[Bulk Diesel Prices] Kerala High Court Reserves Order In Appeals Challenging Interim Order In Favour Of KSRTC

The Kerala High Court on Tuesday reserved its order on the appeals moved by state-owned oil marketing companies (OMC) challenging the interim order issued in favour of Kerala State Road Transport Corporation (KSRTC) wherein the OMCs have been directed to levy the price of High Speed Diesel (HSD) at par with the price available at retail pumps temporarily.

A vacation bench of Justice C.S Dias and Justice Basant Balaji announced that it will declare its verdict in the case on Monday. 

Senior Advocate Parag Tripathi appeared for the appellants and argued that the Single Judge should not have interfered since there was an arbitration clause, the issue is in the realm of contract and it is a matter of policy. It was further pointed out that the Single Judge had not taken a prima facie view in its order on the issue of maintainability which they had argued at great length.

He submitted that the prices shot up only due to the international prices of crude oil soaring after the Ukraine conflict and that they are gradually coming down. It was added that at present, the gap between the market price and price charged for KSRTC was no longer Rs. 20, but around Rs.14 and that this will drop further soon.

Further, the Senior Counsel argued that KSRTC owes over 123 crore rupees to the three OMCs for the diesel already supplied to them which has not yet been paid. Another point they had argued before the Single Judge but does not find a mention in the order was that retail and bulk consumers are not equals under Article 14 of the Constitution for KSRTC to claim equal treatment. 

"In fact, to treat separate classes equally actually violates Article 14," he said. 

Senior Advocate Dushyant Dave appeared for KSRTC and submitted that this appeal was one without any merit and was liable to be dismissed. He argued that the Supreme Court had authoritatively held that an appeal against the exercise of discretionary power by the Single Judge cannot be entertained unless they can show that the exercise of discretion was arbitrary, capricious or perverse.

It was contended that the oil marketing companies were abusing their monopolistic position, in complete contradiction to their contract with KSRTC.

Further, the Counsel argued that KSRTC was not seeking a subsidised price but merely that the OMCs supply diesel to them at the same price they charge the private buses.

"In my 43 years of practice, I have never come across a situation where a public entity is charged more than a private entity. The private buses in Kerala are charged the market price for diesel but we are charged market+k price."

It was also clarified that after 2018, the subsidy which was earlier available to private entities was removed. Thereafter, the OMCS and KSRTC entered into fresh agreement where it was agreed that the prices would be in consonance with the market price. He admitted that KSRTC was given small discounts till February, but that was not a subsidy.

"We don't even want this discount anymore. We just want to be charged the same market price. They can only charge the market price. We are suffering Rs. 85 lakh loss every day and the burden is growing. The appeal is liable to be dismissed."

It is the case of the oil companies that KSRTC is a bulk customer of HSD and inherently different from a retail consumer, therefore they form separate categories.

The appellants also pointed out that KSRTC had approached the Court for similar reliefs in 2013, but the Supreme Court had dismissed the petition holding that this was a matter of policy and that no interim order could have been passed by the High Court in such matters.