Dismissed

M/S. India Carbon Ltd. v. the Union of India and 4 Ors.

Gauhati HC6 Feb 2019WP(C)/491/2019

Case brief

AI extract

What is this about?

Disposes of two writ petitions challenging the e-auction of Raw Petroleum Coke by Numaligarh Refinery Ltd. Court held pricing is technical and its expertise is insufficient. Directed NRL to ensure reserve price parity with Guwahati Refinery and examined feasibility of scaling down price to match import parity.

What did the court decide?

Vacated earlier interim order; disposed of writ petitions without directing intervention in pricing mechanism other than noting NRL's assurance on parity.

M/S. India Carbon Ltd. Vs the Union of India and 4 Ors. — Company and Corporate | Gauhati HC (2019)

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GAHC010015902019

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : WP(C) 491/2019

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1:M/S. INDIA CARBON LTD

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A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT TEMPLE CHAMBERS, 4TH FLOOR, 6, OLD POST OFFICE STREET, KOLKATA- 700001 AND ONE OF ITS UNITS AT NOONMATI, GUWAHATI- 781020, ASSAM AND IS REP. BY ITS POWER OF ATTORNEY HOLDER AND AUTHORISED REPRESENTATIVE, SHRI SHYAMAL KUMAR BHATTACHARJYA AGED 50 YEARS.

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VERSUS

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1:THE UNION OF INDIA AND 4 ORS.

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REP. BY THE SECRETARY, MINISTRY OF PETROLEUM AND NATURAL GAS, SHASTRI BHAVAN, NEW DLEHI- 110001.

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2:NUMALIGARH REFINERY LTD.

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A GOVT. OF INDIA ENTERPRISE DULY REGISTERED UNDER THE COMPANIES ACT AND HAVING ITS REGISTERED OFFICE AT LOTUS TOWER

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G.S. ROAD GUWAHATI ASSAM PIN - 781005.

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3:THE CHAIRMAN

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NUMALIGARH REFINERY LTD. BHARAT PETROLEUM CORPORATION (LTD( BPCL) BALLARD ESTATE 4 AND 6 CURRIMBHOY ROAD MUMBAI-400001.

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4:THE MANAGING DIRECTOR NUMALIGARH REFINERY LTD. LOTUS TOWER

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G.S. ROAD GUWAHATI ASSAM PIN - 781005. 5:SYNISE TECHNOLOGIES LTD. AN ISO 9001- 2008 CERTIFIED COMPANY HAVING ITS OFFICE AT 20 N.S. ROAD KOLKATA- 700001

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Advocate for the Petitioner : MR. M K CHOUDHURY

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Advocate for the Respondent : ASSTT.S.G.I.

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Linked Case : WP(C) 478/2019

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1:M/S. GUWAHATI CARBON LTD AND ANR. A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT 1956 AND HAVING ITS REGD. OFFICE SITUATED AT PUB BORAGAON GORCHUK N.H. 37 P.O. GORCHUK GHY- 35 ASSAM AND REP. BY SHRI SANJIB KUMAR BARUAH ONE OF ITS DIRECTORS 2: SHRI SANJIB KUMAR BARUAH S/O- LT DURGA PRASAD BARUAH R/O- PINK ROYAL HOUSE ADARSHAPUR P.S. DISPUR KAHILIPARA DIST- KAMRUP (M) GHY- 19 ASSAM VERSUS

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1:THE UNION OF INDIA AND 4 ORS. REP. BY THE SECY. TO THE GOVT. OF INDIA MINISTRY OF PETROLEUM AND NATURAL GAS SHASTRI BHAWAN NEW DELHI- 110001 2:THE NUMALIGARH REFINERY LTD. A PUBLIC SECTOR/ GOVT. OF INDIA ENTERPRISE NUMALIGARH REFINERY PROJECT DIST- GOLAGHAT ASSAM INDIA PIN- 785699 3:THE MANAGING DIRECTOR NUMALIGARH REFINERY LTD. 122A G.S.ROAD CHRISTIAN BASTI GHY- 5 4:THE GENERAL MANAGER (MARKETING) NUMALIGARH REFINERY LTD. MARKETING OFFICE DIVINE PLAZA 4TH FLOOR DISPUR SUPER MARKET G.S.ROAD GHY-6 5:SYNISE TECHNOLOGIES LTD. REP. BY ITS MANAGING DIRECTOR PLOT NO- A8 SHIVTIRTH NNAGAR KOTHRUD PUNE- 411038 FAX NO- 020-30277555 EMAIL- [email protected] WEB SITE- INDIAENGINEERING.COM/NRL Advocate for the Petitioner : MR. A DAS Advocate for the Respondent : SC C G S C

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BEFORE HONOURABLE MR. JUSTICE UJJAL BHUYAN

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ORDER

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Date : 06-02-2019

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This order will dispose of both WP(C) Nos. 478 and 491 of 2019.

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Heard Mr K N Choudhury, learned Senior Counsel, assisted by Mr A Das, learned counsel for the petitioners in WP(C) No. 478 of 2019 and Mr M K Choudhury, learned Senior Counsel, assisted by Mr A Barkataki, learned counsel for the petitioner in WP(C) No. 491 of 2019. Also heard Mr N Deka, learned Standing Counsel, Numaligarh Refinery Limited (NRL), respondent Nos. 2, 3 and 4 in both the petitions.

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Prayers made in both the writ petitions are identical. Therefore, both the writ petitions have been heard together. Petitioners seek interference with the e-auction of NRL which was scheduled on 28.01.2019 for sale of 10000 metric tonnes (MT) of raw petroleum coke (RPC, in short) and further seeks a direction to NRL to formulate a pricing policy before fixing the base price of RPC for e- auction.

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Petitioners in both the cases are downstream industries using RPC for manufacture of calcined petroleum coke (CPC, in short). RPC is a by-product of the refineries, the primary function of which is to refine crude oil. While RPC is a residue of the refineries in the process of refining crude oil, it is used as a raw material (industrial product) in the manufacturing units of the petitioners.

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NRL has been auctioning RPC over the years which have been purchased by the petitioners on e- auction. It is stated that in the e-auction scheduled on 23.11.2018, petitioner in WP(C) No. 478 of 2019, had offered bid value of Rs. 24,040.00 per MT. Similar bid value was also offered by the petitioner in WP(C) No. 491 of 2019. Moreover, in the e-auction held on 28.12.2018, petitioners had duly participated, wherein they purchased RPC at the rate of Rs. 28,300.00 per MT.

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It has been pointed out by NRL in its counter affidavit that this fact was not mentioned by the petitioner in the writ petition in WP(C) No. 478 of 2019, whereafter, petitioners filed additional affidavit stating that such omission was due to inadvertence.

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Be that as it may, grievance of the petitioners is that NRL has been increasing the price of RPC so much so that it has affected workability of the petitioners, which are entirely dependant on RPC procured from the refineries of the State. It is further stated that there is no uniformity in the pricing of

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RPC by the four refineries in the State of Assam. While RPC auctioned by BRPL, Bongaigaon and Indian Oil Corporation (AOD) Refinery at Digboi are at a substantially low price; that of NRL has been artificially inflated. It is alleged that consequences of such high price of RPC would have a detrimental effect on the local purchasers. It is in such circumstances that the two writ petitions have been filed.

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This Court by order dated 25.01.2019 in WP(C) No. 478 of 2019 directed NRL not to proceed with the e-auction of RPC, scheduled on 28.01.2019.

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NRL has filed separate but identical affidavits in both the cases.

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Apart from the preliminary objection as to non-disclosure of material facts by the petitioners in WP(C) No. 478 of 2019, it is contended that in the e-auction held on 28.12.2018, RPC was purchased by the petitioners at the rate of Rs. 28,300.00 per MT. At that stage, no challenge was made to the aforesaid price. It is stated that RPC is a price sensitive commodity, its price being dependant on various factors. Allegation of the petitioners that action of NRL may deprive the local producers while giving benefit to outside bidders has been denied. NRL has authorized respondent No. 5 to carry out e- auction and performance of respondent No. 5 has been found to be satisfactory. Respondent No. 5 declares the reserve price at the commencement of e-auction, which is displayed on screen.

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10.1. It is further stated that no outside bidders are in the fray in the auctions conducted by NRL or by various refineries of IOCL. Reserve price for the proposed e-auction of 10000 MT had not been declared and it is stated that the same would be lower than the price of RPC auctioned by the Guwahati Refinery. It is stated that Central Government Circular dated 07.05.2012 in respect of auctioning of RPC is being followed in letter and spirit. Indian Oil Corporation Limited (IOCL) being the market leader fixes the price of RPC. NRL has decided to keep its reserve price lower than that of IOCL since the quality of RPC of NRL is similar to that of RPC of Guwahati Refinery. NRL has assured that in the proposed auction it will keep the reserve price lower than the price at which IOCL, Guwahati Refinery had sold its RPC in the last auction. It is further stated that quality of RPC is different from refinery to refinery being dependant upon the sulphur content. Apprehension of the petitioners that in the proposed e-auction reserve price of RPC would be hiked to Rs. 28,300.00 per MT has been denied stating that such price has not been decided as yet. It will be declared on the date of auction whether reserve price of RPC would be lesser than the price of RPC auctioned by IOCL, Guwahati Refinery, though RPC of both the refineries are of the same quality, i.e., Grade-A as specified by the Bureau of Indian Standards (BIS). NRL has urged that the purpose of filing the writ petitions is to delay the e-auction process for disposal of stock of RPC so that faced with accumulating quantity of RPC, NRL is compelled to go for

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distress sale. It is specifically denied that NRL has attempted to auction RPC to outside calciners.

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Petitioner has filed rejoinder affidavit to the counter affidavit of NRL.

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Submissions made by learned counsel for the parties have been considered.

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Pricing or rather reserve pricing of RPC in e-auction by NRL is a highly technical subject in respect of which Court may not have the requisite expertise. In such circumstances, Court may have to be circumspect in intervening in such matters. Of course, attention of the Court was drawn to a circular dated 07.05.2012 of the Government of India, Ministry of Petroleum and Natural Gas relating to sale/allocation of RPC. As per this circular, the issue relating to allocation of RPC was examined by the Ministry of Petroleum and Natural Gas, whereafter, it was decided that auction should be the preferred mode of sale of RPC to ensure maximum revenue; import parity price should be used as the floor price in the bidding process while taking into account freight charges, quality differentials, marketing costs etc.. It further says that to facilitate equitable distribution and to ensure that local industries are given preference auction may be restricted to units within the State and should be initially completed in 2 (two) months and periodically auctioned thereafter with adequate frequency. It is further seen that a clarificatory letter dated 26.10.2012 was issued by the departmental Secretary in the Ministry of Petroleum and Natural Gas, Government of India, intimating the oil companies that in all the states where RPC is auctioned, bids may be invited from both within or outside the State. Bids of those from within the State should be opened first and their demands are to be met. If any surplus quantity is still available then bids of those from outside the State should be opened and processed.

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However, in view of the categorical stand taken by NRL that its e-auctions of RPC are participated only by local bidders, the clarificatory letter dated 26.12.2012 may not have much significance. Adverting to the circular dated 07.05.2012, what is noticeable is that while carrying out e- auction of RPC, the oil companies are required to give preference to local industries. In such e-auction, the oil companies are required to meet the twin objectives of maximization of revenue on the one hand and equitable distribution on the other hand while encouraging local industries which should be given due preference. The circular also suggests maintaining price parity with the import price of RPC in the bidding process. It is true that the circular speaks of maintaining parity with the import price after taking into consideration freight charges, quality differentials, marketing costs etc., but the fact remains, as has been averred by NRL, that imported RPC are not e-auctioned by the refineries in the State. What is e-auctioned is the locally generated RPC, which is the by-product of the refining process. Therefore, rationalizing import price of RPC by adding freight charges etc. may not be

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justified. Thus, refineries which are situated near the ports or those agencies which offer imported RPC to e-auction being situated near the ports will have a locational advantage thereby offering RPC at the import price dehors the freight charges etc. and such import charges may ordinarily be lower than the reserve price of RPC of inland refineries like NRL.

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NRL is a public sector undertaking. Though it has to generate revenue and earn profit, at the same time it has also to ensure that the local purchasers of RPC are not put to a disadvantage by keeping the reserve price of RPC in the e-auction quite high. While the stand of NRL that the reserve price of RPC in the next e-auction will be kept lower than the reserve price of RPC auctioned by Guwahati Refinery is certainly welcome and appreciable, it may also examine feasibility of scaling down the reserve price of RPC keeping it at par with the import price of RPC.

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Beyond such observations, it may not be proper for the writ Court to venture into such matter requiring technical expertise. Court hopes and trusts that NRL will look into the above aspect of the matter while conducting its next e-auction.

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Subject to the above, no further order is called for.

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Both the writ petitions are disposed of.

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Interim order(s) passed earlier stands vacated.

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JUDGE

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Comparing Assistant

M/S. India Carbon Ltd. v. the Union of India and 4 Ors.

Case brief

What is this about?

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M/S. India Carbon Ltd. v. the Union of India and 4 Ors.

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