Gujarat High Court
Chief Area Manager vs Mahitoshkumar Sureshbhai Patel on 9 July, 2021
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, Vaibhavi D. Nanavati
C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 1798 of 2019
In R/SPECIAL CIVIL APPLICATION NO. 15991 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of NO
the judgment ?
4 Whether this case involves a substantial question of NO
law as to the interpretation of the Constitution of
India or any order made thereunder ?
==========================================================
CHIEF AREA MANAGER
Versus
MAHITOSHKUMAR SURESHBHAI PATEL
==========================================================
Appearance:
MR MANISH R BHATT, SENIOR COUNSEL FOR M R BHATT AND CO.
(5953) for the Appellant(s) No. 1
M R BHATT AND CO.(5953) for the Appellant(s) No. 2
MR MUNJAAL M BHATT(8283) for the Appellant(s) No. 1,2
MR RS SANJANWALA, SENIOR COUNSEL WITH MR JAY S SHAH(7244)
for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021
Date : 09/07/2021
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 This appeal under clause 15 of the Letters Patent is at the instance of the original respondents of a writ application filed by the respondent herein (original writ applicant) and is directed against the order passed by a learned Single Judge of this Court dated 4 th October 2019 in the Special Civil Application No.15991 of 2019, by which the learned Single Judge disposed of the writ application with some observations.
2 The facts giving rise to this appeal may be summarized as under:
3 The original writ applicant came before this Court by filing the Special Civil Application No.15991 of 2019 seeking for the following reliefs:
"(A) Your Lordships may be pleased to issue a writ of prohibition and / or a writ in the nature of prohibition and / or a writ of mandamus and / or a writ in the nature of mandamus to quash and set aside orders / communication dated 09.09.2019 issued by respondent no.2.
(B) Your Lordships may be pleased to issue a writ of prohibition and / or a writ in the nature of prohibition and / or a writ of mandamus and / or a writ in the nature of mandamus directing respondent corporation to permit the petitioner to offer suitable alternate shop / land for the purpose of showroom in connection with advertisement dated 16.06.2017 and consequent selection of the petitioner in view of communication dated 16.01.2018;
(C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the respondent corporation not to proceed further for redraw and / or re-advertisement in connection with advertisement dated 16.06.2017 and consequent selection of the petitioner in view of communication dated 16.01.2018;
(D) An ex-parte ad-interim relief in terms of prayer (C) above may Page 2 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 kindly be granted;
(E) Such other and further relief/s as may be deemed just and necessary in the facts and circumstances of the present case may kindly be granted."
4 It appears from the materials on record that the appellants herein are a Public Sector Undertaking under the Ministry of Petroleum and Natural Gas, Government of India and a Government Company under the Companies Act, 2013. The Corporation is in the business of sale and distribution of petroleum products through its retail outlets / LPG distributorships.
5 The Corporation published an advertisement dated 16 th June 2017 for the LPG distributorship at Surat. The original writ applicant applied pursuant to the said advertisement. The Corporation vide letter dated 16th January 2018 informed the original writ applicant that he had been declared as a successful candidate in the draw of lots conducted on 15 th January 2018 for selection of the LPG distributor at the subject location.
6 In the aforesaid context, the Corporation asked the original writ applicant to do the following:
"1. Deposit an amount of Rs.50000 (Rupees fifty Thousand only) applicable to the subject advertised location, in line with the provisions Unified Guidelines for Selection of LPG Distributors.
The above amount is to be deposited through a CTS compliant Demand Draft / Pay order (Note : Non CTS instrument will not be accepted) in favour of Indian Oil Corporation Ltd. payable at Surat and to be submitted to the following address within 7 working days from the date of this email failing which your candidature is liable to be summarily rejected:
DGM (LPG-S) INDIAN OIL CORPORATION LTD. (M.D.) INDANE AREA OFFICE, Ghod Dod Road, Surat - 395001 Page 3 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 This amount may be adjusted the Security deposit payable at the time of appointment as LPG Distributor at subject location.
2. Submit the set of documents as specified within 7 working days at the above address.
CATEGORY OF DOCUMENTS REQUIRED TO BE SUBMITTED FOR THE LOCATION CARRYING OUT FIELD VERIFICATION (FVC) ADVERTISED OPEN i. Self-attested copy of photo ID as proof of identity, issued by any Government authority. The self-attested copy will be verified with the original.
ii. Declaration by the applicant as per Appendix-1 (in original) iii. Proof of date of birth i.e. - School Leaving Certificate / Birth Certificate / Passport / PAN Card (self attested photocopy of the original) iv. Proof of education qualification i.e. - copy of certificate of passing X Std. or equivalent (self attested photocopy of the original) v. Declaration as per format given in Appendix-4 whichever is applicable (in original).
vi. Land documents: Documents pertaining to land / godown/showroom in the name of applicant or member of 'family unit' registered sale deed / gift deed / lease deed (15 yrs minimum / mutation and government record. (self attested photocopy of the original) 7 It appears that thereafter, the original writ applicant was informed by the Corporation vide letter dated 9th September 2019 that his candidature stood rejected for the reasons assigned in the letter and the amount of Rs.50,000/- deposited by the writ applicant with the Corporation stood forfeited in line with the clause Nos.26(a) and 26(b) respectively of the Brochure of Unified Guidelines for Selection of LPG Distributors. The letter dated 9th September 2019 reads thus:
Page 4 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 "SHRI MAHITOSHKUMAR SURESHBHAI PATEL 120, NANDANVAN ROW HOUSHE MADHAVBAG SOC. PRAVAT PATIYA, SURAT SURAT GUJARAT, PINCODE - 395010 MOBILE NO.7878854282 Sir,
Sub : Application for award of LPG distributorship location : Surat (2) District : Surat Under Open Category advertised on 16.06.2017 Type of LPG Distributorship: Sheheri.
Please refer your application (serial number IOC03112029816072017) for award of abovementioned LPG Distributorship.
We regret to inform you that upon field verification of the information submitted by you in your application mentioned above, the following variance was observed:
Following complaint was received against your selection of candidature for subject location. (a) Mistake in name of the owner of land/lease holder and relation with applicant mentioned in the application form
(b) selected candidate Shri Mohitosh kumar Sureshohai Patel and another applicant Shri Dnavalkumar Mahesbhai Patel had offered same piece of land for showroom at Survey No. 92, Block No. 147, Plot No.1367, Om Nagar Society, Kharvasa Road, Dindoi Dist. Surat.
On physical verification of the plot it was observed that the plot at Survey No.92, Plot No.1367 is 11.9 x 4.5 meter. However further documents were submitted by the committee which shows that total dimension of the plot area 39.03 sq.mtrs. Owner of the shops Shri Ashwinbhai Bhagwanbhai Patel had executed lease deed in favor of Shri Mohitosh kumar Sureshbhai Patel at Plot No.1367 Om Nagar Society with the dimension of 4 meter x 5 meter (20 Sq meter). The owner has also executed another lease deed in favour of Shri Dhavalkumar Maheshbhai Patel with dimension of 4 meter x 5 meter (20 sq. meter).
From the above, it is observed that owner had executed lease deed of 20+20=40 square meter. However he is in a possession of 39.03 square meter and for showroom. This shows that area of the land for which lease document have been executed is more than the land area available on records. This implies that there is an overlap of some portion of the land leased to two applicants of same location.
Page 5 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 As per Unified selection Guidelines (the same piece of land for showroom cannot be offered by more than one applicant for a particular location against the advertisement. In case it if found at any stage that the same piece of the land for showroom has been offered by more than one applicant for the same location, then all such applicant would be rejected or if selection has been done than the sane will be cancelled.
In view of the above, your candidature is rejected and the amount of Rs.50,000/- deposited with the Corporation stands forfeited in line with clause No.26a & 26b as per Brochure of Unified Guidelines for selection of LPG Distributors.
Thanking you, Your faithfully, For Indian Oil Corporation Ltd., sd/-
(Mukesh Kumar) Chief Area Manager"
8 The aforesaid letter was made the subject matter of challenge in the writ application. The learned Single Judge adjudicated the writ application and disposed of the same holding as under:
"7. Learned advocate Mr. Prabhav Mehta for the petitioner submitted that the petitioner has submitted lease deed executed in his favour which is duly registered with the office of Sub- Registrar and as per the said lease deed, the petitioner is to operate his show-room for the purpose of LPG distributorship. He further submitted that there are three shops existing on the aforesaid land. It was therefore, pointed out that the petitioner has taken one of the shops on lease and identical lease deed is executed for other shop as the measurements of the shops are the same. It was submitted that the objection was raised by the respondents to reject the candidature of the petitioner without any basis. Learned advocate for the petitioner invited the attention of the Court to the tax bills issued by Surat Municipal Corporation for each of the two shops which show that there are different tenement numbers and accordingly, it was submitted that the shops for which the petitioner has entered into lease deed is a separate distinct shop which is to be used for the purpose of LPG distributorship. He further submitted that he has filed this petition on 16th September, 2019 and the petition was circulated on 23rd September, 2019 and redraw was done subsequently after filing of this petition Page 6 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 and after this Court has heard the advocates for both the petitioners as well as the respondents and it was understood that redraw which may take place would be subject to outcome of the petition.
8. On the other hand, learned Senior Advocate Mr. Manish Bhatt for the respondents submitted that on inquiry made by field verification, it was revealed that the say of the petitioner is true that there are three shops. However, the petitioner has not submitted any letter showing permission to use such shop nor the petitioner has produced any document granting permission for the purpose of use of the shop. He further submitted that the petitioner is also not able to satisfy as to how in a plot admeasuring 39.03 sq. mtrs, shops more than the area of the land can be situated. He also invited the attention of the Court to the fact that re-draw for allocation has already been held by the respondents.
9. Having regard to the submissions made by learned advocates for the respective parties, it is not in dispute that there are two different shops having two different tenement numbers for which two different lease deeds are executed and one of which is executed in favour of the petitioner who is selected for allotment of LPG distributorship. It is also an admitted position that as per the bills produced on record, area of usage is 15.61 sq. mtrs only. Therefore, what is stated in the lease deed is not correct as per area of usage stated in tax bill issued by the Surat Municipal Corporation for levy of property tax. The respondents ought to have taken into consideration actual measurement as per tax bill. Therefore, reason which is given for rejecting the candidature of the petitioner is non existent and as such impugned order is required to be quashed as the same is passed only on the basis of lease deed executed by the petitioner without taking into account the actual measurement of the shop in question.
10. In view of the aforesaid discussion, the impugned order is hereby quashed and set aside. Redraw for allocation of LPG distributorship would also be of no consequence as the same was conducted pursuant to the impugned order which is now quashed and set aside. The petitioner is however, required to submit the required documents which may be called for by the respondents for the purpose of usage of shop in question so as to avoid any future complications for operation of LPG distributorship.
11. Petition is accordingly disposed of. Rule is made absolute to aforesaid extent with no order as to costs."
9 The Corporation, being dissatisfied and aggrieved with the order passed by the learned Single Judge referred to above, has preferred the Page 7 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 present appeal.
10 On 30th June 20201, this Bench passed the following order:
"1. We have heard Mr. Munjaal M. Bhatt, the learned counsel appearing for the appellant - IOC Ltd., and Mr. Rashesh S. Sanjanwala, the learned Senior Counsel assisted by Mr. Jay S. Shah, the learned advocate appearing for the respondent (original writ applicant).
2. The dispute involved in the present litigation is in a very narrow compass. All that is required for disposal of this appeal is some clarification at the end of both the sides. Our attention has been drawn to para-10 of the impugned order passed by the learned Single Judge. Para-10 reads thus:-
"10. In view of the aforesaid discussion, the impugned order is hereby quashed and set aside. Redraw for allocation of LPG distributorship would also be of no consequence as the same was conducted pursuant to the impugned order which is now quashed and set aside. The petitioner is however, required to submit the required documents which may be called for by the respondents for the purpose of usage of shop in question so as to avoid any future complications for operation of LPG distributorship."
3. Mr. Bhatt would submit that what is hurting his client is the observation of the learned Single Judge that the documents may be called for by the Company for the purpose of usage of shop in question. Mr. Bhatt wants this Court to clarify that instead of saying that "for the purpose of usage of shop" it may be clarified saying that for the purpose of ownership of shop.
4. We are still not clear in the aforesaid regard. Mr. Sanjanwala would submit that any clarification of such nature at this point of time may create further trouble for his client.
5. With a view to secure the interest of both the sides, we request Mr. Bhatt to ask his client to address a letter to the respondent calling for the necessary documents for giving final effect to the order passed by the learned Single Judge. Let this exercise be undertaken at the earliest. Post this matter on 8.7.2021 on top of the Board. "
11 Pursuant to the above referred order passed by this Court, the original writ applicant addressed the following letter to the appellants dated 6th July 2021:Page 8 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022
C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 "To, Divisional LPG Sales Head, Marketing Division, Ghod Dod Road, Surat - 395001 (Gujarat).
Subject : Order Dt. 30/06/2021 in LPA No.1798 of 2019. Ref No.:Letter Dt. 02/07/2021 bearing Ref. No.IAO/SAO/Surat-2.
Sir, In response to your communication Dt.02/07/2021, I have to state as under:
The above communication is issued in pursuance of the order Dt. 30/06/2021 in the LPA, which inter alia records in Para 5 of the order "With a view to secure the interest of both the sides, we request Mr. Bhatt to ask his client to address a letter to the respondent calling for the necessary documents for giving final effect to the order passed by the learned Single Judge. Let this exercise be undertaken at the earliest."
The purpose of this exercise is to give effect to the order of the Ld. Single Judge, however, your communication inter alia calls upon me to submit the documents, to verify the same and to take an appropriate decision. The decision is already taken by the Hon'ble High Court in the SCA and there is no question of taking a decision by you as is being attempted by you in your communication and in response to the requisition made, we wish to clarify as under:
1. That the land bearing Plot No. 1367 of the Omnagar Society of the Revenue Survey No. 92 situated at Didoi, District Surat admeasuring 39.03 Sq. Mtr. along with an undivided share in the road, margin area, common plots etc of 38.47 Sq. Mtr. Thus the total area comes to 77.50 Sq. Mtr. as per the sale deed of the owner of the land. The sale deed Dt.
10/03/2011 is enclosed.
2. As per the report of the consulting engineer Dt. 01/03/2019, the final measurement of the land is 39.03 Sq. Mtr. with an additional margin area of 3.65 x 1.51 Sq. Mtr. Thus, the actual size of the plot is 3.65 x 12.20 Sq. Mtr. = 44.53 Sq. Mtr. The report of the consulting engineer is enclosed herewith.
3. On the above land, the construction is made by the owner which inter alia includes 3 shops/showrooms bearing tenement numbers 73E-
09-3531-0-001, 73E-09-3531-0-002 and 73E-09-3531-0-003, Page 9 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021
admeasuring 17.84 Sq. Mtr., 11.15 Sq. Mtr. and 15.61 Sq. Mtr. respectively. Tax bills of all the three tenements are enclosed herewith.
4. From out of the above three tenements, the tenement no.73E-09- 3531-0-003 is leased to me by lease deed Dt.13/07/2017, which is enclosed herewith.
5. The tenement no.73E-09-3531-0-001 is leased to Dhavalkumar Maheshbhai Patel by lease deed Dt. 13/07/2017, which is enclosed herewith.
6. The third tenement bearing tenement no.73E-09-3531-0-002 is in the possession of the owner.
7. Wis obvious that the area of the land is mixed up with the area of the tenement, which is the shop/showroom obtained on lease by me for the purpose of the dealership.
8. As regarding the shop, which is required for the purpose of the dealership, the requirement is an area of 13.5 Square Metres (4.5 x 3 Sq. Mtr.), the tenement offered by me, thus meets with the requirement.
The above fully clarifies the issues raised by you in your communication.
Thanking you, Mahitoshkumar Sureshkumar Patel Encl :
1. Order Dt. 30/06/2021 in LPA No.1798 of 2019
2. Copy of the Index of Sale Deed and Sale Deed of the ownership
3. Copy of the Consulting Engineers Report Dt. 01/03/2019.
4. Copies of the Tax Bills of all three tenements.
5. Copy of the Lease Deed in my name.
6. Copy of the Lease Deed in the name of Dhavalkumar Patel."
12 The letter addressed by the writ applicant referred to above came to be responded by the Corporation vide reply dated 2nd July 2021. The same reads thus:
"Ref : IAO/SAO/Surat-2 Date: 02.07.2021 To, Mahitoshkumar Sureshbhai patel 120, Nandanvan Row House, Page 10 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 Madhavbaug Society, Paravat Patiya, Surat - 395010.
Subject : Requisition list pursuant to order dated 30.06.2021 passed in Letters Patent Appeal No.1798 of 2019 Sir, You have submitted Lease Deed dated 14.07.2017 executed between Ashwinbhai Bhagavanbhal Patel as Lessor and you as Lessee, under which Plot No. 1367 admeasuring 4 * 5 Metres (20 Sq. Mtrs.) is leased out to you.
We are also in receipt of Lease Deed dated 14.07.2017 executed between Ashwinbhai Bhagavanbhai Patel as Lessor and Patel Dhavalkumar Maheshbhai as Lessee, under which Plot No. 1367 admeasuring 4 * 5 Metres (20 Sq. Mtrs.) Is leased out to him as well.
The Index attached to both these Lease Deeds show that the property leased out by the Lessor is admeasuring a total of 39.03 Sq. Mtrs., whereas if the area leased out to you (i.e. 20 sq. mtrs.) and Patel Dhavalkumar Maheshbhai (i.e. 20 sq. mtrs.) is calculated, the same comes to 40 Sq. Mtrs. In light of this, there is clear overlap of the land teased by the Lessor to you and Patel Dhavalkumar Maheshbhal, and hence, Clause regarding same piece of land being offered by two applicants is attracted which states that "The same piece of land for showroom cannot be offered by more than one Applicant for a particular location against the advertisement. In case It is found at any stage that the same piece of land for showroom has been offered by more than one applicant for the same location of the advertisement, then all such applications would be rejected or if selection has been done, then the same would be cancelled."
In your writ petition, you have produced Municipal Bills for 3 different Tenement Numbers, the sum total of which comes to 44.60 Sq. Mtrs. Therefore, there is clear discrepancy in respect of the total area of plot i.e. 40 Sq. Mtrs. or 39.03. Sq. Mtrs. and there is also discrepancy as to how in a plot admeasuring either 40 Sq. Mtrs. or 39.03 Sq. Mtrs., as the case may be, 44.60 Sq. Mtrs. is being used.
Therefore, in view of the above, you are advised to submit the requisite ownership documents for the Plot No. 1367 In Om Nagar Society, R.S. No. 92, Block No. 147, Village: Dindoli, Surat) to establish that the said plot is having total area admeasuring 40 sq. mtrs. in order to satisfy the above cited guidelines.
Considering that the matter has been kept on 08.07.2021, request you Page 11 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 to kindly submit the documents latest by 05.07.2021 so as to verify the same and take an appropriate decision.
This is issued without prejudice to our rights.
Thanking You Yours faithfully For Indian Oil Corporation Ltd sd/-
Divisional LPG Sales Head"
13 Thus, the parties were not able to reach to any consensus and the Corporation maintained its stance that the writ applicant is not qualified to obtain the LPG distributorship.
14 In such circumstances referred to above, the matter had to be heard on merits.
SUBMISSIONS ON BEHALF OF THE CORPORATION: 15 Mr. M. R. Bhatt, the learned Senior Counsel assisted by Mr.
Munjaal M. Bhatt, the learned advocate appearing for the Corporation vehemently submitted that the learned Single Judge committed a serious error in passing the impugned order as the learned Single Judge has equated the "usage" under the Municipal Tenement Bills with the "ownership". According to Mr. Bhatt, such is not the requirement as laid down in the guidelines. The guidelines nowhere require the I.O.C.L. to see the "usage".
16 Mr. Bhatt would submit that there is a discrepancy writ large in the matter for the reason that the area owned by the lessor is 39.03 sq. mtrs., whereas the area leased out by the lessor is 40 sq. mtrs. It is argued by Mr. Bhatt that the contention canvassed on behalf of the writ applicant that there are three different shops with three different tenement numbers at one particular parcel of land would not save the Page 12 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 situation for the writ applicant in any manner. Mr. Bhatt would argue that how could the land admeasuring 39.03 sq. mtrs. be divided amongst three persons (1 - writ applicant, 2 - Dhaval Patel, 3 - Lessor), more particularly, when the entire land is already leased out. In other words, according to Mr. Bhatt, it is practically not possible to use a piece of land between three persons when the entire chunk is already leased out between two persons.
17 Mr. Bhatt would argue that the writ applicant had relied upon the Tax Usage Bills before the learned Single Judge to make good his case that the requirement of measurement of the showroom is being satisfied. However, according to Mr. Bhatt, the sum total of the usage area of three such tenement bills comes to 44.60 sq. mtrs.
18 Mr. Bhatt would submit that there is no clarity with respect to the exact area of the land either in accordance with the schedule to the lease deed or sum total in accordance with the municipal tenements numbers and in the last, the writ applicant's ownership in accordance with the guidelines of the Corporation.
19 Mr. Bhatt vehemently argued that in the very writ application, the learned counsel appearing for the writ applicant contended that what has been leased out by the lessor is the Municipal Tenement Shop and not the land. According to Mr. Bhatt, such stance is not reflected even from the memorandum of the writ application or even from the order passed by the learned Single Judge.
20 Mr. Bhatt, in the last, submitted that the Corporation has rejected the application of the writ applicant considering that as on date, if the LPG distributorship is awarded in favour of the writ applicant, then, in Page 13 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 future, if a claim is raised by any one (namely Dhaval Patel or the lessor) on the premise that the area of land on which the showroom is being operated does not belong to the writ applicant, then the Corporation will have to undertake a fresh process of redraw and allotment of the LPG distributorship which the Corporation intends to undertake at this point of time itself. In other words, according to Mr. Bhatt, the Corporation would like to start a fresh by issuing a fresh advertisement and calling for the fresh offers from the interested persons.
SUBMISSIONS ON BEHALF OF THE ORIGINAL WRIT
APPLICANT:
21 Mr. R. S. Sanjanwala, the learned Senior Counsel assisted by Mr.
Jay S. Shah, the learned advocate appearing for the original writ applicant would submit that for no good reason, the Corporation has complicated the entire issue. Mr. Sanjanwala would argue that no error, not to speak of any error of law could be said to have been committed by the learned Single Judge in passing the impugned order. According to Mr. Sanjanwala, such letter addressed by his client to the Corporation pertaining to the order passed by this very Bench dated 30 th June 2021 accompanied by all the relevant documents makes the picture abundantly clear. He would submit that the letter addressed by his client dated 6th July 2021 referred to above makes the picture abundantly clear.
22 In such circumstances referred to above, the learned Senior Counsel appearing for the original writ applicant prays that there being no merit in this appeal, the same be dismissed and the Corporation be asked to give effect to the order passed by the learned Single Judge.
Page 14 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 ANALYSIS: 23 Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the only question that falls for our consideration is whether the learned Single Judge committed any error in passing the impugned order.
24 Before we advert to the rival submissions canvassed on either side, we must say something as regards the position of law that should govern the adjudication of the dispute of the present nature. At the outset, we may clarify that in the case on hand, there is no "contract" per se entered into between the parties. On 16 th June 2017, an advertisement was published by the Corporation inviting the applications for the distributorship at Surat. On 16th January 2018, the Corporation informed the writ applicant about his selection and was requested to submit certain documents for field verification of credentials, etc. Post submission of the documents, a discrepancy was noticed by the Corporation and accordingly, the letter of rejection was issued.
25 In the aforesaid context, we may refer to a Full Bench decision of the Patna High Court in the case of M/s. Pancham Singh vs. The State [AIR 1991 Patna 168], Justice N. P. Singh (as His Lordship then was), speaking for the Bench, had observed as under:
"11. In view of the plea taken on behalf of the respondents in respect of cancellation of the work order and agreement executed in favour of the petitioner for construction of the spillway in question, it has been urged that the contract has been cancelled not on ground of any breach of the terms of the agreement by the petitioner but because of the alleged revision of the design and the drawing in respect of the project in question resulting in reduction of the estimated cost of construction. In other words, even according to the respondents, the ground for cancellation of the work order and the agreement is not referable to any of the terms of the agreement but is de hors the said agreement. It has been pointed out that the ground for cancellation does not flow from Page 15 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 the terms of the agreement, but based on a subsequent development in connection with the project in question. In this background the question, which has to be answered, is as to whether on the facts and in the circumstances of the present case it can be said that this case is covered by category (iii), indicated in the judgment of the case of Radhakrishna Agarwal (AIR 1977 SC 1496) (supra), so that the writ application is to be dismissed, directing the petitioner to seek remedy before the appropriate forum.
12. Apart from the case of Radhakrishna Agarwal (supra) Supreme Court has considered the scope of Article 226 of the Constitution in connection with contractual obligations of the State with the citizen, in other cases in the light of Article 14 of the Constitution. In the well known case of Ramana Dayaram Shetty v. The international Airport Authority of India (AIR 1979 SC 1628) it was pointed out that "modern welfare State which is committed to egalitarian values and dedicated to the rule of law", has to act while awarding contract, under the constitutional mandate of Article 14, as also the judicially evolved rule of administrative law. It was pointed out : -
"It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. "
It was also pointed out : -
"It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. " (Emphasis added) It was also said: -
"This rule also flows directly from the doctrine of equality embodied in Art. 14. It is now well settled as a result of the decisions of this Court in E. P. Royappa v. State of Tamil Nadu, (1974) 2 SCR 348: (AIR 1974 SC 555) and Maneka Gandhi v.
Union of India, (1978) 1 SCC 248: AIR 1978 SC 597 that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not Page 16 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 be arbitrary but must be based on some rational and relevant principle which is non-discriminatory it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory."
13. In the case of M/s. Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir (AIR 1980 SC 1992) again it was reiterated: -
"Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner."
14. It was impressed in the case of Maneka Gandhi v. Union of India (AIR 1978 SC 597), that rule of reason, rule against arbitrariness and discrimination, rule of fair play and natural justice are part of the rule of law applicable in the actions by the State instrumentality.
15. Recently in the case of Mahabir Auto Stores v. Indian Oil Corporation, (AIR 1990 SC 1031) the same question was considered. In that case the petitioners' firm was carrying on business of sale and distribution of lubricants for 18 years on the basis of supply being made by Indian Oil Corporation. Abruptly the supply of lubricants was stopped to the firm by the Indian Oil Corporation without any notice or intimation. In that connection it was pointed out as follows :
"In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi monopoly dealings, it should meet the test of Article 14 of the Constitution. If a Government action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. ....Page 17 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022
C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non- discrimination in the type of the transactions and nature of the dealing as in the present case." (Emphasis added)
16. In yet another case of M/s. State Enterprises etc. v. The City and Industrial Development Corporation of Maharashtra Ltd. (1990) 2 JTSC 401 it was said by the Supreme Court : -
"In recent times, judicial review of administrative action has become expansive and is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. State activity too is becoming fast pervasive.
As the State has descended into the commercial field and giant public sector under-takings have grown up, the stake of the public exchequer is also large justifying larger social audit, judicial control and review by opening of the public gaze; these necessitate recording to of reasons for executive, actions including cases of rejection of highest offers. That very often involves long stakes and availability of reasons for action on the record assures credibility to the actio disciplines public conduct and improves the culture of accountability. Looking for reasons in support of such action provides an opportunity for an objective review in appropriate cases both by the administrative superior and by the judicial process;" (Emphasis added)
17. Recently in connection with termination of the appointment of the District Government Counsel by the State Government of Uttar Pradesh the same question was considered by the Supreme Court in the case of Kumari Shrilekha Vidyarthi v. State of U.P. ((1990) 3 SCJ 336) where it was pointed out : -
"Applicability of Article 14 to all executive actions of the State being settled and for the o same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of Page 18 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more? We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist." (Emphasis added) It was further said: -
"We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion, it would be alien to the constitutional Scheme to accept the arguments of exclusion of Article 14 in the contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard from contracts between unequals."
It was then said : -
"However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions."
18. Learned Advocate-General, appearing for the State, in view of the aforesaid judicial pronouncements could not contend that as the dispute relates to contractual obligations between the petitioner and the State, a writ application under Article 226 of the Constitution is not maintainable, where grievance has been made about arbitrariness and lack of fair play on the part of the State, violative of Article 14 of the Constitution. But according to the learned Advocate-General in none of Page 19 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 the cases referred to above, any formal agreement had been executed in terms of Article 299 of the Constitution and, as such, any observation or direction in connection with those contractual obligations shall not be applicable to the facts of the present case. In other words, this case is covered by category (iii) mentioned in the case of Radhakrishna Agarwal (AIR 1977 SC 1496) (supra). It was also pointed out on behalf of the respondents that in the case of Radhakrishna Agarwal (supra) Supreme Court held that once the State or its agents have entered into the field of ordinary contracts, no question of violation of Article 14 or of any other constitutional provision arises. In this connection reference was made to the following observations: -
"But, after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Art.14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the state in the contractual field which is apart from contract."
19. It is true that in none of the cases referred to above any formal agreement had been executed between the persons concerned and the State; the observations in respect of applicability of Article 14 of the Constitution, in connection with contractual obligations has been made in connection with the contracts in general. But at the same time the observation in the case of Radhakrishna Agarwal (supra) that once the State or its agents have entered into the field of ordinary contract no question arises of violation of Article 14 or any other constitutional provision, must be read in connection with the grievances referable to breach of the terms of duly executed agreement. I have already pointed out above, that there will be difference, where the cancellation is because of the breach of any of the terms of the contract and where cancellation of the contract, is on a ground de hors the terms of the contract. In my view, where an agreement executed in accordance with Article 299 of the Constitution is cancelled on a ground which is not referable to any of the terms of the contract, and is per se violative of Article 14 of the Constitution, this Court can exercise the jurisdiction under Article 226 of the Constitution. This can be appreciated by an example. After execution of an agreement in accordance with Article 299 of the Constitution, the contractor is asked by the authority concerned not to proceed with the construction of the project on the ground that later it has been discovered that such contractor is not resident of the district in which the project is to be constructed. Can it Page 20 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 be urged in such a situation, that as the contractor has entered into an agreement with the State Government he cannot invoke the jurisdiction of this Court under Article 226 of the Constitution and he should be directed to knock the door of civil Court for damages or specific performance of the contract although the order is per se violative of Article 14 of the Constitution?"
26 A Division Bench of the Calcutta High Court in the case of The Director of Supply and Disposals and Anr. vs. M/s. Vijay Shree Ltd. and Or. reported in AIR 2006 Calcutta 46 had the occasion to consider the question whether a writ petition is absolutely barred in the matters of non-statutory contract with the "State". V. S. Sirpurkar, C.J. (as His Lordship then was), speaking for the Bench, had observed as under:
"17. This brings us on the wider issue as to whether the writ petition was maintainable and whether it could have been entertained in the circumstances of the case. The Apex Court from time to time has held that the High Court should not ordinarily entertain the writ petition under Article 226 of the Constitution where disputed questions of facts are involved while considering the questions arising out of the contracts where one of the parties is the State. The Apex Court has discouraged the High Courts from entertaining a writ petition under Article 226, particularly when such contracts are not the statutory contracts. In LIC of India v. Escorts Ltd., reported in (1986) 1 SCC 264 : (AIR 1986 SC 1370, the Apex Court declared that if the action of the State related to contractual obligations was not to be ordinarily examined by the Court unless such action had some public law character attached to it. The Court further expressed the difficulty involved in demarcating the public law domain and the private law field and further ordered that the question must be decided in each case with reference to the particular action. The Supreme Court in the same case observed that where the State assumes to itself the ordinary role its right and liability should be tested as an ordinary contracting party. There can however, be no doubt that in this decision it was not held that the High Court's jurisdiction under Article 226 in the matters of contract was totally barred. The Supreme Court in the earlier cases like K. N. Guruswamy v. State of Mysore, reported in AIR 1954 SC 592 and D.F.O. v. Ram Sanehi Singh, reported in (1973) 3 SCC 864 : (AIR 1973 SC 205), had also held that the writ petitions would be maintainable in the sense that there would be no absolute bar to the exercise of the jurisdiction. It was observed by the Supreme Court in State of Bihar v. Jain Plastics and Chemicals Ltd. reported in (2002) 1 SCC 216 : (AIR 2002 SC 206), that seriously disputed questions or rival claims of the parties with regard to Page 21 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 the breach of contract are to be investigated and determined on the basis of evidence which may be led by parties in a properly instituted civil suit rather than by a Court issuing prerogative writs.
18. The learned Senior Counsel for the petitioner, Mr. Pratap Chatterjee, invited our attention to ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. reported in (2004) 3 SCC
553. He pointed out that in this decision the Supreme Court had taken into consideration practically all the cases on the question of the tenability of a writ petition under Article 226 in the matters of contractual obligations of the State. The learned counsel contends that the Supreme Court has held in this decision in the clearest possible terms that the writ petition is not absolutely barred in such matters. Our attention was invited to paragraph 19 which is as under :
"19. Therefore, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the court entertaining such petition under Article 226 of the Constitution is not always bound to relegate the parties to a suit. In the above case of Gunwant Kaur (AIR 1970 SC 802 this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ Court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact."
19. The learned counsel also took us through the paragraph where the Supreme Court has referred to its judgement in Kumari Shrilekha Vidyarthi v. State of U. P., reported in (1991) 1 SCC 212 : (AIR 1991 SC 537). Ultimately, the learned senior counsel pointed out from the observations in paragraph 23 that once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India and where the State acts in contravention of the abovesaid requirement, a writ Court can issue suitable directions to set right the arbitrary actions. Developing his argument and applying it to the present case, the learned counsel argued that in the writ petition itself the basic prayer was for quashing the "order" dated 2nd June 2003 passed by the Jute Commissioner. The learned counsel further pointed out that once that order was quashed and declared to be illegal and invalid, the necessary relief of payment would automatically follow which was prayed for in prayer clause (G) of the writ petition. The learned counsel pointed out that the said order was per se arbitrary inasmuch as the respondents had no power to withhold a payment against a different lot on the ground that the earlier lot supplied was Page 22 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 defective. This, according to the learned counsel, clearly amounted to not only the breach of contract, but an action which is totally arbitrary and without any justification in law.
20. We have already shown that in the first place this was not an "order" passed. It was merely a communication. Again there was no total and final refusal to pay the amount. The amount was only "withheld" temporarily which would be clear from the contents of paragraph 3 of the said letter dated 12-9-2003. In that letter itself, there is a clear reference to the matter being settled with Purchase Officer. Not only this, but thereafter also even before the writ petition was filed, the writ petitioner had shown its readiness to settle the matter regarding the payment. We have already pointed out earlier that the matter could have been settled only after the joint inspection of the damaged goods. Therefore, it was clear that there was no finalized action on the part of the original respondents-appellants herein to refuse the payment. Could such action then be, viewed as an arbitrary action where there was clearly an invitation on the part of the State instrumentality to settle the dispute ? In our opinion, this could not be said to a finalized action and therefore, this could not be viewed to be an appropriate case where a remedy could be sought for by the writ petitioner by way of a writ petition.
21. In the same judgement itself in paragraph 27 and paragraph 28, the Supreme Court has held as under :
"27. From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition.
(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.
(b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also maintainable.
28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the Court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. v. Registrar of Trade Marks) (AIR 1999 SC Page 23 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021
22). And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction."
22. Considering this, it would have to be held that though the writ petition is not absolutely barred in the matters of non-statutory contract with the State, the factual situation has to be tested to see whether it should be entertained. There would be a lot of differences between the two concepts of tenability of the petition and the propriety to entertain the same. As has been held by the Supreme Court above, the High Court has a discretion to entertain or not to entertain a petition and it is again reiterated that the High Court will not normally exercise as plenary right to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14. We have already pointed out that in this case, it could not be said that there is any unreasonableness on the part of the present appellants. On the other hand, we are of the clear opinion that the writ petitioner, without any justification, straightway rushed to file a writ petition even when there was an invitation to settle the dispute and when no final action was taken by the appellants. There was, in fact, no refusal on the part of the appellants to pay the amount in question. What was done, was "withholding" the amount till there was a joint inspection and till the matters were resolved in between the parties in connection with the damaged goods supplied by the writ petitioners. Thus, in our opinion, the writ petition should not have been entertained firstly because it was a premature writ petition and secondly it pertained to the disputed questions of facts which questions we have already shown in the earlier part of the judgement. Undoubtedly, those questions could not have been solved merely on the basis of the affidavit and counter-affidavit. Another reason for not entertaining the writ petition as the availability of the (alternative) remedy of filing the civil suit where all the disputed questions could have been solved by allowing parties to lead the evidence. We are, therefore, not in a position to agree with the learned single Judge and would choose to dismiss the writ petition."
27 Thus, the Courts have maintained a distinction between the statutory contracts, on one hand, and non-statutory ones, on the other. While judicial review was held to be permissible, both as regards the award and cancellation of the contracts of the former category, the same was confined to certain aspects in the latter category. If the termination Page 24 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 of contract is on the ground that a party thereto had violated the conditions therefor, such party is invariably required to work out his remedies as provided for under the relevant contracts, viz., arbitration or civil suit, as the case may be. However, where an element of administrative exercise is undertaken and executive power is exercised, considerations and parameters are somewhat different. The evaluation of such administrative and executive exercise, which in turn had given rise to the cancellation of the contract, would almost be unsusceptible of adjudication by a civil court. The reason is that the exercise of such administrative or executive power is not guided by the clauses in the contract. It is traceable to the inherent executive powers of the State and the only recognised mode of evaluation of such administrative power is judicial review, as provided for under Articles 32 and 226 of the Constitution of India.
28 It goes without saying that the respondent herein is a "State" within the meaning of Article 12 of the Constitution of India. Its conduct in all fields including a contract is expected to be fair and reasonable. It is not supposed to act arbitrarily, capriciously or whimsically. The law is well settled that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India or its action is absolutely arbitrary or unfair, a writ petition would be maintainable even in the contractual field.
29 In the matter of Noble Resources Ltd. vs. State of Orissa and another [(2006) 10 SCC 236], the Supreme Court has held that:
"14. Respondent 2 is "State" within the meaning of Article 12 of the Constitution of India. Its conduct in all fields including a contract is expected to be fair and reasonable. It was not supposed to act arbitrarily, capriciously or whimsically.Page 25 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022
C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021
15. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the court's scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter.
16. This dicta of law was laid down by this Court as far back in 1977, wherein this Court in Radhakrishna Agarwal v. State of Bihar [(1977) 3 SCC 457] accepted the division of types of cases made by the Patna High Court in which breaches of alleged obligation by the State or its agents could be set up. It reads as under:
"(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 of the Constitution;
(ii) where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or rules framed thereunder and the petitioner alleges a breach on the part of the State; and
(iii) where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State.""
30 In the matter of Tata Cellular v. Union of India [(1994) 6 SCC 561], the Supreme Court has laid down certain principles for exercise of the power of judicial review which are as under:
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative Page 26 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.
Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. ..."
31 In the matter of Jagdish Mandal v. State of Orissa [(2007) 14 SCC 517], the Supreme Court has held as under: -
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.Page 27 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022
C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";
(ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/ shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
32 We may note that the law in this regard as developed through a catena of judgments is that in pure contractual matters the extra ordinary remedy of a writ under Article 226 of the Constitution of India cannot be invoked, and such remedies are available in a limited sphere only when the contracting party is able to demonstrate that the remedy it seeks to invoke is a public law remedy, in contradistinction to a private law remedy under a contract.
33 The legal position in this regard is that where the rights which are sought to be agitated are purely of a private character no mandamus can be claimed, and even if the relief is sought against the State or any of its Page 28 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 instrumentality the pre-condition for the issuance of a writ of mandamus is a public duty. In a dispute based on a pure contractual relationship there being no public duty element, a mandamus would not lie.
34 A governmental contract, even if commercial in nature, involves, broadly speaking, four stages. The first stage relates to the floating of tenders by publishing notice inviting tenders. At this stage, the authority concerned is required to formulate the terms and conditions subject to which the tenders would be invited and also the terms and conditions of the contract, which, if entered into, govern the parties. These terms and conditions will obviously include all the legibility criteria for a person to participate in the tender process. After the notice inviting tender is published and the tenders are received, the second stage of such a contract commences. This stage involves the process of taking of the decision to allot the contract or not to allot the contract at all and cancel the entire process. This stage would include the selection of the person or the party to whom the contract shall be allotted. This stage ends with the allotment of the contract or with the decision not to allot the contract at all and cancel the entire tender process. The third stage of the contract essentially covers the stage of performance of the contract. This stage would include commencement of the performance of the allotted contract and would, normally, end with the completion of the allotted contract. During this stage, there may arise the question of breach of the contract, because of non-fulfillment of the terms and conditions of the contract by either party to the contract. The fourth stage of such a contract arises, when, on completion of his part of the contract, the contractor or supplier raises his demand for making payment of his bills. This fourth stage can, however, be divided into two categories. There may be a case, where the amount demanded is not disputed and yet the dues of the contractor are not paid compelling Page 29 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 thereby the contractor to seek avenues for obtaining payment of his dues. In this fourth stage, there may, however, be a case, where the correctness of the demand for payment raised by the contractor is disputed, denied or challenged by the authority, who had allotted the contract. In such a case, too, the contractor may be driven to take recourse to such avenues as may be open to him, in law, for the purpose of enabling him to obtain his dues in terms of the demand that he may have made.
35 What may be further noted is that at the first and the second stage of the contracts, when the government or any of its instrumentalities sets up the terms and conditions of the contract or takes a decision to allot the contract, it acts purely in its executive capacity and its action is, therefore, open to judicial review, though in a limited way, as indicated hereinabove. However, when the third stage is reached and a contract is entered into by the government or its instrumentality, on the one hand, and the contractor, on the other, the parties are no longer governed by Constitutional provisions, but by the terms of the contract. Hence, when a State, purporting to act within the field allotted to it under the terms and conditions of a contract, performs an act, the rights and obligations of the parties would be, ordinarily, governed by the law that governs the terms and conditions of the contract. The mere fact that one of the parties to such a contract is the State or its instrumentality will not make a contract amenable to writ jurisdiction. (See Radhakrishna Agarwal v. State of Bihar (supra)).
36 Before proceeding further, what may be noted is that a writ of mandamus is a public remedy and this remedy lies, when a public authority fails to perform the duty entrusted to it by law. In other words, a writ is issued against a person, who has a legal duty to perform, but Page 30 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 has failed or neglected to do so. Distinguishing a case, wherein a public duty of a State is sought to be enforced, and a case, wherein a contractual obligation of a State is sought to be enforced, Professor Wade, in his well-known treatise, 'Administrative Law', makes it clear that while a public duty is enforceable by the public law remedy of a writ of mandamus, a contractual duty is enforceable, as a matter of private law, through the avenues of civil courts. The observations made, in this regard, by Professor Wade read, thus,-
"...A distinction which needs to be clarified is that between public duties enforceable by mandamus, which are usually statutory and duties arising merely from contract. Contractual duties are enforceable as matters of private laws by the ordinary contractual remedies, such as damages, injunction, specific performance and declaration. They are not enforceable by mandamus, which in the first place is confined to public duties and secondly is not granted where there are other adequate remedies."
37 What, now, needs to be noted is that howsoever thin and subtle the distinction may be, there is, indeed, a real and definite line of demarcation not only between a public wrong and a private wrong, but also between a public law remedy and private law remedy. Article 226 is pre-eminently a public law remedy and is not, generally, available as a remedy against private wrongs. Resort to Article 226 can be had to enforce various rights of the public or to compel the public or statutory authorities to discharge their public duties and/or to act, in the realm of their public functions, within the bounds of law. The remedy under Article 226 can, no doubt, be availed of even against a private body or person; but the scope of the right of mandamus is limited to enforcement of public duty. In minimum possible words, but with extreme exactitude, clarified the Supreme Court, in Binny Limited and Anr. v. Sadasivan and Ors.[(2005) 6 SCC 657], the position of law, in this regard, in these words, Page 31 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 "29. Thus, it can be seen that a writ of mandamus or the remedy under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public or to compel public/statutory authorities to discharge their duties and to act within their bounds. It may be used to do justice when there is wrongful exercise of power or a refusal to perform duties. This writ is admirably equipped to serve as a judicial control over administrative actions. This writ could also be issued against any private body or person, specially in view of the words used in Article 226 of the Constitution. However, the scope of mandamus is limited to enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action."
38 Thus, in the face of succinctly laid down position of law with regard to the issuance of a writ of mandamus under Article 226, what one has to bear in mind is that in a case of private wrong, in order to invoke the writ jurisdiction under Article 226, two conditions must be satisfied, namely, (i) the identity of the person, against whom the writ is sought, as a person or body, which is amenable to writ jurisdiction, and
(ii) the nature of duty, which is sought to be enforced, is a public duty or has an element of public interest. In a given case, one may, perhaps, ignore the first prerequisite, namely, the identity of the person or body as a person or body amenable to writ jurisdiction, but the second prerequisite, as indicated hereinbefore, cannot be ignored, for, in the absence of public interest or in the absence of breach of public duty or in the absence of any public wrong having been committed, no recourse to Article 226 is possible.
39 What also needs to be cautiously noted is that a constitutional or statutory duty is a public duty and enforceable by a writ of mandamus.
Page 32 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 To put in differently, the rights and duties go hand-in-hand. When a right is given to a person by a State, the State cast upon itself a duty to enforce such a right. Logically, therefore, when a person is given fundamental right by the Constitution, a duty rests on the State to ensure that the person realizes his fundamental rights. In a given case, therefore, if a person, aggrieved by a breach of contract, shows that though the breach is in the realm of a contract, the duty, sought to be enforced, is a constitutional or statutory duty, the remedy of a writ of mandamus may not be refused, for, it is the constitutional obligation of the High Court, under Article 226, to enforce the constitutional and statutory duties of the State and its instrumentalities.
40 We may summarize the principle of law that should be kept in mind while deciding the matter of the present nature:
[1] Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual, but such contract has been cancelled on a ground de hors any of the terms of the contract, and which is per se violative of Article14 of the Constitution, the High Court in such case can exercise its jurisdiction under Article 226 and the writ petition under Article 226 by aggrieved person would be maintainable.
[2] The Courts have maintained distinction between statutory contracts, on one hand, and non-statutory ones, on the other. While judicial review was held to be permissible, both as regards award and cancellation of the contracts of the former category, the same was confined to certain aspects in the latter category. If the termination of contract is on the ground that a party thereto had violated the conditions therefor, such party is invariably Page 33 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 required to work out his remedies as provided for under the relevant contracts, viz., arbitration or civil suit, as the case may be. However, where an element of administrative exercise is undertaken and executive power is exercised, considerations and parameters are somewhat different.
[3] Generally, the Court should not exercise its writ jurisdiction to enforce the contractual obligation. The primary purpose of a writ mandamus, is to protect and establish rights and to impose a corresponding imperative duty existing in law. It is designed to promote justice (ex debito justiceiae). The grant or refusal of the writ is at the discretion of the Court.
[4] The discretion must be exercised by the Court on grounds of public policy, public interest and public good. The writ is equitable in nature and thus, its issuance is governed by equitable principles.
[5] The prime consideration for the issuance of the said writ is, whether or not substantial justice will be promoted.
41 Again, at the cost of repetition, we state that in the case on hand, the parties have not entered into any contract. In other words, there is no contract reduced into writing. However, we may proceed on the footing as if the contract had already been entered into between the writ applicant and the Corporation and the disputes have cropped up or the Corporation intends to terminate the contract. Even in such circumstances, the contract would be non-statutory.
42 Fairness in State action is the soul of good governance. Every Page 34 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021
action of the State where it infringes the constitutional mandate or is opposed to basic rule of law or suffers from the infirmity of patent arbitrariness, judicial intervention is inevitable. Government enjoys great freedom while entering into contracts with private parties, but even that freedom is circumscribed by the rule of fairness, transparency and objectivity. It is more so where the Government is dealing with State largesse. The State holds monopoly in certain fields and where this privilege of monopoly is utilized for the purposes of allocation of works, it takes the colour of State largesse as both the State or its instrumentalities or public statutory bodies and the bidder are expected to benefit from such distribution and/or allocation of such works by way of contracts.
POLICY OF THE I.O.C.L.: 43 We may quote the relevant clauses from the "Brochure on Unified Guidelines for Selection of LPG Distributors":
"Ownership or own" for godown / showroom for Sheheri Vitrak, Rurban Vitrak, Gramin Vitrak and Durgam Kshetriya Vitrak Type of Distributorship means having:
a. Ownership title of the property Or b. Registered lease deed having minimum 15 yrs of valid lease period commencing on any day from the date of advertisement up to the last date of submission of application as specified either in the advertisement or corrigendum (if any).
Additionally, applicants having registered lease deed commencing on any date prior to the date of advertisement will also be considered provided the lease is valid for a minimum period of 15 years from the date of advertisement.
The applicant should have ownership as defined under the term 'Own' above in the name of applicant / member of "Family Unit" (as defined Page 35 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 in multiple dealership / distributorship norm of eligibility criteria)/parents (includes Step Father/Step Mother), grandparents (both maternal and paternal), Brother/Sister (including Step Brother & Step Sister), Son/Daughter (including Step Son/Step Daughter), Son- in-law/Daughter in-law of the applicant or the spouse (in case of married applicant) as on last date for submission of application as specified either in the advertisement or corrigendum (if any). In case of ownership/co-ownership by family member(s) as given above, consent in the 'form of a declaration from the family member(s) will be required.
In case the share of land in the jointly owned property by the applicant / member of 'Family Unit' as defined in multiple dealership / distributorship norm)/parents & grandparents (both maternal and paternal) of the applicant or the spouse with any other person(s) meets the requirement of land including the dimensions required, then that land for godown/showroom should qualify for eligibility as 'own' land subject to submission of 'No Objection Certificate' in the form of declaration from other owner(s)."
"Minimum Dimension of Land : The minimum Dimensions of land and the location of Godown land is given below:
i. For Sheheri Vitrak and Rurban Vitrak, the candidate should 'own' a plot of land of minimum dimensions 25 Mertre x 30 Metre in the city or within 15 km from the outer limits of municipal/town/village limits of the location offered in the same State.
ii. Selected candidate for Sheheri Vitrak & Rurban Vitrak locations falling under "X" and "Y" category Metro Cities/Cities/State will be allowed to construct the godown in and within 15 KMs outside the Municipal limit of the town/City of the advertised location. Any financial implication incurred by the LPG Distributor for moving LPG cylinders in and out of the City/town will be borne by the Distributor who sets up his godown outside the Municipal Limit, if any of the movement is on Inter-state basis.
iii. For Gramin Vitrak the candidate should "Own" plot of land of minimum dimensions 21 Metre x 26 Metre within 15 km from the advertised location.
In case there is any dispute/ambiguity regarding location of land vis-a- vis advertised specifications, the matter will be referred to District Revenue authorities whose decision will be final.
The land for construction of godown should be plain, in one contiguous plot, free from live overhead power transmission or telephone lines.Page 36 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022
C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 Canals / Drainage / Nallahs should not be passing through the plot.
It will be the responsibility of the selected candidate to observe and perform the provisions of all rules and regulations, Government or municipal or local or Acts, Laws, Regulations, Bye-Laws as may be enforced from time to time with respect to land for construction of LPG Godown. In case there is any reference relating to violation of any of the statutory provisions, it will be referred to the concerned authority for examination and for appropriate action.
The same piece of land for godown cannot be offered by more than one applicant for a particular location against the advertisement. In case it is found at any Stage that the same piece of land tor godown has been offered by more than one applicant for the same location of the advertisement, then all such applications would be rejected or if selection has been done, then the same would be cancelled."
"N. Should 'Own' a suitable shop for Showroom of minimum size 3 metre by 4.5 metre in outer dimension or a plot of land for construction of showroom of minimum size 3 metre by 4.5 metre as on the last date for submission of application as specified either in the advertisement or corrigendum (if an at the advertised location i.e. within the municipal/town/village limits of the place which is mentioned under the column of 'location' in the advertisement.
In case locality is also specified under the column of 'location' in the advertisement, the candidate should own a suitable shop of minimum size 3 metre by 4.5 metre in outer dimension or a plot of land for construction of showroom of minimum size 3 metre by 4.5 metre as on the last date for submission of application as specified either in the advertisement or corrigendum (if any) as per the standard layout in the said 'locality'. It should be easily accessible to general public through a suitable approach road.
In case an applicant has more than one shop of minimum size 3 metre by 4.5 metre in outer dimension or a plot of land for construction of showroom of minimum size 3 metre by 4.5 metre as on the last date for submission of application as specified either in the advertisement or corrigendum (if any) at the advertised location or locality as specified under the column of 'location' in the advertisement, the details of the same can also be provided in the application.
The applicant should have ownership as defined under the term 'Own' above in the name of applicant / member of "Family Unit' (as defined in multiple dealership / distributorship norm of eligibility criteria)/ parents (includes Step Father/Step Mother), grandparents (both maternal and paternal), Brother/ Sister (including Step Brother & Step Page 37 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 Sister), Son/Daughter (including Step Son/Step Daughter), Son-in-law/ Daughter in-law of the applicant or the spouse (in case of married applicant) as on last date for submission of application as specified either in the advertisement or Corrigendum (if any).
In case of ownership/co-ownership by family member(s) as given above, consent in the form of a declaration from the family member(s) will be required.
Applicants having registered lease deed commencing on any date prior to the date of advertisement will also be considered provided the lease is valid for a minimum period of 15 years from the date of advertisement.
The same piece of land for showroom cannot be offered by more than one applicant for a particular location against the advertisement. In case it is found at any stage that the same piece of land for showroom has been offered by more than one applicant for the same location of the advertisement, then all such applications would be rejected or if selection has been done, then the same would be cancelled.
In case if the, offered land for showroom by the selected candidate which is shown in the application is found not meeting the eligibility conditions / requirements as stipulated in the advertisement/brochure/ application, then the selected candidate can offer an alternate land which is owned by the applicant/member of the 'Family Unit'/ parents (includes Step Father/Step Mother), grandparents (both maternal and paternal), Brother/Sister (including Step Brother & Step Sister), Son/ Daughter (including Step Son/Step Daughter), Son-in-law/Daughter in- law of the applicant or the spouse (in the case of married applicant) as on the last date for submission of application as specified either in the advertisement or corrigendum if any."
44 Thus, apart from the other requirements, the applicant has to offer land towards godown for storage of the LPG products (minimum dimensions - 24 Metre x 30 Metre) and land towards showroom for storage of the LPG products (minimum dimension - 3 Metre x 4.5 Metre = 13.5 sq. mtrs.). The land offered by the writ applicant should fall within the definition of the term "own" as defined under clause 1.23 referred to above. Under "own", the applicant can either have title by way of ownership of the property or a registered lease deed of a Page 38 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 minimum period of 15 years in his name. In the case on hand, the first circumstance is not applicable.
45 In the case on hand, the writ applicant offered land towards godown as well as showroom. No irregularities were noticed in the land offered towards the godown. However, the Corporation noticed an overlap in the case of showroom. This is what we have noticed.
(i) Lease Deed of land in favour of the petitioner by lessor - page 26 - mentions 4 x 5 Metre (20 sq. mtrs.)
(ii) Lease Deed of land in favour of Dhaval Patel by lessor - page 40 - mentions 4 x 5 Metre (20 sq. mtrs.)
(iii) Index at page 29 of the Lease Deed mentions total area owned by the lessor - 39.03. sq. mtrs.
Therefore, the area owned by the lessor (39.03 sq. mtrs) and the area leased out by the lessor (40 sq. mtrs.) is not matching.
In such circumstances referred to above, the clause on internal page 38 of the document filed on 7 th January 2021 was relied upon and the rejection letter was issued since the same talks about "same piece of land being offered by more than one applicant".
46 In view of the aforesaid, could it be said that the Corporation has acted mala fide? The answer is "No". Could it be said that the Corporation has rejected the offer of the writ applicant only with a view to favour some other party? The answer is "No". The Corporation bonafide believes that what has been offered by the writ applicant is not Page 39 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 in consonance with the policy, more particularly, the clauses referred to above. The Corporation has a strong apprehension that if they enter into any contract with the writ applicant with all such discrepancies, then the same may lead to trouble in future. In such circumstances, if the Corporation has thought fit to go for a fresh public advertisement, then, in our opinion, it cannot be said that the Corporation is at fault as no any vested legal right of the writ applicant could be said to have been infringed with the action of the Corporation.
47 Before we conclude, we may refer to a decision of the Supreme Court in the case of K. Vinod Kumar vs. S. Palanisamy and others reported in (2003) 10 SCC 681. It was a case wherein the Bharat Petroleum Corporation Limited had issued an advertisement inviting applications for appointment as LPG distributorship for Bharat Gas at several locations mentioned in the advertisement, one of those was Palladam. One of the conditions of eligibility, as contained in the advertisement, was:
"(g) The applicants should furnish, along with the application, details of land for godown facilities which he/she may make available for the Distributorship. Considering the location of the land from the point of view of commercial angle, applicants willing to transfer the land/facilities on ownership/long lease to BHARAT PETROLEUM CORPN. LTD. , at the rate acceptable to BHARAT PETROLEUM CORPN.
LTD., would be given preference. if an applicant, after selection, is unable to provide the land indicated by him/her earlier, within a period of 2 months, the allotment of the BHARAT GAS Distributorship made to him/her would be cancelled."
The controversy before the Supreme Court centered around the above said eligibility requirement. The appellant before the Supreme Court who was the respondent No.5 in the High Court was one of the applicants who had preferred an application seeking such appointment.
Page 40 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 The Dealer Selection Board scrutinized all the applications and also invited the applicants for interview. The appellant before the Supreme Court was recommended for appointment. One of the respondents, the respondent No.1 before the Supreme Court filed a writ petition questioning the selection of the appellant. A learned Single Judge of the High Court set aside the selection made by the Board. The appellant preferred an intra-Court appeal which was dismissed by a Division Bench and that is how the matter reached before the Supreme Court. The Supreme Court while allowing the appeal observed as under:
"7. The proceedings of the Dealer Selection Board must satisfy the requirements of a bona fide administrative decision arrived at in a fair manner. There are no mala fides alleged against the Dealer Selection Board or the President or any Member thereof. There is no specific plea raised impugning the manner of marking. It appears that all the three members of the Board including the President conducted the proceedings, and each one of them gave marks expressing his own assessment of the merits of the applicants. The marks given by the three were then totalled and arranged in the order of merit. The appellant herein topped the list. In the absence of a particular procedure or formula having been prescribed for the Board to follow, no fault can be found with the manner in which the proceedings were conducted by the Board. The Board is entrusted with the task of finding out the best suitable candidate and, so long as the power is exercised bona fide, the Board is free to devise and adopt its own procedure subject to satisfying the test of reasonableness and fairness. There is no avernment that the procedure adopted by the Board was arbitrary, unfair or unreasonable."
"11. The law is settled that in proceedings and decisions taken in administrative matters, the scope of judicial review is confined to the decision making process and does not extend to the merits of the decision taken. No infirmity is pointed out in the proceedings of the Selection Board which may have the effect of vitiating the selection process. The capability of the appellant herein to otherwise perform as an LPG distributor is not in dispute. The High Court was not, therefore, justified in interfering with the decision of the Selection Board and the decision of the BPCL to issue letter of allotment to the appellant herein."
48 We have referred to the above decision of the Supreme Court only Page 41 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021 with a view to emphasize that the learned Single Judge ought to have kept in mind that the scope of judicial review of the decision taken in administrative matters is confined to the decision making process and would not extend to the merits of the decision taken. In the case on hand, what is being questioned is the merits of the decision taken by the Corporation. In other words, while exercising judicial review in the matter of government contract, the primary concern of the Court is to see whether there is any infirmity in the decision - making process or whether it is vitiated by mala fide, unreasonableness or arbitrariness.
49 The government must have freedom of contract. In Master Marine Services (P) Ltd. vs. Metcalfe & Hodgkinson (P) Ltd. and Anr. (2005) 6 SCC 138, in para (12), the Supreme Court held as under:
"12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi- administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)"
The Court does not have the expertise to correct the administrative decision as held in Laxmikant and Ors. vs. Satyawan and Ors. (1996) 4 SCC 208, the government must have freedom of contract.
Page 42 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022 C/LPA/1798/2019 JUDGMENT DATED: 09/07/2021
50 In such circumstances referred to above, we are inclined to allow
this appeal and set aside the order passed by the learned Single Judge.
51 In the result, this appeal succeeds and is hereby allowed. The impugned order passed by the learned Single Judge is set aside. The Special Civil Application No.15991 of 2019 stands rejected.
52 It shall be open for the Corporation to issue a fresh advertisement for the allotment of the LPG distributorship at Surat. We may clarify that it shall be open for the original writ applicant to apply pursuant to such fresh advertisement provided he fulfills the eligibility criteria and all other requirements in accordance with the policy of the Corporation. In future, if any fresh advertisement is issued by the Corporation and the original writ applicant applies, then his application shall not be rejected only on the ground of the present litigation.
(J. B. PARDIWALA, J) (VAIBHAVI D. NANAVATI,J) CHANDRESH Page 43 of 43 Downloaded on : Sat Jan 15 22:33:43 IST 2022