Oil Marketing Companies Are State Instrumentalities, Empowered To Regulate Fuel Pumps In Public Interest: Delhi High Court

The Delhi High Court has upheld the power of Oil Marketing Companies (OMCs) to formulate Marketing Discipline Guidelines (MDGs) in public interest, i.e., for the benefit of the consumers as well as to protect the rights of the employees at Retail Outlets (ROs).The Division Bench of Chief Justice DN Patel and Justice Jyoti Singh observed,"MDG is a Guideline issued by the OMCs, Instrumentalities of the State to regulate the R.O. Dealers."It added that the ROs are bound by such guidelines."The relationship between the OMCs and the Dealers is governed by the Dealership Agreements, under which, more particularly Clause 43 thereof, the Dealers have undertaken to be bound and to comply with the rules and regulations of the Government, including the directives issued by OMCs and thus the MDGs formulated by the OMCs, are binding on the Dealers."BackgroundIn this case, the OMCs issued amendment to 2012 MDGs, in light of several irregularities observed in the RO dealings impacting the image of the OMCs by customers. Some of the guidelines included directing its RO dealers to: Pay wages to its workers, in addition to the minimum wages as prescribed by the relevant government, as notified by the OMCs from time to timePay salary to its workers via e-payment Cover employees under Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana (Central Government Schemes)Ensure re-calibration of petroleum in case of suspension of sales on account of errors found due to short/excess delivery before re-commencement of sales without prescription of timelines Be subjected to graded penalties, apart from termination of agreement, in case of cited irregularities in the functioning of ROs The RO Dealers had challenged the relevant Clauses of the amended MDGs before a Single Judge of the High Court. The Single Judge had struck down the clauses on various grounds. It was against this decision that the Corporations as Appellant preferred Letters Patent to Appeal. The division bench heard the Appeals of the ruling on Clauses 43 (Obligations of RO Dealers to faithfully carry out directions of the OMCs), 1.5 (Wages), 5.1.2 (Short Delivery of Products), 5.1.18 (Payment of Wages, Modes of Payment and extension of benefits) and 8.3 (graded penalties in case of major irregularities). It deemed the OMCs to be instrumentalities of the State, having the jurisdiction to enforce Marketing Discipline Guidelines upon RO Dealers, in accordance with the Directive Principles of State Policy, Article 43 of the Constitution and other relevant statutes namely, Legal Metrology Act 2009, Industrial Disputes Act, associated Labour Law legislations such as Employees' Provident Funds and Miscellaneous Provisions Act 1952, Minimum Wages and relevant Schemes issued by the Central government.Thus, the bench partly quashed the Single Judge ruling, and held the following: 1. Power of OMCs to issue MDGs: OMCs power to issue MDGs to RO dealers vide the contractual relationship flowing from the Dealership Agreement between the OMCs and RO dealers, as vested under Clause 43 of the Dealership Agreement, giving power to the OMCs to issue MDGs. Clause 43 of the Agreement, effectively quashes all claims of RO dealers to exclude OMCs from claims of "privity of contract" with workers, escaping any beneficial arrangements accorded to workers as accorded to them vide Dealers' Margins for transfer to workers and any Marketing Discipline Guideline. The court cited various High Court decisions including the Delhi High Court in upholding this power of OMCs. 2. Wages and Benefits to Employees: The various benefits and enhancement of wages/application of Central Government schemes accorded to workers of RO dealers under the amended MDGs 2012 in 2017, on account of conformance with constitutional mandates under A 43 of the Constitution and having adequately compensated the ROs on account of such benefits under revised Dealers' Margins, as agreed by the ROs while entering into the Dealership Agreement. Non-disbursement of such benefits would amount to unjust enrichment as the RO dealers had encashed the revised Dealers' Margins incorporating such benefits. Further, the minimum conditions required for schemes such as Minimum Wages Act 1948 and voluntary nature of Schemes such as Pradhan Mantri Suraksha Bima Yojana, cannot be excused by the RO dealers in case of non-fulfilment of such conditions or the voluntary nature. The benefits accorded by the Statutes could be bindingly expanded upon vide the Dealership Agreement, to further the welfare of employees. The Court, while citing Article 43 of the Constitution observed that the phrase "or in any other way" gives the State instrumentality the mandate "living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities". Further, there being no bar in welfare...

Oil Marketing Companies Are State Instrumentalities, Empowered To Regulate Fuel Pumps In Public Interest: Delhi High Court

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