Facts
The petitioners were Assam-based manufacturers of Calcined Petroleum Coke and Electrode Carbon Paste, for which Raw Petroleum Coke (RPC) was the principal raw material.
Source reference: paras. 2–11; pp. 8–12, 15–16They challenged the fixation of the floor/reserve price of RPC by Indian Oil Corporation Ltd. (IOCL), particularly the price of ₹24,150 per MT fixed for the Guwahati Refinery in the e-auction dated 07.06.2019, and subsequent e-auction notices for sale of 14,000 MT of RPC.
Source reference: paras. 2–11; pp. 8–12, 15–16Although the auctions had concluded during the pendency of the petitions, the legality of the pricing mechanism remained for determination.
Source reference: para. 29; p. 19Issues
Whether IOCL’s fixation of the RPC floor price at ₹24,150 per MT for the Guwahati Refinery complied with the Ministry’s Guidelines dated 07.05.2012, particularly the requirement that import parity price, with permissible adjustments, be used as the floor price.
Source reference: paras. 28–35; pp. 19–23Whether the impugned fixation was consistent with this Court’s order dated 30.05.2019 requiring reconsideration of the reserve price so as to keep it more or less at par with other refineries in the State.
Source reference: paras. 6, 18, 41–42; pp. 10–11, 15, 26Whether the petitioners’ participation in the auctions and lifting of RPC precluded them from challenging the legality of the floor price.
Source reference: para. 44; p. 27What relief could be granted after the impugned auctions had already concluded.
Source reference: paras. 29, 47–49; pp. 19, 28–29Law Applied
The Court applied the Ministry of Petroleum and Natural Gas Guidelines dated 07.05.2012, which made auction the preferred mode for sale of RPC and required import parity price, after accounting for freight charges, quality differentials, marketing cost and margin, and other necessary adjustments, to be used as the floor price.
Source reference: paras. 31–32; pp. 20–22The Court held that this requirement prescribed the substantive basis for determining the floor price and was not merely a factor that IOCL could optionally consider.
Source reference: para. 34; p. 23It further applied the principles of judicial review under Article 226, under which courts ordinarily do not substitute their commercial or technical assessment for that of an expert authority, but may intervene where the authority acts contrary to binding guidelines or fails to demonstrate compliance with them.
Source reference: paras. 35, 39–40; pp. 23–25The Court considered, but distinguished, Tata Cellular v. Union of India, State of Orissa v. Hari Narayan Jaiswal, BALCO Employees’ Union v. Union of India, Jagdish Mandal v. State of Orissa, CPIL v. Union of India, and State of Punjab v. Mehar Din, as those decisions did not immunise a commercial decision from review when it violated the governing policy.
Source reference: paras. 25–26, 40; pp. 18–19, 25Reasoning
The Court accepted that IOCL, as owner of the RPC and the auctioning authority, possessed commercial discretion to determine an appropriate floor price, and that the Court could not itself determine the correct market price.
Source reference: paras. 33, 35, 45; pp. 22–23, 27However, IOCL admitted that the 07.05.2012 Guidelines applied and relied on them to justify its decision.
Source reference: paras. 36–38; pp. 23–24Its own material disclosed an import parity price of ₹19,030 per MT, whereas the Guwahati floor price was fixed at ₹24,150 per MT—a substantial difference.
Source reference: paras. 36–38; pp. 23–24Although IOCL produced a calculation containing 15 components, it failed to satisfactorily explain how those components and permissible adjustments justified the substantial departure from the prescribed import parity basis.
Source reference: paras. 37–43; pp. 24–27The Court therefore found that the decision was not protected merely by characterising it as technical or commercial.
Source reference: paras. 37–43; pp. 24–27Participation in the auction and lifting of RPC did not amount to waiver, particularly since the petitioners had challenged the pricing mechanism.
Source reference: para. 44; p. 27As the auctions were already concluded, quashing them would serve no practical purpose; the appropriate remedy was monetary restitution.
Source reference: para. 47; p. 28Holding
The Court held that IOCL’s fixation of the RPC floor price at ₹24,150 per MT for the Guwahati Refinery was not shown to conform to the 07.05.2012 Guidelines, which required import parity price, subject to permissible adjustments, to form the basis of the floor price.
The concluded auctions were not quashed.
Source reference: para. 47; p. 28IOCL and the other respondent authorities were directed to calculate, for each petitioner, the difference between the price actually charged and the import parity price of ₹19,030 per MT for the quantity of RPC purchased in the relevant auctions, and to refund the differential amount.
Source reference: paras. 47–48; p. 28The exercise was to be completed within 60 days from receipt of a certified copy of the judgment.
Source reference: paras. 49–50; p. 29The writ petitions were accordingly disposed of, with no order as to costs.
Source reference: paras. 49–50; p. 29Original Court PDF
M/S. Guwahati Carbon Ltd. And Anr.vsThe Union Of India And 6 Ors
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