- (1.) THESE proceedings have been instituted by the Northern India Glass Manufacturers Association, which is a part of the All India Glass Manufacturers Federation, whose members are engaged in the manufacture of glass containers and glass products. Most of the members of the Association are stated to use natural gas as an industrial fuel. When the petition was initially filed, the subject matter of the grievance was the allocation of Administered Pricing Mechanism (APM) gas to industries situated in the Taj Trapezium Zone (TTZ) by the Union Ministry of Petroleum and Natural Gas. The controversy related to the allocation of 1.1 Metric Million Standard Cubic Meters per Day (MMSCMD) of APM gas to industries which were situated in the TTZ. As we shall explain in some detail hereafter, the basic grievance of the petitioner was the allocation of APM gas to industries within the TTZ, based on which the petitioner sought a mandamus commanding the Union Government to withdraw such allocation. This grievance was resolved during the pendency of the proceedings when the Union Government decided to allocate natural gas to industries in the TTZ on the basis of the Uniform Pricing Mechanism (UPM). The petition was then amended to seek two additional prayers. By the first of the two prayers, the petitioner seeks a declaration that any allocation and supply of natural gas to an industry on any basis or understanding which leads to discrimination, would infringe the fundamental rights conferred under Articles 14 and 19(1)(g) of the Constitution. A consequential direction was, accordingly, sought that the Union Government be prohibited from dealing with the supply of natural gas on the basis of a price mechanism that introduces "undue classifications". The second prayer is to restrain the Union Government from allocating and supplying natural gas to the TTZ industries by adopting UPM as the basis. In sum and substance, the grievance of the petitioners is that UPM, like APM, is a price mechanism for a favoured class of industries to whom preferential treatment would be extended. According to the petitioners, this results in a hostile discrimination between the industries which are not situated in the TTZ and those which are so situated. The submission is that the industries which are situated outside the TTZ have to purchase industrial gas at much higher rates, namely those under the Re -gasified Liquefied Natural Gas (RNLG) rates which are much higher than the UPM gas rates at which natural gas is made available for industries which operate in the TTZ. This, it is asserted, leads to a comparative disadvantage resulting in violation of the fundamental rights conferred by Articles 14 and 19 (1) (g) of the Constitution.
(2.) IN order to understand the background of the case, it would be necessary, at the outset, to advert to the decision of the Supreme Court in M.C. Mehta Vs. Union of India and Ors.1. In that case, the issue which was highlighted before the Supreme Court was the serious environmental impact on the ambient air around TTZ caused, amongst others, by the operation of industrial units which were based largely on coal/coke. Before the Supreme Court, the problem was brought to focus by several reports of Expert Committees. The National Environment Engineering Research Institute (NEERI) found that industries in the TTZ comprising of the districts of Agra, Mathura, Firozabad and Bharatpur were the main source of pollution causing damage to the Taj. The Supreme Court noted that the Expert Committee reports had specifically recommended relocation of industries from TTZ. Although the U.P. Pollution Control Board had placed on record a list of 510 industries which were responsible for causing air pollution, the judgment was confined to 292 industries located and operating in Agra. Based on the reports of Expert Committees, the Supreme Court recorded a finding that the emissions generated by the coke/coal consuming industries had a damaging effect on the Taj as well as on persons living in the TTZ and had to be eliminated at any cost, particularly having regard to the precautionary principle. The salient directions which were issued by the Supreme Court were that (i) 292 industries would apply by the stipulated date to the Gas Authority of India Limited (GAIL) for the grant of industrial gas connections; (ii) industries which were not in a position to obtain gas connections and those which did not wish to do so were to apply to government for allotment of alternative plots in industrial estates outside the TTZ by the stipulated date; (iii) those industries which neither applied for the grant of gas connection nor for the allotment of alternative plots were stopped from functioning with the aid of coal/coke in TTZ with effect from 30 April 1997 and supply of coke/coal was directed to be stopped forthwith; (iv) GAIL would commence supply of gas to the industries by 30 June 1997; and (v) industries which would relocate outside the TTZ would cease to operate in TTZ beyond 31 December 1997. The directions which were issued by the Supreme Court were founded on the fundamental premise that coal/coke based industries in TTZ were the source of serious detriment to the environment. Hence, the directions envisaged that industries would either relocate outside the TTZ by the stipulated date or in the alternate commence the use of natural gas as a source of fuel in place of coke/coal; GAIL being the nominated agency for the supply of natural gas. In other words, with effect from the stipulated date, no industry within the TTZ area covered by the judgment would be entitled to operate with fuel other than natural gas.
(3.) BROADLY speaking, there have been two pricing regimes for natural gas in the country: (i) gas which is priced under the APM; and (ii) non -APM or free market gas. The price of APM gas is set by the Government whereas non -APM gas is governed by the free market. The non -APM gas, in turn, falls within two broad categories, namely (i) imported Liquefied Natural Gas (LNG); and (ii) domestically produced gas from New Exploration Licensing Policy (NELP) and pre -NELP fields. In 1990, the Union Ministry of Petroleum and Natural Gas had formulated a gas use policy considering natural gas as a premium source of fuel and feedstock with a variety of competing demands. The Government of India constituted the Gas Linkage Committee, a Committee of Secretaries in July 1991 which was, inter alia, represented by various user departments including Power, Fertilizer, Steel, Chemical and Petrochemicals, besides representatives from the Planning Commission, Department of Economic Affairs, Department of Expenditure (Ministry of Finance) and three national oil and gas companies, namely GAIL, ONGC and Oil India. The Union Government had allocated 0.6 MMSCMD of APM gas on 2 May 1995 and an additional 0.5 MMSCMD on 5 June 2000. The initial supply of gas by GAIL was made on the basis of APM. With the increase in the demand of natural gas for the industries which were situated in the TTZ area, gas was imported by the Union Government through GAIL in the liquefied form known as RNLG. In July 2012, consumers of natural gas in the TTZ area were informed by a subsidiary of GAIL that it shall supply commingled gas under a UPM regime to all industrial consumers in the TTZ area. The decision to charge UPM prices with effect from 16 July 2012 was challenged by industries which were running in the TTZ area in writ proceedings before a Division Bench of this Court. Their grievance was that as a result of the enforcement of UPM, the price which was hitherto being charged for the supply of natural gas under the APM regime stood increased under the UPM regime. The Division Bench of this Court, by a judgment dated 12 July 2013, dismissed a batch of writ petitions (National Chamber of Industries and Commerce U.P. and Ors. Vs. GAIL (India) Ltd. and Ors., 2013 6 ADJ 435). The Division Bench held that the supply of gas under the APM regime had been extended to industries in the TTZ area to obviate environmental pollution particularly to the Taj Mahal and at a time when coal/coke was the main fuel for the industry. With the growth in the use of natural gas as fuel, the use of coal/coke had become obsolete. The Division Bench held that the advantage which was given to a set of industries for certain reasons, should not be perpetuated and a level playing field for all the industries has to be provided, so as to ensure a proper growth of non -polluting industries. Consequently, the Division Bench was of the view that the industries in the TTZ area represented by the petitioners therein could not have a claim to a monopoly over APM gas for all times and to create an unreasonable classification in their favour. Hence, the protection which was extended in 1996 could not be extended for all times to come. The Division Bench held that price fixation was an arena in which, in the jurisdiction under Article 226 of the Constitution, the Court would not enter. The adoption of the UPM mechanism was only to ensure the equitable distribution of gas at a uniform price to all similarly situated industries in order to prevent an advantage being enjoyed by a particular group of similar industries which had the benefit of supply of APM gas.;