flame, gas stove, cooking-871136.jpg

-Report by Saloni Agarwal

The Supreme Court of India recently in the case of Gas Authority of India Limited v Indian Petrochemicals Corp. Ltd. & Ors concluded the dispute between parties relating to the contract signed for natural gas supply. The case was in favour of IPCL as its claim was just.


The Ministry of Petroleum and Natural Gas provided a letter for the allocation of a Natural Gas Pipeline to IPCL. The contract was to be signed with GAIL and the pipeline would be from Hazira to the Gandhar unit carrying semi-rich gas. IPCL was asked to lay down the plant and a pipeline of its own which would be used to transport the gas. GAIL claimed that it was being charged with transportation costs. The clauses of the contract were clear that the buyer has to bear all the charges of transportation for himself and the seller. The main point of argument is the transportation cost dispute.

Appellant’s Contention:

IPCL claimed that the price of natural gas should be fixed as mentioned in the contract. Earlier the High Court had charged IPCL to pay for the loss of transportation charges which was unfair as IPCL was asked to set up its own pipeline. Even after incurring a huge cost for the establishment, it would otherwise be unjust to pay for the transportation cost. The IPCL also claimed that it had no bargaining power and was asked to accept the contract within 60 days by the Authorities i.e., comes within the ambit of Article 12. Due to time constraints and unrestricted power possessed by GAIL, it dominated the clauses of the contract. Hence the writ petition is maintainable.

Respondent’s Contention:

The GAIL challenged the petition and claimed that the clauses were not unjust. It also claimed that it did not possess any dominating position and that equal rights were provided to both parties. It further said that the contract was a mutual one and was carefully discussed before the implementation.


The Court after hearing about the sides came to the conclusion that the writ petition was maintainable. It also said that there was unjust and unfairness in the contract and asked GAIL to refund the loss of transportation charges within two months failing which interest amounting to 8 per cent per annum will be charged. The IPCL had incurred huge costs in building the pipeline which was mandated in the contract and now cannot be burdened with the establishment cost and transport cost even when it is not using the HBJ Pipeline.

READ FULL JUDGEMENT: https://bit.ly/3YwTTou

Leave a Reply

Your email address will not be published. Required fields are marked *