S. L. TALATI, J. ( 1 ) THE respondent Indian Oil Corporation Limited is a Government of India undertaking and is engaged in distribution of kerosene and light diesel oil (L. D. O ) and it has the sole monopoly in allotment of dealership and distributorship of kerosene and L. D. O. The respondent is the State within the meaning of Article 12 of the Constitution of India. ( 2 ) THE respondent Company in May 1973 gave an advertisement in several Newspapers for appointment of dealer for Baroda- Sankheda region in Baroda district for kerosene and L. D. O. Applications were invited from public for appointment of dealer for kerosene and L. D. O. in Baroda-Sankheda region. About 70 or 80 persons applied in response to that advertisement. The advertisement required certain educational qualifications business capacity to secure sales and management and it further provided that the person whose parents husband or wife brother or sister sons or daughters if any of them have got dealership then such persons should not apply for getting dealership. After scrutiny of the applications which were received interviews were held at Ahmedabad on 27/09/1979 Several persons including the petitioner were called for interview. The committee of four persons was appointed for selecting a person to whom dealership can be granted. After full inquiries and considering the financial capacity and capacity for storage it was unanimously resolved and recommended by the said committee that the petitioner should be appointed as a dealer for the said region. The petitioner had a godown at Makarpura near National Highway and had also an office with telephone communication and ultimately the name of the petitioner was unanimously recommended by the Committee of four persons. After the recommendation was made by the Committee the Senior Sales Officer Mr. Shrivastav verified the contents of the application and also verified the financial capacity of the petitioner collected all the documents from the petitioner including the income tax returns of the petitioner for the last three years. He also endorsed the unanimous recommendation made by the Committee. The petitioner learnt that he was the sole person for dealership for Baroda-Sankheda region. Ultimately the papers were forwarded to the regional office for approval. The petitioner reliably learnt that the regional office at Bombay also approved the granting of dealership to the petitioner. However the petitioner was not appointed. He also endorsed the unanimous recommendation made by the Committee. The petitioner learnt that he was the sole person for dealership for Baroda-Sankheda region. Ultimately the papers were forwarded to the regional office for approval. The petitioner reliably learnt that the regional office at Bombay also approved the granting of dealership to the petitioner. However the petitioner was not appointed. According to the petitioner he was also informed by the Senior Sales Manager that the petitioner was the only person selected for dealership and therefore the petitioner could not be denied for appointment of dealership. ( 3 ) THEREAFTER the Senior Sales Officer Mr. Deshmukh of Ahmedabad visited the petitioners place and again made inquiries which had already made previously and on inquiry the petitioner learnt that some anonymous applications were made by the interested parties who could not get dealership to the effect that one Shri Deepak Shah a partner of J. C. Shah and Co. who had dealership for kerosene and L. D. O. in Baroda was related to or at any rate was a fast friend of the petitioner. According to the petitioner Shri Deepak Shah was not related to him and he was not his fast friend. He only knew him According to the petitioner his statement was recorded and the petitioner in his statement made it clear that he had no relationship with Shri Deepak Shah. The petitioner also learnt that the statement of Shri Deepak Shah was also recorded and he also clearly stated that he was not related to the petitioner. Some how the petitioner was not granted dealership. The petitioner probably thought that on account of some strained relationship of Shri Deepak Shah and some higherup in the office he was not granted dealership. Ultimately the respondent issued another advertisement and fixed interviews on 15/04/1982 at Ahmedabad for selecting a person for granting dealership of kerosene and L. D. O. As a result the petitioner filed the present petition on 13/04/1982 and obtained an interim mandatory order directing the respondent not to hold interviews and praying for a writ of mandamus under Article 226 of the Constitution of India and sought directions against the respondent to grant dealership to the petitioner for kerosene and L. D. O. for Baroda-Sankheda region in pursuance of the advertisement given in May 1979. ( 4 ) THE Deputy Divisional Manager Mr. ( 4 ) THE Deputy Divisional Manager Mr. V. Lobo filed an affidavit in reply to the petition. It is stated in the reply affidavit that inquiries were made by the officers of the respondent in respect of the proposed appointment of the petitioner as a dealer and the relationship/association of the petitioner with M/s. J. C. Shah and Company and it is further stated that after all relevant facts the respondent decided not to appoint the petitioner as a dealer. It is further stated that the respondent denied that the petitioner had satisfied all the conditions as alleged. It is further stated as under :"it is submitted that irrespective of the fact that the petitioner has satisfied such conditions or not the question of appointment of dealership is a matter of confidence between the respondent and the dealer and the assessment by the Respondent and various relevant and material factors pertaining to a proposed dealer including his ability competence resources. etc. to effectively and effectively work as a dealer of the respondent. "it was further stated that the committee had only recommendatory powers and for various administrative reasons no decision could be taken in respect of the appointment of a dealer on the basis of the interviews held by the selection committee on 27/09/1979 who have responded to the advertisement issued in May 1979 According to the respondent they had decided in July 1981 not to approve the appointment in favour of the petitioner. They produced Circulars to show as to who has the power to grant dealership. ( 5 ) NOW it is clear from the reply that it is not the case of the respondent that M/s. J. C. Shah and Co. or Mr. Deepak Shah are relatives as contemplated by the advertisement. Further though it is stated that it is a matter of confidence between the respondent and the dealer and it is further stated that various relevant and material factors pertaining to a proposed dealer including his ability competence resources etc. to efficiently and effectively work as a dealer of the respondent are required to be considered. It is not stated as to whether the petitioner was unable incompetent or had no resources or was not efficient or had any disqualification attached to him which could be suggested that he would not be able to work effectively as a dealer of the respondent. It is not stated as to whether the petitioner was unable incompetent or had no resources or was not efficient or had any disqualification attached to him which could be suggested that he would not be able to work effectively as a dealer of the respondent. Though it is stated that there were various administrative reasons not a single reason is stated. It is stated that relevant facts were considered but it is not stated as to which fact went against the petitioner. Now therefore in the reply affidavit it is not denied as a fact that the name of the petitioner was recommended by the Committee. 1t is also not denied that Shri Shrivastav and Shri Desmukh were satisfied on seeing the income tax returns etc. that the petitioner was financially capable to have the dealership. The respondent perhaps had no reason not to grant dealership to the petitioner and therefore they could not state as to what prompted them to issue new advertisement or what prompted them to reject or not to grant dealership to the petitioner though Mr. Deepak Shah was not related to the petitioner. though he was otherwise competent and financially sound. Therefore it is clear that the respondent only has one case and that case is that the Committee is a recommendatory committee and a particular officer of the respondent had the power to grant dealership and that power is exercised. ( 6 ) IT is clear that the respondent does not understand the meaning of the word power. Where any public officer is given a power it is only an enabling power which gives him an authority to exercise that power. Now when a person gets an authority to exercise power it only means that he is endowed with a duty which casts upon him to work in a democratic structure in such a way that at the time of performing his duty he exercises his power in the interest of the society If that is well understood. it would mean that power is to be exercised in such a way that it is not only fair but it is never arbitrary or with whim or caprice or a power which a person enjoys where the government is dictatorial. it would mean that power is to be exercised in such a way that it is not only fair but it is never arbitrary or with whim or caprice or a power which a person enjoys where the government is dictatorial. Every public servant who has been given power in a democratic structure must understand that he is given a particular duty which he has to perform fairly in a just manner in public interest and in order that he may be able to act justly fairly and in public interest what he does is called exercise of power which in fact is a performance of duty. I may refer to two cases only. ( 7 ) ONE case is RAMANA V. I. A. AUTHORITY OF INDIA A. I. R. 1979 SUPREME COURT 1628 In paragraph 11 it is stated as follows :"11 Today the Government. in a welfare state is the regulator and dispenser of special services and provider of a large number of benefits including jobs contracts licences quotas mineral rights etc. The Government pours forth wealth money benefits services contracts quotas and licences. The valuables dispensed by Government take many forms hut they all share one characteristic. They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationships to Government are of many kinds. They comprise social security benefits cash grants for political sufferers and the whole scheme of State and local welfare. Then again thousands of people are employed in the State and the Central Government and local authorities. Licences are required before one can engage in may kinds of businesses or work. The power of giving licences means power to withhold them and this gives control to the Government or to the agents of Government on the lives of many people. Many individuals and many more businesses enjoy largess in the form of Government contracts. These contracts often resemble subsidies. It is virtually impossible to lose money on them and many enterprises are set up primarily to do business with Government. Government owns and controls hundreds of acres of public land valuable for mining and other purposes. These resources are available for utilisation by private corporations and individuals by way of lease or licence. These contracts often resemble subsidies. It is virtually impossible to lose money on them and many enterprises are set up primarily to do business with Government. Government owns and controls hundreds of acres of public land valuable for mining and other purposes. These resources are available for utilisation by private corporations and individuals by way of lease or licence. All these mean growth in the Government largess and with the increasing magnitude and range of governmental functions as we move closer to a welfare State more and more of our wealth consists of these new forms. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. But on that account can it be said that they do not enjoy any legal protection? Can they be regarded as gratuity furnished by the State so that State may withhold grant or revoke it at its pleasure? Is the position of the Government in this respect the same as that of a private giver ? We do not think so. The law has not been slow to recognise the importance of this new kind of wealth and the need to protest individual interest in it and with that end in view it has developed now forms of protection. Some interests in Government largess formerly regarded as privileges have been recognised as rights while others have been given legal protection not only by forging. procedural safeguards but also by confining/structuring and checking Government discretion in the matter of grant of such largess. The discretion of the Government has been held to be not unlimited in that the Government cannot give or withhold largess in its arbitrary discretion or at its sweet will. It is insisted as pointed out by Professor Reich in an especially stimulating article on The New Property in 73 Yale Law Journal 733 that Government action be based on standards that are not arbitrary or unauthorised. The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences only in favour of those having gray hair or belonging to a particular political Party or professing a particular religious faith. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. It does not stand in the same position as a private individual. "the second case is the case of M/s. KASTURILAL V. STATE OF J. and K. A. I. R. 1980 SUPREME COURT PAGE 1992. The observations made in paragraphs 11 14 and 15 of that judgment are required to be quoted. "where the Government is dealing with the public. whether by way of giving jobs or entering into contracts or granting other forms of largess the Government cannot act arbitrarily at its sweet Will. There are two limitations imposed by law which structure ant control the discretion of the Government in this behalf. The first is in regard to the terms on which largess may be granted and the other in regard to the persons who may be recipients of such largess. Unlike a private individual the State cannot act as it pleases in the matter of giving largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. EVERY activity of the Government has a public element in it and it must therefore be informed with reason and guided by public interest. If the Government awards a contract or leases out or otherwise deals its property or grants any other largess it would be liable to be tested for its validity on the touch stone of reasonableness and public interest and if it fails to satisfy either test it would be unconstitutional and invalid. IT must follow as a necessary corollary that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government therefore cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it unless of course there are other considerations which render it reasonable and in public interest to do so. The Government therefore cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it unless of course there are other considerations which render it reasonable and in public interest to do so. Such considerations may be that some Directive Principle is sought to be advanced or implemented or that the property is given not with a view to earning revenue but for the purpose of carrying out a welfare for the benefit of a particular group or section of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given that contract or the property. THERE may be an infinite variety of considerations which may have to be taken into account by the Government in formulating irs policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action that the Court would have to decide whether the action of the Government is reasonable and in public interest. ONCE basis principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest. But where it is so satisfied it would be a plainest duty of the Court under the Constitution to invalidate the governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law. It may be pointed out that this ground of invalidity namely that the governmental action is unreasonable or lacking in the quality of public interest is different from that of mala fides though it may in a given case furnish evidence of mala fides. It may be pointed out that this ground of invalidity namely that the governmental action is unreasonable or lacking in the quality of public interest is different from that of mala fides though it may in a given case furnish evidence of mala fides. ( 8 ) CONSIDERING the two authorities cited above considering the facts stated in the petition and also considering the affidavit of Shri V. Loho the only possible conclusion is that the power which is exercised is exercised in most arbitrary manner. It is highly unjust and it is exercised without understanding the meaning of the word power which is to be given in this democratic structure. I hope the officers of the Indian Oil Corporation Limited will understand that they are not the officers of any private Corporation and the kerosene and L. D. O. is not the property of any private individual but they belong to the State and when it is a monopoly it is expected that the power given to them is exercised in such a way that citizens from this monopolistic concern expect just and fair play at their hands. If this is understood in its right spirit I hope such a thing will never happen again. ( 9 ) WITH these remarks the petition is allowed and the respondent is directed to grant dealership to the petitioner for kerosene and L. D O. for Baroda-Sankheda region in pursuance of the advertisement given in May 1979 by the respondents. Rule is made absolute with costs. .