Petroleum Adulteration and Direct Cash Transfer: Supreme Court Dismisses PIL

The case of Seema Upadhyay vs. Union of India & Ors. involves a public interest litigation (PIL) filed under Article 32 of the Constitution concerning allegations of large-scale adulteration of petroleum products and a demand for direct cash transfer of kerosene subsidies. The Supreme Court had to determine whether the petitioner’s demands warranted intervention, particularly regarding an independent investigation by the Central Bureau of Investigation (CBI).

The petitioner alleged that a fuel mafia, led by individuals with political influence, was involved in the illicit trade of adulterated diesel and petrol across Uttar Pradesh. The petition sought judicial directions for an inquiry by the CBI and a shift to direct cash transfers of kerosene subsidies through Aadhaar-linked bank accounts. The Supreme Court, after reviewing the submissions and the factual findings of an inquiry by the Ministry of Petroleum and Natural Gas, dismissed the petition.

Background of the Case

The petitioner, Seema Upadhyay, approached the Supreme Court highlighting extensive cases of petroleum adulteration allegedly operated by a network of individuals controlling multiple petrol pumps and diesel dealerships. She contended that the existing regulatory mechanisms failed to curb the illicit trade, leading to a substantial loss to the public exchequer and environmental degradation.

The key demands in the petition were:

• A CBI-led independent inquiry into known and reported cases of fuel adulteration.
• Directions to transfer kerosene subsidies directly to beneficiaries’ bank accounts linked to Aadhaar, to prevent diversion of subsidized fuel into the open market.

Arguments by the Parties

Petitioner’s Arguments (Seema Upadhyay)

The petitioner contended that:

• Petroleum adulteration was rampant in Uttar Pradesh, involving dealers who fraudulently obtained licenses under different names.
• The government failed to enforce the use of anti-adulteration markers in kerosene to detect its illegal use in diesel and petrol.
• Multiple fuel outlets were controlled by a single entity through benami ownership, violating licensing norms.
• The only effective solution was a direct cash transfer of subsidies to prevent kerosene diversion.

Respondents’ Arguments (Union of India & Ors.)

The respondents, represented by the Ministry of Petroleum and Natural Gas, argued that:

• A fact-finding inquiry had already been conducted by a Joint Secretary-level officer, and no conclusive evidence was found to support the petitioner’s allegations.
• The government had taken multiple steps, including marker doping in kerosene and surprise inspections at petrol pumps, to curb adulteration.
• Licensing authorities were responsible for monitoring dealerships, and individual violations could not justify a broad CBI probe.
• Implementation of direct benefit transfers for kerosene was under consideration, and pilot programs were already in place in some districts.

Supreme Court’s Analysis

The Supreme Court examined the procedural and policy aspects of the case:

• The allegations against fuel dealers were largely factual in nature and required adjudication by the licensing authorities.
• The inquiry conducted by the Ministry of Petroleum and Natural Gas found no evidence warranting CBI intervention.
• The government had already initiated policy measures, including phasing out subsidized kerosene and adopting electronic monitoring of fuel stations.
• The issue of fuel adulteration fell within the executive domain, and judicial interference was unwarranted.

Key Observations by the Court

The Supreme Court ruled:

“Whether an individual holds multiple petroleum dealerships in violation of applicable rules is a matter to be decided by the oil companies and regulatory bodies. This Court cannot undertake a factual inquiry under Article 32.”

On the issue of kerosene subsidy transfers, the Court stated:

“Policy decisions such as the implementation of direct cash transfers for kerosene fall within the purview of the executive. It is not for this Court to dictate the mechanism for subsidy distribution.”

Final Judgment

The Supreme Court dismissed the petition, holding that no case was made out for judicial intervention. It ruled:

“The petition is disposed of, leaving it open for the petitioner to present any additional material before the competent licensing authorities.”

Conclusion

This case reinforces the principle that judicial intervention is warranted only when executive action is demonstrably inadequate or unlawful. The Supreme Court’s ruling emphasizes that factual disputes regarding licensing violations and fuel adulteration should be resolved by regulatory bodies, not constitutional courts.

Petitioner Name: Seema Upadhyay.
Respondent Name: Union of India & Ors..
Judgment By: Justice Dipak Misra, Justice A.M. Khanwilkar, Justice Dr. D.Y. Chandrachud.
Place Of Incident: Uttar Pradesh.
Judgment Date: 05-04-2018.

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