'Kerosene Illuminates Homes Of Poor, Oil Companies Cannot Be Permitted To Fix Its Prices': Calcutta High Court Asks Govt To Step In

The Calcutta High Court has directed the Central Government to take a policy decision regarding the fixation of price of Kerosene oil, widely used for cooking, which was classified as an essential commodity under the Essential Commodities Act.

The Court was hearing a plea filed in representative capacity by Bengal’s ration-card holders challenging the “soaring price of kerosene under the Public Distribution System (“PDS”)”

Further directing the State to impose minimum rates of taxes on the selling price of kerosene which is bought by “poorest of poor citizens who need it to illuminate their homes and prepare their food,” a single-bench of Justice Bibek Chaudhuri held:

The concept of sale of essential commodities through Public Distribution System is based on the principle of welfare state. Thus it is the duty of the welfare state based on democratic set up that the Central Government must take some proactive step so that the users of kerosene oil can purchase within their financial means. The oil companies cannot fix the price of kerosene in the manner on the basis of import party pricing. In the instant writ petition the court cannot fix selling price of kerosene oil. Therefore, it is disposed of directing the Central Government to adopt and take a policy decision for fixing the rate of subsidized price of kerosene oil for the consumers…[for] the poorest of the poor citizens of our country who really need kerosene oil to illuminate their homes and prepare their food burning cow dung, coal etc with the help of kerosene oil.

These observations came in a plea by the petitioners who had taken the Court’s leave to espouse the case of all ration-card holders in the State of West Bengal in challenging the rising kerosene prices.

In upholding the maintainability of such a writ petition, which was essentially in the nature of a PIL, the Bench noted that in such cases, the duty of the Court would be to secure the legal and constitutional rights of marginalised public in order to do social justice.

It was observed that the Government ought to welcome such petitions, since they allow social injustices being faced by the poor and weaker sections of society to be addressed and for their welfare to be maintained.

Court further observed that the petitioners were correct in challenging the rise in prices of kerosene, which was made available through a PDS, and if such a rise in prices made an essential commodity like kerosene go out of the reach of the petitioners, then the Court could be approached.

It was argued by the petitioners that the Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993 (hereafter referred to as the 1993 Control Order) was the only statute which provided for the regulation of price mechanism of kerosene and that the price presently was being regulated by the fuel companies, in the absence of a Government declared price.

Petitioners argued that since 2002, the government had been distributing kerosene and domestic LPG under a PDS with a subsidy and at a flat rate, insulating these consumers from the price fluctuations faced by petrol and diesel which depended on the prices fixed by oil companies, depending on the international market.

It was submitted that in 2020-21, such a subsidy had been abolished and that being heavily dependent on kerosene, the poorest of poor, who were unable to afford LPG cylinders, had been thrown at the hands of the oil marketing companies who began fixing kerosene prices.

Petitioners argued that it was the statutory obligation of the central government to fix prices of kerosene under the 1993 order, and to declare its PDS price, but the government had instead delegated its responsibilities to oil marketing companies.

It was argued that these companies had begun keeping the rate of petrol which was a “rich man’s fuel” constant, but had been recovering the profits of the same by increasing kerosene prices, which was an essential commodity, as a “poor man’s fuel” being sold from fair price shops.

Petitioners submitted that the failure to regulate kerosene prices had infringed their rights under Articles 14, 19(1)(g) and 300A of the Constitution.

Respondents, Union of India, on the other hand argued that there had been a large reduction in dependency on kerosene due to the LPG, CNG and electric supply coverage.

It was argued that the government was aiming to widen LPG coverage, due to it being a “clean and environmentally friendly fuel” and as such was shifting away from kerosene towards more healthier and environmentally friendlier alternatives.

Respondents presented statistics stating that multiple states in India had become kerosene free, and that even in West Bengal, the usage had dropped from more than 70 thousand kilo litres in 2021-22 to more around 46 thousand kilo litres in 2022-23.

Counsel submitted that although the subsidy scheme on kerosene had ended, there was a Direct Benefit Transfer in PDS Kerosene Scheme, 2016 (“DBTK”) which had taken directly from all the pricing methodologies in the earlier subsidy scheme, and contemplated payment of subsidies directly to the consumer.

In reiterating the role of the State, it was argued that kerosene would need to be preserved for the weakest sections of society, and that the State would require to calculate such numbers by deducting it from those who were using LPG fuel for the same purpose, in the absence of which no prices could be fixed by the Centre.

Counsel argued that in West Bengal, kerosene was allocated and sold by the State and that expense may depend on the taxes levied, unlike petrol and diesel who’s pricing was dynamic due to being determined by oil companies and market driven factors.

Respondent oil companies also argued that it would be the State’s duty to look after the pricing of kerosene, and that the responsibility of identifying the actual below poverty line beneficiaries rested with the state as well, leaving the oil companies no avenue to be able to fix prices of kerosene.

State argued that there was a large population of people in rural Bengal who depended on kerosene for their basic needs, and that they would not be able to switch over to LPG due to there being a large price gap between the two.

It was argued that the retail price was fixed by oil companies for superior kerosene oil, which had increased 121% between January and July 2022, and that the DBTK scheme had not yet been implemented due to the purchasers of kerosene being found largely in the unorganised sector.

Upon hearing the submissions of all parties, the Court observed:

The Central Government is under obligation to consider if Direct Benefit Transfer Scheme, 2016 is helpful to the user of PDS kerosene. Subsidy is being paid by the Central Government to the oil marketing companies so that the oil marketing companies can fix the price of kerosene oil at some subsidize rate. However, the ground relate is that today the price of kerosene oil has increased to Rs.107 per liter and at the end of the day the price of kerosene oil is higher than the price of petrol and diesel. The Central Government must consider that the end users of kerosene oil are the poorest of poor people of this country. As a result of soaring price of kerosene oil, it is the hard reality in many of the villagers in the state of West Bengal, that they are illuminating their home at night burning dry branches of leave and straw. They cannot afford to purchase kerosene at Rs.107 per liter.

Accordingly, while appreciating the efforts of the central government in making subsidies available for kerosene, the Court directed for a price to be fixated under the Essential Commodities Act, due to the present methodology of fixation of price being changed by oil companies depending on the price of the product in the international market, along with customs and import duty, taking such an essential commodity out of the reach of those who need it most.

It concluded, “Public Distribution System” is the system of distribution, marketing or selling of kerosene at declared price through a distribution system approved by the Central or State Government. Therefore, it is the primary duty of the Central Government to declare the price of PDS kerosene for distribution. This power cannot be delegated to the oil companies.

Citation: 2023 LiveLaw (Cal) 278

Case: Yeasin Molla & Ors. -Vs- Union of India & Ors.

Case No: WPA 9735 of 2022

Click Here To Read/Download Order