Calcutta High Court (Appellete Side)
Gautam Basu vs Union Of India & Ors on 24 July, 2025
24.07.2025
Court No.24
DL/Item No.-1
[Milan]
WPA 15924 of 2025
Gautam Basu
versus
Union of India & Ors.
Mr. Debabrata Saha Roy, Sr. Adv.,
Mr. Pingal Bhattacharyya,
Mr. Subhankar Das
....for the Petitioner
Mr. Prasun Mukherjee,
Mr. Deepak Agarwal
....for the HPCL
1. The petitioner is the distributor of Liquefied
Petroleum Gas (in short, "LPG"), who is distributing
cylinders of respondent, oil marketing companies to the
customers. The petitioner challenges the circular dated
21st February, 2025 on marketing restructuring and
customer transfer policy issued by three leading Oil
Marking Companies, namely, Indian Oil Corporation
Limited (in short, “IOCL”), Bharat Petroleum Corporation
Limited (in short, “BPCL”) and Hindustan Petroleum
Corporation Limited (in short, “HPCL”).
2. It is the contention of the petitioner that on the
earlier occasion, the oil marketing companies have
issued circular under the same nomenclature on 4th
January, 2018 and 9th January, 2018 respectively
regarding the policy of customer transfer from one
distributor to another distributor. The said policy was
under challenge initially before the Hon’ble Division
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Bench of the Bombay High Court in writ petition
No.8753 of 2018 [Mrs. Shailaja R. Khanvilkar & Ors. Vs.
Union of India & Ors.] wherein the Division Bench of the
Bombay High Court has quashed the said circular
dated 4th January, 2018 issued by the oil marketing
companies against which oil marketing companies
proceeded to the Hon’ble Apex Court through SLP. The
Hon’ble Apex Court had not granted any stay against
the order of the Hon’ble Bombay High Court and had
admitted for hearing under civil appeal.
3. The circular dated 9th January, 2018 was also
under challenge before this Court in writ petition being
WPA 20391 of 2023 [M/s. CLS Limited & Ors. Vs. Union
of India], wherein this Court vide judgment dated 20th
February, 2025 has directed the said circulars to be
unreasonable, arbitrary and irrational and also directed
the concerned oil marketing companies to return the
customers in favour of the petitioner therein.
4. The oil marketing companies/respondent
authority has approached the Hon’ble Division Bench
against the said order, wherein the Hon’ble Division
Bench in MAT 335 of 2025 [Hindustan Petroleum
Corporation Ltd. & Ors. Vs. M/s. CLS Ltd. & Anr.]
dismissed the said appeal and did not interfere with the
observations of this Court. A review application was
filed by the oil marketing companies against the said
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order and judgment but the said review application was
also not entertained by the Hon’ble Division Bench.
5. At this juncture, learned advocate for the
petitioner submits that the impugned policy dated 21st
February, 2025 issued by the three leading oil
marketing companies are the same policy of 2018 under
new nomenclature. It is further contention of the
petitioner that as the earlier circular of 2018 is under
challenge and was quashed by the Hon’ble Division
Bench of the Hon’ble Bombay High Court, and as this
could not obtain any order of stay from the Hon’ble
Supreme Court, the oil marketing companies have again
issued new circular for the same purpose.
6. The learned advocate for the petitioner submits
that this Court has already decided the issue that the
policy for transferring the customers from one
distributor to another distributor is unreasonable.
Thus, the said new circular dated 21st February, 2025 is
required to be stayed.
7. The learned advocate for the petitioner further
argued that the said new circular dated 21st February,
2025 was also under challenge before the different High
Courts, wherein the various High Courts had issued an
order of stay. In one case, the Hon’ble Division Bench of
Kerala High Court had passed an order in an appeal
regarding the circular wherein the interim order was
refused by the Learned Single Judge in the said appeal
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being WA No.776 of 2025 [All India LPG Distributors
Federation (Kerala Circle) & Ors. vs. Union of India &
Ors.], the Division Bench of the Kerala High Court has
granted an interim order of say on the observations and
following other interim orders passed by various High
Courts. By virtue of the said order of the Division
Bench, during the pendency of that writ petition, Clause
2.4.1.1.1 Note (i) of the policy 2025 remains stayed pan
India basis.
8. It is further contention of the petitioner that
this Court has a specific observation on the earlier
occasion on merit that customers are the assets of the
distributors; the view has been approved by the Hon’ble
Division Bench. So, at this juncture, this Court cannot
but pass an interim order staying the operation of the
circular dated 21st February, 2025 and the subsequent
letters issued by the oil marketing companies for
transfer of number of customers from customer data
base to the other distributors.
9. The learned advocate for the oil marketing
companies/respondent authority has extensively argued
regarding the area, periphery and ambit of the
distributors under an agreement of LPG distributorship
with the oil marketing companies. It is contention of the
learned advocate for the oil marketing companies that
the customers are using the product of the oil marketing
companies and they are registered under the particular
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oil marketing company. The distributors are the
intermediaries, who, at the instructions of the oil
marketing companies, are distributing LP gas to the
customers for domestic use. It is has been specifically
argued that at the time of entering into an agreement
with oil marketing companies the distributors have
equivocally agreed to carry out all the directions and
orders of the oil marketing companies and also carry out
formalities and the principles laid down in the LP gas
manual.
10. It is further contention of the oil marketing
companies that in Clause 12 of the said agreement, it
has been specifically provided that distributor shall fully
and vigilantly carry out all directions, orders and terms
and conditions as may be issued by the Corporations
(oil marketing companies) from time to time which was
contained in the corporations HP Gas manual.
11. The HP Gas manual has placed before this
Court; particular provision of HP gas manual has made
provisions for the surrender of area and customers and
ceiling limits of each and every distributor and rights
thereof have been reserved by the oil marketing
companies.
12. By showing the specific provisions, it is
argued that the oil marketing companies may transfer
customers from one distributor to another by strength of
HP Gas Manual itself.
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13. It is further argued by the oil marketing
companies/respondent authority that the policy
decision was taken by the Union of India regarding
restructure of market by which the Union of India
intends to eradicate the monopoly of some specific
distributors in catering the business. It is submitted
that competition the policy decision will only benefit the
service of the customers. The Government of India has
issued circular so that the customers may be benefited
for better service.
14. If is further submitted by the oil marketing
companies/respondent authority that policy decision of
Central Government cannot be called in question in a
writ jurisdiction. It has been specifically argued that the
Hon’ble Supreme Court, in several decisions, has put
restriction in interfering with the policy decision. In
support of their contentions, the learned advocate for
the oil marketing companies/respondent authority has
placed decisions of the Hon’ble Apex Court:- i) Tata
Cellular vs. Union of India reported in (1994) 6 SCC
651; ii) Balco Employees’ Union (Regd.) vs. Union of
India & Ors. reported in (2002) 2 SCC 333; iii)
Directorate of Film Festivals & Ors. Vs. Gaurav
Ashwin Jain & Ors. reported in (2007) 4 SCC 737. iv)
The Nagar Rice & Flour Mills & Ors. Vs. N. Teekappa
Gowda & Bros. & Ors. reported in 1970 (1) SCC 575.
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In Tata Cellular (supra), the Hon’ble Apex Court
has set out some principles where a writ Court can
entertain petition in respect of the policy of a Govt. there
are as follows:-
“94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but
merely reviews the manner in which the
decision was made.
(3) The court does not have the expertise to correct
the administrative decision. If a review of the
administrative decision is permitted it will be
substituting its own decision, without the
necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be
open to judicial scrutiny because the invitation
to tender is in the realm of contract. Normally
speaking, the decision to accept the tender or
award the contract is reached by process of
negotiations through several tiers. More often
than not, such decisions are made qualitatively
by experts.
(5) The Government must have freedom of contract.
In other words, a fair play in the joints is a
necessary concomitant for an administrative
body functioning in an administrative sphere or
quasi-administrative sphere. However, the
decision must not only be tested by the
application of Wednesbury principle of
reasonableness (Including its other facts pointed
out above) but must be free from arbitrariness
not affected by bias or actuated by mala fides.
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(6) Quashing decisions may impose heavy
administrative burden on the administration
and lead to increased and unbudgeted
expenditure.”
In Balco Employees’ Union (supra), the Hon’ble
Apex Court has also embodied some principles
regarding judicial restraint in policy decision of the State
as follows:-
“45. In Narmada Bachao Andolan v. Union of India
there was a challenge to the validity of the establishment
of a large dam. It was held by the majority at p.762 as
follows:-
229. It is now well settled that the courts, in the
exercise of their jurisdiction, will not transgress into the
field of policy decision. Whether to have an
infrastructural project or not and what is the type of
project to be undertaken and how it has to be executed,
are part of policy-marking process and the courts are ill-
equipped to adjudicate on a policy decision so
undertaken. The court, no doubt, has a duty to see that
in the undertaking of a decision, no law is violated and
people’s fundamental rights are not transgressed upon
except to the extent permissible under the Constitution.”
“46. It is evident from the above that it is neither
within the domain of the courts nor the scope of the
judicial review to embark upon an enquiry as to whether
a particular public policy is wise or whether better public
policy can be evolved. Nor are our courts inclined to
strike down a policy at the behest of a petitioner merely
because it has been urged that a different policy would
have been fairer or wiser or more scientific or more
logical.”
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In Directorate of Film Festivals (supra), the
Hon’ble Apex Court has also dealt with scope of judicial
review of governmental policy as follows:-
“16. The scope of judicial review of governmental
policy is now well defined. Courts do not and cannot act
as Appellate Authorities examining the correctness,
suitability and appropriateness of a policy, nor are courts
advisors to the executive on matters of policy which the
executive is entitled to formulate. The scope of judicial
review when examining a policy fo the Government is to
check whether it violates the fundamental rights of the
citizens or is opposed to the provisions of the Constitution,
or opposed to any statutory provision or manifestly
arbitrary. Courts cannot interfere with policy either on
the ground that it is erroneous or on the ground that a
better, fairer or wiser alternative is available. Legality of
the policy, and not the wisdom or soundness of the
policy, is the subject of judicial review.”
In Nagar Rice & Flour Mills (supra), the Hon’ble
Apex Court has dealt with fundamental right of the
citizens enshrined under Article 19 (1) (g) of the
Constitution of India, which can be exercised subject to
the restrictions under Article 19 (6) (i).
15. The learned advocate for the oil marketing
companies further argued that the issue which was
dealt with by this Court and the Hon’ble Division Bench
of the Hon’ble Bombay High Court is not similar to that
of present issue; the circular of 2018 is totally different
to that of circular which was issued by Union of India in
the year 2025. On the earlier circular, the viability limit
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75% of each distributor but now the viability limited of
the distributor was taken up 100%. Thus, this is
basically a different circular only to restructure market.
Earlier judgment and observations of this Court cannot
be followed in this case. It is further submitted that the
viability limits of the distributors were fixed to 100%,
thus, it cannot be said that the business of the
distributors can be taken away by the impugned
circular.
16. It is contention of the oil marketing
companies/respondent authority that the justification
and necessary issue of such circular can be very well
demonstrated before this Court, if the respondent
authority is granted a leave to file affidavit-in-opposition
in this matter.
17. They also argued as the business of the writ
petitioner was not at all hampered by the impugned
circular, that is to say their licences have not been
cancelled, thus, the petitioner is not aggrieved by the
said circular.
18. It is further contention of oil marketing
companies/respondent authority that the petitioner is
performing business on the basis of the agreement
entered into by the petitioner with the oil marketing
companies. They are catering business by the strength
of the said agreement, at the same time they cannot
challenge the some provisions of agreement including
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HP Gas Manual while they have agreed and signed it.
On that principle, the oil marketing companies have
cited a decision of the Rajasthan State Industrial
Development and Investment Corporation & Anr. Vs.
Diamond & Gem Development Corporation Ltd. &
Anr. reported in (2013) 5 SCC 470;
“19. There can be no dispute to the settled legal
proposition that matters/disputes relating to
contract cannot be agitated nor terms of the
contract can be enforced through writ jurisdiction
under Article 226 of the Constitution. Thus, the
writ Court cannot be a forum to seek any relief
based on terms and conditions incorporated in the
agreement by the parties.”
19. It is further contended by the oil marketing
companies/respondent authority that though the
judgment passed by the Hon’ble Division Bench of the
Hon’ble Bombay High Court is under challenge before
the Hon’ble Apex Court but there are some observations
of different High Courts in respect of the said circular of
2018 wherein the different High Courts have allowed to
continue the said circular. They submit as the decision
has not been finally arrived at by the Hon’ble Apex
Court, thus, the submission of the learned advocate for
the petitioner regarding finality of earlier circular of
2018 that is not correct.
20. The learned advocate for the oil marketing
companies has also placed some orders of the Hon’ble
Apex Court. In the order dated 21st February, 2025,
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matter came up before the Hon’ble Apex Court for
hearing wherein the learned Solicitor General of India
has expressed that the oil marketing companies will
come up with new policy and it was taken note of. In
order dated 8th April, 2025, application for permission
to file SLP was granted by the Hon’ble Apex Court.
21. It is further contention of the oil marketing
companies that the matter is pending before the Hon’ble
Apex Court, thus, the issue has not yet been finally
decided. It is submitted in the instant case, the interim
order cannot be passed as the impugned circular is a
policy decision of the Union of India, wherein the writ
Court should not entertain.
22. Refuting the contentions of the oil marketing
companies, in reply, the learned advocate for the
petitioner has also pointed out some provisions of the
agreement wherein the distributors are forced to
enhance their business by supplying more cylinders.
The learned advocate for the petitioner also refers
some Clauses of agreement wherein liability of
indemnify customers is only upon the distributors, some
clauses also mention that the corporation shall bear no
warranty in respect of any loss and damages to the
customers. Under the same submissions, it is
contention of the learned advocate for the petitioner that
all responsibility of the customers was upon the
distributor and they were also forced to extend their
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business by the oil marketing companies by such they
have taken huge loan from the different organizations
and expanded their business, suddenly by the strength
of the circular, if the customers were taken away and
was given to another distributor, obviously business of
the petitioner will be at loss. It is submission of the
learned advocate for the petitioner that right guaranteed
under the Article 19 (1) (g) has been violated by issuance
of such circular, thus, it is required to be stayed.
23. The learned advocate for the petitioner has
also cited a judgment reported in (2012) 6 SCC 502
[Brij Mohan Lal vs. Union of India & Ors.], wherein the
Hon’ble Apex Court has categorically absorbed that the
policy decision of the State cannot be challenged in the
writ petition as follows:-
“100. Certain test, whether this Court should or not
interfere in the policy decision of the State, as stated in
other judgments, can be summed up as:
(I) If the policy fails to satisfy the test of
reasonableness, it would be unconstitutional.
(II) The change in policy must be made fairly and
should not give the impression that it was so done
arbitrarily on any ulterior intention.
(III) The policy can be faulted on grounds of mala
fides, unreasonableness, arbitrariness or unfairness, etc.
(IV) If the policy is found to be against any statute
or the Constitution or runs counter to the philosophy
behind these provisions.”
24. Having heard the long submission of the
respective parties and also considering the observations
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of the Hon’ble Apex Court, it appears that much have
argued by the parties in respect of the present impugned
policy circular dated 21st February, 2025 of the three oil
marketing companies. The earlier policy which was
under challenge before this Court and was decided
finally by the order of the Hon’ble Division Bench. There
are Clauses in the earlier circular that distributors may
retain 75% of refill ceiling limit applicable to them. In
the present circular, each distributor was directed to
retain 100% of their refill ceiling limit. At the same
time, the refill ceiling limit per month and viability limits
of all the distributors has been reduced. It means
though the distributors were directed to retain 100%
refill ceiling limit but refill ceiling limit having drastically
reduced 50% to that earlier. Thus, by the strength of
the impugned marketing structural policy, each and
every distributor can retain 100% of their refill ceiling
limit applicable to them, that means the actual refill
ceiling limit which was earlier with the all distributors
reduced by the strength of the circular. The three oil
marketing companies intend to restructure the
marketing of LP Gas distribution amongst the customers
for domestic use.
25. It has been observed by this Court on the
earlier occasion that the customers of LPG distributor
are the assets of the distributor. In deciding the said
issue, this Court has categorically observed each and
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every Clause of the agreement, the same issue has again
placed before this Court. This Court has taken a
decision on that issue which was upheld by the Division
Bench. At this juncture, this Court cannot take a
separate view on the argument placed by the learned
advocate for the oil marketing companies, if entertained
that would be tantamount to be sitting on appears over
the order of stay. Furthermore, it appears that several
High Courts have already stayed the impugned circular
dated 21st February, 2025.
This Court also cannot pass a different order to
that of view taken by the several High Courts.
26. Moreover, for better appreciation of the
matter regarding purpose of issuing such circular by the
oil marketing companies and whether it is actually for
the benefit of the public purpose or for the purpose of
eradicating monopoly in the market, that would be
considered at the final stage. The oil marketing
companies/respondent authority is at leave to file
affidavit-in-opposition against the writ petition within 4
weeks from date. Reply, if any, by the petitioner within
2 weeks thereafter.
27. Considering the entire facts and
circumstances on principle of issuance of interim order,
it appears that prima facie case and balance of
convenience and inconvenience is tilting in favour of the
petitioner as they are admittedly losing their customers.
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This Court feels appropriate to pass an interim order.
Hence, this shall be an interim order in terms of prayer
(g) and (h) of the writ petition; a period of 8 weeks from
date.
(Subhendu Samanta, J.)