Restraining Order to Stop Auction of LPG Share

Restraining Order to Stop Auction of LPG Share Auction Case Laws Civil Law Contract - Common Law Rights Contract - Express & Implied Energy & Utilities Freedom of Trade - Business Injunction Knowledge - Civil Law Litigation & Arbitration Pleadings Public Importance Sindh High Court Solutions - Civil Law Vested Right Mr. Justice Mr. Justice Nazar Akbar in his judgment has decided the application for restraining order to stop auction of LPG share in Suit No. 1683 of 2017.

1. The Plaintiff has filed this suit on 12.7.2017 to permanently restrain Defendant Nos.1 & 2 from selling their 75% share of LPG being produced at Mirpurkhas and Khipro Blocks (MKK Blocks) for two years by auction. The Plaintiffs have shown their grievance on receiving an email from the Senior Commercial Advisor of Defendant No. 1 in this regard. The Plaintiffs claim to be in the business of selling the entire share of the Defendants No.1 & 2 in the LPG from MKK Blocks since its inception under various agreements. However, the last of the series of sale agreement entered into by and between the Plaintiffs and Defendants No.1 & 2 is dated 01.7.2016 and on completion of one year terms on 31.7.2017 it stand terminated. Therefore, before termination of their agreement, the Plaintiff on 12.7.2017 filed the instant suit and on 14.7.2017 on an urgent application, this Court has passed the following orders.

“In the above prayer on the one hand he claimed that the defendants No.1 be restrained from conducting the auction in which he is ready to participate and at the same time he wants that the supply of LPG from Mirpur Khas and Khipro blocks as per the sale purchase agreement dated 01.7.2016 should be continued through the plaintiff. He claimed that he has made investments of billions of rupees, therefore, he is the rightful person to be awarded this contract. This is not the domain of the Court to determine suitability of any person for award of a contract before auction which should be examined by the relevant authorities in accordance with their requirement and the procedure of conducting the auction while accepting the highest bid. The defendants being working interest owners are prima-facie within their right to sale LPG through the auction, if they have the authority to enter in the sale and purchase agreement with the plaintiff which is time bound, the defendants, for their legitimate benefits and in the larger interest of transparency are free to award future contract of sale of LPG through auction.

Be that as it may, since the plaintiffs are participating in the biding process and they have a contractual right to continue to supply LPG under the written agreement till 31.7.2017, I intend to issue notice to the defendants for 27.7.2017 to hear their point of view. However, no final decision on the auction be taken by the defendants till 27.7.2017. This observation is only till 27.7.2017.”

2. On 25.7.2017 the Defendants No.1 & 2 on service of summons filed counter affidavit to the injunction application and supplied copies to the Plaintiff. Alongwith counter affidavit, they have also filed an application under Section 4 of the Arbitration Agreements & Foreign Arbitral Awards Act, 2011 to stay the proceedings of the suit and to refer the Plaintiff to the arbitrators.

3. On 27.7.2017 the case could not be proceeded at length since a senior counsel has died and the Court work was suspended. However, by consent following arrangement were ordered to be made for continuity of supply of LPG from MKK Blocks through the Plaintiffs pending the application for interim injunction.

“It was suggested that pending this application the plaintiff from 01.8.2017 may be allowed to lift the LPG from the resources of defendants No.1 and 2 at the rate offered by the highest bidder subject to the other mechanism of pricing as per Rules. Learned counsel for defendants No.1 and 2 has sought time to seek instructions from his clients. Both the learned counsel, therefore, have filed joint statement in Court which reads:

An amount of Rs.5605/= per metric ton above the monthly published price of LPG which would be the average of the price declared by PARCO and OGDCL from time to time. The above price is based upon the highest bid received by the defendants No.1 & 2.

This arrangement is temporary pending this application. Adjourned to 02.8.2017.”

4. On 02.8.2017 comprehensive arguments were advanced by the Plaintiff for seeking interim orders. However, it was ultimately agreed by the parties that this being suit for permanent injunction, it may be disposed of after hearing of the parties since the issue raised by the Plaintiffs did not require evidence. Therefore, on 02.8.2017 following orders were passed.

After arguing at some length learned counsel for the Plaintiff has relied on the judgment reported as 1994 CLC 1126 for an interim injunction on the ground that the Plaintiffs have made huge investment in developing the network for the supply of LPG to the end consumer. However, since this is a case in which only permanent injunction has been sought, in my humble view, the order of injunction would almost dispose of the suit either way. Interim orders of such nature which are almost final order have been deprecated by the Superior Court. Parties have conceded that there is no factual controversy in this suit which requires evidence. Therefore, all counsel have agreed to the proposition that this case may be finally disposed of after hearing them. The issue for final disposal of the suit jointly proposed by the learned counsel is as follows:

“Whether the Plaintiff company has acquired vested right to the supply of the entire share of LPG from Mirpurkhas and Khipro Blocks owned by the Defendants No.1 & 2 and therefore permanently restrained them from selling it by bidding or any other means to any third party.”
By consent adjourned to 03.08.2017.

5. The brief undisputed facts of the case are that the Plaintiffs are in the business of supply of LPG owned by Defendants No.1 & 2 from their MKK Blocks under an agreement which was initially for 05 years from 01.01.2008 to 31.12.2012. This agreement has been extended from time to time and the commencement date of the last such agreement (annexure-G) is 01.7.2016 and it stand terminated on 31.7.2017 on completion of one year as stipulated in clause 2.2 of the said agreement.

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