Supreme Court of India
MOHD. JAMALversusUNION OF INDIA & ANR.
- Citation
- 2013 INSC 448
- Decided
- 8 July 2013
- Disposal
- Disposed off
- Bench
- ALTAMAS KABIR
Holding
The Supreme Court held that the doctrine of promissory estoppel and legitimate expectation cannot be invoked where definitive lease agreements for COCO outlets were entered into after the dealership policy was suspended, and therefore the land owners have no entitlement to a dealership.
Summary
The petitioners, who were land owners, applied for petroleum retail outlet dealerships under a 2002 policy that later was suspended. They entered into long‑term lease deeds and maintenance‑handling contracts with Indian Oil and IBP, investing substantial sums, and claimed that the oil companies were estopped from withdrawing the promised dealerships. The Supreme Court examined the distinction between a dealership (an independent dealer right) and a Company‑Owned‑Company‑Operated (COCO) unit (owned by the oil company with outsourced operation). It held that after the policy was suspended and a new COCO policy introduced, the lease agreements were definitive contracts that extinguished any prior promise, and the doctrines of promissory estoppel and legitimate expectation were inapplicable. Consequently, the land owners could not claim dealership rights in these proceedings; any claim for damages must be pursued in the appropriate forum. The appeals were dismissed.
Issues considered
- The applicability of the doctrine of promissory estoppel and legitimate expectation to land owners who entered into lease agreements after the dealership policy was suspended.
- Whether the land owners have a right to claim dealership of petroleum retail outlets under the earlier policy in the absence of a Letter of Intent.
- The legal distinction between a dealership and a COCO (Company‑Owned‑Company‑Operated) outlet.
- The effect of the new policy and the entered lease contracts on the rights of the land owners.
Legislation cited
Subjects
Administrative lawPromissory estoppelLegitimate expectationPetroleum retail policyCOCO outletsLease agreementsDealershipOil companiesPublic policyArbitrariness
Judgment
[2013] 7 S.C.R. 469
MOHD. JAMAL A
v.
UNION OF INDIA & ANR.
(Civil Appeal No. 5228 of 2013 etc.)
JULY 8, 2013.
B
[ALTAMAS KABIR, CJI AND J. CHELAMESWAR, J.]
ADMINISTRATIVE LAW:
Policy regarding retail outlets of petroleum products - c
Earlier Policy recognizing land-owners as one of the
categories to be offered dealership - Applications of land-
owners processed - Meanwhile policy suspended, lease
deeds for definite terms entered into and by subsequent
Policy, offering of dealership to land owners of Company 0
Owned and Company Operated (COCO) outlets abandoned
- Claim of landowners for dealership - Held: Concept of a
dealership in respect of a retail outlet is completely alien to
concept of a COCO unit - While the former deals with the right
of dealer to independently operate the retail outlet, in the case E
of a COCO unit, the entire set up of retail outlet is owned by
Oil Companies and only day-to-day operation thereof is
outsourced to Maintenance and Handling Contractor - With
the discontinuance of the earlier policy of granting dealerships
in respect of retail outlets and the introduction of a new policy
of awarding M&H Contracts in respect of the COCO outlets, F
the land owners who had entered into fresh lease agreements
after the policy to grant dealerships had been suspended,
cannot claim any right on the basis of the earlier policy in the
absence of any Letter of Intent having been issued thereunder
- Doctrines of promissory estoppel and legitimate expectation G
are not applicable - Claims of appellants/petitioners have to
be treated on the basis of agreements subsequently entered
into by Oil Companies - It will be open to appellants/
petitioners to approach the proper forum in the event they
469 H
470 SUPREME COURT REPORTS [2013] 7 S.C.R.
A have suffered any damages and Joss, which they are entitled
to recover in accordance with law - Promissory estoppel -
Doctrine of legitimate expectation.
The case of the appellant in CA No. 5228 of 2013 was
that in terms of the advertisement as per Policy/MDPM
8
No.319/02 dated 8.10.2002, he applied for a retail outlet
dealership for his land in the 'land owner's category'.
Based on the recommendation dated 15.1.2003, made by
the Dealer Selection Committee, the General Manager
(ER) of the respondent No.2 Company recommended, on
C 25th January, 2003, that the dealership be given to the
appellant and directed that a Letter of Intent be issued in
his favour on receipt of the explosive licence. Meanwhile,
as claimed by the appellant, it was mutually agreed that
till the issuance of the Letter of Intent, as an interim
D arrangement, a nominee of the appellant would be
appointed as the Maintenance and Handling Contractor
to run the petrol pump. The appellant offered his land on
lease to the Oil Company on 14.3.2003, and on 29.3.2003,
a contract for Maintenance and Handling was executed
E between the Oil Company and the brother and nominee
of the appellant, for running the said petrol pump.
Rs.25,00,000/- were spent in setting up the infrastructure.
On 31.3.2003, the petrol pump was commissioned and
started operating. The appellant executed a lease deed
F in favour of the Oil Company at Rs. 21,000/- per month
for a period of 15 years. However, by a policy circular No.
05/0405 dated 30.3.2005, introduced by the Oil Company,
existing land owners of the Jubilee Retail Outlets and the
Company Owned and Company Operated Outlets were
G disqualified from being appointed as dealers. It was the
case of the appellant that on 6.9.2006, the Oil Company
formulated a new policy whereby the concept of offering
dealership to land owners was abandoned to the
prejudice of the land owners whose Letters of Intent for
H dealership were pending and where lands had also been
MOHD. JAMAL v. UNION OF INDIA & ANR. 471
taken on long term lease by the Oil Company at low rates A
of rent, on the assurance that dealership under the 'land
owners category' would be given to them. By virtue of the
new policy, the Oil Company proposed to run outlets on
their own and/or through Labour Contractors, in
supersession of all earlier policy guidelines. The B
appellant challenged the Notification dated 6.9.2006 in a
writ petition, which was dismissed by the High Court. The
other appeals, writ petitions and transferred cases
involved the similar issues.
It was, inter alia, contended on behalf of the land- C
holders that having acted on the basis of a policy by
which the respondent Oil Companies had offered fut!
dealership to land owners and having caused such land
owners to alter their position to their disadvantage, the
Oil Companies were estopped from going back on their D
promise.
Disposing of the matters, the Court
HELD: 1.1 Upon deregularisation of the distribution
E
of petroleum products, the Oil Companies issued
guidelines dealing with the procedure for locations
outside the marketing plans. The said guidelines referred ·
to grant of dealership, which is completely different from
the grant of long-term leases by the land owners to the
Oil Companies upon the condition that the same could F
be used by the lessees in any way they liked, which
included the right to sublet the demised plot. The concept
of Company Owned and Company Operated (COCO)
outlets was sought to be introduced on 6.9.2003, in
supersession of Policy No.MDPM-319/02 dated 8.10.2002 G
and the two cannot be co-related unless a link can be
established by the appellants that they had entered into
the leas e agreements with the Oil Companies upon the
understanding that once the earlier policy was restored,
the land owners would be given the option of having the H
472 SUPREME COURT REPORTS [2013) 7 S.C.R.
A COCO units converted into regular retail outlets. [para 56-
57) [502-B-C, 0-F]
1.2 The concept of a dealership in respect of a retail
outlet is completely alien to the concept of a COCO unit.
While the former deals with the right of the dealer to
8
independently operate the retail outlet, in the case of a
COCO unit, the entire set up of the retail outlet is owned
by the Oil Companies and only the day-to-day operation
thereof is outsourced to an M&H Contractor. With the
discontinuance of the earlier policy of granting
C dealerships in respect of retail outlets and the
introduction of a new policy awarding M&H Contracts in
respect of the COCO outlets, the land owners who had
entered into fresh lease agreements after the policy to
grant dealerships had been suspended, cannot now
D claim any right on the basis of the earlier policy in the
absence of any Letter of Intent having been issued
thereunder. [para 58) [502-G-H; 503-A-B)
1.3 The doctrine of promissory estoppel and
E legitimate expectation cannot be made applicable to
these cases where the leases have been granted by the
land owners on definite terms and conditions, without any
indication that the same were being entered into on a
mutual understanding between the parties that these
F would be temporary arrangements, till the earlier policy
was restored and the claim of the land owners for grant
of dealership could be considered afresh. On the other
hand, although, the nominees of the lessors were almost
in all cases appointed as the M&H Contractors, that in
G itself cannot convert any claim of the land owner for grant
of a permanent dealership. Even the M&H Contractor had
to submit an affidavit to the effect that he did not have·
and would not have any claim to the dealership of the
retail outlet and that he would not also obstruct the
making over possession of the retail outlet to the Oil
H
MOHD. JAMAL v. UNION OF INDIA & ANR. 473
Company, as and when called upon to do so. [para 59] A
[503-E-H; 504-A]
A.P. Transco Vs. Sai Renewable Power (P) Ltd. 2010 (8)
SCR 636 = (2011) 11 SCC 34; Bannari Amman Sugars Ltd.
Vs. Commercial Tax Officer 2004 (6) Suppl. SCR 264 = 8
(2005) 1 SCC 625; State of Himachal Pradesh Vs. Ganesh
Wood Products 1995 (3) Suppl. SCR 477 = (1995) 6 SCC
363; Kasinka Trading Vs. Union of India 1994 (4) Suppl. SCR
448 = (1995) 1 SCC 274; and Sethi Auto Service Station Vs.
D.D.A. (2009) 1 SCC 180 - referred to.
c
Union of India Vs. M/s. lndo-Afghan Agencies Limited
(1968) 2 SCR 366; Motilal Padampat Sugar Mills Co. Ltd.
Vs. State of Uttar Pradesh and Others 1979 (2) SCR 641 =
(1979) 2 SCC 409; Jit Ram Shiv Kumar Vs. State of Haryana
1980 (3) SCR 689 = (1981) 1 sec 11; Union of India and D
Others Vs. Godfrey Philips India Limited 1985 (3) Suppl. SCR
123 = (1985) 4 SCC 369; State of Bihar Vs. Kalyanpur
Cement Limited 2010 (1) SCR 928 = (2010) 3 SCC 274;
Yomeshbhai Pranshankar Bhatt Vs. State of Gujarat 2011 (6)
SCR 958 = (2011) 6 SCC 312; Kumari Shrilekha Vidyarthi E
=
Vs. State of U.P. 1990 (1) Suppl. SCR 625 (1991) 1 SCC
212; Dwarkadas Marfatia and Sons Vs. Board of Trustees of
the Port of Bombay 1989 (2) SCR 751 = (1989) 3 SCC 293;
and Mahabir Auto Stores Vs. Indian Oil Corporation 1990 (1)
=
SCR 818 (1990) 3 SCC 752; Ramana Dayaram Shetty Vs. F
lntemational Airport Authority of India & Ors. 1979 (3) SCR
=
1014 (1979) 3 SCC 489; E.P. Royappa Vs. State of Tamil
Nadu 1974 (2) SCR 348 = (1974) 4 SCC 3; and Maneka
=
Gandhi Vs. Union of India 1978 (2) SCR 621 (1978) 1 SCC
248 - held inapplicable.
G
1.4 Although, the appeals have been filed on account
of the denial to the land owners of the grant of dealership
in respect of the lands demised by them to the Oil
Companies, the entire focus has shifted to COCO outlets
on account of the fresh lease agreements entered into by H
474 SUPREME COURT REPORTS [2013) 7 S.C.R.
A the appellants with the Oil Companies which has had the _
effect of obliterating the claim of the land owners made
separately under earlier lease agreements. The claims of
the appellants/ petitioners in the instant batch of matters
have to be treated on the basis of the agreements
B subsequently entered into by the Oil Companies. [para
59] [504-A-C]
1.5 The land owners cannot claim any relief in these
proceedings and, if any loss or damages have been
suffered by them on ·account of the assurance earlier
C given regarding grant of dealership, particularly, in
making the sites ready therefor, the remedy of such
applicants would lie elsewhere. It will be open to the
appellants and the petitioners to approach the proper
forum in the event they have suffered any damages and
D loss, which they are entitled to recover in accordance
with law. [para 58 and 60] [503-C-D; 504-F]
Case Law Reference:
(1968) 2 SCR 366 held inapplicable para 19
E
1979 (2) SCR 641 held inapplicable para 21
1980 (3) SCR 689 held inapplicable para 22
1985 (3) Suppl. SCR 123 held inapplicable para 22
F
2010 (1) SCR 928 held inapplicable para 23
2011 (6) SCR 958 held inapplicable para 27
1990 (1) Suppl. SCR 625 held inapplicable para 30
G 1989 (2) SCR 751 held inapplicable para 31
1990 (1) SCR 818 held inapplicable para 31
1979 (3) SCR 1014 held inapplicable para 36
1974 (2) SCR 348 · held inapplicable para 36
H
MOHD. JAMAL v. UNION OF INDIA & ANR. 475
1978 (2) SCR 621 held inapplicable para 36 A
2010 (8) SCR 636 referred to para 46
2004 (6) Suppl. SCR 264 referred to para 46
1995 (3) Suppl. SCR 477 referred to para 46
B
1994 (4) Suppl. SCR 448 referred to para 46
(2009) 1 sec 180 referred to para 46
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5228 of 2013. C
From the Judgment and Order dated 08.02.2008 of the
High Court of Delhi at New Delhi in WP (C) No. 2392 of 2007.
WITH
C.A. Nos. 5229, 5230 of 2013, W.P. (C) Nos. 459 of 2009, 528 D
of2008, C.ANos. 5231, 5232, 5233, 5234, 5235, 5236, 5237,
5238,5239,5240,5241,5242,5243,5244,5245, 5246,5247,
5248,5249,5250,5251,5252,5253,5254,5255,5256,5257,
5258, 5259 of 2013, T.C. (C) No. 88, 89, 90 of 2013, C.A. Nos.
5260,5261,5262,5263,5264,5265,5266,5267,5268,5269, E
5270,5271,5272,5273,5274,5275,5276,5277,5278,5279,
5279, 5280, 5281, 5282, 5283, 5284, 5285, 5286, 5287-88,
5289-90, 5291, 5292-93, 5294-95, 5296, 5297, 5298, 5299,
5300 of 2013, T.C. (C) No. 91 of 2013 & C.A. Nos. 5301-02
of 2013. F
P.P. Malhotra, ASG Pradip K. Ghosh, Sunil Gupta, Jaideep
Gupta, P.K. Ghosh, Harish Chandra, Rana Mukherjee, Jitendra
Kumar Sharma, Abhijit Sengupta, Ajit Singh, Sandeep Singh,
Meenakshi Arora, Goodwill lndeevar, Sandhya Goswami, Jatin G
Zaveri, Rohit Sthalekar, Neel Kamal Mishra, Ajay Majithia, Dr.
Kailash Chand, Sanat Kumar, Sanjay Sharawat, Anjan
Chakraborty, Shekhar Kumar, Praween Gupta, P.K. Sahoo,
Md. Farman, Uttara Babbar, Neha S. Verma, Deeptakirti
Verma, Shomila Bakshi, Abhijeet Sinha, Rajendra Singhvi, H
476 SUPREME COURT REPORTS [2013] 7 S.C.R.
A KKL Gautam, Jitendra Mohan Sharma, Meenakshi Arora, Mala
Narayan, Rahul Narayan, Shalini Kumar, Rachna Joshi lssar,
Raj Kumar Tanwar, Chetan Chawla, 8. Krishna Prasad, Priya
Puri, Amit Pathak, Sagar Singhal, H.K. Puri, E.C. Vidya Sagar,
Arvind Kumar Sharma, Garima Prashad, Chandan
B Ramamurthi, Parijat Sinha, Reshmi Rea Sinha, Vikram Ganguly
for the appearing parties.
The Judgment of the Court was delivered by
ALTAMAS KABIR, CJI. 1. Special Leave Petition (Civil)
C No. 5849 of 2008 filed by one Mohd. Jamal, has been heard
along with several other matters where the same issue has
been raised and the reliefs prayed for are similar.
2. Leave granted in all the matters. During the hearing of
D these matters, Mohd. Jamal's case was taken up as the lead
matter.
3. From the facts as disclosed in the several Special
Leave Petitions (now Appeals), there are three groups of
matters included in these Appeals. The first group relates to
E the State of Karnataka, where the Union of India is the
Petitioner/Appellant. The second group involves matters filed
by the private parties where the jurisdiction is that of Delhi. The
third group deals with the similar question in regard to the
States of Gujarat and Madhya Pradesh. ·
F
4. All the private Appellants were and are aspirants for
dealership in respect of retail outlets of the Indian Oil
Corporation and the IBP, which merged with the Indian Oil
Corporation on 2nd May, 2007. The genesis of the claim for
G dealership arises out of policy guidelines, being Policy/MDPM
No.319/02 dated 8th October, 2002, for selection of retail outlet
dealers, published by the Indian Oil Corporation after the
distribution of petroleum product had been deregulated. The
said guidelines dealt with the procedure for locations outside
H
MOHD. JAMAL v. UNION OF INDIA & ANR. 477
[ALTAMAS KABIR, CJI.]
Marketing Plans and also stipulated that for the purpose of A
selection, the dealership would be categorised as indicated in
the guidelines and all retail outlets would be developed only on
A/C Sites basis which finds place in clause 2 of the guidelines
dealing with the common guidelines for all categories.
B
5. Appearing for the Appellant in SLP(C)No.5842/2008
(now appeal), Mr. Pradip Ghosh, learned Senior Advocate,
submitted that after nationalisation of Oil Companies in 1976,
the sale and distribution of petroleum and petroleum products
were under the control of the Central Government and regulated
by the provisions of the Essential Commodities Act, 1955. On C
and from 1978 the Central Government allowed the Public
Sector Oil Companies to set up retail outlets through an Oil
Selection Board, which was subsequently renamed as Dealer
Selection Board. Mr. Ghosh submitted that the Central
Government devised a methodology of setting up of retail D
outlets, by constituting the Industrial Meeting Committee which
would decide distribution of outlets region-wise in respect of
each petroleum company. Till 1998, the production and
marketing of petroleum and petroleum products were under the
control of the Ministry of Petroleum and Natural Gas and were E
executed through Public Sector Oil Companies. In 1998, the
Central Government decided to partly deregulate the
production, supply and distribution of petroleum and its prod'ucts
and indicated 2002 as a cut-off year to completely deregulate
the production and supply of petroleum and petroleum products. F
The Central Government, therefore, again took steps to meet
such objectives and in that connection decided to make certain
changes with regard to the functioning of natural _oil and gas
companies under the Market Oriven Pricing Regime and to
workout the modalities of setting up petrol pumps on National G
and State Highways.
6. This led to the creation of the concept of Company
Owned Company Operated outlets (COCO) as a means to
enable National Oil Companies to run and operate their own
H
478 SUPREME COURT REPORTS [2013] 7 S.C.R.
A outlets which were to be run as model retail outlets. Mr. Ghosh
submitted that the scheme thus devised was to extend and
cater to all National and State Highways and has certain salient
features which need to be spelt out in order to appreciate future
developments, which form the subject matter of the various
B appeals being heard by us.
7. One of the more important objectives which the scheme
hoped to achieve was to develop the retail outlets on relatively
large plots of land measuring 5 acres or so on the Highways.
Such land would be under the control of the marketing company
C either by way of purchase or on long-term lease basis. Such
retail outlets would also have facilities and amenities to be
developed by the Dealer in line with the norms laid down by
the Oil Companies on a standardised purchase. Such retail
outlets were to be developed outside the Marketing Plan in a
D transparent manner, subject to observance of ban on multiple
dealership. Mr. Ghosh submitted that the said scheme was to.
be executed in two phases. Phase I would enable the Oil
Companies to launch the scheme on pilot project basis for
setting up COCO outlets which might serve as models for future
E outlets. The second phase would be based on the experience
of the first phase and the rest of the scheme would be taken
up and completed within a period of three years.
8. Mr. Ghosh submitted that apparently a decision had
F been taken by the oil companies to convert the COCO outlets
into regular dealerships. A uniform policy was formulated for
manning and controlling of Jubilee Retail Outlets and, pursuant
to such policy, the Government approved the Indian Oil
Corporation's (IOC) decision to run 83 outlets for which sites
G had been taken over and facilities installed on COCO basis
under certain guidelines. Mr. Ghosh urged that it has
subsequently come to light that in respect of the said 82 outlets,
77 dealers or those holding Letters of Intent, had been allotted
dealership.
H
MOHD. JAMAL v. UNION OF INDIA & ANR. 479
[ALTAMAS KABIR, CJI.]
9. However, on 1st April, 2000, the Government of India A
notified its policy for operation of COCO outlets through
contractors. In February, 2002, the Indian Oil Corporation
purchased 33.58% of Equity Shares of IBP Ltd. Till 31st March,
2002, no oil company could by itself select its dealers or award
its dealership to them. The Government appointed Dealer B
Selection Boards, who were entrusted with the task of selection
of dealers for all oil companies. It was only from 1st April, 2002,
that the Administered Price Mechanism was dismantled and
the Dealer Selection Boards were dissolved. The Oil
Companies were, thereafter, given a certain amount of freedom c.
to frame their own policies, relating to the setting up of the retail
outlets by selection of dealers.
10. On 8.10.2002, IBP Ltd. devised and/or formulated its
policy and framed guidelines, inter alia, for selection of retail
outlets in the deregulated scenario. In line with the change in D
policy formulated by the Government of India, guidelines were
framed which recognised the rights of the land owners as a
category of persons entitled to dealership, subject to conditions.
Clause 3 of the scheme provided that the dealership of such
COCO outlets would first be offered to the landlord, provided E
he was found suitable. In case the landlord declined to accept
the dealership, it would be offered to Maintenance and Handling
Contractors (M&H). In the event, the Maintenance and Handling
Contractor also declined to accept the dealership, the same
would be offered to the best candidate available. F
11. Mr. Ghosh submitted that on 14th January, 2003, in line
with the Respondent's policy guidelines for selection· of retail
outlet dealers in the aftermath of deregulation vide Memo
Reference Policy/MDPM No.319/02 dated 8.10.2002, and a G
subsequent clarification of the General Manager (M), MHO
dated 14.12.2002, the Appellant, Mohd. Jamal, applied for a
·.retail outlet dealership for his land in the land owner's category.
Such application was made pursuant to an advertisement
issued by the oil company and the Appellant was also called H
480 SUPREME COURT REPORTS [2013] 7 S.C.R.
A upon by the oil company to obtain Dealership Agreement Form
from the Divisional Office by depositing Rs.1000/-. After
obtaining such Form, the Appellant submitted the same to the
company. Mr. Ghosh submitted that on 15th January, 2003, the
Committee on Dealer Selection found the Appellant's land
B suitable for developing a retail outlet, on National Highway
No.28, Sadatpur PS, Muzaffarpur Road, Bihar. The company
even sought prior approval for the said site from the Joint Chief
Controller of Explosives, East Circle, Calcutta. Based on the
recommendation made by the Dealer Selection Committee
c dated 15.1.2003, on 25th January, 2003, the General Manager
(ER) of the Respondent No.2 Company recommended that the
dealership be given to the Appellant and directed that a Letter
of Intent be issued in his favour on receipt of the explosive
licence. Mr. Ghosh submitted that while the Appellant's matter
D for grant of dealership was at the final stage, on 5th February,
2003, the Policy adopted on 8.10.2002 was suspended. It has,
of course, been claimed on behalf of the Appellant that the
suspension of the policy was never communicated to the land
owners, including the Appellant, Mohd. Jamal.
E 12. It is also the Appellant's case that it was mutually
agreed that till the issuance of the Letter of Intent, as an interim
arrangement, a nominee of the Appellant would be appointed
as the Maintenance and Handling Contractor to run the petrol
pump, provided that an affidavit in the prescribed form would
F be furnished by the Contractor. According to Mr. Ghosh, relying
on such assurance, the Appellant offered his land on lease to
the Oil Company on 14.3.2003, subject to the condition that the
monthly rental of the land would be Rs.27,000/- and would
commence from the date of registration of the documents.
G Further to the said understanding on 29th March, 2003, a
contract for Maintenance and Handling was executed between
the Oil Company and Mohd. lshtiaq Alam, the brother and
nominee of the Appellant, for running the said petrol pump.
Before Mohd. lshtiaq Alam was appointed as M&H Contractor,
H on anticipation of the Oil Company that he would be grahted
MOHD. JAMAL v. UNION OF INDIA & ANR. 481
[ALTAMAS KABIR, CJI.}
dealership, invested a sum of about Rs.25 lakhs to set up A
infrastructure. Ultimately, on 31st March, 2003, the petrol pump
was commissioned and started operating.
13. Mr. Ghosh submitted that in the above circumstances,
the Appellant executed a lease deed in favour of the Oil 8
Company for a period of 15 years, with a clause for further
periods of renewal.
14. Mr. Ghosh submitted that the aforesaid arrangement
was understood by all the parties to be of temporary duration,
as would be evident from the fact that the rent initially settled C
at Rs. 27,000/- per month in respect of the Appellant's land at
Sadatpur was reduced to Rs. 21,000/- per month after
negotiation, which upon calculation comes to approximately 50
paise per square feet, which in terms of the valuation made,
was abysmally low. D
15. Mr. Ghosh submitted that various other decisions were
taken both by the Oil Company as well as the Ministry
concerned by which fresh guidelines were also framed for
selection of retail outlets and SKO-LDO (Super Kerosene Oil E
- Light Diesel Oil) dealers. Learned counsel submitted that by
a policy circular No. 05/0405 dated 30.3.2005, introduced by
the Oil Company, existing land owners of the concerned Jubilee
Retail Outlets and the Company Owned and Company
Operated Outlets were disqualified from being appointed as
F
dealers, although, the same was never communicated to the
Appellant. Mr. Ghosh submitted that, in the meantime, the
temporary arrangement which had been arrived at in the case
of the Appellant, Mohd. Jamal, has been continuing on the
strength of orders passed by this Court. Mr. Ghosh also urged
that on 6th September, 2006, the Oil Company formulated a G
new policy whereby the concept of offering dealership to land
owners was abandoned to the prejudice of the land owners
whose Letters of Intent for dealership were pending and where
lands had also been taken on long term lease by the Oil
Company at low rates of rent; on the assurance that dealership H
482 SUPREME COURT REPORTS [2013) 7 S.C.R.
A under the land owners category would be given to them. By
virtue of the new policy, the Oil Company proposed to run outlets
on their own and/or through Labour Contractors, in
supersession of all earlier policy guidelines.
B 16. Mr. Ghosh submitted that one of such land owners filed
Writ Petition No. 358 of 2006 -· N.K. Bajpai Vs. Union of India
and Others, challenging the changed policy. While disposing
of the Writ Petition, the learned Single Judge of the Delhi High
Court, inter alia, held that Oil Companies cannot assign the
running of petrol pumps on the land of the writ petitioners
C without their consent. Mr. Ghosh submitted that aggrieved by
the said Notification dated 6.9.2006, the Appellant also filed
Writ Petition No. 2392 of 2007, before the Delhi High Court for
quashing of the said Notification and to restrain the respondents
from terminating/cancelling the arrangement arrived at
D regarding the running of the retail outlet on the Appellant's land
through his nominee, or in the alternative, to return the land to
the Appellant if the dealership was not granted to the Appellant.
Mr. Ghosh submitted that the learned Single Judge of the Delhi
High Court referred the matter to a Division Bench for hearing
E and on 8.2.2008, the Delhi High Court disposed of a bunch of
Writ Petitions, while retaining 11 such Writ Petitions, which, it
felt needed further consideration since the said Writ Petitions
projected an implied promise and/or understanding having
been reached between the land owners and the Oil Companies
F concerned having regard to the low lease rentals for the lands
offered by the land owners to the companies for establishing
their retail outlets. Learned counsel submitted that the
Appellant's Writ Petition was among those bunch of petitions,
which were dismissed by the High Court, although, the
G Appellant's case was the same as that of the 11 Petitioners,
whose matters had been retained by the High Court for further
consideration. Mr. Ghosh submitted that it is at that stage that
this Court admitted the Appellant's Special Leave Petition (Civil)
No. 5849 of 2008, on 31st July, 2008, and passed an order
H whereby the parties were directed to maintain status-quo as
MOHD. JAMAL v. UNION OF INDIA & ANR. 483
[ALTAMAS KABIR, CJI.]
I
on that day, with liberty to the respondents to apply for variation A
and/or modification of the order, if so advised.
17. The main ground of challenge .canvassed by Mr.
Ghosh on behalf of the Appellant, Mr. Jamal, and other similarly
placed Appellants, was that having acted on the basis of a B
policy by which the Respondent Oil Companies had offered full
dealership to land owners and having caused such land owners _
to alter their position to their disadvantage, the Oil Companies
were now estopped from going back on their promise. Mr.
Ghosh urged that the decision to discontinue the grant of C
dealership and to introduce the new concept of COCO outlets,
to be run by the Maintenance and Handling contractors, could
not be used to the disadvantage of those land owners in whose
favour a decision had already been taken to issue Letters of
Intent for grant of dealership. Mr. Ghosh submitted that these
cases were clearly covered by the doctrine of promissory D
estoppel, inasmuch as, in these cases the land owners had
altered their positions to their detriment in several ways. Mr.
Ghosh submitted that in most cases the rates of rents at which
the lands were offered to the Oil Companies were extremely
low and did not reflect the market rental of such lands, which is E
one of the indications that a promise had been made to the
land owners that they would be granted dealerships in respect.
of the said lands, which was in tune with the policy, which had
been declared by the Oil Companies earlier.
F
18. Mr. Ghosh submitted that in other cases the landlords
had invested large sums of money, as in the case of Mohd.
Jamal, in preparing the land offered for operating the retail
outlets of petroleum and petroleum products, ostensibly on the
promise that they would be granted dealership for running the G
said outlets. Mr. Ghosh submitted that acting on such promise
the Appellant, Mohd. Jamal, spent more than Rs.27 lakhs to
prepare the site for running the retail outlet and it would not be
unreasonable to accept the case made out on his .behalf that
such expenditure was incurred in lieu of such promise. l_n
H
484 SUPREME COURT REPORTS [2013] 7 S.C.R.
A certain other cases, the land owners had been persuaded to
enter into long term lease agreements, again at nominal rents,
on the assurance that their nominees would be appointed as
Maintenance and Handling Contractors of the different COCO
units, pending the decision to grant full dealership in respect
B of such retail outlets, in keeping with the earlier policy of
reducing the number of COCO units and retaining a few to be
run by the Oil Companies as model outlets.
19. Mr. Ghosh submitted that in these circumstances, the
Oil Companies and the Union of India are estopped by the
C promises made by them to grant dealerships to the land-owners
on the basis of the policy existing prior to 5th February, 2003
and 6th September, 2006.
20. Mr. Ghosh submitted that one of the earliest decisions
D of this Court regarding the doctrine of promissory estoppel was
in Union of India Vs. Mis. Inda-Afghan Agencies Limited
[(1968) 2 SCR 366], wherein it was held that even though the
case did not fall within the scope of Section 115 of the
Evidence Act, it was still open to a party who had acted on a
E representation made by the Government to claim that the
Government should be bound to carry out the promise made
by it, though not recorded in the form of a formal contract.
21. Reference was then made to the celebrated decision
in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar
F Pradesh and Others [(1979) 2 sec 409], commonly known as
the "M.P. Sugar Mills case", wherein a Bench of Two Judges
went into a detailed enquiry regarding the doctrine of
promissory estoppel and equitable estoppel and observed that
the doctrine of promissory estoppel is not really based on the
G principle of estoppel, but is a doctrine evolved by equity in order
to prevent injustice. It has also been observed that there is no
reason as to why it should be given a limited applieation by way
of defence and that it could also be the basis of a cause of
action and all that was necessary for attracting the said doctrine
H was that the promisee should have altered his position in relying
MOHD. JAMAL v. UNION OF INDIA & ANR. 485
[ALTAMAS KABIR, CJI.]
on the promise. It was emphasized that it was not necessary A
that the promise should suffer any detriment as well.
22. Mr. Ghosh submitted that a somewhat different view
had been taken also by a Bench of Two Judges in Jit Ram Shiv
Kumar Vs. State of Haryana [(1981) 1 SCC 11), but the B
differing view expressed in the said case was overruled by a
Bench of Three Judges in Union of India and Others Vs.
Godfrey Philips India Limited [(1985) 4 SCC 369), wherein the
decision in the M.P. Sugar Mills case (supra) was pronounced
as being the correct law.
c
23. Various other decisions have also been cited in
support of the aforesaid doctrine of promissory estoppal or
equitable estoppel, but it will suffice to refer to one of the latest
decisions in this regard in State of Bihar Vs. Kalyanpur
Cement Limited [(2010) 3 SCC 274), wherein it was D
emphasized that in order to invoke the aforesaid doctrine, it has
to be established that a party had made an unequivocal
promise or representation by word or conduct, to the other party,
which was intended to create legal relations or affect the legal
relationship to arise in the future, and that the party invoking the E
doctrine has altered its position relying on the promise.
24. Mr. Ghosh submitted that having held out a promise
to grant a dealership to the Appellant and the other Appellants
in the connected matters, in respect of the lands offered by them F
for setting up retail outlets for the sale of petroleum and
petroleum products and having acted thereupon just prior to the
stage of grant of Letters of Intent, it was no longer available to
the Oil Companies to renege on their promise, particularly when
the aspirants for dealership had altered their position and had
spent enormous sums of money to make the sites ready for G
setting up the retail outlets. As was observed in the M.P. Sugar
Mills case (supra), it was not even necessary for the land
owners to have suffered any prejudice on account of such '
alteration. It was sufficient that, pursuant to the promise made ·
of grant of dealership, they had altered their position and haa H
486 SUPREME COURT REPORTS [2013] 7 S.C.R.
A spent large sums of money to make the sites ready for·
occupation.
25. To bolster his submissions, Mr. Ghosh referred to the
Single Bench decision of the Karnataka High Court dated 28th
B July, 2009, in Writ Petition No. 1016 of 2007, filed by one Shri
Y. T. Narendra Babu and other connected Writ Petitions, wherein
the facts identical to the facts in these cases were in issue. In
fact, SLP(C) No. 9655 of 2010 (now Appeal) has been filed by
the Indian Oil Corporation Limited against Y.T. Narendra Babu,
C against the appellate order of the Karnataka High Court dated
19.11.2009, in Writ Appeal No. 3248 of 2009, endorsing the
judgment of the learned Single Judge in the Writ Petition. In the
same set of facts, where lands had been taken on lease on the
assurance that the land owners would be appointed as dealers
in due course and that till then the retail outlet would be treated
D as a COCO unit to be run by a nominee of the land owner, the
learned Single Judge was of the view that in view of the
assurance given to the land owners and notwithstanding the
change in policy guidelines regarding the allotment of
dealership in favour of the land owners, the doctrine of
E promissory estoppel and of legitimate expectation would apply
to the case. The learned Single Judge, therefore, allowed the
Writ Petition and directed the Respondents to process the
applications filed by the Petitioners or their nominees for grant
of dealership on a co-terminus basis with the period of the lease
F of the land on which the retail outlets are established. As
indicated hereinbefore, the said views were approved by the
Division Bench, which did not interfere with the decision or the
directions given consequent thereto by the learned Single
Judge.
G
26. Mr. Ghosh then turned to another aspect, which had
been considered in the cases heard and determined by the
Gujarat High Court, namely, the issuance of Comfort Letters in
several cases where the lease deed had been executed prior
H to 8th October, 2012, assuring the land owners of the demised
MOHD. JAMAL v. UNION OF INDIA & ANR. 487
[ALTAMAS KABIR, CJI.]
plots that they would enjoy the right of first refusal if COCO A
outlets set up on their lands were to be converted into
dealerships. Mr. Ghosh pointed out that some of the Comfort
Letters addressed to the land owners issued on behalf of the
IBP Company Limited, by its Divisional Manager, have been
annexed to the Special Leave Petitions (now Appeals), filed B
by those aggrieved by the judgment of the Division Bench of
the Gujarat High Court, setting aside the orders of the learned
Single Judge. Upon holding that the Comfort Letters issued to
individual land owners could not be relied upon, as being a
policy decision of the Company, the Division Bench•came to C
the conclusion that the learned Single Judge was in error in
giving a finding of fact in a Writ Petition under Article 226 of
the Constitutio9, particularly when the facts were disputed and
the entire evidence was yet to be disctosed. Mr. Ghosh
submitted that, while allowing the Writ App~als filed by the Oil D
Companies, the Division Bench of the Gujarat High Court had
misconstrued the submissions made with regard to the doctrine
of promissory estoppel, which would be available from the
surrounding facts and circumstances, even if the same had not
been explicitly spelt out. E
27. In support of his submissions, Mr. Ghosh referred to
the decision of this Court in Yomeshbhai Pranshankar Bhatt
Vs. State of Gujarat [(2011) 6 SCC 312), wherein the learn~ct
Judges, while considering the scope of the Supreme Court'$
jurisdiction under Article 142 of the Constitution, held that even F
during a final hearing the Supreme Court was not precluded
from considering the controversy in its entire perspective and
that the power under Article 142 was to do complete justice,
unless there was an express provision of law to the contrary.
Mr. Ghosh urged that this Court had always held that technical G
objections should not come in the way of the Supreme Gou.rt
doing complete justice to the parties. ·
28. Mr. Ghosh submitted that in the light of the above, the
Oil Companies should either be directed to act in terms of the H
488 SUPREME COURT REPORTS [2013] 7 S.C.R.
A promise made to grant dealerships or in the event of their
unwillingness to do so, they may be directed to restore
possession of the lands leased out to them in accordance with
the doctrine of restitution.
29. Mr. Rana Mukherjee, who appeared for some of the
8
Petitioners (now Appellants) in this batch of cases and had also
assisted Mr. Pradip Ghosh, while reiterating the submissions
made by Mr. Ghosh, referred to some of the factual differences
in the individual Writ Petitions and urged that, being in a
dominant position, the Government cannot act arbitrarily. Having
·c made a promise to grant dealership licences to some of the
land owners, who had on the basis of such assurances
demised their lands to the Oil Companies for rents which were
markedly lower than the existing rents in the area and had also
spent large amounts in making such sites ready, the Oil
D Companies could not go back on such assurances on the plea
that there had been a change in the policy for grant of
dealership. Mr. Rana Mukherjee submitted that the window
period, which had been identified by this Court, between 8th
October, 2002 and 5th February, 2013, was a period when the
E policy to grant dealerships was in full force and the applications
received and processed during the said period would have to
be treated differently from the applications made thereafter,
after the change in the policy. Mr. Mukherjee, in fact, contended
that in some of the cases, where applications had been made
F for grant of dealership pursuant to advertisements published in
the Press, but in whose cases the decision to issue Letters of
Intent had been kept in abeyance prior to 8th October, 2002,
were also entitled to the same benefits in keeping with the
doctrine of promissory equity.
G
30. Mr. Mukherjee, who also appeared in SLP(C} No.
5756 of 2008 (now Appeal), filed by one Khurshid Ahmed
Chippa, submitted that this Court in Kumari Shrilekha
Vidyarthi Vs. State of U.P. ((1991) 1 SCC 212), wherein the
doctrine of natural justice fell for consideration, and it was held
H
MOHD. JAMAL v. UNION OF INDIA & ANR. 489
{ALTAMAS KABIR, CJI.]
that every State action, in order to survive, must not be A
susceptible to the vice of arbitrariness, which forms the essence
of Article 14 of the Constitution. While interpreting Article 14
of the Constitution, this Court has consistently held that non-
arbitrariness is a necessary concomitant of the rule of law and
is, in substance, fair play in action. In the said decision, it was B
further observed that whether an impugned act is arbitrary or
not, is ultimately to be decided on the facts and circumstances
of each case, but an obvious test to apply is to see whether
there is any discernible principle emerging from the impugned
act and, if so, does it satisfy the test of reasonableness. It was c
further observed that every State action must be informed by
reason and it follows that an act, uninformed by reasons, is
arbitrary.
31. Mr. Mukherjee also referred to the decision of this
Court in Dwarkadas Marfatia and Sons Vs. Board of Trustees D
of the Port of Bombay [(1989) 3 SCC 293] and Mahabir Auto
Stores Vs. Indian Oil Corporation {(1990) 3 SCC 752), wherein
similar views have consistently been expressed. Mr. Mukherjee
also prayed for the same reliefs as prayed for by Mr. Pradip
Ghosh, learned Senior Advocate, on behalf of some of the E
Appellants.
32. Mr. Jitender Mohan Sharma, learned Advocate who
appeared with Mr. Pradip Ghosh, learned Senior Advocate, in
some of the Appeals, also appeared individually for some of F
the other Appellants, such as Tirath Ram Chauhan, Sohan
Singh, etc. In facts which were similar to that of the facts in
Mohd. Jamal's case and in almost all the other cases, Mr.
Sharma repeated and reiterated the submissions made by Mr.
Ghosh in general and reiterated Mr. Ghosh's submissions with G
regard to the doctrine of promissory estoppel, since the
Appellants in all the cases in which Mr. Sharma appeared, had
altered their position after being given an assurance that they
would be given dealership in respect of the retail outlets to be
established on the demised lands. In their cases interim
H
490 SUPREME COURT REPORTS [2013] 7 S.C.R.
A arrangements were required to be made as the grant of
dealerships were likely to take some time. Mr. Sharma also
urged that the decision of the Respondents to alter their policy
regarding grant of dealership, when matters had almost
reached the final stage of allotment of dealership, was against
B all norms of fair play and was liable to be quashed.
33. Mr. Sanjay Sharawat, learned Advocate appearing for
some of the Respondents, also adopted the submissions made
by Mr. Ghosh and pointed out that the lease deeds executed
by the land owners and the Maintenance and Handling
C Contracts were kept separate, since it was the intention of the
Oil Companies that in terms of the policy of the Indian Oil
Corporation dated 23.7.2003, despite the two contracts being
separate, as and when the Policy permitted, dealership would
be awarded to the land owners or their nominees. It was,
D however, pointed out that in all the cases it had been decided
to grant Maintenance and Handling Contracts to nominees of
the land owners to enable them to run the retail outlets till a final
decision was taken in the matter. Mr. Sharawat submitted that
the very fact that in the Policy of the Indian Oil Corporation dated
E 23. 7 .2003, the Company had specifically permitted the land
owners to nominate anyone from the family or from outside the
family for being appointed as the Maintenance and Handling
Contractor, was sufficient indication that it was the intention of
the Respondents to grant permanent dealership to the land
F owners once a clarification had been received in the matter.
Mr. Sharawat submitted that the problem had been created
only on account of the decision of the Oil Companies to go back
on their promise which brought all these cases squarely within
G the doctrine of promissory estoppal.
34. Much the same arguments were advanced by Mr. Rajiv
Dutt, learned Senior Advocate appearing for the Writ Petitioner,
Tirath Ram Chauhan, in Writ Petition (Civil) No.528 of 2008.
Mr. Dutt urged that pursuant to the advertisement issued by IBP
H Oil Company on 12th April, 2001, the Petitioner (now Appellant)
MOHD. JAMAL v. UNION OF INDIA & ANR. 491
[ALTAMAS KABIR, CJI.]
- had offered his land on NH-1A Jalandhar-Pathankot, but no A
decision had been taken by the Respondents on such offer. On
the other hand, on 8th October, 2002, the Company introduced
a Policy regarding allotment of retail outlets under the land
owners category. Thereafter, as in the other cases, on the
Appellant's land being found suitable a lease deed was B
executed and the Appellant's nominee was appointed as the
Maintenance and Handling Contractor to run the outlet on
16.12.2002. On 30.11.2002, the pump began operational.
Operations were continued in the retail outlet by virtue of the
said contract, which was extended annually. c
35. While the aforesaid arrangement was continuing, on
6.9.2006, the Ministry of Petroleum and Natural Gas issued a
Notification directing all the marketing companies to phase out
the existing COCO retail units within a year.
D
36. Mr. Dutt submitted that the Writ Petitions which had
been filed before the Delhi High Court for quashing the said
Policy dated 6.9.2006 were dismissed by the High Court on
8.2.2008 against which the several Special Leave Petitions
were filed. As far as the Writ Petitions are concerned, the E
present Writ Petition was filed under Article 32 of the
Constitution and was entertained by this Court on 28.11.2008,
when this Court issued Notice and directed the parties to
maintain status-quo, which order is still subsisting. Mr. Dutt also
relied on the decisions which had been cited by Mr. Pradip F
Ghosh and in addition he also relied on the often cited decision
of this Court in Ramana Dayaram Shetty Vs. International
Airport Authority of India & Ors. [(1979) 3 SCC 489], wherein
a question had arisen regarding the right of the Petitioner to
challenge the actions of the International Airports Authority of G
India, which was an instrumentality or agency of the
Government. It was held that where the Corporation is an
instrumentality or the agency of the Government, it would be
subject to the same constitutional or public law limitations as
the Government, which cannot act a~bitrarily and enter into a
H
492 SUPREME COURT REPORTS [2013] 7 S.C.R.
A relationship with any person it likes at its sweet will, but its
action must be in conformity with some principle which meets
the test of reason and relevance. Reference was also made to
the decisions of this Court in the cases of E.P. Royappa Vs.
State of Tamil Nadu [(1974) 4 SCC 3] and Maneka Gandhi
B Vs. Union of India [(1978) 1 SCC 248), wherein it was held
that Article .14 strikes at arbitrariness in State action and
ensures fairness and equality of treatment. It requires that State
action must not be arbitrary, but must be based on some
rational and relevant principle which is non-discriminatory.
c 37. In some of the other cases, learned counsel appeared
and pointed out that the applications for dealership had been
made during the window period between 8.10.2002 and
5.2.2003, making them eligible for being considered for grant
of dealership on the strength of the Policy, wh_ich was then
D prevalent and was subsequently stayed on 5.2.2003 and was
replaced by the decision taken on 6.9.2006 to phase out the
existing COCO Units.
38. Special Leave Petition (C} No.9010 of 2008 (now
E Appeal) arising out of Writ Appeal No.2445 of 2007, from the
Delhi High Court is a case similar to that of Mohd. Jamal.
Appearing on behalf of the Appellant, Satyanarayan Kumar
Singh, Mr. Ravi Shankar Prasad, learned Senior Advocate,
repeated the submissions made by Mr. Pradip Ghosh. Mr.
F Prasad submitted that although the Appellant had applied for
full dealership, the COCO unit was thrust upon him and the
same had to be reconverted into the Appellant's claim for full
dealership.
39. Appearing for two of the Appellants in respect of Civil
G Appeal @ SLP(C}No.20908 of 2011 (Kamar Ahmed Yusuf
Lu/at & Ors. Vs. IBP Co. Ltd. & Ors.} and Civil Appeal @
SLP(C}No.22831 of 2011 (Jaswantsinh A Rana (D) by LRs.
& Ors. Vs. IBP Co. Ltd. & Ors.}, Mr. Sunil Gupta, learned Senior
Advocate, also based the claim of the Appellants on the
H doctrine of promissory estoppel. In fact, the case of the two
MOHD. JAMAL v. UNION OF INDIA & ANR. 493
[ALTAMAS KABIR, CJI.]
Appellants is the same as the case of most of the Appellants A
and Writ Petitioners, where the learned Single Judge had
allowed the Writ Petitions while the Division Bench reversed
the same on the ground that all the writ petitions had been
disposed of by a common reasoning. Mr. Gupta contended that
the new policy formulated on and from 10th August, 2002, was B
really a culmination of the earlier policy of the Oil Companies
dated 31.5.2001, which provided for grant of full dealership in
respect of the lands offered by new applicants. As in the case
of the other claimants, the claim of the Appellant did not fructify
on account of the change in policy and was kept in abeyance c
also, as there was a further change in the policy by which the
Oil Companies decided to phase out the COCO units which
were being run by Maintenance and Handling Contractors. Mr.
Gupta referred to the "comfort letters", which had been provided
by the Government, assuring the land owners that the decision 0
to run the COCO units with the help of the Maintenance and
Handling Contractors, was only a temporary arrangement and
as soon as it would be possible, the land owners would be
given the first option for dealership in respect of the retail outlet.
Mr. Gupta also relied on the decisions of this Court on the
doctrine of promissory estoppal and legitimate expectation E
cited by Mr. Pradip Ghosh, Mr. Rana Mukherjee and the other
learned counsel and urged that the directives issued by the Oil
Company on 6.9.2006 were liable to be quashed.
40. Appearing for several of the claimants for dealership, F
Mr. Jaideep Gupta, learned Senior Advocate, submitted that
the facts in all these cases were similar to the matters in which
submissions had earlier been made. However, in some of the
matters, Mr. Gupta urged that the decision to grant dealership
had been taken before 8.10.2002 and nowhere in the Letters G
of Intent, is there any indication that the retail outlets were COCO
Units. However, after the change in policy, the concept of
COCO Units was introduced and the nominees of the land
owners were appointed as Maintenance and Handling
Contractors to run the said outlets. Thus, there was a tenuous H
494 SUPREME COURT REPORTS [2013) 7 S.C.R.
A connection between the execution of the lease documents and
the grant of Maintenance and Handling Contracts. Mr. Gupta
submitted that apparently, the separation of the lease from the
Maintenance and Handling Contracts, was done with the
deliberate intention that the land owners would not have any role
B to play with the running of the outlet till the matter relating to
dealership of the retail outlet was settled.
41. Mr. Gupta also adopted the submissions made by Mr.
Pradip Ghosh, learned Senior Advocate for the Appellants and
C urged that the decision taken by the Oil Companies not to grant
dealerships in respect of the COCO Units ran counter to the
fact situation which would indicate that the Oil Companies had
intended to grant dealership to the land owners, which would
be evident from the following summary of facts :-
D (a) While in most cases, the issuance of the Letters of
Intent were pending, Maintenance and Handling
Contracts were given to run the retail outlets to the
nominee and/or near relation of the land owners.
(b) The rents initially asked for by the land owners for
E
grant of lease for the lands offered for setting up the
retail outlets were substantially reduced when the
lease deeds were executed.
(c) The investments made by the landlords in making
F the plots ready for setting up thepetrol pumps.
(d) Correspondence exchanged between the parties.
(e) Existence of the policy to offer the land owners the
right of first refusal for the Maintenance and
G
Handling Contractsprior to grant of dealership.
(f) Annual grant of dealership.
42. Mr. Gupta urged that the lease deeds executed
H between the parties do not represent the totality of the matter,
MOHD. JAMAL v. UNION OF INDIA & ANR. 495
[ALTAMAS KABIR, CJI.]
but is only a part of the transaction. Mr. Gupta submitted that A
the cases of the claimants were clearly· covered by the doctrine
of promissory estoppel and as had been urged by Mr. Ghosh
and the other learned counsel, the decision of the Oil
Companies arrived at on 6.9.2006 not to grant any further
dealership but to operate through COCO Units, was bad and B
was liable to be quashed.
43. In all the other cases, the fact situations were almost
identical as were the submissions advanced on their behalf.
The Gujarat matters which were taken up in the said bunch
were not very different from the other matters wherein also C
applications for grant of dealership had been rriade within the
window period when the Policy relating to grant of dealership
was subsisting and steps similar to those taken in the other
matters were ~lso taken with regard to the Special Leave
Petitions filed against the change in Policy contained in the D
Notification dated 6.9.2006.
44. Appearing for the Indian Oil Corporation, the learned
Attorney General confined his submissions to the legal issues
raised during the hearing of this batch of Appeals and left it to E
Ms. Meenakshi Arora, learned Advocate, to deal with the factual
aspect.
45. On the question of the common grounds taken on
behalf of the Appellants and the Writ Petitioners that their
respective cases were covered by the doctrine of promissory F
estoppal, the learned Attorney General submitted that such a
stand was entirely misconceived. Once an Agreement is
entered into, the parties are bound by the terms of the said
Agreement which extinguishes any claim of promissory
estoppal, which may have arisen prior to the signing of the G
Agreement. Referring to the application made by the Appellant,
Mohd. Jamal, on 14th March, 2003, providing the specifications
of the land and indicating that the same, including the building
thereupon, had been made ready and that there was no
problem in giving the same to the Company for running the H
496 SUPREME COURT REPORTS [2013) 7 S.C.R.
A petrol pump in any manner it liked, the learned Attorney General
submitted that the same destroyed any promise that may have
been made before the aforesaid offer was made by the
Appellant. The learned Attorney General pointed out that in the
said letter, while offering the land and structures thereon in
B question to the Oil Company to establish a petrol pump and to
run it in any manner it liked, certain terms and conditions had
been indicated by the Appellant, including the monthly rental
and the increments thereof after every 5 years, together with
the period of the lease with an option of renewal. The learned
c Attorney General submitted that once such an offer had been
made, which was supported by an affidavit affirmed and filed
by the land owner's nominee for being awarded the
Maintenance and Handling Contract, wherein it was undertaken
that.the said nominee would have no claim on the retail outlet
0 dealership at any time and would not seek any legal help at a
future date to stall smooth handing over of the site as and when
desired, nothing remained of the promise, if such an offer had
at all been made and the same could be construed to be an
offer which attracted the doctrine of promissory estoppal or
E equitable estoppal.
46. The learned Attorney General submitted that the
aforesaid letter was written by the Appellant at a point of time
when the Policy dated 8.10.2002 had already been suspended.
Further, the said letter had not only been suppressed but had
F even been disowned by the Appellant. Even after disowning the
said letter, the Appellant has again relied on the same in order
to make out a case that he had agreed to make the said offer
on the assurance given by the Oil Company that he would be
granted full dealership once the proceedings before the Court
G were cleared. The learned Attorney General pointed out that in
none of the documents executed between the Appellants had
any foundation been laid in support of the assertion that a
compromise had been made that a dealership would be given
to land owners and that the awarding of Maintenance and
H Handling contracts was only an interim measure. The learned
MOHD. JAMAL v. UNION OF INDIA & ANR. 497
[ALTAMAS KABIR, CJI.]
Attorney General submitted that given the disputed nature of the A-
claim, the matter cannot be gone into in a Writ Petition which
was, therefore, misconceived. In this regard, the learned
Attorney General referred to the decision of this Court in A.P.
Transco Vs. Sai Renewable Power (P) Ltd. [(2011) 11 SCC
34], in which while considering the doctrine of promissory B
estoppel and legitimate expectation in regard to various
communications extending certain incentives to producers of
electricity from non-conventional energy resources, it was held
that the parties had voluntarily signed the Power Purchase
Agreements by which they were governed and neither the c
doctrine of promissory estoppel nor legitimate expectation
could, therefore, have any application in regard to the
correspondence exchanged between the parties, whereby the
Government had extended certain incentives to the producers
of electricity from non-conventional energy resources. The 0
learned Attorney General also referred to the decision in
Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer
[(2005) 1 SCC 625]; State of Himachal Pradesh Vs. Ganesh
Wood Products [(1995) 6 SCC 363]; Kasinka Trading Vs.
Union of India [(1995) 1 SCC 274] and Sethi Auto Service E
Station Vs. D.D.A. [(2009) 1 SCC 180],wherein the same
doctrine had been considered.
47. Supplementing the submissions made by the learned
Attorney General, Ms. Meenakshi Arora, learned Advocate,
submitted that the cases being heard in this batch of matters F
can be divided into four categories, namely:
(i) Agreements entered into between the Oil
Companies and the land owners prior to 8.10.2002;
(ii) Maintenance and Handling contracts signed G
between 8.10.2002 and 5.2.2003;
(iii) Offers made by land owners and lease Agreements
executed within the aforesaid period;
H
498 SUPREME COURT REPORTS [2013) 7 S.C.R.
A (iv) Petrol pumps commissioned upon lease being
executed after the new Policy came into existence
on 5.2.2003.
48. Ms. Arora submitted that prior to the Policy No. 319
dated 8.10.2002, the Oil Companies granted dealership in
8
respect of retail outlets on the basis of applications invited for
the said purpose. Several land owners had responded to the
said applications and had offered their lands to the Oil
Companies for setting up retail outlets on main Highways.
C However, the Oil Companies were also considering a scheme
whereby they would be able to retain control over the various
retail outlets by operating them as Company Owned and
Company Operated (COCO) units, which provided for retail
outlets to be owned fully by the Oil Companies, but the
operation thereof was outsourced to M&H contractors, who
D would not have any right to dealership of the outlet.
49. Ms. Arora submitted that the cases of the applicants
in the third category would have to be treated differently from
applicants whose claims were based on decisions to grant
E dealership which had been arrived at prior to 8.10.2002. In
certain cases, on the basis of the leases granted, petrol pumps
had already been commissioned and were functioning, but with
the help of M&H contractors. Ms. Arora submitted that once the
policy to grant full dealerships was suspended and the new
F policy was adopted in September, 2003, barring a few cases
no further dealerships were given in respect of the retail outlets
and all the units were, thereafter, run as Company Owned and
Company Operated units where the Company retained control
of the· outlets, but left the day to day management thereof to the
G contractors.
50. Taking the case of Mohd. Jamal, Ms. Arora submitted
that, as was submitted by the learned Attorney General, the
.~· Appellant, whose application for grant of Letters of Intent was
pending, entered into a separate Agreement wi!h the Oi!
H Company on 14.3.2003, when the earlier policy had already
MOHD. JAMAL v. UNION OF INDIA & ANR. 499
[ALTAMAS KABIR, CJI.]
been discontinued and after execution of the lease, named his A
brother, Mohd. lshtiaq Alam, as his nominee, to function as the
M&H contractor in respect of the outlet established on his land.
Ms. Arora submitted that Mohd. lshtiaq Alam was found suitable
to act as M&H contractor and a Agreement was, therefore,
executed on 29.3.2003, which also included an affidavit affirmed B
· by Mohd. 1shtiaq Alam. Pointing to the contents of the said
letters, which had been referred to by the learned Attorney
General, Ms. Arora submitted that the Appellant executed the
lease Agreement, being fully aware of the consequences
thereof, and so was the nominee who affirmed an affidavit c
clearly indicating that he was only managing the unit and had
no claim to the dealership of the said outlet in lieu of being
awarded the contract.
51. Ms. Arora urged that once Policy No.MDPM-319/02
dated 8.10.2002, was replaced by the new Policy dated D
19.9.2003, all future transactions between the Appellants/
Petitioners and the Oil Companies would have to be considered
in the light of the new policy, which dealt with COCO outlets only.
Ms. Arora submitted that as the lease agreement between Md.
Jamal and the Oil Company was executed after the policy dated E
8.10.2002 was suspended, it was a clear indication that the land
owner was aware of his actions in offering his land to the
companies for establishing a petrol pump thereupon, without any
conditions attached except for the rental and period of the lease.
Even, if Ms. Arora's submi~sion that the appointment of M&H F
Contractors was connected with the signing of the lease
agreement is to be accepted, even then the land owner could
have no claim to the dealership in respect of the said retail outlet
being operated as a COCO unit. Ms. Arora submitted that as
has already been indicated hereinbefore, the concept of COCO G
units was that the land and the infrastructure would either be
, owned or taken on long-term lease by the oil company but the
operation of the petrol pump would be outsourced to a M&H
. Contractor, who submitted an affidavit affirmed by him while
· applying for the M&H Contract that he neither had nor would in H
500 SUPREME COURT REPORTS [2013] 7 S.C.R.
A future have any claim to the dealership of the said retail outlet.
52. Ms. Arora submitted that the case made out by the land
owners after the grant of M&H Contracts, was not bona fide,
and, in any event, could not be related to the transactions under
the earlier policies which had been replaced by fresh
8
agreements entered into by the parties on the basis of the new
policy. Ms. Arora urged that neither was the doctrine of
promissory estoppal nor legitimate expectation applicable in
the instant case where there was no foundation for such a claim.
C Ms. Arora reiterated her submissions that Policy No. MDPM-
319/02 dated 8.10.2002, was related to selection of dealers
and not to COCO outlets and it was denied that the Appellant
had leased out the property upon any understanding that he or
his nominee would be allowed to run the retail outlet. On the
other hand, the land owner was not even eligible to be
D appointed as the M&H Contractor.
53. Ms. Arora lastly submitted that since the present batch
of matters related to COCO outlets, the question of returning
the demised land to the land owner did not also arise. Ms. Arora
E submitted that the entire exercise was nothing but an attempt
on the part of the land owners, who had consciously entered
into lease agreements, to try and resile from the contract once
it became evident that there was no likelihood of a further
change in the policy for grant of dealership in respect of the
F COCO units.
54. Referring to the decision of this Court in Sethi Auto
Service Station (supra), Ms. Arora urged that the doctrine of
legitimate expectation, had been considered in the said case
where the Appellant's claim was based on an old policy and it
G was held that the Appellant merely had an expectation for being
considered for resitement. It was also held that a person basing
his claim on the doctrine of legitimate expectation has to
establish that he had relied on the said representation and had
altered his position and that denial of such expectation worked
H to his detriment. The Courts can interfere or.ly if the decision
MOHD. JAMAL v. UNION OF INDIA & ANR. 501
[ALTAMAS KABIR, CJI.]
taken by the authority is found to be arbitrary, unreasonable or A
in gross abuse of power or in violation of principles of natural
justice and contrary to public interest. It was also reiterated that
the concept of legitimate expectation has no role to play where
said action is a matter of public policy or in the public interest,
unless, of course, the action taken amounted to an abuse of B
power. It was further emphasized that in order to establish a
claim of promissory estoppel, it must be proved that there was
such a definite promise and not any vague offer which could
not be enforced. In this regard, Ms. Arora also submitted that
the "comfort letters" referred to by learned counsel for the c
Appellants, purported to have been issued by the State of
Gujarat, would have no avail as a promise made in such a letter
does not constitute a promise which could be enforced. Ms.
Arora submitted that the -Appeals and Petitions were liable to
be dismissed with costs. D
55. Learned Additional Solicitor General, Mr. P.P.
Malhotra, appearing for the Union of India, submitted that the
dispute involved in this batch of matters was between the Oil
Companies and the land owners with whom agreements had
been entered into by the Oil Companies. The learned ASG E
submitted that the Union of India has little to do with the dispute
between the parties, except to the extent that it has been given
a supervisory function to ensure proper distribution of petrol
and petroleum products. Mr. Malhotra urged that anything which
was not in public interest, but was likely to affect the public F
interest, cannot be retained and has to be quashed. As will be
evident from the submissions made on behalf of the respective
parties, the case of the Appellants and the Writ Petitioners, in
most of the· cases, is based on the doctrine of promissory
estoppal on the basis of a promise apparently made by the G
Respondents to the land owners that they would be granted
dealerships in lieu of the lands offered by them for setting up
of the retail outlets. From the facts as disclosed, there is
sufficient evidence to indicate that initially negotiations had
been conducted by the Oil Companies with aspiring land H
502 SUPREME COURT REPORTS [2013] 7 S.C.R.
A owners that in lieu of the lease to be granted they would be
provided with dealerships. The applications made pursuant to
the advertisement published by the Oil Companies were also
duly processed and were acted upon. However, it is only the
suspension of the Policy dated 8.10.2002, which prevented
B such dealerships for being given to the various applicants.
56. Upon deregularisation of the distribution of petroleum
products, the Oil Companies issued guidelines dealing with the
procedure for locations outside the ma~keting plans. It was also
stipulated that for the purpose of selection, the dealerships
C would be categorised as indicated in the guidelines and all retail
outlets would be developed only on A/C sites basis, which finds
place in Clause (2) of the guidelines.
57. The said guidelines referred to grant of dealership
D which is completely different from the grant of long-term leases
by the land owners to the Oil Companies upon the condition
that the same could be used by the lessees in any way they
liked, which included the right to sublet the demised plot. The
concept of Company Owned and Company Operated outlets
E was sought ·to be introduced on 6.9.2003, in supersession of
Policy No.MDPM-319/02 dated 8.10.2002 and the two cannot
be co-related unless a link can be established by the Appellants
that they had entered into the lease agreements with the Oil
Companies upon the understanding that once the earlier policy
F was restored, the land owners would be given the option of
having the COCO units converted into regular retail outlets.
58. In order to appreciate the difference between the two
concepts, it has to be understood that the concept of a
dealership in respect of a retail outlet is completely alien to the
G concept of a COCO unit. While the former deals with the right
of the dealer to independently operate the retail outlet, in the
case of a COCO unit, the entire set up of the retail outlet is
owned by the Oil Companies and only the day-to-day operation
thereof is outsourced to a M&H Contractor. With the
H discontinuance of the earlier policy of granting dealerships in
MOHD. JAMAL v. UNION OF INDIA & ANR. 503
[ALTAMAS KABIR, CJI.]
respect of retail outlets and the introduction of a new policy A
awarding M&H Contracts in respect of the COCO outlets, in
our view, the 'land owners who had entered into fresh lease
agreements after the policy to grant dealerships had been
suspended, cannot now claim any right on the basis of the
earlier policy in the absence of any Letter of Intent having been 8
issued thereunder. Had any Letter of Intent, which tantamounts
to grant of dealership, been issued and then in respect of the
same lands COCO units were established, the situation would
have been different Placed in such a position, the land owners
cannot claim any relief in these proceedings and, if any loss or C
damages have been suffered by them on account of the
assurance earlier given regarding grant of dealership,
particularly in making the sites ready therefor, the remedy of
such applicants would lie elsewhere. The policy guidelines and,
in particular, Clauses 1.2 and 1.2.2 thereof are not available
to the Appellants and the Petitioners in these proceedings, 0
which are concerned mainly with COCO units which have no
connection with the concept of dealership.
59. We are inclined to hold that the doctrine of promissory
estoppal and legitimate expectation, as canvassed on behalf E
of the Appellants and the Petitioners, cannot be made
applicable to these cases where the leases have been granted
by the land owners on definite terms and conditions, without any
indication that the same were being entered into on a mutual
understanding between the parties that these would be F
temporary arrangements, till the earlier policy was restored and
the claim of the land owners for grant of dealership could be
considered afresh. On the other hand, although, the nominees
of the lessorswere almost in all cases appointed as the M&H
Contractors, that in itself cannot, in our view, convert any claim G
of the land owner for grant of a permanent dealership. As has
been indicated hereinbefore, even the M&H Contractor had to
submit an affidavit to the effect that he did not have and would
not have any claim to the dealership of the retail outlet and that
he would not also obstruct the making over possession of the
H
504 SUPREME COURT REPORTS [2013) 7 S.C.R.
A retail outlet to the Oil Company, as and when called upon to
do so. The decisions cited on behalf of the Appellants/
Petitioners, are not, therefore, relevant for a decision in these
cases. Although, the Appeals have been filed on account of the
denial to the land owners of the grant of dealership in respect
8 of the lands demised by them to the Oil Companies, the entire
focus has shifted to COCO outlets on account of the fresh lease
agreements entered into by the Appellants with the Oil
Companies which has had the effect of obliterating the claim
of the land owners made separately under earlier lease
C agreements. The claims of the Appellants/Petitioners in the
present batch of matters have to be treated on the basis of the
agreements subsequently entered into by the Oil Companies,
as submitted by the learned Attorney General.
60. These Appeals and Petitions must, therefore, fail and
D are dismissed. C.A. No. 5259 of 2013 filed by the Indian Oil
Corporation, stands allowed. The four Transfer Petitions, being
T.P.(C) Nos. 971-973 of 2010 and T.P.(C) No. 1260 of 2011,
which were heard along with these Appeals and Petitions, are
allowed. The Writ Petitions, which are transferred as a
E consequence thereof, are also dismissed along with other
matters. Accordingly, the Transferred Cases, arising out of
T.P.(C) Nos. 971-973 of 2010 and T.P.(C) No. 1260 of 2011,
are disposed of. However, it will be open to the Appellants and
the Petitioners to approach the proper forum in the event they
F have suffered any damages and loss, which they are entitled
to recover in accordance with law.
61. Having regard to the peculiar facts of these cases, the
parties are left to bear their individual costs.
G R.P. Matters disposed of.
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