Court refuses to "set the clock back" in Niko case

Vol 5, PW 3 (28 Mar 01) People & Policy

One striking feature of this case is Niko's delayed response to developments in Gujarat.

Why, asks Justice Mahajan, did it stay silent for so long and not take immediate action when it learnt of Gujarat Petroleum's intentions "As early as January 2000, the petitioner (Niko) was aware of the stand of the respondent (Gujarat Petroleum) that the 36-inch pipeline would no longer remain a joint venture," said Mahajan. "In spite of this having been clearly informed, the petitioner (Niko) kept quiet and in the meantime the respondent (Gujarat Petroleum) entered into a MoU with Gujarat State Petronet on 29th January 2000 and the sale transaction was concluded on 27th March 2000.

In my view the court cannot set the clock back so as to rescind those third party rights. Therefore, the petitioner, in my view cannot be permitted to operate the pipeline." Mahajan justifies his position with a letter from the Directorate General of Hydrocarbons on 6th August 1999, which said there was "no justification" for a decision taken by Niko and Gujarat Petroleum on 8th January 1999 to proceed with construction of the pipeline "because gas reserves at Hazira did not warrant it".

Three days later Gujarat Petroleum informed Niko that it had no option but to withdraw the pipeline from the joint venture and transfer it to Gujarat State Petronet. Niko remained silent.