2001 Supreme(SC) 1482

2001(7) Supreme 818
Supreme Court of India
(From Delhi High Court)
G.B. Pattanaik & Mrs. Ruma Pal, JJ.
V. Purushotham Rao —Appellant
versus
Union of India & Ors. —Respondents
Civil Appeal No. 3100 of 2000
With
Civil Appeal Nos. 3104-3105, 3089, 3090, 3117, 3097, 3102, 3086, 3106, 3085, 3094,    3099, 3103, 3092 and 3101 of 2001
Decided on 19-10-2001
Counsel for the Parties
For the Appearing Parties : O.P. Sharma, V.A. Mohta, U.N. Bachawat, Dushyant, A. Dave, M.C. Bhandare, S.C. Maheshwari, G.L. Sanghi, T.L.V. Iyer, and P.N. Misra, Sr. Advocates, P.S. Narasimha, G. Seshagiri, A. Raghunath, P. Sridhar, R.C. Gubrele, K.R. Gupta, Abhishek Atrey, Ms. Nanita Sharma, D. Rama Krishna Reddy, Mrs. D. Bharathi Reddy, Sushil K. Jain, P. Venugopal, K.J. John, Pranab Kumar Mullick, Rajiv Talwar, Swetank Shantanu, Mohan V. Katarki, Jaideep Gupta, Abhijeet Chatterjee, Ms. Rukhsana, Mrs. S. Janani, A. Subba Rao, Ms. C.K. Sucharita, Ms. Dr. Laxmi Shastri, Gopal Singh, Rana Ranjit Singh, Irshad Ahmad, S.R. Bhat, R.K. Kapoor, B.R. Kapoor, Advocates 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, Ms. Praveena Gautam, R. Nedumaran, H.K. Puri, S.K. Puri, Rajesh Srivastava, Ujjwal Banerjee, Mrs. Anindita Gupta, Sanjeev K. Kapoor, Vishal Gupta, Narinder K. Verma, Advocate for Prashant Bhushan, Ms. Indra Swahney, C.V.S. Subba Rao, K.C. Kaushik, B.V. Balram 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 Gupta, Y. Raja Gopal Rao and S.U.K. Sagar, Advocates.

Very important point
The impugned judgment of Delhi High Court cancelling the allotment made by the concerned minister from out of his discretionary quota on Petroleum dealership as well as LPG dealership suffers from no legal infirmity. In view of Supreme Court’s conclusions on the nine issues raised in the appeals, these appeals fail and are dismissed accordingly.

Headnote:(i) Constitution of India—Article 32—Public Interest Litigation for laying down guidelines to regulate allotment of Petroleum dealership and LPG dealership from discretionary quota of Petroleum Minister—Supreme Court laid down guildelines in 1995 Suppl. (3) SCC 382—Whether it has impliedly regularised the allotments made prior to this judgment—High Court holding ‘No’—Whether correct? (Yes). (See Paras 4 read with Para 20).

       Held : 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, therefore, do not find any substance in this submission of the learned counsel for the appellants. (Para 20)

       (ii) Civil Procedure Code, 1908—Section 11 Expl. 4 and Order 2 Rule 2—Principles of constructive res judicata—Whether apply to Public Interest Litigation and if so, in the case in hand in which High Court has cancelled the allotments made by the concerned minister can it be said that the writ petitions filed by the Centre for Public Interest Litigation in Delhi High Court from out of the judgment of which present appeals have been preferred, are barred by the aforesaid principles of constructive res judicata? (No).

       Held : Coming to the second question, Explanation (IV) to Section 11 of the Civil Procedure Code postulates that any matter which might and ought to have been 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 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 if he omits to sue in respect of, or intentionally relinquishes, any 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 of the Code of Civil Procedure, since proceedings under Article 226 of the Constitution is excluded from the expression "proceedings", 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 again, the 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 jeopardised by arbitrary and capricious action of the authorities. In the case of Rural Litigation and Entitlement Kendra vs. State of U.P. 1989 Supp (1) S.C.C. 504, which is commonly known as the ‘Doon Valley’ case, such a contention had been raised, as is apparent from paragraph (14) of the judgment viz. the decision of the Court dated 12th March, 1985 was final in certain aspects, including the release of A category mines outside the city limits of Mussoorie from the proceedings and in view of such finality it was not open to this Court in the same proceedings at a later stage to direct differently in 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 raised by way of public interest litigation and the controversy before the Court is as to whether for social safety and for creating a hazardless environment for 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 interest litigations, procedural laws do not apply. At the same time it has to be remembered that every technicality in the procedural law is not available as a defence when a matter of grave public importance is for consideration 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."

       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. vs. Prabhat Mandal, AIR 1986 Supreme Court 391, whereunder the Court 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 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 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 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 judicata, the Court relied upon the same and cancelled the allotments made in favour of 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 judgment of which are the subject matter of challenge in these appeals, had been filed in Delhi High Court and which were pending when the Common Cause case was taken up by this Court. This Court initially stayed the proceeding and issued notice in 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 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 constructive 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) SCC 667 in paragraph 115, which is quoted 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 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."

       According to the learned counsel, the three Judge Bench accepted the contention 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 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) SCC 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 the judgments viz. 1996(6) SCC 530 as well as 1996(6) SCC 593. In the review petition, the Court was concerned with the correctness of the directions 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) SCC 530, the Court had earlier directed the High Court to dispose of the two writ petitions pending in the High Court 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 short of ‘misfeasance in public office’ which is a specific tort and the ingredients 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 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 dismissed. The extent to which corruption in the governing structure has corroded the very core of our democracy, the notoriety which the discretionary allotment of petroleum dealership and LPG gas agencies had acquired, the earlier 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 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. (Paras 21 and 22)

       (iii) Law of Precedents—Three Judge Judgment in Review Petition reported in 1999(6) SCC 667—Does the expression "overruled" in this judgment, refer to over-ruling the judgment in Common Cause v. Union of India, 1996(6) SCC 530? (No)—It refers to order and direction dated 4.11.1996 since reported in 1996(6) SCC 593—(See Para 23).

       (iv) Effect of 1999(6) SCC 667 on present appeals—Whether observations made in former affect present appeals? (No).

       Held : 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 Common 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 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 criminal case 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 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. (Para 24)

       (v) Constitution of India—Article 136—Appeal against judgment of Delhi High Court cancelling allotments made by concerned minister of Petroleum from his discretionary quota—Are the appellants entitled to any equitable considerations? (No for regularisation)—(Yes, for winding up).

       Held : 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 operated 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 had been found to be atrocious, in the very three Judge Bench decision of this Court and in relation to similar allotments made by the said minister in favour of 15 persons, who were respondents in the 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 allotments. The question of granting the allottees relief on an equitable consideration did not arise at all, for the same reasons in a case like this, a sympathetic 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. (Para 25)

       Held, however, 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 shall be allowed to wind-up their respective businesses by 31st of December, 2001. (Para 31)

       (vi) Constitution of India—Article 136—Appeals against judgment of Delhi High Court cancelling certain allotments made by concerned minister of Petroleum out of his discretionary quota—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 genuine materials? (No).

       Held : So far as the sixth question is concerned, we have examined the judgment of Delhi High Court in the case of each individual appellant. We have 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 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 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 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. (Para 26)

       (vii) Civil Procedure Code, 1908—Order 1 Rule 8—Notice under—Whether mandatory to all persons affected in Public Interest Litigation? On facts of present appeals whether entire exercise is vitiated on that account?

       Held : 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 its order dated 22.8.97, has vitiated the entire proceedings and consequently, the order of cancellation 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 subsequent 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 a suit to be defended by adopting the procedure under Order I Rule 8 C.P.C.. 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 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 of the names of the allottees during a specified period from the Union Government, issued notice to each and every such allottee, who had been allotted out of the discretionary quota of the concerned Minister and granted opportunity to each of such allottee to inspect the relevant file dealing with the allotment in his/her favour and then heard the said allottee before passing the 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 C.P.C. had not been given. If the allottee like the appellant whose allotment has been cancelled by the impugned order, had the opportunity 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 indicated in the application for discretionary allotment, we fail to understand how a contention could be raised that the whole procedure adopted is vitiated for non-compliance of the procedure under Order I Rule 8 C.P.C. The object of Order I Rule 8 C.P.C. 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 C.P.C. without giving individual notice to the allottees to show-cause why the allotment will not be cancelled, then that 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 cancellation had been passed. We have, therefore, no hesitation in answering this question that there was no requirement of following the procedure under Order I Rule 8 nor can it be said that the entire exercise is vitiated. (Para 27)

       (viii) High Court cancelling allotments on ground that there had been no verification—Whether wrong? (No).

       Held : So far as the eighth question is concerned, it was repeatedly argued before us by several counsel that the concerned minister was not required to 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 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 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 capricious or for any extraneous considerations. It is in that context when the Court was examining each and every individual case of discretionary allotment, the Court was trying to find out whether there existed some materials, on the basis of which the Minister could be said to have arrived at his subjective satisfaction for exercise of his discretion in favour of the applicant. It is the 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 conclusion 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 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. (Para 28)

       (ix) Cancellation of allotments of dealership in Petroleum and LPG by the concerned minister from his discretionary quota—Whether principles evolved in Civil Appeal No. 6840 of 2001 relating to allotment of land by Chief Minister of Haryana will have any application to present appeals? (No)—Result—Appeals dismissed.

       Held : 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 discretionary 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 High Court of Punjab and Haryana by its order dated 20th January, 1988 disposed of the case of S.R. Dass vs. 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 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, must be made applicable to the period subsequent to the judgment viz. 5.12.97 and allotments made between 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 Interest Litigation, 1995(3) Supp. (3) SCC 382, are the subject matter of scrutiny and had been made indiscriminately, as there had been no guiding 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. (Paras 29 & 30)