Holding

True and correct disclosure of facts is a condition for award of the dealership; failure to disclose such facts justifies cancellation of the award.

Summary

Indian Oil Corporation invited applications for a dealership and prepared a selection panel that initially included Shiv Kant Yadav. Other candidates complained that Yadav had not fully disclosed his income in the application. An enquiry found that Yadav’s actual income exceeded the amount he declared, violating an undertaking that any false or incomplete statement would permit cancellation of the award. The High Court dismissed Yadav’s writ petition, holding that the income was not fully disclosed and the cancellation was valid. On appeal, the Supreme Court affirmed that true and correct disclosure is a condition for award and that the undertaking allows cancellation for mis‑statement, thus dismissing the appeal.

Issues considered

Whether non‑disclosure or mis‑statement of income in an application for a dealership, absent mens rea, is a ground for cancellation under the terms of the undertaking and the Indian Contract Act, 1872.

Legislation cited

Indian Contract Act, 1872

Subjects

dealershipmisrepresentationnon-disclosurecontractundertakingcancellationIndian Oil Corporationincome disclosureIndian Contract Act

Judgment

A SHIV KANT YADAV M.
v. :r

INDIAN OIL CORPORATION AND ORS.

APRIL 9, 2007

B [DR. ARIJIT PASA YAT AND LOKESHWAR SINGH PANTA, JJ.]

Indian Contract Act, 1872:
-}-
Dealership Contract-Invitation of application by Indian Oil -:.:--
c Corporation for award of dealership-Selection-One of the candidates
allegedly did not disclose the correct information-Enquiry-Cancellation
ofselection ofthe incumbent-Challenge t~Dismissed by High Court holding ~
)
that the income was not fully disclosed by the incumbent-On appeal, Held: ·::~-
True and correct d{sclosure offact is the requirement for consideration of the
D application for award of dealership-Not complied with by the incumbent-
Hence, order of the High Court does not suffer from any infirmity to warrant
interference.
~
Indian Oil Corporation invited applications to award dealership of its
product at Dist. Etah., U.P. The Selection Board prepared a panel of the
E candidates, on the basis of which the Corporation proposed to award dealership.
Candidates at serial nos. 2 and 3 of the panel filed complaints against the
selection contending that some of the candidates did not disclose the correct
i~formation in their applications and, therefore, they were not qualified to
get dealership. The Corporation, after holding an enquiry, cancelled the
selection of such candidates including the appellant. Consequently, the
F selection of the appellant was cancelled and Letter of Intent (LOI) was issued
in favour of respondent No.4. The order was challenged by the appellant by ~-

filing a writ petition, which was dismissed by the High Court holding that the ~

income was not fully disclosed by the appellant. Hence the present appeal.

Appellant contended that no mens rea and mere mistake and unintended
G
omission cannot be a ground for cancellation of dealership.

Dismissing the appeal, the Court

HELD: 1.1. There was a requirement to disclose the true and-correct .h..

H 1000
.~
SHIV KANT YADA V v. INDIAN OIL COPRN. [PASA YAT, I.] 1001
.-
~
fact for award of dealership in the application, which does not appear to have A
been done. (Para 14) (1005-G)

Kendriya Vidyalaya Sangathan and Ors. v. Ram Ratan Yadav, (2003) 3
SCC 437; State of A.P. and Anr. v. T. Suryachandra Rao, {2005) 6 SCC 149
and Bhaurao Dagdu Paralkar v. State of Maharashtra and Ors., [2003) 7 SCC
605, relied on. B
1.2. In view of the undertaking that if any factual mis-statement or
-;
declaration is made, that permits cancellation of the allotment The order of
the High Court does not suffer from any infirmity to warrant interference.
[Para 16) (1006-D)
c
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1844 of2007.
_J~
From the Final Judgment and Order dated 11.11.2005 of the High Court
of Judicature at Allahabad, Lucknow bench, Lucknow in Writ Petition No.
1949(M/B) of2005.
D
V.A. Mohta, Aniruddha P. Mayee, Sanjeev Kumar Chaoudhary, Sanjay
r Visen and Nilakant Nayak for the Appellant.

Dr. R.G. Padia, Sanjay Kumar Singh, M.P. Shorawala, H.K. Puri, S.K. Puri,
Ujjawal Banerjee, Priya Puri, V .M. Chauhan and Anuvrat Shanna for the
Respondents. E

The Judgment of the Court was delivered by

DR ARIJIT PASAYAT, J. l. Leave granted.

2. Challenge in this appeal is the order passed by a Division Bench of F
~
the Allahabad High Court dismissing the Writ Petition filed by Shiv Kant
Yadav, the appellant herein.

3. Background facts in a nutshell are as follows:

Indian Oil Corporation (in short the 'Corporation') invited applications G
from desirous persons by offering advertisements through publication in
newspapers to select suitable persons and grant Letter of Intent (in short
'LOI') to award dealership of SKO/LDO at Jaleshar, Dist. Etah. Appellant and
' -'
several others applied for the same. The Selection Board scrutinized- the
applications on 28th and 29th November, 2003. Names of the applicants in
H
~-
1002 SUPREME COURT REPORTS [2007) 4 S.C.R.

A order of preference were indicated in the panel of selected candidates, on the x
basis of which the Corporation proposed to award dealership. They are as
follows: (i) appellant- Shiv Kant Yadav; (ii) respondent No.4- Smt. Usha
Shanna and (iii) Hari Om Singh who was not impleaded in the writ petition.
Usha and Hari Om Singh fl.led complaints inter-se between themselves against
aforesaid selection contending that candidates did not disclose the correct
B information in their applications and, therefore, were not qualified to get
dealership. The Corporation held an enquiry on the basis of the complaint
made against the appellant and relying on the report received after enquiry "'
passed the order cancelling the selection of the appellant. Consequently, the
Head Office of the Corporation directed the concerned authority to cancel the
'f
c selection of the appellant and to issue LOI in favour ofrespondent No.4 after
ensuring that there was no complaint/court case pending .against the proposed
allottee.
.:.
4. The order was challenged by the appellant by filing a writ petition.
...
D 5. Appellant in the Writ Petition took the stand that as per the enquiry
report the total income of the appellant had tieen fixed at Rs.l,64,000/- per
annum vis-a-vis Rs.84,000/- as disclosed in his application form. The '".(-
discrepancy has no bearing as the eligibility criteria was that the income
should not be above rupees two lakhs in the last financial year. The complaint
made by Hari Om Singh against Smt. Usha was pending and no LOI could
E be issued without ho!ding an enquiry.

6. The Corporation took the stand that the Executive Summary report
discloses that incorrect information had been given and it has been specifically
made clear that any concealment of facts/mis-infonilation would result in
rejection of the application.
F
7. The decision not to allot the dealership to the appellant was on
account of the fact that he did not correctly disclose the income and us f
violated his own declaration in his undertaking incorporated in the applicat on.
~

8. With reference to the application form and the undertaking the High
G
C~urt held that it was obviously clear that the income was not fully disclosed. .
The plea that the income was less than rupees two lakhs, did not m~terially
affect the eligibility of the appellant was not accepted and accordingly, the
writ petition was dismissed. ;._
~

H 9. In support of the appeal, it is submitted that there was no mens rea
SHIV KANT YADA V v. INDIAN OIL COP RN. [PASA YAT, I.] l 003

and mere mistake and unintended omission cannot be a ground for cancellation.
A
The income of S.K. Fertilizers was not necessary to be disclosed. In the
affidavit before the Selection Board it was clearly stated that S.K.
Constructions may have
l
come into existence in 2002-2003.

10. Learned counsel for the respondents on the other hand supported B
the order saying that once there is suppression in view of_the undertaking
the allotment was to be cancelled.

11. The fact of making a wrong statement in the application form and
the effect of the undertaking _though rendered in different context in Kendriya
Vidyalaya Sangathan and Ors. v. Ram Ratan Yadav, [2003] 3 SCC 437, State C
of A.P. and Anr. v. T. Suryachandra Rao, [2005] 6 SCC 149 and Bhaurao
Dagdu Paralkar v. State of Maharashtra and Ors., [2005] 7 SCC 605 need to
be noted.

12. In Kendriya Vidyalaya's case (supra) it was noted as follows:
D
"l l. It is not in dispute that a criminal case registered under Sections
323, 341, 294, 506-B read with Section 34 IPC was pending on the date
when the respondent filled the attestation form. Hence, the information
given by the respondent as against columns 12 and 13 as "No" is
plainly suppression of material information and it is also a false
statement. Admittedly, the respondent is holder of BA, BEd and MEd E
degrees. Assuming even his medium of instruction was Hindi
throughout, no prudent man can accept that he did not study English
language at all at any stage of his education. It is also not the case
of the respondent that he did not study English at all. If he could
understand columns 1-11 correctly in the sanie attestation form, it is F
difficult to accept his version that he could not correctly understan<~
the contents of columns 12 and 13. Even otherwise, if he could not
correctly understand certain English words, in the ordinary course he
could have certainly taken the help of somebody. This being the
position, the Tribunal was right in rejecting the contention of the
respondent and the High Court committed a manifest error in. accepting G
the contention that because the medium of instruction of the
respondent was Hindi, he could not understand the contents of columns
12 and 13. It is not the case that columns 12 and 13 are left blank. The
respondent could not have said "No" as against columns 12 and 13
without understanding the contents. Subsequent withdrawal of criminal H
1004 SUPREME COURT REPORTS [2007] 4 S.C.R.

A case registered against the respondent or the nature of offences, in
our opinion, were not material. The requirement of filling columns 12
and 13 of the attestation form was for the purpose of verification of
character and antecedents of the respondent as on the date 'of filling
and attestation of the form. Suppression of material infonnation and
making a false statement has a clear bearing on the character and
B antecedents of the respondent in relation to his continuance in service.

12. The object of requiring infonnation in columns 12 and 13 of the
attestation fonn and certification thereafter by the candidate was to
ascertain and verify the character and antecedents to judge his
suitability to continue in service. A candidate having suppressed
c material infonnation and/or giving false infonnation cannot claim right
to continue in service. The employer having regard to the nature of
the employment and all other aspects had the discretion to terminate
his services, which is made expressly clear in para 9 of the off~r of
appointment. The purpose of seeking information as per columns 12
D and 13 was not to find out either the nature or gravity of the offence
or the result of a crimi~al case ultimately. The infonnation in the said
columns was sought with a view to judge the character and antecedents
of the respondent to continue in service or not. The High Court, in
our view, has failed to see this aspect of the matter. It went wrong in
saying that the criminal case had been subsequently withdrawn and
E that the offences, in which the respondent was alleged to have been
involved, were also not of serious nature. In the present case the
respondent was to serve as a Physical Education Teacher in Kendriya r'
I
Vidyalaya. The character, conduct and antecedents of a teacher will \
have some impact on the minds of the students of impressionable age.
F The appellants having considered all the aspects passed the order of
dismissal of the respondent from service. The Tribunal after due
consideration rightly recorded a finding of fact in upholding the order
of dismissal passed by the appellants. The High Court was clearly in
error in upsetting the order of the Tribunal. The High Court was again
not right in taking note of the withdrawal of the case by the State
G Government and that the case was not of a serious nature to set aside
the order of the Tribunal on that ground as well. The respondent
accepted the offer of appointment subject to the tenns and conditions
mentioned therein with his eyes wide open. Para 9 of the said
memorandum extracted above in clear terms kept the respondent
H informed that the suppression of any information may lead to dismissal
SHIVKANTYADAVv. INDIANOILCOPRN. [PASAYAT,J.] 1005

from service. In the attestation fonn, the respondent has certified that A
the infonnation given by him is correct and complete to the best of
his knowledge and belief; if he could not understand the contents of
columns 12 and 13, he could not certify so. Having certified that the
information given by him is correct and complete, his version cannot
be accepted. The order of termination of services clearly shows that
there has been due consideration of various aspects. In this view, the B
argument of the learned counsel for the respondent that as per para
9 of the memorandum, the tennination of service was not automatic,
cannot be accepted."

13. It is to be noted that the enquiry report relates to S.K. Fertilizers C
whereas the affidavit alleged to have been filed where reference was made to
S.K. Construction has no relevance. It is not in dispute that in the affidavit
the appellant had stated about the inheritance of income yielding property.
In the report after taking note of the appellant's stand it was concluded as
follows:
D
"Comments: Sh. Shiv Kant Yadav has admitted through affidavit that
he has inherited two houses from his father, which is being used for
personal use only and as such there is no income in the year 1999-
2000 on this account (Annex-c). He has also admitted to be the owner
of two shops which are currently not in use and lying vacant. With
regard to three. vacant shops, I do not agree since all the nine shops, E
which he has shown me at the time of my visit comes under the joint
property and since six shops have been given on rent, automatically
Sh Shiv Kant Yadav gets one third share of the joint property. However,
complainant has produced a letter issued by Nagar Panchayat Jaithra
dated 26-03-04 (Annex-H) stating that Sh Shiv Kant Yadav, s/o Veri F
Singh Yadav has Rs.14,000/- per month towards rental from shops and
Rs.3,000/- per month towards rental from house. Thus, the income for
the year 1999-2000 works out to be approximately Rs.68,000/- towards
his share from the joint property. Enclosed annexures. The allegation
stands proved and the incomes from house and shops have not been
shown in the application." G
14. There was a requirement to disclose the true and correct fact which
does not appear to have been done.

15. The undertaking reads as follows:
H
\

-+
1006 SUPREME COURT REPORTS [2007] 4 S.C.R.

A "That I am fully aware that Indian Oil Corporation (name of the Oil
Company) under its policy will not appoint me as their dealer/distributor,
if I am employed. I shall have to resign from the service and produce
proof of acceptance of my resignation by my employer to Indian Oil
Corporation Ltd. (Name of the Oil Company) before issuance of Letter
of Appointment for the dealership/distributorship.
B
That if any information/declaration give11-by me in my application or
in any document submitted by me in support of my application for the
award of SKO/LDO dealership/distributorship or in this undertaking
shall be found to be untrue or incorrect or false Indian Oil Corporation
(name of the Oil Company) would be within its rights to withdraw the
c letter of intent/terminate the dealership/distributorship (if already
appointed) and that, I would have no claim, whatsoever, against
Indian Oil Corporation (narr:e of the Oil Company) for such withdrawal/
termination."

D 16. In view of the undertaking that if any factual mis-statement or
declaration is made that permits cancellation of the allotment. The order of the
High Court does not suffer from any infirmity to warrant interference. The
appeal is dismissed with no order as to costs.

S.K.S. Appeal dis~is~ed.