Driller John Energy humiliated in GAIL dispute

Vol 18, PW 23 (16 Jul 15) Exploration & Production

Being publicly humiliated is never fun, but it has happened to driller John Energy in its case against GAIL over rig hire charges.

Justice Sudershan Kumar Misra of the Delhi High Court directed John to withdraw its case on July 10 and scolded it for not reading the contract properly. "Justice Misra said John is wasting the court's time," says a source who was present.

John was demanding GAIL pay Rs1.4cr ($221,000) on behalf of its partners Hallworthy Shipping and Nitin Fire Protection Systems for hiring a rig at Rajasthan onland block RJ-ONN-2004/1 in May 2012 to drill three wells. GAIL spud the first on June 10, 2012 using a 1000-hp rig and drilled the last by May 2013.

Of the Rs22cr ($3.4m) bill, all the partners paid in line with their respective stakes except for Hallworthy and Nitin. These two companies only made payments in 2012 not in 2013 and owed Rs1.4cr.

John argued GAIL should pay the outstanding amount as it is the operator and signed the contract. But Justice Misra was not swayed as under the contract liability for payment by each partner is limited to its stake.

"The judge got angry when GAIL's lawyer told him John intentionally did not submit to the court a copy of the contract terms with the 'limited liability clause'," we hear. "Justice Misra told John that GAIL as a Maharatna company must follow the contract."