Supreme Court of India
ONKAR LAL BAJAJ ETC. ETC.versusUNION OF INDIA AND ANR. ETC. ETC.
- Citation
- 2002 INSC 570
- Decided
- 20 December 2002
- Disposal
- Disposed off
- Bench
- Y K SABHARWAL
Holding
The blanket cancellation of all allotments was arbitrary and unconstitutional, violating Article 14, and was quashed except for the specific cases referred to an independent committee.
Summary
The Government cancelled all petrol pump, LPG and kerosene dealership allotments made since January 2000 after media reports alleged political patronage in a few cases. Petitioners, who had received letters of intent or entered into agreements, challenged the order as arbitrary and violative of Article 14. The Court held that cancelling the entire pool, when only about 5‑10% of allotments were in controversy, was an unreasonable, capricious exercise of power and failed the test of fairness, equity and public interest. The order was therefore quashed, but the Court directed an independent committee to examine the 413 specific cases highlighted by the media. The remaining allotments were left undisturbed pending the committee’s report.
Issues considered
- The legality of the Government's en‑masse cancellation of petroleum dealership allotments under Article 14.
- Whether a ‘controversy’ raised by media reports justifies a blanket cancellation without individual scrutiny.
- Whether the order can be reviewed under Article 226 of the Constitution.
- Whether the concept of ‘public interest’ or ‘probity in governance’ can legitimize arbitrary executive action.
Legislation cited
- Constitution of Indias. Article 14, s. Article 226
- Specific Relief Act
Subjects
Article 14ArbitrarinessPublic interestProbity in governancePetroleum dealership allotmentsAdministrative lawJudicial reviewEqual treatment of unequals
Judgment
ONKAR LAL BAJAJ ETC. ETC. A
v
UNION OF INDIA AND ANR. ETC. ETC.
DECEMBER 20, 2002
B
[Y.K. SABHARWAL AND H.K. SEMA, JJ.]
Constitution of India, 1950 :
Article 14-Al/otment of Petrol Pumps by Government-Controversy C
raised regarding some allotments-Cancellation of all the a/lotments-
Chal/enged as arbi1ra1y and violative oflhe provisiotr-Held, equal lreatmenl
of unequals is inequalily-To put bolh categories, /he tainted and the res/ al
par is unjustified, arbitrary and unconslitutional-Alleged lainted allotments
required lo be scrutinized by independenl Commillee-Direction for constilulion
ofCommillee-Cancellation order quashed except in respect of cases referred D
lo the Committee.
Ar1icle 226--Judicia/ Review-Scope of-Arbitrary exercise of executive
power-Deserves 10 be quashed-Bui if two views are possible and the
Government lakes one of it, ii would not be.amenable to judicial review on the E
ground that other view, according to the Court is a heller view.
Adminislra/ive law :
Governance-Principle of-Held, governance has to be tested on the
/ouchstone ofjustice, equityandfai1play and if it is not based thereon, but to F
achieve popular accolade, 1he decision cannol be allowed 10 operate.
Words and Phrases-"Public inleres/'' and "probily in governance"-
Meaning of
Since January 2000, allotments were made with respect to retail
outlets of diesel and petrol, LPG distributorship, Superior kerosene Oil G
(SKO) and Light Diesel Oil (LDO) dealerships, to 3760 intending persons,
on the recommendation of Dealer Selection Boards (DSB). Media exposed
417 names as tainted allotments. The controversy regarding 160 out of
these names were raised upto Sth August, 2002 and regarding the rest it
605 H
606 SUPREME COURT REPORTS (2002) SUPP. S S.C.R.
A was raised between 6th and 24th August, 2002. In view of the controversy
raised by the media, Prime Minister reviewed the matter on 5th August,
2002 and directed the Ministry of Petroleum and Natural Gas to initiate
steps to cancel all the allotments made w.e.r. January 2000 till 5th August,
2002. Thereafter formal order was passed by the Ministry on 9th August,'
B 2002 for cancellation or all the· allotments except the allotments made to
the allottees under Operation Vijay Scheme.
Writ Petitions were filed in various High Courts challenging legality
of the order dated 9th August, 2002. Union of India filed transfer petitions
and this Court directed transfer of certain writ petitions to itself. Writ
C petitions filed by allottees whose cases were highlighted by the media, were
transferred as another category of representative cases. A large number
of intervention applications were also filed by different categories of
persons.
Petitioners and interveners contended that en masse cancellation of
- D allotments was an arbitrary exercise of executive power and the same was
unconstitutional being violative of Article 14 of the Constitut.ion.
Respondent-State contended that the order was justified as the same
was taken in order to uphold the probity in governance, ensure fair play
in action and in larger public interest; that allotments could en masse be
E legally cancelled without individually examining each case and without
affording any opportunity to the concerned .to ~epresent their cases; that
the petitioners had no legal right which could be enforced u/s 226 of the
Constitution as the same was only a contractual right; that the petitions
were only a disguise suits under Specific Relief Act despite the fact that
F the contract was not· enforceable even under the Act because the
agreements could be cancelled without assigning any reason.
Disposing oft.he petition, the Court
HELD: I.I. The mere reason that a controversy has been raised by
itself cannofclothe the Government with the power to pass such a drastic
G order which has a devastating effect on a large number of people. In
governance, controversies are bound to arise. In a given situation,
depending upon facts and figures, it may be legally permissible to resort
to such en masse cancellation where executive finds that primafacie a large
number of such selections were tainted and segregation of good and bad
H would be difficult and time consuming affair. In the present situation
ONKAR LAL BAJAJ v. U.0.1. 607
where the controversy raised was in respect of 5 to 10%, en masse A
cancellation would be unjustified and arbitrary. Impugned order was a
result of panic reaction of the Government. No facts and figures were gone
into. Without application of mind to any of relevant consideration, a
decision was taken to cancel all allotments. The impugned action is clearly
against fair play in action. It cannot be held to be reasonable. It is nothing B
but arbitrary. 1626-F-H; 627-AI
The Bihar School Examination Board v. Subhas Chandra Sinha and
Ors., 119791 l SCC 648 and B. Ramanjini and Ors. v. State ofA.P. and Ors.,
120021 s sec 533, distinguished.
Kumari Shrilekha Vidyarthi and Ors. v. State of UP. and Ors., 119911 C
l sec 212, relied on.
1.2. The solution by resorting to cancellation of all was worse than
the problem. The equal treatment to unequals is nothing but inequality.
To put both categories - tainted and the rest - at par is wholly unjustified, D
arbitrary, unconstitutional being violative of Article 14 of the Constitution.
1627-FI.
1.3. The plea of probity in governance or fair play in action
motivating the impugned action cannot be accepted. No case was
1 examined, not even from a prima facie angle to find out whether there E
was any substance in the media exposure. None examined the impact that
was likely to result because of en masse cancellation. Many had resigned
their jobs. It was necessary because of such a stipulation in 1..01. Many
had taken huge loans. There were many Scheduled Castes/Scheduled
Tribes, war widows and those whose near relation had died as a result of
terrorist activities. The effect of none was considered. How could all those F
large number against whom there was not even insinuation could be
clubbed with the handful of those who were said to have been allotted these
dealerships/distributorships on account of political connection and
patronage. The two were clearly unequals. 1627-E, C-01
1.4. Article 14 guarantees to everyone equality before law. Unequals
G
cannot be clubbed. Likewise, an arbitrary exercise of executive power
deserves to be quashed and that an order passed without application of
mind deserves to be annulled being an arbitrary exercise of power. At the
same time if two views are possible and the Government takes one of it, it
would not be amenable to judicial review on the ground that other view, H
608 SUPREME COURT REPORTS [2002] SUPP. 5 S.C.R.
A according to the Court, is a better view. (620-F-Hl
l.S. The expressions 'public interest' or 'probity in governance'
cannot be put in a strait jacket. 'Public interest' takes into its fold several
factors. There cannot be any hard and fast rule to determine what is public
interest. The circumstances in each case would determine ";'hether
B Government action was taken is in public interest or was taken to uphold
probity in governance. (624-B-CI
1.6. The role model for governance and decision taken thereofshould
manifest equity, fair play and justice. The cardinal principle of governance
C in a civilized society based on rule of law not only has to rise above the
nexus of vested interests and nepotism and eschew window dressing. The
act of governance has to withstand the test of judiciousness and
impartiality and avoid arbitrary or capricious actions. Therefore, the
principle of governance has to be tested on the touchstone of justice, equity
and fair play and if, the decision is not based on justice, equity and fair
D. play and has taken into consideratipn other matters though on the face
of it,_ the decision may look legitimate but as a matter of fact, the reasons
are not based on values but to achieve popular accolade, that decision
cannot be allowed to operate. (624-0-E[
1.7. If media exposure that the allotments were made either to the
E high political functionaries themselves or their near and dear ones is·
correct, the authorities would not only be justified in examining such cases
but it would be their duly to do so. Instead of fulfilling that duty and
obligation, the executive cannot unjustly resort lo cancellation of all the
allotments en masse by treating unequals as equals without even prima
F facie examining any cases exposed by the media, if hue and cry is made
that certain allotments have been made to silting members of Parliament
or their wives or Members of Legislature or their relations, the public,
media and the opposition would be justified in raising eye-brows. It is a
different matter that on independent examination nothing may be found
in those ca~es• .[628-C-E[
G
1.8. It is evident from the facts that the cancellation oflhe agreements
is not for violation of any term thereof. The cancellation is on account of
a policy decision taken by the Gonrnment. The execution of agreement
is not being denied on account of any ineligibility of any such LOI holders.
or any discrepancy having been found in what was required to be fulfilled
H by them. Therefore, the cases of LOI holders are no ilifferent in
ONKAR LAL BAJAJ v. U.0.1. 609
comparison to those cases where agreements have been entered into.
Similar is the p<isition of those who are on published merit panels and were A
awaiting issue of LOls by the oil companies when the impugned decision
was taken. For the present controversy, they are all in same position except
those who may come in the category of alleged tainted class. 1620-B-EI
Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors., B
1199013 sec 752, referred to.
2.1. 417 names were exposed by the media as tainted allotments out
of which particulars of 413 have been provided. The alleged tainted
allotments are required to be scrutinized by an independent committee
so as to determine the validity of impugned circular dated 9th August, C
2002 as against such allotments. Hence, a Committee is constituted to go
into the question whether these allotments were inade on merits or on some
extraneous considerations. 1630-EI
2.2. Government should not have exercised the power in a manner
so as to enable it to escape the scrutiny of allotments exposed by the media. D
No arbitrary exercise of power should intervene to prevent the attainment
of justice. Instead of passing the impugned order, in the context of the
facts of the present case, the Government should have ordered an
independent probe of alleged tainted allotments. The impugned order had
the twin effect of(I) scuttling the probe and (2) depriving a large number E
of others of their livelihood that had been ensured for them after their
due selections pursuant to a welfare policy of the Government as contained
in the guidelines dated 9th October, 2000. The public in general has a right
to know the circumstances under which their elected representatives got
the outlets and/or dealerships/distributorships. 1630-F-GI
F
3. The impugned order dated 9th August, 2002 is hereby quashed
except in respect of cases referred to the Com mjttee. The cases referred
to the Committee would be considered on receipt of the report. 1631-F-GI
CIVIL ORIGINAL JURISDICTION : Transferred Case (C) No. 80
or 2002. G
(Under Article 139-A of the Constitution of India)
With T.C. (C) Nos. 81 to 88/2002, 90/2002 & 91/2002, I.A. Nos. 246-
2556 in TP (C) No.417-423/2002)
H
.I
[
610 SUPREME COURT REPORTS (2002) SUPP. 5 S.C.R.
A With Contempt Petition (C) No. 556/2002 IN TP (C) Nos. 417-423/
2002)
With T.C. (C) Nos. 100-!09 of 2002.
K.N. Rawal, Solicitor General. Harish N. Salve, S.K. Gambhir, Sudhir
B Chandra, ATM Ranga Ramanujam, R. Thyagarajan, Rajeev Dutta, Ranjit
Kumar, Yashank Adhyaru, V.A. Mohta, Rakesh Dwivedi, Hari Lal Agarwal,
R.K. Jain, A.K. Ganguli, S.B. Sanyal, R.F. Nariman, A.K. Chitale, L.N. Rao,
B.N. Deshmukh, O.P. Sharma, Kapil Sibal, Rajinder Sachhar, Jagdeep
Dhankar, Sudhir Chandra, Sr. Advocates, Sanjay Kapur, Raj iv Kapur, Sanjeev
C Kumar, Shubhra Kapur, T.N. Singh, A.K. Sinha, Guntur Prabhakar, H.K.
Puri, Manmohan Kalra, U. Banerjee, S.K. Puri, Ms. Anandita Gupta, B.K.
Satija, Parijat Sinha, Pallav Sishodia, Pravin Bahadur, Rajan Narain, G.K.
Bansal, SUK Sagar, Avinash Avhad, G. Krishnamurthy, Bina Madhavan,
Prasanth P., Mena C.K., V.N. Raghupathy, D.K. Jena, S. Purohit, Meenakshi
Jena, Ms. Rani Jethmalani, Archna Singh, G. Karunadas, D.K. Singh, Archana
D Singh, Anu Gupta, V. Balachandran, Ashok Kumar Sharma, Ajay K. Agrawal,
. Ms. Alka Agrawal, Anamika Agrawal, Anil Kumar Jha, Ms. Alka Jha, Manoj
Saxena, Pravir Choudhary, Mukesh K. Giri, Uday Gupta, Ajay Kumar,
Parmanand Gaur, M. Qamaruddin, Ambar Qamaruddin, P.K. Nanda, B.P.
Sarangi, Manish Goswami, Pratap C. Mohapatra, Himanshu Shekhar, Sunil
Kumar, Manik Vedasen, Ashok Kumar Gupta, Aniruddha P. Mayee, F.S.
E Chauhan, B.S. Billowria, Dinesh Kumar Garg, P.S. Narasimha, A.
Bhattacharya, P. Sridhar, Ms. Niranjana Singh, S.D. Singh, M.D. Adkar,
B.V. Gadnis, Y.P. Singh, C. Siddharth, Debasis Misra, Smitha Inna, Mahesh
C. Krishan, A. Matiri, S.B. Lal, Deepak M. Nargolkar, Laxmidhar Pangari,
R. Mukherjee. Suchit Mohanty, Goodwill lndeevar, P.K. Jain, D.K. Singh,
p Varinder Kumar Sharma, P.A, Siddiqui, Chanchal Thakur, Rajesh Singh, A.
Mariarputham, Aruna Mathur, A.D. Mathur, Chanchal K. Ganguli, Ms. B.
Basak, Rudreshwar Singh, Tapesh Singh, Sanjay Jain. Shishir Pinaki, C.N.
Sreekumar, D. Mahesh Babu, V. Ramasubramanian, Ajay Majithia, Shekhar
K. Sinha, Dr. Kailash Chand, Sushil Kumar Jain, S.V. Deshpande, E.R. Kumar,
P.H. Parekh, S. Ramakrishnan, Janaranjan Das, S.L. Aneja, Mohan B.
G Aggarwal, Krishnanand Pandey, S.K. Kulkarni, M. Greesh Kumar, Kh. Nobin
Singh, Ankur S. Kulkarni, S.S. Jauhar, P.V. George, Rakesh,Dahiya, Ajay
Pal, Mahabir Singh, Abhijit Sengupta, Roy Abraham, A.K. Jain, Himinder
Lal, Jasbir Malik, S.K. Sabharwal, Anil Sharma, Rajeev Yadav, P. Venkat
Reddy, CSN Mohan Rao, G. Venkatesh, Anupam Lal Das, Mukul Gupta,
H T.A. Khan, B.M. Goswami, Sarla Chandra, Anukul Chandra, Shiv Sagar
ONKAR LAL BAJAJ v. U.0.1..(Y.K. SABHARWAL, J.). 611
Tiwari, A.D.N. Rao, Vinita Sinha, B.B. Singh, Anil Nag, Mrs. Rani Chhabra, A
Naresh Kumar, Salish Kumar, Abhishth Kumar, Ravindera Keshavrao Adsure,
Vishwajit Singh, Mrs. Lalita Kaushik, Akhilesh K. Pandey, Surya Kant, M.
Vijaya Bhaskar, Amit Kumar, Aarohi Bhalla, Su]ata Kurdukar, K.R. Gupta,
R.C. Gubrele, Ms. Pratibha Jain, Shiyatullah Khan. Mukesh Jain, Sushil K.
Pathak, A.S. Quereshi, Asha J. Madan,' Aiswarya Bhati, K.S, Bhati, R.D. B
Upadhyay, V. Upadhyay, G.G. Upadhyay, Mukul Gupta, G. Prakash, Shobha
Shetal Agarwal, Dr. Sushi! Balwada, Dr. K.S. Chauhan, Prakash K. Yadav,
P.. Niroop, R. Chandrashekhar Reddy, Pawan Kumar, Manish Pitale, C.S.
Ashri, Ramanand Agarwal, Piju_sh K. Roy, G.R.K. Prasad, Kamini Jaiswal,
Tehmina, Rohit Choudhary, Mithilesh R., Bhupinder Yadav, s:s. Shamshuri,
Babita Yadav, R.C. Kohli and Parijat Sinha, for the appearing parties. C
The Judgment of the Court was delivered by
Y.K. SABHARWAL~ J. The marketing of petroleum products has been
quite a lucrative business. The four public sector oil companies - Indian Oil
Corporation Limited (IOC), Bharat Petroleum Corporation Limited (BPC), . D
Hindustan Petroleum Corporation Limited (HPC) and IBP Company Limited
(IBP) control the marketing of the said products. We are concerned with the
marketing of petrol and diesel,. Superior Kerosene Oil (SKO), Light Diesel
Oil (LDO) and Liquefied Petroleum Gas (LPG). The challenge in these matters
is to the validity of the order of the Government of India dated 9th August,
2002 whereby all allotments made mlth respect to retail outlets, LPG E
distributorships and SKO-LDO dealerships on the recommendations of the
Dealer Selection Boards (DSBs) since Ist January, 2000 were decided to be
cancelled.
In past also allotments of retail outlets for petroleum .products were
cancelled by this Court after coming to the conclusion that the allotments F
made were arbitrary, on account of political connections/motivation and
extraneous considerations. The tainted allotments were also cancelled by
various orders of High Court of Delhi. The allotments which were on merits
. and not tainted were not ordered to be cancelled. It is a matter of co-incidence
ihat exactly seven years ago i.e. in August, 1995 on the front page of Indian G
Express a news item appeared regarding the grant of retail outlets for petrol
pumps on account of political and other connections. Now, in August 2002,
i.e., exactly seven years later again news item appeared on the front page of
same newspaper abOut allotments. to the near and dear ones of the political
function~ries attributing the same on account of political considerations. In
Common Cause, A Registered Society v. Union of India and Ors., (1996] 6 H
612 SUPREME COURT REPORTS (2002) SUPP. S S.C.R.
A sec 530), this Court observed that for these allotments, a transparent and
objective criteria/procedure has to be evolved based on reason, fair play and
non-arbitrariness.
Always, many have been in race for getting these dealerships/
distributorships. From September 1977, " uniform procedure for selection of
B persons for appointment as dealers/distributors applicable to all the public
sector oil marketing companies was introduced by the Government. The dealers
were earlier selected from amongst the applicants by a selection committee
comprising senior officials of the oil companies. The applications were invited
from interested persons by advertising the available dealerships in the
C newspapers.
In the year 1983, the Central Government constituted two member Oil
Selection Boards comprising of a retired High Court Judge as Chairman and
a retired Civil Servant as a member. In the year 1990, one prominent member
_of public importance was also included in the said boards. In January 1993,
D the composition of the Oil Selection Board was a retired High Court Judge
as Chairman and a representative of Scheduled Castes/Scheduled Tribes/Other
Weaker sections and a prominent public figure as members. The name of the
board was later ·changed to 'Dealer Selection Board'. The guidelines were _,
updated and notified in October 2000 by Ministry of Petroleum and Natural
E Gas in terms of Office Memorandum dated 9th October, 2000. According to
these guidelines, the
,, DSBs have the following composition :
"(i) A retired judge of a High Court/ retired
District Judge/retired Additional District
Judge/retired Officer who had held an
F Equivalent Judicial post Chairman
(ii) An Officer of the concerned Oil Company
not below the rank of Deputy General
l'y1anager or Chief Manager depending on
availability Member
G
(iii) An officer of another Oil Company not below
the rank of Deput)' General ,Manager or Chief
Manager depending on availability Member"
The guidelines provide detailed procedure for selecting candidates for
H appointment as dealers/distributors. A total of 59 DSBs were constituted in
ONKAR LAL BAJAJ v. U.0.1. [Y.K. SABHARWAL, J.] 613
June-July 2000 and afterwards. These DSBs were entrusted the task of A
selections for the retail outlets, LPG distributorships and SKO-LDO
dealerships. The guidelines also provide for reservations in each of the
dealership/distributorship categories for the applicants belonging to Scheduled
Castes/Scheduled Tribes, defence personnel, para military/Police/Government
personnCI, outstanding sports persons, freedom fighters and physically B
handicapped. Each of these categories as also in the remaining 50% for open
categories, 33% of the dealerships/distributorships were reserved for women.
The dealerships/distributorships sites for marketing of petrol/diesel or
LPG or SKO-LDO are of two types - Company Owned and Dealer Operated
(CODO) and Dealer Owned and Dealer Operated (DODO). Under the former C
category, the land, superstructure standing thereon and other facilities such as
underground product tanks, dispensing units, other ancillary equipments etc.
are owned by the oil companies and business operations are carried on by the
dealer/distributor and under the latter category, the land is either owned or
held pn lease hold rights by the dealers/distributors. The superstructure, except
the product tanks, dispensing units and other ancillary equipment in the case D
of petrol/diesel retail outlets and cylinders and regulators in the case of LPG,
is owned by the dealers/distributors. In the case of dealership/distributorship
allotted to the candidates belonging to Schedule Castes/Scheduled Tribes and
widows over 40 years of age, the land and the superstructure thereon are
owned by the oil companies, expenditure on which is made from a fund E
created and maintained by the oil companies known as the Corpus Fund.
The guidelines dated 9th October, 2000 were issued, as stated therein,
to provide transparent, uniform, fair and faster procedure for selection of
suitable candidates as dealers/distributors. The educational qualifications for
reserve categories, other than freedom fighters and outstanding sport persons, F
were matriculation or recognized equivalent. The educational qualifications
were, however, not applicable for freedom fighters and outstanding sport
persons. The guidelines also provide that the gross income of the candidate
should not exceed Rs. 2,00,000 per annum in the previous financial year. The
income for this purpose will include that of self, spouse and dependent children.
If the candidate is dependent on parents, then their income was also to be G
taken into consideration for computing total income. A candidate having
income of more than Rs. 2,00,000 per annum is disqualified under the
guidelines. It seems that with a view to minimize the scope of interference
and keep secret, as far as possible, a clause in the guidelines was incorporated
stating that the nomination of the oil company officer as a member of DSB H
614 SUPREME COURT REPORTS [2002] SUPP. 5 S.C.R.
A for a round of selection at a particular location will be made by the Executive
Director or Director (Marketing) of the concerned oil company not earlier
than 48 hours from the date of starting the interviews at a particular location.
In respect of the tenure of Chairman, the guidelines provide that it will be for
a period not exceeding two years, further, however, providing that the
Chairman shall hold office during the pleasure of the Government and his
B services can be dispensed with even before the expiry <'f the tenure without
giving any notice and without assigning any reason. Norms for evaluating the
candidates to judge their inter se suitability for all categories have also been
provided. One of the guidelines is that after completion of the interviews,
board shall not adjourn till such time the merit panel is finalized. It is also
C provided that the DSB shall recommend to the oil companies a panel of
maximum three names for a particular dealership/distributorship immediately
after the interviews are over. The merit panel will be finalized, signed and
handed over by the Chairman, DSB in a sealed envelope to the non-member
secretary or the officer deputed by him who will forward the merit panel to
the Regional Executive Director/General Manager of the concerned oil
D company within 24 hours. A time frame for selection of dealer/distributorship
of 145 days from the date of advertisement has been set out in the guidelines
providing that within 129 days from the notice of advertisement, the selection
shall be made and remaining 16 days, as provided therein, for forwarding the
panel to the oil company, submitting of field investigation report by the oil
E company and issue of LOI after completion of the field investigation report.
A mechanism for grievance redressal system has also been provided for to
consider the complaints against selection of dealers/distributors.
The guidelines laid down a detailed procedure. Despite the guidelines,
according to the media report, certain allotments were on account of political
F patronage. In these matter, the guidelines can never be a foolproof and it
depends on those who have to follow the same. The real question to be
considered in these matters is whether on account of controversy regarding
alleged tainted selections of certain applicants, can the entire selections of all
applicants of all categories made by all selection boards from January 2000
G be annulled.
The DSBs, under the aforesaid guidelines, till date of their dissolution,
i.e., 9th May, 2002, against a total number of7000 dealerships/distributorships,
advertised 5641 locations out of which merit panels were published for 3760
locations. The letters of intent (LOI) were issued to 3546 successful applicants.
H The agreements were signed between oil companies and LOI holders in 2248
,•
ONKAR LAL BAJAJ v. U.0.1. [Y.K. SABHARWAL, J.] 615
cases. These are operational outlets, The remaining LOI holders were in A
process of completing requisite formalities when the impugned order was
issued.
On 2nd August, 2002, Indian Express carried, on its front page, a story
with certain names attributing political patronage in grant of dealership/
distributorship. The newspapers also carried editorials. The insinuations made B
were that the allotments were made to the Members of Parliament, Assembly,
party workers of political party in power, their relatives etc. The resignation
of Minister for Petroleum and Natural Gas was sought by political parties in
opposition, The questions were raised on the floor of the Parliament. The
proceedings of the House were also stalled. C
In view of the controversy, review was done by the Prime Minister on
5th August,, 2002 in which the Deputy Prime Minister, Minister for Petroleum
and Natural Gas, Minister for Parliamentary Affairs participated amongst
others. In view of the controversy regarding the allotments, the Prime Minister
directed the Ministry of Petroleum and Natural Gas to initiate steps to cancel D
all allotments made with effect from January 2000 till date.
The press release issued by Press ·Information Bureau and sent to the
oil marketing companies reads as under :
"The Hon'ble Prime Minister today reviewed the allotment of Petrol E
Pump and LPG Gas and Kerosene Agencies by public sector Oil
Companies.
It was emphasized that all allotments had been made on the
recommendations of Dealership Selection Boards which are headed
by retired Judges. However, since a controversy has arisen with regard F
to these allotments, the Prime Minister has directed the Ministry of
Petroleum & Natural Gas to initiate steps to. cancel all allotments
made with effect from January 2000 till date. AII concerned petrol
pumps and LPG and Kerosene agencies will be auctioned on the
basis of Competitive Bidding. Modalities for the Re-allotment on
competitive bidding shall be finalized by the concerned Ministry. G
However, the allotments made to the families of Kargil Martyrs shall
remain unaffected by this."
The effect of the aforesaid decision was the cancellation of all the merit
panels numbering 3760 that had' been prepared by the DSBs after considering H
616 SUPREME COURT REPORTS (2002) SUPP. 5 S.C.R.
A thousands, if not lacs, of applications and after interviewing thousands of
applicants. All those selected by the DSBs, except 214, had been issued LOI.
As earlier noticed, i(J 2248 cases agreements had been executed between oil
companies and LOI holders. This means that 2248 dealerships/distributorships
were already operational.
B A formal order was, however, issued by the .Government of India,
Ministry of Petroleum and Natural Gas on 9th August, 2002. That order reads
as under :
"The Government has recently reviewed the allotments made since
January 2000 of Petrol Pumps, LPG distributorships and SKO LOO
c dealerships of Public Sector Oil Companies. The allotments were
recommended by the Dealer Selection Boards as per Government's
guidelines dated 9th October, 2000. However, a controversy has arisen
with regard to the allotments. The issue was raised in the Parliament.
The functioning of the DSBs and their recommendations were also
D discussed. In view of this Government reviewed the matter. Having
considered the facts and circumstances as also to ensure fair .play in
action, the Government in the public interest have now decided that
all allotments made with respect to retail outlets. LPG distributorships
and SKO-LDO dealerships on the recommendations of the Dealer
Selection Boards since 1st January 2000 be cancelled. It has further
E been decided that all annulled petrol pumps, LPG distributorships
and kerosene dealerships may be auctioned on the basis of competitive
bidding.
2. You may, in view of the above, take necessary action in the matter
to :
F
(a) cancel all the petrol pumps LPG distributorships and kerosene
dealerships made on the recommendations of DSBs since 1.1.2000
forthwith.
(b) make alternate arrangements to that consumers are not put to any
G difficulties till the appointment of new dealers/distributors and
"(c) settle the above petrol pumps, LPG distributorships and kerosene
dealerships on the basis of auction through competitive bidding
modalities for which be worked. ou~ by the Government.
·3. The above decision will not be applicable to the allonees under
H Operation Vijay scheme." ,
ONKAR LAL BAJAJ v. U.0.1. [Y.K. SABHARWAL, J.) 617
Number of writ petitions were filed in various High Courts challenging A
the legality of the order dated 9th August, 2002.
A transfer petition was filed by the Union of India in this Court.
Considering that the impugned order affects large number of dealers and
distributors all over the country which led to filing of numerous writ petitions
in different High Courts, this Court on 28th August, 2002 observed that the B
legal points in issue should be expeditiously decided by transfer of
representative cases to this Court for adjudication. The Court, therefore,
directed the transfer of certain writ petitions from the High Courts of Delhi,
Rajasthan, Madhya Pradesh, Bombay and Gujarat to this Court. In respect of
2248 dealerships/distributorships, status quo as on 9th August, 2002 was C
directed to be maintained. It was directed that they shall continue to operate
the dealerships/distributorships in accordance with the terms of contracts/
agreements entered into between them and the oil companies concerned. In
respect of 1298 cases where LOI had been issued but retail outlets gas agencies
had not been commissioned, this Court directed that the said LOI shall not
be allotted or transferred to any person during the pendency of the petitions. D
In terms of orders dated I0th November and 22nd November, 2002, certain
other writ petitions filed in the High Courts wherein allottees were of the
category whose cases had been highlighted in the newspaper were transferred
as another category of representative cases. A large number (over 2300)
intervention applications have been filed by different category of persons, E
i.e., (I) those with whom agreements have been entered into by the oil
companies; (2) those to whom the Lots have been issued by the oil companies
but outlets have not been commissioned; and (3) those who are on select
panel but LOls have not been issued.
We have heard learned counsel for the petitioners and interveners in F
support of their challenge to the impugned order and learned Solicitor General
in defence thereof.
The entire matter triggered of as a result of media exposure. As already
noticed, the front page of Indian Express carried the lead story on 2nd August,
2002 attributing political patronage in grant of allotments on political G
considerations. The newspaper of 2nd August published a list of 61 allottees
from Maharashtra with their names and the alleged political connections and
the positions held by the allottees and their relatives. The newspaper of 3rd
August, 2002 carried the names. of 34 allottees from Punjab and Himachal
Pradesh with their political positions and/or connections. The newspaper of H
618 SU~REME COURT REPORTS [2002] SUPP. 5 S.C.R.
A 4th August carried similar news in respect of 21 allottees from the State of
Haryana. The newspaper of 5th August, carried the similar particulars in
~espect of 44 allottees from the State of Uttar Pradesh. The first name published
was that of one Apama Misra alleging that her husband is a relative of ihe
Prime Minister and the address given is the same as that of the Prime Minister's
residence in Lucknow.
B
Thus, upto 5th August, the newspaper carried the names of 160 allottees
from the .states of Maharashtra, Punjab, Himachal Pradesh, Haryana and
Uttar Pradesh attributing political patronage in their selection by the DSBs.
The decision to cancel all allotments was also taken on, 5th August, 2002, as
C earlier noticed. The effect of the decision was on 3760 persons whose merit
panels had been published by the DSBs. The only reason for cancellation on
5th August was that a 'controversy' had been raised relating to the allotments.
Although, the media exposure hinted of more such names but only 160
names had been published in Indian Express upto the date of the decision to
cancel the allotments. It does not appear that the Government had with it on
D 5th August, the basic facts as to the total number of the persons that had been
selected; total number of dealerships/distributorships which were operational;
number of cases where LOI had been issued but agreements on completion
of formalities had not yet been entered into; the different categories of the
selected candidates and categories of those 160 allottees - open or reserv~d
E and which of the reserved category. In short, it seems that the Government
did not have with it the necessary data so as to consider the impact of en bloc
cancellation directed on 5th August, 2002 on account of a 'controversy'
raised pertaining to few cases. The 'controversy' that had been raised upto
5th August was in respect of less than 5% of the total number of merit panel
published. Between 6th and 9th August, Indian Express carried the particulars
F of alleged tainted allottees numberrng I04. Between I0th August and 24th
August, the particulars of 153 such allottees were published. The total number
of the alleged tainted allottees that has been published in Indian Express is
417 which is little over 10% of the total selections made.
We are not suggesting, for the present, that allotments to all or any of
G the persons whose riames have been published in the Indian Express have
been made due to political connections or patronage but assuming it is so,
would it justify the cancellation of allotments of all those on published merit
panel in respect of whom, there is no such insinuation. Is the number of the
alleged tainted allottees of such_ a magnitude that the fair play demanded
H cancellation of all en masse? Did anybody apply mind as to whether the
ONKAR LAL BAJAJ v. U.0.1. (Y.K. SABHARWAL, J.] 619
insinuations of political connection/patronage were at least prima facie of any A
substance? Is such a drastic action, on the facts and circumstances of the
case, not arbitrary, whimsical and, thus, unsustainable? The answer to these
questions would help in determining the legality of the impugned order dated
9th August, 2002.
Mr. Kirit Rawal, learned Solicitor General, .candidly admitted that none B
of individual cases was examined and gone into before decision was taken on
5th August, 2002/9th August, 2002. Learned counsel representing the
petitioners and also learned counsel representing interveners submit that the
en masse cancellation of allotments is clearly an arbitrary exercise of executive
power without any justification therefor. The impugned order is contended to C
be wholly arbitrary and unconstitutional being violative of Article 14 of the
Constitution of India.
On the other hand, learned Solicitor General contends that, in fact, the
course of action adopted by the Government, in the present case, is worthy
of commendation and calls for no intradiction. The impugned decision, learned D
counsel submits, was taken with a view to ensure probity in public life as
doubts over fairness of selection of certain candidates had been raised, the
proceedings of the Parliament had been stalled on account of the controversy
and, therefore, the Government, in order to uphold probity in governance,
ensure fair play in action and in larger public interest, took a decision to
cancel all allotments of retail outlets, SKO-LDO dealerships and LPG E
distributors made since January 2000 by the public sector oil companies on
the basis of recommendations made by the DSBs except the cases of allotment
made under the special scheme for allotment of retail outlet dealerships/LPG
distributorships to the widows/next of kin of the defence personnel killed in
action in "OP Vijay" (Kargil) under the recommendations received from F
Director General (Settlement), Ministry of Defence, Government of India
and not through DSBs. Counj'i:I contends that it was further decided that all
annulled reiail outlet dealerships, LPG distributorships and SKO-LDO
dealerships would be auctioned on the basis of competitive bidding.
Learned Solicitor General also contends that for the enforcement of G
contractual rights, the writ petition is not the appropriate remedy. Reference
was made to the terms of the agreement entered into between the dealers/
distributors and the oil companies after selection. The contention is that the
agreements could be cancelled without assigning any reason and for redressal
of the alleged illegality in cancellation of the agreements, the resort to the H
620 SUPREME COURT REPORTS [2002) SUPP. 5 S.C.R.
A writ jurisdiction was not permissible and was ill~founded.
The petitions, it is contended, are nothing but a disguise suits under the
Specific R.elief Act despite the fact that contract would not be enforceable
even under the said Act. Thus, it is contended, that the petitioners have no
legal right that can be enforced under Article 226 of the Constitution of
B India.
There is no merit in the contentions of learned Solicitor General. It is
evident from the facts that the cancellation of the agreements is not for
violation of any term thereof. The cancellation is on account of a policy
C decision taken by the Government as noticed hereinbefore. The cancellation
is not on account of any uniform reason applicable to all the selectees or
those who have been issued LOls or with whom agreements have been entered
into except that in respect of few others and not this class of petitioners,
media exposure was made. In the present case, on principle, there would be
nu difference in respect of those selectees who have been issued the LO Is but
D are awaiting the execution of the agreement on completion of formalities.
The execution of agreement is not being denied on account of any ineligibility
of any such LOI hold.ers or any discrepancy having been found in what was !
required to be fulfilled by them. We are not concerned with any such individual
case. Therefore, the cases of LOI holders are no different in comparison to
those cases where agreements have been entered into. Similar is the position
E of those who are on published merit panels and were awaiting issue of LO Is
by the oil companies when the impugned decision was taken. for the present
controversy, they are all in same position except those who may come in the
category of alleged tainted class which aspect we would deal later.
F Article 14 guarantees to everyone equality before law. Unequals cannot
be clubbed. The proposition is well settled and does not require reference to
any precedent though many decisions were cited. Likewise, an arbitrary
exercise of executive power deserves to be quashed is a proposition which
again does not require support of any precedent. It is equally well settled that
an order passed without application of mind deserves to be annulled being an
G arbitrary exercise of power. At the same time, we have no difficulty in
accepting the proposition urged on behalf of the Government that if two
views are possible and the Government takes one of it, it would not be
amenable to judicial review on the ground that other view, according to the.
Court, is a better view.
H The decision in The Bihar School Examination Board v. Subhas Chandra
ONKAR LAL BAJAJ v. U.0.1. (Y.K. SABHARWAL, J.) 621
Sinha and Ors., (1970] 1 sec 648 has been relied upon by learned Solicitor A
General in support of the contention that allotments could en masse be legally
cancelled without individually examining each case and without affording an
opportunity to all concerned to represent their cases. Paras 12 ·and 13 on
which reliance has been placed read :
"12. These figures speak for themselves. However, to satisfy ourselves B
we ordered that some answer books be brought for our inspection and
many such were produced. A comparison of the answer books showed
such a remarkable agreement in the answers that no doubt was left in
our minds that the students had assistance from an outside source.
Therefore, the conclusion that unfair means were adopted stands C
completely vindicated.
13. This is not a case of any particular individual who is being charged
with adoption of unfair means but of the conduct of all the examinees
or at least a vast majority of them at a particular centre. If it is not
a question of charging any one individually with unfair means but to D
condemn the examination as ineffective for the purpose it was held.
Must the Board give an opportunity to all the candidates to represent
their cases? We think not. It was not necessary for the Board to give
csn opportunity to the candidates if the examinations as a whole were
being cancelled. The Board had not charged any one with unfair
means so that he could claim to defend himself. In these circumstances, E
it would be wrong to insist that the Board must hold a detailed inquiry
into the matter and examine each individual case to satisfy itself
which of the candidates had not adopted unfair means. The examination
as a whole had to go.,,_
The cited decision relates to cancellation of cheating by en masse copying F
by the students. The aforequoted observations were made after examining
percentage of the marks obtained and compared with the average of successful
candidates at other centers, as is evident from the facts noticed in para 11
which reads thus :
"This brings us to the crux of the problem. The High Court interfered G
on the ground that natural justice and fair-play were not observed in
this case. This was repeated to us by the respondents in the appeal.
A mention of fair-play does not come very well from the respondents
who were grossly guilty of breach of fair-play themselves at the
examinations. Apart from the reports of the experts, the results speak H
622 SUPREME COURT REPORTS [2002) SUPP. 5 S.C.R.
A for themselves. At the other centers the average of successful
candidates was 50%. At this centre the examinations had the following
percentage :
I. Mother Indian Language 94%
2. English 70%
B
'
.>. Social Studies 95%
4. Everyday Science 90%
5. Elementary Mathematics 100%
c 6. Economics and Civics 92%
7. Elementary Physiology & Hygiene 96%
8. Geography 99%
9. History 88%
D 10: Physics 70%
11. Chemistry 100%
12. Advance Mathematics 99%
13. Sanskrit 100%"
E Noticing that all the candidates at the centre in question had obtained
marks of more than 90%, the Court came to the conclusion that the student
had assistance from an outside source. The Court had also examined the
answer books. Tims, it was held that the examination was vitiated by practicing
unfair means on a mass scale and, under these circumstances, it was observed
F that the Board could not be asked to hold a detailed enquiry into the matter
to satisfy itself as to which of the candidate had not adopted unfair means
and the examination had to go as a whole. The facts of the present case are
altogether different. There was no examination of the allegations made in the
media and also that the percentage of alleged tainted allotments was not such
G so as to come to the conclusion that there was en masse bungling by the 59
DSBs nor any such conclusion was reached by the respondents.
The other decision in the case of 8. Ramanjini and Ors. v. State of A.P.
and Ors., [2002) 5 SCC 533 cited by learned Solicitor General has also no
relevance for the present controversy. That was a case where it was found
H that not only there was scope for mass copying and mass copying did take
ONKAR LAL BAJAJ v. U.0.1. [Y.K. SABHARWAL, J.] 623
place, in addition to leakage of question papers which was brazenly published A
in a newspaper and the photocopies of the question papers were available for
sale at a ·price of Rs. 2000 each and, under these circumstances, the
Government decided to cancel the examination of the centre in question. This
decision is of no assistance for the present controversy.
Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors., B
[1990] 3 SCC 752 was a case where the challenge of the appellant was to the
action of the respondent, Indian Oil Corporation in discontinuing the supply
of all kinds of lubricants to the appellant. One of the contention raised by the
Indian Oil Corporation was that there was no written agreement with it and
there was only an ad hoc arrangement which could not be enforced, C
particularly, in a writ jurisdiction. Rejecting the contention, this Court observed
that the respondent's decision can be impeached on the ground that it is
arbitrary or violative of Article 14 on any of the grounds available in public
law field. It was further held that the action had to be fair and reasonable and
that even in the field of pub:ic law, the relevant persons concerned or to be
affected, should be taken into confidence. Whether and in what circumstances D
that confidence should be taken into consideration cannot be laid down on
any strait-jacket basis. It depends on the nature of the right involved and
nature of the power- sought to be exercised in a particular situation.
Kumari Shrilekha Vidyarthi and Ors. v. State of UP. and Ors., [ 1991]
I SCC 212 was a case in which en masse cancellation of panel of Government E
/ Law Officers was questioned before this Court. While quashing the impugned
order, this Court observed that the act of terminating their appointment in one
stroke was without application of mind. It was further observed that it would
be too much to assume that every Government counsel was required to be
replaced in order to streamline the conduct of the Government cases and F
indeed, that is not even the case of the State which itself says that many of
' them were to be reappointed. It is not the case of the respondents that most
or large number of selections in the present case were tainted.
In the case in hand, the only reason for the en masse cancellation was
that a 'controversy' had been raised. There was no application of mind to any G
case. Admitted norie of cases was examined. In Shri/ekha Vidyarthi's case,
this Court held that arbitrariness is writ large on the impugned circular. In the
State action public interest has to be the prime guiding consideration, hi
Shrilekha Vidharthi 's case, it was held that the impugned State action was
taken with only one object in view, i.e., to terminate all existing appointments H
624 SUPREME COURT REPORTS (2002) SUPP. 5 S.C.R.
A irrespective of the subsistence or expiry of the tenure or suitability of the
existing incumbents and that by one omnibus order, the appointments of all
Government counsel in the State of Uttar Pradesh were terminated. It was
also noticed that no common reason applicable to all of them justifying their
termination in one stroke on a reasonable ground had been shown. The-position
B iS similar in the present case.
The expressions 'public interest' or 'probity in governance' cannot be
put in a strait jacket. 'Public interest' takes into its fold several factors. There
cannot be any hard and fast rule to determine what is public interest. The
circumstances in each case would determine whether Government action was
C taken is in public interest or was taken to uphold probity in governance.
The role model for governance and decision taken thereof should
manifest equity, fair play and justice. The cardinal principle of governance
in a civilized society based on rule of law not only has to base on transparency
but must create an impression that the decision making was motivated on the
D consideration of probity. The Government has to rise above the nexus of
vested interests and nepotism and eschew window dressing. The act of
governance has to withstand the test of judiciousness and impartiality and
avoid arbitrary or capricious actions. Therefore. the principle of governance
has to be tested on the touchstone of justice, equity and fair play and if the
decision is not based on justice, equity and fair play and has taken into
E consideration other matters, though on the face of it, the decision may look
legitimate but as a matter of fact, the reasons are not based on values but to
achieve popular accolade, that decision cannot be allowed to operate. .1
Now, before reverting to the contention of learned Solicitor General
F that the impugned order was issued in public interest so as to ensure fair play
in action, the factual position of the DSBs may be noticed and a contention
raised by Mr. Nariman on the basis of averments made in T.C. No.90/2002
be considered.
There were 59 DSBs throughout the country. In bigger States, the number
G of DSBs was more. In UP, there were nine such Boards, in Maharashtra they
were four DSBs, five were the boards in Andhra Pradesh, Madhya Pradesh
and Bihar. On 9th May, 2002, when the DSBs were discontinued, 18 DSBs
were chaired by retired High Court Judges and remaining by retired District
or Additional District Judges.
H In Transfer Case No.90 of 2002, Mr. Nariman, learned counsel for the
ONKAR LAL BAJAJ v. U.0.1. [Y.K. SABHARWAL, J.) 625
petitioner, contends that the entire exercise of canceJlation was a result of the A
name of the Prime Minister's relative being involved on account of which the
Prim.e Minister by a single politically motivated stroke, ordered en masse
cancellation. Reliance has been placed by learned counsel to the allegations
made in para 2.3 which are as under :
"piqued and angered by the expose of the misdeeds of the Petroleum B
Ministry in which the name of the Prime Minister's relative was
involved and the opposition creating a raw in the Parliament and
paralyzing the proceedings in the Parliament, the Prime Minister in
a single politically motivated stroke ordered cancellation of as many
as 3158 petrol pumps, LPG agencies and kerosene oil outlets allotted C
across the country since January 2000 and directed the third respondent
that the cancelled petrol pumps, LPG agencies and kerosene oil outlets
would all be auctioned on the basis of competitive bidding and directed
the Petroleum Ministry to work out the modalities for reallotment.
The decision to cancel the allotments was taken by the Prime Minister
at a meeting attended by the Deputy Prime Minister L.K. Advani, D
Finance Minister Jaswant Singh, Petroleum Minister Ram Naik,
Parliamentary Affairs Minister Pramod Mahajan and Information and
Broadcasting Minister Sushma Swaraj. The Prime Minister refused to
wilt under pressure from a Section of the party to brazen it out and
had final say deciding on cancellation of all allotments despite Ram E
Naik keeping up his more than brave face that there was no wrong
doing at all."
Our attention was also drawn by learned counsel to only reply to the
averment which is to the following effect ~
"With reference to para 2.3.1, 2.3.2, 2.3.3, 2.3.4 and 2.4 of the petition, F
it is submitted that the contents therein are the excerpts quoted from various
newspapers and hence need no reply''. The submission of Mr. Nariman is that
the avennents in para 2.3 are not excerpts from a newspaper but an assertion
of the petitioner and the same having not been denied shall be deemed to be
admitted. It may be that the averment in para 2.3 is not an excerpt from a G
newspaper and is an assertion, as contended by Mr. Nariman but such a
general and vague assertion without any material in support thereof and
which, in fact, is an inference from newspapers is hardly sufficient to attribute
ma/a fldes. The contention of Mr. Nariman, thus, cannot be accepted.
Reverting now to the contention that the impugned action was in public H
626 SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R.
A interest, it may first to be noticed that when the decision was taken on 5th
August, 2002, the only reason was that a controversy had been raised about
certain allotments. We have earlier noticed that the guidelines provide for a
mechanism to look Into the complaint made against selections. Further,
according to the respondents, in respect o'f 360 complaints m.ade against the
Chairmen/Members of the DSBs, inquiries were conducted by Director
B General, Anti Adulteration Cell and out of which 242 cases were recommended
to be closed. This means no substance were found in 242 complaints out of
360; 39 cases were sub-judice; in 27 cancellation of selection had been
recommended and 45 cases had been referred to the Minisfry for its decision
on various grounds by Director General and Oil Companies. In addition, in
C 7 cases, decision on cancellation of the selection of the first empanelled
candidate had been taken by DSB/oil companies. The effect of the impugned
action is the termination of agreements despite the recommendation of the
closure of the complaints and only for the reason that a 'controversy' had
been raised in relation to some allotments. Further, in some cases, the challenge
to selection had failed in courts. The guidelines, as earlier noticed, provide
D for reservation for defence personnel, freedom fighters, outstanding sports
persons, para military/Police/Government personnel, physically handicapped
persons and Scheduled Castes and Scheduled Tribes. There was no application·
of mind as to the effect on all these categories as a result of en masse
cancellation.
E
The contention of the learned Solicitor General that in order to uphold
the probity in governance, ensure fair play in action and in larger public
interest, the Government took a decision to cancel the allotments is clearly
an afterthought besides untenable even otherwise.
p The mere reason that a 'controversy' has been raised by itself cannot
clothe the Government with the power to pass such a drastic order which has
a devastating effect on a large number of people. In governance, controversies
are bound to arise. In a given situation, depending upon facts and figures, it
may be legally permissible to· resort. to such en masse cancellation where
executive finds that prima facie a large number of such selections were
G tainted and segregation of good and bad would be difficult and time consuming
affair. That is, however, not the case. Here the controversy raised was in
respect of 5 to 10%, as earlier indicated. In such a situation, en masse
cancellation would be unjustified and arbitrary. It seems that the impugned
. order was a result of panic reaction of the Government. No facts and figures
H were gone into. Without application of mind to any of relevant consideration,
ONKAR LAL BAJAJ v. U.0.1. [Y.K. SABHARWAL, J.) 627
a decision was taken to cancel all allotments. The impugned action is clearly A
against fair play in action. It cannot be held to be reasonable. It is nothing
but arbitrary.
Regarding the probity in governance, fair play in action and larger
public interest, except contending that as a result of media exposure, the
Government in public interest decided to cancel all allotments, nothing tangible B
was brought to our notice. On 5th August, 2002 only reason was that 'a
controversy' had been raised. In order dated 9th August, 2002 the reasons
given are that facts and circumstances considered and to ensure fair play in
action and in public interest, it was passed. In counter affidavit, the aspect of
probity in governance has been brought in. Be that as it may, the fact remains C
that admittedly, no case was examined, not even from a primafacie angle to
find out whether there was any substance in the media exposure. None
examined the impact that was likely to result because of en masse cancellation.
Many had resigned their jobs. It was necessary because of such a stipulation
in LOI. Many had taken huge loans. There were many Scheduled Castes/
Scheduled Tribes, war widows and those whose near relation had died as a D
result of terrorist activities. The effect of none was considered. How could all
those large number against whom there was not even insinuation could be
clubbed with the handful of those who were said to have been allotted these
dealerships/distributorships on account of political ·connection and patronage.
The two were clearly unequals. The rotten apples cannot be equated with E
good apples. Under these circumsiances, the plea of probity in governance or
fair play in action motivating the impugned action cannot be accepted. The
impugned order, looked from any angle cannot stand the scrutiny of law.
The solution by resorting to cancellation of all was worse than the
problem. Cure was worse than the disease. The equal treatment to unequals F
is nothing but inequality. To put both categories tainted and the rest at par
is wholly unjustified, arbitrary, unconstitutional being violative of Article 14
of the Constitution. It is apparent from the guidelines that the dealerships ar:id
distributorships were provided to be given to the allottees as a welfare measure.
Even in respect of open category there is a limitation for the income of the
applicant being not more than Rs. 2 lakhs per annum so as to be eligible for G
consideration by the DSBs. The DSBs are required to consider the applications
within the parameters of the guidelines and select the best applicant. If the
DSBs in some cases have selected someone not on merits but as a result of
political connections/considerations and positions of the applicant, undoubtedly
such allotments deserve to be quashed. In Common Cause case (supra), this H
628 SUPREME COURT REPORTS (2002) SUPP. S S.C.R.
A Court on examination of the facts held that the allotment to the sons to the
Ministers were only to oblige the Ministers. The allotments to the Members
of the Oil Selection Boards and their/Chairmen's relations had been done to·
influence them and to have favours from them. It was observed that a minister
who is the executive head of the department conM:med, when distributing
B benefits and largesses in a welfare state in the form of allotment of plots,
houses, petrol pumps, gas agencies, mineral leases, contracts, quotas and
licences etc. has to deal with people's property in a fair and just manner. He
holds all these as a trust on behalf of the people. He cannot commit breach
of the trust reposed in him by the people.
C The aforesaid observations would apply with equal if not more force to
DSBs if media exposure that the allotments were made either to the high
political functionaries themselves or their near and dear ones is correct, the
authorities would not only be justified in examining such cases but it would
be their duty to do so. Instead of fulfilling that duty and obligation, the
executive cannot unjustly resort to cancellation of all the allotments en masse
D by treating unequals as equals without even primafacie examining any cases
exposed by the media. If hue and cry is made that certain allotments have
been made to sitting Members of Parliament or their wives or Members of
Legislature or their relations, the public, media and _the opposition would be
justified in raising eye-brows. It is a different matter that on independent
E examination nothing may be found in those cases. As noticed earlier, 417
names of alleged tainted allotments appeared in media between 2nd August
and 24th August, 2002. As a representative category, I0 cases were transferred
to this Court. The respondents have given to us particulars of 413 cases
which appeared in Indian Express ,---- four being not traceable according to
them. The allegations in Transferred Case Nos. I00 to I09 are substantially
F these:
One of the transferred cases relates to allotment ofSKO/LDO dealership
at Lal Bangla, Kanpur in open category in favour of the son of Member of
Parliament from ruling party. It is a case where letter of intent has been
issued though agreement was not entered into before the cancellation and the
G outlet is not operational. According to the petitioner, he had made huge
investments, purchased land and completed other formalities and was a
graduate of 26 years of age and 'being son of a Member of Parliament was
not a disqualification. It appears that the concerned DSB had interviewed 32
applicants. If being the son of Member of Parliament was not a disqualification,
H at the same time, it was also not a qualification. The probity in good
ONKAR LAL BAJAJ v. U.0..1. [Y.K. SABHARWAL, J.) 629
governance requires the examination of such a matter by an independent A
·person so as to clear the doubts or 'controversy' so as to come to the conclusion
whether the allotment was on merits or as a result of the political connections.
The controversy cannot be resolved or put to rest by burying it under carpet
by cancelling all allotments by treating unequals as equals.
Another transferred case pertains to allotn:ient of HPC retail outlet at B
Khaildvi, District Solapur, Maharashtra in favour of the petitioner under the
Scheduled Castes reserved category. The outlet is company owned dealer
operated. 23 applicants were interviewed. The applicant is a wife of a Member
of Parliament of a political party supporting party in power. The district
wherein the outlet has been allotted to the petitioner falls within the C
parliamentary constituency of the husband of the petitioner. The petrol pump
is said to be operational. According to the petitioner; she made huge
investments and 16 persons have been employed by her. If the allotment in
her favour is not on merits and is on account of the applicant being wife of
a Member of Parliament, the afor~said considerations pleaded by her would
be wholly irrelevant. Surely an independent probe is necessary. Someone has D
to look into the matter. In one case, the allotment of IOC's retail outlet at
Udaipur is in favour of a Member of Parliament of the main .Political party
in opposition. The contention ofthe.allottee, however, is that she, as a condition
of LOI, resigned her job of Professor from an Educational Institution. No
equity can be claimed on account of any step or action taken to fulfill the E
condition of LOI if the selectio.n itsblf is illegal. · · .
One of the transferred cases concerns 8 allotments in Maharashtra State.
The allegation in the newspaper was that brother of petitioner no. I is District
President of the Ruling Party and was Member of Parliament; husband of
petitioner no.2 is a sitting MLA, petitioner no.3 is sister-in-law of a sitting F
MLA, father of petitioner no.4 is a sitting MLA, father of petitioner no.5 was
a President of District Unit of the political party some years back, petitioner
no.6 himself is a sitting MLA, petitioner no.7 and petitioner no.8 are political
workers of the Ruling Party. All the 8 petitioners of course contend that the
· allotments in their favour were made on merits and not as a result of political
patronage.
The allegation in one of the transferred cases is that the allottee is son-
in-law of a former Member of Parliament whereas in another transferred
case, the allegation is that the.allottee is a son ofa former MLA: In these two ..
cases, service report on the petitioners was awaited. Another transferred case H
630 SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R.
A relates to IOC's LPG distributorship. The allegation is that the allottee was
the constituency .secretary of the Ruling Party. Lot has been issued though
the outlet is not operational. According to the petitioner since on merit no.2
was a press reporter his name has been included with ma/a fide intentions.
Another transferred case relates to IOC retail outlet at Sawar, Ajmer where
B the allegation is about the allottee being son of a party functionary.
In one of the transferred cases the allegation is that the father of the
allottee is an Inspector General of Anti Corruption Cell in Rajasthan Police.
All the applicants claim that the selection by the DSBs in their favour
was on merits and not on account of any political or other extraneous
C consideration. For the present, we are not expressing any opinion on the
question whether the selection of the allottees by the DSBs in this category
of alleged tainted allotments was a result of the political or other extraneous
consideration or the selection was on merits alone. As already mentioned,
these aspects require an independent probe.·
D
The alleged tainted allotments are required to be scrutinized by an
independent committee so as to determine the validity of impugned circular
dated 9th August, 2002 as against such allotments. As already noticed, 417
names were exposed by the media out of which particulars of 413 have been
provided. We deem it expedient to constitute a Committee to go into the
E question whether these allotments were made on merits or on some extraneous
considerations.
In our view, the Government should not have exercised the power in
a manner so as to enable it to escape the scrutiny of allotments exposed by
the·.media. No arbitrary exercise of power should intervene to prevent the
F attainment of justice. Instead of passing the impugned order, in the context
of the facts of the present case, the Government should have ordered an
independent probe of alleged tainted allotments. The impugned order had the
twin effect of (I) scuttling the probe and (2) depriving a large number of
others of their livelihood that had been ensured for them after their due
G selections pursuant to a welfare policy of the Government as contained in the
guidelines·dated 9th October, 2000. The public in general has a right to know
the drcumstanc~s under which their elected representatives got the outlets
and/or dealershipsldistributorships.
In view of the aforesaid:-
H
ONKAR LAL BAJAJ v. U.0.1. [Y.K. SABHARWAL, J.) 631
I. We appoint a Committee comprising of Mr. Justice S.C. Agrawal, a 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 B
appoint any person to assist it.
Ill. 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 C
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 D
directed by it.
VI. The oil companies are directed to provide as per Committee's
directions, the requisite infrastructure, staff, trimsport and make necessary
arrangements, whenever so directed, for travel, stay, payments and other E
facilities etc:
VII. In respect of any case ifthe 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 F
with probe in detail.
For the reasons aforesaid, the impugned order dated 9th August, 2002
is hereby quashed except in respect of cases referred to the Committee.
. The cases referred to the Committee would be considered on receipt of G
the report. However, the interim order dated 28th August, 2002 would continue
to apply to these referred cases till further orders. The said order is further
extended to cases where select panel has been published but letters of intent,
have not been issued.
Transferred Case Nos 80, 81 to 88, 90 and 9112002, all intervention H
632 SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R.
A applications therein, I.A. Nos.246-2556 in Transfer Petition (C) Nos.417-
423/2002 and Contempt Petition (C) No.556/2002 in Transferred Petition (C)
No.417-423/2002 are disposed of in terms of this decision. ·
A copy of the judgment shall be sent to the Registrar Generals of all
the High Courts so that the writ petitions, if any, pending in the High Courts
B on similar questions can be disposed of in terms of this judgment.
All matters except Transferred Case Nos. I00 to I09 are disposed of.
List Transferred Case Nos. I00 to I09 of 2002 after receipt of the report.
K.K.T. Petition disposed of.
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