Pradeep Sharma vs Union of India (UOI) and Another

Sanjiv Khanna, J.—The Petitioner-Mr. Pradeep Sharma has filed the present writ petition in 2010 in public interest praying for the following relief:

(a) Pass directions calling for the relevant records pertaining to the fixation of price of ethanol for EBP at the rate of Rs. 27 per Litre; and

(b) Issue and appropriate writ in the nature of mandamus or any other appropriate writ, order or direction directing that the fixation of price of ethanol for EBP at the rate of Rs. 27 per litre is arbitrary and without any rationale and is thus per void and invalid in law; and

(c) Pass any such other order/s as may be deemed fit and proper in the facts and circumstances of the case

It is stated that the Petitioner is a Journalist and that the decision of the Government of India in fixing the purchase price of ethanol @ Rs. 27/- per litre to be paid by Oil Manufacturing Companies (OM Cs) shall cause tremendous loss to the exchequer. It is stated that the price of ethanol in the domestic market was between Rs. 18/- to Rs. 20/- a litre and even imported price was Rs. 21.34 per litre. It is stated that the ex-mill price of sugar was Rs. 25/- per kg. and the price of the ethanol cannot be more. Reliance is placed on newspaper reports as well as certain quotations. It is stated that the price of ethanol has been fixed to benefit vested interest. However, persons against whom allegations have been made, have not been impleaded as a party.

Loss to the public exchequer or payment of excessive price by the State is certainly a matter of concern. However, the Respondent Union of India in response has stated that the price of ethanol has been fixed at Rs. 27/- by a group of 5 ministers who were given the task to fix the price as an interim measure and subject to adjustment with respect to the final price recommended by the expert committee and approved by the competent authority. It is stated that Dr. Saumitra Chaudhari, Member Planning Commission is the head of the expert committee. The formula/principles of pricing of ethanol would be transparent and take into account the dynamics involved. The recommendations would be submitted to the National Bio-Fuel Committee constituted under the National Policy on Bio-fuels. The final price determined would be decided by the National Bio-Fuel Committee headed by the Prime Minister. Thus the price fixation is not final and is subject to adjustment.

It is submitted that the group of Ministers while deciding the ad hoc interim price of ethanol at Rs. 27/- have taken the following parameters into consideration:

(i) As the ethanol to be procured for the Ethanol Blending Petrol (EBP for short) programme has to come from indigenous sources only, it will contribute in improving the economic condition of sugarcane farmers community as well as in increasing the indirect rural employment in agriculture sector. This will also give an impetus to increase the production of sugar with proportionate increase in ethanol production.

(ii) Foreign exchange will be saved as expenditure involving in import of crude oil will be reduced.

(iii) Ethanol is an eco-friendly fuel and it will help in mitigating climate change, which is currently point of concern in India and all over the world.

In the counter affidavit, the factual background and matrix leading to the said interim ad hoc price fixation decision has been stated. The facts stated are as under:

(a) The Central Government vide its notification dated 1st January, 2003 had resolved that 5% EBP would be supplied in 9 States and 4 Union Territories. By another notification dated 20th September, 2006, the Government had extended the EBP Programme to 20 states and 4 Union Territories and issued a direction that OM Cs shall sell the 5% EBP subject to commercial viability.

(b) The Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 9th October, 2007 decided that 5% mandatory and 10% optional blending of ethanol with petrol w.e.f. October, 2007 and 10% mandatory blending from October, 2008. A uniform purchase price of Rs. 21.50 per litre was fixed for three year. However, EBP Programme was adversely affected by default in supply of ethanol. Against the requirement 180 crore litres of ethanol for 5% EBP the OM Cs contract for 146.6 crore litres of ethanol, the actual procurement was substantially lower at 58.70 crore litres. In the year 2009 the short fall was more pronounced at 85% of the prorated quantity. In the month of June-July, 2009 OM Cs floated tenders on delivery price basis for supply of ethanol in 16 States and 3 Union Territories for supply of 69 crore litres ethanol for one year after 31st October, 2009. Offers were received for barely 27.30 crore litres i.e. 40% of the tender quantity at the rates ranging between Rs. 25 to Rs. 43 per litre. No offer for supply was received from the State of Chhattisgarh & Jharkhand. It is pointed out that the price of crude oil as well as sugar are volatile and the price of Indian basket of crude oil had gone up to $ 132 per barrel in June, 2008, then declined to $ 46 per barrel in December, 2008 and had risen to $ 89 per barrel in December, 2010.

It is apparent from what has been stated that the prices of ethanol are volatile and move up and down depending upon various factors. It also appears that the Respondent was concerned about the future supplies as in the past there were defaults and supplies were not made. These are economic policy matters which are essentially complex and various aspects have to be taken into consideration. Price fixation in the case at hand is essentially an Executive or administrative function. Exercise of judicial review in such matters is rare and not resorted to unless there is violation of constitution or transgression of legal limits or power or the action clearly amount to abuse of power. Administrators also have right to trial and error, so long as both trial and error are bonafide and within the limit of the authority. The challenge and question to the economic policy matters has to be in different fora.

In view of the explanation given by the Respondent for the present, we are not inclined to exercise power of judicial review and delve deeper into the matter. As we have refused to exercise power of judicial review, it should not be interpreted and it does not mean that the Court has accepted or rejected the price fixation. The writ petition is accordingly disposed of, without any orders as to costs.