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2011 DIGILAW 2038 (RAJ)

Rajasthan Petroleum Dealers Association through its Secretary, Jaipur v. Union of India

2011-09-20

VINEET KOTHARI

body2011
Hon'ble Dr. KOTHARI, J.—The petitioner – Rajasthan Petroleum Dealers Association has filed this writ petition under Article 226 of the Constitution of India for quashing the impugned advertisements dated 4/8/2010 and 29/8/2010 issued by the respondent Oil Marketing Companies; HPCL, BPCL & IOC (`OMC' for short) by which these OMCs sought to invite applications for allotment of retail outlets to the selected applicants for allotment of retail outlets to them. 2. The case set up by the petitioner Association in the writ petition and as argued by learned counsel with all vehemence at his command is that the respondent OMCs have not only breached the conditions and guidelines issued by the Petroleum Ministry of Government of India while issuing these advertisements for allotment of petrol pumps but also by allotting so many petrol pumps, it will cause not only loss to the respondent OMCs but also to the intending dealers as their projected sale targets have been fixed at much lower levels and such dealers would not be able to achieve even the break even point much less profit, if these outlets are allowed to be allotted and constructed with the huge investments. 3. Learned counsel for the petitioner, Mr. Sajjan Singh also canvassed before this Court that allotment of so many petrol pumps will not only congest the retail outlet market but will cause severe competition to the present dealers, who are members of the petitioner association and with the increase of competition, the income earned by way of commission by the members of the petitioner Association is bound likely to go down. 4. Though, the last contention was feebly raised and kept in a veiled cover, this appears to be the most important reason for the petitioner Association to have invoked the extra ordinary jurisdiction of this Court for quashing these advertisements, namely; to avoid competition. 5. Upon issuance of notice by this Court, interim relief was granted by the coordinate bench of this Court on 12/11/2010 that the opening of petrol pumps under the impugned advertisements shall remain subject to final decision of writ petition and factum of pendency of this writ petition shall be mentioned in such allotment letters, if any. 6. 5. Upon issuance of notice by this Court, interim relief was granted by the coordinate bench of this Court on 12/11/2010 that the opening of petrol pumps under the impugned advertisements shall remain subject to final decision of writ petition and factum of pendency of this writ petition shall be mentioned in such allotment letters, if any. 6. Respondent OMCs have filed their respective replies and even Union of India has filed a detailed reply to the writ petition and all respondents have jointly prayed for dismissal of the present writ petition with costs. 7. Mr. Vinit Kumar Mathur for Union of India, Mr. Arun Bhansali for HPCL, Mr. O.P. Mehta, for IOC & Mr. Vijay Bishnoi for BPCL vehemently submitted that the writ petition has been filed for an oblique purpose and ill motive and as a matter of fact existing dealers, the members of petitioner Association, are even estopped by virtue of agreement of dealership entered into by them with the respective OMCs and once such clause 7 with the HPCL (Page 94 of the paper book) was read before this Court in which it is stipulated that, " Nothing contained in this agreement shall be construed to prohibit the Corporation from making direct and/or indirect sales to any person whomsoever or from appointing other dealers for the purpose of direct or indirect sales." 8. Learned counsels for the respondents also submitted that there is no violation of guidelines of the Ministry of Petroleum & Natural Gas and in this regard, attention of this Court was drawn towards the recent guidelines dated 6/4/2011 vide Annex. R/2/8, in which the said Ministry has stipulated that while conducting feasibility studies for opening of new retail outlets/preparation of marketing plan in future the OMCs will henceforth comply with the following conditions, namely; that OMCs should consider appropriate returns for financial viability of a new retail outlet which from the gross margin available to OMCs on MS/HSD is Rs. 354 per kl. & (ii) that OMCs should give greater emphasis on setting up of `B' site retail outlets in preference to `A' site retail outlets as the cost would be much lower while returns would be similar. The OMCs will have to work out a compensation mechanism for `B' site retail outlets where the dealer is compensated adequately. 354 per kl. & (ii) that OMCs should give greater emphasis on setting up of `B' site retail outlets in preference to `A' site retail outlets as the cost would be much lower while returns would be similar. The OMCs will have to work out a compensation mechanism for `B' site retail outlets where the dealer is compensated adequately. Clause 4 of the said guidelines stipulates that no restriction may apply for rural retail outlets which are anyway low cost retail outlets and are giving adequate returns. Thus, learned counsels for the respondents emphasized that with the complete freedom to the OMCs for choosing the location of retail outlets, the petitioner Association has hardly any role to play in the same and has no locus standi to challenge the impugned advertisements. 9. The Union of India in its return filed to the present writ petition has supported the OMCs that they have not breached any guidelines issued by the Ministry of Petroleum. On the other hand, in para no. 15 of the reply, they have clearly submitted that OMCs are free to establish new retail outlets at the locations of their choices, if found viable, within any distance of an existing retail outlet, however subject to no objection from the statutory/State/ Municipal/local authorities concerned in this regard, wherein, this Ministry has no role in selection/establishment of dealership by OMCs. 10. It was also brought to the notice of the Court by the side of the petitioner that while some other High Courts in similar writ petitions granted status quo orders, while some other High Courts have dismissed similar writ petitions. Learned counsel for the petitioner produced before this Court an uncertified photo copy of the communication containing reference of OWP No. 575/2011 and CMP No. 945/2011 (Kashmir Valley Tank Owners vs. Union of India & Ors.) in which a single bench of Jammu and Kashmir High Court at Srinagar appears to have issued notice of said CMP and till next date of hearing status quo as on the date was directed to be maintained with regard to subject matter of the lis. However, no details of this lis, copy of petition, further development in the matter have been placed before this Court. However, no details of this lis, copy of petition, further development in the matter have been placed before this Court. Similarly, copy of the interim order dated 21/1/2011 passed by learned Single Judge of Madras High Court in MP No.2/2011 in WP No. 1198/2011 (Tamilnadu Petroleum Dealers Association vs. Union of India & anr.) has been placed for perusal of this Court, which is to the following effect, "There will be an order of interim stay for a period of four (4) weeks. Notice." Again, for the same matter, no further development, status of the said case have been brought to the notice of the Court. 11. On other hand, learned counsels for the respondents brought to the notice of the Court that on 29/3/2011 the Patna High Court has dismissed similar writ petition – CWJC No. 1209/2010 – Bihar Petroleum Dealer's Association vs. Union of India & Ors. in the following terms:- "29/3/2011 Heard learned counsel for the petitioner and the learned counsel for the respondents. The location of a Petrol Pump is a matter of executive policy. If the opening of a new Petrol Pump affects the business of those running existing out lets, no writ petition shall lie for protection of their commercial interest. It is not the jurisdiction of the Court to usurp executive powers to start taking policy decision as to where Petrol Pumps should be located. The writ petition is dismissed. sd/- (Navin Sinha,J.)" 12. Learned counsel for the respondents also produced before this Court a copy of the Division Bench judgment in the case of Smt. Sabitri Sahu vs. Collector & District Magistrate & Ors. - 104 (2007) CLT 710 : Manu/OR/0320/ 2007 in which the Division Bench of Orissa High Court held that it cannot be said that on opening of retail outlet by BPCL at Odagaon, right of the petitioner, who is a existing dealer of BPCL, would be infringed and, therefore, the petitioner has no locus standi to file the writ petition. The case set up before the Division Bench of Orissa High Court was, as noticed in para no.6 & 7, in the following terms: "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 outlet by the fourth Respondent, near his place of business, on the ground that that would affect his business interest, inasmuch 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. 7. On perusal of the affidavit filed by Opposite Party No.2, and its enclosures, it appears that the Oil Companies are free to establish retail outlets at the location of their choice, if found viable, within any distance of an existing retail outlet subject to no objection from the statutory/State/Municipal/ local authorities concerned in this regard." 13. Similarly, Madras High Court in earlier decision dated 7.12.2004 in the case of Nataraja Agencies vs. The Secretary, Ministry of Petroleum & Natural Gas, Govt. of India & Ors. - 2005(1) CTC 394 dismissed the similar writ petition in the following terms: "3. The Supreme Court in Mithilesh Garg vs. Union of India, MANU/SC/0075/1992 : AIR 1992 SC 443 , held that a rival businessman cannot file a writ petition, challenging the setting up of a similar unit by another businessman, on the ground that establishing a rival business close to his business place would adversely affect his business interest, even if the setting up of the new unit is in violation of law. In Mithilesh case, cited supra, the Supreme Court followed its own decision in Rice and Flour Mills vs. N.T. Gowda, MANU/SC/0453/1970 : (1970)3 SCR 846 , wherein it was held that a rice mill-owner has no locus standi to challenge under Article 226, the setting up of a new rice-mill by another even if such setting up be in contravention of Section 8(3) of the Rice Milling Industry (Regulation)Act, 1958 because no right vested in such an applicant is infringed. 4. 4. 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 affect. 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, inasmuch 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 rates." 14. In view of the aforesaid legal position cited at the bar and after hearing the arguments of learned counsels at length, at the admission stage, this Court is of the opinion that the present writ petition is misconceived and deserves to be dismissed. The reasons are as follows. 15. The present writ petition is nothing but a camouflage to prevent possible competition by other retail outlets. The discretion & freedom of OMCs to set up more outlets with the expansion of road network and consumer markets has neither been disputed nor it can possibly be disputed. From the material placed on record before this Court by the respondent Union of India and OMCs, it is clear that there is no breach of any guidelines, which are not even statutory in nature, by the OMCs while inviting applications for such retail outlets. The allegation that lesser sale targets have been fixed for such applicants than the standard quota does not make out any ground for prohibiting the OMCs for allotting such retail outlets. The allegation that lesser sale targets have been fixed for such applicants than the standard quota does not make out any ground for prohibiting the OMCs for allotting such retail outlets. In their replies, the OMCs have clearly come out with a case that they undertook the cost benefit analysis for each retail outlet to be opened by comparison of possible sales with actual sales of existing retail outlets and profit to be earned by it and it is only upon finding such economic viability for such new proposed retail outlet that such advertisements have been issued with the approval of the Board of Directors of respective OMCs at the highest level and there is no arbitrariness or illegality pointed out in the decision making process of these OMCs in the present writ petition. The fear of competition only seems to be at the bottom of the writ petition of the Association. A fair and legitimate competition coupled with the need of increased number of retail outlets with the expansion and development of road network & consumer market cannot be denied or disputed. 16. The existing petrol outlet dealers like the members of the petitioner Association alone cannot be allowed to have the cake and eat it too to the exclusion of others. It is left only to the wisdom of concerned OMCs to allot such outlets as per their business requirements and their business prudence has neither been questioned nor can possibly be examined by this court in writ jurisdiction as it is a question of complex factual matrix. Unless arbitrariness and unfairness in the decision making process with specific instances is pointed out by them, no bald and blanket writs can be issued by this Court prohibiting their rights. It would be sheer misuse and abuse of jurisdiction of this court if such petitions are entertained and allowed. 17. This Court is, therefore, fully satisfied that the present writ petition, at the instance of Association of existing dealers, is not only misconceived but is an abuse of process of the Court under Article 226 of the Constitution of India and in view of similar writ petitions having been dismissed by the other High Courts, the present writ petition deserves to be dismissed with exemplary cost, which is determined at Rs. 10,000/- to be paid to each of the respondents. 18. The writ petition is accordingly dismissed with costs.