THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.12850 of 2006 Dated:02nd June, 2010 Between: M.V.B.Reddy ….Petitioner and 1. The Union of India, rep. by its Secretary to Government, Ministry of Petroleum & Natural Gas, Shastri Bhavan, New Delhi & Ors. …Respondents **** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.12850 of 2006 ORDER: This Writ Petition has been filed by M.V.B.Reddy with a prayer to issue a writ, order or direction, more particularly, one in the nature of Writ of Mandamus declaring the action of the respondents in not considering the representations commencing from 14.07.2005 to 01.06.2006 as illegal and arbitrary. 2. The case of the petitioner as set out in the affidavit filed in support of the Writ Petition, in brief, is as follows: M/s.Regency Ceramics Limited-5th respondent is a public limited company established as per the provisions of the Companies Act, 1956. The 5th respondent got allocation of natural gas for the purpose of various manufacturing activities such as manufacture of ceramic products. According to the petitioner, the 5th respondent transferred the allocation of natural gas to M/s.Regency Power Corporation Pvt. Ltd-6th respondent. The 6th respondent is neither the subsidiary of the 5th respondent nor the 5th respondent got 51% equity shares in the 6th respondent. The persons in the management of the 5th respondent company made a false declaration before the Registrar of Companies that it has got 51% stake in the 6th respondent company. The 5th respondent company has its unit in Pondicherry and it has no manufacturing activity in Tamil Nadu, where the 6th respondent supposed to have set up a power plant. When the 3rd respondent-Gail India Limited initiated enquiries to ascertain factual position, the 6th respondent filed writ petition in the Delhi High Court and subsequently, withdrew the same. The respondents 1 to 4 are under an obligation to see that the allotted gas be used in accordance with the guidelines framed by the Government of India. The allottee has no right to transfer gas allocation to third parties. He made complaints to the Commissioner, Central Vigilance Commission-2nd respondent on 14.07.2005 and 20.07.2005 for unauthorized transfer of natural gas to the 6th respondent by the 5th respondent. There being no action on his representations, he approached this Court invoking the jurisdiction under Article 226 of the Constitution of India, with the prayer stated supra. For better appreciation of the grievance of the petitioner, I deem it appropriate to refer paras.8 and 9 of the affidavit filed in support of the Writ Petition, which read as follows: “The petitioner caused further enquiries with the Registrar of Companies and came to know that the persons in management of the company viz., Regency Ceramics Ltd. has traded with the gas allocation by making false declaration to the effect that Regency Ceramics Ltd. has got 51% stake in the new company viz., Regency Power Corporation. It is in these circumstances that the petitioner addressed a letter dated 14.07.2005 to the first and second respondents setting out the above facts and requesting the respondents 1 and 2 to take appropriate action, against all concerned. In the said letter, the petitioner also indicated that Regency Ceramics Ltd., has its unit in Pondicherry and that they have no manufacturing activity in Tamil Nadu where Regency Power Corporation was supposed to have setup the power plant. The petitioner submits that he had enclosed along with the said letter the copy of the audited report of Regency Ceramics Ltd., to substantiate their contention. Copy of such communication was also addressed to the Chairman & Managing Director of Gail India Ltd., State Bank of India who are the bankers of Regency Ceramics Ltd. The petitioner also sent similar letters to the Director (Vigilance), Gail India Ltd., i.e., 3rd respondent herein with copy to the 2nd respondent i.e, Commissioner, Central Vigilance Commission, New Delhi. In the meanwhile the name of RPCL was hanged as RPCPL. 9. The petitioner submits that following the above letter dated 14.07.2005, he addressed another letter on 27.09.2005 to the first respondent with copy to the second respondent enclosing the audited 21st annual report of Regency Ceramics Ltd., with the Registrar of Companies covering the period 2004-05 to substantiate the facts submitted by him earlier to the effect that Regency Ceramics Ltd. has no stakes in Regency Power Corporation Pvt. Ltd. and that the latter company is not a subsidiary of Regency Ceramics Ltd. The petitioner followed up with the respondent by addressing further communications dated 28.10.2005 and 16.12.2005.” 3. Rule nisi came to be issued on 22.11.2006. 4. The respondents 3 and 4 filed common counter affidavit. Mr.N.S.Parthasarathy, General Manager (Gas Marketing), GAIL (India) Ltd., has sworn to the counter-affidavit. It is stated in the counter affidavit that the competent authority i.e., Ministry of Petroleum and Natural Gas, Government of India passed appropriate orders vide orders dated 30.06.2006 after considering all the aspects including the representation dated 01.06.2006, which was forwarded by the GAIL to the Ministry of Petroleum and Natural Gas for taking appropriate action vide its letter dated 12.06.2006. In view of the order passed by the Central Government dated 30.06.2006, which was issued in consultation with the Ministry of Law holding that the assignment of gas supply by the 5th respondent in favour of the 6th respondent is in accordance with the Gas Supply Agreement, there is no need for these respondents to advert to and reply to various allegations made in the affidavit filed in support of the writ petition. 5. 6th respondent filed separate counter-affidavit. Mr.K.A.Sastry, Director and authorized representative of M/s.Regency Power Corporation Pvt. Ltd., has sworn to the counter-affidavit. It is stated in the counter-affidavit that assignment of natural gas supply by the 5th respondent in favour of the 6th respondent is in accordance with the Gas Supply Agreement (GSA). The transfer of gas was permissible under Article 12 of the Agreement, dated 21.02.2002. The correspondence between the 5th respondent and the 6th respondent with regard to tripartite agreement has been detailed in the counter- affidavit. 6. Heard Sri N.Subba Rao, learned counsel appearing for the petitioner; learned Assistant Solicitor General appearing for the respondents 1 and 2; Sri K.Ventkata Rao, learned counsel appearing for the respondents 4 and 5 and Sri E.Manohar, learned Senior Counsel appearing for the 6th respondent. 7. Learned counsel appearing for the petitioner submits that the petitioner lodged number of representations complaining unauthorized transfer of natural gas supply from the 5th respondent to the 6th respondent and the said representations remain unattended and therefore, necessary direction is required to be issued to the respondents 1 to 4 to consider the representations submitted by the petitioner and pass appropriate orders thereon. Learned counsel refers the representations dated 14.07.2005, 27.09.2005, 28.10.2005, 16.12.2005, 14.02.2006, 22.04.2006, 02.05.2006 and 24.05.2006. He laid much emphasis on the contents of the representations that the transfer of gas supply by the 5th respondent to the 6th respondent is contrary to the rules in force. 8. Learned counsel appearing for the respondents 3 and 4 submits that the matter has been examined by the Competent Authority and issued proceedings approving the assignment of gas supply by the 5th respondent to the 6th respondent. Learned counsel refers the letter dated 30.06.2006 addressed to the Chairman and Managing Director, GAIL (India) Limited-3rd respondent by the Director, Government of India, Ministry of Petroleum and Natural Gas, New Delhi. The text of the said letter, reads as hereunder: “I am directed to refer to the corresponding resting with GAIL’s letter No.DLH/Mktg./CZO/2006/MOPNG, dated 10th May, 2006 on the above subject and to state that the issue of assignment of gas allocation of M/s.Regency Ceramics Ltd. (RCL) in favour of M/s.Regency Power Corporation Pvt. Ltd. (RPCPL) has been examined in consultation with Ministry of Law. Ministry of Law has concluded that the assignment of gas supply by M/s. RCL in favour of RPCPL is in accordance with the Gas Supply Agreement (GSA). 2. In view of above, I am directed to convey that GAIL may take further necessary action to sign the Agreement with M/s. Regency Power Corporation Pvt. Ltd. for extending the date of gas drawal upto 31.7.2006 as communicated vide this Ministry’s letter of even number dated 17th October, 2005. Further, GAIL may take immediate necessary action for gas pipeline connectivity with the plant of RPCPL within the extended period of gas drawal date of 31.7.2006. In case there is any delay in laying the pipeline, gas drawal date may be suitably extended till the completion of pipeline connectivity.. 3. The above is subject to the user members, including RCL., picking up equity stake so that user members have atleast 26%.” 9. Sri E.Manohar, learned Senior Counsel appearing for the 6th respondent submits that the petitioner has no locus standi to question the assignment of gas supply by the 5th respondent to the 6th respondent, since he was not a shareholder in the 5th respondent company as on the date of his representations. 10. In response, learned counsel appearing for the petitioner submits that the petitioner is a shareholder as on this day and the petitioner has every right to point out the illegality committed by the 5th respondent in respect of the assignment of gas supply by the 5th respondent to the 6th respondent. 11. Learned Senior Counsel appearing for the 6th respondent submits that the tripartite agreement came to be entered into after approval of the Government of India and by virtue of the tripartite agreement, the gas supply has been assigned in favour of the 6th respondent and the said assignment is in accordance with the terms of the contract. Much emphasis has been laid on Article 12 of the Contract dated 21.02.2002 entered into between M/s.Gas Authority of India Limited and M/s.Regency Ceramics Limited, which reads as hereunder: ARTICLE – 12 TRANSFER OF RIGHTS 12.01 The BUYER may transfer or assign its rights and obligations under this CONTRACT to any other associated company or corporation by giving prior notice to the SELLER of such transfer or assignment provided further all its rights and obligations under this CONTRACT for supply of GAS shall stand transferred to such associated company or corporation to whom BUYER transfers its rights and obligations. Provided further that the BUYER shall first make all payments in full including interest, if any, before such transfer or assignment. The said assignment (or) transfer shall be with the prior written consent of the SELLER. 12.02 Notwithstanding anything above, the SELLER shall have right to reject the said assignment (or) transfer of the CONTRACT without assigning any reason. Further, if at any stage during the period of the CONTRACT, it is found that the assignment (or) transfer of the CONTRACT of GAS supply is a ‘Sale’ (or) against the spirit of the CONTRACT, the SELLER shall have the right to stop/suspend the GAS supply and refer the matter to Ministry of Petroleum & Natural Gas/Gas Linkage Committee for cancellation. However, if assignment (or) transfer is sought during the implementation of activities enumerated in Annexure II hereto, the matter shall be referred to Ministry of Petroleum & Natural Gas/Gas Linkage Committee for decision.” 12. It is evident from the material brought on record that the transfer of gas supply to the 6th respondent is as per approval of the 1st respondent. The 1st respondent stated in the letter bearing No.L- 12014/4/99-GP, dated 30th June, 2006, that the assignment of gas supply by 5th respondent to the 6th respondent is in accordance with the gas supply agreement. 13. In view of the material placed on record, I do not see any substance in the contention advanced by the petitioner that the assignment of supply of gas by the 5th respondent in favour of the 6th respondent is contrary to supply agreement. 14. Accordingly, the Writ Petition is dismissed. No costs. ______________________ B.SESHASAYANA REDDY, J. Date:02nd June, 2010. cs THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.12850 of 2006 Dated:02nd June, 2010.