*THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY + WRIT PETITION No.9925 of 2009 % Dated 25-6-2010 # K.Naga Venkata Surya Lakshmi. … Petitioner Vs. $ The Indian Oil Corporation Limited, Reptd., by its Managing Director, G-9, Ali Yavar Jung Marg, Bandra (East), Mumbai- 400 051 and others. … Respondents ! Counsel for the petitioner: Sri P.V.A.Padmanabham. ^ Counsel for the respondents: Sri Toom Srinivas for R.1 and R.2 Sri M.Narender Reddy for R.3. Sri C.Ramachandra Raju for R.4. <Gist: >Head Note: ? Cases referred: IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT: THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY FRIDAY, THE TWENTY FIFTH DAY OF JUNE, TWO THOUSAND TEN WRIT PETITION Nos.9925, 12738 and 15029 of 2009 WRIT PETITION Nos.9925 of 2009: Between: K.Naga Venkata Surya Lakshmi. … Petitioner And The Indian Oil Corporation Limited, Reptd., by its Managing Director, G-9, Ali Yavar Jung Marg, Bandra (East), Mumbai- 400 051 and others. … Respondents Counsel for the petitioner: Sri P.V.A.Padmanabham. Counsel for the respondents: Sri Toom Srinivas for R.1 and R.2 Sri M.Narender Reddy for R.3. Sri C.Ramachandra Raju for R.4. WRIT PETITION Nos.12738 of 2009: Between: M.Satyanarayana Murthy. … Petitioner And The Indian Oil Corporation Limited, Reptd., by its Executive Director, Narspur House, Himayath Nagar, Hyderabad and others. … Respondents Counsel for the petitioner: Sri P.V.A.Padmanabham. Counsel for the respondents: Sri Toom Srinivas for R.1 and R.2 Sri M.Narender Reddy for R3 Sri N.Sreedhar Reddy for R.4. Sri C.Ramachandra Raju for R.5 WRIT PETITION Nos.15029 of 2009: Between: M.Satyanarayana Murthy. … Petitioner And The State Bank of India, reptd., by its General Manager, Local Head Office, Kothi, Hydrabad and others. … Respondents Counsel for the petitioner: Sri P.V.A.Padmanabham. Counsel for the respondents: Sri M.Narender Reddy for R1 & R2. Sri Toom Srinivas for R.3. Sri N.Sreedhar Reddy for R.4. Sri C.Ramachandra Raju for R.6 This Court made the following: COMMON JUDGMENT:- As the subject matter of these three Writ Petitions is common, with the consent of the learned counsel for the parties, they are being heard and disposed of together. Writ Petition Nos.9925 and 12738 of 2009 have been filed by two individual applicants for LPG Distributorship of the Indian Oil Corporation Limited-respondent No.1 (for short “the Corporation”) for Razole and Malkipuram areas respectively in East Godavari District. Writ Petition No.15029 of 2009 has been filed by the petitioner in Writ Petition No.12738 of 2009. THE BACKGROUND FACTS: The Corporation called for applications through notification for appointment of LPG Distributors in Razole and Malkipuram of East Godavari District. The petitioner in Writ Petition No.9925 of 2009 and respondent No.4 therein filed their respective applications for Razole LPG distributorship. The said area is reserved for women. The petitioner in Writ Petition No.12738 of 2009 and respondent No.5 therein applied for the distributorship of Malkipuram area. All the candidates have appeared for interview before the Dealers Selection Committee (for short “the Committee”). Obviously, on coming to know that respondents 4 and 5 in Writ Petition Nos.9925 and 12738 of 2009 respectively (for convenience hereinafter referred to as “the contesting respondents”) were selected and about to be appointed as LPG dealers, the petitioners made separate representations, but with a common complaint, to the officials of the Corporation in April/June, 2009. Both the petitioners have brought to the notice of the officials of the Corporation that the contesting respondents have committed fraud, in collusion with the Branch Manager of the State Bank of India, ADB Branch, Razole-respondent No.3, by making fixed deposits of Rs.18.00 lakhs each in their respective names and drawing Rs.16.00 lakhs each by availing the overdraft facility on the said FDRs., on the same day. The petitioners stated in their representations that the marks given to the contesting respondents, on the premise of unencumbered fixed deposits, have to be deducted and they are liable to be disqualified for furnishing misleading information. It is the common grievance of the petitioners that their representations fell on deaf ears of the officials of the Corporation; and that the Public Information Officer & the Deputy General Manager (LUBES), APSO of the Corporation went to the extent of rejecting the application of the petitioner in Writ Petition No.9925 of 2009 for supply of the details of the application of the contesting respondent along with the documents filed by her, on the purported ground that they are personal documents and contain information of confidential nature. Left with no other alternative, the petitioners filed these two Writ Petitions for a Mandamus to declare that the action of respondents 1 and 2 in selecting and seeking to allot the LPG distributorship at Razole and Malkipuram areas to the contesting respondents is vitiated by arbitrariness and colourable exercise of power. The petitioner in Writ Petition No.12738 of 2009 also filed Writ Petition No.15029 of 2009 for a Mandamus to declare the inaction of respondents 1 and 2, i.e., State Bank of India (for short “the Bank”) and it’s Branch Manager at Razole, in initiating criminal proceedings against respondents 4 and 5 for their criminal and fraudulent acts of forgery, falsification of accounts, fabrication of false evidence and also in initiating departmental/disciplinary proceedings etc., as illegal and arbitrary. Of the two Writ Petitions filed questioning selection of the contesting respondents, Writ Petition No.9925 of 2009 was filed first. On 6-5-2009 this Court, while issuing notice before admission, adjourned the Writ Petition on the request of the learned Standing Counsel for the Corporation to enable him to file counter-affidavit and also to enable the Corporation to communicate the orders, if any, passed on the representation of the petitioner. Writ Petition No.12738 of 2009 came to be filed in June, 2009. Though about a year has elapsed before the Writ Petitions were finally heard at the admission stage on the request of the learned counsel, counter-affidavits have not been filed on behalf of the Corporation in any of these Writ Petitions. In Writ Petition No.15029 of 2009, the Branch Manager, who sanctioned overdraft facility and allowed the contesting respondents to withdraw the sums of Rs.16.00 lakhs each, and his successor, who has sent communications to the Corporation, were impleaded as eo nomine parties. In Writ Petition Nos.9925 and 12738 of 2009, the Assistant General Managers of the Bank filed their counter-affidavits. In addition, the Branch Manager, who was impleaded as respondent No.4 in Writ Petition No.12738 of 2009, also filed his counter-affidavit in the said Writ Petition. On behalf of the Bank, its Assistant General Manager filed counter-affidavit in Writ Petition No.15029 of 2009. SUBMISSIONS: At the hearing, Sri P.V.A. Padmanabham, learned counsel for the petitioners in all these Writ Petitions, contended that the contesting respondents have indulged in a fraudulent act of withdrawing a major portion of the fixed deposits on the very same day on which they were made, in collusion with the Branch Manager of the Bank, and derived undue advantage of allotment of marks from the Corporation under the head “capability to provide finance”. Under Clause 24 of the Guidelines governing the Selection of the Indane Distributors of the Corporation (for short “the Guidelines”), contended the Counsel, the Corporation is liable to cancel the allotments made to the contesting respondents in view of the false information furnished by them. The learned counsel invited the Court’s attention to the averments in Writ Petition No.15029 of 2009 and the material filed in support thereof to show that Sri D.Jayanth, the then Branch Manager-respondent No.4 in the said Writ Petition, acted in his personal interest in furnishing false information to the Corporation, in collusion with the contesting respondents, as his wife- Smt.Durga Kanthamani, along with another person, executed a registered lease deed in favour of the contesting respondent in Writ Petition No.12738 of 2009 giving on lease their building, situated at Malkipuram, as LPG godown; and that the entire process pertaining to selection of LPG distributors for the two places in question is vitiated by malafides and extraneous considerations. The learned counsel further contended that the Corporation has failed to take appropriate action for cancellation of the selection of the contesting respondents even though the petitioners have furnished sufficient material to it in support of their stand that the selection is vitiated by fraud played by the contesting respondents in collusion with the Branch Manager of the Bank. Sri C.Ramachandra Raju, learned counsel for the contesting respondents, strenuously contended that the allegation that his clients have taken loans against the fixed deposits is false and without any basis. According to the learned counsel, there is nothing on record to prove that the contesting respondents have taken loans against the fixed deposits; and that, in the absence of any evidence in support thereof, it has to be presumed that the loans are secured by his clients under separate transactions unconnected with the fixed deposits. Alternatively, the learned counsel contended that even assuming that the loans were taken against the fixed deposits, the Corporation has not stipulated any condition that the applicants should hold unencumbered deposits or that they should disclose the factum of their availing loans on the fixed deposits. He has further contended that under the Guidelines, FDRs., can be withdrawn on the expiry of three months and that the very fact that the contesting respondents have been continuing the deposits even at present and repaid the entire loan amounts on 24-2-2009 and 28-2-2009 respectively shows that they have adequate financial resources; and that there was no need for them to indulge in the alleged fraudulent act. The learned counsel placed heavy reliance on the counter-affidavit filed by Sri D.Jayanth, respondent No.4 in Writ Petition No.12738 of 2009, and submitted that in view of the conflicting stands taken by the Assistant General Managers and the Branch Manager of the Bank, in their respective counter-affidavits, the Court may summon the record before disposing of the Writ Petitions. Sri M.Narender Reddy, learned Standing Counsel representing the Bank, submitted that the contesting respondents made fixed deposits of Rs.18.00 lakhs each on 26-9-2007 in the Razole Branch of the Bank; that after obtaining the fixed deposits they have made requests to the then Branch Manager, on the same day of making the deposits, for Cash Key (overdraft) loan of Rs.16.00 lakhs each against the said fixed deposits; that, on such a request, the Branch Manager sanctioned Cash Key (overdraft) loan of Rs.16.00 lakhs to each of them; and that the contesting respondents, accordingly, utilized the loan amounts. The learned counsel further submitted that on receipt of the complaint in June, 2009 from the petitioners, the matter was investigated into and during investigation it was noticed that Sri B.S.R.Murthy, the Branch Manager, issued two sets of letters dated 14-2-2009 and 9-6-2009 addressed to the officials of the Corporation confirming the fixed deposits made by the contesting respondents and further stating that no loans were sanctioned against the said deposits from that date; and that the relative TDR receipts were with the depositors. The learned counsel further stated that during investigation it was found that the said letters issued by the Branch Manager were incorrect as the contesting respondents have availed Cash Key (overdraft) loans against the fixed deposits on 26-9-2007; and that, in view of noticing of the said irregularities, disciplinary proceedings were initiated against both the Branch Managers and the same are pending. THE RELEVANT CLAUSES: Before adverting to the rival submissions of the learned counsel for the parties, it is necessary to notice the relevant Clauses in the Guidelines. Clause 14 provides for Norms for Evaluating the Candidates, by applying the following parameters: “a) Capability to provide infrastructure* 35 marks. b) Capability to provide finance* 35 marks c) Educational qualifications** 15 marks d) Age** 4 marks e) Experience 4 marks f) Business ability/acumen 5 marks g) Personality** 2 marks Total marks: 100 marks” With reference to each of these parameters, the method of evaluation is prescribed in Clause 14.1. The parameters pertaining to “capability to provide finance” is relevant for the purpose of disposal of these cases and the said Clause, with regard to these parameters, is reproduced hereunder: Parameter Sub Head Description Sub-total maxim marks Max Marks 35 Evaluation Capability o provide inance Financially sound Funds. a) Amount in Savings accounts in Bank (as on date of application). b) Free and unencumbered fixed deposits in scheduled banks or any other documents/resource which can be readily converted to liquid cash to cover working capital/infrastructure requirements (as on date of advertisement) 18 Based on the information given in the application PDs/NSOs/Shares/any other investment bonds in the name of self or family members as defined above under relationship clause). A w a r d 0.1 marks on every unit of Rs.10,000/- or more in multiples of Rs.10,000/- and amounts less than complete unit of Rs.10,000/- will not be considered for award of marks. Maximum marks 18. Rs.18,00,000 & above 18.0 (Emphasis supplied) Clauses 4.5 and 23 of the Guidelines are as under: “4.5. DISQUALIFICATION: The following are not eligible – a) Persons convicted or against whom charges have been framed by a court of law for any criminal offence involving moral turpitude/economic offences (other than freedom struggle). b) Totally paralysed, mentally unsound ant Totally Blind persons. c) Signatory to agreement of a distributorship/dealership of any oil company terminated on the grounds of adulteration/malpractice in the past. d) If any person is allotted the distributorship by giving wrong information or by suppression of information, it will be cancelled”. “23. FURNISHING OF FALSE INFORMATION: e) If any information furnished by the applicant is found to be false at any point of time before or after appointment as a dealer, the allotment will be cancelled forthwith and distributorship terminated in case commissioned”. (Emphasis supplied). ANALYSIS: Before delving into the most contentious issue as to the nature of the loans obtained by the contesting respondents, I would like to deal with the submissions made by the learned counsel for the contesting respondents that the Corporation’s Guidelines do not stipulate making of unencumbered fixed deposits and that his clients were not under an obligation to disclose the encumbrances made on the fixed deposits. In my opinion, this submission completely overlooks Clause 14.1, as reproduced hereinabove. Out of sub-total maximum marks of 35, allotted under the head “Capability to provide finance”, 18 marks are allotted for the deposits contained either in “savings accounts in Bank” or “free and unencumbered fixed deposits in scheduled banks or any other documents/resource, which can be readily converted to liquid cash to cover working capital/infrastructure requirements as on date of advertisement”. The maximum deposit on which the marks are allotted is stipulated as Rs.18.00 lakhs with 0.1 marks prescribed on every unit of Rs.10,000/- and more. A proper analysis of this Clause reveals that the deposits in the Bank are intended to cover the working capital/infrastructure requirements. These deposits were required to be free and unencumbered as on the date of advertisement in case of fixed deposits or any other resource which can be readily converted into liquid cash. It is, therefore, incumbent upon every applicant to hold unencumbered fixed deposit. If there is no restriction regarding encumbrance on deposits, as contended by the learned counsel, the very purpose of stipulating deposits as one of the parameters for awarding the marks will be rendered otiose. After all, an applicant’s capability to provide finance, which undoubtedly is one of the basic requirements for running distribution agency, is judged by his financial soundness, which, in turn, is decided on the cash, which he holds at the relevant point of time, viz., as on the date of advertisement, in case of fixed deposits. Therefore, I find no merit, whatsoever, in the submission of the learned counsel for the contesting respondents that there is no stipulation of unencumbered fixed deposits. Equally fallacious is the contention of the learned counsel for the contesting respondents that there was no need for his clients to inform the Corporation about their obtaining loans on the fixed deposits. As the eligibility to obtain marks is conditional upon the applicant providing for free and unencumbered fixed deposits, it is implied therefrom that every applicant should inform the Corporation of encumbrances, if any, on the fixed deposits held by him. Unless such information is furnished by the applicant, the deposits will be treated as free and unencumbered fixed deposits qualifying the applicant for award of marks, which he would not be entitled to on account of encumbrance created on the fixed deposits. There can, therefore, be no doubt that non- disclosure of encumbrances on fixed deposits not only constitutes suppression of material information but also furnishing of wrong and false information within the meaning of Clauses 4.5(d) and 23 of the Guidelines. With the above findings, let me now consider whether the deposits held by the contesting respondents are free or encumbered. The petitioners in their affidavits specifically averred that the contesting respondents have availed overdraft facility and obtained loan of Rs.16.00 lakhs each against the said deposits and by misleading the respondents got full marks of 18 and that thereby subverted the whole selection process. In Writ Petition No.9925 of 2009 the contesting respondent, in her counter-affidavit, while denying the said allegation stated as under: f) “Para 3. I submit that the allegations of the petitioner that the respondents colluded with each other and decided to allot the distribution-ship in my favour is totally false and untenable. I have made fixed deposit of Rs.18,00,000/- with the 3rd respondent bank on 26-9-2007 and it has been renewed from time to time and the fixed deposit is still continuing even till today with the 3rd respondent Bank. The said fixed deposit is free from any encumbrance. The allegation of the petitioner that I have taken loan from the 3rd respondent bank against the said fixed deposit is totally false and untenable. In fact, I have taken the loan on 26-9-2007 from the 3rd respondent bank independently on a separate Account No.30250086749 and I have repaid the total amount of loan on 24-2-2009. The said loan has nothing to do with my fixed deposit. Had I taken loan against the fixed deposit, the 3rd respondent bank would have taken my FDR at the time of taking loan and would have kept it with the bank till discharge of the loan. In fact, the bank did not take my FDR at the time of taking loan and never kept my FDR with them. My FDR has been always with me and that itself indicates that I had not taken the loan as against my fixed deposit. The bank had granted me loan on the strength of my financial capacity and my reliability. The crucial fact is that I have repaid the loan and my fixed deposit is still continuing with the bank. This fact itself proves beyond any doubt that I have got such a financial capacity to discharge the loan without encashing the fixed deposit and my fixed deposit is free from encumbrances”. (Emphasis added). The contesting respondent in Writ Petition No.12738 of 2009 has taken an identical stand in paragraph 3 of his counter-affidavit. They have maintained that they have taken the loans independently and the loans have nothing to do with the fixed deposits. As against this stand of the contesting respondents, Sri Y.V. Ramana Murthy, Assistant General Manager of the Bank, Region-IV, Administrative Unit, Visakhapatnam, who was also controller of the ADB branch of State Bank of India at Razole, filed a counter-affidavit in Writ Petition 9925 of 2009. In paragraph 4 of the said counter-affidavit he has stated as under: g) “Para 4. I respectfully submit that the 4th respondent on 26-9- 2007 made a fixed deposit of Rs.18 lakhs with the State Bank of India, Razole ADB Branch, and the Bank issued a term deposit receipt No.0414306 with account No.30249779318 in the name of the 4th respondent. After obtaining the said fixed deposit receipt from the Bank, the 4th respondent made a request to the then Branch Manager on the very same day for a Cash Key (overdraft) loan of Rs.16 lakhs against the said fixed deposit receipt. On such request of the 4th respondent, the Bank sanctioned on 26-9- 2007 the Cash key (overdraft) loan of Rs.16 lakhs to the 4th respondent vide account No.30250086749 and the 4th respondent utilized the loan amount”. (Emphasis added). He has further stated in paragraph 5 that on the complaint made by the petitioner, the matter was investigated and it was noticed that the information furnished by Sri B.S.R.Murthy, Branch Manager, in his two letters dated 14-2-2009 and 9-6-2009 was incorrect for the reason that the contesting respondents availed Cash Key (overdraft) loans against the fixed deposit receipts on 26-9-2007. It has also been stated in the counter-affidavit that after noticing the irregularities/lapses committed by the two Branch Managers viz., D.Jayanth and Sri B.S.R.Murthy, disciplinary proceedings were initiated and the same are in progress. Sri P.Lakshminarayana, Assistant General Manager, State Bank of India, Circle-Vigilance Department, Local Head Office, Hyderabad, filed a counter-affidavit in Writ Petition No.12738 of 2009, wherein an identical stand has been taken. Sri D.Jayanth, the Branch Manager, who sanctioned loan of Rs.16.00 lakhs each to the contesting respondents and was impleaded in his personal capacity as respondent No.4 in Writ Petition No.12738 of 2009, filed a separate counter-affidavit and in paragraphs 4 and 6 thereof he has stated thus: “ Para 4: It is respectfully submitted that as per the records of the Branch the deposits in respect of which the above referred writ petition is filed, discloses that Sri Sagi Siva Ramakrishna Ravi Varma made a deposit of Rs.18.00 lakhs on 26-9-2007 with account No.30249770676. The deposit was perpetually renewed. The deposit is still available with the current balance of Rs.19,42,801/- with the same account number. The said Sri Sagi Siva Ramakrishna Ravi Varma availed a overdraft facility of Rs.16.00 lakhs on 26-9- 2007 and the same was subsequently repaid on 28-2-2009 completely and no loan is outstanding against the said deposit. It is further submitted that Smt. Penmetsa Santhi made a fixed deposit of Rs.18.00 lakhs on 26-9-2007 with account No.30249779318. The deposit was perpetually renewed. The Deposit is still available with the current balance of Rs.19,42,801/- with the same account number. Smt.Penmetsa Santhi availed a overdraft loan facility of Rs.16.00 lakhs on 26-9-2007 which was subsequently repaid on 24-2-2009 completely and as on date there is no loan outstanding against Smt. Penmetsa Santhi”. h) “Para 6. It is humbly submitted that M/s. Indian Oil Corporation Ltd., addressed a letter to the Bank on 5-6-2009 confirming that the representative of the company visited the branch, verified the records and satisfied that the 18.00 lakhs deposit is still available and a sum of Rs.16.00 lakhs was given as a loan against the deposits. The Corporation therefore requested the Bank to submit its present status report in respect of the deposit. The respondent Bank replied on 9-6-2009 confirming that the deposit account is still continuing and there is no encumbrance existing on the same”. (Emphasis added). Placing heavy reliance on the counter-affidavit of respondent No.4, the learned counsel for the contesting respondents argued with vehemence and considerable emphasis that the said counter-affidavit supports the case of the contesting respondents that they have not availed loans on the fixed deposits. He also argued that while the Assistant General Managers of the Bank in their counter-affidavits stated that the contesting respondents were sanctioned “Cash Key (overdraft) loan” of Rs.16.00 lakhs each, the Branch Manager did not support the said stand and has merely stated that the contesting respondents have availed the overdraft loan facility. The learned counsel strenuously persisted that in view of this variation in the stands between the two officers of the Bank, summoning of the Bank record is essential. He has even gone to the extent of submitting that this Court cannot close the hearing of the cases until the Bank record is summoned and he is given an opportunity of advancing further arguments after he is permitted to peruse