GVK INDUSTRIES LIMITED HYDERABAD Vs. UNION OF INDIA

JUDGEMENT

(1.) The writ petition is filed praying this Court to issue a writ of mandamus declaring the action of Respondent Nos.l to 4 in not allocating additional quantity of gas of 0.30 MCMD (Million Standard Cubic Meters Per Day) on firm basis to the petitioner as illegal, arbitrary and unreasonable being violative of Articles 14 and 19(l)(g) of the Constitution of India, and also to set aside the decision of first respondent dated 21.11.2002 insofar as the same denies petitioner allotment of 0.15 MCMD on firm basis and further direct respondents to allot 0.15 MCMD of natural gas on the basis of "first come first served principle". To appreciate the controversy, it is necessary to briefly indicate the procedure adopted by Government of India (GOI) in Ministry of Petroleum and Natural Gas (MPNG) for allotting natural gas produced by Oil and Natural Gas Commission (ONGC) and distributed by Gas Authority of India Ltd. (GAIL). It is also necessary to notice the facts leading to filing of the case by petitioner which are not much in dispute. Petitioner's case

(2.) The petitioner is a company, (hereinafter called, GVK) incorporated in 1991 under the Companies Act, 1956. The Government of India formulated a policy to encourage Independent Power Producers (IPP) and identified eight power projects to be opened in private sector. Applications were invited for proper participation in power generation. These projects were accorded 'fast track status' to enable interested companies to get clearance from the Government expeditiously. The selectee industries were eligible for State Government guarantee of tax payments and counter guarantee from Central Government. Jegurupadu project was one such eight projects. The Andhra Pradesh State Electricity Board (APSEB) which is the predecessor in interest of Transmission Corporation of Andhra Pradesh (AP TRANSCO), sixth respondent herein was allocated 1.5 MCMD of gas for setting up of gas based power station of 400 MW (Mega Watts) capacity. Sixth respondent, however, could not ground the project. By letter dated 17-3-1992 addressed to first respondent, sixth respondent sought approval for transfer of allocation of 1.5 MCMD of gas to petitioner company which had been earlier given clearance by the Government, Andhra Pradesh (fifth respondent) to set up 400 MW gas based power plant (later reduced to 200 MW) at Jegurupadu. MPNG by letter dated 9.10.1992 agreed to transfer 0.75 MCMD gas allocation in favour of GVK and 0.75 MCMD to National Thermal Power Corporation (NTPC). The power plant was designed by GVK for dual fuel operation (natural gas/naphtha in the ratio of 80 : 20). In 1996, the unit set up by GVK commenced power production at 200 MW to 235 MW. GVK also plans to set up power plant at Jegurupadu with increased capacity in second phase.

(3.) GVK had been requesting Gas Authority of India Limited (GAIL), fourth respondent herein for additional quantity of natural gas to meet the requirements of existing plant. The request was considered, and in the view of non-availability of gas in the area, and owing to the fact that long term availability of gas is lesser than overall allocation, GAIL came forward with temporary arrangement under its Demand Management Scheme (DMS). As and when gas was made available due to excessive production by ONGC, allocation of gas on temporary/short-term basis was considered. Under demand management scheme GAIL decided to supply additional quantity of gas for shorter duration on days when additional gas was available over and above existing maximum quantity of 0.75 MCMD. This was as per Article 5.01 of the contract (agreement) entered into by and between GVK and GAIL on 16.2.1993. While reserving right to discontinue supply of additional quantity, GAIL informed GVK by letter dated 8/9.10.1998 that gas is allocated on temporary basis subject to certain conditions and that such temporary allocation would not give the buyer any prescriptive right for any future allocation of gas. Under DMS, 0.30 MCMD was additionally allocated to GVK temporarily. GVK accepted the same and has had been availing additional quantity gas of 0.30 MCMD on temporary basis for the last about four years. It asserts that due to utilization of additional gas resulted in reducing cost of power generation, which benefited consumers of power in terms of lower tariff. It is also stated that as per terms of power purchase agreement (PPA) between GVK and A.P. TRANSCO the entire cost of fuel, be it either natural gas or naphtha, would have to be reimbursed at actuals to the petitioner company by A.P.TRANSCO.