LexSPECIAL REFERENCE NO. 1 OF 2001 versus -
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A B SPECIAL REFERENCE NO. I OF 2001 MARCH 25, 2004 [S. RAJENDRA BABU, K.G. BALAKRISHNAN, P. VENKATARAMA REDD!, B.N. SRIKRISHNA AND G.P. MATHUR, JJ.] Constitution of India, 1950: Article 246 and Schedule VII list I Entry 53 and list II Entry 25-- Gujarat Gas (Regulation of Transmission, Supply and Distribution) Act, 2001-- C legislative competence of the State legislature to enact the Act-Held: The provisions relating to natural gas or liquefied natural gas are without legislative competence and the Act to that extent is ultra vires the Constitution. Article 246 Schedule VII list I Entry 53-"Petroleum and petroleum D products "-legislative competence to enact legislation on "natural gas"- Held: Natural gas and liquefied natural gas are included in the expression "petroleum and petroleum products "-Hence, Natural gas and liquefied natural gas are Union subjects and, therefore, the Union has exclusive legislative competence to enact laws on natural gas. E Article 246 Schedule Vll list II Entry 25-"Gas and gasworks"-- legislative competence to enact laws on-Held: Entry 2 5 of List II covers only manufactured gas and not natural gas-Hence, State legislatures do not have legislative competence to enact laws on natural gas and liquefied natural gas. F Articles 245 & 246 Schedule VII lists I, II and J/1-Pith and Substance Rule-Applicability of-Distribution of legislative power-Tests to determine- Held: Parliament might incidentally trench upon the subject covered by State list-Conversely, the State legislature might also do so in respect of a subject in the Union list-If the conflict could not be resolved, the central legislation G would prevail-However, attempts should be made to reconcile the difference. H Words and Phrases: "Gas and gasworks "-Meaning of-In the context of Constitution of India, 1950, Sch. Vil list II Entry_ 25. 534 +' ( SPECIAL REFERENCE NO. 1 OF 2001 535 "Petroleum", "natural gas" and "liquefied natural gas "-Meaning of A The following questions were referred to this Court under Article 143(1) of the Constitution: (1) Whether natural gas in whatever physical form including Liquefied Natural Gas (LNG) is a Union subject covered by B Entry 53 of List I and the Union has exclusive legislative competence to enact laws on natural gas. (2) Whether States have legislative competence to make laws on the subject of natural gas and Liquefied Natural Gas under Entry 25 of List II of the Seventh Schedule to the Constitution. C (3) Whether the State of Gujarat had legislative competence to enact Gujarat Gas (Regulation of Transmission, Supply and Distribution) Act, 200 I. Answering the reference, the Court HELD: l. The controversy in the instant case could only be resolved by examining the question whether the expression 'petroleum' and 'petroleum products' or 'mineral oil resources' mentioned in Entry 53 of List I of the Seventh Schedule would take in its compass the natural gas or its derivative forms. [550-C) QUESTION NO. I D E 2.1. "Natural gas" is defined as a naturally occurring mixture of hydro-carbon and non-hydrocarbon gases found in the porous geologic formations beneath the earth's surface, often in association with petroleum. (550-EI F Kirk-Othomer: Encyclopaedia of Chemical Technology, 3rd Edn. Vol. 11 p. 630, referred to. 2.2. Natural gas is found in areas of the earth that are covered with sedimentary rocks. These sediments contain the organic source materials from which natural gas and petroleum were produced. [550-GI G 2.3. Gas and oil are found in huge subterranean caverns. They both occur in minute pores of such rocks as sandstone and lime:>tone. They are held captive under great pressure by surrounding rock formations that H 536 SUPREME COURT REPORTS 12004 J 3 S.C.R. A are impervious to seepage. Finally they are released when the shifting of the earth's surface cracks the cap rock. 1552-B-Ci 3.1. Petroleum is an oily, inflammable liquid made up mostly of hydrocarbons - compounds containing only hydrogen and carbon. The hydrogen content of petroleum ranges from 50 percent to 98 percent. The B rest is made up chiefly of organic compounds containing oxygen, nitrogen or sulphur. The New Popular Science Vol. 2, referred to. 3.2. Natural gas has also been defined as "A mineral in the form of C a vapour". A gas characterized by hydrocarbons in mixture, occurring naturally in the crust of the earth, obtained by drilling, an
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