[Bulk Diesel Price] Kerala High Court reserves verdict in Oil Companies appeal against interim order in favour of KSRTC

The Kerala High Court on Tuesday reserved its verdict in the appeal moved by three state-owned Oil Marketing Companies (OMC) against the interim order of a single-judge directing them to provide bulk diesel to the Kerala State Road Transport Corporation (KSRTC) at the retail price. [Bharat Petroleum Corporation Ltd. v. Kerala State Road Transport Corporation].A Division Bench of Justices CS Dias and Basant Balaji heard the matter at length today and reserved judgement on it. The Bench opined that it may be beneficial if some material is placed before it regarding the pricing mechanism adopted by the OMCs in setting different rates for bulk and retail consumers."We want to know how this price is set. How does this price fluctuate? How does consumer price go up and retail price come down? Dollar rate, crude oil may go up, we understand. But how does this difference between consumer and retail pumps come up?", Justice Dias orally remarked. .The interim order that has been appealed came on a petition moved by KSRTC, through advocate Deepu Thankan, challenging the decision of the OMCs to increase the price of High Speed Diesel (HSD) sold in bulk to the KSRTC to a higher rate than the market price of diesel charged to retail consumers..In the appeal against the interim order, the OMCs submitted that the single-judge did not prima facie deal with the points raised by them, particularly challenging maintainability on the ground that the jurisdiction of the Court is limited when there is a contractual agreement as opposed to a statutory requirement. Further, it was submitted that the contract between the OMCs and KSRTC contain an arbitration clause making arbitration an effective alternative remedy.Moreover, the oil market is a de-regulated one and price fixation is not the forte of the court. The appeal 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.Senior Advocate Parag Tripathi, appearing for the OMC's, argued that the equality rights under Article 14 provide that 'unequals' must be treated unequally and since there is a clear differentiation between a bulk consumer such as KSRTC and a regular retail consumer, the differential pricing cannot be said to be arbitrary.He also contended that the KSRTC themselves have admitted in their petition that it has not procured diesel from consumer pumps after the price hike and ,therefore, they have not suffered any actual loss or injury. He submitted that the price of crude oil has been rising globally due to factors outside the control of the OMCs, such as the Russian invasion of Ukraine. Further, he contended that KSRTC owes significant dues to the OMCs for bulk diesel already supplied which indicates that the balance of convenience is clearly in favor of the OMCs.On these grounds, among others, he pressed for a stay on the operation of the interim order of the single-judge..Senior Advocate Dushyant Dave, appearing for the KSRTC, submitted that the Supreme Court has authoritatively held that appeal against exercise of a discretionary power by a single-judge cannot be entertained unless it can be shown that the exercise of discretion was arbitrary, capricious or perverse.In the case of the price charged by the OMCs for bulk HSD, he argued that the OMCs, being public sector undertakings (PSU), are discriminating against the KSRTC, another PSU, by imposing a higher rate than that availed by a private bus operator in the state. "The OMCs conduct is completely unbecoming of a public sector undertaking. Having entered into solemn contracts with us, they are clearly abusing their monopolistic position, completely contrary to the contract that they have entered into with us", he said.Dave also clarified that the KSRTC is not seeking a concessional or subsidised rate, just the same market price that is charged to retail consumers. He further submitted that KSRTC is suffering over ₹80 lakhs loss per day and that staying the operation of the interim order would put them and the public at irreparable loss and hardship.