The Kerala High Court on Wednesday, April 13, asked the state-run oil marketing companies (OMCs) to provide diesel to the Kerala State Road Transport Corporation (Kerala RTC) buses at retail rates and not the higher rate being charged from bulk purchasers. The interim order by Justice N Nagaresh came on a plea by Kerala SRTC challenging the OMCs decision to charge a higher rate from bulk purchasers of diesel as compared to retail prices of the fuel.
"Whatever be the mechanism adopted by the OMCs (respondents) in fixing the rates for bulk supply to consumer pumps, prima facie the rate levied is highly exorbitant. If it is in pursuance of any agreement, the same is prima facie, an extremely unconscionable term of bargain. In the facts of the case, there will be an interim order directing the respondents (OMCs) to levy the price for High Speed Diesel (HSD) for Kerala SRTC (petitioner) at par with the price available at retail pumps. The interim order is provisional and will be subject to the outcome of the writ petition," advocate Deepu Thankan, who represented Kerala SRTC in the matter, quoted the court as saying.
On March 22, the court declined to stay the OMCs decision to hike price of bulk diesel purchase or restrict them from further increasing the rates, but had asked them to explain the manner in which their pricing mechanism worked. On Wednesday, April 13, the oil companies -- represented by senior advocate Parag Tripathi -- told the court that it was a commercial dispute which was governed by a contract which specifically provides that any dispute has to be resolved by negotiation or arbitration. “Therefore, the writ petition moved by Kerala SRTC was not maintainable,” Tripathi told the court.
"The price of petroleum products depends on several factors and considerations, including its inevitable dependence on international pricing. There is always a possibility of difference in case of consumer pumps like the petitioner and retail outlets from where citizens get their petroleum products," the OMCs told the court.
Kerala SRTC, represented by senior advocate Dushyant Dave and advocate Thankan, opposed the OMCs contention and said that the oil companies ought to have provided fuel to the corporation at competitive prices, instead of arbitrarily increasing the rates of bulk purchasers.
The court, on the previous date of hearing, had said that the OMCs ought to have given a differential treatment to public service utilities like Kerala SRTC. Alleging hostile discrimination against it by the OMCs, Kerala SRTC urged the High Court to either stay the price hike or to restrict any further increase in the rate for bulk purchasers.
It contended in its plea that it was already running under heavy losses and without any interim relief, it would be forced to shut down. Kerala SRTC also contended that it has to pay more than Rs 27 extra per litre for diesel to the state-run OMCs as compared to the rate of the fuel at private retail outlets. Even the diesel supplied to private bus operators by OMCs was at a lesser rate than that charged from Kerala SRTC, the petition claimed.
The transport corporation claimed, in its plea, that it was charged Rs 121.35 per litre for diesel by the OMCs, while the other consumers of the companies were getting it for Rs 91.72 per litre.
Presently, Kerala SRTC operates 5,481 buses on 3,525 routes every day with around 18.4 lakh passengers per day, it said and added that it presently requires around 300-400 kilolitres of diesel per day. This is lesser than the pre-COVID-19 situation, when the transport corporation was operating 6,241 buses on 6,389 routes every day with an average ridership of 35 lakh per day, the petition said.
“The OMCs decision to increase price of bulk purchase of diesel would result in an approximate accumulated loss of around Rs 83 lakh per day for the Kerala SRTC. The increase in the price of diesel to the Kerala SRTC alone will force them to take a decision to cancel the schedules to manage the cost of services. The increase in price of diesel will directly affect the Kerala SRTC passengers as the Kerala SRTC will have to proportionally increase the tariff rates," the petition further contended.
Kerala SRTC urged the court to direct the OMCs to sell diesel to it at the market rates prevailing at retail outlets and to declare the charging of a higher price from the corporation as discriminatory, arbitrary, unreasonable and violative of Article 14 of the Constitution.