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CASE NO.: Transfer Case (civil)  100 of 2002

PETITIONER: MUKUND SWARUP MISHRA

RESPONDENT: UNION OF INDIA & ORS

DATE OF JUDGMENT: 12/01/2007

BENCH: CJI Y.K. SABHARWAL,C.K. THAKKER & R.V. RAVEENDRAN

JUDGMENT: J U D G M E N T WITH             

TRANSFERRED CASE Nos. 101, 102, 103, 104, 105,  106, 107, 108 of 2002, S.L.P.(C) Nos. 1394 of 2003,  11556, 11568, 16261 of 2002 and T.C. No. 57 of 2006

C.K. Thakker, J.

       Interim applications have been filed by the  applicants who are aggrieved by the Report made by a  Committee appointed by this Court while dealing with  and deciding transferred cases in Onkar Lal Bajaj &  Others v. Union of India & Another, (2003) 2 SCC 673.         It may be stated that a news item appeared in  Indian Express dated August 2, 2002 alleging political  patronaze in allotment of retail outlets of petroleum  products, LPG distributorship and SKO-LDO dealership.  Between August 2 and August 5, 2002, certain names  were published by the said newspaper and it was stated  that without following guidelines, dealers/distributors  were appointed on the basis of political  patronaze/linkage. A question was also raised in  Parliament. Consequent upon criticism by the Press and  Parliament, cases were reviewed on August 5, 2002 by  the then Prime Minister. The Deputy Prime Minister,  Minister of Petroleum & Natural Gas and Minister of  Parliamentary Affairs also participated in the review  process. In view of the controversy in allotment, the  Prime Minister directed the Ministry of Petroleum &  Natural Gas to cancel all allotments made with effect  from January, 2000 till date. Press release was issued by  the Press Information Bureau and a formal order was  issued by the Government of India, Ministry of Petroleum  & Natural Gas on August 9, 2002 cancelling all  allotments.         The said order was challenged by aggrieved  allottees by instituting writ petitions in several High  Courts. Transfer petitions were filed in this Court and  this Court, in Onkar Lal Bajaj disposed of all the  petitions by setting aside the order dated August 9, 2002  passed by the Central Government and by appointing a  Committee comprising of Hon’ble Mr. Justice S.C.  Agrawal, a retired Judge of this Court and Hon’ble Mr.  Justice P.K. Bahri, a retired Judge of the High Court of  Delhi, to examine 413 cases of allotment. This Court   requested the Committee to submit its report within a  period of three months. The said decision dated  December 20, 2002 is reported in (2003) 2 SCC 673. The

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directions which were issued by this Court were as  under: I.      We appoint a Committee comprising of  Mr. Justice S.C. Agrawal, a retired  Judge of this Court and Mr. Justice P.K.  Bahri, a retired judge of Delhi High  Court, to examine the aforesaid 413  cases.  We request the Committee to  submit the report to this Court within a  period of three months.

II.     The Committee would device its own  procedure for undertaking the  examination of these cases.  If  considered necessary, the Committee  may appoint any person to assist it.  

III.    We direct the Ministry of Petroleum and  Natural Gas, Government of India and  the four oil companies to render full,  complete and meaningful assistance and  cooperation to the Committee. The  relevant records are directed to be  produced before the Committee within  five days.

IV.     We direct the Ministry to appoint a  nodal officer not below the rank of a  Joint Secretary for effective working of  the Committee.

V.      The Central Government, State  Government/Union Territories and all  others are directed to render such  assistance to the Committee as may be  directed by it.

VI.     The oil companies are directed to provide  as per Committee’s directions, the  requisite infrastructure, staff, transport  and make necessary arrangements,  whenever so directed, for travel, stay,  payments and other facilities etc.  

VII.    In respect of any case if the Committee,  on preliminary examination of the facts  and records, forms an opinion that the  allotment was made on merits and not  as a result of political connections or  patronage or other extraneous  considerations, it would be open to the  Committee not to proceed with probe in  detail.

       During the pendency of the matters before the  Committee, this Court continued interim order granted  earlier. Pursuant to the directions of this Court, the  Committee commenced its proceedings by examining the  relevant records relating to allotment.  Notices were  issued, replies were sought in the form of affidavits,  letters or other applications/representations. The  Committee also afforded an opportunity of making oral  submissions to the allottees. Oral hearing was also  afforded to other applicants on the panel whose  applications were rejected or who were not granted

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allotment. In several cases, allottees or other applicants  were represented by their counsel to whom opportunity  of hearing was extended. Hearings were held at Delhi  and at other places mentioned in the report. The  Committee, thereafter, considered the relevant materials  keeping in view the salient features of the guidelines laid  down by the Government of India and submitted its  detailed report.         The Committee considered the background of the  case, eligibility criteria, educational qualifications,  income of the applicants and other relevant  considerations in the light of guidelines for allotment.         Referring to the observations in Onkar Lal Bajaj by  this Court, the Committee observed that it was required  to consider whether the alleged tainted allotments were  made on merits or as a matter of political connection or  patronaze or on any other ’extraneous considerations’.  On behalf of the allottees, it had been urged that mere  fact that a person was politically connected should not  disentitle him/her from allotment if he/she is otherwise  found meritorious by the DSB and the political  connection of a person should not stand in the way of  his/her application being considered on merits.          The Committee, in our opinion, rightly stated;         "The correctness of this proposition  cannot be disputed. Merely because a person  has a political connection should not operate  as a handicap in his/her being considered for  allotment on his/her own merits. But if from  other surrounding circumstances, it is  apparent that the political connection of an  applicant has weighed in the matter of  consideration of the application by the DSB  and an allotment has been made in his favour,  then such an allotment would be open to  challenge on the ground that it is not made on  merits but on extraneous considerations".  

       The Committee again correctly observed that an  inference that the political connections of an applicant  have influenced the selection and that such selection is  based on extraneous considerations could be drawn  under the following circumstances; (i)     The applicant was selected even though he did  not fulfill the requisite conditions for eligibility  as prescribed in the Guidelines.

(ii)    The requirements of the Guidelines were not  adhered to in the process of selection.

(iii)   In the matter of award of marks for the  purpose of evaluation of the merits of an  allottee vis-‘-vis other applicants, the  Chairman or any member of the DSB has  displayed an attitude of upgrading the allottee  and downgrading other more or equally  meritorious applicants.

       The Committee was also of the view that an allottee  who had given a wrong information or had concealed a  material fact in his/her application or any document  filed therewith, could not be permitted to avail the  allotment in his/her favour. The Committee then stated  that as regards evaluation of the merits under the  guidelines by DSB, the marks were to be awarded by the

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Chairman and Members of the DSB under the following  norms: (a)     Personality, Business ability and Salesmanship (b)     Capability to arrange finances (c)     Educational qualifications and general level of  intelligence.

(d)     Capability to provide infrastructure and facilities  (land, godown, showroom etc.)

(e)     General assessment.         The Committee noticed that total number of marks  that had been earmarked for each Member of the DSB  was 100. The total number of marks earmarked for  Chairman was also 100 initially but subsequently they  were increased to 200. Thus, the maximum marks  earmarked for the Chairman of DSB were equal to the  maximum marks earmarked for the other two members  of the DSB. The Committee, hence, observed; "In the  matter of evaluation of merit, the marks awarded by the  Chairman could, therefore, prove to be decisive in the  selection process". The Committee further stated that ’it  was also found by the Committee, in many cases, even  though the other two members of the DSB had awarded  more marks to the applicant/applicants placed at Nos. 2  and/or 3 in the merit panel, the applicant at No.1 was  selected for allotment on the basis of very higher number  of marks awarded by the Chairman of DSB. The  situation became further aggravated when the DSB was  composed of the Chairman and one member only  because then, out of total number of 300 marks, the  Chairman had 200 marks and the other member had  only 100 marks. Even though the member had rated  applicant/applicants at Nos. 2 and/or 3 on the merit  panel better than the applicant at No.1, the applicant at  No.1 was selected on the basis of higher number of  marks awarded by the Chairman. This shows that the  Chairman of the DSB, if so inclined, could play a crucial  role in the selection of the candidate for allotment. The  evaluation and award of marks by the Chairman of the  DSB, was, therefore, of considerable significance.         The Committee also regretfully noted that in a large  number of cases, allegations have been made regarding  political linkage and bias of the Chairman and in some  cases, allegations of even corruption had been made  against the Chairman. Since the Committee did not have  any machinery to verify the veracity of those allegations,  it had rested the conclusions on the evaluation and  award of marks by the Chairman and Members of the  DSB.         In the matter of evaluation of the merits of the  candidates, the Committee was of the view that an  inference about the marking being arbitrary could be  drawn in the following situations; (i)     There is a wide variation in the marks awarded by  the Chairman and the marks awarded by the other  member/members of the DSB to the three  applicants who have been placed on the merit  panel.

(ii)    Unusually high marks have been awarded by the  Chairman/Members of the DSB to an applicant as  compared to other applicants on the merit panel.

(iii)   Higher number of marks have been awarded to a

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particular applicant under norms (a), (c), (c) or (d)  even though as per the objective factors relating  such norms, another applicant has shown better  merit and suitability.

The Committee scrutinized 409 cases of alleged  tainted allotments in the States of Himachal Pradesh,  Haryana, Rajasthan, Uttar Pradesh, Bihar, Jharkhand,  Orissa, Madhya Pradesh, Chattisgarh, Gujarat,  Maharashtra, Andhra Pradesh, Tamil Nadu and  Karnataka. Out of 409 cases examined, the Committee  was of the view that in 297 allotments, the selection  could not be said to have been made on merits. The  allottees either did not fulfill the eligibility requirements  or had incurred disqualification on account of  suppression/concealment of material information  relating to their eligibility for consideration or other  extraneous considerations weighed with the Board in  granting such allotments. In other words, almost 73 per  cent of tainted allotments examined by the Committee  were found to be improper. The Committee, therefore,  opined the need for evolving transparent and objective  criteria/procedure. Being aggrieved by the findings of the Committee  holding certain allotments being not made on merits and  therefore were not sustainable, the applicants have  approached this Court by filing interim applications. We have heard the learned counsel for the  applicants as also Mr. Gopal Subramaniam, learned  amicus curiae. On behalf of the applicants, it was  contended that the Committee went beyond the  directions issued by this Court and in observing that the  allotment was not done in accordance with the  guidelines and hence, could not be held to be legal or  proper. It was submitted that so far as the directions of  this Court are concerned, they related to allotment due  to political patronaze/linkage/connection. The  Committee appointed by this Court, therefore, had  limited power to consider whether the allotment was  made due to political linkage or patronaze and was  tainted and nothing more. It was also submitted that the  main consideration before this Court was press reports  in Indian Express which was the basis and foundation of  inquiring into the matters and keeping in view the  allegations in those reports, the orders were passed by  this Court. It was also submitted that the direction of  this Court to consider ’other extraneous matters’ must  be construed ejusdem generis i.e. political influence or of  the like nature. The Committee illegally and  unauthorisedly exceeded its jurisdiction by considering  several other factors, such as, whether the applicants  were eligible, whether the guidelines were followed in the  grant of allotment and whether extraneous  considerations weighed with the Board in giving marks  to applicants. Since it was not within the power of the  Committee, the findings recorded, conclusions arrived at  and observations made by the Committee deserve  interference by this Court by setting aside the direction  to cancel allotments made in favour of  applicants/allottees. It was also submitted that no  adequate opportunity had been afforded by the  Committee inasmuch as in almost all notices issued to  the allottees, the allegation was that the allotment had  been made due to political patronaze/linkage and it was  only at the time of hearing that certain other defects or

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matters came up for consideration by the Committee and  impugned orders were made observing that either the  allottees were not eligible, or the marks given to them  were arbitrary, or there was suppression of fact on the  part of applicants. Virtually, thus, the Committee acted  as an ’appellate forum’ over the decision of the Board  which was not within the power or jurisdiction of the  Committee, nor such authority was conferred or such  power was given by this Court while disposing Onkar Lal  Bajaj and on that ground also, the orders are vulnerable. The counsel also submitted that to say or to hold  that a decision was taken by the Board on extraneous  consideration is to cast aspersion on the members of the  Committee and the Chairman of the Board who is a  retired Judge of a High Court. It would also be against  the principles of natural justice and fair play, since no  opportunity to those members and Chairman had been  afforded and they were neither before the Committee nor  before this Court. According to the applicants, there may  be an error of judgment on the part of the Board but  such error is bona fide and would not vitiate the action  nor it can be construed as violation of guidelines issued  for making selection. It was also urged that the doctrine of equitable/  promissory estoppel would get attracted in all these  cases. After the applicants were selected, letters of intent  (LoI) were issued, agreements were entered into and  huge amount had been spent by the allottees. If, at this  stage, allotment is cancelled, serious prejudice will be  caused to them and they would suffer without there  being any fault on their part. Since there is no grievance  so far as the Board is concerned and it was on the basis  of decision in Onkar Lal Bajaj that such an action is  taken, even if this Court accepts the report of the  Committee, it may not cancel the allotments already  made by declaring correct legal position. It was further submitted that in some cases, the  land has been given by the ’prospective’ allottees to the  Oil Companies since the allotment was to be made to  owners/occupiers of such land. Keeping in view the fact  that allotment has been made or likely to be made to the  applicants, they have made available land at a  concessional rental value. Such agreement is for a  substantial period. Had the applicants/land  owners/occupiers, been not selected and allotted the  distributorship, they would not have entered into lease  agreements and/or claimed substantial amount of rent  or return. If at this stage allotment is cancelled they  would be seriously affected for years to come. This  equitable aspect may also be taken into account while  deciding these applications and before passing final  orders.  The learned amicus curiae, on the other hand,  submitted that a herculean task has been performed by  the Committee. Keeping in view the directions issued by  this Court in Onkar Lal Bajaj and considering individual  cases in their proper perspective, the Committee  submitted a report by dealing with each and every case.  The report runs into few thousand pages. The Committee  has also observed, as seen in the earlier part of the  judgment that no allotment has been cancelled merely  on the ground of political linkage/patronaze but while  considering the legality or otherwise of the allotment,  political linkage/patronaze was kept in mind as one of  the factors. It was submitted that even after recording a

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finding that there was a political linkage/patronaze, the  Committee has considered as to whether such political  linkage/patronaze has weighed with the authorities at  the cost of merits or undue favour in allotment was  made ignoring public interest.  Only in those cases  where merits have suffered or allotment has been made  on extraneous considerations that the Committee held  the allotment as contrary to law. It is also clear from the  fact that out of 409 cases, the Committee had approved  on merits more than 100 cases and in respect of 297  allotments, it found that they were not in accordance  with the guidelines and therefore could not be approved.  The counsel also submitted that the directions in Onkar  Lal Bajaj were explicitly clear and the Committee was  asked to consider claims of all the applicants whether  the allotment in their favour was on merits or on  account of any political or ’other consideration’. It,  therefore, could not be said that the direction to the  Committee was to consider a political linkage/patronaze  only.  The Committee was bound to consider all the  cases as per the direction of the Court which has been  done and no fault can be found against the report of the  Committee and the applications deserve to be dismissed. So far as the preliminary objection is concerned, we  find no substance therein. Reading Onkar Lal Bajaj in its  entirety and the directions issued by this Court, it  cannot be said that the Court was considering allotment  only on the basis of political linkage/patronaze.  It is  clear that the proceedings had been initiated because of  news reports appeared in Indian Express and this Court  was called upon to consider the action taken by the  Central Government of cancellation of all allotments. It  was, therefore, obligatory on the part of the aggrieved  parties to satisfy the Court that the action taken by the  Government was not in consonance with law. This  Court, keeping in view the circumstances in their  entirety, set aside the order as being violative of   principles of natural justice and fair play and directed  the Committee to consider certain cases as to whether  allotment had been on the basis of political  patronaze/linkage or other extraneous considerations  weighed with the Board in making orders of allotment. In  fact, in Onkar Lal Bajaj, the Court noted the submission  of the allottees that selection by DSBs in their favour  was on merits and not on account of any political or  other extraneous consideration.  The Court then said; "For the present, we are not expressing any  opinion on the question whether the selection of  the allottees by DSBs in this category of alleged  tainted allotments was a result of political or other  extraneous consideration or the selection was on  merits alone.  As already mentioned, these aspects  require an independent probe".

The phrase ’other consideration’, in our opinion,  therefore, cannot be read ejusdem generis with political  linkage/connection/patronaze.  The expression ’other  consideration’ would take within its sweep all  considerations other than merit of the case.  Ultimately,  the direction of this Court was not a statute nor it can be  considered as an enactment. In the light of the above, a Committee was  appointed and directions were issued.  The Committee

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considered the question on merits. It, therefore, could  not be said that the Court was  to consider only political  linkage/patronaze and the Committee had exceeded its  powers and/or jurisdiction in taking into account other  extraneous matters. In fact, the direction of this Court  was to consider extraneous considerations, if any, in  allotment and if so, to pass an appropriate order and to  report on those aspects. We are, therefore, not inclined  to uphold the preliminary objection of the learned  counsel for the petitioners. We are also not impressed by the argument of the  petitioners that the doctrine of promissory or equitable  estoppel would apply.  May be that the petitioners have  spent some amount.  But once the allotment itself was  found to be vitiated, obviously they cannot claim any  benefit as allotment was contrary to law. Moreover, such  allotment has been made in remote past and even  though an order of cancellation had been passed by the  Central Government as early as in August, 2002, the  allottees have been protected by interim order passed by  this Court. Even after the decision in Onkar Lal Bajaj,  interim order was continued. In the circumstances, for  more than four years interim order is in favour of  allottees even though the allotment is found to be illegal  or contrary to law. In our opinion, therefore, it is not  open to the allottees whose allotments have been found  to be vitiated to plead equity. In our opinion, the learned amicus curiae is right  that the Committee had considered in detail individual  cases and submitted the report. This Court, therefore,  would consider a complaint of an allottee who can  successfully put forward his complaint and may satisfy  this Court that in the facts and circumstances of the  case, the finding of the Committee that the allotment  was not on merits was not correct. But only in those  individual cases, the Court would consider and may  grant relief to such applicants.  It, however, cannot be  said that the report of the Committee was without power,  authority or jurisdiction or was uncalled for and liable to  be ignored. Having considered the basic issues, it is now time  to consider individual cases.

STATE OF HIMACHAL PRADESH         So far as Himachal Pradesh is concerned, sixteen  cases were referred to the Committee and the Committee  considered all the cases and found that in respect of five  cases, the allotment was on merits while in eleven cases  it was not on merits and was held to be vitiated. Four  applicants, namely, Mahesh Kumar, Deshraj, Ms. Anita  Kumari Sandal and Smt. Lakshmi Devi have approached  this Court. We have gone through the report of the  Committee and found that the Committee was right in  its conclusions. We, therefore, hold that the cancellation  of allotment in eleven cases cannot be said to be illegal  or unlawful.  All interim applications, therefore, deserve  to be dismissed and are, accordingly, dismissed.

STATE OF JHARKHAND         In State of Jharkhand, twelve cases were referred to  the Committee.  Three were found to be on merit and  remaining nine were not on merit.  Five applicants have  approached this Court. In the case of Rohit Priyadarshi  Oraon and Smt. Poonam Singh, the Committee observed  that both were ineligible and hence could not be allotted

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retail outlet. As to Smt. Mamta Kumari, the Committee  observed that though she was only a housewife, a retail  outlet had been allotted to her who is a daughter of one  Nand Kishore Yadav, BJP Bihar Unit President.  It was  also observed that another allotment has been made to  her brother. According to the Committee, the allotment  was not on merits.  It cannot be said that the above  findings deserve interference.  For Smt. Sushila  Hansdak, wife of Congress MP, no one appeared.  The  Report of the Committee is accepted in regard to the said  four allottees.         The case of Janendra Kumar Rai appears to be a  border line case and in the facts and circumstances, in  our opinion, allotment could not have been cancelled.  Application of Janendra Kumar Rai is, therefore, allowed  and recommendation for cancellation of allotment in his  case is not accepted.

STATE OF CHATTISGARH         So far as Chattisgarh is concerned, we are having  two applications. Five cases were referred to the  Committee.  Two were found to be on merits.  Allotment  in favour of 3 allottees was found to be arbitrary by the  Committee. Having gone through the reasons of the  Committee, it cannot be said that the order deserves  interference by this Court. One application is by a non- allottee.  It is not considered by us since we are of the  view that it is not of the function of this Court to  consider the cases of other applicants for the  grant/allotment of outlet.  The Report of the Committee  is accepted.

STATE OF GUJARAT         In regard to Gujarat, eighteen cases were referred  to the Committee.  Seven were found to be on merit.   Nine were not found to be on merit.  Two were not  considered.  There are six applications.  In the cases of  Rathod Bhanu Mayabhai, Manek Jayadeep Karanbhai,  Madhubhai Thakore and Bhartiben Nardevbahi Patel, we  find that the Committee has rightly held that allotment  could not have been made for the reasons recorded in  the report. We have gone through the reasons which  weighed with the Committee and find no illegality  therein.          So far as Siddharaj Bharatsingh Rana and Manish  Kantibhai Solani are concerned, no political connection  was found and they are border line cases. In view of the  said fact, in our opinion, it would be appropriate if  allotment in their favour is not disturbed.  We, therefore,  allow these applications and set aside the cancellation.          Regarding Hirasinh R. Baria, it was not case of  cancellation as he was not an allottee.  It was also stated  that a petition is pending and the matter is sub-judice in  the High Court of Gujarat. We, therefore, reject the  application reserving liberty to pursue the matter before  the High Court. STATE OF TAMILNADU         In the State of Tamil Nadu, eleven cases were  referred to the Committee. Two were found to be on  merit. Nine were found to be not on merit.  Out of them,  six have filed applications before us.  The Committee  dealt with cases of G.Raviraj, S. Guna Sekaran, K.  Sanmugham, Arul R, A.P. Mahesh and Tamilkumaran  and after considering the relevant guidelines held that  allotment was vitiated as they were not in consonance

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with the guidelines. Having examined the Report, we  accept the same in respect of all allottees.  Consequently,  all six applications are rejected.

STATE OF RAJASTHAN         In respect of State of Rajasthan, the Committee  considered forty-seven cases and found that ten were in  order and remaining thirty-seven allotments were not in  consonance with law. Out of them, thirty-three have filed  applications. We have been taken to the reasoning  recorded by the Committee. So far as Smt. Krishna  Kanwar, Kundan Sharma, Prem Ratan and Rameshwar  Khandelwar are concerned, it appears that they are in  the nature of border line cases and we, therefore, hold  that in respect of those four applicants, allotment may  continue. The applications by those four are allowed and  the cancellation is set aside. Regarding other cases,  accepting the reasons recorded in the report by the  Committee, we find that no illegality had been committed  in cancellation.  All those applications are, therefore,  rejected. PUNJAB          In respect of State of Punjab, the Committee  considered thirty-seven cases referred to it. It found that  seven allotments were on merit and twenty-nine  allotments were not in consonance with the guidelines.   Out of them, twenty-six have filed applications.  We have  been taken through the reasoning recorded by the  Committee.  So far as cases of Shri Surinder Singh,  Chander Kant Bhatia, Gurpreet Singh, Smt. Kanta Rani  Smt. Suman Lata, Ms. Ruby Sekhri, Mr. Manmohan  Singh, Mr. Rajesh Madan and Mr. Tejinder Singh are  concerned, they appear to be border line cases. In our  view, it may not be appropriate to cancel the allotment in  favour of these nine persons.  Their applications are  allowed.  Rest of the cases do not call for interference  and the applications are rejected.  There are six  applications by non-allottees.  They are also rejected as  we are not concerned with non-allottees. State of Haryana         In regard to State of Haryana, the Committee  considered twenty-one cases referred.  It found no  irregularity in allotment in seven cases.  It disapproved  allotments in fourteen cases.  Out of them, twelve have  filed applications. We find no infirmity in the conclusions  arrived at or reasons recorded by the Committee and no  interference is called for.  The other applications are  rejected.         All interim applications with regard to above- mentioned States are disposed of, including applications  for impleadment.  Interim orders in favour of those  applicants whose allotments have been cancelled would  continue for three months and stand vacated thereafter.         So far as remaining cases are concerned, they  stand adjourned.  Registry is directed to place the  matters before Hon’ble the Chief Justice of India for  listing of these matters before appropriate bench.               Before parting with the matter, we would like to  place on record our appreciation for Mr. Gopal  Subramaniam, amicus curiae for onerous work  undertaken by him and in placing before the Court  necessary facts and circumstances so as to enable us to  decide individual cases.