SANJAY KUMAR SHUKLA Vs M/S BHARAT PETROLEUM CORP.LTD..
Bench: P SATHASIVAM,RANJAN GOGOI
Case number: C.A. No.-001871-001872 / 2014
Diary number: 18098 / 2012
Advocates: AMIT PAWAN Vs
SUBHRO SANYAL
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REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 1871-1872 OF 2014 Special Leave Petition (C) Nos. 17673-17674 OF 2012
SANJAY KUMAR SHUKLA ... APPELLANT (S)
VERSUS
M/S BHARAT PETROLEUM ... RESPONDENT (S) CORPORATION LTD. & ORS.
J U D G M E N T
RANJAN GOGOI, J.
1. Leave granted.
2. These appeals are directed against the common
judgment and order dated 16.05.2012 passed by the High
Court of Judicature at Patna in Letters Patent Appeal
Nos.1845 and 1916 of 2011. By the aforesaid impugned
order, the High Court has directed that the respondent No.7
herein who was placed at serial No.2 of the select list/merit
panel for award of dealership of retail outlet under the 1
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respondent No.1, i.e. M/s. Bharat Petroleum Corporation
Ltd., be offered the said dealership after completing the
process contemplated under the selection procedure in force
in the Corporation.
3. A summary of the essential facts is delineated
hereinbelow:-
The first respondent Corporation issued an
advertisement dated 30.05.2010 for award of dealership of
retail outlets in different locations including Areraj, East
Champaran District in the State of Bihar. The selection was
to be made in accordance with the norms laid down by the
Corporation and available in a booklet published on
15.09.2008 under the caption “procedure for selection of
petrol/diesel retail outlet dealers” (hereinafter referred to as
the “Norms”). On the basis of the applications received for
grant of the dealership in question, a selection was held
wherein the appellant was placed at Sl.No.1 with 78.04
marks whereas the respondent No.7 who had secured 77.75
marks was placed at Sl.No.2. The dealership was to be
offered to the most meritorious candidate after necessary
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field verification. The norms contemplated issuance of a
Letter of Intent (LoI) on the expiry of 30 days from the date
of publication of the select list/merit panel or till disposal of
complaints, if any, with regard to the selection made by the
Corporation. A grievance redressal mechanism is expressly
laid down in the ‘Norms’.
4. Aggrieved by the selection, the respondent No.7 filed a
complaint dated 25.01.2011 before the Corporation raising a
two-fold grievance. The first was with regard to award of
‘zero’ marks to the Respondent, against a maximum of ‘four’
awardable under the head “Fixed and Moveable Assets”.
The second grievance raised was that the land offered by
the appellant was under litigation and was not immediately
available for use of the retail outlet. The complaint filed by
the respondent No.7 was promptly answered by an order of
rejection dated 28.01.2011 on the ground that the Technical
Evaluation Committee in its report had found the land
offered by the appellant suitable for development of the
retail outlet and that the issue raised by the respondent in
the objection/complaint would be dealt with in the process of
grant of No Objection Certificate (NOC) by the District 3
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Magistrate to whom a reference of the matter is required to
be made. In so far as the claim of the respondent No.7 with
regard to award of marks is concerned, the same was
rejected on the ground that the respondent had not
furnished any document in support of his title to the assets
mentioned by him in his application.
5. Aggrieved by the rejection of his complaint, the
respondent No.7 moved the High Court by means of a writ
petition registered and numbered as C.W.J.C. No.6125 of
2011. No Letter of Intent had been granted to the appellant
at that stage. A learned Single Judge of the High Court by
order dated 29.09.2011 took the view that in so far as award
of marks to the respondent No.7 is concerned no fault can be
found in the decision of the Corporation inasmuch as the
respondent No.7 did not produce any document of title in
respect of assets mentioned by him in his application for the
dealership. In fact, the learned Single Judge came to the
further conclusion that such failure on the part of the
respondent No.7 amounted to suppression/concealment of
relevant facts. In so far as the present appellant is
concerned, the learned Single Judge came to the conclusion 4
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that the requisite NOC from the District Magistrate in respect
of the land offered by the appellant not having been
granted, the Corporation cannot be expected to wait
indefinitely. Consequently, the learned Single Judge directed
that the selection process be redone.
6. Aggrieved by the order dated 29.09.2011 passed by the
learned Single Judge both the appellant and the respondent
No.7 filed their respective Letters Patent Appeals. The
Division Bench of the High Court by the impugned order
dated 16.05.2012 substantially agreed with the findings
recorded by the learned Single Judge in so far as both the
parties are concerned. However, taking note of Clause 16 of
the Norms i.e. “Procedure For Selection Of Petrol/Diesel
Retail Outlet Dealers”, the Bench took the view that once the
appellant was found to be disentitled, the dealership should
have been awarded to respondent No.7, he being, at serial
No.2 of the merit list. Consequential directions were issued
by the Division Bench of the High Court. Aggrieved, the
present appeals have been filed.
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7. Contending that the findings of the learned Single Judge
with regard to suppression/concealment had not been set
aside by the Division Bench of the High Court in its order
dated 16.05.2012, the respondent No.7 had moved SLP (C)
No.28324 of 2012 against the aforesaid part of the order
dated 16.05.2012. The SLP filed by the respondent No.7 was
dismissed by this Court by order dated 05.10.2012.
8. An effective resolution of the contentious issues that
have emerged from the arguments made on behalf of the
rival parties would require specific notice of the relevant
documents brought on record by the parties at different
stages of the proceedings before the High Court as well as
this Court. As none of the said documents are disputed and
the authenticity/genuineness thereof is not questioned,
considering the relevance of the same to the subject matter,
we are of the view that the facts unfolded by the said
documents can be ignored only at the cost of a fair
adjudication of the lis between the parties. We, therefore,
proceed to take note of the said facts in proper sequential
order.
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9. After the selection for the dealership was finalized by
the Corporation on 30.12.2010, a reference was made to the
District Authority on 24.01.2011 for grant of NOC to enable
the Corporation to apply for the necessary licence under the
Petroleum Rules, 2002. By communications dated
11.07.2011 and 16.07.2011 the District Authority informed
the Corporation that NOC cannot be granted on account of
the fact that the land, on which outlet was proposed, was
involved in Partition Suit No.7 of 2006. It would be of some
significance that the appellant was impleaded as defendant
in the said suit on 04.02.2011 i.e. after 5 years of its
institution and that too after the finalization of the select
list/merit panel by the Corporation. An order of injunction to
restrain the District Authority from issuing NOC was sought
by the plaintiff in Partition Suit No.7 of 2006 which was
refused by the learned Trial Court on 19.07.2011. Taking
note of the aforesaid fact i.e. refusal of injunction, the
District Authority, once again, sought for a report from the
Sub-Divisional Officer whether NOC can be granted. This was
on 04.08.2011. The Sub-Divisional Officer sought the
opinion of the Government Advocate and submitted a report 7
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dated 18.08.2011 recommending grant of NOC. These
documents, though vital, were not before the High Court but
have been placed before us. After the learned Single Judge
had decided the writ petition by ordering a fresh selection,
an amendment application dated 17.10.2011 was filed in
Partition Suit No.7 of 2006 for deletion of the land offered for
the dealership from the purview of the suit. The said
amendment was allowed by the learned Trial Court on
19.10.2011. In the L.P.A. filed by the appellant, i.e. L.P.A.
No.1845 of 2011 the amendment application for deletion of
the land in question as well as the order dated 19.10.2011 of
the learned Trial Court allowing the said amendment
application were enclosed. The High Court overlooked the
same and did not consider the effect thereof on the rights
and entitlements of the respective parties. It also appears
that on 26.12.2011, on behalf of the Corporation, a reminder
was issued to the District Authority for grant of the NOC
applied for by the Corporation on 24.01.2011. There is
another letter on record dated 30.12.2011 from the District
Magistrate to the Territory Manager (Retail) Bharat
Petroleum Corporation Limited in the matter of grant of NOC.
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In the said letter reference has been made to the order of
the learned Single Judge in the C.W.J.C. No.6125 of 2011
dated 29.09.2011. In the ultimate paragraph of the said
letter it is stated that:-
“Thus, in view of the present context, kindly inform about your final decision regarding issuance of NOC whether issuance of NOC can be considered or not.”
The aforesaid letter dated 30.12.2011 is an English
translation of the original. The contents of the last
paragraph quoted hereinabove has left the true meaning
thereof clouded though the appellant contends that the said
paragraph should be read as containing a query from the
Corporation as to whether in view of the learned Single
Judge’s order passed in the writ petition, NOC can be issued
or not. Be that as it may, another suit i.e. T.S.No.638 of
2011 involving land in question had been instituted though
the same has been dismissed on 6.1.2014 as not
maintainable. Above all, Partition Suit No.7 of 2006 has
been dismissed as withdrawn on 7.1.2014 on an application
filed by the plaintiff. No other pending litigation involving
the land has been brought to the notice of the Court. 9
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10. In the present case even before the Letter of Intent in
respect of the dealership could be issued to the appellant
the proposed grant came to be challenged before the High
Court by the respondent No.7 who had impugned the
decision of the Corporation dated 28.01.2011 rejecting the
complaint filed by him against the selection made. Initially,
the District Authority had taken the stand that the NOC in
respect of the land offered by the appellant cannot be issued
as the same was found to be involved in a litigation i.e.
Partition Suit No.7 of 2006. While the writ petition was
pending there was a change in the stand of the District
Authority in the matter of grant of NOC. Yet, the same was
not brought to the notice of the learned Single Judge. A vital
fact, therefore, escaped notice. The fact that the appellant
was impleaded in the suit on 04.02.2011, i.e. nearly 5 years
after the institution thereof and after the selection was
finalized by the Corporation on 30.12.2010 was before the
High Court; yet the same had been overlooked by the
learned Single Judge. The Division Bench hearing the Letters
Patent Appeals also overlooked the fact that the learned
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Trial Court by order dated 19.10.2011 had allowed the
deletion of the land in question from the purview of the said
partition suit on an application filed by the plaintiff. This is,
notwithstanding, the fact that the amendment application
dated 17.10.2011 as well as the order thereon dated
19.10.2011 was brought on the record of the L.P.A. by the
appellant. That apart, the facts brought on record of the
present appeal by the parties is of considerable significance.
The subsequent report of the Sub-Divisional Officer dated
18.8.2011 recommending grant of NOC; the reminder of the
Corporation dated 26.12.2011 to the District Authority for
grant of NOC; the institution of Title Suit No.638 of 2011 in
respect of the land in question and the dismissal thereof by
order dated 06.01.2014 on the ground of maintainability as
well as the dismissal of Partition Suit No.7 of 2006 on
07.01.2014 (on withdrawal) are too significant to be ignored,
as already held. Relevant facts have been ignored at
different stages of consideration of the matter by the High
Court and in the light of the totality of the facts now placed
before us, we unhesitatingly come to the conclusion that in
the present case there was a deliberate and not very bona
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fide attempt on the part of the respondent No.7 to deny the
fruit of the selection
made in favour of the appellant by the Corporation as far
back as on 30.12.2010. The situation, therefore, has to be
remedied and it is the precise manner thereof which must
now engage the attention of the Court.
11. We cannot help observing that in the present case
exercise of the extraordinary jurisdiction vested in the High
Court by Article 226 of the Constitution has been with a
somewhat free hand oblivious of the note of caution struck
by this Court with regard to such exercise, particularly, in
contractual matters. The present, therefore, may be an
appropriate occasion to recall some of the observations of
this Court in the above context. In Raunaq International
Ltd. Vs. I.V.R. Construction Ltd. & Ors.1, (paragraphs 9,
10 and 11) this Court had held as follows :-
“9. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations. These would be:
1 (1999) 1 SCC 492 12
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(1) the price at which the other side is willing to do the work;
(2) whether the goods or services offered are of the requisite specifications;
(3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important;
(4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5) past experience of the tenderer and whether he has successfully completed similar work earlier;
(6) time which will be taken to deliver the goods or services; and often
(7) the ability of the tenderer to take follow- up action, rectify defects or to give post- contract services.
Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.
10. What are these elements of public interest? (1) Public money would be expended for the purposes of the contract. (2) The goods or services
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which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work — thus involving larger outlays of public money and delaying the availability of services, facilities or goods, e.g., a delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public
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interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers.”
12. In Air India Ltd. Vs. Cochin International Airport
Ltd. & Ors.2, there was a further reiteration of the said
principle in the following terms:-
“7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty v. International Airport Authority of India3, Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India4, CCE v. Dunlop India Ltd.5, Tata Cellular v. Union of India6, Ramniklal N. Bhutta v. State of Maharashtra7 and Raunaq International Ltd. v. I.V.R. Construction Ltd.8 The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest.
2 (2000) 2 SCC 617 3 (1979) 3 SCC 489 4 (1981) 1 SCC 568 5 (1985) 1 SCC 260 6 (1994) 6 SCC 651 7 (1997) 1 SCC 134 8 (1999) 1 SCC 492
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But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene.”
(Emphasis is ours)
13. Similar reiteration is to be found in Master Marine
Services (P) Ltd. Vs. Metcalfe & Hodgkinson (P) Ltd. &
Anr.9; Tejas Constructions and Infrastructure Private
Limited Vs. Municipal Council, Sendhwa and Another10
and several other pronouncements reference to which would
only be repetitive and, therefore, is best avoided.
14. We have felt it necessary to reiterate the need of
caution sounded by this Court in the decisions referred to
9 (2005) 6 SCC 138 10 (2012) 6 SCC 464
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hereinabove in view of the serious consequences that the
entertainment of a writ petition in contractual matters,
unless justified by public interest, can entail. Delay in the
judicial process that seems to have become inevitable could
work in different ways. Deprivation of the benefit of a
service or facility to the public; escalating costs burdening
the public exchequer and abandonment of half completed
works and projects due to the ground realities in a fast
changing economic/market scenario are some of the pitfalls
that may occur.
15. In the present case, fortunately, the litigation has not
been very time consuming. Nothing has been suggested on
behalf of the Corporation that the establishment of a retail
outlet at Areraj, East Champaran District in the State of Bihar
is not required as on date. It can, therefore, be safely
understood that in the instant case the public of the locality
have been deprived of the benefit of the service that the
outlet could have generated. We have already indicated
that the present litigation initiated by Respondent No. 7 does
not constitute a very bonafide exercise on the part of the
said Respondent and the entire litigation appears to have
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been driven by desire to deny the fruits of the selection in
which the appellant was found to be the most eligible
candidate. Whether the outlet is operated by the appellant
or the Respondent No. 7 is of no consequence to the
ultimate beneficiaries of the service to be offered by the said
outlet. The above highlights the need of caution that was
imperative on the part of the High Court while entertaining
the writ petition and in passing orders therein. Be that as it
may, in the totality of the facts of the present case, we are of
the view that it would be just and proper to direct the
Corporation, if it is of the view that the operation of the retail
outlet is still justified by the exigencies, to award the same
to the appellant by completing the requisite formalities in
accordance with the procedure laid down by the Corporation
itself.
16. Consequently, these appeals are allowed and the
impugned order dated 16.05.2012 passed by the Division
Bench of the High Court in L.P.A. Nos.1845 and 1916 of 2011
as well as the order dated 29.09.2011 passed by learned
Single Judge in C.W.J.C. No.6125 of 2011 are set aside.
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...…………………………CJI. [P. SATHASIVAM]
.........……………………… J.
NEW DELHI, [RANJAN GOGOI] FEBRUARY 07, 2014.
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