may not arise. 10. Relying upon a communication dated 20.6.2005 of the Government of India, Ministry of Petroleum and Natural Gas, addressed to the third respondent, it was contended by Mr.Vijay Narayan, learned Senior Counsel for the petitioner that the quantity reserved or committed as per Court orders, also deserve priority of treatment. Therefore, the learned Senior Counsel contended that the petitioner also deserve priority of treatment. A letter dated 13.3.2004, issued by the third respondent to one of the allottees, indicating the reservation of 30,000 SCMD for the benefit of the petitioner in terms of the interim orders of this Court, was also brought to my notice. 11. However, the above communications cannot advance the case of the petitioner. Once it is found that the impugned decision to make allotments in a particular manner cannot be found fault with, the petitioner would not be entitled to succeed in the main writ petition merely on the basis of any interim order that he was in enjoyment. When the third respondent is not able to supply even the contracted quantity, there is no question of issuing a direction to the respondents to rob Peter to pay Paul. 12. The contention that the allotment to two parties, who were unable to implement the project as per the original agreement, was arbitrary and vitiated by non-application of mind, cannot be accepted, since it is pointed out by the respondents that those two parties were already granted extension of time. Moreover, in respect of one allottee by name Regency Power Corporation, the allotment was made only on account of the necessity to transfer their allocation from Kuttalam zone to Ramnad zone, due to short supply in Kuttalam. 13. In any event, the petitioner has not made any of the allottees, as parties to the writ petition, though the petitioner has challenged the allocations made in favour of at least 3 of those 5 allottees. In such circumstances, the question of setting aside the allotment in their favour, behind their back, does not arise. 14. In view of the above, I find no merit in this writ petition and hence it is dismissed. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ svn To 1.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 2004 bvn(co) ar/26.10.2009. https://hcservices.ecourts.gov.in/hcservices/