Kerala High Court Dismisses Pleas Against Unilateral Change In Distributorship Of LPG Cylinders By Oil Marketing Corporations

The Kerala High Court on Thursday held that the transfer of consumers from one LPG distributor to another by Oil Marketing Corporations was in pursuance of the policy adopted in this regard, and the consumers had no right to challenge the same and contend that they are entitled to continue with the existing distributors.The Division Bench comprising of Chief Justice S. Manikumar and Justice Shaji P. Chaly, while holding so, observed, "...the guidelines and the agreement executed by and between the Oil Marketing Corporations and the distributors would show that the consumers are under the direct supervision and control of the Oil Marketing Corporations and the consumer cannot turn around and say that they are entitled to continue with the existing distributors".It added that, "...such a course of action adopted by the Government and the Oil Marketing Corporations would only enure to the benefit of the consumers, and by no stretch of imagination, it can be visualised and presumed that the shifting of consumer from one distributor to another, would, in any manner, prejudice the consumer".BackgroundThree writ petitions were filed in the instant case before the High Court- two of them were filed by two organizations said to be constituted to protect the interest of the gas consumers; and third by an individual consumer seeking transfer of LPG connections to the nearest distributor of consumers by implementing the Unified Guidelines for Selection of LPG Distributor 2016, and the Ministry of Petroleum and Natural Gas, Government of India Order 16.02.2018, whereunder appropriate directions had been issued to the Oil Marketing Corporations to close down the existing extension counters in various places, including the State of Kerala by 31.03.2018 and to transfer the existing customers to the nearby distributor through intra company or inter company, as the case may be. Arguments by PetitionersOn behalf of the Consumer Associations, it was contended that the respondents had no authority to transfer the LPG Connections from one distributor to another without the knowledge of the consumers, as this right is for the consumers to exercise. The petitioners further submitted that consequent to the porting of the consumers, abnormal delay had occurred in respect of refilling the cylinders, which resulted in delay of supply of cylinders thus creating a major problem for the consumers. It was contended that the right to continue or not with a dealer is crystalized with the policy decision of the Union Government. The petitioners emphasized that the rights crystallized to a consumer could not be taken away by the orders of the Government or the Oil Marketing Corporations, but only through legislative intervention.It was further argued that the Government as well as the Oil Marketing Corporations are liable to remove the difficulties faced by the consumers with respect to the access to LPG and that the consumers, especially from hill area, are unable to reach out their distributors which are functioning far away from their houses. It was further pointed out that the cylinders are not distributed directly to the houses of the consumers, but are stored at some shops of the area and therefore, the consumers are forced to make additional payment to the shop owners for receiving the cylinders. Added to this was that distributors also charged unauthorized transportation fees.Arguments by Oil CorporationsOn the other hand, it was contended by the Oil Marketing Corporations that the right of the Public Sector Oil Marketing Companies to transfer the consumers of their LPG cylinders from one distributorship to another has been upheld in various decisions. Additionally, it was contended that in clause 2.(b)(ii) of Ext. R4(a)LPG Dealership Agreement, and all other similar agreements the Corporation reserves the right to appoint one or more additional distributors within the territory of the existing distributor and also to reduce, restrict, modify or alter the area of distribution of the existing distributors. It was submitted that the reduction in the area of operation would automatically result in reducing the number of consumers registered with the dealer. It was further submitted that adequate safeguards have been provided while undertaking the transfer for protecting the interest of customers. The counsels also pointed out that LPG is a controlled item, an essential commodity under the provisions of the Essential Commodity Act, 1955 and the entire production, distribution and sale of LPG is controlled by various orders passed under the provisions of Section 3 of the Act, 1955 and multiple policies formulated by the Government of India, and in this light it was submitted that the distribution was not affected in any manner. It was contended that the appointment of new distributorship and transfer of customers from existing distributors was also done in public interest. It was their submission...

Kerala High Court Dismisses Pleas Against Unilateral Change In Distributorship Of LPG Cylinders By Oil Marketing Corporations

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