Refund Limited to 3 Years; Payment Due in 2 Months or 8% Interest Applied for Delayed Transportation Charges.

The SC dismissed the appeal concerning the maintainability of the writ petition and quashed the clauses related to loss of transportation charges. It restricted the refund to three years from the writ filing date, mandating payment within two months, or interest at 8% per annum would apply. Parties bear their own costs.

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Issues Involved:
1. Maintainability of the writ petition filed by IPCL.
2. Validity of Clauses 4.04 and 10.01 of the contract on grounds of unequal bargaining power and arbitrariness.
3. Entitlement to monetary relief in the form of a refund after the order dated 19.09.2006.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The Supreme Court held that the writ petition filed by IPCL challenging Clauses 4.04 and 10.01 of the contract was maintainable. Despite the commercial nature of the dispute, GAIL, being a Public Sector Undertaking, qualifies as "˜State' under Article 12 of the Constitution. At the time of entering into the contract, GAIL held a monopolistic position concerning the supply of natural gas, and IPCL had no choice but to enter into the agreement after incurring significant expenses in setting up the infrastructure. The court emphasized that writ jurisdiction can be exercised when the State, even in its contractual dealings, fails to exercise fairness or practices discrimination. The court found GAIL's action in levying "˜loss of transportation charges' discriminatory, as IPCL was mandated to build its pipeline and was not using GAIL's HBJ pipeline. Thus, the court decided that the availability of an alternative remedy did not preclude the exercise of writ jurisdiction.

2. Validity of Clauses 4.04 and 10.01:
The Supreme Court found Clauses 4.04 and 10.01 of the contract, which levied "˜loss of transportation charges,' to be unfair, unjust, and arbitrary. The court noted that IPCL was mandated to lay down its pipelines and was not using GAIL's HBJ pipeline, making the imposition of such charges discriminatory and in violation of Article 14 of the Constitution. The court recognized that IPCL had to enter into the contract under a time constraint after incurring heavy expenditure in constructing the Gandhar Plant, thus facing a "Hobson's choice." The court concluded that GAIL exercised unequal bargaining power at the time of signing the contract, and the clauses were manifestly arbitrary as they contradicted the directives of the Union of India.

3. Entitlement to Monetary Relief:
The Supreme Court upheld the direction for refund issued by the Single Judge, which was a consequence of quashing the clauses. However, the court restricted the refund to a period of three years prior to the date of filing the writ petition (09.03.2006), citing IPCL's delay in approaching the court. The court drew strength from the judgment in Lipton India Limited & Ors. case, which observed that while the writ petition was entertained due to discrimination, the relief was restricted to what could have been claimed in a suit.

Conclusion:
The Supreme Court dismissed the appeal regarding the maintainability of the writ petition and the quashing of the clauses dealing with loss of transportation charges. However, it restricted the refund to a period of three years from the date of filing the writ petition. The court directed that the refund should be made within two months, failing which it will carry interest at 8 percent per annum from the date it became due. If the refund is made within the stipulated time, no interest will be levied. The appeals were allowed in these terms, with parties bearing their own costs.

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