ONGC loses Rs 8-cr legal battle with Sabar Dairy
Even though the court accepted ONGC’s argument that it was entitled to charge the price as per its agreement with the dairy and that it should also get the price difference of Rs 8.33 crore
Vadodara: ONGC has lost a 27-year-old legal battle to Sabarkantha District Cooperative Milk Producers’ Union Ltd, popularly known as Sabar Dairy, to recover over Rs 8 crore from the Himmatnagar-based milk cooperative over a dispute regarding natural gas prices.
Even though the court accepted ONGC’s argument that it was entitled to charge the price as per its agreement with the dairy and that it should also get the price difference of Rs 8.33 crore, the fact that it did not issue notice to the registrar of cooperative society resulted in the suit getting dismissed.
As per ONGC’s claim, the milk union had to pay the price difference to it due to change in government policy on pricing of natural gas and a litigation on the same matter. The PSU and the cooperative society had entered into the agreement in Vadodara in June 1985 for supply of natural gas. According to the agreement, the price was to be decided by ONGC and the gas was to be supplied from April 1987. However, before the supply started, the government of India (GoI) issued a notification that it would decide the uniform price of gas.
Even after the notification when the actual gas supply started in December 1987, ONGC issued bills at the rate decided by it while the milk union made payments at the price fixed by GoI. During the hearing of the case, the milk union claimed that it had reminded ONGC to amend the price clause, but its officers only gave oral assurances.
Meanwhile, in May 1990 the Supreme Court allowed ONGC to fix the price of natural gas. ONGC told the court that after the apex court’s order it asked the milk union to make payment of difference between the agreed price and the actual payment done. However, as the union did not pay the price difference, ONGC took the legal recourse.
The milk union argued its case based on one section of Gujarat Cooperative Societies Act. It claimed that as per section 167 of the law, ONGC should have first issued notice to the registrar of cooperative societies since the dispute is affecting its business.
The act makes it mandatory to issue the notice to the registrar first so that cooperative societies are not dragged into litigation.
Based on the arguments and submissions made by the two entities, the court of commercial and senior civil judge G J Shah dismissed the case. The court observed that ONGC is not entitled to its claims as the case itself is not maintainable because the mandatory notice under the Gujarat Cooperative Societies Act was not issued.