FORM No.HCJD/C-121.

ORDER SHEET
IN THE LAHORE HIGH COURT, LAHORE
JUDICIAL DEPARTMENT

Writ Petition No.25669/2020

Muhammad Shabbir Hussain

Vs.
Federation of Pakistan, etc.

S.No.of order/ Date of order/ Order with signature of Judge, and that of Parties of counsel, where
Proceeding Proceeding necessary.

27.04.2021 Sardar Farhat Manzoor Khan Chandio, Advocate for the

petitioner (Writ Petition No.25669/2020)
M/s Muhammad Azhar Siddique and Mian Ali Asghar,
Advocates for the petitioner in Writ Petition No.26868/2020.
Malik Asif Ahmed Nissoana, Deputy Attorney General with
Abu Bakar Khuda Bakhsh, Additional Director General,
FIA.
M/s Asif Afzal Bhatti and Malik Abdul Aziz Awan,
Additional Advocates General.
M/s Salman Akram Raja and Tariq Bashir, Advocates on
behalf of Chairman OGRA with Ch. Moazzam Hussain SED
and M. Rizwan ul Haq SED.
Ch. Muhammad Hammad, Advocate for Competition
Commission of Pakistan in Writ Petition No.26268/2020.
Mr. Ruman Bilal, Advocate for SECP in Writ Petition
No.26868/2020.
Barrister Hadroon Duggal, Advocate for respondent No.11
in Writ Petition No.25669/2020 and for respondent No.18 in
Writ Petition No.26868/2020.
M/s. Mansoor Usman Awan, Malik Eisa Usman Ghazi and
Asif Mehmood Khan, Advocates for respondent No.14 and
15 in Writ Petition No.25669/2020.
M/s Ali SibtainFazli, Hashim Ahmed Khan and EisaJalil
Ahmed, Advocates for Total PARCO Attock.
Mr. Babar Sultan, Advocate for respondent No.12 in Writ
Petition No.25669/2020.
Sh. Naveed, Advocate for respondent No.28 in Writ Petition
No.26868/2020.
Malik Awais Khalid Advocate/amicus curiae.

Through this single order I intend to dispose of

Writ Petition No.25669/2020 and Writ Petition
No.26868/2020involving same questions of law and facts.
 2
Writ Petition No.25669/2020

2. These writ petitions in the form of PIL (Public

Interest Litigation) have been filed under Article 199 of the
Constitution of Pakistan seeking issuance of appropriate
orders concerning the acute shortage and thereafter
unreasonable price hike of petroleum products occurred in
the first and second quarters of the year 2020.

3 The main crux of prayer clause is that an

appropriate writ in the nature of ‘Mandamus’ be issued
against the respondents for the smooth supply of the
petroleum products and the price hike in the petroleum
products engineered by the companies in order to take undue
advantage from this dreadful situation may be declared
unlawful and illegal.

4. All the concerned quarters were taken on board to

dig out the causes of this national crisis. During the
proceedings of the petition, it emerged that apparently the
Oil and Gas Regulatory Authority (OGRA) and Ministry of
Energy (Petroleum Division) {MoEPD}were responsible for
the smooth supply as well as check on arbitrary hike of the
petroleum products. The core question to be determined by
the Court in the given situation was to ascertain who failed
to perform its obligatory duties efficiently resulting in
national crisis qua shortage of petroleum products? Or were
there some external factors beyond control which caused the
crisis? Additionally, what measures could be suggested or
devised to avoid such like situation in future?

5. Heard. Record perused.

6. Undoubtedly the Oil and Gas sector of a country is

a pivotal part of its economy. Petroleum is one of the prime
sources of energy production.It is a conventional method
with ease of use and key to stimulate the micro economic
development of every country deeply connected with the
 3
Writ Petition No.25669/2020

mobility of transport system. It has revolutionized the entire

transport network of the world, be it road, rail, water or
aviation transport. Energy and economy are inter connected,
hence it has strong impacts on the national economy of any
country. However, unfortunately on a number of occasions
the people of Pakistan have experienced acute shortage of
petroleum. Earlier in the year 2015 the episode of petroleum
shortage occurred, which has haunted the country again in
the early part of 2020. The difference, this time, was that the
crisis developed over a period of time, persisted too long and
witnessed a relatively poor response from the government.
There had been no sign that the concerned authorities,
regulators or market players had learnt any lesson from the
past.

7. There is no gainsaying the fact that the oil industry

always tends to minimize its losses when prices fall and
maximize inventory gains as they move upwards.
Businesses rarely follow principles, but incessant crisis of
the last year confirmed the governance structure to be more
fallacious than it was earlier. As the price decline hit the
market in December 2019 and January 2020 the oil industry
had curtailed its imports, as well as, local production. Red
flags were already up when the coronavirus led to the
lockdowns by the end of March 2020 with ensuing result of
substantial drop in the consumption. The wheat harvest was
just round the corner when local refineries started to close
down for limited offtake by Oil Marketing Companies
(hereinafter to be referred as OMCs). It was quite clear by
the end of March that OMCs were not maintaining
mandatory stocks for the 20-days’ consumption cover as per
the rules and licence-conditions contained in ‘The Petroleum
Act, 1934’.Unfortunately, even the strategic reserves
(necessary for security purposes) had already been
compromised. The supply chain disruption was nationwide
 4
Writ Petition No.25669/2020

and affected all major cities and towns in Punjab,

Balochistan, Azad Jammu and Kashmir, as well as, Gilgit-
Baltistan. So much so that the province of Khyber
Pakhtunkhwa officially admitted that its 77 fueling (petrol)
stations had completely dried out. By the first half of April,
all stakeholders were fully aware of the initial shortages. At
the same time the Oil and Gas Regulatory Authority
(OGRA), the Petroleum Division and the oil industry were
making friendly communications limited to file work. The
rationing of oil products came into play around Eid-ul-Fitr in
the third week of May, 2020. There also appeared some calls
for a change in the pricing mechanism to a quarterly or
weekly basis. In fact, when the priority should have been
maintaining the stocks through administrative, regulatory
and policy response to the shortage, the institutional debate
remained focused on hedging against global oil prices. No
wonder it was the supply chain that was managed like a
‘Ponzi Scheme’.

8. For a country like Pakistan, it is not an easy job to

move stocks from the port to upcountry especially when it is
not equipped with the rapid means of transportation.
Ironically, the world was suffering from storage constraints
owing to a price crash while Pakistan went through one of
the worst oil shortages in which the consumers were being
forced to pay almost double prices.As the crisis culminated
to its peak in the first week of June 2020, the industry along
with the regulator and the government in its public discourse
attributed the shortages to a sudden upsurge in consumption
in that month. It quoted consumption of 850,000 tonnes in
the month against the usual monthly consumption of around
650,000 to 700,000 tonnes. Being corroborated either by
their relevant record or circumstantial evidence such excuse
of the concerned quarters remained nothing more than a
fable and bald assertion vis-à-vis the position that most
 5
Writ Petition No.25669/2020

major cities were already far from resuming normal business

and educational activities. More surprisingly, the
Government appointed a seven-member probe committee
led by the same officers, which too, instead of arriving to
some definite and conclusive result simply confined to
blaming the industry for every dimension of crises.
Separately, the regulator sent show-cause notices to nine
OMCs for not maintaining mandatory stocks and finally
imposed absurdly low fines on six of them. It was in June,
2020, when the instant writ petition was filed in the wake of
an alarming position where the whole country had gone to a
stand-still position and on account of shortage of petroleum
and all kinds of activities in the country had come to a halt
urging this forum to take cognizance of the matter. On the
other hand, as it appears that the concerned officials were
still adamant not to serve the public by performing their
statutory duties.

9. It becomes evident through perusal of the available

material that despite foreseeing crises in the making, no
effort whatsoever was made to take decisive steps to nip the
evil in the bud. Confronted with this position, notices were
issued to the respondents directing them to submit their
respective reports and para-wise comments. Apathy of the
affairs persisted to such extent that replies submitted by the
Government functionaries were not simply unrealistic but
even every length of effort was resorted to for shifting the
responsibility to some other organizations/institutions.
Proceedings were carried out on number of occasions and
keeping in view importance of the issue, Malik Muhammad
Awais Khalid Advocate was appointed as amicus curiae to
assist the Court on the subject. Further in order to chalk out
future mechanism, learned Attorney General for Pakistan
was required to appear before the Court. Vide order dated
30.06.2020, learned Attorney General for Pakistan was
 6
Writ Petition No.25669/2020

directed to establish contact with the Speaker National

Assembly of Pakistan to take viewpoint whether he is ready
to form a Special Parliamentary Committee with equal
membership of Treasury Benches and also Opposition
Benches to probe all the petroleum crises right from the
month of March 2020 to the end of June, 2020 including the
storage capacity, guidelines for strategic storage and
increase, as well as, decrease in petroleum prices during this
period and whether the Speaker is also ready to set a time-
frame for such Committee to finalize its report and place it
before the House for debate and if such report is prepared,
same shall also be placed before this Court. On the next date
of hearing i.e. 09.07.2020, though report with regard to draft
notification for ‘appointment of commission’ was submitted
on behalf of the Federal Government, however, deeming it
deficient for resolution of the real and attending issue with
obvious view of avoiding repetition of such incident(s) in
future, this Court vide order dated 16.07.2020 besides
directing for establishment of the Commission had also
outlined the following ToRs:-

“1. Whether the Government made any policy,

during the crisis occurred to guide the
authorities to take necessary actions and what
steps were taken for the smooth supply of Oil?
Whether such issue was discussed in Cabinet
and any summary was moved by Petroleum
Minister and what were the suggestions in it
and what decision was taken by the Cabinet or
P.M.?
2. Whether during the period when there was
shortage of petroleum products in Pakistan, was
there sufficient quantity of petroleum products
available in the country? If so, who were
responsible for hoarding and consequent
shortage and petroleum crisis and what actions
were or should have been taken against
hoarders by the concerned authority?

3. Is there any mechanism by the Federal

Government, OGRA or the oil companies for
 7
Writ Petition No.25669/2020

the storage and supply of oil during the

crisis/emergency period in order to keep the
flow of oil products continuously and how
much petrol was supplied to oil companies
prior and after the crisis and what is the storage
capacity of different oil companies?
4. Whether any order, decision, action or inaction
including ban and subsequent relaxation on
imports of petroleum products by any person,
Authority or Division was meant to and/or did
confer any undue benefit or advantage to any
person including O.M.Cs., refinery, dealer etc
in this crisis?

5. To examine the role of refineries/oil companies

and determine their responsibility in the
shortage/crisis vis-à-vis the procurement from
local sources, imports, storage and supply in the
country:

i. Whether the Ministry of Petroleum and

OGRA were ill prepared for the artificial
crisis, and its inconsistent response added
to the uncertainty and panic in the
country?
ii. Whether the OGRA failed to handle the
situation under the mandate of OGRA
Ordinance, 2002?
iii. Whether the Officials acted promptly
under the mandate of Sections 3& 4 of
Petroleum Act, 1934 in order to deal with
the situation?
iv. Who are the officials responsible and
guilty of misconduct and criminal
negligence?
v. Whether the poor risk management of the
concerned authorities is the cause of this
crisis?

6. To determine the responsibility of the

Petroleum Division, OGRA, O.M.Cs.,
Refineries, Petroleum Dealers or any other
Authority or person for the shortage/crisis.

7. Whether before the crises and during pandemic

Covid-19 any restriction was imposed on Oil
Companies for importing the oil products? If
so, what policy was made so that Oil
Companies could maintain the required storage
of petroleum?
 8
Writ Petition No.25669/2020

i. What yearly data is available with the

Government authorities and OGRA for
the storage and usage of the petrol on
monthly and daily basis?or the daily
consumption of petrol in the country and
total supply of various oil companies.
ii. What is the total import of the petroleum
products in the ordinary days? Whether
the import of oil, this year, was less as
compared to past years? Was low import
the primary reason for shortage of petrol?
8. To identify the deficiencies in prevailing laws,
regulations, licenses, mechanism for imports,
price determination, storage, storage capacity
and supply of Petroleum products across the
country.

9. To examine the possibility of market

manipulation/cartelization by
O.M.Cs/Petroleum Dealers etc. and
identification of responsible for it.
i. Whether the Government both on federal
and provincial level had provided guidelines
to regulatory and enforcement agencies to
curb the misuse of this crisis by the Cartels
through hoarding or selling it in black on
expensive rates to the general public?
10.The commission shall examine the quantity of
storage of last one year of each company, if the
storage was less than the required limit and
capacity, what action was taken by the authority
on this deficiency?
11.Whether any summary was moved by OGRA to
increase the prices on 26.06.2020, if not then on
whose recommendations rates were increased
before usual date, how much petrol was
supplied by all the companies throughout
Pakistan after, by this increase, what financial
benefits from 26.06.2020 to 01.07.2020 were
derived?
12.Whether the Government of Pakistan has any
strategic storage for the public to cope
emergency situation? If not, is there any
planning for establishing the strategic storage
for public in future? What will be the strategy
to cope with such unpleasant situation in
future?
 9
Writ Petition No.25669/2020

13.Whether there is any need of comprehensive

policy to take the provinces on board in order to
enforce the laws dealing with the petroleum
issues?

14.To suggest short term as well as long term

measures to ensure that such shortage or
manipulation, if any, does not recur.
15.Any other issue deemed appropriate or relevant
to the above ToRs.

10. Vide notification No.1/05/2020 Lit-III dated 28th

July, 2020, Federal Government constituted the
Commission hereinafter shall be referred as (the
Commission) under the chairmanship of Mr. Abubakar
Khudabakhsh, Additional Director General FIA, which
included representative of Attorney General for Pakistan,
representative of Intelligence Bureau, Representative of
FIA, Director General, Anti-Corruption Punjab, Mr.
Rashid Farooq, Former DG Oil, Petroleum Division and
Mr. Asim Murtaza, C.E.O. Petroleum Institute of Pakistan.
It is, however, worth mentioning that the last two members
did not join the proceedings while showing their inability
on account of personal/health reasons. The Commission
also co-opted certain members. The Commission made an
indiscreet probe while taking on board all stakeholders.
After considering and evaluating all the facts and
circumstances within the mandate of ToRs, the
Commission made recommendations which can be
summarized as under:-

1. OGRA
Strongly recommends dissolution of OGRA within
next six months. Also recommends punishment for
those who were involved in illegalities, unlawful
marketing, license permission.

2. MoEPD Ministry of Energy (Petroleum

Division)
Commission recommends that to get out the
present predicament of utter confusion, MoEPD
 10
Writ Petition No.25669/2020

must be empowered to take the matter into its own

hands with consolidated approach. The oil industry
can be straightened with the unified authority.
Draft new rules within 6-12 months with the
approval of cabinet/PM. The departmental penal
action may be taken against incumbent DG Oil for
passing illegal orders.The departmental penal
action be taken against Mr. Imran Abro working
without any legal ground for the term of 6 years on
behalf of his superior.The departmental action
against the Secretary of MoEP be taken for failure
to render explanation with regard to petroleum
crises during June 2020.

3. Penalty for OMCs for June Crises

The Commission recommends that the unlawful
gain must be recovered from the OMCs by the
Federal Government as these profits rightfully
belonged to the general consumer at large.

4. Establishment of a monitoring cell

The Commission recommends that a monitoring
cell must be established in MoEPD. The cell
should collect all relevant data from OMC’s.

5. Invoking the role of Deputy

Commissioner/District Administration
To inspect and examine any premises, facility or
installation on or operated by an OMC or refinery
and to conduct enquiry so as to find any infractions
or violation, is the duty of Deputy Commissioner
under Rule 54 of Pakistan Oil Rules 2016.

6. Closing of illegal retail outlets

The Commission recommends that all the illegal
outlets must immediately be closed down while
simultaneously initiating action not only against
their owners but also against those who allow them
to prosper.

7. Establishment Strategic Storage

The Commission recommends that focus of the
policy formulators on the enhancement of strategic
storage (both crude oil and refined products) of the
country remained amiss be it the MoEPD or
OGRA.

8. Automated Gauging System

Automated Gauging System is the most important
automation step that needs to be taken up, all
storages must be fitted with digital censors. This
system would also help in proper audit at the end
 11
Writ Petition No.25669/2020

of financial year and this would help cut huge tax

leaks that reportedly exist in the oil industry. Both
smuggling and adulteration practices could almost
be brought to a grinding halt once this is fully and
effectively enforced.

9. Transportation
The Commission recommends that all other private
OMC’s develop automated transportation system.

10. Revamping of PSO

The Commission recommends that the
Government of Pakistan (GoP) may settle the
impending debt issues of PSO in due time to
enable it to adopt modern working ways of a
vibrant company. The Commission also
recommends that PSO may be directed to take the
lead in the aforementioned automated process.

11. Shell Model

The Commission recommends that fair complaints
of Shell may be properly addressed and redressed
to attract other international players in the industry.

12. Price Fixing Formula

The Commission is of the view that the mechanism
may be appraised after 6-months and the GoP may
consider the same formula with average of 30 days
instead of 15 days.

13. Abolition of import Quotas

The Commission recommends that in future
product review meeting only quotas of local
refineries be fixed as per the market shares of
OMC’s or as decided by the mutual deliberation of
OMC’s.

14. Smuggling and Adulteration

The quantum of smuggling through Pak-Iran
border has been approximated at Rs.250 million.
The Government must sensitize the Frontier Corps
(south) to take strict measures at the Pak-Iran
border to curb this colossal evasion of tax revenue.
There is a dire need of mobile testing units, such
units should routinely check quality of petroleum
products in retail outlets and depots in their area of
jurisdiction to curb this menace.

15. BYCO Case

It is recommended by the Commission that
operation of both the refineries of BYCO be halted
henceforth and full-scale inquiry be opened.
 12
Writ Petition No.25669/2020

16. Scrutiny of other Regulatory Bodies.

The Commission is compelled to recommend that
the Government may consider getting the
performance audit done of all such regulatory
bodies (NEPRA, PEMRA, DRAP etc.). The people
of Pakistan have a right to know whether their
hard-earned tax money is being utilized properly.

11. It is pertinent to mention here that at one stage Mr.

Salman Akram Raja Advocate appearing on behalf of
OGRA had apprised the Court that proper facts were not
brought on record; hence no action is required to be taken
against OGRA. When confronted learned counsel frankly
conceded and ultimately agreed that once it is directed that
before making any observation or taking any adverse action,
the concerned agency or department shall hear all the
relevant including OGRA, learned counsel agreed that with
such an observation he will be satisfied and convinced that
any official or institution can be proceeded against after
taking his point of view/affording hearing.

12. The recommendations made by the Commission

have been exhaustively gone through and evaluated on
judicial parlance. These have been found just and within the
mandate of the Commission, as well as, proportionate to the
prevailing crises. In the light of the supra recommendations
by the Commission, following directions to the Cabinet
Division of the Government are being issued so that future
incidents of like nature may be eluded:-

i. It is made clear that inquiry report of the

Commission is just a fact finding report and for
further necessary action if any company,
institution/party feels necessary to proceed
adverse against anyone it must take the view
point of all concerned.

ii. The Federal Government is directed to make

necessary arrangements for the implementation
of the recommendations proposed by the
Inquiry Commission reproduced above.
 13
Writ Petition No.25669/2020

iii. The Federal Government shall form a

committee for recovery of unlawful gains from
the OMCs. The committee so formed shall take
point of view of all concerned and in case it
comes to the conclusion that recovery has to be
effected from OMCs, it shall design/draft
mechanism for its materialization.
iv. The Federal Government shall take steps for
the audit of all OMCs and in the light of such
audit report if required, a committee or sub-
committee shall be constituted to examine the
existing rules and regulations, which in the
facts and circumstances may propose
amendments/recommend new legislation.
v. In case need arises, a committee/sub-
committee shall be formed to examine

vi. The Federal Government must culminate legal

action against those who were involved in mal
practices of whatsoever nature or found
responsible for creating the shortage crisis.
vii. In future Federal Government shall ensure that
strategic storage is preserved in all
eventualities.

viii. The Federal Government is directed to ensure

the release of the report of the Commission
regarding the artificial shortage of petroleum
products immediately.
ix. The Federal Government is directed to submit
compliance report within three months with
regard to steps taken by it to the Additional
Registrar (Judicial) of this Court.
x. The Chief Secretaries of the respective
provincial governments are directed to take
effective steps to empower the District
Administration for better role to cater with
such like situation.

xi. The Government shall examine the report of

the Commission qua dissolution of OGRA
through a high powered committee, however,
if such Committee concludes that OGRA
should remain in field then immediately the
rules relating thereto must be revisited and
fresh rules/regulations be framed and the
authority should closely watch the working of
OGRA and other autonomous bodies. In case
 14
Writ Petition No.25669/2020

of any lapse, the concerned officers/officials

must be taken to task.

13. In the light of above referred directions Writ

Petition No.25669/2020 and Writ Petition No.26868/2020
are disposed of accordingly.

14. Before parting with the order this Court deems

essential to appreciate the assistance rendered by learned
counsel for the parties, learned Deputy Attorney General,
learned amicus curiae, Mr. Azhar Siddique, Advocate as
well as, Members of the ‘Commission’ particularly its
‘Chairman’. Admittedly the time-frame given to the
‘Commission’ to probe/dig out the issue was very short
while facts were gigantic wherein big-guns were involved.
Evaluation of all the facts in such a short timeand
formulating recommendations in the shape of a
comprehensive report which may help to articulate policy
guidelines for the Federal Governmentreflects the capacity
of the Chairman of the Commission, which is applauded.

(CHIEF JUSTICE)

15. Announced in Open Court on 25 .06.2021.

(CHIEF JUSTICE)
Approved for Reporting

Javed**