SC admits IOC petition on petroleum products pricing

New Delhi, Sept 21: The Supreme Court will decide whether the Union government notifications governing prices of petroleum products can be construed as law. Indian Oil Corporation has raised the issue before the apex court, which has admitted and tagged the petition with a similar matter pending before it. Oil India Ltd has challenged a Guwahati High Court ruling that upheld the arbitral tribunal's judgment which held that notifications governing prices of petroleum products have a force of law. Citing the apex court's decision, OIL said that the executive instructions of the Centre cannot be construed as law as defined by Article 13 of the Constitution of India. According to the oil company, the Assam Trade Articles (Licensing & Control) Order does not fix price of the petroleum products and the same is fixed by the Ministry of Petroleum vide executive instructions which cannot be construed as law. "The expression having force of law in Article 13 of the Constitution applies only to customs and usages and not to notifications. If a notification cannot be construed as law then it is a mere executive instruction or order and the definition of law cannot be stretched to include within its ambit such executive instruction," it said in its petition. Subsequent to a tender notification, OIL had entered into a contract with South East Asia Marine Engineering and Construction Ltd (SEAMEC) in June 1998 for carrying out drilling and auxiliary operations in Assam. The contract stipulated that SEAMEC would provide fuel and other lubricants for the operations at the rate of Rs 7.45 per litre (high speed diesel) and the same rates and terms and conditions would prevail till the completion of the contract. While the contract was extended for one year, SEAMEC had claimed additional cost on the ground of increase in high speed diesel prices. Aggrieved by the rejection of its claims by the oil company, SEAMEC had referred the dispute to arbitration contending that the increase in prices was brought by the orders of the government having the force of law. The tribunal, and later the HC too, ruled in favour of SEAMEC and asked Oil India to pay around Rs 1 crore to the company.

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