Policy decision of charging pooled price for Regasified Liquefied Natural Gas upheld

Supreme Court: Upholding validity of the policy dated 06.03.2007 by which the Central Government said that a uniform pooled prices should be charged for all the existing and new customers for Regasified Liquefied Natural Gas (RLNG), the bench of V. Gopala Gowda and U.U. Lalit, JJ held that the impugned policy decision was taken keeping in view the larger public interest and that it is nearly impossible to predict or even control LNG prices, as the same are controlled by global market forces. Hence, the only way to have any semblance of control over the prices of RLNG was to pool the prices of RLNG procured by the off-takers under long term contracts.

Regarding the power of the Central Government to pass the impugned policy, it was held that by virtue of Article 73 of the Constitution of India read with Entry 53 of List I, the Union has the power to legislate and take policy decisions in relation to the matters pertaining to mineral oil resources and inflammable substances, which includes RLNG. It was further said that since there is no existing legislative provision as far as fixing of the price of RLNG is concerned, hence, the executive of the Union of India is well within its right to exercise its powers under the Constitution to take such decisions by way of policy decisions.

Stating that the impugned policy was in no manner discriminatory, the Court held that the said decision was taken after due deliberation and exploring all other possible alternatives to reduce the price of RLNG, so as to make it viable for the new entrants in the market to buy it and run their projects in a feasible manner in the larger public interest. The consumers of RLNG though long term contracts are a class by themselves, for the purpose of Article 14 of the Constitution of India and that the policy was to apply to all the players within this class uniformly and across the board. [ESSAR STEEL LTD v. Union of India, 2016 SCC OnLine SC 342, decided on 19.04.2016]

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