Assessing that the price levied by the petroleum companies for the High Speed Diesel (HSD) supplied to the Kerala State Road Transport Corporation as “highly exorbitant”, the Kerala High Court directed the petroleum companies to sell diesel to KSRTC at par with the existing market rate available for the retail outlets.
A single judge of the court, who considered the petition moved by the State road carrier, noted that the seller of the petroleum products was bound to ensure that the product supply was executed at the most competitive price applicable in the market.
If high price fixed for the diesel sold to KSRTC was in pursuance of any agreement, it was an “extremely unconscionable term of bargain”, noted Justice N. Nagaresh.
The Corporation had approached the court seeking directions to the petroleum companies to levy the price for HSD at par with existing market rate available for retail outlets.
The KSRTC said it was a bulk purchaser of HSD and required 300 to 400 kilo litres of HSD a day to operate its 5,481 buses. Initially, consumer pump rate for which the HSD was supplied to the KSRTC was lesser than the retail outlet price. However, since February, the petroleum companies were levying a much higher rate, the KSRTC stated before the court.
The KSRTC said it had to pay ₹121.35 a litre against the ₹91.72 levied from other customers on the day of filing the petition in the High Court.
The petroleum companies contended that the writ petition was not maintainable, as the issue involved was within the realm of contract and there was an arbitration clause in the agreement. Subsidy and concession were matters of policy and the court shall not interfere in it, they argued.
The court noted that the interim order was a provisional one, which will be subject to the outcome of the writ petition.
