HC seeks replies from Centre, DGFT on Cairn India's plea

Delhi High Court today sought the responses of the Centre and Directorate General of Foreign Trade (DGFT) on a plea by Cairn India Ltd challenging a single judge order dismissing its petition for exporting its share of crude oil from Barmer oil field in Rajasthan.
A bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal asked the Centre and DGFT to respond to the petition and posted the matter for hearing on March 30.
Cairn India Ltd has approached the division bench against the order of October 18 last year of a single judge who had rejected its plea on the ground that domestic crude cannot be exported till India attained "self sufficiency".

In its plea, Cairn India has sought setting aside of the October 18 last year order on the ground that foreign trade policy permits free export of crude oil.
"The (single) judge erred in noticing that the only law governing the subject of exports is the foreign trade policy which by its express terms permits the free export of crude oil...," the plea said.
It said, "furthermore, when there is a policy permitting the export of crude oil, as found in the foreign trade policy, respondent number two (Centre's) denial of permission to export the Rajasthan block crude oil on account of respondent number two view that export of crude oil should not be permitted is on the face of it contrary to the foreign trade policy and ex-facie arbitrary and illegal".

Under the production sharing contract (PSC) between Cairn and the Centre, the company gets 70 per cent of the crude produced from Barmer, with the rest going to the government.

The government or its nominee can pick up the company's share of crude and what is not picked up can be sold to private players or exported, Cairn had said during the arguments before the single judge.
The government had opposed Cairn's plea before the single judge saying an empowered committee had decided that export of the domestic crude oil cannot be allowed as it would be detrimental to India's energy security.

The single judge had agreed with the decision of the Empowered Committee of Secretaries denying permission to Cairn to export its share of crude oil, saying the reasons given by the panel "are legal, germane and valid grounds".
The company had claimed before the single judge that as a result of selling excess crude to private domestic companies like Reliance and Essar, at rates lower than international prices, the government was losing about Rs 4.5 crore per day.