TaxTMI 
TaxTMI 
2023 (2) TMI 366
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....or natural gas, issued a letter for allocation of natural gas to IPCL. IPCL was allotted 0.85 MMSCMD of semi-rich gas on firm basis from Hazira to IPCL's Gandhar Unit (at Dahej) for extraction of C-2 and C-3 fractions. The same was made subject to the following conditions: "(i) Signing of gas supply contract with GAIL. (ii) The pipelines require to transport semi-rich gas from Hazira to IPCL Unit at Gandhar and to transport the lean gas back to Hazira shall be laid by M/s IPCL. 2. You are requested to enter into necessary gas supply contract with GAIL within 60 days of issue of this letter failing which above allocation will be liable for allocation." Looking to the significance of the time period in the letter, the parties began negotiating the terms of the gas supply contract. IPCL thus entered into a contract with GAIL on 09.11.2001 for supply of natural gas. IPCL had set up and installed a plant at Gandhar by investing approximately Rs. 4500 crores. Further, in order to meet the stipulation of the allocation letter, it laid down pipelines between Hazira and Gandhar at a cost of approximately Rs. 354 crores. 3. As per the contract, the methodology of supply of gas was....
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....terminal in operable condition. Any interruptions in supply of gas to any consumers on account of such material requirement shall be at the risk and cost of the BUYER. The above Service charges shall be increased by 3 (Three) percent per annum on yearly rest basis with effect from 1st April following the scheduled date of commencement of gas supply mentioned under article 2.01 hereinabove. In addition to the above, the BUYER shall also pay to the SELLER transportation charges, as applicable from time to time along the HBJ pipeline system for the quantity of GAS utilized / shrinkage as per formula provided under Article 5.02 or for the difference in quantity of gas measured at the Point of Onward Delivery at Metering Station No. - I (after adjusting the quantity of Gas Bye Passed as mentioned under Article 4.03 hereinabove) and Point of Return Delivery at Metering Station No. - II, whichever is higher. The BUYER shall pay above charges to the SELLER in addition to invoice for supply of gas to be raised as per Article 11 hereinafter along with all applicable taxes / levies thereon. Provided that in case above charges are not paid by the BUYER within 3 (Three) working days of presenta....
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....t of supply of gas at the time of entering into the contract. Additionally, IPCL had a limited time frame to enter into the contract, particularly as a hefty investment had been made in setting up the gas cracker plant. As a consequence, IPCL claimed refund of the 'loss of transportation charges' paid by them. The Single Judge quashed these clauses vide order dated 19.09.2006 as being contrary to the pricing orders, and thus unfair and unconscionable. 9. GAIL, being aggrieved by the said judgment, preferred a Letters Patent Appeal. In the meantime, IPCL also preferred an application for clarification/modification, seeking directions to GAIL to refund loss of transportation charges, as apparently no such specific direction had been passed by the learned Single Judge. IPCL's application was allowed by an order dated 11.04.2007, predicated on the reasoning that while upholding the claim of IPCL, inadvertently the direction of refund had not been specifically passed. This latter order also came to be assailed before the Division Bench by GAIL. 10. The Division Bench affirmed the Single Judge's observations vide order dated 17.06.2008, thereby leading to the present appeal by GAIL. G....
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....ter the signing of the contract. 13. The basic defence and justification for levy of loss of transportation charges was that GAIL had made a huge investment in constructing its own infrastructure, i.e. the HBJ pipeline (Hazira - Bijaipur - Jagdishpur). GAIL had a limited number of opportunities to supply gas to consumers and, thus, an equally limited number of opportunities to levy transportation charges to recover its legitimate maintenance costs. The allotment had pre-supposed the imposition of such transportation costs. 14. Finally, it was emphasized that the learned Single Judge had become functus officio having pronounced the judgment dated 19.09.2006. Thus, there was no question of directing a refund through a clarification/modification application. Such a refund raised questions of unjust enrichment, as IPCL would have passed on the 'loss of transportation charges' paid by them to their own customers. As to what constituted unjust enrichment, the Solicitor General sought to refer to Rameshwar & Ors. v. State of Haryana and Ors (2018) 6 SCC 215. IPCL's Defence: 15. Dr. A.M. Singhvi, learned Senior Counsel, sought to defend the impugned order and the maintainability of wr....
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....isputed that GAIL is a Public Sector Undertaking and thus qualifies under the definition of 'State' as per Article 12 of the Constitution. At the time of entering into contract, GAIL was enjoying a monopolistic position with respect to the supply of natural gas in the country. IPCL, having incurred a significant expense in setting up the appropriate infrastructure, had no choice but to enter into agreement with GAIL. Thus, there was a clear public element involved in the dealings between the parties. Further, writ jurisdiction can be exercised when the State, even in its contractual dealings, fails to exercise a degree of fairness or practices any discrimination. We are fortified in our view by this Court's decision in ABL Enterprises (supra) and Joshi Technologies (supra). In the present case, GAIL's action in levying 'loss of transportation charges' was ex facie discriminatory, insofar as IPCL was mandated to build its own pipeline in terms of the allocation letter and was not using GAIL's HBJ pipeline at all. Thus, it cannot be said that merely because an alternative remedy was available, the Court should opt out of exercising jurisdiction under Article 226 of the Constitution a....