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1. The Petitioners have been manufacturers and suppliers of LPG cylinders including 14.2 kg LPG cylinders across the country for the last several years. They challenge the tender conditions published by the Indian Oil Corporation Limited (hereafter "IOL", the first respondent), a Central Public sector undertaking and an oil marketing company ("OMC") and other OMCs (BPCL, HPCL) inter alia, for procurement of 14.2 kg LPG capacity cylinders, as discriminatory and arbitrary. The Union of India through its Ministry of Petroleum ("the Union" hereafter) is arrayed as the second respondent (Both respondents are collectively referred to, hereinafter as "the Respondents"). 


 Contentions of parties

I.      Submission of petitioners

7. The Petitioners attack the new policy as making unreasonable changes in the terms and conditions to the prevailing LPG cylinders procurement policies, thereby significantly altering the entire public policy in procurement of such LPG cylinders. These drastic changes were not preceded by any notice/ nor prior intimation was issued on part of the Respondents, inviting the associated bidders for their objections and suggestions. Unilaterally, the Respondents made sweeping and wide-ranging changes that adversely impacts the petitioners' right to carry on business and commerce, in relation to manufacture and supply of LPG cylinders.

29. In the peculiar case of distribution of LPG gas cylinders as domestic fuel, timely delivery of LPG gas cylinders to consumers, at their doorstep, is essence of the said mandate. The said mandate cannot be sustained for years, implemented or executed till all the facilities/ancillary industries, including LPG cylinder manufacturing units required to produce and deliver the final product, i.e. LPG, is also equitably and proportionally manufactured across the country. In absence thereof, disruption of supply chain is inevitable. In the longer run, the OMCs cannot rely on supplies from a limited part of the country to meet the demand in the rest of the country. It is stated that to cater to the domestic fuel requirement of the citizens located in different geographical locations, it is imperative for OMCs to develop and/or promote all the facilities/industries such as bottling units, cylinder manufacturing units etc. in the same or nearby area where consumers of domestic fuel i.e. bottled LPG reside.

30. Mr. Tushar Mehta, learned Additional Solicitor General, who appeared for the Respondents, argued that for implementation of the policy objectives, keeping in mind monopolistic concentration of cylinder manufacturing in a particular geographical areas the OMCs decided to promote greater competition procurement of LPG cylinders, to develop cylinder manufacturing industries in areas where cylinders are actually to be supplied and to bring in an equitable policy of granting level playing field to cylinder manufacturers by bifurcating the procurement market of LPG cylinders into two geographical markets. This is a bona fide effort, inter alia: (a) To bridge the gap between demand and supply of LPG cylinders in eastern area of the country; (b) to remove entry barriers, if any, for new/existing manufactures of LPG cylinders located in under-developed geographical markets of eastern India (where demand for LPG cylinders has grown manifold) and which areas have remained under developed over the years-from where not only the raw material, i.e. steel, used in manufacturing gas cylinders is sourced, but is an area in which the bottled LPG is also sought to be sold and consumed. The ASG argued that the impugned decision is also aimed at curbing the menace of monopolistic pattern clearly visible amongst cylinder manufacturers based in other parts of the country.