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SUPREME COURT OF INDIA
G.S.SINGHVI, V. GOPALA GOWDA, JJ.
GAIL (India) Limited – Appellant
Versus
Gujarat State Petroleum Corporation Limited – Respondent
CIVIL APPEAL No.8263 OF 2013 (Arising out of SLP (C) No. 21932 of 2013)
Decided On : 17-09-2013
Article 226 of the Constitution of India, 1950 – Arguments – Contract - Division Bench of High Court was justified in entertaining petition filed by respondent Article of Constitution in matter of fixation of price of gas supplied by appellant and whether mandamus could be issued requiring appellant to engage itself with respondent to arrive at price of gas effective are questions which arise for consideration in appeal - Government of India constituted Petronet LNG Limited for marketing liquefied natural gas imported from Qatar and other countries - Petronet LNG Limited consists of GAIL Limited Indian Oil Corporation Limited Bharat Petroleum Corporation Limited and Oil and Natural Gas Corporation Limited Petronet LNG Limited entered into Sale Purchase Agreement with Gas Qatar for supply period of years - In August SPA was amended to include additional quantity – Held, Court should have relegated respondent to remedy of arbitration and Arbitral Tribunal could have decided complicated dispute between parties by availing services of experts - Court presumed that negotiations held between appellant and respondent were not fair and that respondent was entitled to benefit of policy decision taken by Government of India despite fact that it had not only challenged that decision but had also shown disinclination to accept offer made by appellant to supply gas at pooled price and had insisted on mutually agreed price - Union of India and others Court was called upon to consider scope of judicial review of complex economic decision taken by State or its instrumentalities - Government of India and Shell entered into a production sharing contract with private enterprise for exploration and exploitation of crude oil and natural gas in respect of Rajasthan Block - After due deliberation Government of India endorsed decision taken by ONGC - While refusing to interfere with decision of Government – Court notice that ONGC and Government of India have considered various commercial and technical aspects flowing from PSC and also its advantages that ONGC would derive if Cairn and Vedanta deal was approved - Court sitting in the jurisdiction cannot sit in judgment over the commercial or business decision taken by parties to the agreement, after evaluating and assessing its monetary and financial implications unless decision is in clear violation of any statutory provisions or perverse or taken for extraneous considerations or improper motives – Appeal dismissed
JUDGMENT
G.S. SINGHVI, J.
1. Leave granted.
2. Whether the Division Bench of the Gujarat High Court was justified in entertaining the writ petition filed by the respondent under Article 226 of the Constitution in the matter of fixation of price of the gas supplied by the appellant and whether a mandamus could be issued requiring the appellant to engage itself with the respondent to arrive at the price of gas effective from 1.1.2014 are the questions which arise for consideration in this appeal.
3. The Government of India constituted Petronet LNG Limited (PLL) for marketing liquefied natural gas (LNG) imported from Qatar and other countries. The Petronet LNG Limited consists of GAIL (India) Limited (the appellant), Indian Oil Corporation Limited (IOC), Bharat Petroleum Corporation Limited (BPCL) and Oil and Natural Gas Corporation Limited (ONGC).
4. On 31.7.1999, Petronet LNG Limited entered into Sale Purchase Agreement (SPA) with Ras Gas, Qatar for supply of 5 MMTPA of LNG for a period of 25 years. In August 2006, the SPA was amended to include additional quantity of 2.5 MMTPA of LNG.
5. In February 2004, the appellant signed Gas Sale Agreement (GSA) with the respondent for supply of re-gasified liquefied natural gas (RLNG) from out of LNG sourced by Petronet LNG Limited. The terms and conditions of supply were incorporated in GSA dated 7.2.2004, paragraphs 3.1, 3.2, 11.3, 11.6, 15.1, 15.5, 15.6 and 20.9 of which read as under:
“3.1 This Agreement shall come into force on the date it is signed and shall remain in force till 0600 Hours of 1.1.2019 (herein called "Basic Period") unless terminated earlier as per the provisions of the Agreement.
3.2 Either party may propose to extend the Agreement beyond the Basic Period by giving notice to the other Party one Year prior to expiry of this Agreement. This Agreement shall be amended accordingly prior to such extension for such period as the Parties may mutually agree, (herein called the "Extension Period").
11.3 The above Contract Price are valid up to 31st December, 2008 and shall be reviewed only and to the extent to which Ras Gas (Supplier of LNG) agrees for a different price.
11.6 Buyer and Seller shall mutually discuss for the Contract Price of Gas to be effective from 1st January 2009. The Seller shall inform not later than 30.06.2008, the revised Contract Price and parties agree to discuss in good faith and finalize the new Contract Prices effective from 1.1.2009 not later than 30.09.2008. In case the Parties are unable to agree on the revised Contact Price, the Agreement may be terminated by the Buyer by giving a written notice to the Seller to this effect.
15.1 Amicable Settlement
The Parties shall use their respective reasonable endeavors to settle any Dispute amicably through negotiations. If a Dispute is not resolved within thirty (30) days after written notice of a Dispute by one Party to the other Party then the provisions of Article 15.5 shall apply unless such Dispute is required to be referred to a Sole Expert under Article 15.2.
15.5 Arbitration
Any Dispute arising in connection with this Agreement which is not resolved by the Parties pursuant to Article 15.1 within thirty (30) days of the notice of the Dispute or pursuant to Article 15.4(b), shall be finally settled by arbitration in accordance with the Indian Arbitration and Conciliation Act, 1996 and rules made thereunder, from time to time. The procedure for appointment of arbitrators shall be as follows.
15.6 (a) After the thirty (30) day period described in Article 15.5, the Dispute shall be referred to a tribunal comprising three (3) arbitrators. Each Party to the arbitration shall appoint one (1) arbitrator and the two (2) arbitrators thus appointed shall choose the third arbitrator who will act as a presiding arbitrator of the Tribunal (together forming the "Arbitral Tribunal").
(b) The decision(s) of the Arbitra
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