The main legal point established in the judgment is that natural gas, including liquefied natural gas, is a Union subject covered by Entry 53 of List I, and the States have no legislative competence to make laws on the subject under Entry 25 of List II. The judgment also emphasized the inclusive definition of natural gas in various legislations related to petroleum and petroleum products, supporting the conclusion that natural gas is a petroleum product and part of mineral oil resource regulated by the Union.

Judgment

K. G. BALAKRISHNAN, J.

( 1 ) THIS is a Reference made by the president of India under Art. 143 (1) of the Constitution of India. The Gujarat state legislature passed an Act by name "gujarat Gas (Regulation of transmission, Supply and Distribution) Act, 2001" (here in after being referred to as "gujarat Act"), which came into force w. e. f. 19th December, 2000. The object of the enactment is to provide for regulation of transmission, supply and distribution of gas, in the interest of general public and to promote gas industry in the State, and for that purpose, to establish gujarat Gas Regulatory Authority and for matters connected therewith and incidental thereto. The term "gas" has been defined in the Gujarat Act under Section 2 (h) as follows ; "gas" means a matter in gaseous state which predominantly consists of methane. "

( 2 ) THE State legislature passed the said enactment by tracing its legislative competence under Entry No. 25 of List II of the Seventh Schedule of the constitution. The Parliament has passed various enactments under Entry no. 53 of List I dealing with the matters of petroleum and petroleum products. The Entry No. 53 of List I of the Seventh Schedule reads as follows: "regulation and development of oilfields and mineral oil resources; petroleum and petroleum products; other liquids and substances declared by parliament by law to be dangerously inflammable. " entry No. 25 of List II reads as follows : "gas and gas works"

( 3 ) ARTICLE 246 of the Constitution lays down the principle that the parliament alone has exclusive powers to make laws with respect to any of the matters enumerated in List I of the Seventh Schedule. As regards entries in list II, the legislature of the State has exclusive power to make laws subject, of course, to clauses (i) and (ii) of Art. 246. Article 246 reads as follows : "246. Subject matter of laws made by Parliament and by the Legislature of States :

(1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in list 1 in the Seventh Schedule (in this Constitution referred to as the "union list"):

(2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumer ted in List III in the Seventh Schedule (in this Constitution referred to as "concurrent List" ).

(3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "state List"),

(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included (in a State) notwithstanding that such matter is a matter enumerated in the State List. "

( 4 ) WHEN the State of Gujarat passed the Gujarat Act, the question arose whether the State Government can pass an enactment in respect of gas, including natural gas in all its forms by virtue of the legislative competence based on Entry 25 of List II of the Seventh Schedule. The Federal Legislature passed Petroleum Act, 1934. The Union of India, inter alia, enacted various legislations, namely, the Oil Fields (Regulation and Development) act, 1948; Oil Industry (Development) Act, 1974; The Petroleum and minerals Pipelines (Acquisition of Right of User in Land) Act, 1962; the Oil industry (Development) Act, 1974, All these legislations have been passed by the Union of India on the basis of the legislative competence under Entry 53 of List I of the Seventh Schedule. Oil and Natural Gas Commission increased the price of natural gas supplied by them. The Association of natural Gas Consuming Industries of Gujarat and others filed Civil Writ Petition before the High Court of Gujarat wherein they challenged the legislative competence of the Union to make laws