State-owned oil marketing companies have moved to the Supreme Court challenging the Petroleum & Natural Gas Regulatory Board?s (PNGRB) powers to regulate prices for non-notified petroleum products?transportation fuels like motor spirit and high-speed diesel.
The prices of non-notified products are fixed by the Centre as per its public policy.
A Bench headed by Justice B Sudershan Reddy sought response from the Mukesh Ambani-led Reliance Industries, Essar Oil Ltd, ONGC, Shell India Marketing Pvt Ltd, Oil India Ltd and Petroleum & Natural Gas Regulatory Board on a petition filed by Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd challenging PNGRB?s powers.
However, the Bench said the board can continue hearing the complaint filed by Reliance and others but no final order should be passed.
The Appellate Tribunal for Electricity (ATE) had dismissed the appeals of the oil PSUs challenging PNGRB?s decision that assumed jurisdiction to decide the allegations pertaining to pricing of petroleum products motor spirit (MS) and high-speed diesel (HSD), though these were non-notified petroleum products within Section 2 (zc) of the Petroleum and Natural Gas Regulatory Board Act, 2006.
According to the oil companies, the board can exercise its powers under Section 11 (1) of the Act only in respect of notified petroleum, petroleum products and natural gas and cannot decide the issues of fair trade and fair competitive practices.
Challenging the ATE?s order, they said the tribunal erred in holding that Section 12 of the Act made it clear that the Board?s jurisdiction was not restricted to the notified petroleum or petroleum products alone but PNGRB can look into various issues connected to activities in the petroleum sector.
?The tribunal failed to appreciate that the reduced prices offered by the petitioner companies under the instructions of the government were not promotional rates, but were considered as affordable rates in greater public interest and were not done with the intention of unseating the competition,? the petition filed by oil firms stated.
The oil firms, which refine crude oil and market petroleum and petroleum products said that the Board can monitor prices and take corrective measures to prevent restrictive trade practice by entities only in respect of notified petroleum and petroleum products. No cause of action had arisen in favour of complainants (Reliance and others) as they (oil PSUs) were not fixing prices of MS and HSD and the same was being done by the central government, thus no relief could be sought against them with regard to fixing of prices of these products, the oil PSUs, which are under the complete administrative control of the ministry of petroleum and natural gas, said.
It said Reliance and others had obtained marketing rights for transportation fuel after the Centre had dismantled administered pricing mechanism (APM) from April 2002 and had allowed private sector participation in the sector.
However, as per the government?s policy matter, the prices for MS and HSD, being sold by the oil PSUs, continued to be fixed by the Centre. ?The result was that even when international prices of crude oil rose from around August 2004 onwards, the petitioners could not rationalise the prices in tune with the international prices and the market conditions, it was the Centre, as a matter of its policy for the country, which decided on the prices to be charged by the petitioners,? the petition filed by Pradeep K Bakshi stated.
According to it, the Centre primarily decided that the prices should be kept within certain limits keeping the country?s interest in mind, notwithstanding the rising international prices from time to time and the companies didn?t have the liberty to fix the prices for MS and HSD.