Delhi HC Division Bench upholds OMC’s penal guidelines for oil retailers – World Affairs SRS

Delhi HC Division Bench upholds OMC’s penal guidelines for oil retailers

– World Affairs SRS

A Division Bench of the Delhi High Court has upheld the Marketing Discipline Guidelines (MDG) 2017 prepared by Oil Marketing Companies (OMCs) to maintain market discipline and uniformity in action for operating a network of petrol and diesel retail outlets (ROs). . Under the guidelines, heavy fines are imposed on petrol pump dealers for malpractices such as short delivery of petroleum products.

Petrol pump dealers had alleged that MDG 2017 gives arbitrary powers to the officials of OMCs and makes their business impractical due to high compliance burden.  The aggrieved dealers had approached the Delhi High Court and a single-judge bench had passed an order quashing MDG 2017.  The division bench on Monday overturned the verdict and ruled in favor of OMC, but granted its approval to all except one provision.  guidelines.

The dealers were represented by the All India Petroleum Dealers Association (AIPDA). Association officials told Business Standard they plan to formulate their future strategy this week after consultations with state heads.

This means that petroleum dealers will face stringent penal action for offenses related to under-delivery of products, operation of automatic dispensing units on manual mode and improper maintenance of toilets.  The dealers have also been directed to pay the minimum wages notified by the OMCs or prescribed by the respective State Governments, whichever is higher.

Petrol pump owners said the condition of minimum wages is one of the most controversial issues in MDG 2017 as it directly affects their margins.

With regard to toilets, the Bench agreed with the concerns raised by the petrol pump dealers. 

A division bench of the Delhi High Court said that allowing everyone to use toilets at petrol pumps without any restrictions could be a security hazard. The court empowered the pump operators to exercise their discretion with regard to the use of toilets in their premises.

OMCs prepared and issued MDGs for the first time in 1981-82.  The guidelines are reviewed and revised from time to time to meet the changing circumstances as well as to set higher customer service benchmarks for the OMCs as well as the dealers network.  The MDGs were reviewed and revised again in the year 2012 and MDG-2012 was issued and made effective from 8 January 2013.

The MDG-2012 was challenged in various High Courts, following which the Allahabad High Court, the Delhi High Court and the Karnataka High Court upheld the OMC's power, jurisdiction and authority to issue MDGs.

According to oil companies, the MDG 2012 was amended in 2017 after large-scale malpractices were detected in some states at the time of supply and distribution of petroleum products.  This was being done by manipulating the software or hardware in the distribution units.  The amendments were aimed at motivating the RO's employees to provide better services and give assurance in terms of quality, quantity, cleanliness and behaviour.

To ensure that the dealers are adhering to the minimum wage instructions, the OMCs reiterated in September 2017 that salaries are required to be paid through e-payment from August 2017 onwards.  A wage register and e-payment details were also to be kept ready by the retail outlets for verification by the OMC officials.

time period

October 2017: Modifications included in MDG 2012

March 18: Single Judge Bench of Delhi High Court quashes amendments in MDG 2012

January 10: Division Bench of Delhi High Court upheld the amendment in MDG 2017

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