Decided on July 30,1983

Oil And Natural Gas Commission Limited Respondents


N.H.BHATT, J. - (1.) The first of the above petitions namely the special civil application No. 883 of 1979 is filed by The Association of Natural Gas Consuming Industries of Gujarat a society registered under the Societies Registration Act, 1860 and by various industrial concerns nine in number. All except the petitioner No. 2 M/s. Jayant Paper Mills Ltd. which is situated at Surat industries are situate at Baroda. The other petitions are filed by other industries consuming natural gas as their fuel. All these petitioners of all these petitions have been being supplied gas by the respondent. The Oil & Natural Gas Commission which is a statutory corporation brought into being under the Provisions of the Oil & Natural Gas Commission Act, 1959. The respondent shall hereinafter be referred to as the the O.N.G.C. for brevitys sake. After the exploration of oil in the Ankleshwar Region the Gujarat industries started receiving gas from the O. N. G. C. In most of the oil fields situated in Gujarat gas is received along with crude oil but in Cambay area, gas is received unaccompanied by crude oil This combustible gas is known as Associated Gas when it is received along with crude and it is known as natural gas pure and simple when from the wells only gas is received. For the purposes of this petition we shall refer to this gas supplied by the O.N.G.C. as gas. After the various industries situated in the Gujarat State Region started receiving gas a question arose amongst the O.N.G.C. and the State of Gujarat aspousing the cause of various industrial units in Gujarat as to the fair price at which such gas should be made available to the consumers in Gujarat. After some negotiations, the question of fair and reasonable price of gas was referred to the sole arbitration of Dr. V.K.R.V. Rao at the instance of the Union Government and the State Government. The said expert economist Dr. Rao had given his award on 23-9-1967 determining the price of natural gas to be supplied to the consumers in Gujarat at Rs. 50.00 per 1000 cubic meters ex-well head to which royalty sales-tax depreciation and the transport charges were permissible to be added. The said award however was to be operative upto 31-3-1971 that is for the period of five years and thereafter the question of price fixation was left to be dealt with afresh on thorough review of the all-round situation. Thus upto 31-3-71 the well-head price continued to be Rs. 50 per 1000 cubic metres but thereafter for the period from April 1971 to December 1975 the well head price was increased to Rs. 66.00 for the same volume by the O.N.G.C. The petitioners complained that after December 1975 the O.N.G.C. adopted allegedly arbitrary and unreasonable attitude and despite repeated requests by the various gas consuming industries to give a break-up of the price demanded by the O.N.G C. the latter did not oblige and did not disclose how the escalated rate was being demanded. It is the say of the petitioners that the policy of entering into contract for five years also was given a go-bye and year-to-year contracts were insisted upon and just at the nick of the expiry of the years period the O.N.G.C. used to almost constrain the industries to enter into contracts for supply of gas at the arbitrarily high rates. The petitioners alleged that this pattern of the tactics adopted by the O.N.G.C. was evident from the fact that from 1-1-76 to 31-3-76 the price was fixed at Rs. 322.00; for the period from 1-4-76 to 31-12-76 the price insisted upon was Rs. 340.42; for the period from 1-1-77 to 31-3-77 the price was demanded at the rate of Rs. 351.00; for the period from 1-4-77 to 31-12-77 it was Rs. 371.16; from 1-1-78 to 31-3-78 it was Rs. 382.15 and then for the period from 1-4-78 to 31-3-79 the price sought to be agreed was Rs. 504.00 per 1000 cubic metres. The petitioners of these petitions complained that after 1975 the O.N.G.C. had then started acting in a most capricious and arbitrary manner in almost extracting the unreasonable price of the associated gas to the consuming industries in Gujarat though to the Gujarat Electricity Board the gas was being supplied at the rate of Rs. 155.00 and to the Gujarat State Fertiliser Corporation a State owned concern at Rs. 320.00 for the same volume. The petitioners of the first petition No. 883 of 1979 therefore approached ultimately this court when according to them the O.N.G.C. went on escalating the rates year after year without disclosing how they were working out the said price. The petitioners grievance in this regard is that the O.N.G.C. which upto 31-12-75 was supplying the details of the break-up including the well-head price had stopped that practice and being virtually a monopolistic agency in the supply of gas had acted in a high-handed manner. The petitioners of the first petition therefore ultimately approached this court in March 1979 with the following prayers: " (a) That this Hon ble Court be pleased to issue a writ of or in the nature of mandamus as any other appropriate writ direction and/or order under Art. 226 of the Constitution of India directing the respondents to supply the break-up and the data on the basis of which the price structure is arrived at by it for supply of associated gas to the petitioners and the gas consuming industries of Gujarat and to fix the price after giving reasonable opportunity to the concerned industries or their representative association i.e. the 1st petitioner herein to discuss and negotiate the fixation of fair and reasonable and just price for such supply of gas to the industries and to fix the minimum guarantee quantity at 75% of the contract and to permanently restrain them from discontinuing the supply of the said gas; (b) This Hon ble Court be pleased to restrain the respondents their agents and/or servants from discontinuing the supply of gas to the petitioners Nos. 2 to 10 on such terms as this Hon ble Court thinks fit and proper by an order and injunction of this Hon ble Court pending the hearing and final disposal of this petition;"
(2.) Prayer (a) set out above also deals with another facet of the grievance of these petitioners in all these petitions. Formerly, the minimum guarantee quantity insisted upon was 75% of the contracted quantity but thereafter the O. N. G. C. insisted on raising the said guarantee to 90% and this is also sought to be arrested by these petitioners.
(3.) During the pendency of this petition from the year 1979 to 1982 much water flew beneath the bridge. When the petition was filed the price fixed with the industries was Rs 504.00 per 1000 cubic metres but with the passage of lime and years it came to R. 741 from 1-4-81 to 31-12-81 and to Rs. 2095.70 for the period between 1-1-82 to 31-12-82 and ultimately it is stated to be R. 2400.00 per 1000 cubic metres.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.