IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. C.W.P. No. 3212 of 2011. Reserved on: 19.08.2011. Decided on: 27.09.2011. _____________________________________________________ Hindustan Petroleum Corporation Ltd.. …Petitioner. -Versus- Distt. Authority and others. …Respondents. Coram: The Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes. __________________________________________________________ For the petitioner : Mr. S.S. Mittal, Senior Advocate with Mr. Surender P. Sharma, Advocate. For respondents No. 1 and 2. : Mr. R.P. Singh, Assistant Advocate General. For respondent No. 3. : Mr. M.A. Khan, Central Government Standing Counsel. Mr. Dushyant Dadwal, Advocate, for the applicants in C.M.P. No. 6033 of 2011. ---------------------------------------------------------------------------------------- Rajiv Sharma, Judge: Petitioner is a Government of India undertaking, fully owned by the Union of India. Petitioner-Company (hereinafter referred to as ‘the Company’ for brevity sake), took a decision in the year 1985 to open a bulk depot for storage and sale of petroleum products in the State of Himachal Pradesh. Petitioner- company made an application to the State Government for grant of lease of suitable land for establishment of the depot. Consequently, the State Government was pleased to accord sanction to grant of lease of 4 bighas 15 bishwas of land situate near village Shogi in favour of the petitioner-company for establishment of ‘POL Bulk Depot’ at Shogi on 20.01.1986 vide 1 Whether the reporters of the local papers may be allowed to see the judgment? Yes. - 2 - Annexure R-1/A. According to the averments contained in the petition, the Company decided to open a company owned- company operated retail outlet alongwith the bulk depot to supply quality petrol/diesel to consumers. Petitioner-company made an application to respondents No. 1 to 3 for issuance of a No Objection Certificate to open the retail outlet, as required under the provisions of ‘The Petroleum Act, 1934’ (hereinafter referred to as “the Act” for convenience sake). The “No Objection Certificate” was issued in favour of the Company on 26th December, 2001. The retail outlet became operational in the beginning of April 2002. The No Objection Certificate issued in favour of the Company was withdrawn by respondent No. 1, i.e., District Authority on 22.11.2002. The order dated 27.11.2002 was subsequently withdrawn on 17.03.2003. A show-cause notice was issued to the petitioner-company on 23.12.2003. Reply was filed to the same on 17.01.2004. Thereafter, the “No Objection Certificate” was again withdrawn on 07.04.2006. Petitioner-Company preferred an appeal before the Divisional Commissioner against the order of withdrawal dated 07.04.2006. The appellate authority remanded the matter to the District Magistrate, Shimla on 15.07.2006 vide Annexure P-7. According to the averments contained in paragraph No. 9 of the petition, the company did not get any response from respondent No. 3 in the matter and decided to re-start the operation of retail outlet in February 2011. The intimation to this effect was sent to respondent No. 1 vide letters dated 14.02.2011 and 29.03.2011. However, the operation of the retail outlet was stopped on the morning of 4th April, 2011. Petitioner was served with a show-cause notice dated 13.04.2011 (Annexure P-13) by - 3 - respondent No. 1 on 18.04.2011. Reply was filed to the same on 28.04.2011. 2. Respondents No. 1 and 2 have filed reply to the petition. According to the averments contained in the reply, the petitioner-company was only granted lease for establishment of Bulk Depot, whereas the petitioner-company has operated retail outlet on the part of the leased land. According to the averments, the petitioner-company has encroached upon the Government land and the proceedings had been initiated for its eviction. It is further averred that “No Objection Certificate” was withdrawn on 07.04.2006, since the leased land has not been used for the purpose for which it has been leased out. It is also specifically averred that the petitioner has not approached the Court with clean hands. The respondent No. 1 has passed fresh orders on 17.11.2006 after the matter was remanded by the appellate authority on 15.07.2006. The petitioner-company was advised to get the land partitioned and apply for amendment in the lease deed for setting up of retail outlet. The Assistant Collector, 1st Grade, Shimla (Rural) was also directed to take steps to complete the ejectment proceedings of encroachment against the company after affording an opportunity of hearing. Petitioner-company sent a communication to respondent No. 1 on 26th June, 2007, seeking permission to use part of the leased land, where it had already established a retail outlet. As per the averments contained in the reply, the matter is under consideration of the State Government regarding change of purpose of the leased land. 3. Respondent No. 3 has also filed a short reply affidavit. According to the averments contained in the reply filed by - 4 - respondent No. 3, after the withdrawal of No Objection Certificate, the Licencing Authority has cancelled the licence on 26.04.2006. 4. Mr. S.S. Mittal, learned Senior Advocate has strenuously argued that the action of respondent No. 1 to withdraw the “No Objection Certificate” on 07.04.2006 is in contravention of the Petroleum Act and the Petroleum Rules framed under the Act. He then argued that the appellate authority has no jurisdiction to remand the matter on 15.07.2006. He further argued that the petitioner-company was required to be permitted to restart the retail outlet on the basis of No Objection Certificate issued vide Annexure P-1 on 26th December, 2001. 5. Mr. R.P. Singh, learned Assistant Advocate General has strenuously argued that the present petition is liable to be dismissed, since the petitioner-company has concealed the material facts from this Court. He then argued that the lease has been sanctioned for establishment of “POL Bulk Depot” and not for running the retail outlet. He has justified the withdrawal of No Objection Certificate on 07.04.2006 and subsequent orders passed by the State Authorities. 6. Mr. M.A. Khan, learned Central Government Standing Counsel for respondent No. 3 has vehemently argued that since the licence granted in favour of the petitioner-company has been cancelled, it could not operate the retail outlet. 7. Mr. Dushyant Dadhwal, learned counsel for the applicants, who has been permitted to intervene on the basis of C.M.P. No. 6033 of 2011, has argued that setting up of retail outlet on the bend near Shogi is dangerous. - 5 - 8. I have heard the learned counsel for the parties and gone through the pleadings carefully. 9. Petitioner-company has applied for sanctioning of lease to the State Government. The same was granted on 20.01.1986. It is evident from the language employed in Annexure R-1/A, dated 20.01.1986 that the land has been leased measuring 4-15 bighas of land for establishment of ‘POL Bulk Depot’ at Shogi. However, surprisingly, in the No Objection Certificate issued by respondent No. 1, the company has been issued No Objection Certificate to set up retail outlet on 26.12.2001. It was withdrawn on 27.11.2002. Petitioner-company approached to respondent No. 1 and at its instance, the letter dated 27.11.2002 was withdrawn on 17.03.2003. A fresh show-cause notice was issued to the petitioner-company on 23.12.2003, to which reply was filed by the petitioner-company on 17.01.2004. Respondent No. 1 passed fresh orders on 07.04.2006 withdrawing the No Objection Certificate dated 26.12.2001. The appellate authority has remanded the matter on 15.07.2006. According to the averments contained in the petition, no action was taken by respondent No. 1 after the matter was remanded on 15.07.2006. These averments are contained in paragraphs No. 9 and 11( c) of the petition. It is also mentioned in Annexure P-14 that the copy of the order passed by respondent No. 1 was never supplied. 10. Respondent No. 1 has passed fresh orders after the matter was remanded on 17.11.2006. A copy of the same has been placed on record by respondents No. 1 and 2 and marked as Annexure R-1/B. It is clear from the order dated 17.11.2006 that both the parties were afforded an opportunity of being heard - 6 - before the order was passed. The copy of the order dated 17.11.2006 was received by the petitioner-company on 12.01.2007, as is evident from Annexure R-1/C, dated 26.06.2007. Petitioner-company has approached the authorities to accord permission to use part of the leased land for establishment of a retail outlet. Thus, it is evident that the petitioner-company has concealed the material facts from this Court. The petitioner– company is a company owned by the Government and its officers/officials are supposed to place true facts before the court. 11. Since the No Objection Certificate was granted in favour of the petitioner-company on 26.12.2001, the case is required to be dealt with under The Petroleum Rules, 1976 and not under the Petroleum Rules, 2002, which have come into force w.e.f. 30.03.2002. 12. The expression “petroleum in bulk” has been defined in Sub rule (xv) of Rule-2 of The Petroleum Rules, 1976, which reads thus: “2(xv) “petroleum in bulk” means petroleum contained in a tank irrespective of the quantity of petroleum contained therein;” 13. Rule-144 of The Petroleum Rules, 1976 provides the procedure, the manner in which the No Objection Certificate is to be issued, which reads thus: “144. No-objection certificate.-(1) Where the licensing authority is the Chief Controller or the Controller of Explosives, as the case may be, an applicant for a new licence other than a licence in (Form III, IX, XV or XVI) shall apply to the District Authority with two copies of the site-plan - 7 - showing the location of the premises proposed to be licensed for a certificate to the effect that there is no objection to the applicant receiving a licence for the site proposed and the District Authority shall, if he sees no objection, grant such certificate to the applicant, who shall forward it to the licensing authority with his application Form VIII. (2) Every certificate issued by the District Authority under sub-rule (1) shall be accompanied by a copy of the plan of the porposed site duly endorsed by him under his official seal. (3) The Chief Controller or the Controller of Explosives, as the case may be, may refer an application not accompanied by certificate granted under sub-rule (1) to the District Authority for his observations. (4) If the District Authority, either on a reference being made to him or otherwise, intimates, to the Chief Controller or the Controller of Explosives, as the case may be, that any licence which has been applied for should not, in his opinion, be granted, such licence shall not be issued without the sanction of the Central Government.” 14. Rule-151 provides for cancellation of No Objection Certificate, which reads thus: “151. Cancellation of no-objection certificate.-(1) A no-objection certificate granted under rule 144 shall be liable to be cancelled by the District Authority or the State Government, if the District Authority or the State Government is satisfied, that the licensee has ceased to have any right to use the site for storing petroleum: Provided that before cancelling a no-objection certificate, the licensee shall be given a reasonable opportunity of being heard. - 8 - (2) A district authority or a State Government cancelling a no-objection certificate shall record in writing the reasons for such cancellation and shall immediately furnish to the licensee and to the licensing authority concerned a copy of the order cancelling the no-objection certificate. 15. Petitioner-company has been granted lease only for the purpose of setting up POL Bulk Depot. In case the petitioner- company wanted to set up a retail out let on the leased land, it was required to get the lease deed amended. In the instant case, the district authority has granted No Objection Certificate to run the retail outlet (petrol pump) to the petitioner-company without there being any change in the terms and conditions of the lease deed. In case the petitioner-company wanted to have CO-CO retail outlet, it was required to follow the prescribed procedure. The action of respondent No. 1 withdrawing the No Objection Certificate without hearing the petitioner on 22.11.2002, was bad in law. However, fact of the matter is that respondent No.1 has issued fresh notice to the petitioner-company on 23.12.2003 and after taking into consideration the reply filed by the petitioner- company, withdrawn the No Objection Certificate on 07.04.2006. The matter was remanded on 15.07.2006 and the fresh order has been passed by the District Magistrate on 17.11.2006. Petitioner- company has not taken any steps to assail the order dated 17.11.2006. The issuance of Annexure R-1/B, dated 17.11.2006 was within its knowledge. In this petition also, there is no challenge to order dated 17.11.2006, which was passed after the matter was remanded on 15.07.2006. The challenge has been made in the present petition only to Annexures P-6 and P-7. Order - 9 - dated 07.04.2006, Annexure P-6 has been set aside by the Divisional Commissioner, Shimla on 15.07.2006 vide Annexure P- 7. The matter was remanded vide Annexure P-7 and thereafter fresh order has been passed on 17.11.2006 vide Annexure R-1/B. The parties have been directed by respondent No. 1 on 17.11.2006 to get the land partitioned and also to take steps for the amendment of lease deed for setting-up of petrol pump. In sequel to order dated 17.11.2006, the matter has been taken up by the petitioner-company with respondent No. 1 on 26.06.2007. The respondent No. 1, as per the averments contained in the reply, has taken up the matter with respondent No. 2. Respondent No. 2 has raised certain quarries and the matter is still under consideration. Petitioner-company has also not disclosed that the eviction proceedings have been initiated against the company and the orders have been passed by the Assistant Collector ejecting the petitioner from Khasra No. 471/425/2/2, measuring 0-8 biswas on 23.07.2008. The company has preferred an appeal before the AC 1st Grade-Cum- Sub Divisional Officer ( C), Shimla (Rural). In view of these circumstances, it was not open to the petitioner-company to re-start the running of retail outlet. In order to run a retail outlet, it must possess No Objection Certificate, as visualized under the Petroleum Rules and also explosive licence and the earlier licence granted to it stood cancelled on 26.04.2006. 16. Mr. S.S. Mittal, learned Senior Advocate has placed strong reliance on Yogesh Kumar and others Vs. Bharat Petroleum Corporation Ltd. and others (1990) 4 Supreme Court Cases 49. The facts of this case are distinguishable. In this case, - 10 - respondent No. 1 was the owner of a petrol pump which is set up on a site in Dehradun. The “No Objection Certificate” granted for conducting the petrol pump was cancelled by the District Magistrate of Dehradun and this order was up held by the Commissioner. However, the Hon’ble Division Bench of Allahabad High Court set aside the order of the Commissioner. Paragraph No. 4 of the judgment reads thus: “4. The High Court has rightly observed that the District Authority under Rule 151 can cancel the No Objection Certificate only when the licensee ceases to have any right to use the site for storing petrol. However, there are certain subsequent observations made by the High Court in the impugned judgment which might lead to an inference that so long as the licensee continues to have lease-hold rights on the site, the 'No Objection Certificate' cannot be cancelled at all. That does not appear to be the correct position in law. On a reading of sub-rule (1) of R. 151 it is. clear that a 'No objection Certificate' granted under R. 144 can be cancelled wherever the licensee ceases to have any right to use the site for storing petrol and that right could be lost by a licensee either by his tenancy or right to the use of the site coming to an end or for any other reason whereby, in law, the right to use the site for storing petrol ceases.” 17. It is true on the plain reading of Rule-151 that a “No Objection Certificate” can be cancelled only whenever the licencee ceases to have any right to use the site for storing petrol. In the case in hand, the petitioner-company has been granted lease only for setting up POL Bulk Depot and not for running the retail - 11 - outlet. Their Lordships of the Hon’ble Supreme Court in paragraph No. 4 have observed that a No Objection Certificate granted under Rule 144 can be cancelled wherever the licensee ceases to have any right to use the site for storing petrol and that right could be lost by a licensee either by his tenancy or right to the use of the site coming to an end or for any other reason whereby, in law, the right to use the site for storing petrol ceases. The petitioner-company has no right to use the leased land for setting up a retail outlet. The respondent No. 1 has advised the petitioner-company to get the land partitioned and thereafter move an appropriate application for the partition of the land and also to seek amendment of the lease for permitting it to use the site for the purpose of running petrol pump. Petitioner-company has taken up this matter with respondent No. 1 as per Annexure R- 1/C, dated 26.06.2007. Respondent No. 1 has already taken up the matter with respondent No. 2 and the matter is under active consideration as per the averments contained in the reply filed by respondents No. 1 and 2. 18. The question whether the appellate authority has jurisdiction to remand the matter or not, looses its significance when the petitioner-company itself has approached the authorities for amending the lease for setting up the retail outlet as per Annexure R-1/C, dated 26.06.2007. 19. It was not open to the petitioner-company to re-start the retail outlet once the licence has been cancelled and No Objection Certificate stood withdrawn. The applicants in C.M.P. No. 6033 of 2011 have no locus standi in the matter, since the lis is between the petitioner-company and respondents No. 1 to 3. - 12 - 20. The ejectment proceedings have been initiated against the petitioner-company and the ejectment order has been passed by the competent authority on 23.07.22008, against which the company has preferred an appeal before the appellate authority, which is pending order. The petitioner-company has been rightly advised to get the land partitioned and to move the case in accordance with law for amendment of the lease deed. The matter is under consideration of respondents No. 1 and 2 since 2007 and no decision has been taken till date. The Court is of the considered view that the decision ought to have been taken by now on Annexure R-1/C, dated 26.06.2007. 21. Accordingly, in view of the observations and discussions made hereinabove, the petition is disposed of. Respondents No. 1 and 2 are directed to take a decision on Annexure R-1/C, dated 26.06.2007, within a period of eight weeks from today. However, it is made clear that the petitioner-company shall be permitted to use the land strictly for the ‘POL Bulk Depot’. The pending application(s), if any also stands disposed of. No costs. (Rajiv Sharma) Judge September 27, 2011. (bhupender) - 13 -