2002 Supreme(SC) 1287

2003(1) Supreme 402
Supreme Court of India
(Under Art. 139-A of the Constitution of India)
Y.K. Sabharwal & H.K. Sema, JJ.
Onkar Lal Bajaj etc. etc.  —Appellants
versus
Union of India & Anr. etc. etc. —Respondents
Transferred Case (C) No. 80 of 2002
With
T.C. (C) Nos. 81 to 88/2002, 90/2002 & 91/2002, I.A.Nos. 246-2556 in TP (C) No. 417-423/2002)
With
Contempt Petition (C) No. 556/2002 in T.P. (C) Nos. 417-423 of 2002
With
T.C. (C) Nos. 100-109 of 2002
Decided on 20-12-2002
Counsel for the Parties :
For the Appearing Parties : K.N. Rawal, Solicitor General, Harish N. Salve, S.K. Gambhir, Sudhir Chandra, ATM Ranga Ramanujam, R. Thyagarajan, Rajeev Dutta, Ranjit Kumar, Yashank Adhyaru, V.A. Mohta, Rakesh Dwivedi, Hari Lal Agarwal, R.K. Jain, A.K. Ganguli, S.B. Sanyal, R.F. Nariman, A.K. Chitale, L.N. Rao, B.N. Deshmukh, O.P. Sharma, Kapil Sibal, Rajinder Sachhar, Jagdeep Dhankar, Sudhir Chandra, Sr. Advocates, Sanjay Kapur, Rajiv Kapur, Sanjeev Kumar, Shubhra Kapur, T.N. Singh, A.K. Sinha, Guntur Prabhakar, H.K. Puri, Manmohan Kalra, U. Banerjee, S.K. Puri, Ms. Anandita Gupta, B.K. Satija, Parijat Sinha, Pallav Sishodia, Pravin Bahadur, Rajan Narain, G.K. Bansal, SUK Sagar, Avinash Avhad, G. Krishnamurthy, Bina Madhavan, Prasanth P., Meena C.K., V.N. Raghupathy, D.K. Jena, S. Purohit, Meenakshi Jena, Ms. Rani Jethmalani, Archna Singh, G. Karunadas, D.K. Singh, Archana Singh, Anu Gupta, V. Balachandran, Ashok Kumar Sharma, Ajay K. Agrawal, Ms. Alka Agrawal, Anamika Agrawal, Anil Kumar Jha, Ms. Alka Jha, Manoj Saxena, Pravir Choudhary, Mukesh K. Giri, Uday Gupta, Ajay Kumar, Parmanand Gaur, M. Qamarudein, Ambar Qamaruddin, P.K. Nanda, B.P. Sarangi, Manish Goswami, Pratap C. Mohapatra, Himanshu Shekhar, Sunil Kumar, Manik Vedasen, Ashok Kumar Gupta, Aniruddha P. Mayee, F.S. Chauhan, B.S. Billowria, Dinesh Kumar Garg, P.S. Narasimha, A. Bhattacharya, P. Sridhar, Ms. Niranjana Singh, S.D. Singh, M.D. Adkar, B.V. Gadnis, Y.P. Singh, C. Siddharth, Debasis Misra, Smitha Inna, Mahesh C. Krishan, A. Maitri, S.B. Lal, Deepak M. Nargolkar, Laxmidhar Pangari, R. Mukherjee, Suchit Mohanty, Goodwill Indeevar, P.K. Jain, D.K. Singh, Varinder Kumar Sharma, P.A. Siddiqui, Chanchal Thakur, Rajesh Singh, A. Mariarputham, Aruna Mathur, A.D. Mathur, Chanchal K. Ganguli, Ms. B. Basak, Rudreshwar Singh, Tapesh Singh, Sanjay Jain, Shishir Pinaki, C.N. Sreekumar, D. Mahesh Babu, V. Ramasubramanian, Ajay Majithia, Shekhar K. Sinha, Dr. Kailash Chand, Sushil Kumar Jain, S.V. Deshpande, E.R. Kumar, P.H. Parekh, S. Ramakrishnan, Janaranjan Das, S.L. Aneja Mohan B. Aggarwal, Krishnanand Pandey, S.K. Kulkarni, M. Greesh Kumar, Kh. Nobin Singh, Ankur S. Kulkarni, S.S. Jauhar, P.V. George, Rakesh Dahiya, Ajay Pal, Mahabir Singh, Abhijit Sengupta, Roy Abraham, A.K. Jain, Himinder Lal, Jasbir Malik, S.K. Sabharwal, Anil Sharma, Rajeev Yadav, P. Venkat Reddy, CSN Mohan Rao, G. Venkatesh, Anupam Lal Das, Mukul Gupta, T.A. Khan, B.M. Goswami, Sarla Chandra, Anukul Chandra, Shiv Sagar Tiwari, A.D.N. Rao, Vinita Sinha, B.B. Singh, Anil Nag, Mrs. Rani Chhabra, Naresh Kumar, Satish Kumar, Abhisth Kumar, Ravindera Keshavrao Adsure, Vishwajit Singh, Mrs. Lalita Kaushik, Akhilesh K. Pandey, Surya Kant, M. Vijaya Bhaskar, Amit Kumar, Aarohi Bhalla, Sujata Kurdukar, K.R. Gupta, R.C. Gubrele, Ms. Pratibha Jain, Shiyatullah Khan, Mukhesh Jain, Sushil K. Pathak, A.S. Quereshi, Asha J. Madan, Aiswarya Bhati, K.S. Bhati, R.D. Upadhyay, V. Upadhyay, G.G. Upadhyay, Mukul Gupta, G. Prakash, Shobha Shetal Agarwal, Dr. Sushil Balwada, Dr. K.S. Chauhan, Prakash K. Yadav, P. Niroop, R. Chandrashekhar Reddy, Pawan Kumar, Manish Pitale, C.S. Ashri, Ramanand Agarwal, Pijush K. Roy, G.R.K. Prasad, Kamini Jaiswal, Tehmina, Rohit Choudhary, Mithilesh R., Bhupinder Yadav, S.S. Shamshuri, Babita Yadav, R.C. Kohli and Parijat Sinha, ­Advocates.

Very important point
The order dated 9.8.2002 of Government of India, Ministry of Petroleum and Natural Gas cancelling allotment of retail outlets of Petroleum Products is arbitrary and is quashed. The allotments which were on merits and not tainted cannot be cancelled. The alleged tainted allotments are required to be scrutinised by a Committee and their case will be considered after receipt of report of the Committee.

Headnote:(i) Constitution of India—Articles 14 and 226—Writ petitions against order dated 9.8.2002 of Government of India, Ministry of Petroleum and Natural Gas cancelling Letters of Indent (LOI) on the basis of newspaper allegation about allotments to the near and dear of the political functionaries on account of political considerations—Writ petitions in various High Courts challenging it as arbitrary under Article 14—Supreme Court transferring to itself under Article 139-A—Contention of Government that writ petitions were not maintainable—Whether correct? (No)—Case law discussed—Whether action was in public interest? (No) (see para 41) LOI given on merits and not tainted cannot be cancelled.

       Held : There is no merit in the contentions of learned Solicitor General. It is evident from the facts that the cancellation of the agreements is not for violation of any term thereof. The cancellation is on account of a policy decision taken by the Government as noticed hereinbefore. The cancellation is not on account of any uniform reason applicable to all the selectees or those who have been issued LOIs or with whom agreements have been entered into except that in respect of few others and not this class of petitioners, media exposure was made. In the present case, on principle, there would be no difference in respect of those selectees who have been issued the LOIs but are awaiting the execution of the agreement on completion of formalities. The execution of agreement is not being denied on account of any ineligibility of any such LOI holders or any discrepancy having been found in what was required to be fulfilled by them. We are not concerned with any such individual case. Therefore, the cases of LOI holders are no different in comparison to those cases where agreements have been entered into. Similar is the position of those who are on published merit panels and were awaiting issue of LOIs by the oil companies when the impugned decision was taken. For the present controversy, they are all in same position except those who may come in the category of alleged tainted class which aspect we would deal later. Article 14 guarantees to everyone equality before law. Unequals cannot be clubbed. The proposition is well settled and does not require reference to any precedent though many decisions were cited. Likewise, an arbitrary exercise of executive power deserves to be quashed is a proposition which again does not require support of any precedent. It is equally well settled that an order passed without application of mind deserves to be annulled being an arbitrary exercise of power. At the same time, we have no difficulty in accepting the proposition urged on behalf of the Government that if two views are possible and the Government takes one of it, it would not be amenable to judicial review on the ground that other view, according to the Court, is a better view. (Paras 26 and 27)

       Held after case law : In the case in hand, the only reason for the en masse cancellation was that a controversy had been raised. There was no application of mind to any case. Admitted none of cases was examined. In Shrilekha Vidyarthi s case, this Court held that arbitrariness is writ large on the impugned circular. In the State action public interest has to be the prime guiding consideration. In Shrilekha Vidharthi s case, it was held that the impugned State action was taken with only one object in view, i.e., to terminate all existing appointments irrespective of the subsistence or expiry of the tenure or suitability of the existing incumbents and that by one omnibus order, the appointments of all Government counsel in the State of Uttar Pradesh were terminated. It was also noticed that no common reason applicable to all of them justifying their termination in one stroke on a reasonable ground had been shown. The position is similar in the present case. (Para 34)

       The mere reason that a controversy has been raised by itself cannot clothe the Government with the power to pass such a drastic order which has a devastating effect on a large number of people. In governance, controversies are bound to arise. In a given situation, depending upon facts and figures, it may be legally permissible to resort to such en masse cancellation where executive finds that prima facie a large number of such selections were tainted and segregation of good and bad would be difficult and time consuming affair. That is, however, not the case. Here the controversy raised was in respect of 5 to 10 , as earlier indicated. In such a situation, en masse cancellation would be unjustified and arbitrary. It seems that the impugned order was a result of panic reaction of the Government. No facts and figures were gone into. Without application of mind to any of relevant consideration, a decision was taken to cancel all allotments. The impugned action is clearly against fair play in action. It cannot be held to be reasonable. It is nothing but arbitrary. (Para 43)

       Held further : the plea or probity in governance or fair play in action motivating the impugned action cannot be accepted. The impugned order looked from any angle cannot stand the scrutiny of law. (Para 44)

       (ii) Constitution of India—Article 139-A—Transferred cases on writ petitions against cancellation of Letters of Indents by Government of India Ministry of Petroleum and Natural Gas regarding allotment of retail Petrol Pumps etc.—Selection by Dealers Selection Board according to guidelines—Whether Government was justified in cancelling them merely on controversy raised by media? (No)—Order dated 9.8.2002 quashed except in respect of transferred cases Nos. 100 to 109 referred to the committee to report whether they are tainted allotments or not (which will be dealt with after receipt of committee respondent)—Order accordingly.

       Held : The alleged tainted allotments are required to be scrutinized by an independent committee so as to determine the validity of impugned circular dated 9th August, 2002 as against such allotments. As already noticed, 417 names were exposed by the media out of which particulars of 413 have been provided. We deem it expedient to constitute a Committee to go into the question whether these allotments were made on merits or on some extraneous considerations. In our view, the Government should not have exercised the power in a manner so as to enable it to escape the scrutiny of allotments exposed by the media. No arbitrary exercise of power should intervene to prevent the attainment of justice. Instead of passing the impugned order, in the context of the facts of the present case, the Government should have ordered an independent probe of alleged tainted allotments. The impugned order had the twin effect of (1) scuttling the probe and (2) depriving a large number of others of their livelihood that had been ensured for them after their due selections pursuant to a welfare policy of the Government as contained in the guidelines dated 9th October, 2000. The public in general has a right to know the circumstances under which their elected representatives got the outlets and/or dealerships/distributor­ships. In view of the aforesaid:-

        I. We appoint a Committee comprising of Mr. Justice S.C. Agrawal, a retired Judge of this Court and Mr. Justice P. K. Bahri, a retired judge of Delhi High Court, to examine the aforesaid 413 cases. We request the Committee to submit the report to this Court within a period of three months.

       II. The Committee would device its own procedure for undertaking the examination of these cases. If considered necessary, the Committee may appoint any person to assist it.

       III. We direct the Ministry of Petroleum and Natural Gas, Government of India and the four oil companies to render full, complete and meaningful assistance and cooperation to the Committee. The relevant records are directed to be produced before the Committee within five days.

       IV. We direct the Ministry to appoint a nodal officer not below the rank of a Joint Secretary for effective working of the Committee.

       V. The Central Government, State Government/Union Territories and all others are directed to render such assistance to the Committee as may be directed by it.

       VI. The oil companies are directed to provide as per Committee s directions, the requisite infrastructure, staff, transport and make necessary arrangements, whenever so directed, for travel, stay, payments and other facilities etc.

       VII. In respect of any case if the Committee, on preliminary examination of the facts and records, forms an opinion that the allotment was made on merits and not as a result of political connections or patronage or other extraneous considerations, it would be open to the Committee not to proceed with probe in detail.

       For the reasons aforesaid, the impugned order dated 9th August, 2002 is hereby quashed except in respect of cases referred to the Committee. The cases referred to the Committee would be considered on receipt of the report. However, the interim order dated 28th August, 2002 would continue to apply to these referred cases till further orders. The said order is further extended to cases where select panel has been published but letters of intent have not been issued. Transferred Case Nos. 80, 81 to 88, 90 and 91/2002, all intervention applications therein, I.A. Nos. 246-2556 in Transfer Petition (C) Nos. 417-423/2002 and Contempt Petition (C) No. 556/2002 in Transferred Petition (C) No. 417-423/2002 are disposed of in terms of this decision. A copy of the judgment shall be sent to the Registrar Generals of all the High Courts so that the writ petitions, if any, pending in the High Courts on similar questions can be disposed of in terms of this judgment. All matters except Transferred Case Nos. 100 to 109 are disposed of. List Transferred Case Nos. 100 to 109 of 2002 after receipt of the report. (Paras 55 to 62)