IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 23RD MAY 2011 / 2ND JYAISHTA 1933 WP(C).No. 1016 of 2010(B) ------------------------------------- PETITIONER: ------------------- MARY ULAHANNAN, PROPRIETOR, CHIRACKPADICKAL FUELS, PAMPAKUDA, ERNAKULAM DISTRICT. BY ADVS. SRI.ALIAS M.CHERIAN, SRI.T.A.JEHFER SADHIQ. RESPONDENTS: ------------------------ 1. UNION OF INDIA, REPRESENTED BY THE SECRETARY, DEPARTMENT OF PETROLEUM AND NATURAL GAS, NEW DELHI. 2. STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. 3. HINDUSTAN PETROLEUM CORPORATION LTD., REPRESENTED BY ITS SENIOR REGIONAL MANAGER, ERNAKULAM. 4. INDIAN OIL CORPORATION LTD., REPRESENTED BY ITS GENERAL MANAGER, ERNAKULAM. 5. BHARATH PETROLEUM CORPORATION LTD., REPRESENTED BY ITS TERRITORY MANAGER, ERNAKULAM. 6. DISTRICT COLLECTOR, ERNAKULAM. 7. TAHSILDAR, MUVATTUPUZHA. W.P.(C). NO.1016/2010-B: 8. EXECUTIVE ENGINEER, P.W.D, MOOVATUPUZHA. *ADDL. R.9 IMPLEADED: 9. DAISY JOY, W/O. JOY MATHEW, THEKKUMPARAMBIL HOUSE, ONAKKOOR VILLAGE, PAMPAKUDA.P.O., ERNAKULAM DISTRICT. *ADDITIONAL RESPONDENT 9 IS IMPLEADED AS PER ORDER DATED 19/02/2010 IN I.A. 2239/10. R1 BY SRI.P.PARAMESWARAN NAIR,ASST.S.G. OF INDIA, R2, R6 TO R8 BY GOVT. PLEADER SRI. T.K. ARAVINDA KUMAR BABU, R3 TO R5 BY ADVS. SRI.E.K.NANDAKUMAR, SRI.A.K.JAYASANKAR NAMBIAR, SRI.K.JOHN MATHAI, SRI.P.BENNY THOMAS, SRI.P.GOPINATH, SRI.V.J.ANAND, ADDL. R9 BY ADVS. SRI.GEORGE SEBASTIAN, SRI.EGY.N.ELIAS. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09/03/2011, ALONG WITH W.P.(C). NO. 1017 OF 2010 AND CONNECTED CASES, THE COURT ON 23/05/2011 DELIVERED THE FOLLOWING: W.P.(C). NO.1016/2010-B: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE AGREEMENT DTD. 26/11/2003. EXT.P.2: COPY OF THE NOTICE PUBLISHED IN MALAYALA MANORAMA NEWS PAPER DTD. 07/10/2009. EXT.P.3: COPY OF THE NOTICE PUBLISHED IN MALAYALA MANORAMA NEWS PAPER DTD. 05/10/2009. EXT.P.3: COPY OF THE NOTICE PUBLISHED IN MALAYALA MANORAMA NEWS PAPER DTD. 31/05/2009. EXT.P.5: COPY OF THE PETITIONER'S SALE DETAILS. EXT.P.6: COPY OF THE RELEVANT PAGES OF THE GUIDELINES PUBLISHED BY INDIAN ROAD CONGRESS 2009. EXT.P.7: COPY OF THE REPRESENTATION DTD. 22/12/2009. EXT.P.8: COPY OF THE REPRESENTATION DTD. 22/12/2009. EXT.P.9: COPY OF THE REPRESENTATION DTD. 28/12/2009. RESPONDENTS' EXHIBITS: EXT.R9.A: COPY OF THE REPRESENTATION DTD. 08/11/2009 FILED BY TAXI WORKERS UNION, PAMPAKUDA BEFORE THE R.3. EXT.R9.B: COPY OF THE REPRESENTATION DTD. 29/10/2009 BY PVT. VEHICLE OWNERS UNION, PAMPAKUDA BEFORE THE R.5. EXT.R9.C: COPY OF THE LETTER DTD. 01/10/2009 ISSUED BY THE R.3. TO THE R.9. //TRUE COPY// P.S. TO JUDGE. Prv. (CR.) P.R. RAMACHANDRA MENON J. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ W.P (C) Nos. 1016, 1017, 1564, 3349, 3360, 3371, 5895, 7362, 25211, 25590 27176, 27236, 30337, 30650, 30651, 33944, 37417, 38283 of 2010, 652, 656, 1254, 2159, 2427, 3373, 3471, 4071, 4863, 5034, 6257, 7159, 7197 of 2011 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Dated, this the 23rd day of May, 2011 JUDGMENT The scope of the 'NOC' to be issued by the District Authority under Rule 144 of the Petroleum Rules, 2002 is the subject matter involved in all these writ petitions. 2. The crux of the contentions raised, except W.P.(C) No. 4863 of 2011, is that the petitioners are the existing retail dealers of petroleum W.P. (C) Nos. 1016 of 2010 & connected cases :2: products marketed/distributed by the three Oil Companies in the public sector, viz. The Indian Oil Corporation Limited, The Bharat Petroleum Corporation Limited and The Hindustan Petroleum Corporation Limited. The said petitioners are stated as aggrieved of the steps being taken by the Petroleum Companies (Company in short) to appoint new retail outlet dealers in the respective areas, inviting applications in this regard through advertisements, without any regard to the feasibility or the potential of the area and in turn, affecting the returns of the petitioners quite adversely. It is contended that, because of the unhealthy competition among the Companies in setting up more and more new units, the entire business is plunging into losses, putting it quite detrimental to the investments made by the petitioners and also without any regard to the 'public money' being W.P. (C) Nos. 1016 of 2010 & connected cases :3: invested by the Companies. It is in the said circumstances, that the State Government has intervened, convening a meeting of all concerned, arriving at a decision and issuing a Circular, stipulating certain norms fixing the minimum viability limit as 250 Kilo litres per month, lest, the business of the existing dealers should be affected while granting NOC to the new retail outlets in the area. Some of the writ petitioners challenge the NOCs issued by the District Authorities without any regard to the above norms, while the others seek for a direction to intercept the proceedings pursuant to the advertisements made by the Oil Companies inviting applications for retail outlets and the on-going steps of the District Authorities under the Petroleum Rules to issue the NOC. W.P. (C) Nos. 1016 of 2010 & connected cases :4: 3. Some of the writ petitions have been already admitted and the service is complete. In some cases, it has been made clear that, the issuance of NOC and the dealership appointments will be subject to the result of the writ petitions. In W.P.(c) No. 30337 of 2010, such an interim order was passed on 01.10.2010 and thereafter, as per order dated 10.12.2010, it was clarified that the Legal Metrology Department can proceed with the steps to verify and 'stamp' the instruments/measuring units and to certify the same. Later, as per interim order dated 18.01.2011 in I.A. 517 of 2011 (seeking to modify the interim order), it was made clear that, the orders passed by this Court never did stand in the way of granting NOC or in commissioning the Unit commencing the operation, but for making the same subject to the result of the writ petition. W.P. (C) Nos. 1016 of 2010 & connected cases :5: 4. Among the writ petitions, as mentioned herein before, W.P. (C) 4863 of 2011 alone stands on a different footing, the same having been filed by the prospective new comer, in favour of whom Ext. P2 NOC dated 17.09.2010 has been issued by the District Authority, in spite of which, Ext. P6 'stop memo' dated 25.10.2010 was issued by the Village Officer, referring to Exts. P8/P9 norms therein issued by the State. This in turn is under challenge, raising many a ground that the State Government or the Authorities under the State do not have any right, power, jurisdiction or competence to issue Exts. P8 and P9; that the petitioner has already invested lakhs of Rupees in connection with the setting up of the unit after receipt of Ext. P1 letter of indent dated 13.04.2010 issued by the 4th respondent Oil Company and Ext. P2 NOC issued by the District Authority thereafter; simultaneously pointing out W.P. (C) Nos. 1016 of 2010 & connected cases :6: that, the competent authority to prescribe the norms, if at all any, is only the 'Central Government'; that the dealership arrangement is to be finalized in tune with the relevant provisions of the Act/Rules framed by the Central Government and that there is absolutely no violation of any stipulation in this regard. 5. Among the remaining writ petitions, W.P.(C) Nos. 37417 of 2010, 25211 of 2010, 27236 of 2010, 30337 of 2010, 5034 of 2011 and 2159 of 2011 have been filed by the persons belonging to Scheduled C Caste community, who, while pressing the common contentions as raised in the other writ petitions, also seek to add that, by virtue of the Constitutional mandate providing reservation to Scheduled Castes and the Scheme implemented by the Oil Companies by giving retail distributorship to such petitioners, it is the duty of the Oil W.P. (C) Nos. 1016 of 2010 & connected cases :7: Companies to ensure that the petitioners, while running the Units, are not smoked out by setting up new retail outlets in the locality in an indiscriminate manner, without any regard to the viability or potential of the area, which accordingly is sought to be intercepted by this Court. It is for this reason as well, that they seek to enforce the norms prescribed by the State Government through 'Minutes/Circulars' issued in this regard, fixing the norms for granting 'NOC' for new units, to be implemented through the District Collectors, who happen to be the District Authorities under Rule 144 of the Petroleum Rules, 2002. In W.P.(C) No. 7197 of 2011 (and in some other cases), in support of the challenge raised against Ext. P14 NOC given by the District Authority, the petitioner therein seeks to rely upon Ext. P6 (Recommendation of the Indian Roads W.P. (C) Nos. 1016 of 2010 & connected cases :8: Congress) as to the locational lay out of the retail outlets and so also on Ext. P20 (Indian Roads Congress - access norms) which are stated as violated. 6. The respondent Companies have filed counter affidavits in most of the cases. Some of the contesting parties, who are stated as selected for the new retail distributor ships have also filed their pleadings. In some of the cases, the petitioners have filed reply affidavits as well, mostly reiterating the averments in the writ petitions. Going by the contents of the separate counter affidavits filed by the respondents 3 to 5 in W.P.(C) No. 1016 of 2010 and similar cases, it is seen that there is no conflict of interest between/among the Oil Companies. 7. The learned counsel for the petitioners submit that the concerned Oil Companies are engaged W.P. (C) Nos. 1016 of 2010 & connected cases :9: in an unhealthy business competition, in which, persons like the petitioners are made scapegoats, who have already made much investments and are having sales far below the optimum level, even on this day, which will further be pushed down, once the new retail outlets sought to be established are given sanction to function. Though, no specific provisions in the Act/Rules or any relevant norms issued by the Government of India with regard to the starting of the new outlets are referred to in any of the writ petitions, it is contended that, the State is at liberty to prescribe such norms in public interest and public safety and it was in this circumstance, that the Government Order dated 17.09.2009 (presumably of 17.09.2010) forwarding the Minutes of the meeting held on 28.07.2010 and Circular dated 31.12.2010 (Ext. P1 and P9 respectively in W.P.(C) 37417 of 2010) were issued W.P. (C) Nos. 1016 of 2010 & connected cases :10: by the State Government. It is pointed out that, even though there is no specific provision of law, it is always open for the Union/State to issue necessary instructions/guidelines in the form of executive orders, by virtue of the power conferred under Articles 73 and 162 respectively of the Constitution of India and as such, the contents of the Minutes/Circular issued by the State are binding upon the Oil Companies, who participated in the proceedings, whereby the feasibility norms have been declared, placing reliance on the business volume, rather than the distance limit. The norms stipulated by the State as above, contemplate 5 different categories, such as, Corporation limits - 350 Kilo litres per month; National Highway area - 340 Kilo litres per month; State Highway area - 250 Kilo litres per month - other roads/areas - 250 Kilo litres per month and Kisan Sevak Kendras - 50 Kilo W.P. (C) Nos. 1016 of 2010 & connected cases :11: litres per month. The petitioners contend that, they do not have the minimum sales output as above and as such, no NOC can be given for starting new retail outlets. 8. The petitioners in W.P. (C) 37417 of 2010 and similar cases, who belong to Scheduled Castes, have got a contention that, as per Ext. P4 letter dated 30.10.2008 (in W.P(C) 37417 of 2010) written by the Minister for the Petroleum and Natural Gases, Government of India to the Ministry for Overseas Indian Affairs, Government of India, it was assured that, unless there was enough potential available for setting up an additional petroleum pump, no new petrol pumps would be sanctioned adjacent to any of the existing petroleum pumps alloted to the SC/ST dealers, which however is stated as given a 'go- bye'. W.P. (C) Nos. 1016 of 2010 & connected cases :12: 9. The learned counsel appearing for the Oil Companies, with specific reference to the counter affidavit filed in W.P.(C) No. 37417 of 2010, submits that Ext. P1 (Minutes) was never with the consent, concurrence or agreement with the Companies and that the representatives of the Companies had not subscribed their signatures to the same. It is stated that, the actual facts and figures were brought to the notice of the authorities concerned, who convened the meeting then and there, simultaneously pointing out that, the State Government or any authority under the State is not having any power or competence to prescribe any norm in this regard, which however stands vested exclusively with the Union Government, by virtue of Rules 144 and 161 of the Petroleum Rules. Reference is also made to Entry 53 of List I of the 7th W.P. (C) Nos. 1016 of 2010 & connected cases :13: schedule to the Constitution of India, whereby all matters touching the production, sale, distribution etc. of the petroleum products are shown as exclusively within the jurisdiction of the Union. It is contended that, in the absence of any legislative power for the State, there is no executive power to have issued Ex.P1/P9 Minutes/Circular to the contrary, as the 'executive power' of the State is co-existent with that of its 'legislative power'. The gist of the contentions raised by the respondents Oil Companies is that, there is no violation of any fundamental right; that there is no 'locus standi' for the petitioners to file the writ petitions, which hence are not maintainable; that there cannot be any monopoly claim by persons like the petitioners to have the retail outlets; that the feasibility study / potential of the area has been carried out/assessed W.P. (C) Nos. 1016 of 2010 & connected cases :14: by the Companies; that the convenience of the public is of paramount importance; that the plea of unviability is thoroughly wrong and unfounded; that the investment required in rural area (less than 15 lakhs) is comparatively less than the investments in the urban area; that the plea as to the investment of around Rupees 2 crores for setting up the units and the requirement of a minimum sale of 140 Kilo litres per month, to have viability for the Unit is wrong and misconceived; that the competition with good service to the customers is the 'Sine Qua Non' of any business; that the dealership 'Selection Policy' is based on the guidelines issued by the Ministry of Petroleum and Natural Gases; that the dealership agreements do not contain any clause opposed to public policy and that the advertisement issued by the Oil Companies were specific, wherein it was made clear that, it was never a job proposal, W.P. (C) Nos. 1016 of 2010 & connected cases :15: but purely a 'business proposal', where no profit or minimum return was assured. Reliance is sought to be placed on judicial precedents, including the verdicts passed by the Supreme Court, holding that, no writ petition will lie by a business rival, as there is no violation of any fundamental rights and such other decisions rendered by the Apex Court as reported in AIR 1976 SC 578 ( J.M. Desai Vs. Roshan Kumar), AIR 1992 SC 443 (Mithilesh Garg Vs. Union of India); the decision rendered by the Delhi High Court in AIR 1993 Delhi 219 (DB) (Simbhaoli Sugar Mills Limited Vs. Union of India); the decisions rendered by this Court, as reported in 2007 (2) ILR Ker. 193 (M/s Reliance Industries Ltd. and another Vs. Commissioner of Land Revenue and Others), 2006 (2) KLT 172 (FB) (Binu Chacko Vs. R.T.A Pathanamthitta) and that of the Madras High Court in W.A. No. 4057 of 2004 - 2005 (1) CTC 394 (Nataraja W.P. (C) Nos. 1016 of 2010 & connected cases :16: Agencies Vs. The Secretary, Ministry of Petroleum and Natural Gas). 10. The learned Government Pleader appearing for the State virtually supported the contentions of the petitioners, seeking to sustain the Minutes/Circular fixing the norms at the instance of the State for issuance of NOC by the District Authorities, while considering the matter under Rule 144 of the Petroleum Rules in relation to the starting of the retail petroleum outlets. The question of 'locus standi' of the petitioners is stated as immaterial, referring to the law declared by the Apex Court in Jayaraj Vs. Commissioner of Excise (2000 (3) KLT 820) and Sai Chalchitra Vs. Commissioner, Meerut Mandal and Others 2005 (3) SCC 683 (where the impugned orders/proceedings were contrary to the guidelines). It is argued by the learned Government Pleader that the existence of W.P. (C) Nos. 1016 of 2010 & connected cases :17: Statute / Law is not mandatory to have issued the relevant Circulars, if it is not in contravention of the relevant provisions of the Law and that the Circulars will hold good in such circumstances. Reference was made to the decisions rendered by this Court as reported in AIR 1958 Ker. 290 / 1958 KLT 233 (DB)(Rev. Fr. Joseph Valamangalam Vs. State of Kerala), AIR 1996 Kerala 241 (Food Corporation of India Vs. Alleppey Municipality), 2010 (2) KHC 334 (Sarala Baby Vs. State of Kerala) and also on AIR 1997 Orissa 30 (DB) (Dilip Kumar Prusti Vs. Collector & District Magistrate, Sambalpur). Even if there is a Central legislation, if there is no provision to meet a contingency, the State can step in, contends the learned Government Pleader, with reference to law declared by the Apex Court in Tika Ramji Vs. State of U.P. (AIR 1956 (SC) 676) and SIEL Limited Vs. Union of India (1998 (7) SCC 26). W.P. (C) Nos. 1016 of 2010 & connected cases :18: Reference is also made to the decisions rendered by the Apex Court reported in AIR 1955 SC 549 (Rai Sahib Ram Jawaya Kapur and others Vs. State of Punjab) [which was stated as followed by this Court in Rev. Fr. Joseph Valamangalam Vs. State of Kerala (1958 KLT 233 / AIR 1958 Kerla 290)], State of Andhra Pradesh Vs. Lavu Narendranath (1971 (1) SCC 607) and State of M.P. Vs. Nivedita Jain (AIR 1981 SC 2045). The learned counsel for the petitioner in W.P.(C) No. 4863 of 2011 (proposed retail dealer), adopting the contentions raised by the respondents Oil Companies, submits that, the petitioner was granted the necessary sanction as borne by Ext. P1 letter of indent, but was virtually defeated from enjoying the fruits, on many a count. Later, as directed by the Oil Companies, the old Tank installed was removed and replaced in 2010 and it was while proceeding with the steps to have unit W.P. (C) Nos. 1016 of 2010 & connected cases :19: commissioned, that Ext. P6 'stop memo' was issued by the Village Officer, which is stated as contrary to the relevant provisions of law and beyond power and competence and hence under challenge. 11. On hearing both the sides, with reference to the pleadings and proceedings, it is seen that, the petitioners / existing dealers have no dispute with regard to the fact that, the NOC for issuance of licence as contemplated under Rule 144 of the Petroleum Rules to start a retail petroleum outlet is to be issued by the District Authority, who is the District Collector. The said petitioners also do not have any case that the Petroleum Act or the Rules do contain any provision / norms for granting NOC or as to the setting up of the retail outlets. No Norms / Circulars / Orders if any, issued by the Central Government are also brought to the notice of this Court. The writ petitions have been moulded, W.P. (C) Nos. 1016 of 2010 & connected cases :20: mostly placing reliance on Ext. P1 Minutes and Ext. P9 Circular (in W.P.(C) No. 37417 of 2010) issued by the State Government, directing the District Collectors to give effect to the same, while considering the applications for NOC in their capacity as the District Officers / Authorities under Rule 144 of the Petroleum Rules. Rule 144 and 161 of the Petroleum Rules, with regard to the granting of NOC to start the retail outlets read as follows: 144. No-objection certificate : - (1) Where the licensing authority is the Chief Controller or the Controller, as the case may be, an applicant for a new licence other than a licence in Forms III, XI, XVII, XVIII or XIX shall apply to the District Authority with two copies of the site-plan showing the location of the premises proposed to be licensed for a certificate to the effect that there is no objection, to the applicant receiving a W.P. (C) Nos. 1016 of 2010 & connected cases :21: licence for the site proposed and the District Authority shall, if he sees no objection, grant such certificate to the applicant who shall forward it to the licensing authority with his application Form IX. (2) Every certificate issued by the District Authority under sub-rule (1) shall be accompanied by a copy of the plan of the proposed site duly endorsed by him under his official seal. (3) The Chief Controller or the Controller as the case may be, may refer an application not accompanied by certificate granted under sub-rule (1) to the District Authority for his observations. (4) If the District Authority, either on a reference being made to him or otherwise, intimates to the Chief Controller or the Controller as the case may be, that any licence which has been W.P. (C) Nos. 1016 of 2010 & connected cases :22: applied for should not, in his opinion, be granted, such licence shall not be issued without the sanction of the Central Government. (5) The District Authority shall complete his inquiry for issuing NO- OBJECTION CERTIFICATE (NOC) under sub-rule (1) and shall complete the action for issue or refusal of the NOC, as the case may be, as expeditiously as possible but not later than three months from the date of receipt of application by him. 161. Executive control over authorities : - Every authority other than the Central Government, acting under this chapter shall perform its duties subject to the control of the Central Government : PROVIDED THAT nothing in this rule shall be deemed to affect the powers of executive control of the Chief Controller over the officer subordinate to him. W.P. (C) Nos. 1016 of 2010 & connected cases :23: 12. The ultimate authority to grant the licence on the basis of the NOC to be given by the District Authority is the Chief Controller of Explosives. The District Authority, while considering an application for issuance of NOC under the Petroleum Rules has necessarily to consider the credentials in the light of the State Rules, with reference to the provisions of the Act / Rules / Norms / Orders, if any, issued by the Central Government or as prescribed by the Central Government. If a person is entitled to have a retail outlet on the basis of the NOC issued by the Central Government, the eligibility is not liable to be watered down by the State Government or by any authorities under the State, with reference to any norm/yardstick, which is detrimental to the parties concerned. The very fact that, the Rules do not contemplate any stipulation as to any requirements, such as W.P. (C) Nos. 1016 of 2010 & connected cases :24: 'Distance Rule' or 'Quantum Rule' (as now proposed to be implemented by the State, through the Minutes/Circulars, with reference to the sale out put of the nearby dealer). No such stipulation can be prescribed/implemented, virtually affecting the business prospects of others concerned, who are having vested rights under Article 19 (1) (g) and other relevant provisions of the Constitution of India. Absence of any such provision in the Act/Rules, as well as the absence of any norms in this regard, itself is a pointer to suggest that the legislative wisdom of the Union did not find it necessary to impose any restrictions/conditions with regard