Civil Writ Jurisdiction Case No. 10902 of 2012. Case: All India Pet Coke Calciners Association, Through Its President B.K. Hisaria Son of Late Shiv Pratap Hisaria office At Champa Niketan, Marvari Mohalla Town and District Begusarai, Bihar and Ors. Vs The Union of India Through Secretary, Ministry of Petroleum and Natural Gas 201-A, Shastri Bhawan, New Delhi and Ors.. High Court of Patna (India)
| Case Number | Civil Writ Jurisdiction Case No. 10902 of 2012 |
| Counsel | For Appellant: Mr. V. Giri, Sr. Adv. Mr. Y.V. Giri, Sr.Adv. with Mr. Sanjay Kumar, Adv. And For Respondents: Mr. Ragib Ahsan, ASG with Mr. Satyendra Kumar Jha, C.G.C. for the Union of India, Mr. S.D. Sanjay, Adv., Mr. Gautam Kejriwal, Adv., Mr. Akash Chaturvedi, Adv. and Mrs. Sushila Agrawal, Adv., Mr. Jitendra Singh, Sr. Adv. Mr. Shankar Kumar... |
| Judges | Jayanandan Singh, J. |
| Issue | Constitution of India - Articles 12, 14, 141, 142, 19(1)(g), 226; Essential Commodities Act, 1955 - Sections 2(i), 3(1)(2)(c) |
| Judgement Date | September 18, 2012 |
| Court | High Court of Patna (India) |
Order:
Jayanandan Singh, J.
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Mr. V. Giri, learned senior counsel, appearing on behalf of the petitioners, on a query from the Court, at the very threshold of his arguments, fairly accepted that in matters, like the present one, scope of interference by a High Court, in exercise of its powers under Article 226 of the Constitution, is very limited. He accepted that in this matter no question of any statutory infraction or question of any violation of mandate of the Constitution was involved and no question of infringement of any statutory or constitutional right of the petitioners was involved.
He submitted that petitioner No. 1 is the Association and other petitioners are member calcination units, long established in the periphery of Refineries, (Barauni in the present case), of the respondent Indian Oil Corporation Ltd. (hereinafter referred to as 'the IOC'). Since about two decades these units were being allotted Raw Petroleum Coke (in short 'R.P.C.'), a by-product of the refining process of the Refinery, by the IOC at a price fixed by it, on pro-rata basis as well as taking into account their installed capacity and their average offtake of the last three years. From the R.P.C. thus purchased, these units produced Calcined Petroleum Coke (in short 'C.P.C.'), which, in turn, was required by the aluminium industries, like HINDALCO, etc. for use in their process of manufacturing of aluminium. He accepted that there was no written agreement between the IOC and these units assuring such supply. But this allotment of R.P.C. to the units, since almost last two decades, gave rise to a legitimate expectation with them that they will continue to get assured supply of R.P.C. from the IOC in future also. Hence, he submitted that the Principles of legitimate expectation, as also of promissory estoppel, by conduct, also became applicable, due to this long standing practice. He submitted that, problem arose when new C.P.C. producing units came into existence and started claiming share in the stock of R.P.C. produced by the Refineries, which was scarce, and not sufficient to meet the demand of the even existing units. When these new units put up their demand before the IOC, they received a curt reply that the IOC could not guarantee any supply to them. At one point of time, the IOC also fixed a cut off date for allotment of R.P.C. to the units commissioned before 1.4.2010 only, declining any assurance of allotment to the new units commissioned thereafter. He submitted that the IOC had been working on this methodology of allotment of R.P.C. to the existing C.P.C. producing units on equitable basis since long with the knowledge and consent of the Ministry of Petroleum and Natural Gas, (hereinafter referred to as 'P & G' or 'the Ministry') Government of India. Grievance arose among the petitioners when the impugned letter dated 7.5.2012 (Annexure-1) was issued by the Ministry to the Public Sector Oil Producing Companies, including the IOC, advising them to prefer auction as mode for sale of R.P.C. to C.P.C. producing units. He submitted that the long standing practice of sale of R.P.C. by allotment to the C.P.C. producing units, based on the average offtake of past three years or the installed capacity, whichever was lower, prorated to actual availability, was changed to sale by an open auction, which wiped out the legitimate expectations of the existing units of assured supply, of R.P.C. as there was/is wide mismatch in production and demand. He submitted that this change of methodology of putting the stock of R.P.C. of the Refineries for sale through an open auction is under challenge in this writ application. He accepted that the entire transaction, from the very beginning, was/is based on commercial considerations for all parties and no case of statutory or constitutional violation is involved in the matter. Hence, he accepted that, the petitioners challenge, to the impugned letter of the Ministry dated 7.5.2012 (Annexure-1), has to be considered by this Court only under the powers of judicial review of an administrative action and within the parameters laid down by judicial pronouncements in this regard. He fairly accepted that under the powers of judicial review, this Court cannot sit in appeal and examine the merits of the decision. He also accepted that, in matters of policy decisions, scrutiny of the Court is required to be confined only to decision making process and it can interfere only if the decision is found to be arbitrary, unreasonable, capricious etc. He submitted that, as laid down by the judicial pronouncements, Courts cannot weigh the pros and cons of the policy or comparative merits and cannot hold it bad on consideration of its possible abrasion and consequences. He submitted that in matters of fiscal policies, like private entrepreneurs, State and its instrumentalities have also right to keep profit motive one of the considerations, but, he submitted that, profit cannot be the only consideration for taking a policy decision without consideration of fairness, rationality and equality in the matter. He submitted that State and its instrumentalities cannot indulge into profiteering only, de hors other considerations relevant for a welfare State, and totally oblivious to its cause and effect. However, he submitted that, before proceeding with his submissions on the scope of judicial review in the matter, it would be appropriate for him to place certain background facts of the case, leading to the issue of impugned letter by the Ministry. Coming to the facts of the case, Mr. Giri, first of all, placed an old letter of the IOC dated 27.8.2001, addressed to the Working President of Laghu Udyog Bharti at Begusarai, an Association of SSI units of the State, annexed with the writ application as Annexure-7 (Page 47). This letter, he placed to emphasize that the IOC had extended the assurance of its endeavour to protect the interest of SSI units of Barauni. He also pointed out that the IOC, through this letter, had also assured that, in spite of restricted availability of the product, i.e. R.P.C., it intended to meet the requirements of the SSI units proportionately, in the line with their past offtakes. He submitted that this letter showed that there was some promise by the IOC to ensure supply to the units on proportionate basis in future also.
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He next referred to another letter of the IOC dated 10.8.2006, again addressed to the said Working President, annexed as Annexure-8 with the writ application (Page 49), only to show that the pricing of the R.P.C. was a unilateral act of the Empowered Pricing Committee of the IOC which the units were required to accept for allotment of R.P.C.
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Next letter in chronology, he placed, was also a letter of the IOC dated 8.5.2008 addressed to the Ministry, annexed as Annexure-R/1 with the counter affidavit filed on behalf of respondent nos. 4 to 6 on 24.7.2012 (Page 328), to show that, in view of the letter of the Ministry dated 25.7.2001, IOC had made endeavours to supply R.P.C. ex-Barauni to the local SSI units on priority, but it had faced some problems during October 2006 to January 2007 when the local SSI units did not come forward to lift the available R.P.C. stock, which forced the IOC to sell the available stock, with heavy trade discount to other customers. It referred to a request of the petitioner Association, made on the basis of a letter of the Ministry dated 28.6.2002, for release of R.P.C. from Barauni, only to local calcination units, and also requests from other customers also, like units from Kota, Wizag and Kolkata, for supply of some quantity to them also out of the total production. Hence, by this letter the IOC proposed streamlining the release of R.P.C. ex-Barauni Refinery with a proposed changed methodology. On the basis of this letter of the IOC, he submitted that in this changed methodology also IOC had proposed to ensure equitable distribution of R.P.C. ex-Barauni Refinery to the local units, with some allocation to outside units also.
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Mr. Giri then referred to another letter of the IOC dated 19.11.2008, addressed to a firm of Kolkata, annexed with the writ application as Annexure-3 (Page 41), by which IOC had declined its request to release R.P.C. to new calcination units due to the reason that production of R.P.C. ex-Barauni was far less than the installed capacity of units at Barauni, indicating that options of importing R.P.C. was always open to the customers to meet their requirements. He submitted that, thus, this letter also showed that a clear policy was being practiced by the IOC to provide R.P.C. ex-Barauni only to existing units at Barauni.
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He next referred to the notings of a discussion held at the headquarter of the IOC on 18.2.2010, in respect of release of R.P.C. from Barauni and North East Refineries, a copy whereof is annexed as Annexure-10 with the reply of the petitioners to the interveners' petition by way of affidavit (Page 162), which shows that average monthly R.P.C. production during the year 2010-11 was noticed and, in view of the expected production of the quantity, it was observed that, the units based in North East would be supplied upto 50% of their installed capacity and Barauni based units would be supplied upto 70%. In the proceeding, prevalent methodology was noticed and it was also noticed that three new units at Bongaigaon and two at Barauni were coming up and there was a demand and representations for release of R.P.C. to other units also confined to the State. Considering the entire facts, in the meeting, a modified methodology was proposed to be adopted which also proposed action in case any unit did not lift its allotted quota of R.P.C. in time. In the meeting it was also proposed that the demand from the new customers could be considered in future only after meeting the demand of existing local customers. On the basis of this, Mr. Giri submitted that, time to time, the IOC had taken...
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