The Writ Petitioner Mrs.K.Sumathi, W/o.late Kandasubramaniam is a Distributor of BPC LPG Cylinders by Bharat Petroleum Corporation Limited (BPCL) and running the agency in the name and style of M/s.V.P.R.Gas Service (hereinafter referred to as "the petitioner agency) and engaged in the business of supplying LPG cylinders in Perundurai area from 08.11.1985 onwards. Subsequently the petitioner was allotted another extension licence to run LPG agency in Chennimalai Town area as well. While so, the impugned order dated 25.09.2008 was passed by the 1st respondent directing the petitioner agency to transfer its LPG customers of Chennimalai area to M/s.Raja Indane Gas Agencies, Chennimalai (hereinafter referred to as "the 3rd respondent Agency") within a period of four months from the date of that order, which is under challenge in the present writ petition.
2.1 The petitioner's husband late Kandasubramaniam was appointed as a Distributor of Bharat Petroleum Corporation Limited, the Government of India undertaking to supply LGP Bharat Gas Cylinders by 2nd respondent over the area covering Perundurai Town as well as peripheral area of the town subject to a limit of 5 kms from the boundary of Perundurai Town. The BPCL has also issued a letter of intend with certain terms and conditions in the matter of distribution of LPG cylinders over the area to which petitioner was appointed as a distributor. Since the BPCL has granted distributorship to the petitioner's husband, her late husband had established a showroom with go-down facilities with required infrastructures. After making all the basic infrastructural facilities as required for running the Gas Agency, the petitioner agency started functioning with effect from 19.02.1986 in the name of style of M/s.V.P.R. Gas Service. In view of the frequent request from some of the villagers of Chennimalai which is situated 12 kms away from Perundurai Town expressing their difficulties in getting supply of LPG cylinders, the petitioner approached the 2nd respondent to allocate Chennimalai area within the area of operation of the petitioner agency to supply BPC LPG cylinders to the consumers in Chennimalai area as well. Having considered the genuine request of the consumers living in Chennimalai area, the 2nd respondent BPCL was pleased to include Chennimalai area within petitioner's area of operation by specifically mentioning in their letter dated 30.01.1986 that the extended area of operation will be treated as part of the original appointment letter. After the order dated 26.09.1986 issued by the 2nd respondent granting extension of area of operation for the purpose of distributing LPG cylinders to the consumers at Chennimalai area, the petitioner has invested huge money by setting up a separate show-room and other necessary infrastructural facilities. Further, the petitioner has set up a full-fledged office at Chennimalai area also and commenced its office from the year 1986 and thereby for the last two decades the petitioner has been supplying LPG cylinders to the consumers in the aforesaid area without any problem whatsoever. Before commencement of operation of LPG cylinders supply, the petitioner has obtained valid explosive license from the competent authorities and also other required registration certificates under the provision Tamil Nadu General Sales Act.
2.2 While so, Indian Oil Corporation Limited , Coimbatore, has appointed the 3rd respondent as their distributor during April 2004 by letter dated 23.07.2004. After 8 years from the date of establishing the petitioner agency in Chennimalai area, the 3rd respondent was granted similar license by a different Oil Company viz., IOCL. Thereafter, the 3rd respondent filed W.P.No.24417 of 2004 seeking an order of injunction against the petitioner on the ground that the area of operation in Chennimalai area has been completely transgressed by the petitioner and the same should be cancelled. In the said writ petition, the 2nd respondent filed a detailed counter opposing the maintainability of the writ petition stating that the extension of area of operation has already been given to the petitioner by letter dated 26.09.1986 and on that basis the 2nd respondent prayed for dismissal of the writ petition filed by the petitioner's business rival.
3.1 The learned counsel appearing for the petitioner submitted that the petitioner was granted dealership for Perundurai Town as well as its peripheral area vide agreement dated 08.11.1985 and subsequently, the area of operation was extended with effect from 26.09.1986 to Chennimalai (urban and rural) as well. The petitioner agency was granted extension of area of operation to cater the needs of the LPG consumers in Chennimalai area also and subsequently Perundurai Town as well as peripheral area of Chennimalai have also become part of one area of operation and further the petitioner has invested sufficient money in setting up of go-down with other necessary infrastructure facilities including manpower for supply of LPG cylinders at door step to various consumers till date.
3.3 It is further contended by the learned counsel that the petitioner has been rendering unblemished services to its consumers. The 3rd respondent has got licence with IOCL 8 years after the business of the petitioner in Chennimalai and Perundurai town area. In such circumstances, either the 3rd respondent ought not to have chosen to set up his agency in the same area where the petitioner has already established its business or in the event of setting up of the LPG agency in the same area, the IOCL ought not to have called upon the petitioner for the closure of the petitioner agency as it is not legally viable for the petitioner to move out of the area of operation where he has established his business.
3.4 Further, the 2nd respondent has filed his counter in the writ petition stating that the claim of monopoly of distribution in the area of Chennimalai (urban and rural) by the 3rd respondent is not tenable in law and the competition between the two gas agencies has to be nurtured.
4.1 Per contra, the learned senior counsel appearing for the 1st respondent contended that pursuant to the order of this Court, the 3rd respondent approached the 1st respondent State Level Co-ordinator and the 1st respondent State Level Co-ordinator after having considered the rival claims of the petitioner as well as statement made by the Assistant Manager (LPG), who represented the BPCL, the 1st respondent passed the impugned order.
4.2 It is further contended by the learned senior counsel appearing for the 1st respondent that there is an uniform policy among the oil and gas marketing companies in allocating one full area to one company for operation of LPG distributorship and since Chennimalai area has already been allotted to IOCL and in view of the policy decision being maintained by the Oil and Gas Marketing Companies, the 1st respondent thought it fit to allot the entire Chennimalai area to the 3rd respondent. Therefore, the impugned order passed by the 1st respondent State Level Co-ordinator cannot be found fault with and on that basis the learned senior counsel prayed for dismissal of the writ petition.
5. Learned senior counsel appearing for the 3rd respondent submitted that the impugned order came to be passed on the basis of an undertaking given by the 2nd respondent BPCL before the State Level Co-ordinator and also following the policy decision taken by the oil marketing companies allocating independent area to their distributors in order to avoid unhealthy business struggles. In addition to that if two different gas agencies are allotted to a single area, it would definitely affect the business prosperity of not only the petitioner agency, but also the 3rd respondent agency. Therefore, in the interest of both the parties, the decision taken by the 1st respondent State Level Co-ordinator can not be interfered with.
6. Heard the learned counsel appearing for the petitioner, learned counsel appearing for the 2nd respondent and the learned senior counsel appearing for the 1st respondent and also the learned senior counsel appearing for the 3rd respondent.
7. Admittedly, the petitioner was appointed as a dealer by the respondent BPCL on 08.11.1985 to supply LPG cylinders to the customers living in Perundurai and its periphery. Subsequently, the petitioner agency received various representations from the customers living in Chennimalai area to supply LPG cylinders and in view of pressing demand, the petitioner in turn approached the 2nd respondent BPCL for the grant of extension of area of operation to Chennimalai area. Having considered the request of the petitioner agency, the 2nd respondent has extended the area of operation to Chennimalai area and thereafter the petitioner has set up his go-down with all infrastructure facilities. From September 1986 onwards, the petitioner has been running her business through the extension of area of operation set up at Chennimalai and catering the needs of LPG customers in Chennimalai area also. While so, after nearly 8 years, the 3rd respondent was appointed as a dealer of IOCL. Having known very well of the fact that the petitioner has been running his business through her extension of area of operation at Chennimalai area apart from original area of operation at Perundurai and its periphery, the 3rd respondent earlier approached this Court stating that extension of area of operation granted to the petitioner has posed a threat to his business livelihood. If it is the claim of the 3rd respondent that after granting dealership to him in Chennimalai area, no other dealers should be appointed by any of the oil companies, then the contention of the 3rd respondent could be sustained. Contrary to this offer coming to the petitioner's area of operative complaining that the existence of the petitioner's agency is causing business rivalry to the late come the 3rd respondent, is far from acceptance.
8. It was the contention of the 3rd respondent, before the 1st respondent-State Level Co-ordinator that as per circular issued by the Ministry of Petroleum and Natural Gas in No.P-20012/65/2000-MKT, dated 17.09.2001 the LPG customers of an old LPG distributor operating in the area of a newly commissioned LPG distributorship have to be transferred to the newly commissioned LPG distributor. The said direction was issued by the ministry only after taking into account the difficulties experienced by the newly commissioned distributorship in enrolling the new customers in the area where there is already an extension counter resulting into making such new distributorships unviable. On the other hand, it was the contention of the petitioner agency before the 1st respondent State Level Co-ordinator that the petitioner agency was given distributorship originally for Perundurai and its peripherals and subsequently, the petitioner agency was given extension of area of operation and the extension of area of operation is different and distinguishable from extension counter.
9. The 1st respondent - State Level Co-ordinator merely on the basis of the oral representation made by the Assistant Manager (LPG) of BPCL, has directed the petitioner agency to transfer its LPG customers of Chennimalai area to the 3rd respondent agency and also directed the 3rd respondent agency to transfer its LPG customers within Perundurai town limit to the petitioner agency. Further direction was also given to the IOCL and BPCL to monitor the transfer of customer and ensure that the process is completed within a period of four months. However, the 2nd respondent BPCL which has all along been supporting the petitioner before this Court in W.P.No.24417 of 2004 stating that the petitioner agency has to continue its extension of area of operation in order to protect their marketing and also to meet the increased demand in the market keeping in mind the customers' interest, all of a sudden, merely on the basis of the oral representation made by the representative of the 2nd respondent BPCL before the 1st respondent State Level Co-ordinator that the petitioner agency will surrender the LPG customers in Chennimalai area shall not be fair enough to dislodge the existing LPG distributorship in Chennimalai area. Had the 1st respondent perused the circular of the Government of India from right perspective with reference to the contention of the petitioner agency that the extension of area of operation is entirely different from extension of counter, definitely he would not have passed the impugned order. Further, when the oil marketing companies have got general policy in metropolitan cities allowing all oil marketing companies like, BPCL, IOCL, HPCL, IBPCL to set up their LPG as well as petrol pumps irrespective of distant barrier, the same policy has to be followed uniformly even in non-urban and villages like Chennimalai area as well. This is for the purpose of maintaining healthy competition among the distributors which will ultimately help the LPG customers in rural areas. While so, the 2nd respondent's decision taking a stand that Chennimalai area has now been allotted to IOCL and therefore, the petitioner cannot be allowed to continue her LPG extension of area of operation in Chennimalai area, will not hold good, as it is contrary to their own general policy which is being followed in cities and towns.
10. On considering the facts and circumstances of the case, I am of the considered view that the impugned order is liable to be set aside for the following reasons:-
i. By the time when the third respondent has applied for getting LPG distributorship in Chennimalai area in the year 2004 he was aware of the fact that the petitioner has established his business 8 years ago in the year 1986, by investing a huge money in establishing godown, appointing permanent employees to supply gas cylinders at the door steps of customers and purchasing other infrastructural facilities like tricycle etc., knowing pretty well in advance that at the time of applying for LPG gas connection, the 3rd respondent was applying to have licence in the petitioner area, wherein the petitioner was granted licence 8 years ago and thereafter coming into the petitioners area he cannot ask the petitioner to go out of his area.
ii. The stand taken by the 1st respondent State Level Co-ordinator that the area of operation for extension counter will not apply for closure of the petitioner distributorship in Chennimalai area since the 2nd respondent has granted an extension of operation of area. Therefore, the order dated 17.09.2001 passed by the Ministry of Petroleum and Natural Gas, Government of India will not be made applicable against the permission granted to the petitioner to have extension of area of operation.
iii. The General Policy of oil marketing companies to allow more than one distributorship in city has to be followed equally and uniformly in the rural areas as well.
iv. For the purpose of ensuring healthy business competition among various gas distributors the license already granted to the petitioner agency shall not be disturbed.
11. In any event since the third respondent came to set up its retail outlet 8 years after the petitioner established his gas agency in Chennimalai area, the 3rd respondent who came later, that too, 8 years after petitioner established his business by setting up his godown, cannot be allowed to complaint that his business has been badly affected. The 3rd respondent at the time of applying for licence, was very well aware of the existing gas agency of the petitioner already in existence in the same area, having known the competitions already posed by the petitioner in same area, either the 3rd respondent could have avoided the petitioner's area by applying to some other new area or should have accepted the petitioner as his competitors. But after obtaining licence to set up gas agency in the petitioner's area, he is not legally entitled to ask the petitioner's company to wind up when they had already set up their business 8 years before the arrival of the 3rd respondent.