Kerala State Road Transport Corporation Moves Supreme Court Against Fuel Price Hike By Oil PSUs For Bulk Purchasers

The Kerala State Road Transport Corporation has moved the Supreme Court of India challenging decisions taken by the State-owned Oil Marketing Companies, relating to increase in fuel prices sold to bulk purchasers.

The petitioner has argued that the decision of the State-owned Oil Marketing Companies to increase the price of diesel sold in bulk, only to the Corporation , which is significantly higher than even the market price of diesel is 'manifestly discriminatory, arbitrary and unreasonable decision'

The writ petition filed through Advocate Biju Raman and Advocate Deepak Prakash has argued that this is further burdening the Corporation which is already suffering exponential financial crisis year after year, and which will eventually render its shutting down inevitable.

The petitioner has argued that as per the prevailing general principles of businesses across the globe, bulk purchasers get discounts from the sellers in comparison to the retail prices because the seller saves a considerable amount of money. However, in the present case, despite saving a huge amount of money in terms of agency commissions and logistical expenses, the State-owned OMCs are not selling the diesel in bulk as per the present retail market rate to the Petitioner Corporation.

"The average consumption of diesel by the Petitioner Corporation is around 4,10,000 liters per day. The decision of the State-owned OMCs to increase the fuel price of bulk purchase of diesel will result in an approximate accumulated loss of around Rs. 19,00,000/- (Rupees Nineteen Lakhs), which will add to the currently persisting acute financial crisis being suffered by the Petitioner and lead the Corporation to stop functioning", the plea states.

According to the petitioner, the Respondents are acting against the statutory mandate as enshrined in the Essential Commodities Act and Essential Services Maintenance Act, by which it is established that the Corporation is discharging essential public service and is a bulk consumer of the same, and Respondents ought to not to treat the Petitioner Corporation at par with other private entities.

"The State-owned OMCs have developed a tendency of squeezing money from Corporations like the Petitioner and making profits, unlike the Petitioner Corporation, which functions not with the objective of generating profits but by prioritizing the interests and convenience of public by providing essential public service." the petition has stated.

It is stated that till 01.02.2022 the Petitioner was getting diesel in bulk at the commercial rate agreed between the parties, however the same was increased "unreasonably" thereafter.

The petitioner has submitted that prior to the decision of the Respondent OMC to hike the price for bulk purchaser of diesel, the Petitioner Corporation had been purchasing diesel at the current market rate which is fixed by the OMCs on the basis of the memorandum of understanding between the parties.

"There is no rhyme or logic in the decision on the OMCs to demand amount in excess of the daily deregulated market price. The policy of dual pricing of fuel has come to an end after the government decided to deregulate the price of fuel in the country whereby subsidies granted to the retail consumers was taken away." the petition has stated

The writ petition has sought directions to the Union of India to set up an Independent Statutory Regulatory Authority headed by a retired Judge of the Supreme Court of India as Chairperson assisted by other technical members having in depth knowledge of the energy sector in India in order to ensure protection of consumers interest as intended under the Act.

The petition has sought directions to Centre to notify petroleum, petroleum products and natural gas under Section 11(f) read with Section 2(zc)  of the Petroleum and Natural Gas Regulatory Board Act 2006 and to ensure legal protection to Indian consumers.

The Respondents in the present petition include the Union of India, Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited.

Case Title: Kerala State Road Transport Corporation vs Union of India & Ors