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Petitioner: (1) M/s.Rashid Silk Mills (2) M/s.Dairyland (Pvt.) Ltd. & another (3) M/s.Ismail Industries Ltd and Others VS Respondent: Federation of Pakistan & others
Court Name: Sindh High Court Judge(s): Muhammad Ali Mazhar Title:(1) M/s.Rashid Silk Mills (2) M/s.Dairyland (Pvt.) Ltd. & another (3) M/s.Ismail
Industries Ltd and Others vs Federation of Pakistan & others Case No.:Suit No. 75, 254, 321, 346, 347, 461, 503, 672, 820, 831, 832, 850, 880, 978, 1146, 1147, 1148, 1149 1713, 1714, 1726, 1737, 1738, 1749, 1753, 1760, 1761, 1799, 1804 and 2345 of 2017 Date of Judgment:2018-10-12 Reported As: PLD 2019 Sindh 189, 2018 SHC 1035 Result: Application Dismissed Judgment Muhammad Ali Mazhar , J. These civil suits have been brought to entreat declaration that the plaintif fs are entitled to uninterrupted supply of natural gas and the disruption/closure by the defendant on Sundays and/or holidays is unlawful. The plaintif fs have also moved miscellaneous applications for securing injunctive orders against the defendants from disordering the gas supply on Sundays and or other holidays. 2. The short-lived facts of the case are that all the plaintif fs are industrial concerns and engaged in the manufacturing process of different merchandises and commodities. They allegedly depend on the supply of natural gas for their respective industrial opera tions and some of the plaintif fs also make use of natural gas for the production of electricity for self-consumption. It has been alleged that the natural gas closure on Sundays causes huge loss of production. In order to address the issue, the plaintif fs had filed earlier Suit No.299/2016 which was decreed on 14.02.2017. The court ordered that the impugned Sunday closure notic es are illegal and ultra vires the Constitution. However the defendants preferred an appeal by means of H.C.A. No.141/2017 and the operation of the impugned judgment has been suspended on 14.01.2017. Since the defendants again issued a gas holiday notification therefore the instant suits have been preferred being a fresh cause of action as alleged. 3. The learned counsel for the plaintif fs argued that the Province of Sindh has an abundance of gas production. This court in Suit No.299 of 2016 held that "24.The consumption as shown in the statistics of Pakistan Economic Survey of 2014-2015 shows the average production of gas in the province of Sindh as 69% of the total production of Pakistan and the average consumption , as shown in the Pakistan Economic Survey is 42%. A plain reading of this Economic Survey would show that there is no scarcity of gas in Sindh."
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4. Much emphasis were made that dictates of Article 158 of the Constitution comm ands that the Province in which a well head is situated shall have precedence over other provinces in meeting its requirement. There being an abundance of gas within the Province of Sindh so the industrial undertakings within Sindh have precedence over other provinces insofar as the supply of gas is concerned. The notices were followed by several others and some of notices were issued for two days. The impugned notification predicates the notice of closure on the decision of the ECC of the cabinet and also under Clause 14 of the General Sales Agreement (GSA). 5. It was further contended that the institution of present proceedings are based on fresh cause of action. The reason given in the impugned notification makes it adequately clear that due to higher off-take, availability of gas has decreased resulting in depletion of line pack and low pressure in the system. They also argued that Clause 14 is applicable only when the event cannot be foreseen. The learned counsel referred to the case of Lucky Cement vs. Federation reported in PLD 2011 Peshawar 57 in which the court held that "the petitioner entered into agreements with respondent No.4 wherein they themselves agreed for supply of gas for nine months but these agreements being against the mandate of the Constitution shall have no force altogether, especially when it is not disputed that the gas produced in the Province is more than its requirements. Needless to say that only those agreements are binding on the parties which are in accordance with law of the land in general and provisions of the Constitution in particular." 6. The learned counsel for the plaintif fs further argued that Articles 4 and 5 of the Constitution collectively enshrine the rights of citizens to be dealt with in accordance with law and as per the express mandate of the Constitution. The impugned notification is in direct conflict with Article 158 of the Constitution. They referred to the case of Watan Party and another vs. Federation of Pakistan & others, PLD 2011 S.C. 997 in which the apex court held that "as far as Fundamental Rights/civil rights of the citizens are concerned, those are to be enforced by the Executive and if it fails to do so, they have to face the consequence envisaged by the Constitution. The Executive functionaries who have also taken oath both in the Province and the Federation to protect and preserve the Constitution cannot be allowed to defeat any provision of the Constitution, whatever the circumstances may be. At this juncture, reference to Article 5 of the Constitution is relevant and appropriate, which commands that loyalty to State is the basic duty of every citizen and obedience to the Constitution and law is the inviolable obligation of every citizen wherever he may be, and of every other person for the time being within Pakistan. Thus, the Executive/public functionaries are bound to enforce the Constitution while protecting the Fundamental Rights of the citizens without any fear or favour or compromise for subjective purpose". In the case of Shahid Orakzai vs. Pakistan, PLD 2011 S.C. 365, the court held that Article 5 (2) of the Constitution has mandated an obligation that "obedience to the Constitution and law is the inviolable obligation of every citizen wherever he may be and every other person for the time being within Pakistan". In the case of Corruption in Hajj Arrangement PLD 2011 S.C. 963, the apex court held that the exercise of Constitutional Powers by the High Court and Supreme Court are categorized as power of judicial review. Every executive and/or administrative action of the state/public or other statutory bodies is open to judicial scrutiny. The apex court in the case of Workers Welfare Fund vs. Chrome Tannery, PLD 2017 S.C. 28, held that the exercise of Constitutional Powers by the High Court and Supreme Court are categorized as power of judicial review . Every executive or administrative action of the State or other statutory bodies is open to judicial scrutiny . They also referred to the case of Corruption in Rental Power Plants, reported in 2012 SCMR 773, in which honourable supreme court held that Energy/electricity is essentially one of the significant facilities required by the citizens for manifold purposes, namely , uplifting of their social and economic status. Non-supply of electricity to the citizens regularly is tantamount to depriving them of one of the essentials of the life including the security of economic activities, which are relatable to their fundamental rights protected under Articles 9 and 14 of the Constitution. 7. The learned counsel further argued that being an abundance of gas within the Province of Sindh, the plaintif fs should be given preference over other entities situated in other provinces. They relied upon the case of Al-Makkah CNG Station vs. Government of Pakistan Ministry of Petroleum, reported in 2011 CLD 1554 wherein the court held that the respondent No.2 has fallen in error while refusing grant of marketing license to the petitioner . The Federal Cabinet in its policy decision has provided that supply of gas shall remain uninterrupted in the areas
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producing gas, including the Province of Baluchistan. It is provided under Article 158 of the Constitution that a Province, in which a well head of natural gas is situated shall have precedence over other part of Pakistan in meeting the requirements from the well-head. In the case of Shandar Petroleum/CNG vs. Federati on of Pakistan & others, reported in 2012 CLD 1714 , the court held that the ownership of gas was with the Federal Government, but still priority was given to the Province where the well-head of the natural gas is situated. 8. The learned counsel further addressed that the impugned notification, insofar as it relies on the directives of the ECC, is unlawful since ECC has no authority to make such decisions and even otherwise the rules of business have been violated and as such the decision if any is of no legal consequence. ECC is not competent to enforce and/or approve any Sectorial Priority Order. At best the ECC can be termed as a Committee of the Cabinet. The Rules of Business 1973 govern the conduct and operation of such committees and outline in the procedure that is to be adopted. Moreover, the present notification being one that deals with national economic policy, rightfully falls within the domain of the National Economic Committee. They referred to the case of M/s. Mustafa Impex, Karachi vs. Federation of Pakistan & others (PLD 2016 SC 808). In this case the apex court held that the Prime Minister and the Federal Ministers, which, in turn, means the cabinet. The cabinet is a composite concept and its components are the Prime Minister and the Federal Ministers. Together they constitute the cabinet. In this case the appellants had challenged withdrawal of exemptions from sales tax on the ground that notification was not issued by Federal Government rather by Additional Secretary who was not competent to do so. The learned counsel further contended that Article 172 of the Constitution was introduced through 18th amendment but Article 158 was not amended in the same way and no priority was given to any province or federal government. The export/supply of natural gas outside the province of Sindh is depriving the said province and its inhabitants from their constitutional rights. The gas production in Sindh is more than the actual consumption which is clearly shown in figure 8 of the Energy Year Book 2014- 2015 and OGRA's Petroleum Report 2015-2016. The data provided in the Energy Year Book reveal that the Province of Sindh and Baluchistan jointly contribute 93% of the total production of gas whereas consumption is only 42% and 29% respectively . The Chief Minister Sindh who is the key member of CCI was never consulted while taking an important decision regarding allocation of the gas to the provinces neither was he communicated the closure of the gas for the industries nor while formulating the so called policy . 9. The learned counsel for the Sui Southe rn Gas Company Ltd. argued that the hon'ble Supreme Court of Pakistan has taken the cognizance of shortfall in gas in the country and has directed to opt for the measurement to be undertaken in order to utilize the gas to its full benefits. In Human Rights Case No.14392/2013, reported in 2014 SCMR 220, the apex court in paragraph 36 (v) of the judgment held that " However, as far as Captive Power Plants are concerned, the policy must be revised and without any justification they cannot be allowed supply of gas to produce electricity because they supply electricity at much higher than the NEPRA rate instead of subsidized rate to NTDC. Therefore, the supply of gas to captive power plants should be revised to a lower priority and not at subsidized rate." He further argued that the natural gas is a finite non-renewable fossil fuel, its continuous use is resulting in its depletion day by day. Natural gas reached its peak point, which means that its maximum global production has been attained. Pakistan is no exception to this phenomenon, there is an ever- increasing gap between demand and supply of natural gas. It is also common knowledge that various industrial, commercial domestic sectors of the country's life and economy are heavily dependent on natural gas. The defendants are guided by the utilitarian principle of "greatest good of the greatest number" to implement the fundamental rights guaranteed under Articles 9 and 14 of the Constitution. Countries all over the world are engaged in formulating policies that ensures that fossil fuels, including natural gas, are consumed in efficacious and value- adding ventures rather than activities which only consume natural gas and provide no additional benefit. 10. It was further contended that the decisions regarding allocation are routed through the Economic Coordination Committee (ECC) of the Cabinet and are based on various factors including the demand for natural gas in a particular area, economic visibility of connecting natural gas in particular network as well as the geographical location of the area where natural gas has been discovered. The policies relating to its efficient utilization through load management have assumed great importance. It is now the endeavor of Federal Government to ensure
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formulation and implementation of a policy that would lead to maximum use of natural gas in sectors which contributes the most to the economy as well as the welfare of the general public. The formulation of policies is not grounded in populism or profit maximizat ion but about the most efficient use of available natural gas in the larger national interest. The defendant No.1 is a public limited company and majority shares are held by the Government of Pakistan. Defendant company is the only integrated natural gas company in Pakistan whose transmission/distribution system and it is responsible for providing distributing natural gas to the Province of Sindh and Baluchistan. It is pertinent to mention that once natural gas is discovered and is capable of being supplied, Federal Government, acting through ECC, allocates natural gas to defendant ?s company for transmission and distribution through its infrastructure. Federal Government has exclusive control over formulating natural gas allocation and management policies and these policies have to be and are followed in letter and spirit by defendant No.1. OGRA is the regulatory body for oil and gas establishment under the OGRA Ordinance, 2002. To cope with diminishing natural gas availability in Pakistan and to make effective and efficient use of existing resources, Federal Government introduced a Natural Gas and Management Policy 2005 which is amended from time to time. In pursuance of the policy , Federal Government through Ministry of Petroleum and Natural Resources examined and evaluated the demand for natural gas and introduced a load management program. It was decided that domestic and commercial consumers (Commercial consumers means small shopkeepers and not large industries) be given priority over other gas consumers. The fertilizer sector is also accorded high preference because natural gas is the only raw material (feed stock) used for the production of fertilizers and fertilizer by itself is used for the development of agriculture, so it is a value added commodity . 11. It was further averred that the plaint iffs are fully aware of the terms of the contract as well as Natural Gas Allocation Management Policy , 2005. Need for curtailment of gas to industry sector arose due to widening of gap between the demand and supply matrix which has intensified with decrease in the temperatures. In view of the current circumstance, it is even not possible to meet the demands of the sectors , placed at the top of the list of sectorial priority order . The Federal Government is facing huge gas shortfall on its system following severe depletion of the major gas fields of the country . The gap between demand and supply has widened so much that the transmission system of the defendant company is being operated at a critical level with a gas pack below minimum requirement. It is pertinent to mention herein that further reduction in gas pack due to huge gap in demand and supply may lead to total collapse of the answering defendant transmission system leading to inability such as uplift gas from sources due to tripping of Compressor stations and no gas supplies to other gas consumers or defendant ?s system. To cope up with the situation, the defendant company is undertaking heavy load curtailment in the CNG sector . 12. He further argued that the defendan t company has no infrastructure to stop the gas supply of hundreds and thousands of individuals except going to each and every individual and cut-of f supply at their respective premises on which the gas meters are installed. The only way to provide gas to the plaintif f is to cease the supply to other consumers on the system and thereafter if the defendant company would shut down the main supply it would cause extreme hardship to domestic users, who have a top priority over all others. 13. It was further contended that the plaintif fs are using gas only for production of electricity on holidays which is not the alternate fuel. The plaintif f can use electricity on Sunday if they want to run their plants. One cannot be compelled to do an act which it possibly cannot do. The defendant cannot be compelled to do an act which it cannot perform. Reliance is placed on 2003 SCMR 1772 , PLD 2004 S.C. 690, PLD 1993 Lahore 673 and PLD 1985 S.C. 28. Domestic users are prioritized and commercial/captive/industrial users are at the bottom of priority list. Public interest supersedes the intere st of an individual or individuals. It is pertinent to mention here that the defendant prioritizes the allocation of gas in terms of Natural Gas Allocation Management Policy , 2005. Ref: PLD 2016 SC 961 and PLD 2016 ISL 32. Keeping in mind the principal of separ ation of powers, courts are not to interfere with the Government policy . Ref: 2016 SCMR 2012, 2013 SCMR 1687 , 2016 SCMR 442 and 2014 SCMR 220. 14. The learned Additional Attorney General argued that the notices were issued pursuant to the Natural Gas Allocation and Management Policy 2005 (as amended from time to time). This court may not interfere in the policy
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making domain of the Executive and should permit the CCI where this dispute has been brought by the Government of Sindh and is pending determination to resolve the issue of gas allocation between the provinces. The suits are premised entirely on the judgment passed in Suit No.820/2017 which has been suspended in H.C.A. No.141/2017. The suspension order is an order in rem, hence the policy and closure notices issued pursuant thereto, remain valid and binding until such time as the suspension so granted is lifted or until final disposal of HCA No.141/2017. 15. It was further contended that in the case of Shandar Petroleum/CNG vs. Federation of Pakistan [2012 CLD 1714 ], the court upheld the policy and observe d that it is neither arbitrary not unreason able. The policy imposes a restriction, taking into account the larger public interest, as the object of the policy is to benefit all consumers. In Pakistan Muslim League (N) vs. Federa tion of Pakistan [PLD 2007 SC 642], the apex court held that while interpreting Fundamental Rights guarant eed by the Constitution, a cardinal principle has always to be borne in mind that these guarantees to individuals are subject to the overriding necessity or interest of community . A balance has to be struck between these rights of individuals and the interests of the community. If in serving the interests of the community, an individual or number of individuals have to be put to some inconvenience and loss by placing restrictions on some of their rights guaranteed by the Constitution, the restrictions can never be considered to be unreasonable. In the case of Shaheen Cotton Mills vs. Federation of Pakistan [PLD 2011 Lahore 120], the court held that the Constitution must be interpreted as a whole and no part should be read in isolation. 16. It was further contended that the relief, if granted, shall also serve to the grave detriment of non-industrial consumers i.e. the general public of Pakistan, who shall be deprived of their most basic energy requirements. The plaintif fs entered into contracts with SSG C on the understanding that the supply of gas may be interrupted from time to time. The question whether any excess ? or surplus? natural gas is being produced in Sindh and whether the said Province is producing more than its consumption, cannot prima facie made out from the pleadings. He added that the Pakistan Economic Survey 2012-2013 shows a sharp increase in the shortfall of natural gas during 2004-2005. There exists a constrained demand for natural gas of 6,000 MMCFD against a supply of 4,000 MMCFD or more than double the current domestic production. The shortfall has already hit a segment of the population disproportionately , with many areas facing gas load-shedding all year around. The learned counsel also cited the case of Hajj Organizers Association of Pakistan and others vs. Federation of Pakistan and others (2017 MLD 1616 ), Al-Tamash Medical Society vs. Dr. Anwar Ye Bin Ju and others (2017 MLD 785) and Roche Pakistan Limited vs. Pakistan and others (PLD 2018 Sindh 222). 17. Heard the arguments. A constitution is a set of fundamental principles or established precedents according to which a state is governed. It guarantees, secures and protects the fundamental rights of the citizen. It is an organic and fundamental law of a nation or state establishing the character and conception of its government, laying the basic principles to which its internal life is to be conformed, organizing the government, and regulating, distributing, and limiting the functions of its different departments and prescribing the extent and manner of the exercise of sovereign powers. Within states, a constitution defines the principles upon which the state is based, the procedure in which laws are made and by whom. All units of Federation of Pakistan may have various common points and interests for the prosperity of the whole country. The views are exchanged to discuss inter- Provincial harmony which is a basic tool for National Harmony. Though under Article 158 of the Constitution, the Province in which a well-head of natural gas is situated has precedence over other parts of Pakistan but a vital change has been effected through Constitution (Eighteenth Amendment) Act, 2010, whereby new Article 172 (3) has been inserted pursuant to which ownership of oil and gas resources has been vested jointly and equally in the Federal Government and the relevant Provinces. For the ease of reference, Article 158 and 172 of the Constitution of Islamic Republic of Pakistan are reproduced as under:- "158. Priority of requirements of natural gas. The Province in which a well-head of natural gas is situated shall have precedence over other parts of Pakistan in meeting the requirements from the well-head, subject to the commitments and obligations as on the commencing day".
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"172. Ownerless property. (1) Any property which has no rightful owner shall, if located in a Province, vest in the Government of that Province, and in every other case, in the Federal Government. (2) All lands, minerals and other things of value within the continental shelf or underlying the ocean [beyond] the territorial waters of Pakistan shall vest in the Federal Government. (3) Subject to the existing commitments and obligations, mineral oil and natural gas within the Province or the territorial waters adjacent thereto shall vest jointly and equally in that Province and the Federal Government." 18. The impugned Sunday closure notice and the cause of issuing such closure notice is also relevant. The text of impugned notice is reproduced as under:- "Monday , February 20, 2017 Attention: All Industrial Sector Associations Dear Sir(s) One day Industrial Gas Holiday Notification For: Sunday February 26, 2017 Due to higher off-take, availability of gas has decreased resulting in depletion of line pack and low pressure in the system. Consequently as authorized vide Clause No:14 of GSA for Industrial Customers approved by OGRA and allowed by ECC of the Cabinet to manage Gas Load according to approved Sectorial Priority Order, all industries including Captive Power Plants will remain closed according to the below mentioned schedule. [Emphasis added] Sunday, February 26, 2017 From 7.00 a.m. to Monday, February 27, 2017 till 7.00 a.m. (24) hours. SSGC surveillance team will be monitoring compliance and have been fully authorized to disconnect gas supply for 48 hours of any customer found violating the above schedule. Your cooperation/full support will be highly appreciated. With regards DGM (CNG & Coordination)." 19. Much emphasis and reliance made up by the defence side on Clause 14 of the GSA which is in essence a force majeure clause to deal with different incidences and exigencies. Since this clause has also some nexus and close proximity to the issue in hand, therefore I feel it appropriate to reproduce it as under:- "14.COMP…
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