Adovcate General of Kerala government assured the Kerala High court that the state government would bear the liability of oil marketing companies if the petition filed by Kerala State Transport Corporation was finally dismissed.
Following this, the court restrained oil companies from increasing the price of diesel being supplied to cash-strapped the corporation till final disposal of the writ petition filed by it.
Kerala State Transport Corporation filed a petition with the court asking the latter to direct oil marketing firms to sell diesel at a subsidised price.
The corporation filed the petition after the oil marketing firms considered the former a bulk consumer of diesel and hence started charging market price.
According to the petition, if higher prices without subsidy were introduced by oil companies considering it as a bulk consumer, the corporation would suffer a loss of Rs 18 crore per month.
During the hearing, counsel for oil companies had raised the apprehension that they might not be able to recover the difference in rates if the Corporation’s petition was finally dismissed.
Following this, the court asked the government to stand as surety for the excess liability, if any, during the interim period.
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