M/s Gas Authority of India Limited (for short ‘GAIL’), the appellant herein, is a Government of India undertaking, incorporated on 16.08.1984, engaged primarily in the activity of providing services for the utilisation of natural or associated gas.
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(for short ‘IPCL’), respondent no.1 herein, formerly a public sector undertaking, is engaged in the manufacture of petrochemicals. Further, i n order to meet the stipulation of the allocation letter, it laid down pipelines between Hazira and Gandhar at a cost of approximately Rs. O n one hand, as per the allocation terms, IPCL had to lay down its own pipelines (which were so laid), and those pipelines alone were utilised for carrying gas.
In order to understand the contractual context, the relevant two clauses are extracted below: “4.04 The BUYER, in addition to price of GAS mentioned in Article 10, shall pay to the SELLER Rs. 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.
10.1997 is applicable as per Government Pricing Order
No L-12015/3/94-GP dated 18.9.1997 (Annexure-IV) after which the SELLER shall have right to fix the price of GAS which may be as per directive, instruction, order, etc. The Central or State Government of Municipality or any other local body or bodies payable on purchase of Gas from ONGCL/Other Producer(s) by the SELLER or on sale from SELLER to the BUYER or on return of the balance quantity of GAS after processing by the BUYER to the SELLER and these shall be borne by the BUYER over and above the aforesaid price.”
(Emphasis supplied) 8.
Further, the allocation letter by the MoPNG mandated that transportation of gas to IPCL’s plant had to be through IPCL’s own pipelines from the ONGC Metering Station. 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 ha d been passed by the learned Single Judge. The endeavour of IPCL, by invoking such writ jurisdiction, was alleged to be an attempt to bypass the law of limitation, as the contract had been signed way back in 09.11.2001. Brojonath Ganguly was misplaced as a principle applied to a service contract between the employer and the employee could not be imported to a commercial contract, and that too between two public sector enterprises. 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. This was notwithstanding the fact that the issue arose from a contract between the parties, as was also the case in ABL International Ltd.
, this Court 5 6 7 8 11 considered the bargaining capacity of contracting parties in a commercial dispute as there was a seemingly unfair or unreasonable clause in the contract. It is not disputed that GAIL is a Public Sector Undertaking and thus qualifies under the 12 definition of ‘State’ as per Article 12 of the Constitution. 13 unfair and unjust, apart from being an arbitrary action in violation of Article 14 of the Constitution of India that IPCL is charged for loss of transportation charges when it is mandated to lay down its own pipelines and not to transport the gas through the HBJ pipeline. What is of most significance is that IPCL was bound to follow the allocation terms provided by the principal authority, i.e., MoPNG.
GAIL may have made a huge investment in constructing the HBJ pipeline, but at the same time IPCL had also made a huge investment in constructing its own pipelines.
Thus, while upholding the quashing of the clauses, we are of the view that the refund should be restricted to a period of three years prior to the date of the filing of the writ petition on account of IPCL’s delay in approaching the court. We are also of the view that this refund should be made within a period of two months from today, failing which it will carry interest at 8 per cent per annum from the date it became due. If the refund is made within the stipulated time, we are not inclined to levy interest on the amount due.
Case Title: M/S GAIL (INDIA )LTD Vs. M/S.INDIAN PETROCHEM.CORP.LTD. THROUGH ITS MANAGER (2023 INSC 103)
Case Number: C.A. No.-003504-003505 / 2010
