HPCL, BPCL pump agreements allow termination without reasons

The agreements of the other oil PSU major Indian Oil Corporation (IOC) do not have this clause.

According to officials in the petroleum ministry, out of around 1,300 petrol pumps whose licences have already been cancelled, only 600 which belong to IOC do not have this clause. The rest all have this clause inserted in the agreement.

According to the HPCL agreement, “however the same may be determined without assigning any reason by either party by giving three months’ notice in writing to the other of its intention to terminate this agreement”.

The same clause in the BPCL agreement reads as “this licence may be terminated without assigning any reason whatsoever by either party giving to the other not less than ninety days notice in writing to expire at any time of its intention to terminate it and upon the expiration of any such notice this licence shall stand cancelled and revoked. The requisite period of notice may be reduced or waived by mutual consent”, the clause added.

The IOC agreement, on the other hand, lists out 12 events in case of which licence can be cancelled — these include “if the dealer commit a breach of any of the covenants and stipulations contained in the agreement and fail to remedy such breach within four days of the receipt of a written notice from the corporation or if the dealer or any partner of the dealer’s firm or any member of the cooperative society appointed as dealer be convicted of a criminal offence.” IOC’s agreements do not allow for termination without assigning any reason. Ministry officials expect the most trouble in cancelling these licenses.

Sources in petroleum ministry also added that out of the around 3,500 dealerships which have been cancelled around 2,200 had been commissioned and 1,300 were letter of intents (LoIs). Out of those commissioned 900 dealerships have been cancelled and 700 cases are being heard in the various courts. Of the dealerships that were to be cancelled, in petrol pumps 834 belong to IOC, 215 belong to BPCL, 278 belong to HPCL and 44 belong to IBP. Out of the 1,604 LPG dealership, 761 belong to IOC, 465 to BPCL, 327 to HPCL and 51 to IBP.