SC vacates Guj HC stay on pooling LNG prices

The Supreme Court today lifted the stay imposed by the Gujarat High Court on the pricing policy for liquefied natural gas (LNG).  After severely criticising the High Court for ordering the stay in a "summary manner" without hearing the central government or major petroleum corporations, the Supreme Court asked the High Court to reconsider the order by a division bench.

A single judge bench of the High Court, on July 31, had passed the
controversial order without giving time to the central government, Gas
Authority of India and other oil corporations to present their case. The
order created chaos among LNG consumer companies - one result of which was the shut-down of the Ratnagiri power project.

A bench, headed by Justice Ashok Bhan, remarked that such an order of
great magnitude should have been passed only after giving sufficient time to the opposite parties to reply to the petitions. The petitions were filed in
the High Court by Gujarat State Petrochemical Corporation and a few other Gujarat consumer companies. The judges remarked that the single judge of the High Court committed "legal impropriety in the sense that the order violated the principle of natural justice." According to this principle, no order can be passed by a court without hearing the affected parties.

The Supreme Court, therefore, directed the High Court to hear Petronet LNG, GAIL, IOC and BPCL as parties in the case and pass fresh orders. The single judge had deleted their names before passing the stay order. The new division bench will be constituted by the Chief Justice of the High Court, and it will hear the stay application once again on September 10.

At the centre of the dispute is the directive of the petroleum ministry
issued on July 24. According to it, all LNG procured on a long-term basis
would have to be sold on "a non-discriminatory basis, and uniform pool prices should be charged from all consumers." It was feared that the new pricing policy would result in a hike of about 32% for existing consumers.

Petitions against the directive are pending in the Delhi and Gujarat High Courts. The central government has requested the Supreme Court to
transfer all the cases to one High Court. GAIL has alleged that several
major players, apart from itself,  were kept out of the Gujarat litigation
in a malafide move by a group of  firms from that state.