TMI Blog2002 (12) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... after coming to the conclusion that the allotments made were arbitrary, on account of political connections/motivation and extraneous considerations. The tainted allotments were also cancelled by various orders of High Court of Delhi. The allotments which were on merits and not tainted were not ordered to be cancelled. It is a matter of co-incidence that exactly seven years ago i.e. in August, 1995 on the front page of Indian Express a news item appeared regarding the grant of retail outlets for petrol pumps on account of political and other connections. Now, in August 2002, i.e., exactly seven years later again news item appeared on the front page of same newspaper about allotments to the near and dear ones of the political functionaries attributing the same on account of political considerations. In Common Cause, A Registered Society v. Union of India Ors. [(1996) 6 SCC 530], this Court observed that for these allotments, a transparent and objective criteria/procedure has to be evolved based on reason, fair play and nonarbitrariness. Always, many have been in race for getting these dealerships/distributorships. From September 1977, a uniform procedure for selection of perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tributorships sites for marketing of petrol/diesel or LPG or SKO-LDO are of two types Company Owned and Dealer Operated (CODO) and Dealer Owned and Dealer Operated (DODO). Under the former category, the land, superstructure standing thereon and other facilities such as underground product tanks, dispensing units, other ancillary equipments etc. are owned by the oil companies and business operations are carried on by the dealer/distributor and under the latter category, the land is either owned or held on lease hold rights by the dealers/distributors. The superstructure, except the product tanks, dispensing units and other ancillary equipment in the case of petrol/diesel retail outlets and cylinders and regulators in the case of LPG, is owned by the dealers/distributors. In the case of dealership/distributorship allotted to the candidates belonging to Schedules Castes/Scheduled Tribes and widows over 40 years of age, the land and the superstructure thereon are owned by the oil companies, expenditure on which is made from a fund created and maintained by the oil companies known as the Corpus Fund. The guidelines dated 9th October, 2000 were issued, as stated therein, to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or selection of dealer/distributorship of 145 days from the date of advertisement has been set out in the guidelines providing that within 129 days from the notice of advertisement, the selection shall be made and remaining 16 days, as provided therein, for forwarding the panel to the oil company, submitting of field investigation report by the oil company and issue of LOI after completion of the field investigation report. A mechanism for grievance redressal system has also been provided for to consider the complaints against selection of dealers/distributors. The guidelines laid down a detailed procedure. Despite the guidelines, according to the media report, certain allotments were on account of political patronage. In these matter, the guidelines can never be a foolproof and it depends on those who have to follow the same. The real question to be considered in these matters is whether on account of controversy regarding alleged tainted selections of certain applicants, can the entire selections of all applicants of all categories made by all selection boards from January 2000 be annulled. The DSBs, under the aforesaid guidelines, till date of their dissolution, i.e., 9th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naffected by this. The effect of the aforesaid decision was the cancellation of all the merit panels numbering 3760 that had been prepared by the DSBs after considering thousands, if not lacs, of applications and after interviewing thousands of applicants. All those selected by the DSBs, except 214, had been issued LOI. As earlier noticed, in 2248 cases agreements had been executed between oil companies and LOI holders. This means that 2248 dealerships/distributorships were already operational. A formal order was, however, issued by the Government of India, Ministry of Petroleum and Natural Gas on 9th August, 2002. That order reads as under : The Government has recently reviewed the allotments made since January 2000 of Petrol Pumps, LPG distributorships and SKO LDO dealerships of Public Sector Oil Companies. The allotments were recommended by the Dealer Selection Boards as per Government s guidelines dated 9th October, 2000. However, a controversy has arisen with regard to the allotments. The issue was raised in the Parliament. The functioning of the DSBs and their recommendations were also discussed. In view of this Government reviewed the matter. Having considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 10th November, and 22nd November, 2002, certain other writ petitions filed in the High Courts wherein allottees were of the category whose cases had been highlighted in the newspaper were transferred as another category of representative cases. A large number (over 2300) intervention applications have been filed by different category of persons, i.e., (1) those with whom agreements have been entered into by the oil companies; (2) those to whom the LOIs have been issued by the oil companies but outlets have not been commissioned; and (3) those who are on select panel but LOIs have not been issued. We have heard learned counsel for the petitioners and interveners in support of their challenge to the impugned order and learned Solicitor General in defence thereof. The entire matter triggered of as a result of media exposure. As already noticed, the front page of Indian Express carried the lead story on 2nd August, 2002 attributing political patronage in grant of allotments on political considerations. The newspaper for 2nd August published a list of 61 allottees from Maharashtra with their names and the alleged political connections and the positions held by the allottees and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Indian Express is 417 which is little over 10% of the total selections made. We are not suggesting, for the present, that allotments to allotments to all or any of the persons whose names have been published in the Indian Express have been made due to political connections or patronage but assuming it is so, would it justify the cancellation of allotments of all those on published merit panel in respect of whom, there is no such insinuation. Is the number of the alleged tainted allottees of such a magnitude that the fair play demanded cancellation of all en masse? Did anybody apply mind as to whether the insinuations of political connection/patronage were at least prima facie of any substance? Is such a drastic action, on the facts and circumstances of the case, not arbitrary, whimsical and, thus, unsustainable? The answer to these questions would help in determining the legality of the impugned order dated 9th August, 2002. Mr. Kirit Rawal, learned Solicitor General, candidly admitted that none of individual cases was examined and gone into before decision was taken on 5th August, 2002/9th August, 2002. Learned counsel representing the petitioners and also learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l right that can be enforced under Article 226 of the Constitution of India. There is no merit in the contentions of learned Solicitor General. It is evident from the facts that the cancellation of the agreements is not for violation of any term thereof. The cancellation is on account of a policy decision taken by the Government as noticed hereinbefore. The cancellation is not on account of any uniform reason applicable to all the selectees or those who have been issued LOIs or with whom agreements have been entered into except that in respect of few others and not this class of petitioners, media exposure was made. In the present case, on principle, there would be no difference in respect of those selectees who have been issued the LOIs but are awaiting the execution of the agreement on completion of formalities. The execution of agreement is not being denied on account of any ineligibility of any such LOI holders or any discrepancy having been found in what was required to be fulfilled by them. We are not concerned with any such individual case. Therefore, the cases of LOI holders are no different in comparison to those cases where agreements have been entered into. Similar is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Board to give an opportunity to the candidates if the examinations as a whole were being cancelled. The Board had not charged any one with unfair means so that he could claim to defend himself. In these circumstances, it would be wrong to insist that the Board must hold a detailed inquiry into the matter and examine each individual case to satisfy itself which of the candidates had not adopted unfair means. The examination as a whole had to go. The cited decision relates to cancellation of cheating by en masse copying by the students. The aforequoted observations were made after examining percentage of the marks obtained and compared with the average of successful candidates at other centers, as is evident from the facts noticed in para 11 which reads thus : This brings us to the crux of the problem. The High Court interfered on the ground that natural justice and fair-play were not observed in this case. This was repeated to us by the respondents in the appeal. A mention of fair-play does not come very well from the respondents who were grossly guilty of breach of fair-play themselves at the examinations. Apart from the reports of the experts, the results speak for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was no written agreement with it and there was only an ad hoc arrangement which could not be enforced, particularly, in a writ jurisdiction. Rejecting the contention, this Court observed that the respondent s decision can be impeached on the ground that it is arbitrary or violative of Article 14 on any of the grounds available in public law field. It was further held that the action had to be fair and reasonable and that even in the field of public law, the relevant persons concerned or to be affected, should be taken into confidence. Whether and in what circumstances that confidence should be taken into consideration cannot be laid down on any straitjacket basis. It depends on the nature of the right involved and nature of the power sought to be exercised in a particular situation. Kumari Shrilekha Vidyarthi Ors. v. State of U.P. Ors. [(1991) 1 SCC 212] was a case in which en masse cancellation of panel of Government Law Officers was questioned before this Court. While quashing the impugned order, this Court observed that the act of terminating their appointment in one stroke was without application of mind. It was further observed that it would be too much to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair play and has taken into consideration other matters, though on the face of it, the decision may look legitimate but as a matter of fact, the reasons are not based on values but to achieve popular accolade, that decision cannot be allowed to operate. Now, before reverting to the contention of learned Solicitor General that the impugned order was issued in public interest so as to ensure fair play in action, the factual position of the DSBs may be noticed and a contention raised by Mr. Nariman on the basis of averments made in T.C. No.90/2002 be considered. There were 59 DSBs throughout the country. In bigger States, the number of DSBs was more. In UP, there were nine such Boards, in Maharashtra they were four DSBs, five were the boards in Andhra Pradesh, Madhya Pradesh and Bihar. On 9th May, 2002, when the DSBs were discontinued, 18 DSBs were chaired by retired High Court Judges and remaining by retired District or Additional District Judges. In Transfer Case No.90 of 2002, Mr. Nariman, learned counsel for the petitioner, contends that the entire exercise of cancellation was a result of the name of the Prime Minister s relative being involved on account of which the Prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at when the decision was taken on 5th August, 2002, the only reason was that a controversy had been raised about certain allotments. We have earlier noticed that the guidelines provide for a mechanism to look into the complaint made against selections. Further, according to the respondents, in respect of 360 complaints made against the Chairmen/Members of the DSBs, inquiries were conducted by Director General, Anti Adulteration Cell and out of which 242 cases were recommended to be closed. This means no substance were found in 242 complaints out of 360; 39 cases were sub-judice; in 27 cancellation of selection had been recommended and 45 cases had been referred to the Ministry for its decision on various grounds by Director General and Oil Companies. In addition, in 7 cases, decision on cancellation of the selection of the first empanelled candidate had been taken by DSB/oil companies. The effect of the impugned action is the termination of agreements despite the recommendation of the closure of the complaints and only for the reason that a controversy had been raised in relation to some allotments. Further, in some cases, the challenge to selection had failed in courts. The guid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd out whether there was any substance in the media exposure. None examined the impact that was likely to result because of en masse cancellation. Many had resigned their jobs. It was necessary because of such a stipulation in LOI. Many had taken huge loans. There were many Schedule Casts/Schedule Tribes, war widows and those whose near relation had died as a result of terrorist activities. The effect of none was considered. How could all those large number against whom there was not even insinuation could be clubbed with the handful of those who were said to have been allotted these dealerships/distributorships on account of political connection and patronage. The two were clearly unequals. The rotten apples cannot be equated with good apples. Under these circumstances, the plea of probity in governance or fair play in action motivating the impugned action cannot be accepted. The impugned order looked from any angle cannot stand the scrutiny of law. The solution by resorting to cancellation of all was worse than the problem. Cure was worse than the disease. The equal treatment to unequals is nothing but inequality. To put both categories ? tainted and the rest ? at par is who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d earlier, 417 names of alleged tainted allotments appeared in media between 2nd August and 24th August, 2002. As a representative category, 10 cases were transferred to this Court. The respondents have given to us particulars of 413 cases which appeared in Indian Express ? four being not traceable according to them. The allegations in Transferred Case Nos.100 to 109 are substantially these: One of the transferred cases relates to allotment of SKO/LDO dealership at Lal Bangla, Kanpur in open category in favour of the son of Member of Parliament from ruling party. It is a case where letter of intent has been issued though agreement was not entered into before the cancellation and the outlet is not operational. According to the petitioner, he had made huge investments, purchased land and completed other formalities and was a graduate of 26 years of age and being son of a Member of Parliament was not a disqualification. It appears that the concerned DSB had interviewed 32 applicants. If being the son of Member of Parliament was not a disqualification, at the same time, it was also not a qualification. The probity in good governance requires the examination of such a matter by an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the transferred cases is that the allottee is son-in-law of a former Member of Parliament whereas in another transferred case, the allegation is that the allottee is a son of a former MLA. In these two cases, service report on the petitioners was awaited. Another transferred case relates to IOC s LPG distributorship. The allegation is that the allottee was the constituency secretary of the Ruling Party. LOI has been issued though the outlet is not operational. According to the petitioner since on merit no.2 was a press reporter his name has been included with mala fide intentions. Another transferred case relates to IOC retail outlet at Sawar, Ajmer where the allegation is about the allottee being son of a party functionary. In one of the transferred cases the allegation is that the father of the allottee is an Inspector General of Anti Corruption Cell in Rajasthan Police. All the applicants claim that the selection by the DSBs in their favour was on merits and not on account of any political or other extraneous consideration. For the present, we are not expressing any opinion on the question whether the selection of the allottees by the DSBs in this category of alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fective working of the Committee. V. The Central Government, State Government/Union Territories and all others are directed to render such assistance to the Committee as may be directed by it. VI. The oil companies are directed to provide as per Committee s directions, the requisite infrastructure, staff, transport and make necessary arrangements, whenever so directed, for travel, stay, payments and other facilities etc. VII. In respect of any case if the Committee, on preliminary examination of the facts and records, forms an opinion that the allotment was made on merits and not as a result of political connections or patronage or other extraneous considerations, it would be open to the Committee not to proceed with probe in detail. For the reasons aforesaid, the impugned order dated 9th August, 2002 is hereby quashed except in respect of cases referred to the Committee. The cases referred to the Committee would be considered on receipt of the report. However, the interim order dated 28th August, 2002 would continue to apply to these referred cases till further orders. The said order is further extended to cases where select panel has been published but letters of i ..... 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