You are on page 1of 7

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION I.A. No. __________ OF 2014 IN WRIT PETITION (CIVIL) NO.

728 OF 2013 PUBLIC INTEREST LITIGATION In the matter of: Common Cause & Ors Versus Union of India & Ors. Respondents Petitioners

APPLICATION FOR DIRECTIONS ON BEHALF OF THE PETITIONERS To, The Honble Chief Justice of India And His Honble Companion Justices of the Honble Supreme Court of India The humble application of the petitioners above named:

1. That the petitioners have filed the instant writ petition under Article 32 of the Constitution for the enforcement of the Rights of the citizens under Article 14 and 21 of the Constitution. The petition has sought cancellation/termination of the Production Sharing Contract (PSC) with Reliance regarding the KG Basin block because of multiple defaults on part of the operator, levying of appropriate penalty on the operator and relinquishment of the entire area except where mining lease has been signed, quashing of the decision to double the price of gas and a thorough SIT investigation.

2. On the issue of relinquishment, the petitioners have demonstrated that the PSC has a built-in mechanism for progressive surrender of exploration areas back to the government as the contractor discovers gas for commercial production in specific pockets and as it delineates certain portions as relatively less promising.

3. Thus in the PSC, the exploration was divided into three phases and at the end of each of the first two phases the contractor was supposed to relinquish 25% of the area and finally after the phase III, it was to hold on to only that area where the operator discovered petroleum resources in commercially viable quantities and was willing to develop it further for production. The rest of the area was supposed to go back to the government. RIL moved from phase to phase without relinquishing any area and retained the entire 7645 sq km of area until recently rather than the 390 sq km from which it had begun commercial production after phase III. The Government decided to declare the whole area as a discovery area and thus practically awarded it to RIL for future development in gross violation of the PSC.

4. The Petitioners have shown how even at this late stage, in the context of the clear findings in the CAG report, the DGH reviewed the entire issue and demanded that Reliance should relinquish 6497.12 sq km of the exploration area, including the area of D29, D30 and D31 reserves (Pg 231 of the Rejoinder). The DGH furnished detailed reasons why the said area had to be relinquished as per the PSC. Reliance contested this demand and pleaded that it

should be allowed to retain the D29, D30 and D31 reserves. The Minister for Petrolum, Mr. Veerappa Moily overruled the DGH and his own officers in the Ministry in October 2013 and held that since there was a difference of opinion on the issue between RIL and the DGH, a balanced view needed to be taken (Pg 237 of Rejoinder).
Based on the Ministers decision, RIL was allowed to retain the said 3 fields by the Ministry (Pg 241 of Rejoinder). After the Ministry unfairly

tried to blame the DGH on this issue, the DGH wrote a strongly worded letter to the Ministry defending its position and in effect faulting the Ministry for its incorrect reading of the PSC (Pg 245 of Rejoinder). Immediately after this, the Director General of Hydrocarbons was removed.

5. The ASG appearing for the Union of India has stated before this Honble Court that no final decision on D29-31 has been taken. The Government is caught in a tricky situation as the DGH as well as Ministry officials have asserted that RIL ought to relinquish D29-31 fields. They have pointed out that DST has not been done though the timelines for exploration are long over and hence, the retention of these fields by the contractor would violate the terms of the PSC. To break this impasse, the Ministry of Petroleum under Mr. Moily has now come up with the devious proposal that the PSC be amended to allow Reliance to retain these fields which contain huge reserves of natural gas.

6. The petitioners have come to know that the Ministry of Petroleum & Natural Gas has moved a note seeking the approval of the Cabinet

Committee on Economic Affairs (CCEA ) for the amendment of the PSC on 31.03.2014, while the Model Code of Conduct was in force and no major policy decision could legitimately be taken by the Government. A copy of the said note approved by Mr. Moily is annexed as Annexure A (Page ________________).

The note for CCEA is for the amendment of the PSC which was signed with Reliance in the year 2000. The noting of the Joint Secretary on the said note is as follows:

The draft CCEA note is for amendment of PSC provisions. The options available are to get the area relinquished or approach CCEA (with ECI permission) to amend the existing policy as embodied in the PSC and policy guidelines of Feb 2013.

This proposal would entail a major policy decision that would have serious consequences for the petroleum sector and encourage other contractors to seek similar indulgences. The CCEA note itself acknowledges that this would lead to similar demands from operators in other oil & gas blocks. The text of the note is selfexplanatory and gives the historical background to the issue of nonrelinquishment of D29-31 fields.

7. The note for CCEA itself mentions that the fields that Reliance would be entitled to retain consequent to the amendment of the PSC are valued at $ 1.45 billion at the current price of gas of $4.2/mmbtu, and if the price is doubled as per the decision of the respondents, which was to come into effect on 01.04.2014, the

value of the largesse proposed to be granted to Reliance would be almost $3 billion. The CCEA note also states that the amendment will also apply to other PSCs with Reliance, where the recoverable reserves are of the order of 1300 BCF. This would mean a further benefit to RIL of $5.46 billion at current prices and of almost $11 billion at the revised price of $8.4/mmbtu. Thus, a whopping benefit of $14 billion is illegitimately sought to be conferred on Reliance.

8. Article 21.5.12 of the PSC states: In the event that the Contractor does not commence development within 10 years from the date of first Discovery Well, the Contractor shall relinquish its right to such Discovery and the area relating to such Discovery shall be excluded from the Contract Area. The CCEA note contains the following admission. The first Discovery in this Block was made on 29.10.2002 and the 10 year period expired on 29.10.2012. Therefore the timelines prescribed in the PSC have expired and the present proposal to allow development of these discoveries requires relaxation of Article 21.5.12.

9. It is the established law of this Honble Court that the government is a custodian of petroleum reserves which belong to the people of this country. The action contemplated by the government is tantamount to depriving the people of this precious resource. The government, which has acquiesced in repeated violations of the PSC by Reliance, has now crossed all bounds of propriety and public accountability by seeking to amend the PSC itself in order to grant a

huge windfall benefit to the contractor. This action is completely arbitrary, unreasonable and unconstitutional.

10.

It is also to be noted that the CCEA note has been moved

while the hearing of this matter is going on and this Honble Court has not even been informed that such a move is afoot. The very fact that the Government is trying to amend the PSC to enable Reliance to retain D 29-31 is proof enough that the current retention of these lucrative fields by Reliance is in violation of the express provisions of the PSC. The petitioners, therefore, request this Honble Court to direct the Union of India to refrain from amending the Production Sharing Contracts (PSCs) with Reliance with a view to allowing the contractors to retain lucrative oil and gas fields, which it is contractually bound to surrender.

PRAYERS Under the circumstance, the Petitioners pray that your Lordships may be pleased to pass the following ad interim directions: (i) Direct the Union of India not to amend the Production Sharing Contracts (PSCs) with Reliance Industries Ltd (RIL) as proposed in Draft CCEA note dated

31.03.2014 (Annexure A) and also direct RIL to relinquish the oil and gas fields that it ought to have surrendered in terms of the relevant PSCs, including the D29 to 31 fields of the KG basin block.

(ii)

Direct the Union of India to keep in abeyance pendente lite its proposal vide draft CCEA Note dated 31.03.2014 (Annexure A) to amend the Production Sharing Contracts (PSCs).

(iii)

Pass such further orders as may be deemed fit and proper.

AND FOR THIS ACT OF KINDNESS THE APPLICANTS AS IN DUTY BOUND SHALL EVER PRAY Petitioners Through:

PRASHANT BHUSHAN Counsel for the Petitioners Filed on: New Delhi April 2014

You might also like