Corporate Accountability

Pilferage & Adulteration of LSHS:

In December 1991, NCCL brought to the notice of the Prime Minister a well-organized racket of theft and adulteration of Low Sulphur Heavy Stock (LSHS) by a well-organized gang of transporters, in collusion with officials of the Atomic Power Station (ATP) near Kota, Rajasthan.

The ATP was lifting about 20 tankers of LSHS everyday from the Koyali refinery near Baroda. The gang of drivers/transporters used to pilfer 10 to 20 drums from each tanker at various places en route the Baroda-Ahmedabad Highway, and add water in the tankers to compensate the weight difference. While the pilferage cost the Central Government crores of rupees, the adulteration also posed a threat to the costly plant and machinery of the ATP.

The NCCL’s representation was voiced in the Parliament (Lok Sabha) by Mr Nathuram Mirdha, Hon'ble Member of Parliament, on 11th May, 1992. The Central Government ordered raids on the adulteration points and the receiving points at ATP, the concerned officers were suspended, and the pilferage & adulteration racked was ended.

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Hot loading of light diesel oil by IOC:

In January 1992, NCCL filed a complaint with the Director General -- Investigation & Registration (DGI & R) of the Monopolies & Restrictive Trade Practices Commission (MRTP Commission), exposing an Unfair Trade Practice by the monopolistic public sector unit, the Indian Oil Corporation (IOC).

IOC indulged in hot loading of Light Diesel Oil (LDO) at temperatures up to 60 degrees at its Mathura refinery, against the standard filling temperature of 29.5 degrees. LDO is supplied on a volume basis, and the higher the loading temperature, the lesser the actual quantity. IOC would not mention the loading temperature on the delivery challans, keeping the customers in the dark about the actual quantity of LDO supplied to them. This meant that lakhs of end-users were being short-supplied by up to 340 litres of LDO in each 14,000 litre-capacity tanker lorry.

In its complaint, NCCL provided all relevant documentary evidences, and the DGI & R found a prima facie case against IOC. Following this, the MRTP Commission granted an ex parte interim injunction against IOC, directing it to mention the loading temperature of LDO on the challans.

The IOC refused to comply with the directives of the MRTP Commission. In October 1997, the DGI & R filed a contempt petition against IOC at the MRTP Commission, on the basis of evidences supplied by the NCCL. IOC apologized before the Commission in May 1998, and started mentioning the loading temperature on the challans, ending a blatantly unfair trade practice.

Temperature variation racket in LDO:

In May 1993, NCCL approached the Ministry of Petroleum & Natural Gas (MoPNG), demanding that either the customers of LDO be supplied at standard loading temperature (29.50 degrees), or be given a Temperature Variation Allowance (TVA) against the short-supply resulting from hot loading of LDO -- an unfair trade practice indulged in by all Oil Companies.

On the request of NCCL, the issue was raised twice in the Parliament (Rajya Sabha) by Hon'ble MPs, Mr K K Birla and Mr J P Mathur through starred questions, and followed by discussions in the House. The MoPNG agreed to give TVA on LDO with effect from September 1994 on an all-India basis.

More than 10 lakh, large and small LDO customers across the country, were benefited by this order, receiving an average TVA of Rs 1,300 to 1,500 per tanker lorry.

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Unfair trade practices by GEB:

In May 1993, NCCL filed an Unfair Trade Practice complaint with the Director General (Investigation & Registration) - MRTP Commission, against the Gujarat Electricity Board (GEB), for deducting cash discount and imposing penalty on various suppliers.

GEB was purchasing various items for their plants through tenders. As per the condition in the tenders, GEB was empowered to deduct half percent cash discount in case it releases the payment to the supplier within 15 days from the date of submission of the bill. But it invariably allowed the 15-day period to lapse, and deducted the cash discount from the bill in contravention of its own contract.

Similarly, the supply schedules were clearly mentioned in the tenders, including a penalty clause for not supplying the material within the specified period. GEB deliberately withheld the supply schedule for the last balance quantity, allowing the supply period to expire, and then, invoked the penalty clause mentioned in the tenders.

Following NCCL’s complaint, DGI & R effectively intervened, and several crores of rupees deducted by GEB towards cash discount and penalty were refunded to the suppliers.

Non-adherence to production schedule by ONGC & OIL:

In August 1993, NCCL filed a complaint with the DGI&R MRTP Commission, against a Restrictive Trade Practice (RTP) of the Oil & Natural Gas Commission (ONGC) and Oil India Limited (OIL).

The complaint exposed that Oil & Natural Gas Commission (ONGC) and Oil India Limited (OIL) were deliberately not meeting production schedules.

These were the only two oil and gas producing companies of the country at that time, and India's self-reliance in crude production had gone down from 70% in 1984 to 30% in 1988. India produced only 30 million tonnes of crude in 1988 against a production capacity of 65 to 70 million tonnes, and the cost of imported crude being 75% higher than the indigenous crude, it resulted in hugely adverse Balance of Payment (BoP) situations.

India’s crude reserves estimates had gone up from 558 million tonnes in 1986 to 1,300 million tonnes in 1993. Despite this, the two companies failed to maintain production as per the targets given by the MoPNG.

Following NCCL’s expose’ and complaint, ONGC promised to meet the production schedules defined by the MoPNG.

Unfair trade practices by the Indian Railways:

In August 1993, NCCL lodged an Unfair Trade Practice complaint against the Indian Railways with DGI & R, MRTP Commission, for not allowing loading of wagons as per their 'maximum carrying capacity'.

Railways used two types of box wagons -- 4-wheeled and 8-wheeled. The 'carrying capacity' of each wagon is clearly marked on each wagon. The 'maximum carrying capacity' of a 4-wheeled wagon was 1 MT higher than its 'carrying capacity’. The 'maximum carrying capacity' of an 8-wheeled wagon was 2 MT higher than its 'carrying capacity’.

A thorough investigation by NCCL found that the Railways used to allow wagons to load only as per 'carrying capacity'. However, at the destination point, the companies and traders were forced to pay 'under-loading charges' for not loading up to the ‘maximum carrying capacity' of the wagons, and slapped penalty. This was not only an unfair trade practice, but smacked of a monopolistic attitude. And the Railways had mopped up Rs 18 crore through this method, in a very short span of time.

Following NCCL’s complaint, DGI & R intervened, forcing the Railways to stop this unfair trade practice.

Tax evasion by HPCL:

In November 1993, NCCL detected Central Sales Tax (CST) evasion to the tune of Rs 2.15 crore by Hindustan Petroleum Corporation Limited (HPCL), the public sector oil company.

The tax evasion related to the supply of 6,000 MT of Low Sulphur Heavy Stock (LSHS) from Indian Oil Corporation’s refinery in Koyali, Baroda, to a customer in Rawat Bhatta, District Kota, Rajasthan. This was a direct sale, but HPCL showed it as 'Stock Transfer' from IOC’s Koyali refinery to its Kota Depot, which was still under construction.

Here’s how this evasion was carried out: Although HPCL’s tankers were directly unloading LSHS at Rawat Bhatta, transporters were issued ‘stock transfer challans' from the Koyali refinery, which were surrendered at the Kota Depot, and fresh ‘sales challans' were issued to them for transfer of the material from the Kota depot to Rawat Bhatta.

NCCL approached the Commissionerate Sales Tax, Ahmedabad with documentary evidence to prove that this was a case of ‘direct sale’, on which, Gujarat Government was entitled to collect tax. The Commissioner of Sales Tax, Ahmedabad, finding a prima facie case of Tax Evasion, started proceedings against HPCL, for recovery of Rs 12.86 crore (including interest and penalty). Subsequently, the Sales Tax Department recovered the bulk of this amount from HPCL, and also asked HPCL to submit a Bank Guarantee for future transactions. Failing which, it would have had its license suspended.

Unfair trade practice by IOC:

In December 1993, NCCL exposed a case of unfair trade practice by the Indian Oil Corporation (IOC).

IOC was freezing the credit balance of all customers at the end of every financial year (on March 31), pocketing the credit balance of lakhs of customers all over the country, running into several crores of rupees. Various depots and refineries of IOC were transferring these frozen credit balances to their respective regional offices. Customers were asked to get refunds after reconciliation of their accounts with the respective regional offices of IOC. The customers found this an uphill task, in the absence of proper records and designated officers at the regional offices. It was a no-win situation for the customers, and amounted to an unfair trade practice.

Following NCCL’s expose’, and vigorous follow-up, IOC refunded frozen balances of many customers, and de-froze the balances of others. The corporation also made an assurance to NCCL that it would not freeze the credit balance of customers in the future, without their prior consent.

Price manipulation by oil majors' cartel:

In December1993, NCCL lodged a complaint at the MRTPC against the country’s four public sector undertakings – Indian Oil Corporation Limited (IOC), Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and Indo-Burma Petroleum Company (IBP), for forming a cartel to raise the cost of 'price-controlled' lubricants by 20%, and other lubes by 8%, with effect from November 1993. The Oil PSUs had also increased the dealer's commission uniformly, resulting in a 40% rise in market prices of lubes. Acting on NCCL’s complaint, MRTPC issued notices to the oil PSUs, who agreed to reduce rates.

Contamination in Coke bottles:

In May 1996, NCCL filed an Unfair Trade Practice case against Coca Cola India Limited, before the MRTP Commission. The case related to the contamination found in some bottles of Coca Cola and Limca, which could pose health hazards. NCCL pointed out that the company's claims of using advanced inspection technology for bottling rang hollow.

Following NCCL’s complaint, MRTPC sent notices to Coca-Cola India Ltd. When the company failed to reply several notices, the MRTPC slapped a fine on the company in April 1999.

NCCL’s complaint brought critical glare on the company’s claims about its advanced quality inspection technologies, and focused societal attention on the way multinationals were functioning in India.

Dishonest salt sales promotion scheme by HLL:

In May 1997, NCCL filed an Unfair Trade Practice case before the MRTP Commission, against Hindustan Levers Limited (HLL). The case related to a ‘false scheme’ launched by the company.

HLL had brought out a scheme in the market, offering a free Wheel Soap with two 1 kg packs of HLL’s 'Kisan Annapurna’ iodized salt. According to the evidence collected by NCCL, HLL increased the MRP of the 1 kg 'Kisan Annapurna’ salt pack from Rs 5.50 to Rs 6.00 just before the launch of this scheme, duping the buyers.

In response to NCCL’s case, the MRTPC directed HLL to withdraw the scheme from the market.

Duty exemption misuse by Rajasthan Hospital:

In September 1997, NCCL exposed how the Ahmedabad-based Rajasthan Hospital had misused the Customs Duty Exemption offered to the healthcare segment, by importing equipment for its research institute by submitting false statements.

The complaint also included charges such as concealment of real income, and false research claims. It also blew holes in the Hospital’s claim of being a no-profit organization, treating up to 40% of its patients free of cost. In short, it established a pattern of systemic misuse and economic offenses by the Hospital.

NCCL’s expose’ activated the Customs Department, which assessed that the hospital had evaded duty amounting to Rs 2 crore through this method during 1992-97. It slapped a Rs 2-crore penalty on the hospital, under Section 64 of the Customs Act 1988.

Import of Polio vaccine:

In February 1998, NCCL filed a petition before the MRTP Commission, against the illogical import practices of the Ministry of Health & Family Welfare.

Following the complaint, MRTPC issued a notice to the Ministry, asking it to explain why it had allowed import of 150 lakh doses of Oral Polio Vaccine (OPV) at Rs 70 per 20 doses, ignoring indigenously produced OPV, available at Rs 51 per 20 doses. The case was eventually withdrawn, following an assurance by the Ministry to the Commission that the vaccine import would be stopped.

Frequent petro price hike by IOC:

In August 1999, NCCL lodged a protest with the Indian Oil Corporation (IOC) and the Ministry of Petroleum & Natural Gas (MoPNG), against the frequent rises in prices of decontrolled petroleum products such as Residual Fuel Oil (RFO), Furnace Oil (FO), Naphtha LSHS and LDO – which were raised 11 times in 5 months!!!

The Government of India had decontrolled these products, allowing oil companies to market them on an Import Parity basis. And Oil PSUs, in the name of Import Parity, frequently raised the prices of these products without any notice. This made lifting the product difficult for small consumers, because the amounts in the demand drafts carried by their transporters differed from the changed prices, causing ‘loss and injury’ to them.

On the other hand, large companies were selectively given pay-by-cheque facility (in place of the demand drafts that comparatively smaller consumers were required to furnish) as well as a whopping discount of Rs 300 to 600/KL/MT. This meant that any upward price rise would not affect the dispatch schedule of the larger consumers, while putting smaller consumers to considerable trouble.

Following NCCL’s representation, the MoPNG intervened to reduce the frequency of price revisions, and totally abolished the discriminate discount system.

Hedging of crude & petro-products by Central Govt:

In March 2000, NCCL put across a strategically structured suggestion to the Ministry of Petroleum & Natural Gas, in view of the fact that India's total annual oil import (2000-2001) bill crossed Rs 60,000 crore, or 70 % of its crude requirements.

The proposal urged the Ministry to allow ‘hedging’, and long-term future contracts to oil companies for bulk-sourcing crude oil and finished products when the prices in the international markets were low. Hedging would help the nation get crude and other petro-products at much cheaper rates and enable continuous supply. NCCL pointed out that the practice of buying crude and finished products through spot buying and tendering was not a foolproof system. It often resulted in huge losses to the government, being exposed to the risk of high and frequent price variations by the Oil Producing and Exporting Countries (OPEC). It also resulted in an extra burden on POOL account.

The Ministry, which at first refused to accept NCCL's suggestions, eventually accepted its logic, and allowed hedging of crude oil with effect from November 2000.

Ban on inter-state movement of petro-products:

In August 2000, a Rs 500-crore scam in High Speed Diesel (HSD) was unearthed by the Central Bureau of Investigation (CBI) in Ahmedabad. Instead of punishing the individual officials involved in the scam, the MoPNG took collective action, imposing a blanket ban on inter-state movement on all other petro-products such as FO, LDO, LSHS, HPS and Naphtha, besides HSD.

Customers all over the country were directed to take supplies of these products from respective depots within their states. The Ministry issued the order knowing fully well that products such as RFO, LSHS and Bitumen could be supplied only through refineries, there being no storage & loading facilities for such products in the inland depots.

In between, the Ministry partially relaxed the order, allowing inter-state movement by only few big companies. This decision forced thousands of small customers to source their fuel oils from distant depots, paying higher taxes and transportation charges. The extra burden, as calculated by NCCL, came to Rs 4,000 to 5,000 per 12-kilolitre tanker lorry.

NCCL opposed this decision, threatening to file a criminal case against the officials if the ban was not lifted immediately. The Ministry finally lifted the ban in September 2000.


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