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Diesel Price Hike For Bulk Purchasers: Kerala High Court Denies Interim Relief To KSRTC
Hannah M Varghese
22 March 2022 12:10 PM IST
The Kerala High Court on Tuesday refused to grant interim relief on the plea moved by Kerala State Road Transport Corporation (KSRTC) challenging the decision of State-owned Oil Marketing Companies to increase the price of diesel sold to the Corporation, which is allegedly much higher than the market price.Justice N. Nagaresh directed the Oil Marketing Companies to file a statement explaining...
The Kerala High Court on Tuesday refused to grant interim relief on the plea moved by Kerala State Road Transport Corporation (KSRTC) challenging the decision of State-owned Oil Marketing Companies to increase the price of diesel sold to the Corporation, which is allegedly much higher than the market price.
Justice N. Nagaresh directed the Oil Marketing Companies to file a statement explaining the present pricing mechanism by the next posting date. The matter will be taken up again on April 4.
However, the Court also opined that the Indian Oil Corporation being a public sector undertaking, should consider providing some leniency to public entities like the petitioner.
Yesterday the case was before a different Single Bench which then ordered that it be posted before the appropriate court. Justice Nagaresh had earlier issued notice to the Centre and the oil companies in the matter.
Advocate Deepu Thankan appearing for KSRTC submitted that this price hike was merely a marketing strategy devoid of any logic. The Counsel further argued that if an interim stay was not granted, the Corporation would have to shut down since it was already running on massive losses. When this was refused, he urged that a direction be issued to the effect that the present price may not be further increased.
However, the Judge declared that this was beyond its jurisdiction under Article 226 of the Constitution.
The primary grievance of KSRTC is that the decision of the Oil Marketing Companies to increase the price of diesel sold in bulk only to the Corporation is discriminatory, arbitrary and violative of Article 14 of the Constitution of India.
"Supply of HSD (High Speed Diesel) to the KSRTC alien at a higher price than available in the retail outlets for others would amount to discrimination and thus violative of Article 14 of the Constitution. The increase in the price of HSD to the KSRTC will force them to cancel the schedules to manage the cost of services," the plea reads.
The petition had argued KSRTC required around 300-400 litres of diesel on a daily basis. Petroleum corporations offer exclusive storage and handling facilities to bulk customers like the petitioner, which are commonly called consumer pumps. Being a bulk consumer, KSRTC has 72 such consumer pumps across the State.
Although the State was in charge of fuel prices in the beginning, it was entirely deregulated in 2002 with petroleum corporations being empowered to fix the prices. According to the petitioner, this led to the oil companies fixing the tariff on unreasonable grounds.
Meanwhile, in 2013, the subsidy granted to KSRTC was withdrawn, and a non-subsidized market-determined price was fixed for the corporation. It was pointed out that the diesel available at consumer pumps were sold at lesser prices than at the retail outlets initially. However, this gap started gradually decreasing in January 2022.
The complication arose when the price of diesel at the consumer pumps unexpectedly skyrocketed in February 2022 from Rs. 88 to Rs. 121. Aggravating the situation, it was noticed that this price was Rs. 21 higher than the price of diesel sold at the retail outlets.
This implies that private bus operators who are competitors of the petitioner operating with the same fare tariff fixed by the State were getting diesel at lesser prices.
It has also been pointed out that the Petroleum and Natural Gas Regulatory Board Act, 2006 was introduced to prevent exploitation of consumers in the deregulated scenario, no action has been taken by the Centre yet to bring all petroleum products under the Act despite several recommendations.
Notably, the petitioner had approached the Apex Court earlier this month with a similar plea. However, while orally criticising the State's policy, the Supreme Court had granted KSRTC liberty to approach the High Court.
Case Title: Kerala State Road Transport Corporation v. Union of India & Ors.
