Hyderabad: The Telangana High Court has granted an interim stay on a contentious policy by state-run oil companies that sought to reallocate LPG customers among distributors, citing potential harm to long-standing businesses.
Justice NV Shravan Kumar halted the implementation of the “Policy on Consumer Transfer – Area of Operation” (dated February 21, 2025) for three weeks, specifically protecting petitioners M/s Srinivasa Enterprises, HP Gas Distributors, and 34 other distributors.
Policy under scrutiny
Introduced by Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited, the policy mandated customer redistribution based on the 2011 census and imposed monthly refill ceilings (20,000 cylinders) and viability limits (10,000 customers for cities with populations exceeding 10 lakhs).
Distributors argued these measures lacked prior contractual justification and threatened their operations.
Legal arguments
During the hearing, petitioners emphasized their decades-long investments in infrastructure and customer service, asserting that the policy arbitrarily disrupted their businesses.
Senior Counsel highlighted that similar 2018 guidelines were quashed by the Bombay High Court in 2019, a decision upheld by the Supreme Court without interim relief for oil firms.
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Court’s observations
Justice Shravan Kumar noted the policy’s disproportionate impact on existing distributors and the absence of evidence justifying urgent restructuring.
“The restructuring policy would shift existing customers to new distributors, creating a balance of convenience in favor of petitioners,” the court observed, adding that no prejudice would arise for oil companies during the stay period.
The court directed both parties to submit a common distributorship agreement and ordered oil companies to file counter-affidavits.
The case has been adjourned to April 16 for further hearings.
