Full Judgment Text
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CASE NO.:
Transfer Case (crl.) 355-365 of 2002
PETITIONER:
M/s ONGC Limited
RESPONDENT:
Assn. Of Natural Gas Consuming Indus. & Ors.
DATE OF JUDGMENT: 12/04/2004
BENCH:
S. RAJENDRA BABU, DR. AR. LAKSHMANAN & G.P. MATHUR.
JUDGMENT:
J U D G M E N T
IN
I.A. NOS. 190-200
IN
CIVIL APPEAL NOS. 8530-40 OF 1983
[With I.A.Nos.333-343 of 2002 in I.A. 190-200
in C.A. Nos. 8530-40 of 1983]
RAJENDRA BABU, J. :
A batch of writ petitions was filed in the High
Court of Gujarat challenging the increase in the price of
gas and by an interim order, the High Court directed
ONGC to supply gas at the old rate of Rs.504/- per
1000 M3. Subsequently, by another order made on
29.10.1982, the price was raised to Rs.1000/- per
1000M3. By an order made on 30.7.1983, the High
Court allowed the writ petitions and set aside the price
which had been determined by ONGC. Pursuant to a
certificate of fitness, appeals were filed in this Court
and this Court continued the interim order granted by
the High Court and thereby the respondents in the
appeals received gas for which they paid a price of
Rs.1000/- per 1000M3.
This Court, on 4.5.1990, by judgment upheld the
prices fixed by ONGC and allowed the appeals. After
the appeals were allowed, ONGC became entitled to
receive the difference in the price of gas supplied.
ONGC, in addition to the said principal amount, also
demanded interest thereon in terms of Clause 5.02 of
the contract. When payment was not made in
accordance with their demands, I.A. Nos.1-11 and 23-
33 were filed in this Court and this Court, by an order
made on 6.4.1993, passed the orders for categorising
the respondents into three categories. The first
category being where the principal amount was allowed
to be paid in instalments. Where such offer was not
made, this Court made it clear that ONGC was entitled
to recover the entire dues. The third category is of
such cases where the companies concerned have
become sick and proceedings were pending before BIFR
under the SICA. Subsequently, it was directed that
these IAs will remain pending and would be listed for
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hearing for directions regarding payment of interest
after the principal amount is paid. But in some of the
cases, there is no dispute that the payment of principal
amount has been made in terms of this Court’s order.
Thereafter, applications in I.A.Nos. 190-200 were
filed by ONGC claiming interest on the balance principal
amount in terms of this Court’s order dated 4.5.1990.
This Court, after examining the matter, held as under:
"\005\005\005. ONGC was under an obligation by
virtue of the interim orders to comply with
the terms of the earlier contracts and to
supply gas in the manner provided
thereunder. This part of the contract was
performed by the ONGC who thus became
entitled to recover from the industries the
price which had originally been charged by
them. For the late payment of the amount,
the contract in clause 5 had contemplated
payment of interest at the rate and the
manner specified therein\005..."
However, it was made clear therein that the cases
of Sarabhai Common Services and Alembic Chemicals
Ltd. [now known as ’Alembic Ltd.’] will be dealt with
separately and now these applications have come up
for consideration.
There is a serious dispute between ONGC and the
applicants as regards the demands raised by ONGC. It
is contended that the ONGC while calculating the
arrears of principal amount has applied for a higher
price contrary to the decision of this Court and hence
the arrears of principal amount had to be recalculated
by applying the correct rate/price in accordance with
the order of this Court; that the arrears claimed on
account of short-liftment have been calculated by
ONGC using the rates for actual supply which include
the element of sales tax and royalty on the short-lifted
quantities; that the money payable for short-liftment of
gas less than the minimum quantity of gas agreed to
be purchased is neither delivered nor supplied and
hence cannot be treated as sale and in such a case
neither royalty nor tax is leviable and, therefore, they
contend that the statement of arrears which contained
the element of royalty and sales tax will have to be
recalculated by excluding the same; that they had
made a request by a letter dated 24.6.1985 for
reduction in the contracted quantity from 60000 cubic
meters per day to 50,000 cubic meters per day; that
since the matter was sub-judice before this Court, the
change in the contracted quantity could not be done.
Therefore, they claim that this aspect has to be
considered now that the matters have been disposed of
by ONGC and thereafter to re-compute the demands.
In addition, it is also contended that the contract
provides for force majeure and strike by workmen and
furnace collapse are covered by this clause and ONGC
is required to bill on actual usage quantity during the
period of strike and furnace collapse. Again on the plea
that the matter was pending before this Court, this
aspect was not examined by ONGC. In these
circumstances, it is submitted that the applicant is
entitled to relief.
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A similar application has also been made by M/s
Sarabhai Common Services contending that the interest
payable by them on the amounts due will have to be
taken note of and there have been representations
made by both M/s Sarabhai Common Services and also
by Alembic Ltd. However, in neither of the cases has
ONGC considered the demands made by them
effectively and thereafter determined the amount of
arrears due from them without making appropriate
adjustments for the money paid by them pursuant to
the orders of this Court or further claims arising
therefrom. The representations made by both these
companies have been dealt with in usual bureaucratic
style without due consideration to the points raised.
We find that the points raised by them both in regard
to the payment of interest and in regard to other
aspects are of substantial nature and cannot be
brushed aside as has been done now but needs to be
considered by ONGC appropriately.
So far as interest is concerned, though this Court
stated in the order made on 26.7.2001, that interest is
payable in terms of clause 5 of the contract as contract
continued to be in force till the matters were finally
disposed of by this Court, but that was in the normal
circumstances arising in this case. We may notice that
these two cases where Sarabhai Common Services and
Alembic Chemicals Ltd. [now known as ’Alembic Ltd.’]
are drug manufacturing companies and prices at which
they sell their goods are fixed by the Drug Price Control
Orders, which had taken into consideration the price at
which the gas was supplied, which now gets enhanced
by reason of the orders of this Court.
Therefore, in the totality of the circumstances, we
think, interest shall be payable by these two companies
at the rate as stipulated in clause 5 of the contract but
not compoundable but simple rate of interest. To that
extent, we allow the applications filed by Sarabhai
Common Services and direct ONGC to reduce their
claim to that extent in the demands made by them. In
case of M/s Alembic Ltd. ONGC shall examine other
points raised by them as regards: (i) the exclusion of
the royalty and sales tax on the damages for short-
liftment; (ii) the effect of their letter seeking for
reduction of supply from 60000 cubic meters per day to
50,000 cubic meters per day; and (iii) Claim made on
the basis of force majeure clause and thereafter re-
determine the arrears payable by them along with
interest.
The applications accordingly stand disposed of in
terms of the aforesaid directions.