Kerala High Court

Bharath Petroleum Co.Ltd vs Kerala State Road Transport ... on 6 May, 2022

                                           1
W.A Nos 503, 504 and 505 of 2022


                      IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                         PRESENT

                         THE HONOURABLE MR.JUSTICE C.S.DIAS

                                            &

                       THE HONOURABLE MR.JUSTICE BASANT BALAJI

                FRIDAY, THE 6TH DAY OF MAY 2022 / 16TH VAISAKHA, 1944

                                 WA NO. 503 OF 2022

AGAINST THE INTERIM ORDER DATED 13.4.22 IN WP(C) 9414/2022 OF THE HIGH COURT OF

                                         KERALA

APPELLANT/S:

                INDIAN OIL CORPORATION LTD,REGISTERED OFFICE INDIAN OIL BHAVAN, G-
                9, ALI YAVAR JUNG MARG, BANDRA EAST, MUMBAI, MAHARASHTRA - 400051,
                REPRESENTED BY ITS COMPANY SECRETARY.

                BY ADVS.
                M.GOPIKRISHNAN NAMBIAR
                K.JOHN MATHAI
                JOSON MANAVALAN
                KURYAN THOMAS
                PAULOSE C. ABRAHAM
                RAJA KANNAN
                PARAG.P.TRIPATHI(SR)


RESPONDENT/S:

     1          KERALA STATE ROAD TRANSPORT CORPORATION (KSRTC),TRANSPORT BHAVAN,
                EAST FORT, THIRUVANANTHAPURAM - 695023, REPRESENTED BY ITS CHIEF
                LAW OFFICER (IN CHARGE) HENA P.N.

     2          UNION OF INDIA, MINISTRY OF PETROLEUM & NATURAL GAS, A-WING
                SHASTRI BHAVAN ROAD, IP ESTATE, NEW DELHI - 110002, REPRESENTED BY
                ITS SECRETARY.

     3          BHARAT PETROLEUM CORPORATION LTD, BHARAT BHAVAN, 4 AND 6
                CURRIMBHOY ROAD, BALLARD ESTATE, MUMBAI, MAHARASHTRA - 400001,
                REPRESENTED BY ITS MANAGING DIRECTOR.

     4          HINDUSTAN PETROLEUM CORPORATION LIMITED, PETROLEUM HOUSE 17,
                JAMSHEDJI TATA ROAD, CHURCHGATE, MUMBAI, MAHARASTHRA - 400020,
                REPRESENTED BY ITS MANAGING DIRECTOR,

     5          PETROLEUM & NATURAL GAS RAGULATORY BOARD, FIRST FLOOR, WORLD TRADE
                CENTRE, BARBER ROAD, NEW DELHI - 110001, REPRESENTED BY ITS
                CHAIRPERSON.

                BY ADV MANU S., ASG OF INDIA

                BY ADV DEEPU THANKAN, SC, KSRTC

                BY ADV DUSHYANT DAVE (SR), KSRTC


      THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 26.4.22, ALONG WITH

WA.504/2022 AND 505/2022, THE COURT ON 6.5.22 DELIVERED THE FOLLOWING:
                                            2
W.A Nos 503, 504 and 505 of 2022


                      IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                         PRESENT

                         THE HONOURABLE MR.JUSTICE C.S.DIAS

                                            &

                       THE HONOURABLE MR.JUSTICE BASANT BALAJI

                FRIDAY, THE 6TH DAY OF MAY 2022 / 16TH VAISAKHA, 1944

                                 WA NO. 504 OF 2022

AGAINST THE INTERIM ORDER DATED 13.4.22 IN WP(C) 9414/2022 OF THE HIGH COURT OF

                                         KERALA

APPELLANT/S:

                HINDUSTAN PETROLEUM CORPORATION LIMITED,PETROLEUM HOUSE, 17,
                JAMSHEDJI TATA ROAD, CHURCHGATE, MUMBAI, MAHARASHTRA - 400 020,
                REPRESENTED BY ITS MANAGING DIRECTOR.

                BY ADVS.
                M.GOPIKRISHNAN NAMBIAR
                K.JOHN MATHAI
                JOSON MANAVALAN
                KURYAN THOMAS
                PAULOSE C. ABRAHAM
                RAJA KANNAN
                PARAG.P.TRIPATHI(SR)


RESPONDENT/S:

     1          KERALA STATE ROAD TRANSPORT CORPORATION (KSRTC),TRANSPORT BHAVAN,
                EAST FORT, THIRUVANANTHAPURAM - 695023, REPRESENTED BY ITS CHIEF
                LAW OFFICER (IN CHARGE) HENA P.N.

     2          UNION OF INDIA, MINISTRY OF PETROLEUM & NATURAL GAS,A-WING SHASTRI
                BHAVAN ROAD, IP ESTATE, NEW DELHI - 110002, REPRESENTED BY ITS
                SECRETARY.

     3          INDIAN OIL CORPORATION LTD.,REGISTERED OFFICE INDIAN OIL BHAVAN,
                G-9, ALI YAVAR JUNG MARG, BANDRA EAST, MUMBAI, MAHARASHTRA -
                400051, REPRESENTED BY ITS COMPANY SECRETARY.

     4          BHARAT PETROLEUM CORPORATION LTD, BHARAT BHAVAN,4 AND 6 CURRIMBHOY
                ROAD, BALLARD ESTATE, MUMBAI, MAHARASHTRA - 400001, REPRESENTED BY
                ITS MANAGING DIRECTOR.

     5          PETROLEUM & NATURAL GAS RAGULATORY BOARD,FIRST FLOOR, WORLD TRADE
                CENTRE, BARBER ROAD, NEW DELHI - 110001, REPRESENTED BY ITS
                CHAIRPERSON.

                BY ADV MANU S., ASG OF INDIA

                BY ADV DEEPU THANKAN, SC, KSRTC

                BY ADV DUSHYANT DAVE (SR), KSRTC


      THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 26.4.22, ALONG WITH

WA.503/2022 AND 505/2022, THE COURT ON 6.5.22 DELIVERED THE FOLLOWING:
                                            3
W.A Nos 503, 504 and 505 of 2022


                      IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                         PRESENT

                         THE HONOURABLE MR.JUSTICE C.S.DIAS

                                            &

                       THE HONOURABLE MR.JUSTICE BASANT BALAJI

                FRIDAY, THE 6TH DAY OF MAY 2022 / 16TH VAISAKHA, 1944

                                 WA NO. 505 OF 2022

AGAINST THE INTERIM ORDER DATED 13.4.22 IN WP(C) 9414/2022 OF THE HIGH COURT OF

                                         KERALA

APPELLANT/S:

                BHARATH PETROLEUM CORPORATION .LTD
                BHARAT BHAVAN, 4 AND 6 CURRIMBHOY ROAD, BALLARD ESTATE, MUMBAI,
                MAHARASHTRA - 400001, REPRESENTED BY ITS MANAGING DIRECTOR.

                BY ADVS.
                M.GOPIKRISHNAN NAMBIAR
                K.JOHN MATHAI
                JOSON MANAVALAN
                KURYAN THOMAS
                PAULOSE C. ABRAHAM
                RAJA KANNAN
                PARAG.P.TRIPATHI (SR)


RESPONDENT/S:

     1          KERALA STATE ROAD TRANSPORT CORPORATION(KSRTC)
                TRANSPORT BHAVAN, EAST FORT, THIRUVANANTHAPURAM - 695023,
                REPRESENTED BY ITS CHIEF LAW OFFICER (IN CHARGE), NENA P.N.

     2          UNION OF INDIA
                MINISTRY OF PETROLEUM & NATURAL GAS, A-WING SHASTRI BHAVAN ROAD,
                IP ESTATE, NEW DELHI - 110002, REPRESENTED BY ITS SECRETARY.

     3          THE INDIAN OIL CORPORATION,
                REGISTERED OFFICE INDIAN OIL BHAVAN, G-9, ALI YAVAR JUNG MARG,
                BANDRA EAST, MUMBAI, MAHARASHTRA - 400051, REPRESENTED BY ITS
                COMPANY SECRETARY.

     4          HINDUSTAN PETROLEUM CORPORATION LIMITED,
                17, JAMSHEDJI TATA ROAD, CHURCHGATE, MUMBAI, MAHARASHTRA - 400020,
                REPRESENTED BY ITS MANAGING DIRECTOR.

     5          PETROLEUM & NATURAL GAS REGULATORY BOARD,
                FIRST FLOOR, WORLD TRADE CENTRE, BARBER ROAD, NEW DELHI - 110001,
                REPRESENTED BY ITS CHAIRPERSON.

                BY ADV MANU S., ASG OF INDIA

                BY ADV DEEPU THANKAN, SC, KSRTC

                BY ADV DUSHYANT DAVE (SR), KSRTC



THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 26.4.2022, ALONG WITH
WA.503/2022 AND CONNECTED CASES, THE COURT ON 6.5.2022 DELIVERED THE FOLLOWING:
                                      4
W.A Nos 503, 504 and 505 of 2022




                                                                'C.R.'
              C.S DIAS & BASANT BALAJI, JJ.

---------------------------

W.A Nos 503, 504 and 505 of 2022

-----------------------------

Dated this the 6th day of May, 2022.

COMMON JUDGMENT C.S.DIAS, J.

The intra-Court appeals are filed by the

respondents 2 to 4 in W.P(C) 9414/2022 ― the Public

Sector Oil Marketing Companies ― aggrieved by the

interim order passed in the writ petition, directing them

to sell high-speed diesel to the writ petitioner ― the

Kerala State Road Transport Corporation ― at the

market price available for Retail Outlets. The parties are

referred to as per their status in the writ petition.

2. The concise facts in the writ petition, relevant for

the determination of the appeals, are:

2.1. The petitioner is a State Transport undertaking

established under the Road Transport Corporation Act,

1950. The petitioner is aggrieved by the decision of

the respondents 2 to 4 (hereinafter collectively referred

to as 'OMCs') to increase the price of high-speed diesel

W.A Nos 503, 504 and 505 of 2022

(in short 'diesel'), sold in bulk to the petitioner, higher

than the market price of diesel, approximately more

than Rs.21/- per litre, which is violative of Articles 14

and 19 (i) (g) of the Constitution of India.

2.2. The petitioner is the largest establishment in

the State, with 26578 employees and 41,000

pensioners. Before the pandemic, the petitioner used to

transport nearly 35,00,000 passengers every day using

6241 buses on 6389 routes. The petitioner operates the

schedules and pays the salaries and other emoluments

to its employees. It is the State Government that fixes

the fare tariff considering the various aspects like fuel

prices, tax, and revision of minimum wages to the

workers. The petitioner cannot demand the Government

to effect changes in the fare tariff due to its commitment

to the society.

2.3. The respondents 2 and 3 are Petroleum

Corporations owned by the first respondent - the Union

of India. The fourth respondent is a subsidiary of the Oil

and Natural Gas Corporation. The fifth respondent is

the Board constituted under the Petroleum and Natural

Gas Regulatory Board Act, 2006.

W.A Nos 503, 504 and 505 of 2022

2.4. The petitioner requires 300 to 400 kilolitres of

diesel per day. The petitioner has 72 consumer pumps

across the State. Being a bulk consumer of petroleum

products, the petitioner has entered into separate

agreements with the respondents 2 to 4.

2.5. Fuel prices were fixed by the first respondent,

and the rules were revised from time to time by

imposing restrictions on pricing. The pricing of

petroleum products was brought under the

Administered Pricing Mechanism (in short, 'APM')

effective July 1975. The APM was dismantled from

1.4.2002, starting with aviation turbine fuel, followed by

petrol and diesel. As an aftermath of the dismantling of

the APM, there is an unprecedented hike in the price of

petroleum products as per the whims and fancies of the

respondents 2 to 4.

2.6. The petitioner was enjoying the price

concession granted by the first respondent to all the

bulk consumers of the OMCs. However, the benefit was

withdrawn in 2013, and a non-subsidized market-

determined price was fixed. Although the petitioner and

other State Transport Corporations challenged the

W.A Nos 503, 504 and 505 of 2022

withdrawal of subsidy before the High Courts and the

Supreme Court, the challenge was rejected by the

Supreme Court in the case reported in Indian Oil

Corporation Ltd v. Kerala State Road Transport

Corporation [(2018) 12 SCC 518] finding that the

concession granted by the Government to its

beneficiaries cannot confer upon them a legally

enforceable right.

2.7. Initially, the price of diesel supplied to

consumer pumps was less than the price supplied to

retail outlets. By the end of January 2022, the price

difference between the two classes of outlets got

gradually reduced. By the first week of February 2022,

the price of diesel supplied to consumer pumps

skyrocketed to touch Rs.121.35 per litre from Rs.88/-.

Due to the unforeseen price hike, as of 17.3.2022,

the petitioner is paying Rs.21/- per litre more than the

retail consumers for diesel.

2.8. The private bus operators, who are competitors

of the petitioner, are operating on the same fare tariff

fixed by the Government but are getting diesel at a

lesser price. The supply of diesel to the petitioner alone

W.A Nos 503, 504 and 505 of 2022

at a higher price is violative of Article 14 of the

Constitution of India. The OMCs have no reason to

supply diesel at a higher price to the petitioner. The

petitioner is facing a severe financial crunch and has a

liability of Rs.10,000 crore.

2.9. After the dismantling of the APM, the OMCs

are enjoying unbridled power to fix the prices of

petroleum products. The Petroleum and Natural Gas

Regulatory Board Act, 2006 has provided for the

establishment of the Petroleum and Natural Gas

Regulatory Board, to monitor the price fixation of

petroleum products and protect the interest of the

consumers. Even though the Board has advised

notifying petroleum, petroleum products and natural

gas, the first respondent has not taken any action.

Hence, the first respondent is to be directed to notify

that petroleum, petroleum products and natural gas fall

under Section 11 (f) read with Section 2 (zc) of the

above Act. Aggrieved by the action of the OMCs in

increasing the price of diesel being supplied to the

petitioner, the petitioner has sought the following

reliefs:

W.A Nos 503, 504 and 505 of 2022

(i) issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents 1 to 4 to sell diesel to the petitioner at the available market rate in the retail outlets in the state;

(ii) issue a writ of mandamus or any other appropriate writ, order or direction directing declaring that the action of the respondents 2 to 4 to sell diesel to the petitioner at a higher rate than the retail market rates is inherently discriminatory, arbitrary unreasonable and violative of Article 14 of the Constitution of India;

(iii) issue a writ of mandamus or any other appropriate writ, order or direction directing the first respondent to notify petroleum, petroleum products and natural gas under Section 2 (zc) of the PNGRB Act, 2006 enabling the fifth respondent to function under Section 11 (f) of the Act.

2.10. The petitioner has also sought the following

interim relief:

"For the reasons stated in the writ petition and accompanying affidavit, it is humbly submitted that this Hon'ble Court may be pleased to direct the respondents 2 to 4 to levy the price of diesel at par with the existing market rate available market for the retail outlets, pending disposal of the writ petition."

3. The second respondent has filed a counter

affidavit objecting to the maintainability of the writ

petition. It is, inter alia, contended that there is no

public law element or violation of rights of any person

involved in the writ petition. This Court may not invoke

its extraordinary jurisdiction under Article 226 of the

Constitution of India. Exhibit P1 agreement is

contractual. It is a settled law that this Court shall not

W.A Nos 503, 504 and 505 of 2022

exercise its jurisdiction under Article 226 of the

Constitution of India for resolving contractual disputes.

Clause 14 of Exhibit P1 expressly provides that in case

of any dispute arising between the parties, relating to

the terms and conditions outlined in the agreement, the

same shall be resolved by mutual negotiation, failing

which the dispute shall be adjudicated through

arbitration. The pricing of products, which is the subject

matter of the writ petition, squarely falls within Clause

14 of Exhibit P1. The writ petition is silent on the

alternative remedy provided in the agreement. The

price fixation of petroleum products is a policy

consideration and is not the forte of the Court. Hence,

the scope of judicial review is limited. In non-statutory

price fixation matters, as in the present case, the scope

of judicial scrutiny is minimal. This Court may not

judicially review the price fixation made by the

respondent. The petitioner's attempt is to persuade this

Court to enter the intricacies of inter-party commercial

matters and the price fixation mechanisms. In a

situation of contractual price fixation, a mere difference

in price may not justify the prayer to judicially review

W.A Nos 503, 504 and 505 of 2022

the price fixation mechanism and arrive at a different

price to be fixed by this Court under Article 226 of the

Constitution of India. Moreover, the petitioner has failed

to produce any material to show any demand made to

the respondents, to issue a writ of mandamus. Hence

the writ petition may be dismissed.

4. The learned Single Judge admitted the writ

petition and passed the impugned interim order on a

finding that the price levied is exorbitant and is an

unconscionable term of bargain. The operative portion

of the order reads as follows:

"In the facts and circumstances of the case, there will be an interim order directing the respondents 2 to 4 to levy the price for HSD from the petitioner at par with the existing market rate available for the retail outlets. This interim order is provisional and will be subject to the outcome of the writ petition".

5. It is challenging the above finding and direction

that the respondents 2 to 4 have independently

preferred the three writ appeals.

6. Heard; Sri. Parag P. Tripathi, the learned Senior

Counsel appearing for appellants/respondents 2 to 4,

assisted by Sri.Paulose C.Abraham and Sri. Dushyant

Dave, the learned Senior Counsel appearing for the first

W.A Nos 503, 504 and 505 of 2022

respondent/writ petitioner, assisted by Sri.Deepu

Thankan.

7. Sri. Parag P.Tripathi argued that the learned

Single Judge has erred in passing the impugned order,

which is against the well-settled principles of law laid

down by the Hon'ble Supreme Court. He contended that

the learned Single Judge ought to have adverted to the

objection raised by the 2nd respondent in the counter

affidavit regarding the maintainability of the writ

petition, in view of Clause 14 of Exhibit P1. The

agreement mandates the parties to resort to the 'ADR'

mechanism. Unfortunately, the same was overlooked by

the learned Single Judge without assigning any reason.

He placed reliance on the decisions of the Hon'ble

Supreme Court in Gail (India) Ltd v. Gujarat State

Petroleum Corporation Ltd [(2014) 1 SCC 329] and

Kerala State Electricity Board and Anr v. Kurien

E.Kalathil [ (2000) 6 SCC 293] to support his

submission. He contended that the learned Single

Judge has failed to consider the implication of the inter-

party judgment in Indian Oil Corporation Ltd v.

KSRTC (supra), on substantially the same issue, which

W.A Nos 503, 504 and 505 of 2022

operates as res-judicata against the petitioner. He

further contended that, as the petitioner has entered

independent contracts with the respondents 2 to 4 for

the bulk purchase of petroleum products, the petitioner

cannot compare itself to a retail customer. Only equals

have to be treated equally. Therefore, there is no

violation of Article 14 of the Constitution of India, as

alleged in the writ petition. He relied on the decisions of

the Hon'ble Supreme Court in K.T Moopil Nair v.

State of Kerala [AIR 1961 SC 552], Indira Sawhney v.

Union of India [ (1992) Supp (3) SCC 217] to fortify his

contention. He also submitted that the petitioner is

being offered interest-free credit facilities for the first

15 days of supply, and petroleum products are being

supplied at the doorsteps of the petitioner's consumer

pumps with all facilities and technical services.

Approximately Rs.140/- crore is outstanding from the

petitioner to the respondents 2 to 4 towards arrears of

petroleum charges. Without considering the above

factual and legal aspects and the principles of balance

of convenience, the learned Single Judge has passed the

impugned order. Now, since the petitioner is not taking

W.A Nos 503, 504 and 505 of 2022

supplies from the respondents 2 to 4, no hardship is

being caused to them. Hence the writ appeals may be

allowed.

8. Sri. Dushyant Dave countered the above

submissions and argued that writ appeals are devoid of

merit. He contended that the learned Single Judge has

passed the interim order in exercise of his discretionary

powers under Article 226 of the Constitution of India,

particularly on a consideration of the peculiar facts and

circumstances of the case. He drew the attention of this

Court to paragraphs 9 and 10 of the judgment in Indian

Oil Corporation Ltd v. KSRTC (supra) and argued

that, at that point in time, the Government of India had

given specific reasons for taking a policy decision in

deregulating the prices of diesel, that too in a phased

manner. Whereas now the respondents 2 to 4 are not

giving any reason for fortnightly increasing the price of

diesel being supplied to bulk purchasers. According to

him, as per Clause 5 of Exhibit P1, the respondents 2 to

4 are contractually bound to supply petroleum products

to the petitioner at the most competitive price available

in the market. Instead, the respondents 2 to 4 are

W.A Nos 503, 504 and 505 of 2022

indiscriminately increasing the price day by day, which

has now skyrocketed to touch the price of Rs.121.35/-

per litre, i.e., Rs.21/- above the current retail price. If

the respondents 2 to 4 are given such leeway, the

petitioner, who is reeling in debt, would have to stop

their operations completely. He contended that as the

petitioner requires approximately 300-400 kilolitres

of diesel per day, with the arbitrary escalation of the

price of diesel, the petitioner is put to severe hardship

and financial loss. He relied on the decision of the

Hon'ble Supreme Court in Wander Ltd and Ors v.

Antox India Private Ltd [(1990) Supp SCC 727] to

canvass the position that the Appellate Court should not

interfere with the discretionary orders passed by the

Single Judge. He also placed emphasis on the decision

in Unitech Ltd v. Telangana State Industrial

Infrastructure Corporation (TSIIC) [2021 SCC

Online SC 99] to drive home the point that merely

because the parties had agreed to resort to arbitration,

it does not oust the jurisdiction of this Court, to exercise

its discretion as enshrined under Article 226 of the

Constitution of India. He further submitted that

W.A Nos 503, 504 and 505 of 2022

although the respondents 2 to 4 were directed to file a

statement explaining the pricing mechanism, the same

was not done. Hence the learned Single Judge has

exercised his discretion and passed the interim order.

The appellants have not made out a case warranting

interference by this Court to exercise its powers under

Section 5 of the Kerala High Court Act. Hence the writ

appeals may be dismissed.

9. In the light of the rival contentions, the points

that arise for consideration in these appeals are:

(i) whether the learned Single Judge has erred in proceeding with the writ petition without considering the objection raised by the 2 nd respondent and not stating any reason in not relegating the petitioner to the 'ADR' mechanism provided in the contract?

and

(ii) whether the direction in the impugned order that the respondents 2 to 4 have to supply diesel to the petitioner at par with the current market price available to retail outlets is sustainable in law?

10. The petitioner and the OMCs have entered into

separate agreements for the supply of diesel, lubricants,

greases, and other petroleum products at the

petitioner's various depots/consumer pumps. It is

W.A Nos 503, 504 and 505 of 2022

admitted that Exhibit P1 was subsequently renewed

twice, i.e., on 25.6.2019 and 6.3.2020, and the contract

is valid till 14.3.2023. Similarly, Exhibit P2 agreement

entered between the petitioner and the 3 rd respondent is

valid till 31.05.2022.

11. Clause 14 of Exhibits P1 and P2 reads thus:

"14. ARBITRATION In the event of any dispute arising between the two parties relating to the various terms and conditions set forth in the contract, the two parties undertake to resolve the difference by mutual negotiation. If such dispute or difference could not be resolved within one month from the date having arisen, the same shall be referred to a Sole Arbitrator to be appointed by the Managing Director of Buyer and by Director (Marketing) of Seller by mutual consent.

If however, the parties failed to agree upon a sole arbitrator with mutual consent, as aforesaid the Seller and Buyer will each nominate an arbitrator of their choice, and the two arbitrators so nominated shall choose a third arbitrator. The award published by arbitrator/s so appointed shall be final and conclusive and binding on both the parties to the Agreement. The award published by arbitrator/s should contain the reasons.

The provisions of the Indian Arbitration & Conciliation Act of 1996 or any statutory modification or re-enactment thereof and the rules made there under for the time being in force shall apply to the arbitration proceedings under this clause. The venue of arbitrator/s should be Ernakulam".

12. It is alleging arbitrariness, unfairness, and

irrationality on the part of the OMCs in increasing the

W.A Nos 503, 504 and 505 of 2022

price of diesel sold to the petitioner above the retail

price that the petitioner has approached this Court,

inter alia, to direct the OMCs to sell diesel to the

petitioner at the current rate being sold to the retail

customers.

13. The second respondent has in its counter

affidavit objected to the maintainability of the writ

petition in view of the inbuilt 'ADR' mechanism agreed

in Exhibit P1.

14. The Hon'ble Supreme Court in Whirlpool

Corporation v. Registrar of Trade Marks [(1998) 8

SCC 1] has expressed as follows:

"14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose".

15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition.

But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural

W.A Nos 503, 504 and 505 of 2022

justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field."

15. The Hon'ble Supreme Court has reiterated the

above legal position in a host of subsequent judicial

pronouncements, namely Harbansal Sahinia and

Another v. Indian Oil Corporation Ltd. and others

[(2003) 2 SCC 107, Rajasthan State Electricity Board

v. Union of India and other [(2008) 5 SCC 632,

Pimpri Chinchwad Municipal Corpn. V Gayatri

Construction Co. [(2008) 8 SCC 172, Balkrishna

Ram v. Union of India [(2020) 2 SCC 442, Unitech

Ltd v. Telangana State Industrial Infrastructure

Corporation (TSIIC) [2021 SCC Online SC 99].

16. Recently, the Hon'ble Supreme Court in Radha

Krishnan Industries v. State of Himachal Pradesh

and others [(2021) 6 SCC 771] has carved out the

exceptions to the "rule of alternative remedy" to invoke

the jurisdiction of the High Court under Article 226 of

the Constitution of India, which are enumerated

hereunder:

W.A Nos 503, 504 and 505 of 2022

"27. The principles of law which emerge are that:

27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well.

27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person.

27.3. Exceptions to the rule of alternate remedy arise where : (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged.

27.4. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law.

27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.

27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.

28. These principles have been consistently upheld by this Court in Chand Ratan v. Durga Prasad [(2003) 5 SCC 399] Babubhai Muljibhai Patel v. Nandlal Khodidas Barot [(1974) 2 SCC 706] and Rajasthan SEB v. Union of India [(2008) 5 SCC 632] among other decisions."

W.A Nos 503, 504 and 505 of 2022

17. The above-cited precedents demonstrate that

the discretionary power of this Court to entertain a writ

petition filed under Article 226 of the Constitution of

India, instead of relegating the parties to an alternative

remedy, is separated by a narrow line. Currently, in the

post amendment era of the Arbitration and Conciliation

Act, 1996 (post Act 3 of 2016 and Act 33 of 2019) and

the emergence of the doctrine of kompetenz-kompetenz,

and the exposition of the law in Vidya Drolia and

others v. Durga Trading Corporation [(2021) 2 SCC

1] the line has got narrower.

18. In addition to the above, the Constitutional

Bench of the Hon'ble Supreme Court in S.B.P and

Company vs Patel Engineering Ltd [(2005) 8 SCC

681 has held thus:

"16. We may at this stage notice the complementary nature of Sections 8 and 11. Where there is an arbitration agreement between the parties and one of the parties, ignoring it, files an action before a judicial authority and the other party raises the objection that there is an arbitration clause, the judicial authority has to consider that objection and if the objection is found sustainable to refer the parties to arbitration. The expression used in this section is "shall" and this Court in P. Anand Gajapathi Raju v. P.V.G. Raju [(2000) 4 SCC 539] and in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums [(2003) 6 SCC 503] has held that the judicial authority is bound to refer the matter to arbitration once the existence of a valid arbitration clause is established.

W.A Nos 503, 504 and 505 of 2022

Thus, the judicial authority is entitled to, has to and is bound to decide the jurisdictional issue raised before it, before making or declining to make a reference. Section 11 only covers another situation. Where one of the parties has refused to act in terms of the arbitration agreement, the other party moves the Chief Justice under Section 11 of the Act to have an arbitrator appointed and the first party objects, it would be incongruous to hold that the Chief Justice cannot decide the question of his own jurisdiction to appoint an arbitrator when in a parallel situation, the judicial authority can do so. Obviously, the highest judicial authority has to decide that question and his competence to decide cannot be questioned. If it is held that the Chief Justice has no right or duty to decide the question or cannot decide the question, it will lead to an anomalous situation in that a judicial authority under Section 8 can decide, but not a Chief Justice under Section 11, though the nature of the objection is the same and the consequence of accepting the objection in one case and rejecting it in the other, is also the same, namely, sending the parties to arbitration. The interpretation of Section 11 that we have adopted would not give room for such an anomaly."

(emphasis given)

19. Thus, the law has crystalised that when a party

invokes the plenary power of the High Court to issue a

prerogative writ under Article 226 of the Constitution of

India, notwithstanding the arbitration clause contained

in an inter-party contract, and the opposite party objects

to the maintainability of the writ petition, the High

Court is bound to consider the objection and be satisfied

that it is a fit case to exercise its discretion instead of

relegating the parties to the alternative remedy.

20. In the case at hand, the learned Single Judge

has erred in not adverting to the objection raised by the

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2nd respondent and in not stating the reason for not

relegating the parties to the alternative remedy, dehors

the arbitration clause. Hence, we answer point No. (i) in

favour of the appellants.

21. Even though we have held that the impugned

order is erroneous in the light of our findings on point

No. (i), we proceed to decide on point No. (ii) due to the

questions of law that were argued.

22. The dispute in the writ petition is regarding the

prohibitive price of diesel sold to the bulk

consumers/consumer pumps compared to the price of

retail customers/retail outlets.

23. Exhibit P3 proves that till 31.01.2022, the price

of diesel sold to bulk consumers was lower than the

price of retail customers. As per Exhibit P-11, the price

of diesel sold to bulk consumers was fortnightly

increased from Rs.82.75 per litre as of 31.12.2021 to

Rs.121.35 per litre as of 30.03.2022, i.e., an increase by

Rs.22.03 per litre.

24. Clause 5 of Exhibit P1 deals with fixation of

price, which reads as follows:

"5. Price

W.A Nos 503, 504 and 505 of 2022

The price of the petroleum Products shall be ex-Seller supply points as determined by the Seller's policy and shall be charged as applicable on the date of supply.

The Seller shall ensure that Products supply is executed at the most competitive price applicable in the market.

The Buyer will bear all the applicable taxes/duties or any other charges as imposed by the Govt./Local Bodies on supply of Products from time to time."

25. Clause 5 gives absolute freedom to the OMCs to

fix the price of petroleum products as per their policy

and as on the date of supply.

26. As can be gathered from the decision of the

Hon'ble Supreme Court in Indian Oil Corporation

Ltd. v. Kerala SRTC [(2018) 12 SCC 518], that is the

earlier round of litigation between the parties, the

petitioner had sought the following reliefs which are

extracted in paragraph 2 of the said decision, which

reads thus:

"2. Writ Petition (Civil) No. 7517 of 2013 was filed in the High Court of Kerala at Ernakulam. The prayer made in the writ petition is as follows:

(i) Issue an appropriate writ, order or direction declaring that the diesel price hike introduced as per Ext. P-1 to Kerala State Road Transport Corporation, compelling the petitioner to pay enhanced rate than while purchasing diesel from private or other diesel bunk, is wholly arbitrary, illegal, unjust, unconstitutional and violative of Articles 12 and 14 of the Constitution of India.

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(ii) Issue any appropriate order commanding the first respondent to withdraw the dual pricing policy of diesel introduced as per Ext. P-1 or in the alternative accord exemption to the petitioner, from the category of bulk consumer, and treat the petitioner as a retail customer for the purpose of diesel purchasing.

(iii) Issue a writ of mandamus or any other appropriate writ, order or direction commanding the respondents to refund the excess diesel charge collection in pursuance of clause (b) of Ext. P-1, with interest at the treasury rate, with effect from 17-1-2013 to the petitioner, forthwith."

27. On a juxtaposition of the reliefs sought in the

earlier round of litigation and the one at hand reveals

that reliefs are identical.

28. A learned Single Judge of this Court had by

order dated 21.03.2013 in W.P.(C) No.7517/2013

restrained the respondents 2 and 3 from realising a

higher price for diesel sold to the petitioner than the

retail customers.

29. The Hon'ble Supreme Court, by order dated

16.09.2013 in S.L.P (Civil) No.19996/2013 filed by the

respondents 2 and 3, stayed the operation of the

impugned order after observing as under:

"In our opinion, having regard to the over-all facts and circumstances of the case, particularly that 83% of diesel is imported and the current value of Rupee against Dollar has substantially gone down, we are satisfied that not only the Oil Company has balance of convenience in its favour but we are also of the view that irretrievable injustice shall be caused to the Oil Company if the interim injunction granted by the High Court is allowed to operate."

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30. Later, the Honourable Supreme Court, by its

common order dated 07.11.2017 in Indian Oil

Corporation Ltd. v. Kerala SRTC (supra), allowed the

Civil Appeal filed by the respondents 2 and 3 and

dismissed the writ petition. It is apposite to extract

paragraphs 15 and 19 of the said judgment.

"15. Firstly, coming to the issue of the policy framed by the Government of India; the grant of subsidy is a matter of privilege, to be extended by the Government. It cannot be claimed as of right. No writ lies for extending or continuing the benefit of privilege in the form of concession. Subsidy is the matter of fiscal policy. Such privilege can be withdrawn at any time is the settled proposition of law. Thus, it was open to the Government of India to take a decision to withdraw the subsidy enjoyed by the bulk consumers; and, it was a decision based upon the aforestated rationale to direct funds for social welfare scheme for common man and that by grant of subsidy, OMCs had suffered heavy losses, and had borrowed the excessive money to the extent indicated in the aforesaid paragraphs. Thus, it was decided by the Government of India, not to extend subsidy to bulk consumers; same could not be said to be an arbitrary decision, discriminatory or in violation of the principles contained in Article 14 of the Constitution of India.

xxx xxx xxx xxx

19. Thus, we find no merit in the submissions raised that subsidy should have been continued as an exception for the State Road Transport Corporations, though they may have been rendering public service. However, for the purpose of such public services corporation cannot claim as of right that the Government of India or the State Government should continue or grant the subsidy. It cannot be claimed as a matter of right; no such right exists to claim the subsidy. The Court cannot interfere in such matters."

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31. The common order in Indian Oil Corporation

Ltd. v. Kerala SRTC (supra) indicates that the

Government of India had dismantled the Administered

Pricing Mechanism and deregulated the price of diesel

in a phased manner. Afterwards, the OMCs were given

the complete autonomy to fix the price as per their

respective policies.

32. Notwithstanding the above common order, the

petitioner continued to purchase petroleum products

from the OMCs as a bulk purchaser at the prices fixed

by the OMCs. The petitioner has on its free will and

volition, renewed Exhibit P-1 with the 2 nd respondent,

not once but twice, on the same terms and conditions.

Thus, it is beyond any semblance of doubt that the

petitioner is fully conscious that the fixation of the price

for petroleum products is exclusively within the domain

of the OMCs, and the petitioner has no say in the

matter. Moreover, after the passing of the common

order in 2017, the petitioner has not complained about

the price fixation, instead has enjoyed the benefits

under the contract, especially the credit facility. It's only

now that the petitioner cries foul when the price of

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diesel sold to bulk consumers has risen above the price

of retail customers. The petitioner is estopped from

approbating and reprobating on the contract terms.

33. We accept the submission of Sri. Parag

P.Tripathi that the petitioner cannot be treated at par

with retail customers because the latter would have to

go to a retail outlet and pay for the product then and

there. On the contrary, petroleum products are supplied

to the petitioner at their doorsteps, with credit facilities

and other benefits as envisaged in the contract.

Therefore, the petitioner ― a bulk purchaser, falls

within a separate class and cannot be treated at par

with retail customers. Consequentially, following the

principles laid down in K.T Moopil Nair v. State of

Kerala and Indira Sawhney v. Union of India (supra)

and a whole line of decisions, we hold there is no

infringement of the petitioner's fundamental right as

alleged in the writ petition.

34. The Hon'ble Supreme Court in Union of India

and another v. Cynamide India Ltd. and others

[(1987) 2 SCC 720 has held that 'price fixation is neither

the function nor the forte of the court.'

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35. The above view has been reiterated in Union of

India and others v. Cipla Limited and another

[(2017) 5 SCC 262]. Paragraph 96 of the judgment is

relevant for the determination of the case at hand,

which reads as follows:

"96. Fixing the price of any commodity is not only difficult but also tricky. There is material to be considered, a bundle of factors to be considered and appropriate weight is to be given to the material and the factors. This is not easy to decide and there will always be some criticism with regard to either the material utilised or the factors considered or the weight attached to the materials and factors. In matters pertaining to drug formulations, it is not only an issue of demand and supply but also the ability of a common person to afford the formulation. At the same time, the manufacturer must also make some profit and be in a position to invest in research and development. There simply cannot be any mathematical precision in fixing the price of a commodity. More than enough elbow room or a play in the joints is required to be given in such matters -- and even then the price fixing authority may commit an error. Once this is appreciated, it will be realised that the task before the Central Government in prescribing the norms was not easy".

36. In the light of the categoric declaration of law

in the afore-cited decisions and the inter-party common

order in Indian Oil Corporation Ltd. v. Kerala SRTC

(supra), we have no doubt in our mind that it is not the

function or forte of this Court to decide the optimal or

competitive price at which diesel should be sold to the

petitioner.

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37. This Court finds that the petitioner has not

represented their alleged grievance to the OMCs;

instead has rushed to this Court. Therefore, no inaction

can be alleged against the respondents 2 to 4,