Arun Kumar Agrawal vs Union Of India & Ors

2. Government of India had, earlier, retained the exclusive privilege for mining of hydrocarbons, which was carried out on nomination basis through the statutory corporations like ONGC. The need for maximising domestic exploration of production of oil led to the Government of India encouraging private sector participation in the exploration of oil and natural gas from the year 1980. Rajasthan Block (RJ-ON-90/1) was one of the Pre-New Energy Licensing Policy (Pre-NELP) exploration block offered by a Competitive Building Mechanism. The said block was offered in the 4th round of Pre-NELP regime to M/s. Shell India in execution of a Production Sharing Contract (PSC) on 15.5.1995. Since the exploration licence for Rajasthan Block was held by ONGC, the PSC had three parties, (a) Government of India, (b) the bidder, M/s. Shell India Production Development BV (Shell) and (c) the licensee ONGC. PSC was entered into for the exploration and exploitation of crude oil and natural gas. As per the PSC, ONGC is holding 30% of the participating interest (PI) in the development or within the contract area since 13.1.2005.

3. Shell failed to make any commercial discovery even after investing US$ 9 million and was contemplating to part with its interest in the PSC. Consequently, Cairn Energy India Pvt. Ltd. (CEIL) acquired 27.5% of Shell’s interest under the contract with effect from 27.1.1999 and a further 22.5% with effect from 20.12.1999. Cairn Energy Hydrocarbons Ltd. (CEHL) acquired Shell’s remaining 50% interest under the contract with effect from 23.6.2003. CEIL and CEHL, subsidiary companies of CAIRN, have accordingly succeeded Shell as parties to the aforementioned contract and together became the holder of the 70% of the PI.

5. CIL and its subsidiary have interests in the seven exploratory blocks (out of which Block VN-ONN-2003/1 has already been relinquished) and three producing fields in India and another exploration block in Sri Lanka as per the following details:

20. We notice that the above report of the SBI Caps was placed before the 109th Project Appraisal Committee meeting held on 27.9.2011, wherein after detailed deliberations, the PAC resolved for consideration and approval of the ONGC Board that ONGC might not exercise its pre-emptive rights with reference to the offer made by CAIRN and its associates to Vedanta and its associates, for the proposed transaction of sale of shares of CIL at the rate of Rs.355/- per share as the same was more than the value estimated by SBI Caps. It further resolved that the NOC to the proposed transaction be granted to CAIRN with a condition that CAIRN, Vedanta and their associates should enter into an agreement with ONGC to protect ONGC’s interest so that royalty and cess in respect of block RJ-ON-90/1 would be binding on Cairn, Vedanta and their future assignees etc. in alignment with MoPNG direction dated 26.7.2011.

shall agree and give an undertaking that Royalty paid by ONGC is cost recoverable by ONGC as contract costs, as per the provisions of PSC.

54. We have referred to the report of the CAG, the role of the PAC and the procedure followed in the House, only to indicate that the CAG report is always subject to scrutiny by the Parliament and the Government can always offer its views on the report of the CAG.

55. The question that is germane for consideration in this case is whether this Court can grant reliefs merely placing reliance on the CAG’s report. The CAG’s report is always subject to parliamentary debates and it is possible that PAC can accept the ministry’s objection to the CAG report or reject the report of the CAG. The CAG, indisputably is an independent constitutional functionary, however, it is for the Parliament to decide whether after receiving the report i.e. PAC to make its comments on the CAG’s report.

58. In such circumstances, we find no merits in the writ petition which was filed without appreciating or understanding the scope of the decision or the making process concerning economic and commercial matters which gives liberty to States and its instrumentalities to take appropriate decision after weighing advantages and disadvantages of the same and this Court sitting in this jurisdiction, as already indicated, is not justified in interfering with those decisions, especially when there is nothing to show that those decisions are contrary to law or actuated to mala fide or irrelevant considerations. The writ petition, therefore, lacks merits. Hence, the same is dismissed.

………………………………..J. (K. S. RADHAKRISHNAN) ………………………………..J. (Dipak Misra) New Delhi, May 09, 2013 ITEM NO.1A COURT NO.9 SECTION PIL (For Judgment) S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS WRIT PETITION (CIVIL) NO(s). 69 OF 2012 ARUN KUMAR AGRAWAL Petitioner(s) VERSUS UNION OF INDIA & ORS. Respondent(s) Date: 09/05/2013 This Petition was called on for pronouncement of judgment.

Hon'ble Mr. Justice K.S. Radhakrishnan pronounced the judgment of the Bench comprising His Lordship and Hon'ble Mr. Justice Dipak Misra.

The writ petition is dismissed in terms of the signed judgment.

(Signed "Reportable" Judgment is placed on the file)