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Independent Gas Based Power Producers? A Vs. Union of India Represented by Its Secret - Court Judgment

LegalCrystal Citation
CourtAndhra Pradesh High Court
Decided On
Judge
AppellantIndependent Gas Based Power Producers? A
RespondentUnion of India Represented by Its Secret
Excerpt:
the honble sri justice ramesh ranganathan writ petition no.39390 of201228-01-2015 independent gas based power producers association, a society registered under the societies registration act, 1860 represented by its secretary & authorised representative b. ramesh babu. .petitioner union of india represented by its secretary and others.respondents counsel for the petitioner: sri s. niranjan reddy counsel for respondents:learned asst. solicitor general; sri p. wilson, learned senior counsel; sri r. raghunandan, learned senior counsel; sri o. manohar reddy,; ?. citations:1. (2010) 7 scc12) (2011) 5 air bom. r. 60 3) (2006) 4 scc3854) (1984) 1 scc6685) air1957sc3636) 2002) 7 scc5597) (1995) 1 scc858) (2011) dlt7009) (1999) 4 scc14910) air1916pc7811) (1974) 2 scc151 air1974sc74912) (2000) 3.....
Judgment:

THE HONBLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO.39390 OF201228-01-2015 Independent Gas based Power Producers Association, a society registered under the Societies Registration Act, 1860 represented by its Secretary & Authorised representative B. Ramesh Babu. .Petitioner Union of India represented by its Secretary and others.Respondents Counsel for the petitioner: Sri S. Niranjan Reddy Counsel for respondents:Learned Asst. Solicitor General; Sri P. Wilson, Learned Senior Counsel; Sri R. Raghunandan, Learned Senior Counsel; Sri O. Manohar Reddy,; ?. Citations:

1. (2010) 7 SCC12) (2011) 5 AIR Bom. R. 60 3) (2006) 4 SCC3854) (1984) 1 SCC6685) AIR1957SC3636) 2002) 7 SCC5597) (1995) 1 SCC858) (2011) DLT7009) (1999) 4 SCC14910) AIR1916PC7811) (1974) 2 SCC151 AIR1974SC74912) (2000) 3 SCC35013) AIR1965SC94814) AIR1976SC156915) (1824) 2 B&C883 107 ER61016) (1956) 1 WLR289WLR at p. 297 (PC) 17) (1952) 2 All ER767 All ER77118) (1939) 62 CLR464 553 (Aus HC) 19) AIR1938Lah 571 20) (1998) 6 SCC50721) (1992) 4 SCC68322) (1937) 2 All E.R. 646 23) (1985) 3 SCC54524) [1959]. Supp. 1 S.C.R. 528 = AIR1959SC14925) (2000) 3 SCC58826) (2007) 6 SCC12027) (2004) 7 SCC16628) (1998) 7 SCC6629) (2003) 5 SCC43730) (1993) 1 SCC7131) [1990 (64) Australian LJR32732) (2005) 13 SCC28733) 1992 Supp.(1) SCC54834) (1982) 1 SCC27135) (2012) 2 SCC54236) (1989) 4 SCC18737) Judgment in WP (PIL) No.47 of 2011 dated 25.07.2012 38) AIR1966SC33439) AIR1962SC121040) AIR1973SC96441) (1977) 4 SCC14542) (2000) 6 SCC60843) 1992 Suppl (1) SCC32344) (1986) 2 SCC6845) (2007) 8 SCC41846) (2011) 13 SCC38347) (2000) 10 SCC66448) (2002) 2 SCC33349) 57 l Ed 730:

228. US61(1912) 50) (1986) 4 SCC56651) (1974) 1 SCC19= AIR1974SC152) (2012) 10 SCC153) (1981) 4 SCC67554) (2011) 7 SCC63955) (1970) 1 SCC248 56) (2011) 1 SCC64057) 320 US591 602 (1944) 58) 311 US570577, 85 L. ed. 358,362 59) (1984) 3 SCC46560) (1992) 2 SCC34361) (1978) 3 SCC45962) (2012) 3 SCC163) (1991) 3 SCC1164) (1996) 5 SCC26865) (1980) 3 SCC9766) (2008) 2 SCC67267) (2012) 6 SCC50268) (1989) Suppl.(2) SCC36469) (1990) 3 SCC22370) (1996) 10 SCC30471) (2005) 13 SCC49572) (2006) 4 SCC16273) (2007) 8 SCC174) (2006) 10 SCC175) (1898) 2 QB9176) (1948) 1 KB22377) (1965) AC73578) (1962) 1 QB34079) [1978]. 1 SCC24880) (1994) 2 SCC69181) (2003) 5 SCC43782) (1991) 3 SCC91 AIR1991SC115383) (2012) 10 SCC35284) (2004) 4 SCC48985) (2006) 3 SCC54986) (1997) 1 SCC38887) 33 Cali 419 88) 1979 (3) SCC48989) (1983) 1 SCC30590) (1981) 1 SCC72291) (1994) 6 SCC34992) AIR1968SC109993) AIR1958SC53894) AIR1955SC19195) AIR1956SC47996) 1952 SCR28497) (1997) 9 SCC49598) (1997) 1 WLR90699) (1999) 4 SCC727100) (1994) 1 WLR74101) AIR1967SC839102) (2002) 3 SCC302103) (2002) 4 SCC539104) (2014) 8 SCC390105) (1974) 4 SCC428106) 1989 Suppl. (1) SCC116107) (1994) 3 SCC569108) (2004) 3 SCC609109) (2010) 3 SCC314110) (2011) 2 SCC575111) AIR1990SC933112) AIR1965SC101113) AIR1959SC459114) AIR1952SC326115) AIR1953SC148116) (1980) 2 SCC593117) (1972) 3 SCC717118) (1972) 2 SCC594119) (1977) 4 SCC193120) (1986) 3 SCC50121) (2008) 1 SCC683122) (2006) 2 SCC670123) (2007) 6 SCC805124) AIR1988(AP) 144 125) (1981) 4 SCC335126) (2002) 10 SCC226THE HONBLE SRI JUSTICE RAMESH RANGANATHAN WPMP NO.40245 OF2013IN/AND WRIT PETITION No.39390 OF2012

ORDER

: The reliefs sought for in this Writ Petition are (i) to direct respondents 1 & 2 to frame a comprehensive policy / bring a suitable legislation with regard to energy security of India and supply of natural gas under NELP as per the directions of the Hon'ble Supreme Court in Reliance Natural Resources Ltd. v. Reliance Industries Ltd., ; (ii) to direct respondents 1 & 2 to modify the EGoM decision dated 24.02.2012 so as to enable supply of gas to gas based power plants of the members of petitioner on priority over other consumers of gas in the KG basin, at least till such time LNG terminals are set up in the east coast of the country, to enable supply of generated power to the AP DISCOMS; and (iii) to further direct the 1st respondent to supply 19.72 MMSCMD of Natural Gas from the KG-D6 gas fields, or from any other source in the KG basin, to the aggrieved independent power producers (members of the petitioner as listed in Annexure P-2), to enable them to generate their respective power plants to their full capacity and supply power to the AP DISCOMS. When this Writ Petition was pending adjudication before this Court the Empowered Group of Ministers (EGoM for short) meetings took place on 17.07.2013 and 23.08.2013, and a policy decision was taken by the EGoM on 23.08.2013. Thereafter the petitioners filed an application seeking amendment of the second prayer in the Writ Petition. The amended relief sought for is - "to direct respondents 1 & 2 to modify the EGoM decision dated 24.02.2012, and the consequent EGOM decision including those dated 17.07.2013 & 23.08.2013 so as to enable supply of gas to gas based power plants in KG basin of the members of Petitioner on priority over other consumers of Gas in KG basin at least till such time LNG terminals are set up in the east coast of the country to supply generated power to AP DISCOMS". The first petitioner is a society, registered under the Societies Registration Act, 1860, established for promoting and safeguarding the common interests of gas based Independent Power Producers (IPPs for short) located in the KG basin in the State of Andhra Pradesh. The 2nd petitioner, M/s. GMR Vemagiri Power Generation Limited, is an IPP and the 3rd petitioner is the authorised signatory of the 2nd petitioner. The petitioners are aggrieved by the failure of respondents 1 and 2 in responding to their various representations for a fair and equitable distribution of gas to operate their power plants which has resulted not only in their assets, worth more than Rs.30,000 crores, being rendered idle but also in loss of generation of electricity. Respondents 1 and 2 are responsible for allocation and supply of gas from the KG basin to various sectors/consumers like power, fertilisers, steel, domestic use etc. The 3rd respondent is the Government of A.P. Respondents 4 to 7 are the State owned distribution licencees in the State of A.P. (DISCOMS for short) which had signed long term Power Purchase Agreements (PPAs) with the members of the first petitioner association. The 8th respondent is the co-ordination committee formed by the Government of A.P to co-ordinate procurement of power by the State owned DISCOMS. The 9th respondent is the Chambers of Commerce, a society representing large, medium and small scale industries in the State of A.P. The 10th respondent is Nagarjuna Fertilisers and Chemicals Limited, a public limited company manufacturing fertilisers. The 11th respondent, a non-profit and non-trading company registered under the Companies Act, is an association of fertiliser manufacturing units. The Government of India framed a policy, by its resolution dated 22.10.1991, to encourage participation of privately owned enterprises in the field of electricity generation, supply and distribution. While, conventionally, electricity is generated through hydro and thermal power plants, some of the thermal plants use natural gas as an input for producing electricity. Indigenously produced natural gas can be divided, based on the pricing mechanism, into four major categories, namely: (i) Administered Pricing Mechanism (APM) from nominated blocks of Oil and Natural Gas Corporation (in short ONGC) and Oil India Ltd. (in short OIL); (ii) non-APM gas produced from new fields of nominated blocks; (iii) natural gas produced from pre New Exploration Licensing policy (for short pre-NELP) blocks; and (iv) natural gas produced from New Exploration Licensing Policy (for short NELP) blocks. In addition, Liquefied Natural Gas (LNG) is imported from abroad. All gases are chemically, predominantly, methane with a small but varying proportion of higher carbon fractions such as ethane and propane. Upto the early 90s, i.e., prior to NELP and pre-NELP regime, natural gas was produced only from fields operated by government companies, namely, ONGC and OIL out of blocks which were given to them by the Government on nomination basis, and thereby the Governments power to regulate the natural gas sector was absolute. (Reliance Natural Resources Ltd.1). Considering natural gas as a premium source of fuel and feedstock with a variety of competing demands, the Ministry of Petroleum and Natural Gas (MoPNG for short) in the year 1990, formulated the natural gas use policy. For effective and efficient utilization of natural gas, the production potential/ availability of natural gas from various regions was taken into consideration. The potential demand of natural gas from various sectors, such as Fertilizer, Power, Sponge Iron, LPG, Industrial use, petro-chemicals, etc. was also taken into consideration. In order to rationalise allocation of gas, the Government of India constituted the Gas Linkage Committee (Committee of Secretaries) in July, 1991. This Committee was represented by the various user departments namely, power, fertiliser, steel, chemicals and petrochemicals and representatives from the Planning Commission, department of Economic Affairs, department of Expenditure (Ministry of Finance) and three national oil and gas companies, namely, GAIL, ONGC and OIL. This committee, headed by the Secretary, Petroleum and Natural Gas, was entrusted with the following responsibilities (a) to periodically review the progress of implementation of upstream and downstream projects for utilization of natural gas to ensure maximum and timely synchronization of these facilities; (b) to consider and recommend requests for allocation of natural gas, including its fractions, by downstream consumers keeping in view the objective of ensuring that the allocation of gas, to downstream users, is economically efficient; (c) to monitor the progress of downstream units to whom gas has been allocated, and make recommendations regarding cancellation or otherwise of gas allocations to downstream units the progress of implementation of which was not satisfactory. Considering the demand, availability and imputed economic value of natural gas in various sectors, the Gas Linkage Committee allocated natural gas to various sectors on a 'firm basis' to ensure that the available gas, and that which was projected to be available, was fully utilized. Circumstances, such as when all the consumers with firm allocations were unable to draw their full quantity leading to a temporary surplus of gas availability in the system which, in turn, required such surplus gas available to be used from to time to time, necessitated allocation of gas on a "fallback - as and when available basis", as a contingency measure, to ensure optimal utilization of gas. Priority for supply, against such fallback allocations, was given only after meeting the requirement of consumers with firm allocations. There were a few isolated fields whose life was short and uncertain. In order to utilize the gas available from such fields, even for short durations, gas was allocated on a fallback basis, and the consumers were not given any long term commitment. There were certain gas wells yielding only low pressure gas for a short term which was required to be compressed before being put to use in the pipeline system. Such low pressure gas was also made available on a fallback basis without any long term commitment. Subsequently with the availability of APM gas in the country falling far short of the demand, and the production projected to decline further in future, no useful role was envisaged for the Gas Linkage Committee in making gas allocations and, as a result, the Government wound up the Gas Linkage Committee on November 9, 2005. No APM gas has been allocated since then. Non-APM gas is any gas discovered from new fields of the nominated blocks. In the year 2010, the Central Government formulated 'guidelines for commercial utilization for non-APM gas' with the following sectoral priority:- (i) gas-based fertilizers plants; (ii) LPG plants; (iii) Power plants supplying to the grid; (iv) city gas distribution systems for domestic and transport sectors; (v) steel, refineries & petrochemicals plants for feedstock purposes; (vi) city gas distribution systems for industrial & commercial customers; and (vii) any other customers for captive & merchant power, feedstock or fuel purposes. No reservation of gas was envisaged for any sector, and it was allotted to those who were ready to utilize gas at the time of allotment. As exploration and production was at the core of energy security, it was decided to open the gas fields to private sector investment. (Reliance Natural Resources Ltd.1). During the mid-1990s, known as the pre-NELP years, private investment was sought on competition basis and certain blocks were awarded under a production-sharing contract. Pre-NELP gas is the gas produced from pre-NELP blocks which is sold by the contractors in accordance with the provisions of the production sharing contracts entered into between the Government and the producers. The pre-NELP regime was further improved to the NELP regime. New sources of gas were discovered under the NELP regime and, after its advent, production of indigenous gas increased substantially. The production from KG-D6 block under NELP was envisaged at the level of 60 MMSCMD. Sourcing of investment, technology and efficient operations from companies within the country and from outside, on a level playing field with domestic public sector companies, was the main feature of the NELP regime. (Reliance Natural Resources Ltd.1). The Executive of the Union of India enjoys constitutional powers, under Article 73 and Article 77(3) of the Constitution, to fulfil the objectives of the Directive Principles of State Policy relating to the distribution of natural gas which is a material resource under Article 39(b) thereof, including acquisition of privately owned material resources. Natural gas continues to be the property of the Government of India till it reaches the delivery point, and cannot be disposed of without its express approval. (Reliance Natural Resources Ltd.1). The EGoM was constituted in August, 2007 under the business rules framed under Article 77(3), and its decisions are treated as the decisions of the union cabinet itself. It is a policy decision of the government, and has the force of law since the field is not occupied by parliamentary legislation. (Reliance Natural Resources Ltd.1). The EGoM was constituted to examine disputes relating to pricing and commercial utilisation of gas under the NELP regime. In the EGoM meeting held on 23.05.2008 the Central Government formulated a gas utilisation policy which was made applicable only to the gas available under the NELP regime, and not for gas produced from the pre-NELP/APM/Non-APM regimes. The gas utilisation policy empowered the Central Government to regulate and distribute natural gas through allotments and allocation which would subserve the best interests of the country. (Reliance Natural Resources Ltd.1). In addition to the affidavit filed in support of the Writ Petition, the petitioners have filed affidavits/rejoinder affidavits on 20.12.2012, January 2013, 16.02.2013, 22.03.2013, August 2013, 10.10.2013, 11.11.2013, 26.11.2013, and 24.01.2014. Besides the counter-affidavit filed in reply to the main Writ Petition, additional affidavits/counter-affidavits have been filed on behalf of respondents 1 and 2 on 11.02.2013, 12.03.2013, 14.04.2013, September 2013, 09.11.2013, 25.11.2013, 28.11.2013, 03.12.2013, and 24.10.2014. Counter-affidavits have also been filed on behalf of the 3rd respondent and respondents 4 to 8 supporting the petitioners claim that natural gas from the KG-D6 basin should be supplied to power plants in Andhra Pradesh in preference to all other sectors including fertilizers. A counter- affidavit is filed on behalf of respondents 10 and 11 supporting the stand of respondents 1 and 2, and opposing grant of any relief to the petitioners. The petitioners case, in short, is that non-allocation of gas to power projects in the State of Andhra Pradesh has rendered Rs.30,000 crores worth investment, in these power projects, idle, making these assets non-performing; allocation of gas from the KG basin to power plants and fertilizer plants in the west coast of the country, although such plants have access to alternative sources of fuels and the necessary infrastructure therefor in terms of LNG terminals, is arbitrary; allocation of gas to the fertilizer sector, in preference to the power sector, is contrary to the National Electricity Policy framed under the Electricity Act, 2003; the Government of India should take a comprehensive view of the changing needs and precarious gas availability, and accord top priority to gas based power projects in the KG basin ahead of the fertiliser projects, and power projects outside the State of Andhra Pradesh, as the southern region is facing a severe power deficit; gas based power offers substantial environmental benefits, it requires just 1/10th of the land area as compared to coal, its water requirements are much lower, and it is 20% more efficient; fertiliser manufacturing units can use other fuels apart from natural gas, and can also import gas from abroad; failure to ensure a level playing field, to gas based IPPs in the KG basin, is in violation of Articles 14 and 19(1)(g) of the Constitution of India; in 2009, when availability of KG-D6 gas was projected to be in abundance, the fertilizer sector was accorded top priority in allocation of gas from KG-D6 fields; the same priorities continued even though gas production from the KG basin drastically reduced; as a result of the failure of EGoM, to review the gas utilisation policy, the fertiliser plants in North and West India are receiving near full supplies of gas and the IPPs in Andhra Pradesh, which have been deprived of the requisite gas supplies, face closure; this would not only result in thousands of people losing employment but would also affect the general public and farmers in terms of long power cuts. The petitioners would also contend that the adhoc method of reverse priority amongst the core sector, for supply of gas from the KG basin, prescribed by the MoPNG by proceedings dated 30.03.2011, has caused prejudice and injustice to members of the petitioner-association; the contention, that not according first priority to fertilizers would result in a subsidy burden estimated to be around Rs.70,000 crores, is not correct; the Government of India, as the custodian of scarce natural resources like natural gas, is required to balance various public interests, and take a fair and equitable decision; gas can be imported and supplied to the fertilizer plants located in the west coast; the policy decision of the Government of India has failed to provide equal treatment to all stakeholders, and a level playing field; as an alternative to its indigenous production, fertilizer can be imported; however there is very little scope for import of electricity; electricity cannot be generated in the east coast by using imported gas, as there is no LNG terminal presently available thereat; production of electricity, by use of imported gas, is not economical; the public debt of IPPs in the State of Andhra Pradesh is to the tune of Rs.30,000 crores, and the unutilized capacity in generation of power is 7000 mega watts; there is a need to pool all domestically available gas for its rational and optimum utilization, after taking into consideration regional and sectoral imbalances; gas-based power plants, in North and West India, were set up either as dual fuel-based power plants or relying on gas from other sources including LNG terminals; all KG-D6 gas cuts have been borne only by the power sector, and the fertilizer sector is largely left untouched; this has resulted in inequitable distribution; prior to March, 2011, MoPNG had stipulated, as was the practice for APM gas, cuts to be enforced on a pro-rata basis for NELP gas also; this was subsequently changed, and cuts have been stipulated on a reverse priority basis with the first to be affected being the power sector; even today, in the case of APM gas, cuts are imposed on a pro-rata basis; there is no change in the priority of usage of non-KG-D6 gas because of reduction of supply from KG D6 gas fields; the reduction in gas supplies is more from KG-D6, as compared to non-KG-D6 sources; the east coast power plants have no access to gas from Bombay High, Hazira and the North East; as all the Regasified Liquid Natural Gas (RNLG for short) terminals are located in the west coast, RNLG is being imported and supplied to plants in the western and northern states; and the respondents have failed to periodically evaluate the current system of distribution of natural gas, and in balancing equities between different regions. The petitioners would further submit that the reverse cut introduced in March, 2011, when gas production in KG-D6 was 40 MMSCMD, needed immediate and periodic review after a fall in gas production from the year 2012; both the Writ Petitions before the Bombay and Delhi High Courts were filed by applicants belonging to the steel sector which is a non-core sector; the non-core sectors were entitled to gas allocation only when the gas production exceeded 40 MMSCMD, that too after the demands of the core sectors were met; the petitioners before the Bombay and Delhi High Courts were aggrieved by the allocation of gas to the core sectors in priority over other industries; the Bombay and Delhi High Courts upheld the validity of the classification of core and non-core sectors in prioritising supply of natural gas; the issue of reservation/priority within the core sector was neither raised nor decided in those cases; at no point of time, prior to 30.03.2011, had the EGoM prescribed the application of reverse cut within the four core-sectors; even after the EGoM meeting held on 23.08.2013, there is no change in the policy decision regarding allocation of gas; relevant material was not considered before the EGoM took the decision; the earlier decision to discriminate against the power sector, and accord priority to the fertilizer sector, continues; the changed circumstances were not taken into account, before arriving at the present decision to maintain the level of supplies of domestic gas to the fertilizer sector at 31.5 MMSCMD, before allocating gas to the power sector; there is no rational basis for the EGoM decision to prioritize the fertilizer sector over the power sector; when gas production from KG D6 reached its optimum level during 2009-10, allocation to the fertilizer sector was 15.7 MMSCMD; this was continued arbitrarily despite there being a drastic reduction in supply from KG D6; the first respondent failed to bring the various representations, submitted by the petitioners to the EGoM, MoP, MoPNG and the Prime Minister, to the notice of the EGoM; the EGoM has not considered the projected availability of gas for the years 2013 to 2016; in the absence of information, regarding the projected estimated availability of KG-D6 gas, the proposed supply of additional gas (which is subject to availability of gas from the KG D6 field) is merely an eye wash; the portability factor, affecting transportation of gas from the non-KG D6 basin, is only a small portion of the available gas; from the data downloaded from the website-www.indianpetro.com, which is a news information and market intelligence provider in Indian oil, gas, power and fertilizer sectors, it is evident that, from out of 92.76 MMSCMD of available gas supplied during 2012-13, 81.6 MMSCMD is connected to the grid, and only 11.16 MMSCMD is not connected; from out of the total APM and non-APM gas supply of 55.62 MMSCMD, 44.46 MMSCMD is connected to the grid; and the petitioners have been repeatedly contending before this Court that the portability factor, affecting transportation of gas from non-KG D6 basin to the KG-D6 basin, is only a small portion of the available gas. The case of respondents 1 and 2, in brief, is that the Union of India is empowered to take policy decisions on allocation and pricing of natural gas; it is entitled to utilize and distribute gas keeping in view the best interests of the country and the public at large; the only question before this Court is whether the policy decision is arbitrary, unjust, in violation of the fundamental rights under the Constitution or in violation of any statutory right; the sectoral priority, for allocation of domestic gas, was formulated to serve larger public interest; the consumption of urea in the country is 58 million metric tonnes of which 18 million metric tonnes is produced from domestic natural gas, and 4 million metric tonnes from LNG; the price of fertilizer is directly and predominantly determined by the price of gas; one MMSCMD of gas enables production of around 0.5 MMTPA of urea benefitting millions of farmers which, if not produced domestically, will have to be imported at a much higher cost or will have to be produced at a higher price through RLNG, and then subsidized through the Union Budget; the annual subsidy on fertilizers ranges between Rs.60,000 to 70,000 Crores; fertilizer is sold below cost price, and the entire subsidy burden is borne by the Central Government; priority to the fertilizer sector fulfils the twin objectives of self- sufficiency in fertilizers and a lower subsidy burden; domestic LPG is a subsidized product in which the country is not self-sufficient; any disruption in supplies of LPG would lead to a public outcry; the power sector has been given high priority next only to the fertilizer and LPG sectors; even from the KG-D6 gas, 18 MMSCMD was allocated to the power sector; as this was not sufficient to meet the requirements of the power sector, the EGoM decided that any additional gas would be given to the power sector and, with increase in production of KG-D6 gas, the allocation to the power sector was increased to 32 MMSCMD; both compressed natural gas (CNG) and piped natural gas (PNG) are safer than the presently used fuels; hence priority was given to the transport and domestic segments of city gas distribution (CGD) projects; the industrial/commercial sectors were kept out of priority; within the four core sectors, CGD (transport and domestic) has been accorded priority after fertilizer, LPG and power as the end price of CNG and PNG, by virtue of an increase in the input price of gas, is being passed on to the consumers; other sectors, such as steel, petro chemicals, refineries etc have been placed after the CGD (CNG & PNG) sector as they are in a position to respond to the market prices of inputs; the policy decision of the Government, endorsed by the EGoM, has been judicially tested and approved by the Bombay and Delhi High Courts; the discretion exercised by the Government of India, in allocation and allotment of gas, is in public interest and is in accordance with the standards and norms laid down under the policy and guidelines prescribed by the EGoM for NELP gas; sectoral priority has been applied even during a fall in production; the order of the MoPNG dated 30.03.2011 was informed to the EGoM in its meeting held on 24.02.2012; the principle underlying these decisions is that a lower priority sector should face a cut prior to a higher priority sector; though the RGPPL plant was accorded priority, equivalent to the fertilizer sector by the EGoM, this decision was kept in abeyance, and supply of gas to the Ratnagiri Gas Power Plant Limited Dabhol Power Project (RGPPL for short) is being made on par with the power sector; the Union of India has not allocated gas to public sector power plants at the cost of private sector power plants; the gas utilization policy does not advocate reservation of gas; gas, being a national asset, has to be allocated on the basis of a national policy; sufficient imported gas is available as RLNG which can be procured by the petitioners for running their power plants; non-APM gas allocation is made to meet the shortfall in APM allocation followed by new demands in accordance with the sectoral priority, beginning with the region to which the source of gas belongs; within a sector, after meeting the shortfall in the region to which a source of gas belongs, the shortfall of that sector in other regions is to be met before meeting the new demands from that sector followed by a shortfall or new demands of the sectors next in priority; and, at the request of the Government of Andhra Pradesh, respondents 1 and 2 had allowed swapping of RLNG with KG-D6 gas for supply to the IPPs in the State of Andhra Pradesh. According to respondents 1 and 2, the production of gas in the KG D6 basin reached its peak of 60 MMSCMD in March, 2010 and, thereafter, the production has decreased steadily; gas production in KG-D6 has fallen so much, that now gas is supplied only to the fertilizer and LPG sectors, and cuts are being imposed, in accordance with the same order dated 30.03.2011, on the power sector; the power producers were also parties to the Writ Petitions before the Bombay and Delhi High Courts in which the sectors, below the power sector, had challenged the validity of the MoPNG order dated 30.03.2011; the power sector had then supported the order of the Government; the members of the petitioner-association were agreeable to the authority of the MoPNG to issue the order dated 30.03.2011, and had never challenged the said order until the cut order affected them; 20% - 30% of the total urea consumed in the country is imported, and self-sufficiency can only be achieved if supply of domestic natural gas, for domestic urea units, is ensured; the cost of production of urea on R-LNG is even more than the imported price of urea; the issues which are now sought to be raised in this Writ Petition have already been raised and, in any event, could have been raised in the Writ Petitions filed by Essar Steel Limited and Welspun Maxsteel Limited before the Delhi and Bombay High Courts; the petitioners herein had supported the stand of the Central Government in those writ petitions, and have benefitted thereby; it is not true to state that power plants in the State of Andhra Pradesh have no access to RLNG; the domestic gas, available from all sources, cannot be considered as a single basket as gas produced from all fields cannot be transported to all consumers in the country due to technical limitations such as the source of gas, lack of pipeline connectivity etc; gas based power plants were established without any commitment from the respondents that additional gas would be allocated to them; they have taken an unavoidable business risk, along with a corresponding risk-return profile inherent in any business; and the respondents cannot be called upon to reduce the petitioners risks or to improve their returns. Respondents 1 and 2 would submit that supply from various domestic sources, and imported R-LNG, has been factored in by the EGoM while allocating KG-D6 gas to power plants to enable them to operate at a specified PLF; urea fertiliser plants and LPG sell their products at controlled rates, and the government has a huge subsidy burden which will be substantially higher if RLNG is used instead; the gas produced anywhere in the country must be utilised as per the sectorial policy; the EGoM has been kept informed about the decline in production, and has rightly deemed it not fit to revise its policy against this decline; due to a drastic fall in supplies, gas is now supplied only to the fertiliser/LPG sectors; the power sector continued to get gas preferentially till January, 2013 i.e., for a period of around two years by diversion of gas from sectors lower than them in priority; the petitioners never objected to the principle of reverse priority cut till they were adversely affected; the petitioners cannot approbate and reprobate; APM and non-APM gas cannot be compared with KG-D6 gas; the latter is produced from a single geographical location situated in AP, whereas the former is produced from many blocks scattered over many States viz., Gujarat, Maharashtra, Rajasthan, Andhra Pradesh, Tamil Nadu, Assam, Tripura etc; the gas available from KG-D6 is transported through a major single pipeline i.e., the east- west pipeline which has connectivity with the gas grid for distribution of gas in Andhra Pradesh, and connectivity with GSPC and GAILs pipeline network in the western and northern parts of the country; as APM gas is produced in around 100 scattered fields it has, historically, been distributed locally due to pipeline constraints and due to the isolated nature of its pipeline network; APM gas, produced from some blocks in Gujarat and Andhra Pradesh, cannot be transported to other parts of the country as these blocks also do not have connectivity with major pipelines; the APM gas and KG-D6 gas are completely different classes, and are not equal; reverse cuts are feasible only in the KG-D6 basin as it is a large single source of gas; even in the case of APM allocations to various consumers, the future allocation made against reduction in production of APM gas are as per the allocation priority, thereby effectively achieving a near reverse cut regime; the development of R-LNG terminals depend on the demand and supply situation in a particular area, and pipeline connectivity with the demand centre; majority of the LNG terminals were constructed before availability of gas in the KG-D6 basin; respondents 1 and 2 have always facilitated swapping of RLNG to ensure supply of gas to the power plants in Andhra Pradesh by issuing necessary guidelines and instructions; and the respondents do not have any say in the sale and purchase of R-LNG as it is freely traded in the market. Respondents 1 and 2 would further submit that the people of the entire country have a stake in natural gas, and its benefit has to be shared by the whole country; if one State alone is allowed to extract and use natural gas, then the other States would be deprived of their equitable share; the gas utilisation policy is not static, but is evolving over a period of time; the reverse priority cut order is based on the strong rationale of facilitating gas availability to the core sectors; the reverse priority cut order has, in fact, improved the supply of KG-D6 gas to the core sectors at the expense of supply to the non-core sectors; the petitioners have been the beneficiary of this policy decision taken in supervening public interest; the principle of level playing field and promoting competition has been upheld; the note placed by the MoPNG before the EGoM, in its meeting held on 23.08.2013, contained the views of both the Ministry of Power and the Ministry of Fertilizers; the Minister of Power and the Minister of Fertilizers were members of the EGoM along with other Ministers; the EGoM arrived at a decision to maintain supplies of domestic gas to the fertilizer sector at 31.5 MMSCMD, i.e the level of average supply of domestic gas to the fertilizer sector during 2012-13, and give the sector first priority in meeting the requirements of any shortfall below the level of 31.5 MMSCMD from any additional production of NELP gas; it was further decided that the entire additional NELP gas production available during the years 2013-14, 2013-14 and 2015-16, after meeting the supply level of 31.5 MMSCMD to the fertilizer sector, should be supplied to the power sector; the EGoM has taken a conscious decision to give the fertilizer sector first priority, and maintain supplies of domestic gas to the fertilizer sector at the level of 31.5 MMSCMD; the decision to allocate NELP gas was taken by EGoM after considering the views of both the Ministry of Power and the Department of Fertilizers; as against the allocation of 54.18 MMSCMD of domestic gas, the average supply of domestic gas to the fertilizer sector in the year 2012-13 was 31.5 MMSCMD; the EGoM noted the concerns of the power sector and, accordingly, put a cap on the supply of domestic gas to the fertilizer sector at the level of 31.5 MMSCMD; though two meetings of the EGoM were held on 17.07.2013 and 23.08.2013, a final decision, regarding inter-se sectoral priority in supply of NELP gas, was taken by the EGoM in the meeting held on 23.08.2013; while framing the policy on gas pricing and commercial utilization of NELP gas, all relevant factors were taken into consideration by the EGoM; the decision regarding utilization of natural gas does not suffer from any legal or constitutional infirmities, and is binding on all the parties; and the projected gas availability from all categories of domestic gas, envisaged during the XII Plan period (2012-2017), was placed before the EGoM which took note of the same before taking a decision in its meeting held on 23.08.2013. Respondents 1 and 2 would also submit that the present total allocation of domestic gas to the fertilizer sector is 54.18 MMSCMD out of which 32.64 MMSCMD is from APM, 2.85 MMSCMD from Pre-NELP, 3.02 MMSCMD from non-APM, and 15.67 MMSCMD from NELP (KG D6); in the year 2012-13, the fertilizer sector was supplied 31.5 MMSCMD of domestic gas which included 14.43 MMSCMD of gas from KG D6; the order of MoPNG dated 30.03.2011 implies that supply from KG D6 would be first utilized to meet the requirement of the fertilizer sector upto their total allocation from KG D6 (at present 15.67 MMSCMD) and, thereafter, any additional production from KG-D6 would be supplied to the LPG sector, then to the power sector, and then to the CGD sector for CNG (transport) and PNG (domestic); supply of NELP gas to the non-priority sector is to be made only after the requirements of the core/priority sectors are met upto their full allocation; supply to the fertilizer sector from KG D6, prior to the decision of EGoM dated 23.08.2013, was limited by the total allocation from the KG D6 basin to the fertilizer sector (at present 15.67 MMSCMD); however, after the decision of the EGoM dated 23.08.2013, another limit has been imposed and the total supply of domestic gas (NELP gas plus other domestic gases) to the fertilizer sector would remain limited to 31.5 MMSCMD against the total allocation of 54.18 MMSCMD; this implies that if the requirement of 31.5 MMSCMD is met, even before exhausting the full allocation of NELP gas to the fertilizer sector, supply from NELP gas would be restricted to that level; to comply with the decision of the EGoM dated 23.08.2013 any shortfall, below 31.5 MMSCMD, to the fertilizer sector would be met from the additional production of NELP gas only to the extent of allocation of NELP gas to the fertilizer sector of 31.5 MMSCMD; the report down loaded from the website-www.indianpetro.com is incorrect, its authenticity is doubtful, and cannot be relied upon; during the period April to June, 2014, the average domestic gas supplied by various marketers was 79.48 MMSCMD; while gas from the KG D6 basin was 12.79 MMSCMD, the non-NELP gas supplied was 66.69 MMSCMD; the entire KG D6 gas was being supplied to the fertilizer sector, and a part thereof has been utilized for operation of the East West pipeline; gas is being supplied by several suppliers as per the provisions of the production sharing agreements, and the Government has no role to play in the distribution of gas of an extent of 0.82 MMSCMD; an extent of 0.42 MMSCMD of gas is being supplied by ONGC, Essar and CEECL from their respective CBM blocks, and they are not connected to any major inter-state pipeline grid; this quantity cannot be considered for diversion; an extent of 2.45 MMSCMD and 5.4 MMSCMD of domestic gas is directly marketed by ONGC and OIL; these fields are isolated in nature and cannot be considered for diversion; GAIL is the only marketeer supplying gas through both the regional and the inter- state pipeline networks; GAIL supplied 57.62 MMSCMD of domestic gas during April-June, 2014 out of which 48.88 MMSCMD was to the core sector and 9.14 MMSCMD to the non- core sector; and, from out of the 9.4 MMSCMD of domestic gas supplied, 6.48 MMSCMD of gas cannot be diverted to the core sector because of various factors, including compliance with the order of the Supreme Court dated 30.12.1996. Though the Learned Assistant Solicitor General, during the course of hearing on 24.01.2014, had stated that the respondents would make available, in the counter-affidavit filed by them, details of the extent to which gas available in the non-KG D6 basins is affected by the portability factor, the counter-affidavit filed thereafter makes no mention of the extent of gas, available in the non-KG D6 basins, which is affected by the portability factor. Again, during the course of hearing on 19.09.2014, the Learned Central Government Standing Counsel sought time to obtain instructions regarding the extent to which gas available in the non- KG-D6 basin is affected by the portability factor. Despite repeated directions, the respondents have not furnished the said information sought for by this Court. In the counter-affidavit, filed on behalf of the Government of A.P, it is stated that eight independent power producers are supplying power to A.P. Discoms under long term power purchase agreements; the combined installed capacity of all these projects is 2770 MW; during 1997, these IPPs were selected through competitive bidding with fuel as naptha/furnace oil; due to the steep hike in the price of naptha, and due to non-achievement of financial closure by some of the IPPs, the Government of A.P. negotiated with the IPPs and permitted their projects to be operated mainly on natural gas; the Andhra Pradesh Electricity Regulation Commission, based on the assurances given by MoPNG, GAIL and ONGC, gave consent to the IPPs, during April 2003, to use natural gas as the primary fuel; from 2003-2004 onwards there was a decline in natural gas supplies to AP, and ONGC was able to supply only 50% of the allocation to four projects; even though the other projects were ready by 2006, ONGC was not able to supply any gas to them; the Union Minister for Petroleum and Natural Gas, by his letter dated 14.12.2004, assured that the total requirements of the IPPs in AP could be met from the expected additional availability of gas; there are eleven gas based power projects in operation, with a total installed capacity of 3356 MW; the natural gas requirements of these power projects is 15.67 MMSCMD for full generation; new gas based plants, with 3936 MW capacity, have also come up in the State expecting availability of natural gas; they are ready for commissioning, and are lying idle for want of gas; these projects require 19 MMSCMD to make them functional; the gas allocation to the power sector was zero by March, 2013; the Government of India was requested to allocate natural gas from the west coast to the east coast units; no gas was made available to A.P. projects from other NELP/ONGC blocks in the west coast, though the East-West pipeline was established; the power supply position in the State is precarious, mainly because of unprecedented reduction in KG-D6 gas supplies; due to power shortage, the maximum power cut is imposed on the industrial sector and, thereby, the economic activity of the State is severely affected; the State is being forced to purchase power from the open market at a high cost to meet power demands in the State; the A.P. power projects have alone received allocation based on the availability of gas from the KG basin; the plants located in the western and northern region were established taking into consideration other sources of natural gas; these projects also have access to LNG terminals located in the west coast; to augment natural gas to AP projects, the Government of India was requested to allocate natural gas from the west coast to the east coast; however no gas was made available to A.P. projects, from other blocks of the west coast, through the East-West pipeline; the natural gas under APM, produced from the Bombay High and the North-East to an extent of 45 mmscmd, is being supplied to the fertiliser and power projects in the western and northern parts of the country; RLNG, which is being imported and re-gasified in the LNG terminals situated in the west coast to an extent of 45 mmscmd, is being supplied entirely to the fertilizer and power projects in the western and northern parts of the country; these LNG terminals are in an expansion mode and are likely to be commissioned shortly; these additional capacities would also be available to projects in the west coast; there is no LNG terminal in the east coast; though the pipeline, from west to east, has been in existence from 2007-2008, EGoM has not announced any policy to provide open access for transporting RLNG from west to east; the tax dues on transportation have also not been resolved; the power plants and fertiliser plants, located in the western region, are operating at comfortable levels since they have multiple sources of gas whereas AP projects have only one source i.e., the KG basin; and it would be appropriate to review the gas utilisation policy, considering the overall availability of natural gas in the entire country including KG-D6 gas, giving due priority to A.P. power plants. The counter-affidavit filed on behalf of the A.P. Power Distribution Companies, broadly, reiterates what the Government of Andhra Pradesh has stated in its counter-affidavit. It is further stated that, based on the expected gas availability for commercial operation from ONGC G-1 fields from September, 2011, the Union Minister for Petroleum and Natural Gas was requested to allocate natural gas from G-1 and G-15 fields of ONGC to the stranded gas based power projects in A.P. as per the commitments already made by MoP&NG; the Central Government had, during September, 2011, allocated a meagre quantity of 0.445 MMSCMD of natural gas from North West fields to the old IPPs in the State of AP; these gas supplies have also not commenced till date; ONGC has reported to MoP&NG about additional availability of 6 MMSCMD of non-APM gas during 2012-13 and 2013-14, from various fields of the western and G-1 & G-15 blocks in the eastern region, for allocation of non-APM gas; in view of the dwindling gas supply from KG-D6 fields, and the severe power crisis in the State, there is an urgent need to honour the earlier commitments made by the MoP&NG to supply gas from the KG basin of G-1 and G-15 fields to the IPPs in the State; and this Court should direct respondents 1 and 2 to allocate 6 MMSCMD of non-APM gas expected from 2012- 13 and 2013-14, from various fields of the Western and G-1 and G-15 blocks of ONGC in the eastern region, to the A.P. projects so that these gas based power plants can operate. In the counter-affidavit filed on behalf of the 10th respondent, it is stated that, in its meeting held on 23.05.2008, the EGoM framed a policy giving priority to certain sectors in allocation of gas; this policy was formulated on the premise that huge reserves of natural gas was available in the KG basin; in course of time, production of natural gas in the KG basin has reduced drastically; as a result, there is a short fall in the supply of gas as against the allocation made; the EGoM directed that the entire short fall should be borne by the sector which was given least priority, and as the short fall increases it has to be borne by the sectors in the reverse order of priority; there is a short fall or no supply of gas to the power sector, whereas the fertilizer sector has suffered a cut to a large extent; it is the petitioners case that any short fall should be shared amongst all the sectors on the basis of a pro-rata cut, instead of the reverse cut, and one sector bearing the brunt of the short fall and, while the short fall under the APM mechanism is distributed pro-rata over various sectors, the short fall in the NELP regime is borne only by the power sector; India is the second largest consumer of fertilizers only after China; as against the 59 million tonnes of fertilisers consumed in 2011-12 at an imported cost of Rs.24,564 per tonne, the domestic cost of production, using a mix of domestic and imported gas, is only Rs.11,000 per tonne; the farmer buys urea at a statutory price of Rs.5,360 per tonne and the Government bears a subsidy of Rs.5,640 per tonne on domestic urea; on imported urea the subsidy is Rs.18,640 per tonne; this has led to a ballooning of the subsidy estimate of Rs.70,013 crores; any increase in the cost of fertiliser, as a result of non-availability of gas, will only push up the cost of urea and fertilisers which will have a cascading effect on the cost of agriculture; in order to reduce its subsidy burden, the Government of India directed the fertiliser manufacturing units to dispense with the use of naptha and change over to natural gas within a period of three years; it was made clear that units which did not change over would not receive any subsidy; a committee was constituted to facilitate connectivity, and supply of gas to non-gas based units; the petitioners cannot seek a level playing field between different sectors; the fertiliser companies have received firm allocation from the Government of India before setting up their fertiliser plants; in contrast, the allocations sought for by power producing companies is only after they were established; the policy enunciated by the Government of India is well considered after taking into account the huge short fall in actual production against the estimated production of natural gas; the EGoM formulated the principle of priority between various sectors; the MoPNG and EGoM have adhered to these principles; and the minutes of the meetings show that EGoM was fully aware of the reduction in production. Before examining the rival contentions, it is necessary to refer to the decisions taken by the Government of India, from time to time, regarding priority in allocation of natural gas to various sectors, more particularly fertilizers and power. Pursuant to the EGoM meeting held on 28.05.2008, the MoPNG issued a press note dated 25.06.2008 which reads as under: The EGoM recognized the fact that supply of natural gas to power plants would result in utilisation of idle assets and cheaper incremental cost of power on account of better utilization of existing assets. Gas based power plants handle peak loads very well and they are also preferred for environmental considerations. The production of natural gas from RILs KG D6 field is expected to commence from September, 2008 and will initially be about 25 mmscmd. It is further expected that the production would gradually increase to 40 mmscmd by March, 2009. The EGoM decided that this gas should be supplied in the following order of priority: a. Existing gas based urea plants, which are now getting gas below their full requirement, would be supplied gas so as to enable full capacity utilization. b. A maximum quantity of 3 mmscmd would be supplied to existing gas based LPG plants. c. Up to 18 mmscmd natural gas, being the partial requirement of gas- based power plants lying idle/under-utilized and likely to be commissioned during 2008-09, and liquid fuel plants, which are now running on liquid fuel and could switch over to natural gas, would be supplied to power plants. d. A maximum quantity of 5 mmscmd would be made available to City Gas Distribution projects for supply of Piped Natural Gas (PNG) to households and Compressed Natural Gas (CNG) in transport sector. e. Any additional gas available, beyond categories i) to iv) above, would be supplied to existing gas-based power plants, as their requirement is more than 18 mmscmd. In its subsequent meeting held on 23.10.2008, the EGoM modified its earlier decision dated 28.05.2008 according priority to RGPPL along with the fertiliser units. By its letter dated 30.03.2011, the MoPNG directed its NELP contractors to enforce pro-rata cuts in the supply of natural gas in the following manner: Hence, in modification of the direction mentioned in para 1 above, supply to fertilisers, LPG, power and CGD (domestic and transport) sectors, apart from the gas needed for operation of EWPL (East-West Pipeline) should be entirely met upto the firm allocations. In case gas availability is insufficient to meet the firm demand of these four sectors, cuts may be applied in the following order: CGD (domestic & transport), power, LPG, fertilizers. In view of the reduction in KG D6 production, if there is a shortfall in meeting the firm demand of the remaining sectors, pro-rata cuts should be imposed on the same. In its subsequent meeting held on 24.02.2012, EGoM took note of the fall in production of KG-D6 gas during the period April, 2010 to January, 2012 and the pro-rata cuts imposed by the MoPNG in its letter dated 12.10.2010 and 30.03.2011. The minutes of the EGoM meeting dated 24.02.2012 read as under:- The EGoM considered the note dated 12.01.2012 and supplementary note dated 16.02.2012 from the Ministry of Petroleum and Natural Gas (Petroleum aur Prakritik Gas Mantralaya) and while noting the contents of paragraphs 16(i), 16(v), 16(viii), 16(xi) and 16(xii) of the main note, and paragraphs 6(i) and 6(ii) of the supplementary note, approved the proposals contained in paragraphs 16(ii), 16(iii) and 16(x) of the main note.

1. The EGoM further noted as under: (i) that M/s.Wellspun and M/s.Essar Steel have filed petitions in the Supreme Court challenging the orders of the Mumbai High Court and Delhi High Court, respectively, in the matter of imposition of cuts in supply of gas to non-core sectors; and 3. Further, the EGoM directed as under: (i) the earlier allocation of 0.933 mmscmd to the Pragati Power Corporation Ltd, (PPCL) Bawana, need not be cancelled, but be reduced to 0.836 mmscmd, and RIL/NIKO be asked to sign the Gas Sale and Purchase Agreement (GSPA) for the same so that it gets pro-rata to its allocation as per orders of the Ministry dated 30.03.2011; (ii) the proposal to suspend the supply of KG-D6 gas to P&K plants (Deepak, GSFC and RCF) including the proposal to restrict future supply only to Urea fertilizer plants be kept in abeyance till 24.05.2012, during which time, the Department of Fertilizers will finalize the guidelines mentioned in paragraph 2 of the supplementary note and thereafter the matter be placed before the EGoM; (iii) the existing and future allocations of NELP gas to power plants be subject to the condition that the entire electricity produced from the allocated gas shall only be sold to the Distribution Licenses at tariffs determined or adopted (in case of bidding) by the tariff regulator of the power plant. The gas will be supplied only for the duration of the Power Purchase Agreement (PPA) and supply of gas will start only after the signing of PPA. The PPA may initially be for one year (short term PPA) during which electricity shall be sold at the tariff determined by the regulator and the subsequent PPA should be for medium term or long term. The EGoM also authorized the Ministry to cancel the current allocation of any power plant(s) not complying with the aforesaid conditions: (iv) that as M/s.Lanco Kondapalli (Expansion) and GMR Tanir Bawi have signed the short term PPA till 30.05.2012, the supply to both these plants need not be suspended till 30.05.2012, after which the supply would be suspended if they fail to comply with the conditions specified by the EGoM for supply of domestic; and (v) the EGoM noted that there is a wide divergence between the domestic and international prices of gas and import of natural gas at a high price to meet the domestic shortfall adversely impacts the current account balance. The EGoM further noted that the gas prices fixed in 2009 were valid for a period of five years and on this ground, the request of the contractor for revised prices was turned down in 2010 itself, international prices were comparatively lower. After discussions, the EGoM directed that: (a) the advice of Ministry of Law and Justice, including the views of Attorney General of India be obtained in the matter of gas price revision for consideration of the EGoM; and (b) the Ministry could suggest an appropriate Regulatory Authority to aid and advise the EGoM on the issue. The minutes of the EGoM meeting held on 23rd August, 2013 reads thus:- The EGoM, in the light of its directions while considering a note dated 24.06.2013 from the Ministry of Petroleum and Natural Gas (Petroleum aur Prakritik Gas Mantralaya) in the meeting held on 17.07.2013, considered the note dated 13.08.2013 from the Ministry of Chemicals and Fertilizers (Rasayan aur Urvarak Mantralaya), Department of Fertilizers (Urvarak Vibhag) and noted: (i) the contents of paragraphs 22, 23, 24 and 25 of the note dated 24.06.2013; (ii) the average supply of domestic gas to the Fertilizer sector during 2012-13 was 31.5 Million Metric Standard Cubic Meters Per Day (MMSCMD); and (iii) the year-wise additional production of all categories of domestic gas envisaged during the XII Plan Period.

1. In the light of the above, the EGoM decided: (i) to maintain at 31.5 MMSCMD the level of supplies of domestic gas to the Fertilizer sector and give the sector first priority in meeting the requirements of any shortfall below the level of 31.5 MMSCMD from any additional production of NELP gas; (ii) the entire additional NELP gas production available during the years 2013-14, 2014-15 and 2015-16, after meeting the supply level of 31.5 MMSCMD to the Fertilizer sector, be supplied to the Power sector. The plant-wise allocation of additional production of NELP gas available during these years shall be done by the Ministry of Power; and (iii) to allow supply of NELP gas to Power plants based on short term Power Purchase Agreements (PPAs) in all cases where medium/long-term PPAs are not practicable in view of limited balance tenure of the Gas Supply and Purchase Agreements (GSPAs). Elaborate submissions, both oral and written, were put forth by Sri S. Niranjan Reddy, Learned Counsel for the petitioners, Sri P. Wilson, Learned Senior Counsel appearing for respondents 1 and 2, and Sri R. Raghunandan, Learned Senior Counsel appearing on behalf of respondents 10 and 11. Sri O. Manohar Reddy, Learned Counsel for respondents 4 to 7, also put forth his submissions. It is convenient to examine the contentions, urged by Learned Counsel on either side, under different heads. I. AMENDMENT OF THE PRAYER: The petitioners filed WPMP No.40245 of 2013 on 11.11.2013 seeking amendment of the prayer in W.P.No.39390 of 2012 by adding the words and subsequent EGoM decisions including those dated 17.07.2013 and 23.08.2013 in Part - (ii) of the main prayer. In the affidavit filed in support thereof, the petitioners stated that they were informed about the decision taken at these EGoM meetings only by way of the additional affidavit filed by respondents 1 and 2; they were not given a copy of the minutes; this application was filed immediately after they learnt about the decision and after their efforts, to obtain a copy of the minutes, proved unsuccessful; the amendment petition does not alter the character of the lis, and does not prejudice the respondents in any manner; the amendment is, in fact, formal in nature; and the relief prayed for flows from the pleadings already on record. In their counter-affidavit dated 25.11.2013, respondents 1 and 2 submitted that amendment of the prayer, as sought for by the petitioners, was merely an after thought; it amounted to filing a new writ petition against the decision of the EGoM dated 23.08.2013, and the amendment should not be allowed. In the rejoinder filed thereto dated 28.11.2013, the petitioners stated that hearing of the Writ Petition was deferred by this Court by its order dated 25.06.2013; they had filed the amendment petition at the earliest possible time, without any delay, when there were news reports that EGoM had reconvened, and had taken a decision as late as on 23.08.2013; the allegation that the amendment petition is a dilatory tactic on their part is not tenable; the latest decision of the EGoM dated 23.08.2013 reiterates its earlier decision dated 24.02.2012 in continuing the inter-se priorities for allocation of gas to various sectors, and is merely its reaffirmation; by way of the said amendment, no new case or no new pleadings are sought to be made by them; they are merely seeking to extend their challenge to the latest policy decision dated 23.08.2013 which, substantially, continues the same policy decision challenged in the writ petition; as a result of the latest decision of the EGoM, on inter-se priorities in allocation of gas, no new policy has come into existence; no case, therefore, exists for the petitioner to file a fresh writ petition to challenge the decision of the EGoM dated 23.08.2013; the objections taken by the first respondent, in opposition to the amendment petition, are technical in nature; the first respondent has failed to make out any grounds of prejudice being caused to it if the amendment is allowed by this Court; the amendment petition filed by the petitioner would sub-serve an effective adjudication, save precious judicial time, and help in avoiding further delay in determining the lis if a fresh writ petition, challenging the latest EGoM decision, were to be filed separately; and the State, which is expected to act fairly, cannot be permitted to take technical pleas to defeat the rights of citizens. Sri S. Niranjan Reddy, Learned Counsel for the petitioners, would submit that the amendment petition ought to be allowed as the nature of the lis is not altered; the latest EGoM decision dated 23.08.2013 is a continuation of the earlier policy of reverse cut adopted through the EGoM decision dated 24.02.2012 which is under challenge in the present writ petition; hence the challenge to the earlier decision constitutes a challenge to the latest decision dated 23.08.2013 also; and the Bombay High Court, in Welspun Maxsteel Limited v. Union of India , had permitted an amendment, challenging a subsequent decision of the EGoM, by way of an oral application. On the other hand Sri P. Wilson, Learned Senior Counsel appearing for respondents 1 and 2, would submit that amendment of the prayer, as sought for by the petitioners, is an afterthought and tantamounts to filing a new writ petition against the decision of EGOM dated 23.08.13; and this Court should disallow the amendment sought for by the petitioners. The real controversy test is the cardinal test, and it is the primary duty of the Court to decide whether an amendment is necessary to decide the real dispute between the parties. The Court may also take notice of subsequent events in order to shorten the litigation, to preserve and safeguard the rights of both parties, and to sub-serve the ends of justice. The rule of amendment is essentially a rule of justice, equity and good conscience and the power of amendment should be exercised in the larger interest of doing full and complete justice to the parties before the Court. (Rajesh Kumar Aggarwal v. K.K.Modi ). The test for allowing the amendment is to find out whether the proposed amendment works any serious injustice to the other side. The Court should be extremely liberal in granting the prayer of amendment of pleadings unless serious injustice or irreparable loss is caused to the other side. (Haridas Aildas Thadani v. Godrej Rustom Kermani ; Pirgonda Hongonda Patil v. Kalgonda Shidgonda Patil ). If the basic structure of the Writ Petition is not altered by the proposed amendment, and what is sought to be changed is the nature of the relief sought for by the petitioner, it is difficult to understand, if it is permissible for the petitioner to file an independent Writ Petition, why the same relief which could be prayed for in a new Writ Petition cannot be permitted to be incorporated in the pending Writ Petition when allowing the amendment would curtail multiplicity of legal proceedings. (Sampath Kumar v. Ayyakannu ). Since the cause of action for seeking the amendment arose during the pendency of this Writ Petition, the proposed amendment ought to be granted because the basic structure of the Writ Petition has not changed. If it is permissible for the petitioners to file an independent Writ Petition, there is no reason why the same relief, which could be prayed for in the new Writ Petition, cannot be permitted to be incorporated in the pending proceedings. (Rajesh Kumar Aggarwal3). When this Writ Petition was pending adjudication before this Court, the modified policy decision was taken by the EGoM on 23.08.2013. The application, in W.P.M.P. No.40245 of 2013, was filed on 11.11.2013 less than three months thereafter. While the EGoM decision dated 23.08.2013 has resulted in fixing the upper limit for supply of gas to the fertilizer sector at 31.5 mmscmd, the earlier policy decisions of according priority to the fertilizer sector over the power sector, imposition of a reverse cut on reduction of gas supplies from the KG-D6 basin, and a pro-rata cut on reduction in supply of non-NELP gas, continue to remain in force. The basic structure of the Writ Petition has not been altered, and the amendment merely seeks to include a challenge to the latest EGoM decision dated 23.08.2013. As the subsequent EGoM decision is not unrelated to the issues which arise for consideration, and taking notice of these subsequent events would not only result in shortening the litigation but would also avoid multiplicity of proceedings, I see no reason to relegate the petitioner to the remedy of challenging the subsequent EGoM decision dated 23.08.2013 in separate writ proceedings, more so as it is not even the case of respondents 1 and 2 that serious injustice or irreparable loss would be caused to them if a portion of the prayer in the writ petition is permitted to be amended. The amendment petition is allowed, and the prayer in the Writ Petition shall stand amended accordingly. II. PRELIMINARY OBJECTIONS: (i) CAN THE PETITIONER ASSOCIATION MAINTAIN THIS WRIT PETITION Sri P. Wilson, Learned Senior Counsel appearing on behalf of respondents 1 and 2, would submit that petitioner association cannot maintain the present writ petition as no allocation of gas is made in the name of the association; consequently no enforceable right arises; and the present writ petition is also not in the nature of a public interest litigation. While an Association cannot file a writ petition before the Supreme Court under Article 32 of the Constitution if it has no fundamental right, (Mahinder Kumar Gupta v. Union of India ), Article 226(1) stipulates that, notwithstanding anything in Article 32, every High Court shall have power to issue directions, orders or writs for the enforcement of any of the rights conferred by Part-III or for any other purpose. The power conferred on the High Court, to issue directions, orders or writs under Article 226 of the Constitution of India, is not confined merely to the enforcement of fundamental rights under Part-III of the Constitution, but also for any other purpose. In any event while the first petitioner is an association, the 2nd petitioner is an independent power producer which is directly affected by the impugned policy decisions, and the 3rd petitioner is an individual, who is the authorised signatory of the 2nd petitioner. It cannot, therefore, be said that the Writ Petition as filed is not maintainable. (ii) IS THIS WRIT PETITION BARRED BY THE PRINCIPLES OF RESJUDICATA Sri P. Wilson, Learned Senior Counsel appearing on behalf of respondents 1 and 2, would submit that members of the petitioner association were also parties to W.P. No.3748/2011 (M/s. Welspun Max Steel Ltd & Anr.) filed before the Bombay High Court wherein the proceedings of the MoPNG dated 30.03.2011, which was subsequently incorporated in the minutes of the EGOM meeting dated 24.02.2012, was under challenge; the Division Bench of the Bombay High Court, while upholding the order dated 30.03.2011, dismissed the said writ petition by its order dated 08.07.2011; the petitioner therein filed SLP Nos.30392/2011 which is pending before the Supreme Court; W.P.No.3106/2011 (i.e., M/s. Essar Steel Limited v. Union of India ) was filed before the Delhi High Court challenging the order of the MoPNG dated 30.03.2011; some of the members of the petitioner association were also parties thereto; the Delhi High Court, after recording the submission of the members of the petitioner association that the order dated 30.03.2011 of the MoPNG was agreeable to them, dismissed W.P.No.3106/2011 by its order dated 29.09.2011; the petitioner therein filed Writ Appeal before the Division Bench of the Delhi High Court and, thereafter, filed T.C.No.56/2012 before the Supreme Court which is still pending; the stand taken by the petitioners in the present writ petition is contrary to the stand taken by the industries, represented by the petitioner - association, before the High Courts of Bombay and Delhi; the petitioner is now challenging the same MoPNG order dated 30.03.2011 which it had supported earlier before the Bombay and Delhi High Courts; and the petitioners are estopped, by the principles of resjudicata, from challenging the impugned EGOM decisions. Sri R. Raghunandan, Learned Senior Counsel appearing for respondents 10 and 11, would submit that the petitioners did not have any objection to the categorization of consumers into core and non-core sectors; having accepted this categorisation, it is not open to them to object to the order of priority set out under that categorization, as the order of priority is a species of the genus of categorization into core and non-core sectors; and the rule of res- judicata would apply as the petitioners had supported and accepted the categorization of consumers in the earlier two cases before the Bombay and Delhi High Courts. On the other hand Sri S. Niranjan Reddy, Learned Counsel for the petitioners, would submit that before any plea, by the respondents, can be said to be barred by res-judicata in future proceedings inter-se such respondents, it must be shown that such a plea was required to be raised by the respondents to meet the claim of the petitioner in such proceedings; the issues that arise for consideration in the present writ petition are distinct and separate from the issues that were raised and considered by the Bombay and Delhi High Courts; the Bombay and Delhi High Courts, in Welspun Maxsteel Ltd2 and Essar Steels Ltd8 respectively, were called upon to examine the validity of classification of the core and non-core sectors for supply of natural gas; the issue of reservation within the core sector was neither raised nor decided in those proceedings; the issue before this Court is on the reservation of natural gas and priority within the core sector, more specifically priority to the fertilizer sector over power; these issues are based on independent causes of action inter-se the respondents; and, hence, cannot be said to be barred by the principles of res- judicata. The principles of res-judicata are attracted while considering the question of constructive res-judicata between the petitioner on the one hand and the respondents on the other who were co- respondents in the Writ petitions before the Bombay and the Delhi High Courts. (Ferro Alloys Corpn. Ltd. v. Union of India ). While the principles of constructive res judicata can be invoked even inter-se the respondents, before any plea by the respondents can be said to be barred by constructive res judicata in future proceedings inter-se such respondents, it must be shown that such a plea was required to be raised by the respondents to meet the claim of the petitioner in such proceedings. If such a plea was not required to be raised by the respondents with a view to successfully meet the case of the petitioner, then such a plea inter- se the respondents would remain in the domain of independent proceedings giving an entirely different cause of action inter-se the respondents with which the petitioner would not be concerned. Such pleas, based on independent causes of action inter-se the respondents, cannot be said to be barred by constructive res judicata in the earlier proceedings where the lis is between the petitioner on the one hand and all the respondents on the other. In other words, when the petitioner is not concerned with the inter-se disputes between the respondents, such inter-se disputes amongst the respondents would not give rise to a situation wherein it can be said that such respondents might and ought to have raised such a ground of defence or attack for the decision of the Court. (Ferro Alloys Corpn. Ltd.9). The application of the rule of res-judicata by Courts should be influenced by no technical considerations of form but by matters of substance within the limits allowed by the law. (Sheoparsan Singh v. Ramnandan Prasad Narayan Singh ; Ferro Alloys Corpn. Ltd.9; Iftikhar Ahmed v. Syed Meharban Ali ). If the matter was in issue directly and substantially in a prior litigation and decided against a party, then the decision would be res judicata in a subsequent proceeding. However, if a matter was only collaterally or incidentally in issue and decided in an earlier proceeding, the finding therein would not, ordinarily, be res judicata in a latter proceeding where the matter is directly and substantially in issue. (Sajjadanashin Sayed Md. B.E. Edr. v. Musa Dadabhai Ummer ). A matter in respect of which relief is claimed in an earlier suit can generally be said to be a matter directly and substantially in issue. If the issue was necessary to be decided for adjudicating the principal issue and was decided, it would have to be treated as directly and substantially in issue and, if it is clear that the judgment was in fact based upon that decision, it would then be res judicata in a latter case. (Ishwer Singh v. Sarwan Singh and Syed Mohd. Salie Labbai v. Mohd. Hanifa ; Sajjadanashin Sayed Md. B.E. Edr.12). A judgment is not conclusive if any matter came collaterally in question or if any matter was incidentally cognizable. (Halsburys Laws of England (Vol. 16, para 1538, 4th Edn.), R. v. Knaptoft Inhabitants ; Heptulla Bros. v. Thakore ; Sanders (otherwise Saunders) v. Sanders (otherwise Saunders) ; Sajjadanashin Sayed Md. B.E. Edr.12). A collateral or incidental issue is one that is ancillary to a direct and substantive issue; the former is an auxiliary issue and the latter the principal issue. The expression collaterally or incidentally in issue implies that there is another matter which is directly and substantially in issue. (Spencer Bower and Turner on The Doctrine of Res Judicata (2nd Edn., 1969, p. 181); Australian High Court in Blair v. Curran ; Halsbury says (Vol. 16, para 1538) (4th Edn.); Sajjadanashin Sayed Md. B.E. Edr.12). In order to understand this essential distinction, one has always to inquire with unrelenting severity is the determination upon which it is sought to find an estoppel so fundamental to the substantive decision that the latter cannot stand without the former Nothing less than this will do. Even where this inquiry is answered satisfactorily, there is still another test to pass: viz. whether the determination is the immediate foundation of the decision as opposed to merely a proposition collateral or subsidiary only, i.e. not more than a part of the reasoning supporting the conclusion. A mere step in reasoning is insufficient. What is required is no less than the determination of law, or fact or both, fundamental to the substantive decision. (Sajjadanashin Sayed Md. B.E. Edr.12). For a judgment to operate as res judicata between or among co-respondents, it is necessary to establish that (1) there was a conflict of interest between the co- respondents; (2) it was necessary to decide the conflict in order to give the relief which the petitioner claimed in the writ proceedings, and (3) the Court actually decided the question. (Ferro Alloys Corpn. Ltd. v. Union of India9; Iftikhar Ahmed11). When gas production was envisaged to be 40 MMSCMD, allotments were made to the fertilizers, LPG, power and CGD (domestic and transport) sectors. The steel sector was not allocated any gas within the first 40 MMSCMD. It is only because the CGD (transport and domestic) sector was not in a position to off-take the entire 5 MMSCMD allocated to it by the EGoM was 3.75 MMSCMD of gas, unutilized by the CGD sector, transferred to the steel sector. As there was a significant reduction in the production of natural gas from KG-D6, which had led to substantial cuts being imposed on customers, the MoPNG, by proceedings dated 30.03.2011, decided to supply gas to the fertilizers, LPG, power and CGD (domestic and transport) sectors apart from gas needed for operation of the East West Gas Pipeline (EWPL for short) to entirely meet their firm allocations. Again by letter dated 21.04.2011 the MoPNG clarified that, under the Gas Utilization Policy, allocations from the KG-D6 fields had initially been made to the core sectors and subsequently, taking into account the expectation of higher production, allocations had been made to the non-core sectors; as the gas production from the KG- D6 basin had decreased to around 50 MMSCMD, it was natural that the said production be supplied firstly to the core sectors; and the said directions had been issued pursuant to the Gas Utilization Policy under the provisions of the production sharing agreement. The relief sought for by the petitioners before the Bombay High Court, in Welspun Maxsteel Limited2, was to quash the directions of the MoPNG dated 30.03.2011 and 21.04.2011; to direct the first respondent to conduct an exhaustive investigation into the affairs of respondents 2 and 3 in respect of extraction of natural gas from the KG-D6 fields; and to issue appropriate directions to ensure that the maximum production levels from the KG D6 fields were attained. The Division bench of the Bombay High Court held that the EGoMs decisions clearly showed that a very high priority had been accorded to the core/priority sectors like Fertilizer, Power, CGD (Domestic and Transport) and LPG; initially the production from KG D-6 basin was expected to be only 25 mmscmd and was, thereafter, expected to gradually increase to 40 mmscmd; the decisions of the EGOM clearly indicated that the entire supply would be distributed amongst the core sector; any further supply was to be allocated to the power sector; the priority to sponge iron plants was kept after the aforesaid four core priority sectors; the impugned action of curtailing gas supply to non- priority sectors, so as to ensure that the reduction in supply of gas to core/priority sectors is kept at the minimum, is eminently in public interest; the authority was conscious that various industries/plants had come up in various sectors which were dependent on gas and it was, therefore, necessary to identify the sectors where lower price of gas resulted in passing on the benefit to the public at large; they were also conscious about the difference between the core sectors and non-core sectors; the non-priority sectors could pass on their additional financial burden, on account of procurement of gas from the open market, to their customers; the core/priority sectors, which operated in a controlled price regime, were unable to pass on such additional burden to their customers; it was not possible to hold that either the decision making process or the decision itself was arbitrary, illegal, irrational or manifestly unjust; and the Court, exercising jurisdiction under Article 226 of the Constitution of India, would not sit in appeal over such a well informed decision on a matter relating to financial policy involving complex economic factors. In Essar Steel Limited8, the orders under challenge were the proceedings of the MoPNG dated 30.03.2011 and 21.04.2011 and the consequential letter dated 04.05.2011 issued by Reliance Industries Limited intimating the petitioner that, consequent upon compliance with the directions of the MoPNG, supply of natural gas to them, in terms of the Gas Sales and Purchase Agreement, was likely to be affected. The contention of the petitioner before the Delhi High Court was that the said directions of the MoPNG, reducing supply of natural gas to them, was in contravention of the policy/ directions/guidelines framed by the EGoM regarding allocation of the limited available quantity of gas to the consumers thereof; as per the decisions of EGoM they were entitled, from the first 40 mmscmd of gas extracted, to the unutilized gas out of the allocation of 5 mmscmd to the CGD and CNG sectors, and to priority in the gas extracted beyond 40 mmscmd; the directions of EGoM of first giving priority to the steel sector, including the petitioner, in the allocation of unutilized gas of CGD had thus been violated; the categorization by MoPNG of core and non-core sectors was contrary to the decisions of EGoM; and, while the power sector was getting cheap natural gas, it was free to sell power at the market rate. It was contended before the Delhi High Court, on behalf of the power companies (some of the members of the petitioner association in the present writ petition), that the steel sector was not entitled to anything in the first 40 mmscmd of gas extracted/produced; the decisions of the EGoM did not provide for any pro-rata cut; a pro-rata cut would be contrary to prioritization; as per the EGoM, the power sector is to get any additional gas available within the first 40 mmscmd of gas produced and only if, after fulfilling the complete requirement of gas based power plants, there is any unutilized gas is the steel sector entitled to get the same; in the meeting of EGoM held on 27th October, 2009 it was decided that KG-D6 gas should be supplied on firm basis to power plants so as to enable them to operate at 75% PLF; firstly, such supply had to be made to the power plants; the press note, regarding the EGoM meeting dated 27th October, 2009, showed that the firm allocation of the power sector stood at 31 mmscmd before steel gets any gas; the EGoM decisions do not provide for any pro-rata cut, and the said argument had also been rejected by the Bombay High Court; the steel industries had no vested right and no priority; no priority for steel beyond 40 mmscmd had been provided; and the discretion in this regard was still with the Ministry. The Delhi High Court held that, on the basis of the decisions of MoPNG, the steel sector was not found entitled to any supply of gas in production till 40 mmscmd; and, in the production beyond 40 mmscmd, the priority of the steel sector was again only after the sectors of Fertilizers, LPG, Power, CGD and CNG. The issues regarding reservation of gas inter-se the core sector, according priority to the fertilizer sector over the power sector in the supply of gas, and the imposition of reverse cut in the supply of NELP gas to the IPPs in the State of Andhra Pradesh while imposing a pro-rata cut, in the supply of non-NELP gas, to power producers in Western and Northern India did not arise for consideration either before the Bombay or the Delhi High Court. These issues were not even collaterally or incidentally in issue, much less being directly and substantially in issue in those writ proceedings. The determination of these issues was neither fundamental nor the immediate foundation of the decision by the Bombay and Delhi High Courts. A decision on the aforesaid issues was wholly unnecessary for deciding the issues which arose for consideration in Welspun Maxsteel Limited2 and Essar Steel Limited8. The mere fact that the priority given to the fertiliser sector over the power sector, and the reverse cut policy, is referable to the MoPNG letter dated 30.03.2011 which was under challenge before the Bombay and Delhi High Courts is of no consequence, as the challenge was evidently to a different facet of these proceedings. I see no reason, therefore, to non-suit the petitioners on this ground. (iii) APPROBATE AND REPROBATE: Both Sri P. Wilson and Sri R. Raghunandan, Learned Senior Counsel, would submit that the members of the petitioner association were hitherto agreeable to the authority of MOPNG to issue the order dated 30.03.2011, and it was never challenged until the cut order affected the power sector; their contention, that the classification of consumers of gas into core sector and non-core sector is a valid classification but the further classification of core sector consumers and fixation of priority of supply of gas to such core sector members is arbitrary, is not tenable as the petitioners, themselves, have accepted the basic concept of categorization of consumers and fixation of priority in the supply of gas on the basis of such categorization; and, having accepted this principle of categorization and having filed this writ petition on the basis of such a classification, the petitioners cannot now turn around and claim or contend that the order of priority, within that category, should be set aside for violation of Article 14 of Constitution of India. The raison dtre of the rule of res-judicata is to confer finality on decisions arrived at by competent courts between interested parties after genuine contest; and to allow persons who had deliberately chosen a position to reprobate it and to blow hot now, when they were blowing cold before, would be completely to ignore the whole foundation of the rule. (Ferro Alloys Corpn. Ltd.9; Iftikhar Ahmed11; Ram Bhaj v. Ahmad Said Akhtar Khan ). Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that 'a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which they could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage. (P.R. Deshpande v. Maruti Balaram Haibatti ; R. N. Gosain v. Yashpal Dhir ; Halsbury's Laws of England para 1508 in Vol. 16 of the 4th Edn.). The doctrine of election is based on the rule of estoppel - the principle that one cannot approbate and reprobate inheres in it. Doctrine of estoppel by election is one of the species of estoppel in pais (or equitable estoppel) which is a rule in equity. By that rule a person may be precluded by his action or conduct or silence, when it is his duty to speak, from asserting a right which he otherwise would have had. (P.R. Deshpande20; Black's Law Dictionary, 5th Edn.). Before the Bombay and Delhi High Courts, some of the IPPs supported the decision of the MoPNG dated 30.03.2011 in according priority to the core sectors over the non-core sectors in the supply of gas from the KG-D6 fields. The inter-sectoral priority within the core- sector, and the imposition of a reverse cut in supply of NELP gas to different sectors within the core sector while imposing a pro-rata cut to industries within the core sector in the supply of non-NELP gas was not even in issue, and the petitioners herein cannot be said to have supported such a stand of the Union of India before the Bombay and Delhi High Courts. The principle that one cannot approbate and reprobate is based on the doctrine of election which, in turn, is based on the rule of estoppel. It is settled law that the principle of estoppel cannot impede the constitutional remedy. (P.R. Deshpande20; Evans v. Bartlam ). The petitioners question the action of respondents 1 and 2 in according priority to the fertilizer sector over the power sector, and in imposing a reverse cut in supply of NELP gas while imposing a pro-rata cut in supply of non-NELP gas thereby extending benefits to the power sector in West and North India as compared to IPPs in the East Coast, as arbitrary, discriminatory and in violation of Article 14 of the Constitution of India. There can be no estoppel against the Constitution. The doctrine of estoppel is based on the principle that consistency in word and action imparts certainty and honesty to human affairs. This principle can have no application to representations made regarding the assertion or enforcement of fundamental rights. No individual can barter away the freedoms conferred upon him by the Constitution. (Olga Tellis v. Bombay Municipal Corporation ; Basheshar Nath v. The Commissioner of Income Tax, Delhi ). Fundamental Rights cannot be compromised nor can there be any estoppel against the exercise of Fundamental Rights available under the Constitution. (Nar Singh Pal v. Union of India ). The contention that the Writ Petition should be dismissed, on the application of the doctrine of approbate and reprobate, does not merit acceptance as the petitioners claim of violation of Article 14 is required to be examined in the present writ proceedings. iv. HAVE THE PETITIONERS SUPPRESSED MATERIAL FACTS Sri P. Wilson, Learned Senior Counsel appearing on behalf of respondents 1 and 2, would submit that the petitioners have suppressed the fact that they were parties to the Writ Petitions filed by Welspun Maxsteel Limited2 before the Bombay High Court, and Essar Steel Limited8 before the Delhi High Court; the very same reverse-cut policy framed by MoPNG by its proceedings dated 30.03.2011, which was under challenge before the Bombay and Delhi High Courts, was supported by the petitioners then; the petitioners have now sought to secure an undue advantage by suppressing the fact that they were parties to the earlier writ petitions; and the Writ Petition, as now filed, is an abuse of process of Court. On the other hand Sri S. Niranjan Reddy, Learned Counsel for the petitioners, would submit that the Petitioners have placed all relevant and material facts including the judgments of the Bombay and Delhi High Courts on record; in fact the EGoM decision dated 24.02.2012, which is under challenge in this Writ Petition, directly refers to the said judgments; no question of suppression can arise as the issues that arose for consideration in the said judgments are separate and distinct from the issues which fall for consideration in the present writ petition; and it is not suppression of any fact, but suppression of material and relevant facts that would judge the conduct of a party before the Court. A person invoking the discretionary jurisdiction of the court cannot be allowed to approach it with unclean hands. (Arunima Baruah v. Union of India ). The rule, that suppression of a material fact by a litigant disqualifies him from obtaining any relief, has been evolved to deter a litigant from abusing the process of court by deceiving it. To enable the court to refuse to exercise its discretionary jurisdiction, suppression must be of a material fact, in the sense that, had it not been suppressed, it would have had an effect on the merits of the case. It must be a matter which was material for the consideration of the court, whatever view the court may have taken. Material fact would mean material for the purpose of determination of the lis, the logical corollary whereof would be whether the same was material for grant or denial of the relief. If the fact suppressed is not material for determination of the lis between the parties, the court may not refuse to exercise its discretionary jurisdiction. What would be a material fact, suppression whereof would disentitle the petitioner to obtain a discretionary relief, would depend upon the facts and circumstances of each case. (Arunima Baruah26; S.J.S. Business Enterprises (P) Ltd. v. State of Bihar ). The EGoM proceedings dated 24.02.2012 which is under challenge in the present proceedings, and a copy of which has been filed along with the Writ Petition, records that M/s. Welspun Maxsteel Limited2 and Essar Steel Limited8 had filed petitions in the Supreme Court challenging the orders of the Mumbai and Delhi High Courts. As noted hereinabove, the issues which arose for consideration before the Mumbai and Delhi High Courts are distinct and different from those which arise for consideration in the present Writ Petition. As the fact, that writ petitions were filed before the Mumbai and Delhi High Courts, is not material for determination of the lis before this Court, the petitioners cannot be held guilty of suppression of material facts necessitating dismissal of the present writ petition. While the petitioners would have been well advised to refer to these proceedings in their writ affidavit, the mere fact that they did not, would not justify dismissal of the present writ petition on this score. III. LEGITIMATE EXPECTATION: Sri S. Niranjan Reddy, Learned Counsel for the petitioners, would submit that gas based power plants in Andhra Pradesh were established, and their capacity increased, only on the basis of definite scientific data made available to them by the first respondent projecting sufficient gas availability to feed these industries atleast upto the year 2017; if the said projection of the first respondent, which was always claimed to be accurate, has not come true then there is a duty cast upon them to ensure availability of gas to the power generating units set up in the State of Andhra Pradesh; the members of the petitioner association have a legitimate expectation to be supplied gas upto atleast 75% PLF which was the assurance given by the EGoM in the year 2009, based on which these units were set up; the projected availability of gas was pegged at 80 mmscmd upto the year 2017, after which alone was it estimated that production of gas would start to fall; and, if the first respondent had not made such a prediction of availability of gas till 2017, the members of the petitioner association would have either waited to set up their plants after creation of terminals in the east coast, or terminals would have been planned to come up in the east coast so as to become operational in the year 2011-2012, if it had been known that availability of gas will dwindle from the said year. On the other hand Sri P. Wilson, Learned Senior Counsel appearing for respondents 1 and 2, would submit that, when the power plants were established, no assurance was given to them of supply of NELP gas; theirs is a business risk as NELP gas cannot be the sole source, more so as there is no guaranteed supply; except the allocation order, there is no agreement between the Government of India and the power plants; apart from the policy taken from time to time, and the projections given by contractors based on which supply or allocation was made, there is no written contract/ statute governing assured supply/ allocation; allocation of natural gas does not guarantee or assure that, during the period of availability of gas from that source, the allottees will be supplied gas equal to their allocation; allocation merely acts as the basis to determine the actual quantity of supply of gas from a particular source based on actual availability; the gas utilization policy does not advocate any reservation of gas allocation; a plant must be ready to consume gas whenever gas is available; the power producers have established gas based power plants based on future "projections" without any commitment from respondents 1 and 2 that additional gas would be allocated to their plants; the respondent cannot be asked to reduce the risks to improve their returns in case of adversity; alternate source of gas like imported R-LNG, albeit costlier, is available in the market which the petitioner can utilize; merely on the basis of legitimate expectation, the petitioner cannot maintain this writ petition; and, moreover, there cannot be a legitimate expectation as against the policy of the government. A claim based on legitimate expectation requires reliance on representations and resulting detriment to the claimant in the same way as claims based on promissory estoppel. (National Buildings Construction Corpn. v. S. Raghunathan ). Doctrines of promissory estoppel and legitimate expectation cannot come in the way of public interest which must prevail over private interest. (Union of India v. International Trading Co. ). Legitimacy of an expectation can be inferred only if it is founded on the sanction of law. (International Trading Co.29). Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimants perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. (Food Corporation of India v. Kamdhenu Cattle Feed Industries ). The decision to impose a reverse cut in supply of NELP gas to different sectors within the core sector, and to accord priority to fertilizer and LPG over the power sector, is a matter of economic policy. As has been submitted by Sri P. Wilson, Learned Senior Counsel appearing for respondents 1 and 2, neither was any assurance given to the IPPs nor was any agreement entered into with them for supply of a specified quantity of NELP gas. The mere fact that the availability of gas was predicted to increase till the year 2017, which prediction later turned out to be highly exaggerated, does not, by itself, confer any right on the petitioners to claim that they should be supplied gas upto their allocated quantity even if the genuine claims of other sectors within the core sector are denied thereby. To strike at the exercise of administrative power, solely on the ground of avoiding the disappointment of the legitimate expectations of an individual, would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the negation of a legitimate expectation (falling short of a legal right) is too nebulous to form the basis for invalidating the exercise of a power when its exercise otherwise accords with law. 'If a denial of legitimate expectation in a given case amounts to denial of a guaranteed right or is arbitrary, discriminatory, unfair or biased or is a gross abuse of power, the same can be questioned on the well known grounds attracting Article 14 but a claim based on mere legitimate expectation, without anything more, cannot ipso facto give a right to invoke these principles. It can be one of the grounds to consider, but the court must lift the veil and see whether the decision is violative of the principles warranting interference. (International Trading Co.29; Attorney General for New Southwale v. Quin ). While their contention regarding the EGoM decisions failing the test of Article 14 shall be examined hereinafter, the petitioners cannot claim priority in supply of gas on the specious plea of their having established their units based solely on the predictions of increased availability and production of gas. The petitioners have taken an unavoidable business risk in establishing their power plants and, in the absence of any contractually guaranteed supply, cannot rest their case solely on the ground of legitimate expectation. IV. CAN THE UNION GOVERNMENT BE DIRECTED TO FRAME A POLICY Sri S. Niranjan Reddy, Learned Counsel for the petitioner, would submit that the Union of India has failed in its duty to frame an equitable gas distribution policy as mandated by the Supreme Court; as a result, there is no level playing field either amongst the power units situated in various parts of the country or for the power units vis--vis fertilizer units situated in different areas; the Government of India also failed to undertake a review of the policy decision qua any regional/sectoral preferences as mandated by the Supreme Court; and any departure, from the directions of the Supreme Court, has to be consciously made after being alive to the additional preferences accorded in the previous exercise. On the other hand both Sri P. Wilson and Sri R. Raghunandan, Learned Senior Counsel, would submit that the prayer, seeking enforcement of the order of Supreme Court, is not maintainable as no such direction was given by the Supreme Court; the Supreme Court cautiously made an observation and a reminder, as no direction could be given to enforce rights under Part-IV of the Constitution of India; an observation made by the Supreme Court cannot now be sought to be issued as a direction in the present writ petition; such a prayer cannot be countenanced in law; and, even otherwise, a writ petition seeking a direction to frame a policy or to bring in legislation is not maintainable. In Reliance Natural Resources Ltd.1 B. Sudershan Reddy, J, in his separate opinion, observed:- Before we part with the case, we consider it appropriate to observe and remind the GoI that it is high time it frames a comprehensive policy/suitable legislation with regard to energy security of India and supply of natural gas under Production Sharing Contracts.. While Sri S. Niranjan Reddy, Learned Counsel for the petitioner, would contend that the aforesaid observations are reflected in a concurring opinion, Sri R. Raghunandan, Learned Senior Counsel appearing for respondents 10 and 11, would submit these observations form part of the minority opinion with which the majority disagreed. He would draw attention of this Court to the opinion of Justice P. Sathasivam who, while speaking for himself and Chief Justice K.G. Balakrishnan (as he then was), held that he had the benefit of reading the erudite judgment of B. Sudershan Reddy J, but was unable to share the view expressed by him on some points and must respectfully dissent. It is wholly unnecessary for this Court to examine whether the afore-extracted observations form part of a concurring opinion or a minority opinion as what Sri B. Sudeshan Reddy, J observed was a reminder to the Government to frame a comprehensive policy or to make suitable legislation. These observations cannot be understood as a direction to the Central Government, for it is settled law that no court can direct a legislature to enact a particular law or frame a particular policy. Similarly, the executive cannot be asked to enact a law under their delegated legislative authority. (Suresh Seth v. Commr., Indore Municipal Corpn., ; State of J&K v. A.R. Zakki ; A.K. Roy v. Union of India ; V.K. Naswa v. Union of India ; Supreme Court Employees Welfare Assn. v. Union of India ). In any event the petitioners remedy, to question the failure of the Government to frame a policy or to make a law based on the aforesaid observations, is to approach the Supreme Court. It would be wholly inappropriate for this Court to decide whether or not the aforesaid observations obligated the Government of India to frame a policy or to make a law. V. NO DIRECTION CAN BE ISSUED TO THE CENTRAL GOVERNMENT TO SUPPLY GAS TO THE PETITIONERS: Sri P. Wilson, Learned Senior Counsel appearing on behalf of respondents 1 and 2, would submit that the 3rd prayer seeking "a direction to supply 19.72 MMSCMD of natural gas from KG D6 gas field or from any other source in the KG basin to the petitioners members" cannot be countenanced in law and is, therefore, not maintainable; the distribution of material resources forms part of the directive principles of state policy (Article (39(b)), and this Court would not direct its enforcement; no person has a right to seek a mandamus to supply natural gas from a particular source; public interest and priority have to be taken into consideration while distributing material resources, such as natural gas; the petitioners have no enforceable right much less a statutory or a legal right; there is no public interest in the claim of the petitioners, and only commercial interest looms large; and this Court would not exercise its discretionary jurisdiction when competing public interests require it to refrain. It is no doubt true, as contended on behalf of the petitioners, that the Division bench of the Gujarat High Court, in Dhrangadhra Prakruti Mandal v. Union of India , issued a mandamus directing the Government of India to allot natural gas for domestic and vehicular usage in the city of Ahmedabad at the same rate at which it was supplied to Delhi and Mumbai; and not to discriminate between CGDs promoted by the Central Public Sector Undertakings and other CGDs, and also among Gujarat based CGDs, in the matter of allocation of natural gas. The Division bench opined: .. In such circumstances, discrimination of excess allotment at cheaper rate to Delhi and Mumbai in comparison to that of Ahmedabad definitely violates Article 14 of the Constitution of India. We, therefore, find that in the facts of the present case, the Government of India should be directed to allot natural gas for domestic and vehicular usage at the same rate at which the same is supplied to Delhi and Mumbai. There is no justification of supplying the gas to those two cities at a cheaper rate in comparison to the one at which it is supplied to Ahmedabad when the level of air-pollution is no less than that prevailing in those two cities. There should be, at any rate, the same yardstick for measuring the peril of public health throughout the vulnerable cities of the country. The second prayer of the above writ-application is for a direction upon the Government of India to prioritize and diversity unutilized natural gas from non-priority sector to the CGDs for their domestic and vehicular usage as directed by the Supreme Court of India in the case of M.C.Mehta v. Union of India : (2002) 4 SCC356. On consideration of the materials on the record, we find that the policy that has been adopted by the Union of India is not strictly in conformity with the above direction of the Supreme Court of India, and the Union of India has violated such norms as it appears from the Chart at paragraph 8.2.1 of this order at page-50 .. .We are also convinced that the respondent No.1 has not only discriminated between CGDs promoted by the Central PSUs and other CGDs but also among Gujarat based CGDs. For instance, the respondent no.1 in paragraph-15 of its affidavit-in-reply has submitted that allocation of 2 Lac MMSCMD gas from KG D6 has been made to Adani Gas Limited. However, even though gas has been allotted to Adani Gas Limited from KG D6, the other CGDs, e.g., GSPC Gas Company Ltd. and Charotar Gas Ltd. were denied the same though they also could have been allocated gas on the same principle. As indicated earlier, within the narrow scope of Article 226 of the Constitution, as pointed out by us above, we, therefore, dispose of these two writ-applications by passing the following directions:- 1. The Government of India is directed to allot natural gas for domestic and vehicular usage at the same rate to the city of Ahmedabad at which the same is supplied to Delhi and Mumbai to enforce the right of equality.

2. The respondent no.1 for the same reason is directed not only to discriminate between CGDs promoted by the Central PSUs and other CGDs but also among Gujarat based CGDs in the matter of allocation of natural gas.

3. State of Gujarat is directed to pass necessary order compelling the owners of all the vehicles having registration in the State of Gujarat to use natural gas and, if necessary, even at the higher prices within a shortest possible period, at any rate, not exceeding one year from today for protection of the lives of the citizens living in this State.

4. For the purpose of prevention of wastage of the natural gas, it is for the State Government to decide whether it would impose additional tax upon the sale of natural gas for the use of private owners of motor vehicle and utilize that additional amount available on such taxation, by selling the natural gas to those who are the owners of public vehicle at a cheaper rate. At the same time, taking into consideration the fact that by taking advantage of cheaper price of the natural gas, those owners of the public vehicles do not misuse the same and the end-benefit goes to the ordinary public who avails of public transport facility, it is for the State Government to decided whether it would fix a fare-structure at a reasonable rate in consultation with the experts as it thinks fit.

5. So long such restriction to make it compulsory for all the vehicles plying in the State by natural gas instead of other types of fuel is not enforced, necessary order imposing stringent restriction be passed for reducing the pollution by fixing the level of emission to the minimum in accordance with one approved by experts at the international level. Let such decision be taken within two months from today. (emphasis supplied). It is however settled law that, in order that mandamus may issue to compel the authorities to do something, it must be shown that there is a statute which imposes a legal duty and the aggrieved party has a legal right under the statute to enforce its performance. (Lekhraj Satramdas Lalvani v. N.M.Shah, Deputy Custodian-cum-Managing Officer ; Rai Shivendra Bahadur (Dr) v. Governing Body of the Nalanda College and Umakant Saran (Dr) v. State of Bihar ; Bihar Eastern Gangetic Fishermen Coop. Society Ltd. v. Sipahi Singh ). The petitioners claim is not founded on a constitutional, statutory or a legal right. They are not entitled, therefore, to seek a mandamus that the Central Government be directed to supply them a specified quantity of gas. Whether, and to what extent, gas should be supplied to the IPPs in Andhra Pradesh is not an exercise which this Court would undertake in proceedings under Article 226 of the Constitution of India as these are all matters in the executive realm. Granting the relief which the petitioners seek as prayer No.3 would deprive both the fertilizer and the LPG sectors of much needed gas. It is not in the province of this Court to confer a benefit to one sector while depriving other sectors of the limited natural resources available. If the relief sought for is granted by this Court to benefit the petitioners, it would result in amending the existing government policy by way of a judicial order, and would amount to extending benefits to persons to whom the policy was not intended to apply, (Principal, Madhav Institute of Technology & Science v. Rajendra Singh Yadav ; and Union of India v. Deoki Nandan Aggarwal ), or beyond what was intended. The petitioners are, therefore, not entitled to the reliefs sought for as prayers (i) and (iii). The question which necessitates examination is whether, and to what extent, the petitioners are entitled to be granted the relief sought for as the amended prayer No.(ii) in this Writ Petition VI. IS THE DECISION MAKING PROCESS OF THE UNION OF INDIA VITIATED FOR NOT TAKING ALL RELEVANT FACTORS INTO CONSIDERATION Sri S. Niranjan Reddy, Learned Counsel for the petitioners, would submit that there are two facets to the policy decisions of the UoI i.e., (i) a sectoral priority being accorded to the fertilizer industry, and (ii) the mode of allocation of gas from KG-D6 in the event of reduction in supply; both these facets are inter-twined and inter-connected; the mode of allocation of KG-D6 gas by the EGoM is not insulated from the mode of allocation of gas in the non KG- D6 sector; supply to the fertilizer industry, from the KG-D6 basin, has always been linked to supplies from the non-KG-D6 fields as KG D6 was a top-up gas to meet the shortfall in supply of gas; this policy continues in the same form even after the EGoM meeting held on 23.08.2013 whereby KG-D6 continues to be a top-up gas upto the newly imposed ceiling limit of 31.5 mmscmd; in taking the policy decision dated 23.08.2013, the UOI failed to consider all relevant and germane factors that ought to have been considered; the UoI was swayed by irrelevant considerations; the following would be the relevant factors in any decision making process relating to allocation of natural gas (a) the total availability of gas on the date of the decision and projected availability or reduction in future, if any; (b) the demand for supply of gas, including existing allocations made and pending applications, if any; (c) peculiar factors in relation to the available gas (such as portability issues); (d) any peculiar and special circumstances attendant to any applicant distinguishing it and prioritizing its claims for gas over others; and (e) the overall Governmental policy including any discernible legislative policy or larger policy pursued; the decisions of EGOM from time to time, including that of 23.08.2013, suffer from a non-consideration of all the above; it appears that EGOM dealt with antiquated facts relating to the gas availability average for the year 2012-13, that too on a misleading 'average availability' factor; though the decision was made in the meeting held on 23.08.2013, the current availability figures and month-wise gas availability figures, from April to July, 2013, were not placed before the EGoM which did not also advert to the existing allocation policy in respect of non-NELP gas; and thereby the decision making process stands vitiated. On the other hand Sri P. Wilson, Learned Senior Counsel appearing on behalf of respondents 1 and 2, would submit that the final decision regarding inter-se sectoral priority, in supply of NELP gas, was taken by the EGoM in the meeting held on 23.08.2013; the EGoM was informed of the various representations received from the Ministry of Power, the Chief Minister of Andhra Pradesh, Parliament, the members of the power producers association, and individual power companies; the EGoM noted the concerns of the power sector and, accordingly, put a cap on the supply of domestic gas to the fertilizer sector at the level of 31.5 MMSCMD, and took a decision to supply additional production of NELP gas to the power sector in the years 2013-14, 2014-15 and 2015-16; this decision was taken after considering the views of both the Ministry of Power and the Department of Fertilizers; while 54.18 MMSCMD of gas is allocated to the fertilizer sector, the average supply of gas to the fertilizer sector in the year 2012-13 was 31.5 MMSCMD; the projected gas availability, from all categories of domestic gas envisaged during the XII Plan Period (2012-2017), which corresponds to other NELP Blocks discoveries expected to go in for production during the XII plan period, was placed before EGoM; and the demands of the petitioners were duly considered. Sri R. Raghunandan, Learned Senior Counsel appearing on behalf of respondents 10 and 11, would submit that the EGoM decisions, ever since its first meeting, are based on availability of gas, the projected availability and the subsequent fall in production of gas; the note, which was considered by EGoM in these meetings, have been produced by the UoI before this Court; and the contention that EGoM had taken the decision, without considering relevant material, is not correct. The note dated 24.06.2013 submitted to the EGoM, to consider the inter-se priority between the core sectors for allocation of gas under NELP, records that there has been a sharp decline in production of KG-D6 gas from a peak production of 61 MMSCMD to 15.01 MMSCMD in May, 2013; this had resulted in a drastic cut in gas supply to the power plants necessitating a review in priorities for gas allocation; some other associated matters were also required to be placed before the EGoM for a decision; the overall gas production in the country peaked in 2010-11 at 143.1 MMSCMD, mainly due to increase in production from Pvt./JV fields (KG-D6); it had declined thereafter to 130 MMSCMD in 2011- 12, and then to 111.44 MMSCMD in 2012-13; the projected availability of gas in 2013-14 was pegged at 105.3 MMSCMD, and hence the present problem especially in the power sector; and the overall gas production scenario in the country from 2008-09 to 2012-13 is as under: Source 2008- 08 2009- 10 2010- 11 2011- 12 2012- 13 2013-14 (Projected) ONGC22486 23.109 23.095 23.316 23.55 23.44 OIL2269 2.415 2.352 2.633 2.64 2.739 Pvt./JV809 21.985 26.774 21.609 14.49 12.271 Total (BCM) 32.845 47.51 52.22 47.56 40.68 38.45 Total (MMSCMD) 90 130.2 143.1 130 111.44 105.3 The Note dated 24.06.2013 also refers to the allocation of KG-D6 gas for a total quantity of 93.337 MMSCMD (firm plus fall back) of which 15.67 MMSCMD was allocated to the fertilizer sector, 2.59 MMSCMD to the LPG sector, and 44.58 MMSCMD to the power sector (32.58 MMSCMD firm allocation plus 12 MMSCMD in future fall back allocation). The said Note also discloses that supply of gas from KG-D6 reached its maximum of 55.35 MMSCMD in 2010-11, thereafter it fell to 42.33 MMSCMD in 2011-12, and 25.74 MMSCMD in 2012-13; and, consequently during May 2013, the actual KG-D6 supply to the fertilizers sector was 14.10 MMSCMD, 0.67 MMSCMD to the LPG sector and the power sector not getting any gas from KG-D6. The Note dated 24.06.2013 also records that, as per projections, the indigenous gas availability is not going to increase substantially in the next couple of years; and the year-wise projected availability is as follows: Source 2013-14 2014-15 Pre NELP /CBM1372 16.32 KG-D6 18.22 16.53 ONGC5558 OIL910 Total availability from domestic source (MMSCMD) 95.94 100.85 DGH has calculated gas availability assuming 95% of production available for sale as per past data. While the availability of gas in the entire country is projected as 95.94 MMSCMD for 2013-14 and 100.85 MMSCMD for 2014- 15, the projected supply of gas from KG-D6 is quantified as 18.22 MMSCMD in 2013-14 and 16.53 MMSCMD for 2014-15. The availability of gas from non-KG-D6 gas fields as projected for 2013- 14 is 77.72 MMSCMD, and 84.32 MMSCMD for 2014-15. The note dated 24.06.2013 assesses the impact if power and fertilizer sectors are given equal priority, and states that a decrease in supply to fertilizer plants of 9.41 MMSCMD would result in an additional subsidy burden of Rs.5,372 crores per annum; and, if the same quantity is produced from imported R-LNG, the annual subsidy burden would be around Rs.8,595 crores; an increase in the supply of gas to the power sector by 9.74 MMSCMD would result in additional production of about 16,624 million kilo watts per annum; the additional production cost, using domestic gas, would be Rs.11,300 crores per annum lower than where the same energy is produced using imported R-LNG; an increase in supply to the power sector in Andhra Pradesh by 3 MMSCMD would result in additional production of 4,763 MKWs per annum; and the additional production cost using domestic gas would be Rs.3,535 crores per annum lower than where the same energy is produced using imported R-LNG gas. The following proposals were placed for consideration/approval of the EGoM. (i) In respect of the inter-se sectoral priority for allocation of NELP gas to the core sector, approval is sought for one of the following options:- a) To maintain status quo in the sectoral priority for allocation of NELP gas; OR b) To accord equal priority to all core sectors viz., fertilizers, LPG, power and CGD for domestic and transport; and re-distribute the available NELP gas amongst the core sector users, prorated based on the signed GSAs; OR c) To accord equal priority to fertilizer and power sectors and re-distribute the available NELP gas among the two sectors, prorated based on their signed GSAs. (ii) In case the EGoM approves the option under para 27(i) (a), RGPPL may be accorded the same priority as the fertilizer sector, reiterating the decision taken by EGoM in its meeting held on 23.10.2008; (iii) to take note of the contents of Para.22 and issue approrpaite directions; (iv) To take note of contents of Para.23 and 24 and allow supply of NELP gas to power plants based on short term PPAs in all such cases where medium/long term PPAs are not practicable in view of the limited balance tenure of the GSPAs. (v) To take note of the contents of Para.25. The record placed before this Court contains the views of the Ministry of Power regarding change in the sectoral priority for allocation of gas, and that highest priority be given to the power sector along with the fertilizer sector for allocation/supply of domestic gas including KG-D6 gas. The views of the Member (Energy), Planning Commission are also noted as suggesting that a balance be struck between the requirements of the fertilizer sector and the power sector so that there are no non-performing assets, and that the economy also grows. The record also contains the views of the department of fertilizers that replacement of domestic gas with imported RLNG would cost the exchequer about Rs.1,000 crores for each one MMSCMD of domestic gas. While the EGoM was appraised of the representations received from different quarters, and the supply of NELP gas in May, 2013, there are certain other relevant factors which were not considered by the EGoM in its meeting held on 23.08.2013. Details thereof shall be referred to, and its consequences dealt with, hereinafter. VII. IS THE EGOM POLICY, OF GIVING HIGHER PREFERENCE TO THE FERTILISER SECTOR OVER THE POWER SECTOR, IRRATIONAL AND ARBITRARY Sri S. Niranjan Reddy, Learned Counsel for the petitioners, would submit that the sectoral preference given to fertilizers over power is irrational, arbitrary and discriminatory as essentially all industries are alike, and are entitled to equal treatment under Article 14; the impugned policy decision discriminates the power industry qua the fertilizer industry; the initial burden of showing that the policy withstands the test of Article 14 is not discharged by the UoI; the solitary goal of reducing the financial/subsidy burden cannot constitute a legal object justifying a classification; the sectoral preference given to fertilizers over power is rendered irrational and arbitrary as relevant factors have not been taken into account qua the competing claims of the fertilizers and the power sectors; the EGOM was predominantly and unjustifiably swayed by only one factor i.e. subsidy implications on the Government of India; quite like contractual matters where the State is an interested party, an executive policy pursued by the State may render it an interested party; as the State is the custodian of natural resources, the doctrine of public trusteeship would require their actions to be subjected to greater scrutiny by Courts; the financial interest of the Union of India, as an interested party, does not equate to an overarching public interest; as it is required for industrial and agricultural development of the country, electricity should be given the highest priority next only to CNG; if KG-D6 gas were to be supplied to the petitioner, the annual cost of generation of 7000 MW would be Rs.10,165 Crores; the resultant savings, to the people of the State of Andhra Pradesh and to the nation, would be Rs.35,600 crores each year; the power sector should be given higher priority as (a) fertilizers can be imported with a very minimal differential price whereas there is no scope for importing power to meet the present shortfall in supply; (b) fertilizer units, which are situated largely in Western and Northern India, can be operated on imported gas available from the terminals on the West Coast, whereas there is no such terminal in the East Coast and it is therefore not possible to operate power plants on imported gas; (c) 20% of the electricity generated is used in the agricultural sector and, without power, agriculturist would not be in a position to gainfully utilize fertilizers due to lack of irrigation provided by electrically operated pump sets; (d) power is considered the world over as a basic industrial sector need essential for all round economic development of the area; (e) providing subsidy is also a part of the policy of the Government and cannot, per-se, justify grant of a better status to the fertilizer industry as compared to the power industry; and (f) availability of fertilizers, without availability of power, will not result in an increase in agricultural production. On the other hand Sri P. Wilson, Learned Senior Counsel appearing for respondents 1 and 2, would submit that Article 14 is not attracted as fertilizer producers cannot be placed on the same footing as power producers; unequals cannot be treated as equals and, hence, discrimination does not arise; the price of fertilizer is directly and predominantly determined by the price of gas; giving first priority to the fertilizer sector, in the supply of domestic gas, fulfils the twin objectives of self-sufficiency in fertilizers and a lower subsidy burden; domestic LPG is a subsidized product in which the country is not self-sufficient; any disruption in supplies of LPG would lead to a public outcry in the country; the EGoM also decided that higher fractions should be extracted from gas and, accordingly, the LPG sector should get full supply of gas; the EGoM includes the Minister of Power and the Minister of Fertilizers who have individually presented the case of their respective sectors; the EGoM has taken a considered decision after taking into account all facts and circumstances; the power sector continued to get KG-D6 gas preferentially, as per the MoPNG order dated 30.3.2011, till January 2013 (i.e., for a period of nearly two years), by diversion of KG-D6 gas from sectors lower than them in priority; by way of the 2nd prayer, the petitioner seeks to substitute the existing Government policy with a new policy to be framed by this Court; a policy can be struck down, but cannot be re-written by way of judicial review; save the policy being unconstitutional, or in violation of any statutory provision, the Courts would not compel the Government to change its policy; considering the demand and supply need, and to subserve the best interests of the country, the Government may bring in a new policy or change the existing policies; Courts refrain from striking down a policy merely because another policy would be fairer or wiser or more scientific or more logical; the Government cannot be divested of its supervisory power to regulate supply and distribution of gas; and the EGOM decisions have the force of law. Sri R. Raghunandan, Learned Senior Counsel appearing for respondents 10 and 11, would submit that, in the present case, the facts staring at the EGoM were that the available gas was insufficient to meet the demand, and supply of gas would further dwindle in the foreseeable future; in these circumstances, EGoM took the decision to protect the fertilizer industry as its first priority and, thereafter, the other three categories of consumers; the decision, on this broad parameter, cannot be challenged on the alleged ground that the EGoM did not consider the minute details of allotment; in the present case, the object sought to be achieved is allocation of scarce gas in a manner which would best sub-serve the national interest; the differentia applied, to achieve this object, is the nature of the manufacturing activity of the consumer; and as long as the policy decision of EGoM is not totally unreasonable or arbitrary the Court, in the exercise of its power of judicial review, would defer to the wisdom of the executive in framing a policy even if it results in hardship to some sections of society. (a). COURTS DO NOT SIT IN APPEAL OVER POLICIES MADE BY THE GOVERNMENT: The earlier decision of MoPNG dated 30.03.2011 and the decisions of EGoM dated 24.02.2012 and 23.08.2013 are policy decisions whereby priority in supply of gas has been given to the core sector vis--vis the non-core sectors; and inter-se the core sector priority has been accorded to the fertiliser and LPG sectors over the power sector. The scope of judicial review of an executive policy is limited. The court cannot impinge upon the judgment of the executive as to the priorities. (State of H.P. v. Umed Ram Sharma ). Public authorities must have liberty and freedom in framing policies. While the discretion is not absolute, unqualified, unfettered or uncanalised, and the judiciary has control over all executive actions, Courts are ill-equipped to deal with these matters. In complex economic and commercial matters, decisions are taken by the government keeping in view several factors, and it is not possible for Courts to consider competing claims and conflicting interests, and conclude which way the balance tilts. There are no objective, justiciable or manageable standards to judge the issues nor can such questions be decided on a priori considerations. (Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal ). It is neither desirable nor advisable for the Court to direct or sermonise the Government to adopt a particular policy which it deems fit or proper, as it does not have effective means to decide which alternative, out of the many competing ones, is the best in the circumstances. (State of Jharkhand v. Ashok Kumar Dangi ). In respect of public policies of the Government, the Court should not become the approval authority. When two or more options or views are possible, and after considering them the Government takes a policy decision, it is then not the function of the court to examine the matter afresh or sit in appeal over such a policy decision. (Narmada Bachao Andolan v. Union of India ; BALCO Employees Union (Regd.) v. Union of India ). (b). THE EXECUTIVE IS ENTITLED FOR SOME PLAY IN THE JOINTS IN FRAMING AN ECONOMIC POLICY: In complex economic matters every decision is necessarily empiric and is based on experimentation. Its validity cannot be tested on the application of any straitjacket formula. The Court must, while adjudging the constitutional validity of an executive decision relating to economic matters, grant a certain measure of freedom or play in the joints to the executive. Mere errors of the government are not subject to judicial review. It is only its palpably arbitrary exercise which can be declared void. The court cannot strike down a policy decision taken by the Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. (Dhampur Sugar (Kashipur) Ltd.45; Metropolis Theater Co. v. State of Chicago ; State of M.P. v. Nandlal Jaiswal ). The Government has, while taking a policy decision, the right to trial and error as long as both trial and error are bona fide and within the limits of authority. (BALCO Employees Union (Regd.)48). Reform must begin somewhere if it has to begin at all and, therefore, the administrator who has complex problems to solve must be allowed the freedom to proceed tentatively, step by step. (State of J & K v. Triloki Nath Khosa ). (c). WISDOM AND ADVISABILITY OF POLICIES ARE, ORDINARILY, NOT AMENABLE TO JUDICIAL REVIEW: It is not for the courts to examine the relative merits of different economic policies, and consider whether a wiser or better one can be evolved. Nor are Courts inclined to strike down a policy merely because it is urged that a different policy would have been fairer or wiser or more scientific or more logical. (BALCO Employees Union (Regd.)48). It is not in the domain of the Court to embark upon the unchartered ocean of public policy. Greater judicial deference must be shown towards a policy relating to economic activities. The fact that an economic policy may be troubled by crudities, inequities, uncertainties or the possibility of abuse cannot form the basis for striking it down. (Natural Resources Allocation, In Re, Special Reference No.1 OF2012; R.K. Garg v. Union of India ). The judiciary cannot engage in an exercise of comparative analysis of the fairness, logical or scientific basis, or wisdom of a policy. The wisdom and advisability of policies are, ordinarily, not amenable to judicial review unless the policies are contrary to statutory or constitutional provisions or is arbitrary or irrational or an abuse of power. (Natural Resources Allocation, In Re, Special Reference No.1 of 201252; State of M.P. v. Narmada Bachao Andolan ). The Court is not the forum where conflicting policy claims may be debated, as it is only required to adjudicate the legality of a measure which has little to do with the relative merits of different economic theories. (Natural Resources Allocation, In Re, Special Reference No.1 of 201252; Rustom Cavasjee Cooper v. Union of India ). (d). COURTS DEFER TO THE WISDOM OF EXPERTS IN FRAMING A POLICY, AND DO NOT SUBSTITUTE THEIR VIEWS FOR THAT OF THE EXPERTS: Judges should encroach warily in economic regulatory measures, as they are not experts in these matters. (Bajaj Hindustan Ltd. v. Sir Shadi Lal Enterprises Ltd., ). Nothing in the Constitution warrants a rejection of expert conclusions. Nor, on the basis of intrinsic skills and equipment, are the Courts qualified to set their independent judgment on such matters against that of the chosen state authorities. (Federal Power Commission v. Hope Gas Co., ; Railroad Commission of Texas v. Rowan & Nichols Oil Company ). Expertise in public matters is necessary before one may engage in the making, or in the criticism, of a policy. Courts do not possess the expertise and are, consequently, incompetent to pass judgment on the appropriateness or the adequacy of a particular policy. (Dhampur Sugar (Kashipur) Ltd.45; Liberty Oil Mills v. Union of India ). The Court does not supplant the "feel of the expert" by its own views. (Federal Power Commission57). Matters of economic policy must necessarily be left to experts. Economic policies are often matters of prediction of ultimate results on which even experts can seriously err and, doubtlessly, differ. Courts cannot be expected to decide them without even the aid of experts. (Natural Resources Allocation, In Re, Special Reference No.1 of 201252; BALCO Employees Union (Regd.)48; Peerless General Finance and Investment Co. Ltd. v. Reserve Bank of India ; M/s. Prag Ice Oil Mills v. Union of India ). Due respect should be given to the wisdom of those who are entrusted with the task of framing policies. (Centre for Public Interest Litigation v. Union of India ). The methodology, pertaining to disposal of natural resources, is an economic policy which entails intricate economic choices and the Court lacks expertise to make them. It would, therefore, not make a comparative study of the various methods of distribution of natural resources and suggest the most efficacious mode, if there is one universal efficacious method in the first place. The wisdom of the executive must be respected in such matters. (Natural Resources Allocation, In Re, Special Reference No.1 of 201252). These factors must, necessarily, be borne in mind while examining the validity of the impugned policy decisions. (e). THE POWER TO MAKE A POLICY INCLUDES THE POWER TO WITHDRAW, CHANGE OR REVISE IT: While no Court can compel the Government to change its policy involving expenditure, (Union of India v. Tejram Parashramji Bombhate ), the policies of the Government ought not to remain static. What may have been in the public interest at a point of time may no longer be so. (BALCO Employees Union (Regd.)48). The earlier policy decisions of the MoPNG dated 30.03.2011, and the EGoM decision dated 24.02.2012, have been modified, albeit to a limited extent, by the policy decision of the EGoM dated 23.08.2013. The power to lay policy by executive decisions includes the power to withdraw the earlier policy or to change it. (Bajaj Hindustan Ltd.56). The action of the Government cannot be declared illegal, arbitrary or ultra vires the provisions of the Constitution merely on the ground that the earlier policy had been given up, changed or not adhered to. It cannot also be attacked on the plea that the earlier policy was better suited to the prevailing situation. (Dhampur Sugar (Kashipur) Ltd.45). Whether the policy should be altered or not is a matter for the Government to decide. (Federal Power Commission57). When the Government is satisfied that a change in the policy is necessary in the public interest, it would be entitled to revise the policy and lay down a new policy. It is equally entitled to issue or withdraw or modify the policy. The Court would not bind the Government with a previous policy. (P.T.R. Exports (Madras) Pvt. Ltd. v. Union of India ). The Court cannot strike down a policy merely because there is a variation. Consistency is not always a virtue. What is important is to know whether irrational and extraneous factors foul. There can be no quarrel if a policy is revised. The wisdom of yesterday may obsolesce into the folly of today, even as the science of old may sour into the superstition now, and vice versa. (Tamil Nadu Education Deptt. Ministerial & General Subordinate Services Assn. v. State of T.N. ). (f). GROUNDS ON WHICH A POLICY DECISION IS SUBJECT TO JUDICIAL REVIEW: While the scope for interference is limited, policy decisions are, nonetheless, not beyond the pale of judicial review. The Court would not lay its judicial hands off merely because a plea is raised that the decision is a policy decision. Interference by the Court in such matters is not without jurisdiction as a policy decision is also subject to judicial review. Broadly, a policy decision is subject to judicial review on the following grounds: (a) if it is unconstitutional; (b) if it is dehors the provisions of the Act and the regulations; (c) if the delegatee has acted beyond its power of delegation; (d) if the executive policy is contrary to a statutory or a larger policy. (DDA v. Joint Action Committee, Allottee of SFS Flats ). When it is demonstrated that the policy framed by the State and/or its implementation is contrary to public interest, or is violative of the constitutional principles, it is the duty of the Court to exercise its jurisdiction in larger public interest and reject the plea of the State that the scope of judicial review should not be exceeded beyond recognised parameters. (Centre for Public Interest Litigation62). The essence of judicial review is a constitutional fundamental. (Narmada Bachao Andolan47; BALCO Employees Union (Regd.)48). Keeping in view its constitutional duty, and the constitutional rights of citizens, the Court is duty-bound to extend its arm in accordance with the principle est boni judicis ampliare justiciam non-jurisdictionem. The argument that matters of policy are, as a rule, beyond the power of judicial review has to be dispelled. The Court would ensure that the rule of law prevails and the constitutional goals are not defeated by inaction when the policy is so arbitrary that it defeats the larger public interest. (Brij Mohan Lal v. Union of India ). The scope of judicial review of a government policy is to scrutinize whether it violates the fundamental rights of the citizens or is opposed to the provisions of the Constitution of India or to any statutory provision or is manifestly arbitrary. The legality, and not the wisdom or soundness, of the policy is subject to judicial review. (Asif Hameed v. State of J & K. ; Shri Sitaram Sugar Co. Ltd. v. Union of India ; Khoday Distilleries v. State of Karnataka ; BALCO Employees Union48; State of Orissa v. Gopinath Dash and Akhil Bharat Goseva Sangh v. State of Andhra Pradesh ; Dhrangadhra Prakruti Mandal37). The basic test is to see whether the decision-maker has understood correctly the law that regulates his decision- making power and he must give effect to it otherwise it may result in illegality. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely illegality, irrationality and procedural impropriety. All errors of law are jurisdictional errors. (Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd. ; Reliance Airport Developers (P) Ltd. v. Airports Authority of India ). Courts interfere when the economic policy is demonstrated to be violative of constitutional or legal limits on power or is abhorrent to reason, (BALCO Employees Union (Regd.)48), or if it is patently arbitrary, discriminatory or mala fide. (Dhampur Sugar (Kashipur) Ltd.45; Metropolis Theater Co.49; Nandlal Jaiswal50). Any act of the repository of power, whether legislative or administrative or quasi-judicial, is open to challenge if it is in conflict with the Constitution or the general principles of law or it is so arbitrary or unreasonable that no fair minded authority could ever have made it. (Shri Sitaram Sugar Co. Ltd.69; Kruse v. Johnson ; Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation ; Chertsey UDC v. Mixnam Properties Ltd., ; Commissioners of Customs and Excise v. Cure and Deeley Ltd., ). The doctrine of judicial review implies that the repository of power acts within the bounds of the delegated power, and does not abuse it. He must act reasonably and in good faith. (Maneka Gandhi v. Union of India ; Shri Sitaram Sugar Co. Ltd.69; Natural Resources Allocation, In Re, Special Reference No.1 of 201252; Premium Granites v. State of T.N. ). The Courts may interfere where a decision, made in the purported exercise of power, is such that a repository of the power, acting reasonably and in good faith, could not have made it. (Union of India v. International Trading Co. ; G.B. Mahajan v. Jalgaon Municipal Council ). (g). COURTS WILL STRIKE DOWN A POLICY, INVOLVING DISTRIBUTION OF NATURAL RESOURCES, IF IT FALLS FOUL OF ARTICLE14 As they constitute public property/national assets, the State, while distributing natural resources, is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest. (Centre for Public Interest Litigation62; Natural Resources Allocation, In Re, Special Reference No.1 of 201252; Natural Resources Allocation, In re ). The Court can test the legality and constitutionality of the methods of distribution of natural resources, analyse the legal validity of different means of distribution, and give a constitutional answer as to which methods are either ultra vires or intra vires the provisions of the Constitution. If a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court would not hesitate in striking it down. (Natural Resources Allocation, In Re, Special Reference No.1 of 201252). As natural resources are public goods, the doctrine of equality, which emerges from the concepts of justice and fairness, must guide the State in determining the actual mechanism for its distribution. In this regard, the doctrine of equality has two aspects: first, it regulates the rights and obligations of the State vis--vis its people and demands that the people be granted equitable access to natural resources and/or its products and that they are adequately compensated for the transfer of resource to the private domain; and second, it regulates the rights and obligations of the State vis-a-vis private parties seeking to acquire/use the resource, it demands that the procedure adopted for distribution is just, non- arbitrary and transparent, and does not discriminate between similarly placed private parties. (Natural Resources Allocation, In Re, Special Reference No.1 OF20125; Natural Resources Allocation, In re83). (h): DOCTRINE OF PUBLIC TRUST: In a constitutional democracy like ours, the national assets, such as natural gas, belong to the people. The people of the entire country have a stake in natural gas, and its benefit has to be shared by the whole country. There should be a just and reasonable use of natural gas for national development. (Special Reference No.1 of 2001, In re ; Reliance Natural Resources Ltd.1). The natural resource i.e., gas is vested in the UOI to be held in trust on behalf of the people. The State is the trustee of all natural resources which are, by nature, meant for public use and enjoyment. (Intellectuals Forum v. State of A.P., ; Natural Resources Allocation, In re, Special Reference No.1 of 201252; M.C. Mehta v. Kamal Nath ). The Government owns the gas till it reaches its ultimate consumer. It has supervisory powers to regulate the supply and distribution of gas. (Reliance Natural Resources Ltd.1). The broader notion of public trust is that the sovereign rights of the Nation-States over certain environmental resources are not proprietary, but fiduciary. (Reliance Natural Resources Ltd.1). The idea of public trusteeship rests upon three related principles. First, that certain interests have such importance to the citizenry as a whole that it would be unwise to make them the subject of private ownership. Second, that they partake so much of the bounty of nature, rather than of individual enterprise, that they should be made freely available to the entire citizenry, without regard to economic status. And finally, that it is a principal purpose of the Government to promote the interests of the general public rather than to redistribute public goods from public uses to restricted private benefits. (Reliance Natural Resources Ltd.1). Public trust is an affirmation of the duty of the State to protect the peoples common heritage surrendering the right only in those rare cases when the abandonment of the right is consistent with the purposes of the trust. (Intellectuals Forum85; National Audubon Society v. Superior Court of Alpine Country ; Natural Resources Allocation, In re, Special Reference No.1 of 201252). When the State holds a resource that is freely available for the use of the public, it provides for a high degree of judicial scrutiny on any action of the Government that attempts to restrict such free use. To properly scrutinise such actions of the Government, the courts must make a distinction between the Governments general obligation to act for the public benefit, and the special, more demanding, obligation which it may have as a trustee of certain public resources (Intellectuals Forum85; Joseph L. Sax The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention; Michigan Law Review, Vol. 68, No.3 (Jan. 1970) pp. 471-566].. Three types of restrictions on governmental authority are often thought to be imposed by the public trust doctrine (1) the property subject to the trust must not only be used for a public purpose, but it must be held available for use by the general public; (2) the property may not be sold, even for fair cash equivalent; (3) the property must be maintained for particular types of use (i) either traditional uses, or (ii) some uses particular to that form of resources. (Intellectuals Forum85). The public trust doctrine is a specific doctrine with a particular domain and has to be applied carefully. (Natural Resources Allocation, In re, Special Reference No.1 of 201252). (i). THE TWIN TESTS TO BE SATISFIED FOR A CLASSIFICATION TO BE HELD REASONABLE UNDER ARTICLE14OF THE CONSTITUTION: The mere fact that the fertilizer sector and the power sector are two different categories of consumers of gas would not, by itself, mean that the priority given to the former over the latter is not ultra-vires Article 14 of the Constitution. The equality doctrine in Article 14 permits reasonable classification which satisfies the twin tests of being founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group, and that differentia must have a rational nexus to the object sought to be achieved. Executive action may, accordingly, be sustained if it satisfies the twin tests of a reasonable classification and the rational principle correlated to the object sought to be achieved. The twin tests can only be satisfied if it is established that the principle on which classification is founded is rational, and it correlates to the objects sought to be achieved. (Ramana Dayaram Shetty v. International Airport Authority of India ; D.S. Nakara v. Union of India ). Article 14 is violated where equals are treated differently without any reasonable basis. (Ajay Hasia v. Khalid Mujib Sehravardi ; D.S. Nakara89). A person, setting up a grievance of denial of equal treatment, must establish that, between persons similarly circumstanced, some were treated to their prejudice and the differential treatment has no reasonable relation to the object sought to be achieved. (Gauri Shanker v. Union of India ; Western U.P. Electric Power & Supply Co. Ltd. v. State of U.P. ). The classification may be founded on different basis. What is necessary is that there must be a nexus between the basis of classification and the object of the policy under consideration. (Gauri Shanker91; Ram Krishna Dalmia v. Justice S.R. Tendolkar ; Budhan Choudhry v. State of Bihar ). The classification must rest upon a real and substantial distinction bearing a reasonable and just relation to the thing in respect to which the classification is made; and classification made without any reasonable basis should be regarded as invalid. (Bidi Supply Co. v. Union of India ; State of West Bengal v. Anwar Ali Sarkar ). If the policy decision is demonstrably capricious or arbitrary or it suffers from the vice of discrimination, the policy decision can be struck down. A public policy can be tested in the context of illegality and unconstitutionality. (Krishnan Kakkanth v. Govt. of Kerala ). If the policy of the Government fails to satisfy the test of reasonableness, it would be unconstitutional. What is imperative and implicit in terms of Article 14 is that a policy is made fairly, and not arbitrarily. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review, to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. (International Trading Co.81). The exercise of discretion is impeachable on well accepted grounds such as 'ultra vires' or 'unreasonableness'. (Shri Sitaram Sugar Co. Ltd.69). The ultimate test is whether, on the touchstone of reasonableness, the policy decision comes out unscathed. (Internatinal Trading Co.81). If the policy of the government fails to satisfy the test of "reasonableness", then such a decision would be unconstitutional. (Reliance Energy Ltd.73). A policy, or a change in it, can only be justified on the Wednesbury test of reasonableness. (R. v. Secy. of State for the Home Deptt., ex p Hargreaves ; Punjab Communications Ltd. v. Union of India ; R. v. Secy. of State for Transport, ex p Richmond upon Thames London BC ; Punjab Communications Ltd.99). The Wednesbury principle of reasonableness is that an administrative decision is unlawful if it is so outrageous in its defiance of logic or of accepted moral standards that no sensible person, who had applied his mind to the question to be decided, could have arrived at it. (R. v. Secy. of State for the Home Deptt., ex p Hargreaves98; Punjab Communications Ltd.99). These principles must be borne in mind while examining whether the policy decisions of the Government of India, in according priority to fertilizers over power, satisfy the requirements of a valid classification under Article 14 of the Constitution of India. Before doing so, it is necessary to examine whether the onus lies on the petitioner or on the Union of India to establish the validity or otherwise of the classification. (j). BURDEN TO PROVE THE VALIDITY OR OTHERWISE OF A CLASSIFICATION: In order to establish that the protection of the equality clause has been denied to them, it is not enough for the petitioners to say that they have been treated differently from others, not even enough that a differential treatment has been accorded to them in comparison with others similarly circumstanced. Discrimination is the essence of classification and does violence to the constitutional guarantee of equality only if it rests on an unreasonable basis. It is for the petitioners to show that the classification is unreasonable and bears no rational nexus with its purported object. (Triloki Nath Khosa51). The person assailing the classification "carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences, (Shri Sitaram Sugar Co. Ltd.69; Federal Power Commission57), or that there has been a clear transgression of the constitutional principles. (Ram Krishna Dalmia93; Gauri Shanker91). Where a party seeks to impeach the validity of a policy made by a competent authority on the ground that they offend Article 14, the burden is on him to plead and prove the infirmity, to set out facts necessary to sustain the plea of discrimination, and to adduce cogent and convincing evidence to prove those facts for there is a presumption that every factor which is relevant or material has been taken into account in formulating the classification. Unless the classification is unjust on the face of it, the onus lies upon the party attacking the classification to show, by pleading and placing the necessary material before the Court, that the said classification is unreasonable and is violative of Article 14 of the Constitution.( Triloki Nath Khosa51; G.D. Kelkar v. Chief Controller of Imports and Exports ). While this is ordinarily the rule, the doctrine of public trust, which requires the Court to undertake a stricter judicial scrutiny in matters involving distribution of scarce natural resources, constitutes an exception thereto, warranting the initial onus being placed on the State to justify the classification, instead of on persons impeaching its validity. As noted hereinabove the IPPs (members of the first petitioner association), the Government of A.P. and the A.P. DISCOMS claim that the power sector should be given priority over the fertilizer sector in the supply of NELP gas. They claim that gas based power offers substantial environmental benefits; it requires just 1/10th of the land area as compared to coal; its water requirements are much lower, and it is 20% more efficient; fertiliser manufacturing units can use other fuels apart from natural gas, and can also import gas from abroad; as an alternative to its indigenous production, fertilizer can be imported; however there is very little scope for import of electricity; electricity cannot be generated in the east coast by using imported gas, as there is no LNG terminal presently available thereat; production of electricity, by use of imported gas, is not economical; at no point of time, prior to 30.03.2011, had the EGoM applied the reverse cut within the four core-sectors; when gas production from KG D6 reached its optimum level during 2009-10, allocation to the fertilizer sector was 15.7 MMSCMD; and this was continued arbitrarily despite there being a drastic reduction in supply from KG D6. On the other hand both the Union of India, and the fertilizer Association, contend that the fertilizer sector has been justifiably given priority over the power sector in the supply of NELP gas. They claim that the consumption of urea in the country is 58 million metric tonnes of which 18 million metric tonnes is produced from domestic natural gas, and 4 million metric tonnes from LNG; the price of fertilizer is directly and predominantly determined by the price of gas; 20% - 30% of the total urea consumed in the country is imported, and self-sufficiency can only be achieved if supply of domestic natural gas, for domestic urea units, is ensured; the cost of production of urea, on the use of R- LNG, is even higher than the imported price of urea; India is the second largest consumer of fertilizers only after China; as against the 59 million tonnes of fertilisers consumed in 2011-12, at an imported cost of Rs.24,564 per tonne, the domestic cost of production, using a mix of domestic and imported gas, is only Rs.11,000 per tonne; the farmer buys urea at a statutory price of Rs.5,360 per tonne, and the Government bears a subsidy of Rs.5,640 per tonne on domestic urea; the subsidy on imported urea is Rs.18,640 per tonne; this has led to a ballooning of the subsidy estimate of Rs.70,013 crores; urea fertiliser plants sell their products at controlled rates; if not produced domestically, urea will have to be imported at a much higher cost or will have to be produced at a higher price through RLNG, and then subsidized through the Union Budget; the huge subsidy burden will be substantially higher if RLNG is used instead; any increase in the cost of fertiliser, as a result of non-availability of gas, will only push up the cost of urea and fertilisers which will have a cascading effect on the cost of agriculture; in order to reduce its subsidy burden, the Government of India directed the fertiliser manufacturing units to dispense with the use of naptha, and change over to natural gas, within a period of three years; it was made clear that units, which did not change over, would not receive any subsidy; the fertiliser companies have received firm allocation from the Government of India before setting up their fertiliser plants; in contrast, the allocations sought for by power producing companies is only after they were established; fertilizer is sold below cost price, and the entire subsidy burden is borne by the Central Government; and priority to the fertilizer sector fulfils the twin objectives of self-sufficiency in fertilizers and a lower subsidy burden on the Union of India. The fertiliser sector, which consists of urea and fertiliser manufacturing units, forms a distinct and separate class from the power sector which consists of electricity generating units. The differentia between the fertiliser sector and the power sector is intelligible. The stated objects, in according priority to the fertilizer sector over the power sector, are self-sufficiency in domestic fertilizer production and reduction in the subsidy burden of the Union of India of around Rs.70,000/- crores per annum. The differentia between the fertiliser and the power sector has a reasonable nexus to the object sought to be achieved. In examining the validity of a classification, on the touchstone of Article 14, it is not prudent or pragmatic to insist on a mathematically accurate classification covering diverse situations and all possible contingencies in view of the inherent complexities involved. (State of Karnataka v. Mangalore University Non-Teaching Employees Association ). The Government enjoys considerable latitude, and exercises its power of classification enriched by its experience and taking into consideration myriad circumstances. (Ombalika Das v. Hulisa Shaw ). Precision and arithmetical accuracy will not exist in any categorisation, and such precision and accuracy is not what Article 14 contemplates. As long as the broad features of the categorisation are identifiable and distinguishable, and the categorisation is reasonably connected with the object targeted, Article 14 does not forbid such a course of action. (Subramanian Swamy v. Raju ; Murthy Match Works v. CCE ; Roop Chand Adlakha v. DDA ; Kartar Singh v. State of Punjab ; Basheer v. State of Kerala ; B. Manmad Reddy v. Chandra Prakash Reddy and Transport and Dock Workers Union v. Mumbai Port Trust ). It is evident that the classification between the fertilizer sector and the power sector, in according priority in supply of NELP gas to the former over the latter, satisfies the twin tests of a reasonable classification and cannot, therefore, be said to be in violation of Article 14 of the Constitution. While the anguish of gas based power plants in Andhra Pradesh (whose cause is also supported by the Government of A.P. and the A.P. DISCOMS), may necessitate ameliorative measures being taken to ensure effective utilization of public assets of around Rs.30,000 crores, and an unutilised power generation capacity of 7000 MW, this Court must bear in mind that these are all matters of balancing equities between two vital sectors of the economy. While the stricter judicial scrutiny test, applicable to cases attracting the doctrine of public trust, may justify the initial onus, of establishing that the subject classification does not violate Article 14, being placed on the UoI instead of the petitioners, that does not, however, mean that this Court can act as an appellate or approving authority and dissect the decision making process of the EGoM to determine whether priority should be given to the fertiliser sector or the power sector in the supply of natural gas. Suffice it to hold that, on the application of the wednesbury test of reasonableness, it cannot be said that according priority to the fertiliser sector over the power sector, to achieve the twin objects of self sufficiency in domestic fertilizer production and to avoid a higher subsidy burden on the Union of India, is neither so outrageous in its defiance of logic nor is it so unreasonable as to violate Article 14 of the Constitution of India. Further, as it is ill- equipped to examine these complex issues, this Court would defer to the wisdom of experts and not sit in judgment over the policy decisions of the Union of India in this regard. VIII. IS THE DIFFERENTIAL TREATMENT ACCORDED TO POWER PLANTS IN THE WEST COAST, AS AGAINST POWER PLANTS IN THE EAST COAST, DISCRIMINATORY AND IN VIOLATION OF ARTICLE14OF THE CONSTITUTION OF INDIA Sri S. Niranjan Reddy, Learned Counsel for the petitioners, would submit that the policy of distribution and allocation of natural gas, adopted by the UoI, must be uniform for both KG-D6 and non-KG-D6 gas, failing which it would be arbitrary thereby violating Article 14; two agencies of the UoI viz. EGoM and MoPNG have been constituted and entrusted with the task of enacting a policy in respect of allocation of the same commodity, being natural gas, in two separate dispensations; that does not justify differentiation since the commodity sought to be distributed, as well as the decision maker, is one and the same; any such distinction or differentiation must have a rational basis failing which it would attract the vice of arbitrariness; the policy decisions of EGoM and MoPNG, in respect of gas in KG D6 and non-KG-D6 gas, are non- uniform; there is no intelligible classification for such differentiation; the said policy decision of the UoI is, therefore, violative of Article 14 of the Constitution; natural gas should be considered a single basket throughout the country; there is no uniform policy for supply of APM, non-APM, and KG-D6 gas; in respect of APM and non-APM gas pro-rata cuts are being imposed, as a result of which both fertilizer and power units get reduced supply depending on their allocation; a reverse cut is applied in KG-D6 and, unlike APM and Non-APM gas, there is no pro-rata cut in supply of gas to the power sector and the fertilizer sector; resultantly, power plants on the West Coast are in a much better position as compared to the petitioners power plants; the sole justification, for such discriminatory treatment, is that non-KG-D6 Gas is produced in many scattered blocks and lacks portability and connectivity to the gas pipeline; from out of 66.22 mmscmd available gas in non-KG D6, there are portability issues only in relation to 11 mmscmd which is not supplied to the pipeline grid; in respect of the remaining extent, natural gas must be treated as one for the purpose of allocation; the petitioners have filed their affidavit dated 23.01.2014 placing the same on record; the UoI has not placed any data on record to the contrary; in any event, no such material was placed for consideration before the EGoM, and the EGoM did not consider this relevant aspect while framing a divergent policy on behalf of the same UoI in respect of KG D6; resultantly the supply of gas to the petitioners power plants has been reduced to zero since March 2013; these plants have been lying idle ever since, as opposed to power plants in the West Coast which are still operational; the policy (and the mode of allocation being intertwined with it) results in discrimination between industries within the power sector itself as the Union of India has not disputed its obligation to treat all power industries alike; they did not also dispute the contention that RGGPL is similar to any other power plant and is, therefore, not entitled to a higher preference in allotment of gas; as it is the public trustee of gas no differentiation can be made by the UoI with regards gas finds/discoveries in different regions unless an intelligible distinction can be made; otherwise all gas discoveries must be treated as falling within one basket; the submission that, in non- KG D6, MoPNG is achieving a "near" reverse cut regime is a tacit acknowledgement of the requirement of maintaining parity in the manner of allocation; there is no uniformity in the supply of gas even within the power sector; while there is no alternate supply of fuel to members of the petitioner-association, because of the lack of a terminal in the East Coast, yet no priority has been accorded to them vis--vis power generating units situated in Western and Northern India which are not only being supplied domestic gas but have access also to imported gas because of availability of terminals, to store and supply such gas, in Western India. On the other hand Sri P. Wilson, Learned Senior Counsel appearing on behalf of respondents 1 and 2, would submit that the Government can regulate and distribute natural gas, through allotments and allocation, in a manner which would sub-serve the best interests of the country; framing of the "gas utilization policy", identifying the priority sectors, allocating the requisite quantities in accordance with the needs of the said sectors, and subjecting marketing freedom to the order of priority and the guidelines framed, is in accordance with law; all gas allocations made so far by the Government are strictly in accordance with the aforesaid policy; the discretion exercised by the UoI, in the allocation and allotment of gas, is in public interest and is in accordance with the standards and norms prescribed under the policy laid down by the EGoM for NELP gas; the first respondent is following the policy decisions of the EGoM, and is supplying gas as per the priorities decided by them; APM & non-APM gas cannot be compared with KG-D6 gas; while KG-D6 gas is produced from a single geographical location in Andhra Pradesh, APM gas is produced from many blocks scattered over many States; the peculiarities of APM gas are localised supplies, distributed production from several fields etc; APM gas and KG-D6 gas are completely different classes, and are not equal; the petitioners have wrongly submitted that East coast power plants do not have access to imported R-LNG; on the request of APTRANSCO, respondents 1 and 2 have allowed swapping of R-LNG with KG-D6 gas for supply of R-LNG to Andhra Pradesh IPPs; transportation of gas is a natural corollary of finding gas in a certain region and, being a national asset, gas has to be allocated to everybody based on a national policy keeping in view public interest. Sri R. Raghunandan, Learned Senior Counsel appearing for respondents 10 and 11, would submit that the premise that the differential treatment meted out to power plants, under different gas allocation regimes of APM, non-APM, Pre-NELP and NELP, would result in violation of Article 14 of Constitution of India is unfounded; differential treatment, under different regimes, is a by- product of the manner in which gas has been allocated over a period of time; allocation of gas, under various regimes, came to be made in circumstances existing at the time of allocation of gas; industries were not only established on the basis of such allocation, but are also functioning on such a basis; and treating all the gas available in the country as forming one pool, to be equally distributed, would itself result in violation of Article 14 of Constitution of India as such a policy would not only disrupt existing allocations which have been acted upon, but would also amount to discrimination under Article 14 of Constitution of India as un-equals would be treated as equals under this system of allocation. The amended second prayer, as sought for by the petitioners, is to direct respondents 1 and 2 to modify the EGoM decision dated 24.02.2012 and the subsequent EGoM decisions including those dated 17.07.2013 and 23.08.2013 so as to enable supply of gas to gas based power plants of the members of the petitioner on priority over other consumers of gas in the KG-basin, at least till such time LNG Terminals are set up in the east coast of the country to enable supply of generated power to AP DISCOMS. The Court cannot rewrite, recast or reframe the legislation/policy as it has no power either to legislate or frame a policy. Courts decide what the law is and not what it should be. (Deoki Nandan Aggarwal43; P.K. Unni v. Nirmala Industries ; Mangilal v. Suganchand Rathi ; Sri Ram Ram Narain Medhi v. State of Bombay ; Hira Devi (Smt) v. District Board, Shahjahanpur ; Nalinakhya Bysack v. Shyam Sunder Haldar ; Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha ; G. Narayanaswami v. G. Pannerselvam ; N.S. Vardachari v. G. Vasantha Pai ; Union of India v. Sankal Chand Himatlal Sheth ; and CST v. Auriaya Chamber of Commerce, Allahabad ). Courts do not stray into the executive domain or in matters of policy. The Court cannot, by a judicial order, first create a law or frame a policy, and then seek to enforce it. (Aravali Golf Club v. Chander Hass ; Deoki Nandan Agarwal43; Vemareddy Kumaraswamy Reddy v. State of A.P ; Suresh Seth32; and Bal Ram Bali v. Union of India ). No mandamus can, therefore, be issued to respondents 1 and 2 to modify the EGoM decisions. The Court can however modify the relief, and grant the petitioner the modified relief, as long as the relief granted does not go beyond the relief sought for in the Writ Petition. Article 226 of the Constitution empowers the High Court to issue orders for any other purpose, apart from Writs for the enforcement of any of the rights conferred by Part III of the Constitution of India. This Court, in Writ proceedings under Article 226 of the Constitution, has the power to mould the relief taking into account the totality of the circumstances, and the exigencies of the situation. It is the duty of this Court to ensure that ends of justice are not allowed to be frustrated, and the discretion to mould the relief should be so exercised as to ensure substantial justice. (D. Satyanarayana v. N.T. Rama Rao ). With respect to the natural resources, extracted and exploited from the geographic zones specified in Article 297, the UoI may not, among others, allow a situation to develop wherein the various users in different sectors could potentially be deprived of access to such resources; allow the extraction and distribution without periodic evaluation of the current distribution and making an assessment of how greater equity can be achieved, as between sectors and also between regions; and no end user may be given any guarantee for continued access and of use beyond a period to be specified by the Government. Any arrangement which does not take within its ambit, the afore-stated principles, may fall foul of Article 14 of the Constitution. (Reliance Natural Resources Ltd.1). Whether the policy is framed by the MoPNG, or the EGoM, they are policy decisions of the Union of India. Natural gas is a national resource of which the UoI is the trustee. As natural gas is a national asset it must be made available for use by citizens all over the country, and no State can claim preference on the ground that the gas fields fall within its territorial limits. The claim by IPPs in the Andhra Pradesh, of being entitled to preference in the supply of gas from the KG-D6 gas fields located within the State of Andhra Pradesh on the ground that their power plants are also located within Andhra Pradesh, does not, therefore, merit acceptance. By the same analogy, power plants in the North and West of India cannot claim priority in allotment of non-KG-D6 gas merely on the basis of the location of the gas fields from where gas is supplied. In all fairness it must be stated that respondents 1 and 2, in their counter-affidavits filed before this Court, do not make any such assertion. While examining whether the classification, of power plants in the north and west of the country, and power plants in the East coast, is founded on an intelligible differentia, it must be borne in mind that, even if there be one class having several categories with different attributes and incidents, such a category becomes a separate class by itself and no difference or discrimination between such category and the general members of the other class would amount to discrimination or to denial of the equality clause, (Air India v. Nergesh Meerza ). However Sri P. Wilson, Learned Senior Counsel appearing on behalf of respondents 1 and 2, has not been able to show, from the material on record, the different attributes and incidents, if any, between power plants in the North and West of India and those on the East coast. It is evident, therefore, that gas based power plants all over the country form a homogenous class. As such, the first of the twin tests of a reasonable classification is not satisfied. KG-D6 gas is produced from a single geographical location situated in AP. However APM and non-APM gas are produced from many blocks scattered over many States. Natural gas under APM was allocated to units located in the western and northern parts of the country prior to 2007-2008 when there was no pipeline infrastructure to carry gas from west to east. The east and west pipeline infrastructure was completed in the year 2007-2008. The gas available from KG-D6 is transported through a major single pipeline i.e., the east-west pipeline which has connectivity with the gas grid for distribution of gas in Andhra Pradesh, and connectivity with GSPC and GAILs pipeline network in the western and northern parts of the country. Prior to March, 2011, MoPNG had stipulated, as was the practice for APM gas, cuts to be enforced on a pro-rata basis even in the KG-D6 basin. By the order of the MoPNG dated 30.03.2011, cuts have been stipulated on a reverse priority basis in KG-D6 basin, with the first to be affected being the power sector. However, in the case of non-KG-D6 gas, cuts are still being imposed on a pro-rata basis and there is no change in the priority of usage of non-KG-D6 gas because of reduction of supply from KG D6 gas fields. No gas has been made available to A.P. projects, from gas fields in the west coast, through the East- West pipeline though it has been in existence from 2007-2008. As all the RNLG terminals are located in the west coast, RNLG is being imported and supplied to plants in the western and northern States. There is no LNG terminal in the east coast. The production of gas in the KG D6 basin reached its peak of 60 MMSCMD in March, 2010 and, thereafter, the production has decreased steadily. The steep fall in production at KG-D6 has resulted in gas being supplied only to the fertilizer and LPG sectors, and KG-D6 gas is not being supplied to the power sector from Feb/March, 2013. Prior to the decision of EGoM dated 23.08.2013, supply of gas was limited by the total allocation from the KG D6 basin to the fertilizer sector at 15.67 MMSCMD. The limit imposed by the decision of the EGoM dated 23.08.2013 restricting supply of domestic gas, (NELP gas plus other domestic gases), to the fertilizer sector to 31.5 MMSCMD, against their total allocation of 54.18 MMSCMD, is of no avail to the IPPs in Andhra Pradesh as, even according to respondents 1 and 2, the average domestic gas supplied from the KG D6 basin, during the three month period from April to June 2014, was only 12.79 MMSCMD, the entire KG D6 gas was being supplied to the fertilizer sector, and a part thereof has been utilized for operation of the East West pipeline. In view of the pro-rata cut in non-NELP gas it is highly unlikely that the requirement of 31.5 MMSCMD of the fertilizer sector would be met before exhausting the full allocation of 15.67 MMSCMD of KG-D6 gas to them. As against the three month average supply of gas from KG-D6, between April to June 2014 of 12.79 mmscmd, the note dated 24.06.2013, placed before the EGoM in its meeting held on 23.08.2013, projects the availability of KG-D6 gas for 2013-14 as 18.22 mmscmd and for 2014-15 at 16.53 mmscmd. As the allocation of KG-D6 gas to the fertilizer sector is 15.67 mmscmd and is 2.59 mmscmd to the LPG sector, i.e a total of 18.26 mmscmd, which is more than the projected availability of KG-D6 gas for the years 2013-14 and 2014-15, the submission of Sri S. Niranjan Reddy, Learned Counsel for the petitioners, that the proposed supply of additional gas to the power sector as per the EGoM decision dated 23.08.2013 (which is subject to availability of gas from the KG D6 field) is merely an eye wash, is not unjustified. While fertilizer units are said to be receiving 100% of the available KG-D6 gas, the supply of KG-D6 gas to the power sector is zero. However, because of the pro-rata cuts, supply of non-KG- D6 gas to the fertilizer sector is said to be 30%, and the power sector is said to be receiving 50% of the available non-KG-D6 gas. Depletion in availability of gas in the KG-D6 basin has resulted in zero supply of gas to the power sector (IPPs in Andhra Pradesh) as the gas supply from the KG-D6 basin is insufficient to meet the entire allocation of gas of the fertilizer and LPG sectors. However the pro-rata cut imposed in the supply of non-NELP gas has only resulted in a pro-rata reduction in supply of gas to the fertilizer, LPG and power sectors and, thereby, the power plants located in the Northern and Western parts of the country continue to be supplied gas, albeit of a reduced extent. The justification given by respondents 1 and 2, for adopting a different criteria for power plants in western and northern parts of the country on the one hand and those on the east coast on the other, is that non-KG-D6 gas fields are scattered over many States, and its supply is affected by the portability factor. While inability to transport gas, from the several gas fields in the non-KG-D6 basins, may justify supplying gas only to proximately located consumers, the petitioners contend that, from out of 92.76 mmscmd of available gas supplied during 2012-13, 81.6 mmscmd is connected to the grid, and only 11.16 is not; and from out of the total APM and non-APM gas supply of 55.62 mmscmd, 44.46 mmscmd is connected to the grid. Their submission, in effect, is that it is only a small portion of non-KG-D6 gas which is affected by the portability factor, and a major portion thereof is connected to the grid. If this submission of the petitioners is true then the classification of power plants between those located in the west and northern parts of the country on the one hand and the East coast on the other, and in imposing a pro-rata cut on the former and a reverse cut on the latter, has no rational nexus with the object sought to be achieved which is to ensure greater equity in supply of gas to power plants in different regions and an equitable distribution of gas which is a scarce natural resource. It would, then, be discriminatory and fall foul of Article 14 of the Constitution of India. IX. CONCLUSION: As noted hereinabove despite repeated directions by this Court, respondents 1 and 2 have not furnished any information regarding the extent to which gas, available in the non-KG-D6 basin, is affected by the portability factor. It is evident from the records placed before this Court that the MoPNG did not take note of the extent to which the portability factor necessitated gas supplies being restricted only to end users located in proximity to the source of supply, resulting in their inability to maintain parity between power plants in north and west of the country and power plants in the east coast. Neither did the MoPNG, in its note dated 24.06.2013, refer to this disparity in imposing a pro-rata cut in supply of non-KG-D6 gas to power plants in the North and West of India, and in imposing a reverse cut in supply of KG-D6 gas to power plants in the East Coast, nor did the EGoM consider this issue in its meeting held on 23.08.2013. As information, regarding the portability factor, was not even placed before it in the meeting held on 23.08.2013, it is evident that the EGoM was not apprised of the extent to which the portability factor affected non-KG-D6 gas supplies to the power sector. In the absence of such information being made available to them, the EGoM was disabled from taking a considered decision on whether the policy of imposing a reverse cut for gas based power plants in the KG-D6 basin, while providing a pro-rata cut on gas based power plants in the non-KG-D6 basin, should be continued or must be changed bringing about a parity among all gas based power plants in the country irrespective of their location or their proximity to the source of supply of gas. Even if a case for interference with a policy decision has been made out, in that it is not in accordance with the law, the only direction which can be issued by the court is for the Government to consider the matter afresh. (Union of India v. Kannadapara Sanghatanegala Okkuta & Kannadigara ). Respondents 1 and 2 are, therefore, directed to examine whether parity can be restored between gas based power plants all over the country, to the extent supply of non-KG-D6 gas is not affected by the portability factor; and then take a decision, or place the matter before the EGoM for its decision, in accordance with law. While there is no principle of natural justice which requires prior notice and hearing to persons who are generally affected as a class by an economic policy decision of the Government, (BALCO Employees Union (Regd.)48, it is desirable, as a matter of good governance and administration, that, whenever policy decisions are taken, there should be a wide range of consultations including considering any representations which may have been made. (BALCO Employees Union (Regd.)48). As any policy decision taken by the Union of India, in allocation and supply of gas to power plants located in different regions, will have far reaching consequences, it is but appropriate that the petitioners, respondents 3 to 11 and other stake holders are permitted to submit their representations in this regard to respondents 1 and 2. I have no reason to doubt that, if any such representations are made within six weeks from today, the matter shall be examined by respondents 1 and 2, in accordance with law, at the earliest preferably within four months thereafter. X. FOOT NOTE: Before parting with the case, the needless burden placed on this Court, in having to examine the voluminous records all by itself without assistance from the Learned Counsel on either side on account of the claim of privilege by respondents 1 and 2, must be placed on record. Sri S. Niranjan Reddy, Learned Counsel for the petitioner, submitted that the UoI had shielded information from the petitioner regarding the material that was considered by the EGoM in arriving at the present policy decision; the UoI has not placed on record the material on the basis of which the EGoM had taken the said policy decision, and the same had not been made available to the Petitioner inspite of filing a petition for inspection of the same, citing privilege; and, though privilege of documents was initially claimed by the UoI before the Delhi High Court (Essar Steel Limited8), it was later given up and all relevant documents were produced. In the exercise of its powers under Article 225 of the Constitution of India, the High Court of Andhra Pradesh made the Writ Proceeding Rules, 1977, to regulate proceedings under Article 226 of the Constitution of India. Rule 15 of the said Rules stipulates that the party to the proceedings under the Rules shall be entitled to inspect the records called for, and relating to the proceedings, on a request made in writing in that behalf to the Government Pleader or the Standing Counsel concerned; and, if such a request is refused, the party shall be entitled to apply to the Court for directions. While W.P.M.P. No.42588 of 2013 was filed by the petitioners on 27.11.2013, to permit them to inspect the records, in terms of Rule 15 of the Writ Proceeding Rules, 1977, the respondents claimed privilege over the records. With a view to avoid any further delay in adjudicating the lis, hearing of which spread over a period of more than one and half years, the records were not permitted to be perused either by the petitioners or their Counsel, and this Court under took the ardous task of examining the voluminous records all by itself. While maintenance of secrecy may, possibly, be justified before a decision is taken, the claim of privilege, after the decision is taken, does not stand to reason, more so as the records were produced before the Court to enable it to examine whether the contentions urged by Counsel on either side are borne out from the record. All that has been achieved, by this specious plea of privilege, is to needlessly waste the precious time of the Court which could have been easily avoided if Counsel on either side had been permitted to put forth their submissions after perusing the records. I do not wish to say more. The Writ Petition is disposed of accordingly. The Miscellaneous petitions pending, if any, shall also stand disposed of. However, in the circumstances, without costs. _____________________________ RAMESH RANGANATHAN, J Date:

28. 01-2015.


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