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CASE NO.:

Appeal (civil) 3100 of 2000

PETITIONER:

V. PURUSHOTHAM RAO

Vs.

RESPONDENT:

UNION OF INDIA & ORS.

DATE OF JUDGMENT: 19/10/2001

BENCH:

G.B. Pattanaik & Ruma Pal

JUDGMENT:

With

Civil Appeal Nos. 3104-3105, 3089, 3090, 3117, 3097, 3102,

3086, 3106, 3085, 3094, 3099, 3103, 3092 & 3101 of 2000.

JUDGMENT

PATTANAIK, J.

In this batch of appeals the judgment of Delhi High

Court, canceling the allotment made by the concerned

minister from out of his so- called discretionary quota on

petroleum dealership as well as LPG dealership is under

challenge. Prior to 1995, the Minister of Petroleum in

exercise of his discretion had been allotting retail outlets for

petroleum products, LPG dealership and SKO dealership,

without having any prescribed norms. A Public Interest

Litigation had been filed in this Court by Centre for Public

Interest Litigation under Article 32 of the Constitution,

praying that guidelines to regulate the exercise of discretion

in the matter of such allotment, which results in exercise of

the discretion arbitrarily be fixed. It may be stated that

initially a prayer had also been made in that application to

cancel the dealership in favour of respondent No. 4, but

that prayer stood deleted and an amended petition was filed

as the said respondent did not accept the dealership in

question. This Court after hearing the counsel for the

petitioner, and the learned Attorney General, issued a set of

guidelines for discretionary allotment of petroleum products

agencies to ensure that the exercise of discretion in making

such allotments are in conformity with the rule of law and by

excluding the likelihood of arbitrariness and minimising the

area of discretion. The said decision of this Court has since

been reported in the case of Centre for Public Interest

Litigation vs. Union of India and Ors., 1995 Supp.(3)

S.C.C. 382. In para (4) of the aforesaid Judgment, the

Court had directed as under:

We hereby direct that the above-quoted

norms/guidelines etc. shall be followed by the

Central Government in making all such

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discretionary allotments of retail outlets for

petroleum products, LPG Dealership and SKO

Dealership, hereafter.

The Common Cause had filed a petition under Article 32 on

the basis of a news item which appeared in a national

newspaper that the Minister of Petroleum was personally

interested in making allotment of petrol pumps in favour of

15 persons, who were either the relations of his personal

staff or sons of the Ministers, or sons/relations of the

Chairman and Members of the Oil Selection Boards, praying

for cancellation of allotments made inter alia on the ground

that the allotments had been made by the concerned minister,

mala fide and the decision is arbitrary and motivated by

extraneous considerations. The Court ultimately cancelled

the allotments made in favour of the 15 persons mentioned in

the petition, on a conclusion that the allotments are arbitrary,

discriminatory, mala fide and wholly illegal. The Court also

issued certain other directions in relation to the allottees and

called upon the concerned minister to show cause as to why a

direction be not issued to the appropriate police authority to

register a case and initiate prosecution against him for

criminal breach of trust or any other offence under law and in

addition, why he should not be liable to pay damages for his

mala fide action in allotting petrol pumps to 15 persons

mentioned therein. This judgment of the Court is reported in

1996(6) SCC 530. While the Common Cause case was

pending in this Court, Civil Writ Petition Nos. 4003 and 4430

of 1995 had been filed in Delhi High Court by the Centre for

Public Interest Litigation, as public interest litigation, which

were pending in Delhi High Court. In those two petitions,

allotment of petrol pumps/gas agencies to various persons

during the period 1992-93, 1993-94, 1994-95 and 1995-96

had been challenged. A Transfer Petition had been filed in

this Court, which was registered as Transfer Petition No.

127/96 and this Court had issued notice in the transfer

petition and stayed further proceedings before the High

Court. In an affidavit filed by the Ministry of Petroleum in

the aforesaid transfer petition, the then Joint Secretary had

stated that in 1995-96 under the discretionary power of the

Government, allotment had been made to 99 persons and

further orders had already been made in favour of 61 more

persons, allotting petrol pumps/gas agencies. One Mr.

Srinivasan, Advocate had filed an affidavit giving a long list

of persons who are related to the then Prime

Minister/Ministers and other V.I.Ps and who had been

allotted petrol pumps and gas agencies. On behalf of

petroleum ministry, an affidavit had been filed, stating that

due inquiry had been made through the oil companies and

after due inquiry, the concerned minister had made the

allotment. This Court ultimately held that since the two writ

petitions are pending before the High Court, wherein the

allotment made to all these persons have been challenged, it

would not be necessary for this Court to get the writ

petitions transferred and decide the matter. The Court,

therefore, vacated the stay order granted and directed the

Registry of the Court to send all affidavits filed by the parties

in the transfer petition along with the annexures to the High

Court. The Court observed:

We have no doubt that the High Court shall

examine the issues involved in the writ petitions

and shall also go into the validity of the allotment

of petrol pumps/gas agencies to various persons,

after hearing them, in accordance with law. We

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request the High Court to expedite the hearing of

the petitions.

Pursuant to the directions contained in the judgment of this

Court in Common Cause vs. Union of India, 1996(6) SCC

530, show cause notice having been issued to the then

Minister Captain Satish Sharma, said Shri Sharma had filed

an affidavit in reply to the show cause notice. The Court

ultimately perused the show cause notice filed and after

hearing the counsel appearing for the Minster, directed the

CBI to hold an investigation, after registering a case against

the concerned minister in respect of the allegations dealt with

and findings made by the Court earlier in the Common Cause

case. On the question of liability of the minister to pay

exemplary or compensatory damages, the Court considered

the matter and came to the conclusion that Captain Satish

Sharma, the then minister would be liable to pay exemplary

damages and quantified the same at Rs. 50 lacs. This

Judgment of the Court has been reported in 1996(6) S.C.C.

593.

Pursuant to the directions of this Court in Common

Cause case, 1996(6) S.C.C. 530, the Delhi High Court took

up the writ petitions which had been filed as Public Interest

Litigation by the Centre for Public Interest Litigation. On

examination of the relevant files dealing with the allotment

of retail outlets of petrol, LPG distributorship and SKO/LDO

dealership under the discretionary quota made by the

minister concerned, it was revealed that between January

1993 till 1996, 179 retail outlets (petrol pumps), 155 LPG

distributorships and 45 SKO/DLO dealerships had been

allotted by the concerned minister under the discretionary

quota. In its order dated 29th of August, 1997, the Division

Bench of Delhi High Court came to the conclusion that the

examination of files clearly shows that these are not the cases

of aberrations here or there but are cases which show a

pattern of favouritism. From the judgment of Delhi High

Court in C.W. 4003/95 dated 29.8.1997, it transpires that

even before the Supreme Court stayed the proceedings by

order dated 6th December, 1995 , the High Court had called

upon the respondents by order dated 2nd November, 1995 to

produce the list of allotments made under the discretionary

quota of the petroleum minister for allotment of petrol retail

outlets, LPG distributorship and Kerosene distributorship

from the date of the tenure of the minister which was 18th of

January, 1993. Before the Delhi High Court, it had been

contended by the allottees as well as by the Government that

the judgment dated 31st March, 1995 of the Supreme Court

laying down the guidelines, since reported in 1995 Supp.(3)

S.C.C. 382 would indicate that the Supreme Court had

implidely regularised the allotments made prior to 31st

March, 1995 and consequently the validity of the said

allotments need not be gone into. The High Court however

was not persuaded to agree with the submissions and in our

view rightly, particularly, when in the Common Cause case

[1996(6) SCC 530] this Court has positively directed the

High Court to examine the issues involved and dispose of the

two pending writ petitions in accordance with law. Since the

allottees were required to be noticed before any decision is

taken, the High Court by its order dated 11th December,

1996, constituted a Committee of three advocates and

directed them to examine all the files and submit a report in a

Proforma which had been prepared by the Court itself, after

discussion with the counsel appearing for the parties. The

said Committee submitted its report, on the basis of which

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the Court issued notices to various persons by its order dated

27th of February, 1997 and 20th of March, 1997 and the Court

was to deal with the cases of about 400 allottees. Pursuant to

the notices issued, the allottees filed their respective show

causes and then the Court heard the respective counsel for

the allottees as well as examined the report of the Committee

and scrutinized the same by perusing the original file and

finally disposed of the cases of about 100 allottees by its

judgment dated 29th of August, 1997. The Court on

examination of the materials before it and on perusal of the

original files, appears to have taken the view in several cases

that the discretion had been exercised on sufficient materials

and after inquiry and held those allotments to have been

proper exercise of the discretion and accordingly discharged

the notices of cancellation. But in those cases, where the

Court found either there were no materials before the

concerned minister in support of the applications filed to

justify the exercise of power for allotment under the

discretionary quota or such allotments had been made on

account of political patronage or some other extraneous

considerations, the Court cancelled the allotment made with

certain directions therein. It would be appropriate at this

stage to notice the observations of the High Court:

It is unfortunate that perusal of the files show that

a large number of persons to whom allotments

were made under the discretionary quota belong to

an affluent class of society and not to the class

which may deserve compassion, resulting in

exercise of discretion in their favour. Whether this

large number of persons got allotment on account

of their affluence or on account of their close

proximity with the powers that be, it may be

difficult to say definitely, one way or the other but

that makes no difference since both affluence

and/or proximity, are irrelevant and extraneous

considerations for exercise of discretion.

The Court also came to the further conclusion that there had

been no verification of the statements made in the

applications by the allottees and hardly any application

contains details of annual income or bio-data and hardly any

person had filed any affidavit in support of his claim, seeking

grant of discretionary allotment and in several cases the

applications even did not bear any data and a number of

allottees belonged to one Parliamentary Constituency and

were active members and supporters of the party in power at

the relevant time. The Court having cancelled the allotments

made in favour of the appellants, who are before us, the

present appeals have been filed by grant of special leave.

After the disposal of first batch of cases by the High Court by

its judgment dated 29.8.1997, the High Court issued notices

to some other allottees and disposed of the second batch of

cases by its order dated 11.10.99 and both these orders of

Delhi High Court are under challenge, so far as it relates to

the cancellation of allotments made under the discretionary

quota.

Captain Satish Sharma, who was the concerned

minister and against whom the Court had directed

registration of a criminal case by the C.B.I., and also levied

penalty of Rs. 50 lacs, filed a review petition against the

aforesaid two directions of the Court, which was entertained

and that review petition was allowed by a three Judge Bench

of this Court, since reported in 1999(6) S.C.C. 667. In the

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aforesaid case, this Court came to the conclusion that the

factors relevant to the award of exemplary damages had not

been taken by this Court and consequently the levy of

penalty of Rs.50 lacs was not in accordance with law. The

Court also held that no case could be said to have been made

out against the concerned minister for directing registering a

case under Section 409 and such a direction could not have

been given under Article 32 or under Article 142 and further,

such a direction would be contrary to the concept of right to

life under Article 21. The Court, therefore, set aside the two

directions earlier made in relation to registering a criminal

case and levy of penalty against the minister. Certain

observations had been made in the aforesaid three Judge

Bench Judgment, which form the sheet anchor of one of the

contentions of the appellants in the present batch of appeals

and we will refer to those observations and deal with the

same at appropriate stage. The aforesaid judgment of the

Court has since been reported in 1999(6) SCC 667.

Between 1997 and 1999, against the order of cancellation of

allotments made under discretionary quota, about 79 special

leave petitions had been filed in this Court, which had been

dismissed or dismissed as withdrawn. Notwithstanding the

dismissal of the aforesaid special leave petitions, after the

three Judge Bench Judgment of this Court dated 3rd August,

1999 since reported in 1999 (6) S.C.C. 667, special leave

petitions having been filed, this batch of cases were listed

before the Bench presided over by the very learned Judge,

who was presiding over the Bench which reviewed the earlier

judgment and absolved the concerned minister from the

direction of levy of penalty as well as from the criminal

prosecution. The Bench, therefore, having granted leave, the

present appeals were placed for hearing. At this stage, it

would be appropriate for us to notice that the review petitions

filed by Captain Satish Sharma, the concerned Minister was

in relation to the order dated 4.11.96 in the case of Common

Cause vs. Union of India, 1996(6) S.C.C. 593 and was not

in relation to the judgment dated 25.9.96 in the case of

Common Cause vs. Union of India reported in 1996(6)

S.C.C. 530. The three Judge Bench however committed an

error in paragraph (7) by noticing that the review petition

relates to both the judgments viz. the Judgment dated 25.9.96

and 4.11.1996. Mr. P.P. Rao, the learned counsel,

appearing in four of these appeals viz. Civil Appeal Nos.

3085, 3094, 3099 and 3092, seriously contended that the

judgment of this Court in the Centre for Public Interest

Litigation vs. Union of India, 1995 Supp.(3) S.C.C. 382

in no uncertain terms, stipulates that the norms and

guidelines should be followed by the Central Government in

making discretionary allotment of retail outlets of petroleum

products, LPG distributorship and SKO dealership,

subsequent to the said judgment which necessarily and

impliedly indicates that the Court has approved the earlier

lapses in the matter of such allotment under discretionary

quota and, therefore, it was not open to the High Court to re-

examine all the cases and decide the legality of the allotments

made under the discretionary quota. He further contended

that in view of the observations of this Court in the three

Judge Bench Judgment [1999(6) S.C.C. 667], in paragraph

115 of the said judgment, the plea of constructive res-

judicata should have been applied by the High Court and the

High Court committed error in rejecting the said contention.

According to Mr. Rao, on a plain reading of the judgment of

this Court in Centre for Public Interest Litigation case [1995

Supp.(3) S.C.C. 382], the conclusion is irresistible that the

Court in that case had given its stamp of judicial approval to

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the discretionary allotments had already been made by that

date and it is for that reason, the Court had indicated that the

guidelines therein would be followed hereafter. That being

the position, not only that the principle of constructive res-

judicata would apply, but also it was not open for the High

Court to re-open and examine the legality of the discretionary

allotments made prior to 1995. According to Mr. Rao, during

the period when the allotments had been made in favour of

his clients, which is prior to the guidelines indicated by this

Court in the Centre for Public Interest Litigation case, under

the pre-existing practice and norms, the concerned minister

having exercised the discretion, the High Court committed

serious error in interfering with those discretionary orders of

allotment. Mr. Rao further urged that the impugned judgment

would indicate that there has been no due consideration of

the show-cause filed by the allottees and the materials

referred to in the show-cause have not been considered by the

High Court and, therefore, it would be a fit case where matter

should be remitted back to the High Court for re-

consideration. According to Mr. Rao , the discretion having

been exercised in favour of his clients, who happened to be

political sufferers and a political sufferer having been

recognised as a class/category by themselves in the case of

D.N. Chanchala vs. State of Mysore and Ors. etc., 1971

Supp.S.C.R. 608 at 629, the High Court committed serious

error of law in interfering with the allotments made in favour

of his clients and as such the impugned orders cannot be

sustained. Mr. Rao also urged that allotments having been

made in individual cases of extreme hardship by the minister

concerned and that being one of the norms which this Court

formulated in its guidelines in the case of Centre for Public

Interest Litigation and the appellants having invested huge

money and this being the only source of livelihood since

1993, the same ought not to have been cancelled, particularly

when no public interest will be served by such cancellation.

Mr. P.S. Narasimha, the learned counsel, appearing for

the appellant in Civil Appeal No. 3100/2000, while

supporting the arguments of Mr. Rao, further urged that all

the necessary information was available with the High Court

but the Court never considered those materials nor did the

Court inquire into the correctness of those materials, as it

would be apparent from the affidavit of the appellant, filed

pursuant to the notice of show-cause and also the impugned

order of the High Court dealing with the appellants case.

This being the position, Mr. Narsimhan urged that the order

of cancellation should be set aside and the matter should be

remitted back to the High Court for re-consideration.

Appearing for the appellants in Civil Appeal Nos.

3104-3105 of 2000, Mr. Narsimha, the learned counsel

urged that in these two cases, the concerned authority having

exercised the discretion in favour of a young educated

unemployed youth belonging to a back-ward community

and his family being under financial constraint, the

conclusion of the High Court that it was a case of arbitrary

allotment, is unsustainable in law.

Mr. V.A. Mohta, the learned senior counsel appearing

for the appellant in Civil Appeal No. 3089/2000, urged that

the allotment in favour of his client had been made under

discretionary quota as the family of the applicant had been

put to severe financial hardship on account of natural

calamity on one hand and the Naxailite activities on the other

hand. According to the learned counsel, this must be held to

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be a germane consideration which weighed with the

concerned authority for exercise of his discretionary power

and, therefore, the High Court ought not to have cancelled

the allotment made in favour of the appellant.

Mr. Dushyant A. Dave, the learned senior counsel

appearing for the appellant in Civil Appeal No. 3090 of 2000

urged that the only ground on which the High Court has set

aside the allotment made in favour of the appellant is that

there had been no verification whatsoever regarding other

members of his family and their sources of income before

exercising discretion, and therefore, since the minister

approved the allotment without any verification, the

allotment is liable to be cancelled. According to Mr. Dave,

the fact that the order of allotment itself indicated that the

I.O.C.Ltd. would conduct requisite verification before

issuance of Letter of Intent, it cannot be said that the order in

question was without any inquiry. Mr. Dave urged that it is

nobodys case that the I.O.C., on an inquiry came to the

conclusion that the grant of distributorship in favour of the

appellant on compassionate grounds was unjustified. That

apart, the appellant himself had filed an affidavit before the

High Court, indicating his family conditions and the fact that

he had no resources and he had gathered the resources from

friends, but the High Court unfortunately over-looked these

materials and directed cancellation of the allotment made in

favour of the appellant. The learned counsel also urged that

the order of the High Court would indicate that in case of

several other noticees, the High Court discharged the notice

of cancellation without ascribing any reason and therefore,

there was no reason why the High Court should have

cancelled the allotment made in favour of the appellant. The

learned counsel further urged that even if the High Court

found that there had been no verification, then it would have

been appropriate for the High Court to direct for a fresh

verification, rather than canceling the distributorship and the

approach of the High Court is wholly uncalled for.

According to the learned counsel, the appellants case being

covered under the existing discretionary scheme, as was

prevalent, and further even under the guidelines issued by

this Court in the judgment reported in 1995 Supp.(3) S.C.C.

382, individual cases of extreme hardship which in the

opinion of the Government are extremely compassionate and

deserve sympathetic consideration being one of the criteria,

there was absolutely no rhyme or reason on the part of the

High Court to set aside the discretionary allotment made in

favour of the appellant. He also reiterated the arguments

advanced on behalf of Mr. Rao that the judgment of this

Court in 1995 Supp.(3) S.C.C. 382 must be so construed,

that allotments made under the discretionary quota prior to

the date of the said judgment were not intended to be

interfered with and as such, the High Court had no

jurisdiction to examine the allotment made in favour of the

appellant, which was in the year 1993.

Mr. Sushil Kumar Jain, the learned counsel, appearing

for the appellant in Civil Appeal No. 3117 of 2000,

contended in addition to what had been urged by Mr. P.P.

Rao that the impugned judgment of the High Court is earlier

to the three Judge Bench Judgment of this Court in 1999(6)

S.C.C. 667 and the observations made in the three Judge

Bench Judgment more particularly, in paragraph 115 thereof,

unequivocally supports the contention of the appellant that

the Court approved all allotments made prior to the Judgment

in 1995 Supp.(3) S.C.C. 382 and therefore, the matter

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should be remitted back to the High Court for re-

consideration in the light of the aforesaid three Judge Bench

decision of this Court. Mr. Jain also appearing for the

appellant in Civil Appeal No. 3114 of 2000 reiterated his

submissions made in the earlier case and contended that there

has been gross injustice by the High Court in canceling the

allotment made and the equitable considerations require that

this Court should interfere with the order of cancellation and

in the alternative, the matter should be remitted back to the

High Court for reconsideration after due inquiry.

In the written submission given by Mr. Bhachawat,

learned senior counsel, in this case it was urged that prior to

31st March, 1995 there being no fixed guidelines for

allotment under discretionary quota, the High Court was not

justified in canceling the allotment which are not tainted by

any favoritism or nepotism merely because there is no proof

to support the allotment on compassionate ground, or that the

application is undated, or there is no receipt entry on the

application or even that there is no bio-data of the applicant.

According to Mr. Bhachawat even judicial notice can be

taken of the fact that Ministers hold open Darbar in which

they meet people, hear their grievances and also solve their

problems on the spot, therefore, the possibility of

applications for allotment from discretionary quota having

been received during such Darbars cannot be denied. Mr.

Bhachawat also urged in his written submission that the

concerned Minister, who is the author of the alleged wrong

allotment having been given a clean chit by the three Judge

Bench of this Court, since reported in 1999 (6) SCC 667

and the main culprit thus being exonerated, it would not be

fair deal to punish the allottees, particularly when they have

made investments and are earning their livelihood by

operating the allotments made in their favour. He also

reiterated on the question of applicability of the principle res

judicata by stating that if the parties were the same and the

relief sought for is identical then Explanation 6 to Section 11

should apply.

Mr. M.C. Bhandari, the learned senior counsel,

appearing for the appellant in Civil Appeal No. 3101 of

2000, seriously contended that the appellant does not belong

to any of the three categories of persons mentioned in the

judgment of this Court in 1996(6) S.C.C. 530 inasmuch as

the High Court never found that the allotment in favour of

the appellant had been made as he happened to be relation of

any personal staff of the minister or that the allotment had

been made on extraneous considerations nor the appellant

can be said to be belonging to the category of sons of

ministers or related to any member of the Oil Selection

Board. That being so and no mala fide, favouritism or

nepotism having been established, the allotment could not

have been nullified by the High Court. According to Mr.

Bhandari, the father of the appellant, Karibasavaraj, being a

well known talented stage artist in the State of Karnataka,

who through his performance, had been able to convey the

messages of freedom fighters and religious tolerance, having

faced with acute financial stringency and said Karibasavaraj

having died, the responsibility to maintain a large family fell

on the appellant, who though a graduate, had no job or

employment. It is on this consideration, the then Chief

Minister of Karnataka and the then Vice President of India

had recommended the case of the appellant for being

favourably considered for getting allotment under

discretionary quota and ultimately the Minister, Petroleum

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had made the grant in favour of the appellant. The said

allotment is neither arbitrary nor motivated nor vitiated by

mala fides and as such the High Court was wholly in error in

canceling the allotment without proper examination of the

aforesaid materials. According to Mr. Bhandari, the finding

of the High Court that the minister has exercised his

discretion without any verification, is on the face of it

erroneous inasmuch as the order of allotment itself specified

that the Letter of Intent could be issued only after requisite

verification. In fact such verification can be effectively done

only by the Oil Company at site and not by the Minister,

sitting in Delhi and to hold that the minister must verify the

contents of the application, would be unreasonable and

impracticable. Mr. Bhandari further urged that the so-called

questionnaire which was formulated was behind the back of

the appellant and the records indicating that the appellant is

related/connected to Mr. Veerapa Moily, the then Chief

Minister of Karnataka is untrue. Mere recommendation by

the Chief Minister would not constitute any relationship and

the conclusion therefore, is without any materials.

According to the learned counsel, the procedure adopted by

the High Court, so far as the appellant is concerned,

tantamounts to denial of a fair hearing and justice to the

appellant inasmuch as even before serving the notice on the

appellant on 15.4.1999, the High Court itself heard the first

batch of cases and delivered its judgment on 29.8.97,

answering all the questions of law, including the question of

constructive res judicata. Mr. Bhandari urged that in a public

interest litigation like the one, the High Court was duty

bound to issue notice under Order 1 Rule 8 CPC so that

persons likely to be affected, could have appeared before the

High Court and made their submissions before the High

Court prior to its first order on 29.8.1997. Since the Court

itself has come to a definite conclusion on several issues

arising in the matter by its order dated 29.8.97, the issuance

of notice to the appellant was a mere formality to comply

with the principles of natural justice and the ultimate disposal

of the appellants case by the High Court must be held to be

a disposal by the learned Judges who had already made up

their mind and this resulted in patent injustice. In support of

this contention, the learned counsel placed reliance on the

decision of this Court in 1989(3) S.C.C. Page 202 at 208-

210 (para 13). Mr. Bhandari also urged that even in the case

of a public interest litigation, the basic principle of law to

avoid multiplicity of proceedings should be implemented.

Necessarily, therefore, when the Centre for Public Interest

Litigation filed a petition in this Court, which was disposed

of by the Judgment since reported in 1995 Supp.(3) SCC

382 and that application also related to the allotment of retail

dealership in petroleum, under discretionary quota and did

not assail the allotments already made, then a second

petition before the Delhi High Court was not entertainable.

He also reiterated the argument that explanation 4 to Section

11 CPC should apply to the case in hand and in support of

the same he placed reliance on the judgment of this Court

reported in AIR 1986 SC 391 at Page 397, para 20. The

learned counsel with emphasis urged that it is no doubt true

that discretion in public matters should be least but it cannot

be totally denuded of, nor can any Court strike down the

power exercised by an authority having discretion even in

deserving cases. The exercise of discretion by an authority

depends upon the independence and integrity of the

individual exercising such discretion. Adjudged from any

stand point, the allotment made in favour of the appellant in

his case would not be a case of allotment on the ground of

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favouritism, nepotism and/or abuse of power and, therefore,

the High Court committed serious error in canceling the

allotment made. According to Mr. Bhandari, compassion or

a case of extreme hardship has all along been recognised as a

germane factor for exercise of a discretion. Even this has

been recognised in the guidelines issued by this Court in

1995 Supp (3) S.C.C. 382. The allotment made in favour

of the appellant being covered by the guidelines (6) and (7)

of the Judgment of this Court in 1995 Supp.(3) S.C.C. 382,

it must be held that the discretion has been exercised in a

fair, reasonable and legal manner and, therefore, the same

ought not to have been interfered with by the High Court.

Mr. Bhandari lastly urged that such a discretionary allotment

having existed for a long time, as has been noticed by the

three Judge Bench decision of this Court in 1999(6) S.C.C.

667 and the appellant having been allowed to run the agency

for about eight years and having invested about Rs. 30 lacs

and the entire family being dependent on the income derived

from the agency, this Court should set aside the order of

cancellation made by the Delhi High Court and follow the

judgment of this Court dated 28th of September, 2001 in

Civil Appeal No. 6840/2001 and batch, relating to allotment

of land from the discretionary quota in the State of Haryana.

Mr. Jaideep Gupta, the learned counsel, appearing for

the appellant in Civil Appeal No. 3103 of 2000 contended

that in his case, an eminent Member of Parliament, highly

respected in the political sphere Smt. Gita Mukherjee, since

deceased, had herself filed an affidavit before the Delhi

High Court, explaining the circumstances that led her to

recommend the case of the appellant and the High Court

even did not bother to notice the said affidavit filed by Late

Smt. Gita Mukherjee and came to the conclusion that the

Minister before exercising the discretion, did not himself

verify about the source of income of the applicant and his

family members. According to Mr. Gupta, if a Member of

Parliament recommends the case of a citizen belonging to

his/her constituency and if the Minister acts upon such

recommendations, it cannot be said that the Minister did not

verify himself before exercising his discretion. Mr. Gupta

also urged that even before entering into the dealership

agreement, the appellant had been extensively interviewed

by the Chief Regional Manager and the Legal Officer of the

company regarding his income and on being fully satisfied

with the same and the aforesaid state of affairs having been

made by the appellant on oath, which was not denied by

anyone concerned, on the un-controverted statement of the

appellant, the High Court was not justified in canceling the

allotment made on the ground as already stated. Mr. Gupta

further urged that the agreement entered into between the

appellant and the Oil Company itself contains power to

terminate the dealership if it is found that the applicant had

made any incorrect statement at the time of allotment of

dealership. That being the position, it would be always open

for the Oil company to annul the dealership if it is found that

the appellant had furnished any incorrect information. In the

premises, it would be more appropriate to direct the oil

company to investigate into the matter, rather than to cancel

the allotment made. According to Mr. Gupta, the principles

to be followed in a case of cancellation of a grant should be

different from the principles for determining the legality of a

grant and, therefore, the High Court was wholly unjustified

in canceling the allotment made on the sole ground that the

concerned minister had not made any inquiry before

exercising his discretion. The learned counsel also urged

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that the appellant has invested a huge amount of money and

cancellation of the dealership at this point would cause

untold hardship. To deprive of the appellant and his family

of earning his livelihood at this length of time would not be

in the interest of justice and, therefore, this Court should set

aside the order of cancellation passed by the Delhi High

Court.

Mr. Subba Rao, the learned counsel appearing for the

appellant in Civil Appeal No. 3097 of 2000 urged that the

appellant, a widow was a destitute, having no source of

income and the allotment made in her favour cannot but be

held to be an allotment on germane consideration and,

therefore, the High Court was wholly in error in canceling

the allotment solely on the ground that the minister accepted

the statement made in the application as a gospel truth.

According to Mr. Subba Rao, it is nobodys contention nor

has the High Court found as a fact that the statements made

in the application for allotment are untrue and in such a case

the discretion exercised ought not to have been interfered

with on an hypothesis that the Minister committed an error

in accepting the statement made in the application for

allotment. In this case the source of livelihood from out of

the agency is a source for the entire family. According to

Mr. Rao, this source ought not to be closed down, which

would make the entire family destitute. Mr. Subba Rao in

support of his contention placed reliance on a judgment of

this Court in the case of Ram and Shyam Company vs.

State of Haryana and Ors. 1985 Supp.(1) S.C.R.541,

whereunder this court noticed that there exists a clear

distinction between the use and disposal of private property

and social property. While the Court observed in the

aforesaid case that disposal of public property partakes the

character of a trust in that in its disposal their should be

nothing dubious, but this is subject to one important

limitation namely that the socialist property may be disposed

at a price lower than the market price or even for a token

price to achieve some defined constitutionally recognised

public purpose, one such being to achieve that goals set out

in Part IV of the Constitution. In this view of the matter,

according to Mr. Subba Rao the discretion used by the

concerned minister in favour of his client cannot be held to

be illegal or invalid.

Mr. P. N. Misra, the learned senior counsel appearing

for the appellant in Civil Appeal Nos. 3102/2000 and

3086/2000, strenuously urged that in the first appeal, the

applicant had lost her husband in a road accident while she

was of a young age of 32. She had two small school going

children and to establish her in life for the maintenance of the

young children it is her father-in-law who had made the

application to allot her a retail outlet. The concerned

Minister had approved the case of allotment in favour of the

applicant. In the other case, on an application being made,

an inquiry had been made from the ministry to furnish the

bio-data which the applicant had furnished and on being

satisfied with the materials furnished, the allotment had been

made in favour of the applicant. According to Mr. Misra,

these are two genuine cases and a case of pure compassion

and as such the order of allotment ought not to have been

interfered with. Be it be stated that the father-in-law, who

had made the application for getting an allotment in favour

of the applicant was none else than a Member of Parliament.

According to Mr. Misra, the allotment letter clearly having

stipulated that the allotment would be subject to verification

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to be made by the concerned oil company and the company

itself having made the necessary verification, the High Court

was not justified in interfering with the allotment made.

According to Mr. Misra, the applicant was asked to furnish

the bio-data, which the applicant did comply with and

therefore, the conclusion that there were no material before

the minister was incorrect. According to Mr. Misra, it is no

doubt true that the father-in-law of the applicant was an

M.P. since 1991 but the application was made only in 1994,

after the unfortunate death of his son which is indicative of

the fact that the father-in-law never misused his position.

Mr. P. N. Misra also placed before us the counter affidavit

filed on behalf of the Union Government in the Delhi High

Court in some other allied matters and also the noting dated

5.5.93, which indicates as to how the application of the

allottee is sent to the company concerned for verification of

facts therein like income, residence, social status etc., and

contends that the conclusion of the High Court that there had

been no verification is unsustainable.

Mr. O.P. Sharma, the learned senior counsel, appearing

for the appellant in Civil Appeal No. 3106/2000 reiterated

the submissions made by all the counsel appearing before

him and argued at considerable length by placing all the

decisions afresh and urged that the three Judge Bench

Judgment having over-ruled the earlier two Judge Bench

decision, the High Court could not have set aside the

allotment made, relying upon the judgment of this Court in

the two Judge Bench decision. The learned counsel also

urged that the three Judge Bench Judgment has categorically

come to a finding that allotment has been made in

accordance with the prescribed guidelines. That being the

position, the High Court was not competent to over-ride the

aforesaid conclusion of the three Judge Bench Judgment of

this Court and arrive at a conclusion contrary to the same.

Mr. Sharma also urged that the plea of constructive res

judicata should apply to the case in hand inasmuch as the

aforesaid plea is applied as a matter of public policy to avoid

multiplicity of litigation and not to allow re-opening of a

matter already adjudicated upon. In this view of the matter,

the High Court was not entitled to re-examine the matter

after the judgment of this Court in 1995 Supp.(3) SCC 382.

In support of this contention, reliance had been placed on the

decision of this Court in AIR 1997 SC 1680. Mr. Sharma

also relied upon the recent judgment of this Court in Haryana

Land Allotment case and contended that the theory of

prospective over-ruling should apply to prospective

cancellation of the grant made and that would subserve larger

public interest and in this view of the matter this Court

should set aside the order of cancellation made by the High

Court. Relying upon the observations made in the reviewed

judgment of three learned Judges of this Court, Mr. Sharma

contended that this decision approves the fact that allotments

made earlier to the guidelines issued by this Court in 1995

must not be interfered with and the said observation being

binding on this Bench, this Bench should allow this appeal

or refer the matter to a three Judge Bench. Mr. Sharma

urged that right to life engrafted in Article 21 of the

constitution also equally applies to the case in hand and as

such the entire family will be ruined if the dealership is

cancelled. He lastly urged that pursuant to the notice issued

to the appellant, the appellant having filed an affidavit before

the High Court, giving all material particulars, the High

Court could not have set aside the allotment made in favour

of the appellant without even consideration of those

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materials. The disposal made by the High Court on such

non-consideration of such germane materials must be held to

be vitiated and therefore, the matter should be remitted back

to the High Court. So far as the ground on which the High

Court set aside the allotment made viz. the minister had not

verified the particulars, Mr. Sharma urged that the minister is

not required to make any check or verification and can make

the allotment under the discretionary quota, relying upon the

statements made by an applicant, since the so-called grant is

subject to the verification to be made by the oil company. It

is always open for the oil company on verification, not to

grant the dealership notwithstanding the order of the minister

inasmuch as order itself stipulates that the grant should be

subject to the verification by the oil company. According to

Mr. Sharma, the touch-stone for exercise of discretionary

power being that it should not suffer from the virus of

nepotism and favouritism and should be devoid of any

personal interest and should not be for extraneous

considerations and none of these grounds having been found

by the High Court, the order of cancellation on the face of it

is wholly unsustainable.

Mr. Sanjeev K. Kapoor, the learned counsel appearing

for the Centre for Public Interest Litigation repels the

submissions made by the counsel for the appellants.

According to the learned counsel, the contention that the

judgment of this Court in the Centre for Public Interest

Litigation[1995 Supp.(3) S.C.C 382] amounts to a tacit

approval of the Court to the allotments made, any illegal

exercise of discretionary power is nothing but a misreading

of the judgment. He further urged that in public interest

litigation, when there is no adversarial adjudication, the

principles of constructive res judicata ought not to apply, as

was held by this Court in the case of Rural Litigation and

Entitlement Kentra vs. State of U.P. 1989 Supp.(1) S.C.C.

504. At any rate the earlier litigation filed at the behest of

the Centre for Public Interest Litigation was only for laying

down the guidelines for exercise of the discretionary power,

as is apparent from the amended petition, the amended

petition was considered and disposed of and as such there

has been no adjudication by this Court with regard to the

legality or illegality of the allotments made by the concerned

minister from the discretionary quota. The learned counsel

also vehemently submitted that in the Common Cause case,

where subsequent to the judgment in Centre for Public

Interest Litigation case, legality of allotments made in favour

of 15 allottees from the discretionary quota was the subject

matter for adjudication, this Court in no uncertain terms,

cancelled the allotments made and in the very same

judgment, directed the Delhi High Court where the writ

petitions were pending to dispose of the matter in accordance

with law. In fact the High Court proceeded to dispose of the

matter pursuant to the aforesaid judgment/observations of

this Court in the Common Cause case. In this view of the

matter, the contention that the High Court should have

applied the principle of constructive res judicata, is wholly

misconceived. So far as the observations made by the three

Judge Bench Judgment of this Court in the review petition

arising out of Common Cause case judgment, Mr. Kapoor

contends that the review petition merely related to the

subsequent order, wherein this Court directed institution of a

criminal case and levied exemplary damages to the tune of

Rs.50 lacs on the concerned minister Capt. Satish Sharma.

In the aforesaid premise, any observations made by the said

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three Judge Bench in relation to the legality of the allotments

made by the minister from discretionary quota, cannot be

treated to be of any binding precedent. According to Mr.

Kapoor, the High Court was examining the legality of the

exercise of discretion by the concerned minister on the

materials available to find out whether it was in fact an

exercise of discretion on germane materials or the discretion

has been exercised arbitrarily and for extraneous

considerations in which event the order emanated out of such

discretion was required to be nullified. The High Court has

applied its mind to each and individual case of allotment

under the discretionary quota and wherever some materials

were there, the High Court has discharged the notice of

cancellation and it is only when there existed no materials for

the minister concerned for exercise of his discretion and the

minister passed the order of allotment without any inquiry

into the assertions made in the application, the Court has set

aside the same. According to Mr. Kapoor, the notoriety by

which such discretionary allotment by a Minister has

reached, it would be unwise to interfere with well reasoned

order of the High Court, particularly when the High Court

had the opportunity of examining the file from the Ministry,

in relation to each and every case of allotment under the

discretionary quota.

Mr. T.L.V. Iyer, the learned senior counsel, appearing

for the Union of India, submitted that the Union Government

has no role to play and it merely complied with the directions

of the Court.

In view of the rival submissions at the Bar, the

following questions arise for our consideration:

(a) Is the Judgment of this Court in the case of Centre for

Public Interest Litigation [1995 Supp.(3) S.C.C. 382]

susceptible of a construction that the Court indicated

the guidelines for future guidance and had it given its

stamp of judicial approval to the discretionary

allotments already made by the date of the judgment?

(b) Would the principle of constructive res judicata as

provided under Section 11 explanation 4 of the Code of

Civil Procedure or Order 2 Rule 2 CPC apply to a

public interest litigation and if so, in the case in hand,

can it be said that the writ petitions filed by the Centre

for Public Interest Litigation in Delhi High Court from

out of the judgment of which the present appeals have

been preferred, are barred by the aforesaid principles on

the ground that in the petition filed under Article 32 by

the said Centre, no prayer for cancellation of illegal

allotments had been made, though could have been

made? and what is the impact of the observations

made by the three Judge Bench in the review petition

filed by Captain Satish Sharma, which stood disposed

of by the judgment reported in 1999(6) S.C.C. 667?

(c) Does the expression over ruled in the three Judge

Bench Judgment, refer to over-ruling the judgment in

the Common Cause case wholly or does it refer to only

the subsequent order in the Common Cause case,

directing registration of the criminal case and its

investigation and levy of penalty/exemplary damages

against Captain Sharma?

(d) The judgment of the High Court being earlier to the

three Judge Bench judgment of this Court in the review

petition filed by Captain Satish Sharma since reported

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in 1999(6) SCC 530, is there any necessity for

remitting these appeals to the High Court for

reconsideration, in the light of the subsequent three

Judge Bench judgment of this Court?

(e) Are the appellants entitled to any equitable

considerations on the ground that they have spent a

substantial amount and have also operated the petrol

outlets/gas agencies for about eight years? and

(f) Can the impugned judgment of the High Court in any of

these appeals be said to be vitiated on account of non-

consideration of any germane materials?

(g) Whether in a Public Interest Litigation, where large

number of persons are going to be affected, the Court is

bound to issue notice under Order I Rule 8 and does

non-issuance of such notice vitiate the entire

proceedings?

(h) Whether the verification supposed to have been made

by the Oil Company pursuant to the order of allotment

made by the Minister, can be held to be the proper

verification for exercise of discretion by the Minister

himself and in such event whether the order of

cancellation by the High Court is valid?

(i) Whether the principle decided in the judgment of this

Court in Civil Appeal No. 6840 of 2001, in relation to

such discretionary allotment of land in the State of

Haryana, can be made applicable to the case in hand, so

that the judgment would be made applicable

prospectively and consequently, the orders of

cancellation will have to be set aside?

So far as the first question is concerned, the entire

emphasis is on the directions given by the Court in

paragraph (4) of the Judgment, which is quoted hereunder:

We hereby direct that the above-quoted

norms/guidelines etc. shall be followed by the

Central Government in making all such

discretionary allotments of retail outlets for

petroleum products, LPG Dealership and SKO

Dealership, hereafter.

The appellants contention is that while the writ petition was

filed in public interest, the exercise of discretion in allotment

of retail outlets for petroleum products, LPG Dealership and

SKO Dealership had been challenged and a prayer for laying

down the guidelines to regulate the exercise of discretion

had been made, the Court only laid down the guidelines and

further observed that the norms and guidelines would be

followed hereafter and necessarily, therefore, there has been

a tacit approval to the earlier allotments made under the

discretionary quota inasmuch as the Court never cancelled

the allotments made nor had issued any direction in that

respect. This contention in our considered opinion, cannot

be sustained for two reasons. Firstly, the amended petition

which the Centre for Public Interest Litigation has filed,

merely prayed for laying down the guidelines to regulate

exercise of discretion in the matter of such allotments.

Secondly, which is rather more important is that this

judgment was delivered by the Court on 31st of March, 1995.

The Common Cause had filed another petition under Article

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32, alleging arbitrary exercise of discretion in favour of 15

allottees and that petition was entertained by this Court and

disposed of by Judgment dated 25th September, 1996 and the

Court cancelled all such allotments on a finding that the

Minister without keeping in view any guidelines, allotted in

exercise of his discretion in a cluster manner and the public

property have been doled out in wholly arbitrary and

discriminatory manner. If the earlier Judgment is susceptible

of the construction, as contended by the appellants, then it

would not have been possible in the Common Cause case to

examine the legality of such allotments which had been

made in favour of 15 persons. Instead of construing the

judgment in the Centre for Public Interest Litigation to the

effect that it accords a tacit approval of the allotments made

prior to the judgment in the Common Cause case, the Court

relied upon the earlier judgment in 1995 Supp.(1) S.C.C.

382, and ultimately cancelled the orders of allotment, having

found that the allotments were made arbitrarily and for

extraneous considerations. In this view of the matter, it is

difficult for us to sustain the contention of the learned

counsel, appearing for the appellants. We, therefore, hold

that the judgment of this Court in Centre for Public

Interest Litigation, 1995 Supp.(3) S.C.C. 382, cannot be

construed by any stretch of the imagination to be a tacit

approval of the discretionary allotments made prior to that

judgment. We, therefore, do not find any substance in this

submission of the learned counsel for the appellants.

Coming to the second question, Explanation (IV) to

Section 11 of the Civil Procedure Code postulates that any

matter which might and ought to have been made ground of

defence or attack in such former suit shall be deemed to

have been a matter directly and substantially in issue in such

suit. Order II Rule (2) of the Code of Civil Procedure

provides that every suit shall include the whole of the claim

which the plaintiff is entitled to make in respect of the cause

of action and if he omits to sue in respect of, or intentionally

relinquishes, any portion of his claim, then he shall not

afterwards sue in respect of the portion, so omitted or

relinquished. By virtue of explanation to Section 141 of the

Code of Civil Procedure, since proceedings under Article

226 of the Constitution is excluded from the expression

proceedings, therefore, the Civil Procedure Code is not

required to be followed in a proceeding under Article 226

unless the High Court itself has made the provisions of Civil

Procedure Code applicable to a proceeding under Article

226. Then again, the principles of Section 11 as well as

Order II Rule 2, undoubtedly contemplate an adversarial

system of litigation, where the Court adjudicates the rights

of the parties and determines the issues arising in a given

case. The Public Interest Litigation or a petition filed for

public interest cannot be held to be an adversarial system of

adjudication and the petitioner in such case, merely brings it

to the notice of the Court, as to how and in what manner the

public interest is being jeopardised by arbitrary and

capricious action of the authorities. In the case of Rural

Litigation and Entitlement Kendra vs. State of U.P. 1989

Supp.(1) S.C.C. 504, which is commonly known as the

Doon Valley case, such a contention had been raised, as is

apparent from paragraph (14) of the judgment viz. the

decision of the Court dated 12th March, 1985 was final in

certain aspects, including the release of A category mines

outside the city limits of Mussoorie from the proceedings

and in view of such finality it was not open to this Court in

the same proceedings at a later stage to direct differently in

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regard to what had been decided earlier. The Court repelled

the same by holding that the writ petitions are not inter-

parties disputes and have been raised by way of public

interest litigation and the controversy before the Court is as

to whether for social safety and for creating a hazardless

environment for the people to live in, mining in the area

should be permitted or stopped. The Court hastened to add:

We may not be taken to have said that for public

interest litigations, procedural laws do not apply.

At the same time it has to be remembered that

every technicality in the procedural law is not

available as a defence when a matter of grave

public importance is for consideration before the

Court. Even if it is said that there was a final

order, in a dispute of this type it would be difficult

to entertain the plea of res judicata.

Thus even in the self-same proceeding, the earlier order

though final, was treated not to create a bar inasmuch as the

controversy before the Court was of grave public interest.

The learned counsel appearing for the appellants drew our

attention to the decision of this Court in the case of Forward

Construction Co. and Ors. vs. Prabhat Mandal, AIR 1986

SC 391, whereunder the Court did record a conclusion that

Section 11 of the Civil Procedure Code applied to Public

Interest Litigation. In our considered opinion, therefore, the

principle of constructive res judicata cannot be made

applicable in each and every public interest litigation,

irrespective of the nature of litigation itself and its impact on

the society and the larger public interest which is being

served. There cannot be any dispute that in competing rights

between the public interest and individual interest, the public

interest would over-ride. In the Centre for Public Interest

Litigation case, which had been filed in this Court, the prayer

that had been made was to lay down the guidelines for the

discretion being exercised in the matter of allotment of Gas

agencies, petroleum dealership and others. It is no doubt true

that the applicant therein could have made a prayer for

examining the legality of the allotments already made but as

the applicant states in the writ petition filed in Delhi High

Court that he had no knowledge about the persons to whom

such allotments had been made and in fact the Delhi High

Court itself on a petition being filed, called upon the

respondents to submit the list of such allottees, whereafter

notices could be issued to the allottees. That apart, when this

Court entertained another public interest litigation, filed by

the Common Cause in respect of 15 discretionary allotments

made in favour of 15 persons, the Court did entertain the

same and instead of treating the earlier decision to be a bar

and applying the principle of constructive res judicata, the

Court relied upon the same and cancelled the allotments

made in favour of those 15 persons who had been arrayed as

parties to the said petition filed under Article 32. That apart,

the writ petitions in which the judgment of which are the

subject matter of challenge in these appeals, had been filed in

Delhi High Court and which were pending when the

Common Cause case was taken up by this Court. This Court

initially stayed the proceedings and issued notice in the

Transfer Petitions but ultimately, vacated the stay order and

instead of bringing the writ petitions to this Court on transfer,

directed the Registry of the Court to send the petitions along

with the annexures to the High Court and required the High

Court to examine the issues involved in the writ petitions and

go into the validity of the allotments of petrol pumps/Gas

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agencies to various persons. In view of the aforesaid positive

direction in para 31 of the judgment of this Court in Common

Cause case, 1996(6) S.C.C. 530, it is difficult for us to

sustain the plea of bar of constructive res judicata, as urged

by the counsel, appearing for the appellants. In this

connection, the counsel also brought to our notice,

observation made in the review petition judgment in the

Common Cause Case 1999(6) S.C.C. 667 in paragraph 115,

which is quoted herein below in extenso:

It is contended that since the allotments

made by the petitioner till the filing of the writ

petition in this Court, in spite of a challenge

having been raised therein, were not set aside and

only guidelines were settled for future exercise of

discretionary quota, tacit stamp of judicial

approval shall be deemed to have been placed on

the allotments made by the petitioner and

consequently those allotments could not have

been reopened on the principle of constructive res

judicata. Normally, we would have accepted this

argument, but in this case we cannot go to that

extent.

According to the learned counsel, the three Judge Bench

accepted the contention of the applicability of principle of

constructive res judicata and, therefore, this Bench being a

two Judge Bench must be bound by the said observations or

in the alternative, may refer the matter to a larger Bench. We

are not in a position to accept either of these submissions. It

may be stated at the outset that the three Judge Bench was

concerned with the review petition that had been filed in

relation to the order dated 4.11.96 since reported in 1996(6)

S.C.C. 593. The learned Judges committed an error in the

beginning in thinking that the review petition filed by Capt.

Satish Sharma was in relation to both the judgments viz.

1996(6) S.C.C. 530 as well as 1996(6) S.C.C. 593. In the

review petition, the Court was concerned with the correctness

of the directions contained in the order dated 4.11.96 to

institute criminal prosecution against the concerned Minister

and levy of penalty as exemplary damages to the tune of Rs.

50 lacs. It is in that context the Court made the aforesaid

observations not noticing the fact that in 1996(6) S.C.C.530,

the Court had earlier directed the High Court to dispose of

the two writ petitions pending in the High Court and decide

the legality of the order of discretionary allotment made by

the concerned minister. It is indeed interesting to notice that

in paragraph 125 of the judgment of the three Judge Bench,

the Court itself had indicated that the conduct of the

concerned minister in making allotments of petrol outlets was

atrocious and reflects a wanton exercise of power by the

Minister. But what the Court wanted to examine and

ultimately held was that the said action fell short of

misfeasance in public office which is a specific tort and the

ingredients of that tort were not wholly met in the case, so

that there was no occasion to award exemplary damages. It

would be indeed a travesty of justice to accept the submission

of the counsel for the appellants that the three Judge Bench

expressed opinion that the principle of constructive res

judicata would apply to the case in hand, so as to debar the

High Court from entertaining the writ petitions and disposing

them of on merits. As we have already noted, prior to the

three Judge Bench Judgment of this Court , the self-same

order of the Delhi High Court had been assailed in as many

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as 79 cases by approaching this Court by way of special

leave petitions and all those petitions had been dismissed.

The extent to which corruption in the governing

structure has corroded the very core of our democracy, the

notoriety which the discretionary allotment of petroleum

dealership and LPG gas agencies had acquired, the earlier

petition under Article 32 entertained by this Court at the

behest of the Common Cause, the cancellation of 15 of

such allotments and finally, the express direction therein to

the High Court to dispose of the pending writ petitions after

examining the individual cases, it is difficult for us to accept

the bar of principle of constructive res judicata on the ground

that the earlier judgment in the case of Centre for Public

Interest Litigation has accorded any tacit approval or the

subsequent so-called observation made in the three Judge

Bench decision of this Court in the review petition. We,

therefore, unhesitatingly hold that the aforesaid contention is

devoid of any substance.

The third contention was seriously argued by Mr.

Sharma, the learned counsel appearing for the appellant in

Civil Appeal No. 3106 of 2000. The learned counsel very

much emphasised that Common Cause vs. Union of India

1996(6) S.C.C. 530, has been over-ruled and, therefore,

nothing survived for Delhi High Court to examine the

legality of the allotments made under discretionary quota.

This argument appears to have been made on the basis of the

Head Note at page 671 of the reported judgment with

reference to paragraph 123 of the judgment. But when we

examine paragraph 123 of the judgment, we do not find

anywhere that the three Judge Bench had in fact over-ruled

the judgment in Common Cause case, 1996(6) S.C.C.530.

On the other hand, in paragraph 125 it affirms the earlier

conclusion that the conduct of the Minister was wholly

unjustified. Then again, the review petition itself, as already

stated had been filed by Capt. Satish Sharma, the then

Minister only in relation to the order and direction dated

4.11.96 since reported in 1996(6) S.C.C.593. In this view of

the matter, we find no substance in the aforesaid contention

raised by Mr. Sharma, appearing for the appellant in Civil

Appeal No. 3106 of 2000. We have therefore no hesitation in

rejecting the same.

So far as the fourth question is concerned, it is no

doubt true that the three Judge Bench decision of this Court,

reviewing the direction in the Common Cause Case, so far as

order dated 4.11.96 is concerned, is subsequent to the

disposal of the writ petition by the Delhi High Court, but we

do not find any justification for requiring the Delhi High

Court to re-consider the appeals in the light of the

observations made by the three Judge Bench judgment of this

Court inasmuch as in the said judgment this Court was

merely concerned with the directions to register a criminal

case and prosecute the concerned minister, if he is found to

have committed any criminal offence and levy of exemplary

damages to the tune of Rs. 50 lacs. Consequently, any

observation made in that regard will have no bearing on the

merits of the individual allotments, which were the subject

matter of consideration in the two writ petitions before the

Delhi High Court. We, therefore, do not find any substance

in the aforesaid submission made on behalf of the appellants.

So far as the fifth question is concerned, it is no doubt

true that the appellants have invested considerable amount in

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the business and have operated for about eight years but even

on equitable considerations, we do not find any equity in

favour of the appellants. The conduct of the Minister in

making the discretionary allotments has been found to be

atrocious, in the very three Judge Bench decision of this

Court and in relation to similar allotments made by the said

minister in favour of 15 persons, who were respondents in the

Common Cause case. This Court came to hold that the

allotments of the public property has been doled out in

arbitrary and discriminatory manner and the appellants had

been held to be beneficiaries of such arbitrary orders of

allotments. The question of granting the allottees relief on an

equitable consideration did not arise at all, for the same

reasons in a case like this, a sympathetic consideration on the

ground of equity would be a case of misplaced sympathy and

we refrain from granting any relief on any equitable

consideration. In our view, the appellants do not deserve any

equitable consideration.

So far as the sixth question is concerned, we have

examined the judgment of Delhi High Court in the case of

each individual appellant. We have also considered the

questionnaire that had been evolved and also the replies to

the show-cause notices that had been filed by the allottees.

We have also considered the original applications that had

been filed by these appellants and the orders of allotment

made by the concerned minister, wherever they are available

on record as well as the recommendations and circumstances

leading to the exercise of discretion. The impugned

judgment also indicates that in each and every case, the High

Court had considered the original file, dealing with the

allotments in question and it cancelled only those allotments

where there was not an iota of material in support of the

claim made by the applicant, whereas it sustained several

other cases of discretionary allotments made during that

period, wherever materials were available in the original file.

It is difficult for us to come to a conclusion that the

conclusion of the High Court in the cases in hand can be said

to be vitiated on account of non-consideration of any

germane materials. Factually, we do not have any basis to

come to the aforesaid finding. On the other hand, we are

satisfied that the High Court has applied its mind to each and

every individual case of discretionary allotment and

cancelled only those, which it came to hold to have been

arbitrarily granted without any inquiry and only on being

persuaded by certain recommendations of high dignitaries

and without verification of any materials. We, therefore, see

no infirmity with the ultimate conclusion of the High Court,

canceling the allotments in favour of the appellants, so as to

be interfered with by this Court.

So far as the seventh question is concerned, it is Mr.

Bhandari, who argued with vehemence that non-issuance of

notice under Order I Rule 8 CPC by the High Court before

deciding the legal issues by its order dated 22.8.97, has

vitiated the entire proceedings and consequently, the order of

cancellation must be set aside by this Court. According to

Mr. Bhandari, in a matter like the present one, unless the

Court directs issuance of notice by publication in a

newspaper, following the procedure under Order I Rule 8

CPC and all the affected persons get an opportunity to appear

and made their submissions, before the Court formulates the

legal position and answers them, the subsequent notice to

different persons like the appellants is nothing but a

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compliance of paper formality and such procedure adopted

has grossly prejudiced the appellants. We, however, are not

persuaded to accept this submission. The provisions of Order

I Rule 8 C.P.C. get attracted when there are numerous

persons having the same interest, are sued or sue and the

Court can permit such a suit to be defended by adopting the

procedure under Order I Rule 8 CPC. In the case in hand, the

writ petition that had been filed was in fact a petition in

Public Interest, where the allegations were that the

concerned authority had been involved in large-scale

allotments of retail outlets in petrol, gas and kerosene,

arbitrarily and for extraneous considerations without having

any guidelines for such allotments and as such it

tantamounted to disposal of public property in a manner

which is shocking to conscience. By the time when the High

Court went into those allegations in the two petitions filed,

this Court had taken the view that such allotments had in fact

been made arbitrarily and contrary to the public interest and

this Court directed the High Court to dispose of the pending

proceedings in accordance with law. The High Court, on

receipt of the names of the allottees during a specified period

from the Union Government, issued notice to each and every

such allottee, who had been allotted out of the discretionary

quota of the concerned Minister and granted opportunity to

each of such allottee to inspect the relevant file dealing with

the allotment in his/her favour and then heard the said

allottee before passing the final order, either discharging

notice of cancellation or canceling the allotment made. In

this view of the matter, we hardly find any justification in the

submission of Mr. Bhandari that the entire proceedings are

vitiated as notice under Order I Rule 8 CPC had not been

given. If the allottee like the appellant whose allotment has

been cancelled by the impugned order, had the opportunity of

examining the materials on the file of the Government,

wherein his case of allotment has been dealt with and had the

opportunity of filing his show-cause, pursuant to the notice of

cancellation that had been issued and the allotment in his

case having been cancelled on the ground that the concerned

minister did not make any verification with regard to the

necessary criteria indicated in the application for

discretionary allotment, we fail to understand how a

contention could be raised that the whole procedure adopted

is vitiated for non-compliance of the procedure under Order I

Rule 8 CPC. The object of order 1 Rule 8 CPC is to give

notice to persons likely to be affected by litigation, so that

they may be heard. If the Court would have directed

issuance of notice under Order I Rule 8 CPC without giving

individual notice to the allottees to show-cause why the

allotment will not be cancelled, then that perhaps would

have been an infraction and violation of the principle of

natural justice. But in this case, each and every allottee had

been duly noticed, they have filed their replies to the notices,

they have availed of the opportunity of examining the

original file, wherein the case of discretionary allotment had

been dealt with and it was only after hearing them that the

orders of cancellation had been passed. We have, therefore,

no hesitation in answering this question that there was no

requirement of following the procedure under Order I Rule 8

nor can it be said that the entire exercise is vitiated.

So far as the eighth question is concerned, it was

repeatedly argued before us by several counsel that the

concerned minister was not required to verify and since the

order of allotment stipulates that the Oil company would

verify before granting the agency in question that itself is a

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good verification and consequently, the High Court was in

error in canceling the allotment on the ground that there had

been no proper verification. It is no doubt true that the

Minister having exercised his discretion and allotting a

particular agency in favour of the applicant, has required the

Oil company to make necessary verification before entering

into an agreement with the allottee, but that verification

supposed to have been done by the oil company has nothing

to do with the materials on which the subjective satisfaction

of the Minister was arrived at for exercise of his discretion in

favour of any individual for any justifiable reason. When a

State property as distinct from a private property is being

dealt with by a Minister then it is of paramount importance

that such public property must be dealt with for public

purpose and in the public interest. The disposal of a public

property undoubtedly partakes the character of a trust and

therefore, in the matter of such disposal, there should not be

any suspicion of a lack of principle. The exercise of

discretion must not be arbitrary or capricious or for any

extraneous considerations. It is in that context when the

Court was examining each and every individual case of

discretionary allotment, the Court was trying to find out

whether there existed some materials, on the basis of which

the Minister could be said to have arrived at his subjective

satisfaction for exercise of his discretion in favour of the

applicant. It is the so-called satisfaction of the Minister for

exercise of his discretionary power and making the grant that

was being examined and scrutinized by the Court and only

when the Court found that there had been absolutely no

materials or that Minister had made the grant without making

any inquiry or verification, that the Court had interfered with

the allotments in question, obviously on a conclusion that

such allotments had been arbitrarily made. The subsequent

inquiry supposed to have been conducted by the Oil company

cannot replace the pre-conditions for exercise of discretion

by the Minister. If the initial order of allotment by exercise

of discretion is vitiated on the ground of absence of any

materials or verification by the concerned authority who has

exercised the discretion, then the so-called subsequent

inquiry by the Oil company which operates in different fields

cannot make the so-called arbitrary order of the Minister a

legal or just order. This being the position, we see no force

in the submission made by the counsel appearing for the

appellants on this score. The same accordingly stands

rejected.

The next question which arises for consideration is

whether the judgment of this Court in Civil Appeal No. 6840

of 2001 and principles evolved therein can be applied to the

case in hand, so as to protect the allotments already made

under the discretionary quota. The aforesaid case no doubt

was a case of allotment of land by the Chief Minister of a

State in the State of Haryana. The High Court of Punjab and

Haryana by its order dated 20th January, 1988 disposed of the

case of S.R. Dass vs. State of Haryana, 1988 Punjab Law

Journal page 123, under which it formulated certain

principles on which the discretionary allotments could be

made with certain conditions. The so-called discretionary

allotments made by the Government and HUDA, pursuant to

the earlier judgment of Punjab and Haryana High Court were

sought to be assailed as being contrary to certain stricter

principles, which were evolved in the case of Anil

Sabharwal which stood disposed of on 5.12.97. This Court

in the appeal in question held that the stricter scrutiny

required to be made as per the guidelines evolved in Anil

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Sabharwals case, must be made applicable to the period

subsequent to the judgment viz. 5.12.97 and allotments made

between 1988 and 1997 in accordance with the principles and

guidelines indicated in S.R. Dass case, were protected by

applying the principle of prospective application, so far as the

judgment in Anil Sabharwals case. We fail to understand

how the aforesaid principle can apply to the case in hand

where the allotments made prior to the judgment of this

Court in Centre for Public Interest Litigation, 1995(3)

Supp.(3) S.C.C. 382, are the subject matter of scrutiny and

had been made indiscriminately, as there had been no

guiding principle for making such allotments. Consequently,

the principles evolved in Civil Appeal No. 6840 of 2001, will

have no application at all to the present appeals. The said

contention, therefore, must fail.

In view of our conclusions on the nine issues, as

mentioned above, these appeals fail and are dismissed. There

however will be no order as to costs.

While, we are dismissing the appeals, we are also aware

of the fact that these appellants are operating the allotments

made in their favour since 1993-94 and even after the

judgment of the High Court, they are continuing by virtue of

an interim order of this Court. In these circumstances, we

direct that they shall be allowed to wind-up their respective

businesses by 31st of December, 2001.

..........................J

(G.B. PATTANAIK)

..........................J.

(RUMA PAL)

October 19, 2001.