V. PURUSHOTHAM RAO

UNION OF INDIA AND ORS.

OCTOBER 19, 2001

[G.B. PATTANAIK AND RUMA PAL, JJ.]

Constitution of India, 1950 :

Article 226-Writ petition-Challenging the allotments of petrol pumps/ Gas agencies under the discretionary quota made by the Minister-High Court held, the discretion had been exercised on sufficient materials and "fter enquiry discharged the notice of cancellation-In other cases, found allotment made on some extraneous considerations/political patronage hence cancelled the allotment-On appeal, held, in one of the matter B, the Court issued guidelines to be followed while making discretionary allotments-Subsequently, in another matter on similar issue the Court cancelled allotments, on.finding, that Minister had made allotments without following guidelines and in a cluster manner and the public property doled out in wholly arbitrary and discriminatory manner.

Civil Procedure Code, 1908 :

Section ] ]-Explanation (IV) -Constructive res-judicata-Applicability of Principle of Constructive res-judicata-lt cannot be made applicable in each and every public interest litigation, irrespective of the nature of litigation.

Order 1, Rule 8-Issuance of notice-Procedure of-The objective to give opportunity to persons likely to be "ffected by litigation so ihat they may be heard-Each and every allottee had been duly noticed, availed of opportunity of examining the original file-Under the circumstances there was no requirement of issuing further notice.

Administrative Law :

Discretion-Exercise of-Verification by the Minister-The material on which subjective satisfaction of the Minister was arrived at-For justifiable G reasons-Inquiry by the Oil Company cannot make the arbitrary order of the Minister legal or just order-Public property-Must be dealt with for public purposes and in public interest.

Grant of relief to allottees-On equitable consideration~It is not appropriate as granting of relief on sympathetic consideration on the ground of H

A equity would be a case of misplaced sympathy-No infirmity with ultimate conclusion of High Court in cancelling the allotments.

Prior to 1995, the then Union Minister of Petroleum, in exercise of his discretion had been allotting retail outlets for petroleum products, L.P.G. dealership and SKO dealership without any prescribed norms. A PIL petition under Article 32 of the Constitution of India was filed praying for issuance of guidelines to regulate the exercise of discretion, in the matter of such allotment Accordingly, this Court issued guidelines which had been reported in 1995_ Suppl. (3) SCC 382.

'Common Cause' had also filed a petition on the same issue under Article 32 on the basis of a news item praying for cancellation of allotment made by the Minister concerned. This Court ultimately cancelled the allotment holding that the allotments were arbitrary, discrimintory, malafide and wholly illegal and also issued show cause notice to the Minister concerned as to why direction be not issued to police authority to register a case for criminal breach of trust or any other offence and why he should not be liable to pay damages for his malafide action. This decision was reported in 1996 (6) sec 530.

In the meanwhile, Centre for Public Interest Litigation filed Civil Writ Petitions on similar issues before Delhi High Court. Subsequently it filed Transfer Petition for transferring the matters to this Court On notice, affidavits had been filed by the Ministry of Petroleum. This Court held that since two Writ Petitions were pending before the Delhi High Court challenging the above said allotments, it was not necessary for this Court to transfer the petitions and decide the matter. However, directions were issued for transfer of the affidavits with enclosures to the High Court and for expediting the hearing of the Petitions by the High Court.

In the matter of Common Cause v. Union of India, the then Minister filed an affidavit. After hearing, the Court directed the CBI to hold an investigation after registering a case against the Minister and also imposed exemplary damage of Rs. 50 lacs on the Minister concerned. The judgment was reported in 1996 (6) SCC 593. Aggrieved, the then Minister filed a Review Petition which was allowed by a three-Judge Bench of this Court holding that the factors relevant to the exemplary damages had not been taken by the Court and consequently levy of penalty was not in accordance with law and that no case could be said to have been made out against the

V. PURUSHOTHAM RAO v. U.O.l. 413

Minister concerned for directing registration of a case and such direction could not have been given under Article 32 or Article 142; and such a direction would be contrary to the concept of right to life under Article 21.

Pursuant to the directions of this Court, Delhi High Court examined the relevant files dealing with allotments and came to the conclusion that these were not the cases of aberrations here or there but were cases which show a pattern of favouritism. Before the High Court, it had been contended on behalf of the allottees and the Government that the guidelines laid down by the Supreme Court had impliedly regularised the allotments made prior to 31st March, 1995 when this Court issued guidelines. Further the High Court constituted a Committee of Advocates, to examine all.the files and submit a report in a prescribed proforma. After discussing the matter.with the counsel for the parties the Committee submitted its report and subsequently notices were also issued to allottees. The allottees filed their reply, and the Court heard counsel for the parties, scrutinized the report by perusing the original files and finally disposed of the cases of about 100 allottees by holding that discretion had been exercised on sufficient material, discharged the notices of cancellation but in other cases the Court found that either there w"; re no material before the Minister concerned to justify the exercise of power for allotment or such allotment had been made on account of political patronage or some other extraneous considerations, and cancelled the allotments made. The High Court disposed of the remaining cases subsequently. These Orders of Delhi High Court cancelling the allotment made by the Minister from discretionary quota, have been challenged before this Court.

On behalf of the appellants it was inter alia contended that this Court issued guidelines which need to be followed by the Central Government in making discretionary allotment of retail outlets of petroleum products etc. which implied that the Court had approved earlier lapses in the matter of allotment under discretionary quota and, therefore, it was not open to the High Court to re-examine all the cases and decide the legality of the allotments; that in view of the observations of three Judge Bench Judgment in Common Cause v. Union of India, the plea of constructive res judicata should have been applied by the High Court; that the High Court

did not consider the material available on record; that the High Court discharged the notice of cancellation without ascribing any reasons; that verification can be effectively done by the Oil Company at site and not by H

the Minister and to hold that the Minister must verify the contents of 'the application, would be unreasonable; that even if the High Court found that there had been no verification then, it would have directed a fresh verification rather than cancelling the distributorship; that the main culprit being exonerated by the three Judge Bench of this Court, it would not be a fair deal to punish the allottees, particularly when they had made investments and earning their livelihood by operating the allotment in their favour; that compassion or a case of extreme hardship has all along been recognised a germane factor for exercise of discretion which has also been

reognised by the Court in the guidelines issued; that the discretion exercised being fair, reasonable and legal the same ought not to have been interfered by the High Court; that a three Judge Bench Judgment having overruled the earlier two Judge bench decision of this Court, High Court could not have set aside the allotment made, relying upon the two )"udge Bench Judgment of this Court.

On. behalf of the Centre for Public Interest Litigation it was contended that any illegal exercise of discretionary power is nothing but a misreading of the Judgment in Common Cause v. Union of India; that in Public Interest Litigation there is no adversial adjudication, the pripciple of constructive 'res-judicata ought not to apply; that the review petition was filed against the order of the Court directing institution of a criminal case and levying of exemplary damages on the Minister concerned; in that premise, any observation made by the three Judge Bench, in relation. to legality of the allotment made by the Minister from discretionary quota cannot be treated to be of any binding effect; that it would be unwise to interfere with the well reasoned decision of the High Court, when the High Court had examined all the files from the Ministry relating to allotment under discretionary quota.

Dismissing the appeals, the Court

HELD : 1.1. In the review petition, the three Judge Bench of this Court was concerned with the correctness of the directions contained in the order dated 4.11.96 to institute criminal prosecution against the Minister concerned and levy of penalty as exemplary damages. It is in that context the Court made the observations not noticing .the fact that in the matter of Common Cause, this Court had earlier directed .the High Court to dispose of the two Writ Petitions pending in the High Court and to decide the legality of the order of discretionary allotment made by the

V. PURUSHOTHAM RAO v. U.0.1. 415

Minister concerned. [441-A-B]

1.2. The Judgment of this Court in Centre for Public Interest Litigation, (1995) Supp. (3) SCC 382 cannot be construed by any stretch of imagination to be a tacit approval of the discretionary allotments made prior to that Judgment, since in the bmended petition, the petitioner, Centre for Public Interest Litigation had only prayed for laying down the guidelines to regulate exercise of discretion in the matter of allotment.

Moreover, when Common Cause had filed another petition under Article 32 alleging arbitrary exercise of directions in favour of 15 allottees and

this Court while disposing of the petition vide Judgment dated 25.9.96, cancelled all such allotments on a finding that the Minister without keep- C ing in view any guidelines allotted in exercise of his discretion in a cluster manner and the public property have been doled out in wholly arbitrary and discriminatory manner. [434-H; 435-A; 437-C-F]

S.R. Dass v. State of Haryana, (1988) Punjab Law Journal page 123, approved.

2. Civil Procedure Code is not required o be followed in a proceeding under Article 226 unless the High Court itself has made the provisions of Civil Procedure Code applicable to a proceeding under Article 226.

Then again, the principles of section 11 as well as Order 11 Rule 2, undoµbtedly contemplate an adversarial system of litigation, where the Court adjudicates the rights of the parties and determines the issues arising in a ginn case .. Public Interest Litigation of a petition filed for public interest cannot be held to be an adversarial system of adjudication and the petitionei: in such case, mert:IY brings it to the notice of the Court, as to how and in what manner the public interest is being jeopardised by arbitrary and capricious action o.f the authorities. [438-D-E]

3. The principle of consfructive res-judicata cannot be made applicable in each and every public interest litigation irrespective of litigation itself and its impact on the society and the larger public interest which is being served. There can not be any dispute that in competing rights between the public interest and individual interest, the public interest would over-ride. [439-D-E]

Rural Litigation and Entitlement Kendra v. State of U.P., [1989] Supp. 1 sec 504, relied on.

SUPREME COURT REPORTS pool] SUPP. 4 S.C.R.

A Forward Construction, Co. and Ors. v. Prabhat Manda/, AIR (1986) SC

391, referred to.

4. The provisions of Order 1, Rule. 8 C.P.C. get attracted when there are numerous persons having the ame interest, are sued or sue and the Court can permit such a suit to be defended by adopting the procedure under Order 1, Rule 8 CPC. In this case, the writ petition was in fact a petition in public interest, and the allegations were that the concerned authority had been involved in large scale allotment of retail outlets in petrol, gas and kerosene, allotted arbitrarily and for extraneous considerations without having any guidelines for such allotments and as such it C tantamounted to disposal of public property in a manner.which is shocking to conscience. The object of Order 1, Rule 8 C.P.C. is to give notice to persons likely to be affected by litigation, so that they may be heard. In this case, each and every allottee had been duly noticed, they have filed their replies, they have availed of the opportunity of examining the original rde D and it was only after hearing them that the Orders of cancellation had been passed. Therefore, there was no requirement of following the procedure under Order 1, Rule 8, nor can it be said that the entire exercise is vitiated. (444-B-D; 445-B-C)

5.1. It is no doubt true that the Minister having exercised his discretion E and allotting a particular agency in favour of the applicant, has required the oil company to make necessary verification before entering into any agreement with the alfottee, but this verification 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 justifiable reasons.

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 public interest. The disposal of public property undoubtedly partakes the character of a trust and therefore in a matter of such disposal, there should not be any suspicion of lack of principle. The exercise of discretion must not be arbitrary or capricious or for any extraneous c.onsideration. The subsequent inquiry supposed to have been conducted by the oil company cannot replace the pre-conditions for exercise of discretion by the Minister. (445-E-G; 446-B]

5.2. If the initial order of allotment by exercise of discretion is initi- H ated on the ground of absence of any material on verification by the con-

V. PURUSHOTHAM RAO v. U.0.1. 417

cerned authorjty, who has exercised his discretion, then subsequent inquiry A by the oil company while operates in different fields cannot make the so called arbitrary order of the Minister a legal or just order. [446-B~C]

. 6. The question of granting relief to the allottees on an equitable consideration did not arise at all. In a case like this, sympathetic consideration on the ground of equality would be a case of misplaced sympathy and this Court refrains from granting any. relief on any equitable consideration. [ 443-B]

7. The High Court has applied its mind to each and every individual

case of discretionary allotment and cancelled only those allotments which C have been arbitrarily granted without any inquiry on being persuaded by certain recommendations of High Court dignitaries and without verification of any materials. Therefore, there is no infirmity in the ultimate conclusion of the High Court, cancelling the allotments in favour of the appellants, so as to be interfered with by this Court. [434-H] D

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3100 of 2000.

From the Judgment and Order dated 10.9.99 of the Delhi High Court in C.W.P. No. 4003 of 1995

WITH

C.A. Nos. 3104-05, 3089, 3090, 3117, 3097, 3102, 3086, 3106, 3085, 3094, 3099, 3103, 3092 and 3101 of 2000.

O.P. Sharma, V.A. Mohta, U.N. Bachawat, Dushyant A. Dav.e, M.C.

Bhandare, S.C. Maheshwari, G.L. Saaghi, T.L. V. Iyer and P.N. Misra, P; S.

Narasimha, G. Seshagiri, A. Raghunath, P. Sridhar, R.C. Gubrele, K.R. Gupta, Abhishek Atrey, Ms. Nanita Sharma, D. Rama Krishna Reddy, D. Bharathi Reddy, Sushi! K. Jain, P. Venugopal, K. J. John, Pranab Kumar Mullick, Rajiv Talwar, Swetank Shantanu, Mohan V. Katarki, Jaideep Gupta, Abhijeet Chatterjee, Ms. Rukhsana, S. Janani, A. Subba Rao, Ms. C.K. Sucharita, Ms.

Dr. Lax.mi Shastri, Gopal Singh, Rana Ranjit Singh, Irshad Ahmad, S.R. Bhat, R.K. Kapoor, B.R. Kapoor for Anis Ahmed Khan, B. Partha Sarthy, M.P.S.

Tomar; P.K. Chakraverti, K. Ram Kumar, B.K. Satija, Dhruv Mehta, Ms.

Shobha, Ms. Anu Mehta, S.K. Mehta, Ms. Rekha Palli, Pramod B. Agarwala,

A , Ms. Praveena GaUtaJI\, R. Nedumaran, H.K. Pri. S.K,. Puri, Rajesh sdvastava,

Ujjwal Banerjee, Anindita Gupta, Sanjeev ~- Kapoor, Vishal Gupta, Narinder K. Verma for Prashant Bhushan, Ms. Indra Swahney, C.V.S. Subba Rao, K. C . . Kaushik, B.V. Bairam Das, A.K. Raina, R.K. Bhartiya, Anil .K. Jha, B.R. Vig, Sanjay Kapur, K.K .. Gupta; Sanjay Sarin,.Ashok Mathur,.Jai Prakash Narayan B Gupta, Y. Raja Gopal Rao and S.U.K. Sagar for the appearing parties.

'ff

The Judgment of the Court was delivered by

. PATTANAIK, J. In this batch of appeals the judgment Qf Delhi High Court, cancelling the allotment made by the concerned minister from out of his s9called. discretionary quota on petroleum dealership , as well as LPG dealership is under challenge .. Prior to 1995, the Minister of Petrleum in exercise of his discretion h.ad been allotting retail outlets for petroleum products, LPG

dealerhip and SKO deaiershjp, without having any prescribd ~Qrms. . A Public Interest Litigation had been. filed in this Court by Centre for Public Interest Litigation under Article 32 of the Constitution, praying that .guidelines to regulate the exercise of discretion in the matter of such allotment, which results in exerCise of the discretion arbitrarily be fixed. It may be stated that initially a prayer ha~ also been made in that application to cancel the dealership in favour of respondent No. 4, but that prayer stood deleted and an amended petition was filed as the said respondent did not accept the dealership in question. This Court after hearing the counsel for the petitioner, and the learned Attorney General, issued a set of _guidelines fr discretionary allotment of petroleum products' agencies to ensure that the exercise of discretion in making such allotments are in conformity with the rule of law and by excluding the likelil, iood of arbitrariness and minimising the area of discretion. The said decision of this Court has since been reported in the case of Centre .for Public Interest Litigation v. Union o.f/ndia and Ors., i[l995] Supp.3 S.C.C. 382. In . para (4) of the aforesaid Judgent, the Court had directed as under :

, . . "We hereby direct that the above-quoted norms/guidelines etc. shail be followed by the Central Government in making all :; uch discretionary allotments of retail outlets for petroleum products, LPG Dealership and SKO Dealership, hereafter." '

The Common Cause had filed a petition under Article 32 on the basis of a news item which appeared in a national newspaper that the Minister of Petroleum

was personally interested in making allotment of petrol pumps in favour of 15 A persons, who were either the relations of his personal staff or sons of the Ministers, or sons/relations of the Chairman and Members of the Oil Selection Boards, praying for cancellation of allotments made inter alia on the ground that the allotments had been made by the concerned minister, ma/a.fide and the

decision is arbitrary and motivated by extraneous considerations. The Court B ultimately cancelled the allotments made in favour of the 15 persons mentioned in the petition, on a conclusion that the allotments are arbitrary, discriminatory, mala.fide and wholly illegal. The Court also issued certain other directions in relation to the allottees and called upon the concerned minister to show cause as to why a direction be not issued to the appropriate police authority to register C a case and initiate prosecution against him for criminal breach of trust or any other offence under law and in addition, why he should not be liable to pay damages for his ma/a fide action in , i1otting petrol pumps to 15. persons mentioned therein. This judgment of the Court is reported in [1996] 6 SCC 530.

While the Common Cause case was pending in this Court, Civil Writ D Petition Nos. 4003 and 4430 of 1995 had been filed in Delhi High Court by the Centre for Public Interest Litigation, as public interest litigation, which were pending in Delhi High Court. In those two petitions, allotment of petrol pumps/gas agencies to various persons during the period 1992-93, 1993-94, 1994-95 and 1995-96 had been challenged. A Transfer Petition had been filed in this Court, which was registered as Transfer Petition No. 127/96 and this Court had issued notice in the transfer petition and stayed further proceedings before the High Court. In an affidavit filed by the Ministry of Petroleum in the aforesaid transfer petition, the then Joint Secretary had stated that in 1995- 96 under the discretionary power of the Government, allotment had been made to 99 persons and further orders had already been made in favour of 61 more persons, allotting petrol pumps/gas agencies. One Mr. Srinivasan, Advocate had filed an affidavit giving a long list of persons who are related to the then Prime Minister/Ministers and other V.I.Ps and who had been allotted petrol

pumps and gas agencies. On behalf of petroleum ministry, an affidavit had

been filed, stating that due inquiry had been made through the oil companies. and after due inquiry, the concerned minister had made the allotment. This

Court ultimately held that since the two writ petitions are pending before the High Court, wherein the allotment made to all these persons have been chal~ lenged, it would not be necessary for this Court to get the writ petitions

transferred and decide the matter. The Court, therefore, vacated the stay order

granted and directed the Registry of the Court to' send all affidavits filed by the parties in the transfer petition along with the annexures to the High Court. The Court observed:

"We have no doubt that the High Court shall examine the issues involved in the writ petitions and shall also go into the validity of the . allotment of petrol pumps/gas agencies to various persons, after hearing them, in accordance with law. We request the High Court to expedite the heing of the petitions."

Pursuant. to the directions contained in the judgment of this Court in C Common Cause v. Union of India, [1996] 6 SCC 530," show cause notice having been issued to the then Minister Captain Satish Sharma, said Shri Sharma had filed an affidavit in reply to the show cause notice. The Court ultimately perused the show cause n.otice filed and after hearing the counsel apI>earing for the Minister, directed the CBI to hold an investigation, after D registering a case against the concerned minister in respect of the allegations dealt with and findings made by the Courtearlier in th_e Common Cause case.

On the question of liability of the minister to pay exemplary or compensatory damages, . the Court considered the matter and came to the conclusion that Captain Satish Sharma, the then minister would be liable to pay exemplary

damages and quantified the same at Rs. 50 lacs. This Judgment of the Court has been reported in [1996] 6 S.C.C. 593.

Pursuant to the directions of this Court in Common Cause case, [ 1996] 6 S.C.C. 530, the Delhi High Court took up the writ petitions which had een filed a.i; Public Interest Litigation by the Centre for Public Interest Litigation.

On ex; imination of the relevant files dealing with the allotment of retail outlets of pettol, LPG distributorship and SKO/LDO dealership under the discretionary quota made by the minister concerned, it was revealed that between January 1993 till 1996, 179 retail outlets (petrol pumps), 155 LPG distributorships and 45 SKO/DLO dealerships had been allotted by the concer.ned minister under the discretionary quota. In its order dated 29th of August, 1997, the Division Bench of Delhi High Court came to the conclusion that the examination of files clearly shows that these are not the ca::; es of aberrations here or there but are cases which show a pattern of favouritism. From the judgment of Delhi Hgh Court in C.W. 4003/95 dated 29.8.1997, it transpires that even before the

Supreme Court stayed the proceedings by order dated 6th December, 1995,

the High Court had called upon the. respondents by order dated 2nd November, 1995 to produce the list of allotments made under the discretionary quota of the petroleum minister for allotment of petrol retail outlets, LPG distributorship arid Kerosene distributorship from the date of the tenure of the minister which was 18th of January, 1993. Before the Delhi High Court, it had been contended by the allottees as well as by the Government that the judgment dated 31st March, 1995 of the Supreme Court laying down the guidelines, since reported in (1995) Supp. 3 S.C.C. 382 would indicate that the Supreme Court had implidely regularised the allotments made prior to 31st March, 1995 and consequently the validity of the said allotments need not be gone into. The High Court however was not persuaded to agree with the submissions and in our view rightly, particularly, when in the Common Cause case (1996) 6 SCC 530 this Court has psitively directed the High Court to examine the issues involved and dispose of the two pending writ petitions in accordance with law.

Since the allottees were required to be noticed before any decision is taken, the High Court by its order dated 11th Dec,:ember, 1996, constituted a Committee of three advocates and directed them tQ examine all the files and submit a report in a Proforma which had been prepared by the Court itself, after discussion with the counsel appearing for the parties. The said Committee submitted its report, on the basis of which the Court issued notices to various persons by its order dated 27th of February, 1997 and 20th of March, 1997 and the Court was to deal with the cases of about 400 allottees. Pursuant to the notices issued, the allottees filed their respective show causes and then the Court heard the respective counsel for the allottees as well as examined the report of the Committee and scrutinized the same by perusing the original file and finally disposed of the cases of abput 100 allottees by its judgment dated 29th of August, 1997.

The Court on examination of the materials before it and on perusal of the original files, appears to have taken the view in several cases that the discretion had been exercised on sufficient materials and after inquiry and held those allotments. to have been proper exercise of tlle discretion and accordingly discharged the notices of cancellation. But in those cases, where the Court found either there were no materials before the concerned minister in support of the applications filed to justify the exercise of power for allotment under the discretionary quota or such allotments had been made on account of political patronage or some other extraneous considerations, the Court cancelled the allotment made with certain directions therein. It would be apprbpriate at this stage to notice the observations of the High Court:

"It is unfortunate that perusal of the files show that a large number of persons to whom allotments were made under the discretionary quota belong to an affluent class of society and not the class which may deserve compassion, resulting in exercise of discretion in their favour.

Wpether this hrrge number of persons got allotment on accouht of their affluence or on account of their close proximity with. the powers that be, it may be difficult to say de.finitely, one way or the other but that makes no difference since both affluence and/or proximity; are irrelevant.and extraneous considerations for exercise of discretion."

The Court also came to the further conclusion that there had been no verification of the. statements made in the applications by the allottees _and hardly any application contains details of annual income or bio-data and hardly any person had filed iµiy affidavit in support of his claim, seeking grant of discretionary allotment and in several cases the applications even did not bear any data and a number of allottees belonged to one Parliamentary Constituency an.d were active members and supporters of the party in power at the relevant

tim~. The Court having cancelled the allotments made in favour of he appellants, who-e before us, the present appeals have been filed by grant of special leave'. . After the disposal of first batch of cases by the High Court by its judgment dated 29 .8:.1997, the High Court issued notices to some other allottees and disposed of the second batch of cases by its order dated 11.10.99 and both these orders of Delhi High Court are under challenge, so far as it relates to the cancellation of allotments made under the discretionary quota.

Captain Satish Sharma, who was the concerned minister and against whom the Court had directed registration of a criminal case by the C.B.I., and also levied penalty of Rs. 50 lacs, filecl a review petition against the aforesaid two directions of the Court, which was entertained and that review petition was allowed by a three Judge Bench of this Court, since reported in [ 1999] 6 S.C.C.

667. In the aforesaid case, this Court came to the conclusion that the factors relevant to the award of exemplary damages had not been taken by this Court and consequently the levy of penalty of Rs.50 lacs was not in accordance with law. The Court also held that no case could be said to have been made out against' the concerned minister for directing registering a case under Section 409 and such a direction could not have been given under Article 32 or under Article 142 and further, such a direction would be contrary to the concept of right to life under Article 21. The Court, therefore,; set aside the two directions

earlier made in relation to registering a criminal case and levy of penalty A against the minister. Certain observations had been made in the aforesaid three Judge Bench Judgment, which form the sheet anchor of one of the contentions of the appellants in the present batch of appeals and we will refer to those observations and deal with the same at appropriate stage. The aforesaid Judgment of the Court has since been reported in [ 1999] 6 SCC 667.


an error in paragraph (7) by noticing that the review petition relates to both the judgments viz. the Judgment dated 25.9.96 and 4.11.1996. Mr. P.P. Rao, the learned counsel, appearing in four of these appeals viz. Civil Appeal Nos. 3085, 3094, 3099 and 3092, seriously contended that th~ judgment of this Court in the Centre for Public Interest Litigation v. Union of India, [1995] F Supp. 3 S.C.C. 382 in no uncertain terms, stipulates that the norms and guidelines should be followed by the Central Government in making discretionary allotment of retail outlets of petroleum products, LPG distributorship and SKO dealership, subsequent to the said judgment which necessarily and impliedly indicates that the Court has approved the earlier lapses in the matter of such G allotment under discretionary quota and, therefore, it was not open to the High Court to re-examine all the cases and decide the legality of the allotments made under the discretionary quota.


SUPREME CO(JRT REPORTS

[2001] _SUPP. 4 S.C.R.

judicata. should have been applied by the High Court and the High Court committed error in rejecting the said contention. According to Mr. Rao, on a plain reading of the judgment of this Court in Centre for Public Interest Litigation case [1995] Supp. 3S.C.C. 382, the conclusion is irresistible (hat the Court in that case. had given its stamp of judicial approval t<:>. the d.iscretionmi . allotments had already been made by that date and it is for. that reason; the Court had indicated that the guidelines 'therein would b~ f()llciwed hereafter.

That being th_e position, not only that tl; le principle of constructive res-judic_ata .

would apply, but also it was not open for the.High Court to re"open and examine the legality of the discretionary allotmen.ts made. prior to 1995: .

Aceording to Mr. Rao, during the period when the aUotffientshad beer) made in favour of his clients, which is prior to the guiaeiines indicated by. this Court . in the Centre for Public Interest Litigation case, under the pre•exising practice and norms, the concerned minister having exercised the disc.1; etion1. the High Court committed serious error in interfering with th()se discretio!l~ orers of . allotment. Mr. Rao further urged tQat. the impugned judgment wollld indic; ate that there has been no due consideration of the show'-cal!se filed by the.alloUees and the materials referred to in the showcause have'noi b6en considerdby ' the High Court and, therefore, it would be a fit case where attet ~hould be remitted back to the High Court for re-consideration. According '.to Mf. Rao~ the discretion having been exercised .in favour of his>clients, who l:iappened to be political sufferers and a po Ji ti cal sufferer having been recognised as.a la5s/ ' category by themselves in the case ofD)I, Chanchala v. State'of'Afyfo; e and Ors. etc., [1971fSupp. S.C.R. 608 at 629, the High. Court committ¢ serious error of law in interfering with the allotmeQts ade in fa\lor of his clients and ' as such the impugned orders cannot be sustnd; Mr. R~~ . also urged' ; that allotments having been made in individualcases of extreme hardship' by the minister concerned and that being one of the norms wh.ich this C9titt fol1nu-_ .< lated in its guidelines in the case of Centre for Publit Intrest Litigation nd · the appellants having invested huge mony nd this beillg the oly source pf livelihood since 1993, the same ought not to have been cancelled,'partic~Jarly _ when. no public interest will be served by such cancellation.

Mr. P.S. Narasimha, the learned . counsel, appearing for the appellant in Civil A, ppeal No. 3100/2000, while supporting the arguments ofMr. Rao, further urged that all the necessary information was available with the High Court !Jut the Court never considered those materials nor did the Court inquire H into the correctness of those materials, as it would be apparent from the

affidavit of the appellant, filed pursuant to the notice of show-cause and also A the impugned order of the High Court dealing with the appellant's case. This being the position, Mr. Narsimha urged that the order of cancellation should be set aside and the matter should be remitted back to the High Court for reconsideration.

Appearing for the appellants in Civil Appeal Nos. 3104-3105 of 2000, Mr. Narsimha, the learned counsel urged that in these two cases, the concerned authority having exercised the discretion in favour of a young educated unemplOyed youth belonging to a back-ward community and his family being under financial constrnt, the conclusion of the High Court that it was a case of arbitrary allotment, is unsustainable in law.

Mr. V.A Mohfa, the learned senior counsel appearing for the appellant in Civil Appeal No. 3089/2000, urged that the allotment in favour of his client . had been made under discretionary quota as the family of the applicant had

been put to severe financial hardship on account of natural calamity on one D hand and the Naxalite activities on the other hand. According to the learned counsel, this must be held to be a germane consideration which weighed with the concerned authority for exercise of his discretionary power and, therefore, the High Court ought not to have cancelled. the allotment made in favour of the appellant.

Mr: Dushyant A. Dave, the learned senior counsel appearing for the appellant in Civil Appe!il No. 3090 of 2000 urged that. the only ground on . which the Higq Court has set aside the allotment made in favour of the appellant is that there had been no verification whatsoever regarding other members of his family and their sources of income before exercising discretion, and therefore; since the minister approved the allotment without any verification, the allotment is liable to be cancelled. According to Mr. Dave, the fact . that the order of allotment itself indicated that the 1.0.C. Ltd. would conduct requisite verifi<,:atiori before issuance of Letter of Intent, it cannot be said that

the order in question was without any inquiry. Mr. Dave urged that it is G nobody's case that the 1.0.C., on an inquiry came to the conclusion that the grant of distributorship in favour of the appellant on compassionate grounds was unjustified. That apart, the appellant himself had filed an affidavit before the High Court, indicating his family conditions and the fact that he had no resources and he had gathered the resources from friends, but the High Court H

A unfortunately over-looked these materials and directed cancellation of the allotment made in favour of the appellant. The learned counsel also urged that the order of the High Court would indicate that in case of several other notices, the High Court discharged the notice of cancellation without ascribing any reason and therefore, there was rio reason why the High Court should have B cancelled the allotment made in favour of the appellant. The learned counsel further urged that even if the High Court found that there had been no verification, then it would have been appropriate for the High Court to direct for a fresh verification, rather than cancelling the distributorship and the approach of the High Court is wholly uncalled for.

According to the learned counsel, c

the appellant's case being covered under the existing discretionary scheme, as was prevalent, and further even under the guidelines issued by this Court in the judgment reported in [1995] Supp. 3 S.C.C. 382, individual cases of extreme hardship which in the opinion of the Government are extremely compsionate and deserve sympathetic consideration being on~ of the criteria, there was absolutely no rhyme or reason on the part of the High Court to set aside the discretionary allotment made in favour of the appellant. He also reiterated the arguments advanced on behalf of Mr. Rao that the judgment of this Court in [1995] Supp. 3 S.C.C. 382 must be so construed, that allotments made under the discretionary quota ptior to the date of the said judgment were not intended to be interfered with and as such, the High Court had no jurisdiction to examine the allotment made in favour of the appellant, which was in 'the year , . 1993.


-..

matter should be remitted back to the High Court for reconsideration after due A inquiry.

In the written submission given by Mr. Bhachawat, learned senior counsel, in this case it was urged that prior to 31st March, 1995 there being no fixed guidelines for allotment under discretionary quota, the High Court was not B justified in cancelling the allotment which are not tainted by any favoritism or nepotism merely because there is no proof to support the allotment on compassionate ground, or that the application is undated, or there is no receipt entry on the application or even that there is no bio-data of the applicant. According to Mr. Bhachawat even judicial notice can be taken of the fact that Ministers hold open Darbar in which they meet people, hear their grievances and also solve their problems on the spot, therefore, the possibility of applications for allotment from discretionary quota having been received during such Darbars cannot be denied. Mr. Bhachawat also urged in his written submission that the concerned Minister, who is the author of the alleged wrong allotment having been given a clean chit by the three Judge Bench of this Court, since reported in [1999] 6 SCC 667 and the main culprit thus being exonerated, it would not be fair deal to punish the allottees, particularly when they have made investments and are earning their livelihood by operating the allotments made in their favour. He also reiterated on the question of applicability of the principle res judicata by stating that if the parties were the same and the relief sought for is identical then Explanation 6 to Section 11 should apply.

Mr. M.C. Bhandari, the learned senior counsel, appearing for the appellant in Civil Appeal No. 3101 of 2000, seriously contended that the appellant


A messages of freedom fighters and religious tolerance, having faced with acute financial stringency and said Karibasavaraj having died, the responsibility to maintain a large family fell on the appellant, who though a graduate, hd no job or employment. It is on this consideration; the then Chief Minister of Karnataka and. the then Vice President of India had recommended the case of B the appellant for being favourably considered for getting allotment under discretionary quota and ultimately the Minister, Petroleum had made the grant in favour of the appellant. The said allotment is neither arbitrary nor motivated nor vitiated by mala fides and as such the High Court was wholly in error in cancelling the allotment without proper examination of the aforesaid materials.

C According to Mr. Bhandari, the finding of the High Court that the minister has exercised his discretion without any verification, is on the face of it erroneous inasmuch as the order of allotment itself specified that the Letter of Intent could be issued only after requisite vefication. In fact such verification can be effectively done only by the Oil Company at site and not by the.Minister, sitting

in Delhi and to hold that the minister must verify the contents of the application, would be unreasonable and impracticable. Mr. Bhandari further urged that the so-called questionnaire which was formulated was behind the. back of the appellant and the records indicating that the appellant is related/connected to Mr. Veerapa Moily, the then Chief Minister of Karnataka is untrue. Mere rec:ommendation by the Chief Minister would not constitute any relationship and the conclusion therefore, is without any materials. According to the. learned counsel, the procedure adopted by the High Court, so far as the appellant is concerned, tantamounts to denial of a fair hearing and justice to the appellant inasmuch as even before serving the notice on the appellant on 15.4.1999, the High Court itself heard the first batch of cases and delivered its judgment on 29.8.97, answering all the questions of law, including the question of constructive res judicata. Mr. Bhandari urged that in a public interest litigation like the one, the High Court was duty bound to issue notice under Order 1 Rule 8 CPC so that persons likely to be affected, could have appeared before the High Court and made their submissions before the High Court prior G to its first order on 29.8.1997. Since the Court itself has come to a definite conclusion on several issues arising in the matter by its ::irder dated 29.8.97, the issuance of notice to the appel1ant was a mere formality to comply with the principles of natural justice and the ultimate disposal of the appellant's case by the High Court must be held. to be a disposal by the learned Judges who had H already made up their mind and this resulted in patent injustice. In support of .

....


B 3 sec 382 and that application also related to the allotment of retail dealership in petroleum, under discretionary quota and did not assail the allotments already made, then a second petition before the Delhi High Court was not entertainable. He also reiterated the argument that explanation 4 to Section 11 CPC should apply to the case in hand and in support of the same he placed C reliance on the judgment of this Court reported in AIR 1986 SC 391 at Page 397, para 20. The learned counsel with emphasis urged that it is no doubt true that discretion in public matters should be least but it cannot be totally denuded of, nor can any Court strike down the power exercised by an authority having discretion even in deserving cases. The exercise of discretion by an authority depends upon the independence and integrity of the individual exercising such discretion. Adjudged from any stand point, the allotment made in favour of the appellant in his case would not be a case of allotment on the ground of favouritism, nepotism and/or abuse of power and, therefore, the High Court committed serious error in cancelling the allotment made. According to Mr.

Bhandari, compassion or a case of extreme hardship has all along been recognised as a germane factor for exercise of a discretion. Even this has been recognised in the guidelines issued by this Court in [1995] Supp. 3 S.C.C. 382.

The allotment made in favour of the appellant being covered by the guidelines

(6) and (7) of the Judgment of this Court in [1995] Spp. 3 S.C.C. 382, it must be held that the discretion has been exercised in a fair, reasonable and legal manner and, therefore, the same ought not to have been interfered with by the


G 30 lacs and the entire family being dependent on the income derived from the agency, this Court should set aside the order of cancellation made by the Delhi High Court and follow the judgment of this Court dated 28th of September, 2001 in Civil Appeal No. 6840/2001 and batch, relating to allotment of land

from the discretionary quota in the State of Haryana.

SUPREME COURT REPORTS

[2001] SUPP. 4 S.C.R.

A Mr. Jaideep Gupta, the learned counsel, appearing for the appellant in Ci vii Appeal No. 3103 of 2000 contended that in his case, an eminent Member of Parliament, highly respected in the political sphere Smt. Gita l\1kherjee, since deceased, had herself filed an affidavit before the Delhi High Court, explaining the circumstances that led her to recommend the case of the appel- B !ant and the High Court even did not bother to notice the said affidavit filed by Late Smt. Gita Mukherjee and came to the conclusion that the Minister before exercising the discretion, did not himself verify about the source of income of the applicant and his family members. According to Mr. Gupta, if a Mmber of Parliament recommends the case of a citizen belonging to his/ c

her constituency and if the Minister acts upon such recommendations, it cannot be said that the Minister did not verify himself before exercising his discretion.

Mr. Gupta also urged that even before entering into the dealership agreement; the appellant had been extensively interviewed by the Chief Regional Manager and the Legal Officer of the company regarding his incoe and on being fully satisfied with the same and the aforesaid state of affairs having been made by the appellant on oath, which was not denied by anyone concerned, on the uncontroverted statement of the appellant, the High Court was not j, ustified in cancelling the allotment made on the ground as already stated. Mr. Gupta further urged that the agreement entered into between the appellant and the Oil Company itself contains power to terminate the dealership if it is found that the applicant had made any incorrect statement at the time of allotment of dealership. That being the position, it would be always open for the Oi! company to annul the dealership if it is found that the appellant had furnished any incorrect information. In the premises, it would be more i.>.ppropriate to direct the oil company to investigate into the matter, rather than to cancel the F allotment made. According to Mr. Gupta, the principles to be followed in a c'ase of cancellation of a grant should be different from the principles for determining the legality of a grant and, therefore, the High Court was wholly unjustified in cancelling the allotment made on the sole ground that the concerned minister had not made any inquiry before exercising his discretion. The G Ieared counsel also urged that the appellant has invested a huge ambunt of money and cancellation of the dealership at this point would cause untold hardship. To deprive of the appellant and his family of earning his livelihood at this length of time would not be in the. interest of justice and, therefore, this Court should set aside the order of cancellation passed by the Delhi High Court.

H Mr. Subba Rao, the learned counsel appearing for the appellant in Civil

Appeal No. 3097 of 2000 urged that the appellant, a widow was a destitute, having no source of income and the allotment made in her favour cannot but be held to be an allotment on germane consideration and, therefore, the High Court was wholly in error in cancelling the allotment solely on the ground that the minister accepted the statement made in the application as a gospel truth.

According to Mr. Subba Rao, it is nobody's contention nor has the High Court found as a fact that the statements made in the application for allotment are untrue and in such a case the discretion exercised ought not to have been interfered with on an hypothesis that the Minister committed an error in accepting the statement made in the application for allotment. In this case the source of livelihood from out of the agency is a source for the e?tire family.

According to Mr. Rao, this source ought not to be closed down, which would make the entire family destitute. Mr. Subba Rao in support of his contention placed rliance on a judgment of this Court in the case of Ram and Shyam Company v. State of Haryana and Ors., 1985 Supp.(1) S.C.R.541, whereunder this court noticed that there exists a clear distinction between .the use and disposal of private property and social property. While the Court observed in the aforesaid case that disposal of public property partakes the character of a trust in that in its disposal their should be nothing dubious, but this is subject to one important limitation namely that the socialist property may be disposed

at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve E that goals set out in Part IV of the Constitution. In this view of the matter, according to Mr; Subba Rao the discretion used by the concerned minister in favour of his client cannot be held to be illegal or invalid.

Mr. P. N. Misra, the learned senior counsel appearing for the appellant in Civil Appeal Nos. 3102/2000 and 3086/2000, strenuously urged that in the first appeal, the applicant had lost her husband in a road accident while she was of a young age of 32. She had two small school going children and to establish her in life for the maintenance of the young children it is her father-in-law who had made the application to allot her a retail outlet. The concerned Minister

had approved the case of allotment in favour of the applicant. In the other case, G on an application being made, an inquiry had been made from the ministry to furnish the bio-data which the applicant had furnished and on being satisfied with te materials furnished, the allotment had been made in favour of the applicant. According to Mr. Misra, these are two genuine cases and a case of pure compassion and as such the order of allotment ought not to have been H

interfered with. Be it be stated that the father-in-law, who had made the application for getting an allotment in favour of the applicant was none else than a Member of Parliament. According to Mr. Misra, the allotment letter clearly having stipulated that the allotment would be subject to verification to be made by the concerned oil company and the company itself having made the necessary verification, the High Court was not justified in interfering with the allotment made. According to Mr. Misra, the applicant was asked to furnish the bio-data, which the applicant did comply with and therefore, the conclusion that there were no material before the minister was incorrect. According to Mr. Misra, it is no doubt true that the father-in-law of the applicant was an M.P. since 1991 but the application was made only in 1994, after the unfortunate deaih of his son which is indicative of the fact that the father-in-law never misused his position. Mr. P.N. Misra also placed before us the counter affidavit filed on behalf of the Union Government in the Delhi High Court in some other allied matters and also the noting dated 5.5.93, which indicates as to how the application of the allottee is sent to the company concerned for verification of facts therein like income, residence, social status etc., and contends that the conclusion of the High Court that there had been no verification is unsustainable.

Mr. O.P. Sharma, the learned senior counsel, appearing for the appellant in Civil Appeal No. 3106/2000 reiterated the submissions made by all the counsel appearing before him and argued at considerable length by placing all the decisions afresh and urged that the three Judge Bench Judgment having over-ruled the earlier two Judge Bench decision, the High Court could not have set aside the allotment made, relying upon the judgment of this Court in the two Judge Bench decision. The learned counsel also urged that the three Judge Bench Judgment has categorically come to a finding that allotment has been made in accordance with the prescribed guidelines. That being the position, the High Court was not competent to over-ride the aforesaid conclusion of the three Judge Bench Judgment of this Court and arrive at a conclusion contrary to the same. Mr. Sharma also urged that the plea of constructive res judicata should apply to the case in hand inasmuch as the aforesaid plea is applied as a matter of public policy to avoid multiplicity of litigation and not to allow reopening of a matter already adjudicated upon. In this view of the matter, the High Court was not entitled to re-examine the matter after the judgment of this Court in [1995) Supp. 3 SCC 382. In support of this contention, reliance had been placed on the decision of this Court in AIR (1997) SC 1680. Mr. Shanria

...

also relied upon the recent judgment of this Court in Haryana Land Allotment case and contended that the theory of prospective over-ruling should apply to prospective cancellation of the grant made and that would subserve larger public interest and in this view of the matter this Court should set aside the order of cancellation made by the High Court. Relying upon the observations made in the reviewed judgment of three learned Judges of this Court, Mr.

Sharma contended that this decision approves the fact that allotments made earlier to the guidelines issued by this Court in 1995 must not be interfered with and the said observation being binding on this Bench, this Bench should allow this appeal or refer the matter to a three Judge Bench. Mr. Sharma urged that right to life engrafted in Article 21 of the constitution also equally applies to the case in hand and as such the entire family will be ruined if the dealership is cancelled. He lastly urged that pursuant to the notice issued to the appellant, the appellant having filed an affidavit before the High Court, giving all material particulars, the High Court could not have set aside the allotment made in favour of the appellant without even consideration of those materials. The disposal made by the High Court on such non-consideration of such germane materials must be held to be vitiated and therefore, the matter should be remitted back to the High Court. So far as the ground on which the High Court set aside the allotment made viz. the minister had not verified the particulars,

Mr. Sharma urged that the minister is not required to make any check or verification and can make the allotment under the discretionary quota, relying E upon the statements made by an applicant, since the so-called grant is subject to the verification to be made by the oil company. It is always open for the oil company on verification, not to grant the dealership notwithstanding the order of the minister inasmuch as order itself stipulates that the grant should be subject to the verification by the oil company. According to Mr. Sharma, F the touch-stone for exercise of discretionary power being that it should not suffer from the virus of nepotism and favouritism and should be devoid of any personal interest and should not be for extraneous considerations and none of these grounds having been found by the High Court, the order of cancellation on the face of it is wholly unsustainable.

Mr. Sanjeev K. Kapoor, the learned counsel appearing for the Centre for Public Interest Litigation repels the submissions made by the counsel for the appellants. According to the learned counsel, the contention that the judgment of this Court in the Centre for Public Interest Litigation [1995] Supp. 3 S.C.C 382 amounts to a tacit approval of the Court to the allotments made, any illegal H

A exercise of dicretionary power is nothing but a misreading of the judgment.

He further urged that in public interest litigation, when there is_ no adversarial adjudication, the principles of constructive res judicata ought not to apply, as was held by this Court in the case of Rural Litigation and Entitlement Kendra

v. State of U.P., [1989] Supp. 1 S.C.C. 504. At any rate the earlier litigation B filed at the behest of the Centre for Public Interest Litigation was only for laying down the guidelines for exercise of the discretionary power, as is apparent from the amended petition, the amended petition was consideed and disposed of and as such there has been no adjudication by this Court with regard to the legality or illegality of the allotments made by the concerned C minister from the discretionary quota: The learned cunsel also vehemently submitted that in the Common Cause case, where subsequent o the judgment in Centre for Public Interest Litigation case, legality of allotments made in favour of 15 allottees from the discretionary quota was the subject matter for adjudication, this Court in no uncertain terms, cancelled the allotments made

and in the very se judgment, directed the Delhi High Court where the writ petitions were pending to dispose of the matter in accordance with law. In fact the High Court proceeded to dispose of the matter pursuant to the aforesaid judgment/obser, vations of this Court in the Common Cause case. In this view of the matter, the contention tha.t the High Court should have applied the principle of constructive res judicata, is wholly misconceived. So far as the observations made by the three Judge Bench Judgment of this Court. in the review petition arising out of Common Cause case judgment, Mr. Kapoor contends that the review petition merely related to the subsequent order, wherein this Court directed institution of a criminal case and levied exemplary damages to the tune of Rs.50 lacs on the concerned minister Capt. Satish Sharma. In the aforesaid premise, any observtions made by the said three Judge Bench in relation to the legality of the allotments made by the minister from discretionary quota, cannot be treated to be of any binding precedent. According to Mr. Kapoor, the High Court was examining the legality of the exercise of discretion by_ the concerned minister on the materials available to find out G whether it was in fact an exercise of discretion on .germane materials or the discretion has been exercised arbitrarily and for extraneous considerations in which event the order emanated out of such discretion was reqi.lfred to be nullified; The High Court has applied its mind to each and individual case of allotment under the discretionary quota and wherever some materials were H there, the High Court has disharged the notice of cancellation and it is only

when there existed no materials for the minister concerned for exercise of his A discretion and the minister passed the order of allotment without any inquiry into the assertions made in the application, the Court has set aside the same.

According to Mr. Kapoor, the notoriety by which such discretionary allotment by a Minister has reached, it would be unwise to interfere with well reasoned order of the High Court, particularly when the High Court had the opportunity B of examining the file from the Ministry, in relation to each and every case of allotment under the discretionary quota.

Mr. T.L.V. Iyer, the learned senior counsel, appearing for the Union of India, submitted that the Union Government has no role to play and it merely complied with the directions of the Court.

In view of the rival submissions at the Bar, the following questions arise for our consideration:

(a) Is the Judgment of this Court in the case of Centre for Public

Interest Litigation [1995) Supp. 3 S.C.C. 382 susceptible of a construction that the Court indicated the guidelines for future guidance and had it given its stamp of judicial approval to the discretionary allotments already made by the date of the judgment?


(c) Does the expression "over ruled" in the three Judge Bertch Judgc

ment, refer to over-ruling the judgment in the Common Cause case wholly or does it refer to only the subsequent order in the Comn:ion Cause case, directing registration of the criminal case and its investigation and levy of penalty/exemplary damages against Captain Sharma?

(d) The judgment of the High Court being earlier to the three Judge Bench judgment of this Court in the review petition filed by Captain Satish Sharma since reported in [1999] 6 SCC 530, is there any necessity for remitting these appeals to the High Court for reconsideration, in the light of the subsequent three Judge Bench judgment of this Court?

(e) Are the appellants entitled to any equitable considerations on the ground that they have spent a substantial amount and have also operated the petrol outlets/gas agencies for about eight years? and

(f) Can the impugned judgment of the High Court in any of these appeals be said to be vitiated on account of non-consideration of any germane materials?

(g) Whether in a Public Interest Litigation, where large number of persons are going to be affected, the Court is bound to issue notice under Order I, Rule 8 and does non-issuance of such notice vitiate the entire proceedings?

(h) Whether the verification supposed to have been made by the Oil

Company pursuant to the order of allotment made by the Minister, can be held to be the proper verification for exercise of discretion by the Minister himself and in such event whether the order of cancellation by the High Court is valid?

(i) Whether the principle decided in the judgment of this Court in Civil Appeal No. 6840 of 2001, in relation to such discretionary allotment of land in the State of Haryana, can be made applicable to the case in hand, so that the judgment would be made applicable prospectively and consequently, the orders of cancellation will have to be set aside?

,··

1'-

' ( I I

So far as the first question is concerned, the entire emphasis is on the A directions given by the Court in paragraph ( 4) of the Judgment, which is quoted hereunder:

"We hereby direct that the above-quoted norms/guidelines etc. shall be foJiowed by the Central Government in making aJI such discretionary allotments of retail outlets for petroleum products, LPG Dealership and SKO Dealership, hereafter."

The appellants' contention is that while the writ petition was filed in public interest, the exercise of discretion in alJotment of retail outlets for petroleum products, LPG Dealership and SKO Dealership had been chalJenged and a C prayer for laying down the guidelines to regulate the exercise of discretion had been made, the Court only laid down the guidelines and further observed that the norms and guidelines would be foIJowed hereafter and necessarily, therefore, there has been a tacit approval to the earlier aIJotments made Ul)der the discretionary quota inasmuch as the Court never cancelled the allotments made D nor had issued any direction in that respect. This contention in our considered opinion, cannot be sustained for two reasons. Firstly, the amended petition which the Centre for Public Interest Litigation has filed, merely prayed for laying down the guidelines to regulate exercise of discretion in the matter of such allotments. Secondly, which is rather more important is that this judgment was delivered by the Court on 31st of March, 1995. The Common Cause had filed another petition under Article 32, alleging arbitrary exercise of discretion in favour of 15 allottees and that petition was entertained by this Court and disposed of by Judgment dated 25th September, 1996 and the Court cancelled

aIJ such allotments on a finding that the Minister without keeping in view any guidelines, aIIotted in exercise of his discretion in a cluster manner and the F public property have been doled out in wholly arbitrary and discriminatory manner. If the earlier Judgment is susceptible of the construction, as contended by the appellants, then it would not have been possible in the Common Cause case to examine the legality of such aIIotments which had been made in favour of 15 persons. Instead of construing the judgment in the Centre for Public G Interest Litigation to the effect that it accords a tacit approval of the allotments made prior to the judgment in the Common Cause case, the Court relied upon the earlier judgment in [1995] Supp. 1 S.C.C. 382, and ultimately cancelled the orders of allotment, having found that the allotments were made arbitrarily and for extraneous considerations. In this view of the matter, it is difficult for us H


[2001] SUPP. 4 S.C.R.

A to sustain the cohtention of the learned counsel; appearing for the appellants.

We, therefore, hold that the judgment of this Court in Centre .for Public Interest Litigation, [1995] Supp. 3 S.C.C. 382, cannot be construed by any stretch of the imagination to be a tacit approval of the discretionary allotments made prior to that judgment. We, therefoe. do not find aJJY substance in this

. B submission of he learned counsel for the appellants.

Coming to the second question, Explanation (N) to Section 11 of the Civil Procedure Code postulates that any matter which might and ought to have heen made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. Order II, C Rule (2) of the Code of Civil Procedure provides that every suit shall include · the whole of the claim which the plaintiff is entitled to make in respect of the cause of action and ifhe omits to sue in respect of, or intentionally relinquishes, !lny portion of his claim, then he shall not afterwards sue in respect of the portion, so omitted or relinquished. By virtue of explanation to Section 141 D of he Code of Civil Procedure, since proceedings under Article 226 of the Constitution is excluded from the expression "proceedins", therefore, the Civil Procedure Code is not required to be followed in a proceeding under Article 226 unless the High Court itself has made the provisions of Civil Procedure Code applicable to a proceeding under Article 226'. Then agrun, the E , principles of Section 11 as well as Order II Rule 2, undoubtedly contemplate an adversarial system of litigation, where the Court adjudicates the rights of the ' ' ' parties and determines the issues arising in a given case. The Public Interest Litigation or a petition filed for public interest cannot be held to be an adversarial system of adjudication and the petitioner in such case, merely brings it to the notice of the Court, as to how and in what manner the public interest is being F jeopardised by arbitrary and capricious action of the authorities. In the case of Rural Litigation and Entitlement Kendra v. State o.f U.P .. [1989] Supp. l

< • ' • ' S.C.C. 504, which is commonly known as the 'Doon Valley' case, such a contention had been raised, as is apparent from paragrap~ ( 14) of the judgment viz. the decision of the Court dated 12th arch, 1985 was'final in certain G .' aspects, including the release of A category mines outside the. city limits of . / Mussoorie from the proceedings and in vi, ew of such finality it was not open

i , t.o this Court in the same proceedings at a. later stage to direct differently in , I regard to what had been decided earlier. The Court repelled the same by holding that the writ petitions are not inter-parties disputes and have been H raised by way of public interest litigation and the controversy before the Court

,.._

is as to whether for social safety and for creating a hazardless environment for the people to live in, mining in the area should be permitted or stopped. The Court hastened to add:

"We may not be taken to have said that for public inte1t!st litigations, procedural laws do not apply. At the same time it has to be remembered that every technicality in the procedural Jaw is not available as a defence when a matter of grave public importance is for consideration before the Court. Even if it is said that there was a final order, in a dispute of this type it would be difficult to entertain the plea of res judicata."

Thus even in the self-same proceeding, the earlier order though final, was treated not to create a bar inasmuch as the controversy before the Court was of grave public interest. The learned counsel appearing for the appellants drew our attention to the decision of this Court in the case of Forward Construction

Co. and Ors. v. Prabhat Mandal, AIR (1986) SC 391, whereunder the Court D did record a conclusion that Section 11 of the Civil Procedure Code applied to Public Interest Litigation. In our considered opinion, therefore, the principle of constructive res judicata cannot be made applicable in each and every public interest litigation, irrespective of the nature of litigation itself and its impact on the society and the larger public interest which is being served. There cannot be any dispute that in competing rights between the public interest and individual interest, the public interest would over-ride. In the Centre for Public Interest Litigation case, which had been filed in this Court, the prayer that had been made was to lay down the guidelines for the discretion being exercised in the matter of allotment of Gas agencies, petroleum dealership and others.

It is no doubt true that the applicant therein could have made a prayer for examining the legality of the allotments already made but as the applicant states in the writ petition filed in Delhi High Court that he had no knowledge about the persons to whom such allotments had been made and in fact the Delhi High Court itself on a petition being filed, called upon the respondents to submit the list of such allottees, whereafter notices could be issued to the allottees. That apart, when this Court entertained another public interest litigation, filed by the Common Cause in respect of 15 discretionary allotments made in favour of 15 persons, the Court did entertain the same and instead of treating the earlier decision to be a bar and applying the principle of constructive res judica((l, the Court relied upon the same and cancelled the allotments made in favour of


[2001] SUPP. 4 S.C.R.

A those 15 persons who had been arrayed as parties to the said petition filed under Article 32. That apart, the writ petitions in which the j.udgment of which are the s.ubject matter of challenge in these appeals, had been filed in Delhi High Court and which were pending when the Common Ca.use case was taken up by this Court. This Court initially stayed the proceedings and issued notice in B the Transfer Petitions but ultimately, vacated the stay order and instead of bringing the writ petitions to this Court on transfer, directed the Registry of the Court to send the petitions along with the annexures to the High Court and required the High Court to examine the issues involved in the writ petitions and go into the validity of the allotments of petrol pumps/Gas agencies to various c


"It is contended that since the allotments made by the petitioner till the filing of the writ petition in this Court, in spite of a challenge having been raised therein, were not set aside and only guidelines were settled for future exercise of discretionary quota, tacit stamp of judicial approval shall be deemed to have been placed on the allotments made by the petitioner and consequently those allotments could not have been reopened on the principle of constructive res judicata. Normally, we would have accepted this argument, but in this case we cannot go to that extent."

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 G 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 4.11.96 since reported in [1996) 6 S.C.C. 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 H the judgments viz. [1996) 6 S.C.C. 530 as well as [1996) 6 S.C.C. 593. In the


this Court by way of special leave petitions and all those petitions had been E dismissed.

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 substance.

The third contention was seriously argued by Mr. Sharma, the learned H

A 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 [1996) 6 S.C.C. 530, 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 S.C.C. 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 4.11.96 since reported in [1996) 6 S.C.C. 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 same.

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 4.11.96 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 crimina~ CflSe 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 appellants.

G 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 H Judge Bench decision of this Court and in relation to similar allotments made

by the said minister in favour of 15 persons, who were respondents in the A 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 B 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 consideration.

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 C 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 D 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 Court.

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 ils order dated 22.8.97,

has vitiated the entire proceedings and consequently, lhe order of cancellation H

A 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 subse- B quent 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 C.P.C. get attracted when there are numerous persons having the same interest, are sued or sue and the Court can permit such C 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, gas 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 f'!UCh 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 opportu- G nity 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 showcause, 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 H indicated in the application for discretionary allotment, we fail to understand

how a contention could be raised that the whole procedure adopted is vitiated A 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 th~ allottees to show-cause why the allotment will not be cancelled, then that B 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 cancellaiion 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 <;;:m. it be said that the entire exercise is vitiated.

So far as the eighth question is concerned, it was repeatedly argued before us by several counsel ti1at the concerned minister was not required to D 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 E 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 c0uld be said to have arrived at his subjective satisfaction for exercise of his discretion in favour of the applicant. It is the H

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 on this score. The same accordingly stands rejected.

D 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 discretioi; iary 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 E 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 5.12.97. This Court in the appeal in question held that the stricter scrutiny required to be made as per the guidelines evolved in Anil Sabharwal's case, ust be made applicable to the period subsequent to the judgment viz. 5.12.97 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 Sabharwal's 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 H Interest litigation, [1995] 3 Supp. 3 S.C.C. 382, are the subject matter of

• .

scrutiny and had been made indiscriminately, as there had been no guiding A 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.

In view of our conclusions on the nine issues, as mentioned above, these appeals fail and are dismissed. There however will be no order as to costs.

While, we are dismissing the appeals, we are also aware of the fact that these appellants are operating the allotments made in their favour since 1993- 94 and even after the judgment of the High Court, they are continuing by virtue of an interim order of this Court. .In these circumstances, we direct that they shall be allowed to wind-up their respective businesses by 31st of December, 2001.

~.K.S.

Appeals dismissed.