GAIL LTD Vs. NAGARJUNA CERACHEM P LTD

JUDGEMENT

(1.) This appeal is by the respondent, which is Government of India Undertaking, against the order passed by the learned Single Judge on 23.7.2004 in W.P. M.P. No.10632 of 2004 in Writ Petition No.8180 of 2004. By the said impugned order, learned single Judge allowed the application filed by the respondent/writ petitioner holding that the action of the appellant requiring the writ petitioner to agree to the amendment of contract is neither fair nor reasonable and thus the appellant was acting arbitrarily in asking the writ petitioner to take 10,000 SCMD per day. The agreement between the parties does not provide for taking of minimum supply of gas to be utilized by the writ petitioner and, therefore, the appellant cannot insist the writ petitioner to take the entire quantity of the allocation made by the Central Government. Thus holding the writ petition to be maintainable, learned Single Judge proceeded to issue interim direction as prayed for in the miscellaneous application thereby directing the appellant to forthwith commence and continue to supply the gas to the respondent/writ petitioner.

(2.) We have heard learned Counsel for the parties at the admission stage itself. The facts in brief are that on 24.12.2002 Government of India approved allocation of 10,000 SCMD gas on fallback basis to the writ petitioner subject to the condition of writ petitioner entering into the contract with the appellant. On 3.1.2003 the appellant requested the writ petitioner to confirm its willingness to receive the allocated quantity of gas. Ultimately, on 30.4.2003 the writ petitioner signed gas supply contract with the appellant accepting for commencement of drawal of gas from 31.3.2004 with a condition that if the drawal of gas is not started by the said date, the appellant will have unrestricted right to terminate the contract and forfeit the security deposit.

(3.) It is the case of the appellant that on 27.10.2003 while the writ petitioner expressed its willingness to utilize only 2,000 SCMD gas by 31.3.2004 requested the appellant to permit it to assign/sell the remaining 8,000 SCMD out of the total allocation to NCL Industries Limited. On 17.1.2004, the appellant asked the writ petitioner to sign amendment to the contract by incorporating minimum guarantee off take clause (in short MGO) since the appellant had come under obligation to pay minimum guarantee take off charges to ONGC in view of the delay being caused in drawing of the gas by the consumers. On 28.1.2004 the writ petitioner refused to agree for the amendment proposed by the appellant. On 6.2.2004 the appellant informed the writ petitioner that the appellant has to pay MGO charges to ONGC and as such amendment to incorporate MGO clause need to be signed by the writ petitioner as by that date it was clear that the writ petitioner was not in a position to draw the allocated gas by the agreed date i.e., 31.3.2004. On 25.2.2004 the appellant is alleged to have informed the writ petitioner that it would be difficult to consider writ petitioner's request for transfer of 8,000 SCMD in the absence of amendment to the contract incorporating MGO clause. On 8.3.2004 the writ petitioner conveyed its unwillingness to the amendment as proposed by the appellant asserting that the terms and conditions of contract as existed will continue. It is alleged by the appellant that on 27.3.2004 the writ petitioner was informed that all facilities to supply gas were ready and requested the writ petitioner to start drawal of gas from 31.3.2004 as per the contract. On 1.4.2004 writ petitioner requested the appellant to extend the gas drawal date up to 30.4.2004 so as to enable it to utilize 2,000 SCMD out of total allocation of 10,000 SCMD. On 2.4.2004 the writ petitioner was asked to furnish gas drawal pattern for the entire 10,000 SCMD gas since the contract date of drawal of gas had already elapsed.