Compensation Granted for Hardship Caused by Delayed Verification
In a significant ruling, the Chhattisgarh High Court has upheld the decision of Hindustan Petroleum Corporation Limited (HPCL) to withdraw a Letter of Intent issued for the establishment of a rural retail outlet dealership, citing non-compliance with mandatory eligibility criteria. The judgment, delivered by Justice Amitendra Kishore Prasad, recognizes the legal justification for HPCL's withdrawal but awards compensation for the hardship suffered by the petitioner due to delayed verification by the authorities.
The petitioner, Smt. Ananta Chowdhary, had initially secured a Letter of Intent on December 29, 2020, for establishing a retail outlet at Village Nawagaon, District Mahasamund. Despite incurring substantial financial liabilities and commencing construction based on assurances from HPCL, her dealership application was later revoked after it was discovered that the proposed site was located on State Highway No. 16, violating the Dealer Selection Guidelines which prohibit retail outlets on highways.
The court acknowledged that the petitioner acted in good faith, relying on the initial acceptance by HPCL, and had made significant investments. These included obtaining financial assistance, starting construction, and installing infrastructure necessary for the retail outlet's operation. The petitioner also engaged in legal proceedings previously to expedite the commissioning process.
While the court concurred with HPCL's adherence to the Dealer Selection Guidelines, it noted the undue hardship faced by the petitioner due to delayed verification by HPCL, which initially approved the site. Consequently, the court directed HPCL to compensate the petitioner with Rs. 1,00,000, covering expenses and compensating for mental and financial distress.
The judgment emphasizes principles of fairness and legitimate expectation, recognizing the petitioner's reliance on HPCL's assurances. It also distinguishes the case from a precedent cited by the petitioner, reinforcing the non-applicability of the earlier ruling to the present circumstances.
Respondents were instructed to disburse the compensation within 60 days, marking a partial relief for the petitioner while maintaining the integrity of the Dealer Selection Guidelines.
This judgment underscores the importance of thorough and timely verification by authorities and reinforces adherence to statutory guidelines in dealership allocations.
Bottom line:-
Withdrawal of Letter of Intent for dealership due to non-fulfillment of mandatory eligibility criteria under Dealer Selection Guidelines, despite initial acceptance and issuance, was legally justified; however, compensation awarded for hardship caused due to delayed verification by authorities.
Statutory provision(s): Dealer Selection Guidelines for Rural Retail Outlets, Principles of fairness and legitimate expectation
