Case: V. Purushotham Rao Vs. U.O.I.

fail to understand how a contention could be raised that the whole procedure adopted is vitiated for non-compliance of the procedure under Order I Rule 8, CPC. The object of Order I Rule 8, CPC is to give notice to persons likely to be affected by litigation, so that they may be heard. If the Court would have directed issuance of notice under Order I Rule 8, CPC without giving individual notice to the allottees to show-cause why the allotment will not be cancelled, then that perhaps would have been an infraction and violation of the principle of natural justice. But in this case, each and every allottee had been duly noticed, they have filed their replies to the notices, they have availed of the opportunity of examining the original file, wherein the case of discretionary allotment had been dealt with and it was only after hearing them that the orders of cancellation had been passed. We have, therefore, no hesitation in answering this question that there was no requirement of following the procedure under Order I Rule 8 nor can it be said that the entire exercise is vitiated. 26. So far as the eighth question is concerned, it was repeatedly argued before us by several Counsels that the concerned Minister was not required to verify and since the order of allotment stipulates that the Oil Company would verify before granting the agency in question that itself is a good verification and, consequently, the High Court was in error in cancelling the allotment on the ground that there had been no proper verification. It is no doubt true that the Minister having exercised his discretion and allotting a particular agency in favour of the applicant, has required the Oil Company to make necessary verification before entering into an agreement with the allottee, but that verification supposed to have been done by the Oil Company has nothing to do with the materials on which the subjective satisfaction of the Minister was arrived at for exercise of his discretion in favour of any individual for any justifiable reason. When a State property as distinct from a private property is being dealt with by a Minister then it is of paramount importance that such public property must be dealt with for public purpose and in the public interest. The disposal of a public property undoubtedly partakes the character of a trust and, therefore, in the matter of such disposal, there should not be any suspicion of a lack of principle. The exercise of discretion must not be arbitrary or capricious or for any extraneous considerations. It is in that context when the Court was examining each and every individual case of discretionary allotment, the Court was trying to find out whether there existed some materials, on the basis of which the Minister could be said to have arrived at his subjective satisfaction for exercise of his discretion in favour of the applicant. It is the so-called satisfaction of the Minister for exercise of his discretionary power and making the grant that was being examined and scrutinized by the Court and only when the Court found that there had been absolutely no materials or that Minister had made the grant without making any inquiry or verification, that the Court had interfered with the allotments in question, obviously on a conclusion that such allotments had been arbitrarily made. The subsequent inquiry supposed to have been conducted by the Oil Company cannot replace the pre-conditions for exercise of discretion by the Minister. If the initial order of allotment by exercise of discretion is vitiated on the ground of absence of any materials or verification by the concerned authority who has exercised the discretion, then the so-called subsequent inquiry by the Oil Company which operates in different fields cannot make the so-called arbitrary order of the Minister a legal or just order. This being the position, we see no force in the submission made by the Counsel appearing for the appellants in this score. The same accordingly stands rejected. 27. The next question which arises for consideration is whether the judgment of this Court in Civil Appeal No. 6840 of 2001 and principles evolved therein can be applied to the case in hand, so as to protect the allotments already made under the discretionary quota. The aforesaid case no doubt was a case of allotment of land by the Chief Minister of a State in the State of Haryana. The High Court of Punjab and Haryana by its order dated 20th January, 1988 disposed of the case of S.R. Dass v. State of Haryana, 1988 Punjab Law Journal page 123, under which it formulated certain principles on which the discretionary allotments could be made with certain conditions. The so-called discretionary allotments made by the Government and HUDA, pursuant to the earlier judgment of Punjab and Haryana High Court were sought to be assailed as being contrary to certain stricter principles, which were evolved in the case of Anil Sabharwal which stood disposed of on 5.12.1997. This Court in the appeal in question held that the stricter scrutiny required to be made as per the guidelines evolved in Anil Sabharwals case, must be made applicable to the period subsequent to the judgment viz. 5.12.1997 and allotments made between 1988 and 1997 in accordance with the principles and guidelines indicated in S.R. Dass case, were protected by applying the principle of prospective application, so far as the judgment in Anil Sabharwals case. We fail to understand how the aforesaid principle can apply to the case in hand where the allotments made prior to the judgment of this Court in Centre for Public Interest Litigation, 1995(3) Supp. (3) SCC 382, are the subject matter of scrutiny and had been made indiscriminately, as there had been no guiding principle for making such allotments. Consequently, the principles evolved in Civil Appeal No. 6840 of 2001, will have no application at all to the present appeals. The said contention, therefore, must fail.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]According to the learned Counsel, the three-Judge Bench accepted the contention of the applicability of principle of constructive res judicata and, therefore, this Bench being a two-Judge Bench must be bound by the said observations or in the alternative, may refer the matter to a Larger Bench. We are not in a position to accept either of these submissions. It may be stated at the outset that the three-Judge Bench was concerned with the review petition that had been filed in relation to the order dated 4.11.1996 since reported in 1996(6) SCC 593. The learned Judges committed an error in the beginning in thinking that the review petition filed by Capt. Satish Sharma, was in relation to both the judgments viz. 1996(6) SCC 530 as well as 1996(6) SCC 593. In the review petition, the Court was concerned with the correctness of the directions contained in the order dated 4.11.1996 to institute criminal prosecution against the concerned Minister and levy of penalty as exemplary damages to the tune of Rs. 50 lacs. It is in that context the Court made the aforesaid observations not noticing the fact that in 1996(6) SCC 530, the Court had earlier directed the High Court to dispose of the two writ petitions pending in the High Court and decide the legality of the order of discretionary allotment made by the concerned Minister. It is indeed interesting to notice that in paragraph 125 of the judgment of the three-Judge Bench, the Court itself had indicated that the conduct of the concerned Minister in making allotments of petrol outlets was atrocious and reflects a wanton exercise of power by the Minister. But what the Court wanted to examine and ultimately held was that the said action fell short of ‘misfeasance in publicwhich is a specific tort and the ingredients of that tort were not wholly met in the case, so that there was no occasion to award exemplary damages. It would be indeed a travesty of justice to accept the submission of the Counsel for the appellants that the three-Judge Bench expressed opinion that the principle of constructive res judicata would apply to the case in hand, so as to debar the High Court from entertaining the writ petitions and disposing them of on merits. As we have already noted, prior to the three-Judge Bench judgment of this Court, the self-same order of the Delhi High Court had been assailed in as many as 79 cases by approaching this Court by way of special leave petitions and all those petitions had been dismissed20. The extent to which corruption in the governing structure has corroded the very core of our democracy, the notoriety which the discretionary allotment of petroleum dealership and LPG gas agencies had acquired, the earlier petition under Article 32 entertained by this Court at the behest of the Common Cause, the cancellation of 15 of such allotments and finally, the express direction therein to the High Court to dispose of the pending writ petitions after examining the individual cases, it is difficult for us to accept the bar of principle of constructive res judicata on the ground that the earlier judgment in the case of Centre for Public Interest Litigation has accorded any tacit approval or the subsequent so-called observation made in the three-Judge Bench decision of this Court in the review petition. We, therefore, unhesitatingly hold that the aforesaid contention is devoid of any substance21. The third contention was seriously argued by Mr. Sharma, the learned Counsel appearing for the appellant in Civil Appeal No. 3106 of 2000. The learned Counsel very much emphasised that Common Cause v. Union of India (supra), has been over-ruled and, therefore, nothing survived for Delhi High Court to examine the legality of the allotments made under discretionary quota. This argument appears to have been made on the basis of the Head Note at page 671 of the reported judgment with reference to paragraph 123 of the judgment. But when we examine paragraph 123 of the judgment, we do not find anywhere that the three- Judge Bench had in fact over-ruled the judgment in Common Cause case, 1996(6) SCC 530. On the other hand, in paragraph 125 it affirms the earlier conclusion that the conduct of the Minister was wholly unjustified. Then again, the review petition itself, as already stated, had been filed by Capt. Satish Sharma, the then Minister only in relation to the order and direction dated 4.11.1996 since reported in 1996(6) SCC 593. In this view of the matter, we find no substance in the aforesaid contention raised by Mr. Sharma, appearing for the appellant in Civil Appeal No. 3106 of 2000. We have therefore no hesitation in rejecting the same22. So far as the fourth question is concerned, it is no doubt true that the three- Judge Bench decision of this Court, reviewing the direction in the Common Cause case, so far as order dated 4.11.1996 is concerned, is subsequent to the disposal of the writ petition by the Delhi High Court, but we do not find any justification for requiring the Delhi High Court to re-consider the appeals in the light of the observations made by the three-Judge Bench judgment of this Court inasmuch as in the said judgment this Court was merely concerned with the directions to register a criminal case and prosecute the concerned Minister, if he is found to have committed any criminal offence and levy of exemplary damages to the tune of Rs. 50 lacs. Consequently, any observation made in that regard will have no bearing on the merits of the individual allotments, which were the subject matter of consideration in the two writ petitions before the Delhi High Court. We, therefore, do not find any substance in the aforesaid submission made on behalf of the appellants23. So far as the fifth question is concerned, it is no doubt true that the appellants have invested considerable amount in the business and have operated for about eight years but even on equitable considerations, we do not find any equity in favour of the appellants. The conduct of the Minister in making the discretionary allotments has been found to be atrocious, in the very three-Judge Bench decision of this and in relation to similar allotments made by the said Minister in favour of 15 persons, who were respondents in the Common Cause case. This Court came to hold that the allotments of the public property has been doled out in arbitrary and discriminatory manner and the appellants had been held to be beneficiaries of such arbitrary orders of allotments. The question of granting the allottees relief on an equitable consideration did not arise at all, for the same reasons in a case like this, a sympathetic consideration on the ground of equity would be a case of misplaced sympathy and we refrain from granting any relief on any equitable consideration. In our view, the appellants do not deserve any equitable consideration24. So far as the sixth question is concerned, we have examined the judgment of Delhi High Court in the case of each individual appellant. We have also considered the questionnaire that had been evolved and also the replies to the show-cause notices that had been filed by the allottees. We have also considered the original applications that had been filed by these appellants and the orders of allotment made by the concerned Minister, wherever they are available on record as well as the recommendations and circumstances leading to the exercise of discretion. The impugned judgment also indicates that in each and every case, the High Court had considered the original file, dealing with the allotments in question and it cancelled only those allotments where there was not an iota of material in support of the claim made by the applicant, whereas it sustained several other cases of discretionary allotments made during that period, wherever materials were available in the original file. It is difficult for us to come to a conclusion that the conclusion of the High Court in the cases in hand can be said to be vitiated on account of non-consideration of any germane materials. Factually, we do not have any basis to come to the aforesaid finding. On the other hand, we are satisfied that the High Court has applied its mind to each and every individual case of discretionary allotment and cancelled only those, which it came to hold to have been arbitrarily granted without any inquiry and only on being persuaded by certain recommendations of high dignitaries and without verification of any materials. We, therefore, see no infirmity with the ultimate conclusion of the High Court, cancelling the allotments in favour of the appellants, so as to be interfered with by this Court25. So far as the seventh question is concerned, it is Mr. Bhandari, who argued with vehemence that non-issuance of notice under Order I Rule 8, CPC by the High Court before deciding the legal issues by its order dated 22.8.1997, has vitiated the entire proceedings and, consequently, the order of cancellation must be set aside by this Court. According to Mr. Bhandari, in a matter like the present one, unless the Court directs issuance of notice by publication in a newspaper, following the procedure under Order I Rule 8, CPC and all the affected persons get an opportunity to appear and made their submissions, before the Court formulates the legal position and answers them, the subsequent notice to different persons like the appellants is nothing but a compliance of paper formality and such procedure adopted has grossly prejudiced the appellants. We, however, are not persuaded to accept this submission. The provisions of Order I Rule 8, CPC get attracted when there are numerous persons having the same interest, are sued or sue and the Court can permit such a suit to be defended by adopting the procedure under Order I Rule 8, CPC. In the case in hand, the writ petition that had been filed was in fact a petition in public interest, where the allegations were that the concerned authority had been involved in large-scale allotments of retail outlets in petrol, gass and kerosene, arbitrarily and for extraneous considerations without having any guidelines for such allotments and as such it tantamounted to disposal of public property in a manner which is shocking to conscience. By the time when the High Court went into those allegations in the two petitions filed, this Court had taken the view that such allotments had in fact been made arbitrarily and contrary to the public interest and this Court directed the High Court to dispose of the pending proceedings in accordance with law. The High Court, on receipt of the names of the allottees during a specified period from the Union Government, issued notice to each and every such allottee, who had been allotted out of the discretionary quota of the concerned Minister and granted opportunity to each of such allottee to inspect the relevant file dealing with the allotment in his/her favour and then heard the said allottee before passing the final order, either discharging notice of cancellation or cancelling the allotment made. In this view of the matter, we hardly find any justification in the submission of Mr. Bhandari that the entire proceedings are vitiated as notice under Order I Rule 8, CPC had not been given. If the allottee like the appellant whose allotment has been cancelled by the impugned order, had the opportunity of examining the materials on the file of the Government, wherein his case of allotment has been dealt with and had the opportunity of filing his show-cause, pursuant to the notice of cancellation that had been issued and the allotment in his case having been cancelled on the ground that the concerned Minister did not make any verification with regard to the necessary criteria indicated in the application for discretionary allotment, we fail to understand how a contention could be raised that the whole procedure adopted is vitiated for non-compliance of the procedure under Order I Rule 8, CPC. The object of Order I Rule 8, CPC is to give notice to persons likely to be affected by litigation, so that they may be heard. If the Court would have directed issuance of notice under Order I Rule 8, CPC without giving individual notice to the allottees to show-cause why the allotment will not be cancelled, then that perhaps would have been an infraction and violation of the principle of natural justice. But in this case, each and every allottee had been duly noticed, they have filed their replies to the notices, they have availed of the opportunity of examining the original file, wherein the case of discretionary allotment had been dealt with and it was only after hearing them that the orders of cancellation had been passed. We have, therefore, no hesitation in answering this question that there was no requirement of following the procedure under Order I Rule 8 nor can it be said that the entire exercise is vitiated26. So far as the eighth question is concerned, it was repeatedly argued before us by several Counsels that the concerned Minister was not required to verify and since the order of allotment stipulates that the Oil Company would verify before granting the agency in question that itself is a good verification and, consequently, the High Court was in error in cancelling the allotment on the ground that there had been no proper verification. It is no doubt true that the Minister having exercised his discretion and allotting a particular agency in favour of the applicant, has required the Oil Company to make necessary verification before entering into an agreement with the allottee, but that verification supposed to have been done by the Oil Company has nothing to do with the materials on which the subjective satisfaction of the Minister was arrived at for exercise of his discretion in favour of any individual for any justifiable reason. When a State property as distinct from a private property is being dealt with by a Minister then it is of paramount importance that such public property must be dealt with for public purpose and in the public interest. The disposal of a public property undoubtedly partakes the character of a trust and, therefore, in the matter of such disposal, there should not be any suspicion of a lack of principle. The exercise of discretion must not be arbitrary or capricious or for any extraneous considerations. It is in that context when the Court was examining each and every individual case of discretionary allotment, the Court was trying to find out whether there existed some materials, on the basis of which the Minister could be said to have arrived at his subjective satisfaction for exercise of his discretion in favour of the applicant. It is the so-called satisfaction of the Minister for exercise of his discretionary power and making the grant that was being examined and scrutinized by the Court and only when the Court found that there had been absolutely no materials or that Minister had made the grant without making any inquiry or verification, that the Court had interfered with the allotments in question, obviously on a conclusion that such allotments had been arbitrarily made. The subsequent inquiry supposed to have been conducted by the Oil Company cannot replace the pre-conditions for exercise of discretion by the Minister. If the initial order of allotment by exercise of discretion is vitiated on the ground of absence of any materials or verification by the concerned authority who has exercised the discretion, then the so-called subsequent inquiry by the Oil Company which operates in different fields cannot make the so-called arbitrary order of the Minister a legal or just order. This being the position, we see no force in the submission made by the Counsel appearing for the appellants in this score. The same accordingly stands rejected27. The next question which arises for consideration is whether the judgment of this Court in Civil Appeal No. 6840 of 2001 and principles evolved therein can be applied to the case in hand, so as to protect the allotments already made under the discretionary quota. The aforesaid case no doubt was a case of allotment of land by the Chief Minister of a State in the State of Haryana. The High Court of Punjab and Haryana by its order dated 20th January, 1988 disposed of the case of S.R. Dass v. State of Haryana, 1988 Punjab Law Journal page 123, under which it formulated certain principles on which the discretionary allotments could be made with certain conditions. The so-called discretionary allotments made by the Government and HUDA, pursuant to the earlier judgment of Punjab and Haryana High Court were sought to be assailed as being contrary to certain stricter principles, which were evolved in the case of Anil Sabharwal which stood disposed of on 5.12.1997. This Court in the appeal in question held that the stricter scrutiny required to be made as per the guidelines evolved in Anils case, must be made applicable to the period subsequent to the judgment viz. 5.12.1997 and allotments made between 1988 and 1997 in accordance with the principles and guidelines indicated in S.R. Dass case, were protected by applying the principle of prospective application, so far as the judgment in Anils case. We fail to understand how the aforesaid principle can apply to the case in hand where the allotments made prior to the judgment of this Court in Centre for Public Interest Litigation, 1995(3) Supp. (3) SCC 382, are the subject matter of scrutiny and had been made indiscriminately, as there had been no guiding principle for making such allotments. Consequently, the principles evolved in Civil Appeal No. 6840 of 2001, will have no application at all to the present appeals. The said contention, therefore, must fail