Patna High Court
All India Pet Coke Calciners Ass vs The Union Of India & Ors on 18 September, 2012
Author: Jayanandan Singh
Bench: Jayanandan Singh
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.10902 of 2012
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1. All India Pet Coke Calciners Association, Through Its President B.K. Hisaria
Son Of Late Shiv Pratap Hisaria Office At Champa Niketan, Marvari Mohalla
Town And District Begusarai, Bihar
2. Neo Carbons Pvt. Ltd. Through Its Manager Subhash Chandra Bose Son Of
Late Shailendra Nath Bose, Town And P.S. Barauni, District Begusarai
3. Bihar Carbons Pvt. Ltd. Through Its Manager, Anil Kumar Sharma Son Of
Ram Krishna Hari Sharma Town And P.S. Barauni, District Begusarai
4. Kanishka Carbon Pvt. Ltd. Through Its Director Binod Kumar Hisaria Son Of
Late Shiv Pratap Hisaria Papraur, P.S. Barauni, District Begusarai
5. Mahabir Petro Products Pvt. Ltd. Barauni Industrial Area, P.S. Barauni,
District Begusarai, Through Its Director Deep Kumar Maskara Son Of Ram
Dayal Maskara
6. Premier Industries, A Partnership Firm Through Its Partner Natwar Kumar
Agrawal Son Of Anand Prasad Agrawal Barauni Industrial Area, P.S. Barauni,
District Begusarai
7. Mahabir Carbon Through Its Proprietor Pranav Sinha Son Of Anil Sinha
Barauni Industrial Area, P.S. Barauni, District Begusarai
8. Universal Hydro Carbon Ltd. Through Its Manager Jayanta Kundu Son Of
Late Panchanand Kundu Barauni Industrial Area, P.S. Barauni, District
Begusarai
9. Guwahi Carbon Ltd. Through Its Commercial Manager Biman Kumar
Karamkar Son Of Late Dr. B.C. Karamkar Pub Goragaon, P.S. Guruchuk,
District Guwahati
.... .... Petitioner/s
Versus
1. The Union Of India Through Secretary, Ministry Of Petroleum And Natural
Gas 201-A, Shastri Bhawan, New Delhi
2. Secretary, Ministry Of Petroleum And Natural Gas 201-A, Shastri Bhawan,
New Delhi
3. Under Secretary, Ministry Of Petroleum And Natural Gas 201-A Shastri
Bhawan, New Delhi
4. Indian Oil Corporation Limited Marketing Division, Indian Oil Bhawan, G-9 ,
Ali Yavar Jung Marg, Bandra (East) Mumbai
5. Indian Oil Corporation Limited Marketing Division, Bihar State Office,
Loknayak Jai Prakash Bhawan (5th Floor), Dak Bunglow Chowk, Patna
6. North East, Integrated State Office, Indian Oil Corporation Ltd. Marketing
Division, East Point Tower, Bamuni Maidan Guwahati.
7. Carbon Resources Private Limited, A Company incorporated under the
provisions of the Companies Act, 1956 having its registered office at 33/1
N.S.Bose Road Kolkata and one of this plant at Tilrath Industrial area,
Begusarai, District-Begusarai through one of its Directors Abhinav Kumar Jalan,
son of Sri Suresh Kumar Jalan, resident of Narayani Niwas, Giridih.
8. Krishna Hydrocarbon Private Limited, a Company incorporated under the
provisions of the Companies Act, 1956 having its registered office at "Krishana
Kutir," Mungeriganj, P.O.+P.S.+District-Begusarai and the Industrial Unit
situated at 57/P Barauni Industrial area, Tilrath, P.S.-Barauni Refinery, District-
Begusarai through one of its Directors, Akash Deep, son of Shri Gopal Krishana
Gupta, resident of Mohalla-Mungeriganj, P.S.-Begusarai Town, District-
Begusarai.
9. New Age Petcoke Private Limited, a Company incorporated under the
provisions of the Companies Act, 1956 having its registered office at Village-
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North Kajalgaon, P.O.-Kajalgaon, District-Chirang BTAD, Bongaigaon-783308,
Assam.
10. Vpper Assam Petro cake Private Limited, with its registered office situated at
No.-2, Makum Pather Margherita, District-Tinsukiya, Assam through its
Director, Sushil Kumar Jha, son of Sri Rudra Narayan Jha, resident of 339
M.G.Road, Satyajit Park, Thakur Pukur, Kolkata-700063.
.... .... Respondent/s
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Appearance :
For the Petitioner/s : Mr.V.Giri, Sr. Adv.,
Mr.Y.V.Giri, Sr.Adv. with
Mr. Sanjay Kumar, Adv.
For the Union of India : Mr. Ragib Ahsan, ASG with
Mr.Satyendra Kumar Jha, C.G.C.
For respondent no.7 : Mr.S.D.Sanjay, Adv.,
Mr.Gautam Kejriwal, Adv.,
Mr.Akash Chaturvedi, Adv. and
Mrs.Sushila Agrawal, Adv.
For respondent no.8 : Mr.Jitendra Singh, Sr.Adv.
Mr.Shankar Kumar Thakur, Adv.
For respondent nos.9 &10 : Mr.Vinod Kanth, Sr.Adv.
Mr.Abhinav Srivastav, Adv.
For I.O.C. : Mr.K.D.Chatterji, Sr.Adv.
Mr.Anil Kumar Sinha and
Mr.Amitesh Kumar Verma, Adv.
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CORAM: HONOURABLE MR. JUSTICE JAYANANDAN SINGH
CAV ORDER
Date: 18-09-2012
Jayanandan Singh,J: Mr. V. Giri, learned senior counsel, appearing on
behalf of the petitioners, on a query from the Court, at the very
threshold of his arguments, fairly accepted that in matters, like
the present one, scope of interference by a High Court, in
exercise of its powers under Article 226 of the Constitution, is
very limited. He accepted that in this matter no question of any
statutory infraction or question of any violation of mandate of the
Constitution was involved and no question of infringement of any
statutory or constitutional right of the petitioners was involved.
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He submitted that petitioner no.1 is the Association and other
petitioners are member calcination units, long established in the
periphery of Refineries, (Barauni in the present case), of the
respondent Indian Oil Corporation Ltd. (hereinafter referred to as
„the IOC‟). Since about two decades these units were being
allotted Raw Petroleum Coke (in short „R.P.C.‟), a by-product of
the refining process of the Refinery, by the IOC at a price fixed
by it, on pro-rata basis as well as taking into account their
installed capacity and their average offtake of the last three years.
From the R.P.C. thus purchased, these units produced Calcined
Petroleum Coke (in short „C.P.C.‟), which, in turn, was required
by the aluminium industries, like HINDALCO, etc. for use in
their process of manufacturing of aluminium. He accepted that
there was no written agreement between the IOC and these units
assuring such supply. But this allotment of R.P.C. to the units,
since almost last two decades, gave rise to a legitimate
expectation with them that they will continue to get assured
supply of R.P.C. from the IOC in future also. Hence, he
submitted that the Principles of legitimate expectation, as also of
promissory estoppel, by conduct, also became applicable, due to
this long standing practice. He submitted that, problem arose
when new C.P.C. producing units came into existence and started
claiming share in the stock of R.P.C. produced by the Refineries,
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which was scarce, and not sufficient to meet the demand of the
even existing units. When these new units put up their demand
before the IOC, they received a curt reply that the IOC could not
guarantee any supply to them. At one point of time, the IOC also
fixed a cut off date for allotment of R.P.C. to the units
commissioned before 1.4.2010 only, declining any assurance of
allotment to the new units commissioned thereafter. He submitted
that the IOC had been working on this methodology of allotment
of R.P.C. to the existing C.P.C. producing units on equitable
basis since long with the knowledge and consent of the Ministry
of Petroleum and Natural Gas, (hereinafter referred to as „P & G‟
or „the Ministry‟) Government of India. Grievance arose among
the petitioners when the impugned letter dated 7.5.2012
(Annexure-1) was issued by the Ministry to the Public Sector Oil
Producing Companies, including the IOC, advising them to prefer
auction as mode for sale of R.P.C. to C.P.C. producing units. He
submitted that the long standing practice of sale of R.P.C. by
allotment to the C.P.C. producing units, based on the average
offtake of past three years or the installed capacity, whichever
was lower, prorated to actual availability, was changed to sale by
an open auction, which wiped out the legitimate expectations of
the existing units of assured supply, of R.P.C. as there was/is
wide mismatch in production and demand. He submitted that this
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change of methodology of putting the stock of R.P.C. of the
Refineries for sale through an open auction is under challenge in
this writ application. He accepted that the entire transaction, from
the very beginning, was/is based on commercial considerations
for all parties and no case of statutory or constitutional violation
is involved in the matter. Hence, he accepted that, the petitioners
challenge, to the impugned letter of the Ministry dated 7.5.2012
(Annexure-1), has to be considered by this Court only under the
powers of judicial review of an administrative action and within
the parameters laid down by judicial pronouncements in this
regard. He fairly accepted that under the powers of judicial
review, this Court cannot sit in appeal and examine the merits of
the decision. He also accepted that, in matters of policy decisions,
scrutiny of the Court is required to be confined only to decision
making process and it can interfere only if the decision is found
to be arbitrary, unreasonable, capricious etc. He submitted that, as
laid down by the judicial pronouncements, Courts cannot weigh
the pros and cons of the policy or comparative merits and cannot
hold it bad on consideration of its possible abrasion and
consequences. He submitted that in matters of fiscal policies, like
private entrepreneurs, State and its instrumentalities have also
right to keep profit motive one of the considerations, but, he
submitted that, profit cannot be the only consideration for taking
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a policy decision without consideration of fairness, rationality
and equality in the matter. He submitted that State and its
instrumentalities cannot indulge into profiteering only, de hors
other considerations relevant for a welfare State, and totally
oblivious to its cause and effect. However, he submitted that,
before proceeding with his submissions on the scope of judicial
review in the matter, it would be appropriate for him to place
certain background facts of the case, leading to the issue of
impugned letter by the Ministry.
2. Coming to the facts of the case, Mr.Giri, first of all,
placed an old letter of the IOC dated 27.8.2001, addressed to the
Working President of Laghu Udyog Bharti at Begusarai, an
Association of SSI units of the State, annexed with the writ
application as Annexure-7 (Page 47). This letter, he placed to
emphasize that the IOC had extended the assurance of its
endeavour to protect the interest of SSI units of Barauni. He also
pointed out that the IOC, through this letter, had also assured that,
in spite of restricted availability of the product, i.e. R.P.C., it
intended to meet the requirements of the SSI units
proportionately, in the line with their past offtakes. He submitted
that this letter showed that there was some promise by the IOC to
ensure supply to the units on proportionate basis in future also.
3. He next referred to another letter of the IOC dated
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10.8.2006, again addressed to the said Working President, annexed as Annexure-8 with the writ application (Page 49), only to show that the pricing of the R.P.C. was a unilateral act of the Empowered Pricing Committee of the IOC which the units were required to accept for allotment of R.P.C.
4. Next letter in chronology, he placed, was also a letter of the IOC dated 8.5.2008 addressed to the Ministry, annexed as Annexure-R/1 with the counter affidavit filed on behalf of respondent nos.4 to 6 on 24.7.2012 (Page 328), to show that, in view of the letter of the Ministry dated 25.7.2001, IOC had made endeavours to supply R.P.C. ex-Barauni to the local SSI units on priority, but it had faced some problems during October 2006 to January 2007 when the local SSI units did not come forward to lift the available R.P.C. stock, which forced the IOC to sell the available stock, with heavy trade discount to other customers. It referred to a request of the petitioner Association, made on the basis of a letter of the Ministry dated 28.6.2002, for release of R.P.C. from Barauni, only to local calcination units, and also requests from other customers also, like units from Kota, Wizag and Kolkata, for supply of some quantity to them also out of the total production. Hence, by this letter the IOC proposed streamlining the release of R.P.C. ex-Barauni Refinery with a proposed changed methodology. On the basis of this letter of the 8 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 8 / 100 IOC, he submitted that in this changed methodology also IOC had proposed to ensure equitable distribution of R.P.C. ex- Barauni Refinery to the local units, with some allocation to outside units also.
5. Mr. Giri then referred to another letter of the IOC dated 19.11.2008, addressed to a firm of Kolkata, annexed with the writ application as Annexure-3 (Page 41), by which IOC had declined its request to release R.P.C. to new calcination units due to the reason that production of R.P.C. ex-Barauni was far less than the installed capacity of units at Barauni, indicating that options of importing R.P.C. was always open to the customers to meet their requirements. He submitted that, thus, this letter also showed that a clear policy was being practiced by the IOC to provide R.P.C. ex-Barauni only to existing units at Barauni.
6. He next referred to the notings of a discussion held at the headquarter of the IOC on 18.2.2010, in respect of release of R.P.C. from Barauni and North East Refineries, a copy whereof is annexed as Annexure-10 with the reply of the petitioners to the interveners‟ petition by way of affidavit (Page 162), which shows that average monthly R.P.C. production during the year 2010-11 was noticed and, in view of the expected production of the quantity, it was observed that, the units based in North East would be supplied upto 50% of their installed capacity and 9 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 9 / 100 Barauni based units would be supplied upto 70%. In the proceeding, prevalent methodology was noticed and it was also noticed that three new units at Bongaigaon and two at Barauni were coming up and there was a demand and representations for release of R.P.C. to other units also confined to the State. Considering the entire facts, in the meeting, a modified methodology was proposed to be adopted which also proposed action in case any unit did not lift its allotted quota of R.P.C. in time. In the meeting it was also proposed that the demand from the new customers could be considered in future only after meeting the demand of existing local customers. On the basis of this, Mr. Giri submitted that, time to time, the IOC had taken into account the working of the methodology of allotment of R.P.C. to the existing units and, as and when it felt necessity of any modification or improvement in the methodology, it promptly introduced the same. He referred to another letter of the IOC dated 22.7.2010 addressed to the same Kolkata Firm, annexed with the writ application as Annexure-2 (Page 40), declining any assurance of supply of R.P.C. to its new unit at Bongaigaon, in view of the demand of existing customers far exceeding the production of R.P.C. from the Refineries.
7. Next letter in chronology, Mr.Giri referred, was again a letter of the IOC dated 4.11.2010, addressed to the Deputy 10 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 10 / 100 Secretary of the Ministry, annexed as Annexure-R/2 with the said counter affidavit on behalf of respondent nos.4 to 6 (Page 330), appearing to have been sent in reference to Ministry‟s letter dated 5.10.2010, and some discussions held with him on 18.10.2010, giving in detail, current supply demand scenario of R.P.C. and the present system of allotment and future proposition. He pointed out that, in the present system, allotment from Barauni Refinery was based on average offtake of past three years on rolling basis or the installed capacity of units, whichever was lower, prorated to the actual production capacity. He submitted that this shows that, a careful methodology was being adopted by the IOC for an equitable distribution of the R.P.C. produced from its Refineries, as it was in far less quantity than the demand. He submitted that in the future proposition also, contained in this letter, the IOC did not propose any assured allocation of R.P.C. to the new units commissioned after 1.4.2010.
8. Thereafter, Mr. Giri referred to one letter of the Minister of the Department of P & NG dated 20.9.2011, addressed to one Dr. Manas Bhunia, Minister-in-charge of Micro and Small Scale Enterprises, Textiles, Irrigation and Waterways Department, Government of West Bengal, annexed as Annexure- 4 (Page 42), sent in response to his letter dated 5.1.2011, in respect of allocation of R.P.C. ex-Bongaigaon Refinery to M/s Brahmputra 11 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 11 / 100 carbon Ltd. In the said letter, he made it clear that the matter was examined, in consultation with the IOC, and he was informed that the R.P.C. produced by the three Refineries in the North East were supplied to five calcination units in the vicinity, including Brahmputra Carbon Ltd., based on demand put by them and depending upon monthly projected availability from the Refineries prorated to availability and limited to the assessed capacity of the units.
9. Next document, referred by Mr. Giri, was a letter dated 10.1.2012 of the Director (Marketing) of the IOC, addressed to Joint Secretary of the Ministry, annexed as Annexure- R/3 with the said counter affidavit of respondent nos.4 to 6 (Page 333), with which, it appears that, in response to Ministry‟s letter dated 4.1.2012, enclosing a letter of M/s Carbon Resources Pvt. Ltd. (Respondent no.7) dated 15.10.2011, a new revisited and rationalized pricing and allocation methodology was enclosed. It was mentioned in the letter that, for meeting the requirement of local calcination units and others, decisions in respect of changes had been taken in consultation with the officials of the Ministry in the meeting held on 18.10.2010 and 1.11.2010.
10. An information supplied under the Right to Information Act, 2005 to M/s Bihar Carbon Pvt. Ltd. (Petitioner no.3) by the IOC on 27.3.2012, annexed with the writ application as 12 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 12 / 100 Annexure-5 (Page 43), was the next document referred by Mr. Giri, which shows the practice adopted by the IOC, so far, in respect of allocation of R.P.C. to the calcination units was allotment prorated to actual availability, on the basis of average offtake of past three years on rolling basis or the installed capacity, whichever was lower. It mentions that the guidelines were affected from November 2010 and the calcination units commissioned after 1.4.2010 were not being presently considered for regular allocation. He submitted that this shows that till this date the methodology of allotment of R.P.C. was on equitable basis, dependent on its availability, with preference to the local calcination units.
11. He, therefore, submitted that, from the above documents it was clear that, till this date, there was nothing to indicate that any change in the methodology, in vogue since more than two decades and adoption of a new methodology for allocation/distribution/sale of R.P.C. by auction or in any manner, was under contemplation even. Hence, he submitted that the change of methodology by the impugned communication of the Ministry dated 7.5.2012, suggesting for sale of R.P.C. through open auction was sudden, abrupt, without any deliberation at any level with any party and without any application of mind by any authority with regard to its propriety or advantages, or otherwise, 13 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 13 / 100 over the methodology being practiced by the IOC since so long. He submitted that, this sudden and abrupt change of methodology negatived the very policy of the IOC of equitable distribution of R.P.C. with preference to local calcination units, which was being practiced by the IOC due to the fact that the availability of R.P.C. was much less than the over all requirement of the existing calcination units. He submitted that this mismatch of supply and demand was the reason for the IOC to have adopted the methodology of prorated distribution, as per the availability, which was a sound and equitable methodology with a purpose to enable the small SSI C.P.C. producing units, set up in the periphery of the concerned Refineries, to survive. He submitted that it was not at all considered by any authority, before this change of methodology, that this introduction of auction will expose the smaller units to the danger of some party, with deep pockets, lifting the entire stock, with a clear game plan to force the other rival units to run out of business and pull down their shutters. He pointed out that, in the circumstances, petitioner no.1, the Association, sent a representation to the Secretary of the Ministry on 12.5.2012, annexed as Annexure-10 with the writ application (Page 51), requesting him to review the said decision, communicated through the impugned letter. He submitted that, as it appears from the communication of the Ministry to the Director 14 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 14 / 100 (Marketing) of the IOC dated 7.6.2012, annexed as Annexure-A with the rejoinder of the petitioners to the reply filed by respondent nos.1 to 3 (Page 508), the IOC had also sent some letter to the Ministry on 14.5.2012 on the subject which, in this letter of the Ministry was claimed, was considered and it was decided that the IOC should follow the instructions contained in impugned letter dated 7.5.2012. He also referred to some communications between some of the petitioners and the IOC, annexed as Annexure-15 series (Pages 172-184), in respect of the changed methodology of sale of R.P.C. through auction. However, since nothing transpired in spite of filing of the representations by the Association, and on their request to the IOC also, petitioners filed this writ application with a prayer for quashing of the said communication of the Ministry dated 7.5.2012 (Annexure-1) and for issue of mandamus to the respondents to continue the existing procedure, mechanism and scheme for allocation of R.P.C. and for prohibiting respondent nos.4 to 6 i.e. the IOC officials, from implementing the said impugned decision of the Ministry.
12. Mr. Giri also placed several paragraphs of the counter affidavit of the IOC (Page 320) and, in particular, on paragraphs 5, 6, 12, 13, 17 and 19, and submitted that the counter affidavit did not spell out any difficulty, whatsoever, in the methodology 15 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 15 / 100 being applied by the IOC earlier. He submitted that the pleadings made in paragraph 17 of the counter affidavit did not disclose any deliberation in the matter and supported the apprehension of the petitioners that, in the process of auction, some of the units may not get any allotment at all and may be either forced to go for 100% import, which was not a viable option, or to close their units. He submitted that the possible result of this could also be that some of the larger units, with stronger financial base, may lift the entire quantity of R.P.C. from the Refineries of the IOC, which was much better in quality than the imported R.P.C., thus, intentionally indulging into negative trade practice, only to eliminate their rivals. He submitted that the R.P.C. being a scarce commodity, the Ministry and the IOC were not expected to be guided only by commercial considerations and take a decision only with a view to get more profit out of it. They being public authorities, it was their constitutional duty to see to it that a scarce free trade commodity, available at their disposal, is distributed amongst its consumers (calcination units) on equitable basis while safeguarding their financial interest also. He submitted that the counter affidavit of the IOC shows that the decision of auction was guided by the judgment of the Apex Court in the case, popularly known as „2G Spectrum Case‟, holding auction as the best method for distributing or alienating 16 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 16 / 100 natural resources through wide publicity for making it possible for all eligible to participate. He submitted that this may be true in case of 2G Spectrums, not suffering from availability constraints. But in the present case said principle may not be most appropriate, as, by throwing a scarce commodity open to all through auction, dangers of negative trade practice looms large. Hence, he submitted that, in principle, sale of a free-trade commodity, in control of a public authority, through auction, may be good, but, in implementation, it may create many complications and may prove to be inequitable, unjust and counter productive.
13. However, as pointed out earlier, Mr. Giri did accept that the entire transaction, either under the old methodology, or on the basis of new methodology proposed by impugned Annexure-1 are basically commercial activity of the petitioners and other calcination units at the one hand and the IOC and the Ministry on the other. He submitted that R.P.C., a by-product of the refining process of the Refineries of the IOC, which otherwise was a waste material for them, was being sold by the IOC only to make profit out of it and add to their financial resources. The calcination units, in turn, were using the R.P.C. to convert the same into C.P.C. and sell it to the aluminium producing industries, like HINDALCO and others, on profit, which they 17 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 17 / 100 used in the process of their production of finished products. Thus, only a profit motive was involved in the entire transaction throughout. He submitted that, though the Government and its instrumentalities were free to act in their commercial interest, like any other private entrepreneur, and normally no interference could be made in the same, but, since they were public authorities also, they, even in their commercial activities, were required to act fairly and reasonably, taking into consideration the effect of their action on the parties likely to be involved. He submitted that, since earlier methodology was in vogue for more than two decades, it was, in normal circumstances, expected from the Ministry to take into account the interest of stakeholders, who were likely to be adversely affected by such sudden change of methodology and take them into confidence by consulting them before the abrupt change. In this connection, he placed reliance on a judgment of the Apex Court in the case of Mahabir Auto Stores Vs, I.O.C. & Ors. [(1990)3 SCC 752] and in particular, on paragraphs 11, 12, 13, 17, 18, 20 and 21 thereof. He submitted that even if public authorities were free to enter into a contract or take commercial decisions, like private parties, being public authorities, their action was amenable to judicial review by this Court in exercise of its powers under Article 226 of the Constitution of India. He submitted that, being public authorities, 18 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 18 / 100 to sustain judicial scrutiny of their action, they must establish that their decision was rational, logical and sequential and was not arbitrary, capricious, whimsical or mala fide. He submitted that these parameters have been laid down by the Apex Court through a number of judicial pronouncements, some of which he relied upon, were cases of Kumari Srilekha Vidyarthi Vs. State of U.P. & Ors. [(1991)1 SCC 212], and in particular, on paragraphs 18, 19, 20, 21, 22, 26, 27, 28, 30 and 32 thereof and Sterling Computers Limited Vs. M & N Publications [(1993)1 SCC 445], and in particular, on paragraphs 14 and 15 thereof.
14. Mr. Giri next submitted that due to long practice of more than two decades of allotment of R.P.C. on equitable and pro-rata basis, legitimate expectations arose with the petitioners of its continuance in future also. Hence, on this basis a right had accrued to them to get the supply of R.P.C. on the basis of old methodology, unless an overwhelming public interest was involved to compel the respondents to deviate from the old practice. In this connection, he placed reliance on judgments of the Apex Court in the cases of Union of India Vs. Hindustan Development Corporation [(1993)3 SCC 499], and in particular, on paragraphs 19, 23, 24, 27, 28, 29, 30, 31 and 33 thereof; and then of Bannari Amman Sugars Ltd. v. Commercial Tax Officer, [(2005) 1 SCC 625], and in particular, on paragraphs 8 and 9 19 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 19 / 100 thereof. He submitted that the IOC being an instrumentality of the State, it is not open to it to be guided only by profit motives in its actions just to maximize its revenue. Even if it is assumed that by this change of methodology it was going to generate more income, being a public authority, it was also obligatory on its part to see to it that, while protecting its fiscal interest, distribution of R.P.C. should also be on equitable basis, protecting the interest of the units dependent upon it since more than two decades. In this connection, he placed reliance on the judgments of the Apex Court in the case of KSEP Vs. Govind Prabhu [(1986)4 SCC 498], followed in Ashoka Smokeless Coke India Pvt. Ltd. Vs. Union of India [(2007)2 SCC 640], and in particular, on paragraphs 85, 86, 90, 91, 92, 113, 114, 144 and 193 thereof.
15. In the circumstances, concluding his arguments, Mr. Giri submitted that, the decision of the respondents to abruptly change the mode of sale of R.P.C. by auction is completely arbitrary and hence violative of Article 14 of the Constitution of India. He further submitted that the reasons given by the respondents to justify their decision are unsustainable and misconceived. No material has been placed before the Court to convince it that the impugned communication dated 7.5.2012 (Annexure-1) was issued after deliberation at the instance of the Government with the IOC or in consultation with the stakeholders. Hence, the 20 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 20 / 100 prayer of the petitioners is fit to be allowed and the said impugned communication dated 7.5.2012 is fit to be quashed with consequential reliefs as prayed for.
16. Challenge to the reliefs prayed for by the petitioners in the writ application was led by Mr.Vinod Kanth, learned senior counsel appearing for respondent no.10 and assisted by Mr.Abhinav Srivastava, Advocate. However, leaving the factual aspects of the case to be presented by other learned counsels appearing for the other respondents, he confined himself to pure questions of law arising in the case. He submitted that there cannot be two opinion that the impugned letter of the Ministry, as contained in Annexure-1 with this writ application, reflected policy decision taken by the Ministry to go for open auction for sale of R.P.C. being produced by the Refineries of the IOC. He submitted that it has been categorically held by the Apex Court, repeatedly, that a policy decision of the State cannot be questioned in a court of law, unless the same affects somebody‟s legal rights. He submitted that, merits of a policy of the Government, or a public authority, cannot be judged by this Court under Article 226 of the Constitution, even though or only because, it may result into some adverse effect upon some vested interests, nor can it be struck down only on representation of some parties urging that a different policy would have been fairer 21 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 21 / 100 or more scientific or more logical. In this connection, he placed reliance on a judgment of the Apex Court in the case of Union of India Vs. Manu Deo Arya [(2004)5 SCC 232] and in particular on paragraph 9 thereof. He further placed reliance on a celebrated judgments of the Apex Court in the case of BALCO Employees Union (Regd.) Vs. Union of India [(2002)2 SCC 333] and in particular, on paragraphs 46, 92 and 93 thereof, and also in the case of Tata Cellular Vs. Union of India [(1994)6 SCC 651], and in particular, on paragraphs 72, 73, 75, 77, 79, 80, 81 and 94 thereof.
17. Mr.Kanth also submitted that, a right under Article 19(1)(g) of the Constitution, is a right available to all the citizens of the Country. In the garb of this right, nobody can claim monopoly to do business. He submitted that new calcination units have established their manufacturing units with due permission from the concerned authorities of the State. Hence, they have also a right to get an opportunity to purchase R.P.C. from the Refineries of the IOC. He submitted that, only because some of the petitioners and the like had established their units earlier, does not give them the right to monopolize in purchase of R.P.C. in exclusion of others. In support of this proposition, he relied upon a judgment of the Apex Court in the case of Hansraj Kehar Vs. State of U.P. [(1975) 1 SCC 40], and in particular, on paragraph 8 22 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 22 / 100 thereof.
18. On the question of legitimate expectation, Mr. Kanth submitted that legitimate expectation of a party itself cannot be a ground to interfere with a policy decision of the State. To interfere with a policy decision under powers of judicial review, much more is required than mere legitimate expectation of the parties expecting a contrary action and decision by the State. In this context, he placed reliance on a judgment of the Apex Court in the case of Sethi Auto Service Station Vs. D.D.A. [(2009)1 SCC 180]. He accepted that the Apex Court has laid down some parameters for the Courts to interfere in policy decision also, but, he submitted that, the petitioners have completely failed to bring their case within any of the parameters laid down by the Apex Court and have not at all made out a case for interference by this Court.
19. Mr. Abhinav Srivastava, learned counsel appearing for respondent no.9 independently, adopted the submissions of Mr. Kanth. In addition, he submitted that R.P.C. was not being exclusively produced by the IOC Refineries and it was easily available through import also. He submitted that the calcination units do not totally depend upon supply from the IOC as admittedly quantity of R.P.C. supplied by the IOC is only 25% of the total demand by the units set up before 1.4.2010 also. He 23 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 23 / 100 submitted that there was no implied contract between the calcination units and the IOC and only as a practice, same was being allotted to them by sale. He submitted that, by making an effort to get more revenue from sale of R.P.C., the IOC was only making an attempt to cover up some loss being faced by it in its operations and thus the IOC, being an authority under Article 12, was only adding some profit to the public exchequer.
20. Mr. S.D.Sanjay, learned counsel for Respondent no.7, appeared thereafter and advanced elaborate submissions on facts as well as on questions of law. He submitted that materials are on record to show that not all the calcination units commissioned prior to 1.4.2010 were opposed to this policy. He submitted that petitioners have not come to this Court with clean hands and for legitimate purpose. He submitted that in fact the entire game plan of the petitioners is to get R.P.C. from the Refineries of the IOC at lower price. He submitted that, in fact, they had been manipulating things in their favour, forcing the IOC to scale down the price due to urgency of evacuation of R.P.C. from their premises to ensure uninterrupted continuance of refining process. He submitted that thus it were the petitioners, who were indulging into profiteering by forcing the IOC to sell R.P.C. to them at a lower price and selling their finished product i.e. C.P.C. to the aluminium manufacturing giants at a higher price and in 24 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 24 / 100 this process making heavy profit. He referred to the pleadings of his counter affidavit containing details of the units in Bihar and Assam and pointed out that, out of 10 units, which were opposed to auction system, 5 were of one group alone i.e. Maniyar Group. He pointed out that it was one unit i.e. Brahmputra Carbon Limited which has increased its installed capacity from 40,000 M.T. to 1,20,000 M.T. per annum and therefore was desperate in getting assured supply of R.P.C. He pointed out that this Brahmputra Carbon Ltd. had filed writ application in Guwahati High Court for implementation of the deliberations of the said meeting at IOC Headquarters, in which counter affidavit was filed on behalf of the IOC, a copy whereof is Annexure-R/3 with his counter affidavit (Page 289). In the counter affidavit IOC disclosed to the Court that the said Brahmputra Carbon Ltd. enjoyed near monopoly in this sector and, from the records it was apparent that, from time to time it had stopped uplifting R.P.C. from the Refineries, resulting into piling of R.P.C. and forcing the IOC to sell it on discounted price to avoid shutting down of refining process. He referred to other documents, annexed with his counter affidavit, giving details of calcinine units and their installed capacities and upliftment in the last three years. He also referred to list of litigation entered into by the old units, prepared and annexed with his counter affidavit as Annexure-R/10 (Page 25 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 25 / 100
312). He also placed his additional counter affidavit and two documents of the respondent IOC, annexed with it as Annexure- R/11 and R/11A (Pages 649-650), to show that, at times, the IOC had to reduce the price due to market condition and competitive prices and in the wake of delay in lifting of allotted R.P.C. by the existing units.
21. On the question of law, Mr. Sanjay also submitted that the Courts cannot strike down policy decision merely because it feels that another decision would have been better or fairer. He submitted that the wisdom and advisability of a policy are normally not amenable to judicial review unless they are found to be contrary to statutory or constitutional provisions or arbitrary or irrational and an abuse of power. In support of this submission, he placed reliance on the judgment of the Apex Court in the case of State of M.P. Vs. Narmada Bachao Andolan [(2011)7 SCC 639], and in particular, on paragraph 6 thereof.
22. He submitted that sale of goods by the State or its instrumentalities on fiscal considerations and the manner to be adopted for the same is a matter of policy and the Court cannot examine the correctness or otherwise of the same except in exceptional circumstances. In this respect, he placed reliance on a judgment of the Apex Court in the case of Ram Singh Vijay Pal Singh Vs. State of U.P. [(2007)6 SCC 44] and in particular, on 26 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 26 / 100 paragraph 11 thereof.
23. He further submitted that a legislative decision, or a policy decision in the line of legislative decision, is distinguishable from judicial decision or quasi judicial decision. Judicial or quasi judicial decision or administrative decision affecting rights of individual may require compliance of a Principles of Natural Justice. But a legislative decision, or a policy decision taking colour of a legislative decision, does not call for any compliance of Principles of Natural Justice and no right accrues to any affected party to be noticed and heard in the matter, unless the Statute itself so requires. In support of this submission, he placed reliance on the judgment of the Apex Court in the case of M/s Sri Sitaram Sugar Company Ltd. Vs. Union of India [AIR 1990 SC 1277] and in particular, on paragraphs 32 and 37 thereof.
24. Mr. Sanjay also placed reliance on paragraphs 35 and 36 of a judgment of the Apex Court in the case of Srilekha Vidyarthi (Supra) to submit that though it is true that, to survive the test of Article 14, an action of the State must appear to be reasonable and not arbitrary, but, he submitted that, the question whether any act of the State was arbitrary or not is ultimately to be answered on the facts and in the circumstances of the given case and not in abstract.
27 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 27 / 100
25. He next placed reliance on a judgment of the Apex Court in the case of M/s Meerut Development Authority Vs. Association of Management Studies [(2009)6 SCC 171] and its various paragraphs to submit that efforts by the State or any of its instrumentalities to augment financial resources as revenue, itself cannot be said to be an unreasonable decision. State has a right to get full value of its resources through sale of natural assets in private sector. He submitted that mere use of word arbitrary and capricious does not carry any special significance. Question, which in every case of judicial review of a policy decision requires to be considered, is whether decision measures legal standard of reasonableness or not. He submitted that the facts of this case are somewhat similar to the facts of the present case and therefore, law laid down therein is squarely applicable in the present case.
26. He submitted that in matters of change of policy, Principle of Promissory Estoppel also does not apply and no party gets a right to be noticed and heard in the matter likely to be affected by the said change. In support of this submission, he relied upon a judgment of the Apex Court in the case of Bannari Amman Sugar Ltd. Vs. C.T.O. [(2005)1 SCC 625], and in particular, on paragraphs 19 and 20 thereof.
27. He next placed reliance on a well known Judgment of the 28 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 28 / 100 Apex Court in the case of M/s Kasturilal Vs. State of J & K [AIR 1980 SC 1992], and in particular, on paragraphs 11, 14 and 15 thereof, to submit that the Government cannot discriminate and adopt an unfair procedure and cannot, like a private individual, choose persons to deal with, leaving others aside, without any intelligible differentia or reasonable classification. He submitted that in case of sale of commodities in its possession, it must do so by auction giving opportunity to all the eligible to participate.
28. He lastly placed reliance on paragraphs 74, 75, 76 and 95 of the judgment of the Apex Court in the case of Centre for Public Interest Litigation Vs. Union of India (popularly known as 2G Spectrum case) [(2012)3 SCC 1], to submit that natural resources or Government property must be distributed or sold by transparent and fair method so that all eligible persons get a fair opportunity of competition. He submitted that the State and its instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of others. He submitted that the Court has held that where a question of alienation of scarce natural resource comes for consideration, State must ensure that non- discriminatory method is adopted for its distribution and alienation which would necessarily result into protection of national/public interest. He submitted that after enunciation of 29 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 29 / 100 law, the Apex Court in the said judgment has held that publicized auction, conducted fairly and impartially, is the best method of discharging its burden, which the respondents have decided to adopt in the present case and, therefore, their action is perfectly legal and valid and no interference is called for by this Court in the matter.
29. Mr. Jitendra Singh, learned senior counsel, on behalf of respondent no.8 appeared next. He submitted that the action of the Ministry was a policy decision as per the fiscal necessity of the IOC, an instrumentality of the State. He also submitted that, in the circumstances, no judicial review was called for in the matter. He submitted that the IOC met only about 25% of the total demand of the units and the rest of the demand of the units was met through import, which was not a complex process as R.P.C. is a free import commodity. He also referred to Annexure- R/10 of his counter affidavit and submitted that in all the earlier litigations Union of India was a party and entire matter was in its knowledge. Hence, to settle the dispute once for all, between the rival calcination units, it thought it proper to make changes in the policy. By that time, judgment of Apex Court in 2G Spectrum case had come, which laid down that the auction of natural resource was the best mode for distribution among the eligible citizens. As such on the lines of law laid down by the Apex 30 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 30 / 100 Court, it was decided to change the modality of sale of R.P.C. from the Refineries of the IOC by allotment to sale through an open auction. He submitted that it was not permissible to judge the comparative merit of the policy decision in exercise of powers under judicial review and this Court could not undertake an exercise in the matter as an appellate court. In support of this submission, he relied upon judgment of the Apex Court in the case of K. Nagraj Vs. State of A.P. [(1985)1 SCC 523], and in particular, on paragraphs 7 and 13 thereof. He submitted that this policy was not only desirable but expedient also as it gave equal opportunity to all the units to apply for purchase of R.P.C. He submitted that, at the time of taking decision in respect of change in policy, all facts were there before the Ministry and, hence, decision was taken on relevant materials. He submitted that the bid price for auction has to be fixed in consideration with the market price of the imported R.P.C. as on the site. Hence, nobody would be in a position to bid so high that he would incur loss, in purchasing R.P.C. at a very high price which may completely wipe out his profit from the sale of finished product i.e. C.P.C. He also relied upon judgment of BALCO (Supra) and in particular, on paragraph 47 and 48 thereof and submitted that Principles of Natural Justice had no role to play in a policy decision. In this context, he also relied upon judgments of the 31 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 31 / 100 Apex Court in the cases of Indian Airlines Officers‟ Association Vs. Indian Airlines Ltd., [(2007)10 SCC 684] and in particular, on paragraph 9 thereof; in the case of Hardev Singh Vs. Union of India [(2011)10 SCC 121], and in particular, on paragraphs 25 and 26 thereof; Ram Chandra Murarilal Bhattad Vs. State of Maharashtra [(2007)2 SCC 588], and in particular, on paragraphs 49, 53, 61 and 64 thereof and Narmada Bachao Andolan (Supra) and in particular, on paragraphs 52, 55, 258 and 261 thereof. He submitted that in effect petitioners were calling upon this Court to decide comparative merit and desirability of the two methodology for being adopted by the IOC in future, which cannot be done by this Court under the powers of judicial review.
30. Mr. K. D. Chatterjee, learned senior counsel, appeared for the IOC. He adopted the arguments on behalf of other private respondents and submitted that, in the wake of change of policy by the Ministry to be adopted by the IOC in the matter, detailed Guidelines were drawn by the IOC in consultation with Metals Scrap Trading Corporation (in short „MSTC‟), a Government of India Undertaking, specialized in holding auctions for public sector undertakings, which has been engaged by the IOC for the scheduled auction. This Guideline has been put on the web site of MSTC and is available to all interested parties. He also produced a downloaded copy of the Guidelines for perusal by this Court 32 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 32 / 100 and to be kept on the records of this case. He submitted that a training session was held recently by the IOC in which representatives of all petitioners and all respondents participated. No party complained, in the meeting or in the session or thereafter, with regard to any of the clauses of the said Guidelines. In fact, nothing has been said by the petitioners before this Court also in respect of any infirmity or short fall in the Guidelines. He pointed out that, instead of pointing out any infirmity in the said Guidelines, petitioners have merely raised bogy of a possibility of some party, with deep pockets, lifting the entire stock, which was not logically possible. He submitted that the intention of the Ministry or the IOC was not profiteering, as, under the new methodology, the price of R.P.C. has to be fixed at rational basis and restrictions are imposed on re-sale, trade etc. of the R.P.C. and it has been decided to restrict the auction for local units to safeguard their interest. He submitted that, had the Ministry or the IOC been interested in profiteering, first step the Ministry would have taken was to get the import duty on imported R.P.C. increased, so as to get the price of R.P.C. produced by the IOC fixed at a higher rate in auction and it would have thrown the commodity open for sale to one and all from the Country and also from abroad on highest price without any preference to local buyers and would have allowed its resale or 33 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 33 / 100 trade etc. Auction was proposed only to get more revenue from the sale of R.P.C. on the basis of market based price. He submitted that the auction is yet to be held first time, which is to be held strictly on the basis of Guidelines prepared for the same by the IOC in consultation with MSTC. He submitted that Petitioners have moved this Court only on apprehension that they may suffer adversely if the auction is held. He submitted that even if, without assuming, there may be some justification in the apprehension of the petitioners, mere apprehension or possibility of misuse or abuse of a policy, or apprehension of its defective implementation in future, cannot be a ground to hold the policy bad calling upon this Court in exercise of powers of judicial review to set it aside. Dealing with the cases relied upon by learned senior counsel for the petitioners, he submitted that the case of Mahabir Auto (Supra) is clearly distinguishable on facts. He submitted that in the peculiar facts of that case the Apex Court had held that a contractual relationship was existing from long between the IOC and the appellant and the IOC in effect was treating and projecting it as its authorized distributor. He submitted that, so far as present case is concerned, relationship of the IOC with the petitioners was only of seller and buyer, transacting as per their own requirements and necessity, without any express or implied promise to any one of them of assured 34 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 34 / 100 supply under the earlier methodology. He submitted that earlier R.P.C. was being made available to only few units, but now, under the changed policy, it is being made available to one and all, with equal opportunity to them to compete. In respect of the judgment of the Apex Court in the case of Ashoka Smokeless (Supra), he submitted that the Court was dealing with coal which was an essential commodity in terms of 2000 Order. It held that since the product i.e. smokeless coal and briquettes were directly being consumed by the rural people, its price could not be allowed to shoot up, creating uncertainty and hardship for the masses. The Court also took into account that under section 2(i) & (ii) and section 3(1)(2)(c) of the Essential Commodities Act, it was incumbent upon the Central Government to fulfill object thereof, namely, making a scarce commodity available to the people at an affordable price. He submitted that there was no such consideration before the Ministry or the IOC in the present case. R.P.C. is a by-product of refining process which is useful for the calcination units for converting it into C.P.C. and selling it at a higher price to the aluminium manufacturing giants. It was purely a profit making venture of the petitioners which had nothing to do with the people at large. It was also profit making for the IOC to sell the by-product, which otherwise was a waste material for it, at a price, to augment its revenue. Hence, the 35 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 35 / 100 principles laid down in Ashoka Smokeless (Supra) was not at all applicable in the present case.
31. Mr. Raghib Hasan, learned senior counsel, appeared for respondent nos.1 to 3 i.e. the Union of India and its functionaries. He broadly adopted the submission of Mr. Jitendra Singh, learned senior counsel for respondent no.8, and also submitted that a policy decision of the Ministry has been questioned by the petitioners, which calls for no interference. He submitted that Annexure-1 was issued by the Ministry after much deliberation, for grant of equal opportunity to new units also, along with the existing units, who had also a right to enter into business in terms of Article 19(1)(g) of the Constitution. He submitted that the said Guidelines for auction of R.P.C. provided sufficient safeguards and the policy decision was arrived at after examining the matter in detail on receipt of an application from petitioner no.8.
32. This Court had earlier requested Mr. Hassan to produce the original file of the Ministry in which the matter had been dealt with as it had found that there was broad consensus between the parties that the issues raised in this matter had to be decided in the background of facts and circumstances of this case. Hence, he produced the entire original records of the Ministry and also filed a short note reflecting the developments in the file and placed reliance on judgment of 2G Spectrum case (Supra) and in 36 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 36 / 100 particular, on paragraphs 94, 95 and 96 thereof in support of the decision taken by the Ministry, suggesting the IOC to hold auction for sale of R.P.C.
33. In reply to the submissions of learned counsels for the respondents, Mr. Giri, learned senior counsel for the petitioners, submitted that, in his opening arguments on behalf of the petitioners, he had already covered the objection of the respondents to the petitioners‟ prayer in the writ application. He submitted that it was not the case of the petitioners that the Court should examine the correctness of the policy decision of the Ministry on merits. He submitted that he accepted the settled proposition of law that wisdom of decision making authority cannot be substituted by a Court with its own wisdom. Hence, he had confined and was confining his challenge to the decision of change of methodology of sale of R.P.C. only on the basis of gross error in the process adopted by the Ministry in coming to the decision. He submitted that, since notes of arguments, reflecting materials available in the file of the Ministry, was placed before this Court only during the arguments of learned counsel for the Union of India, and copies of the same were made available to him then, he would like to deal with it only, treating the same as reflecting the materials available in the original file. He placed the notes at pages 9 and 10 and submitted that it 37 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 37 / 100 showed that on the representation of a unit, Director (Marketing) was asked to examine the methodology of distribution of R.P.C. and to suggest any improvement in the same. The Director (Marketing) accordingly examined the matter and submitted his report suggesting improvements. Comparative table at page 10 of the notes, showing existing methodology of allocation and the proposed changes, showed that the proposed changes by the Director (Marketing) in the methodology was fool proof, on the basis of equity and to the benefit of even the new units. He submitted that this suggested change was a perfect solution to the problem in distribution of R.P.C. as it covered all the existing units, including the new ones commissioned after 1.4.2010, without any discrimination or undue favour to any one and in the best interest of the IOC. He submitted that this proposal of the Director (Marketing) could not be found fault with from any angle. Therefore, there was no compelling circumstance before the Ministry to ignore the same and propose sale of R.P.C. through auction. He pointed out from the notes that it did not show that in the discussion between the Hon‟ble Minister of the Department and the Joint Secretary, held on 31.3.2012 the IOC was at all involved and the views of the stakeholders, i.e. existing units were at all obtained. Hence, apparently decision for change of methodology was arrived at thereafter suddenly and abruptly. 38 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 38 / 100 He submitted that the letter of the Ministry dated 7.6.2012, annexed as Annexure-A with the rejoinder of the petitioners filed on 6.8.2012 (Page 508), showed that the IOC had sent some letter to the Ministry on 14.5.2012 in respect of the new policy, in response to which, Ministry had clarified, through this letter, that the instructions issued by the Ministry in the impugned letter had to be followed. He submitted that the said letter of the IOC dated 14.5.2012 is not on record, but, from the tenor of this reply of the Ministry, it appears that the IOC had taken objections to the change of methodology in allocation of R.P.C. through auction. He submitted that the notes do not disclose that there was any deliberation at the Ministry level with the officials of the IOC or stakeholders prior to issue of the impugned letter dated 7.5.2012 or subsequent to the receipt of the said letter of the IOC dated 14.5.2012 and till the said letter of the Ministry dated 7.6.2012 was issued. He submitted that, thus, it was clear that, in the facts and circumstances of the case, process leading to the decision of change of methodology was vitiated on account of lack of due deliberation, lack of application of mind, without calling for and considering the views of the stakeholders and taking them in confidence, without consulting the IOC and without at all considering the pros and cons of the proposed new methodology. He placed paragraphs of the counter affidavit of respondent nos.1 39 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 39 / 100 to 3 and submitted that there was no pleading that the suggestions of the Director (Marketing) was ever considered by the Ministry. He submitted that the pleadings and averments made in the counter affidavit did not match with the materials available in the file of the Ministry, as reflecting from the notes filed by learned Assistant Solicitor General of India. He submitted that the IOC, being an instrumentality of the State, maximization of its revenue should not be a dominant factor in the decision of the Ministry. He submitted that this submission he had already advanced before this Court relying upon judgment of Govinda Prabhu (Supra) and Ashoka Smokeless (Supra). He submitted that the claim of the respondents, that open auction for sale of R.P.C. would ensure equitable distribution, is misconceived. He submitted that maximization of revenue cannot go with equitable distribution and both are antithetical to each other as maximizing revenue only targets highest return and sale of commodity to the highest bidder, irrespective of more pressing demands and need of others. He submitted that, though aiming for maximizing revenue, both Ministry and the IOC have claimed that new arrangement is for equitable distribution, which is apparently ridiculous, as production of R.P.C. by the Refineries of the IOC are much less than conjoined requirement of all the existing units, making it possible for any one unit with big pockets, or a group 40 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 40 / 100 of units, lifting the entire stock of the scarce commodity, forcing other units to pack up and leave the arena. He submitted that the contents of the counter affidavit filed in the Guwahati High Court, referred by learned counsel for respondent no.7, cannot be taken into account, as the party, in whose case the same was filed has left the fray, and it is not known as to how the same was replied in the case and what was the Court‟s finding on it in the matter. He, therefore, submitted that this extraneous material has been placed on the records of this case by the respondents only to prejudice this Court. He submitted that, in any case, stand of the respondents in the counter affidavit is not reflected in any subsequent correspondence between the IOC and other party. Commenting on the case of Manu Deo Arya (Supra) relied upon by the respondents, he submitted that in the present case, on account of long standing practice, petitioners had acquired a right to get assured allotment of R.P.C. In connection with K. Nagraj case (Supra), he submitted that the facts of the case show that there was much deliberation and consideration at the Government level, before the policy decision was taken, whereas in the present case, facts are otherwise.
34. From the submissions of Mr. Giri, learned senior counsel appearing for the petitioners, it was apparent that he did not challenge the merits of the decision of the Ministry, reflected 41 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 41 / 100 by the impugned letter. He did not challenge that the methodology of open auction itself was bad and violative of any statutory or constitutional provisions or in infringement of any right of the petitioners. He did not challenge that the decision of sale of R.P.C. through open auction was, on merits, in any way violative of Principles of Equality enshrined in the Constitution and against the spirit of Article 14. He also did not submit, during his arguments, that the decision of the Ministry, as reflected by the impugned letter, was not a policy decision and was only an executive fiat. In fact, at one point, during his arguments, he accepted that the observations of the Ministry in the impugned letter was a communication of a policy decision of the Ministry, which may be available in the files. In his main notes of arguments also, it has not been disputed that the decision of the Ministry, reflected by the impugned letter dated 7.5.2012, was not a policy decision and only an executive or administrative decision opening more scope for this Court to interfere in the matter, apart from the scope of interference in exercise of its powers of judicial review. It is only in his subsequent notes, on the decisions relied upon by the respondents, that a vague statement is made to the effect that the communication/instructions of the Government to the IOC was not in fact a change of policy. This stand was never taken by Mr. 42 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 42 / 100 Giri earlier at any point of time nor any submissions were made by him in this regard. His entire challenge to the decision of the Ministry was confined to the process involved in coming to the decision, in respect of which, his particular stand was that the same was taken suddenly and abruptly and without any deliberation with the IOC and without taking into confidence the stakeholders i.e. petitioners and without hearing them in the matter. His next submissions were in respect of applicability of principles of promissory estoppel and legitimate expectations of the petitioners. One more challenge to the decision of the Ministry was on the ground that the Ministry and the IOC, being public authorities, could not act solely with profit motive and indulge into profiteering, completely overlooking the Principles of equity and fairness in action.
35. Powers of this Court of judicial review was the main plank of arguments of learned counsels of the parties. Learned counsel for the petitioners, on the one hand, made elaborate arguments on the scope of this power, whereas, on the other hand, learned counsels for the respondents advanced their arguments on the limitation of this power. Judgments relied upon by learned counsels on the issue, and the specific paragraphs thereof, referred to by either of the side, were only for this purpose, from which it was clear that, the established golden rule, 43 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 43 / 100 in the matter of interference with executive/administrative decisions or policies, in exercise of powers of judicial review, is of restraint, unless the decision/policy was clearly in breach of a statute, violative of any constitutional provisions or arbitrary, unreasonable and capricious etc., which are essential tests for upholding the validity, or otherwise, of the decision on the touchstone of Article 14 of the Constitution of India. In the long line of judgments cited by the respective counsels, this Court did not find much noticeable deviation from this approach. However, since counsels have referred to and relied upon specific judgments in this regard, in all fairness, this Court considers it appropriate to notice them individually, but in chronological order, rather than in order of appearance of the learned counsels before the Court.
36. But one judgment, which requires to be noticed at the very beginning, is the judgment of Court of Appeals (Civil Division) of England and Wales in the case of Associated Provincial Picture Houses Ltd. Vs. Wednesbury Corporation [(1947) 2 AllER 680]. This judgment deserves notice first, because of the fact that this is, perhaps, one of the most often referred judgment of the Court of England by the Courts of India with approval, till today, on the parameters of test of reasonableness of an executive action. In this judgment their 44 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 44 / 100 Lordships upheld the judgment of Mr. Justice Henn Collins, dismissing the action of the plaintiff-appellant for a declaration of a condition, imposed by the respondent-Corporation on the grant of a licence for Sunday performance of cinema in its cinema theatre, as ultra vires. Before the Court, a great deal was argued, in challenge to the said condition, on the ground of it being „unreasonable‟. Lord Greene, M.R. enumerated the powers of the courts in this respect and made a fine analysis of the phraseology „unreasonable‟, finding the same very commonly used in a comprehensive sense in relation to exercise of statutory discretions. At the end, while dismissing the appeal, he summarized the principles applicable in such matter in the following manner:-
"In the result, this appeal must be dismissed. I do not wish to repeat myself but I will summarize once again the principle applicable. The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or, conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may be still possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The power of the court to interfere in each case is not as an appellate authority to
45 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 45 / 100 override a decision of the local authority, but as a judicial authority which is concerned and concerned only, to see whether the local authority have contravened the law by acting in excess of the powers which Parliament has confided in them."
37. While granting that ground of „unreasonableness‟ could be an independent ground for attacking the decision of the authority, the Court differed with the proposition that „ultimate arbiter of what is and is not reasonable is the court and not the local authority.‟ Thereafter the Court laid down the correct test of unreasonableness, for which the judgment is famous for and is being relied on by all courts of the Country, in the following words:-
"It is clear that the local authority are entrusted by Parliament with the decision on a matter which the knowledge and experience of that authority can best be trusted to deal with. The subject-matter with which the condition deals is one relevant for its consideration. They have considered it and come to a decision upon it. It is true to say that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere. That, I think, is quite right; but to prove a case of that kind would require something overwhelming, and, in this case, the facts do not come anywhere near anything of that kind. I think Mr. Gallop in the end agreed that his proposition that the decision of the local authority can be upset if it is proved to be unreasonable, really meant that it must be proved to be unreasonable in the sense that the court considers it to be a decision that no reasonable body could have come to. It is not what the court considers unreasonable, a different thing altogether. If it is what the court 46 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 46 / 100 considers unreasonable, the court may very well have different views to that of a local authority on matters of high public policy of this kind. Some courts might think that no children ought to be admitted on Sundays at all, some courts might think the reverse and all over the country I have no doubt on a thing of that sort honest and sincere people hold different views. The effect of the legislation is not to set up the court as an arbiter of the correctness of one view over another. It is the local authority that are set in that position and, provided they act, as they have acted, within the four corners of their jurisdiction, this court, in my opinion, cannot interfere."
38. It appears to this Court that, it is the manner of applicability of the test of reasonableness, flowing from the above paragraph of the judgment, for which this judgment is still treated as an authority by all courts of the Country and approved till today. In the opinion of this Court, what flows from the above paragraph, is that, no court, as they may differ in their opinion, can put up the cloak of „a reasonable man‟ and test the action of an authority from its own glasses. The vires of the action is necessarily to be tested from the point of view of „a reasonable man‟ in the position of the authority and acting as such. It is the relevancy, or otherwise, of factors and materials, taken into consideration, or ignored by him, while taking an action/decision, in exercise of his discretion, within the four corners of his powers, which only can be taken into account by a court to hold the action/decision „unreasonable‟, or not. 47 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 47 / 100
39. Coming back to the judgments cited by the learned counsels, the first in chronology, laying down parameters for judicial review and other parameters to be followed by the High Courts in the matters of administrative/policy decisions of the Government and its instrumentalities, was judgment of the Apex Court in the case of K. Nagraj Vs. State of A.P. [(1985)1 SCC 523], which was relied upon by Mr.Singh, appearing for respondent no.8. Learned counsel referred the following observations of the Court, made towards end of paragraph 7 of the judgment, for this Court‟s consideration :
"................ But while resolving the validity of policy issues like the age of retirement, it is not proper to put the conflicting claims in a sensitive judicial scale and decide the issue by finding out which way the balance tilts. That is an exercise which the administrator and the legislature have to undertake."
(Para-7)
40. Next judgment in chronology referred to by learned senior counsel for the petitioners was also of the Apex Court in the case of Mahabir Auto Stores & Ors. Vs. Indian Oil IOC & Ors. [(1990)3 SCC 752]. In this case, appellate, a partnership firm, had challenged the decision of the respondent IOC, stopping supply of lubricants to it, suddenly and without any notice to it. Case of the appellant was that, for almost 18 years, it had received supply from the IOC, to be marketed by it to the 48 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 48 / 100 consumers acting as its distributor. Its stand was that in the long period of 18 years it had acted under an unwritten contract to act as its agent or distributor, which could not be terminated or cancelled unilaterally. This judgment shows that, on the facts of the case and from the nature of the business being carried on by the appellant, the Court found it manifest that the supply of lubricants of the type, with which respondents had monopoly, could be carried on by the appellant only as a distributor of the IOC. The Court, on facts, held that there was a relationship between the IOC and the appellant as manufacturer and supplier of the commodity. It found that the IOC was instrumentality under Article 12 of the Constitution of India and rules of reasons and fair play were applicable to it. Findings of the Court in this respect were summarized in paragraph 11 thereof towards end in the following manner:
"....... 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."
(Para-11) 49 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 49 / 100
41. In the circumstances, the Court found that whether the State or its instrumentalities function in public field or private field, though may depend upon facts and circumstances or situation, but the power could not be dealt with without informing or taking into confidence the parties, whose rights and power is affected or sought to be affected. Observations of the Court in this respect towards end of paragraph 18 thereof are as follows :
".......... It is true that there is discrimination (distinction) between power and right but whether the State or the instrumentality of a State has the right to function in public field or private field is a matter which, in our opinion, depends upon the facts and circumstances of the situation, but such exercise of power cannot be dealt with by the State or the instrumentality of the State without informing and taking into confidence, the party whose rights and powers affected or sought to be affected, into confidence. In such situations most often people feel aggrieved by exclusion of knowledge if not being taken into confidence."
(Para 18)
42. Hence, setting aside judgment and order of the High Court, respondent IOC was directed to consider the submissions of the appellant afresh to the effect that the existing arrangement was akin to a contract, by which, distributorship had continued in case of the appellant without any formal contract and the new policy would not cover it. However, Court made it clear that it was not issuing any direction that any reason should be recorded in the matter or any oral hearing was to be granted. 50 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 50 / 100
43. In order of chronology, next judgment of the Apex Court, in the case of Kumari Shrilekha Vidyarthi Vs. State of U.P. [(1991)1 SCC 212], was also placed by learned senior counsel for the petitioner. He placed many paragraphs of the judgment which elaborately dealt with the scope of judicial review of administrative action by the Courts. Some of the paragraphs giving gist of the view of the Court are reproduced here below:
"The scope of judicial review permissible in the present case, does not require any elaborate consideration since even the minimum permitted scope of judicial review on the ground of arbitrariness or unreasonableness or irrationality, once Art. 14 is attracted, is sufficient to invalidate the impugned circular as indicated later. We need not, therefore, deal at length with the scope of judicial review permissible in such cases since several nuances of that ticklish question do not arise for consideration in the present case."
(Para-18) "Even otherwise and sans the public element so obvious in these appointments, the appointment and its concomitants viewed as purely contractual matters after the appointment is made, also attract Art. 14 and exclude arbitrariness permitting judicial review of the impugned State action. This aspect is dealt with hereafter".
(Para-19) "......... The view, we are taking, is, therefore, in consonance with the current thought in this field. We have no doubt that the scope of judicial review may vary with reference to the type of matter involved, but the fact that the action is reviewable, irrespective of the sphere in which it 51 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 51 / 100 is exercised, cannot be doubted."
(Para-25) "Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Art. 14 and permit judicial review, we have no hesitation in saving that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity on the anvil of Art. 14."
(Para-28) "It can no longer be doubted at this point of time that Art. 14 of the Constitution of India applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional. (See Ramana Dayaram, Shetty v. The International Airport Authority of India (1979) 3 SCR 1014:
(AIR 1979 SC 1628) and Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir (1980) 3 SCR 1338: (AIR 1980 SC 1992)). In Col. A. S. Sangwan v. Union of India, 1980 (Supp) SCC 559: (AIR 1981 SC 1545), while the discretion to change the policy in exercise of the executive power, when not trammelled by the statute or rule, was held to be wide, it was emphasised as imperative and implicit in Art. 14 of the Constitution that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Art. 14 and the requirement of every State action qualifying for its validity on this touch-stone, irrespective of the field of activity of the State, has long been settled. Later decisions of this Court have reinforced the foundation of this tenet and it would be sufficient to refer only to two recent decisions of this Court for this purpose."
52 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 52 / 100 (Para-29) "It is now too well settled that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Art. 14 of the Constitution and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of the rule of law. Satisfaction of this basic test in every State action is sine qua non to its validity and in this respect, the State cannot claim comparison with a private individual even in the field of contract. This distinction between the State and a private individual on the field of contract has to be borne in the mind."
(Para-35) "The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to apply is to see whether there is any discernible principle emerging from the impugned act and if so, does it satisfy the test of reasonableness. Where a mode is prescribed for doing an act and there is no impediment in following that procedure, performance of the act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness. Every State action must be informed by reason and it follows that an act uninformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that be you ever so high, the laws are above you'. This is what men in power must remember, always."
(Para-36)
44. Next judgment in chronology, also placed by learned senior counsel for the petitioners, was also of the Apex Court, in 53 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 53 / 100 the case of Sterling Computers Ltd. Vs. M & N Publication [(1993)1 SCC 445], which was also in the line of Mahabir Auto (Supra). In the case, it was held that the actions, even in the matters of awarding contracts in respect of properties belonging to the State, would be judged and decided on the touchstone of Article 14 of the Constitution of India.
45. Judgment of the Apex Court in the case of Tata Cellular Vs. Union of India [(1994)6 SCC 651], in the line of judgments in issue, in chronology, was relied upon by Mr. Kanth, appearing for Respondent no.10. He placed several paragraphs of this judgment, which contains elaborate discussion on the scope of judicial review in reference to English decision also, and drew the attention of this Court to paragraph 80 thereof in which the Apex Court has noticed Wednesbury Principle of reasonableness, as appearing in Supreme Court Practice 1993(1) PP. 849-850, and has reproduced the same in the following manner :
"4. Wednesbury principle.-- A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., per Lord Greene, M.R.)"
(Para 80)
46. Two more parameters were recognized by the Apex 54 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 54 / 100 Court in this judgment in reference to English decisions in the following manner :
"Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision-
maker's evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment, the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident's bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J. said that he could not see on what basis the Secretary of State had reached his conclusion.
(2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R. v. Barnet London Borough Council, ex p Johnson the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority's parks was struck down."
(Para-81)
47. Thereafter, the Principles deducible from judgments noticed by the Court were crystallized in paragraph 94 as follows :
"The principles deducible from the above are :
(1) The modern trend points to judicial restraint in administrative 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 55 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 55 / 100 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."
(Para-94)
48. Next Judgment in chronology, on the question of judicial review, falling in the line of judgments of the Apex Court, was also referred to by Mr. Kanth. He relied upon the judgment in the case of BALCO Employees Union (Regd.) Vs. Union of India [(2002)2 SCC 333] and particularly referred to the observations of the Court in paragraph 46 thereof which were as follows :
"It is evident from the above that it is neither within the domain of the courts nor the scope of the judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are our courts inclined to strike down a policy at the behest of a petitioner merely because it has 56 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 56 / 100 been urged that a different policy would have been fairer or wiser or more scientific or more logical."
(Para-46)
49. He further placed reliance on observations of the Court in paragraph 93, which were as follows :
"Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution. In other words, it is not for the courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is Parliament and not the courts. Here the policy was tested and the motion defeated in the Lok Sabha on 1-3-2001."
(Para-93)
50. On the question of exercise of powers of judicial review and interference in policy matters, next judgment in chronology, also placed by Mr. Kanth, was in the case of Union of India Vs. Manu Deo Arya [(2004)5 SCC 232], and on its one sentence observations in paragraph 9 to the effect that "A policy decision of the State unless affects somebody's legal right cannot be questioned."
51. Next judgment of the Apex Court, on the scope of judicial review, in chronology, was in the case of Ram Chandra Murari Lal Vs. State of Maharashtra [(2007) 2 SCC 588] which was placed by Mr. Singh, appearing for respondent no.8. He 57 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 57 / 100 placed the following observations of the Court made in paragraphs 49, 55 and 64 :
"While exercising its jurisdiction of judicial review, the court is required to decide the cases before it, keeping the well-known principles therefor in mind and having regard to the fact situation obtaining therein. No hard-and-fast rule can be laid down therefor."
(Para-49) "The next question which arises for consideration is as to whether any reason was required to be assigned. A power to deal with a contractual matter and a power of a statutory authority to exercise its statutory power in determining the rights and liabilities of the parties are distinct and different. Whereas reasons are required to be assigned in a case where civil or evil consequences may ensue, the same may not be necessary where it is contractual in nature, save and except in some cases..."
(Para-55) "It is not a case where the court is called upon to exercise its equity jurisdiction. It is also not a case where ex facie the policy decision can be held to be contrary to any statute or against a public policy. A policy decision may be subjected to change from time to time. Only because a change is effected, the same by itself does not render a policy decision to be illegal or otherwise vitiated in law."
(Para-64)
52. In chronological order, next judgment was placed by Mr. Sanjay appearing for respondent no.7, also of the Apex Court, in the case of Ram Singh Vijaypal Singh Vs. State of U.P. [(2007)6 SCC 44], in which, relying on judgment of the Apex Court in the 58 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 58 / 100 case of BALCO Employees Union (Supra), it was held that the correctness or otherwise of the policy would not be the subject matter of judicial review except in a very narrow compass.
53. Mr. Sanjay relied upon another judgment of the Apex Court in the case of State of M.P. Vs. Narmada Bachao Andolan [(2011)7 SCC 639], and in particular, paragraph 36 thereof as hereunder :
"The Court cannot strike down a policy decision taken by the Government merely because it feels that another decision would have been fairer or more scientific or logical or wiser. The wisdom and advisability of the policies are ordinarily not amenable to judicial review unless the policies are contrary to statutory or constitutional provisions or arbitrary or irrational or an abuse of power."
(Para-36)
54. Above referred judgments, relied upon by the parties on the issue, shows that, in matters of policy decision, Courts cannot look into the wisdom of the policy maker and cannot substitute its own views. It cannot weigh the comparative merits of the alternative policies placed before it for consideration. The only scope for the Courts to interfere with the policy, in exercise of powers of judicial review, is available on the ground of same being violative of Article 14 of the Constitution, which necessarily means that it must be found to be arbitrary, irrational, unreasonable, capricious etc. and/or violative of any statutory 59 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 59 / 100 provision or constitutional mandate. The judgment of Mahabir Auto (Supra), Kumari Shrilekha Vidyarthi (Supra) and Sterling Computers (Supra), and the particular paragraphs of the judgments, relied upon by learned senior counsel for the petitioners, only show this much that, wherever the above conditions or any one of them is found to exist, the Courts must interfere, in exercise of the powers of judicial review, and strike down the decision. The expressions arbitrary and capricious have been explained by the Apex Court very lucidly in a few words, in the case of Meerut Development Authority Vs. Association of Management Studies [(2009) 6 SCC 171] in the following manner:
"The expression "arbitrary and capricious", etc. employed by the learned Senior Counsel for AMS to characterise the decision of MDA does not carry any special significance. The real question is whether the decision measures up to the legal standard of reasonableness? The meaning of all such expressions as arbitrary and capricious, frivolous or vexatious is necessarily the same, since the true question must always be whether the statutory powers have been abused? ............"
(Page-57)
55. Judgments, as noticed above, also show that the question of validity of a policy decision, on the touchstone of Article 14 has to be considered on the facts and in the circumstances of each case, and not in abstract, and no hard and fast rule can be laid 60 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 60 / 100 down in this regard. Perhaps having this in mind, and being conscious of the consistent view of the Apex Court flowing from the above referred judgments, learned senior counsel for the petitioners had suggested that this Court should call for the original file from the Ministry and examine it, to ascertain whether the decision of the Ministry passed the test of Article 14 or not. Hence, this Court had directed learned counsel for respondent nos.1 to 3 to produce the concerned original file of the Ministry. The same was, accordingly made available to this Court, as pointed out above, by learned Assistant Solicitor General of India, during the course of his submissions, which this Court has perused.
56. Now, from the records, this Court finds that this file, numbered as P-19012/32/2010-IOC, was opened on receipt of a representation dated 21.9.2010 from Universal Hydrocarbons Company Ltd. (Petitioner no.8), addressed to the Secretary to Government in the Ministry, requesting for assured supply of at least 2500 M.T. of R.P.C. per month, on the ground that it was the oldest calcination unit in Barauni Industrial Area. In the representation, it was pointed out, that the Unit was commissioned in 1973 and had increased its installed capacity to 60,000 M.T. by mid 1990s. It was mentioned that, since 1990, many units had come up which had stronger financial base and 61 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 61 / 100 were procuring R.P.C. in much excess to their actual utilization, causing shortage in availability of R.P.C. to it. Hence, a request was made for assured supply of said quantity of R.P.C., if necessary, from both Barauni and Bongaigaon Refineries. It appears that this representation was referred to the IOC, which was duly replied by the IOC, expressing its regret to accede to the request of the said Company. It appears that one M/s Amritesh Industries Pvt. Ltd. also sent a request to the Ministry for resumption of supply of R.P.C. to it, which was also forwarded to the IOC. The IOC, in response to the letter of the Ministry dated 5.10.2010, upon discussion with the Deputy Secretary of the Ministry on 18.10.2010, through its letter dated 4.11.2010 (Annexure-R/2 at page 330) gave exhaustive account to the Ministry with regard to current demand supply scenario, present system of allocation and future proposition (as noticed in this judgment earlier). Then a complaint of Krishna Hydrocarbons Pvt. Ltd. (Respondent No.8), a new Unit, dated 25.2.2011 was received in the Ministry in respect of non-supply of R.P.C. to it and the Marketing Division of the IOC at Barauni indulging into quota system and selling R.P.C. at 35% less than the import price. A copy of this complaint was also received by the Marketing Division of IOC, which replied to it, expressing its inability to meet its requirement, with a copy of the same to the Ministry 62 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 62 / 100 also. In view of the said representation of Krishna Hydrocarbons Pvt. Ltd., Ministry appears to have made query from the Director (Marketing) of the IOC, through letter dated 2.8.2011, in respect of calcination units which were not being given R.P.C. by the IOC and as to which was the last unit which was given R.P.C. allocation by it. Another representation dated 18.8.2011 of the same Krishna Hydrocarbons Pvt. Ltd. was also received in the meanwhile. This was also suitably replied by the IOC, through letter dated 30.8.2011, with a copy of the same to the Ministry. Then it appears that representation of New Age Petcoke Pvt. Ltd. (Respondent No.9) was received through the Ministry of Transport and Tourism, State of Assam, which was replied by the IOC informing that a decision had been taken not to release R.P.C. to cancination units commissioned after 1.4.2010. Then a representation was received in the Ministry from Carbon Resources (P) Ltd. (Respondent No.7), which was also forwarded by the Joint Secretary of the Department of Petroleum in the Ministry to the Director (Marketing) of IOC through letter dated 4.1.2012. In the letter of the Joint Secretary it was, inter alia, noticed that the representation of Carbon Resources (P) Ltd. raised serious issues of IOC being commercially harmed due to action of a particular group of R.P.C. purchasers, which were using their monopolistic position to force IOC to offer discount 63 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 63 / 100 on the sale of R.P.C. by not lifting R.P.C. and thereby choking the refinery. Counter affidavit of the IOC, filed before the Guwahati High Court in the matter of Brahmputra Carbons Ltd., enclosed with the said representation of the Carbon Resources, was also referred in the letter. As the letter of the Joint Secretary had also noticed that the representation of the Carbon Resources was also for more equitable distribution of the R.P.C., which may also possibly enhance the price realized by the IOC, the IOC through letter dated 10.1.2012 (Annexure-R/3 at page 333) proposed broad changes in the existing guidelines, as enclosed with it as Annexure-1 (as noticed in this judgment earlier). By a subsequent letter of the Section Officer of IOC Section of the Ministry dated 27.1.2012, issued in reference to the said earlier letter dated 10.1.2012, IOC was informed that the matter was examined in the Ministry and it was requested from the IOC to furnish pricing methodology for allocation of R.P.C. to the Ministry positively by 30.1.2012. This letter appears to have been replied by the IOC on 1.2.2012, pointing out the methodology for allocation of R.P.C. from both Barauni and North East Refineries. Thereafter, there is a hard copy of exchange of e-mails dated 29/30.3.2012 from which it appears that the Joint Secretary (Marketing) in the Ministry had asked the Director (Marketing), IOC to send note on the pros and cons of auction of R.P.C. from 64 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 64 / 100 the Refineries, as opposed to the current pricing methodology. Along with the said hard copy of the exchange of e-mails between the Joint Secretary and the Director (Marketing), a „brief‟, appearing to have been prepared by the Director (Marketing) in respect of his views on pros and cons of the auction, is attached. Thereafter, there is a draft of the impugned letter dated 7.5.2012 along with a final office copy of the letter. A letter of HINDALCO dated 1.3.2012, addressed to the Ministry, is also on record, pointing out mistakes in the pricing pattern in allocation system and urging the Government to prevail upon PSU Refineries to develop a pricing mechanism with respect to R.P.C., based on import parity pricing in a more transparent manner, relying on comprehensive import data. This letter of HINDALCO appears to have been referred by the Ministry to the IOC through letter dated 8.5.2012 i.e. after issue of impugned letter, in a routine manner. Thereafter, letter of the IOC dated 14.5.2012 addressed to the Ministry is on record in which a request was made to review the issue. Then, it appears that, immediately after issue of the impugned letter, petitioner Association submitted its request, addressed to the Secretary of the Ministry, for review of the decision contained in the impugned letter. A letter of a calcination unit of Vishakhapattanam dated 15.5.2012 is also on record, requesting 65 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 65 / 100 the Ministry to open auction to all the units of the Country. It appears that the petitioner Association filed repeated representations to different authorities, including Dr. Monazir Hassan, Shivanand Tiwary, Dr. C.P.Thakur, Members of Parliament, which were directly or through the Secretariat of the Prime Minister and through Standing Committee on Petroleum and Natural Gas etc. were sent to the Ministry. The replies sent by the Ministry in respect of repeated representations of the petitioner Association, HINDALCO etc. are also on record, which need no detailed reference. A letter of the Ministry dated 7.6.2012 (Annexure-A at page 508) replying to the IOC‟s request for review through its letter dated 4.5.2012 is also on record (as noticed in this judgment earlier). There is one letter of Biswajit Daimary, M.P., (appears to be hailing from Assam), is also on record, enclosing a representation of New Age Petcoke (P) Ltd. (Respondent No.9) and approving auction system and recommending for its early implementation. There is one letter from the District Chamber of Commerce and Industries, Begusarai dated 17.7.2012 also on record, addressed to the Minister of the Department, appreciating its decision to go for sale of R.P.C. through auction and complaining that the IOC has not yet implemented the said decision. There are some other letters, representations etc. also on record, which do not require 66 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 66 / 100 any specific notice by this Court. Letters which have been noticed, as above, have been noticed only for the purpose of giving brief picture of the development in the matter.
57. Coming to the Note Sheet side of the file, this Court finds that on the Note Sheet Joint Secretary on 13.1.2012 dealt with, in detail, letter of the Carbon Resources dated 15.10.2011 and noticed that the matter was taken up with the Director (Marketing) of IOC, vide letter dated 4.1.2012, in respect of the issues raised in the letter, inter alia, of using of their monopolistic position by a particular group of R.P.C. purchasers to force IOC to offer discount on the price of R.P.C. and praying for more equitable policy of pricing. The note also notices the contents of the letter of the Director (Marketing) dated 10.1.2012 and the proposed new changes in the methodology contained in his said letter. The Joint Secretary, in his said note, mentions that since R.P.C. is a de-controlled/de-regulated product, Ministry may convey the IOC that their proposed methodology for allocation of R.P.C. has been noted, thereby allowing them to implement the new allocation policy. But this note does not appear to have been finally approved and a query appears to have been made with regard to pricing methodology. It appears that thereafter said Joint Secretary gave an alternative proposal on 28.2.2012 to convey the IOC that any allocation policy for R.P.C. may be 67 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 67 / 100 devised so long as the same was based on objective criteria, transparent procedure and principle of equity apart from other technical and commercial considerations. This note also does not appear to have been finally approved. Thereafter, after a long gap, there is a detailed note of the same Joint Secretary dated 11.4.2012. From this note, it appears that the matter was discussed in presence of Minister of the Department on 31.3.2012 and it was felt that the current system of allocation of R.P.C. could be improved so as to make it more transparent and based on objective criteria while also ensuring maximum/highest price realization for IOC. He mentions that, therefore, succeeding paragraphs of his notes are in the light of the said approach decided in the meeting. He notices the current pricing policy of the IOC and the comments of the IOC dated 30.3.2012 received through the said e-mail in respect of pros and cons of auctioning the R.P.C. In the note, comment of the IOC has also been noticed and then he records his suggestion for consideration of change of methodology of sale of R.P.C. through auction in the light of prescription of Comptroller And Auditor General Of India (in short „CAG‟) in respect of 2G Spectrum and recently on allocation of coal mines. He further recommends that to prevent the possibility of distortion in supply/allocation, with all or most of the R.P.C. going to the highest bidders, a ceiling on allocation 68 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 68 / 100 to calcination units, keeping in view installed/assessed offtake capacities, may be considered.
58. Paragraphs 23 and 24 of Note Sheet containing part of the notes of the Joint Secretary in this regard may be reproduced herein for proper appreciation :
"RPC is a de-regulated product, i.e., its prices are not subject to Government control; the oil company is free to follow a market-determined pricing principle. However, for a product that is in short supply, (and following from the CAG‟s prescription of the auction route for 2G spectrum and recently on allocation of coal mines), a methodology of auctioning RPC could be considered, with the import parity price forming the floor price. This way, depending on the demand-supply situation, IOCL could reasonably be expected to achieve a better price realization for a product that is scarce (75% of the country‟s requirement having to be imported)."
(Para 23) "While the auction route can achieve the objective of a higher price realization for IOCL, it may give rise to distortion in supply/allocation, with all or most of the RPC going to the highest bidder(s). This may necessarily not be equitable, i.e., smaller calcination units may not be able to compete with the larger ones. To ensure that the RPC is distributed equitably among the units agreeing to pay the price arrived at through the auction route, IOCL may have to think in terms of fixing ceilings on allocation to calciners keeping in view their installed/assessed offtake capacities."
(Para-24)
59. This note was approved by the Additional Secretary, who also opined that auction was undoubtedly a perfect option for the 69 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 69 / 100 purposes of price discovery and more efficient use of the resources. However, the Additional Secretary also made a comment that the current pricing policy of the IOC satisfy the requirement of an objective price discovery mechanism, and hence, the IOC and the other Oil Marketing Companies may be asked to further improve the allocation process, to make it more transparent and objective to maximize customer satisfaction. The Secretary of the Ministry approved the notes and thereafter matter was placed before the Minister, who, on 20.4.2012 under Note 28, took policy decision in the file in favour of the auction process. This decision of the Minister has led to issue of impugned letter dated 7.5.2012 (Annexure-1 with the writ application). Subsequent notes show that the letter of the IOC dated 14.5.2012 and letter of HINDALCO for review of decision were considered in the Ministry. Recommendation letters of Members of Parliament and other correspondences, available on the file, have all been considered and dealt with for suitable replies.
60. Thus, from perusal of the documents available in the file of the Ministry and the notings of the Note Sheet side, three things are apparent. First, there was claim and counter claim being received by the Ministry from different units for allocation of R.P.C., with some allegations against existing units using their 70 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 70 / 100 monopolistic position in purchase of R.P.C. Ministry did ask comments of the IOC in the matter, which proposed improvements in the methodology of allocation. However, the same was not approved in the Ministry finally, and the IOC was asked to give its views on pros and cons of auctioning of R.P.C., which the Director (Marketing) furnished through his e-mail dated 30.3.2012. This shows that, while the matter was under
consideration in the Ministry, views of the IOC was obtained on sale of R.P.C. by auction and thereafter, it appears, that the matter was discussed threadbare in the meeting held on 31.3.2012, in presence of Minister, and a consensus was arrived at to change the policy of sale of R.P.C. by allotment on pro-rata basis to sale by auction. This was done after taking into account comments of the IOC received through its said e-mail dated 30.3.2012.
Secondly, from the note of the Joint Secretary dated 13.4.2012, it appears that in the said meeting dated 31.3.2012, recent reports and comments of the CAG, in respect of allotment of 2G Spectrum and the coal mines, were discussed and the views of CAG were taken into account. That is why, in paragraph 23 in his notes, the joint Secretary has recorded "(and following from the CAG‟s prescription of the auction route for 2G spectrum and recently on allocation of coal mines)". Thirdly, paragraph 24 of the Note Sheet, as reproduced hereinabove, shows that the Joint
71 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 71 / 100 Secretary suggested effective means, to be introduced in the auction process, to take care of the apprehensions of the Director (Marketing), expressed in his e-mail dated 30.3.2012. Thus, it is clear that, in the process leading to the final decision of change of policy for sale of R.P.C. by auction, communicated through the impugned letter, IOC was involved and consulted and its views were taken into account, including, and in particular, views of CAG in the matters of allocation of natural resources like 2G Spectrum and coal mines and the fear of the Director (Marketing) was also taken care of. This clearly demolishes the allegations of the petitioners that the decision of change of policy, taken by the Ministry, was sudden and abrupt, without any application of mind, arbitrary, unreasonable and capricious. Hence, in the backdrop of the well defined parameters of judicial review, laid down by the Apex Court in the catena of decisions, relied upon by learned counsels for the parties and noticed above, besides others, and also applying Wednesbury principles of reasonableness, this Court does not find that the petitioners have made out any case of interference in the decision of the Ministry reflected by the impugned letter.
61. Recently also, the Apex Court in the case of Bajaj Hindustan limited Vs. Shadilal Enterprises Limited, [(2011)1 SCC 640], has clearly held that the scope of judicial review of 72 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 72 / 100 decisions of the executive or legislative authorities in economic matters is very limited. After noticing paragraphs 92 and 93 of BALCO (Supra), and some other judgments, findings of the Court in respect of judicial review and applicability of doctrine of legitimate expectations were as follows :
"We should not be understood to have meant that the judiciary should never interfere with administrative decisions. However, such interference should be only within narrow limits e.g. when there is clear violation of the statute or a constitutional provision, or there is arbitrariness in the Wednesbury sense. It is the administrators and legislators who are entitled to frame policies and take such administrative decisions as they think necessary in the public interest. The Court should not ordinarily interfere with policy decisions, unless clearly illegal."
(Para-39) "Economic and fiscal regulatory measures are a field where Judges should encroach upon very warily as Judges are not experts in these matters. The impugned policy parameters were fixed by experts in the Central Government, and it is not ordinarily open to this Court to sit in appeal over the decisions of these experts. We have not been shown any violation of law in the impugned notification or press note."
(Para 40) "The power to lay policy by executive decisions or by legislation includes power to withdraw the same unless it is by mala fide exercise of power, or the decision or action taken is in abuse of power. The doctrine of legitimate expectation plays no role when the appropriate authority is empowered to take a decision by an executive policy or under law. The court leaves the authority to decide its full range of choice within the executive or legislative power. In matters of 73 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 73 / 100 economic policy, it is settled law that the court gives a large leeway to the executive and the legislature. Granting licences for import or export is an executive or legislative policy. The Government would take diverse factors for formulating the policy in the overall larger interest of the economy of the country. When the Government is satisfied that change in the policy was necessary in the public interest it would be entitled to revise the policy and lay down a new policy."
(Para 41) Finally, at the end, while concluding, the Court observed as follows :
"In our opinion there should be judicial restraint in fiscal and economic regulatory measures. The State should not be hampered by the Court in such measures unless they are clearly illegal or unconstitutional. All administrative decisions in the economic and social spheres are essentially ad hoc and experimental. Since economic matters are extremely complicated this inevitably entails special treatment for distinct social phenomena. The State must therefore be left with wide latitude in devising ways and means of imposing fiscal regulatory measures, and the Court should not, unless compelled by the statute or by the Constitution, encroach into this field."
(Para 45) "In our opinion, it will make no difference whether the policy has been framed by the legislature or the executive and in either case there should be judicial restraint. The Court can invalidate an executive policy only when it is clearly violative of some provisions of the statute or Constitution or is shockingly arbitrary but not otherwise.
(Para 46) 74 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 74 / 100
62. The Court also noticed in paragraph 37 its earlier judgment in the case of India Cement Limited Vs. Union of India [(1990)4 SCC 356] with approval, which held that disadvantage or loss being suffered by some persons on account of formulation or implementation of Government policy could not itself be sufficient ground for interference by Courts.
63. Although this Court has found that the decision of the Ministry, reflected through the impugned letter dated 7.5.2012, was not sudden or abrupt and was not arbitrary, unreasonable, capricious and was not without taking into account relevant considerations and not without consulting and considering the views of the IOC, which was called for and received more than 20 days earlier and discussed threadbare in the meeting dated 31.12.2011 and, hence, did not call for any interference by this Court in exercise of its powers of judicial review, since learned senior counsel for the petitioners had raised the question of legitimate expectations of the petitioners also in the matter, in the fitness of things, it will only be appropriate for this Court to deal with the same also. To raise the claim of legitimate expectations, learned senior counsel for the petitioners had referred to several documents available on record, as noticed above, to show that there was long standing practice, since last more than 20 years, of allocation of R.P.C. to the existing calcination units on pro-rata 75 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 75 / 100 basis, taking into account their installed capacity or last three years‟ offtake, on price fixed on the basis of import parity plus freight and transportation charges and other costs, adding marketing cost and marketing margin and also quality premium ex-Barauni Refinery with notional deduction for North East Refineries. He had also pointed out that, in its various communications to the existing calcination units, the Ministry and third parties, the IOC had clearly expressed its assurance and commitment for assured supply to the existing units under the methodology in vogue, excluding those commissioned after 1.4.2010. He submitted that, in the circumstances, from the conduct of IOC, legitimate expectation arose to the petitioners that assured supply of R.P.C. to them would continue in future also. The decision of the Ministry to change the methodology clearly killed this expectation and made it highly uncertain for the petitioners to get continued supply of R.P.C., and in adequate quantity, as being done since last more than 20 years. In support of this submission, learned senior counsel for the petitioner heavily relied upon judgment of the Apex Court in the case of Union of India Vs. Hindustan Development Corporation [(1993)3 SCC 499], and in particular, on paragraphs 19, 23, 24, 27, 28, 29, 30, 31 and 33 thereof.
64. This Court finds that this case before the Apex Court 76 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 76 / 100 involved a question of award of contract of supply of cast steel bogies by the Railways to 12 suppliers. After much deliberation, the Railway Ministry decided to adopt dual pricing system to make offers to different sets of tenderers. This led to litigation before the High Court as well as Apex Court at the interlocutory stage itself, in the process of award of contract, and, also in the second round, at the final stage. At the final stage, writ applications were allowed by the High Court, against which the Union of India, through the Ministry of Railways moved the Apex Court. Special Leave Petitions were disposed of earlier by judgment dated 14th of January, 1993, conclusions whereof was to be given later on, which were given by the Apex Court, reported as above. On the basis of earlier practice of the Railways of entering into a contract with the established manufacturers for supply of cast steel bogies, a plea of legitimate expectation by the writ petitioners had been raised and was allowed by the High Court. The Apex Court, while entertaining the appeal of the Railways, went in detail about the scope of interference in policy matters and applicability of doctrine of legitimate expectations in fiscal decisions of the Government. Court also considered the meaning and import of the words „cartel‟, „cartelize‟ and „predatory‟ with reference to different dictionaries and large number of precedents of English Courts, on the principles of 77 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 77 / 100 legitimate expectation and also considered the definition of that expression in Halsbury Law of England and found that it had not come across any pronouncement on the subject, explaining meaning and scope of doctrine of legitimate expectation and hence it decided to examine the same elaborately. The Court also examined the scope of judicial review, in a challenge made to an action on the basis of doctrine of legitimate expectation, with reference to English decisions. After elaborate discussion and consideration of judicial pronouncements in its various paragraphs, including paragraphs referred to by learned senior counsel for the petitioners, the Court recorded its final conclusions in respect of scope and ambit of applicability of legitimate expectation in paragraph 35 of the judgment, as reproduced herein below :
"Legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the governmental activities. They shift and change so fast that the start of our list would be obsolete before we reached the middle. By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in somewhat similar situations. For instance discretionary grant of licences, permits or the like, carry with it a reasonable expectation, though not a legal right to renewal or non-revocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard. But there
78 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 78 / 100 again the court has to see whether it was done as a policy or in the public interest either by way of G.O., rule or by way of a legislation. If that be so, a decision denying a legitimate expectation based on such grounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power.
Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended. Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. For instance if an authority who has full discretion to grant a licence prefers an existing licenceholder to a new applicant, the decision cannot be interfered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. It would thus appear that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected. In other words such a legal obligation exists whenever the case supporting the same in terms of legal principles of different sorts, is stronger than the case against it. As observed in Attorney General for New South Wales case: "To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would 79 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 79 / 100 be to set the courts adrift on a featureless sea of pragmatism. Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law." If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the grounds to consider but the court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognized general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case. It follows that the concept of legitimate expectation is "not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits", particularly when the element of speculation and uncertainty is inherent in that very concept. As cautioned in Attorney General for New South Wales case the courts should restrain themselves and restrict such claims duly to the legal limitations. It is a well-meant caution. Otherwise a resourceful litigant having vested interests in contracts, licences etc. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important."
(Para 35) 80 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 80 / 100
65. After giving its conclusions, the Court made it clear that its direction for "the modification by way of judicial review was not on the ground of legitimate expectation and in violation of Principles of Natural Justice but on the other grounds, namely, decision of the authorities was based on wrong assumption of formation of cartel".
66. Final conclusions of the Court, as reproduced herein above, clearly goes against the claim of the petitioners, for interference in the present matter on the ground of legitimate expectation only, as, in view of the findings of this Court earlier, grounds of the impugned order being arbitrary, unreasonable, capricious etc. has already not been found made out in the facts of the case.
67. Although, in the gist of submissions made by Mr. Giri, learned senior counsel for the petitioners, filed in this case did not contain reference of judgment of the Apex Court in the case of Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer [(2005)1 SCC 625], but, since, during the course of his arguments, he had referred to it also, it may be appropriate to notice the said judgment also, in reference to submissions made by him, on the question of grant of relief to the petitioners on the basis of legitimate expectation. But this judgment does not hold 81 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 81 / 100 this Court long, as, from a bare reading of the judgment, it is apparent that the Court, while dealing with the doctrine of legitimate expectation, heavily relied on and referred to the observations and discussions of the Court in the case of Hindustan development Corporation (Supra) and nothing new was added by this judgment to the applicability or otherwise, of the doctrine in similar matters. However, observation of the Court, made in paragraph 14 of the judgment, on the matter may be reproduced herein below for easy reference :
"As was observed in Punjab Communications Ltd. v. Union of India the change in policy can defeat a substantive legitimate expectation if it can be justified on "Wednesbury reasonableness". The decision-maker has the choice in the balancing of the pros and cons relevant to the change in policy. It is, therefore, clear that the choice of policy is for the decision- maker and not the court. The legitimate substantive expectation merely permits the court to find out if the change of policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made. A claim based on merely legitimate expectation without anything more cannot ipso facto give a right. Its uniqueness lies in the fact that it covers the entire span of time; present, past and future. How significant is the statement that today is tomorrow's yesterday. The present is as we experience it, the past is a present memory and future is a present expectation. For legal purposes, expectation is not same as anticipation. Legitimacy of an expectation can be inferred only if it is founded on the sanction of law.
(Para 14)
82 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 82 / 100
68. Similarly, at the beginning of the arguments, Mr. Giri, learned senior counsel for the petitioners did raise question of applicability of Principles of Promissory Estoppel also in the case. However, no arguments were made by him on this issue and, from the notes of his arguments, it is clear that this issue has been given up by him. Hence, this Court is not required to make any elaborate considerations of the same and express its opinion. Suffice is to say that, it is well settled that for applicability of Principles of Promissory Estoppel clear cut foundation is required to be laid down in the pleadings and a definite case has to be made out on facts. More so in the matters where executive is not dealing with any particular individual rather with a group and is taking decision as a policy to deal with them in matter of fiscal transactions with them, this Principle may not apply. However, this Court leaves this question as it is, as, the written notes of arguments, filed by Mr. Giri in the case after conclusion of his arguments, does not find any mention about this Principle.
69. Mr. Giri has very strongly raised the issue of involvement of stakeholders i.e. petitioners and other existing calcinations units, in the process and the requirement of consulting them and taking them into confidence in the decision making process leading to the change of methodology. For this he placed strong reliance on the case of Mahabir Auto (Supra). 83 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 83 / 100
70. This Court may point out that the case of Mahabir Auto was decided by the Apex Court clearly on its own facts. The Court had found that the IOC had, in practice, treated the appellant company as its Lube Distributor and had recognized it and represented it to the 3rd parties, for a very long period, as its authorized distributor. Although, IOC had taken a stand before the Court that there was no approved contract between it and the appellant Company and there was irregular course of supply of lubricants to it and it was only an ad hoc arrangement between IOC and the Company for sale of lubricants to it, the Court found that this practice had continued for very long and IOC, in different communications and representations to the 3rd parties, had created an impression that the Company was acting on its behalf as an authorized distributor. The Court found that, due to such long practice and status given to the Company by the IOC in practice, it had created a right in the Company, at least to be heard in the matter, before discontinuing or denying further supply to it and ousting or black-listing it, making it disentitled to continue in the business of supply of lubricants. Hence, in the backdrop of the facts, Court held that fairness demanded that the Company ought to have been heard by the IOC before any adverse order was passed against it. The observations of the Court, in paragraph 18 of the judgment, in this context, have 84 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 84 / 100 already been reproduced in this judgment earlier. However, concluding the judgment, findings of the Court in this respect in paragraph 20, were as follows :
"Having regard to the nature of the transaction, we are of the opinion that it would be appropriate to state that in cases' where the instrumentality of the state enters the contractual field, it should be governed by the incidence of the contract. It is true that it may not be necessary to give reasons but, in our opinion, in the field of this nature fairness must be there to the parties concerned, and having regard to the large number or the long period and the nature of the dealings between the parties, the appellant should have been taken into confidence. Equality and fairness at least demands this much from an instrumentality of the State dealing with a right of the State not to treat the contract as subsisting. We must, however, evolve such process which will work."
(Para 20)
71. Next paragraph of the judgment, containing directions, is also useful to be reproduced herebelow, which clearly shows that the arrangement between the IOC and the appellant Company was treated by the Court as a contract. Observation of the Court were clear that it found the right of the firm in the matter limited to being „taken into confidence‟, without any direction to the IOC for reasons to be recorded or for grant of any oral hearing before the decision was arrived at. The only observation of the Court made in the matter was that the decision should be based on fair play, equity and consideration by Institution like IOC.
85 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 85 / 100 "Therefore, we direct that the case of the respondent be put to the appellants, and let the respondent authorities consider afresh the submissions made by the appellant firm, namely, that the existing arrangement amounts to a contract by which the distributorship was continued in case of the appellant firm without any formal contract and further that the new policy of the Government introduced in December, 1982 would not cover the appellant firm and as such the appellant should continue. It will be sufficient, having regard to the nature of the claims, for the respondent authority to consider this aspect after taking the appellant firm into confidence on this aspect. Nothing further need be stated or required to be done and we give no directions as to whether reasons should be recorded or hereinafter should be given. In the facts and circumstances, it is not necessary to give oral hearing or record the reasons as such for the decision. The decision should be based on fair play, equity and consideration by an institution like IOC. It must act fairly."
(Para 21)
72. Facts of the present case are clearly distinguishable from the case of Mahabir Auto (Supra). Refineries of the IOC needed to evacuate R.P.C., a by-product of the refining process and otherwise a waste material for them, regularly from refining sites on account of space constraints. Calcination units came up in the periphery of Refineries as they found that this, otherwise waste material of the Refineries, would be useful for them for earning profit by converting it into C.P.C. and selling it to aluminium industries at a higher price. A pure commercial consideration was behind the setting up of these units. There was 86 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 86 / 100 no promise by the IOC or its Refineries, before the units were set up, that there would be guaranteed supply to them, in relation to their assessed capacity, nor subsequently any promise was made to them in this regard, nor these units entered into business of conversion of R.P.C. into C.P.C. and sale of the same to aluminium industries on behalf of the IOC. They were not acting on behalf of the IOC in any manner. It is true that, since many units had come up recently and had put a demand on the Refineries for supply of R.P.C., production of which was less than total assessed capacity of all the existing units, IOC, with some approval of the Ministry, had adopted a methodology of distributing/selling R.P.C. on pro-rata basis, taking into account the average of last three years offtake by them. But this was purely a working arrangement between them on economic considerations and, at no point of time, and, as admitted by learned senior counsel for the petitioners also, in formulating this methodology, IOC or its Refineries had ever taken these existing calcination units into confidence or had fixed up the price of R.P.C. for sale to them with their consultation. Thus, it is clear that, except for purchasing R.P.C. from the Refineries, on terms and conditions and price as fixed by the IOC, the existing calcination units had no say in the matter, nor were they at any point of time, given any commitment by the IOC or the 87 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 87 / 100 Refineries for dedicated supply of fixed quantity. These calcination units, therefore, were only beneficiaries to a commercial activity of the IOC and had no involvement in the process. In the circumstances, when the Ministry, after taking IOC into confidence, took a policy decision to change the methodology of sale by allotment on pro- rata basis to sale by open auction, there was no requirement of taking the existing calcination units also into confidence and there was no requirement to consult them in the matter. Moreover, facts of this case show that, it is only a change of methodology of sale of R.P.C., which has been introduced, taking precaution of interest of calcination units functioning in the periphery of the Refineries and in the State, by providing that, auction should be restricted for the units within the State. Thus, the existing calcination units still remain entitled for purchase of R.P.C., with floor price being fixed on almost same basis as being fixed earlier. If protecting their interest by restricting the auction for local units, the Ministry was also intending to get some more profit for the Corporation due to increased demand, this cannot be held as illegitimate expectation or an attempt by it to indulge into profiteering. It may be pointed out that, after the policy decision of the Ministry was notified by the impugned letter dated 7.5.2012, petitioner Association had submitted representations 88 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 88 / 100 which did reach the Ministry and were taken into account and discussed and suitable replies were sent to the sources through which the representations of the petitioner Association was received. Hence, clearly submissions on behalf of the petitioners in this regard were considered and discussed, which was definitely prior to the issue of letter dated 7.6.2012 (Annexure-A with the rejoinder of the petitioners to the reply filed by respondent nos.1 to 3) (Page 508), to the IOC, issued in reply to its letter for review dated 14.5.2012. In any case, taking the „stakeholders‟ into confidence, even if considered as desirable, on its own surely cannot be a ground for holding the policy decision of the Ministry as illegal and unreasonable. Moreover, in terms of Mahabir Auto (Supra) their „submissions‟ were considered and discussed at the Ministry level before affirmance of the decision was communicated to the IOC by said letter dated 7.6.2012.
73. The IOC and the Government of India and its functionaries have taken a stand, before this Court, that the decision of change of methodology for sale of R.P.C. through open auction, was taken in the light of judgment of the Apex Court in the case of Centre for Public Interest Litigation v. Union of India, [(2012) 3 SCC 1], popularly known as 2G Spectrum case. Though, the notings of the Joint Secretary dated 11.4.2012 89 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 89 / 100 does not contain reference of this Judgment, but it appears that, auction route suggested by the Comptroller and Auditor General of India in the matters of 2G Spectrum and allocation of coal mines, was discussed in the meeting held on 31.3.2012 in presence of the Minister of the Department. Paragraph 23 of the notings, as quoted above, shows that specific reference was made by the Joint Secretary to this while putting up his notes.
74. Mr. Giri, learned senior counsel for the petitioners submitted that the judgment of the Apex Court in 2G Spectrum case was not applicable to the present case as the same was related to natural resources with unlimited availability, whereas present case is related to an industrial by-product of the refining process of Refineries of the IOC, being produced in limited quantity and hence related to a scarce commodity.
75. From a reading of judgment of the Apex Court in the said case, this Court finds that in paragraphs 95 and 96 of the judgment (as reproduced herein below), the Court has laid down the proposition of adoption of method of auction for sale of natural resources/public property as a law for universal application and not in the facts and circumstances of that case only :
"This Court has repeatedly held that wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent and fair method for making 90 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 90 / 100 selections so that all eligible persons get a fair opportunity of competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like spectrum, etc. it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest."
(Para 95) "In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty- bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process."
(Para 96)
76. It does not need to be reiterated that, the law laid down by the Apex Court, for universal application, is a law of land in terms of Article 141 of the Constitution of India and is binding on all Courts and authorities. Still this Court is tempted to reproduce the observations of the Apex Court in a recent judgment in the case of Brij Mohan Lal Vs. Union of India, [(2012)6 SCC 502], in paragraph 202, which is as follows :
"In terms of Articles 141 and 142 of the 91 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 91 / 100 Constitution, the law declared by the Supreme Court of India is binding on all courts and all authorities which are to act in aid of the law so declared. The Framers of the Constitution, in no uncertain terms, declared that the judgments of this Court are binding on all. In fact, there is a duty upon the authorities and all other courts to act in aid of such decisions."
(Para 202)
77. Law thus laid down by the Apex Court had come into operation on February 2, 2012. The same had to be followed by all Courts and authorities in matters covered by it. In the meanwhile, change of methodology of sale of R.P.C. was already under consideration, as tug of war between the two groups of calcination units had already reached the Ministry and claims, counter claims, and allegations, counter allegations had already been received by it. A copy of the counter affidavit, filed before the Guwahati High Court by the IOC in the case of Brahmputra Carbon Ltd. had also been received, which showed that the IOC itself was not satisfied with the present methodology of sale of R.P.C. through allotment due to conduct of the existing calcination units. In the circumstances, a conscious decision was taken by the Ministry, after due deliberation in the meeting dated 31.3.2012 and after consulting and obtaining the opinion of the IOC, for change of methodology to sale of R.P.C. through open auction. The interest of local calcination units were taken care of by restricting it for units within the State and fixing the floor 92 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 92 / 100 price on almost the same lines it was done earlier. From any angle and applying any parameter, this decision, therefore, could not be held unreasonable or arbitrary. The guidelines placed on record by learned senior counsel for the IOC, drawn up for holding e-auction has further fine tuned the process of implementation of this policy by introducing sufficient safeguards for abuse or misuse by any unscrupulous elements, which does not need any detailed notice in this judgment. Suffice is to say that the safeguards provided in the said guidelines appears to this Court as sufficient to ward off all apprehensions of the petitioners.
78. So far as challenge to the motive of the Ministry for holding auction, as only profiteering, is concerned, learned Assistant Solicitor General of India has rightly submitted,verbally as well as in his written short notes, that had that been the motive, the Ministry would not have proposed to fix up floor price of R.P.C. at par with import price plus freight etc. Instead, to earn more profit, the Ministry would have managed to first raise Excise Duty etc. on the imported R.P.C. also, so that it could get more as Excise Duty etc. on the imported price and also more profit by consequential increase of floor price of the domestic R.P.C. He also rightly pointed out that had the profiteering been the only motive to change the methodology, instead of restricting 93 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 93 / 100 the auction to the local calcination units, auction would have been thrown open to all units of the Country and even of abroad, which could have attracted buyers manifold and could have introduced tough competition raising bid amount. This Court considers the submissions of learned Assistant Solicitor General of India as correct. Mr. Giri, learned senior counsel for the petitioners failed to point out as to in what manner the decision of the Ministry was solely governed with profit motive and nothing else. It has been made clear by the Apex Court, more than once, that in commercial and fiscal activity, Government and its instrumentalities have also a legitimate right to keep profit also one of the considerations in mind and their action will be totally justified in this regard if it was combined with fair play in action and reasonableness. The decision of the Ministry, no doubt, was with a view to earn some more profit for the Corporation, which is already in red, but it had also taken into consideration the interest of local calcination units and the reasonableness of the price and thus had kept equitable considerations also in mind, which has rightly been pointed out by Mr. Kanth, learned senior counsel, is synonymous to reasonableness and fair play. Hence, this Court does not find that the charge of profiteering leveled by Mr. Giri, to the action of the Ministry has also any substance. As such, reliance placed by him on the judgment of Apex Court in 94 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 94 / 100 the case of Kerala State Electricity Board Vs. S.N.Govinda Prabhu [(1986)4 SCC 198] and Ashoka Smokeless Coal India (P) Ltd. Vs. Union of India [(2007)2 SCC 640] in support of this submission, in the light of the facts of the present case, is totally misconceived.
79. Mr. Giri has placed the earlier methodology, being adopted by the IOC since more than two decades in detail, as also the proposed change in methodology, communicated by it to the Ministry through its letter dated 10.1.2012 and talked highly about them. He submitted that the methodology adopted earlier was reasonable and equitable and in the interest of all existing calcination units as well as IOC. He submitted that the change proposed by the Director (Marketing) of the IOC through his said letter dated 10.1.2012, was with further improvement, by taking into account new units also and it ensured assured supply of R.P.C. to at least 25% of the assessed capacity of all calcination units and then surplus, if any, had to be allocated among existing calcination units commissioned before 31.3.2010 in the ratio of their assessed capacity or average offtake of last three years, and then the remaining R.P.C. was to be allocated to the new units in the ratio of their assessed capacity. He put great emphasis on the merits of this methodology and submitted that it served the purpose and interest of all concerned and was perfectly in 95 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 95 / 100 accordance with equitable principles. Hence, he submitted that, there was no need for change of policy by the Ministry for sale of R.P.C. through auction in place of its allocation in terms of the said methodology.
80. Submission of Mr. Giri may be correct. This Court also finds that the proposed change in the old methodology by the Director (Marketing) through his said letter did take care of the interest of the new units also. But the question arises, can this be a ground for holding new policy introduced by the Ministry as bad ? It is settled by catena of decisions of the Apex Court that, in matters of fiscal activities, Government and its instrumentalities have to be allowed more play in joints and its decision cannot be held bad or violative of Article 14 of the Constitution by holding it unreasonable and arbitrary, only on the ground that there could be a better decision in the matter in the interest of Government and its instrumentalities itself. It is settled that the decisions in the fiscal matters involve considerations of diverse factors and this Court is not equipped nor has competence to enter into thickets of complicated facts and technicalities involved in a fiscal decision and form its own opinion, as an appellate authority, and substitute it in place of the decision of the Government or its instrumentalities. As held by the Apex Court in paragraph 45 of the judgment in Bajaj Hindustan Limited (Supra), reproduced 96 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 96 / 100 hereinabove, "all administrative decisions in economic and social affairs are essentially ad hoc and experimental". Hence, this submission of Mr. Giri, though may be very appealing, but fails to qualify as a valid ground for this Court to interfere in the matter on its basis.
81. Mr. Giri, during his arguments, had very seriously harped upon the dangers underlying in sale of R.P.C. through auction and expressed serious apprehension of its misuse and abuse by the vested interests. He submitted that, in an open auction, any calcination unit, with deep pockets and greater financial resources, or a group of units, by forming a cartel, may bid for the entire available stock, offer exorbitant price and lift it, forcing other similar units, to solely dependent on import of R.P.C. of lower quality, which may not be very viable option, or to shut down. He submitted that some units may deliberately do it and stockpile R.P.C. much beyond their requirement only to reduce or obliterate competition in the field. In fact, when the opinion of the IOC was sought for by the Ministry through e-mail in the month of March, 2012, the Director (Marketing) through his reply e-mail dated 30.3.2012 had sent his comments, in which he had also pointed out some draw backs in the methodology of sale of R.P.C. through auction. In fact, inter alia, he had also expressed apprehension of possibility of formation of cartel. 97 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 97 / 100 Letter of the Executive Director, Consumer Cell of the IOC dated 14.5.2012 requesting the Ministry for review of the decision also pointed out certain draw backs in the new methodology of sale of R.P.C. through auction. The representation of Association, filed for review of the decision of the Ministry, also raised same doubts. Notings of the file mentions that these were considered. From the notings, prima facie, it appears that, in the meeting dated 31.3.2012, views of Director (Marketing) were taken into account and, after discussion, a conscious decision was arrived at to change the methodology. The notings on the file shows that the said views of Director Consumer Cell and representation of the Association were also considered before confirmation of the decision by letter dated 7.6.2012.
82. But even before first auction could be held, petitioners have moved this Court. Thus, change of methodology has not been tried and tested even once. In the circumstances, lacuna and defects pointed out by the petitioners before this Court and by the IOC in its letters and Association in its repeated representations, remains in the realm of apprehension in appropriate working out of the new methodology. As observed by the Apex Court in Bajaj Hindustan Limited (Supra), any administrative decisions of the Government or its instrumentality in economic sphere are essentially ad hoc and experimental, which can always be 98 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 98 / 100 changed or improved if the situation and events so require. But this apprehensions, or the draw backs pointed out in implementation of the changed methodology, cannot be a ground for striking down the methodology, more so, when it has not been given a try, even once.
83. Relying on the decision of the Apex Court in the case Hansraj Kehar [(1975)1 SCC 40], Mr. Kanth, learned senior counsel, also raised an issue that, in fact, depriving new calcination units from competing and participating for purchase of R.P.C. itself may be violative of their rights guaranteed under Article 19(1)(g) of the Constitution of India. But this Court does not consider it necessary to go into this issue further as, this Court has already come to the conclusion that no flaw could be found in the decision of the Ministry, communicated through impugned letter, calling for any interference in it. For the same reason, this Court does not find it necessary to consider and discuss the other judgments of the Apex Court, relied upon and referred by the learned counsels for the respective respondents, as, in view of the conclusions already arrived at herein above, it may only amount to adding pages to this judgment.
84. In the circumstances, in view of the findings and conclusions arrived at in this judgment, in respect of various issues raised by Mr. Giri, learned senior counsel for the 99 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 99 / 100 petitioners, this Court finds that the petitioners have completely failed to make out a case and satisfy this Court of any necessity to interfere with the said policy decision of the Ministry reflected by its impugned communication dated 7.5.2012, as contained in Annexure-1 with the writ application. Consequently, this Court does not find any merit in this writ application and the same is dismissed.
85. But before parting with the judgment, this Court will like to put a word of caution for the Ministry and the IOC as well as for MSTC, who is to hold auction of R.P.C. on behalf of IOC. It is difficult to express any opinion on the apprehensions of the petitioners in respect of some unit or group of units lifting entire stock. In its comments, communicated to the Ministry, through e- mail dated 30.3.2012 and again in its letter dated 14.5.2012, IOC has also raised some issues, which are apart from apprehensions of the calcination units. Since new methodology has not been given a try even once, whether these issues are real or are only imaginary and unfounded, cannot be commented upon. But this Court feels that they do call for, for the Ministry, the IOC and the MSTC to keep a very close eye on the working of the methodology and on each and every step in the process of auction and see to it that the apprehensions, raised in the said two communications of the IOC and in the representations of the 100 Patna High Court CWJC No.10902 of 2012 dt.18-09-2012 100 / 100 petitioner Association, do not come true. This will be more in the interest of IOC itself than the calcination units participating in the auction. This Court is assured that as and when IOC and the MSTC come across any such action by any party, which may raise questions on the impartiality, fairness and objectivity of auction process, they will not hesitate to raise the issue immediately with the Ministry requesting it to reconsider the entire matter and devise ways and means to take remedial steps, in consultation with all concerned.
86. At the end, this Court would like to make it clear that it has proceeded to consider the matter and materials as placed before this Court by learned counsels for the parties and appearing in their written notes and has not taken into account other pleadings made in their different affidavits and materials/documents annexed with them, but not placed before this Court specifically, treating the same as given up by the parties.
87. Let the original file of the Ministry of Petroleum and Natural Gas, Government of India be returned to learned Assistant Solicitor General of India.
Pradeep/- (Jayanandan Singh, J) AFR.