Case: center For Public Interest Litigation &amp; Anr Vs. Union of India &amp; Ors

2. Respondent No. 1, Government of India (GOI), took a policy decision in the year 1992 to offer some of its discovered oil fields for development on a join venture basis. Its decision in this regard was that medium sized oil fields will be offered for development under the joint venture with the participation of the Oil and Natural Gas Commission (ONGC)/the Oil India Limited (OIL) while the small sizedwill be offered for development without the participation of the ONCG/OIL. This policy decision was taken on the ground that the country was facing foreign exchange crisis and there was lack of resources to fully develop theseThe GOI was also of the opinion that the domestic crude production was declining and there was a need to augment its production. With the said policy in mind, the GOI invited bids for 12 medium sized oil fields and 31 small sized oil fields. In response to the invitation of the GOI in regard to the two medium sizednamely, Panna and Mukta, as many as 8 consortia offered their bids and after preliminary technical evaluation of those bids, discussions were held with the bidders and based on such discussions, the GOI shortlisted respondent Nos. 4 and 5 and another consortium of Hyundai Heavy Industries. Essar Oil Limited, Dan Offshore and Albion International. Sometime in October 1993, these two consortia were called for further negotiations by the Negotiating Committee to finalise the contract and after such negotiations and evaluation of the bids on the recommendations of the said Committee, the bid of respondent Nos. 4 and 5 was accepted in February 1994 and a Letter of Award (LOA) was issued to the said consortium. As per this award, thePanna and Mukta wereagreed to be given to the said consortium with a participating interest of 30% each to respondent Nos. 4 and 5 in association with the ONGC which was given a share of 40%. The said contract provided that the GOI had the first option to purchase up to 100% of the production of oil from these fields at an international market price to be determined in accordance with the provisions of the contract. It further provided that the international price shall be determined with reference to one or more freely traded international market prices which bear resemblance to the produce crude in terms of standard parameters such as gravity, sulphur content, yield etc. which are critical to the market value of the crude. The contract price to be paid to the contractor had to be the price of Brent (DTD) crude with a discount of $ 0.10 cents per barrel. Brent is said to be a similar sweet crude which is freely traded in the international market. The actual contract termed as `Profit Sharing Contract (PSC) was signed by the GOI and the consortium of respondent Nos. 3, 4 and 5 in regard to Panna and Mukta3. The appellants herein challenged the awarding of this contract before the High Court of Delhi on 26th July, 1997 seeking the following reliefsdirect a thorough criminal investigation into this deal by an appropriate agency to be supervised by a senior independent person such as a retired Judge of a High Court or the Supreme Court;direct the Respondents No. 1 and 2 to take further follow up action by way of criminal prosecution and departmental proceedings against officials who have played a corrupt or improper role in the award of the contract for the PannaMukta oil fields;order the cancellation of the contract for the PannaThe main ground of attack before the High Court was that the contract in question was awarded arbitrarily for collateral consideration and is actuated by mala fides. It was contended before a High Court that the oil fields which were developed by a public sector company, namely, the ONGC at an expenditure of Rs. 800 crores and which had the reserve oil capacity worth more than Rs. 20,000/crores was given on a 25 years lease to a private joint venture for a paltry sum of Rs. 12 crores. It was also alleged that the quantum of oil and gas reserves which was originally estimated at 54.25 MMT was subsequently brought down to 14 MMT in order to justify the award of this contract. It was also contended before the High Court that the GOI agreed for a fixed royalty and cess payment from the consortium which would mean that the GOI has tied its income from the royalty and cess from theseto a fixed rate for a period of 25 years which was opposed to all known standards of business prudence. They also contended that the price at which the GOI agreed to purchase the oil from the JV was far in excess of the market price and over and above that excess market price, the GOI also agreed to pay a further sum of $ 4 per barrel of oil as a premium on an ostensible ground of the quality and locational advantage of the oil so purchased.The appellants who were the petitioners before the High Court strongly relied on the observations made by the Comptroller and Auditor General of India (CAG) who in its report submitted to the Parliament, had raised many objections in regard to this contract. They also relied upon a recommendation made by the Superintendent of Police, Anti Corruption Unit of CBI, Bombay, who had recommended the filing of a First Information Report pointing out various irregularities committed in the awarding of this contract. According to the appellants, this recommendation of the Superintendent of Police, CBI, Bombay, was scuttled by some higher officers of the CBI with a view to favour the persons involved in awarding of this contract. It was also alleged in the said petition that some of the senior officers of the ONGC who actively participated in the negotiations which culminated in awarding of this contract in favour of respondent Nos. 4 and 5 had joined the services of respondent Nos. 4 or 5 which fact, according to the petitioners, clearly indicated that these officers during their tenure with ONGC had colluded with respondent Nos. 4 and 5. It was further alleged that the contract in question lacked transparency in the invitation of the bids as well as in the evaluation of bids which has led to the grant of a very valuable contract on unconscionable terms leading to plundering of national resources. The appellants also relied on a statement purported to have been made by the Private Secretary to the then Minister of Petroleum, who had averred in the said statement to the investigating agency, to the effect that large sums of monies were paid to the said Minister.The petition was opposed by all the respondents on almost similar grounds contending that the contract in question was awarded after a careful consideration of all the commercial/technical aspects of the contract bearing in mind the policy of the GOI in this regard and the contract in question was to the best advantage of the GOI and the ONGC. The respondents have asserted that there has been no collateral consideration or mala fides involved in awarding of the contract; and that each of the terms of the contract was carefully considered keeping in mind the interest of the GOI and the ONGC. It was further argued that the figures mentioned in the writ petition are wholly imaginary and exaggerated both in regard to the oil reserves as also in regard to potential returns from the oil fields and as a matter of fact the estimated take of the GOI and the ONGC in this contract is to an extent of 80 to 82 per cent of the total net revenue or technical profits from the contract. The respondents also denied the fact that under the contract the GOI had agreed to purchase the crude oil from the joint venture consortium at a highly inflated price of $ 24 per barrel which included a premium of $ 4 per barrel. According to the respondents, this figure was deliberately inflated by the petitioners, and there was no such agreement to pay $ 4 per barrel as premium. On the contrary, the price fixed under the contract for purchase of the crude oil by the GOI was the international market price prevailing on the date of such purchase minus a rebate of $ 0.10 cents per barrel on such price which meant that the price paid by the GOI was less than the international price prevailing. The respondents also questioned the correctness of the petitioners claim that the quantity of oil reserves in these wells were to an extent of 54.4 MMT and also contended that at no point of time the reserve oil figure was deflated, as alleged in the petition. They also contended thatof the officials named in the petition had no effect on the contract. In regard to the statement of Mr. Safaya, they contended that the alleged statement of the Private Secretary to the Minister was false and, at any rate, the same was subsequently withdrawn before the Court and the said bribery case is theof a pending criminal trial. The CBI has also denied the allegation made against it.The High Court as per its judgment dated 25th January, 1999 rejected the preliminary objection of the respondents in regard to the maintainability of the petition and proceeded to deal with the petition on its merits. It came to the conclusion that the questions raised by the appellants/petitioners in their petition involved matters of economic policy in respect of which the GOI had greater latitude and flexibility and the Courts would be slow to interfere in such matters. Dealing with the allegation pertaining to abnormality in fixing of royalty and cess amounts payable by the joint venture, the High Court came to the conclusion that the liability to pay royalty is upon the oil produced and sold, irrespective of the price payable by the GOI which could vary depending on the international market. On this foundation, it came to the conclusion that there was no basic fallacy in the methodology adopted by the GOI as to the payment of royalty and cess. It also held that in regard to the evaluation of bids, more than one view was possible, hence it could not come to the conclusion that the view taken by the GOI was actuated by mala fides. In regard to the price payable by the GOI for the crude oil to be purchased from the joint venture, the High Court came to the conclusion that the price payable was actually less than the international price for oil of similar proof and the High Court concluded that the Governments take in the contract would not be less than 80% of the total value of the contract. In regard to the complaint made against the CBI, the High Court refrained from expressing any opinion. On this basis, the High Court came to the conclusion that the allegations of the petitioners before it that the contract in question was unconscionable as to call for an independent probe, were not established and, accordingly, dismissed the petition.

Court's reasoning:
25. This leaves us to consider the argument of the appellants in regard to the conduct of the CBI before the High Court as respondent No. 2 in the writ petition. Though the appellants have made many allegations against the investigation conducted by the CBI in this case, we do not think it is necessary for us to go into all these allegations except confining our consideration to the stand taken by the CBI before the High Court as to the existence ofFile No.1/636/D/95/AC/BOM said to have been opened by the then Superintendent of Police, CBI, Mumbai.According to the appellants, the said file is in continuation of Part I file which was meant to be sent to the headquarters. In the writ petition, it was specifically alleged that this Part II file was opened in the Anti CorruptionCBI, Mumbai sometime in March, 1996 itself and the same was segregated from the original file and withheld by some officers of the CBI with ulterior motives. In reply to the said allegation, the CBI filed a counter affidavit before the High Court verified by one Shri K. Surenderan Nair, Deputy Superintendent of Police, CBI Special Task Force, New Delhi, wherein in paragraph 4 of the said affidavit it is stated thusof File No. 1/636/D/95/AC/BOM in which Shri Y.P. Singh, the then Superintendent ofACB, Mumbai Branch allegedly recommended that a FIR be registered and a Regular Case started, it was got checked up with Dy. Inspector General of Police, ACB Mumbai who has intimated that no such file is in existence in ACB Mumbai Branch." (emphasis supplied).It is based on the use of the words "no such file is in existence" which made the appellants contend before the High Court that a deliberate incorrect statement was made by the CBI in its affidavit filed before the High Court with a view to deny the allegation made by the writ petitioners as to the motive of the superior officers of the CBI to suppress the contents offile opened by said Mr. Y.P. Singh, Superintendent of Police. The writ petitioners before the High Court in their rejoinder affidavit reproduced certain portions of the saidfile which contained the nothings of the senior officers of the CBI including the one dated 11.4.1996 of Mr. Raghuvanshi who instructed Mr. Nair to swear to the first affidavit of the CBI. Still when the CBI filed the first affidavit before the High Court on 19.8.1997, Mr. Raghuvanshi instructed the deponent of the said affidavit to state before the Court that "no such file is not in existence in ACB Mumbai Branch". When the rejoinder affidavit was filed, it seems the CBI was caught on the wrong foot and it tried to wriggle out of the situation by filing another affidavitthis time sworn to by Mr. Raghuvanshi himself wherein an ingenuous stand was taken that the intention of the CBI in informing the Court in the first affidavit by using the words "no such file is in existence in ACB Mumbai Branch" was to intimate the Court that no such file was available at the time of filing of the first affidavit. While examining this belated explanation of the CBI we have to bear in mind that the first affidavit of the CBI was, among other facts, in reply to the specific allegations of the writ petitioners as to the opening of and the contents of Part II file which, according to the writ petitioners, was being suppressed by the CBI from the Court. As a matter of fact, in para 18 of the writ petition, it was stated thusfile containing recommendation of registering a regular case in the matter was withheld by the then Joint Director, CBI Shri Mahendra Kumawat and was not sent to the head quarters.While the CBI had to explain this averment made in para 18 of the writ petition, if really it wanted to convey to the Court as to theII file to comment on the above allegation, one would have expected the CBI to come forward with a simple explanation that it is unable to respond to the above allegation in view of the fact that the said file was not traceable instead of averring in the affidavit that no such file is in existence. The use of the words "no such file" clearly indicates that what the CBI intended to convey to the Court in the first affidavit was to tell the Court that such file never existed and it is only when the reply to the said affidavit was filed by the writ petitioners with a view to get over the earlier statement, the second affidavit was filed by Mr. Raghuvanshi interpreting the word "existence" to mean "not traceable". In the circumstances mentioned hereinabove, we are unable to accept this explanation of the CBI and are constrained to observe that the statement made in the first affidavit as to the existence offile can aptly be described as suggestion falsi and suppressio veri. That apart, the explanation given in the second affidavit of the CBI also discloses a sad state of affairs prevailing in the Organisation. In that affidavit, the CBI has stated before the Court thatfile with which the Court was concerned, was destroyed unauthorisedly with an ulterior motive by none other than an official of the CBI in cullousion with a senior officer of the same Organisation which fact, if true, reflects very poorly on the integrity of the CBI. We note herein with concern that Courts including this Court have very often relied on this Organisation for assistance by conducting special investigations. This reliance of the Courts on the CBI is based on the confidence that the Courts have reposed in it and the instances like the one with which we are now confronted with, are likely to shake our confidence in this Organisation. Therefore, we feel it is high time that this Organisation puts its house in order before it is too late.Leaving apart the above observations of ours in regard to the CBI, having considered all the materials placed before us and the arguments addressed, we are satisfied that on the facts and the circumstances of this case, the prayer of the appellants to direct a criminal investigation into the deal in question by an appropriate agency, as prayed for in the appeal, cannot be granted.