Calcutta High Court
Ambica Charan Sinha vs Union Of India (Uoi) And Ors. on 2 May, 2005
Equivalent citations: 2005(3)CHN468
Author: Pranab Kumar Chattopadhyay
Bench: Pranab Kumar Chattopadhyay
JUDGMENT Pranab Kumar Chattopadhyay, J.
1. The petitioner herein has challenged the decisions taken in the meeting held on 25th August, 2004 in presence of the superior officers of the Oil companies in order to resolve the disputes between the petitioner and the respondent No. 8 to finalise the trading area.
2. The petitioner herein is the proprietor of M/s. Jangipur Gas Service and was appointed as a distributor by Indian Oil Corporation Limited (hereinafter referred to as IOC) pursuant to the agreement dated April 17, 1986. In the said agreement it has been specifically mentioned that the said M/s. Jangipur Gas Service has been appointed as Distributor in the territory or distribution area of Jangipur.
3. Subsequently, Senior Area Manager of M/s. Indian Oil Corporation by the letter dated August 9, 2004 clarified certain points regarding the Indane Distributorship at Janipur in the following manner :
1) This distributor initially marketed Indane within the townships of Jangipur and Raghunathganj under the Jangipur Municipality area as per the prevailing Policy at that time.
2) In course of time, depending on changes of Policies including release of priority connections at the instructions of MOP & NG and Hon'ble MPs, release of tatkal connections in the rural areas to restrict deforestation and minimize pollution etc., customers residing in and around Jangipur were enrolled.
4. In other words, the petitioner and the IOC both understood that under the agreement the territory assigned to the petitioner was "territory or distribution area of Jangipur" including rural areas "in and around Jangipur". The Central Government published a policy guideline dated March 10, 2000 whereby refill sales ceiling limit for towns upto 10 lakhs population was increased from 6000 to 8000.
5. The Government of India also issued a guideline regarding transfer of LPG connections on the basis of viability norms and communicated to the oil companies by the circular dated 16th October, 2001. The relevant portions of the said guidelines are quoted hereunder :
"Oil Marketing Companies are advised to effect the transfer of customers (restructure the market) on the basis of the viability norms of each market instead of ceiling limit. To start this exercise, the viability limit for a distributor in a given market need to be fixed as the 75% of the present ceiling limit prescribed for the different market as the bench-mark for the viability of a distributorship.
In view of the above, it has been decided that the transfer of LPG connections from the old distributor to the newly commissioned/unviable LPG distributorship in all the saturated markets should be effected on the basis of viability norms, as suggested above instead of ceiling limit criteria to ensure the viability of newly commissioned/unviable distributorships within first year of its operation."
6. The aforesaid viability norm was further clarified by the Central Government by a subsequent policy guideline dated 1st February, 2002. The relevant portions of the said guidelines are set out hereunder :
1) The transfer of customers needs to be made only from those distributors who are operating above the 75% of the ceiling of the market.
2) While transferring the connections from old distributors, it would be ensured that such distributors would not be brought down below the 75% of the ceiling limit of the market.
3) The unviable distributors (newly commissioned as well as old distributors) would be given such number of customers to reach the 50%; of the refill ceiling of the market.
7. The Oil companies appoint LPG distributors in three categories, namely (i) Urban Market; (ii) Semi-Urban Market; or Urban/Rural Market; and (iii) Rural Market. HPCL published an advertisement for Shazadpur in Urban/ Rural Category, i.e. Semi-Urban category in the district of Murshidabad under marketing plan 1994-96. HPCL issued an appointment letter dated January 29, 2003 to the private respondent No. 8, paragraph 3 whereof provided as follows :
"Trading Area :
Your trading area of operation will comprise of within the Panchayat limits of Sahajadpur...."
8. From the records I find that the respondent No. 8 also by her letter dated 30th July, 2004 addressed to IOC Limited accepted the aforesaid position. The relevant portion from the aforesaid letter of the respondent No. 8 is set out hereunder :
"I happen to be a LPG Distributor of Hindustan Petroleum Corporation Limited at Sahajadpur, P.S. Raghunathganj in the district of Murshidabad, West Bengal, under open (W) category-rural & urban."
9. According to the writ petitioner, the respondent Hindustan Petroleum Corporation Limited wrongfully started describing the respondent No. 8 under the rural category. The learned Counsel of the petitioner submits that the said petitioner does not market LPG in the Sahajadpur Panchayat area. The learned Counsel of the petitioner further submits that although the petitioner had some customers in the Sahajadpur Panchayat area before the appointment of the respondent No. 8 but subsequently those customers have been transferred to the respondent No. 8.
10. It has been submitted on behalf of the petitioner that after appointment of the respondent No. 8 as the distributor of M/s. Hindustan Petroleum Corporation Limited, the said petitioner and his wife had been threatened and pressure was created to wind up the business from the areas which are outside the Jangipur Municipality. It has also been alleged by the petitioner that not only the petitioner herein but also the senior officers of the IOC Limited had been unduly pressurised in order to restrict the business of the petitioner within the municipal limit of Jangipur.
11. From the records it appears that the Block Development Officer, Raghunathganj - II, issued a letter to the Senior Area Manager, Indian Oil Corporation Limited wherein a specific request was made for not entering into the marketing jurisdiction of the private respondent. The said B. D. O. also threatened the petitioner and the Senior Area Manager of the IOC Limited with the administrative measures in the event the aforesaid request was not adhered to.
12. Undisputedly, the problems relating to the distribution area and/or marketing area of the distributors of different Oil companies cannot be decided by the Block Development Officer for want of jurisdiction and/or authority.
13. Subsequently, pursuant to the request of the District Magistrate, Murshidabad, Senior Area Manager, IOC Limited explained the stand of the IOC Limited in the matter of distributorship area of the writ petitioner by the written communication dated 9th August, 2004. In the said letter, it was pointed out that the refill sale of the subject distributor can be brought down upto 75% of the refill ceiling limit i.e. 6000 per month and the selling limit for Jangipur as per present norms was 8000 Nos. of refills sale per month. In the said letter it has been specifically mentioned that the petitioner herein was appointed the distributor for marketing Indane within the township of Jangipur and Raghunathganj under the Jangipur Municipal area.
14. By the said letter the District Magistrate, Murshidabad was also requested to appreciate the fact that the contention of M/s. Rahaman H P Gas Agency is not logical and the petitioner should be allowed to operate within the area where it has marketed LPG. The relevant portions from the said letter dated 9th August, 2004 written by the Senior Area Manager, IOC Limited are quoted here under :
1) "The subject distributor, M/s. Jangipur Gas Service was commissioned in 1985.
2) This distributor initially marketed Indane within the townships of Jangipur and Raghunathganj under the Jangipur Municipality area as per the prevailing Policy at that time.
3) ...
4) ...
5) Meanwhile, M/s. BPCL commissioned M/s. Sheetal Gas Agency at Dhulian, M/s. IBP commissioned M/s. Krishna Distributor at Aurangabad and M/s. HPCL commissioner M/s. Rahaman HP Gas Agency at Sahajadpur in the years 2001, 2002 and 2003 respectively.
6) Since M/s. Jangipur Gas Service was already marketing LPG in these areas, customer transfer from M/a. Jangipur Gas Service to these distributors were arranged as per the guidelines of MOP & N vide communication No. P-20012/65/2000-MKT dated 16/10/2001 and 01.02.2002 based on the viability norms as fixed by the Ministry.
7) ...
8) As a result of the above customer transfers the average monthly refill sales of the subject distributor has been reduced to 8360 Nos. during the year 2003-04 and to 6813 Nos. refills per month during the current year (i.e. upto July'04).
9) As per the Ministry circulars referred above the refill sale of the sub-distributor can be brought down up to 75% of the refill ceiling limit i.e. 6000 refill per month. It is pertinent to mention here that the ceiling limit of Jangipur as per the present norms is 8000 Nos. of refills sale per month.
10) ...
11) ...
12) You will kindly appreciate that the above contention of M/s. Rahaman HP Gas Agency is not logical and M/s. Jangipur Gas Service must be allowed to operate within the areas where it has marketed LPG all throughout this period once his refill sale reaches the 75% level of the ceiling limit of the market."
15. Ultimately, a meeting of the concerned parties was arranged in the chamber of the Deputy General Manager, LPG, IOC Limited on 25th August, 2004 for resolving the disputes between the petitioner and the respondent No. 8.
16. It has been specifically alleged on behalf of the petitioner that in the said meeting, the Senior Officers of the IOC Limited expressed their helplessness in the matter and requested the petitioner to agree to restrict his business area of operation within Jangipur municipality and allow the respondent No. 8 to have monopoly over the area of 15 K. M. radius from his showroom outside the municipal area. The decision taken in the said meeting in presence of the parties has been recorded in the minutes of the meeting, which has been annexed with the writ petition. The relevant portion from the said minutes of the meeting held on 25th august, 2004 is quoted hereunder :
"In this regard the following has been discussed and decision taken :
i) M/s. Jangipur Gas Service will remain within the municipal limit of Jangipur and serve the customers within this area.
ii) M/s. Rahaman H P Gas Agency will be operating within his trading area and serve the customers in that area.
iii) Transfer of customers will take place based on the above,
iv)..."
17. The learned counsel of the petitioner, however, submits that the petitioner was compelled to sign to the said minutes of the meeting although the petitioner never accepted the decision of the said meeting. The petitioner also endorsed his objections in the said minutes of the meeting to the following effect :
"Below 6000 (six thousand) cyl. per month shall be financially ruined. So protest."
18. According to the petitioner, if the impugned decision taken in the said meeting held on August 25, 2004 is given effect to then the number of refills of the petitioner would be reduced to 3500 refills, which according to the petitioner is not only unreasonable but contrary to Central Government guidelines and viability norms of 6000 refills.
19. Mr. Pratap Chatterjee, learned Senior Counsel appearing on behalf of the petitioner urged before this Court that the impugned decision dated August 25, 2004 tends to modify the agreement between the petitioner and the IOC Limited which is not permissible in law. Mr. Chatterjee strongly placed reliance on the decision of the Supreme Court in the case of National Fertilizers v. Puran Chand Nangia, .
20. The learned Counsel of the petitioner further submits that although the policy guidelines are binding upon the oil companies but in the present case, the respondent Oil companies are acting in violation of the policy guidelines being pressurised and/or influenced by some powerful superior authority. Mr. Chatterjee also relied upon a decision of the Calcutta High Court in the case of Sri Ardhendu Manna v. Union of India and Ors., reported in 1997(2) CLJ 187 in support of his aforesaid contention.
21. The respondent No. 8, however, admitted the fact that he was appointed in a place which belongs to Panchayat and such appointment was made under urban/rural category. The learned Counsel of the said respondent No. 8 submits that the petitioner herein is a rival in trade and therefore, the present writ petition at the instance of the petitioner is not maintainable.
22. Mr. Ashok De, learned Senior Counsel appearing on behalf of the respondent No. 8 referred to and relied upon a decision of the Supreme Court in the case of Mithilesh Garg etc. etc. v. Union of India and Ors. etc. etc. and also an unreported decision of this Court in the case of Mrityunjoy Transport Co. v. State of West Bengal.
23. The learned Senior Counsel of the respondent No. 8 further submits that the trading area of the writ petitioner and the respondent No. 8 are different i.e. Jangipur municipal area and Sahajadpur Panchayat area respectively and therefore, the policy guidelines regarding viability norms of 6000 refills per month cannot be made applicable in the facts of the present case. Mr. De also referred to and relied upon various documents annexed with the affidavit-in-opposition filed on behalf of his clients and submits that under the policy guidelines, extension counters are not permissible. Mr. De also submits that the respondent IOC Limited has every right to appoint any or more additional distributor in the same territory and specific provision has also been made in the agreement executed between the petitioner and IOC Limited.
24. Mr. R. Bachwat, the learned Counsel appearing on behalf of the respondent IOC Limited, however, submits that the writ petitioner herein cannot challenge the decision recorded in the minutes of the meeting held on 25th August, 2004 as the said writ petitioner is a signatory to the said decision. The learned Counsel of the IOC Limited further submits that the allegation of duress and/or coercion as alleged on behalf of the petitioner cannot be gone into a proceeding under Article 226 of the Constitution of India.
25. It has also been submitted by the learned Counsel of the IOC Limited that in the event, this Hon'ble Court holds that the decisions as recorded in the minutes of the meeting held on 25th August, 2004 are not in accordance with the policy guidelines framed by the Ministry of Petroleum and Natural Gas then, the order to be passed by this Court should be restricted to the decisions and/or agreements relating to the writ petitioner only.
26. Considering the rival contentions of the respective parties and also scrutinising the records I find that the respondent No. 8 herein has been appointed under the urban/rural category and his area of operation is restricted to Sahajadpur Panchayat limit. As a matter of fact, the learned Counsel of the respondent No. 8 has also accepted the aforesaid position.
27. The impugned decision as recorded in the minutes of the meeting held on 25th August, 2004 are wholly without jurisdiction as the same encroaches upon the trading area of the petitioner as specifically mentioned in the agreement executed between the petitioner and IOC Limited which is not permissible in law. Furthermore, the said decision clearly violates the Central Government policy guidelines regarding viability norms of 6000 refills per month
28. The respondent Oil companies cannot reduce the number of refills of the petitioner less than 6000 refills in violation of the specific guidelines of the Government of India regarding viability norms as discussed hereinbefore.
29. Scrutinising the Memorandum of Agreement made by and between the IOC Limited and the petitioner herein I find that the distribution area of the petitioner has been specifically mentioned as Jangipur.
30. The Senior Area Manager, Indian Oil Corporation Limited by his letter dated 9th August, 2004 specifically made it clear that the petitioner herein as the distributor of Indian Oil Corporation Limited initially marketed Indane within the township of Jangipur and Raghunathganj under the Jangipur Municipal area as per the prevailing policy at that time and the respondent Oil companies therefore, cannot arbitrarily curtail the marketing area of the petitioner company in violation of the Memorandum of Agreement executed earlier by and between the petitioner and the IOC Limited.
31. The principle of law as decided by the Hon'ble Supreme Court in the case of National Fertilizers v. Puran Chand Nangia in relation to the variation clauses in the contract between the parties are very much applicable in the facts of the present case. In the aforesaid decision, Hon'ble Supreme Court specifically held as hereunder :
"23. We may also state that under the general law of contracts, once the contract is entered into, any clause giving absolute power to one party to override or modify the terms of the contract at his sweet will or to cancel the contract -- even if the opposite party is not in breach, will amount to interfering with the integrity of the contract...."
32. Undisputedly, the petitioner and the respondent No. 8 are the distributors of two different Oil companies and the petitioner herein is aggrieved by the impugned decision of the principal, namely, the IOC Limited. The respondent No. 8 has no privity of contract with IOC Limited or the petitioner. The petitioner herein is not seeking to take away the customers of the respondent No. 8 operating neither in Sahajadpur Panchayat area nor in other area outside the distributorship zone of the petitioner herein.
33. The petitioner is admittedly complaining about the arbitrary and illegal curtailment of the area of operation at the instance of the respondent No. 8 and its principal, namely, HPCL. Therefore, the doctrine of competitors in trade is not at all applicable in the facts of the present case.
34. The Senior Area Manager of the IOC Limited in his written communication dated 9th August, 2004 addressed to the District Magistrate, Murshidabad specifically admitted that the petitioner as the distributor of the IOC Limited marketed Indane within the townships of Jangipur and Raghunathganj under the Jangipur municipality area and therefore, the petitioner should be allowed to operate within the areas where it has always marketed Indane throughout pursuant to the Memorandum of Agreement till its refill sale reaches 75% of the ceiling limit i.e. 6000 refills per month.
35. The respondent Oil companies cannot be allowed to act in contravention of the policy guidelines of the Central Government regarding viability norms. In the present case, following the viability norms, refill sale of the distributor can be brought down upto 75% of the ceiling limit i.e. 6000 refills per month.
36. The petitioner has specifically mentioned in the writ petition that if the decision taken in the meeting held on August 25, 2004 is acted upon then the monthly refill of the petitioner will fall below 3500 whereas the customer number of the respondent No. 8 will be increased to more than 10,000. The contention of the writ petitioner mentioned in paragraph 31 of the writ petition is quoted hereunder :
"Pursuant to the purported decision taken in meeting dated August 25, 2004 the respondent No. 8 has been illegally favoured and your petitioner's operation has been curtailed to customers situated within the Municipality limit of Jangipur and the monthly refill is bound to fall below 3500, whereas the customer number of the respondent No. 8 will be increased to more than 10000."
37. The respondent No. 8, however, in his affidavit-in-opposition did not dispute the aforesaid contention of the petitioner that the monthly refill number is bound to fall below 3500 and the total customer numbers of the respondent No. 8 will be increased to more than 10000 if the decision of the meeting held on 25th August, 2004 is acted upon and/or given effect to.
38. For the aforementioned reasons, I am constrained to hold that if the decisions taken in the aforesaid meeting of the parties held on 25th August, 2004 are given effect to and/or acted upon then, the same would not only arbitrarily curtail the business area of the petitioner in violation of the agreement executed by and between the petitioner and the IOC Limited but will also contravene the policy guidelines of the Central Government regarding viability norms.
39. The respondents herein cannot take any decision which will violate the refill ceiling limit of the petitioner in the present case, i.e. 6000 Nos. of refills per month.
40. The learned Counsel of the respondent No. 8 although submitted that the Indian Oil Corporation Limited is empowered to appoint any or more additional distributors in the same territory but undisputedly, in the present case, the said IOC Limited has not appointed any dealer within the area of operation of the petitioner. Furthermore, the learned Counsel of the respondent No. 8 referred to the policy guidelines regarding opening and/or running of extension counters but in my view, the policy regarding opening and/or running of extension counters is not the subject-matter of dispute in the present case and therefore, I do not like to make any comment in this regard.
41. It may not be out of place to mention that the stand taken by the IOC Limited is very fair. It has also not been disputed by the learned Counsel of the IOC Limited that if the impugned order is given effect to then the same would contravene the policy guidelines of the Central Government regarding viability norms and the total number of refills sale of the petitioner will go below the viability limit as fixed by the Central Government.
42. On examination of the Memorandum of Agreement executed by and between the petitioner and the IOC Limited and scrutinising the decisions recorded in the minutes of the meeting held on 25th August, 2004, I am convinced that the aforesaid decisions recorded in the impugned order dated 25th August, 2004 would virtually modify the agreement executed by and between the petitioner and the IOC Limited which is not permissible in law. Furthermore, the aforesaid decisions will also violate the policy guidelines of the Central Government regarding viability norms as under the policy guidelines of the viability norms, number of refills of the petitioner cannot be reduced below 6000 refills per month.
43. Considering the correspondences of the Block Development Officer, Raghunathganj - II, District Magistrate, Murshidabad and also considering the decisions taken in the meeting of the parties held on 25th August, 2004 in presence of the Senior Officials of the Indian Oil Corporation Limited, I am convinced that the senior officers of the State Government and the superior officers of the Indian Oil Corporation Limited have acted under tremendous pressure in the matter and decided to curtail the business area of operation of the petitioner even in violation of the established norms of the Central Government policy guidelines regarding viability norms.
44. For the reasons stated hereinabove. the directions of the Block Development Officer, Raghunathganj - II, as mentioned in the written communication dated 21st November, 2003 being Annexure 'P-9' to the writ petition and the subsequent decisions taken in the meeting of the parties held on 25th August, 2004, recorded in the minutes of the meeting being Annexure 'P-15' to the writ petition cannot be sustained. The same are therefore, quashed.
45. This writ petition thus stands allowed. There will be, however, no order as to costs.
46. Let xerox plain copy of this judgment duly countersigned by the Assistant Registrar (Court) be given to the learned Advocates of the parties upon compliance with usual undertaking.