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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.5228 OF 2013

(Arising out of SLP(C) NO. 5849 OF 2008)

MOHD. JAMAL          ...APPELLANT                      Vs. UNION OF INDIA & ANR.      ...RESPONDENTS

WITH  

C.A. No.5229/2013 @ S.L.P.(C) No.8658/2008 C.A. No.5230/2013 @ S.L.P.(C) No.27299/2008 W.P.(C) No.459/2009 W.P.(C) No.528/2008 C.A. No.5231/2013 @ S.L.P.(C) No.5756/2008 C.A. No.5232/2013 @ S.L.P.(C) No.5349/2008 C.A. No.5233/2013 @ S.L.P.(C) No.5643/2008 C.A. No.5234/2013 @ S.L.P.(C) No.7167/2008 C.A. No.5235/2013 @ S.L.P.(C) NO.7176/2008 C.A. No.5236/2013 @ S.L.P.(C) NO.7229/2008 C.A. No.5237/2013 @ S.L.P.(C) NO.7234/2008 C.A. No.5238/2013 @ S.L.P.(C) NO.7237/2008 C.A. No.5239/2013 @ S.L.P.(C) NO.8664/2008 C.A. No.5240/2013 @ S.L.P.(C) NO.8681/2008 C.A. No.5241/2013 @ S.L.P.(C) NO.8685/2008

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C.A. No.5242/2013 @ S.L.P.(C) NO.8722/2008 C.A. No.5243/2013 @ S.L.P.(C) No.8765/2008 C.A. No.5244/2013 @ S.L.P.(C) No.8956/2008 C.A. No.5245/2013 @ S.L.P.(C) No.9010/2008 C.A. No.5246/2013 @ S.L.P.(C) No.9027/2008 C.A. No.5247/2013 @ S.L.P.(C) No.9051/2008 C.A. No.5248/2013 @ S.L.P.(C) No.9920/2008 C.A. No.5249/2013 @ S.L.P.(C) No.5596/2009 C.A. No.5250/2013 @ S.L.P.(C) No.5903/2009 C.A. No.5251/2013 @ S.L.P.(C) No.5909/2009 C.A. No.5252/2013 @ S.L.P.(C) No.6350/2009 C.A. No.5253/2013 @ S.L.P.(C) No.8241/2009 C.A. No.5254/2013 @ S.L.P.(C) No.8297/2009 C.A. No.5255/2013 @ S.L.P.(C) No.11000/2009 C.A. No.5256/2013 @ S.L.P.(C) No.10346/2009 C.A. No.5257/2013 @ S.L.P.(C) No.16711/2008 C.A. No.5258/2013 @ S.L.P.(C) No.16922/2008 C.A. No.5259/2013 @ S.L.P.(C) No.9655/2010 T.C.(C) No.88/2013 @ T.P.(C) No.971 of 2010 T.C.(C) No.89/2013 @ T.P.(C) No.972 of 2010 T.C.(C) No.90/2013 @ T.P.(C) No.973 of 2010 C.A. No.5260/2013 @ S.L.P.(C) No.11540/2009 C.A. No.5261/2013 @ S.L.P.(C) No.11541/2009 C.A. No.5262/2013 @ S.L.P.(C) No.16377/2009 C.A. No.5263/2013 @ S.L.P.(C) No.30226/2008 C.A. No.5264/2013 @ S.L.P.(C) No.22891/2008 C.A. No.5265/2013 @ S.L.P.(C) No.20908/2011 C.A. No.5266/2013 @ S.L.P.(C) No.21794/2011 C.A. No.5267/2013 @ S.L.P.(C) No.21911/2011 C.A. No.5268/2013 @ S.L.P.(C) No.21914/2011 C.A. No.5269/2013 @ S.L.P.(C) No.22016/2011 C.A. No.5270/2013 @ S.L.P.(C) No.22017/2011 C.A. No.5271/2013 @ S.L.P.(C) No.22018/2011 C.A. No.5272/2013 @ S.L.P.(C) No.22019/2011 C.A. No.5273/2013 @ S.L.P.(C) No.22020/2011 C.A. No.5274/2013 @ S.L.P.(C) No.22021/2011 C.A. No.5275/2013 @ S.L.P.(C) No.22028/2011

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C.A. No.5276/2013 @ S.L.P.(C) No.22029/2011 C.A. No.5277/2013 @ S.L.P.(C) No.22440/2011 C.A. No.5278/2013 @ S.L.P.(C) No.22355/2011 C.A. No.5279/2013 @ S.L.P.(C) No.22363/2011 C.A. No.5280/2013 @ S.L.P.(C) No.22831/2011 C.A. No.5281/2013 @ S.L.P.(C) No.22637/2011 C.A. No.5282/2013 @ S.L.P.(C) No.22691/2011 C.A. No.5283/2013 @ S.L.P.(C) No.22704/2011 C.A. No.5284/2013 @ S.L.P.(C) No.22737/2011 C.A. No.5285/2013 @ S.L.P.(C) No.22861/2011 C.A. No.5286/2013 @ S.L.P.(C) No.22899/2011 C.A. Nos.5287-88/2013 @S.L.P.(C)Nos.25721-25722/2011 C.A. Nos.5289-90/2013 @ S.L.P.(C)Nos.25934-25935/2011 C.A. No.5291/2013 @ S.L.P.(C) No.22742/2011 C.A. Nos.5292-93/2013 @S.L.P.(C)Nos.27235-27236/2011 C.A. Nos.5294-95/2013 @S.L.P.(C)Nos.28112-28113/2011 C.A. No.5296/2013 @ S.L.P.(C) No.32096/2011 C.A. No.5297/2013 @ S.L.P.(C) No.33698/2011 C.A. No.5298/2013 @ S.L.P.(C) No.138/2012 C.A. No.5299/2013 @ S.L.P.(C) No.1535/2012 C.A. No.5300/2013 @ S.L.P.(C) No.1142/2012 T.C.(C) No.91/2013 @ T.P.(C) No.1260 of 2011 C.A. Nos.5301-02/2013 @ S.L.P.(C)Nos.24315-24316/2008

J U D G M E N T

ALTAMAS KABIR, CJI.

1. Special  Leave  Petition  (Civil)  No.  5849  of  

2008 filed by one Mohd. Jamal, has been heard along

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with several other matters where the same issue has  

been raised and the reliefs prayed for are similar.

2. Leave granted in all the matters. During the  

hearing of these matters, Mohd. Jamal's case was  

taken up as the lead matter.

3. From the facts as disclosed in the several  

Special Leave Petitions (now Appeals), there are  

three groups of matters included in these Appeals.  

The first group relates to the State of Karnataka,  

where  the  Union  of  India  is  the  

Petitioner/Appellant.   The  second  group  involves  

matters  filed  by  the  private  parties  where  the  

jurisdiction is that of Delhi.  The third group  

deals with the similar question in regard to the  

States of Gujarat and Madhya Pradesh.

4. All  the  private  Appellants  were  and  are  

aspirants  for  dealership  in  respect  of  retail  

outlets of the Indian Oil Corporation and the IBP,

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which merged with the Indian Oil Corporation on 2nd  

May, 2007.  The genesis of the claim for dealership  

arises out of policy guidelines, being Policy/MDPM  

No.319/02 dated 8th October, 2002, for selection of  

retail outlet dealers, published by the Indian Oil  

Corporation  after  the  distribution  of  petroleum  

product had been deregulated.  The said guidelines  

dealt  with  the  procedure  for  locations  outside  

Marketing Plans and also stipulated that for the  

purpose  of  selection,  the  dealership  would  be  

categorised as indicated in the guidelines and all  

retail outlets would be developed only on A/C Sites  

basis  which  finds  place  in  clause  2  of  the  

guidelines dealing with the common guidelines for  

all categories.

5. Appearing  for  the  Appellant  in  

SLP(C)No.5842/2008  (now appeal), Mr. Pradip Ghosh,  

learned  Senior  Advocate,  submitted  that  after

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nationalisation of Oil Companies in 1976, the sale  

and  distribution  of  petroleum  and  petroleum  

products  were  under  the  control  of  the  Central  

Government and regulated by the provisions of the  

Essential Commodities Act, 1955.  On and from 1978  

the Central Government allowed the Public Sector  

Oil Companies to set up retail outlets through an  

Oil Selection Board, which was subsequently renamed  

as  Dealer  Selection  Board.   Mr.  Ghosh  submitted  

that the Central Government devised a methodology  

of setting up of retail outlets, by constituting  

the Industrial Meeting Committee which would decide  

distribution of outlets region-wise in respect of  

each petroleum company.  Till 1998, the production  

and marketing of petroleum and petroleum products  

were under the control of the Ministry of Petroleum  

and Natural Gas and were executed through Public  

Sector  Oil  Companies.   In  1998,  the  Central  

Government  decided  to  partly  deregulate  the

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production,  supply  and  distribution  of  petroleum  

and its products and indicated 2002 as a cut-off  

year to completely deregulate the production and  

supply of petroleum and petroleum products.  The  

Central Government, therefore, again took steps to  

meet such objectives and in that connection decided  

to  make  certain  changes  with  regard  to  the  

functioning of natural oil and gas companies under  

the Market Driven Pricing Regime and to workout the  

modalities of setting up petrol pumps on National  

and State Highways.   

6. This led to the creation of the concept of  

Company Owned Company Operated outlets (COCO) as a  

means to enable National Oil Companies to run and  

operate their own outlets which were to be run as  

model retail outlets.  Mr. Ghosh submitted that the  

scheme thus devised was to extend and cater to all  

National and State Highways and has certain salient  

features which need to be spelt out in order to

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appreciate  future  developments,  which  form  the  

subject matter of the various appeals being heard  

by us.

7. One  of  the  more  important  objectives  which  

the  scheme  hoped  to  achieve  was  to  develop  the  

retail outlets on relatively large plots of land  

measuring 5 acres or so on the Highways. Such land  

would be under the control of the marketing company  

either by way of purchase or on long-term lease  

basis.   Such  retail  outlets  would  also  have  

facilities  and  amenities  to  be  developed  by  the  

Dealer in line with the norms laid down by the Oil  

Companies on a standardised purchase.  Such retail  

outlets were to be developed outside the Marketing  

Plan in a transparent manner, subject to observance  

of ban on multiple dealership.  Mr. Ghosh submitted  

that the said scheme was to be executed in two  

phases.  Phase I would enable the Oil Companies to  

launch  the  scheme  on  pilot  project  basis  for

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setting up COCO outlets which might serve as models  

for  future  outlets.   The  second  phase  would  be  

based on the experience of the first phase and the  

rest of the scheme would be taken up and completed  

within a period of three years.   

8.  Mr. Ghosh submitted that apparently a decision  

had been taken by the oil companies to convert the  

COCO outlets into regular dealerships.  A uniform  

policy was formulated for manning and controlling  

of  Jubilee  Retail  Outlets  and,  pursuant  to  such  

policy,  the  Government  approved  the  Indian  Oil  

Corporation's (IOC) decision to run 83 outlets for  

which  sites  had  been  taken  over  and  facilities  

installed on COCO basis under certain guidelines.  

Mr. Ghosh urged that it has subsequently come to  

light that in respect of the said 82 outlets, 77  

dealers  or  those  holding  Letters  of  Intent,  had  

been allotted dealership.  

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9. However, on 1st April, 2000, the Government  

of India notified its policy for operation of COCO  

outlets through contractors.  In February, 2002,  

the  Indian  Oil  Corporation  purchased  33.58%  of  

Equity Shares of IBP Ltd.  Till 31st March, 2002,  

no oil company could by itself select its dealers  

or award its dealership to them.  The Government  

appointed  Dealer  Selection  Boards,  who  were  

entrusted with the task of selection of dealers for  

all oil companies.  It was only from 1st April,  

2002,  that  the  Administered  Price  Mechanism  was  

dismantled  and  the  Dealer  Selection  Boards  were  

dissolved.   The  Oil  Companies  were,  thereafter,  

given a certain amount of freedom to frame their  

own policies, relating to the setting up of the  

retail outlets by selection of dealers.   

10. On  8.10.2002,  IBP  Ltd.  devised  and/or  

formulated its policy and framed guidelines, inter  

alia,  for  selection  of  retail  outlets  in  the

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deregulated scenario.  In line with the change in  

policy  formulated  by  the  Government  of  India,  

guidelines were framed which recognised the rights  

of  the  land  owners  as  a  category  of  persons  

entitled  to  dealership,  subject  to  conditions.  

Clause 3 of the scheme provided that the dealership  

of such COCO outlets would first be offered to the  

landlord, provided he was found suitable.  In case  

the landlord declined to accept the dealership, it  

would  be  offered  to  Maintenance  and  Handling  

Contractors (M&H).  In the event, the Maintenance  

and Handling Contractor also declined to accept the  

dealership, the same would be offered to the best  

candidate available.   

11. Mr.  Ghosh  submitted  that  on  14th  January,  

2003,  in  line  with  the  Respondent's  policy  

guidelines for selection of retail outlet dealers  

in  the  aftermath  of  deregulation  vide Memo  

Reference  Policy/MDPM  No.319/02  dated  8.10.2002,

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and  a  subsequent  clarification  of  the  General  

Manager (M), MHO dated 14.12.2002, the Appellant,  

Mohd. Jamal, applied for a retail outlet dealership  

for his land in the land owner's category.  Such  

application was made pursuant to an advertisement  

issued by the oil company and the Appellant was  

also  called  upon  by  the  oil  company  to  obtain  

Dealership  Agreement  Form  from  the  Divisional  

Office by depositing Rs.1000/-.  After obtaining  

such Form, the Appellant submitted the same to the  

company.  Mr. Ghosh submitted that on 15th January,  

2003, the Committee on Dealer Selection found the  

Appellant's land suitable for developing a retail  

outlet,  on  National  Highway  No.28,  Sadatpur  PS,  

Muzaffarpur Road, Bihar.  The company even sought  

prior approval for the said site from the Joint  

Chief  Controller  of  Explosives,  East  Circle,  

Calcutta.  Based on the recommendation made by the  

Dealer Selection Committee dated 15.1.2003, on 25th

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January,  2003,  the  General  Manager  (ER)  of  the  

Respondent  No.2  Company  recommended  that  the  

dealership be given to the Appellant and directed  

that a Letter of Intent be issued in his favour on  

receipt  of  the  explosive  licence.   Mr.  Ghosh  

submitted  that  while  the  Appellant's  matter  for  

grant of dealership was at the final stage, on 5th  

February, 2003, the Policy adopted on 8.10.2002 was  

suspended.   It  has,  of  course,  been  claimed  on  

behalf of the Appellant that the suspension of the  

policy was never communicated to the land owners,  

including the Appellant, Mohd. Jamal.    

12. It is also the Appellant's case that it was  

mutually  agreed  that  till  the  issuance  of  the  

Letter  of  Intent,  as  an  interim  arrangement,  a  

nominee of the Appellant would be appointed as the  

Maintenance  and  Handling  Contractor  to  run  the  

petrol  pump,  provided  that  an  affidavit  in  the  

prescribed  form  would  be  furnished  by  the

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Contractor.   According  to  Mr.  Ghosh,  relying  on  

such assurance, the Appellant offered his land on  

lease to the Oil Company on 14.3.2003, subject to  

the condition that the monthly rental of the land  

would be Rs.27,000/- and would commence from the  

date of registration of the documents.  Further to  

the  said  understanding  on  29th  March,  2003,  a  

contract for Maintenance and Handling was executed  

between the Oil Company and Mohd. Ishtiaq Alam, the  

brother and nominee of the Appellant, for running  

the said petrol pump.  Before Mohd. Ishtiaq Alam  

was appointed as M&H Contractor, on anticipation of  

the  Oil  Company  that  he  would  be  granted  

dealership, invested a sum of about Rs.25 lakhs to  

set up infrastructure.  Ultimately, on 31st March,  

2003, the petrol pump was commissioned and started  

operating.    

13. Mr.  Ghosh  submitted  that  in  the  above  

circumstances, the Appellant executed a lease deed

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in favour of the Oil Company for a period of 15  

years,  with  a  clause  for  further  periods  of  

renewal.   

14. Mr.  Ghosh  submitted  that  the  aforesaid  

arrangement was understood by all the parties to be  

of temporary duration, as would be evident from the  

fact  that  the  rent  initially  settled  at  Rs.  

27,000/- per month in respect of the Appellant's  

land at Sadatpur was reduced to Rs. 21,000/- per  

month  after  negotiation,  which  upon  calculation  

comes to approximately 50 paise per square feet,  

which in terms of the valuation made, was abysmally  

low.

15. Mr.  Ghosh  submitted  that  various  other  

decisions were taken both by the Oil Company as  

well  as  the  Ministry  concerned  by  which  fresh  

guidelines were also framed for selection of retail  

outlets  and  SKO-LDO  (Super  Kerosene  Oil  -  Light

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Diesel  Oil)  dealers.   Learned  counsel  submitted  

that  by  a  policy  circular  No.  05/0405  dated  

30.3.2005, introduced by the Oil Company, existing  

land owners of the concerned Jubilee Retail Outlets  

and the Company Owned and Company Operated Outlets  

were disqualified from being appointed as dealers,  

although, the same was never communicated to the  

Appellant.  Mr.  Ghosh  submitted  that,  in  the  

meantime, the temporary arrangement which had been  

arrived  at  in  the  case  of  the  Appellant,  Mohd.  

Jamal,  has  been  continuing  on  the  strength  of  

orders passed by this Court.  Mr. Ghosh also urged  

that  on  6th  September,  2006,  the  Oil  Company  

formulated  a  new  policy  whereby  the  concept  of  

offering dealership to land owners was abandoned to  

the prejudice of the land owners whose Letters of  

Intent for dealership were pending and where lands  

had also been taken on long term lease by the Oil  

Company at low rates of rent, on the assurance that

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dealership under the land owners category would be  

given to them.  By virtue of the new policy, the  

Oil Company proposed to run outlets on their own  

and/or through Labour Contractors, in supersession  

of all earlier policy guidelines.

16. Mr.  Ghosh  submitted  that  one  of  such  land  

owners filed Writ Petition No. 358 of 2006 - N.K.  

Bajpai Vs. Union of India and Others, challenging  

the changed policy.  While disposing of the Writ  

Petition,  the  learned  Single  Judge  of  the  Delhi  

High  Court,  inter  alia,  held  that  Oil  Companies  

cannot assign the running of petrol pumps on the  

land of the writ petitioners without their consent.  

Mr.  Ghosh  submitted  that  aggrieved  by  the  said  

Notification  dated  6.9.2006,  the  Appellant  also  

filed Writ Petition No. 2392 of 2007, before the  

Delhi  High  Court  for  quashing  of  the  said  

Notification and to restrain the respondents from  

terminating/cancelling  the  arrangement  arrived  at

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regarding the running of the retail outlet on the  

Appellant's  land  through  his  nominee,  or  in  the  

alternative, to return the land to the Appellant if  

the dealership was not granted to the Appellant.  

Mr. Ghosh submitted that the learned Single Judge  

of the Delhi High Court referred the matter to a  

Division  Bench  for  hearing  and  on  8.2.2008,  the  

Delhi  High  Court  disposed  of  a  bunch  of  Writ  

Petitions, while retaining 11 such Writ Petitions,  

which, it felt needed further consideration since  

the  said  Writ  Petitions  projected  an  implied  

promise  and/or  understanding  having  been  reached  

between  the  land  owners  and  the  Oil  Companies  

concerned having regard to the low lease rentals  

for the lands offered by the land owners to the  

companies  for  establishing  their  retail  outlets.  

Learned counsel submitted that the Appellant's Writ  

Petition was among those bunch of petitions, which  

were  dismissed  by  the  High  Court,  although,  the

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Appellant's case was the same as that of the 11  

Petitioners, whose matters had been retained by the  

High Court for further consideration.  Mr. Ghosh  

submitted that it is at that stage that this Court  

admitted  the  Appellant's  Special  Leave  Petition  

(Civil) No. 5849 of 2008, on 31st July, 2008, and  

passed an order whereby the parties were directed  

to maintain status-quo as on that day, with liberty  

to the respondents to apply for variation and/or  

modification of the order, if so advised.

17. The main ground of challenge canvassed by Mr.  

Ghosh on behalf of the Appellant, Mr. Jamal, and  

other similarly placed Appellants, was that having  

acted  on  the  basis  of  a  policy  by  which  the  

Respondent  Oil  Companies  had  offered  full  

dealership to land owners and having caused such  

land  owners  to  alter  their  position  to  their  

disadvantage, the Oil Companies were now estopped  

from going back on their promise.  Mr. Ghosh urged

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that  the  decision  to  discontinue  the  grant  of  

dealership and to introduce the new concept of COCO  

outlets, to be run by the Maintenance and Handling  

contractors, could not be used to the disadvantage  

of those land owners in whose favour a decision had  

already been taken to issue Letters of Intent for  

grant  of  dealership.   Mr.  Ghosh  submitted  that  

these cases  were clearly covered by the doctrine  

of promissory estoppel, inasmuch as, in these cases  

the  land  owners  had  altered  their  positions  to  

their  detriment  in  several  ways.   Mr.  Ghosh  

submitted that in most cases the rates of rents at  

which the lands were offered to the Oil Companies  

were extremely low and did not reflect the market  

rental  of  such  lands,  which  is  one  of  the  

indications that a promise had been made to the  

land owners that they would be granted dealerships  

in respect of the said lands, which was in tune

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with the policy, which had been declared by the Oil  

Companies earlier.

18. Mr. Ghosh submitted that in other cases the  

landlords had invested large sums of money, as in  

the  case  of  Mohd.  Jamal,  in  preparing  the  land  

offered  for  operating  the  retail  outlets  of  

petroleum and petroleum products, ostensibly on the  

promise that they would be granted dealership for  

running the said outlets.  Mr. Ghosh submitted that  

acting on such promise the Appellant, Mohd. Jamal,  

spent more than Rs.27 lakhs to prepare the site for  

running  the  retail  outlet  and  it  would  not  be  

unreasonable to accept the case made out on his  

behalf that such expenditure was incurred in lieu  

of such promise.  In certain other cases, the land  

owners had been persuaded to enter into long term  

lease agreements, again at nominal rents, on the  

assurance that their nominees would be appointed as  

Maintenance  and  Handling  Contractors  of  the

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different COCO units, pending the decision to grant  

full dealership in respect of such retail outlets,  

in keeping with the earlier policy of reducing the  

number of COCO units and retaining a few to be run  

by the Oil Companies as model outlets.

19. Mr.  Ghosh  submitted  that  in  these  

circumstances, the Oil Companies and the Union of  

India are estopped by the promises made by them to  

grant dealerships to the land-owners on the basis  

of the policy existing prior to 5th February, 2003  

and 6th September, 2006.  

20. Mr. Ghosh submitted that one of the earliest  

decisions of this Court regarding the doctrine of  

promissory estoppel was in Union of India Vs. M/s.  

Indo-Afghan Agencies Limited [(1968) 2 SCR 366],  

wherein it was held that even though the case did  

not fall within the scope of Section 115 of the  

Evidence Act, it was still open to a party who had

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acted on a representation made by the Government to  

claim that the Government should be bound to carry  

out the promise made by it, though not recorded in  

the form of a formal contract.

 21. Reference  was  then  made  to  the  celebrated  

decision in  Motilal Padampat Sugar Mills Co. Ltd.  

Vs. State of Uttar Pradesh and Others [(1979) 2 SCC  

409],  commonly  known  as  the  "M.P.  Sugar  Mills  

case", wherein a Bench of Two Judges went into a  

detailed  enquiry  regarding  the  doctrine  of  

promissory  estoppel  and  equitable  estoppel  and  

observed that the doctrine of promissory estoppel  

is not really based on the principle of estoppel,  

but is a doctrine evolved by equity in order to  

prevent injustice.  It has also been observed that  

there is no reason as to why it should be given a  

limited application by way of defence and that it  

could also be the basis of a cause of action and

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all  that  was  necessary  for  attracting  the  said  

doctrine was that the promisee should have altered  

his position in relying on the promise.  It was  

emphasized  that  it  was  not  necessary  that  the  

promise should suffer any detriment as well.

22. Mr. Ghosh submitted that a somewhat different  

view had been taken also by a Bench of Two Judges  

in Jit Ram Shiv Kumar Vs. State of Haryana [(1981)  

1 SCC 11], but the differing view expressed in the  

said case was overruled by a Bench of Three Judges  

in  Union of India and Others Vs.  Godfrey Philips  

India  Limited [(1985)  4  SCC  369],  wherein  the  

decision in the  M.P. Sugar Mills case (supra) was  

pronounced as being the correct law.   

23. Various other decisions have also been cited in  

support  of  the  aforesaid  doctrine  of  promissory  

estoppel or equitable estoppel, but it will suffice  

to refer to one of the latest decisions in this

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regard  in  State  of  Bihar Vs.  Kalyanpur  Cement  

Limited [(2010)  3  SCC  274],  wherein  it  was  

emphasized that in order to invoke the aforesaid  

doctrine, it has to be established that a party had  

made an unequivocal promise or representation by  

word  or  conduct,  to  the  other  party,  which  was  

intended to create legal relations or affect the  

legal relationship to arise in the future, and that  

the  party  invoking  the  doctrine  has  altered  its  

position relying on the promise.

24. Mr.  Ghosh  submitted  that  having  held  out  a  

promise to grant a dealership to the Appellant and  

the other Appellants in the connected matters, in  

respect of the lands offered by them for setting up  

retail  outlets  for  the  sale  of  petroleum  and  

petroleum products and having acted thereupon just  

prior to the stage of grant of Letters of Intent,  it was no longer available to the Oil Companies to  

renege  on  their  promise,  particularly  when  the

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aspirants for dealership had altered their position  

and had spent enormous sums of money to make the  

sites ready for setting up the retail outlets.  As  

was observed in the M.P. Sugar Mills case (supra),  

it was not even necessary for the land owners to  

have  suffered  any  prejudice  on  account  of  such  

alteration.  It was sufficient that, pursuant to  

the promise made of grant of dealership, they had  

altered their position and had spent large sums of  

money to make the sites ready for occupation.   

25. To bolster his submissions, Mr. Ghosh referred  

to the Single Bench decision of the Karnataka High  

Court dated 28th July, 2009, in Writ Petition No.  

1016 of 2007, filed by one Shri Y.T. Narendra Babu  

and  other  connected  Writ  Petitions,  wherein  the  

facts identical to the facts in these cases were in  

issue.   In  fact,  SLP(C)  No.  9655  of  2010  (now  

Appeal)  has  been  filed  by  the  Indian  Oil  

Corporation  Limited  against  Y.T.  Narendra  Babu,

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against the appellate order of the Karnataka High  

Court dated 19.11.2009, in Writ Appeal No. 3248 of  

2009, endorsing the judgment of the learned Single  

Judge in the Writ Petition.  In the same set of  

facts, where lands had been taken on lease on the  

assurance that the land owners would be appointed  

as dealers in due course and that till then the  

retail outlet would be treated as a COCO unit to be  

run by a nominee of the land owner, the learned  

Single Judge was of the view that in view of the  

assurance  given  to  the  land  owners  and  

notwithstanding  the  change  in  policy  guidelines  

regarding the allotment of dealership in favour of  

the  land  owners,  the  doctrine  of  promissory  

estoppel and of legitimate expectation would apply  

to the case.  The learned Single Judge, therefore,  

allowed  the  Writ  Petition  and  directed  the  

Respondents to process the applications filed by  

the  Petitioners  or  their  nominees  for  grant  of

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dealership on a co-terminus basis with the period  

of  the  lease  of  the  land  on  which  the  retail  

outlets are established. As indicated hereinbefore,  

the said views were approved by the Division Bench,  

which did not interfere with the decision or the  

directions given consequent thereto by the learned  

Single Judge.

26. Mr. Ghosh then turned to another aspect, which  

had  been  considered  in  the  cases  heard  and  

determined by the Gujarat High Court, namely, the  

issuance of Comfort Letters in several cases where  

the  lease  deed  had  been  executed  prior  to  8th  

October,  2012,  assuring  the  land  owners  of  the  

demised plots that they would enjoy the right of  

first refusal if COCO outlets set up on their lands  

were to be converted into dealerships.  Mr. Ghosh  

pointed  out  that  some  of  the  Comfort  Letters  

addressed to the land owners issued on behalf of  

the IBP Company Limited, by its Divisional Manager,

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have been annexed to the Special Leave Petitions  

(now  Appeals),  filed  by  those  aggrieved  by  the  

judgment of the Division Bench of the Gujarat High  

Court,  setting  aside  the  orders  of  the  learned  

Single  Judge.   Upon  holding  that  the  Comfort  

Letters issued to individual land owners could not  

be relied upon, as being a policy decision of the  

Company, the Division Bench came to the conclusion  

that  the  learned  Single  Judge  was  in  error  in  

giving a finding of fact in a Writ Petition under  

Article 226 of the Constitution, particularly when  

the facts were disputed and the entire evidence was  

yet to be disclosed.  Mr. Ghosh submitted that,  

while allowing the Writ Appeals filed by the Oil  

Companies, the Division Bench of the Gujarat High  

Court had misconstrued the submissions made with  

regard  to  the  doctrine  of  promissory  estoppel,  

which would be available from the surrounding facts

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and circumstances, even if the same had not been  

explicitly spelt out.    

27. In  support  of  his  submissions,  Mr.  Ghosh  

referred  to  the  decision  of  this  Court  in  

Yomeshbhai Pranshankar Bhatt Vs.  State of Gujarat  

[(2011)  6  SCC  312],  wherein  the  learned  Judges,  

while considering the scope of the Supreme Court's  

jurisdiction under Article 142 of the Constitution,  

held that even during a final hearing the Supreme  

Court  was  not  precluded  from  considering  the  

controversy in its entire perspective and that the  

power under Article 142 was to do complete justice,  

unless there was an express provision of law to the  

contrary.   Mr.  Ghosh  urged  that  this  Court  had  

always held that technical objections should not  

come in the way of the Supreme Court doing complete  

justice to the parties.

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28. Mr. Ghosh submitted that in the light of the  

above, the Oil Companies should either be directed  

to  act  in  terms  of  the  promise  made  to  grant  

dealerships or in the event of their unwillingness  

to  do  so,  they  may  be  directed  to  restore  

possession  of  the  lands  leased  out  to  them  in  

accordance with the doctrine of restitution.   

29. Mr. Rana Mukherjee, who appeared for some of  

the Petitioners (now Appellants) in this batch of  

cases and had also assisted Mr. Pradip Ghosh, while  

reiterating  the  submissions  made  by  Mr.  Ghosh,  

referred to some of the factual differences in the  

individual Writ Petitions and urged that, being in  

a  dominant  position,  the  Government  cannot  act  

arbitrarily.  Having  made  a  promise  to  grant  

dealership licences to some of the land owners, who  

had on the basis of such assurances demised their  

lands to the Oil Companies for rents which were

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markedly lower than the existing rents in the area  

and had also spent large amounts in making such  

sites ready, the Oil Companies could not go back on  

such assurances on the plea that there had been a  

change in the policy for grant of dealership.  Mr.  

Rana Mukherjee submitted that the window period,  

which had been identified by this Court, between  

8th October, 2002 and 5th February, 2013, was a  

period when the policy to grant dealerships was in  

full  force  and  the  applications  received  and  

processed during the said period would have to be  

treated  differently  from  the  applications  made  

thereafter, after the change in the policy.  Mr.  

Mukherjee, in fact, contended that in some of the  

cases, where applications had been made for grant  

of dealership pursuant to advertisements published  

in the Press, but in whose cases the decision to  

issue Letters of Intent had been kept in abeyance  

prior to 8th October, 2002, were also entitled to

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the same benefits in keeping with the doctrine of  

promissory equity.   

30.  Mr. Mukherjee, who also appeared in SLP(C) No.  

5756 of 2008 (now Appeal), filed by one Khurshid  

Ahmed Chippa, submitted that this Court in  Kumari  

Shrilekha Vidyarthi Vs. State of U.P. [(1991) 1 SCC  

212], wherein the doctrine of natural justice fell  

for consideration, and it was held that every State  

action,  in  order  to  survive,  must  not  be  

susceptible  to  the  vice  of  arbitrariness,  which  

forms  the  essence  of  Article  14  of  the  

Constitution.  While interpreting Article 14 of the  

Constitution, this Court has consistently held that  

non-arbitrariness  is a necessary concomitant of  

the rule of law and is, in substance, fair play in  

action.   In  the  said  decision,  it  was  further  

observed that whether an impugned act is arbitrary  

or not, is ultimately to be decided on the facts

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and circumstances of each case, but 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.  It  

was further observed that every State action must  

be informed by reason and it follows that an act,  

uninformed by reasons, is arbitrary.     

31. Mr. Mukherjee also referred to the decision of  

this Court in Dwarkadas Marfatia and Sons Vs. Board  

of Trustees of the Port of Bombay [(1989) 3 SCC  

293]  and  Mahabir  Auto  Stores Vs.  Indian  Oil  

Corporation [(1990)  3  SCC  752],  wherein  similar  

views  have  consistently  been  expressed.   Mr.  

Mukherjee  also  prayed  for  the  same  reliefs  as  

prayed  for  by  Mr.  Pradip  Ghosh,  learned  Senior  

Advocate, on behalf of some of the Appellants.

32. Mr. Jitender Mohan Sharma, learned Advocate who  

appeared  with  Mr.  Pradip  Ghosh,  learned  Senior

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Advocate,  in  some  of  the  Appeals,  also  appeared  

individually for some of the other Appellants, such  

as Tirath Ram Chauhan, Sohan Singh, etc.  In facts  

which were similar to that of the facts in Mohd.  

Jamal's case and in almost all the other cases, Mr.  

Sharma repeated and reiterated the submissions made  

by Mr. Ghosh in general and reiterated Mr. Ghosh's  

submissions  with  regard  to  the  doctrine  of  

promissory estoppel, since the Appellants in all  

the cases in which Mr. Sharma appeared, had altered  

their position after being given an assurance that  

they would be given dealership in respect of the  

retail  outlets  to  be  established  on  the  demised  

lands.  In  their  cases  interim  arrangements  were  

required to be made as the grant of dealerships  

were likely to take some time.  Mr. Sharma also  

urged that the decision of the Respondents to alter  

their policy regarding grant of dealership, when  

matters  had  almost  reached  the  final  stage  of

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allotment of dealership, was against all norms of  

fair play and was liable to be quashed.  

33.  Mr.  Sanjay  Sharawat,  learned  Advocate  

appearing for some of the Respondents, also adopted  

the submissions made by Mr. Ghosh and pointed out  

that the lease deeds executed by the land owners  

and  the  Maintenance  and  Handling  Contracts  were  

kept separate, since it was the intention of the  

Oil Companies that in terms of the policy of the  

Indian Oil Corporation dated 23.7.2003, despite the  

two  contracts  being  separate,  as  and  when  the  

Policy permitted, dealership would be awarded to  

the  land  owners  or  their  nominees.   It  was,  

however, pointed out that in all the cases it had  

been  decided  to  grant  Maintenance  and  Handling  

Contracts to nominees of the land owners to enable  

them  to  run  the  retail  outlets  till  a  final  

decision  was  taken  in  the  matter.  Mr.  Sharawat  

submitted that the very fact that in the Policy of

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the  Indian  Oil  Corporation  dated  23.7.2003,  the  

Company had specifically permitted the land owners  

to nominate anyone from the family or from outside  

the family for being appointed as the Maintenance  

and Handling Contractor, was sufficient indication  

that it was the intention of the Respondents to  

grant permanent dealership to the land owners once  

a clarification had been received in the matter.

Mr.  Sharawat  submitted  that  the  problem  had  

been created only on account of the decision of the  

Oil Companies to go back on their promise which  

brought  all  these  cases  squarely  within  the  

doctrine of promissory estoppel.   

34.  Much the same arguments were advanced by Mr.  

Rajiv Dutt, learned Senior Advocate appearing for  

the Writ Petitioner, Tirath Ram Chauhan, in Writ  

Petition (Civil) No.528 of 2008.  Mr. Dutt urged  

that pursuant to the advertisement issued by IBP

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Oil  Company  on  12th  April,  2001,  the  Petitioner  

(now  Appellant)  had  offered  his  land  on  NH-1A  

Jalandhar-Pathankot, but no decision had been taken  

by  the  Respondents  on  such  offer.  On  the  other  

hand, on 8th October, 2002, the Company introduced  

a  Policy  regarding  allotment  of  retail  outlets  

under the land owners category.  Thereafter, as in  

the  other  cases,  on  the  Appellant's  land  being  

found suitable a lease deed was executed and the  

Appellant's  nominee  was  appointed  as  the  

Maintenance  and  Handling  Contractor  to  run  the  

outlet on 16.12.2002. On 30.11.2002, the pump began  

operational.   Operations  were  continued  in  the  

retail outlet by virtue of the said contract, which  

was extended annually.   

35. While the aforesaid arrangement was continuing,  

on 6.9.2006, the Ministry of Petroleum and Natural  

Gas  issued  a  Notification  directing  all  the

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marketing companies to phase out the existing COCO  

retail units within a year.   

36.  Mr.  Dutt  submitted  that  the  Writ  Petitions  

which had been filed before the Delhi High Court  

for quashing the said Policy dated 6.9.2006 were  

dismissed  by  the  High  Court  on  8.2.2008  against  

which  the  several  Special  Leave  Petitions  were  

filed. As far as the Writ Petitions are concerned,  

the present Writ Petition was filed under Article  

32 of the Constitution and was entertained by this  

Court on 28.11.2008, when this Court issued Notice  

and directed the parties to maintain status-quo,  

which order is still subsisting.  Mr. Dutt also  

relied on the decisions which had been cited by Mr.  

Pradip Ghosh and in addition he also relied on the  

often  cited  decision  of  this  Court  in  Ramana  

Dayaram Shetty Vs. International Airport Authority  

of  India  &  Ors. [(1979)  3  SCC  489],  wherein  a  

question  had  arisen  regarding  the  right  of  the

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Petitioner  to  challenge  the  actions  of  the  

International  Airports  Authority  of  India,  which  

was an instrumentality or agency of the Government.  

It  was  held  that  where  the  Corporation  is  an  

instrumentality or the agency of the Government, it  

would be subject to the same    constitutional or  

public  law  limitations  as  the  Government,  which  

cannot  act  arbitrarily  and  enter  into  a  

relationship with any person it likes at its sweet  

will, but its action must be in conformity with  

some principle which meets the test of reason and  

relevance.   Reference  was  also  made  to  the  

decisions  of  this  Court  in  the  cases  of  E.P.  

Royappa Vs.  State of Tamil Nadu [(1974) 4 SCC 3]  

and Maneka Gandhi Vs. Union of India [(1978) 1 SCC  

248], wherein it was held that Article 14 strikes  

at  arbitrariness  in  State  action  and  ensures  

fairness and equality of treatment.  It requires  

that State action must not be arbitrary, but must

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be based on some rational and relevant principle  

which is non-discriminatory.  

37.  In some of the other cases, learned counsel  

appeared and pointed out that the applications for  

dealership had been made during the window period  

between  8.10.2002  and  5.2.2003,  making  them  

eligible  for  being  considered  for  grant  of  

dealership on the strength of the Policy, which was  

then  prevalent  and  was  subsequently  stayed  on  

5.2.2003 and was replaced by the decision taken on  

6.9.2006 to phase out the existing COCO Units.

38. Special  Leave  Petition  (C)  No.9010  of  2008  

(now Appeal) arising out of Writ Appeal No.2445 of  

2007, from the Delhi High Court is a case similar  

to that of Mohd. Jamal.  Appearing on behalf of the  

Appellant,  Satyanarayan  Kumar  Singh,  Mr.  Ravi  

Shankar Prasad, learned Senior Advocate, repeated  

the  submissions  made  by  Mr.  Pradip  Ghosh.   Mr.

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Prasad submitted that although the Appellant had  

applied  for  full  dealership,  the  COCO  unit  was  

thrust upon him and the same had to be reconverted  

into the Appellant's claim for full dealership.

39. Appearing  for  two  of  the  Appellants  in  

respect  of  Civil  Appeal  @SLP(C)No.20908  of  2011  

(Kamar Ahmed Yusuf Lulat & Ors. Vs. IBP Co. Ltd. &  

Ors.)  and  Civil  Appeal  @SLP(C)No.22831  of  2011  

(Jaswantsinh A Rana (D) by LRs. & Ors. Vs. IBP Co.  

Ltd.  &  Ors.),  Mr.  Sunil  Gupta,  learned  Senior  

Advocate, also based the claim of the Appellants on  

the doctrine of promissory estoppel.  In fact, the  

case of the two Appellants is the same as the case  

of  most  of  the  Appellants  and  Writ  Petitioners,  

where the learned Single Judge had allowed the Writ  

Petitions  while  the  Division  Bench  reversed  the  

same on the ground that all the writ petitions had  

been disposed of by a common reasoning.  Mr. Gupta  

contended  that  the  new  policy  formulated  on  and

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from 10th August, 2002, was really a culmination of  

the  earlier  policy  of  the  Oil  Companies  dated  

31.5.2001,  which  provided  for  grant  of  full  

dealership in respect of the lands offered by new  

applicants.  As in the case of the other claimants,  

the  claim  of  the  Appellant  did  not  fructify  on  

account of the change in policy and was kept in  

abeyance also, as there was a further change in the  

policy by which the Oil Companies decided to phase  

out  the  COCO  units  which  were  being  run  by  

Maintenance and Handling Contractors.  Mr. Gupta  

referred to the "comfort letters", which had been  

provided  by  the  Government,  assuring  the  land  

owners that the decision to run the COCO units with  

the  help  of  the  Maintenance  and  Handling  

Contractors, was only a temporary arrangement and  

as soon as it would be possible, the land owners  

would be given the first option for dealership in  

respect  of  the  retail  outlet.   Mr.  Gupta  also

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relied  on  the  decisions  of  this  Court  on  the  

doctrine  of  promissory  estoppel  and  legitimate  

expectation  cited  by  Mr.  Pradip  Ghosh,  Mr.  Rana  

Mukherjee and the other learned counsel and urged  

that the directives issued by the Oil Company on  

6.9.2006 were liable to be quashed.

40. Appearing  for  several  of  the  claimants  for  

dealership,  Mr.  Jaideep  Gupta,  learned  Senior  

Advocate,  submitted  that  the  facts  in  all  these  

cases  were  similar  to  the  matters  in  which  

submissions  had  earlier  been  made.   However,  in  

some  of  the  matters,  Mr.  Gupta  urged  that  the  

decision to grant dealership had been taken before  

8.10.2002 and nowhere in the Letters of Intent, is  

there any indication that the retail outlets were  

COCO Units.  However, after the change in policy,  

the concept of COCO Units was introduced and the  

nominees  of  the  land  owners  were  appointed  as  

Maintenance  and  Handling  Contractors  to  run  the

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said outlets.  Thus, there was a tenuous connection  

between the execution of the lease documents and  

the grant of Maintenance and Handling Contracts.  

Mr. Gupta submitted that apparently, the separation  

of  the  lease  from  the  Maintenance  and  Handling  

Contracts, was done with the deliberate intention  

that the land owners would not have any role to  

play with the running of the outlet till the matter  

relating  to  dealership  of  the  retail  outlet  was  

settled.

41. Mr. Gupta also adopted the submissions made by  

Mr. Pradip Ghosh, learned Senior Advocate for the  

Appellants and urged that the decision taken by the  

Oil Companies not to grant dealerships in respect  

of the COCO Units ran counter to the fact situation  

which  would  indicate  that  the  Oil  Companies  had  

intended to grant dealership to the land owners,  

which would be evident from the following summary  

of facts :-

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(a) While in most cases, the issuance of the  

Letters  of  Intent  were  pending,

Maintenance and Handling Contracts were   

given to run the retail outlets to the   

nominee and/or near relation of the land  

owners.

(b) The rents initially asked for by the land  

owners for grant of lease for the lands   

offered for setting up the retail outlets   

were substantially reduced when the lease  

deeds were executed.   

(c) The investments made by the landlords in  

making the plots ready for setting up the  

petrol pumps.

(d) Correspondence  exchanged  between  the   

parties.

(e) Existence of the policy to offer the land  

owners the right of first refusal for the

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Maintenance  and  Handling  Contracts   

prior to grant of dealership.

(f) Annual grant of dealership.

42. Mr.  Gupta urged that the lease deeds executed  

between the parties do not represent the totality  

of  the  matter,  but  is  only  a  part  of  the  

transaction.  Mr. Gupta submitted that the cases of  

the claimants were clearly covered by the doctrine  

of promissory estoppel and as had been urged by Mr.  

Ghosh and the other learned counsel, the decision  

of the Oil Companies arrived at on 6.9.2006 not to  

grant any further dealership but to operate through  

COCO Units, was bad and was liable to be quashed.   

43. In all the other cases, the fact situations  

were  almost  identical  as  were  the  submissions  

advanced on their behalf.   The Gujarat matters  

which were taken up in the said bunch were not very  

different  from  the  other  matters  wherein  also

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applications for grant of dealership had been made  

within the window period when the Policy relating  

to  grant  of  dealership  was  subsisting  and  steps  

similar to those taken in the other matters were  

also  taken  with  regard  to  the  Special  Leave  

Petitions  filed  against  the  change  in  Policy  

contained in the Notification dated 6.9.2006.   

44. Appearing for the Indian Oil Corporation, the  

learned Attorney General confined his submissions  

to the legal issues raised during the hearing of  

this batch of Appeals and left it to Ms. Meenakshi  

Arora, learned Advocate, to deal with the factual  

aspect.

45. On the question of the common grounds taken  

on  behalf  of  the  Appellants  and  the  Writ  

Petitioners  that  their  respective  cases  were  

covered by the doctrine of promissory estoppel, the  

learned  Attorney  General  submitted  that  such  a

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stand was entirely misconceived.  Once an Agreement  

is entered into, the parties are bound by the terms  

of the said Agreement which extinguishes any claim  

of promissory estoppel, which may have arisen prior  

to the signing of the Agreement.  Referring to the  

application made by the Appellant, Mohd. Jamal, on  

14th March, 2003, providing the specifications of  

the land and indicating that the same, including  

the  building  thereupon,  had  been  made  ready  and  

that there was no problem in giving the same to the  

Company for running the petrol pump in any manner  

it liked, the learned Attorney General submitted  

that the same destroyed any promise that may have  

been made before the aforesaid offer was made by  

the  Appellant.   The  learned  Attorney  General  

pointed out that in the said letter, while offering  

the land and structures thereon in question to the  

Oil Company to establish a petrol pump and to run  

it  in  any  manner  it  liked,  certain  terms  and

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conditions  had  been  indicated  by  the  Appellant,  

including  the  monthly  rental  and  the  increments  

thereof  after  every  5  years,  together  with  the  

period of the lease with an option of renewal.  The  

learned Attorney General submitted that once such  

an offer had been made, which was supported by an  

affidavit affirmed and filed by the land owner's  

nominee  for  being  awarded  the  Maintenance  and  

Handling Contract, wherein it was undertaken that  

the said nominee would have no claim on the retail  

outlet dealership at any time and would not seek  

any legal help at a future date to stall smooth  

handing  over  of  the  site  as  and  when  desired,  

nothing remained of the promise, if such an offer  

had  at  all  been  made  and  the  same  could  be  

construed  to  be  an  offer  which  attracted  the  

doctrine  of  promissory  estoppel  or  equitable  

estoppel.  

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46. The learned Attorney General submitted that  

the aforesaid letter was written by the Appellant  

at a point of time when the Policy dated 8.10.2002  

had  already  been  suspended.   Further,  the  said  

letter had not only been suppressed but had even  

been  disowned  by  the  Appellant.   Even  after  

disowning the said letter, the Appellant has again  

relied on the same in order to make out a case that  

he  had  agreed  to  make  the  said  offer  on  the  

assurance given by the Oil Company that he would be  

granted full dealership once the proceedings before  

the  Court  were  cleared.   The  learned  Attorney  

General pointed out that in none of the documents  

executed between the Appellants had any foundation  

been  laid  in  support  of  the  assertion  that  a  

compromise had been made that a dealership would be  

given  to  land  owners  and  that  the  awarding  of  

Maintenance  and  Handling  contracts  was  only  an  

interim  measure.   The  learned  Attorney  General

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submitted  that  given  the  disputed  nature  of  the  

claim, the matter cannot be gone into in a  Writ  

Petition which was, therefore, misconceived.   In  

this regard, the learned Attorney General referred  

to the decision of this Court in A.P. Transco Vs.  

Sai Renewable Power (P) Ltd.[(2011) 11 SCC 34], in  

which while considering the doctrine of promissory  

estoppel and legitimate expectation  in regard to  

various communications extending certain incentives  

to producers of electricity from non-conventional  

energy resources, it was held that the parties had  

voluntarily signed the Power Purchase Agreements by  

which they were governed and neither the doctrine  

of promissory estoppel nor legitimate expectation  

could, therefore, have any application in regard to  

the correspondence exchanged between the parties,  

whereby  the  Government  had  extended  certain  

incentives  to  the  producers  of  electricity  from  

non-conventional  energy  resources.   The  learned

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Attorney General also referred to the decision in  

Bannari  Amman  Sugars  Ltd. Vs.  Commercial  Tax  

Officer [(2005)  1  SCC  625];  State  of  Himachal  

Pradesh Vs.  Ganesh  Wood  Products [(1995)  6  SCC  

363]; Kasinka Trading Vs. Union of India [(1995) 1  

SCC 274] and Sethi Auto Service Station Vs. D.D.A.  

[(2009) 1 SCC 180],wherein the same doctrine had  

been considered.  

47. Supplementing  the  submissions  made  by  the  

learned  Attorney  General,  Ms.  Meenakshi  Arora,  

learned Advocate, submitted that the cases being  

heard in this batch of matters can be divided into  

four categories, namely:

(i) Agreements  entered  into  between  the  Oil  

Companies  and  the  land  owners  prior  to  

8.10.2002;

(ii) Maintenance  and  Handling  contracts  signed  

between 8.10.2002 and 5.2.2003;

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(iii) Offers  made  by  land  owners  and  lease  

Agreements  executed  within  the  aforesaid  

period;

(iv) Petrol  pumps  commissioned  upon  lease  being  

executed  after  the  new  Policy  came  into  

existence on 5.2.2003.

48. Ms. Arora submitted that prior to the Policy  

No. 319 dated 8.10.2002, the Oil Companies granted  

dealership  in  respect  of  retail  outlets  on  the  

basis of applications invited for the said purpose.  

Several  land  owners  had  responded  to  the  said  

applications and had offered their lands to the Oil  

Companies  for  setting  up  retail  outlets  on  main  

Highways.   However,  the  Oil  Companies  were  also  

considering a scheme whereby they would be able to  

retain control over the various retail outlets by  

operating  them  as  Company  Owned  and  Company  

Operated (COCO) units, which provided for retail  

outlets to be owned fully by the Oil Companies, but

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the  operation  thereof  was   outsourced  to  M&H  

contractors,  who  would  not  have  any  right  to  

dealership of the outlet.

49. Ms.  Arora  submitted  that  the  cases  of  the  

applicants in the third category would have to be  

treated  differently  from  applicants  whose  claims  

were based on decisions to grant dealership which  

had been arrived at prior to 8.10.2002.  In certain  

cases, on the basis of the leases granted, petrol  

pumps  had  already  been  commissioned  and  were  

functioning, but with the help of M&H contractors.  

Ms. Arora submitted that once the policy to grant  

full dealerships was suspended and the new policy  

was adopted in September, 2003, barring a few cases  

no further dealerships were given in respect of the  

retail outlets and all the units were, thereafter,  

run  as  Company  Owned  and  Company  Operated  units  

where the Company retained control of the outlets,

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but left the day to day management thereof to the  

contractors.

50. Taking  the  case  of  Mohd.  Jamal,  Ms.  Arora  

submitted  that,  as  was  submitted  by  the  learned  

Attorney General, the Appellant, whose application  

for grant of Letters of Intent was pending, entered  

into a separate Agreement with the Oil Company on  

14.3.2003, when the earlier policy had already been  

discontinued  and  after  execution  of  the  lease,  

named  his  brother,  Mohd.  Ishtiaq  Alam,  as  his  

nominee,  to  function  as  the  M&H  contractor  in  

respect of the outlet established on his land.  Ms.  

Arora submitted that  Mohd. Ishtiaq Alam was found  

suitable to act as M&H contractor and a Agreement  

was, therefore, executed on 29.3.2003, which also  

included  an  affidavit  affirmed  by  Mohd.  Ishtiaq  

Alam.   Pointing  to  the  contents  of  the  said  

letters, which had been referred to by the learned  

Attorney  General,  Ms.  Arora  submitted  that  the

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Appellant executed the lease Agreement, being fully  

aware of the consequences thereof, and so was the  

nominee  who   affirmed  an  affidavit  clearly  

indicating that he was only managing the unit and  

had no claim to the dealership of the said outlet  

in lieu of being awarded the contract.

51. Ms.  Arora  urged  that  once  Policy  No.MDPM-

319/02  dated  8.10.2002,  was  replaced  by  the  new  

Policy  dated  19.9.2003,  all  future  transactions  

between  the  Appellants/Petitioners  and  the  Oil  

Companies would have to be considered in the light  

of the new policy, which dealt with COCO outlets  

only.   Ms.  Arora  submitted  that  as  the  lease  

agreement between Md. Jamal and the Oil Company was  

executed  after  the  policy  dated  8.10.2002  was  

suspended, it was a clear indication that the land  

owner was aware of his actions in offering his land  

to  the  companies  for  establishing  a  petrol  pump  

thereupon, without any conditions attached except

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for the rental and period of the lease.  Even, if  

Ms. Arora's submission that the appointment of M&H  

Contractors was connected with the signing of the  

lease agreement is to be accepted, even then the  

land owner could have no claim to the dealership in  

respect of the said retail outlet being operated as  

a  COCO  unit.   Ms.  Arora  submitted  that  as  has  

already been indicated hereinbefore, the concept of  

COCO units was that the land and the infrastructure  

would either be owned or taken on long-term lease  

by the oil company but the operation of the petrol  

pump would be outsourced to a M&H Contractor, who  

submitted  an  affidavit  affirmed  by  him  while  

applying for the M&H Contract that he neither had  

nor  would  in  future  have  any  claim  to  the  

dealership of the said retail outlet.   

52. Ms. Arora submitted that the case made out by  

the land owners after the grant of M&H Contracts,  

was not bona fide, and, in any event, could not be

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related  to  the  transactions  under  the  earlier  

policies  which  had  been  replaced  by  fresh  

agreements entered into by the parties on the basis  

of the new policy.  Ms. Arora urged that neither  

was  the  doctrine  of  promissory  estoppel  nor  

legitimate  expectation  applicable  in  the  instant  

case  where  there  was  no  foundation  for  such  a  

claim.  Ms. Arora reiterated her submissions that  

Policy No. MDPM-319/02 dated 8.10.2002, was related  

to selection of dealers and not to COCO outlets and  

it was denied that the Appellant had leased out the  

property  upon  any  understanding  that  he  or  his  

nominee would be allowed to run the retail outlet.  

On the other hand, the land owner was not even  

eligible to be appointed as the M&H Contractor.   

53. Ms.  Arora  lastly  submitted  that  since  the  

present batch of matters related to COCO outlets,  

the question of returning the demised land to the  

land owner did not also arise.  Ms. Arora submitted

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that the entire exercise was nothing but an attempt  

on the part of the land owners, who had consciously  

entered into lease agreements, to try and resile  

from the contract once it became evident that there  

was no likelihood of a further change in the policy  

for  grant  of  dealership  in  respect  of  the  COCO  

units.   

54. Referring to the decision of this Court in  

Sethi Auto Service Station (supra), Ms. Arora urged  

that the doctrine of legitimate expectation, had  

been  considered  in  the  said  case  where  the  

Appellant's claim was based on an old policy and it  

was  held  that  the  Appellant  merely  had  an  

expectation  for  being  considered  for  resitement.  

It was also held that a person basing his claim on  

the  doctrine  of  legitimate  expectation  has  to  

establish  that  he  had  relied  on  the  said  

representation  and  had  altered  his  position  and  

that  denial  of  such  expectation  worked  to  his

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detriment.  The Courts can interfere only if the  

decision  taken  by  the  authority  is  found  to  be  

arbitrary, unreasonable or in gross abuse of power  

or in violation of principles of natural justice  

and  contrary  to  public  interest.   It  was  also  

reiterated  that  the  concept  of  legitimate  

expectation has no role to play where said action  

is  a  matter  of  public  policy  or  in  the  public  

interest,  unless,  of  course,  the  action  taken  

amounted to an abuse of power.  It was further  

emphasized that in order to establish a claim of  

promissory estoppel, it must be proved that there  

was such a definite promise and not any vague offer  

which could not be enforced.  In this regard, Ms.  

Arora  also  submitted  that  the  "comfort  letters"  

referred to by learned counsel for the Appellants,  

purported  to  have  been  issued  by  the  State  of  

Gujarat, would have no avail as a promise made in  

such a letter does not constitute a promise which

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could be enforced.  Ms. Arora submitted that the  

Appeals and Petitions were liable to be dismissed  

with costs.    

55. Learned  Additional  Solicitor  General,  Mr.  

P.P. Malhotra, appearing for the Union of India,  

submitted that the dispute involved in this batch  

of matters was between the Oil Companies and the  

land owners with whom agreements had been entered  

into  by  the  Oil  Companies.  The  learned  ASG  

submitted that the Union of India has little to do  

with the dispute between the parties, except to the  

extent  that  it  has  been  given  a  supervisory  

function to ensure proper distribution of petrol  

and petroleum products.  Mr. Malhotra urged that  

anything which was not in public interest, but was  

likely  to  affect  the  public  interest,  cannot  be  

retained and has to be quashed.  As will be evident  

from  the  submissions  made  on  behalf  of  the  

respective parties, the case of the Appellants and

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the  Writ  Petitioners,  in  most  of  the  cases,  is  

based on the doctrine of promissory estoppel on the  

basis  of  a  promise  apparently  made  by  the  

Respondents to the land owners that they would be  

granted dealerships in lieu of the lands offered by  

them for setting up of the retail outlets.  From  

the  facts  as  disclosed,  there  is  sufficient  

evidence  to  indicate  that  initially  negotiations  

had  been  conducted  by  the  Oil  Companies  with  

aspiring land owners that in lieu of the lease to  

be granted they would be provided with dealerships.  

The applications made pursuant to the advertisement  

published  by  the  Oil  Companies  were  also  duly  

processed and were acted upon.  However, it is only  

the suspension of the Policy dated 8.10.2002, which  

prevented such dealerships for being given to the  

various applicants.   

56.  Upon deregularisation of the distribution of  

petroleum  products,  the  Oil  Companies  issued

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guidelines dealing with the procedure for locations  

outside the marketing plans. It was also stipulated  

that for the purpose of selection, the dealerships  

would be categorised as indicated in the guidelines  

and all retail outlets would be developed only on  

A/C sites basis, which finds place in Clause (2) of  

the guidelines.   

57. The  said  guidelines  referred  to  grant  of  

dealership which is completely different from the  

grant of long-term leases by the land owners to the  

Oil  Companies  upon  the  condition  that  the  same  

could be used by the lessees in any way they liked,  

which  included  the  right  to  sublet  the  demised  

plot.  The concept of Company Owned and Company  

Operated  outlets  was  sought  to  be  introduced  on  

6.9.2003, in supersession of Policy No.MDPM-319/02  

dated 8.10.2002 and the two cannot be co-related  

unless a link can be established by the Appellants  

that  they  had  entered  into  the  lease  agreements

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with the Oil Companies upon the understanding that  

once  the  earlier  policy  was  restored,  the  land  

owners would be given the option of having the COCO  

units converted into regular retail outlets.   

58. In order to appreciate the difference between  

the two concepts, it has to be understood that the  

concept  of  a  dealership  in  respect  of  a  retail  

outlet is completely alien to the concept of a COCO  

unit.  While the former deals with the right of the  

dealer to independently operate the retail outlet,  

in the case of a COCO unit, the entire set up of  

the retail outlet is owned by the Oil Companies and  

only the day-to-day operation thereof is outsourced  

to a M&H Contractor.  With the discontinuance of  

the  earlier  policy  of  granting  dealerships  in  

respect of retail outlets and the introduction of a  

new policy awarding M&H Contracts in respect of the  

COCO outlets, in our view, the land owners who had  

entered  into  fresh  lease  agreements  after  the

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policy  to  grant  dealerships  had  been  suspended,  

cannot now claim any right on the basis of the  

earlier  policy  in  the  absence  of  any  Letter  of  

Intent  having  been  issued  thereunder.   Had  any  

Letter  of  Intent,  which  tantamounts  to  grant  of  

dealership, been issued and then in respect of the  

same  lands  COCO  units  were  established,  the  

situation  would  have  been  different.   Placed  in  

such a position, the land owners cannot claim any  

relief in these proceedings and, if any loss or  

damages have been suffered by them on account of  

the  assurance  earlier  given  regarding  grant  of  

dealership, particularly in making the sites ready  

therefor, the remedy of such applicants would lie  

elsewhere.  The  policy  guidelines  and,  in  

particular, Clauses 1.2 and 1.2.2 thereof are not  

available to the Appellants and the Petitioners in  

these proceedings, which are concerned mainly with

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COCO  units  which  have  no  connection  with  the  

concept of dealership.   

59. We are inclined to hold that the doctrine of  

promissory estoppel and legitimate expectation, as  

canvassed  on  behalf  of  the  Appellants  and  the  

Petitioners,  cannot  be  made  applicable  to  these  

cases where the leases have been granted by the  

land  owners  on  definite  terms  and  conditions,  

without  any  indication  that  the  same  were  being  

entered into on a mutual understanding between the  

parties that these would be temporary arrangements,  

till the earlier policy was restored and the claim  

of the land owners for grant of dealership could be  

considered afresh.  On the other hand, although,  

the  nominees  of  the  lessors  were  almost  in  all  

cases  appointed  as  the  M&H  Contractors,  that  in  

itself cannot, in our view, convert any claim of  

the land owner for grant of a permanent dealership.  

As has been indicated hereinbefore, even the M&H

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Contractor had to submit an affidavit to the effect  

that he did not have and would not have any claim  

to the dealership of the retail outlet and that he  

would not also obstruct the making over possession  

of the retail outlet to the Oil Company, as and  

when called upon to do so.  The decisions cited on  

behalf  of  the  Appellants/Petitioners,  are  not,  

therefore, relevant for a decision in these cases.  

Although, the Appeals have been filed on account of  

the  denial  to  the  land  owners  of  the  grant  of  

dealership in respect of the lands demised by them  

to the Oil Companies, the entire focus has shifted  

to  COCO  outlets  on  account  of  the  fresh  lease  

agreements entered into by the Appellants with the  

Oil  Companies  which  has  had  the  effect  of  

obliterating  the  claim  of  the  land  owners  made  

separately  under  earlier  lease  agreements.   The  

claims of the Appellants/Petitioners in the present  

batch of matters have to be treated on the basis

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of the agreements subsequently entered into by the  

Oil Companies, as submitted by the learned Attorney  

General.

60. These Appeals and Petitions must, therefore,  

fail and are dismissed.  C.A. No.5259 of 2013 filed  

by the Indian Oil Corporation, stands allowed.  The  

four Transfer Petitions, being T.P.(C) Nos. 971-973  

of 2010 and T.P.(C) No. 1260 of 2011, which were  

heard along with these Appeals and Petitions, are  

allowed.  The Writ Petitions, which are transferred  

as a consequence thereof, are also dismissed along  

with other matters.  Accordingly, the Transferred  

Cases, arising out of T.P.(C) Nos. 971-973 of 2010  

and  T.P.(C)  No.  1260  of  2011,  are  disposed  of.  

However, it will be open to the Appellants and the  

Petitioners  to  approach  the  proper  forum  in  the  

event  they  have  suffered  any  damages  and  loss,  

which they are entitled to recover in accordance  

with law.

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61. Having regard to the peculiar facts of these  

cases,  the  parties  are  left  to  bear  their  

individual costs.   

...................CJI.    (ALTAMAS KABIR)

.....................J.  (J. CHELAMESWAR)

New Delhi Dated: July 8, 2013.

CORRIGENDUM No.F.3/Ed.B.J./48/2013 dated 31.07.2013 issued  

(in  judgment  delivered  by  ALTAMAS  KABIR,  CJI.)(reportable  -450/2013)  In  Page  No.69,  Para No.60, Line No.2 of para,  FOR 'are dismissed. The  four...' READ:' are dismissed.  C.A. No.5259 of 2013  filed  by  the  Indian  Oil  Corporation,  stands  allowed. The four...'