Delhi High Court Cairn India Limited & Ors vs Directorate General Of Foreign Trade & ... on 18 October, 2016 $~ * + W.P.(C) 11600/2015 & CM APPL. 30709/2015 CAIRN INDIA LIMITED & ORS ..... Petitioners Through Mr. C.S. Sundaram, Senior Advocate with Ms. Fereshte Sethna, Mr. Rajat Juneja and Mr. Adhijraj Malhotra, Advocates. versus DIRECTORATE GENERAL OF FOREIGN TRADE & ORS ..... Respondents Through Mr. Tushar Mehta, ASG with Mr. Anurag Ahluwalia, CGSC with Mr. Naveen Bhardwaj, Advocate for R1& 2/UOI. Mr. V.N. Koura with Mr. P.K. Benipal and Mr. Sumit Benipal, Advocates for R3. Reserved on : 10th August, 2016 % Date of Decision : 18th October, 2016 HON'BLE MR. JUSTICE MANMOHAN JUDGMENT MANMOHAN, J: 1. Petitioners have filed the present writ petition seeking a writ of mandamus or any other appropriate writ, order or direction to respondent no.1 to issue to the petitioners necessary permissions/approvals/ authorisations for direct export or in the alternative, permission/facilitation W.P.(C) 11600/2015 Page 1 of 27 for canalised export through respondent no.3 of petitioners' share of crude oil extracted from the Rajasthan Block RJ0N90/1 (for short "Rajasthan Block"), to the extent not lifted by respondent no. 2 or its nominee Public Sector Undertakings (for short "PSUs"). 2. Mr. C.S. Sundaram, learned senior counsel for the petitioners stated that exploration, development and production of crude oil is a highly capital extensive operation. He stated that petitioner nos. 1 and 3 have invested more than rupees thirty thousand crores in the Rajasthan Block and have brought world class technology to India. 3. He stated that today, at the current level of production, approximately sixty to seventy per cent of the price realized from the Rajasthan Block Crude Oil production flows back to the public exchequer in the form of profit petroleum, inter alia through share of Government's nominee, royalty (paid to the State Government) and cess. He pointed out that every additional US$ 1 per barrel of Rajasthan Block Crude Oil realized would fetch the public exchequer an additional US$ 41 million / Rs. 258 crores (Rs. 63/US$) on account of the Government's share of profit petroleum, share of its nominee, royalty and cess. 4. Mr. Sundaram contended that the Foreign Trade Policy of Government of India permits canalized export of crude oil through respondent no. 3 or direct export with the approval of respondent no.1. He stated that as Sr. No. 113 of Chapter 27 of Schedule 2 of ITC (HS) Classification of Export and Import provides for procedure for export of crude oil, it is permissible to export the crude oil. Consequently, according to him, petitioners have a legal right to export and the present writ petition has been filed for enforcement of the said legal right. W.P.(C) 11600/2015 Page 2 of 27 5. Learned senior counsel for petitioners submitted that though Article 18.1 of the Production Sharing Contract (for short "PSC") provides that until India attains selfsufficiency, the Contractor is obliged to sell to the Government or its nominee the entire share of crude oil, yet Article 18.7 of the PSC entitles the Contractor to freely lift, sell and export any portion of its share of the Rajasthan Block Crude Oil which the Government or its nominee PSUs are unable to lift. He stated that as Government and its Nominee PSUs are unable to lift the entire Rajasthan Block Crude Oil, Article 18.7 of the PSC comes into play and the petitioners have the unfettered right to lift and export the Rajasthan Block Crude Oil to the said extent. 6. He further submitted that Article 18.7 of the PSC is independent of Article 18.1 and therefore, the fact that India has not attained selfsufficiency is irrelevant. He also stated that Article 18 of the PSC does not provide for partial waiver/dispensation of the condition of India attaining self sufficiency. 7. In any event, he submitted that this embargo had been dispensed with in the meeting of the Empowered Committee of Secretaries held on 17 th August, 2009. 8. Mr. Sundaram lastly contended that respondentUOI's decision to deny permission to export was with intent to force the petitioners to sell their crude oil containing high viscosity and wax t