VERY IMPORTANT POINTS
1. The orders passed by Capt. Satish Sharma, the then Minister of State for Petroleum and Natural Gas, Government of India, alloting petrol pumps to 15 persons are arbitrary, discriminatory, mala fide, wholly illegal and as such are liable to be quashed.
2. If a public servant abuses his office either by an act of omission or commision, and the consequence of that is injury to an individual or loss of public property, an action may be maintained against such public servant.
3. The petrol pumps/gas agencies are a kind of wealth which the Government must distribute in a bonafide manner and in conformity with law.
4. Any procedure laid down by the Government must be transparent, just, fair and non-arbitrary and in cases of allotment of public property, the names of the allottees, the orders and the reasons for allotment should be available for public knowledge and scrutiny.

Headnote:(i) Constitution of India-Article 32-Public interest petition-Allotment of retail outlets for petroleum products (petrol pumps) by Minister of State for Petroleum and Natural Gas in discretionary quota-Validity challenged-Applications have not been officially received by Petroleum Ministry-No advertisement made to invite applications-All 15 allotments made in a stereotyped manner-No guidelines kept in view-Six of allottees related to various officials working with the Minister-Two allottees related to politicians-Remaining seven allottees are either members of Oil Selection Boards or their relations-All these allotments are wholly arbitrary, nepotistic and motivated by extraneous considerations-Minister for Petroleum and Natural Gas deliberately acted in arbitrary, biased and unjust manner-Orders of allotment held liable to be quashed-Show cause notice issued to the Minister.
Held : The Government today - in a welfare State - provides large number of benefits to the citizens. It distributes wealth in the form of allotment of plots, houses, petrol pumps, gas agencies, mineral leases, contracts, quotas and licences etc. Government distributes largesses in various forms. A Minister who is the executive head of the department concerned distributes these benefits and largesses. He is elected by the people and is elevated to a position where he holds a trust on behalf of the people. He has to deal with the peoples property in a fair and just manner. He cannot commit breach of the trust reposed in him by the people. We have no hesitation in holding that Capt. Satish Sharma in his capacity as a Minister for Petroleum and Natural Gas deliberately acted in a wholly arbitrary and unjust manner. We have no doubt in our mind that Capt. Satish Sharma knew that the allottees were relations of his personal staff, sons of Ministers, sons/relations of Chairmen and members of the Oil Selection Boards and the members of the Oil Selection Boards themselves. The allotments made by him were wholly mala fide and as such cannot be sustained. (Para 17)
Further held that Capt. Satish Sharma acted in a wholly biased manner inasmuch as he unfairly regarded with favour the cases of 15 allottees before him. The relevant circumstances available from record and discussed by us leave no manner of doubt in our mind that Capt. Satish Sharma deliberately acted in a biased manner to favour these allottees and as such the allotment orders are wholly vitiated and are liable to be set aside. (Para 18)
(ii) WELFARE STATE-Public Property-Petrol pumps/gas agencies-Allotment of-Government must distribute it in a bona fide manner and in conformity with law. (Para 19)
(iii) PUBLIC PROPERTY-A minister in the Central Government is in a position of a trustee in respect of public property under his charge and discretion-Public servants should be held personally responsible for their mala fide acts in discharge of their functions as public servants-No public servant can arrogate to himself the power to act in a manner which is arbitrary-Any procedure laid down by the Government must be transparent, just, fair and non-arbitrary-Names of allottees, orders and reasons for allotment should be available for public knowledge and scrutiny-(Constitution of India-Article 14)-Law of Torts.
Held : While Article 14 permits a reasonable classification having a rational nexus to the objective sought to be achieved, it does not permit the power to pick and choose arbitrarily out of several persons falling in the same category. A transparent and objective criteria/procedure has to be evolved so that the choice among the members belonging to the same class or category is based on reason, fair play and non arbitrariness. It is essential to lay down as a matter of policy as to how preferences would be assigned between two persons falling in the same category. If there are two eminent sportsmen in distress and only one petrol pump is available, there should be clear, transparent and objective criteria/procedure to indicate who out of the two is to be preferred. Lack of transparency in the system promotes neptosism and arbitrariness. It is absolutely essential that the entire system should be transparent right from the stage of calling for the applications upto the stage of passing the orders of allotment. The names of the allottees, the orders and the reasons for allotment should be available for public knowledge and scrutiny. Mr. Shanti Bhushan has suggested that the petrol pumps, agencies etc. may be allotted by public auction - category-wise amongst the eligible and objectively selected applicants. We do not wish to impose any procedure on the Government. It is a matter of policy for the Government to lay down. We, however, direct that any procedure laid down by the Government must be transparent, just, fair and non-arbitrary. (Para 19)
Further held : The allotment orders which are now before the Court clearly indicate that leaving the authorities to enjoy absolute discretion even within the guidelines would inevitably lead to gross violation of the constitutional norms when the persons for allotment are picked up arbitrarily and discriminatory. (Para 20)
A minister in the Central Government is in a position of a trustee in respect of the public property under his charge and discretion. The petrol pumps/gas agencies are a kind of wealth which the Government must distribute in a bone fide manner and in conformity with law. Capt. Satish Sharma has betrayed the trust reposed in him by the people under the Constitution. It is high time that the public servants should be held personally responsible for their mala fide acts in the discharge of their functions as public servants. With the change in socio-economic outlook, the public servants are being entrusted with more and more discretionary powers even in the field of distribution of Government wealth in various forms. We take it to be perfectly clear, that if a public servant abuses his office either by an act of omission or commission, and the consequence of that is injury to an individual or loss of public property, an action may be maintained against such public servant. No public servant can say "you may set-aside an order on the ground of mala fide but you cannot hold me personally liable". No public servant can arrogate to himself the power to act in a manner which is arbitrary. (Para 21)

Judgement Key Points

The Supreme Court examined allotments of retail outlets (petrol pumps) made by Capt. Satish Sharma, Minister of State for Petroleum and Natural Gas, challenged via public interest petition under Article 32. (!) (!)
A news item highlighted allotments to relatives of the Minister's staff, Oil Selection Board members, and politicians, prompting court scrutiny. (!) (!) (!) (!) (!) (!) (!) (!) (!)
Ministry affidavits confirmed relationships: allottees included sons of ministers (!) (!) , relatives or members of Oil Selection Boards (!) (!) (!) (!) (!) (!) , and relatives of ministerial staff (!) (!) (!) (!) (!) (!) .
Applications lacked official receipt, no advertisements invited applications, no guidelines followed, and allotments used stereotyped language ignoring relationships noted in files. (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
Minister's orders repeatedly cited "sympathetic consideration" for unemployment, poverty, or compassionate grounds, applied arbitrarily without criteria among similarly situated persons. (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
Allotments favored relatives of Minister's driver/mother (!) , private secretary (!) , additional private secretaries (!) (!) (!) , and personal assistant (!) .
Process lacked transparency: direct hand-delivery to Minister, no branch scrutiny, no public knowledge of availability or reasons. [1000010460013]
Distribution of public largesse like petrol pumps requires fair, just, non-arbitrary procedure; absolute discretion leads to nepotism. [1000010460018]
Minister acted as trustee of public property, breached trust via mala fide, biased allotments to influence staff, politicians, and board members. [1000010460016][1000010460017]
Public servants personally liable for abusing office causing loss to public property; tortious misfeasance applicable. [1000010460020]
All 15 allotments quashed as arbitrary, discriminatory, mala fide, illegal; existing pumps to be taken over, auctioned publicly, with compensation to original allottees for investments. [1000010460021] (!) (!) (!) (!)
Show cause notice to Minister for potential prosecution (criminal breach of trust) and personal damages liability. (!)
Guidelines must ensure transparency from application to allotment; names, orders, reasons public. [1000010460018]
Court appreciated petitioner's assistance, awarded costs payable personally by Minister. [1000010460023]

JUDGMENT

Kuldip Singh, J.-The allotments of retail outlets for petroleum products (the petrol pumps), by Capt. Satish Sharma, Minister of State for Petroleum & Natural Gas, exercising the powers of the Central Government, have been challenged in this public interest petition under Article 32 of the Constitution of India. The petition as originally filed was directed against corruption in various fields of public life. Mr. H.D. Shourie - Director "Common Cause" - appearing in person, invited this Court s attention to a news item dated August 11, 1995, on the front page of "Indian Express" under the caption "In Satish Sharma s Reign, Petrol and Patronage Flow Together". The solicitor general who was present in Court, took notice of the news item and stated that he would have the matter examined in the Ministry concerned and file an affidavit giving Ministry s response to the news item. The news item, inter alia, stated as under :-

"Not only the relatives of most of the officials working for Captain Satish Sharma but even his own driver and the driver of his additional Private Secretary have been allotted a petrol pump and a gas agency respectively.

The wives of two clerks and a stenographer in the Ministry have similarly been allotted petrol pumps. Some of these allotments have been made from the discretionary quota with the Petroleum Minister while others have been made through an ostensibly objective selection process undertaken by the Oil Selection Boards (OSBs). ........... A Mr. Poda Rajshekar, a relative of Mr. G. Gurusharan, Private Secretary to Captain Sharma has been allotted a petrol pump at Banjara Hills, Hyderabad out of the Minister s discretionary quota taking pity on the "financial circumstances that the family finds itself in."

Ms. Madhuri Safaya, a relation of the Additional Private Secretary to the Minister, Mr. V.N. Safaya has been allotted a petrol pump "on compassionate grounds" from the discretionary quota.

Another relation of Mr. Safaya, Mrs. Monica Malla, has also been a beneficiary of a petrol pump, courtesy Captain Sharma.

Mrs. Daya Rani, wife of Mr. Hari Ram Verma, personal assistant to the Additional PS to the Minister, Mr. V.N. Safaya, was allotted a petrol pump out of the discretionary quota......Mrs. Vijaya Nair, wife of Mr. D.V. Pillai, another additional Private Secretary to Captain Sharma has been allotted a petrol pump on the grounds that the "applicant is a young unemployed (woman) with the responsibility of looking after a large family" - hardly a unique classification in this country of 900 million. ......The Chairman of the OSB for Uttar Pradesh is Justice S.H. Abidi (retd.) who lives at 50, Dariyabad, Allahabad. It so happens that Syed Shaukat Hasan Abidi, his son, living at 50/1, Daryabad, Allahabad put in a request and was allotted a petrol pump on "compassionate grounds" at Fatehpur (80 km Mile Stone) in Uttar Pradesh.

A former MLA, Mr. Shiv Balak Passi, from Rae Bareli is a member of the OSB for Madhya Pradesh and his job is to allot petrol pumps to others. He too had put in a request for the discretionary allotment of a petrol pump. Lo and behold, on "compassionate grounds" he was immediately allotted a petrol pump on the Rae Bareli-Lucknow Road in UP.

Mr. Krishna Swaroop a Congress party worker and resident of 18/7, Punjabi Bagh Extension, New Delhi-26 is a member of the OSB for Delhi and Chandigarh. His son, Mr. Pradeep Kumar, was favoured with a petrol pump by the Minister on the grounds that "the applicant is a youngman from Scheduled Caste Community with no source of regular income. The case deserves sympathetic consideration. Therefore, a retail Outlet for MS-HSD in the Union Territory of Delhi is allotted to Shri Pradeep Kumar, r/o 18/7, Punjabi Bagh Extension, New Delhi-110026."

Mr. Ghulam Ahmed Mir is also a member of the OSB for Delhi and Chandigarh. An application was made by him for the allotment of a petrol pump. And the Minister passed the order

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1996 Supreme(SC) 1545

Cases Referred (2)