Conflict In The Three Lists-case Study

Conflict in the Three Lists A Case Study: The Gujarat State Petroleum Corporation by C.K.Koshy

The Genesis  Gujarat State formed in 1960 from Old Bombay State  Soon became an industrially advanced State: Investor Friendly  Lack of energy biggest hindrance to growth  Absence of Hydel Power; Distance from Coal fields

Discovery of Oil and Natural Gas  Early finds of oil and gas at Ankleshwar  Emergence of ONGC and GAIL  Issue of regional inequity  Entry 53 of List I

Entry 53, List I “Regulation and development of oil fields and mineral oil resources; petroleum and petroleum products; other liquids and substances declared by parliament by law to be dangerously inflammable”

Gujarat State Petroleum Corporation  Formed in 1979 to set up a petrochemical complex  In 1994 entered into partnership with M/s NIKO of Canada for gas exploration  Struck gas near Hazira in Surat.  Commenced distribution of gas through subsidiary Gujarat State Petronet Ltd.

The Rise of GSPC & GSPL  GSPC enters Oil and Gas Exploration under NELP (New Exploration and Licensing Policy) 1999  GSPL starts distribution of gas.  By 2003-2004 turn over of GSPC & GSPCL touches Rs. 1000 crores.  Legislative framework necessary  The Gujarat Gas Act, formulated in 2001

The Gujarat Gas Act 2001  Was passed by State Assembly and sent to President for assent  Opposed by Govt. of India: Ministry of Petroleum; ONGC, GAIL  Drafted under Entry 25 of List II

Entry 25, List II

“Gas and gas-works”

Dispute over Jurisdiction  President made a reference to the Supreme Court on Oct 8th 2001 under Article 143 (1) of the Constitution for ‘Opinion’ of the Supreme Court.  Meanwhile Govt. of India drafted its own Petroleum Regulatory Board Bill and introduced it in Parliament in May 2002

In the Supreme Court  Govt of Gujarat sought opinion of the best legal luminaries: Fali Nariman, Nishit Desai, Crawford and Bailey, A.M Ahmed (former Chief Justice of India: All opined in favour of Gujarat  Supreme Court considered ‘Reference’ from President as a ‘case’ and asked Govt. of India, States and PSUs to file affadavits

In the Supreme Court  23 Responses filed  15 Responses in favour of stand of Gujarat  8 in support of Govt of India from GOI PSUs

The Positions  Govt. of India: 1.Entry 53 of List I very wide 2. Petroleum Act of 1934 passed before Independence by the then British Govt. 3.Laws passed by GOI after Independence: The Oilfield (Regulation Act & Development Act 1948, The Oil Industry Development Act 1974,The Petroleum and Minerals Pipeline( Acquisition of ROU on Land) Act 1962,The Oil Industry Development Act 1974

The Position of the Govt. of India  Many of the Acts already includes ’gas’ in its definition of petroleum.  Natural gas is a product of petroleum (hydro-carbon)  For orderly and balanced growth of the oil and gas industry central control necessary

Gujarat’s Case  Specific Entry supercedes General Entry: Accepted in jurisprudence  Since founding fathers did not mention ‘gas’ under Entry 53 of List I amendment of the Constitution necessary to include it

The Verdict  Natural Gas is a Union Subject covered by Entry 53 of List I  State shall have no right to legislate on this subject under Entry 25 of List II  The Gujarat Gas Act is ultra vires of the Constitution