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2000 DIGILAW 1071 (PAT)

Indian Oil Corporation Ltd. v. Alok Prasad Verma

2000-09-04

D.P.S.CHOUDHARY, NAGENDRA RAI

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Judgment 1. The appeal is barred by limitation. 2. After having heard the learned counsel for the parties and considered the grounds given in the limitation petition, the delay in filing the appeal is condoned. 3. Heard the learned counsel or the parties on merit. 4. This appeal is directed against the judgment and order dated 5th June, 2000 passed by a learned Single Judge of this Court in CWJC No. 1994 of 1998 [reported in 2000(4) PLJR 4 (Alok Prasad Verma V/s. Union of India)] by which he has quashed the order dated 2.12.1997 (Annexure-16 to the writ application) passed by the Indian Oil Corporation Limited (hereinafter referred to as the Corporation) whereby the letter of intent granted to respondent No.1 for setting up a retail outlet for sale of petroleum products at village Gaunaha in the district of West Champaran had been withdrawn, and restored the issuance of the Letter of Intent in favour of respondent No.1 and directed the appellant-Corporation to take further steps in accordance with law and also directed the apellant to pay costs of a sum of Rs. 5,000/- to respondent No.1 and also deposit a sum of Rs. 5,000/- with the Member-Secretary, State Legal Services Authority, both within a period of one month from the date of passing the judgment. 5. The fact in this case lie within a narrow compass. The appellant-Corporation issued a notice/advertisement on 19.8.1981 to appoint retail outlet dealers in the State of Bihar under different categories. One of the locations was Village Gaunaha within the district of West Champaran which was reserved for unemployed graduate. According to the aforesaid advertisement, an income limit was fixed for unemployed graduate. The income limit was as follows : "In the case of candidates who are applying against dealerships reserved for Unemployed Graduate and Unemployed Engineering Graduate, parents joint income should not exceed Rs. 15,000/- per annum. In the case of married women, husbandss income should not exceed Rs. 15,000/- per annum." 6. The respondent no. 1 applied for retail outlet dealership claiming himself to be an Unemployed Graduate and his parents joint income having less than Rs. 15,000/-. per annum. The other candidates also applied. Respondent No. 1 was selected and the Letter of Intent was issued to him. Therefore, he arranged a plot of land and also deposited the requisite sum of Rs. 46,000/- in the Bank. 15,000/-. per annum. The other candidates also applied. Respondent No. 1 was selected and the Letter of Intent was issued to him. Therefore, he arranged a plot of land and also deposited the requisite sum of Rs. 46,000/- in the Bank. Thereafter, the Corporation received several complaints/objections from, Mukhiya, Gram Panchayat Gaunaha, M.L.A.s of Bihar and the Chairman of Zila Parishad that the respondent No. 1 is a rich man having two Cinema Halls at Narkatiaganj, a large agricultural land at village Dhanauji and a big house in the posh area at Chajjubagh, Patna. After considering the said complaints, the Corporation by order dated 8.8.1983 revoked the Letter of Intent. Respondent No.1 filed a writ application being CWJC No. 4523 of 1984 before this Court challenging the order dated 8.8.1983 and the same was disposed of on 23rd September. 1996. The learned Single Judge having noticed that once the Letter of Intent was issued to respondent No.1, the appellant-Corporation should have given an opportunity of hearing before revocation of the Letter of Intent and accordingly quashed the order primarily on that ground and directed the Deputy General Manager, Marketing Division, Eastern Region, Calcutta, appellant No.4, to issue notice to respondent No.1 to show cause annexing all such materials within the time mentioned in the order and thereafter respondent No.1 will submit his explanation and in case he desires of an opportunity of personal hearing, then the same may be given to him and thereafter the appellant Corporation will pass appropriate orders and communicate to respondent No.1 as early as possible. Thereafter, respondent No.1 appears to have submitted a letter on 30th September, 1996 to the appellants asking them to give copies of all the complaints/representations made to the authorities of the Corporation by the public functionaries so that he could effectively put his defence with regard to those allegations. On 30th October, 1996, the officers of the Corporation issued a show cause notice stating the four grounds which were as follows : "(1) That Shri Jagannath Pandey, Mukhiya, Gram Panchyat Raj, Parsa Gaunaha, West Champaran vide his letter no. 25/82(P) dated 16.8.1982 addressed to our Divisional Manager at Patna represented that you own two cinema halls at Narkatiaganj, possess a large farm at Dhanauji and your annual income exceeds Rs. 15,000/-. Hence you do not meet the eligibility criteria. A photo copy of the above representation is enclosed herewith. 25/82(P) dated 16.8.1982 addressed to our Divisional Manager at Patna represented that you own two cinema halls at Narkatiaganj, possess a large farm at Dhanauji and your annual income exceeds Rs. 15,000/-. Hence you do not meet the eligibility criteria. A photo copy of the above representation is enclosed herewith. (2) That a Joint petition dated 1.9.1982 to the Hon ble Minister, Ministry of Petroleum & Chemicals, New Delhi, submitted by Shri Ram Chandra Mishra, MLA, Shri Rajendra Prasad Sharma, MLA, Sri Mahendra Narayan Jha, MLA and Sri Mithilesh Kumar Pandey, MLA all from, Bihar Bidhan Sabha represented that your annual income far exceeded the limit of Rs. 15,000/- per annum as you are owner of two cinema halls at Narkatiaganj, a large farm at Dhanauji, own a big house at Chajjubagh, Patna fetching rent of about Rs. 20,000/- per annum from M/s Hindustan Fertilizers Corporation Ltd. A photocopy of the above representation is enclosed herewith. (3) That the Chairman, Zila Parishad, Bettiah vide letter dated 16.9.1982 addressed to our Divisional Manager at Patna and copied to Ministry of Petroleum, New Delhi, represented that you are not unemployed but self-employed as you own two cinema halls at Narkatiaganj and have an annual income much above Rs. 15,000/-. The representation further stated that one of your house at Chhajubagh, Patna alone gets rent of Rs. 21,000/- per annum from M/s Hindustan Fertilizer Corporation Ltd. A photocopy of above representation is enclosed. (4) Our enquiries revealed that particulars of income of your parent exceeded than what you had mentioned in your application dated 16.8.1981 and the enclosures thereto. Kindly produce relevant Income-Tax clearance certificate dated 16.8.1981 that your parents income did not exceed Rs. 15,000/- per annum." 7. It appears that along with show cause notice, the relevant letters written by Mukhiya of Gram Panchyat Raj, Parsa Gaunaha, and letters written by the Members of Legislative Assembly, Bihar, and the Chairman, Zila Parishad which form the basis of allegation of grounds were also annexed with the show cause notice. The respondent No.1 filed a show cause and stated that his father died in 1981 and the joint family consisting of himself and mother own and possess Himalaya Chitra Mandir and Bhagwati Picture Palace at Narkatiyaganj, agricultural land and a house in the town of Patna. The respondent No.1 filed a show cause and stated that his father died in 1981 and the joint family consisting of himself and mother own and possess Himalaya Chitra Mandir and Bhagwati Picture Palace at Narkatiyaganj, agricultural land and a house in the town of Patna. He claimed that he and her mother has 1/3rd share in the Cinema business and 1/2 share in the house of Patna. He also admitted that he has income from agricultural land. However, he stated that the total income of the family is below Rs. 15,000/- per annum. The matter was considered by the General Manager (Sales) of the Corporation after coming into finding that the income of respondent No.1 during 1981-82 (relevant period) was more than Rs. 15,000/- per annum and as such he was not eligible for grant of retail outlet dealership. The said order was communicated by covering letter dated 15.12.1997 to respondent No.1, a copy of which has been annexed as Annexure- 16 to the writ application. From perusal of the aforesaid order, it appears that before passing the impugned order, respondent No.1 was given a personal hearing apart from showing cause and filing relevant documents. The General Manager (Sales) of the Corporation also directed the Deputy General Manager, Patna EDO of the Corporation to enquire the family income of respondent No.1 during 1981-82 who carried out the inquiry through his Field Officers and submitted the report. The General Manager (Sales) of the Corporation thereafter having considered entire materials passed the impugned order. The respondent No.1 challenged the aforesaid order before this Court. 8. The learned Single Judge quashed the impugned order and restored the grant of Letter of Intent for retail outlet to respondent No.1 on three grounds. Firstly, that the impugned order has been passed without supplying all the relevant materials forming the basis of decision in breach of the direction issued by this Court on earlier occasion. Secondly, no reason has been assigned to revoke the Letter of Intent and thirdly that the appellant has acted arbitrarily in arriving at a conclusion that the parents income of respondent No.1 was above Rs. 15,000/- per annum. 9. The learned cousel for the appellant Corporation submitted that grant of retail outlet dealership is largesse and the Corporation with a view to achieve economic and social justice laid down a policy for the grant of the same. 15,000/- per annum. 9. The learned cousel for the appellant Corporation submitted that grant of retail outlet dealership is largesse and the Corporation with a view to achieve economic and social justice laid down a policy for the grant of the same. One of its policies was that the dealership should be given to unemployed youth graduate whose parents joint income does not exceed Rs. 15,000/-. This policy would be defeated if the largesse is granted to a person who possesses sufficient property. The respondent No.1 and his mother have possessed two Cinema halls at Narkatiaganj, a house in the town of Patna and agricultural lands and suppressing these facts, respondent No.1 obtained a Letter of Intent and when the appellants came to know the same on the basis of the allegations against him, inquired into the matter and revoked the Letter of Intent. While doing so, the appellants have complied with the direction given by this Court earlier inasmuch as the relevant documents were supplied to respondent No.1 and he was given an opportunity of hearing and thereafter the order was passed. The learned counsel for the appellants also submitted that the reasons are stated in the impugned order and they acted in just and fair manner in revoking the grant of retail outlet dealership. 10. The learned counsel for respondent No.1 on the other hand supported the reasons given by the learned Single Judge and further reiterated that the appellants have acted arbitrarily in revoking the Letter of Intent without carrying out the direction given by this Court earlier. In this connection, he submitted that even the report of the Enquiry Officer which was conducted by the appellant was not supplied though the said report has been heavily relied upon by the appellants in passing the impugned order. 11. The Corporation is a State within the meaning of Section 12 of the Constitution of India and all its action in every field including contractual field or in the field of granting largesse should be just, fair and reasonable. It can neither have an unfettered discretion in exercise of its power, nor it can lay down arbitrary and capricious standards for the choice of persons. It can neither have an unfettered discretion in exercise of its power, nor it can lay down arbitrary and capricious standards for the choice of persons. Non-arbitrariness being a necessary commitment (sic concomitant) of the rule of law, all actions of the public functionary should be guided by reasons and not by humour, whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State. In other words, the action of the public authorities in every sphere including contractual matter has to be decided and judged In the light of Article 14 of the Constitution of India. 12. In the case of V. Punnen Thomas V/s. State of Keraia (AIR 1969 Kerala 81), Mathew, J, (as he then was) observed that "The Government is not and should not be as free as an individual in selecting the recipients for its largesse. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal." 13. In the case of Kumari Shrilekha Vidyarthi and others V/s. State of U.P. and others [(1991) 1 Supreme Court Cases 212], the Apex Court held that the action of the public fuctionary in whatever sphere must be guided by reason and any action of the public authorities not informed by reason cannot be protected as the same would amount to arbitrary one. 14. Recently in the case of Style (Dress Land) V/s. Union Territory, Chandigarh and another (batch cases) [(1999) 7 Supreme Court Cases 89], the Apex Court held in paragraphs 10 and 12 as follows : "The Government cannot act like a private individual in imposing the conditions solely with the object of extracting profits from its lessees. Governmental actions are required to be based on standards which are not arbitrary or unauthorised. X X X X X X Non-arbitrariness, being a necessary concomitant of the rule of law, it is imperative that all actions of every public functionary in whatever sphere must be guided by reason and not humour, whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all powers must be for public good instead of being an abuse of power. Action of renewability should be gauged not on the nature of function but public nature of the body exercising that function and such action shall be open to judicial review even if it pertains to the contractual field. The State action which is not informed by reason cannot be protected as it would be easy for the citizens to question such an action as being arbitrary." 15. The same view has been reiterated in the case of Common Cause, A registered Society V/s. Union of India and others {(1999)6 Supreme Court Cases 667} and in the case of TVL Sundaram Granites V/s. Imperial Granites Ltd. and others {(1999) 8 Supreme Court Cases 150}. 16. Thus, it is settled law that the public authority has to act in a just and fair manner even into contractual matter and grant of largesse and its order should be supported by reasons. It is equally well settled that every decision of the authority, except the judicial decision is amenable to judicial review and if the impugned action is against the law or in violation of principles of natural justice or malafide or capricious, then the judicial review is permissible. However, in making the judicial review, the Court is not concerned with the correctness of the decision, but has only to see as to whether in decision making process, the authorities have erred. In other words, whether the established principle of law or principle of natural justice etc. have been followed or not. The Court cannot substitute its own opinion or judgement in place of the decision arrived at by the administrative authority. See AIR 1996 Supreme Court 11, Tata Cellular V/s. Union of India, AIR 1996 Supreme Court 51, Sterling Computers Ltd. V/s. M/s M & N Publications Ltd. and others. 17. The facts of the present case has to be judged in the light of well settled law. In terms of advertisement, the retail outlet dealership is to be granted to an unemployed youth graduate whose family has Rs. 15,000/- per annum income. Any attempt to frustrate this object has to be checked by the Corporation. The respondent No.1 obtained the dealership suppressing the fact that he has share in the Cinema business, in the house which situate at mohalla Chhajubag, Patna and also possessed of agricultural land. The appellants having come to know through different sources revoked the letter of Intent. Any attempt to frustrate this object has to be checked by the Corporation. The respondent No.1 obtained the dealership suppressing the fact that he has share in the Cinema business, in the house which situate at mohalla Chhajubag, Patna and also possessed of agricultural land. The appellants having come to know through different sources revoked the letter of Intent. The matter came to this court and this Court set- aside the order primarily on the ground that the same was done without observing the principles of natural justice. Thereafter the authorities issued a show cause notice and supplied all the papers which were filed against respondent No.1 and respondent no.1 filed a show cause. While the matter was pending, the appellant- Corporation got an inquiry held and the concerned Officer also submitted an inquiry report and that inquiry report has also been relied upon while passing the order adverse to respondent No.1. This Court as stated above, while quashing the earlier order of revocation directed that all the materials including inquiry report should be supplied before passing final order. Admittedly, that inquiry report was not supplied by the Corporation which has been heavily relied upon by the officers of the Corporation while cancelling the Letter of Intent. This non- supply of the aforesaid report amounts to not carrying out the direction given by this Court earlier. This apart, it amounts to following an unfair procedure while dealing with matter as non-supply of the aforesaid inquiry report was not just and fair as the same amount to breach of principles of natural justice. We fully agree with the view taken by the learned Single Judge that the impugned order is vitiated because of non-supply of some of the materials in terms of the earlier direction given by this Court. As stated above, while exercising the power of judicial review, the Court has only to see whether there is any infirmity in decision making process. It cannot decide on merit as an appellate forum. We have found that the appellant-Corporation has erred in decision making process by not supplying a copy of the inquiry report before passing the final order. It is made clear that other relevant documents have been supplied. The impugned order passed by the appellant-Corporation is vitiated on this ground alone. It cannot decide on merit as an appellate forum. We have found that the appellant-Corporation has erred in decision making process by not supplying a copy of the inquiry report before passing the final order. It is made clear that other relevant documents have been supplied. The impugned order passed by the appellant-Corporation is vitiated on this ground alone. In our view, it was not necessary at all to go into the question on merit to find out as to whether respondent No.1 has income of Rs.15,000/- or more. This decision has to be taken by the authority and not by this Court in exercise of power of review. In our view, the learned Single Judge should not have decided on merit. 18. In the result, the appeal is allowed in part and the order of the learned Single Judge by which he has restored the dealership of retail outlet in favour of respondent No.1 is set aside and quashing the impugned order by him is upheld and the matter is remitted to the appellant- Corporation to consider the question afresh after supplying the copy of the inquiry report. We would like to make it clear that the main object in terms of the advertisement is to grant dealership of retail outlet for distribution of petroleum product to a person who is unemployed Graduate in a true sense and this should be kept in mind by the Corporation while considering the question afresh. There shall be no order as to costs.