'Nothing But The Old Case With A New Docket': Kerala High Court While Refusing To Provide Diesel To KSRTC At Retail Price

The Kerala High Court on Friday allowed 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 Division Bench of Justice C.S Dias and Justice Basant Balaji observed that a similar litigation with identical reliefs had already done its rounds in the Supreme Court in 2018 in the case of Indian Oil Corporation Ltd v. KSRTC [(2018) 12 SCC 518].

"This Court finds that the present writ petition is nothing but the old case with a new docket...The petitioner has not made out a prima facie case, and the balance of convenience is in favour of the OMCs. In the above legal and factual background, we hold that the impugned order directing the respondents 2 to 4 to sell diesel to the petitioner at par with the market price available to retail customers is unsustainable in law."

The KSRTC had approached the High Court recently challenging the decision of the OMCs to charge them much high for bulk diesel than the retail price. The High Court after hearing both the parties had granted interim relief in favour of KSRTC. Three oil companies moved the High Court in appeal assailing this interim order. 

The Court noted that in a similar plea moved by the KSRTC before the High Court in 2013, a Single Judge had similarly restrained the OMCs from realising a higher price for diesel sold to KSRTC than the retail customers. However, the Supreme Court had stayed the operation of the impugned order. 

Later, by a common order in Indian Oil Corporation Ltd. v. KSRTC, the Supreme Court allowed the appeal filed by the OMCs and dismissed the writ petition. The common order indicates that the Centre had dismantled the Administered Pricing Mechanism and deregulated the price of diesel in a phased manner. Afterwards, the OMCs were given the complete autonomy to fix the price as per their respective policies. 

Notwithstanding the above common order, KSRTC continued to purchase petroleum products from the OMCs as a bulk purchaser at the prices fixed by the OMCs. On its free will and volition, the KSRTC renewed their agreement with the OMCs, not once but twice, on the same terms and conditions, which implies that KSRTC was fully conscious that price fixation was within the exclusive domain of the OMCs.

"it is beyond any semblance of doubt that the petitioner is fully conscious that the fixation of the price for petroleum products is exclusively within the domain of the OMCs, and the petitioner has no say in the matter."

Moreover, it was found that even after the common order was passed in 2017, KSRTC had not complained about the price fixation so far, instead, it enjoyed the benefits under the contract, especially the credit facility. It only cried foul now when the price of diesel sold to bulk consumers rose above the price of retail customers. The Bench ruled that the petitioner (KSRTC) was estopped from approbating and reprobating on the contract terms. 

The Court also accepted the submission of the appellants that KSRTC cannot be treated at par with retail customers because retail consumers have to go to a retail outlet and pay for the product then and there. On the contrary, petroleum products are supplied to KSRTC at their doorsteps, with credit facilities and other benefits as envisaged in the contract.

"Therefore, the petitioner a bulk purchaser falls within a separate class and cannot be treated at par with retail customers," the Court held. 

Consequentially, it was held that there was no infringement of the petitioner's fundamental right as alleged in the petition.

Moreover, it was found that it is settled law that price fixation is neither the function nor the forte of the court and hence the Court refrained from deciding the optimal or competitive price at which diesel should be sold to KSRTC.

Since the petition sought identical reliefs which were already decided by the Supreme Court, it was found that the observations of the Apex Court in its common order squarely apply to the case at hand. 

As such, the interim order directing the respondents to sell diesel to KSRTC at par with the market price available to retail customers was found to be unsustainable in law. Accordingly,the appeals were allowed and the impugned order was set aside. 

Case Title: Bharat Petroleum Corporation Ltd. v. Kerala State Road Transport Corporation & connected matters.