Temporary customer transfers during distributorship suspension create no enforceable right to permanent reassignment.

The petitioner, M/s Devika Indane, was granted LPG distributorship at Jharia, Dhanbad, by Indian Oil Corporation Ltd. (“IOCL”) under a memorandum of agreement dated 08.04.2017.

The petitioner claimed that customers of the erstwhile M/s Jyoti Jwala Gas Agency, whose distributorship had been terminated on 30.07.2012, were not transferred to it after its distributorship commenced.

In March 2020, approximately 25,600 consumers of Jharia were temporarily transferred to the petitioner during the suspension of M/s Binod Gas Distributor’s distributorship.

After Binod Gas Distributor’s distributorship was revived, those consumers were restored to it on 17.10.2021.

The petitioner submitted representations seeking permanent transfer of the consumers but received no relief.

1. Whether the petitioner was entitled to transfer of the regular refill customers formerly associated with M/s Jyoti Jwala Indane on the basis of IOCL Circular dated 25.08.2015 and the distributorship agreement dated 08.04.2017?

2. Whether the consumers of M/s Binod Gas Distributor, temporarily transferred to the petitioner during suspension of Binod’s distributorship, could be claimed permanently by the petitioner after Binod’s distributorship was revived?

3. Whether the circular conferred an enforceable right upon the petitioner to demand transfer of consumers from another existing distributorship?

The Court applied IOCL Circular No. SL/AKM/1601 dated 25.08.2015.

Under Clause 7(ii), where a new distributor is commissioned in a lone market, all registered consumers of that market are to be transferred to the newly commissioned distributor; under Clause 7(iii), where a new distributor is commissioned in lieu of a terminated distributor in a multiple-distributor market, consumers are to be transferred in accordance with the applicable norms, with surplus consumers being transferred if existing distributors remain above the prescribed restructuring norms.

The Court treated the circular as an administrative guideline requiring a pragmatic and functional interpretation, particularly in the context of maintaining uninterrupted LPG supply to consumers.

The circular did not, however, create an unconditional or enforceable right in favour of a distributor to obtain consumers belonging to another operational distributorship.

The Court found that M/s Jyoti Jwala Indane’s distributorship had been terminated in 2012, whereas the petitioner’s distributorship commenced only in 2017.

During the intervening period, the former consumers had been distributed among other distributors, and some consumers had subsequently been allotted to the petitioner after its commissioning.

The Court interpreted the circular as primarily facilitating alternate supply arrangements and regulating consumer reallocation, rather than guaranteeing that every consumer of a previously terminated distributorship would automatically be transferred to a later-appointed distributor.

The temporary transfer of Binod Gas Distributor’s consumers occurred only because Binod’s distributorship was under suspension; once that distributorship was revived, restoration of its consumers to the parent distributor was justified.

Further, the petitioner already exceeded the prescribed viability level, with approximately 14,000 active customers and monthly sales of about 5,500 refills against the benchmark of 4,400.

Accordingly, the petitioner could not establish either a continuing contractual entitlement or a right under the circular to demand permanent transfer of Jyoti Jwala’s or Binod Gas Distributor’s consumers.

It held that the petitioner was not entitled to transfer of all consumers formerly associated with M/s Jyoti Jwala Indane and had no enforceable right to permanently retain the consumers of M/s Binod Gas Distributor, who had been transferred only as a temporary arrangement during suspension of Binod’s distributorship.

The writ petition seeking mandamus against IOCL was therefore dismissed, with no direction for transfer of the disputed consumers.