VEMBANAD GAS AGENCIES Vs. UNION OF INDIA

JUDGEMENT

(1.) A distributor of domestic Liquid Petroleum Gas (LPG) is before this Court, asserting his right to retain the consumers, who have subscribed with him. The learned Single Judge found that the transfer of consumers from the appellant to the newly appointed distributor does not affect the appellant's business, since he would continue to have average refill sales corresponding to the ceiling limits of the market. The agreement produced as Ext.P1 was also gone into, in which there was an arbitration clause. Looking at that specific clause, it was found that though the appointment stipulated is of an officer of the Corporation, consequent to the amendment of the Arbitration and Conciliation Act, 1996, necessarily an independent Arbitrator has to be appointed. The learned Single Judge found that this would not affect the arbitration clause as such, since the appellant could approach the Company for appointment of an independent Arbitrator, which if not conceded to, the appellant would also have the remedy under Sec. 11 of the Act of 1996. The decision in Harbanslal Sahnia V. Indian Oil Corporation Ltd. (2003(2)SCC 107) was distinguished. There, the issue was with respect to termination of a dealership, which was held to be based on an irrelevant and non existent cause. Whereas in the present case, the issue is only with respect to the interpretation of the clause and whether the action of the respondent would lead to a breach of the agreement or not. It was held, relying on All India LPG Distributors Federation V. Union of India (2003(2) KLJ 451) that appointment of additional distributors in an area, where there is a distributor appointed; resulting in reduction of consumers of the existing dealer, cannot give rise to a valid challenge on the ground of arbitrariness or illegality. The writ petition was dismissed, leaving open the liberty of the appellant to seek remedy in accordance with the alternate disputes resolution mechanism.

(2.) The learned counsel appearing for the appellant, Sri Anchal C Vijayan, relies on Harbanslal Sahnia (supra) to urge this Court to exercise discretion and consider the issue raised, on merits. It is also pointed out that, a Division Bench of the High Court of Bombay in WP(C)No.8753 of 2018 Shailaja R. Khanvilkar vs. Union of India dated 30.09.2019, has elaborately considered the issue to set aside a circular dated 04.01.2018 issued by Bharat Petroleum Corporation Ltd (BPCL). The contention of the distributor that the power to reduce the area or territory does not include a right to reduce existing consumers was upheld. It was also held that the impugned circular visits the earlier distributors with discrimination, in so far as conferring benefits to the newly appointed distributors and there is no intelligible differentia validating such categorization. It is pointed out that, the attempt of the respondent to transfer the existing consumers of the appellant, to the newly appointed distributor, violates Ext.P2 Inter-Company Portability Scheme, which permits such portability only on a request made by the consumer. Various provisions of Ext.P1 agreement are read over to impress upon us that the agreement between the distributor and the oil company is an agreement between a principal and principal and there is no agency in conferring such distributorship. The business efficacy of the appellant should also weigh with the Corporation when a decision is taken, since otherwise the loans taken by the appellants would not be serviced and the appellant would be reduced to penury. The consumer is enrolled and serviced by the distributor and the oil company has no proprietary rights over the consumers.

(3.) Sri Adarsh Kumar, learned counsel appearing for the 5th respondent, which is a Federation of the existing LPG distributors, supports the appellant and emphasizes that the distributors are not agents of the Corporation and they purchase the LPG cylinders from the Corporation and sell it to the consumer; who is enrolled with the distributor. It is argued that, though there is power on the Oil Company to appoint additional distributors and reduce or increase the area of operation, there is no power to take away the consumers of an existing distributor, since the consumers have been subscribed through the efforts of the distributor. The decision of the High Court of Bombay is pointed out to emphasize this point, where specifically their Lordships held that the LPG distributorship of an Oil Company is not an agency. It is submitted that contractually, there is no power on the Oil Company to expropriate the consumers of an existing distributor and statutorily too, there is no such power conferred on the respondent Corporation. The Unified Selection Guidelines produced as Ext.R5(A) is referred, to argue that the power to select and appoint is confined to only virgin markets, where there are no consumers serviced by an existing dealership. The learned counsel would assertively reiterate that there is no power conferred on the respondent Corporation to expropriate the consumers of an existing dealer.