KARNATAKA STATE PETROLEUM DEALERS WELFARE ASSOCIATION REPRESENTED BY ITS PRESIDENT SRI R. NARAYANASWAMY Vs. STATE OF KARNATAKA BY ITS SECRETARY FOOD AND CIVIL SUPPLIES AND CONSUMER AFFAIRS AND ORS.

JUDGEMENT

(1.) THE petitioner, Karnataka State Petroleum Dealers Welfare Association, has invoked Article 226 and 227 of the Constitution with the grievance that respondent Nos. 2, 3 and 4, petroleum companies were, by their advertisements in the year 2011 and 2012, indiscriminately granting dealerships of petroleum products supplied by them. Even as the petition is styled as Public Interest Litigation, it is prima facie intended to benefit the Members of the petitioner association. It is averred in the petition that petrol outlets established in small towns and rural areas in the State of Karnataka are battling for their survival on account of insufficient turnover/sales. Inspite of that, respondent Nos. 2 to 4 Companies have ventured to open up nearly 3000 to 4000 new petroleum outlets all over the State, forcing the existing outlets to wind up. These averments are not substantiated by any evidence or figures, and therefore remain too vague. The petitioner has mainly relied on a judgment of the Division Bench of Kerala High Court in WA No. 741/2011 and it is further averred that dealers in Himachal Pradesh, Andhra Pradesh, Delhi and Jammu and Kashmir have secured orders banning the Oil Manufacturing Companies (OMCs) from issuing the Letter of Intent without permission of the Court. It was submitted for the petitioner that respondent Nos. 2 to 4 companies are already incurring huge losses and it was clear that spending so -much money on setting up of around 3000 new petrol pumps all over the State would cause more loss, which may ultimately be passed on to the public, either directly or through the Central Government which subsidizes the loss. Under the circumstances, the petitioner is stated to have made a detailed representation which is not duly considered, is the submission of learned Senior Counsel for the petitioner. Learned senior counsel Mr. Anant Mandagi, further vehemently argued that public funds were being wasted by the erroneous policy and investments by the oil companies in opening new outlets for petroleum products, which fact has indirectly been now recognized and necessary directions are now issued by the Ministry of Petroleum and Natural Gas of the Government of India vide its letters dated 03.12.2012 and 26.12.2012, whereby it is decided that henceforth the OMCs would not invest in opening of new retail outlets and the investments are required to be made by prospective dealers only. It was on that basis submitted that dealerships which may be awarded pursuant to the earlier advertisements issued in the year 2011 may still cause huge investment and unfair competition on account of required number of outlets having already been established and they having been running into losses. He also submitted that the clarifications and directions as aforesaid issued by two letters of the Central Government were an attempt at circumventing the interim order of this Court and at creating a defence before this Court after interim relief in the form of direction to maintain status -quo was granted by this Court on 26.02.2013. Learned senior counsel however, fairly conceded that the decision of Division Bench of Kerala High Court on which reliance was mainly placed by the petitioner, was not only stayed, but has now been reversed by the Apex Court vide its order dated 02.04.2013 in SLP (Civil) Nos. 1728 -1736/2012. He also fairly conceded in reply to specific queries in that regard that no direct violation of any legal provision could be cited in support of the contentions contained in the petition.

(2.) ON the other hand, respondent Nos. 2 and 3 have filed detailed statements of objections and applications for vacating the interim relief to point out that the dealerships are not being granted in the way and on the scale apprehended by the petitioner. It is denied that nearly 3000 to 4000 outlets were slated to be established. Even after the advertisement issued in the year 2011, respondent No. 2 had identified 799 locations, out of which, responses were received in respect of 269 locations and out of that only 158 locations were short -listed. After deregulation of the petroleum sector in the year 2002, public sector oil companies are put to challenge in the petroleum market by the private sector. Even as the administered price mechanism was dismantled, every oil company has to make its own survey with regard to potentiality of the area where new retail outlet is required, keeping in view the existing retail outlet of any oil company. In order to cater to the demands of the consumers in the rural areas as well as in towns and cities, the OMCs have to expand the network of dealership and encourage healthy competition which is not detrimental to either public interest or the members of the petitioner -Association.

(3.) RESPONDENT No. 4 Company has categorically stated in its statement of objections that the petitioner claims to be the Registered Association of the existing dealers of the respondent Companies and as its members or as the petitioner they cannot be allowed to adjudicate their grievances in the form of a public interest litigation. In fact, the real motive behind the petition is to protect private monopoly interest of the existing dealers. The petitioner has not)established any statutory violation and the petition is mainly based on apprehended loss of business. It is further submitted that private -sector companies such as Reliance, ESSAR, SHELL etc., have come forward and started exploration as well as marketing of petroleum products and have set up their own retail outlets in various parts of the country. The Public Sector Companies viz., respondent Nos. 2 to 4 have also been given commercial freedom by the Ministry - of Petroleum and Natural Gas to set up retail outlets on their own, so as to face competition from private companies. For a developing country like India, rural areas are vast and development of rural areas are pivotal in the overall economic development of the country. Setting up of retail outlets in rural and interior markets not only benefit rural public, especially farmers, but also contribute to the development of the rural and interior area.