The court established that the right to export crude oil is contingent on India attaining self-sufficiency, as per the PSC, and that the denial of permission was justified based on energy security and national interest.

Manmohan, J.

1. Petitioners have filed the present writ petition seeking a writ of mandamus or any other appropriate writ, order or direction to respondent no.1 to issue to the petitioners necessary permissions/approvals/authorisations for direct export or in the alternative, permission/facilitation for canalised export through respondent no.3 of petitioners' share of crude oil extracted from the Rajasthan Block RJ-0N-90/1 (for short "Rajasthan Block"), to the extent not lifted by respondent no. 2 or its nominee Public Sector Undertakings (for short "PSUs").

2. Mr. C.S. Sundaram, learned senior counsel for the petitioners stated that exploration, development and production of crude oil is a highly capital extensive operation. He stated that petitioner nos. 1 and 3 have invested more than rupees thirty thousand crores in the Rajasthan Block and have brought world class technology to India.

3. He stated that today, at the current level of production, approximately sixty to seventy per cent of the price realized from the Rajasthan Block Crude Oil production flows back to the public exchequer in the form of profit petroleum, inter alia through share of Government's nominee, royalty (paid to the State Government) and cess. He pointed out that every additional US$ 1 per barrel of Rajasthan Block Crude Oil realized would fetch the public exchequer an additional US$ 41 million/Rs. 258 crores (Rs. 63/US$) on account of the Government's share of profit petroleum, share of its nominee, royalty and cess.

4. Mr. Sundaram contended that the Foreign Trade Policy of Government of India permits canalized export of crude oil through respondent no. 3 or direct export with the approval of respondent no.1. He stated that as Sr. No. 113 of Chapter 27 of Schedule 2 of ITC (HS) Classification of Export and Import provides for procedure for export of crude oil, it is permissible to export the crude oil. Consequently, according to him, petitioners have a legal right to export and the present writ petition has been filed for enforcement of the said legal right.

5. Learned senior counsel for petitioners submitted that though Article 18.1 of the Production Sharing Contract (for short "PSC") provides that until India attains self-sufficiency, the Contractor is obliged to sell to the Government or its nominee the entire share of crude oil, yet Article 18.7 of the PSC entitles the Contractor to freely lift, sell and export any portion of its share of the Rajasthan Block Crude Oil which the Government or its nominee PSUs are unable to lift. He stated that as Government and its Nominee PSUs are unable to lift the entire Rajasthan Block Crude Oil, Article 18.7 of the PSC comes into play and the petitioners have the unfettered right to lift and export the Rajasthan Block Crude Oil to the said extent.

6. He further submitted that Article 18.7 of the PSC is independent of Article 18.1 and therefore, the fact that India has not attained self-sufficiency is irrelevant. He also stated that Article 18 of the PSC does not provide for partial waiver/dispensation of the condition of India attaining self-sufficiency.

7. In any event, he submitted that this embargo had been dispensed with in the meeting of the Empowered Committee of Secretaries held on 17th August, 2009.

8. Mr. Sundaram lastly contended that respondent-UOI's decision to deny permission to export was with intent to force the petitioners to sell their crude oil containing high viscosity and wax to Essar and Reliance at a price lower than the international rates. He pointed out that Essar and Reliance are the only refineries which have the technology to refine the particular grade of crude oil generated by the petitioners.

9. On the other hand, Mr. Tushar Mehta, learned Additional Solicitor General appearing for respondents stated that the relationship between the petitioners and respondent No.2 is con