Holding

The Supreme Court dismissed the appeals, upholding the High Court’s cancellations, and held that the earlier guidelines did not approve prior discretionary allotments, constructive res judicata does not apply, and no equitable relief is warranted.

Summary

The Supreme Court examined appeals against the Delhi High Court’s cancellation of petrol pump, LPG and SKO dealership allotments made by the Minister of Petroleum under a discretionary quota. The Court held that the 1995 Supreme Court guidelines did not tacitly approve prior allotments, and that the principle of constructive res judicata does not apply to each public‑interest litigation. It further clarified that the three‑judge bench had not over‑ruled the Common Cause decision, and that verification by the oil company does not replace the minister’s need for material before exercising discretion. The High Court’s cancellations, based on lack of material and arbitrary exercise of power, were upheld; no equitable relief was granted, and procedural notice under Order 1 Rule 8 CPC was deemed unnecessary as each allottee was individually heard. The appeals were dismissed, with a direction that the appellants may wind up their businesses by 31 December 2001.

Issues considered

Whether the 1995 Supreme Court judgment laying down guidelines tacitly approved discretionary allotments made prior to that date.
Whether the principle of constructive res judicata under Section 11 CPC applies to public‑interest litigations and bars the High Court’s cancellation orders.
Whether the three‑judge bench over‑ruled the Common Cause judgment, thereby negating the High Court’s jurisdiction to re‑examine allotments.
Whether the High Court’s orders should be reconsidered in light of the three‑judge bench’s later observations.
Whether equitable considerations (hardship, investment) merit relief to the allottees.
Whether the High Court’s cancellation orders are vitiated for non‑consideration of germane material.
Whether notice under Order 1 Rule 8 CPC is mandatory in public‑interest writ petitions.
Whether verification by the oil company suffices for the minister’s discretion.
Whether principles from Civil Appeal No. 6840 of 2001 on discretionary land allotment apply to the present case.

Legislation cited

Code of Civil Procedure, 1908s. Explanation 4 to Section 141, s. Explanation (IV) to Section 11, s. Order 1 Rule 8, s. Order 2 Rule 2, s. Section 11
Constitution of Indias. Article 21, s. Article 226, s. Article 32

Subjects

discretionary allotmentpetroleum pumpspublic interest litigationconstructive res judicataministerial discretionarbitrary exercise of powerequitable reliefnotice under Order 1 Rule 8 CPCverification by oil companyexemplary damagescancellation of allotments

Judgment

V. PURUSHOTHAM RAO A
v.
UNION OF INDIA AND ORS.

OCTOBER 19, 2001

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

Constitution of India, 1950 :

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

Civil Procedure Code, 1908 :

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

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

Administrative Law :

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

Grant of relief to allottees-On equitable consideration~It is not appro-
priate as granting of relief on sympathetic consideration on the ground of H
411
412 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A equity would be a case of misplaced sympathy-No infirmity with ultimate
conclusion of High Court in cancelling the allotments.

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

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

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

In the matter of Common Cause v. Union of India, the then Minister
filed an affidavit. After hearing, the Court directed the CBI to hold an
investigation after registering a case against the Minister and also imposed
G exemplary damage of Rs. 50 lacs on the Minister concerned. The judgment
was reported in 1996 (6) SCC 593. Aggrieved, the then Minister filed a
Review Petition which was allowed by a three-Judge Bench of this Court
holding that the factors relevant to the exemplary damages had not been
taken by the Court and consequently levy of penalty was not in accordance
H with law and that no case could be said to have been made out against the
V. PURUSHOTHAM RAO v. U.O.l. 413
Minister concerned for directing registration of a case and such direction A
could not have been given under Article 32 or Article 142; and such a
direction would be contrary to the concept of right to life under Article 21.

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

On behalf of the appellants it was inter alia contended that this Court
F
issued guidelines which need to be followed by the Central Government in
making discretionary allotment of retail outlets of petroleum products etc.
which implied that the Court had approved earlier lapses in the matter of
allotment under discretionary quota and, therefore, it was not open to the
High Court to re-examine all the cases and decide the legality of the
allotments; that in view of the observations of three Judge Bench Judg- G
ment in Common Cause v. Union of India, the plea of constructive res
judicata should have been applied by the High Court; that the High Court
did not consider the material available on record; that the High Court
discharged the notice of cancellation without ascribing any reasons; that
verification can be effectively done by the Oil Company at site and not by H

•
414 SUPREME COURT REPORTS [2001) SUPP. 4 S.C.R.
A the Minister and to hold that the Minister must verify the contents of 'the
application, would be unreasonable; that even if the High Court found that
there had been no verification then, it would have directed a fresh verifica-
tion rather than cancelling the distributorship; that the main culprit being
exonerated by the three Judge Bench of this Court, it would not be a fair
deal to punish the allottees, particularly when they had made investments
B
and earning their livelihood by operating the allotment in their favour;
that compassion or a case of extreme hardship has all along been recog-
nised a germane factor for exercise of discretion which has also been
re~ognised by the Court in the guidelines issued; that the discretion exer-
cised· being fair, reasonable and legal the same ought not to have been
c interfered by the High Court; that a three Judge Bench Judgment having
overruled the earlier two Judge bench decision of this Court, High Court
could not have set aside the allotment made, relying upon the two )"udge
Bench Judgment of this Court.

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

Dismissing the appeals, the Court

HELD : 1.1. In the review petition, the three Judge Bench of this
G Court was concerned with the correctness of the directions contained in
the order dated 4.11.96 to institute criminal prosecution against the Minis-
ter concerned and levy of penalty as exemplary damages. It is in that
context the Court made the observations not noticing .the fact that in the
matter of Common Cause, this Court had earlier directed .the High Court
to dispose of the two Writ Petitions pending in the High Court and to
H decide the legality of the order of discretionary allotment made by the
V. PURUSHOTHAM RAO v. U.0.1. 415
Minister concerned. [441-A-B] A
1.2. The Judgment of this Court in Centre for Public Interest Litiga-
tion, (1995) Supp. (3) SCC 382 cannot be construed by any stretch of
imagination to be a tacit approval of the discretionary allotments made
prior to that Judgment, since in the bmended petition, the petitioner,
Centre for Public Interest Litigation had only prayed for laying down the B
guidelines to regulate exercise of discretion in the matter of allotment.
Moreover, when Common Cause had filed another petition under Article
32 alleging arbitrary exercise of directions in favour of 15 allottees and
this Court while disposing of the petition vide Judgment dated 25.9.96,
cancelled all such allotments on a finding that the Minister without keep- C
ing in view any guidelines allotted in exercise of his discretion in a cluster
manner and the public property have been doled out in wholly arbitrary
and discriminatory manner. [434-H; 435-A; 437-C-F]

S.R. Dass v. State of Haryana, (1988) Punjab Law Journal page 123,
approved. D
2. Civil Procedure Code is not required ~o be followed in a proceed-
ing under Article 226 unless the High Court itself has made the provisions
of Civil Procedure Code applicable to a proceeding under Article 226.
Then again, the principles of section 11 as well as Order 11 Rule 2,
undoµbtedly contemplate an adversarial system of litigation, where the
E
Court adjudicates the rights of the parties and determines the issues aris-
ing in a ginn case ..Public Interest Litigation of a petition filed for public
interest cannot be held to be an adversarial system of adjudication and the
petitionei: in such case, mert:IY brings it to the notice of the Court, as to
how and in what manner the public interest is being jeopardised by arbi- F
trary and capricious action o.f the authorities. [438-D-E]

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

Rural Litigation and Entitlement Kendra v. State of U.P., [1989] Supp. 1
sec 504, relied on. H
416 SUPREME COURT REPORTS pool] SUPP. 4 S.C.R.
A Forward Construction, Co. and Ors. v. Prabhat Manda/, AIR (1986) SC
391, referred to.

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

5.1. It is no doubt true that the Minister having exercised his discretion
E and allotting a particular agency in favour of the applicant, has required the
oil company to make necessary verification before entering into any agree-
ment with the alfottee, but this verification has nothing to do with the mate-
rials on which the subjective satisfaction of the Minister was arrived at for
exercise of his discretion in favour of any individual for justifiable reasons.
F When a State property as distinct from a private property is being dealt with
by a Minister then it is of paramount importance that such public property
must be dealt with for public purpose and in public interest. The disposal of
public property undoubtedly partakes the character of a trust and there-
fore in a matter of such disposal, there should not be any suspicion of lack of
principle. The exercise of discretion must not be arbitrary or capricious or
G for any extraneous c.onsideration. The subsequent inquiry supposed to have
been conducted by the oil company cannot replace the pre-conditions for
exercise of discretion by the Minister. (445-E-G; 446-B]

5.2. If the initial order of allotment by exercise of discretion is initi-
H ated on the ground of absence of any material on verification by the con-
V. PURUSHOTHAM RAO v. U.0.1. 417
cerned authorjty, who has exercised his discretion, then subsequent inquiry A
· by the oil company while operates in different fields cannot make the so
called arbitrary order of the Minister a legal or just order. [446-B~C]

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

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

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

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

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

O.P. Sharma, V.A. Mohta, U.N. Bachawat, Dushyant A. Dav.e, M.C.
F
Bhandare, S.C. Maheshwari, G.L. Saaghi, T.L. V. Iyer and P.N. Misra, P;S.
Narasimha, G. Seshagiri, A. Raghunath, P. Sridhar, R.C. Gubrele, K.R. Gupta,
Abhishek Atrey, Ms. Nanita Sharma, D. Rama Krishna Reddy, D. Bharathi
Reddy, Sushi! K. Jain, P. Venugopal, K. J. John, Pranab Kumar Mullick, Rajiv
Talwar, Swetank Shantanu, Mohan V. Katarki, Jaideep Gupta, Abhijeet G
Chatterjee, Ms. Rukhsana, S. Janani, A. Subba Rao, Ms. C.K. Sucharita, Ms.
Dr. Lax.mi Shastri, Gopal Singh, Rana Ranjit Singh, Irshad Ahmad, S.R. Bhat,
R.K. Kapoor, B.R. Kapoor for Anis Ahmed Khan, B. Partha Sarthy, M.P.S.
Tomar; P.K. Chakraverti, K. Ram Kumar, B.K. Satija, Dhruv Mehta, Ms.
Shobha, Ms. Anu Mehta, S.K. Mehta, Ms. Rekha Palli, Pramod B. Agarwala, H
418 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A ,Ms. Praveena GaUtaJI\, R. Nedumaran, H.K. P~ri. S.K,. Puri, Rajesh sdvastava,
Ujjwal Banerjee, Anindita Gupta, Sanjeev ~- Kapoor, Vishal Gupta, Narinder
K. Verma for Prashant Bhushan, Ms. Indra Swahney, C.V.S. Subba Rao, K. C .
.Kaushik, B.V. Bairam Das, A.K. Raina, R.K. Bhartiya, Anil .K. Jha, B.R. Vig,
Sanjay Kapur, K.K .. Gupta; Sanjay Sarin,.Ashok Mathur,.Jai ·Prakash Narayan
B Gupta, Y. Raja Gopal Rao and S.U.K. Sagar for the appearing parties.

The Judgment of the Court was delivered by

. PATTANAIK, J. In this batch of appeals the judgment Qf Delhi High
Court, cancelling the allotment made by the concerned minister from out of his
c s9- called. discretionary quota on petroleum dealership , as well as LPG deal-
ership is under challenge.. Prior to 1995, the Minister of Petr~leum in exercise
of his discretion h.ad been allotting retail outlets for petroleum products, LPG
dealer~hip and SKO deaiershjp, without having any prescrib~d ~Qrms. . A
Public Interest Litigation had been. filed in this Court by Centre for Public
D Interest Litigation under Article 32 of the Constitution, praying that .guidelines
to regulate the exercise of discretion in the matter of such allotment, which
results in exerCise of the discretion arbitrarily be fixed. It may be stated that
initially a prayer ha~ also been made in that application to cancel the dealership
in favour of respondent No. 4, but that prayer stood deleted and an amended
E petition was filed as the said respondent did not accept the dealership in
question. This Court after hearing the counsel for the petitioner, and the
learned Attorney General, issued a set of _guidelines f~r discretionary allotment
of petroleum products' agencies to ensure that the exercise of discretion in
making such allotments are in conformity with the rule of law and by excluding
the likelil,iood of arbitrariness and minimising the area of discretion. The said
F
decision of this Court has since been reported in the case of Centre .for Public
Interest Litigation v. Union o.f/ndia and Ors., i[l995] Supp.3 S.C.C. 382. In
. para (4) of the aforesaid Judg~ent, the Court had directed as under :

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

The Common Cause had filed a petition under Article 32 on the basis of a news
'ff item which appeared in· a national newspaper that the Minister of Petroleum
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 419
was personally interested in making allotment of petrol pumps in favour of 15 A
persons, who were either the relations of his personal staff or sons of the
Ministers, or sons/relations of the Chairman and Members of the Oil Selection
Boards, praying for cancellation of allotments made inter alia on the ground
that the allotments had been made by the concerned minister, ma/a.fide and the
decision is arbitrary and motivated by extraneous considerations. The Court B
ultimately cancelled the allotments made in favour of the 15 persons mentioned
in the petition, on a conclusion that the allotments are arbitrary, discriminatory,
mala.fide and wholly illegal. The Court also issued certain other directions in
relation to the allottees and called upon the concerned minister to show cause
as to why a direction be not issued to the appropriate police authority to register C
a case and initiate prosecution against him for criminal breach of trust or any
other offence under law and in addition, why he should not be liable to pay
damages for his ma/a fide action in ,i1otting petrol pumps to ·15. persons
mentioned therein. This judgment of the Court is reported in [1996] 6 SCC
530. While the Common Cause case was pending in this Court, Civil Writ · D
Petition Nos. 4003 and 4430 of 1995 had been filed in Delhi High Court by
the Centre for Public Interest Litigation, as public interest litigation, which
were pending in Delhi High Court. In those two petitions, allotment of petrol
pumps/gas agencies to various persons during the period 1992-93, 1993-94,
1994-95 and 1995-96 had been challenged. A Transfer Petition had been filed
in this Court, which was registered as Transfer Petition No. 127/96 and this E
Court had issued notice in the transfer petition and stayed further proceedings
before the High Court. In an affidavit filed by the Ministry of Petroleum in
the aforesaid transfer petition, the then Joint Secretary had stated that in 1995-
96 under the discretionary power of the Government, allotment had been made
to 99 persons and further orders had already been made in favour of 61 more F
persons, allotting petrol pumps/gas agencies. One Mr. Srinivasan, Advocate
had filed an affidavit giving a long list of persons who are related to the then
Prime Minister/Ministers and other V.I.Ps and who had been allotted petrol
pumps and gas agencies. On behalf of petroleum ministry, an affidavit had
been filed, stating that due inquiry had been made through the oil companies. G
and after due inquiry, the concerned minister had made the allotment. This
Court ultimately held that since the two writ petitions are pending before the
·High Court, wherein the allotment made to all these persons have been chal~
lenged, it· would not be necessary for this Court to get the writ petitions
transferred and decide the matter. The Court, therefore, vacated the stay order H
420 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A granted and directed the Registry of the Court to' send all affidavits filed by the
parties in the transfer petition along with the annexures to the High Court. The
Court observed:

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

Pursuant. to the directions contained in the judgment of this Court in
C Common Cause v. Union of India, [1996] 6 SCC 530," show cause notice
having been· issued to the then Minister Captain Satish Sharma, said Shri
Sharma had filed an affidavit in reply to the show cause notice. The Court
ultimately perused the show cause n.otice filed and after hearing the counsel
apI>earing for the Minister, directed the CBI to hold an investigation, after
D registering a case against the concerned minister in respect of the allegations
dealt with and findings made by the Courtearlier in th_e Common Cause case.
On the question of liability of the minister to pay exemplary or compensatory
damages, .the Court considered the matter and came to the conclusion that
Captain Satish Sharma, the then minister would be liable to pay exemplary
damages and· quantified the same at Rs. 50 lacs. This Judgment of the Court
E
has been reported in [1996] 6 S.C.C. 593.

Pursuant to the directions of this Court in Common Cause case, [ 1996]
6 S.C.C. 530, the Delhi High Court took up the writ petitions which had ~een
filed a.i; Public Interest Litigation by the Centre for Public Interest Litigation.
F On ex;imination of the relevant files dealing with the allotment of retail outlets
of pettol, LPG distributorship and SKO/LDO dealership under the discretion-
ary quota made by the minister concerned, it was revealed that between January
1993 till 1996, 179 retail outlets (petrol pumps), 155 LPG distributorships and
45 SKO/DLO dealerships had been allotted by the concer.ned minister under
the discretionary quota. In its order dated 29th of August, 1997, the Division
Bench of Delhi High Court came to the conclusion that the examination of files
clearly shows that these are not the ca::;es of aberrations here or there but are
cases which show a pattern of favouritism. From the judgment of Delhi H~gh
Court in C.W. 4003/95 dated 29.8.1997, it transpires that even before the
Supreme Court stayed the proceedings by order dated 6th December, 1995,
H
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 421
the High Court had called upon the. respondents by order dated 2nd November, A
1995 to produce the list of allotments made under the discretionary quota of
the petroleum minister for allotment of petrol retail outlets, LPG distributorship
arid Kerosene distributorship from the date of the tenure of the minister which
was 18th of January, 1993. Before the Delhi High Court, it had been contended
by the allottees as well as by the Government that the judgment dated 31st B
March, 1995 of the Supreme Court laying down the guidelines, since reported
in (1995) Supp. 3 S.C.C. 382 ·would indicate that the Supreme Court had
implidely regularised the allotments made prior to 31st March, 1995 and
consequently the validity of the said allotments need not be gone into. The
High Court however was not persuaded to agree with the submissions and in c
our view rightly, particularly, when in the Common Cause case (1996) 6 SCC
530 this Court has p~sitively directed the High Court to examine the issues
involved and dispose of the two pending writ petitions in accordance with law.
Since the allottees were required to be noticed before any decision is taken, the
High Court by its order dated 11th Dec,:ember, 1996, constituted a Committee
D
of three advocates and directed them tQ examine all the files and submit a report
in a Proforma which had been prepared by the Court itself, after discussion with
the counsel appearing for the parties. The said Committee submitted its report,
on the basis of which the Court issued notices to various persons by its order
dated 27th of February, 1997 and 20th of March, 1997 and the Court was to
deal with the cases of about 400 allottees. Pursuant to the notices issued, the
E
allottees filed their respective show causes and then the Court heard the respec-
tive counsel for the allottees as well as examined the report of the Committee
and scrutinized the same by perusing the original file and finally disposed of
the cases of abput 100 allottees by its judgment dated 29th of August, 1997.
The Court on examination of the materials before it and on perusal of the F
original files, appears to have taken the view in several cases that the discretion
had been exercised on sufficient materials and· after inquiry and held those
allotments. to have been proper exercise of tlle discretion and accordingly
discharged the notices of cancellation. But in those cases, where the Court
found either there were no materials before the concerned minister in support G
of the applications filed to justify the exercise of power for allotment under the
discretionary quota or such allotments had been made on account of political
patronage or some other extraneous considerations, the Court cancelled the
allotment made with certain directions therein. It would be apprbpriate at this
stage to notice the observations of the High Court: H
422 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A "It is unfortunate that perusal of the files show that a large number of
persons to whom allotments were made under the discretionary quota
belong to an affluent class of society and not the class which may
deserve compassion, resulting in exercise of discretion in their favour.
Wpether this hrrge number of persons got allotment on accouht of their
B ·affluence or on account of their close proximity with. the powers that
be, it may be difficult to say de.finitely, one way or the other but that
makes no difference since both· affluence and/or proximity; are irrel-
evant.and extraneous considerations for exercise of discretion."

The Court also came to the further conclusion that there had been no verifi-
c cation of the. statements made in the applications by the allottees _and hardly
any application contains details of annual income or bio-data and hardly any
person had filed iµiy affidavit in support of his claim, seeking grant of discre-
tionary allotment and in several cases the applications even did not bear any
data and a number of allottees belonged to one Parliamentary Constituency
an.d were active members and supporters of the party in power at the relevant
tim~. · The Court having cancelled the allotments made in favour of ~he appel-
lants, who-~e before us, the present appeals have been filed by grant of special
leave'. . After the disposal of first batch of cases by the High Court by its
judgment dated 29 .8:.1997, the High Court issued notices to some other allottees
E and disposed of the second batch of cases by its order dated 11.10.99 and both
these orders of Delhi High Court are under challenge, so far as it relates to the
cancellation of allotments made under the discretionary quota.

Captain Satish Sharma, who was the concerned minister and against
whom the Court had directed registration of a criminal case by the C.B.I., and
F also levied penalty of Rs. 50 lacs, filecl a review petition against the aforesaid
two directions of the Court, which was entertained and that review petition was
allowed by a three Judge Bench of this Court, since reported in [ 1999] 6 S.C.C.
667. In the· aforesaid case, this Court came to the conclusion that the factors
relevant to the award of exemplary damages had not been taken by this Court
G and consequently the levy of penalty of Rs.50 lacs was not in accordance with
law. The Court also held that no case could be said to have been made out
against' the concerned minister for directing registering a case under Section
409 and such a direction could not have been given under Article 32 or under
Article 142 and further, such a direction would be contrary to the concept of
H right to life under Article 21. The Court, therefore,;set aside the two directions
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 423
earlier made in relation to registering a criminal case and levy of penalty A
against the minister. Certain observations had been made in the aforesaid three
Judge Bench Judgment, which form the sheet anchor of one of the contentions
of the appellants in the present batch of appeals and we will refer to those
observations and deal with the same at appropriate stage. The aforesaid
Judgment of the Court has since been reported in [ 1999] 6 SCC 667. Between B
1997 and 1999, against the order of cancellation of allotments made under
discretionary quota, about 79 special leave petitions had been filed in this
Court, which had been dismissed or dismissed as withdr~wn. Notwithstanding
the dismissal of the afore.said special leave petitions, after the three Judge
Bench Judgment of this Court dated 3rd August, 1999 since reported in [ 1999] C
6 S.C.C. 667, special leave petitions having been filed, this batch of cases were
listed before the Bench presided over by the very learned Judge, who was
presiding over the Bench which reviewed the earlier judgment and absolved
the concerned minister from the direction of levy of penalty as well as from
the criminal prosecution. The Bench, therefore, having granted leave, the
D
present appeals were placed for hearing. At this stage, it would be appropriate
for us to notice that the review petitions filed by Captain Satish Sharma, the
concerned Minister was in relation to the order dated 4.11.96 in the case of
Common Cause v. Union of India, [1996] 6 S.C.C. 593 and was not in relation
to the judgment dated 25.9.96 in the case of Comnwn Causey. Union of India
reported in [1996] 6 S.C.C. 530. The three Judge ~ench however committed E
an error in paragraph (7) by noticing that the review petition relates to both the
judgments viz. the Judgment dated 25.9.96 and 4.11.1996. Mr. P.P. Rao, the
learned counsel, appearing in four of these appeals viz. Civil Appeal Nos.
3085, 3094, 3099 and 3092, seriously contended that th~ judgment of this
Court in the Centre for Public Interest Litigation v. Union of India, [1995] F
Supp. 3 S.C.C. 382 in no uncertain terms, stipulates that the norms and guide-
lines should be followed by the Central Government in making discretionary
allotment of retail outlets of petroleum products, LPG distributorship and SKO
dealership, subsequent to the said judgment which necessarily and impliedly
indicates that the Court has approved the earlier lapses in the matter of such G
allotment under discretionary quota and, therefore, it was not open to the High
Court to re-examine all the cases and decide the legality of the allotments made
under the discretionary quota. He further contended that in view of the
observations of this Court in the three Judge Bench Judgment [1999] 6 S.C.C.
667, in paragraph 115 of the said judgment, the plea of constructive res- H
424 SUPREME CO(JRT REPORTS [2001] _SUPP. 4 S.C.R.
A judicata. should have been applied by the High Court and the High Court
committed error in rejecting the said contention. According to Mr. Rao, on a
plain· reading of the judgment of this Court in Centre for Public Interest
Litigation case [1995] Supp. 3S.C.C. 382, the conclusion is irresistible (hat the
Court in that case. had given its stamp of judicial approval t<:>. the d.iscretionmi .
a allotments had already been made by that date and it is for. that reason; the
Court had indicated that the guidelines 'therein would b~ f()llciwed hereafter.
That being th_e position, not only that tl;le principle of constructive res-judic_ata .
would apply, but also it was not open for the.High Court to re"open and
examine the legality of the discretionary allotmen.ts made. prior to 1995: .
Aceording to Mr. Rao, during the period when the aUotffientshad beer) made
c in favour of his clients, which is prior to the guiaeiines indicated by. this Court .
in the Centre for Public Interest Litigation case, under the pre•exis~ing practice
and norms, the concerned minister having exercised the disc.1;etion 1 . the High
Court committed serious error in interfering with th()se discretio!l·~ or~ers of .
allotment. Mr. Rao further urged tQat. the impugned judgment wollld indic;ate ·
D that there has been no due consideration of the show'-cal!se filed by the.alloUees
and the materials referred to in the show~cause have'noi b6en consider~d·by '
the High Court and, therefore, it would be a fit case where ~attet ~~hould be ·
remitted back to the High Court for re-consideration. According '.to Mf. Rao~
the discretion having been exercised .in favour of his>clients, who l:iappened to·
E a
be political sufferers and po Ji ti cal sufferer having been recognised as.a ~la5s/ '
category by themselves in the case ofD)I, Chanchala v. State'of'Afyfo;e and
Ors. etc., [1971fSupp. S.C.R. 608 at 629, the High. Court committ¢ serious
error of law in interfering with the allotmeQts ~ade in fa\lo~r of his clients and '
as such the impugned orders cannot be sust~n~d; ·Mr. R~~ .also urged' ;that
F allotments having been made in individualcases of extreme hardship' by the
minister concerned and that being one of the norms wh.ich this C9titt fol1nu-_ .<
lated in its guidelines in the case of Centre for Publit Int~rest Litigation ~nd ··
the appellants having invested huge mon~y ~nd this beillg the o~ly source pf
livelihood since 1993, the same ought not to have been cancelled,'partic~Jarly _
when. no public interest will be served by such cancellation.
G
Mr. P.S. Narasimha, the learned .counsel, appearing for the appellant in
Civil A,ppeal No. 3100/2000, while supporting the arguments ofMr. Rao,
further urged that all the necessary information was available with the High
Court !Jut the Court never considered those materials nor did the Court inquire
H into the correctness of those materials, as it would be apparent from the
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 425

affidavit of the appellant, filed pursuant to the notice of show-cause and also A
the impugned order of the High Court dealing with the appellant's case. This
being the position, Mr. Narsimha urged that the order of cancellation should
be set aside and the matter should be remitted back to the High Court for re-
consideration.
B
Appearing for the appellants in Civil Appeal Nos. 3104-3105 of 2000,
Mr. Narsimha, the learned counsel urged that in these two cases, the concerned
authority having exercised the discretion in favour of a young educated unem-
plOyed youth belonging to a back-ward community and his family being under
financial constr~nt, the conclusion of the High Court that it was a case of
arbitrary allotment, is unsustainable in law.
c
Mr. V.A Mohfa, the learned senior counsel appearing for the appellant
in Civil Appeal No. 3089/2000, urged that the allotment in favour of his client
.had been made under discretionary quota as the family of the applicant had
been put to severe financial hardship on account of natural calamity on one D
hand and the Naxalite activities on the other hand. According to the learned

•• counsel, this must be held to be a germane consideration which weighed with
the concerned authority for exercise of his discretionary power and, therefore,
the High Court ought not to have cancelled. the allotment made in favour of
the appellant. E

Mr: Dushyant A. Dave, the learned senior counsel appearing for the
appellant in Civil Appe!il No. 3090 of 2000 urged that. the only ground on
. which the Higq Court has set aside the allotment made in favour of the
appellant is that there had been no verification whatsoever regarding other
members of his family and their sources of income before exercising discretion,
F

- and therefore; since the minister approved the allotment without any verifica-
tion, the allotment is liable to be cancelled. According to Mr. Dave, the fact .
that the order of allotment itself indicated that the 1.0.C. Ltd. would conduct
requisite verifi<,:atiori before issuance of Letter of Intent, it cannot be said that
the order in question was ·without any inquiry. Mr. Dave urged that it is G
nobody's case that the 1.0.C., on an inquiry came to the conclusion that the
grant of distributorship in favour of the appellant on compassionate grounds
was unjustified. That apart, the appellant himself had filed an affidavit before
the High Court, indicating his family conditions and the fact that he had no
resources and he had gathered the resources from friends, but the High Court H
426 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A unfortunately over-looked these materials and directed cancellation of the
allotment made in favour of the appellant. The learned counsel also urged that
the order of the High Court would indicate that in case of several other notices,
the High Court discharged the notice of cancellation without ascribing any
reason and therefore, there was rio reason why the High Court should have
B cancelled the allotment made in favour of the appellant. The learned counsel
further urged that even if the High Court found that there had been no veri-
fication, then it would have been appropriate for the High Court to direct for
a fresh verification, rather than cancelling the distributorship and the approach
of the High Court is wholly uncalled for. According to the learned counsel,
the appellant's case being covered under the existing discretionary scheme, as
c was prevalent, and further even under the guidelines issued by this Court in the
judgment reported in [1995] Supp. 3 S.C.C. 382, individual cases of extreme
hardship which in the opinion of the Government are extremely comp~sionate
and deserve sympathetic consideration being on~ of the criteria, there was
absolutely no rhyme or reason on the part of the High Court to set aside the
D discretionary allotment made in favour of the appellant. He also reiterated the
arguments advanced on behalf of Mr. Rao that the judgment of this Court in
[1995] Supp. 3 S.C.C. 382 must be so construed, that allotments made
under the discretionary quota ptior to the date of the said judgment were not
intended to be interfered with and as such, the High Court had no jurisdiction
E to examine the allotment made in favour of the appellant, which was in 'the
, . year
1993.

Mr. Sushil Kumar Jain, the learned counsel, appearing for the appellant
in Civil Appeal No. 3117 of 2000, contended in addition to what had been
urged by Mr. P.P. Rao that the impugned judgment of the High Court is earlier
F to the three Judge Bench Judgment of this Court in [1999] 6 S.C.C. 667 and
the observations made in the three Judge Bench Judgment more particularly,
in paragraph 115 thereof, unequivocally supports the contention of the appel-
lant that the Court approved all allotments made prior to the Judgment in
-
[1995] Supp. 3 S.C.C. 382 and therefore, the matter should be remitted back
G to the High Court.for re-consideration in the light of the aforesaid three Judge
Bench decision of this Court. Mr. Jain also appearing for the appellant in Civil
Appeal No. 3114 of 2000 reiterated his submissions made in the earlier
case and contended that there has been gross injustice by the High Court in
cancelling the allotment made and the equitable considerations require that this
H Court should interfere with the order of cancellation and in the alternative, the
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 427
matter should be remitted back to the High Court for reconsideration after due A
inquiry.

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

Mr. M.C. Bhandari, the learned senior counsel, appearing for the appel-
lant in Civil Appeal No. 3101 of 2000, seriously contended that the appellant
does not belong to any of the three categories of persons mentioned in the F
judgment of this Court in [1996] 6 S.C.C. 530 inasmuch as the High Court
never found that the allotment in favour of the appellant had been made as he
happened to be relation ·of any personal staff of the minister or that the

..
-
allotment had been made on extraneous considerations nor the appellant can
be said to be belonging to the category of sons of ministers or related to any
member of the Oil Selection Board. That being so and no mala .fide, favour-
itism or nepotism having been established, the allotment could not have been
G

nullified by the High Court. According to Mr. Bhandari, the father of the
appellant, Karibasavaraj, being a well known talented stage artist in the State
of Karnataka, who through his performance, had been able to convey the H
428 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A messages of freedom fighters and religious tolerance, having faced with acute
financial stringency and said Karibasavaraj having died, the responsibility to
maintain a large family fell on the appellant, who though a graduate, h~d no
job or employment. It is on this consideration; the then Chief Minister of
Karnataka and. the then Vice President of India had recommended the case of
B the appellant for being favourably considered for getting allotment under
discretionary quota and ultimately the Minister, Petroleum had made the grant
in favour of the appellant. The said allotment is neither arbitrary nor motivated
nor vitiated by mala fides and as such the High Court was wholly in error in
cancelling the allotment without proper examination of the aforesaid materials.
C According to Mr. Bhandari, the finding of the High Court· that the minister has
exercised his discretion without any verification, is on the face of it erroneous
inasmuch as the order of allotment itself specified that the Letter of Intent could
be issued only after requisite ve~fication. In fact such verification can be
effectively done only by the Oil Company at site and not by the.Minister, sitting
in Delhi and to hold that the minister must verify the contents of the applica-
D
tion, would be unreasonable and impracticable. Mr. Bhandari further urged that
the so-called questionnaire which was formulated was behind the. back of the
appellant and the records indicating that the appellant is related/connected to
Mr. Veerapa Moily, the then Chief Minister of Karnataka is untrue. Mere
....
rec:ommendation by the Chief Minister would not constitute any relationship
E and the conclusion therefore, is without any materials. According to the.
learned counsel, the procedure adopted by the High Court, so far as the
appellant is concerned, tantamounts to denial of a fair hearing and justice to
the appellant inasmuch as even before serving the notice on the appellant on
15.4.1999, the High Court itself heard the first batch of cases and delivered its
F judgment on 29.8.97, answering all the questions of law, including the ques-
tion of constructive res judicata. Mr. Bhandari urged that in a public interest
litigation like the one, the High Court was duty bound to issue notice under
Order 1 Rule 8 CPC so that persons likely to be affected, could have appeared
before the High Court and made their submissions before the High Court prior
G to its first order on 29.8.1997. Since the Court itself has come to a definite
conclusion on several issues arising in the matter by its ::irder dated 29.8.97,
the issuance of notice to the appel1ant was a mere formality to comply with the
principles of natural justice and the ultimate disposal of the appellant's case by
the High Court must be held. to be a disposal by the learned Judges who had
H already made up their mind and this resulted in patent injustice. In support of .
·v. PURUSHOTHAM RAO v. U.0.I. [PATTANAIK, J.] 429
this contention, the learned counsel placed reliance on the decision of this A
Court in [1989] 3 S.C.C. Page 202 at 208-210 (para 13). Mr. Bhandari also
urged that even in the case of a public interest litigation, the basic principle of
law to avoid multiplicity of proceedings should be implemented. Necessarily,
therefore, when the Centre for Public Interest Litigation filed a petition in this
· Court, which was disposed of by the Judgment since reported in [1995] Supp. B
3 sec 382 and that application also related to the allotment of retail dealership
in petroleum, under discretionary quota and did not assail the allotments al-
ready made, then a second petition before the Delhi High Court was not
entertainable. He also reiterated the argument that explanation 4 to Section 11
CPC should apply to the case in hand and in support of the same he placed C
reliance on the judgment of this Court reported in AIR 1986 SC 391 at Page
397, para 20. The learned counsel with emphasis urged that it is no doubt true
that discretion in public matters should be least but it cannot be totally denuded
of, nor can any Court strike down the power exercised by an authority having
discretion even in deserving cases. The exercise of discretion by an authority
D
depends upon the independence and integrity of the individual exercising such

- discretion. Adjudged from any stand point, the allotment made in favour of
the appellant in his case would not be a case of allotment on the ground of
favouritism, nepotism and/or abuse of power and, therefore, the High Court
committed serious error in cancelling the allotment made. According to Mr.
Bhandari, compassion or a case of extreme hardship has all along been E
recognised as a germane factor for exercise of a discretion. Even this has been
recognised in the guidelines issued by this Court in [1995] Supp. 3 S.C.C. 382.
The allotment made in favour of the appellant being covered by the guidelines
(6) and (7) of the Judgment of this Court in [1995] S~pp. 3 S.C.C. 382, it must
be held that the discretion has been exercised in a fair, reasonable and legal F
manner and, therefore, the same ought not to have been interfered with by the
High Court. Mr. Bhandari lastly urged that such a discretionary allotment
having existed for a long time, as has been noticed by the three Judge Bench
decision of this Court in [1999] 6 S.C.C. 667 and the appellant having been
allowed to run the agency for about eight years and having invested about Rs. G
30 lacs and the entire family being dependent on the income derived from the
agency, this Court should set aside the order of cancellation made by the Delhi
High Court and follow the judgment of this Court dated 28th of September,
2001 in Civil Appeal No. 6840/2001 and batch, relating to allotment of land
from the discretionary quota in the State of Haryana. H
430 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A Mr. Jaideep Gupta, the learned counsel, appearing for the appellant in
Ci vii Appeal No. 3103 of 2000 contended that in his case, an eminent Member
of Parliament, highly respected in the political sphere Smt. Gita l\1~kherjee,
since deceased, had herself filed an affidavit before the Delhi High Court,
explaining the circumstances that led her to recommend the case of the appel-
B !ant and the High Court even did not bother to notice the said affidavit filed
by Late Smt. Gita Mukherjee and came to the conclusion that the Minister
before exercising the discretion, did not himself verify about the source of
income of the applicant and his family members. According to Mr. Gupta, if
a M~mber of Parliament recommends the case of a citizen belonging to his/
her constituency and if the Minister acts upon such recommendations, it cannot
c be said that the Minister did not verify himself before exercising his discretion.
Mr. Gupta also urged that even before entering into the dealership agreement;
the appellant had been extensively interviewed by the Chief Regional Manager
and the Legal Officer of the company regarding his inco~e and on being fully
satisfied with the same and the aforesaid state of affairs having been made by
D the appellant on oath, which was not denied by anyone concerned, on the un-
controverted statement of the appellant, the High Court was not j,ustified in
cancelling the allotment made on the ground as already stated. ·Mr. Gupta
further urged that the agreement entered into between the appellant and the Oil
-
Company itself contains power to terminate the dealership if it is found that
E the applicant had made any incorrect statement at the time of allotment of
dealership. That being the position, it would be always open for the Oi!
company to annul the dealership if it is found that the appellant had furnished
any incorrect information. In the premises, it would be more i.>.ppropriate to
direct the oil company to investigate into the matter, rather than to cancel the
F allotment made. According to Mr. Gupta, the principles to be followed in a
c'ase of cancellation of a grant should be different from the principles for
determining the legality of a grant and, therefore, the High Court was wholly
unjustified in cancelling the allotment made on the sole ground that the con-
cerned minister had not made any inquiry before exercising his discretion. The
G Iear~ed counsel also urged that the appellant has invested a huge ambunt of
money and cancellation of the dealership at this point would cause untold
hardship. To deprive of the appellant and his family of earning his livelihood
at this length of time would not be in the. interest of justice and, therefore, this
Court should set aside the order of cancellation passed by the Delhi High Court.

H Mr. Subba Rao, the learned counsel appearing for the appellant in Civil
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 431
Appeal No. 3097 of 2000 urged that the appellant, a widow was a destitute, A
having no source of income and the allotment made in her favour cannot but
be held to be an allotment on germane consideration and, therefore, the High
Court was wholly in error in cancelling the allotment solely on the ground that
the minister accepted the statement made in the application as a gospel truth.
According to Mr. Subba Rao, it is nobody's contention nor has the High Court B
found as a fact that the statements made in the application for allotment are
untrue and in such a case the discretion exercised ought not to have been
interfered with on an hypothesis that the Minister committed an error in
accepting the statement made in the application for allotment. In this case the
source of livelihood from out of the agency is a source for the e?tire family.
According to Mr. Rao, this source ought not to be closed down, which would
c
make the entire family destitute. Mr. Subba Rao in support of his contention
placed r~liance on a judgment of this Court in the case of Ram and Shyam
Company v. State of Haryana and Ors., 1985 Supp.(1) S.C.R.541, whereunder
this court noticed that there exists a clear distinction between .the use and
disposal of private property and social property. While the Court observed D
in the aforesaid case that disposal of public property partakes the character of
a trust in that in its disposal their should be nothing dubious, but this is subject
to one important limitation namely that the socialist property may be disposed
at a price lower than the market price or even for a token price to achieve some
defined constitutionally recognised public purpose, one such being to achieve E
that goals set out in Part IV of the Constitution. In this view of the matter,
according to Mr; Subba Rao the discretion used by the concerned minister in
favour of his client cannot be held to be illegal or invalid.

Mr. P. N. Misra, the learned senior counsel appearing for the appellant
in Civil Appeal Nos. 3102/2000 and 3086/2000, strenuously urged that in the
F
first appeal, the applicant had lost her husband in a road accident while she was
of a young age of 32. She had two small school going children and to establish
her in life for the maintenance of the young children it is her father-in-law who
had made the application to allot her a retail outlet. The concerned Minister
had approved the case of allotment in favour of the applicant. In the other case, G
on an application being made, an inquiry had been made from the ministry to
furnish the bio-data which the applicant had furnished and on being satisfied
with t~e materials furnished, the allotment had been made in favour of the
applicant. According to Mr. Misra, these are two genuine cases and a case of
pure compassion and as such the order of allotment ought not to have been H
432 SUPREME COURT REPORTS [2001) SUPP. 4 S.C.R.
A interfered with. Be it be stated that the father-in-law, who had made the
application for getting an allotment in favour of the applicant was none else
than a Member of Parliament. According to Mr. Misra, the allotment letter
clearly having stipulated that the allotment would be subject to verification to
be made by the concerned oil company and the company itself having made
B the necessary verification, the High Court was not justified in interfering with
the allotment made. According to Mr. Misra, the applicant was asked to furnish
the bio-data, which the applicant did comply with and therefore, the conclusion
that there were no material before the minister was incorrect. According to
Mr. Misra, it is no doubt true that the father-in-law of the applicant was an
M.P. since 1991 but the application was made only in 1994, after the unfor-
c tunate deaih of his son which is indicative of the fact that the father-in-law
never misused his position. Mr. P.N. Misra also placed before us the counter
affidavit filed on behalf of the Union Government in the Delhi High Court in
some other allied matters and also the noting dated 5.5.93, which indicates as
to how the application of the allottee is sent to the company concerned for
D verification of facts therein like income, residence, social status ·etc., and
contends that the conclusion of the High Court that there had been no verifi-
cation is unsustainable.

Mr. O.P. Sharma, the learned senior counsel, appearing for the appellant
E in Civil Appeal No. 3106/2000 reiterated the submissions made by all the
counsel appearing before him and argued at considerable length by placing all
the decisions afresh and urged that the three Judge Bench Judgment having
over-ruled the earlier two Judge Bench decision, the High Court could not have
set aside the allotment made, relying upon the judgment of this Court in the
two Judge Bench decision. The learned counsel also urged that the three Judge
F
Bench Judgment has· categorically come to a finding that allotment has been
made in accordance with the prescribed guidelines. That being the position,
the High Court was not competent to over-ride the aforesaid conclusion of the
three Judge Bench Judgment of this Court and arrive at a conclusion contrary
to the same. Mr. Sharma also urged that the plea of constructive res judicata
G should apply to the case in hand inasmuch as the aforesaid plea is applied as
a matter of public policy to avoid multiplicity of litigation and not to allow re-
opening of a matter already adjudicated upon. In this view of the matter, the
· High Court was not entitled to re-examine the matter after the judgment of this
Court in [1995) Supp. 3 SCC 382. In support of this contention, reliance had
H been placed on the decision of this Court in AIR (1997) SC 1680. Mr. Shanria
V. PURUSHOTHAM RAO v. U.O.I. [PATTANAIK, J.] 433

also relied upon the recent judgment of this Court in Haryana Land Allotment A
case and contended that the theory of prospective over-ruling should apply to
prospective cancellation of the grant made and that would subserve larger
... public interest and in this view of the matter this Court should set aside the
order of cancellation made by the High Court. Relying upon the observations
made in the reviewed judgment of three learned Judges of this Court, Mr. B
Sharma contended that this decision approves the fact that allotments made
earlier to the guidelines issued by this Court in 1995 must not be interfered with
and the said observation being binding on this Bench, this Bench should allow
this appeal or refer the matter to a three Judge Bench. Mr. Sharma urged that
right to life engrafted in Article 21 of the constitution also equally applies to
the case in hand and as such the entire family will be ruined if the dealership
c
is cancelled. He lastly urged that pursuant to the notice issued to the appellant,
the appellant having filed an affidavit before the High Court, giving all material
particulars, the High Court could not have set aside the allotment made in
favour of the appellant without even consideration of those materials. The
disposal made by the High Court on such non-consideration of such germane D
materials must be held to be vitiated and therefore, the matter should be
remitted back to the High Court. So far as the ground on which the High Court
set aside the allotment made viz. the minister had not verified the particulars,
Mr. Sharma urged that the minister is not required to make any check or
verification and can make the allotment under the discretionary quota, relying E
upon the statements made by an applicant, since the so-called grant is subject
to the verification to be made by the oil company. It is always open for the
oil company on verification, not to grant the dealership notwithstanding the
order of the minister inasmuch as order itself stipulates that the grant should
be subject to the verification by the oil company. According to Mr. Sharma, F
the touch-stone for exercise of discretionary power being that it should not
suffer from the virus of nepotism and favouritism and should be devoid of any
personal interest and should not be for extraneous considerations and none of
these grounds having been found by the High Court, the order of cancellation
on the face of it is wholly unsustainable. G
Mr. Sanjeev K. Kapoor, the learned counsel appearing for the Centre for
Public Interest Litigation repels the submissions made by the counsel for the
appellants. According to the learned counsel, the contention that the judgment
of this Court in the Centre for Public Interest Litigation [1995] Supp. 3 S.C.C
382 amounts to a tacit approval of the Court to the allotments made, any illegal H
434 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A exercise of di~cretionary power is nothing but a misreading of the judgment.
He further urged that in public interest litigation, when there is_ no adversarial
adjudication, the principles of constructive res judicata ought not to apply, as
was held by this Court in the case of Rural Litigation and Entitlement Kendra
v. State of U.P., [1989] Supp. 1 S.C.C. 504. At any rate the earlier litigation
B filed at the behest of the Centre for Public Interest Litigation was only for
laying down the guidelines for exercise of the discretionary power, as is
apparent from the amended petition, the amended petition was conside~ed and
disposed of and as such there has been no adjudication by this Court with
regard to the· legality or illegality of the allotments made by the concerned
C minister from the discretionary quota: The learned c~unsel also vehemently
submitted that in the Common Cause case, where subsequent ~o the judgment
in Centre for Public Interest Litigation case, legality of allotments made in
favour of 15 allottees from the discretionary quota was the subject matter for
adjudication, this Court in no uncertain terms, cancelled the allotments made
and in the very s~e judgment, directed the Delhi High Court where the writ
D
petitions were pending to dispose of the matter in accordance with law. In fact
the High Court proceeded to dispose of the matter pursuant to the aforesaid
judgment/obser,vations of this Court in the Common Cause case. In this view
of the matter, the contention tha.t the High Court should have applied the
principle of constructive res judicata, is wholly misconceived. So far as the
E observations made by the three Judge Bench Judgment of this Court. in the
review petition arising out of Common Cause case judgment, Mr. Kapoor
contends that the review petition merely related to the subsequent order, wherein
this Court directed institution of a criminal case and levied exemplary damages
to the tune of Rs.50 lacs on the concerned minister Capt. Satish Sharma. In
F the aforesaid premise, any observ~tions made by the said three Judge Bench
in relation to the legality of the allotments made by the minister from discre-
tionary quota, cannot be treated to be of any binding precedent. According to
Mr. Kapoor, the High Court was examining the legality of the exercise of
discretion by_ the concerned minister on the materials available to find out
G whether it was in fact an exercise of discretion on .germane materials or the
discretion has been exercised arbitrarily and for extraneous considerations in
which event the order emanated out of such discretion was reqi.lfred to be
nullified; The High Court has applied its mind to each and individual case of
allotment under the· discretionary quota and wherever some materials were
H there, the High Court has dis~harged the notice of cancellation and it is only
V. PURUSHOTHAM RAO v. U.O.I. [PATTANAIK, J.] 435
when there existed no materials for the minister concerned for exercise of his A
discretion and the minister passed the order of allotment without any inquiry
into the assertions made in the application, the Court has set aside the same.
According to Mr. Kapoor, the notoriety by which such discretionary allotment
by a Minister has reached, it would be unwise to interfere with well reasoned
order of the High Court, particularly when the High Court had the opportunity B
of examining the file from the Ministry, in relation to each and every case of
allotment under the discretionary quota.

Mr. T.L.V. Iyer, the learned senior counsel, appearing for the Union of
India, submitted that the Union Government has no role to play and it merely
complied with the directions of the Court. c
In view of the rival submissions at the Bar, the following questions arise
for our consideration:

(a) Is the Judgment of this Court in the case of Centre for Public D
Interest Litigation [1995) Supp. 3 S.C.C. 382 susceptible of a
construction that the Court indicated the guidelines for future
guidance and had it given its stamp of judicial approval to the
discretionary allotments already made by the date of the judg-
ment?
E
(b) Would the principle of constructive res. judicata as provided
under Section 11 explanation 4 of the Code of Civil Procedure
or Order 2 Rule 2 CPC apply to a public interest litigation and
if so, in the case in hand, caa it b.:: said that the writ petitions filed
by the Centre for Public Interest Litigation in Delhi High Court F
from out of the judgment of which the present appeals have been
preferred, are barred by the aforesaid principles on the ground
that in the petition filed under Article 32 by the said Centre, no
prayer for cancellation of illegal allotments had been made,
though could have been made? and what is the impact of the G
observations made by the three Judge Bench in the review
petition filed by Captain Satish Sharma, which stood disposed of
by tl~e judgment reported in [1999] 6 S.C.C. 667?

(c) Does the expression "over ruled" in the three Judge Bertch Judg-
H
436 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A ment, refer to over-ruling the judgment in the Common Cause
case wholly or does it refer to only the subsequent order in the
Comn:ion Cause case, directing registration of the criminal case
and its investigation and levy of penalty/exemplary damages
against Captain Sharma?
B (d) The judgment of the High Court being earlier to the three Judge
Bench judgment of this Court in the review petition filed by
Captain Satish Sharma since reported in [1999] 6 SCC 530, is ,··
there any necessity for remitting these appeals to the High Court
for reconsideration, in the light of the subsequent three Judge
c Bench judgment of this Court?

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

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

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

(h) Whether the verification supposed to have been made by the Oil
F
Company pursuant to the order of allotment made by the Min-
ister, can be held to be the proper verification for exercise of
discretion by the Minister himself and in such event whether the
order of cancellation by the High Court is valid? 1'-

G (i) Whether the principle decided in the judgment of this Court in
Civil Appeal No. 6840 of 2001, in relation to such discretionary
allotment of land in the State of Haryana, can be made applicable
to the case in hand, so that the judgment would be made appli-
cable prospectively and consequently, the orders of cancellation
H will have to be set aside? ('
II
~
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 437
So far as the first question is concerned, the entire emphasis is on the A
directions given by the Court in paragraph (4) of the Judgment, which is quoted
hereunder:

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

The appellants' contention is that while the writ petition was filed in public
interest, the exercise of discretion in alJotment of retail outlets for petroleum
products, LPG Dealership and SKO Dealership had been chalJenged and a C
prayer for laying down the guidelines to regulate the exercise of discretion had
been made, the Court only laid down the guidelines and further observed that
the norms and guidelines would be foIJowed hereafter and necessarily, there-
fore, there has been a tacit approval to the earlier aIJotments made Ul)der the
discretionary quota inasmuch as the Court never cancelled the allotments made D
nor had issued any direction in that respect. This contention in our considered
opinion, cannot be sustained for two reasons. Firstly, the amended petition
which the Centre for Public Interest Litigation has filed, merely prayed for
laying down the guidelines to regulate exercise of discretion in the matter of
such allotments. Secondly, which is rather more important is that this judgment
was delivered by the Court on 31st of March, 1995. The Common Cause had
E
filed another petition under Article 32, alleging arbitrary exercise of discretion
in favour of 15 allottees and that petition was entertained by this Court and
disposed of by Judgment dated 25th September, 1996 and the Court cancelled
aIJ such allotments on a finding that the Minister without keeping in view any
guidelines, aIIotted in exercise of his discretion in a cluster manner and the F
public property have been doled out in wholly arbitrary and discriminatory
manner. If the earlier Judgment is susceptible of the construction, as contended
by the appellants, then it would not have been possible in the Common Cause
case to examine the· legality of such aIIotments which had been made in favour
of 15 persons. Instead of construing the judgment in the Centre for Public G
Interest Litigation to the effect that it accords a tacit approval of the allotments
made prior to the judgment in the Common Cause case, the Court relied upon
the earlier judgment in [1995] Supp. 1 S.C.C. 382, and ultimately cancelled the
orders of allotment, having found that the allotments were made arbitrarily and
for extraneous considerations. In this view of the matter, it is difficult for us H
438 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A to sustain the cohtention of the learned counsel; appearing for the appellants.
We, therefore, hold that the judgment of this Court in Centre .for Public Interest
Litigation, [1995] Supp. 3 S.C.C. 382, cannot be construed by any stretch of
the imagination to be a tacit approval of the discretionary allotments made
prior to· that judgment. We, therefo~e. do not find aJJY substance in this
. B submission of ~he learned counsel for the appellants.

Coming to the second question, Explanation (N) to Section 11 of the
Civil Procedure Code postulates that any matter which might and ought to have
heen made ground of defence or attack in such former suit shall be deemed
to have been a matter directly and substantially in issue in such suit. Order II,
C Rule (2) of the Code of Civil Procedure provides that every suit shall include ·
· the whole of the claim which the plaintiff is entitled to make in respect of the
cause of action and ifhe omits to sue in respect of, or intentionally relinquishes,
!lny portion of his claim, then he shall not afterwards sue in respect of the
portion, so omitted or relinquished. By virtue of explanation to Section 141
D of ~he Code of Civil Procedure, since proceedings under Article 226 of the
Constitution is excluded from the expression "proceedin~s", therefore, the
Civil Procedure Code is not required to be followed in a proceeding under ,.._
Article 226 unless the High Court itself has made the provisions of Civil
Procedure Code applicable to a proceeding under Article 226'. Then agrun, the
E , principles of Section 11 as well as Order II Rule 2, undoubtedly contemplate
an adversarial system of litigation, where the Court adjudicates the rights of the
' ' '

parties and determines the issues arising in a given case. The Public Interest
Litigation or a petition filed for public interest cannot be held to be an adversarial
system of adjudication and the petitioner in such case, merely brings it to the
notice of the Court, as to how and in what manner the public interest is being
F jeopardised by arbitrary and capricious action of the authorities. In the case
<
of Rural Litigation and Entitlement Kendra v. State o.f U.P .. [1989] Supp. l
• ' • '

S.C.C. 504, which is commonly known as the 'Doon Valley' case, such a
contention had been raised, as is apparent from paragrap~ ( 14) of the judgment
viz. the decision of the Court dated 12th ~arch, 1985 was'final in certain
G .' aspects, including the release of A category mines outside the. city limits of
. / Mussoorie from the proceedings and in vi,ew of such finality it was not open
i , t.o this Court in the same proceedings at a. later stage to direct differently in
,I
regard to what had been decided earlier. The Court repelled the same by
holding that the writ petitions are not inter-parties disputes and have been
H raised by way of public interest litigation and the controversy before the Court I
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 439

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

"We may not be taken to have said that· for public inte1t!st litigations,
procedural laws do not apply. At the same time it has to be remem-
bered that every technicality in the procedural Jaw is not available as
B
a defence when a matter of grave public importance is for considera-
tion before the Court. Even if it is said that there was a final order,
in a dispute of this type it would be difficult to entertain the plea of
res judicata."
c
Thus even in the self-same proceeding, the earlier order though final, was
treated not to create a bar inasmuch as the controversy before the Court was
of grave public interest. The learned counsel appearing for the appellants drew
our attention to the decision of this Court in the case of Forward Construction
Co. and Ors. v. Prabhat Mandal, AIR (1986) SC 391, whereunder the Court D
did record a conclusion that Section 11 of the Civil Procedure Code applied
to Public Interest Litigation. In our considered opinion, therefore, the principle
of constructive res judicata cannot be made applicable in each and every public
interest litigation, irrespective of the nature of litigation itself and its impact on
the society and the larger public interest which is being served. There cannot
be any dispute that in competing rights between the public interest and E
individual interest, the public interest would over-ride. In the Centre for Public
Interest Litigation case, which had been filed in this Court, the prayer that had
been made was to lay down the guidelines for the discretion being exercised
in the matter of allotment of Gas agencies, petroleum dealership and others.
It is no doubt true that the applicant therein could have made a prayer for F
examining the legality of the allotments already made but as the applicant states
in the writ petition filed in Delhi High Court that he had no knowledge about
the persons to whom such allotments had been made and in fact the Delhi High
Court itself on a petition being filed, called upon the respondents to submit the
list of such allottees, whereafter notices could be issued to the allottees. That 0
apart, when this Court entertained another public interest litigation, filed by the
Common Cause in respect of 15 discretionary allotments made in favour of 15
persons, the Court did entertain the same and instead of treating the earlier
decision to be a bar and applying the principle of constructive res judica((l, the
Court relied upon the same and cancelled the allotments made in favour of H
440 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A those 15 persons who had been arrayed as parties to the said petition filed under
Article 32. That apart, the writ petitions in which the j.udgment of which are
the s.ubject matter of challenge in these appeals, had been filed in Delhi High
Court and which were pending when the Common Ca.use case was taken up
by this Court. This Court initially stayed the proceedings and issued notice in
B the Transfer Petitions but ultimately, vacated the stay order and instead of
bringing the writ petitions to this Court on transfer, directed the Registry of the
Court to send the petitions along with the annexures to the High Court and
required the High Court to examine the issues involved in the writ petitions and
go into the validity of the allotments of petrol pumps/Gas agencies to various
persons. In view of the aforesaid positive direction in para 31 of the judgment
c of this Court in Common Cause case, [1996] 6 S.C.C. 530, it is difficult for
us to sustain the plea of bar of constr.uctive res judicata, as urged by the
counsel, appearing for the appellants. In this connection, the counsel also
brought to our notice, observation made in the review petition judgment in the
Common Cause Case [1999] 6 S.C.C. 667 in paragraph 115, which is quoted
D herein below in extenso:

"It is contended that since the allotments made by the petitioner
till the filing of the writ petition in this Court, in spite of a challenge
having been raised therein, were not set aside and only guidelines were
E settled for future exercise of discretionary quota, tacit stamp of judicial
approval shall be deemed to have been placed on the allotments made
by the petitioner and consequently those allotments could not have
been reopened on the principle of constructive res judicata. Normally,
we would have accepted this argument, but in this case we cannot go
to that extent."
F
According to the learned counsel, the three Judge Bench accepted the conten-
tion of the applicability of principle of constructive res judicata and, therefore,
this Bench being a two Judge Bench must be bound by the said observations
or in the alternative, may refer the matter to a larger Bench. We are not in a
G position to accept either of these submissions. It may be stated at the outset
that the three Judge Bench was concerned with the review petition that had
been filed in relation to the order dated 4.11.96 since reported in [1996) 6
S.C.C. 593. The learned Judges committed an error in the beginning in thinking
that the review petition filed by Capt. Satish Sharma was in relation to both
H the judgments viz. [1996) 6 S.C.C. 530 as well as [1996) 6 S.C.C. 593. In the
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 441
review petition, the Court was concerned with the correctness of the directions A
contained in the order dated 4.11.96 to institute criminal prosecution against
the concerned Minister and levy of penalty as exemplary damages to the tune
of Rs. 50 lacs. It is in that context the Court made the aforesaid observations
not noticing the fact that in [1996] 6 S.C.C. 530, the Court had earlier directed
the High Court to dispose of the two writ petitions pending in the High Court B
and decide the legality of the order of discretionary allotment made by the
concerned minister. It is indeed interesting to notice that in paragraph 125 of
the judgment of the three Judge Bench, the Court itself had indicated that the
conduct of the concerned minister in making allotments of petrol outlets was
atrocious and reflects a wanton exercise of power by the Minister. But what
the Court wanted to examine and ultimately held was that the said action fell
c
short of 'misfeasance in public office' which is a specific tort and the ingre-
dients of that tort were not wholly met in the case, so that there was no
occasion to award exemplary damages. It would be indeed a travesty of justice
to accept the submission of the counsel for the appellants that the three Judge
Bench expressed opinion that the principle of constructive res judicata would D
apply to the case in hand, so as to debar the High Court from entertaining the
writ petitions and disposing them of on merits. As we have already noted,
prior to the three Judge Bench Judgment of this Court , the self-same order of
the Delhi High Court had been assailed in as many as 79 cases by approaching
this Court by way of special leave petitions and all those petitions had been E
dismissed.

The extent to which corruption in the governing structure has corroded
the very core of our democracy, the notoriety which the discretionary allot-
ment of petroleum dealership and LPG gas agencies had acquired, the earlier
F
petition under Article 32 entertained by this Court at the behest of the Common
Cause, the cancellation of 15 of such allotments and finally, the express
direction therein to the High Court to dispose of the pending writ petitions after
examining the individual cases, it is difficult for us to accept the bar of principle
of constructive res judicata on the ground that the earlier judgment in the case
of Centre for Public Interest Litigation has accorded any tacit approval or the G
subsequent so-called observation made in the three Judge Bench decision of
this Court in the review petition. We, therefore, unhesitatingly hold that the
aforesaid contention is devoid of any substance.

The third contention was seriously argued by Mr. Sharma, the learned H
442 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A counsel appearing for the appellant in Civil Appeal No. 3106 of 2000. The
learned counsel very much emphasised that Common Cause v. Union of India
[1996) 6 S.C.C. 530, has been over-ruled and, therefore, nothing survived for
Delhi High Court to examine the legality of the allotments made under discre-
tionary quota. This argument appears to have been made on the basis. of the
B Head Note at page 671 of the reported judgment with reference to paragraph
123 of the judgment. But when we examine paragraph 123 of the judgment,
we do not find anywhere that the three Judge Bench had in fact over-ruled the
judgment in Common Cause case, [1996) 6 S.C.C. 530. On the other hand,
in paragraph 125 it affirms the earlier conclusion that the conduct of the
Minister was wholly unjustified. Then again, the review petition itself, as
c already stated had been filed by Capt. Satish Sharma, the then Minister only
in relation to the order and direction dated 4.11.96 since reported in [1996) 6
S.C.C. 593. In this view of the matter, we find no substance in the aforesaid
contention raised by Mr. Sharma, appearing for the appellant in Civil Appeal
No. 3106 of 2000. We have_ therefore no hesitation in rejecting the same.
D
So far as the fourth question is concerned, it is no doubt true that the
three Judge Bench decision of this Court, reviewing the direction in the Com-
mon Cause Case, so far as order dated 4.11.96 is concerned, is subsequent to
the disposal of the writ petition by the Delhi High Court, but we do not find
E any justification for requiring the Delhi High Court to re-consider the appeals
in the light of the observations made by the three Judge Bench judgment of
this Court inasmuch as in the said judgment this Court was merely concerned
with the directions to register a crimina~ CflSe and prosecute the concerned
minister, if he is found to have committed any criminal offence and levy of
exemplary damages to the tune of Rs. 50 lacs .. Consequently, any observation
F
made in that regard will have no bearing on the merits of the individual
allotments, which were the subject matter of consideration in the two writ
petitions before the Delhi High Court. We, therefore, do not find any substance
in the aforesaid submission made on behalf of the appellants.

G So far as the fifth question is concerned, it is no doubt true that the
appellants have invested considerable amount in the business and have oper-
ated for about eight years but even on equitable considerations, we do not find
any equity in favour of the appellants. The conduct of the Minister in making
the discretionary allotments has been found to be atrocious, in the very three
H Judge Bench decision of this Court and in relation to similar allotments made
·1 V. PURUSHOTHAM RAO v. U.O.I. [PATTANAIK, J.] 443

by the said minister in favour of 15 persons, who were respondents in the A
Common Cause case. This Court came to hold that the allotments of the public
property has been doled out in arbitrary and discriminatory manner and the
appellants had been held to be beneficiaries of such arbitrary orders of allot-
ments. The question of granting the allottees relief on an equitable considera-
tion did not arise at all, for the same reasons in a case like this, a sympathetic B
consideration on the ground of equity would be a case of misplaced sympathy
and we refrain from granting any relief on any equitable consideration. In our
view, the appellants do not deserve any equitable consideration.

So far as the sixth question is concerned, we have examined the judg-
ment of Delhi High Court in the case of each individual appellant. We have C
also considered the questionnaire that had been evolved and also the replies to
the show-cause notices that had been filed by the allottees. We have also
considered the original applications that had been filed by these appellants and
the orders of allotment made by the concerned minister, wherever they are
available on record as well as the recommendations and circumstances leading D
to the exercise of discretion. The impugned judgment also indicates that in
each and every case, the High Court had considered the original file, dealing
with the allotments in question and it cancelled only those allotments where
there was not an iota of material in support of the claim made by the applicant,
whereas it sustained several other cases of discretionary allotments made E
during that period, wherever materials were available in the original file. It
is difficult for us to come to a conclusion that the conclusion of the High Court
in the cases in hand can be said to be vitiated on account of non-consideration
of any germane materials. Factually, we do not have any basis to come to the
aforesaid finding. On the other hand, we are satisfied that the High Court has
F
applied its mind to each and every individual case of discretionary allotment
and cancelled only those, which it came to hold to have been arbitrarily granted
without any inquiry and only on being persuaded by certain recommendations
of high dignitaries and without verification of any materials. We, therefore,
see no infirmity with the ultimate conclusion of the High Court, cancelling the
allotments in favour of the appellants, so as to be interfered with by this Court. G

So far as the seventh question is concerned, it is Mr. Bhandari, who
argued with vehemence that non-issuance of notice under Order I Rule 8 CPC
by the High Court before deciding the legal issues by ils order dated 22.8.97,
has vitiated the entire proceedings and consequently, lhe order of cancellation H
444 SUPREME COURT REPORTS (2001] SUPP. 4 S.C.R.
A must be set aside by this Court. According to Mr. Bhandari, in a matter like
the present one, unless the Court directs issuance of notice by publication in
a newspaper, following the procedure under Order I, Rule 8 CPC and all the
affected persons get an opportunity to appear and made their submissions,
before the Court formulates the legal position and answers them, the subse-
B .
quent notice to different persons like the appellants is nothing but a compliance
of paper formality and such procedure adopted has grossly prejudiced the
appellants. We, however, are not persuaded to accept this submission. The
provisions of Order I, Rule 8 C.P.C. get attracted when there are numerous
persons having the same interest, are sued or sue and the Court can permit such
C a suit to be defended by adopting the procedure under Order I, Rule 8 CPC.
In the case in hand, the writ petition that had been filed was in fact a petition
in Public Interest, where the allegations were that the concerned authority had
been involved in large-scale allotments of retail outlets in petrol, gas and
kerosene, arbitrarily and for extraneous considerations without having any
guidelines for such allotments and as such it tantamounted to disposal of public
D
property in a manner which is shocking to conscience. By the time when the
High Court went into those allegations in the two petitions filed, this Court
had taken the view that such allotments had in fact been made arbitrarily and
contrary to the public interest and this Court directed the High Court to dispose
of the pending proceedings in accordance with law. The High Court, on receipt
E of the names of the allottees during a specified period from the Union Gov-
ernment, issued notice to each and every such allottee, who had been allotted
out of the discretionary quota of the concerned Minister and granted opportu-
nity to each of f'!UCh allottee to inspect the relevant file dealing with the
allotment in his/her favour and then heard the said allottee before passing the
F final order, either discharging notice of cancellation or cancelling the allotment
made. In this view of the matter, we hardly find any justification in the
submission of Mr. Bhandari that the entire proceedings are vitiated as notice
under Order I, Rule 8 CPC had not been given. If the allottee like the appellant
whose allotment has been cancelled by the impugned order, had the opportu-
G nity of examining the materials on the file of the Government, wherein his case
of allotment has been dealt with and had the opportunity of filing his show-
cause, pursuant to the notice of cancellation that had been issued and the
allotment in his case having been cancelled on the ground that the concerned
minister did not make any verification with regard to the necessary criteria
H indicated in the application for discretionary allotment, we fail to understand
V. PURUSHOTHAM RAO v. U.0.I. [PATTANAIK, J.] 445
how a contention could be raised that the whole procedure adopted is vitiated A
for non-compliance of the procedure under Order I, Rule 8 CPC. The object
of order I, Rule 8 CPC is to give notice to persons likely to be affected by
litigation, so that they may be heard. If the Court would have directed issuance
of notice under Order I Rule 8 CPC without giving individual notice to th~
allottees to show-cause why the allotment will not be cancelled, then that B
perhaps would have been an infraction and violation of the principle of natural
justice. But in this case, each and every allottee had been duly noticed, they
have filed their replies to the notices, they have availed of the opportunity of
examining the original file, wherein the case of discretionary allotment had
been dealt with and it was only after hearing them that the orders of cancel-
laiion had been passed. We have, therefore, no hesitation in answering this
c
question that there was no requirement of following the procedure under Order
I, Rule 8 nor <;;:m. it be said that the entire exercise is vitiated.

So far as the eighth question is concerned, it was repeatedly argued
before us by several counsel ti1at the concerned minister was not required to D
verify and since the order of allotment stipulates that the Oil company would
verify before granting the agency in question that itself is a good verification
and consequently, the High Court was in error in cancelling the allotment on
the ground. that there had been no proper verification. It is no doubt true that
the Minister having exercised his discretion and allotting a particular agency E
in favour of the applicant, has required the Oil company to make necessary
verification before entering into an agreement with the allottee, but that
verification supposed to have been done by the oil company has nothing to do
with the materials on which the subjective satisfaction of the Minister was
arrived at for exercise of his discretion in favour of any individual for any
F
justifiable reason. When a State property as distinct from a private property
is being dealt with by a Minister then it is of paramount importance that such
public property must be dealt with for public purpose and in the public interest.
The disposal of a public property undoubtedly partakes the character of a trust
and therefore, in the matter of such disposal, there should not be any suspicion
of a lack of principle. The exercise of discretion must not be arbitrary or G
capricious or for any extraneous considerations. It is in that context when the
Court was examining each and every individual case of discretionary allot-
ment, the Court was trying to find out whether there existed some materials,
on the basis of which the Minister c0uld be said to have arrived at his subjective
satisfaction for exercise of his discretion in favour of the applicant. It is the H
446 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A so-called satisfaction of the Minister for exercise of his discretionary power and
making the grant that was being examined and scrutinized by the Court and
only when the Court found that there had been absolutely no materials or that
Minister had made the grant without making any inquiry or verification, that
the Court had interfered with the allotments in question, obviously on a con-
B clusion that such allotments had been arbitrarily made. The subsequent
inquiry supposed to have been conducted by the Oil company cannot replace
the pre-conditions for exercise of discretion by the Minister. If the initial order
of allotment by exercise of discretion is vitiated on the ground of absence of
any materials or verification by the concerned authority who has exercised the
discretion, then the so-called subsequent inquiry by the Oil company which
c operates in different fields· cannot make the so-called arbitrary order of the
Minister a legal or just order. This being the position, we see no force in the
submission made by the counsel appearing for the appellants on this score. The
same accordingly stands rejected.

D The next question which arises for consideration is whether the judgment
of this Court in Civil Appeal No. 6840 of 2001 and principles evolved therein
can be applied to the case in hand, so as to protect the allotments already. made
under the discretioi;iary quota. The aforesaid case no doubt was a case of
allotment of land by the Chief Minister of a State in the State of Haryana. The
E High Court of Punjab and Haryana by its order dated 20th January, 1988
disposed of the case of S.R. Dass v. State of Haryana, 1988 Punjab Law
Journal page 123, under which it formulated certain principles on which the
discretionary allotments could be made with certain conditions. The so-called
discretionary allotments made by the Government and HUDA, pursuant to the
earlier judgment of Punjab and Haryana High Court were sought to be assailed
F
as being contrary to certain stricter principles, which were evolved in the case
of Anil Sabharwal which stood disposed of on 5.12.97. This Court in the
appeal in question held that the stricter scrutiny required to be made as per the
guidelines evolved in Anil Sabharwal's case, ~ust be made applicable to the
period subsequent to the judgment viz. 5.12.97 and allotments made between
G 1988 and 1997 in accordance with the principles and guidelines indicated in
S.R. Dass case, were protected by applying the principle of prospective
application, so far as the judgment in Anil Sabharwal's case. We fail to
understand how the aforesaid principle can apply to the case in hand where the
allotments made prior to the judgment. ·of this Court in Centre for Public
H Interest litigation, [1995] 3 Supp. 3 S.C.C. 382, are the subject matter of
.
•
V. PURUSHOTHAM RAO v. U.0.1. [PATTANAIK, J.] 447
scrutiny and had been made indiscriminately, as there had been no guiding A
principle for making such allotments. Consequently, the principles evolved in
Civil Appeal No. 6840 of 2001, will have no application at all to the present
appeals. The said contention, therefore, must fail.

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

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

~.K.S. Appeals dismissed.