HC rejects Essar plea for gas from RIL's KG-D6 basin

The Delhi High Court today rejected Essar Steel's plea against the Ministry of Petroleum and Natural Gas (MoPNG) decision asking Reliance Industries (RIL) to cut gas supply to it from KG-D6 basin and give priority to fertiliser and power sectors.

A Bench of Justice Rajiv Sahai Endlaw dismissed the plea of Essar Steel and also imposed a cost of Rs 5 lakh on it, which would be paid to the ministry.

"There is no merit in the petition. The same is dismissed with costs of Rs 5 lakh payable by the petitioner [Essar] to the MoPNG within four weeks of today," Justice Endlaw said.

The court also rejected the Essar argument that the ministry's directive was contrary to the decision of Empowered Group of Ministers (EGoM) regarding the allocation of limited available quantity of gas.

It said that there was no such EGoM decision that goes in the favour of Essar.

"There being no decision of EGoM in favour of the petitioner, forming the basis of the claim of the petitioner, no merit is found in the argument that the directives of MoPNG impugned in this petition are contrary to the decision of EGoM...," the court held.

Essar steel had challenged the decision of MoPNG, directing RIL to cut the supply of gas from KG-D6 basin. RIL then informed Essar that the supply of gas, in terms of the Gas Sales and Purchase Agreement between them, was likely to be affected.

Due to drop in gas output from RIL’s KG-D6 basin, MoPNG had prioritised the supply of natural gas in the following manner: fertilisers, LPG, power, city gas distribution and steel sectors.

Essar had contended that the move will put at stake the steel company's survival.

It said that a proportionate cut, shared by everyone, was provided for in the policy decision and that the direction of MoPNG to reduce the supply is in contravention of that policy.