Calcutta High Court Dismisses Challenge To IOCL's Revocation Of LPG Distributorship Reconstitution Approval

The Calcutta High Court has dismissed a challenge to Indian Oil Corporation Limited's decision revoking in-principle approval for reconstitution of an LPG distributorship from proprietorship to partnership, holding that the reconstitution process had not attained finality as the revised distributorship agreement remained unexecuted.

Justice Smita Das De observed that while judicial review remained available against arbitrary State action, the court's role in the present dispute was limited.

“The scope of the judicial review in the present matter is circumscribed, inasmuch as the issues involve complex questions of policy and technical considerations pertaining to the grant of LPG distributorship. However, it is trite law that judicial review is not ousted where the action of the State is arbitrary, irrational, or in violation of the principles of natural justice.”, the court observed.

The writ petition was filed by Begampur Indane Gramin Vitrak and its proposed partners challenging IOCL's January 21, 2026 speaking order confirming revocation of the in-principle approval for reconstitution of the distributorship.

The dispute arose after sole proprietor Kabita Mandal, sought reconstitution of the LPG distributorship by inducting three other petitioners as partners, citing financial difficulties in operating the business. IOCL granted in-principle approval on February 21, 2024, following which the petitioners claimed statutory licences reflecting inclusion of the proposed partners' names had been obtained.

However, the revised distributorship agreement was never executed. The petitioners attributed this to Mandal's refusal to sign the documents, while the private respondent alleged that she had been coerced into the reconstitution process.

Rejecting the challenge, the Court held that the competent authority's decision was a well-reasoned speaking order. “The petitioners challenge to the order of confirming the revocation of the in-principal approval, is premature. The reconstitution of the firm from a proprietorship to a partnership has not attained finality since the revised distributorship agreement remains unexecuted.”

The court further noted that although the names of the proposed partners had been incorporated in statutory licences submitted for the purpose of reconstitution, the licences continued to stand in the name of the proprietorship concern. It held that the petitioners had failed to adhere to the stipulated timeline despite multiple reminders issued by IOCL, and dismissed the writ petition.