calcutta high court

Calcutta High Court: A single-judge bench comprising of Bibek Chaudhuri,* J., upheld the rejection of the petitioner’s representation and the cessation of the Letter of Intent (LOI) due to the unauthorized change in business structure without prior approval from the Indian Oil Corporation.

Brief Facts

In the instant matter, petitioner 1 was selected for distributorship of LPG cylinders through a draw of lots and the Letter of Intent (LOI) was issued in his favor on 24-04-2019. After receiving the LOI, Petitioner 1 entered into a partnership with petitioner 2 on 09-02-2021, to run the LPG distributorship.

The petitioners’ partnership deed was executed without obtaining the required approval as Clause 5.4 of the LOI stipulated that any change in the nature of the distributorship, such as converting from proprietorship to partnership, required prior approval from the Indian Oil Corporation (IOC). On 19-07-2022, the representation made by the petitioners was rejected, and the LOI was withdrawn.

The petitioners filed a petition which resulted in a Co-ordinate Bench directing IOC to consider their representation and pass a reasoned order based on existing policy within four weeks. Following the Co-ordinate Bench’s order, IOC rejected the representation and recalled the LOI. Aggrieved by IOC’s rejection, the petitioners preferred the present petition before this Court challenging the same.

Moot Point

Whether the subsequent change in the distributorship structure (from proprietorship to partnership) without prior approval, as stipulated in the LOI, should be considered a mere irregularity or a substantial illegality leading to the cessation of the LOI?

Court’s Decision

The Court concluded that the petitioners’ change from proprietorship to partnership without obtaining approval constituted a violation of the terms outlined in the LOI. The Court held that the guidelines for reconstitution of LPG distributorship introduced in 2022 were not applicable to this case since the change had been made prior to the issuance of these guidelines.

The Court dismissed the instant writ petition, upholding the rejection of the petitioners’ representation and the withdrawal of the LOI.

[Md. Musir Ahmed v. Indian Oil Corpn. Ltd., 2023 SCC OnLine Cal 2364, order dated 16-08-2023]

*Judgment by Justice Bibek Chaudhuri

Advocates who appeared in this case :

Mr. Suman Dey, Counsel for the Petitioners;

Mr. Siddhartha Banerjee Mr. Jyoti Rauth Mr. Rakib Hussain Khan Mr. Anjan Bhandari, Counsel for the Respondent.

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