HC sets aside directive to supply diesel at retail price to KSRTC


‘Not the function of court to decide the optimal price at which diesel has to be sold’

‘Not the function of court to decide the optimal price at which diesel has to be sold’

A Division Bench of the Kerala High Court on Friday set aside a single judge’s directive to the public sector oil marketing companies to sell high-speed diesel to the Kerala State Road Transport Corporation (KSRTC) at retail price, instead of the higher price charged from bulk consumers.

The Bench comprising Justice C.S. Das and Justice Basant Balaji, while allowing the appeals filed by three public sector oil companies, held that the single judge’s interim order was unsustainable in law and observed that it was not the function or forte of the court to decide the optimal or competitive price at which diesel should be sold to the KSRTC.

The court also pointed out that the Supreme Court while dismissing a petition by the KSRTC in 2017 against the withdrawal of subsidy for diesel had observed that subsidy could not be claimed as a right.

‘Firms given autonomy’

The court said the Supreme Court order had indicated that the administered pricing mechanism had been dismantled and the price of diesel deregulated in a phased manner. Afterwards, the oil companies were given complete autonomy to fix the price.

The Bench added that notwithstanding the Supreme Court order, the petitioner continued to purchase petroleum products from the oil companies as a bulk purchaser at the prices fixed by the companies. The petitioner had, of its free will and volition, renewed its contract with the oil companies, not once but twice, on the same terms and conditions for the supply of diesel. Thus, it was clear that the petitioner was fully conscious that the fixation of the price for petroleum products was exclusively within the domain of the companies.

‘Enjoyed benefits’

The court also noted that after the Supreme Court order the petitioner had not complained about the price fixation. Instead, it had enjoyed the benefits under the contract, especially the credit facility. It’s only now that the petitioner was crying foul when the price of diesel sold to bulk consumers had risen above the price of retail customers.

The court accepted the contention of the oil companies that a bulk purchaser fell within a separate class and could not be treated on par with retail customers. The counsel for the companies also submitted that petroleum products were supplied to the petitioner at their doorsteps, with credit facilities and other benefits as envisaged in the contract.

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