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2019 DIGILAW 2257 (BOM)

Shailaja R. Khanvilkar v. Union Of India

2019-09-30

AKIL KURESHI, S.J.KATHAWALLA

body2019
JUDGMENT : S.J.KATHAWALLA, J. 1. This Writ Petition impugns a circular dated 4th January,2018 issued by Bharat Petroleum Corporation Limited ("BPCL") / Respondent No.3 ("Impugned Circular") and a communication dated 13th March,2018 addressed pursuant to the Impugned Circular ("Impugned Communication"). 2. Prior to dealing with the respective arguments canvassed by the parties, it would be necessary to set-out the following : 2.1 The Petitioners are distributors of Liquefied Petroleum Gas ("LPG") being marketed by BPCL. For this purpose, between 1964 and 1999, various Distributorship Agreements have been entered into individually between each of the Petitioners and BPCL from time to time. 2.2 The Distributorship Agreements do not prescribe any maximum number of cylinders that can be supplied. However, since earlier there was a shortage of LPG cylinders and people had to wait for a long time to get the LPG connection, BPCL from time to time issued Circulars prescribing ceiling limits ("refill ceiling limits"). The said refill ceiling limits were increased from time to time. 2.3 Since later the shortage of LPG did not continue and people were in a position to get the LPG connection and LPG cylinder on demand, refill ceiling limits prescribed were never really implemented and admittedly, each of the Petitioners have consistently been selling LPG cylinder refill far in excess of prescribed monthly ceiling limits. 2.4 Not only were the ceiling limits not implemented, but infact contrary to the refill ceiling limits, BPCL kept continuously exhorting its distributors to increase their sales and to increase the number of LPG customers as part of a competitive drive between rival petroleum companies (pages 47 to 70 of the Petition). 2.5 For this purpose, between 2012 and 2018 various letters/communications were issued by BPCL laying down enhanced norms in terms of increased capital infusion, manpower requirements, infrastructure etc., to improve customer services and thereby increase domestic customers for existing distributors. 2.6 In the year 2016, a Unified Selection Guidelines ('USG') 2016 were propounded as selection criteria for new distributorship. However, the Petitioners have all been awarded distributorships prior to USG 2016 coming into force. 2.7 On 4th January, 2018, the impugned Circular was issued by Respondent No.2 for "Market Restructuring - Transfer of Customers." The impugned Circular is in two parts. Part A lays down the modalities which will govern distributorships awarded prior to USG 2016 and part B lays down Distributorships awarded post USG 2016. 2.7 On 4th January, 2018, the impugned Circular was issued by Respondent No.2 for "Market Restructuring - Transfer of Customers." The impugned Circular is in two parts. Part A lays down the modalities which will govern distributorships awarded prior to USG 2016 and part B lays down Distributorships awarded post USG 2016. This Circular seeks to restructure the LPG market by transferring customers of the existing distributors both prior to and under, USG 2016. For existing distributors the Respondents have propounded a formula, wherein refill sales in excess of 75% of the ceiling limit will stand transferred to new/non-performing distributors to achieve purported market viability of 50% of the ceiling limit for such new/non-performing distributors. In short, the Circular contemplates a compulsory expropriation of customers of existing distributors (upto 75% of the ceiling limit) and transfer them to those distributors who have less customers till they reach 50% of the ceiling limit. 2.8 By a communication dated 13th March,2018 issued by BPCL, BPCL sought to enforce the impugned Circular by transferring customers of the existing distributors including the Petitioners to new/non-performing distributors. 2.9 The present Writ Petition was fled on 7th July,2018. 2.10 By an order dated 11th September, 2018, this Court stayed the effect and operation of the Impugned Circular. 3. For ease of reference, it would be necessary to reproduce the Impugned Circular which has been extracted below : EXHIBIT - A Circular TO : State LPG Heads Ref. No : SL/1601 RPT : Area Managers Date : 04.01.2018 Market restructuring - Transfer of customers In view of various representations received regarding restructuring of markets subsequent to commissioning of new distributorships, the procedure for customer transfer has been revisited on industry basis for uniform implementation. The procedure to be followed for market restructuring / customer transfer at field level is given its under : A. Process of Customer Transfer for distributorships awarded under selection guidelines prior to Unified Selection Guidelines (USG) 2016. 1. The market ceiling limits to be reckoned as under : Sr. No. Towns/Population (based on census) Refill Ceiling per month Refill sale Viability level for transfer (50% of ceiling) 1. Cities/Towns with population of 40 lakhs and above 16500 8250 2. Towns with 20 lakhs to 40 lakhs population. 13200 6600 3. Towns with 10 lakhs to 20 lakhs population. 11000 5500 4. Towns upto 10 lakhs population. 8800 4400 2. No. Towns/Population (based on census) Refill Ceiling per month Refill sale Viability level for transfer (50% of ceiling) 1. Cities/Towns with population of 40 lakhs and above 16500 8250 2. Towns with 20 lakhs to 40 lakhs population. 13200 6600 3. Towns with 10 lakhs to 20 lakhs population. 11000 5500 4. Towns upto 10 lakhs population. 8800 4400 2. Domestic cylinder sales of old distributors for preceding 3 months shall be considered to arrive at average monthly Refill sales. Refill sales >75% of above market Refill ceiling shall be the basis of the number of customers available for transfer to the distributorship selling <50% of (pre USG2016) Refill ceiling of that market (whether old or new). 3. The customer transfer should be made till the viability limits are reached, however in no case the transferor distributor shall be brought <75% of the market Refill ceiling. 4. Scenarios in customer transfer : a. Wherever the customer transfer is in the same town/city, ideally, contiguous areas should be carved out for transfer to avoid overlap and economize cost of delivery also keeping in view the distance from go-down / show room. b. In cases where the area of the above threshold transferor distributor is not contiguous to that of the recipient distributor, customer transfer to be undertaken in a cascading manner e.g. area of Distributor 'B' lies between area of Distributor 'A' (transferor) and Distributor 'C' (<50% of Refill ceiling) then contiguous areas/customers may be transferred from distributor 'A' to distributor 'B' and in turn contiguous areas/customers from 'B' to 'C'. Consumer per capita consumption of individual distributor shall be the basis for number of customers to be transferred from 'A' to 'B' as well as from 'B' to 'C'. However, for any reason the cascading transfer is not practicable, customer transfer may be done from distributor 'A' to distributor 'C' (provided distributor C is willing) even across area of distributor 'B'. c. In cases where a distributor has been set-up in/at a location (town/village) which was catered to by an existing distributor from another locality/location, then the customers of such town / village and its peripheral areas will be transferred to the new distributor for having a compact area of operation as far as possible. c. In cases where a distributor has been set-up in/at a location (town/village) which was catered to by an existing distributor from another locality/location, then the customers of such town / village and its peripheral areas will be transferred to the new distributor for having a compact area of operation as far as possible. d. In cases where the area of existing distributor was extended in the past with a view to make it viable, then customer transfer from such distributor shall be limited to numbers that constitute excess Refill sales >75% of market ceiling. The principle in foregoing para shall also be applicable in cases where old/existing distributor's original area was town/city municipal limit but it was allowed to enroll consumers in nearby areas and subsequently distributor(s) have been commissioned in the same market under 'Urban/ Rural' or 'Rurban' category. However, in such cases, customers of the areas lying outside the existing /old distributor's normal trading area will be transferred to the extent of making the newly commissioned distributor viable. e. Where distributor is commissioned in adjoining town/villages which were hitherto serviced by the existing distributor by extending area of operation, then consumers of such town/village(s) shall be transferred to the low selling /newly commissioned distributor irrespective of Refill sales of existing distributor. 5. Area Manager shall work out the number of customers to be transferred (only active customers) in line with the above and considering the per capita consumption of the donor distributor. 6. Subject to availability of excess / above norms numbers as worked out in 5 above. Area Manager shall; (a) Transfer consumers in numbers equivalent to maximum 1500 Refills p.m. within 7 days of commissioning. (b) Within further 10 days' transfer customers in numbers adding up to Refill sales corresponding to 30% of market Refill ceiling. (c) At the end of 3 months of customer transfer, examine the infrastructure provided by the recipient distributor and Refill sales. In cases the infrastructure is adequate and services s satisfactory (TDT rating of minimum three stars*), will transfer, within 15 days thereof, the balance costumers in numbers corresponding to the recipient distributor reacting viability level. In cases where infrastructure provided by the distributor is found inadequate and TDT rating below three Stars, the Area Manager will counsel the distributor to improve, giving specific / reasonable time and confirm the same in writing. In cases where infrastructure provided by the distributor is found inadequate and TDT rating below three Stars, the Area Manager will counsel the distributor to improve, giving specific / reasonable time and confirm the same in writing. Performance of such distributors will be examined on quarterly basis and remaining customers transferred within 15 days of end of the quarter in which the distributor provides adequate infrastructure and attains three star in TDT rating. *(TDT rating @ 1 star or 2 star due to reasons beyond distributor's control will not disqualify for customer transfer) 7. Similar process as given in 6 above shall be adopted in respect of commissioned distributors operating below viability levels and eligible for customer transfer. 8. The en-block intra company customer transfer process shall be undertaken as per provisions available in 'Clndsoft'. 9. Wherever distributor of one OMC has been commissioned in a market/areas where other OMCs have enrolled customers, in such case the market will be added to the portability cluster to facilitate ease of inter-company transfer. OMCs will work out detailed modalities for inter-company transfer with least inconvenience to the customers. Other OMC distributor will also stop further enrollment of customers in such area. 10. AM shall ensure triggering SMS/e-mail, as per facility available in the software/ system, to the consumers intimating of the transfer and new distributor details. Additionally, public notice may also be published in local newspaper. If a consumer makes a representation for continuing at old distributor, same may be considered. After undertaking the above, further restructuring will be carried out as per Unified Selection Guidelines 2016. B. Process of Customer Transfer for distributorships awarded under Unified Selection Guidelines (USG) 2016. 1. Market Ceiling Limit and the Feasibility Norm for different types of Distributorship area under USG 2016 is as below : Type of Distributorship area Population as per census 2011 Refill ceiling limit per month Refill sale per month for feasibility level (50% of ceiling) Sheheri Vitrak Cities with population > 40 lakh 20,000 10,000 Cities with 20 to 40 lakh population 15,000 7,500 Cities with 10 to 20 lakh population 12,000 6,000 Rurban Vitrak Towns with <10 lakh population 10,000 5,000 Gramin Vitrak Village / Cluster of villages 5,000 2,500 Durgam Kshetriya Vitrak Village / Cluster of villages 1,500 # 600 ## # Refill sale limit for up gration to Gramin Vitrak. ## Wherever customer transfer is made to a DKV, it should be made till the viability limit of 600 Refill sales per month is reached. 2. Customer transfer from DKV on account of restructuring will not be applicable. If the Refill sale of the DKV exceeds 1500 Refills per month, then such DKV will be upgraded to Gramin Vitrak. 3. In view of the above, sales of existing distributors up-to respective market Refill ceiling will be protected. Only active consumers in such numbers that would constitute Refill sales in excess of market ceiling (basis per capita LPG consumption of active customers) will be considered for transfer to new distributors commissioned as per USG 2016. The average per capita consumption of the donor distributor for the last three months will be considered to calculate the number of active customers to be transferred. However, for Rural Distributorship existing prior to USG2016, Refill ceiling limit of 8800 per month will be protected as mentioned in the said guidelines. 4. Rest of the procedure for customer transfer shall be same as detailed in distributorships awarded under selection guidelines prior to Unified Selection Guidelines 2016 at 'A' above. Sd/- (Sathish Kumar Thatipelli) CGM (LPG-Sales) Copy : State Heads Copy : CGM, Dir (M), Sectt., HO Copy : CVO, CO 4. As can be discerned from the Impugned Circular, it is in 2 parts and contemplates (i) for distributors who have been appointed prior to the Unified Selection Guidelines 2016 ("USG"); and (ii) distributors who have been appointed after the USG. These two categories of distributors have been dealt with in Clauses (A) and (B) of the Impugned Circular respectively. The Impugned Circular stipulates that within 3 months of a new distributor being appointed, he will get 50% of the refill ceiling limit either on account of his own exertions or on account of migration of customers from existing distributors. The Impugned Circular, therefore, forces existing distributors to give up their existing customers to new distributors. 5. We understand from the parties that BPCL has issued circulars prescribing higher refill ceiling limits from time to time. The reason for prescribing refill ceiling limits appears to date back to such time when there was a shortage of LPG cylinders and citizens had to wait for long durations to obtain LPG connections. 5. We understand from the parties that BPCL has issued circulars prescribing higher refill ceiling limits from time to time. The reason for prescribing refill ceiling limits appears to date back to such time when there was a shortage of LPG cylinders and citizens had to wait for long durations to obtain LPG connections. The parties are ad idem to the fact that all along, the Petitioners have in fact been selling over and above the refill ceiling limit. Therefore, it is common ground between the parties that the Petitioners have been affecting sales with volumes significantly higher than the refill ceiling limit. 6. With the aforesaid background in mind, we now proceed to record the various submissions put forth by the parties assailing and defending the Impugned Circular respectively. 7. Appearing for the Petitioners, Learned Senior Advocate Mr. Venkatesh Dhond submitted that the Impugned Circular is arbitrary and unreasonable. According to him, by issuing the Impugned Circular, the Respondents have arbitrarily propounded a formula that refill sales more than/in excess of 75% of the ceiling limit for such existing distributors will stand transferred to new distributors to achieve a purported market viability of 50% of the ceiling limit for new distributors. Such policy is being put into effect unilaterally and arbitrarily with the sole purported motive of achieving market viability for new distributors which has been arbitrarily set at 50% of the ceiling limit, without providing any rationale or basis for such ceiling limit or without due consideration of the adverse impact such mass transfers will have on the business and livelihood of existing distributors viz. the Petitioners. It is further submitted that the quantum of customers to be transferred i.e. more than 75% of the ceiling limit for existing customers is also arbitrary and unilateral. He argued that Article 14 of the Constitution requires equality and fairness on the State's part and its instrumentalities whilst dealing with similar persons. His second argument was that the actions of BPCL are contrary to its prevalent policy. In this respect, it is submitted that the prevalent norms for the last several years in the LPG distribution industry has been to bring in new distributors to expand the reach of the LPG distribution network. New distributors have been historically appointed based on the growth potential available in a particular region. In this respect, it is submitted that the prevalent norms for the last several years in the LPG distribution industry has been to bring in new distributors to expand the reach of the LPG distribution network. New distributors have been historically appointed based on the growth potential available in a particular region. According to him, introducing new distributors in regions where there already exist a sizeable number of distributors who are offering satisfactory service does not stand to reason and the attempt of the Respondents, having introduced such new distributors to artificially create market viability for such new distributors by seeking to suddenly and drastically transfer existing customers of the Petitioners, is arbitrary and detrimental to the Petitioners. That the Petitioners are not, as such, opposed to the appointment of new distributors in existing territories but submit that taking away the existing customers of the Petitioners to benefit new distributors to help them achieve an artificially imposed market viability figure is antithetical to a free market economy in addition to the same being arbitrary and discriminatory. This is not a case where the Petitioners are being compelled to give up customers beyond the ceiling limits (which limits were never implemented in the first place). This is a case where there is a forced migration of customers within the ceiling limit. In other words 25% of their customers within the limit will be taken away. The policy for appointing distributors by BPCL over the years has been protective of the interest of new distributors without adversely affecting existing distributors. The sudden departure from such practices and the attempt to improve the viability of new distributors by taking away a sizeable number of current customers of existing distributors puts the survival of existing distributors such as the Petitioners at jeopardy. He further submitted that the Impugned Circular arbitrarily confers a benefit to new distributors which benefit is completely unprecedented, drastic and purportedly aims at artificially creating and imposing an ad-hoc and arbitrary market viability without any basis or reasoning afforded for the same. He submitted that manifest arbitrariness and irrationality is writ large in the Circular. The Circular creates two categories of Distributors (i) Pre USG 2016 distributors; and (ii) Post USG Distributors. The Circular then, without any rationale or basis, treats the two categories very differently on two vital counts, viz. He submitted that manifest arbitrariness and irrationality is writ large in the Circular. The Circular creates two categories of Distributors (i) Pre USG 2016 distributors; and (ii) Post USG Distributors. The Circular then, without any rationale or basis, treats the two categories very differently on two vital counts, viz. the number of refill sales permitted; and the percentage at which forced migration occurs. On both basis post USG Distributors have been given a better deal. This is manifestly arbitrary. If any benefit were to be given it should have enured for the existing (Pre USG 2016) distributors. He also submitted that the Circular also illegally discriminates against existing distributors and is bad on this ground as well. Lastly, Mr. Dhond submitted that the Impugned Circular is contrary to the doctrine of legitimate expectations, promissory estoppel and violative of Article 19(1)(g) of the Constitution. According to him, the Petitioners, being existing distributors, have made investments in terms of infrastructure, manpower and therefore, by the Impugned Circular, the Petitioners' vested rights cannot be taken away in such manner. The effect of the Impugned Circular will have a cascading effect which will render the added infrastructure, manpower, etc. futile. The arbitrariness of the Impugned Circular is all the more glaring in view of the fact that the Respondents have completely failed and/or neglected to consider the consequential detrimental effect such policy will have on existing distributors. He argued that the doctrine of Promissory Estoppel would also squarely apply in the present case. In this context, reliance was placed on the decisions in the case of Union of India & Ors. vs. M/s. Anglo Afghan Agencies Ltd., (1968) AIR SC 718; M/s. Motilal Padampat Sugar Mills Company Ltd. vs. State of Uttar Pradesh & Ors., (1979) 2 SCC 409 and Union of India & Ors. vs. Godfrey Phillips India Limited, (1985) 4 SCC 369 . Lastly, Mr. Dhond challenged the authority of Respondent No. 2 to issue the Impugned Circular. Mr. Dhond therefore concluded that the Impugned Circular ought to be quashed and set-aside on the strength of the aforesaid arguments. 8. Appearing for Respondent Nos. 2 and 3, Learned Senior Advocate Mr. Pradeep Sancheti submitted that the present Writ Petition is not maintainable as the issue involved arises out of the Distributorship Agreements and is in the nature of a contractual dispute for which an alternate remedy of arbitration is provided for. Mr. 8. Appearing for Respondent Nos. 2 and 3, Learned Senior Advocate Mr. Pradeep Sancheti submitted that the present Writ Petition is not maintainable as the issue involved arises out of the Distributorship Agreements and is in the nature of a contractual dispute for which an alternate remedy of arbitration is provided for. Mr. Sancheti further submitted that in view of the contractual relationship between the Petitioners and Respondent Nos. 2 and 3, the customers are that of BPCL and not of the Petitioners/Distributors. He submitted that the consumers of LPG are customers of BPCL and the Petitioners are merely agents of BPCL acting on behalf of BPCL and earning commission for distributorship. In support of such contention, he relied on documents to demonstrate that the consumers execute agreements directly with BPCL and there is no privity of contract between the consumers and distributors. Further, the distributorship appointment letter indicates that consumers are paying consideration to BPCL and the Petitioners are earning commission out of such consideration. Mr. Sancheti thereafter submitted that Clause 1 (b) (ii) and (iv) of the Distributorship Agreement empowers BPCL to enlarge, reduce or modify the territory of distributors. The fact that BPCL is entitled to control the sale by the distributors, coupled with the fact that distributors are earning commission from such sales demonstrates that the Petitioners are only agents of BPCL and cannot claim any vested right over the customers. In so far as the pre-existing policy of BPCL is concerned, it was submitted that the letters dated 16th October,2001 and 1st February,2002 addressed by the Union of India to all Oil Marketing Companies and minutes of meeting dated 9th March,2002 of such Oil Marketing Companies (including BPCL) demonstrates the existence of the policy at-least since the year 2001. The consistent policy for the purpose of transfer/redistribution was that no such transfer will be affected to reduce the number of customers below 75% of the ceiling limit of the transferor distributor and no transfer of customers shall take place once the transferee distributor reaches 50% of the ceiling limit (considered as viability limit). It was therefore submitted that it is not in dispute that since 2001, the ceiling limit has increased from time to time. Illustratively, in towns below 10 lakh population, the ceiling limit has increased from 4,000 (on 29th October,1985) to 10,000 (post USG). It was therefore submitted that it is not in dispute that since 2001, the ceiling limit has increased from time to time. Illustratively, in towns below 10 lakh population, the ceiling limit has increased from 4,000 (on 29th October,1985) to 10,000 (post USG). Considering that the Respondents are entitled to f the ceiling limit as well as geographical limit, the policy devised by the Government to prescribe the higher ceiling limit and then to prescribe within that a 75% limit to stop migration cannot be said to be improper. Instead of keeping the buffer between 75% and the ceiling limit, the limit could have been kept even lower than 75%. In so far as the current policy under the Impugned Circular is concerned, it was submitted that the policy as contained in Clauses 2 and 3 of the Impugned Circular, is similar/almost the same as the pre-existing policy viz. (i) no such transfer will be effected to reduce the number of customers below 75% of the ceiling limit of the transferor distributor; (ii) no transfer of customers shall take place once the distributor reaches 50% of the ceiling limit (considered as viability limit). It was further submitted that the policy contained in Clauses 4 (a) to 4 (e) of the Impugned Circular i.e. the process for selection of distributor for the purpose of transfer is also similar / almost the same as the Minutes of Meeting dated 9th March,2002. It was further submitted that the Petitioners are fully aware of the prevailing policies in as much as Petitioner Nos.5 and 6 were beneficiaries of 'transferred customers' from other distributors. In this context, reliance was placed on a handwritten list of 12 customers who were transferred to Petitioner No.5. That the Petitioners are well aware of refill ceiling limit because when they applied for distributorships, there were ceiling limits in place at that time as well. It was also pointed out to this Court that the pre-existing policies prior to the Impugned Circular have not been challenged before this Court. It was thereafter submitted that the Petitioners have made out no case for legitimate expectation. The directions issued by BPCL in its correspondence are common for all distributors. Such correspondence does not constitute any promise and/or assurance and much less a guarantee, e press or implied that their customer base will not be disturbed. It was thereafter submitted that the Petitioners have made out no case for legitimate expectation. The directions issued by BPCL in its correspondence are common for all distributors. Such correspondence does not constitute any promise and/or assurance and much less a guarantee, e press or implied that their customer base will not be disturbed. In any event, the entire case of legitimate expectation put forth by the Petitioners is vague, bald and without any evidence. In any event, a change in policy can always defeat a substantive legitimate expectation. In this respect, he placed reliance on the decisions in Bajaj Hindustan Ltd. vs. Sri Shadilal Enterprises Ltd. & Anr., (2011) 1 SCC 640 ; Madras City Wine Merchants Association vs. State of Tamil Nadu & Anr., (1994) 5 SCC 509 ; PTR Exports (Madras) Pvt. Ltd. vs. Union of India & Ors., (1996) 5 SCC 268 ; APM Terminals B.V. vs. Union of India & Anr., (2011) 6 SCC 756 . Mr. Sancheti net argued that the scope of judicial review is limited in respect of policy decisions more so with respect to economic policies. In matters of policy decision, the policy making authority has wide latitude. The limited role of courts is only to ascertain whether the policy is arbitrary or suffers from Wednesbury unreasonableness. Merely because the policy operates to the detriment of a person or a group of persons, the same cannot be termed as unreasonable. In any event, the Petitioners have not raised allegations of mala fides or biasness. In this respect, reliance was placed by Advocate Sancheti on the decisions in Federation of Railway Association vs. Union of India, (2003) 4 SCC 289 ; Bajaj Hindustan Ltd. vs. Sri Shadilal Enterprises Ltd. & Anr., (2011) 1 SCC 640 ; Municipal Corporation of Ujjain vs. BVG India Limited, (2018) 5 SCC 462 ; and Federation Haj PTOs of India vs. Union of India,2019 SCCOnline 119. Lastly, without prejudice to the argument that in matters involving policy decisions, arguments of unreasonableness cannot be considered to be relevant, it was submitted that no case of Wednesbury unreasonableness has been made out. On the basis of the aforesaid submissions, Mr. Sancheti concluded that the Petition ought to be dismissed. 9. Mr. Dhond responded to the contentions of Mr. Sancheti. He firstly submitted that even on the touchstones of the law cited by Mr. On the basis of the aforesaid submissions, Mr. Sancheti concluded that the Petition ought to be dismissed. 9. Mr. Dhond responded to the contentions of Mr. Sancheti. He firstly submitted that even on the touchstones of the law cited by Mr. Sancheti, the Circular and actions are bad. A State entity cannot merely cite 'Policy' as a mantra ; tender a host of judicial decisions; and then contend that the Policy is immune to judicial review. The scope for judicial review in matters of policy may be narrower. The present case does not involve policy. However, even if it did this impugned policy is bad in law, on the law cited by Mr. Sancheti himself. He also drew our attention to clause 17 of the Distributorship Agreement which states thus :- "17. In all contracts or engagements entered into by the Distributor with the customers for sale of LPG and/or the sale and /or Installation and/or repairs of appliances and/or connections thereof with LPG Cylinders (filled or empty) and/ or refills and/or pressure regulators and/or attached equipment the Distributor shall act and shall always be deemed to have acted as a principal and not as an agent or on account of the Corporation, and the Corporation shall not in any way be liable in any manner in respect of such contracts and /or engagements and /or in respect of any act or omission on the part of the Distributor, his servants, agents and workmen in regard in such installation, sale distribution, connections, repairs or otherwise. The Distributor shall be bound to inform the customers in writing of this provision, through correspondences or at the time of enrolment, of the customer." He contended that the customers were as much those of the Distributors. There is a difference between refill cylinders (which belong to the Oil Company alone) and customers (who clearly belong to both). 10. We have heard the arguments canvassed by the Learned Senior Advocates as aforesaid. We have also considered the Written Submissions fled by the respective parties. 11. We propose to first deal with the preliminary objection raised by Mr. Sancheti as to the maintainability of the present Petition. 10. We have heard the arguments canvassed by the Learned Senior Advocates as aforesaid. We have also considered the Written Submissions fled by the respective parties. 11. We propose to first deal with the preliminary objection raised by Mr. Sancheti as to the maintainability of the present Petition. It was his submission that the disputes between the Petitioners and BPCL arise out of the Distributorship Agreements and are in the nature of contractual disputes for which an alternate remedy of arbitration is provided for and therefore, the Petitioners are not entitled to invoke this Court's writ jurisdiction. In our opinion, the question as to whether or not this Court can exercise its writ jurisdiction in contractual matters is no longer res integra. The Petitioners have, in the present Writ Petition, not canvassed or pleaded a breach of the Distributorship Agreement but have assailed the Impugned Circular on the basis that it is arbitrary, unreasonable and irrational. These grounds of challenge would enable this Court to exercise its writ jurisdiction despite the presence of the Distributorship Agreement and/or an arbitration clause contained therein. In this respect, the Ape Court has, in its decision rendered in Whirlpool Corporation vs. Registrar of Trademarks, (1998) 8 SCC 1 held that the existence of an alternate remedy would not preclude a Writ Court from exercising jurisdiction. The same view has been also reiterated by the Ape Court in Ramana Dayaram Shetty vs. International Airport Authority of India & Ors., (1979) 3 SCC 489 ; and Tata Cellular vs. Union of India, (1994) 6 SCC 651 . In view thereof, we reject Mr. Sancheti's objection as to the maintainability of the Writ Petition. 12. Since we have held that the present Writ Petition is maintainable, we now deal with whether or not the Impugned Circular is arbitrary and unreasonable as submitted by Mr. Dhond. As recorded hereinabove, the Impugned Circular stipulates that refill sales more than/in excess of 75% of the ceiling limit for existing distributors will stand transferred to new distributors to achieve market viability of 50% of the ceiling limit for new distributors. In effect, the Impugned Circular unilaterally seeks to achieve market viability of 50%. It is an admitted position that there is no rationale and/or basis provided for the percentage stipulated by BPCL in the Impugned Circular. In effect, the Impugned Circular unilaterally seeks to achieve market viability of 50%. It is an admitted position that there is no rationale and/or basis provided for the percentage stipulated by BPCL in the Impugned Circular. Further, the quantum of customers to be transferred i.e. more than 75% of the ceiling limit of existing customers, also appears to be imposed unilaterally. It is an evident position that there is no rationale and/or reasoning for affixing such percentage nor were the Petitioners heard before the Impugned Circular was issued. This is despite the fact that the Impugned Circular does in fact impinge on the Petitioners' rights. Therefore, it can be concluded that (i) the percentage(s) referred to in the Impugned Circular appear to be stipulated in the absence of any rationale and/or reasoning; and (ii) the Petitioners (or other dealers/distributors) were not even consulted on the effects and/or consequences before such Circular was published. Had any such consultation been done, perhaps the infirmities in the operation of the Circular would have been brought to the attention of the Oil Company. In our opinion, the Impugned Circular arbitrarily seeks to achieve market viability. We are unable to ascertain as to on what basis has BPCL determined what constitutes "excess customers". We cannot therefore sustain the Impugned Circular which seeks to impose such arbitrary stipulations which violate the Petitioners' rights. At this stage, it would be apposite to refer to Mr. Dhond's proposed case scenario in the event the Impugned Circular is implemented: 12.1 The Impugned Circular draws a distinction between distributorships which have been awarded prior to USG 2016 and distributorships awarded post USG 2016. 12.2 Mr. Dhond suggested we take an example of a town with population between 20,00,000/- to 40,00,000/- to understand the effect of the Impugned Circular which will be as under : a. For distributorships prior to USG 2016, the refill ceiling for such town is 13,200. For distributorships post USG 2016, the refill ceiling is 15,000. b. Therefore, distributorships prior to USG 2016 start with a disadvantage, namely a significantly lower refill ceiling c. They will then be forced to reduce their refill ceiling from 13,200 to 9,900 in accordance with clause (A) of the Impugned Circular viz. a reduction of 3,300 customers (75% of ceiling limit). d. This sacrifice of 3,300 customers will then endure to the benefit of a new distributor. a reduction of 3,300 customers (75% of ceiling limit). d. This sacrifice of 3,300 customers will then endure to the benefit of a new distributor. This new distributor will continue to receive similar benefits from other distributors till it reaches the 50% viability norm viz. 7,500 refill ceiling. e. After it achieves the viability norm of 7,500 ceiling, it is then free to attract its own customers all the way up to 15,000 without having to make any sacrifice, since there is no 75% cap for new distributors. f. On the other hand, distributorships prior to USG 2016 will be capped at 9,900 as the moment they exceed 9,900, they will be called upon to make a sacrifice in terms of the Impugned Circular. g. The result of the Impugned Circular will, therefore, be that distributorships prior to USG 2016 run the risk of losing their refill ceilings the moment they exceed 9,900 whilst a new distributor runs no such risk till it exceeds 15,000. 13. If we refer to Mr. Dhond's proposed case scenario, the result is clearly arbitrary and unreasonable. Whilst it is understandable that BPCL's intent is to promote new distributors, it certainly does not stand to reason that old distributors who have toiled over the years, should be forced to sacrifice their existing customers in favour of new distributors who would then receive a disproportionate and excessive benefit without any effort. In fact, clause 6 of the Circular contemplates that new Distributors will, by this arrangement reach 50% levels within 3 months. This will have the result that while old distributors who have spent decades building customers will be deprived of the fruit of their effort and reduced to 9900 a new Distributor will be at 50% in 3 months and get 7500 (50% of 15,000). For the reasons aforesaid, we hold that the Impugned Circular is arbitrary and unreasonable. At this stage, we note that should BPCL have prescribed a mechanism whereunder; it prohibited existing distributors from enrolling any new customers once the outer ceiling limit would be reached, it would possibly stand the test of a challenge. However, we are unable to approve BPCL's act in as much as it seeks to take away existing customers who would otherwise have been those of the Petitioners. In our considered opinion, the Impugned Circular leads to arbitrary, unreasonable and irrational exercise of power. 14. However, we are unable to approve BPCL's act in as much as it seeks to take away existing customers who would otherwise have been those of the Petitioners. In our considered opinion, the Impugned Circular leads to arbitrary, unreasonable and irrational exercise of power. 14. It was Mr. Sancheti's next argument that in view of the contractual relationship between the Petitioners and Respondent Nos. 2 and 3, the customers are that of BPCL and not of the Petitioners/Distributors. Mr. Sancheti submitted that the consumers of LPG are customers of BPCL and that the Petitioners are merely agents of BPCL acting on behalf of BPCL and earning commission for distributorship. In support of such contention, he relied on documents such as subscription vouchers to demonstrate that the consumers execute agreements directly with BPCL and that there is no privity of contract between the consumers and distributors. Further, the distributorship appointment letter indicates that consumers are paying consideration to BPCL and the Petitioners are earning commission out of such consideration. In so far as the above argument of Mr. Sancheti on behalf of BPCL is concerned, it is pertinent to note that firstly, in so far as the subscription vouchers relied upon by Mr. Sancheti are concerned, the said vouchers also reflect the signatures of the Petitioners. Secondly, Mr. Sancheti's submissions appear to be at contrast with certain e press provisions of the Distributorship Agreement. At the cost of repetition clause 17 of the Distributorship Agreement is once again reproduced hereunder : "17. In all contracts or engagements entered into by the Distributor with their customers for sale of LPG and/or the sale and/or installation and/or repairs of appliances and/or connections thereof with LPG Cylinders ( filled or empty) and/or refills and/or pressure regulators and/or attached equipment the Distributor shall act and shall always be deemed to have acted as a principal and not as an agent or on account of the Corporation, and the Corporation shall not in any way be liable in any manner in respect of such contracts and/or engagements, and/or in respect of any act or omission on the part of the Distributor, his servants, agents and workmen in regard to such installation, sale, distribution, connections, repairs or otherwise. The Distributor shall be bound to inform the customers in writing of this provision, through correspondence or at the time of enrolment of the customer." A careful reading of this clause clearly indicates that the Petitioners act as the Principal and not as an Agent of BPCL as contended by Mr. Sancheti. Faced with this Clause, Mr. Sancheti sought to argue that this clause specifically deals with the acts and omissions on part of the distributor and is essentially to seek a safeguard against possible vicarious liability. In our view, the said Clause 17 is not restricted to matters of liability but e tends to "all contracts or engagements entered into by the Distributor with their customers for sale of LPG and/or the sale and/or installation and/or repairs of appliances and/or connections thereof with LPG Cylinders ( filled or empty) and/or refills and/or pressure regulators and/or attached equipment". This is clear from the language used in the said Clause. In our view, BPCL cannot on one hand absolve itself of any and all acts and omissions by virtue of its distributors being Principals and on the other, for the purpose of defending the Impugned Circular, contend that they are Agents. In view of the above, we are unable to agree with Mr. Sancheti's argument that the Petitioners are only agents of BPCL and cannot claim any vested right over the customers. 15. Relying once again on the Distributorship Agreement, Mr. Sancheti thereafter argued that BPCL is entitled to enlarge, reduce or modify the territory of its Distributors viz. the Petitioners and therefore; also entitled to reduce the number of customers. In order to deal with this submission, it would be necessary to reproduce Clauses 1 (b) (ii) and (iv) of the Distributorship Agreement which reads as under : "(ii) Without prejudice to the above, the Corporation shall also be entitled to require the Distributor to effect minimum sales of Bharatgas in accordance with the policy that may be formulated from time to time by the Corporation and shall be further entitled at its sole discretion to reduce, restrict, modify or alter the area of the distributorship territory and the decision of the Corporation shall be final and binding on the Distributor. The Corporation shall further be entitled to notify, without any legal obligation to do so, from time to time to the Distributor in writing the minimum number of LPG filled cylinders which the Distributor shall be required to uplift in each month. The Corporation shall also be entitled to require the Distributor to maintain during the duration of the Agreement such minimum stock as to meet the customer's requirements. (iv) The Distributor will during the continuance of this Agreement confine himself to effect the sales in the area or territory specified hereinabove but the Corporation shall be entitled without the consent of the Distributor to enlarge, reduce, increase or modify such area or territory to such other place as may from time to time be authorised by the Corporation in writing." 16. In our opinion, the aforesaid clause is restricted to "area or territory" and not 'customers' as is being sought to be contended by Mr. Sancheti. We do not believe that a corollary to BPCL's right to reduce the area or territory would also include a right to reduce existing customers. Contrary to the submissions, it appears that the Distributorship Agreements contemplates instances of causing the Petitioners to increase their customers and not decrease the same. Illustratively, Clause 1(iii) and 1(v) of the Distributorship Agreement read as under : "1 (iii) Without prejudice to the above the Corporation shall also be entitled to require the Distributor to effect minimum sales of Bharatgas in accordance with the policy that may be formulated from time to time by the Corporation and shall be further entitled as its sole discretion to reduce, restrict, modify or alter the area of the distributorship territory and the decisions of the Corporation shall further be entitled to notify, without any legal obligation to do so, from time to time to the Distributor in writing the minimum number of LPG filled cylinders which the Distributor shall be required to uplift in each month. The Corporation shall also be entitled to require the Distributor to maintain during the duration of the Agreement such minimum stock as to meet the customer's requirements. 1(v) The Distributor shall make his best efforts for enrolling customers and canvassing business and for developing and increasing the sale of LPG within the area allotted to him." Therefore, we are also unable to accept Mr. 1(v) The Distributor shall make his best efforts for enrolling customers and canvassing business and for developing and increasing the sale of LPG within the area allotted to him." Therefore, we are also unable to accept Mr. Sancheti's submission that the Distributorship Agreement permitted BPCL to reduce existing customers under the Impugned Circular. 17. The aforesaid reproduced Clauses 1(iii) and 1(v) bring us to Mr. Dhond's argument that the Impugned Circular is contrary to the doctrine of Legitimate Expectations and Promissory Estoppel and therefore, violative of Article 19 (1) (g) of the Constitution of India. In order to understand the e tent of the Petitioner's expectations, we have perused the various correspondence addressed by BPCL to the Petitioners from time to time. According to Mr. Dhond, a perusal of these communications would reveal that BPCL and its officers have been time and again impressing upon the Petitioners to increase their sale and customer base. Illustratively, BPCL wrote to the Petitioners on 13th November,2012 laying down enhanced norms in terms of increased capital infusion, manpower requirements, infrastructure etc. to improve customer services. Thereafter, on 5th August,2016, a circular was issued by BPCL calling upon the Petitioners to increase their infrastructure and capital infusion. The Petition annexes various other correspondence whereunder BPCL has aggressively caused the Petitioners to infuse capital, increase man power, improve their infrastructure and thereby; increase the customer base. By doing so, BPCL has been able to sustain itself vis-à-vis its competitors. The Petitioners have, at Exhibit I to the Petition, provided statements reflecting the investments made by the Petitioners, as demanded by BPCL over the years. It can thus be seen that BPCL called upon the Petitioners from time to time to increase their infrastructure, sales and widen their customer base. In response to BPCL's demands, the Petitioners have increased their customer base and number of gas refills. On the basis of instructions received from BPCL, the Petitioners have invested resources to consequently increase their customer base. However, today, by the Impugned Circular, the business of the Petitioners is at the threat of reduction under the guise of a 'Policy Decision' for evidently no fault of the Petitioners. 18. With the aforesaid context in mind, we now propose to analyse the scope of the doctrine of Promissory Estoppel as has been explained by the Ape Court in Motilal Padampat Sugar Mills Co. 18. With the aforesaid context in mind, we now propose to analyse the scope of the doctrine of Promissory Estoppel as has been explained by the Ape Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 as under: "7.That takes us to the question whether the assurance given by Respondent 4 on behalf of the State Government that the appellant would be exempt from Sales Tax for a period of three years from the date of commencement of production could be enforced against the State Government by invoking the doctrine of promissory estoppel. Though the origins of the doctrine of promissory estoppel may be found in Hughes v. Metropolitan Railway Co.,1877 2 AC 439 [36 LT 932] and Birmingham and District Land Co. v. London and North-Western Rail Co.,1888 40 ChD 268 [286 : 60 LT 527] , authorities of old standing decided about a century ago by the House of Lords, it was only recently in 1947 that it was rediscovered by Mr Justice Denning, as he then was, in his celebrated judgment in Central London Property Trust Ltd. v. High Trees House Ltd., (1956) 1 AllER 256[ 1947 KB 130] This doctrine has been variously called "promissory estoppel", "equitable estoppel", "quasi estoppel" and "new estoppel". It is a principle evolved by equity to avoid injustice and though commonly named "promissory estoppel", it is, as we shall presently point out, neither in the realm of contract nor in the realm of estoppel. It is interesting to trace the evolution of this doctrine in England and to refer to some of the English decisions in order to appreciate the true scope and ambit of the doctrine particularly because it has been the subject of considerable recent development and is steadily expanding. The basis of this doctrine is the inter-position of equity. Equity has always, true to form, stepped in to mitigate the rigours of strict law. The early cases did not speak of this doctrine as estoppel. They spoke of it as "raising an equity". Lord Cairns stated the doctrine in its earliest form - it has undergone considerable development since then - in the following words in Hughes v. Metropolitan Railway Company: "It is the first principle upon which all Courts of Equity proceed if parties, who have entered into definite and distinct terms involving certain legal results . . . Lord Cairns stated the doctrine in its earliest form - it has undergone considerable development since then - in the following words in Hughes v. Metropolitan Railway Company: "It is the first principle upon which all Courts of Equity proceed if parties, who have entered into definite and distinct terms involving certain legal results . . . afterwards by their own act, or with their own consent, enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, that the person who otherwise might have enforced these rights will not be allowed to enforce them where it would be inequitable, having regard to the dealings which have taken place between the parties." 8.This principle of equity laid down by Lord Cairns made sporadic appearances in stray cases now and then but it was only in 1947 that it was disinterred and restated as a recognised doctrine by Mr. Justice Denning, as he then was, in the High Trees' case. The facts in that case were as follows. The plaintiffs leased to the defendants, a subsidiary of the plaintiffs, in 1937 a block of fats for 99 years at a rent of # 2500 a year. Early in 1940 and because of the war, the defendants were unable to find sub-tenants for the fats and unable in consequence to pay the rent. The plaintiffs agreed at the request of the defendants to reduce the rent to # 1250 from the beginning of the term. By the beginning of 1945 the conditions had improved and tenants had been found for all the fats and the plaintiffs, therefore, claimed the full rent of the premises from the middle of that year. The claim was allowed because the court took the view that the period for which the full rent was claimed fell outside the representation, but Mr. Justice Denning, as he then was, considered obiter whether the plaintiffs could have recovered the covenanted rent for the whole period of the lease and observed that in equity the plaintiffs could not have been allowed to act inconsistently with their promise on which the defendants had acted. Justice Denning, as he then was, considered obiter whether the plaintiffs could have recovered the covenanted rent for the whole period of the lease and observed that in equity the plaintiffs could not have been allowed to act inconsistently with their promise on which the defendants had acted. It was pressed upon the Court that according to the well settled law as laid down in Jordenv Money, (1854) 5 HLC 185 [10 ER 868], no estoppel could be raised against the plaintiffs since the doctrine of estoppel by representation is applicable only to representations as to some state of facts alleged to be at the time actually in existence and not to promises de future which, if binding at all, must be binding only as contracts and here there was no representation of an existing state of facts by the plaintiffs but it was merely a promise or representation of intention to act in a particular manner in the future. Mr Justice Denning, however, pointed out: "The law has not been standing still since Jorden v. Money. There has been a series of decisions over the last fifty years which, although they are said to be cases of estoppel, are not really such. They are cases of promises which were intended to create legal relations and which, in the knowledge of the person making the promise, were going to be acted on by the party to whom the promise was made, and have in fact been so acted on. In such cases the courts have said these promises must be honoured." The principle formulated by Mr. Justice Denning was, to quote his own words, "that a promise intended to be binding intended to be acted on and in fact acted on, is binding so far as its terms properly apply". NowHughes v. Metropolitan Railway Co. and Birmingham and District Land Co, v. London & North Western Rail Co. the two decisions from which Mr. Justice Denning drew inspiration for evolving this new equitable principle, were clearly cases where the principle was applied as between parties who were already bound contractually one to the other. In Hughes v. Metropolitan Railway Co. NowHughes v. Metropolitan Railway Co. and Birmingham and District Land Co, v. London & North Western Rail Co. the two decisions from which Mr. Justice Denning drew inspiration for evolving this new equitable principle, were clearly cases where the principle was applied as between parties who were already bound contractually one to the other. In Hughes v. Metropolitan Railway Co. the plaintiff and the defendant were already bound in contract and the general principle stated by Lord Cairns, L.C. was: "[I]f parties who have entered into definite and distinct terms involving certain legal results afterwards - enter upon a course of negotiations. Ten years later Bowen, L.J. also used the same terminology in Birmingham and District Land Co. v. London and North Western Rail Co. that if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe ...." These two decisions might, therefore, seem to suggest that the doctrine of promissory estoppel is limited in its operation to cases where the parties are already contractually bound and one of the parties induces the other to believe that the strict rights under the contract would not be enforced. But we do not think any such limitation can justifiably be introduced to curtail the width and amplitude of this doctrine. We fail to see why it should be necessary to the applicability of this doctrine that there should be some contractual relationship between the parties. In fact Donaldson, J. pointed in Dunham Fancy Goods Ltd. v. Michael Jackson (Fancy Goods) Ltd., (1968) 2 AllER 987,991 : "Lord Cairns in his enunciation of the principle assumed a pre-existing contractual relationship between the parties, but this does not seem to me to be essential, provided that there is a pre-existing legal relationship which could in certain circumstances give rise to liabilities and penalties." But even this limitation suggested by Donaldson, J. that there should be a preexisting legal relationship which could in certain circumstances give rise to liabilities and penalties is not warranted and it is significant that the statement of the doctrine by Mr Justice Denning in the High Trees case does not contain any such limitation. The learned Judge has consistently refused to introduce any such limitation in the doctrine and while sitting in the Court of Appeal, he said in so many terms, in Evenden v. Guildford City Association Football Club Ltd, (1975) 3 AllER 269 .[ : (1975) 3 WLR 251 ] : "Counsel for the appellant referred us, however, to the second edition of Spencer Bower's book on Estoppel by Representation [(1966) pp. 340-342] by Sir Alexander Turner, a Judge of the New Zealand Court of Appeal. He suggests that promissory estoppel is limited to cases where parties are already bound contractually one to the other. I do not think it is so limited: see Durham Fancy Goods Ltd. v. Michael Jackson (Fancy Goods) Ltd. It applies whenever a representation is made, whether of fact or law, present or future, which is intended to be binding, intended to induce a person to act on it and he does act on it." This observation of Lord Denning clearly suggests that the parties need not be in any kind of legal relationship before the transaction from which the promissory estoppel takes its origin. The doctrine would seem to apply even where there is no pre-existing legal relationship between the parties, but the promise is intended to create legal relations or affect a legal relationship which will arise in future. Vide Halsbury's Laws of England 4th Edn., p. 1018, Note 2 to para 1514. Of course it must be pointed out in fairness to Lord Denning that he made it clear in the High Trees case that the doctrine of promissory estoppel cannot found a cause of action in itself, since it can never do away with the necessity of consideration in the formation of a contract, but he totally repudiated in Evenden case the necessity of a pre-existing relationship between the parties and pointed out in Crabb v. Arun District Council, (1975) 3 AllER 865 [ (1975) 3 WLR 847 ] , that equity will, in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute. The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. 19.When we turn to the Indian law on the subject it is heartening to find that in India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived. It is remarkable that as far back as 1880, long before the doctrine of promissory estoppel was formulated by Denning, J., in England, a Division Bench of two English Judges in the Calcutta High Court applied the doctrine of promissory estoppel and recognised a cause of action founded upon it in the Ganges Manufacturing Co. v. Sourujmull, (1880) 5 ILR(Cal) 669 [5 CLR 533] . The doctrine of promissory estoppel was also applied against the Government in a case subsequently decided by the Bombay High Court in Municipal Corporation of Bombay v. Secretary of State, 1905 29 ILR(Bom) 580[7 Bom LR 27] ." It would also be apposite to reproduce the following from Godfrey Phillips India Limited, (1985) 4 SCC 369 : "9. Now the doctrine of promissory estoppel is well established in the administrative law of India. It represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. Now the doctrine of promissory estoppel is well established in the administrative law of India. It represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is the interposition of equity which has always, true to its form, stepped in to mitigate the rigour of strict law. This doctrine, though of ancient vintage, was rescued from obscurity by the decision of Mr. Justice Denning as he then was, in his celebrated judgment in Central London Property Trust Ltd. v. High Trees House Ltd., (1956) 1 AllER 256 The true principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted upon by the other party, the promise or representation would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which have taken place between the parties. It has often been said in England that the doctrine of promissory estoppel cannot itself be the basis of an action: it can only be a shield and not a sword: but the law in India has gone far ahead of the narrow position adopted in England and as a result of the decision of this Court in Motilal Padampat Sugar Mills v. State of U.P., (1979) 2 SCC 409 [1979 SCC (Tax) 144 : (1979) 2 SCR 641 ] it is now well settled that the doctrine of promissory estoppel is not limited in its application only to defence but it can also found a cause of action. The decision of this Court in Motilal Sugar Mills case, (1979) 2 SCC 409 [1979 SCC (Tax) 144 : (1979) 2 SCR 641 ] contains an exhaustive discussion of the doctrine of promissory estoppel and we find ourselves wholly in agreement with the various parameters of this doctrine outlined in that decision." 19. The decision of this Court in Motilal Sugar Mills case, (1979) 2 SCC 409 [1979 SCC (Tax) 144 : (1979) 2 SCR 641 ] contains an exhaustive discussion of the doctrine of promissory estoppel and we find ourselves wholly in agreement with the various parameters of this doctrine outlined in that decision." 19. The principal laid down in the aforesaid decisions of the Ape Court prohibits the State and/or an instrumentality thereof from resiling on a promise made earlier by it on which promise a citizen has acted upon. In the facts and circumstances of the present case and in view of the correspondence repeatedly addressed by BPCL to the Petitioners as referred to hereinabove, we are of the considered opinion that the doctrine of Promissory Estoppel would impede the existence of the Impugned Circular. BPCL has failed to consider and/or appreciate aspects such as the added obligations upon existing distributors towards retrenchment of manpower in the event the Impugned Circular is given effect to. Therefore, the lack of due regard to the consequences that the Impugned Circular will have, brings forth the arbitrary and high-handed manner in which the Impugned Circular has been issued. As recorded herein, since the grant of their respective distributorship(s), the Petitioners have infused capital, manpower and infrastructure to improve their customer base on the legitimate expectation of not only retention of the existing clientele but also that their customer base will increase in the future. The Petitioner's investments over the years (caused by BPCL) would be rendered futile by the effect and operation of the Impugned Circular. Therefore, in our considered opinion, the doctrine of legitimate expectation also applies squarely to the present case and in fact, is gravely violated by the Impugned Circular. 20. Mr. Sancheti also argued that the scope of judicial review is limited in respect of policy decisions more so with respect to economic policies. In so far as this argument is concerned, there is no quarrel with the proposition that whilst entertaining a challenge to a policy decision, the limited role of this Court is only to ascertain whether the policy is irrational, arbitrary and violative of the Constitution of India. The said exceptions to the proposition that this Court ought not to interfere in matters of policy decisions have in fact been recognized in the various judgments cited by Mr. Sancheti himself. The said exceptions to the proposition that this Court ought not to interfere in matters of policy decisions have in fact been recognized in the various judgments cited by Mr. Sancheti himself. In the present case, the Impugned Circular came to be issued without even consulting the Petitioners (or others similarly situated) despite the Impugned Circular gravely affecting them. Further, the Impugned Circular purports to impose parameters without providing any reasoning, basis or explanation for prescribing such parameters. In our considered opinion, no case for intelligible differentia has been made out by the Respondents to sustain the distinction as is being sought to be meted out to old distributors vis-à-vis new distributions. As rightly submitted by Mr. Dhond, the rigors of Article 14 of the Constitution of India, require equality and fairness on the State's part in dealing with similar persons. However, by the Impugned Circular, an unfair distinction is being drawn between new and existing distributors and an even more unfair transfer policy is being imposed without any intelligible differentia between such distributors. This being so, this Court cannot be a silent spectator and feign ignorance to the grievances raised by the Petitioners solely due to the Impugned Circular being a 'Policy Decision'. Whilst on this, Mr. Sancheti has submitted that in any event, a change in policy can always defeat substantive legitimate expectation. Whilst we agree with this proposition laid down by our Courts from time to time, we note that a policy decision may defeat a substantive legitimate expectation only in the event such policy decision is not irrational or perverse [see paragraph no. 42 of Punjab Communications Ltd. vs. Union of India, (1999) 4 SCC 727 . We are of the further considered opinion that the foundation of the Impugned Circular is not overwhelming public interest which is another recognized criteria whereunder legitimate expectation may be defeated. Since we have already held that the Impugned Circular is arbitrary, we are unable to accept Mr. Sancheti's submission that the Petitioners' legitimate expectation stands defeated. 21. Further, it is submitted that the letters dated 16th October,2001 and 1st February,2002 addressed by the Union of India to all Oil Marketing Companies and minutes of meeting dated 9th March,2002 of such Oil Marketing Companies (including BPCL) demonstrates the existence of the policy at-least since the year 2001. Sancheti's submission that the Petitioners' legitimate expectation stands defeated. 21. Further, it is submitted that the letters dated 16th October,2001 and 1st February,2002 addressed by the Union of India to all Oil Marketing Companies and minutes of meeting dated 9th March,2002 of such Oil Marketing Companies (including BPCL) demonstrates the existence of the policy at-least since the year 2001. In so far as the current policy under the Impugned Circular is concerned, it is submitted that the policy as contained in Clauses 2 and 3 of the Impugned Circular, is similar/almost the same as the pre-existing policy viz., (i) no such transfer will be effected to reduce the number of customers below 75% of the ceiling limit of the transferor distributor; (ii) no transfer of customers shall take place once the distributor reached 50% of the ceiling limit (considered as viability limit). It was further submitted that the policy contained in Clauses 4 (a) to 4 (e) of the Impugned Circular i.e. the process for selection of distributor for the purpose of transfer is also similar / almost the same as the Minutes of Meeting dated 9th March,2002. It is also pointed out to this Court that the pre-existing policies prior to the Impugned Circular have not been challenged before this Court. In our view, the basis for such letters/Minutes, from a perusal of the same do not appear to have the same end and intent as that of the Impugned Circular. The earlier prevalent policy does not appear to be as drastic as the Impugned Circular. At the relevant time, BPCL has itself increased the ceiling limits, and in fact, allowed existing distributors to enroll more customers. Thus, the entire premise and reliance of the Respondents on such letters/minutes is flawed and cannot stand to reason. The earlier policy did not appear to prescribe that existing customers of the Petitioners will be transferred en masse to new distributors. We are cognizant of the fact that BPCL intends to promote new distributors. However, such seemingly well intended promotion cannot be at the cost of old distributors as is being sought to be done under the Impugned Circular. 22. It is further submitted by Mr. Sancheti that the Petitioners are fully aware of the prevailing policies in as much as Petitioner Nos.5 and 6 were previously beneficiaries of 'transferred customers' from other distributors. However, such seemingly well intended promotion cannot be at the cost of old distributors as is being sought to be done under the Impugned Circular. 22. It is further submitted by Mr. Sancheti that the Petitioners are fully aware of the prevailing policies in as much as Petitioner Nos.5 and 6 were previously beneficiaries of 'transferred customers' from other distributors. In this context, reliance was placed on a handwritten list of 12 customers who were transferred to Petitioner No.5. It was also submitted that the Petitioners are well aware of refill ceiling limits because when they applied for distributorship, there were ceiling limits in place at that time as well. In order to deal with this submission, we must first note that the "list of 12 customers who were transferred to Patil Gas Agency (Petitioner No.5)" appearing at Annexure 5 of BPCL's Affidavit in Reply is a list handwritten in Marathi on a plain sheet of paper. When this Court asked Mr. Dhond as to what his response to the said list is, Mr. Dhond contended that his client cannot be expected to respond to such handwritten list, the veracity of which is uncertain. He also mentioned that it would not be appropriate for the Court to decide the issue of legality of a Circular on a hand written jotting down of some particulars on a sheet of paper, with no signature and with no date. He submitted their this jotting down is even on Mr. Sancheti's submission, several decades old. He submitted that the list supposedly reflects customers transferred to Patil Gas Agency; Patil Gas Agency was set up in 1999; the list mentions various dates between 15th and 19th November,1997; It is therefore extremely doubtful. Mr. Sancheti submits that dates mentioned are not dates of transfer but dates of the connections. Quite evidently there is much to be urged on both sides and a Writ Petition is not the remedy where these disputed facts of some antiquity can be properly decided. With this backdrop in mind and in the absence of any cogent evidence to demonstrate as to whether or not Petitioner No.5 has in fact sought a benefit and if so, under what e act scheme, we are unable to place any reliance on this handwritten list. In any event, it is not Mr. Sancheti's contention that Petitioner No.5 was provided a benefit under the Impugned Circular. In any event, it is not Mr. Sancheti's contention that Petitioner No.5 was provided a benefit under the Impugned Circular. It is his contention that Petitioner No.5 availed of such similar schemes in the past. His reliance on events prior to the Impugned Circular cannot be accepted by us to sustain the Impugned Circular. In any event, Mr. Sancheti has only provided vague particulars in this respect and therefore, we are unable to accept this submission. 23. Mr. Sancheti had also opposed the Writ Petition on the ground that the Petitioners have raised no allegations of mala fides or biasness and therefore, the current challenge ought not to be entertained. In our view, it is not always a prerequisite that a policy decision ought to be challenged on the grounds of mala fides or biasness alone. It is for this reason that arbitrary and irrational policy decisions can always be challenged before this Court even in the absence of allegations of mala fides or biasness. Therefore, we are also unable to agree with this submission. 24. It was Mr. Sancheti's last argument that in the absence of any case that the Impugned Circular is arbitrary or suffers from Wednesbury unreasonableness, the challenge of the Petitioners to the Impugned Circular cannot be sustained. For the reasons set-out hereinabove, this argument holds no water since we have already held that the Impugned Circular is arbitrary, irrational and in the least, violates the Petitioners' vested rights whilst providing for benefits accruing to new distributors in the absence of any intelligible differentia. 25. For the reasons aforesaid, the Writ Petition is allowed in terms of prayer clauses (a) and (b). Consequently, the Impugned Circular and Impugned Communication are quashed and set-aside.