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REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.  8980  OF 2014

(Arising out of S.L.P. (Civil) No. 313 of 2012)

Chairman cum Managing Director Indian Oil Corporation Ltd. and Ors.                     ….Appellants

Vs. Sunita Kumari & Anr.                            ….Respondents

WITH S.L.P. (Civil) No. 31006 of 2012

Rajesh Kumar Tiwary             …Petitioner

Vs. The Union of India & Ors.                           ….Respondents

J U D G M E N T

Madan B. Lokur, J.

1. Leave granted in S.L.P. (Civil) No. 313 of 2012.

2. The question for consideration is whether, on the cancellation  

of  the  allotment  of  a  dealership  or  distributorship  for  petroleum  

products in favour of the first ranked or first empanelled candidate,  

there is an automatic allotment in favour of the second ranked or  

second  empanelled  candidate,  subject  to  fulfillment  of  the  

conditions of allotment. In our opinion, in view of the decisions of  

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this Court, if the allotment is tainted due to political connections or  

patronage or other extraneous considerations, the entire selection  

process  is  vitiated  and,  therefore  the  second  ranked  or  second  

empanelled candidate is not entitled to an automatic allotment of a  

dealership or distributorship in his or her favour.   

The facts 3. On  10th July  2000,  an  advertisement  was  issued  by  the  

appellants, that is, Indian Oil Corporation Ltd. (for short ‘IOC’) for the  

appointment of dealers for superior kerosene oil and light diesel oil  

(SKO-LDO).  The appointment was reserved for women belonging to  

Scheduled  Castes  and  was  for  Warisnagar,  District  Samastipur  

(Bihar).

4. Several applications appear to have been received in response  

to the advertisement  and on 24th July,  2001,  a  panel  of  selected  

candidates was prepared by the IOC in order of merit.  The panel  

was as follows:-

1. Smt. Neelam Kumari 2. Smt. Sunita Kumari (respondent no.1 herein)  3. Kumari Anju Chaudhary

5. Sometime  in  the  beginning  of  August,  2002  a  news  item  

appeared on the front page of the Indian Express to the effect that  

all  over  the  country,  a  large  number  of  dealerships  or  

distributorships  were  allotted  in  respect  of  several  petroleum  

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products  to persons  close to political functionaries.  The news item  

implied that the allotments were not on merits but on account of  

political considerations to favour the allottees.

6. The news item resulted in a public outcry and on 5/9 August,  

2002  the  Government  of  India  passed  an  order  cancelling  all  

allotments for dealerships in petroleum products with effect from 1st  

January, 2000 including of SKO-LDO dealerships.   

7. The blanket cancellation led to a spate of writ petitions being  

filed  all  over  the  country  since  several  thousand  allottees  were  

affected. Soon thereafter,  transfer petitions were filed to transfer  

the  cases  pending  in  various  High  Courts  to  this  Court.  These  

transfer petitions were allowed and the writ petitions taken up for  

consideration.

8. This Court then heard the allottees as well as the Government  

of India and in Onkar Lal Bajaj v. Union of India1 it was observed  

that  the  news  item  and  subsequent  news  items  in  the  Indian  

Express  made  a  specific  reference  to  413  allegedly  tainted  

dealership  or  distributorship  allotments.   After  considering  all  

aspects  of  the  case,  this  Court  appointed  a  Committee  of  two  

retired judges to examine these 413 allotments and determine, on a  

preliminary examination of the facts and records, if the allotments  

were made on merits and not as a result of political connections or  1  (2003) 2 SCC 673

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patronage or other extraneous considerations.

9. The Committee examined the records of the allotments made  

and also heard the aggrieved parties and submitted its Report to  

this  Court.  Objections  were  filed  to  the  Report  and  they  were  

considered and rejected in Mukund Swarup Mishra v. Union of   

India.2 This  Court  also  considered  the  allotment  of  dealerships  

made in  respect  of  some States  and passed appropriate  orders.  

The case was then adjourned for taking up the allotments made in  

other States including the State of Bihar.   

10. The allotment of dealerships in respect of the State of Bihar  

was considered by this Court  Mukund Swarup Mishra v. Union  

of India3 in the light of the Report given by the Committee. It was  

held therein that the allotment made to Neelam Kumari was not on  

merits but for extraneous considerations.  As a result the allotment  

made in her favour stood cancelled.

11. Following the cancellation of the allotment in favour of Neelam  

Kumari, a writ petition was filed by Sunita Kumari in the Patna High  

Court  being  CWJC No.  7186 of  2008 next  in  the  list  of  selected  

candidates for the SKO-LDO dealership in Warisnagar.  In her writ  

petition,  Sunita  Kumari  claimed  that  since  she  was  the  second  

ranked  selected  candidate,  the  SKO-LDO  dealership  should  be  

2  (2007) 2 SCC 536 3  (2008) 15 SCC 243

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awarded  to  her  after  the  cancellation  of  Neelam  Kumari’s  

dealership.   

Decision of the High Court

12. The  writ  petition  filed  by  Sunita  Kumari  was  allowed  by  a  

learned Single Judge of the Patna High Court by his judgment and  

order dated 15th April, 2009.  While allowing the writ petition the  

learned Single  Judge held  that  Sunita  Kumari  was entitled to  be  

treated as the first empanelled candidate upon the cancellation of  

the dealership in favour of Neelam Kumari.

13. Feeling  aggrieved  by  the  decision  rendered  by  the  learned  

Single Judge, a Letters Patent Appeal being LPA No. 307 of 2010 was  

preferred by the IOC before the Division Bench of the Patna High  

Court. By the impugned judgment and order dated 10th February,  

2011 the Division Bench dismissed the appeal of IOC and upheld  

the decision of the learned Single Judge.

14. It  is under these circumstances, that the present appeal has  

come up before us.

Discussion 15. It was submitted by learned counsel for the IOC that in view of  

the decisions of this Court in Awadesh Mani Tripathi v. Union of  

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India4 and  Bharat  Petroleum  Corporation  Ltd.  v.  Ramesh  

Chand Trivedi5 when the allotment of a dealership is cancelled due  

to an illegality in selecting and preparing the panel of successful  

candidates,  the  entire  selection  process  is  vitiated.  Therefore,  

merely because the first empanelled candidate is found ineligible or  

the allotment in his or her favour is otherwise cancelled, it would  

not automatically result in the allotment of the dealership in favour  

of the next empanelled candidate.   

16. Learned counsel for Sunita Kumari on the other hand relied on  

Ritu Mahajan v.  Indian Oil Corporation6, Raj Bala v. Union of  

India7 and  Anil  Kumar  Singh  v.  The  Chairman,  Dealers  

Selection  Board.8 It  was  contended,  on  the  basis  of  these  

decisions that when the allotment in favour of the first empanelled  

candidate is cancelled, the next empanelled candidate is entitled to  

an automatic allotment.   

17. Raj  Bala was  the  first  such  case  in  which  the  second  

empanelled  candidate  was  awarded  the  dealership  on  its  

cancellation in respect of the first empanelled candidate. That case,  

however, did not deal with blanket cancellations such as the one we  

are concerned with. In that sense, that case is somewhat dissimilar  

4  (SLP (C) No. 34226/2009 decided on 23rd April, 2013) 5  (Civil Appeal No. 8586 of 2010 decided on 4th October, 2010) 6  (2009) 3 SCC 506 7  (Civil Appeal No.7718 of 1995  decided on 23rd August, 1995) 8  (Civil Appeal Nos.2012-2014 of 2003  decided on 3rd March, 2003)   

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to  the  present  case.  The  facts  in  Raj  Bala  were  that  the  first  

empanelled  candidate  was  held  eligible  for  an  allotment  of  a  

distributorship  of  petroleum products  by  the  High  Court  but  this  

finding was set aside in appeal by a three-judge Bench of this Court.  

It was then held:

“Having  regard  to  the  ineligibility  of  the  7th  respondent, who was placed first on the merit list,  the distributorship ought to have been awarded to  the  appellant,  who  was  second  in  the  merit  list.  Having regard to  what  has transpired,  we think it  appropriate to direct that the 7th respondent should  cease  to  act  as  a  dealer  for  the  2nd respondent,  pursuant to the award of the dealership to him as  aforesaid, on and from 1st September, 1995 and that  on  and  from that  date  the  2nd respondent  should  award the dealership to the appellant who would be  entitled to conduct business by reason thereof from  that date.  The appellant shall, of course, be obliged  to fulfil all necessary conditions to the satisfaction of  the second respondent.”

18. Anil Kumar Singh also did not pertain to blanket cancellations  

made by the Government  in  2002 nor  did  it  pertain  to  the  case  

referred to the Committee. However, a Bench of two learned Judges  

relied upon  Raj Bala  and held  that  once a  person to whom the  

allotment is made has become ineligible, the distributorship must be  

awarded to the person who is second in the merit list.  

19. In Ritu Mahajan a two-Judge Bench dealt with the allotment of  

a retail outlet dealership arising out of an advertisement issued by  

the IOC on 22nd June, 2000.  It  had been alleged that the allottee  

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(Rani Gauba) was illegally given the allotment. The allotment was  

one of the many in the blanket cancellations and was a case referred  

to the Committee set up by this Court in  Onkar Lal Bajaj.  The  

Committee found that the allotment in favour of Rani Gauba was  

indeed illegal and that view was upheld by this Court.  Ritu Mahajan  

then claimed a right to the allotment in place of Rani Gauba. In the  

final paragraph of the judgment, her prayer was accepted and it was  

held as follows:-

“In that view of the matter, the selection of the fifth  respondent for allotment of retail outlet dealership at  Dhariwal  is  set  aside  and  Indian  Oil  Corporation  Respondent 1 is hereby directed to make allotment of  the said retail outlet dealership at Dhariwal in favour  of the appellant immediately.  The appeal is allowed  accordingly.”

20. It will be seen that this Court proceeded on the basis that there  

was  an  entitlement  for  an  automatic  allotment  in  favour  of  Ritu  

Mahajan after the retail  outlet dealership in favour of Rani Gauba  

was cancelled.

21. These  three  decisions  proceed  on  the  basis  that  when  an  

allotment is cancelled in favour of the first empanelled candidate,  

there is an automatic allotment in favour of the second empanelled  

candidate.  The  first  two  decisions  did  not  deal  with  blanket  

cancellations while the third one did.

22. In  Ramesh Chand Trivedi a  two-judge  Bench dealt  with  a  

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case referred to the Committee and took the view that when the  

allotment in favour of the first person in the panel is set aside due to  

some irregularity in the selection and preparation of the panel, the  

decision  taken  to  have  a  fresh  selection  does  not  call  for  

interference. This view was taken on the basis that the select panel  

is itself vitiated. Therefore, the two-judge Bench declined to make  

the allotment of the distributorship to the next eligible applicant as  

prayed for by Ramesh Chand Trivedi.   

23. Awadesh  Mani  Tripathi concerned  itself  with  blanket  

cancellations that  were referred to the Committee set  up by this  

Court.  In that case, a three-judge Bench took the view that “when  

the  merit  list  prepared  by  the  Selection  Board  was  found  to  be  

vitiated  due  to  the  influence  of  extraneous  considerations,  the  

petitioner who was placed at no. 2 cannot seek a mandamus for  

allotment  of  LPG distributorship.  Any such direction by the Court  

would  amount  to  perpetuation  of  the illegality  committed  by  the  

Selection Board.”

24. It is clear from a perusal of the decisions mentioned above that  

the view taken by this Court is that when the selection of the first  

empanelled  candidate  for  the  allotment  of  a  dealership  or  a  

distributorship is cancelled, the next empanelled candidate ought to  

be automatically given the allotment subject to the fulfillment of all  

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necessary conditions. This is clear from the decisions rendered by  

this Court in Raj Bala in 1995, Anil Kumar Singh in 2003 and Ritu  

Mahajan in 2009.

25. This Court has, however, taken a different view particularly in  

the  case  of  mass  cancellations  which  were  dealt  with  by  the  

Committee set up by this Court.   The view taken by a two-judge  

Bench was that if the allotment of the dealership or distributorship in  

favour  of  the  first  empanelled  candidate  is  cancelled  then  the  

second empanelled candidate is  not  automatically  entitled to  the  

allotment (Ramesh Chand Trivedi contrary to Ritu Mahajan).  

26. The controversy has now been set at rest in  Awadesh Mani  

Tripathi where a three-judge Bench has taken the view that if the  

selection  process  is  vitiated  due  to  political  considerations  or  

patronage or other extraneous considerations, there is no automatic  

allotment in favour of the second empanelled candidate when the  

selection  of  the  first  empanelled  candidate  is  cancelled.  This  is  

because the entire selection process gets vitiated and not just one  

selection or allotment. If the selection process is itself vitiated, there  

is no question of going down the list of empanelled candidates. We  

respectfully accept and follow this view. We make it clear that if an  

individual selection is cancelled on merits, such as lack of eligibility  

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or erroneous calculation of marks that is  cancellation for  reasons  

other than political considerations or patronage or other extraneous  

considerations,  then  the  entire  selection  process  would  not  be  

vitiated and the law laid down in Raj Bala would be applicable.  

27. Under  these  circumstances,  in  our  opinion,  the  decisions  

rendered in  Raj Bala and  Anil Kumar Singh fall in one category  

since they do not concern themselves with mass cancellations or  

have any reference to the Committee as in the present case and  

also  because  the  entire  selection  process  was  not  vitiated  by  

political  considerations  or  patronage  or  other  extraneous  

considerations. These cases dealt with one-off cancellations. On the  

other hand, Ramesh Chand Trivedi and Awadesh Mani Tripathi  

fall in a different category altogether. The decision in Ritu Mahajan  

is contrary to Awadesh Mani Tripathi and so we must hold that it  

does not lay down the correct law with regard to the allotment of a  

dealership or a distributorship in favour of the second empanelled  

candidate  in  cases  concerning  blanket  cancellations  or  in  cases  

when the allotment in favour of the first empanelled candidate is  

cancelled,  the  allotment  having  been  made  for  political  

considerations or patronage or other extraneous considerations.

28. Since  the  present  case  concerns  itself  with  the  mass  

cancellations and the Report of the Committee, we are bound by the  

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decision  taken  by  the  three-Judge  Bench  in  Awadesh  Mani  

Tripathi.  Accordingly we hold, following that decision that when the  

allotment of the dealership or distributorship in favour of the first  

empanelled candidate is cancelled as a result of the Report of the  

Committee appointed in  Onkar Lal Bajaj, which Report has been  

accepted by this  Court,  the selection process  itself  is  vitiated.  In  

such  an  event,  there  is  no  question  of  the  second  empanelled  

candidate  being  automatically  granted  the  dealership  or  

distributorship in place of the first empanelled candidate.  The entire  

panel  of  selected  candidates  must  stand  cancelled  and  a  fresh  

selection process must be initiated.

29. In view of our conclusion, the impugned order of the High Court  

directing allotment of the dealership in SKO-LDO in favour of Sunita  

Kumari is quashed. The appeal is allowed. No costs.

Special Leave Petition (Civil) No. 31006 of 2012 30. In this case, the allotment of LPG dealership/distributorship was  

advertised for Bihiya, District Bhojpur (Bihar).   

31. After  completing  the  selection  process,  the  IOC  prepared  a  

panel consisting of the following applicants in order of merit:-

1. Kameshwar Prasad Singh 2. Rangi Lal Rai 3. Rajesh Kumar Tiwary (Petitioner herein)

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32. The allotment of the dealership/distributorship was in favour of  

Kameshwar  Prasad  Singh  but  it  was  quashed,  pursuant  to  the  

decision of this Court in Mukund Swarup Mishra.  

33. Rajesh Kumar Tiwary claimed that Rangi Lal Rai was not eligible  

for an allotment and therefore being the third empanelled candidate  

the allotment should be made in his favour.  On this basis he filed a  

writ petition in the Patna High Court being CWJC No. 18809 of 2008.  

A learned Single Judge of the High Court dismissed Rajesh Kumar  

Tiwary’s writ petition by following the decision rendered in another  

case, that is, CWJC No. 9362 of 2009 and Mukund Swarup Mishra.

34. In appeal, being LPA No. 1291 of 2012 the High Court followed  

the decision rendered by this Court in Ramesh Chand Trivedi and  

found no merit in the appeal by the impugned judgment and order  

dated 13th September, 2012.

35. In view of our discussion in Sunita Kumari (supra) there is no  

merit in this petition and it is accordingly dismissed.  No costs.

          .………………………J          ( Madan B. Lokur )

New Delhi;   ……………….……J September 18, 2014            ( C. Nagappan )

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