Indian Oil Corporation Limited & Anr. v. Kerala State Road Transport Corporation & Ors.
Background
The Kerala State Road Transport Corporation and several other State transport undertakings challenged a 17 January 2013 Government of India decision to stop subsidizing diesel sold in bulk directly to large consumers (such as state transport corporations and railways), forcing them to pay the market-determined, non-subsidized price instead of the subsidized retail rate. The transport corporations argued this was arbitrary, discriminatory, and financially crippling given their public-service role and existing losses. The Supreme Court transferred similar writ petitions pending in various High Courts to itself and stayed the interim relief those High Courts had granted.
Decision Breakdown
The Court held that grant of a subsidy is a matter of government privilege and fiscal policy, not an enforceable legal right, so withdrawing it does not violate Article 14 even if it burdens public-service providers like state transport corporations. Relying on earlier precedents (State of Rajasthan v. J.K. Udaipur Udyog Ltd., Shree Sidhbali Steels, and others), the Court reasoned that a concession can be enjoyed only during the period of its grant and can be withdrawn at any time by the authority that granted it; such policy decisions, driven by the OMCs' mounting under-recoveries and the need to redirect funds to social welfare, are not ordinarily amenable to judicial review. The Court dismissed the writ petitions and disposed of all the connected appeals and transfer cases, while recording Kerala's specific undertaking to reimburse any deficit to the transport corporation if the petition was ultimately dismissed, and leaving other states to work out equities among themselves. No costs were awarded.
Lesson Learnt
Government subsidies and concessions are discretionary policy benefits, not vested legal rights: courts will generally not strike down a withdrawal of subsidy as unconstitutional merely because it causes financial hardship to the recipient, even a public body providing an essential service.