The Allahabad High Court has directed Hindustan Petroleum Corporation Limited (HPCL) to pay ₹15,78,486 in compensation to Shantanu Singh after the cancellation of a proposed retail outlet dealership in Ghazipur, Uttar Pradesh. A Division Bench comprising Justice Saral Srivastava and Justice Siddharth Nandan held that the applicant should not be made to bear the financial loss incurred while complying with the conditions of a Letter of Intent (LOI), when the cancellation was not caused by any fault on his part.
Background
HPCL advertised the retail outlet dealership location between Mahavir Mandir and Bhadaura stand on either side of State Highway 99 in Ghazipur on November 25, 2018. Singh applied for the dealership and was selected through a draw of lots on February 1, 2019. The company subsequently issued him a Letter of Intent on August 2, 2019.
Under the LOI, Singh was required to develop the proposed site to road level and construct retaining and compound walls. However, on March 11, 2021, HPCL informed him that the advertised location had been cancelled.
The company argued that its advertisement conditions permitted cancellation without assigning reasons. It also submitted that an LOI did not create a binding contract for the dealership.
The Court acknowledged that HPCL had the authority to withdraw the advertisement under its stated conditions. However, it distinguished the company's power to cancel the location from its responsibility for the financial consequences suffered by an applicant who had acted on its representation.
The Bench observed:
"The taking out of an advertisement, with respect to a location, which has already been notified as a National Highway No. 134-C, prior to the advertisement dated 25.11.2018, cannot be a fault of the incumbent who takes part in the process of allotment and after being successful, being issued a Letter of Intent also, which requires him to make an investment in the project, and accordingly he cannot be rendered remedy-less, without there being any fault of his own."
The Court further considered the principle of legitimate expectation, which protects reasonable expectations arising from an authority's representation in appropriate circumstances. It noted that Singh had invested money in developing the land after receiving the LOI and had not been found responsible for the cancellation.
The Bench also examined Singh's claim that he had incurred expenses of ₹15,78,486 between February 1, 2019, and March 11, 2021. The respondents had not specifically denied the investments detailed in his affidavit.
The Court held that compensation was justified for the financial loss caused by the cancellation. It directed the respondents to pay Singh ₹15,78,486 within one month of receiving a certified copy of the order.
The judgment stated:
"In view of the aforesaid admitted position pertaining to the investment made by the petitioner to the tune of Rs. 15,78,486.00, this Court deems it appropriate to award the compensation to the tune of Rs. 15,78,486.00, which shall be payable to the petitioner within a period of one month from the date of production of certified copy of this order; and in case the same is not paid within the said stipulated period, the petitioner shall be entitled to 8% simple interest per annum, till the date of actual payment."
The writ petition was allowed.
Case Details
Case Title: Shantanu Singh v. State of U.P. and 2 Others
Case Number: Writ-C No. 19155 of 2021
Judges: Justice Saral Srivastava and Justice Siddharth Nandan
Decision Date: October 12, 2026
