The court emphasized that termination of business agreements requires adherence to principles of natural justice, including the right to a personal hearing, and that mere allegations without substantiation cannot justify such actions.

Judgment :

Rajesh Mazumdar, J.

1. On the 24^th of October 2025, this Court had extensively heard Mr. P K Roy Choudhury, learned counsel appearing for the petitioners and Mr. M. Sharma, learned Standing counsel appearing for the Indian Oil Corporation and its instrumentalities. The hearing has been concluded on the 6^th of November 2025. The learned counsel for the contesting parties have submitted their written arguments. The judgment, which was reserved on the said date, is delivered today.

Contentions raised in the petition:

2. By this petition under Article 226 of the Constitution of India, the petitioners are assailing the impugned order dated 22^nd of September 2025, which was issued by the respondent No. 2, and whereby the LPG distributorship of the petitioner No.1 was terminated alleging breach of conditions of the Letter of Intent issued by the respondents on 27.06.2011, as well as violations of the provisions of the Distributor agreement dated 18^th of October 2012 and the subsequent agreement dated 21^st of November 2023.

3. The petitioner number 2 had applied for distributorship for sale of Liquid Petroleum Gas (hereinafter, referred to as ‘LPG’) to be supplied for household consumers and commercial consumers in Silchar Town. She was accordingly issued a Letter of Intent on 27^th of June 2011 by the Respondent-Company and as she fulfilled all the terms and conditions, the petitioner No. 2 started preparations as required under the said letter of intent. Facing some financial difficulty, the petitioner No. 2 executed a power of attorney in favor of Zarzis Alam Choudhury and another Gautam Kumar Kaunda on 19.01.2012, authorizing them to manage, control, supervise and administer the proprietorship firm which was then named as M/s Silchar Indane Service. The petitioner No. 2 realized that one of the conditions laid down in the Letter of Intent was that she could not allow any other entity to manage the business of distributorship of LPG and therefore, she revoked the power of attorney executed on the 19^th of January 2012 by a revocation deed notarized on 8^th of October 2012. Having fulfilled all the norms as required by the letter of intent, an agreement was executed between the Indian Oil Corporation Limited through its authorized signatory and the petitioner No. 2 acting on behalf of the proprietorship firm on 18.10.2012 and the distributorship was commissioned on 19^th of October 2012.

4. The petition further states that the petitioner No. 2 and petitioner No. 3 entered into a partnership agreement by a partnership Deed executed on 21^st of September 2023 to carry on the business of the LPG dealership and financial management as well as administrative management The respective shares of the partners in the profit and loss were recorded to be 51% and 49% respectively for the petitioner No. 2 and petitioner No. 3. The intention of reconstituting of the proprietorship firm into a partnership firm was given to the respondent authorities by a communication dated 9^th of March, 2023 and after creation of the partnership firm, the respondent No. 4 approved the reconstitution of M/s Silchar Indane Service to a partnership firm from a proprietorship firm. A fresh agreement was entered into on 21^st of November, 2023 by the petitioner Nos. 2 and 3, (acting as partners of petitioner No. 1), and the Indian Oil Corporation Limited represented by its authorized representative.

5. The respondent IOCL received a complaint given by Gautam Kum