Supply diesel to KSRTC at retail price: Kerala HC leads oil companies

The Kerala High Court on Wednesday ordered state-run Petroleum Marketing Companies (OMC) to supply diesel to Kerala State Road Transport Corporation (KSRTC) buses at retail rates and not the highest rate charged to wholesale buyers.

Judge N Nagaresh’s interim order came on a plea by KSRTC challenging the WTO’s decision to charge wholesale buyers of diesel a higher rate compared to retail fuel prices.

”Regardless of the mechanism adopted by the Respondents (WTO) to set bulk supply rates for consumer pumps, on its face, the rate charged is very exorbitant. If it is under an agreement, so is a prima facie, extremely unreasonable market condition. In the facts of the case, there will be an interim order directing the respondents (OMC) to collect the price of HSD for the petitioner at par with the price available at retail pumps. The interim order is interim and will depend on the outcome of the brief motion,” attorney Deepu Thankan, who represented KSRTC in the case, said, citing the court.

On March 22, the court refused to suspend the WTO’s decision to raise the price of buying bulk diesel or prevent it from raising tariffs further, but asked it to explain how which its pricing mechanism operated.

On Wednesday, the oil companies – represented by lead attorney Parag Tripathi – told the court it was a commercial dispute governed by a contract which expressly states that any disputes should be resolved through negotiation or agreement. arbitration.

Therefore, the writ petition filed by KSRTC was not admissible, Tripathi told the court.

He further argued in court that the issue of pricing, which is challenged through this plea, was explicitly contemplated in the agreement and fell within the scope of the litigation as described in the contract.

The oil companies further argued that it is well established law that price fixing is a political consideration and that price fixing is not the court’s forte and that the scope of judicial review is extremely limited.

They argued that KSRTC wanted the tribunal to intervene in a purely contractual area leading to price fixing.

”The price of petroleum products depends on several factors and considerations, including its inevitable dependence on international prices. There is always a possibility of difference in the case of consumer pumps like the petitioner and retail outlets from where citizens obtain their petroleum products,” CMO told the court.

KSRTC, represented by lead attorney Dushyant Dave and attorney Thankan, objected to the WTO assertion and said oil companies should have supplied fuel to the company at competitive prices, instead to arbitrarily increase wholesale buyers’ prices.

The tribunal, at the date of the previous hearing, said that the CMO should have given differential treatment to utilities such as KSRTC.

Alleging hostile discrimination against it by the WTO, KSRTC urged the High Court to either suspend the price increase or restrict any further rate increases for wholesale buyers.

He argued in his plea that he was already suffering heavy losses and without any interim relief he would be forced to close.

KSRTC argued that it had to pay more than Rs 27 extra per liter of diesel at state-run OMCs compared to the price of fuel at private outlets.

Even the diesel supplied to private bus operators by OMC was at a lower rate than that charged by KSRTC, according to the petition.

The transport company claimed in its plea that it was charged Rs 121.35 per liter of diesel by OMC, while other company consumers got it for Rs 91.72 per litre.

”There is no reason to supply diesel only to KSRTC at a higher price. It cannot be said that it is because of the massive use by the KSRTC, since there is no shortage of petroleum products in the country. There is no valid explanation for treating the KSRTC as a separate class,’ the petition states.

Currently, KSRTC operates 5,481 buses on 3,525 routes every day with around 18.4 lakh passengers per day, he said and added that it currently requires around 300-400 kiloliters of diesel per day.

This is less than the pre-COVID-19 situation, when the transport company operated 6,241 buses on 6,389 routes every day with an average ridership of 35 lakh per day, according to the petition. the buyers would push the already ailing company into the deep abyss of debt and deprive the general public of its service.

The WTO’s decision to raise the price of bulk purchase of diesel would result in an approximate cumulative loss of around Rs 83 lakh per day for the KSRTC, according to the petition.

”The increase in the price of diesel at KSRTC alone will force them to take a decision to cancel timetables to manage the cost of services. The diesel price increase will directly affect KSRTC passengers as KSRTC will have to proportionally increase the tariff rates,” the petition added.

The KSRTC urged the court to order OMC to sell diesel to it at prevailing market rates at retail outlets and declare the company’s charging of a higher price as discriminatory, arbitrary, unreasonable and contrary in article 14 of the Constitution.