Telangana High Court Pioneer Power Ltd vs Gail India Ltd on 6 June, 2022 W.P.No.37418 of 2021 1 THE HONOURABLE SMT. JUSTICE P.MADHAVI DEVI WRIT PETITION No.37418 of 2021 ORDER: This Writ Petition has been filed seeking a writ of mandamus declaring the action of the Respondent company in refusing to execute Gas Sales Agreement with the petitioner and demanding payments from the petitioner on the ground of non payments of alleged disputed amounts under the Gas Sales Agreement dated 21.02.2011 and 05.01.2016 as arbitrary, illegal and consequently to direct the Respondent to execute the Gas Sales Agreement on such lawful terms as may be mutually agreed upon without insisting for payment of the alleged outstanding dues payable by the petitioner under the Gas Sales Agreement dated 21.02.2011 and 05.01.2016 and to pass such other orders as this Court may deem fit and proper in the circumstances of the case. 2. Brief facts leading to filing of this Writ Petition are that the petitioner is a company incorporated under the provisions of Companies Act, 1956 and is engaged in the business of generation of electricity and supply of electricity to end users including the State Governments. It is submitted that upon receiving the necessary W.P.No.37418 of 2021 2 sanctions, the petitioner had set up a plant at Ramanathapuram District, Tamil Nadu for the said purpose. The Respondent, namely Gas Authority of India Limited (GAIL) is a Public Sector Undertaking (PSU) under the Ministry of Petroleum & Natural Gas (MoP & NG) incorporated in the year 1984. It is a Government Company primarily engaged in the transmission/distribution and marketing of gas in India and is also engaged in other aspects of gas value chain including exploration, production, transmission, extraction, processing of natural gas and its related processes, products and services. 3. On 21.02.2011, the petitioner and the Respondent entered into an agreement for purchase of gas at the price as fixed by the Government under the Administered Pricing Mechanism (APM) and the agreement is called as Gas Sales Agreement (GSAI) and the same was extended from time to time with the last Addendum dated 29.01.2018 extending the period of agreement till 30.06.2021. There was second Gas Sales Agreement dated 05.01.2016 (GSAII) whereby the Respondent had agreed to sell natural gas with the maximum daily contracted quantity (DCQ) being reckoned as 2,98,000 SCMD sourced from ONGC at the plant and W.P.No.37418 of 2021 3 the petitioner agreed to purchase the gas at the price as per the market for the Market Driven Priced (MDP) Gas and the GSAII was valid till 05.07.2021. It is submitted that as per the terms of GSAI and GSAII, the petitioner purchased the gas from the Respondent from time to time as per the terms agreed to between the parties and made payments towards the same. 4. While the matter stood thus, on 04.06.2020 at around 11.00 PM, a major explosion had occurred at the plant of the petitioner causing fire in the 110 KV switch yard PT and eventually resulted in the breakdown of the switch yard. As a result, the power plant tripped and no power was being generated and the operations in the plant had to be stopped. Consequently, the petitioner addressed a letter dated 05.06.2020 to the Respondent informing that due to the events that transpired on 04.06.2020 and 05.06.2020 which constitute a 'force majeure' event as under the aforesaid agreement, the petitioner would not be able to accept the gas supplies for consumption until reinstatement of power generation equipment in the plant. Vide the said letter, it was also requested that during the period of shutdown of the plant, the gas supply will not be eligible for claiming MGO and thus no invoices W.P.No.37418 of 2021 4 may be raised against MGO i.e. Minimum Guarantee Obligation till such time, the force majeure event is cleared and the plant goes into operation. Since there was no response from the Respondent, the petitioner addressed another letter dated 16.06.2020. In response to the petitioner's letter dated 05.06.2020, the Respondent addressed a letter dated 17.06.2020 stating that the breakdown of the switch yard is not covered under 'Force Majeure' Event and hence, the request of the petitioner is not acceptable. It was further informed that the gas supplies to the petitioner shall