By medium of this application, the applicant has sought an amendment of the plaint on the ground that it gathered knowledge of the fact that the policy dated 6.9.2009 had not been challenged ...
No Acts & Articles mentioned in this case
High Court of H.P. IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
RSA No. : 30 of 2017 alongwith
CMP No. 8793/2017
Reserved on: 19.12.2017
Date of decision: 27.12.2017
____________________________________________________________
M/s Jai Mata Naina Devi Filling Station. ....Appellant.
Versus
Bharat Petroleum Corporation Ltd. & others. …Respondents.
Coram
Hon’ble Mr. Justice Tarlok Singh Chauhan, J.
Whether approved for reporting
1?. Yes
For the Appellant : Mr. B.S. Chauhan, Sr. Advocate with
Mr. Munish Datwalia, Advocate.
For the respondents : Mr. B.N. Misra, Advocate with
Ms. Vandana Misra, Advocate.
___________________________________________________________
Justice Tarlok Singh Chauhan, J.
CMP No. 8793/2017
By medium of this application, the applicant has
sought an amendment of the plaint on the ground that it
gathered knowledge of the fact that the policy dated 6.9.2009
had not been challenged in the suit, reference/observation
Whether reporters of the Local papers are allowed to see the judgment? yes
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whereof finds mention in the judgment under challenge
passed by the first appellate court while deciding the appeal.
It is further averred that the applicant had given complete
narration with respect to the matter in controversy to its
counsel and being not well conversant with the
intricacies/nitty gritty of the pleadings, in good faith, relied
on the expertise of its counsel that its case has been properly
drafted. However, fact of not challenging the policy dated
6.9.2006 has adversely effected the interest of the plaintiff
which has come to its knowledge only after passing of the
judgment by the first appellate court. It is further pleaded
that the notification dated 6.9.2006 goes to the root of the lis
and its impleadment in the pleading before the trial court
was necessary to determine the real controversy in issue.
The lapse on the part of the learned counsel has prejudiced
the interest of the applicant materially and for this lapse the
applicant cannot be made to suffer. It is in this background
that the applicant intends to add paras 7 (A) and 7 (B) after
para 7 of the plaint and in the relief clause para (iii) intends
to be added as under:
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“7-A. That the instructions/letter/guidelines dated 6.9.2006 and
advertisement dated 30.4.2010 issued by the Government of
India superseding the earlier instructions/letters vide which the
petrol pump was allotted to the applicant and continued till date
may be declared to be nonest, void and not applicable qua the
applicant as these instructions would have become ioperative
prospectively in view of the clause 22 of the agreement.
7-B. That since the applicant had already applied for approval to
carry on the business before the expiry of agreement dated
4.3.2004 and also before the instructions/letter dated 6.9.2006
and the respondents did not pass any order on the application till
date, therefore, the applicant/plaintiff has reason to believe that
contention of the applicant has been accepted/conceded.
(iii) Declaration to the effect that the instructions/letter dated
6.9.2006 and advertisement dated 30.4.2010 may be declared
nonest, void and not applicable qua the rights of the applicant.”
2. The respondents have opposed the application by
filing reply wherein preliminary objection has been raised
that after the amendment of the Code of Civil Procedure,
there is a clear mandate against entertaining of the
application unless the Court comes to the conclusion that
despite due diligence, the party could not raise the matter
before the commencement of the trial. The applicant herein
has neither pleaded nor proved due diligence and, therefore,
the amendment application is liable to be dismissed. It is
further averred that the application to challenge the policy
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has been filed after 11 long years of its formulation on
6.9.2006 and, therefore, the present application is nothing
but abuse and misuse of judicial process primarily with the
motive to delay the final decision of the matter. It is further
averred that even if it is assumed, though not admitted, that
the counsel of the applicant had failed to challenge the policy
dated 6.9.2006 despite the instructions of the applicant, it
would be impossible to believe that the fact came to the
attention of the applicant only when the judgment was
passed by the first appellate court in 2017. This averment is
misleading because the suit was filed before the trial court in
the year 2010 and even the trial court had clearly noted in
its judgment dated 16.11.2016 that the applicant had not
challenged the policy dated 6.9.2006. It has been averred
that the application has been filed with ulterior motive of
delaying the litigation on one pretext or the other primarily
with the intention to deprive the selected scheduled caste
candidate, who was given the dealership of retail outlet as
per roster as well as per advertisement dated 30.4.2010.
3. I have heard the learned counsel for the parties
and have perused the record of the case.
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4. At the outset it may be observed that though the
applicant has levelled allegations against its counsel but has
failed to name the said counsel(s). A perusal of the records
of the case would show that before the trial court the
applicant was represented by Sh. Neelam Sharma, Advocate
while in the first appellate court he came to be represented
by Sh. K.S. Kaundal, Advocate, whereas before this Court, he
was initially represented by Sh. Neeraj K. Sharma, Advocate
who even appeared when the appeal was heard in part on
5.9.2017. However, having sensed that the Court is not
inclined to interfere in the appeal, the applicant thereafter
changed his counsel and appointed Sh. Munish Datwalia,
Advocate and at the same time engaged the services of Sh.
B.S. Chauhan, Senior Advocate. It is at the instance of Mr.
Munish Datwalia, this application has been moved.
5. Sh. B.S. Chauhan, Senior Advocate on
instructions of Sh. Munish Datwalia, Advocate has not been
able to point out the negligence of any one of the counsels
and would claim that all the counsel(s) engaged by the
applicant had been negligent and would further claim that
only on account of the negligence of its lawyer, the applicant
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should not suffer. In support of such contention, he has
placed reliance upon the judgment of the Hon’ble Supreme
Court in M/s Ganesh Trading Co., vs. Moji Ram, AIR 1978
SC 484, more particularly, the observations made in para 4,
which read thus:
“[4] It is clear from the foregoing summary of the main rules of
pleadings that provisions for the amendment of pleadings, subject
to such terms as to costs and giving of all parties concerned
necessary opportunities to meet exact situations resulting from
amendments, are intended for promoting the ends of justice and
not for defeating them. Even if party or its counsel is inefficient in
setting out its case initially the shortcoming can certainly be
removed generally by appropriate steps taken by a party which
must no doubt pay costs for the inconvenience or expense caused
to the other side from its omissions. The error is not incapable of
being rectified so long as remedial steps do not unjustifiably injure
rights accrued.”
6. What probably has been ignored by Mr. Chauhan,
learned senior counsel while placing reliance on this
judgment is that the judgment relied upon was based on the
provisions of the Code as prevailing on the said date, whereas
it cannot be disputed that the amendment brought about in
the Code of Civil Procedure by amendment Act 22 of 2002
with effect from 1.7.2002, more particularly, the provisions of
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rule 17 of order 6 have brought about far reaching changes in
the position of law and the same reads thus:
"Provided that no application for amendment shall be allowed after
the trial has commenced, unless the court comes to the
conclusion that in spite of due diligence, the party could not have
raised the matter before the commencement of trial."
7. The proviso appended to order 6 rule 17 of the
Code now restricts the fetter of the Court. This would be
embargo on the exercise of the jurisdiction . Now the
discretion to grant permission to a party to amend its
pleadings lies on two conditions, firstly no injustice must be
done to either side and secondly, the amendment must be
necessary for the purpose of determining the real question in
controversy between the parties. However, to save the
interest of the parties in a suit, the provision has been added
which clearly states that “no application for amendment shall
be allowed after the trial has commenced, unless the court
comes to the conclusion that in spite of due diligence, the party
could not have raised the matter before the commencement of
trial”. Therefore, the decision in M/s Ganesh Trading Co .
case (supra) would hardly be of any assistance.
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8. It is evident from the bare perusal of the proviso
that ordinarily amendment in pleadings is not allowed after
the trial has commenced unless the Court is satisfied that the
party concerned could not apply even after exercise of due
diligence for such amendment before the commencement of
trial. In other words, it was incumbent upon the applicant to
have specifically pleaded that inspite of due diligence they
could not raise the matter now sought to be raised. After all,
right to amend is not an absolute right but depends on
various principles. Concededly, there is not even a whisper
regarding this fact in the entire application.
9. The Hon’ble Supreme Court has interpreted the
proviso to be a requirement mandated to prevent frivolous
applications for amendment intended, only to delay the trial.
In Salem Advocate Bar Associatio n versus Union of India
AIR 2005 SC 3353, it was held as under:-
“27. Order VI Rule 17 of the Code deals with amendment of
pleadings. By Amendment Act 46 of 1999, this provision was
deleted. It has again been restored by Amendment Act 22 of 2002
but with an added proviso to prevent application for amendment
being allowed after the trial has commenced, unless court comes
to the conclusion that in spite of due diligence, the party could not
have raised the matter before the commencement of trial. The
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proviso, to some extent, curtails absolute discretion to allow
amendment at any stage. Now, if application is filed after
commencement of trial, it has to be shown that in spite of due
diligence, such amendment could not have been sought earlier.
The object is to prevent frivolous applications which are filed to
delay the trial. There is no illegality in the provision.”
10. The Hon’ble Supreme Court in Revajeetu
Builders and Developers vs. Narayanaswamy and sons
and others, (2009) 10 SCC 84, after in depth and critical
analysis of the entire law of both the Indian and English
cases, laid down some basic principles which ought to be
taken into consideration while allowing or rejecting the
application for amendment and the same read thus:
“[63] On critically analyzing both the English and Indian cases,
some basic principles emerge which ought to be taken into
consideration while allowing or rejecting the application for
amendment.
(1) Whether the amendment sought is imperative for proper
and effective adjudication of the case?
(2) Whether the application for amendment is bona fide or
mala fide?
(3) The amendment should not cause such prejudice to the
other side which cannot be compensated adequately in terms of
money;
(4) Refusing amendment would in fact lead to injustice or
lead to multi- ple litigation;
(5) Whether the proposed amendment con - stitutionally or
fundamentally changes the nature and character of the case? and
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(6) As a general rule, the court should decline amendments
if a fresh suit on the amended claim s would be barred by
limitation on the date of application.”
11. It also needs to be noticed that the Hon’ble
Supreme Court has thereafter categorically held that an
application made under order 6 rule 17 of the Code is very
serious judicial exercise and such exercise should not be
undertaken in a casual manner and further observed that
while deciding an application for amendment the court must
not refuse bona fide, legitimate, honest and necessary
amendments and should not permit mala fide, worthless
and/or dishonest amendments.
12. Earlier to that the Hon’ble Supreme Court
observed that even though order 6 rule 17 was one of the
important provisions of the CPC, but the Hon’ble Supreme
Court had no hesitation in observing that this was one of the
most misused provision of the Code for dragging the
proceedings indefinitely, particularly in the Indian courts
which are otherwise heavily overburdened with the pending
cases. It is apposite to reproduce relevant observations and
the same read thus:
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“[29] In our considered view, Order VI Rule 17 is one of the
important provisions of the CPC, but we have no hesitation in also
observing that this is one of the most misused provision of the
Code for dragging the proceedings indefinitely, particularly in the
Indian courts which are otherwise heavily overburdened with the
pending cases. All Civil Courts ordinarily have a long list of cases,
therefore, the Courts are compelled to grant long dates which
causes delay in disposal of the cases. The applications for
amendment lead to further delay in disposal of the cases.”
13. Having set out the legal parameters, it would be
noticed that the only ground taken by the applicant for
amendment of the plaint is negligence of its counsel, whereas
to my mind this application has been filed with the sole
intention of dragging on these proceedings indefinitely as the
applicant has ex parte ad interim injunction in its favour
whereby it has been permitted to run the retail outlet despite
having lost before both the courts below. The applicant has
failed to satisfy the requirement of law that the matter now
sought to be introduced by the amendment could not have
been raised earlier in spite of the due diligence.
14. What is due diligence has not been defined in the
Code but has been explained by the Hon’ble Supreme Court
in Chander Kanta Bansal vs Rajinder Singh Anand ,
(2008) 5 SCC 177 in the following terms:
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“16. The words "due diligence" has not been defined in the Code.
According to Oxford Dictionary (Edition 2006), the word "diligence"
means careful and persistent application or effort. "Diligent"
means careful and steady in application to one's work and duties,
showing care and effort. As per Black's Law Dictionary (Eighth
Edition), "diligence" means a continual effort to accomplish
something, care; caution; the attention and care required from a
person in a given situation. "Due diligence" means the diligence
reasonably expected from, and ordinarily exercised by, a person
who seeks to satisfy a legal requirement or to discharge an
obligation. According to Words and Phrases by Drain -Dyspnea
(Permanent Edition 13A) "due diligence", in law, means doing
everything reasonable, not everything possible. "Due diligence"
means reasonable diligence; it means such diligence as a prudent
man would exercise in the conduct of his own affairs.”
15. In view of the aforesaid discussion, not only do I
find no merit in this application but I am of the considered
view that the application is mala fide and has been filed with
the sole motive of delaying decision in the appeal. That being
so, the same is dismissed.
RSA No. 30/2017
1. “Litigation may turn into a fruitful industry.
Though litigation is not gambling yet there is an element of
chance in every litigation. Unscrupulous litigants may feel
encouraged to approach the Courts, persuading the court to
pass interlocutory orders favourable to them by making out a
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prima facie case when the issues are yet to be heard and
determined on merits and if the concept of restitution is
excluded from application to interim orders, then the litigant
would stand to gain by swallowing the benefits yielding out of
the interim order even though the battle has been lost at the
end. This cannot be countenanced. We are, therefore, of the
opinion that the successful party finally held entitled to a
relief assessable in terms of money at the end of the litigation,
is entitled to be compensated by award of interest at a
suitable reasonable rate for the period for which the interim
order of the Court withholding the release of money had
remained in operation”. (Refer: South Eastern Coalfields
Ltd. Vs. State of M.P, 2003 8 SCC 648).
2. The instant case is a classical example of litigation
being turned into a fruitful industry by the unscrupulous
appellant, who have been encouraging the Courts, persuading
them to pass interlocutory orders in its favour and may have
made huge profits although it has eventually lost at the end.
3. This Regular Second Appeal under section 100 of
the Code of Civil Procedure is directed against the judgment
and decree dated 9.1.2017, passed by the learned Additional
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District Judge-I, Solan, District Solan camp at Nalagarh in
Civil Appeal No. 28-NL/13 of 2016, whereby he affirmed the
judgment and decree dated 16.11.2016, passed by the
learned Civil Judge (Junior Divison), Court No.2, Nalagarh,
District Solan in Civil Suit No.85/1 of 2010.
The parties shall be referred to as the “plaintiff”
and “defendant”.
4. The plaintiff is a partnership firm duly registered
under the Registration Act and is represented by its three
partners. The plaintiff filed a suit for permanent prohibitory
injunction on the ground that the family members of the
partners of the plaintiff, who were already in the petroleum
business and were running various petroleum pumps
efficiently and diligently and pleased with the performance
and services rendered by them, the defendants with a view to
enhance its sale and image and also to counter the expansion
efforts of other oil corporations, persuaded the plaintiff to
provide suitable place situated either at commercially viable
location or at vintage point so as to attract the customers.
Accordingly, land comprising Khewat No. 314 min, Khatauni
No. 328 min, Khasra No. 1178/886/1 (1-10) was identified at
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village Baddi Sitalpur, Tehsil Baddi, District Solan for setting
up a retail outlet. It was averred that the defendants agreed
that the arrangement of ad hoc dealership would continue till
the time regular dealership is granted to the plaintiff firm or
its nominee. In pursuance to such un derstanding, ‘No
Objection Certificates’ were applied from various departments
of the Government by spending huge money, energy and time
and thereafter retail outlet/petrol pump was given to the
plaintiff firm on ad hoc basis by the defendants with the
understanding in the guise of explicit undertaking that it
shall be regularized. The outlet commenced its operation
with effect from 4.3.2004. The plaintiff spent huge amount in
setting up of the retail outlet and developing the site only with
the hope as he was given to understand that the dealership in
its favour would be regularized even though the ad hoc
dealership agreement was only for one year with effect from
4.3.2004 to 31.3.2005, as would be evident from stipulation
No. 22, which reads thus:
“22. Notwithstanding anything contained hereinabove, this
agreement unless terminated prior to 31.3.2005, will come to an
end on 31.3.2005, and you will be liable to deliver vacant
possession of the retail outlet with all the facilities mentioned
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hereunder alongwith any other assets of the corporation, which
may be added to the said retail outlet and/or handed over to you,
to the representative of the corporation unless the validity period
of this agreement is extended by us in writing before expiry of the
aforesaid date. If you are interested to carry on the business even
after the expiry of the date mentioned above, you will have to
make a formal application to the company and obtain its approval
before 31.3.2005 and in case of your failure to do so, you will be
treated as trespasser and will be liable to pay damage thereof and
will also be liable for criminal breach of trust.”
5. It was in pursuance to the above stipulation that
the plaintiff sent a representation to the defendants on
11.3.2005 wherein a formal request to carry out business
even after 31.3.2005 was made. It was averred that on
receipt of the above said application, the defendants on their
part continued supplying the requisite petroleum products to
the plaintiff without any break or interruption and, therefore,
the firm’s request application dated 11.3.2005 stands
accepted and allowed. It was averred that on the date of filing
of the suit, the plaintiff was still getting regular supply from
the defendants. It was further averred that the defendants
have not issued any termination letter to the plaintiff nor the
formal request application dated 11.3.2005 had been rejected
or dismissed. However, despite this, the defendants went
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ahead with an advertisement on 30.4.2010 in Hindustan
Times (Chandigarh) for regularization of retail out in
question, which was already reserved to the S.C. category and
letter/order had been issued by the defendant-company to
the plaintiff for termination of the dealership. It was averred
that since the publication of advertisement cast a cloud over
the title and interest of plaintiff, therefore, it approached the
defendants and on failure to even take any remedial measure,
plaintiff filed the instant suit for perpetual injunction and
mandatory injunction.
6. The defendants contested the suit by filing written
statement wherein objections regarding the maintainability,
cause of action, the plaintiff having not approached the court
with clean hands were taken. On merits, it was averred that
the plaintiff never approached the defendants even though
they were already trying to enhance their sale and image
every where in India and also selected the spot at Baddi
Sitalpur, Tehsil Baddi. It was averred that the defendants
applied to the State of H.P. for the procurement of
Government land on lease and it was due to the tireless
efforts of the defendants that they were able to get
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Government land in village Sitalpur, Tehsil Baddi, District
Solan on a nominal rent of Rs. 5,432/ - per annum for a
period of ten years as per office order dated 21.8.2003 and
the lease for the land was registered on 6.9.2003 at Tehsil
Nalagarh. It was thereafter that the ‘No Objection Certificate’
was granted by the District Magistrate and the defendants
made a proposal for conducting interviews towards selection
of ad hoc dealers. Four dealers were considered in the
selection process and the interviews were conducted on
2.10.2003. Based on the assessment made by the panel, M/s
Jai Mata Naina Devi Filling Station was selected as the most
suitable candidate for running the petrol outlet of ad hoc
dealership and the defendants never agreed to convert ad hoc
dealership into regular/permanent dealership in favour of the
plaintiff. It was further averred that these were the
defendants who set up the retail outlet/petrol pump at village
Sitalpur and nothing in fact was done by the plaintiff for
setting up the petrol pump/retail outlet as alleged. The
dealership granted to the plaintiff was purely temporary in
nature and the same was governed by letter dated 4.3.2004
issued by the authorized officer of the corporation to the
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plaintiff. As per the terms and conditions of the said letter,
the appointment of ad hoc dealer was a temporary agreement
and, therefore, the plaintiff could not claim any right or title
on the basis of such letter. It is further averred that no doubt
the representation of the plaintiff dated 11.3.2005 was
received but keeping in view the guidelines issued by the
Government of India date d 9.6.2006, the defendants
published advertisement in the daily news paper to allot the
dealership of the retail outlet/petrol pump in favour of the
person, who falls under the category of Corpus Fund Scheme
(SC/ST category of dealership/widow and women above 40
years of age without earning parents).
7. Replication to the written statement was filed
wherein the contents of the plaint were reiterated and
reaffirmed and those of the written statement had been
denied.
8. Learned trial court on 13.9.2012 framed the
following issues:
1. Whether the plaintiff is entitled for the relief of perpetual
permanent injunction, as prayed for? OPP
2. Whether the plaintiff is entitled for the relief of mandatory
injunction, as prayed for? OPP
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3. Whether the suit is not maintainable in the present form?
OPD
4. Whether the plaintiff has no cause of action and locus
standi to file the present suit? OPD
5. Whether the plaintiff has not come to the court with clean
hands and suppressed the material facts from this court?
OPD.
6. Relief.
9. After recording the evidence and evaluating the
same, learned trial court dismissed the suit. Aggrieved
thereby the plaintiff filed an appeal before the first appellate
court, however, the same was also dismissed with costs of Rs.
2,000/- vide judgment and decree dated 9.1.2017 .
Undeterred the plaintiff has filed the instant appeal by
claiming that the judgments rendered by the courts below are
perverse being based on complete misreading and
misinterpretation of the pleadings and evidence on record.
10. I have heard the learned counsel for the parties
and have gone through the records of the case.
11. What is ‘perverse’ was considered by the Hon’ble
Supreme Court in a detailed judgment in Arulvelu and
another vs. State Represented by the Public Prosecutor
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and another (2009) 10 S CC 206 wherein it was held as
under:-
“26. In M. S. Narayanagouda v. Girijamma & Another AIR
1977 Kar. 58, the Court observed that any order made in
conscious violation of pleading and law is a perverse order.
In Moffett v. Gough, (1878) 1 LR 1r 331 the Court observed
that a perverse verdict may probably be defined as one that
is not only against the weight of evidence but is altogether
against the evidence. In Godfrey v. Godfrey 106 NW 814,
the Court defined `perverse' as turned the wrong way, not
right; distorted from the right; turned away or deviating
from what is right, proper, correct etc.
27. The expression "perverse" has been defined by
various dictionaries in the following manner:
1. Oxford Advanced Learner's Dictionary of Current
English Sixth Edition
PERVERSE:- Showing deliberate determination to
behave in a way that most people think is wrong,
unacceptable or unreasonable.
2. Longman Dictionary of Contemporary English -
International Edition
PERVERSE: Deliberately departing from what is
normal and reasonable.
3. The New Oxford Dictionary of English - 1998
Edition
PERVERSE: Law (of a verdict) against the weight of
evidence or the direction of the judge on a point of
law.
4. New Webster's Dictionary of the English Language
(Deluxe Encyclopedic Edition)
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PERVERSE: Purposely deviating from accepted or
expected behavior or opinion; wicked or wayward;
stubborn; cross or petulant.
5. Stroud's Judicial Dictionary of Words & Phrases,
Fourth Edition
PERVERSE: A perverse verdict may probably be
defined as one that is not only against the weight of
evidence but is altogether against the evidence.
28. In Shailendra Pratap & Another v. State of U.P.
(2003) 1 SCC 761, the Court observed thus: (SCC p.766,
para 8
"8…We are of the opinion that the trial court was
quite justified in acquitting the appellants of the
charges as the view taken by it was reasonable one
and the order of acquittal cannot be said to be
perverse. It is well settled that appellate court would
not be justified in interfering with the order of
acquittal unless the same is found to be perverse. In
the present case, the High Court has committed an
error in interfering with the order of acquittal of the
appellants recorded by the trial court as the same
did not suffer from the vice of perversity."
29. In Kuldeep Singh v. The Commissioner of Police
& Others (1999) 2 SCC 10, the Court while dealing with the
scope of Articles 32 and 226 of the Constitution observed as
under: (SCC p.14, paras 9-10)
"9. Normally the High Court and this Court would
not interfere with the findings of fact recorded at the
domestic enquiry but if the finding of "guilt" is based
on no evidence, it would be a perverse finding and
would be amenable to judicial scrutiny.
10. A broad distinction has, therefore, to be
maintained between the decisions which are perverse
and those which are not. If a decision is arrived at on
no evidence or evidence which is thoroughly
unreliable and no reasonable person would act upon
it, the order would be perverse. But if there is some
evidence on record which is acceptable and which
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could be relied upon, howsoever compendious it may
be, the conclusions would not be treated as perverse
and the findings would not be interfered with."
30. The meaning of `perverse' has been examined in
H. B. Gandhi, Excise and Taxation Officer-cum- Assessing
Authority, Karnal & Others v. Gopi Nath & Sons & Others
1992 Supp (2) SCC 312, this Court observed as under:
(SCC pp. 316-17, para 7)
"7. In the present case, the stage at and the points
on which the challenge to the assessment in judicial
review was raised and entertained was not
appropriate. In our opinion, the High Court was in
error in constituting itself into a court of appeal
against the assessment. While it was open to the
respondent to have raised and for the High Court to
have considered whether the denial of relief under
the proviso to Section 39(5) was proper or not, it was
not open to the High Court re-appreciate the primary
or perceptive facts which were otherwise within the
domain of the fact-finding authority under the
statute. The question whether the transactions were
or were not sales exigible to sales tax constituted an
exercise in recording secondary or inferential facts
based on primary facts found by the statutory
authorities. But what was assailed in review was, in
substance, the correctness - as distinguished from
the legal permissibility - of the primary or perceptive
facts themselves. It is, no doubt, true that if a finding
of fact is arrived at by ignoring or excluding relevant
material or by taking into consideration irrelevant
material or if the finding so outrageously defies logic
as to suffer from the vice of irrationality incurring the
blame of being perverse, then, the finding is rendered
infirm in law."
12. What is ‘perverse’ has further been
considered by this Court in RSA No.436 of 2000 , titled
‘Rubi Sood and another vs. Major (Retd.) Vijay Kumar Sud
and others, decided on 28.05.2015 in the following manner:-
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“25….. A finding of fact recorded by the learned Courts
below can only be said to be perverse, which has been
arrived at without consideration of material evidence or
such finding is based on no evidence or misreading of
evidence or is grossly erroneous that, if allowed to stand, it
would result in miscarriage of justice, is open to correction,
because it is not treated as a finding according to law.
26. If a finding of fact is arrived at by ignoring or excluding
relevant material or by taking into consideration irrelevant
material or even the finding so outrageously defies logic as
to suffer from the vice of irrationality incurring the blame of
being perverse, then the finding is rendered infirm in the
eye of the law.
27. If the findings of the Court are based on no evidence or
evidence, which is thoroughly unreliable or evidence that
suffers from vice of procedural irregularity or the findings
are such that no reasonable persons would have arrived at
those findings, then the findings may be said to be
perverse.
28. Further if the findings are either ipse dixit of the Court
or based on conjectures and surmises, the judgment suffers
from the additional infirmity of non application of mind and
thus, stands vitiated.”
13. What is ‘perversity’ recently came up for
consideration before the Hon’ble Supreme Court in Damodar
Lal vs.Sohan Devi and others (201 6) 3 SCC 78 wherein it
was held as under:-
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“8. “Perversity” has been the subject matter of
umpteen number of decisions of this Court. It has also
been settled by several decisions of this Court that the
first appellate court, under Section 96 of The Civil
Procedure Code, 1908, is the last court of facts unless
the findings are based on evidence or are perverse.
9. In Krishnan v. Backiam (2007) 12 SCC 190, it has
been held at paragraph-11 that: (SCC pp. 192-93)
“11. It may be mentioned that the first appellate
court under Section 96 CPC is the last court of facts.
The High Court in second appeal under Section 100
CPC cannot interfere with the findings of fact
recorded by the first appellate court under Section
96 CPC. No doubt the findings of fact of the first
appellate court can be challenged in second appeal
on the ground that the said findings are based on no
evidence or are perverse, but even in that case a
question of law has to be formulated and framed by
the High Court to that effect.”
10. In Gurvachan Kaur v. Salikram (2010) 15 SCC
530, at para 10, this principle has been reiterated:
(SCC p. 532)
“10. It is settled law that in exercise of power
under Section 100 of the Code of Civil
Procedure, the High Court cannot interfere with
the finding of fact recorded by the first appellate
court which is the final court of fact, unless the
same is found to be perverse. This being the
position, it must be held that the High Court
was not justified in reversing the finding of fact
recorded by the first appellate court on the
issues of existence of landlord -tenant
relationship between the plaintiff and the
defendant and default committed by the latter in
payment of rent.”
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11. In the case before us, there is clear and cogent
evidence on the side of the plaintiff/appellant that
there has been structural alteration in the premises
rented out to the respondents without his consent.
Attempt by the respondent-defendants to establish
otherwise has been found to be totally non-acceptable
to the trial court as well as the first appellate court.
Material alteration of a property is not a fact confined
to the exclusive/and personal knowledge of the owner.
It is a matter of evidence, be it from the owner himself
or any other witness speaking on behalf of the plaintiff
who is conversant with the facts and the situation.
PW-1 is the vendor of the plaintiff, who is also his
power of attorney. He has stated in unmistakable
terms that there was structural alteration in violation
of the rent agreement. PW-2 has also supported the
case of the plaintiff. Even the witnesses on behalf of
the defendant, partially admitted that the defendants
had effected some structural changes.
12. Be that as it may, the question whether there is a
structural alteration in a tenanted premises is not a
fact limited to the personal knowledge of the owner. It
can be proved by any admissible and reliable evidence.
That burden has been successfully discharged by the
plaintiff by examining PWs-1 and 2. The defendants
could not shake that evidence. In fact, that fact is
proved partially from the evidence of the defendants
themselves, as an admitted fact. Hence, only the trial
court came to the definite finding on structural
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alteration. That finding has been endorsed by the first
appellate court on re-appreciation of the evidence, and
therefore, the High Court in second appeal was not
justified in upsetting the finding which is a pure
question of fact. We have no hesitation to note that
both the questions of law framed by the High Court
are not substantial questions of law. Even if the
finding of fact is wrong, that by itself will not
constitute a question of law. The wrong finding should
stem out on a complete misreading of evidence or it
should be based only on conjectures and surmises.
Safest approach on perversity is the classic approach
on the reasonable man’s inference on the facts. To
him, if the conclusion on the facts in evidence made by
the court below is possible, there is no perversity. If
not, the finding is perverse. Inadequacy of evidence or
a different reading of evidence is not perversity.
13. In Kulwant Kaur v. Gurdial Singh Mann (2001) 4
SCC 262, this Court has dealt with the limited leeway
available to the High Court in second appeal. To quote
para 34: (SCC pp.278-79)
“34. Admittedly, Section 100 has introduced a
definite restriction on to the exercise of jurisdiction
in a second appeal so far as the High Court is
concerned. Needless to record that the Code of Civil
Procedure (Amendment) Act, 1976 introduced such
an embargo for such definite objectives and since we
are not required to further probe on that score, we
are not detailing out, but the fact remains that while
it is true that in a second appeal a finding of fact,
even if erroneous, will generally not be disturbed but
where it is found that the findings stand vitiated on
wrong test and on the basis of assumptions and
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conjectures and resultantly there is an element of
perversity involved therein, the High Court in our
view will be within its jurisdiction to deal with the
issue. This is, however, only in the event such a fact
is brought to light by the High Court explicitly and
the judgment should also be categorical as to the
issue of perversity vis-à-vis the concept of justice.
Needless to say however, that perversity itself is a
substantial question worth adjudication — what is
required is a categorical finding on the part of the
High Court as to perversity. In this context reference
be had to Section 103 of the Code which reads as
below:
‘103. Power of High Court to determine issues of
fact.- In any second appeal, the High Court may, if
the evidence on the record is sufficient, determine
any issue necessary for the disposal of the appeal,—
(a) which has not been determined by the
lower appellate court or by both the court of
first instance and the lower appellate court, or
(b) which has been wrongly determined by
such court or courts by reason of a decision
on such question of law as is referred to in
Section 100.”
The requirements stand specified in Section 103 and
nothing short of it will bring it within the ambit of
Section 100 since the issue of perversity will also
come within the ambit of substantial question of law
as noticed above. The legality of finding of fact
cannot but be termed to be a question of law. We
reiterate however, that there must be a definite
finding to that effect in the judgment of the High
Court so as to make it evident that Section 100
of the Code stands complied with.”
14. In S.R. Tiwari v. Union of India (2013) 6 SCC 602,
after referring to the decisions of this Court, starting
with Rajinder Kumar Kindra v. Delhi Administration,
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(1984) 4 SCC 635, it was held at para 30: (S.R.Tewari
case
6, SCC p. 615)
“30. The findings of fact recorded by a court can be
held to be perverse if the findings have been arrived
at by ignoring or excluding relevant material or by
taking into consideration irrelevant/inadmissible
material. The finding may also be said to be perverse
if it is “against the weight of evidence”, or if the
finding so outrageously defies logic as to suffer from
the vice of irrationality. If a decision is arrived at on
the basis of no evidence or thoroughly unreliable
evidence and no reasonable person would act upon
it, the order would be perverse. But if there is some
evidence on record which is acceptable and which
could be relied upon, the conclusions would not be
treated as perverse and the findings would not be
interfered with. (Vide Rajinder Kumar Kindra v. Delhi
Admn. [(1984) 4 SCC 635 : 1985 SCC (L&S) 131 :
AIR 1984 SC 1805] , Kuldeep Singh v. Commr. of
Police [(1999) 2 SCC 10 : 1999 SCC (L&S) 429 : AIR
1999 SC 677] , Gamini Bala Koteswara Rao v. State
of A.P. [(2009) 10 SCC 636 : (2010) 1 SCC (Cri) 372 :
AIR 2010 SC 589] and Babu v. State of Kerala[(2010)
9 SCC 189 : (2010) 3 SCC (Cri) 1179] .)”
This Court has also dealt with other aspects of
perversity.
15. We do not propose to discuss other judgments,
though there is plethora of settled case law on this
issue. Suffice to say that the approach made by the
High Court has been wholly wrong, if not, perverse. It
should not have interfered with concurrent findings of
the trial court and first appellate court on a pure
question of fact. Their inference on facts is certainly
reasonable. The strained effort made by the High
Court in second appeal to arrive at a different finding
is wholly unwarranted apart from being impermissible
under law. Therefore, we have no hesitation to allow
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the appeal and set aside the impugned judgment of the
High Court and restore that of the trial court as
confirmed by the appellate court.”
14. Thus, it can be taken to be settled that a judgment
can be said to be perverse if the conclusions arrived at by the
learned Courts below are contrary in evidence on record, or if
the Court’s entire approach with respect to dealing with the
evidence or the pleadings is found to be patently illegal,
leading to the miscarriage of justice, or if its judgment is
unreasonable and is based on erroneous understanding of
law and of the facts of the case. A perverse finding is one
which is based on no evidence or one that no reasonable
person would have arrived at. Therefore, unless it is found
that some relevant evidence has not been considered or that
certain inadmissible material has been taken into
consideration, the findings cannot be said to be perverse.
15. Having noticed the pleadings, which have been set
out in detail above, now I would proceed to evaluate the oral
as well as documentary evidence led by the parties.
16. One of the partners of the plaintiff Rajesh Verma
stepped into the witness box and tendered in examination-in-
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chief his affidavit Ex.PW-1/A wherein he reiterated the
contents of the plaint and tendered the documents, i.e. Form-
C Ex.P-1, appointment letter Ex.P-2, invoice Ex.P-3, Form No.
26 Ex.P-4, invoices Ex.P-5 and P-6, Tatima Ex.P-7,
Jamabandi Ex.P-8, limit certificate Ex.P-9, letter Ex.P-10,
postal receipt Ex.P-11 and partnership deed Ex.P-12.
17. However, when put to cross -examination, the
plaintiff clearly admitted that the dealership of petrol pump
was given to him on ad hoc basis. He volunteered to state
that it was mentioned in the appointment letter that if
plaintiff makes representation before 31.3.2005, then the
retail outlet would be allowed to continue. He denied that ad
hoc dealership is temporary dealership. He further denied
that ad hoc dealership had been terminated by the company.
He further denied that the defendant-company had never
promised to regularize the dealership. He even denied the
issuance of instructions of Government of India vide letter
dated 6.9.2006 whereby the petrol pumps on ad hoc basis
were reserved for SC/ST category.
18. Now, adverting to the evidence led by the
defendants, it would be noticed that they examined one
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Achman Treha, who tendered in his examination-in-chief his
affidavit Ex.DW-1/A wherein he reiterated the contents of
written statement and tendered the documents, i.e. POA
Ex.D-1, letter of Ministry of Petroleum and Natural Gas Ex.
D-2 and Corporate Broadcast Ex.D-3. This witness is the
Territory Manager in Noida and joined at Ambala on
1.4.2014. He stated that he was authorized to depose on
behalf of defendants vide power of attorney Ex.D -1. He
feigned ignorance who had made efforts to procure the land
from the Government of Himachal Pradesh on lease.
However, volunteered that the person authorized by the
company might have made efforts at such time. He feigned
ignorance regarding ignorance letter dated 11.3.2005 Ex.
P-10. He, however, admitted that the defendant -company
was regularly supplying petroleum product to the plaintiff
since March, 2005. He denied that the expenditure of the
petrol outlet was incurred by the plaintiff. He further denied
that as per Ex.P-2 (appointment letter), the defendant
company was bound to regularize the outlet.
This in entirety is the evidence led by the parties.
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19. On the basis of aforesaid evidence there can be no
dispute that the plaintiff vide letter dated 4.3.2004 was in fact
appointed as ad hoc dealer for the petrol outlet at Baddi.
However, this outlet was to be governed by stipulation 22 of
the letter dated 4.3.2004, as reproduced hereinabove.
20. A perusal of the aforesaid letter clearly goes to
show that no promise has been held out to the plaintiff so as
to even remotely indicate that his dealership would continue
even after 31.3.2005. The letter, in fact, is only for a period of
one year with the provision of extension that too in writing,
which clearly not only indicates but proves that such
dealership was of temporary nature and, therefore, no claim
for regular dealership on the basis of aforesaid agreement
could have been claimed. Yet the plaintiff is operating the
outlet after obtaining ex parte order from this Court.
21. It would be noticed that there were no factual or
legal basis upon which the plaintiff could have filed the suit,
yet he managed to linger on it before the trial court itself for
nearly 6½ years with effect from 28.5.2010 up till 16.11.2016
and during this time, he enjoyed an order of injunction in its
favour. Even after the dismissal of the suit, it promptly filed
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an appeal before the first appellate court on 5.12.2016 and
obtained ex parte stay and when the appeal itself was
dismissed on 9.1.2017, it promptly filed an appeal before this
Court on 18.1.2017 and obtained ex parte ad interim order of
status quo from the learned Vacation Judge.
22. It would also be noticed that the plaintiff had not
claimed any right to run the outlet on the basis of any of the
species of estoppel like acquiescence, waiver, promissory
estoppel etc. and, therefore, I really wonder as to how the suit
itself was maintainable. The plaintiff even did not raise the
legal pleas including legitimate expectation because such
pleas obviously were not available to it, yet under the garb of
having simply instituted the litigation, it has continued to
reap the benefit of the litigation in the Courts itself for over a
period of 6½ years.
23. What is more amazing is the fact that despite
period of the agreement having come to an end on 31.3.2005,
plaintiff without intervention of the Court, enjoyed supplies of
petroleum products till the time of the institution of the suit,
i.e. 28.5.2010 without any right. This obviously could not
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have been possible without the active connivance and
support from the officials of the defendants.
24. There can be no doubt that offices being held by
the defendants are held by them as sacred trust and,
therefore, meant for use and not abuse and in case they
would surpass the rules, then law is not that powerless and
would step to quash such arbitrary orders.
25. In a welfare State the Government and its
authorities have to act in fair, transparent and reasonable
manner. It must as said by Mr. Justice Frankfurther in
Vitrelli vs. Satun, 359 US 535 rigorously hold to the
standard by which it professes its action to be judged, no
action of the Government or its functionaries can be founded
on the arbitrary exercise of power, nor can any individual be
chosen for distribution of State largesse or benefits on its
liking. The Government cannot be permitted to exercise its
action in favour of any person on the basis of its discretion to
do so unless such exercise of discretion is founded on clear
cut guidelines and the policy bereft of unreasonableness or
arbitrariness.
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26. Admittedly the defendants are a State within the
meaning of Article 12 of the Constitution of India and
therefore cannot act like a private individual, who is free to
act in a manner whatsoever he likes, unless it is interdicted
or prohibited by law. It is settled that the State and its
instrumentalities have to act strictly within the four corners
of law and all its activities are governed by Rules, regulations
and instructions. In addition, the defendants are bound to act
in a fair and transparent manner so as to dispel all fears that
its action is, in fact, activated by extraneous consideration.
27. The role of the Government and its authorities as
provider of services and benefits to the people has been
considered in detail by the Hon’ble Supreme Court in Akhil
Bhartiya Upbhokta Congress vs State of Madhya Pradesh
and others, (2011) 5 SCC 29, wherein it was observed as
under:
“[46] The concept of 'State' has changed in recent years. In all
democratic dispensations the State has assumed the role of a
regulator and provider of different kinds of services and benefits to
the people like jobs, contracts, licences, plots of land, mineral
rights and social security benefits. In his work "The Modern State"
MacIver (1964 Paperback Edition) advocated that the State should
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be viewed mainly as a service corporation. He highlighted
difference in perception about the theory of State in the following
words:
"To some people State is essentially a class-structure, "an
organization of one class dominating over the other
classes"; others regard it as an organisation that
transcends all classes and stands for the whole community.
They regard it as a power- system. Some view it entirely as
a legal structure, either in the old Austinian sense which
made it a relationship of governors and governed, or, in the
language of modern jurisprudence, as a community
"organised for action under legal rules". Some regard it as
no more than a mutual insurance society, others as the
very texture of all our life. Some class the State as a great
"corporation" and others consider it as indistinguishable
from society itself."
[47] When the Constitution was adopted, people of India
resolved to constitute India into a Sovereign Democratic Republic.
The words 'Socialist' and 'Secular' were added by the Constitution
(Forty-second Amendment) Act, 1976 and also to secure to all its
citizens Justice - social, economic and political, Liberty of thought,
expression, belief, faith and worship; Equality of status and/or
opportunity and to promote among them all Fraternity assuring
the dignity of the individual and the unity and integrity of the
Nation. The expression 'unity of the Nation' was also added by the
Constitution (Forty-second Amendment) Act, 1976. The idea of
welfare State is ingrained in the Preamble of the Constitution. Part
III of the Constitution enumerates fundamental rights, many of
which are akin to the basic rights of every human being. This part
also contains various positive and negative mandates which are
necessary for ensuring protection of the Fundamental Rights and
making them real and meaningful.
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(48) Part IV contains 'Directive Principles of State Policy'
which are fundamental in the governance of the country and it is
the duty of the State to apply these principles in making laws.
Article 39 specifies certain principles of policy which are required
to be followed by the State. Clause (b) thereof provides that the
State shall, in particular, direct its policy towards securing that
the ownership and control of the material resources of the
community are so distributed as best to sub-serve the common
good. Parliament and Legislatures of the States have enacted
several laws and the governments have, from time to time, framed
policies so that the national wealth and natural resources are
equitably distributed among all sections of people so that have-
nots of the society can aspire to compete with haves.
[49] The role of the Government as provider of services and
benefits to the people was noticed in R.D. Shetty v. International
Airport Authority of India, 1979 3 SCC 489 in the following words:
"Today the Government in a welfare State, is the regulator
and dispenser of special services and provider of a large
number of benefits, including jobs, contracts, licences,
quotas, mineral rights, etc. The Government pours forth
wealth, money, benefits, services, contracts, quotas and
licences. The valuables dispensed by Government take
many forms, but they all share one characteristic. They are
steadily taking the place of traditional forms of wealth.
These valuables which derive from relationships t o
Government are of many kinds. They comprise social
security benefits, cash grants for political sufferers and the
whole scheme of State and local welfare. Then again,
thousands of people are employed in the State and the
Central Governments and local authorities. Licences are
required before one can engage in many kinds of
businesses or work. The power of giving licences means
power to withhold them and this gives control to the
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Government or to the agents of Government on the lives of
many people. Many individuals and many more businesses
enjoy largesse in the form of Government contracts. These
contracts often resemble subsidies. It is virtually impossible
to lose money on them and many enterprises are set up
primarily to do business with Government. Gov ernment
owns and controls hundreds of acres of public land
valuable for mining and other purposes. These resources
are available for utilisation by private corporations and
individuals by way of lease or licence. All these mean
growth in the Government largesse and with the increasing
magnitude and range of governmental functions as we
move closer to a welfare State, more and more of our wealth
consists of these new forms. Some of these forms of wealth
may be in the nature of legal rights but the large majority of
them are in the nature of privileges.........."
[50] For achieving the goals of Justice and Equality set out
in the Preamble, the State and its agencies/instrumentalities have
to function through political entities and officers/officials at
different levels. The laws enacted by Parliament and State
Legislatures bestow upon them powers for effective
implementation of the laws enacted for creation of an egalitarian
society. The exercise of power by political entities and
officers/officials for providing different kinds of services and
benefits to the people always has an element of discretion, which
is required to be used in larger public interest and for public good.
In principle, no exception can be taken to the use of discretion by
the political functionaries and officers of the State and/or its
agencies/instrumentalities provided that this is done in a rational
and judicious manner without any discrimination against anyone.
In our constitutional structure, no functionary of the State or
public authority has an absolute or unfettered discretion. The very
idea of unfettered discretion is totally incompatible with the
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doctrine of equality enshrined in the Constitution and is an
antithesis to the concept of rule of law.
[51] In his work 'Administrative Law' (6th) Edition, Prof.
H.W.R. Wade, highlighted distinction between powers of public
authorities and those of private persons in the following words:
"... The common theme of all the authorities so far
mentioned is that the notion of absolute or unfette red
discretion is rejected. Statutory power conferred for public
purposes is conferred as it were upon trust, no absolutely -
that is to say, it can validly be used only in the right and
proper way which Parliament when conferring it is
presumed to have intended. Although the Crown's lawyers
have argued in numerous cases that unrestricted
permissive language confers unfettered discretion, the truth
is that, in a system based on the rule of law, unfettered
governmental discretion is a contradiction in terms."
Prof. Wade went on to say:
"...... The whole conception of unfettered discretion is
inappropriate to a public authority, which possesses
powers solely in order that it may use them for the public
good.
There is nothing paradoxical in the imposition of such legal
limits. It would indeed be paradoxical if they were not imposed.
Nor is this principle an oddity of British or American law; it
is equally prominent in French law. Nor is it a special restriction
which fetters only local authorities: it applies no less to ministers
of the Crown. Nor is it confined to the sphere of administration: it
operates wherever discretion is given for some public purpose, for
example where a judge has a discretion to order jury trial. It is
only where powers are given for the personal benefit of the person
empowered that the discretion is absolute. Plainly this can have
no application in public law.
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For the same reasons there should in principle be no such
thing as unreviewable administrative discretion, which should be
just as much a contradiction in terms as unfettered discretion.
The question which has to be asked is what is the scope of judicial
review, and in a few special cases the scope for the review of
discretionary decisions may be minimal. It remains axiomatic that
all discretion is capable of abuse, and that legal limits to every
power are to be found somewhere."
[52] Padfield v. Minister of Agriculture, Fishery and Food,
1968 AC 997, is an important decision in the area of
administrative law. In that case the Minister had refused to
appoint a committee to investigate the complaint made by the
members of the Milk Marketing Board that majority of the Board
had fixed milk prices in a way that was unduly unfavourable to
the complainants. The Minister's decision was founded on the
reason that it would be politically embarrassing for him if he
decided not to implement the committee's decision.
[53] While rejecting the theory of absolute discretion,
Lord Reid observed:
"Parliament must have conferred the discretion with the
intention that it should be used to promote the policy and
objects of the Act; the policy and objects of the Act must be
determined by construing the Act as a whole and
construction is always a matter of law for the court. In a
matter of this kind it is not possible to draw a hard and fast
line, but if the Minister, by reason of his having
misconstrued the Act or for any other reasons, so uses his
discretion as to thwart or run counter to the policy and
objects of the Act, then our law would be very defective if
persons aggrieved were not entitled to the protection of the
court."
[54] In Breen v. Amalgamated Engineering Union, 1971 2
QB 175, Lord Denning MR said:
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"The discretion of a statutory body is never unfettered. It is
a discretion which is to be exercised according to law. That
means at least this: the statutory body must be guided by
relevant considerations and not by irrelevantly. It its
decision is influenced by extraneous considerations which
it ought not to have taken into account, then the decision
cannot stand. No matter that the statutory body may have
acted in good faith; nevertheless the decision will be set
aside. That is established by Padfield v. Minister of
Agriculture, Fisheries and Food which is a landmark in
modern administrative law."
[55] In Laker Airways Ltd. v. Department of Trade,1977 QB
643, Lord Denning discussed prerogative of the Minister to give
directions to Civil Aviation Authorities overruling the specific
provisions in the statute in the time of war and said:
"Seeing that prerogative is a discretion power to be
exercised for the public good, it follows that its exercise can
be examined by the Courts just as in other discretionary
power which is vested in the executive."
[56] This Court has long ago discarded the theory o f
unfettered discretion. In S.G. Jaisinghani v. Union of India, 1967
AIR(SC) 1427, Ramaswami, J. emphasised that absence of
arbitrary power is the foundation of a system governed by rule of
law and observed:
"In this context it is important to emphasize that the
absence of arbitrary power is the first essential of the rule
of law upon which our whole constitutional system is
based. In a system governed by rule of law, discretion,
when conferred upon executive authorities, must be
confined within clearly defined limits. The rule of law from
this point of view means that decisions should be made by
the application of known principles and rules and, in
general, such decisions should be predictable and the
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citizen should know where he is. If a decision is taken
without any principle or without any rule it is unpredictable
and such a decision is the antithesis of a decision taken in
accordance with the rule of law. (See Dicey-"Law of the
Constitution" - Tenth Edn., Introduction ex.). 'Law has
reached its finest moments', stated Douglas, J. in United
States v. Underlick,1951 342 US 98, "when it has freed
man from the unlimited discretion of some ruler..... Where
discretion is absolute, man has always suffered'. It is in this
sense that the rule of law maybe said to be the sworn
enemy of caprice. Discretion, as Lord Mansfield stated it in
classic terms in the case of John Wilkes (1770 98 ER
327),'means sound discretion guided by law. It must be
governed by rule, not humour it must not be arbitrary,
vague and fanciful"
[57] In Ramana Dayaram Shetty v. International Airport
Authority of India (supra), Bhagwati, J. referred to an article by
Prof. Reich "The New Property" which was published in 73 Yale
Law Journal. In the article, the learned author said, "that the
Government action be based on standard that are not arbitrary or
unauthorized." The learned Judge then quoted with approval the
following observations made by Mathew, J. (as he then was) in V.
Punnen Thomas v. State of Kerala, 1969 AIR(Ker) 81 (Full Bench):
"The Government is not and should not be as free as an
individual in selecting recipients for its largesses. Whatever
its activities, the Government is still the Government and
will be subject to the restraints inherent in its position in a
democratic society. A democratic Government cannot lay
down arbitrary and capricious standards for the choice of
persons with whom alone it will deal."
[58] Bhagwati, J. also noticed some of the observations
made by Ray, C.J. in Eursian Equipments and Chemicals Ltd. v.
State of West Bengal, 1975 1 SCC 70 who emphasized that when
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the Government is trading with public the democratic form of
Government demands equality and absence of arbitrariness and
discrimination in such transactions and held:
"..........This proposition would hold good in all cases of
dealing by the Government with the public, where the
interest sought to be protected is a privilege. It must,
therefore, be taken to be the law that where the
Government is dealing with the public, whether by way of
giving jobs or entering into contracts or issuing quotas or
licences or granting other forms of largesse, the
Government cannot act arbitrarily at its sweet will and, like
a private individual, deal with any person it pleases, but its
action must be in conformity with standard or norms which
is not arbitrary, irrational or irrelevant. The power or
discretion of the Government in the matter of grant of
largesse including award of jobs, contracts, quotas,
licences, etc. must be confined and structured by rational,
relevant and non-discriminatory standard or norm and if
the Government departs from such standard or norm in
any particular case or cases, the action of the Government
would be liable to be struck down, unless it can be shown
by the Government that the departure was not arbitrary,
but was based on some valid principle which in itself was
not irrational, unreasonable or discriminatory."
[59] In Kasturi Lal Lakshmi Reddy v. State of J And K, 1980
4 SCC 1, Bhagwati J. speaking for the Court observed:
"Where any governmental action fails to satisfy the test of
reasonableness and public interest discussed above and is
found to be wanting in the quality of reasonableness or
lacking in the element of public interest, it would be liable
to be struck down as invalid. It must follow as a necessary
corollary from this proposition that the Government cannot
act in a manner which would benefit a private party at the
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cost of the State; such an action would be both
unreasonable and contrary to public interest. The
Government, therefore, cannot, for example, give a contract
or sell or lease out its property for a consideration less than
the highest that can be obtained for it, unless of course
there are other considerations which render it reasonable
and in public interest to do so. Such considerations may be
that some directive principle is sought to be advanced or
implemented or that the contract or the property is given
not with a view to earning revenue but for the purpose of
carrying out a welfare scheme for the benefit of a particular
group or section of people deserving it or that the person
who has offered a higher consideration is not otherwise fit
to be given the contract or the property. We have referred to
these considerations only illustratively, for there may be an
infinite variety of considerations which may have to be
taken into account by the Government in formulating its
policies and it is on a total evaluation of various
considerations which have weighed with the Government in
taking a particular action, that the court would have to
decide whether the action of the Government is reasonable
and in public interest. But one basic principle which must
guide the court in arriving at its determination on this
question is that there is always a presumption that the
governmental action is reasonable and in public interest
and it is for the party challenging its validity to show that it
is wanting in reasonableness or is not informed with public
interest. This burden is a heavy one and it has to be
discharged to the satisfaction of the court by proper and
adequate material. The court cannot lightly assume that
the action taken by the Government is unreasonable or
without public interest because, as we said above, there are
a large number of policy considerations which must
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necessarily weigh with the Government in taking action and
therefore the court would not strike down governmental
action as invalid on this ground, unless it is clearly
satisfied that the action is unreasonable or not in public
interest. But where it is so satisfied, it would be the
plainest duty of the court under the Constitution to
invalidate the governmental action. This is one of the most
important functions of the court and also one of the most
essential for preservation of the rule of law. It is imperative
in a democracy governed by the rule of law that
governmental action must be kept within the limits of the
law and if there is any transgression, the court must be
ready to condemn it. It is a matter of historical experience
that there is a tendency in every Government to assume
more and more powers and since it is not an uncommon
phenomenon in some countries that the legislative check is
getting diluted, it is left to the court as the only other
reviewing authority under the Constitution to be
increasingly vigilant to ensure observance with the rule of
law and in this task, the court must not flinch or falter. It
may be pointed out that this ground of invalidity, namely,
that the governmental action is unreasonable or lacking in
the quality of public interest, is different from that of mala
fides though it may, in a given case, furnish evidence of
mala fides."
[60] In Common Cause, A Registered Society v. Union of
India, 1996 6 SCC 530 the two Judge Bench considered the
legality of discretionary powers exercised by the then Minister of
State for Petroleum and Natural Gas in the matter of allotment of
petrol pumps and gas agencies. While declaring that allotments
made by the Minister were wholly arbitrary, nepotistic and
motivated by extraneous considerations the Court said:
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"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 people's property in a fair and just
manner. He cannot commit breach of the trust reposed in
him by the people."
[61] The Court also referred to the reasons recorded in the
orders passed by the Minister for award of dealership of petrol
pumps and gas agencies and observed:
"24...........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
nepotism and arbitrariness. It is absolutely essential that
the entire system should be transparent right from the
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stage of calling for the applications up to the stage of
passing the orders of allotment."
[62] In Shrilekha Vidyarthi v. State of U.P., 1991 1 SCC
212, the Court unequivocally rejected the argument based on the
theory of absolute discretion of the administrative authorities and
immunity of their action from judicial review and observed:
".... We have no doubt that the Constitution does not
envisage or permit unfairness or unreasonableness in State
actions in any sphere of its activity contrary to the professed
ideals in the Preamble. In our opinion, it would be alien to the
Constitutional Scheme to accept the argument of exclusion of
Article 14 in contractual matters. The scope and permissible
grounds of judicial review in such matters and the relief which
may be available are different matters but that does not justify the
view of its total exclusion. This is more so when the modern trend
is also to examine the unreasonableness of a term in such
contracts where the bargaining power is unequal so that these are
not negotiated contracts but standard form contracts between
unequals.............................
Even assuming that it is necessary to import the concept of
presence of some public element in a State action to attract Article
14 and permit judicial review, we have no hesitation in saying that
the ultimate impact of all actions of the State or a public body
being undoubtedly on public interest, the requisite public element
for this purpose is present also in contractual matters. We,
therefore, find it difficult and unrealistic to exclude the State
actions in contractual matters, after the contract has been made,
from the purview of judicial review to test its validity on the anvil
of Article 14.
It can no longer be doubted at this point of time that Article
of the Constitution of India applies also to matters of
governmental policy and if the policy or any action of the
Government, even in contractual matters, fails to satisfy the test
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of reasonableness, it would be unconstitutional. (See Ramana
Dayaram Shetty v. The International Airport Authority of India,
1979 AIR(SC) 1628] and Kasturi Lal Lakshmi Reddy v. State of
Jammu and Kashmir, 1980 AIR(SC) 1992], In Col. A.S. Sangwan
v. Union of India, 1981 AIR(SC) 1545], while the discretion to
change the policy in exercise of the executive power, when not
trammelledly the statute or rule, was held to be wide, it was
emphasised as imperative and implicit in Article 14 of the
Constitution that a change in policy must be made fairly and
should not give the impression that it was so done arbitrarily or
by any ulterior criteria. The wide sweep of Article 14 and the
requirement of every State action qualifying for its validity on this
touch-stone, irrespective of the field of activity of the State, has
long been settled. Later decisions of this Court have reinforced the
foundation of this tenet and it would be sufficient to refer only to
two recent decisions of this Court for this purpose."
[63] Similarly, in L.I.C. of India v. Consumer Education &
Research Centre, 1995 5 SCC 482, the Cour t negatived the
argument that exercise of executive power of the State was
immune from judicial review and observed:
".... Every action of the public authority or the person
acting in public interest or its acts give rise to public
element, should be guided by public interest. It is the
exercise of the public power or action hedged with public
element becomes open to challenge. If it is shown that the
exercise of the power is arbitrary, unjust and unfair it
should be no answer for the State, its instrument ality,
public authority or person whose acts have the insignia of
public element to say that their actions are in the field of
private law and they are free to prescribe any conditions or
limitations in their actions as private citizens, similicitor, do
in the field of private law. Its actions must be based on
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some rational and relevant principles. It must not be guided
by traditional or irrelevant considerations.............
This Court has rejected the contention of an
instrumentality or the State that its action is in the private
law field and would be immune from satisfying the tests
laid under Article 14. The dichotomy between public law
and private law rights and remedies, though may not be
obliterated by any straight jacket formula, it would depend
upon the factual matrix. The adjudication of the dispute
arising out of a contract would, therefore, depend upon
facts and circumstances in a given case.
The distinction between public law remedy and
private law filed cannot be demarcated with precision. Each
case will be examined on its facts and circumstances to find
out the nature of the activity, scope and nature of the
controversy. The distinction between public law and private
law remedy has now become too thin and practicably
obliterated.......
In the sphere of contractual relations the State, its
instrumentality, public authorities or those whose acts bear
insignia of public element, action to public duty or
obligation are enjoined to act in a manner i.e. fair, just and
equitable, after taking objectively all the relevant options
into consideration and in a manner that is reasonable,
relevant and germane to effectuate the purpose for public
good and in general public interest and it must not take
any irrelevant or irrational factors into consideration or
arbitrary in its decision. Duty to act fairly is part of fair
procedure envisaged under Articles 14 and 21. Every
activity of the public authority or those under public duty
or obligation must be informed by reason and guided by the
public interest."
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[64] In New India Public School v. HUDA, 1996 5 SCC 510,
this Court approved the judgment of the Division Bench of the
Punjab and Haryana High Court in Seven Seas Educational
Society v. HUDA,1996 AIR(P&H) 229, whereby allotment of land in
favour of the appellants was quashed and observed:
".... A reading thereof, in particular Section 15(3) read with
Regulation 3(c) does indicate that there are several modes
of disposal of the property acquired by HUDA for public
purpose. One of the modes of transfer of propert y as
indicated in Sub- section (3) of Section 15 read with sub-
regulation (c) of Regulation 5 is public auction, allotment or
otherwise. When public authority discharges its public duty
the word "otherwise" would be construed to be consistent
with the public purpose and clear and unequivocal
guidelines or rules are necessary and not at the whim and
fancy of the public authorities or under their garb or cloak
for any extraneous consideration. It would depend upon the
nature of the scheme and object of public purpose sought
to be achieved. In all cases relevant criterion should be pre-
determined by specific rules or regulations and published
for the public. Therefore, the public authorities are required
to make necessary specific regulations or valid guidelines to
exercise their discretionary powers, otherwise, the salutory
procedure would be by public auction. The Division Bench,
therefore, has rightly pointed out that in the absence of
such statutory regulations exercise of discretionary power
to allot sites to private institutions or persons was not
correct in law."
[65] What needs to be emphasized is that the State and/or
its agencies/instrumentalities cannot give largesse to any person
according to the sweet will and whims of the political entities
and/or officers of the State. Every action/decision of the State
and/or its agencies/instrumentalities to give largesse or confer
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benefit must be founded on a sound, transparent, discernible and
well defined policy, which shall be made known to the public by
publication in the Official Gazette and other recognized modes of
publicity and such policy must be implemented/executed by
adopting a non - discriminatory or non -arbitrary method
irrespective of the class or category of persons proposed to be
benefitted by the policy. The distribution of largesse like allotment
of land, grant of quota, permit licence etc. by the State and its
agencies/instrumentalities should always be done in a fair and
equitable manner and the element of favoritism or nepotism shall
not influence the exercise of discretion, if any, conferred upon the
particular functionary or officer of the State.
[66] We may add that there cannot be any policy, much
less, a rational policy of allotting land on the basis of applications
made by individuals, bodies, organizations or institutions de hors
an invitation or advertisement by the State or its
agency/instrumentality. By entertaining applications made by
individuals, organisations or institutions for allotment of land or
for grant of any other type of largesse the State cannot exclude
other eligible persons from lodging competing claim. Any allotment
of land or grant of other form of largesse by the State or its
agencies/instrumentalities by treating the exercise as a private
venture is liable to be treated as arbitrary, discriminatory and an
act of favoritism and nepotism violating the soul of the equality
clause embodied in Article 14 of the Constitution.”
28. What are the duties, responsibilities and
obligations of public authority in a system based on rule of
law has been subject matter of a very recent decision of the
Hon’ble Supreme Court in Indian Oil Corporation Ltd &
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Ors vs. Shashi Prabha Shukla & anr., Civil Appeal No.
5565 of 2009 decided on 15.12.2017, wherein it was observed
as under:
“[23] It is no longer res integra that a public authority, be a person
or an administrative body is entrusted with the role to perform for
the benefit of the public and not for private profit and when a
prima facie case of misuse of power is made out, it is open to a
court to draw the inference that unauthorized purposes have been
pursued, if the competent authority fails to adduce any ground
supporting the validity of its conduct.
[24] The following extract from the Halsbury's Laws of
England, Fourth Edition, Vol.1(1) Administrative Law provide the
foundation of these observations:
"A public authority may be described as a person or
administrative body entrusted with functions to perform for
the benefit of the public and not for private profit. Not every
such person or body is expressly defined as public
authority or body, and the meaning of a public authority or
body may vary according to the statutory context."
[25] In re, the duties, responsibilities and obligations of a
public authority in a system based on rule of law, unfettered
discretion or power is an anathema as every public authority is a
trustee of public faith and is under a duty to hold public property
in trust for the benefit of the laity and not for any individual in
particular. The following excerpts from the Foulkes Administrative
Law, 7th Edition at page 174 provide the elaborate insight:
"A true trust exists when one person, the trustee, is under
a duty to hold the trust property vested in him for the
benefit of other persons, the beneficiaries. The term 'trust'
is, however, used in a much wider sense. We may speak of
government being 'entrusted' with power, of Parliament as
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the trustee which the nation has authorized to act on its
behalf. The purpose of the use of the concept in such
contexts is of course to emphasize that the powers and
duties of such bodies should be exercised not for the
advancement of their own interest, but that of the others, to
underline their obligation to others.
[26] The distinction between the power of a public authority
and a private person has since been succinctly brought about in
the following quote from the celebrated work "Administrative Law",
Tenth Edition by H.W.R. Wade and C.F. Forsyth:
"The common theme of all the authorities so far mentioned
is that the notion of absolute or unfettered discretion is
rejected. Statutory power conferred for public purposes is
conferred as it were upon trust not absolutely that is to say,
it can validly be used only in the right and proper way
which parliament when conferring if is presumed to have
intended. In a system based on rule of law, unfettered
governmental discretion is contradictory in terms ....
The powers of public authorities are therefore
essentially different from those of private persons. A man
making his will may , subject to any rights of his
dependants, dispose of his property just as he may wish.
He may act out of malice or a spirit of revenge, but in law
this does not affect his exercise of his power. In the same
way a private person has an absolute power to allow whom
he likes to use his land, to release a debtor, or, where the
law permits, to evict a tenant, regardless of his motives.
This is unfettered discretion. But a public authority may do
none of these things unless it acts reasonably and in good
faith and upon lawful and relevant grounds of public
interest."
[27] In Akhil Bhartiya Upbhokta Congress vs. State of M.P.,
2011 5 SCC 29 , this Court was seised as well with the nature of
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the norms to be adhered to for allotment of land, grant of quotas,
permits, licenses etc. by way of distribution thereof as State
largesse. The following observations provide the guiding
comprehension:
65. What needs to be emphasised is that the State and/or
its agencies/instrumentalities cannot give largesse to any
person according to the sweet will and whims of the
political entities and/or officers of the State. Every
action/decision of the State and/or its
agencies/instrumentalities to give largesse or confer benefit
must be founded on a sound, transparent, discernible and
well-defined policy, which shall be made known to the
public by publication in the Official Gazette and other
recognised modes of publicity and such policy must be
implemented/executed by adopting a non -discriminatory
and non-arbitrary method irrespective of the class or
category of persons proposed to be benefited by the policy.
The distribution of largesse like allotment of land, grant of
quota, permit licence, etc. by the State and its
agencies/instrumentalities should always be done in a fair
and equitable manner and the element of favouritism or
nepotism shall not influence the exercise of discretion, if
any, conferred upon the particular functionary or officer of
the State.
66. We may add that there cannot be any policy,
much less, a rational policy of allotting land on the basis of
applications made by individuals, bodies, organisations or
institutions dehors an invitation or advertisement by the
State or its agency/instrumentality. By entertaining
applications made by individuals, organisations or
institutions for allotment of land or for grant of any other
type of largesse the State cannot exclude other eligible
persons from lodging competing claim. Any allotment of
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land or grant of other form of largesse by the State or its
agencies/instrumentalities by treating the exercise as a
private venture is liable to be treated as arbitrary,
discriminatory and an act of favouritism and/or nepotism
violating the soul of the equality clause embodied in Article
14 of the Constitution.
[28] In his work Administrative Law (6th Edn.) Prof. H.W.R.
Wade highlighted the distinction between powers of public
authorities and those of private persons in the following words:
“The common theme of all the authorities so far mentioned
is that the notion of absolute or unfettered discretion is
rejected. Statutory power conferred for public purposes is
conferred as it were upon trust, no absolutely —that is to
say, it can validly be used only in the right and proper way
which Parliament when conferring it is presumed to have
intended. Although the Crown's lawyers have argued in
numerous cases that unrestricted permissive language
confers unfettered discretion, the truth is that, in a system
based on the rule of law, unfettered governmental
discretion is a contradiction in terms.”
29. While rejecting the theory of absolute discretion, Lord
Reid observed in Padfield v. Minister of Agriculture, Fisheries and
Food2 :
“… Parliament must have conferred the discretion with the
intention that it should be used to promote the policy and
objects of the Act; the policy and objects of the Act must be
2 [1968] AC 997 34 determined by construing the Act as a
whole and construction is always a matter of law for the
court. In a matter of this kind it is not possible to draw a
hard and fast line, but if the Minister, by reason of his
having misconstrued the Act or for any other reason, so
uses his discretion as to thwart or run counter to the policy
and objects of the Act, then our law would be very defective
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if persons aggrieved were not entitled to the protection of
the court.”
[30] The role of the Government as provider of services and
benefits to the people was noticed in Ramana Dayaram Shetty v.
International Airport Authority of India, 1979 3 SCC 489 in the
following words:
"11. Today the Government in a welfare State, is the
regulator and dispenser of special services and provider of a
large number of benefits, including jobs, contracts,
licences, quotas, mineral rights, etc. The Government pours
forth wealth, money, benefits, services, contracts, quotas
and licences. The valuables dispensed by Government take
many forms, but they all share one characteristic. They are
steadily taking the place of traditional forms of wealth.
These valuables which derive from relationships to
Government are of many kinds. They comprise social
security benefits, cash grants for political sufferers and the
whole scheme of State and local welfare. Then again,
thousands of people are employed in the State and the
Central Governments and local authorities. Licences are
required before one can engage in many kinds of
businesses or work. The power of giving licences means
power to withhold them and this gives control to the
Government or to the agents of Government on the lives of
many people. Many individuals and many more businesses
enjoy largesse in the form of government contracts. These
contracts often resemble subsidies. It is virtually impossible
to lose money on them and many enterprises are set up
primarily to do business with the Government. The
Government owns and controls hundreds of acres of public
land valuable for mining and other purposes. These
resources are available for utilisation by private
corporations and individuals by way of lease or licence. All
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these mean growth in the Government largesse and w ith
the increasing magnitude and range of governmental
functions as we move closer to a welfare State, more and
more of our wealth consists of these new forms. Some of
these forms of wealth may be in the nature of legal rights
but the large majority of them are in the nature of
privileges."
[31] In the same vein, in Natural Resources Allocation, In
Re, Special Reference No.1 of 2012 , this Court summed up the
long line of judicial enunciations on this theme thus:
"107. From a scrutiny of the trend of decisions it is clearly
perceivable that the action of the State, whether it relates to
distribution of largesse, grant of contracts or allotment of
land, is to be tested on the touchstone of Article 14 of the
Constitution. A law may not be struck down for bein g
arbitrary without the pointing out of a constitutional
infirmity as McDowell case has said. Therefore, a State
action has to be tested for constitutional infirmities qua
Article 14 of the Constitution. The action has to be fair,
reasonable, non-discriminatory, transparent, non -
capricious, unbiased, without favouritism or nepotism, in
pursuit of promotion of healthy competition and equitable
treatment. It should conform to the norms which are
rational, informed with reasons and guided by public
interest, etc. All these principles are inherent in the
fundamental conception of Article 14. This is the mandate
of Article 14 of the Constitution of India."
[32] This Court in Center for Public Interest Litigation and
others Vs. Union of India and others,2012 3 SCC 2 , while
examining the challenge to the allocation of 2G Telecom Services,
reflected on the considerations that should inform the process
thereof and observed thus:
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“95. This Court has repeatedly held that wherever a
contract is to be awarded or a licence is to be given, the
public authority must adopt a transparent and fair method
for making selections so that all eligible persons get a fair
opportunity of competition. To put it differently, the State
and its agencies/instrumentalities must always adopt a
rational method for disposal of public property and no
attempt should be made to scuttle the claim of worthy
applicants. When it comes to alienation of scarce natural
resources like spectrum, etc. it is the burden of the State to
ensure that a non-discriminatory method is adopted for
distribution and alienation, which would necessarily result
in protection of national/public interest.
[33] Jurisprudentially thus, as could be gleaned from the
above legal enunciations, a public authority in its dealings has to
be fair, objective, non -arbitrary, transparent and non -
discriminatory. The discretion vested in such an authority, which
is a concomitant of its power is coupled with duty and can never
be unregulated or unbridled. Any decision or action contrary to
these functional precepts would be at the pain of invalidation
thereof. The State and its instrumentalities, be it a public
authority, either as an individual or a collective has to essentially
abide by this inalienable and non-negotiable prescriptions and
cannot act in breach of the trust reposed by the polity and on
extraneous considerations. In exercise of uncontrolled discretion
and power, it cannot resort to any act to fritter, squander and
emasculate any public property, be it by way of State largesse or
contracts etc. Such outrages would clearly be unconstitutional
and extinctive of the rule of law which forms the bedrock of the
constitutional order.”
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29. After making the observations and after having
found the complexity of the offices of the Indian Oil
Corporation, the Hon’ble Supreme Court passed the following
orders:
“35…………In this view of the matter, we direct the Corporation to
cause an in-house inquiry to be made to fix the liability of the
errant officials on the issue and decide appropriate action(s)
against them in accordance with law within a period of two
months herefrom. The Corporation after completing this exercise
would submit a report before this Court for further orders, if
necessary. We make it clear that any breach or non-compliance of
this direction would be per se construed to be a contempt of this
Court with penal consequences as contemplated in law.”
30. What, therefore, can be deduced from the law
expounded by the Hon’ble Supreme Court is that the State
and/or its agencies/instrumentalities cannot give largesse to
any person according to the sweet will and whims of their
entities. Every action/decision of the State and/or its
agencies/instrumentalities to give largesse or confer benefit
must be founded on a sound, transparent, di scernible and
well defined policy, which shall be made known to the public
by publication in the official Gazette and other recognized
modes of publicity and such policy must be
implemented/executed by adopting a non- discriminatory or
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non-arbitrary method irrespective of the class or category of
persons proposed to be benefitted by the policy. The
distribution of largesse like allotment of land, grant of quota,
permit licence, retail outlets etc. by the State and its
agencies/instrumentalities should always be done in a fair
and equitable manner and the element of favoritism or
nepotism is not to influence the exercise of such discretion, if
any, conferred upon the particular functionary or officer of
the State.
31. It is proved on record that the claim set up by the
plaintiff was absolutely false. In Maria Margarida Sequeria
Fernandes v. Erasmo Jack de Sequeria , 2012 5 SCC 370,
the Supreme Court held that false claims and defences are
serious problems with the litigation. The Supreme Court held
as under:-
"False claims and false defences
84. False claim s and defences are really serious problems with
real estate litigation, predominantly because of ever escalating
prices of the real estate. Litigation pertaining to valuable real
estate properties is dragged on by unscrupulous litigants in the
hope that the other party will tire out and ultimately would settle
with them by paying a huge amount. This happens because of the
enormous delay in adjudication of cases in our Courts. If
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pragmatic approach is adopted, then this problem can be
minimized to a large extent."
32. In Dalip Singh v. State of U.P., 2010 2 SCC 114,
the Supreme Court observed that a new creed of litigants
have cropped up in the last 40 years who do not have any
respect for truth and shamelessly resort to falsehood and
unethical means for achieving their goals. The observations of
the Supreme Court are as under:-
"1. For many centuries, Indian society cherished two basic values
of life i.e., 'Satya' (truth) and 'Ahimsa' (non-violence). Mahavir,
Gautam Buddha and Mahatma Gandhi guided the people to
ingrain these values in their daily life. Truth constituted an
integral part of the justice-delivery system which was in vogue in
the pre-Independence era and the people used to feel proud to tell
truth in the courts irrespective of the consequences. However,
postIndependence period has seen drastic changes in our value
system. The materialism has over shadowed the old ethos and the
quest for personal gain has become so intense that those involved
in litigation do not hesitate to take shelter of falsehood,
misrepresentation and suppression of facts in the court
proceedings.
2. In last 40 years, a new creed of litigants has cropped up.
Those who belong to this creed do not have any respect for truth.
They shamelessly resort to falsehood and unethical means for
achieving their goals. In order to meet the challenge posed by this
new creed of litigants, the courts have, from time to time, evolved
new rules and it is now well established that a litigant, who
attempts to pollute the stream of justice or who touches the pure
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fountain of justice with tainted hands, is not entitled to any relief,
interim or final."
33. In Satyender Singh v. Gulab Singh, 2012 129
DRJ 128, the Division Bench of Delhi High Court following
Dalip Singh v. State of U.P. observed that the Courts are
flooded with litigation with false and incoherent pleas and
tainted evidence led by the parties due to which the judicial
system in the country is choked and such litigants are
consuming Courts? time for a wrong cause."
The observations of Court are as under:-
"2. As rightly observed by the Supreme Court, Satya is a basic
value of life which was required to be followed by everybody and is
recognized since many centuries. In spite of caution, courts are
continued to be flooded with litigation with false and incoherent
pleas and tainted evidence led by the parties. The judicial system
in the country is choked and such litigants are consuming courts"
time for a wrong cause. Efforts are made by the parties to steal a
march over their rivals by resorting to false and incoherent
statements made before the Court. Indeed, it is a nightmare faced
by a Trier of Facts; required to stitch a garment, when confronted
with a fabric where the weft, shuttling back and forth across the
warp in weaving, is nothing but lies. As the threads of the weft
fall, the yarn of the warp also collapses; and there is no fabric
left."
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34. In Sky Land International Pvt. Ltd. v. Kavita P.
Lalwani, 2012 191 DLT 594, Delhi High Cour t held as
under:-
"26.20 Dishonest and unnecessary litigations are a huge strain on
the judicial system. The Courts are continued to be flooded with
litigation with false and incoherent pleas and tainted evidence led
by the parties. The judicial system in the country is choked and
such litigants are consuming courts" time for a wrong cause.
Efforts are made by the parties to steal a march over their rivals
by resorting to false and incoherent statements made before the
Court.
26.22 Unless the Courts ensure that wrongdoers are denied
profit or undue benefit from the frivolous litigation, it would be
difficult to control frivolous and uncalled for litigations. In order to
curb uncalled for and frivolous litigation, the Courts have to
ensure that there is no incentive or motive for uncalled for
litigation. It is a matter of common experience that the Courts?
scarce and valuable time is consumed or more appropriately
wasted in a large number of uncalled for cases. It becomes the
duty of the Courts to see that such wrong doers are discouraged
at every step and even if they succeed in prolonging the litigation,
ultimately they must suffer the costs. Despite settled legal
positions, the obvious wrong doers, use one after another tier of
judicial review mechanism as a gamble, knowing fully well that
the dice is always loaded in their favour, since even if they lose,
the time gained is the real gain. This situation must be redeemed
by the Courts."
35. The judicial system has been abused and virtually
brought to its knees by unscrupulous litigants like the
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plaintiff in this case. It has to be remembered that Court's
proceedings are sacrosanct and should not be polluted by
unscrupulous litigants. The defendant/appellant has abused
the process of the Court.
36. The Hon'ble Supreme Court in K.K.Modi vs
K.N.Modi and others, reported in (1998) 3 SCC 573 has
dealt in detail with the proposition as to what would
constitute an abuse of the process of the Court, one of which
pertains to re-litigation. It has been held at paragraphs 43 to
46 as follows:
“43. The Supreme Court Practice 1995 published by Sweet &
Maxwell in paragraph 18/19/33 (page 344) explains the phrase
"abuse of the process of the Court" thus: "This terms connotes
that the process of the Court must be used bona fide and properly
and must not be abused. The Court will prevent improper use of
its machinery and will in a proper case, summarily prevent its
machinery from being used as a means of vexation and oppression
in the process of litigation. . . . . . . .
The categories of conduct rendering a claim frivolous,
vexatious or an abuse of process are not closed but depend on all
the relevant circumstances. And for this purpose considerations of
public policy and the interests of justice may be very material."
44. One of the examples cited as an abuse of the process of
Court is re-litigation. It is an abuse of the process of the Court
and contrary to justice and public policy for a party to re-litigate
the same issue which has already been tried and decided earlier
against him. The re-agitation may or may not be barred as res
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judicata. But if the same issue is sought to be re-agitated, it also
amounts to an abuse of the process of the Court. A proceeding
being filed for a collateral purpose, or a spurious claim being
made in litigation may also in a given set of facts amount to an
abuse of the process of the Court. Frivolous or vexatious
proceedings may also amount to an abuse of the process of Court
especially where the proceedings are absolutely groundless. The
Court then has the power to stop such proceedings summarily
and prevent the time of the public and the Court from being
wasted. Undoubtedly, it is a matter of Courts' discretion whether
such proceedings should be stopped or not; and this discretion
has to be exercised with circumspection. It is a jurisdiction which
should be sparingly exercised, and exercised only in special cases.
The Court should also be satisfied that there is no chance of the
suit succeeding.
45. In the case of Greenhalgh v. Mallard,1947 2 AllER 255,
the Court had to consider different proceedings on the same cause
of action for conspiracy, but supported by different averments.
The Court held that if the plaintiff has chosen to put his
case in one way, he cannot thereafter bring the same transaction
before the Court, put his case in another way and say that he is
relying on a new cause of action. In such circumstances he can be
met with the plea of res judicata or the statement or plaint may be
struck out on the ground that the action is frivolous and vexatious
and an abuse of the process of the Court.
46. In Mcllkenny v. Chief Constable of West Midlands Police
Force, 1980 2 AllER 227, the Court of Appeal in England struck
out the pleading on the ground that the action was an abuse of
the process of the Court since it raised an issue identical to that
which had been finally determined at the plaintiffs ' earlier
criminal trial. The Court said even when it is not possible to strike
out the plaint on the ground of issue estoppel, the action can be
struck out as an abuse of the process of the Court because it is an
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abuse for a party to re-litigate a question or issue which has
already been decided against him even though the other party
cannot satisfy the strict rule of res judicata or the requirement of
issue estoppels.”
37. The plaintiff by keeping these proceedings alive
has gained an undeserved and unfair advantage. The plaintiff
has successful in dragging the proceedings for a very long
time on one count or the other and because of his wrongful
possession he has drawn delight in delay in disposal of the
cases by taking undue advantage of procedural
complications. The case at hand shows that frivolous
defences and frivolous litigation is a calculated venture
involving no risks situation. One has onl y to engage
professionals to prolong the litigation so as to deprive the
rights of a person and enjoy the fruits of illegalities. The
Court has been used as a tool by the plaintiff to perpetuate
illegalities and has perpetuated an illegal possession. It is on
account of such frivolous litigation that the court dockets are
overflowing. Here it is apt to reproduce the observations made
by the Hon'ble Supreme Court in paras 174, 175 and 197 of
the judgment in Indian Council for Enviro-Legal Action vs.
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Union of India and others, 2011 8 SCC 161 which are as
under:
“174. In Padmawati vs Harijan Sewak Sangh, 2008 154 DLT 411
decided by the Delhi high Court on 6.11.2008, the court held as
under: (DLT p.413, para 6)
"6. The case at hand shows that frivolous defences and
frivolous litigation is a calculated venture involving no risks
situation. You have only to engage professionals to prolong
the litigation so as to deprive the rights of a person and
enjoy the fruits of illegalities. I consider that in such cases
where Court finds that using the Courts as a tool, a litigant
has perpetuated illegalities or has perpetuated an illegal
possession, the Court must impose costs on such litigants
which should be equal to the benefits derived by the litigant
and harm and deprivation suffered by the rightful person so
as to check the frivolous litigation and prevent the people
from reaping a rich harvest of illegal acts through the
Court. One of the aims of every judicial system has to be to
discourage unjust enrichment using Courts as a tool. The
costs imposed by the Courts must in all cases should be
the real costs equal to deprivation suffered by the rightful
person."
We approve the findings of the High Court of Delhi in the
aforementioned case.
175. The Court also stated: (Padmawati case, DLT pp. 414-
15, para 9)
"Before parting with this case, we consider it necessary to
observe that one of the main reasons for over-flowing of
court dockets is the frivolous litigation in which the Courts
are engaged by the litigants and which is dragged as long
as possible. Even if these litigants ultimately loose the lis,
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they become the real victors and have the last laugh. This
class of people who perpetuate illegal acts by obtaining
stays and injunctions from the Courts must be made to pay
the sufferer not only the entire illegal gains made by them
as costs to the person deprived of his right and also must
be burdened with exemplary costs. Faith of people in
judiciary can only be sustained if the persons on the right
side of the law do not feel that even if they keep fighting for
justice in the Court and ultimately win, they would turn out
to be a fool since winning a case after 20 or 30 years would
make wrongdoer as real gainer, who had reaped the
benefits for all those years. Thus, it becomes the duty of the
Courts to see that such wrongdoers are discouraged at
every step and even if they succeed in prolonging the
litigation due to their money power, ultimately they must
suffer the costs of all these years long litigation. Despite
settled legal positions, the obvious wrong doers, use one
after another tier of judicial review mechanism as a gamble,
knowing fully well that dice is always loaded in their favour,
since even if they lose, the time gained is the real gain. This
situation must be redeemed by the Courts."
197. The other aspect which has been dealt with in great
details is to neutralize any unjust enrichment and undeserved
gain made by the litigants. While adjudicating, the courts must
keep the following principles in view.
1. It is the bounden duty and obligation of the court
to neutralize any unjust enrichment and undeserved gain
made by any party by invoking the jurisdiction of the court.
2. When a party applies and gets a stay or injunction
from the court, it is always at the risk and responsibility of
the party applying. An order of stay cannot be presumed to
be conferment of additional right upon the litigating party.
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3. Unscrupulous litigants be prevented from taking
undue advantage by invoking jurisdiction of the Court.
4. A person in wrongful possession should not only
be removed from that place as early as possible but be
compelled to pay for wrongful use of that premises fine,
penalty and costs. Any leniency would seriously affect the
credibility of the judicial system.
5. No litigant can derive benefit from the mere
pendency of a case in a court of law.
6. A party cannot be allowed to take any benefit of
his own wrongs.
7. Litigation should not be permitted to turn into a
fruitful industry so that the unscrupulous litigants are
encouraged to invoke the jurisdiction of the court.
8. The institution of litigation cannot be permitted to
confer any advantage on a party by delayed action of
courts."
38. The further question which now arises is as to
how to curb this tendency of abuse of process of court. As
suggested in Kishore Samrita, one of the ways to curb this
tendency is to impose realistic or punitive costs. The Hon'ble
Supreme Court in Ramrameshwari Devi and others Vs.
Nirmala Devi and others , 2011 8 SCC 249 took judicial
notice of the fact that the courts are flooded with these kinds
of cases because there is an inherent profit for the
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wrongdoers and stressed for imposition of actual, realistic or
proper costs and it was held:-
"52. The main question which arises for our cons ideration is
whether the prevailing delay in civil litigation can be curbed? In
our considered opinion the existing system can be drastically
changed or improved if the following steps are taken by the trial
courts while dealing with the civil trials:
A. Pleadings are the foundation of the claims of
parties. Civil litigation is largely based on documents. It is
the bounden duty and obligation of the trial Judge to
carefully scrutinize, check and verify the pleadings and the
documents filed by the parties. T his must be done
immediately after civil suits are filed.
B. The court should resort to discovery and
production of documents and interrogatories at the earliest
according to the object of the Act. If this exercise is
carefully carried out, it would focus the controversies
involved in the case and help the court in arriving at the
truth of the matter and doing substantial justice.
C. Imposition of actual, realistic or proper costs
and/or ordering prosecution would go a long way in
controlling the tendency of introducing false pleadings and
forged and fabricated documents by the litigants.
Imposition of heavy costs would also control unnecessary
adjournments by the parties. In appropriate cases the
courts may consider ordering prosecution otherwise it may
not be possible to maintain purity and sanctity of judicial
proceedings.
D. The court must adopt realistic and pragmatic
approach in granting mesne profits. The court must
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carefully keep in view the ground realities while granting
mesne profits.
E. The courts should be extremely careful and
cautious in granting ex parte ad interim injunctions or stay
orders. Ordinarily short notice should be issued to the
defendants or respondents and only after hearing the
parties concerned appropriate orders should be passed.
F. Litigants who obtained ex parte ad interim
injunction on the strength of false pleadings and forged
documents should be adequately punished. No one should
be allowed to abuse the process of the court.
G. The principle of restitution be fully applied in a
pragmatic manner in order to do real and substantial
justice.
H. Every case emanates from a human or a
commercial problem and the court must make serious
endeavour to resolve the problem within the framework of
law and in accordance with the well-settled principles of
law and justice.
I. If in a given case, ex parte injunction is granted,
then the said application for grant of injunction should be
disposed of on merits, after hearing both sides as
expeditiously as may be possible on a priority basis and
undue adjournments should be avoided.
J. At the time of filing of the plaint, the trial court
should prepare a complete schedule and fix dates for all the
stages of the suit, right form filing of the written statement
till pronouncement of the judgment and the courts should
strictly adhere to the said dates and the said timetable as
far as possible. If any interlocutory application is filed then
the same be disposed of in between the said dates of
hearing fixed in the said suit itself so that the date fixed for
the main suit may not be disturbed."
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39. The Hon'ble Supreme Court in Indian Council
for Envirolegal Action Vs. Union of India and others ,
(2011) 8 SCC 161 observed:-
"191. In consonance with the principles of equity, justice and good
conscience Judges should ensure that the legal process is not
abused by the litigants in any manner. The court should never
permit a litigant to perpetuate illegality by abusing the legal
process. It is the bounden duty of the court to ensure that
dishonesty and any attempt to abuse the legal process must be
effectively curbed and the court must ensure that there is no
wrongful, unauthorized or unjust gain for anyone by the abuse of
the process of the court. One way to curb this tendency is to
impose realistic costs, which the respondent or the defendant has
in fact incurred in order to defend himself in the legal proceedings.
The courts would be fully justified even imposing punitive costs
where legal process has been abused. No one should be permitted
to use the judicial process for earning undeserved gains or unjust
profits. The court must effectively discourage fraudulent,
unscrupulous and dishonest litigation.
192. The court's constant endeavour must be ensure that
everyone gets just and fair treatment. The court while rendering
justice must adopt a pragmatic approach and in appropriate cases
realistic costs and compensation be ordered in order to discourage
dishonest litigation. The object and true meaning of the concept of
restitution cannot be achieved or accomplished unless the courts
adopt a pragmatic approach in dealing with the cases.
193. This Court in a very recent case Ramrameshwari Devi
v. Nirmala Devi had an occasion to deal with similar questions of
law regarding imposition of realistic costs and restitution. One of
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us (Bhandari, J.) was the author of the judgment. It was observed
in that case as under: (SCC pp. 268-69, paras 54-55)
"54. While imposing costs we have to take into
consideration pragmatic realities and be realistic as to what
the defendants or the respondents had to actually incur in
contesting the litigation before different courts. We have to
also broadly take into consideration the prevalent fee
structure of the lawyers and other miscellaneous expenses
which have to be incurred towards drafting and filing of the
counter-affidavit, miscellaneous charges towards typing,
photocopying, court fee, etc.
55. The other factor which should not be forgotten
while imposing costs is for how long the defendants or
respondents were compelled to contest an d defend the
litigation in various courts. The appellants in the instant
case have harassed the respondents to the hilt for four
decades in a totally frivolous and dishonest litigation in
various courts. The appellants have also wasted judicial
time of the various courts for the last 40 years."
40. The answer to the question as to why the plaintiff
kept the instant litigation alive is not difficult to find. The
Court can take judicial notice that Baddi is probably the only
developed and still rapidly developing industrial area in the
whole of Himachal Pradesh and, therefore, there was and still
a great demand of fuel. It was for this sole reason that this
litigation has been kept alive knowing fully well that there
was no substance in the same.
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41. Accordingly, the appeal is dismissed with costs of
Rs. 50,000/- to be paid by the plaintiff to the defendants.
The defendants are directed to take over the possession of the
retail out within 48 hours of receipt of certified copy of this
judgment and thereafter to handover the same to the eligible
candidate.
42. In addition to above, the Corporation is directed to
cause an in-house inquiry to be made to fix the liability of the
errant officials on the issue and decide appropriate action(s)
against them in accordance with law within a period of two
months irrespective of the fact whether such officials are still
serving or have retired. The Corporation after completing this
exercise shall submit a report before this Court for further
orders and for this purpose the case be listed before this
Court on 28.2.2018. That apart, the defendants shall claim
damages from the plaintiff and also register a case of criminal
breach of trust.
43. The appeal is disposed of as aforesaid, so also the
pending application, if any.
(Tarlok Singh Chauhan)
Judge
27.12. 2017*awasthi*
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