Karnataka High Court

Indian Oil Corporation Ltd vs Sri. N Lingaradhya on 8 October, 2025

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                                                     NC: 2025:KHC:39470-DB
                                                       WA No. 211 of 2024


                HC-KAR




                    IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                         DATED THIS THE 8TH DAY OF OCTOBER, 2025

                                        PRESENT

                      THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
                                          AND
                         THE HON'BLE MR. JUSTICE C.M. POONACHA

                          WRIT APPEAL NO. 211 OF 2024 (GM-RES)

               BETWEEN:
               1.   INDIAN OIL CORPORATION LTD
                    REGISTERED OFFICE AT
                    No.6, ALI YAVAR JUNG MARK
                    BANDRA EAST, MUMBAI - 400 051

               2.   INDIAN OIL CORPORATION LTD
                    MYSURU DIVISION OFFICE
                    No. L 36/A, 1ST FLOOR
                    B.N. ROAD MYSURU TRADE CENTER
                    OPP. KSRTC BUS STAND
Digitally           MYSURU - 570 001
signed by           REP. BY DIVISIONAL RETAIL HEAD
AMBIKA H B          MYSURU - 570 001
                                                            ...APPELLANTS
Location:      (BY SRI AMBRISH, ADVOCATE FOR
High Court
                SRI NAGARALE SANTOSH SUBHASHCHANDRA, ADVOCATE)
of Karnataka
               AND:
               1.   SRI N. LINGARADHYA
                    SON OF K NAGARAJU
                    AGED ABOUT 30 YEARS
                    R/AT NO. KALLESHWARA NILAYA
                    13TH CROSS, SRINAGAR
                    DEVARAYAPATNA POST
                    TUMKUR - 572 104
                                                            ...RESPONDENT
               (BY SRI GANAPATHI BHAT VAJRALLI, ADVOCATE)
                                 -2-
                                           NC: 2025:KHC:39470-DB
                                              WA No. 211 of 2024


 HC-KAR



     THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE FINAL
JUDGMENT DATED 31.07.2023 PASSED BY THE LEARNED SINGLE
JUDGE IN WRIT PETITION No.9660/2020 AND CONSEQUENTLY
DISMISS THE PETITION & ETC.

    THIS APPEAL, COMING ON FOR ORDERS, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
       and
       HON'BLE MR. JUSTICE C.M. POONACHA

                        ORAL JUDGMENT

(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)

1. Issue notice. Mr.Ganapati Bhat Vajralli, learned counsel

accepts notice for the sole respondent.

2. For the reasons stated in IA No.1/2024, the same is allowed

and the delay in filing the present appeal is condoned.

3. With the consent of the learned counsel for the parties, the

present appeal has been finally heard.

4. The appellant [hereafter 'IOCL'] has filed the present appeal

impugning an order dated 31.07.2023 passed by the learned Single

Judge in Writ Petition No.9660/2020, captioned 'Sri N. Lingaradya

v. Indian Oil Corporation Limited and Another'.

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5. The respondent [writ petitioner] had filed the said writ

petition, inter alia, praying as under:

"Issue Writ of Mandamus or any appropriate order directing the respondents to take appropriate steps for issuance of drawing and supply of required equipments for establishment and commissioning of Retail Outlet Dealership/Petrol Bunk in furtherance of Letter of Intent (LOI) dated 24.12.2019, issued by the 2nd respondent, as per Annexure-G, with specified time in the interest of justice and equity.

Grant such other relief's as this Hon'ble Court deems fit to grant on the facts and circumstances of the case, in the interest of justice and equity."

6. The writ petitioner held leasehold rights in lands comprised in

Survey Nos.24/1 and 24/14 located at Kowthamaranahalli Village,

Gulur Hobli, Tumakuru Taluk and District [ hereafter 'the subject

land'].

7. IOCL had issued Notification dated 24.11.2018 inviting

applications from eligible candidates for appointment as dealers to

operate rural outlets in Kowthamaranhalli Village, Tumakuru District

and, particularly on the road from Kesarmadu to Honnudike. The

subject land was located on the road in question. The writ

petitioner being desirous of utilizing the subject land for operating a

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retail petroleum outlet for petroleum products submitted his

application pursuant to IOCL's notification dated 24.11.2018.

Thereafter, the subject land was inspected by the officials of IOCL

for examining whether it was suitable for establishment of a

petroleum outlet.

8. Undisputedly, the officials reported that the subject land was

suitable for the said purpose. Thereafter, IOCL issued a Letter of

Intent [LoI] dated 24.12.2019 for establishment of the retail outlet.

However, thereafter IOCL did not take any further steps, including

issuance of building drawings for construction of a petrol bunk.

The facts on record indicate that IOCL had abandoned the

proposal for establishment of a petroleum outlet on the road in

question [Kesarmadu to Honnudike road in Tumakuru District] for

the reason that the said road was a part of the State Highway and

according to the guidelines issued by IOCL, a rural outlet was not

required to be located on a State Highway.

9. In view of IOCL's refusal to proceed further in terms of the

LoI, the writ petitioner filed the aforementioned writ petition.

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10. The learned Single Judge allowed the said writ petition on

the ground that the LoI in effect, was an acceptance of the writ

petitioner's offer. Therefore, it was not open for IOCL to renege

from its commitment. The learned Single Judge held that IOCL

was required to be compelled to "stick to its promise made to the

petitioner in terms of the letter of intent". The learned Single Judge

also observed that it was for IOCL to comply with its guidelines and

since it had given a go by to the said guidelines by proposing to

establish a rural outlet on the road in question, the writ petitioner

could not be held liable for the same.

11. As is apparent from a plain reading of the impugned order,

the decision rests on the premise that the LoI had resulted in a

binding contract between the parties and, therefore, IOCL was

required to adhere to the same.

12. A plain reading of the LoI indicates that it did not amount to

acceptance of an offer as construed by the learned Single Judge.

We consider it apposite to set out the opening sentence of the LoI

which reads as under:

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"Please be informed that by this Letter of Intent, we propose to offer you a Kisan Seva Kendra dealership of Indian Oil Corporation Ltd. ..."

[ emphasis added]

The said sentence clearly indicates that the LoI was only an

information of IOCLs proposal and did not amount to acceptance of

any offer. Paragraph 20 of the LoI is also significant and in our

view dispositive of the question regarding the nature of the LoI.

The said paragraph is set out below:

"This letter is merely a letter of intent and is not to be construed as a 'firm offer' of dealership to you. The dealership will be allotted to you on your complying with the terms and conditions spelt out herein above by issuance of appointment letter along with signing of our standard dealership agreement between you and us."

13. The learned Single Judge has erred in proceeding on the

basis that a firm contract for establishing a petroleum dealership

came into existence between the parties by the issuance of the LoI.

14. The learned counsel for the appellants has referred to a

decision of the Supreme Court in Rajasthan Co-operative Dairy

Federation Ltd. v. Maha Laxmi Mingrate Marketing Service Pvt.

Ltd. and Ors.: (1996) 10 SCC 405. In the said case, the Supreme

Court had observed as under:

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"... The Letter of Intent merely expressed an intention to enter into a contract. If the conditions stipulated in the Letter of Intent were not fulfilled by respondent No.1 and if the conduct of respondent No.1 was otherwise not such as would generate confidence, the appellant was entitled to withdraw the Letter of Intent. There was no binding legal relationship between the appellant and respondent No.1 at this stage and the appellant was entitled to look at the totality of circumstance in deciding whether to enter into a binding contact with respondent No.1 or not. "

15. It is the IOCL's case that the final letter of appointment was

not issued as the subject land was located on the State Highway.

Although the notice inviting applications had mentioned the road in

question and the inspection had also proceeded on the basis that

the site was a rural site, the LoI did not constitute a firm offer or

acceptance of the writ petitioner's offer. Clearly, no right vested

with the writ petitioner for being appointed as a dealer. Once IOCL

had discovered that the subject land was on a State Highway and

establishment of a rural outlet was not permissible according to its

guidelines, there was no impediment for IOCL to decline to proceed

further pursuant to the LoI.

16. We are also unable to accept that the decision of IOCL is