Right To Trade Can't Restrict Competition: P&H HC Declines Plea For Halting Setting Up Of New Petrol Pumps Because They Would Affect Profits Of Existing Ones

The Punjab & Haryana High Court has said that although the right of business and trade is guaranteed by Article 19(1)(g) of the Constitution of India, it cannot be used to restrict anyone else's trade to stop competition in the business.

The Court refused the Petrol Pump Association's request to stop setting up new Petrol Pumps in the vicinity on the ground that it would wipe out pre-existing financial viability and the existing Pumps may suffer losses.

Justice Jagmohan Bansal said, "Article 19 (1)(g) of the Constitution of India guarantees right to trade but does not permit to quell or devour a competition which is neither unethical nor against the ethos of our Constitution."

The Court said if the proposition of petitioners was accepted, every businessman or professional would come forward and claim that no new person should be permitted to come into their business or profession because it would wipe out their financial viability

Moga Periphery Pump Association moved the High Court seeking the setting aside of an advertisement whereby the Central Government had invited applications for 60 additional petrol pumps in the Punjab's District Moga.

It was contended that the members of the Association have petrol pumps within District Moga. It was stated that the respondents by impugned advertisement invited applications for setting up 60 additional petrol pumps in the District.

Petitioner contended that no additional petrol pump should be set up within the jurisdiction of Moga because existing petrol pumps were sufficient to cater need of the consumers.

Senior advocate for the petitioner argued that as per the contract executed between Oil Companies and existing petrol pump dealers, a dealer is required to achieve a minimum turnover of 350 KL of Motor Spirit & High Speed Diesel.

It was stated that there are 141 petrol pumps in District Moga and the average turnover of these petrol pumps is 92 KL per month which is much lower than the minimum prescribed limit.

If 60 new petrol pumps are set up within District Moga, the turnover of every dealer would substantially reduce and no petrol pump would be financially viable. It would lead to malpractices and unethical competition, it was contended.

After hearing the submissions from both sides, the Court noted that the members of the petitioner-Association at the time of setting up of the petrol pump have entered into a contract with the respective Oil Company, in which it was specifically provided that the Corporation shall be free to set up any number of petrol pumps.

The Court rejected the argument of the petitioner that new petrol pumps would be set up in violation of guidelines issued by CPCB as well as the Ministry of Road Transport & Highways (MORTH).

"This Court is sanguine of the fact that as soon as Oil Companies would apply for NOC in terms of Rule 144 of Petroleum Rules 2002, the jurisdictional Deputy Commissioner would take care of guidelines issued by CPCB, MORTH and State Government," the Court said.

It opined that anybody can bring to the knowledge of the Court, any illegality committed or to be committed by authorities. In the case at hand, the intent of the petitioner was not to stop alleged illegality on the part of the authorities but tos avoid competition, the Court opined.

The petitioner is trying to use a judicial forum to halt the setting up of new petrol pumps. The judicial process cannot be used to stop healthy competition in the guise of an allegation of violation of any instruction issued by the Government, added the Court.

Justice Bansal observed further that every Oil Company in the form of Tanks, Dispensers and other equipment has to invest a good amount while setting up a petrol pump. It said that if the Oil Companies have decided to set up new petrol pumps, it is their wisdom and the Court cannot substitute a policy decision of a Corporation especially when the contracts between the parties are commercial in nature.

Adding that the members of the Association have undoubtedly the right of business and trade as guaranteed by Article 19(1)(g) of the Constitution of India, the Court said that they have no right to restrict anyone else to trade.

Consequently, the Court disposed of the plea.

Senior Advocate Chetan Mittal, Advocates Shreenath A. Khemka, and Udit Garg for the petitioners.

Satya Pal Jain, Addl. Solicitor General of India with Dharam Chand Mittal, Senior Panel Counsel,

Saigeeta Srivastava, Senior Panel Counsel and Ashish Rawal, Senior Panel Counsel for the respondents No.1 to 3-UOI.

Ashish Kapoor, Advocate for respondent No.4.

Raman Sharma, Advocate for respondent No.5.

Citation: 2024 LiveLaw (PH) 83

Title: MOGA PERIPHERY PUMP ASSOCIATION v. UNION OF INDIA AND ORS.

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