2nd DR. PARAS DIWAN MEMORIAL “ENERGY LAW” NATIONAL MOOT COURT COMPETITION, 2012 is scheduled to be organized at University of Petroleum & Energy Studies, Dehradun on 6th, 7th & 8th April 2012 before the Hon’ble Supreme Court of Indoi.

1. 2nd Dr. PARAS DIWAN MEMORIAL “ENERGY LAW”
NATIONAL MOOT COURT COMPETITION, 2012
Organized by:
College of Legal Studies
University of Petroleum & Energy Studies
Bidholi Campus
Dehradun (Uttarakhand)
On 6th, 7th & 8th April 2012
MOOT PROBLEM
Before the Hon’ble Supreme Court of Indoi
e
In the matter of:
1. Government of Indoi
through The Secretary, Ministry of Petroleum & Natural Gas
he
2. Indoi Oil Corporation Ltd.
3. Hexxon Petroleum Corporation Ltd.
4. Bright Petroleum Corporation Ltd. ……………………………………..Appellants
……………………………………..
vs.
Retro Petroleum Ltd. ………………………………………….
…….Respondent
1

2. 2nd Dr. PARAS DIWAN MEMORIAL “ENERGY LAW”
NATIONAL MOOT COURT COMPETITION, 2012
1. Indoi is a country whose constitutional framework is similar to that of India.
2. The advent of globalization has fuelled the demand for efficient, reliable and competitively
priced energy supply for accelerating economic growth of developing countries like Indoi.
Affordable energy directly contributes to reducing poverty, increasing p productivity and
improving the quality of life. The strategy for energy development is an integral part of overall
economic strategy.
3. Indoi is the world’s fifth largest consumer of crude and petroleum products with product
consumption growing by over 5% every year. The domestic production of crude oil and natural
every
gas not been increasing in tandem with the demand of petroleum products. Consequently, I
Indoi’s
independence an imported crude oil has been on a rise and its share of imports in its total
consumption is around 80%.
n
4. Government of Indoi, constitutionally committed to cater the economic interest of the vulnerable
,
sections of the people, has a policy to provide them certain petroleum products like kerosene oil,
gas and diesel on subsidized rates. Accordingly, to put on place an appropriate price mechanism
for the petroleum products is one of the major concerns of the Ministry of Petroleum & Natural
Ministry
Gas (MoPNG) of the Government of Indoi.
NG)
5. During 1970s, when several oil companies were nationalized the Government of Indoi
nationalized,
introduced the Administered Pricing Mechanism (APM) which was a complex system of cross
stered
subsidization wherein prices of some petroleum products were kept much higher than what
market-determined prices would have been. The surplus generated in this way was used to
determined generated
partially subsidize certain other petroleum products. The APM ensured a 12 percent post-tax
post
return to the oil companies. However, the APM also empowered the government to artificially
decide upon prices of petroleum products, and thus pricing became a political rather than an
products,
economic decision.
2

3. 2nd Dr. PARAS DIWAN MEMORIAL “ENERGY LAW”
NATIONAL MOOT COURT COMPETITION, 2012
6. The explosive growth of 1990,s required the Government of Indoi to call for funds from private
and international investors. The ability of the oil companies to generate investible surpluses got
reduced considerably by the APM which allowed returns on the depreciated net fixed assets.
Accordingly, the Government of Indoi constituted a committee in 1995 to prepare the blue print
for the deregulation and tariff reforms required in the oil sector. The Committee recommended
dismantling of the APM for various reasons. These recommendations were approved by the
Government in principle in September, 1997 and further action was started. T Government
The
appointed an “Expert Technical Group (ETG)” to study the phasing and tariff structure of the oil
sector. The ETG recommended, inter alia, that there should be a phased deregulation of the oil
sector spread over a period of four to five years, culminating in total deregulation by 1.4.2002
regulation
and that the subsidies should be phased out gradually within acceptable limits which will be
provided through the budget.
7. Government of Indoi accepted the recommendation of ETG. MoPNG notified phased
recommendations phase
st
dismantling of APM vide resolution no. P
ling P-20012/29/97 dated 21 November, 1997. Thereafter,
dismantling of APM for consumer pricing w.e.f. 1st April, 2002 was notified and private players
were authorized to market the transportation fuel including HSD as per the guidelines contained
in MoPNG resolution no. P 23015/1/2001 Mkt. Accordingly APM was completely dismantled
P-23015/1/2001
st
w.e.f 1 April 2002.
8. Transportation fuel including High Speed Diesel (HSD) was being marketed by Indoi Oil
Corporation Ltd. (IOCL), Hexxon Petroleu Corporation Ltd. (HPCL), and Bright Petroleum
Petroleum Pet
Corporation Ltd. (BPCL), hereinafter referred collectively as National Oil Marketing Companies
,
(NOMCs) till the private companies entered the field. NOMCs are public sector companies in
ate
which the Government of Indoi holds majority shares.
ndoi
9. The global scenario in the oil sector post 2004 witnessed steep increase in the price of crude oil.
10. The Government of Indoi taking into consideration the adverse effect of increasing price of HSD
on the common man and economically vulnerable section did not increase the domestic price of
section, pri
HSD in conformity with international prices. The government tacitly regulated and subsidized
the domestic retail selling price of HSD which was lower than the market determined price.
11. NOMCs suffered huge losses by selling HSD at subsidized price according to the policy of the
Government of Indoi. The government compensated the loss thus suffered by NOMCs by issuing
them Oil Bonds.
3

4. 2nd Dr. PARAS DIWAN MEMORIAL “ENERGY LAW”
NATIONAL MOOT COURT COMPETITION, 2012
12. Retro Petroleum Limited (RPL) a private company, applied for and obtained the authorization
(RPL),
for marketing HSD in pursuance of resolution no. P.23015/1/2001 of the MoPNG. RPL invested
heavily and set up several outlets for retail sale of HSD across the country under the legitimate
expectation that the prices of HSD would be fixed by the marketing companies themsel
themselves in
consonance with the market determined price and, in consequence, it would be able to make
ith
profit from retail sales.
13. The Government of Indoi, despite resolution no P 23015/1/2005- Mkt issued by the MoPNG,
Mo
continued to regulate the retail price of HSD. Consequently all market players i.e. NOMCs and
nsequently
RPL suffered losses by selling HSD at prices lower than the market determined prices. But
whereas the losses suffered by NOMCs were compensated by issue of Oil Bonds as already
stated, this benefit was not available to RPL.
14. RPL suffered huge market revenue losses and had no option but to close most of their retail
outlets selling HSD.
15. The Government of Indoi has enacted Competition Act, 2002 with the objective to promote and
ndoi
sustain competition in the market to protect the interest of the consumers and ensure freedom of
trade, to promote economic efficiency, to make markets work for the welfare and benefit of the
consumers and to ensure fair and healthy competition. Competition Commission of Indoi (CCI)
has been constituted under the provisions of the Competition Act to achieve the objectives of the
said Act.
16. The Government of Indoi also constituted a board named Petroleum and Natural Gas Regulatory
Board (PNGRB) under the Petroleum and Natural Gas Regulatory Board Act, 2006 to regulate
the refining , processing, storage, transportation, distribution, marketing and sale of petroleum
and petroleum products and natural gas excluding production of crude oil and natural gas so as to
protect the interest of consumers and entities engaged in specified activities relating to
est
petroleum, petroleum products and natural gas and to ensure uninterrupted and adequate supply
of petroleum, petroleum products and natural gas in all parts of the country and to prom promote
competitive market.
17. RPL filed a complaint in the CCI against the Government of Indoi and NOMCs praying to
omplaint
restrain them from selling the HSD at regulated prices instead of selling at market determined
em
prices in accordance with the terms of the above resolution of the MoPNG.
f
4

5. 2nd Dr. PARAS DIWAN MEMORIAL “ENERGY LAW”
NATIONAL MOOT COURT COMPETITION, 2012
In the complaint, RPL complain that the acts of the respondents namely Government of Indoi
complained
and NOMCs amount to abuse of dominant position and the regulation of prices amount to
indulging in predatory pricing for the purposes of the Competition Act, 2002. The CCI
entertained the complaint and issued notice to the respondent.
18. The NOMCs and the Government of Indoi appeared in pursuance of the notice by the CCI and
raised the following preliminary objections:
objections:-
i. CCI has no jurisdiction to deal with the issues relating to regulation of prices of HSD, a
petroleum product and the same falls within the jurisdiction of PNGRB.
PNGRB.
ii. The determination of issues relating to the contentions raised by RPL with regard to
petroleum products is wit
within the exclusive domain of PNGRB and not the CCI.
RB
iii. The regulation of prices of HSD is a policy matter of the Government and as such the
same cannot be questioned b the CCI.
annot by
After hearing the parties, the CCI rejected all the above preliminary objections and held that the
he
CCI has jurisdiction to decide the complaint.
19. Aggrieved by the above order o CCI, the NOMCs and Government of Indoi preferred as appeal
of
before the Competition App Appellate Tribunal (CAT) constituted under the provisions of the
Competition Act. The appe ellants also filed an application before the CAT praying for interim
ion
stay of the proceedings in the CCI.
20. CAT, after hearing the parties, dismissed the application to stay the proceedings in the CCI.
However an interim order was passed directing the CCI to continue with the proceedings but not
pass any final order till disposal of the appeal.
21. In January 2012, CAT finally dismissed the appeal and held that CCI has the jurisdiction to
entertain, enquire and decide the complaint.
22. Aggrieved by the decision of CAT, the Government of Indoi and NOMCs (the appellants)
moved the Hon’ble Supreme Court of Indoi and prayed for quashing the impugned order. The
appellants have also filed an application seeking interim stay of the proceedings before CCI.
5