IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 01.03.2011 CORAM: THE HONOURABLE MR.JUSTICE S.MANIKUMAR W.P.No.724 of 2001 Tamil Nadu Petroleum Dealers Association rep.by its President A.R.Damodaran ... Petitioner Vs. 1.The Union of India, rep. by its Secretary, Ministry of Petroleum and Natural Gas, Shastru Bhavan, New Delhi. 2.Indian Oil Corporation Ltd., rep. by its G.M. Indian Oil Bhavan, 139, Nungambakkam High Road, Chennai-600 034. 3.Hindustan Petroleum Corporation Ltd., rep. by its G.M. No.8, Gandhi Irwin Road, Egmore, Chennai-600 008. 4.Bharat Petroleum Corporation Ltd., rep. by its G.M. Ranganathan Gardens, Off, 11th Main, Anna Nagar, Chennai-600 041. ... Respondents Prayer : Writ petition is filed under Article 226 of the Constitution of India, praying for a Writ of Mandamus, directing the 1st respondent herein, to grant arrears in Shrinkage allowance for the period 31.07.1989 to 29.09.2000 on advalorem basis to the Dealers in high altitude areas. For petitioner : Mr.T.R.Mani SC for Mr.B.Ramamoorthy For R1 : Mr.J.Ravindran Additional Solicitor General For RR2 to 4 : Mr.M.Vijayan for M/s. King & Partridge O R D E R Tamil Nadu Petroleum Dealers Association, represented by its President has sought for a writ of Mandamus, directing the Union of India, represented by its Secretary, Ministry of Petroleum and Natural Gas, Shastri Bhavan, New Delhi, the 1st respondent herein, to grant arrears of Shrinkage allowance, for the period from 31.07.1989 to 29.09.2000, on advalorem basis, to the Dealers in high altitude areas. 2. The petitioner's association is a society registered under the Tamil Nadu Societies Registration Act, 1975. It has dealers all over Tamil Nadu selling Petrol, diesel and kerosene, through their District Associations and there are Life members in the petitioner's association. The objective of the association is to protect the interest and welfare of the dealers and to represent on their behalf of them to the Oil industry and Ministry of Petroleum, whenever difficulties are faced by the members of the association. It is further submitted that some of the members of the petitioner's association are high altitude dealers, selling motor spirit (Petrol) and high speed diesel in Hill Stations, such as Nilgiris District, Kodaikanal in Dindigul District, Yearcaud in Salem District, and business in petrol/diesel at Hill Stations involve operational difficulties. The storage tanks and filling points of the respondents 2 to 4 are located in plains at Coimbatore (Peelamedu and Irugur) and Sankari, where, the temperature is 29 Degree Celsius and above. Dealers in high altitude areas sell petrol and high speed diesel in retail, through their dispersing pumps at 15 Degree Celsius and below, sometimes in winter period, the temperature would fall as low as zero Degree Celsius. With every degree drop in temperature, there is a reduction in volume and quantity of petrol and diesel, due to shrinkage and the same is also linked to coefficient of expansion or contraction of the product conserved for petrol, the density of which is between 0.695 to 0.720. The temperature of the filling station located in plain is 29 Degree Celsius and that of the petrol pump at Ooty is 15 Degree Celsius and therefore, there is shrinkage loss for every Kilolitre of petrol, due to difference in temperature. Similarly, in respect of high speed diesel, there is shrinkage or contraction in volume per litre, depending upon the variation in temperature. In order to compensate the loss in quantity and volume, due to shrinkage, to the dealers in high altitude areas, the Government of India, the 1st respondent herein, has considered and decided to grant shrinkage allowance commencing from 1977 and as per their decision, the cost price of the quantity loss, through shrinkage per kilolitre was sanctioned as shrinkage allowance and that the same was permitted to be recovered by the dealers, in the sale price, from the consumers on the advice of respondents 2 to 4. 3. The petitioner association has further submitted that in the year 1977, shrinkage allowance has been sanctioned for motor spirit (petrol)/high speed diesel by the Government of India, Ministry of Petroleum and Natural Gas, New Delhi, the 1st respondent herein, who directed the oil companies namely, respondents 2 to 4, to grant shrinkage allowance to high altitude dealers. Subsequently, shrinkage allowance was enhanced in proportion to the increase in the sale price of high speed diesel/petrol till 1989. 4. It is the grievance of the petitioner that though the sale price of petrol/high speed diesel has been increased on many occasions, from 1989 onwards, the Oil Companies, respondents 2 to 4 have not increased the shrinkage allowance, on the ground that the Ministry of Petroleum and Natural Gas, New Delhi, the 1st respondent herein, has not passed any specific orders, permitting shrinkage allowance. Though several meetings were held by the Oil Companies and it was agreed that the dealers of petrol/high speed diesel can add shrinkage allowance along with the commission, in arriving at the retail selling price per litre for petrol/high speed diesel, no specific orders were passed by the Government of India. However, shrinkage allowance has been increased with effect from 30.09.2000 without granting such allowance for the interregnum period between 31.07.1989 and 29.09.2000. The 1st respondent has not passed any orders, inspite of reminders from the petitioner's association, as well as periodical reminders from the respondents 2 to 4, the Oil Companies. Being aggrieved by the action of the 1st respondent in not granting shrinkage allowance for the period between 31.07.1989 and 29.09.2000, the petitioner's association filed W.P.No.3523 of 1994, for a Mandamus, directing the Union of India, represented by its Secretary, Ministry of Petroleum and Natural Gas, New Delhi, the 1st respondent herein, to fix shrinkage allowance on advalorem basis, for petrol and diesel to the dealers in high altitude areas in Tamil Nadu. When the matter came up for hearing, it was represented by the learned Additional Central Government Standing Counsel appearing for the 1st respondent that subsequent to filing of W.P.No.3523 of 1994, the Central Government has passed certain orders with regard to the claim made by the petitioner's association and on the basis of such representation made by the Learned Central Government Counsel, the writ petition filed by the petitioner's association came to be dismissed. When the petitioner's association enquired into the matter, they came to know that by proceedings dated 29.09.2000, the 1st respondent has addressed a communication to the Oil Co-ordination Committee stating that the revision of rates of shrinkage allowance shall be passed on to the consumers in retail selling price, except in North-East states and that there was no mention about the shrinkage allowance claimed by the petitioner association for the period between 1989 and 2000, for almost 11 years till 30.09.2000. 5. The petitioner's association has further submitted that shrinkage allowance had been sanctioned from the year 1977 for motor spirit (petrol) and high speed diesel by the Government of India, the 1st respondent, who directed the Oil Companies namely, respondents 2 to 4, to grant shrinkage allowance to high altitude dealers. The price of petrol and high speed diesel has increased in manifold from 1989 onwards and consequently, the 1st respondent ought to have issued appropriate orders, directing the respondents 2 to 4, Oil Companies, to grant shrinkage allowance for the dealers in high altitude areas. When the 1st respondent has granted shrinkage allowance from 1977 to 1989 and thereafter, from 30.09.2000 onwards, there is no reason as to why the 1st respondent has declined to consider to grant shrinkage allowance to high altitude dealers, in the interregnum period between 1989 and 2000. 6. Taking this Court, through the material on record, Mr.T.R.Mani, Learned Senior Counsel for the petitioner's association submitted that when the Government of India on principle, have agreed to grant shrinkage allowance since 1977, and thereafter continued from 30.09.2000 onwards and when the cost price of petrol/high speed diesel has increased in manifold, the 1st respondent herein, has failed to consider that the members of the petitioner's association have a legitimate right and expectation for grant of shrinkage allowance, for the period between 1989 and 2000 and that therefore “causus omissus”, is apparent on the face of the record. 7. Learned Senior Counsel for the petitioner further submitted that when shrinkage allowance is admitted to retail pump outlets (RPO) located at high altitudes with temperature significantly, lower than the temperature prevailing in the supply depot area, and that different rates of shrinkage allowance have been fixed by the Government of India, taking into account, the difference between the average annual mean temperature prevailing in the supply depot area and receiving locations and the co-efficient of shrinkage, based on the average density of the product namely, petrol/high speed diesel and when the rate of shrinkage allowance approved by the Government of India is included in the sale price except North-East, where, it was absorbed by the Oil Pool Accounts, there is absolutely no reason as to why there should be a denial of shrinkage allowance between 1989 and 2000. 8. Inviting the attention of this Court, to paragraph Nos.18 and 19 of the counter affidavit filed by the Under Secretary to the Government of India, Ministry of Petroleum & Natural Gas, New Delhi, the 1st respondent herein, the reasons assigned by the respondents that the Administered Pricing Mechanism (APM) had been dismantled with effect from 01.04.2002 and any retrospective revision in the rates of shrinkage allowance cannot be implemented, as Administered Pricing Mechanism (APM) had already been dismantled and that the contention that the shrinkage allowance is not a fundamental right and the losses estimated are only theoretical. Learned Senior counsel further submitted that the abovesaid contentions are wholly irrelevant, for the reason that shrinkage allowance has been granted since 1977 and thereafter continued from 30.09.2000 onwards and therefore, the abovesaid objections are liable to be rejected. 9. Learned Senior Counsel further submitted that following several representations, a meeting between the Federation of All India Petroleum Traders (FAIPT) and the Government of India, New Delhi, the 1st respondent herein, represented by the Additional Secretary to the Government of India, and the respondents 2 to 4, represented by their Directors, was held on 23.08.2006 wherein, it was agreed that the Oil industries would release shrinkage allowance within 10 days and therefore, it was legitimately expected and believed that the arrears of shrinkage allowance between 1989 and 2000 would be settled. In this context, Learned Senior Counsel took this Court through the reply dated 28.03.2002 of the Hon'ble Minister for Petroleum and Natural Gas, Government of India, New Delhi, addressed to the Federation of All India Petroleum Traders, New Delhi. He also took this Court through the minutes of the meeting held on 23.08.2006 at 05.00 P.M., in the Ministry of Petroleum and Natural Gas, Government of India, at Shastri Bhawan, New Delhi, under the Chairmanship of the then Additional Secretary, Mr.Anil Razdan, wherein, it was recorded that when FAIPT has raised the issue of arrears of shrinkage allowance which had not been released to hill area dealers since 2004; that the Oil industry has agreed to release the shrinkage allowance within 10 days. Highlighting the minutes, Learned Senior Counsel submitted that the members of the petitioner's association have a legal right to demand payment of shrinkage allowance for the interregnum period between 31.07.1989 and 29.09.2000, as a matter of right, as the Central Government on principle, have agreed to grant shrinkage allowance taking into consideration the loss of petrol or high speed diesel on account of contraction of the product depending upon the variation in the temperature and the co-efficient factor of the product, and also of the fact that on principle, they have allowed shrinkage allowance to be recovered by the dealers in the sale price of petrol/high speed diesel from 1977 to this date, excepting for the break period between 31.07.1989 and 30.09.2000. 10. Per contra, based on the averments made in the counter affidavit filed by the Under Secretary, Ministry of Petroleum and Natural Gas, the 1st respondent herein, Mr.J.Ravindran, Learned Assistant Solicitor General of India, submitted that the writ petition filed by an association seeking for a Mandamus, is not maintainable in law, as no legal right is conferred on the members of the association nor there is any infringement of right in not granting shrinkage allowance, which is only a concession made by the Government of India. He further submitted that pricing of petroleum products was based on the recommendations of the Expert Pricing Committees and when the Government have referred the issue of grant of shrinkage allowance to Oil Review Committee (OPRC) in September 1989, the said committee submitted a report to the Government in June 1991 and recommended the following simplifications: i) No shrinkage allowance may be allowed at a location where the difference between the average annual mean temperature of receiving and supplying location is less than 1 Degree Celsius. ii) At the time of opening a new retail pump outlet as well as during revisions in the prices of MS and HSD, the shrinkage allowance to be given may be finalised between the oil industry and the OCC and Government be kept informed of the change. Formal approval of Government before giving allowance need not be obtained, as is being done now. iii) It is not necessary to review the shrinkage allowance once it is fixed unless there is a change in the price of product, change in the location of the supplying depot or the retail pump outlet. 11. The Learned Assistant Solicitor General further submitted that though the recommendations of the Oil Pricing Review Committee in a way supported the interest of the retail outlet owners, it was not accepted by the Government. However, in 1996, the Government have advised the oil Industry to suggest a new scheme of shrinkage allowance, taking into account the changes in supply source market linkages, revisions in temperature data, if any, and the need for new markets to be added. In 1996, it was also thought fit to have a relook at the grant of shrinkage allowance. In the light of the above decision and in order to propose a new scheme, the Oil Industry embarked upon the process of collecting reliable temperature data. He further submitted that the industry attempted to obtain reliable temperature data, which could form an uniform basis for calculating shrinkage allowance. The oil industry tried to collect temperature data from India Meteorological Department (IMD), Government of India, Survey of India, Geological Survey of India and few other Government departments, which can provide reliable data. However, respondents 2 to 4 came to the conclusion that the most reliable source for providing temperature data would be India Meteorological Department, Government of India (IMD), as it possesses the standard methods and equipment for making temperature measurements which are relied upon by defence and aeronautical establishments. 12. Learned counsel for the 1st respondent further submitted that though in 1996, the Government advised the oil industry to suggest a new scheme of shrinkage allowance, taking into consideration the changes in the supply source market linkages, revision in temperature data, two years of efforts culminated in an industry team visit to India Meteorological Department (IMD) headquarters in Pune during October 1998, and the industry learnt that though IMD had over 500 observatories throughout the country, many of them were not located, where the industry had retail markets and supply points. Therefore, India Meteorological Department, Government of India (IMD), could not provide reliable temperature data for most of the locations that oil industry required. Out of 303 markets and 45 supply points involved, IMD could provide corresponding temperature data for 57 locations and even then the corresponding supply point temperatures were available for 20 markets only. Therefore, the whole exercise of finding out the variable temperature at the market supply points could not be achieved and therefore, the oil industry attempted to explore other alternative for calculating shrinkage allowance, without sacrificing reliability and uniformity. Ultimately, it was thought fit that IMD could provide a universal lapse rate, which could be applied for arriving at the average temperature differentials between markets and supply points, based on the altitude differential between them. 13. He further submitted that the figure provided by the IMD was 0.6 degree Celsius drop in temperature for every 100 meter increase in height. The 1st respondent decided to adopt the lapse rate formula for the purpose as to whether shrinkage allowance could be granted or not. He further submitted that in the scheme proposed by the Oil Industry, it turned out that 16 markets out of 177 markets which are currently enjoying shrinkage allowance would be disqualified, if the lapse rate formula is adopted. Accordingly, a meeting was arranged with IMD, Pune, to discuss the issue of calculating temperature data through other formulae. But the IMD officials informed that no further temperature data was available but agreed to arrive at a estimated temperature based on the latitude and longitude details for markets and supply points. Though the industry proceeded to collect latitude/longitude data from the Survey of India Officers, responsible for various geographical areas through out the country, collection of data for 303 markets and 45 supply points was time consuming and therefore, based on the data available, the revision in rates of shrinkage allowance was worked out by the Oil Co-ordination Committee and accordingly, the Government approved the revision in rates of shrinkage with effect from 30.09.2000. 14. Learned counsel for the 1st respondent further submitted that the Government had dismantled the Administered Pricing Mechanism (APM) with effect from 01.04.2002. The Oil Pool Account was also abolished with effect from 31.03.2002 and any retrospective revision in the rates of shrinkage allowance cannot be implemented, as APM has already been dismantled. He also submitted that shrinkage allowance is an element to be recovered in the retail price from the consumers and any retrospective revision in shrinkage is not feasible. 15. Learned counsel for the 1st respondent further submitted that shrinkage allowance is only a trade arrangement and not even a part of contract. The losses estimated by the members of the petitioner's association are only theoretical and therefore, in the absence of any legal right, no Mandamus can be issued. As regards the contention that in a meeting held on 23.08.2006 and when FAIPT has raised an issue of arrears of shrinkage allowance not released to the hill area dealers since 2004, the oil industry had agreed to release the shrinkage allowance within 10 days, learned counsel for the 1st respondent further submitted that on verification of the official records, it was found that the said minutes were not recorded and issued by Government of India or by any oil companies and therefore, the minutes signed by the Joint Secretary of FAIPT cannot be said to be an authenticated official document which requires to be acted upon. In sum and substance, he submitted that grant of shrinkage allowance is purely a matter of concession by the Government and as the said allowance is an element to be recovered in the retail price from the consumers, retrospective revision in shrinkage allowance from 1987 to September 2000 cannot be granted. 16. Learned counsel for the 1st respondent further submitted that all the representations enclosed in the additional typed set of papers have been made only after 2000 and since no representations have been made for grant of shrinkage allowance, between the period 1989 and 2000, it is not open to the petitioner to raise a demand for grant of shrinkage allowance retrospectively, at this length of time, and particularly, when the shrinkage allowance for the abovesaid period cannot be recovered from the customers. For the abovesaid reasons, he prayed for dismissal of the writ petition. 17. The respondents 2 to 4, Oil Companies, in their respective counter affidavits, have submitted that the retail sale of motor spirit and high speed diesel is carried on through the authorised dealers of the Corporations. According to Oil Companies, the prices of the petroleum products Viz., Petrol, Diesel, Kerosene, LPG till 31.03.2002 were governed by the Administered Pricing Mechanism (APM) of the Government of India. As the writ petition has been filed during the period when APM was in existence, the parties are bound by the said mechanism of price structure and the retail selling price of petrol and diesel at the retail outlet was fixed and conveyed to the dealers by the Corporations. According to them, the temperature in retail outlets located in hilly regions may not be constant and it is subject to variations. While agreeing with the contention of the petitioner that co-efficient factor of motor spirit and high speed diesel depends upon the temperature variation, between the filling points and the marketing points, resulting in shrinkage of the product during receipt, storage and sale, shrinkage allowance was allowed by the Oil Companies, as per the directions of the Government of India, so as to compensate the loss on account of such shrinkage/contraction. It is the further submission of the respondents 2 to 4, that the allowance provided by them was recovered from the consumers, as per the amount arrived at by the Administered Pricing Mechanism (APM). However, in their counter affidavit the Oil Companies have admitted that shrinkage allowance, as applicable from time to time was added in the sale price of the petro products in retail outlet in hilly regions. In their counter affidavit, they have also admitted that in so far as Oil Companies are concerned, the directions of the 1st respondent as and when issued have been sincerely followed and implemented. However, the respondents 2 to 4 have not admitted the figures given in the annexure, as to the alleged loss sustained by the members of the petitioner's association, dealers of petrol and high speed diesel. As the relief sought for, is against the 1st respondent, they have prayed for dismissal of the writ petition against them. 18. By way of reply, Mr.T.R.Mani, Learned Senior Counsel submitted that when W.P.No.3523 of 1994 was filed by the petitioner's association, for a Mandamus directing the Union of India, represented by its Secretary, Ministry of Petroleum and Natural Gas, New Delhi, and four others, for a direction to revise the shrinkage allowance on advalorem basis, to the dealers in high altitude areas in Tamilnadu, there was no objection as regards the maintainability of the writ petition and after considering the submission of the Learned Counsel for the Central Government that the Government had passed certain orders, the writ petition was dismissed, as infructuous. He further submitted that payment of shrinkage allowance from 1977 on the basis of the decision of the Central Government, is a right accrued to the members of the petitioner's association and recognised by periodical payments. Further, when the writ petition has been filed in the representative capacity, in the light of the rules framed by this Court, it is not open to the respondents to object to the maintainability of the writ petition, on the ground that it is filed by an Association. He further submitted that shrinkage allowance is an existing right accepted and recognised by the Government on principle, for a long period since 1977 and deprivation of the same during the interregnum period from 1989 to 2000, is without any basis and therefore, the writ petition by the Association, for a Mandamus to enforce such a legal right against the respondents is maintainable in law and therefore, prayed to reject the objections. He also submitted that the contention of the respondents that all along the petitioner's association had remained quite and therefore, it is not open to the petitioner to make a demand for grant of shrinkage allowance, belatedly is not the case of the respondents in their counter affidavit and in such circumstances, no oral submissions can be advanced, in the absence of any pleadings. He also submitted that several representations have been made prior to filing of the writ petition and therefore, it cannot be contended that the petitioner had remained quite, when they were