Gujarat High Court
All India Lpg Distributors Federation ... vs Union Of India & 3 on 21 September, 2017
Equivalent citations: AIR 2018 (NOC) 510 (GUJ.)
Author: R.Subhash Reddy
Bench: R.Subhash Reddy
C/LPA/1410/2017 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
LETTERS PATENT APPEAL NO. 1410 of 2017
In SPECIAL CIVIL APPLICATION NO. 15094 of 2017
With
CIVIL APPLICATION NO. 11316 of 2017
In
LETTERS PATENT APPEAL NO. 1410 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MR. R.SUBHASH REDDY
and
HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI
=============================================
1 Whether Reporters of Local Papers may be allowed to see Yes
the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any
order made thereunder ?
=============================================
ALL INDIA LPG DISTRIBUTORS FEDERATION (GUJARAT) & 7....Appellant(s)
Versus
UNION OF INDIA & 3....Respondent(s)
=============================================
Appearance:
MR DC DAVE, SENIOR ADVOCATE WITH MR JF MEHTA, ADVOCATE for the
Appellant(s) No. 1 8
MR MR BHATT, SENIOR ADVOCATE WITH MRS MAUNA M BHATT,
ADVOCATE for the Respondent(s) No. 2 , 4
MS MINOO A SHAH, ADVOCATE for the Respondent(s) No. 3
NOTICE SERVED BY DS for the Respondent(s) No. 2
SERVED BY RPAD (N) for the Respondent(s) No. 1
=============================================
CORAM: HONOURABLE THE CHIEF JUSTICE MR. R.SUBHASH REDDY
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and
HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI
Date : 21/09/2017
ORAL JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MR. R.SUBHASH REDDY) [1] This Letters Patent Appeal under clause 15 of the Letters Patent is filed by the original petitioners in Special Civil Application No.15094 of 2017 aggrieved by the order dated 16.08.2017. [2] Special Civil Application No.15094 of 2017 is filed with the prayers which reads as under : "27.(a) Your Lordships may be pleased to admit the petition.
(b) Your Lordships may be pleased to issue the writ of appropriate nature to quash the action of respondent No.2 to 4 to publish an advertisement dated 16th June 2017 in the daily news papers calling upon the fresh application to appoint the LPG distributor in the area notified in the advertisement.
(c) Your Lordships may be pleased to issue the writ of appropriate nature declaring the action of respondent no.2 to 4 to publish an advertisement dated 16th June 2017 in the daily news papers calling upon the fresh application to appoint the LPG distributor in the area notified in the advertisement as illegal, arbitrary, irrational and unilateral.
(d) Your Lordships may be pleased to restrain the respondent No.2 to 4 from inviting the application of the appointment of LPG Distributorship.
(e) Your Lordships may be pleased to pass and exparte ad interim relief in terms of para 24(d).
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OR in the alternative
(f) Your Lordships will be pleased to restrain the respondent no.2
to 4 from processing the application received by the respondent no.2 to 4 for the appointment of LPG Distributorship for the notified location pending hearing and final disposal of the petition.
(g) Your Lordships will be pleased to restrain the respondent no.2 to 4 from appointing the LPG distributors in the notified locations as published in the advertisement dated 16th June 2017 in the newspaper Gujarat Samachar.
(h) Your Lordships may be pleased to allow the petition.
(i) Your Lordships may be pleased to grant any other and further reliefs deem fit and proper in the facts of the case.
(j) Your Lordships may be pleased to award cost of this petition." [3] 1st petitioner is All India LPG Distributors' Federation (Gujarat) and petitioner Nos.2 to 8 are members of the 1st petitioner - Association, who are appointed by Oil Marketing Companies and presently they are working as distributor for the LPG cylinders in different areas as stated in the petition. When the impugned advertisement is issued inviting applications for selection of further LPG distributorship to extend distribution to rural areas, Special Civil Application is filed mainly on the ground that, such advertisement issued runs contrary to the guidelines issued by the Government of India.
[4] The learned Single Judge mainly on the ground that advertisement issued is pursuant to the policy decision and by further holding that in absence of complete data and details, the submission of the Page 3 of 14 HC-NIC Page 3 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT petitioners that the advertisement run contrary to the guidelines, cannot be interfered with by invoking discretionary jurisdiction under Article 226 of the Consideration of India, dismissed the petition in limine. [5] We have heard Mr. D.C.Dave, learned Senior Advocate appearing for the appellants and Mr. M.R.Bhatt, learned Senior Advocate appearing on behalf of respondent No.2 and 4.
[6] As, submission of Mr.Dave, learned Senior Advocate in support of his case is mainly on the ground that advertisement issued inviting applications for selection of LPG distributorship is contrary to the Unified Guidelines for Selection of LPG Distributorship issued by the Ministry of Petroleum and Natural Gas, Government of India, before we deal with such argument, we deem it appropriate to refer to relevant provisions of the Unified Guidelines which are placed on record. [7] Clause (1) of the Guidelines, deals with definitions and clause 1.1 to 1.3 defines types of distributorship areas. There are various types of distributorship areas titled as Sheheri Vitrak, Rurban Vitrak, Gramin Vitrak and Durgam Kshetriya Vitrak. Presently, case of the petitioners is that distributors of the petitioners are operating in the areas called 'Rurban Vitrak'. Definition of 'Rurban Vitrak' is defined as under : 'Rurban Vitrak : In the guidelines, the word Rural Urban means LPG Page 4 of 14 HC-NIC Page 4 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT Distributor located in 'Urban Area' and also providing service to the LPG Customers in specified 'Rural Area', generally covering all villages falling within 15 km from the municipal limits of the LPG distributorship location and or the area specified by the respective OMCs. LPG Distributors servicing this area will be called Rurban Vitrak.' [7.1] Other relevant, definition of Virgin Market as defined in clause 1.11 reads as under : "1.11 Virgin Market means a town or a village where no LPG Distributorship is located and nor serviced by any LPG distributor of OMC. Cluster of villages includes villages considered for working out refill sale potential for considering the feasibility for setting up of a Gramin Vitrak or Durgam Kshetriya Vitrak."
[7.2] Celling limit as defined under clause 1.14 reads as under : "1.14. Celling limit means maximum limit of refill sale of domestic LPG cylinders in terms of 14.2 kg capacity per month of the distributorship for the market."
[7.3] Identification of locations is governed by clause (2). For the purpose of this appeal, clause 2.1, 2.2, 2.3, 2.4, 2.4.1 reads as under : "2.1 Locations for setting up of LPG Distributorship (Sheheri Vitrak, Rurban Vitrak, Gramin Vitrak and Durgam Kshetriya Vitrak) will be identified based on available refill sale potential that can sustain economically viable operation of LPG distributorship. It will also be based on data mining involving features of a particular geographical Page 5 of 14 HC-NIC Page 5 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT area and its demographic profile.
2.2. The refill sale potential will be based on several factors including population, population growth rate, economic prosperity of the location and the distance from the existing nearest distributor. 2.3. In selecting locations, inputs will also be taken from State Government / Local Administration / Public Representatives. 2.4. To the extent possible, new LPG Distributorships will be planned in the virgin location either of an existing market or virgin market as below.
2.4.1 Virgin Market - Sheheri, Rurban Vitrak, Gramin and Durgam Kshetriya Vitrak.
New distributorship will be planned in a virgin market if the refill (14.2 kg) sale potential is 50% of celling limit applicable for the market in the 2nd year of operation.
In a virgin market, Durgam Kshetriya Vitrak (DKV) will be planned in a village or a cluster of villages in such areas (which do not fall under the area of operation of any existing LPG distributor) if the refill sale potential of the village / cluster of village is 600 per month." [7.4] Existing market is defined in Clause 2.4.1.1.
2.4.1.1.1. Market celling The market refill ceiling limit is the maximum number of the domestic refill sales stipulated for LPG Distributorships and based on the market. Market Ceiling Limit and the feasibility norm for different types of distributorship area is proposed below : Type of Population as per census Refill Ceiling Refill sale per Distributors 2011 limit per month for hip area month feasibility limit.
Sheheri Cities with population > 20000 10000
Vitrak 40 lakh
Cities with 20 to 40 lakh 15000 7500
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population
Cites with 10 to 20 lakh 12000 6000
population
Rurban Towns with < 10 lakh 10000 5000
Vitrak population
Gramin Village / Cluster of villages 5000 2500
Vitrak
Durgam Village / Cluster of villages 1500 600
Khetriya
Vitrak
Restructuring of the LPG distributorship viz. Sheheri Vitrak, Rurban Vitrak, Gramin Vitrak and Durgam Kshetriya Vitrak in the existing market will be planned only after the refill sale exceeds by 50% of the refill ceiling limit of the market."
[8] Mr. D.C. Dave, learned Senior advocate appearing for the appellants by taking us to various clauses as referred above submitted that impugned advertisement runs contrary to the guidelines referred above. It is submitted that if further distributorships' are allowed, it will be difficult for existing distributors for their economic sustenance, who are already covering the area of distributorship over the years, for which impugned advertisement is issued. It is submitted that as the area for which impugned advertisement is issued, is already covered by the distributorship area of the petitioners, and it will not be economically viable for new distributors also. Relying on definition of Rurban Vitrak, it is contended by Mr. Dave, learned Senior Advocate that as appellants are covering distributorship under Rurban Vitrak located in Urban areas and also providing service to Page 7 of 14 HC-NIC Page 7 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT the LPG Customers in specified Rural area covering all villages falling within 15 km from the municipal limits of the LPG distributorship location, impugned advertisement issued inviting applications is overlapping areas covering within 15 km from the municipal limits and same is in conflict with the guidelines. It is also contended by Mr. Dave that all the distributors of 1st petitioner and other petitioners, refill sale per month is not more than 5000, as such, the impugned advertisement is in contravention of guideline under clause (2.4.1.1.1.). It is submitted by learned Counsel that though advertisement issued runs contrary to the guidelines notified by the Government of India, learned Single Judge has rejected the petition in limine on the wrong premise that the petitioners are questioning the guidelines and such decision is policy decision, which is not amenable for discretionary jurisdiction under Article 226 of the Constitution of India.
[9] Per contra, Mr. Bhatt, learned Senior Advocate appearing for respondent No.2 and 4 (Oil Companies) referred to affidavit in reply filed on behalf of the Indian Oil Corporation and submitted that current household in Gujarat is around 136.90 lakhs and as such LPG penetration in the State is 59.5%, against all India percentage of 76.4. It is submitted that purpose of impugned advertising new locations for LPG distributorship is to reach out to the rural areas in the State of Gujarat and to provide LPG to the poorest of the poor for health and environmental reasons. It is submitted that at present, there are 751 LPG distributorships' in the State of Page 8 of 14 HC-NIC Page 8 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT Gujarat and these distributors are unable to cater to the needs of the entire rural areas. It is further submitted that out of 319 distributorship advertised, 306 are for new distributorship and all are in the rural category and none of the new distributorship is advertised at the place of existing distributorship. Balance 13 distributorship are advertised against the old terminated distributorship which were non existent. [9.1] By referring to detailed reply affidavit, it is submitted by Mr. Bhatt, learned Senior Advocate that as distributors of the petitioners are unable to reach LPG customers in the remote rural areas, advertisement is issued for the virgin area. It is submitted that distributorship granted to the petitioners are governed by agreement and by referring to one of the agreements entered into by Bharat Petroleum Corporation Limited with C.R. Gas Agency at Nadiad, it is submitted that terms of the agreement permits the Corporation to appoint additional distributorship in the same territory also. It is submitted that as terms of the agreement are governed by the contract, no case is made out for interference in this appeal filed under clause 15 of the Letters Patent. It is also submitted that advertisement is issued to serve larger public interest and will not have any effect on the distributorship of the petitioners.
[10] Mr. D.C.Dave, learned Senior advocate appearing for the appellants has referred to para 9 of the reply affidavit filed by Hindustan Petroleum Corporation Limited and submitted that new distributorship Page 9 of 14 HC-NIC Page 9 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT advertisement is issued for the area within 15 km of existing distributorship area and as such it is in violation of guidelines issued by the Corporation. [11] Having heard learned Senior advocates for the parties, we have perused the order passed by the learned Single Judge and other material placed on record. At the outset, it is noticed that Petroleum Companies have given distributorship to the existing distributors by entering into agreement which is titled as "(Liquefied Petroleum Gas) Distributorship (Domestic and Commercial) Agreement". Clause 1(b)(ii) of the agreement dated 01.07.1995 entered by Bharat Petroleum Corporation Limited with one C.R.Gas Agency reads as under : '(b) The aforesaid appointment is subject to the following
(i) xxxx...xxx
(ii) The Corporation reserves the right, without any reference to or consent of the distributor, to appoint one or more additional distribution in the same territory referred to in clause (a) above and such additional distributor or distributors shall be entitled to make sales of Bharatgas in the same territory without any objection from the distributor and the distributor shall not be entitled to claim any over riding remuneration, commission or allowance for the purpose'. [12] From reading the above clause of agreement, it is clear that the Corporation reserved the right without any reference to or consent of the distributor, to appoint one or more additional distributors in the same territory also. Learned Counsel for the petitioner in support of his Page 10 of 14 HC-NIC Page 10 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT argument that advertisement issued inviting applications for appointing distributors is coincidentally within 15 km of the municipal limits, has placed reliance on definition 'Rurban Vitrak'. From the definition of Rurban Vitrak under clause 1.3 (ii), it is clear that word Rural Urban means LPG distributor located in Urban area and also providing service to the LPG customers in specified Rural Area, generally covering all villages falling within 15 km from the municipal limits of the LPG distributorship location. In view of language used in the definition, it cannot be accurately said that it confers right on the petitioners for the villages within 15 km from the municipal limits so as to preclude the companies from issuing distributorship in such areas. When it is specific case of the respondents that there is no penetration by the existing distributors in the rural areas, as such impugned advertisement is issued, there is no reason to disbelieve such statement made on behalf of the companies filed in the reply affidavit. [13] Even market ceiling defined under clause 2.4.1.1.1, the market refill ceiling limit is the maximum number of domestic refill sales stipulated for LPG distributorship and based on the market. Market ceiling limit and the feasibility norm for different types of distributorship is shown in clause 2.4.1.1.1. Even assuming that refill sale per month is less than 5000, that will not confer any indefeasible right on the petitioners to seek enforcement of such guidelines by way of petition under Article 226 of the Constitution of India.
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[14] From the submission made in reply affidavit filed on behalf of
the company, it is amply clear that impugned advertisement is issued only to reach virgin areas where there is no distribution of LPG by existing distributorship. On one hand, the petitioners are unable to reach such rural area for the purpose of distribution of LPG and on the other hand, they are seeking to preclude the respondent company to invite distributorship for the virgin areas only on the ground that they are not in tune with the guidelines. In any event, only on the ground that new advertisement for distributorship is issued within area of 15 km of municipal limits of the existing distributorship, and in absence of any material to show that such areas are attended to by the existing distributors, no case is made out for grant of directions as prayed..
[15] Mr. Dave, learned Senior advocate in support of his argument that the action of the respondents is arbitrary and in violation of guidelines, placed reliance on the judgment in the case of Mahabir Auto Stores and Ors. v/s. Indian Oil Corporation and Ors. reported in (1990) 3 SCC 752. In the aforesaid judgment, the Hon'ble Supreme Court has held that Indian Oil Corporation is an organ or instrumentality under the State within the meaning of Article 12 of the Constitution of India and further held that its action must be reasonable, fair and just, even when no formal contract is entered into. It is true that now there is no bar to issue appropriate directions in exercise of powers under Article 226 of the Constitution of Page 12 of 14 HC-NIC Page 12 of 14 Created On Sun Oct 01 23:15:48 IST 2017 C/LPA/1410/2017 JUDGMENT India even in the matters relating to contracts, but whether the action is arbitrary or not, and whether interference is called for in a given case is a matter, which is required to be considered with reference to facts of each case. When it is case of the respondents that impugned advertisement is issued only to reach virgin areas to penetrate rural areas for supply of LPG gas, which area is not attended to by the petitioners, it cannot be said that action of the respondents is either arbitrary or illegal. There cannot be any dispute with regard to proposition of law laid down by Hon'ble Supreme Court in the case of Mahabir (supra), but at the same time we are of the view that there is no illegality or arbitrariness on the part of the respondents in issuing advertisement inviting applications for rural areas where there is no distributor for supply of LPG gas. We are of the view that the judgment in the case of Mahabir (supra) would not render any assistance to the petitioners in support of their case. [16] As it is evident from the reply affidavit filed on behalf of the respondent Company, LPG penetration in the State is only 59.5 % against all India percentage of 76.4%. The purpose of advertising new locations for LPG distributorship is to reach out to the rural areas in the State. As such, we are of the view that such step, taken by the respondents is in larger public interest and to bring in tune with all India percentage of 76.4. In view of the same, we are of the view that no case is made out for interference.
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[17] However, we make it clear that any of the member of 1st
petitioner - Association or other petitioners make representation alleging that their economic viability is affected by virtue of granting distributorship in nearby place to the place of their business, this will not preclude the authorities to consider such representation independently, uninfluenced by any of the findings or observations made in this order. [18] For the reasons recorded above and in view of reasons assigned by the learned Single Judge, we are of the view that no case is made out to interfere with the order passed by the learned Single Judge. Accordingly, Letters Patent Appeal is dismissed. Consequently, Civil Application is also disposed of. No order as to costs.
(R. SUBHASH REDDY, CJ) (VIPUL M. PANCHOLI, J.) satish Page 14 of 14 HC-NIC Page 14 of 14 Created On Sun Oct 01 23:15:48 IST 2017