' MUSHIR ALAM, C. J. ---Petitioner, Engro Fertilizers Limited has invoked the writ jurisdiction of this Court seeking directions against the respondent to supply 100 MMSCFD of gas to the petitioner's fertilizer plant and consequential restraining orders against respondents from suspending, discontinuing or curtailing supply of 100 MMSCFD of gas to them.
2. Mr. Makhdoom All Khan learned counsel for the petitioner, contends that sovereign guarantee and unequivocal commitment was extended by the Federation of Pakistan guaranteeing uninterrupted and regular supply 100 MMSCFD gas to the petitioner, therefore the petitioner had made colossal investment of over $ 1.1 billion in the establishment of new state of the art fertilizer plant at Ghotki.
3. ' It is not disputed that that respondent No,3, SNGPL is a gas transmission company its major consumers are in Punjab, KPK, FATA, Kashmir and petitioner being major consumer that is situated in Sindh. SNGPL is a public limited company which is majority owned managed and controlled by the respondent No,1, and works under the directive of Ministry of Petroleum and Natural Resources, Government of Pakistan, the respondent No,
1. SNGPL on the directive and as per assurance committed and entered into Gas Supply and Purchase Agreement (GSPA) with the petitioner guaranteeing supply of 100 Million Standard Cubic Feet Per Day (MMSFD) to the petitioner. SNGPL also has gas supply agreement with other industrial undertaking, which does not guarantee supply of the gas as against the petitioner. Mr. Makhdoom, has drawn our attention to one of such agreement relevant clause at page 385 reads "company does not by this Contract undertake to furnish to the Consumer a full and uninterrupted supply of natural gas but only to furnish such supply and for such length of time as it reasonably can." It is further provided in the agreement that the company shall not be liable for any loss, damage or injury that may result either directly or indirectly from shortage or interruption in the supply of natural gas or from discontinuation thereof.
However, the GSPA with the petitioner guarantees supply of contracted quality and quantity of Gas to the petitioner for a period of 20 years.
4. Mr. Makhdoom learned counsel for the petitioner further argued that the proposed load management policy of the government issued in 2005 also placed Fertilizer at No,1 in the priority order followed by power sector. It is stated that in Writ Petition No,3325 of 2011 filed by Pakistan Textile Mills Association against SNGPL seeking supply of the gas to the textile units in Punjab, the SNGPL defended its position and in paragraph 20 of the comments, it was stated as follow:--
20. Admitted to the extent of matter of record, rest incorrect hence denied. The gas supply agreement (GSA) was, executed with M/ s. Engro Chemical Pakistan Limited on 11-4-2007 for supply of 100 MMSCFD gas, initially from Qadirpur and in case Qadirpur gas production is below 100 MMSCFD on permanent basis, then to meet the shortfall, the gas is to be supplied from SNGPL system. Letter from Ministry of Petroleum and Natural Resources conveying allocation of 100 MMSCFD gas for Fertilizers Plant up to the validity of Qadirpur Development and Production Lease or twenty years with effect from date of execution of GSA whichever is later, without linking this allocation to any specific field is attached.
5. Mr. Makhdoom Ali Khan, learned counsel for the petitioner contends that Qadirpur Gas Field is situated in the Province of Sindh and Article 158 of the Constitution of Pakistan 1973 mandates that the Province in which a wellhead of natural gas is situated shall have precedence over other parts of Pakistan in meeting the requirement from said well-head, subject to the commitments and obligations as on the commencing day of the Constitution of Pakistan. It was urged that the petitioner is the only major customer of the respondent No,3 SNGPL, situated in the Province of Sindh; therefore, the commitment made by the Government of Pakistan to supply committed quantity of gas to petitioner's fertilizer unit situated in Sindh is to be meted out of the resources of the Province of Sindh. He has placed reliance on the case of LUCKY CEMENT LTD. v. FEDERATION OF PAKISTAN (PLD 2011 Peshawar 57). Peshawar High Court directed supply of gas to the industrial units in KPK out of the well head producing gas in KPK as mandate under Article 158 of the Constitution. Mr. Makhdoom also relied upon a short order dated 13-1-2011 passed in C.Ps. Nos.2887, 71314 of 2010, wherein the learned DB for the reason to follow directed the Federal Government and the Provincial Government to adhere to the provisions of Article 158 of the Constitution. It is argued that such judgment, though a short order is as good as a regular judgment in support he relies on the cases of Bismillah Textile v. HBL 2008 CLC 504 (508), The State v. Asif Adil 1997 SCMR 209 (225), In re. Office reference; PLD 1982 Kar 250 (255) and Ghulam Hussain v. The State PLD 1981 Kar. 711 at 714C. There is no cavil to such proposition, even as recently as in 2010 SCMR 1972 and PLD 2011 SC 235 similar views have been recorded by the apex Court.
6. ' Mr. Asim Iqbal learned counsel for the respondent No,3 SNGPL contends that the Gas Sales and Purchase Agreement (GSPA) speak for itself. It was urged that SNGPL is a distribution company, and entered into the GSPA in view of the commitment made by the Government of Pakistan and not by them. According to him, the respondent No,1 made a commitment to SNGPL that capacity of the Qadirpur Well Head will be increased by 100 MMSCFD gases, which was to be supplied to the petitioner but since the respondent No,1 failed to take any measure to increase the capacity, therefore, the respondent No,3 is not obliged to fulfil its commitment. Mr. Asim Iqbal learned counsel in support of contention has drawn our attention to the summary for the ECC of the cabinet relating to allocation of gas to the fertilizer units, which records "presently, Qadirpur field is supply pipeline quality gas @ 500 million cubic feet per day (MMSCFD) to SNGPL, which according to OGDCL can be enhanced to 600 MMSCFD making additional 100 MMSCFD available for a new fertilizer unit of 950,000 tons per annum. It was therefore urged that since capacity of Qadirpur Gas.
Filed was not enhanced, therefore, they are not obliged to supply contracted gas to the petitioners fertilizer unit.
7. It was next contended by Mr. Asim Iqbal, that agreement was entered with the petitioner at Lahore and the respondent No,3 is situated at Lahore beside Article 3.3 of the GSPA provides arbitration, therefore, this petition is not maintainable.
8. Mr. Sarwar Khan learned AAG contended that Article 158 of the Constitution is clear and self explanatory, he vehemently urged that priority and precedence should be given to Province of Sindh for all the gas that is extracted from the 'Well Head' situated in the Province of Sindh as per 4th Schedule Part-II read with Article 154 of the Constitution of Pakistan 1973. He pointed out that worthy Chief Minister has already taken up this issue with the Council of Common Interest.
9. It was next urged that in terms of Article 172(3) which deals with property, contract, liabilities and suit under the 18th Constitutional Amendment Act "subject to the existing commitments and obligations, mineral oil and natural gas within the province or the territorial waters and adjacent thereto shall vest jointly and equally in that province and the Federal Government". Mr. Sarwar Khan, learned Addl. AG contended that reading Article 158 with Article 172 clearly mandates that the property in gas vest equally in the province and the federation which will be subject to the existing commitment and obligation.
10. Mr. Makhdoom Ali Khan learned counsel for the petitioner, exercising right of rebuttal, submits that indeed the respondent No,3 SNGPL is distributor company but bound by the directives and policy decision of Government of Pakistan. According to Mr. Makhdoom, summary as pointed out by Mr. Asim Iqbal dated 12-8-2005 is merely a proposal, which proposal was translated into an agreement after two years on 11-4-2007. It was reiterated that in proceeding in Lahore, respondent No,3 took specific position in a petition filed by APTMA that they are supplying 100 MMSCFD of gas to the petitioner, therefore now they cannot be allowed to take a somersault and take a divergent position.
11. It was further urged that even under the Force Majeure clause in the GSPA the respondent No,3 made a categorical commitment that even if Force Majeure as defined under Article 14 of GSPA occurs then also SNGPL is obligated to supply gas from other sources. He has further drawn our attention to the force majeure invoked by the respondent No,3 on 14-4-2011 at page 435 stating that 36" dia line in Zamzama, Pirkoh Loti and Hassan has been damaged due to sabotage. It was modified that no gas available to the fertilizer plant assuring that same will be restored on priority.
In another declaration of such force majeure at page 437, dated 12-4-2011, it was pointed out that pursuant to decision of Peshawar High Court .They cannot stop supply to any sector in KPK.
12. Mr. Asim Iqbal learned counsel with permission of the court, passionately contended that common citizen are suffering and crying on account load shedding and petitioner is pressing gas supply to a commercial fertilizer unit at the cost of common citizens. It is urged that the petitioner is a commercial venture and export fertilizer at the ,suffering of poor people of Pakistan. It is urged that for want of Gas and resultant shortfall in electricity creates law and order situation in one or the other part of country now and then. He therefore prayed for the dismissal of the Petition.
13. Mr. Makhdoom Ali Khan learned counsel promptly responded urging that had the Government of Pakistan not extended sovereign commitment guarantying regular supply of 100 MMSCFD gas, petitioner would not have made colossal investment of 1.1 billion US$. It is pointed out major foreign exchange has been raised through financial institution. Petitioner has to incur substantial amount to service debt, which is not possible without running the fertilizer unit. It is urged that sovereign guarantee cannot be taken lightly. In case the guarantee extended by the Government of Pakistan is not honoured, it will be devastating for the future of the Pakistan. It was further urged that urea is equally important for Pakistan and its 80% population, Kharif season is laying a head, people who had suffered catastrophe flood and rain if not provided much needed fertilizer will suffer even major catastrophe than flood and rain. He made a statement at bar that not a single kilo fertilizer produced in Pakistan is exported out by the petitioner. He made a statement at bar that the petitioner alone is unable to meet the fertilizer demand of Pakistan market therefore question of export does not arise at all.
14. Mr. Makhdoom has also drawn our attention to the comparison of supply of the gas in the respondent No,3 system since present controversy relates to the Qadirpur Gas Field situated in the Sindh, the detail shows that in May 2010 385 MMSCFD, in January 2011 478 MMSCFD and May 2011 399 MMSCFD gas was produced total gas that came into the system in the said months is reported as 1724, 1881 and 1658 MMSCFD respectively. It is stated that gas produced is more than committed quantity required by the petitioner. Learned counsel for the petitioner has drawn our attention to statement filed by the respondent No,3 at page 691 of the file, which shows that the petitioner demand is 240 MMSCFD against supply of 112 MMSCFD and there is a short fall of 128 MMSCFD. As regard objection as to jurisdiction Mr. Makhdoom urged that petitioners has a vested right and principles of legitimate expectation and promissory estoppel are applicable in instant case. He placed reliance on the following case;
(i) DEWAN PETROLEUM (PVT.) LIMITED v. FEDERATION OF PAKISTAN (2010 CLD 988).
(ii) AZRA RIFFAT RANA v. FEDERATION OF PAKISTAN (PLD 2008 SC 476)
(iii) FEDRATION OF PAKISTAN v. FECTO BELARUS TRACTORS LIMITED (PLD 2002 SC 208)
14(sic). Mr. Makhdoom, relied upon following citation in support of his contention that Constitution Petition is maintainable against public limited companies owned and controlled by the Federation of Pakistan and SNGPL undisputedly is one of such company
(a) PETROSIN GAS PAKISTAN LTD. v. PSO (2010 YLR 2643 (LAH, SB) AT 2648 D)
(b) ECHO WEST INTERNATIONAL v. GOVERNMENT OF PUNJAB (2009 CLD 937 (SC) AT 947B)
(c) HUFFAZ SEAMLESS PIPE INDUSTRIES LIMITED v. SNGPL (1998 CLC 1890) (Lah. DB) at 1910L.
15. In order to emphasize that the petition is maintainable even where matter concerned contractual dispute and in instant case it was urged that there are no contractual dispute, contract is admitted, guarantee of Federation of Pakistan is admitted reliance on following referred precedent was placed;
(1) DEWAN PETROLIUM v. GoP, 2010 CLD 988
(2) HAZARA IMPROVEMENT TRUST v. QAISARA ELAHI, 2005 SCMR 687 at 692H
(3) RAMNA PIPE v. SNGPL 2004 SCMR 1274
(4) AIRPORT SERVICES MANAGER v. QUAID-E-AZAM INTERNATIONAL AIRPORT 1998 SCMR 2268.
16. As regard arbitration clause is concerned, it was refuted on three fold ground firstly; that relief is claimed against the Federation of Pakistan, who is not privy to the arbitration and secondly the question as to implementation of and interpretation of constitutional provision is the function of the Court and lastly that the arbitrator could not have granted interim relief, in support reliance was placed on;
(i) AMEER KHAN v. GOVT. OF PUNJAB PLD 2010 Lah 443 (SB) at 448B
(ii) HABIBULLAH ENERGY LTD. v. WAPDA 2008 YLR 2612 at 2642A
(iii) HYDRI SHIP BREAKING INDUSTRIES v. SINDH GOVERNMENT 2007 MLD 770 at 787B
17. As regards objection as to territorial jurisdiction of this Court is concerned, it was urged that indeed contract was signed at Lahore, yet it was to be performed within the jurisdiction of this court and tile petitioner is being affected by the action of respondent in Sindh, in support reliance was placed on;
(a) A.R. KHAN v. FEDERATION OF PAKISTAN (2010 CLD 1648 AT 1660-1)
(b) LT. GEN. SALAHUDDIN TIRMIZI v. ELECTION COMMISSION OF PAKISTAN (PLD 2008 SC 735 at 760C)
(c) AL-IBLAGH LIMITED v. THE COPYRIGHT BOARD, KARACHI (1985 SCMR 758).
18. It may be observed that since interpretation of constitutional provisions was involved, notice to the learned Attorney-General was issued on the very first day on 26-4-2011. Again notice was repeated to the learned Attorney-General on 18-8-2011 and so also learned DAG was also directed to inform the Attorney-General with direction to ensure that some senior and competent counsel is nominated or deputed to defend the respondents Nos.1 and 2. When this matter came up for hearing learned DAG informed that directions of this court were communicated to the learned Attorney-General but no intimation has been sent. However comments of respondents Nos.1 and 2 are on record and were examined with the assistance of learned DAG. In comments respondent No,1 stated that they in order to manage winter peak load of domestic sector, the curtailment of gas to the fertilizer plants was made in pursuance of ECC decision across board and no discrimination was made in respect of the petitioner. Respondent No,2 in the comments stated that the petition may be decided in accordance with provisions of Constitution of Pakistan. We have heard the arguments of learned counsel for the petitioner, respondent No,3 and learned DAG, and perused the record.
19. Economy of Pakistan is agro based; 80% of Pakistan's population depends on agriculture in turn survival of which is dependent on regular and constant supply of the fertilizer.. It seems that realizing pressing need and importance for the fertilizer, Federation of Pakistan in 2006 through Ministry of Industries and Production respondent No,2 announced Fertilizers Incentive. Whereby offering "allocation of 100 MMSCFD of gas for a state of the art, energy efficient and brand new fertilizer unit". Instructions to the investors and bidders were issued in November 2006 detailing the representation held out on the part of Government of Pakistan and incentives offered to the investors in modern state of art fertilizer plant, relevant part of the bid documents containing the incentives and representation to attract investors reads as follows:- Fertilizer Plant. A state-of-the art, energy efficient and brand new fertilizer unit having at least 950,000 tonnes per annum fertilizer manufacturing capacity, which will be located at a distance of up to ten (10) kilometers of Sui Northern Gas Pipeline Limited (SNGPL) network connecting Qadirpur Field of Oil and Gas Company Limited (OGDCL) located in district Ghotki, Sindh to Bhong compressor station located in district Sadiqabad, Punjab. If the Successful Bidder intends to setup such new fertilizer unit at a distance greater than ten (10) kilometers of the said system then such bidder will be required to bear all incremental costs. For avoidance of doubt, it must be noted by all Bidders that no second hand, used, refurbished or relocated, in whatsoever form or fashion, plant including but not limited to its parts and ancillary equipments will not be allowed to be installed in this fertilizer plant. Following detailed engineering and award of engineering, procurement, construction and commissioning contract, the Successful Bidder will be required to obtain a certificate from MOIP&SI to the effect that this proviso of ITB is fully complied with to the satisfaction of MOIP&SL
20. In order to attract prospective parties, bidding document also contained incentive for the Gas Allocation Commitment in the following terms:-- Gas Allocation.--Up to 100 Million Cubic Feet Per Day (MMSCFD) of Specification Gas to be provided by SNGPL to the Fertilizer Plant from Qadirpur Field up to validity of Qadipur Development and Production Lease or twenty years with effect from date of signing of GSPA between the Successful Bidder and SNGPL, whichever is later.
21. One of the essential clause 2.1.6 provided that successful bidder will be required to enter into Gas sales and Purchase Agreement (GSPA) with Sui Northern Gas Pipelines Limited as per annexure 5 to the bid documents. Successful bidder was also required to meet upfront premium to Ministry of Industry within 15 days of issuance of letter of acceptance equivalent to 25% and balance 75% was required to be paid within 45 days of the issuance of acceptance or 30 days from the date of deposit of the first installment.
22. It is not disputed that three bidders participated in the bidding process beside petitioner others were Fauji Fertilizer and IPIC and ARJV, all the three bidders on 16th November 2006 agreed to terms and conditions (GSPA) for 100 MMSCFD, Qadirpur Gas with SNGPL (page 241 of the Ole).
23. Admittedly the petitioner succeeded and earned the Contract. As required, Oil and Gas Regulatory Authority (OGRA) on 6th April, 2007 (page 331) approved the GSPA between the petitioner and SNGPL for the supply of 100 MMSCFD of gas with minor variation. Consequently GSPA was executed between the petitioner and SNGPL on. 11-4-12007 incorporation all the assurances and guarantees extended by the Federation of Pakistan for uninterrupted supply contracted quantity of Gas to the petitioner, recital-B records the commitment made by the Government of Pakistan as follows:-- B. By virtue of a letter dated 12th September 2005, Reference Number NG(ii)- 7(55)05)/ Fert. From the Ministry of Petroleum and Natural Resources addressed to the Managing Director of the Seller and the letter No,NG(II)- 7(155)/ 06-Fert Vol-I dated 23rd February, 2007 copies of which letters have been provided to the Buyer, the Government of Pakistan has allocated to the Seller 100 MMSCFD of pipeline quality gas from the Qadirpur field and, if required, from the system of the Seller for supply to an efficient new state of the art fertilizer plant (the "Gas Allocation").
24. In the definition clause of the agreement "Guarantee Delivery" is defined as follows:- "Guaranteed Deliveru"---Subject to (a) Volumetric Adjustment as defined in Article 8.2. (b) any permitted suspension or termination hereunder (c) any adjustments made taking into account applicable Tolerance, and (d) Force Majeure Events; and provided that the delivery of the Specification Gas does not exceed the Flow Rate, 100 MMSCFD of Specification Gas commencing from the Commissioning Period Start Date until the expiry of the Term of the Agreement.
25. It was further agreed in terms of clause 3.1(b) as follows:-- It is understood that the 100 MMSCFD Specification Gas to be supplied hereunder shall initially be obtained by the Seller from the Qadirpur field under the Qadirpur GSA. Without effecting the Seller's obligations under Article 3.1(a), if during the Term the volume of Gas available under the Qadirpur GSA reduces on a permanent basis below 100 MMSCFD then the Seller shall be obliged to supply any shortfall up to the Guaranteed Delivery of Specification Gas to the Buyer from the transmission system of the Seller (the "System") and to enable such supply the Buyer from the transmission system of the Seller (the "Switch"). The Seller shall use all commercially reasonable efforts to ensure that the Switch takes place in a manner which (subject to the obligation of the Seller under Article 11.2(b)(v) minimizes disruption of supply to the Buyer provided that the Seller shall have up to 45 days to undertake such Switch. It is agreed and understood that even prior to the Switch, the Seller may supply Gas to, the Buyer from the System. The Delivery Priority shall apply after the Switch to all supplies to the Buyer whether from the Qadirpur Field or from the System.
26. In Clause 3.5 it was committed that "SNGPL shall not be entitled to suspend deliveries of specification gas under the agreement except in the specific circumstances described in Articles 5.3 and 6.5 except for the duration required to switch the Buyer to the system Qadirpur Field as provided in Article 3.1(b) and subject to the obligations of the petitioner in terms of Article 11.2(b)(v) in Article 9.1 total number of shutdown was stipulated "shall not exceed 480 hours in any contract year with a maximum of Jive (5) shut downs in a contract year". SNGPL further committed subject to fulfilment of the contract condition by the petitioner, to extend unqualified support and render assistance and monitor reserve in the Qadirpur Field.
27. In instant case admittedly GSPA was executed between the petitioner and the respondent No, 3 on 11-4-2007 and the respondent No,1 through allocated 100 MMSCFD of pipelines quality gas from Qadirpur Field and if required from the system of seller to an efficient state of art fertilizer plant and in terms of the agreement guaranteed delivery of gas for 20 years period. The agreed 100 MMSCFD was guaranteed even if gas from the Well Head at Qadirpur gas filed, is reduced on a permanent basis below such quantity then the respondent No,3 was obligated to supply any shortfall up to the guaranteed delivery of the specification gas to the petitioner from the transmission system in accordance with the clause 3.1(b) of the agreement as reproduced above.
28. From the facts as recorded above, it could be noted that Federation of Pakistan had made a categorical representation, assurance and guarantee for the supply of the specified quality and quantity of gas through respondent No,3. It is not uncommon, that States and Governments to lure and attract investment in any particular industrial, or commercial sector or area offer incentives, tax holiday remission, concession or rebate on custom and excise duty, levies and other privileges etc. And when such investment in the announced sector or area is made by the investor local or international, than the State and or Governments =are obligated to extend such concession, privileges and fulfil such assurances and guarantees. In case the State or Government fail to live up to its commitments, assurances and guarantees courts do enforce such incentive scheme and concessions, assurances and guarantee offered and acted upon at the motion of parties complaining of breach or violation thereof. Whenever any State or Government to lure or attract investment holds out, give assurance or represents to the investors to provide certain incentive, tax holiday, concession in Customs or Excise Duties, advantages, concessions, licenses and or benefit etc; and acting on such sovereign incentive assurances, representation and guarantees any investor make investments in any industrial undertaking it is an obligation on the part of the State or the Government to ensure that it lives up to its sovereign representations, assurances, commitments, representation and guarantees, otherwise it would cause a serious dent in the creditability of any State and or Government. No State or Government could afford to breach such .Sovereign commitment, assurances and guarantee. In case it is not fulfilled such State and or Government would not only lose its face and credibility in International and locally but also confidence and trust of investors would be shattered, which would not only be devastating for the future of any State and or Government but will have far reaching adverse impact and consequence immeasurable in terms of money.
29. Contention of Mr. Asim Iqbal learned counsel for the respondent No,3 that if any assurance was given it was given by the Government of Pakistan and not by the respondent No,3 such arguments are propitious. It is not denied that SNGPL is owned-managed and controlled by the respondent No,1 and any commitment, assurance and guarantee held out by the respondent No,1 and .Based on such sovereign commitment, assurances, and guarantee any of the public functionary or corporate entity owned and controlled as to majority share and management of the State it .Is no more an ordinary contractual commitment obligation but become State or Sovereign obligation and duty, which cannot be avoided or excused except in extreme cases or force majeure, which is to be strictly construes.
30. As noted above, the bidding documents were issued in November 2006 on the face of such bidding documents it is mentioned in bold caption "ALLOCATION OF 100 MMSCFD GAS FOR A STATE OF THE ART, ENERGY EFFICIENT AND BRAND NEW FERTILIZER UNIT" and one of the essential incentive in the bidding' documents is provision of gas as mentioned above. Bidding documents were to be accompanied by the gas sale and purchase agreement. The Gas supply and purchase agreement was entered between the petitioner and the respondent No,3 on 11-4-2007 recital of the agreement has already been reproduced above, which acknowledges the commitment held out by the Federation of Pakistan. The GSPA was considered and approved by OGRA, the regulatory authority, therefore, it cannot be said at this stage that the respondent No,3 is not a privy to the gas allocation commitment. Such commitment was made by the respondent No,3 on the assurance and directions of the Government of Pakistan and honoured by the respondent No,3 they cannot be allowed to wriggle out of such obligations. Pursuant to directions of this Court on 26-5-2011 the respondent No,3 has filed a total input of gas in different gas field/wells. The total supply of gas from Qadirpur Field since 2005-2006 to 2010-2011 fluctuates from 400 to 500 MMSCFD, which is much more than the committed guaranteed quantity of 100 MMSCFD to the petitioner.
31. Contention of Mr. Asim Iqbal learned counsel that the respondent No,3 will supply gas to the petitioner as per commitment only if they are supplied required quantity of the gas and since OGDCL is supplying less than 400 MMSCFD to the applicant, therefore, they are not able to supply the required quantity of gas it is true that respondent No,3 is not a producer of the gas but receive gas from various oil field. It may be observed the petitioner had invested 1.1 billion US$ in installation of the State of Art New Fertilizer Plant one of the most modern and state of art fertilizer plant in this region on the representation and commitment of the respondent No,
1. The Federation of Pakistan in order to attract not only foreign but local investment do regularly announce incentive and investment friendly policies that may generated economic activity and contribute to the well being of its people beside alleviating poverty and generating more employment and business opportunity.
32. Keeping in view above objective investor do critically analyze such incentive perceive risk and benefit before making any. Decision to invest or otherwise. In the instant case as noted above the sovereign assurances, concession, privilege and guarantee extended by Government of Pakistan through Ministry of Petroleum and Industries holding out a commitment to provide guaranteed quality quantity of gas. Had the government not held out such assurances, representation, guarantee or commitment on its part petitioner might have thought many times before making any decision to make such a colossal investment. It may be observed if the government do not honour or is not in a position to enforce its own sovereign guarantee then confidence and trust of the investor as noted above will be seriously eroded. It would entail serious repercussion and of far reaching economic and financial consequences.
33. Another aspect of the matter is that Qadirpur Field is situated in the Province of Sindh, it is rightly pointed out that under the constitutional dispensation under Article 158 has already been reproduced in the narrative above is producing between 400 to 500 MMSCFD gas and the guaranteed 100 MMSCFD under Article 158 as stated above Province of Sindh share is 50% i,e, between 200 to 250 MMSCFD out of which petitioner was committed 100 MMSCFD of gas. While examining the various agreements entered by the respondent No,3 with other customers it is noted that no guaranteed gas commitment has been made except with the petitioner. Learned counsel for the respondents was not able to show that 50% of the gas produced from the well head situated in the Province of Sindh including Qadirpur Field are being supplied to its consumer in the Province of Sindh to claim any pro rata arrangement between such consumer inter se or otherwise.
34. To appreciate arguments rested on Articles 158 and 172 of the Constitution it would be advantageous to examine the same, which runs as follows;
158. Prioritu 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.
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.]
35. When Article 158 and Article 172 are read together leaves no doubt in mind, that mineral, oil and natural gas produced in any Province vest in the Province producing it and the Federal Government jointly and equally. However, Article 158 clearly mandates that in case of natural gas, as against the mineral and oil, the Province in which a well head is situated shall have precedence over other parts of Pakistan in meeting the requirement from the well head situated in that particular Province, even in terms of Article 161 of the Constitution it is mandated notwithstanding the provisions of Article 178 of the Constitution net proceed of the excise duty on the natural gas levied at the well head and the Royalty collected by the Federal Government shall be paid to the Province in which the well head of the natural gas and oil is situated, such amount though collected by the Federal Government does not form part of the Federal Consolidated Fund. Of course, such constitutional precedence of a Province, in meeting its requirement from the Well Head situated in that very Province is subject to the commitment and obligations as on the commencing date of the Constitution which is 14-8-1973. (Article 265 ibid) . Nothing has been brought on record to show that Government of Pakistan and or respondent No,3 had any pre- existing contractual or otherwise commitment and or obligation as on the date of commencement of the Constitution. Another important aspect of the matter is newly inserted Sub Article (3) of Article 172 inserted through 18th Constitutional Amendment Act X of 2010 recognizes that all things of value, including natural resources mineral, oil and natural gas situated within the Province or the territorial water adjacent thereto vest jointly and equally in that Province and the Federal Government. Vesting of natural resources in terms Article 173(3) is "subject to the existing commitment and obligation", which means that vesting of natural resources either in the Province or the Federal Government is subject to any commitment and or obligation as existing on the date of commencement of Sub-Article (3) of Article 172 of the Constitution, which is 19th April 2010, (when it received the assent of the President of Pakistan). Therefore, even if the respondent No,1 claims 50% ownership in the resources of natural gas and claims any right to distribute gas through respondent No,3, then also such exercise of right over 50% of gas produced by Qadirpur well head, situated in Sindh is subject to existing commitment and obligations of the Province and Federal Government. In the instant case respondents Nos. 1 and 2 held out commitment, assurance and guarantee to supply 100 MMSCFD to the petitioner much prior to vesting of Gas 50% of Gas produced in the Province of Sindh in the Federal Government. However Article 172 of the Constitution does not speaks of precedence of a Province over the natural resources produced by the Province, which has received constitutional. Recognition per Article 158 ibid, as conceded by the Additional Advocate General of Sindh, industrial undertaking and other consumers in the Province of Sindh have precedence in meeting the requirement of natural gas produced in Sindh over the other part of Pakistan. According to Mr. Sarwar Khan, learned Additional Advocate General of Sindh, worthy Chief. Minister of Sindh has already raised this issue in the Council of Common Interest.
Learned DAG was not able to controvert such legal and constitutional position. This view also find support from the recent pronouncement made in the case of Lucky Cement Ltd v. Federation and others PLD 2011 Peshawar 57 and so also by a decision of learned DB of this Court though through short order in C.Ps. Nos.2887 and 1314 of 2010 whereby the Federal Government and the Government of Sindh were directed to adhere to the provisions of Article 158 of the Constitution, and we are bound by the decision of Division Bench of this court which we also for the reasons recorded above respectfully follow.
36. In this view of the scheme of the Constitution of Pakistan 1973 the petition is allowed.
Respondent No,3 is directed to supply guaranteed quantity 100 MMSCFD of gas to the petitioner's plant strictly in accordance with the contract dated 11-4-2007 at least during terms of the contract and of course subject to fulfilment of the contractual obligations on the part of the petitioner.
Respondents Nos.1 and 2 are also directed to ensure that the commitment, assurance and guarantee held out for the supply of 100 MMSCFD through respondent No,3 is honoured in letter and spirit. This is of course without prejudice to the rights of the petitioner to claim such quantity of natural gas subject to availability and other commitment of Province of Sindh as is produced in the Province of Sindh in terms of Article 158 read with Article 172 of the Constitution of Pakistan.