Failure to fulfil dealership LOI conditions disentitles an applicant to continuation of the dealership.

The petitioner applied for a Kisan Seva Kendra/retail outlet dealership at Majhuwa, Araria, pursuant to an advertisement dated 25 November 2018. After being declared successful in the draw of lots, she was issued a Letter of Intent (LOI) on 31 January 2020.

She obtained the requisite leasehold land, site-plan approval and ownership certificate, and the District Magistrate issued the necessary No-Objection Certificate (NOC) on 26 August 2021.

Under the Selection Brochure and LOI, she was required to deposit the fixed fee and security deposit and complete the construction and development work within the stipulated period. She failed to do so despite repeated communications, show-cause notices and an undertaking given in a meeting held on 20 October 2022.

The petitioner attributed the delay to financial difficulties, family circumstances and the COVID-19 situation, and claimed to have spent approximately ₹19 lakh on site development. The respondent Corporation withdrew the LOI on 3 March 2023. Her subsequent representation was rejected, leading to the present writ petition seeking quashing of the withdrawal and a direction to award the dealership to her.

Whether the respondent Corporation acted illegally or arbitrarily in withdrawing the petitioner’s LOI for failure to comply with the stipulated financial, construction and development requirements.

Whether the petitioner had an enforceable right to continuation or award of the dealership despite failing to fulfil the conditions of the LOI within the prescribed and extended periods.

The Court applied the principle that Indian Oil Corporation, being “State” under Article 12 of the Constitution, must act fairly, reasonably and uniformly, but must also adhere strictly to the standards and conditions prescribed in the advertisement and Selection Brochure.

Any unauthorised relaxation or deviation may render the selection process arbitrary and unsustainable.

Relying on Indian Oil Corporation Ltd. v. Raj Kumar Jha, 2012 (2) PLJR 783, and the Division Bench order in Mukesh Pandey v. Hindustan Petroleum Corporation, LPA No. 925 of 2012, the Court held that prescribed eligibility and dealership conditions must be uniformly enforced.

The terms of the LOI required timely deposit of the fixed fee and security deposit and completion of the requisite development and construction work; failure to comply, even after reasonable opportunities and show-cause proceedings, disentitled the applicant from continuation of the dealership.

The Court found that the NOC had been issued on 26 August 2021, after which the petitioner was required to fulfil the financial and construction conditions of the LOI within the stipulated period.

Her failure to make the requisite deposits and complete the work was undisputed, and her own communications acknowledged her financial inability to comply.

The Corporation had nevertheless granted additional opportunities, issued show-cause notices and considered her representations, thereby satisfying the requirement of procedural fairness.

The Court held that the petitioner’s reliance on COVID-related difficulties, family circumstances and investment in the site could not override the express conditions of the LOI, particularly when sufficient time and repeated opportunities had been provided.

Granting further relaxation to the petitioner would be inconsistent with the requirement of uniform adherence to the prescribed dealership standards.

The writ petition was dismissed as devoid of merit, and any pending interlocutory applications were disposed of.