1. License for petroleum retail outlet cancelled by regulator after landlord alleged lease expiry — dispute sub judice. (Para 1 , 2 , 8 , 9 , 10 )
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2026 Supreme(AP) 1236
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
K. Sreenivasa Reddy, J.
Indian Oil Corporation Ltd. - Appellant
Vs.
Union of India and another Respondent
WP No.2652 of 2026
Decided On : 09-03-2026
Advocates:
Advocate Appeared:
For the Appellant : Ashok Ram V.
For the Respondent: (Ms.) Amrutha Boppudi (Central Government Standing Counsel)
Advocate Appeared:
For the Appellant : Ashok Ram V.
For the Respondent: (Ms.) Amrutha Boppudi (Central Government Standing Counsel)
Cancellation of a petroleum license under Rule 152 of the Petroleum Rules, 2002, requires mandatory adherence to principles of natural justice, including the effective service of a show-cause notice and an opportunity for a hearing, which cannot be satisfied by mere electronic uploading on a portal.
Headnote:(A) Petroleum Rules, 2002 - Rule 152 - Suspension and Cancellation of license - Mandatory requirement of providing an opportunity of being heard before suspending or cancelling a license - Mere uploading of a show-cause notice on an official website or portal does not constitute valid or effective service of notice to the licensee, especially when such action leads to the cancellation of a license (Paras 14, 16 and 17).
(B) Principles of Natural Justice - Any adverse administrative action taken against a party, which affects their operational rights, must be preceded by a fair opportunity to be heard - Failure to afford such an opportunity renders the administrative order illegal and void (Para 17).
Facts of the case:
A public sector undertaking operated a petroleum retail outlet on land obtained via a lease. Following the expiration of the lease term, the legal heirs of the original landowner disputed the renewal and sought cancellation of the license. While civil and writ proceedings regarding the lease renewal and possession were pending, the licensing authority cancelled the license on the grounds that the licensee ceased to have a right to the site. The licensee challenged the cancellation, contending that no show-cause notice was served and no hearing was granted, in violation of the statutory rules and the principles of natural justice.
Findings of Court:
The court found that the show-cause notice was not served in person and was merely uploaded on a portal. Relying on a circular for paperless applications to justify the lack of personal service is insufficient when the consequence is the cancellation of a license. Since the licensee was unaware of the notice and the subsequent interim suspension, the cancellation order was passed in disregard of the mandatory procedure prescribed under the rules.
Issues: Whether the cancellation of a petroleum license without the effective service of a show-cause notice and without providing an opportunity for a hearing is violative of Rule 152 of the Petroleum Rules, 2002 and the principles of natural justice.
Ratio Decidendi: Under Rule 152 of the Petroleum Rules, 2002, a license holder must be given an opportunity to be heard before suspension or cancellation. Effective service of the notice is essential to fulfill this requirement; mere electronic uploading does not suffice as service if the party remains unaware of the proceedings, making any subsequent cancellation order a violation of natural justice.
Result: Writ Petition is allowed; impugned Order cancelling the license is set-aside.
Legal Category Hierarchy
Table of Contents
2. Licensee argues no notice, no hearing, pending lease suit; regulator asserts automatic cancellation per Rule 152 for cessation of site right. (Para 5 , 6 , 11 , 12 , 15 )
3. Show-cause notice not served; cancellation without hearing violates Rule 152 proviso requiring opportunity before suspension or cancellation. (Para 13 , 14 , 15 , 16 , 17 )
4. Rule 152(1) proviso requires opportunity of hearing before cancellation even when licensee ceases to have site right; no automatic cancellation. (Para 14 , 17 )
5. Writ petition allowed; impugned cancellation order set aside for violation of natural justice and Rule 152. (Para 18 )
6. Does a license under the Petroleum Rules stand automatically cancelled when the licensee ceases to have any right to the site?
No, cancellation under Rule 152(1) requires an opportunity of hearing as per the proviso to clause (iii), even if the licensee has ceased to have a right to the site. (Para 12 , 14 , 17 )
7. Is uploading a show-cause notice on an official website sufficient service to the licensee?
No, mere uploading on a portal does not constitute valid or effective service; personal service or actual notice is required to satisfy natural justice. (Para 11 , 15 , 16 , 17 )
8. Can an order passed in a writ petition to which the licensee was not a party be used to cancel the licensee's license without hearing the licensee?
No, an order obtained without notice to the affected licensee cannot authorize cancellation without following mandatory procedure and affording an opportunity of hearing. (Para 2 , 5 , 17 )
ORDER :
K. Sreenivasa Reddy, J.
This Writ Petition was filed seeking the following relief:
“…to issue an appropriate Writ, Order or direction more particularly one in the nature of Mandamus, declaring the action of 2nd respondent in cancelling the license granted to the petitioner for the Petroleum Retail Outlet of M/s. Sivajyothi Enterprises vide Order respondent bearing No.P/SC/AP/1/3134(P64072) dated 28.11.2025, as illegal, arbitrary, violative of Rule 152 of the Petroleum Rules, 2002 and principles of natural justice, without assigning any reasons and violative of Articles 14, 19 (1) (g) and 21 of the Constitution of India and consequently, set-aside the order and direct the respondents to forthwith restore the said license and permit uninterrupted operations at the said premises and pass such other order or orders …”
2. Contents of the affidavit filed by the Chief Divisional Retail Sales Manager of Writ Petitioner, in brief, are that the schedule premises admeasuring 1,341 square yards of site situated in Town Survey No.3 of Waltair Ward, Block No.1, Resapuvanipalem, Visakhapatnam belonged to one Resapu Sri Rama Reddy, and the said site was given to M/s.Sivajyothi Enterprises to operate ‘A’ site Petroleum Retail Outlet pertaining to the Writ Petitioner, commissioned on 30.07.2004 by granting license under Form XIV and the same was periodically renewed under the Petroleum Rules, 2002.
(b) Subsequently, the land owner viz. Resapu Sri Rama Reddy, died intestate leaving his two sons viz. Resapu Srinivasa Reddy and Resapu Sadasiva Reddy as his legal heirs. There exists a dispute between the land owners and the Writ Petitioner, regarding renewal of lease, therefore, the Writ Petitioner filed Original Suit No.185 of 2025 on the file of the Junior Civil Judge’s Court, Visakhapatnam to direct the defendants therein to execute a Registered Renewal Lease Deed for a period of 20 years in respect of the schedule property and for Permanent Injunction and the same is pending for consideration. One Resapu Srinivasa Reddy, landlord of the Retail Outlet filed Writ Petition No.26040 of 2024 on the file of this Court, relating to continuation of operations at the said premises and the same is also pending for adjudication. Therefore, the entire issue, relating to lease, is sub-judice before the competent Forums.
(c) During pendency of aforesaid proceedings, 2nd respondent, without issuance of any show-cause notice, without affording an opportunity of personal hearing, despite the Writ Petitioner being in lawful possession of the premises, high- handedly and unilaterally cancelled the license vide No.P/SC/AP/ 14/3134(P64072), dated 28.11.2025 stating that the lease has expired, which is blatant violation of Rule 152 of the Petroleum Rules, 2002. Respondent No.2 is a safety regulator, but not an adjudicator of private lease disputes and merely because a landlord demands for cancellation of license, 2nd respondent cannot cancel the license.
(d) The Writ Petitioner brought its grievance to the notice of the Joint Chief Controller of Explosives, PESO, Secunderabad through a representation, dated 10.12.2025 and stated that the landlord had already consented for renewal, and negotiations for lease renewal are underway and therefore, cancellation, solely on the ground of alleged lease expiry, is improper and illegal. But, the said representation was neither considered nor answered by the PESO. The show-cause notice was merely uploaded in the website of 2nd respondent, which does not constitute valid or effective service.
(e) The respondent authorities acted in complete disregard of the Office Memorandum dated 06.02.2024 and Office Memorandum dated 26.12.2023 issued by 1st respondent-Ministry of Petroleum & Natural Gas (MoPNG), the parent Ministry exercising administrative control over 2nd respondent-PESO. The impugned cancellation Order dated 28.11.2025 is a sequel to the earlier interim suspension letter dated 28.04.2025 issued by 2nd respondent, which its
