M-S O.N.G.C. LTD. v. ASSN. OF NATURAL GAS CONSUMING INDUSTRIES AND ORS

Citation: [2004] SUPP. 1 S.C.R. 1

Court: Supreme Court of India

Bench: S. RAJENDRA BABU, AR. LAKSHMANAN, G.P. MATHUR

Case summary

M-S O.N.G.C. LTD. v. ASSN. OF NATURAL GAS CONSUMING INDUSTRIES AND ORS.pdf

Judgment text

MIS O. N. G. C. LTD. v ASSN. OF NATURAL GAS CONSUMING INDUSTRIES AND ORS. APRIL 12, 2004 (S. RAJENDRA BABU, DR. AR. LAKSHMANAN AND G. P. MATHUR, JJ. ] Natural gas-Price fixation by ONGC-Upheld by Court-Interest on differential amount-Two drug manufacturing companies disputing calculation ofarrears ofprincipal amount-Held, demands made by applicants have not been considered effectively by ONGC-Interest to be paid by them would be payable at stipulated rate but at simple rate ofinterest and not compoundable- effectively and thereafter determined the amount of arrears due from them without making apropriate adjustments for the money paid by them pursuant to the orders of the Court or further claims arising therefrom. The representations made by both these companies have been dealt with in usua:l bureaucratic style without due consideration to the points raised.

We find that the points raised by them both in regard to the payment of interest and in regard to other aspects are of substantial nature and cannot be brushed aside as has been done now but needs to be considered by ONGC appropriately. So far as interest is concerned, though this Court stated in the order made on 26. 7. 200I, that interest is payable in terms ofclause 5 ofthe contra~t as contract continued to be in force till the matters were finally disposed of by this Court, but that was in the normal circumstances arising in this :ise. ) We may notice that these two cases where Sarabhai Common Services and Alembic Chemicals Ltd. [now known as 'Alembic Ltd. '] are drug manufacturing companies and prices at which they sell their g~ods are fixed by the Drug Price Control Order, which had taken into consideration the price at which the gas was supplied, which now gets enhanced by reason of the orders of this Court.

Th~refore, in the totality of the circumstances, we think, interest shall be payable by these two companies at the rate as stipulated in clause 5 of the contract but not compoundable but simple rate of interest. To that extent, we allow the applications filed by Sarabhai Common Services and direct ONGC to reduce their claim to th extent in the demands made by them. In case of A Mis Alembic Ltd. ONGC shall examine other points raised by them as regards: (i) the exclusion of the royalty and sales tax on the damages for shortliftment; (ii) the'effect oftheir letter seeking for reduction of supply from . 60000 cubic meters per day to 50,000 cubic meters per day; and (iii) claim made on the basis offorce majeure clause and thereafter redetermine the arrears payable B by them along with interest. The applications accordingly stand disposed of in terms ofthe aforesaid directions. R. P. I. As. disposed of.