Shree Nilakantha Filling Station and Another vs Bharat Petroleum Corporation Ltd. and Others

I.M. Quddusi, J.—The points raised and relief claimed in these four writ petitions being same, they were heard together and are disposed of by this common judgment.

The Petitioner in each of these four writ petitions has been allotted dealership of Petrol and High Speed Diesel in respect of retail outlet of different public sector oil companies. They have challenged in each of these writ petitions the advertisements by the Oil Companies for opening of new retail outlets at the places where they are having their retail outlets.

The Petitioner in W.P.(C) No. 8773 of 2005 is a partnership firm and has been granted the retail outlet dealership at Barang of Indian Oil Corporation since the year 1986 and since then it has been running the retail outlet at Barang in the name and style of M/s. Nilakantha Filling Station. It has called in question the advertisement (Annexure-3) of the Bharat Petroleum Corporation Limited published in the daily Sambad dated 10.6.2005 and the Samaj dated 11.6.2005 inviting applications from interested persons for grant of dealership of retail outlets in rural areas to make available petroleum products to the farmers. The Petitioner in W.P.(C) Nos. 10086 of 2005 and W.P.(C) No. 15391 of 2006 is one and the same. He is a Dealer of Indian Oil Corporation Ltd. and runs the retail outlet at Balipatna in the district of Khurda in the name and style of M/s. Budhanath Service Station. Being aggrieved by the advertisement dated 22.7.2005 issued by the Hindustan Petroleum Corporation Limited inviting applications from interested persons for appointment as dealers at different places including Balipatna and the advertisement dated 27.10.2006 issued by Bharat Petroleum Corporation Limited for the selfsame purpose, the Petitioner has filed W.P.(C) No. 10086 of 2005 and W.P.(C) No. 15391 of 2006 respectively for quashing of the said advertisements. The Petitioner in W.P.(C) No. 15364 of 2006 was granted dealership by the Bharat Petroleum Corporation Limited in respect of their retail outlet at Nirakarpur in the district of Khurda since 31.3.2006. Since then he has been operating the retail outlet at Nirakarpur in the name and style of M/s. Samantaray Filling Station. He has prayed for quashing the advertisement and the appointment of dealer in respect of proposed retail outlet of M/S. Hindustan Petroleum Corporation at Nirakarpur.

The grounds of challenge is that the retail outlet of the Petitioners in all the four writ petitions is situated in ''E'' Class Market and is in remote areas which are not covered by National/State Highway and as per the guidelines prescribed, there should be no retail outlet within a radius of 10 kms from the proposed location. Learned Counsel for the Petitioner has referred to the Ministry of Petroleum''s letter No. P19011/18/79-IOC dated 4.8.1980 as amended vide No. P-19011/1/82IOC dated 24.2.1982 in which it has been mentioned that in order to cater to the requirements of the agriculturists in the remote areas, i.e. areas which are not on National/ State Highways, for the purpose of setting up low cost outlets, the minimum volume for opening such outlet has been fixed at 25 kl per month and the minimum distance between two retail outlets was fixed at 10 kMs. Therefore, opening of outlet by another Oil Company near the place where the Petitioner in each of the writ petitions is having his retail outlet is in contravention of the policy. The same would destroy the viability of the Petitioner''s filling station and negate the expected income from the Petitioner''s filling station and would result in unhealthy competition.

Though no counter affidavit has been filed by the Union of India in these cases, the learned Assistant Solicitor General by produced a copy of the counter affidavit filed by the Union of India in W.P.(C) No. 6521 of 2004 (since disposed of) and submitted that the same may be adopted in all these cases. In the said counter affidavit it has been stated that after dismantling of Administered Pricing Mechanism (APM) in the petroleum sector with effect from 1.4.2002, the entire selection process of dealers/distributors for retail outlets (petrol pumps)/LPG distributorships (cooking gas agencies)/SKO-LDO dealerships (Kerosene depots) is done by the oil marketing companies themselves. The Government has neither any role in the same nor the government interferes with the selection process. After dismantling of the APM in the petroleum sector, the public sector oil companies enjoy commercial freedom in the matter of marketing/ distribution of petroleum products" through their respective networks of retail outlet dealerships, LPG distributorships and SKO-LDO dealerships. The oil companies choose their own locations for setting up such dealerships/distributorships, if found viable after feasibility study thereof by the oil companies themselves and have their own respective guidelines for selection of dealers/distributors for such agencies and manage and run their retail outlets as per their own guidelines.

Counter affidavit has been filed by the Oil Company-opposite party in each of the cases. Their stand is that the volume distance norms relied upon by the Petitioner in each of the writ petitions are no longer in force with the dismantling of the Administered Pricing Mechanism. After dismantling of the Administered Pricing Mechanism in the Petroleum Sector from 1.4.2002, the entire selection process of dealers/distributors for retail outlet is done by the Oil Marketing Companies themselves. The Government has neither any role in the same nor does the Government interfere with the selection process. The public Sector Oil Companies enjoy commercial freedom in the matter of marketing/distributing of petroleum products through their respective networks of retail outlet dealerships. They have relied upon Resolution No. P-23015/1/2001/Mkt. dated 8th March, 2002 of the Ministry of Petroleum and Natural Gas under which Government of India has laid down a new policy in supersession of the earlier policy laid down in 1997 in which the Union Government has done away with the volume distance restrictions for encouraging investments in the refining sector thereby giving them marketing rights for transportation fuels, i.e. M.S., H.S.D. and A.T.F. It has further been stated that the Ministry of Petroleum and Natural Gas by the aforesaid resolution after dismantling of Administered Pricing Mechanism and with a view to grant authorization to market transportation fuels, namely, MS,HSD and ATF have framed certain guidelines for granting authorization to market transportation fuels. In Clause 3 (XII) of the guidelines, it has been mentioned that the company seeking authorization to market transportation fuels will be required to make an application in the specified form accompanied by such fees, as may be specified, giving details of the scheme of marketing for which authorization is sought. There shall be no limit to the quantum and size of the scheme and the number and location of retail outlets in the scheme provided that no encroachments on the existing retail outlets will be allowed. Therefore, the only restriction is that there should be no encroachment under the scheme of the Oil Companies on the existing retail outlets. It appears that the Petitioner has misinterpreted the definition of ''Low service area'', which means an area not covered by National Highway/State Highway, and not having any retail outlet within 10 KMs or as may be notified by the Central Government from time to time. It does not mean that there is restriction to open a retail outlet within an area of 10 KMs. ''Low service area'' has been defined because of the reason of improvement of the area, meaning thereby that if there is any retail outlet within 10 KMs in an area not covered by National Highway/State Highway, it cannot come within the ''low service area''. Further there is restriction in Sub-clause (b) that the eligible company shall not operate with this authorization through a dealer with whom another marketing company has entered into an agreement for marketing of transportation fuel(s) or from the existing retail outlet of another company, meaning thereby that if any other marketing company had already entered into an agreement with a person for marketing of transportation fuels, the other eligible company would not make a contract with him for the same purpose either by making separate allotment of retail outlet or from the existing retail outlet of another marketing company. It does not mean there is restriction authorizing any other person as a dealer to open a retail outlet within 10 KMs of the existing outlet. Their further stand is that no dealer of any Oil Marketing Company can claim as a matter of right as a ''Dealer'' for any exclusive area/locality and the opening of a new outlet by another company would not infringe the right of the Petitioner in each of the writ petitions who is an existing retail outlet dealer. It is their further case that a rival businessman has no locus standi to challenge the opening of a similar unit by another businessman.

We have perused the letter of the Under Secretary to the Government of India, Ministry of Petroleum and Natural Gas dated 30th June, 2006 annexed as Annexure-A/1 in W.P.(C) No. 10086 of 2005 wherein it has been stated that the volume-distance norms dated 4.8.1980 and 24.2.1982 are not in force with effect from 1.4.2002 with the dismantling of Administered Pricing Mechanism. Petitioner''s contention is that no retail outlet can be opened within ten kilometer radius of a outlet in a ''E'' class market. But since the volume-distance norms are no more m force, there is no merit in the contention of the Petitioner.

It would not be out of place to mention here that in The Nagar Rice and Flour Mills and Others Vs. N. Teekappa Gowda and Bros. and Others, , the Director of Food and Civil Supplies directed shifting of the rice mill of the Appellant to the vicinity of the rice mill of the Respondent who challenged the same in the High Court. High Court quashed the same inter alia on the ground that the order of the Director was made in violation of the mandatory injunction of the Rice Milling Industry (Regulation) Act, 1958 and it prejudicially affected the business of the Respondents as rice-millers. The apex Court quashed the said decision holding that a rice mill owner has no locus standi to challenge under Articles 226, the setting up of a new rice mill by another even if such setting up be in contravention of Section 8(3)(c) of the Rice Milling Industry (Regulation) Act, 1958 because no right vested in such an applicant is infringed. In M/s. Nataraj Agencies v. the Secretary, Ministry of Petroleum and Natural Gas (W.A. No. 4057 of 2004 disposed of on 7.12.2004), Nataraj Agencies challenged the opening of another outlet within one kilometer radius of their outlet on the ground that it would affect their business interest adversely. The Madras High Court considering the facts and circumstances held as follows:

In the present case, the only grievance of the Appellant is that if the fourth Respondent is permitted to set up her retail outlet within one kilometer radius of the Appellant''s outlet, his business interest would be adversely affected. In our opinion, the Appellant has no locus standi at all to complain against the setting up of a rival retail outlet by the fourth Respondent, near his place of business, on the ground that would affect his business interest, in as much as the damage, if any, suffered thereby was damnum sine injuria damage without infringement of legal right. In our opinion, this will only result in promoting competition among the traders, which is good for the consumers. Merely because some of the customers may switch over to the rival retail outlet does not mean that public interest will suffer rather, in our opinion, it will benefit the consumers because, when there is competition, the businessmen are compelled to provide better quality products at reasonable price.

Therefore, it cannot be said that on opening of a retail outlet by another Oil Company in the area where the Petitioner in each of the writ petitions has his retail outlet, his right would be infringed. Therefore, the Petitioner in each of the writ petitions has no locus standi to file the writ petition.

For the reasons stated above, we find no merit in these writ petitions which are accordingly dismissed. The interim orders passed in the writ petitions stand discharged.

There would be no order as to costs.

Pradip Mohanty, J.

I agree.