IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 15.12.2009 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.NOs.34999 to 35004 of 2005, 41313 of 2006, 6116 to 6118, 6409, 8017,11532, 14829, 18392, 21415, 21477 and 24341 of 2007 and 640 of 2008 and 19757 of 2007 and M.P.NOS.1,1 AND 1,2,2,1,1,1 and 1 OF 2007 and 1 of 2008 and 1 of 2007 W.P.NOS.34999 TO 35004 OF 2005: H.P. Auto Care, Dealer, Hindustan Petroleum Corporation Ltd., operated by its Land Owner R.Ramkumar No.384,Thennampalayam, Palladam Road, Tiruppur-641 604 Coimbatore District .. Petitioner in W.P.No.34999 of 2005 H.P.Fuel Centre, Dealer, Hindustan Petroleum Corporation Ltd., operated by its Land owner, K.Ponnusamy Rakkiapalayam, Kangeyam Road, Tiruppur-641 606, Coimbatore District. .. Petitioner in W.P.No.35000 of 2005 H.P.Co Co., Dealer, Hindustan Petroleum Corporation Ltd. Operated by its Land owner R.Dhanalakshmi, S.F.No.385/2, Thippampatty, Pollachi, Coimbatore District .. Petitioner in W.P.No.35001 of 2005 Udumalapet Taluks Lorry Urimaiyalargal Pothunala Trust, Dealer, Hindustan Petroleum Corporation Ltd. Rep. By its Land Owner, A.Thangaraj S.F.Nos.254,256, Pollachi Road, Udumalpet-642 126, Coimbatore District .. Petitioner in W.P.No.35002 of 2005 H.P.Autho Services, Dealer, Hindustan Petroleum Corporation Ltd. operated by its Land Owner, K.S.Selvaraju, 2/567, K.S.S.Garden, Mangalam Road, Tiruppur-641 687, Coimbatore District. .. Petitioner in W.P.No.35003 of 2005 H.P.Co Co Outlet, Dealer, Hindustan Petroleum Corporation Ltd. operated by its Land Owner, R.Natarajan T.S.No.101, Palakad Road, Gandhi Nagar,Pollachi, Coimbatore District. .. Petitioner in W.P.No.35004 of 2005 Vs. 1.The Secretary, Ministry of Petroleum, Oil and Natural Gas, Government of India, New Delhi. 2.The Chairman, Hindustan Petroleum Corporation Limited, Petroleum House, No.17,J.Tata Road, Mumbai-400 020. 3.The General Manager-South Zone, Hindustan Petroleum Corporation Ltd. 4th Floor, Thalamuthu Natarajan Building, No.8, Gandhi Irwin Road, Egmore, Chennai-600 008. 4.The Senior Regional Manager, Coimbatore Regional Office, Hindustan Petroleum Corporation Ltd., 333,Cross Cut Road, Coimbatore-641 012. .. Respondents in
W.P.Nos.34999,35000,35001, 35002,35003,35004 of 2005
W.P.No.41313 of 2006, 6116 to 6118, 14829,
18392, 21477 and 24341 of 2007 and 640 of 2008:
1.V.Balakrishnan,
Land Owner,
IBP Auto Services,
No.37-38,Velacherry Main Road,
Balaiah Garden,Madipakkam,
Chennai-600 091.
2.V.Chandra,
Land Owner,
IBP Auto Services
Dharmapuri Main Road,
Pochampalli-635 206,
Krishnagiri District.
3.B.Devarajan,
Land Owner,
IBP Auto Services,
Pondy Bangalore Highway,
(Opp.)Boys High School,
Singarapettai-635 307,
Krishnagiri District.
4.N.Kandasamy,
Land Owner,
IBP Auto Services
Manianoor Village & Post,
Paramathi Velur-637 201,
Namakkal District.
5.K.Palanisamy,
Land Owner,
IBP Auto Services
Kalarangadu Minnampalli Village,
Vaiyaappamalai Post,
Tiruchengode Taluk,
Namakkal District.
6.C.Pannirselvam,
Land Owner,
IBP Auto Services
Sangagiri Main Road,
Karuveppampatti,
Tiruchengode-637 204.
Namakkal District.
7.P.Kalidass,
Land Owner,
IBP Auto Services,
Palani Road,
Near Samathuvapuram,
S.V.Mills Post,
Udumalpet-642 126.
Coimbatore District.
8.K.Tamil Selvi,
IBP Auto Services,
168,Dhali Road,
Udumalpet-642 126.
Coimbatore District.
9.S.Selvaraj,
Land Owner,
IBP Auto Services,
Cuddalore Main Road,
Kattukottai,
Vada Chennimalai,
Attur,Salem District.
10.J.S.RAdhakrishnan,
Land Owner,
IBP Auto Services
Hosur Road,
Royakottai,
Krishnagiri District.
11.A.Sameela Kouser,
Land Owner,
IBP Auto Services
Krishnagiri Main Road,
Addakkurukki Village,
Hosur Taluk,
Krishnagiri District.
12.B.Vijaya Babu,
Land Owner,
IBP Auto Services
Tukkapet Village,
Pondy-Krishnagiri Road,
Chengam,
Tiruvannamalai District.
13.Sri Jaganatha Ginning & Oil Mills,
Land Owner,
IBP Auto Services,
1,Avarampalayam Road,
Sidhapudur,
Coimbatore.
Rep. By its Partner,
D.Lakshmi Narayanasamy.
14.T.Amirthavalli,
Land Owner,
IBP Auto Services
Naranapuram Post,
Palladam,
Coimbatore District.
15.Dana Lekha,
Land Owner,
IBP Auto Services
Pondy Cuddalore Road,
Toll Gate,
Manaveli Village,
Pondicherry-8.
16.C.Arunachalam,
Land Owner,
IBP Auto Services
Ozunglnachery,
Kanyakumari District .. Petitioners in
W.P.No.41313 of 2006
S.Indira,
Land Owner,
IBP Auto Services
S.No.1/2,Thiruvannamalai main Road,
Chellankuppam Village,
Thirukovilur Taluk,
Villupuram District. .. Petitioner in
W.P.No.6116 of 2007
R.Subburayalu,
Land Owner,
IBP Auto Services,
S.No.68/4A & S.No.58/4B
A.Puthur Village,
Elavarasur Kottai,
Ulundurpet Taluk,
Villupuram District .. Petitioner in
W.P.No.6117 of 2007
R.Subburayalu,
Land Owner,
IBP Auto Services,
S.No.140/1B2,
N.H.68, Chennai-Salem main Aorad,
Neelamangalam Village,
Kallakurichi Taluk,
Villupuram District. .. Petitioner in
W.P.No.6118 of 2007
1.P.Mangaiarkarassy
2.L.Periyasamy
3.P.Dhanalekha
4.Minor P.Dhania,
rep. By her father and
natural Guardian
L.Periyasamy
Joint Land owners
IBP Auto Services,
S.F.No.47/3,46/2,
Near Boat House,
E.C.R. Road,
Manaveli Village,
Ariyankuppam Post,
Pondicherry-605 007. .. Petitioners in
W.P.No.14829 of 2007
Syed Shah Jameeluddin
Land Owner,
IBP Auto Services,
S.No.215/2,Kundarapalli Village,
Krishnagiri Taluk &
District. .. Petitioner in
W.P.No.18392 of 2007
G.Bhuvaneswari,
Land Owner,
IBP Auto Services,
S.No.274/4 Part of No.137,
Velacherry,
Chennai-600 042. .. Petitioner in
W.P.No.21477 of 2007
J.Ramesh Chowdary,
Land Owner,
IBP Auto Services,
S.No.233/1 (Part),
R.S.No.151, T.S.No.12,
Block No.28,
Door No.35,
Jawaharlal Nehru Salai,
(Inner Ring Road)
Anna Nagar West,
Chennai-600 040. .. Petitioner in
W.P.No.24341 of 2007
1.C.S.Natarajan.
2.N.Lakshmi. .. Petitioners in
W.P.No.640 of 2008
Vs.
1.The Secretary,
Ministry of Petroleum,
Oil and Natural Gas,
Government of India,
New Delhi.
2.The Chairman,
IBP Co. Limited,
Nirmal Chandra Street,
Kolkatta-700 013.
3.The General Manager-South Region
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031. .. Respondents 1 to 3 in all the petitions
4.The Senior Marketing Manager,
Tamil Nadu Region,
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031. .. Respondent No.4 in
W.P.No.41313 of 2006
4.The Deputy Manager,
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031. .. Respondent No.4 in
w.P.Nos.6116,6117 and
6118,14829 of 2007
4.The Divisional Manager,
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031. .. Respondent No.4 in
W.P.No.18392,21477 of 2007
1.The Secretary,
Ministry of Petroleum,
Oil and Natural Gas,
Government of India,
New Delhi.
2.The Managing Director,
IBP Co. Limited,
Nirmal Chandra Street,
Kolkatta-700 013.
3.The General Manager-South Region
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031.
4.The Divisional Manager,
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031. .. Respondents in
W.P.No.24341 of 2007
1.The Secretary,
Ministry of Petroleum,
Oil and Natural Gas,
Government of India,
New Delhi.
2.The Chairman,
IBP Co. Limited,
Nirmal Chandra Street,
Kolkatta-700 013.
3.The General Manager
IBP Co Limited,
Tamil Nadu State Office,
No.39,Nungambakkam High Road,
Chennai.
4.The Divisional Manager,
IBP Co Limited,
No.8/1079, Avinasi Road,
Coimbatore-16. .. Respondents in
W.P.No.640 of 2008
W.P.No.6409, 11532 of 2007:
S.Rajasekar .. Petitioner in
w.P.No.6409 of 2007
T.S.Thanikachalam .. Petitioner in
W.P.No.11532 of 2007
Vs.
1.Union of India,
represented by its Secretary,
Department of Petroleum &
Industrial Gases,
Shastri Bhavan, New Delhi.
2.Deputy General manager,
(Marketing),
I.B.P. Company Limited,
Head Office, Mumbai.
3.The General Manager-Southern Region
IBP Company Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031.
4.The Deputy General Manager,
Chennai Region,
IBP Company Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet, Chennai-600 031. .. Respondents
W.P.No.8017 of 2007:
1.G.S.Sampath
2.Mrs.Gunavathi Sampath .. Petitioners
Vs.
1.IBP Company having its
Regional Office at
No.10, Mayor Ramanathan Road,
Chetpet,
Chennai-31.
2.The Divisional Manager,
IBP Company Ltd.
Madurai Divisional Office,
Plot Nos.3 and 4
Ponmeni Byepass Road,
Madurai-16. .. Respondents
W.P.No.21415 of 2007:
K.V.Chandramohan .. Petitioner
Vs.
1.The General Manager,
South Region IBP Co. Ltd.,
10, Mayor V.R.Ramanathan Road,
Chetpet, Chennai-600 031.
2.The Divisional Manager,
IBP Company Ltd.,
10, Mayor V.R.Ramanathan Road,
Chetpet, Chennai-600 031.
3.The Senior Marketing Manager,
Tamil Nadu Region,
IBP Co. Ltd.,
10, Mayor V.R.Ramanathan Road,
Chetpet, Chennai-600 031. .. Respondents
W.P.No.19757 of 2007:
Sathyamangalam Lorry Owners'
Association rep. By its President
S.K.Ponnuswamy
105, Mysore Trunk Road,
Rangasamudram
Sathyamangalam,
Namakkal 638 402 .. Petitioner
Vs.
1.The Union of India rep. By
its Secretary to Government,
Ministry of Petroleum, Oil and
Natural Gas, Sastribhavan,
New Delhi.
2.The Indian Oil Corporation Ltd.,
Nungambakkam High Road,
India Oil Bhavan,
Madras.
3.IBP Company Ltd., IBP House,
34-A, Nirmal Chandra Street,
Kolkatta.
4.IBP Company Ltd.
Southern Regional Office,
10, Mayor V.P.Ramanathan Road,
Chetpet, Chennai-31.
5.IBP Company Ltd.,
Divisional Office,
10, Mayor V.R.Ramanathan Road,
Chetpet, Chennai-31. .. Respondents.
W.P.Nos.34999,35000,35001,35002,35003 and 35004 of 2005, 41313 of 2006, 6116 to 6118,14829,18392,21415,21477 and 24341 of 2007 and 640 of 2008 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of mandamus to direct the respondents to allot the retail outlets dealership to the petitioners on Land Owners Category as in the case of Indian Oil Corporation and Bharat Petroleum.
W.P.No.6409, 11532 of 2007 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorarified mandamus to call for the entire records relating to the letter No.P-19011/9/2001-IOC dated 6.9.2006 and issued by the Secretary, Government of India, Ministry of Petroleum and Natural Gas, New Delhi, the first respondent herein and the letter No.JRO/COCO (No.155/06-07) dated 13.10.2006 and issued by the second respondent and to quash the same insofar as the petitioners are concerned and consequently direct the respondents 2 to 4 to consider and appoint the petitioners or their nominees as the dealer of IBP Company Limited retail outlet situated in S.Nos.215/2, 214/2 and 216/4A, Red Hills-Ikkadu Road, Tiruvellore Town, Tiruvallore Taluk and District, S.No.555/7 at NH-5, Sholavaram Bye-pass Road, Solavaram Village, Ponneri Taluk, Thiruvallure District under the land owners category as per the policy of the respondents in POLICY/MDPM No.319/02, dated 8.10.2002.
W.P.No.8017 of 2007 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorarified mandamus calling for the records of the second respondent herein relating to his proceedings in COCO/Lenavilakku dated 10.10.2006, quash the same and consequently direct the respondents to allot the retail outlet dealership in respect of Lenavilakku, Thirumayam Taluk, Pudukottai District of the respondents herein to the petitioners herein.
W.P.No.19757 of 2007 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of declaration declaring that action of respondents 2 to 4 in not applying the policy dated 8.10.2002 in ref. Policy/MDPM No.319/02 in respect of the retail outlet situated at Satyamangalam and further action in seeking to apply the revised policy of the first respondent dated 6.9.2006 regarding the appointment of regular dealer for the said outlet as arbitrary illegal colourable exercise of power violative of fundamental right guaranteed under Articles 14 and 19 of the Constitution of India and contrary to the policy of the first respondent dated 8.10.2002 and consequently direct the respondents to adhere to the policy dated 8.10.2002 by way of appointing petitioner as regular dealer in respect of the aforesaid retail outlet.
For Petitioners : Mr.V.P.Sengottuvel
in w.P.No.640 of 2008
Mr.S.Doraisamy
in W.P.Nos.41313/06, 6116 to 6118
of 2007, 34999 of 2005,14829,
18392,21477 and 24341 of 2007
Mr.V.T.Gopalan, SC
for Mr.V.Chandrakanthan
in W.P.No.6409/07,11532/07
Ms.AL.Gandhimathi,
in w.P.No.8017/2007
Mr.P.Jagadeesan in
W.P.No.21415 of 2007
Mr.R.Subramaniam in
W.P.No.19757 of 2007
For Respondents : Mr.T.R.Rajagopalan, SC
for Mr.R.Ravi in all petitions
Mr.Vijayan for
M/s.King & Patridge for RR3 and 4
in W.P.34999 of 2005
Mr.M.Gopikrishnan for R1
in W.P.No.34999 of 2005,11512/07,
18392 of 2007
– – – –
COMMON ORDER
Heard both sides. In all these writ petitions, the petitioners are the land owners and have given their lands for running retail outlets of the Indian Oil Corporation or Hindustan Petroleum Corporation Ltd. or IBP Co. Ltd., as the case may be, and are demanding grant of regular retail outlet dealership on the basis of land owners category. All these matters were heard on 20.11.2009 and orders were reserved.
2.In W.P.No.19757 of 2007, the said writ petitioner is one Sathyamangalam Lorry Owners’ Association represented by its President, seeking for a writ of declaration declaring that action of respondents 2 to 4 in not applying the policy dated 8.10.2002 in ref. Policy/MDPM No.319/02 in respect of the retail outlet situated at Satyamangalam and further action in seeking to apply the revised policy of the first respondent dated 6.9.2006 regarding the appointment of regular dealer for the said outlet as arbitrary, illegal, colourable exercise of power, violative of fundamental right guaranteed under Articles 14 and 19 of the Constitution of India and contrary to the policy of the first respondent dated 8.10.2002. The said writ petition was heard on 26.11.2009 and orders were reserved. A common order is being passed in all these writ petitions.
3.In many of the cases, the lease agreements have been entered into between the parties. Allotment of outlets was also made in favour of the petitioners. The lease has also been registered on several dates. The petitioners submitted that they were the owners of lands, in which retail outlets are operated. The Oil Companies, after taking the lands on lease, awarded dealership to the owners. The petitioners’ land were situated in vantage position. The lands were levelled with considerable extent to locate the retail outlets. The lease has also been signed for a long period, i.e. 15 to 20 years. After entering into the lease deeds, No Objection Certificates were obtained from the District Revenue Officer. Licence from the Fire Service, Electricity Supply from the Tamil Nadu Electricity Board and licence from the department of Explosives were also obtained.
4.It was also stated that the petitioners were directed to get appropriate clearance from the authorities under various labour enactments. It is only on complying with these conditions, a retail outlet is being operated either by the petitioners or their nominees, who are their close relatives. They have incurred considerable expenses. It is only on the basis of their implementing all these conditions, the retail outlets were allotted to be run by the petitioners. They were under the fond hope that they will be made as regular or permanent dealers. However, unlike in the past where the land owners who were allotted to run retail outlets, were made as regular dealers, the petitioners were not made as regular dealers, but kept as Company Owned Company Operated (COCO) retail outlets and that too on nominal rents being given to land owners.
5.The petitioners by leasing out their lands to the Petroleum companies on long lease and by the promise held out under various guidelines, have acquired a legal right and have claimed that they should be recognised as regular dealers. But, instead of recognising their vested right, the Oil companies were calling for fresh applications in respect of those retail outlets. This is contrary to the guidelines for selection of retail outlet dealers. Therefore, it was challenged on the ground that the oil companies cannot discriminate between one set of COCO operators and others, especially after commissioning of the outlets. In the lease agreements which the petitioners have entered into, were signed with the hope that the dealership will be issued in the name of the petitioners. Therefore, the respondents are estopped from giving dealership to any other persons.
6.It was during the month of October/November, 2003, the dealership policy was introduced and they commissioned new outlets. The petitioners were not given regular dealerships. They were informed that a new policy is being introduced and the existing COCOs were converted. The action of the respondents in not assigning the dealerships, but gainfully utilizing the lands given by the petitioners on nominal rents is not only arbitrary, but violative of Articles 19(1)(g) of the Constitution of India. It is under these circumstances, the writ petitions came to be filed.
7.In most of the writ petitions, interim orders have been granted by this court stating that as long as the writ petitions are pending, the Company Owned Company Operated Retail outlets would continue to operate and no final decision will be taken until the matters are disposed of by this court. It was also stated that if the petitioners are found to have committed any breach of terms and conditions, subject to which they have been permitted to operate, like adulteration of petroleum products, then the interim orders will not stand in the way of taking an appropriate action against them. In doing so, the Government of India guidelines, dated 6.9.2006 was recorded.
8.On notice from this court, the first respondent has filed a counter affidavit, dated 28.11.2006. In the counter affidavit, it was stated that the Administered Pricing Machanism (APM) in the Petroleum sector was dismantled with effect from 1.4.2002. The selection process of dealers/distributors was left to the Oil Marketing Companies (OMCs) themselves. The Government has no role to interfere with the selection process. The OMCs like Indian Oil Corporation Limited, Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd. and IBP Co. Ltd. enjoy commercial freedom in the matter of marketing/distribution of dealership products through their respective networks of retail outlet dealerships. The OMCs can choose their own locations for dealerships and can frame their own guidelines.
9.It was also stated that on 19.8.2003, the Ministry of Petroleum and Natural Gas had advised broad guidelines to the OMCs for selection of dealers/distributors. Thereafter, the companies framed their own guidelines. Subsequently, on 27.12.2004, the Central Government advised OMCs that they should temporarily suspend the allotment of dealerships under the land owners category in case it was to be done they must follow the transparent procedures like advertisements. It was also stated that after detailed discussions with the OMCs, the guidelines which provided allotment of dealerships under the land owners category without recourse to advertisements, was modified by a letter, dated 22.2.2005. By this letter, the OMCs were directed to follow advertisements route for such cases so that there will be transparency. This policy was once again reiterated on 17.11.2005. It was also advised that after the receipt of direct offers of lands and assessing the viability of location and if it is found to be viable, the OMCs must release advertisements in two leading newspapers having circulation in the area notifying that they have received offers of land for dealerships and invite for similar offers from others. The advertisement must also indicate that final selection of dealership will be on the basis of evaluation of land in respect of guidelines.
10.It was also stated that on 6.9.2006, the Government of India after due consideration with the OMCs provided broader guidelines for operation of retail outlets by OMCs and on the question of Company Owned Company Operated basis. The establishment of COCOs are done at the expenses of OMCs. It was also stated that there are two kind of COCOs, one is permanent and the other is temporary. The permanent COCOs are of strategic importance for the oil companies and they are operated permanently by the companies themselves with additional manpower through labour contractors. Temporary COCOS are operated temporarily by the companies through labour contractors till appointment of regular dealers.
11.Since huge investments are made by the companies for the procurement and establishment of temporary COCOs outlet, appointment of regular dealers is necessary. Therefore, it was decided to phase out of temporary COCOs outlets preferably within one year. It was also stated that the oil companies in respect of temporary COCOs retail outlets subject to suitability must first be handed over to the pending Letter of Intent (LOI) holders as per the priorities indicated such as Special Scheme the Kargil allottees, Discretionary quota scheme, Corpus Fund Scheme and other categories. In case no suitable LOI holdes are available to these categories, then dealerships should be advertised as per normal process. Since it was also felt that there are huge pendency of LOI holders, emergent steps to be taken to offer temporary COCOs retail outlet to LOI holders under the special scheme.
12.The Oil companies have also filed counter affidavits. In their counter affidavit, it was stated that the dealership selection policy implemented during September/October, 2003 provides for conversion of COCOS to regular dealerships as per paragraphs 4.3.13.2. Apart from tracing out the history of the policy taken by the Government and the oil companies, it was stated that all the temporary COCOs since their commissioning are operated through maintenance and handling contract (M & H) Contract. It was also stated that filling up the lands and construction of retention wall work were the condition agreed at the time of negotiations. Finalisation of lease, rentals, obtaining of NOCs and clearance were done as per the statutory approval. It was also stated that the M & H contractors have to satisfy the requirement of various statutory authorities. Though M&H contractor selection policy permitted the award of contractors to any suitable individuals like Fleet owners, truck operators, Taxi associations, such award of contract cannot be granted to land owners. It may be in case of some of the contractors who are friends of land owners, might have been selected as M&H contractors.
13.It was also stated that there was no written commitment to grant of dealerships. The petitioners should be aware of capital expenditure involved in providing lands. They have agreed for the specified rentals at the time of singing of lease. It was stated as the policy dated 8.10.2002 was in force, certain existing COCOs were converted to dealerships in favour of the land owners/nominees as per the policy. After the new policy of September/October, 2003, the award of dealership was done under the new policy. In September, 2006, the Government has issued guidelines providing for different mode of allotment. Since the companies were under the administrative guidance of the Government of India, they are bound to implement those guidelines. The petitioners did not have any enforceable legal right and there was no violation of any constitutional provision. The present policy evolved by the Central Government is more transparent and consistent with the constitutional objectives.
14.In some of the cases, the petitioners have contended that they have already registered lease deeds before the introduction of new policy. Therefore, that would amount to a firm commitment by the oil companies. In one case, it was stated that the lease deed was dated 2.11.2002, which was prior to the 2003 policy.
15.In the other writ petitions though the prayer was differently moulded, the essence of their demand is that they should be allotted retail outlet without giving it to any other person on the basis of the pre-revised policy.
16.Mr.V.T.Gopalan, learned Senior counsel appearing for some of the petitioners contended that the Central Government’s stand is at variance with the OMCs and their stand shifted from time to time. The September, 2003 Policy had only done away on the land owners being granted retail outlets. He took through the counter affidavit of the Union of India to establish that it was at variance with the Oil Marketing companies (OMCs).
17.He also submitted by relying upon the judgment of the Supreme Court in Union of India v. Godfrey Philips India Ltd. reported in (1985) 4 SCC 369 to contend that though the concept of promissory estoppel cannot be enforced against the legislature in the exercise of its legislative functions nor prevent the public authority enforcing the statutory provisions and also it cannot be enforced to compel the Government to implement the promises which are contrary to law. In that case, the Supreme Court laid down parameters for enforcing the doctrine of promissory estoppel as an equitable doctrine where equity if requires it must yield to the same. Therefore, it is necessary to refer to the following passage found in paragraph 13 of the said judgment, which is as follows:
“13. Of course we must make it clear, and that is also laid down in Motilal Sugar Mills case3 that there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or, power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires; if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case3 and we find ourselves wholly in agreement with what has been said in that decision on this point.”
18.The learned Senior Counsel also placed reliance upon the judgment of the Supreme Court in Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & ETIO reported in (2007) 5 SCC 447. The following passages found in paragraphs 122 to 130 were relied on and they are as follows:
“122. Unlike an ordinary estoppel, promissory estoppel gives rise to a cause of action. It indisputably creates a right. It also acts on equity. However, its application against constitutional or statutory provisions is impermissible in law. This aspect of the matter has been considered in State of Bihar v. Project Uchcha Vidya, Sikshak Sangh52 stating: (SCC pp. 575-76, para 77)
77. We do not find any merit in the contention raised by the learned counsel appearing on behalf of the respondents that the principle of equitable estoppel would apply against the State of Bihar. It is now well known, the rule of estoppel has no application where contention as regards a constitutional provision or a statute is raised. The right of the State to raise a question as regards its actions being invalid under the constitutional scheme of India is now well recognised. If by reason of a constitutional provision, its action cannot be supported or the State intends to withdraw or modify a policy decision, no exception thereto can be taken. It is, however, one thing to say that such an action is required to be judged having regard to the fundamental rights of a citizen but it is another thing to say that by applying the rule of estoppel, the State would not be permitted to raise the said question at all. So far as the impugned circular dated 18-2-1989 is concerned, the State has, in our opinion, a right to support the validity thereof in terms of the constitutional framework.
123. Yet again in Mahabir Vegetable Oils (P) Ltd. v. State of Haryana53 it was stated: (SCC pp.632-33, para 38)
38. The promises/representations made by way of a statute, therefore, continued to operate in the field. It may be true that the appellants altered their position only from August 1996 but it has neither been denied nor disputed that during the relevant period, namely, August 1996 to 16-12-1996 not only have they invested huge amounts but also the authorities of the State sanctioned benefits, granted permissions. Parties had also taken other steps which could be taken only for the purpose of setting up of a new industrial unit. An entrepreneur who sets up an industry in a backward area unless otherwise prohibited, is entitled to alter his position pursuant to or in furtherance of the promises or representations made by the State. The State accepted that equity operated in favour of the entrepreneurs by issuing Note 2 to the notification dated 16-12-1996 whereby and whereunder solvent extraction plant was for the first time inserted in Schedule III i.e. in the negative list.
124. We may, however, notice that a survey of the earlier decisions has also been made by this Court in State of Punjab v. Nestle India Ltd.9 wherein the law has been stated in the following terms: (SCC p. 474, para 25)
25. In other words, promissory estoppel long recognised as a legitimate defence in equity was held to found a cause of action against the Government, even when, and this needs to be emphasised, the representation sought to be enforced was legally invalid in the sense that it was made in a manner which was not in conformity with the procedure prescribed by statute.
125. Referring to Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P.54 this Court observed: (Nestle India Ltd. case9, SCC pp.475-76, para 29)
29. As for its strengths it was said: that the doctrine was not limited only to cases where there was some contractual relationship or other pre-existing legal relationship between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made contractual, administrative or statutory. To put it in the words of the Court:
The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. (SCC p.442, para 24)
* * *
[E]quity will, in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute. (SCC p.425, para 8)
* * *
Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it. (SCC p.453, para 33) (emphasis in original)
126. This Court distinguished its earlier decision in Kasinka Trading v. Union of India55 whereupon Mr Andhyarujina placed strong reliance, in the following terms: (Nestle India Ltd. case9, SCC p.479, para 40)
40. The case of Kasinka Trading v. Union of India55 cited by the appellant is an authority for the proposition that the mere issuance of an exemption notification under a provision in a fiscal statute such as Section 25 of the Customs Act, 1962, could not create any promissory estoppel because such an exemption by its very nature is susceptible to being revoked or modified or subjected to other conditions. In other words, there is no unequivocal representation. The seeds of equivocation are inherent in the power to grant exemption. Therefore, an exemption notification can be revoked without falling foul of the principle of promissory estoppel. It would not, in the circumstances, be necessary for the Government to establish an overriding equity in its favour to defeat the petitioners plea of promissory estoppel. The Court also held that the Government of India had justified the withdrawal of exemption notification on relevant reasons in the public interest. Incidentally, the Court also noticed the lack of established prejudice to the promises when it said: (SCC p.289, para 22)
The burden of customs duty, etc. is passed on to the consumer and therefore the question of the appellants being put to a huge loss is not understandable.
(See also Shrijee Sales Corpn. v. Union of India56 and STO v. Shree Durga Oil Mills57.) We do not see the relevance of this decision to the facts of this case. Here the representations are clear and unequivocal.
127. In MRF Ltd. v. Asstt. CST8 wherein one of us (Katju, J.) was a member, Kasinka Trading555 has also been held to be inapplicable where a right has already accrued; for instance, in a case where the right to exemption of tax for a fixed period accrues and the conditions for that exemption have also been fulfilled, the withdrawal of that exemption cannot affect the already accrued right.
128. In MRF Ltd.8 it was held that the doctrine of promissory estoppel will also apply to statutory notifications.
129. We may also notice an interesting observation made by Beg, J. in Madan Mohan Pathak v. Union of India010 wherein the learned Judge in his concurrent judgment while striking down the Life Insurance Corporation (Modification of Settlement) Act, 1976, opined: (SCC p.87, para 34)
34. Furthermore, I think that the principle laid down by this Court in Union of India v. Indo-Afghan Agencies Ltd.58 can also be taken into account in judging the reasonableness of the provision in this case. It was held there (at SCR p.385):
Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.
In that case, equitable principles were invoked against the Government. It is true that, in the instant case, it is a provision of the Act of Parliament and not merely a governmental order whose validity is challenged before us. Nevertheless, we cannot forget that the Act is the result of a proposal made by the Government of the day which, instead of proceeding under Section 11(2) of the Life Insurance Corporation Act, chose to make an Act of Parliament protected by emergency provisions. I think that the prospects held out, the representations made, the conduct of the Government, and equities arising therefrom, may all be taken into consideration for judging whether a particular piece of legislation, initiated by the Government and enacted by Parliament, is reasonable.
130. We, therefore, are of the opinion that doctrine of promissory estoppel also preserves a right. A right would be preserved when it is not expressly taken away but in fact has expressly been preserved.
19.M/s.S.Doraisamy, P.Jagadeesan and V.P.Sengottuvel, learned counsel for various petitioners have also made their submissions and have also adopted the arguments advanced by the learned Senior Counsel.
20.Mr.T.R.Rajagopalan, learned Senior Counsel appearing for the Oil Companies contended that no promise was held out on the question of dealership. The execution of lease deeds were not on the basis of any promise. He also relied upon the judgment of this Court in S.Pasupathi and others Vs. Union of India and others in W.P.No.40381 of 2006, dated 17.7.2007. In that case, a claim was made against the Hindustan Petroleum Corporation Ltd. (HPCL) on similar lines. Rejecting the stand of the petitioners, this Court held in paragraphs 9 and 10 which is as follows:
“9.As far as the other contention of the learned senior counsel for the petitioners, with the legitimate expectation, the petitioners have invested huge amount in establishing the retail outlets is concerned, it is a specific case of the first respondent as well as the second and third respondents that all the formalities were complied with by the Oil Marketing Companies. Apart from this, the averment of the petitioners that they have invested huge amount is also specifically denied by the respondents 2 & 3. Besides, it is a specific case of the second and third respondents that the retail outlet is the property of the HPCL, as it was established by the HPCL by spending its money. Negativing this, no reply has been filed by the petitioners. As such, the argument of the learned senior counsel for the petitioners that the respondents are estopped from issuing the advertisements will not stand.
10.The other contention of the learned senior counsel for the petitioners that easing out of the petitioners is arbitrary is concerned, it has been specifically averred in the counter affidavit filed by the respondents that the advertisement has been called for only for the offer of the land, besides, Company Owned and Company operated retail outlets were established by the HPCL, at the places leased out by the petitioners 1,3,5,7,8,9 and 11, pending selection of the regular dealers agreements for providing labour were entered into between the HPCL and the petitioners 2,4,6 & 10 and adhoc operation with the petitioner No.12. As such, it cannot be construed that the petitioners are existing dealers. Consequently, question of leasing out does not arise at all. Having entered into an agreement for lease of vacant land, they were provided with consideration for the same also. Apart from this, the petitioner has not made out any case to grant the relief sought for. Though a stand is taken that the dealership was given to the adhoc operators, no particulars have been brought to the notice of this Court by the petitioners in this regard.”
21.Though it is contended that a writ appeal is pending against the said order, the petitioners were not able to give the number of the writ appeal. The learned Senior Counsel for respondents also produced an unreported judgment of the Karnataka High Court in Y.T.Narendra Babu Vs. Union of India and others in W.P.No.1016 of 2007, dated 28.7.2009 in order to complete the decisions on the issue. In the said judgment, a learned Judge of the Karnataka High Court held that promissory estoppel and the concept of legitimate expectations will apply to the case of petitioners since OMCs were enjoying commercial freedom from 1.4.2002 and that the guidelines were issued by the companies only from 19.8.2003. Therefore, in that case, a direction was issued to grant dealerships Co-terminus with the lease of land on which the retail outlets are established and on similar terms and conditions as in the case of the other land owners immediately prior to February, 2003. The contention of the oil companies that their policy of the year 2002 was suspended from February, 2003 was not held to be substantiated. But, the learned Senior counsel for the respondents stated that the matter has been taken on appeal by the OMCs.
22.The learned Senior Counsel also placed reliance upon the judgment of the Andhra Pradesh High Court and the judgment of the Delhi High Court in this regard.
23.The judgment of the Andhra Pradesh High Court was rendered in a batch of writ petitions in W.P.Nos.5351 of 2007, etc., which were disposed of by a common order, dated Nil (January, 2008). After referring to the similar contentions raised before the Andhra Pradesh High Court, the learned Judge of that High Court rejected the contentions. The learned Judge rejected the ground of attack on the basis of arbitrariness and also legitimate expectations. The following passage found in paragraph 70 of that judgment may be extracted below:
“70….In the light of the settled principles of law in relation to the power of judicial review in interfering with such policy decisions, it is needless to say that writ courts are expected to be slow in interfering with such policy decisions. These are cases where parties are bound by the terms and conditions of the respective lease deeds. The change in policy is an uniform policy and, no doubt, in the broad policy laid down by the Union of India, the modalities or the details had not been elaborated but the fundamentals of the policy had been clearly spelt out and in pursuance thereof, the Oil companies had adopted the present policy, which cannot be said to be either arbitrary or discriminatory. Further, the applicability of the promissory estoppel or the legitimate expectation also would not arise. At any rate, this court is thoroughly satisfied that this uniform policy had been adopted only in public interest. Hence, in the light of the clear guidelines which had been specified above, and also the clear stands taken by the Union of India and also the respective Oil Companies which had been referred to above, this court is thoroughly satisfied that these Writ Petitions are devoid of merit and the same are liable to be dismissed.”
24.Similarly, a division bench of the Delhi High Court on hearing the appeals from the order of the learned Single Judge of the court in granting the relief to similarly placed persons, reversed the order of the learned Single Judge of that Court by a common judgment dated 8.2.2008 in LPA No.158/2007. In that judgment, they have held that none of the petitioners were granted Petroleum retail outlets by the companies and there was no vested right accrued to them. After obtaining the lease deeds, the M&H contract was executed on the three persons, who were some times, may be the petitioners. The legality of the policy issued by the oil companies were not under challenge. Though there is vested right was claimed for allowing dealership of petrol bunk, in the lease deed there is no express or implied promise that retail outlet will be handed over to the landlord. On the contrary, the oil companies have incurred huge expenses to the length of Rs.30 to 50 lakhs on creation of necessary infrastructure. By the terms of the agreement, it was only the lease creating jural relationship with the landlord and tenant. By the revised policy, there are many special categories will have to be adopted to LOI. Under the contract terms, the agreement is for a period of one or two years. The company is at liberty to terminate the agreement by giving one month notice. The COCO outlets are run by the contractors, who may some time happen to be the land owners and the question of legitimate expectation will not arise.
25.It was also stated that the petitioners were not entitled for any relief. Only in case where there was doubt regarding the land owners, the petitioners are entitled to transaction with the oil companies based on an understanding and the other circumstances. Thus, the questions were kept separated and a direction was issued to the oil companies to file a counter affidavit. In other respect, the writ appeals were allowed and the order of the learned Single Judge was reversed.
26.Aggrieved by the order of the division bench of the Delhi High Court, the aggrieved petitioners moved the Supreme Court. The Supreme Court, excepting in certain matters, where agreements were executed between the parties within the time period when the earlier policy was in force i.e. from 8.10.2002 to 5.2.2003, all other SLPs were dismissed, thereby confirming the order of the division bench of the Delhi High Court by a speaking order.
27.In a chart furnished by Mr.T.R.Rajagopal, learned Senior Counsel, in W.P.No.41313 of 2006, one C.Paneerselvam, the sixth petitioner had entered into an agreement of lease on 26.6.2002 and commissioned an outlet on 28.6.2002 and the lease deed itself was registered on 21.11.2002. Hence, in all other writ petitions, no relief can be granted as prayed for by the petitioners.
28.Mr.S.Doraisamy, learned counsel for the petitioner in W.P.Nos.6116 and 6118 of 2007 contended that there was an offer by a letter dated 11.10.2004, but the offer was given by the subordinate officers and long after the new policy had come into force. But, in the case of one Mangaiyarkarasi (first petitioner in W.P.No.14829 of 2007), the said offer was dated 10.1.2000. It merely stated that in the event of the company not operating as COCO basis and decides to operate through any dealer, an offer will be made to the landlord and the landlord should exercise his option within thirty days.
29.Therefore, except in case of the first petitioner Mangaiyarkarasi in W.P.No.14829 of 2007 and the sixth petitioner Paneerselvam in W.P.No.41313 of 2006, in all other cases no relief can be given to the petitioners. The order of the Andhra Pradesh High Court and the Delhi High Court as well as this court in respect of HPCL Ltd., having concluded the issue and this court as it is in full agreement with those decisions, the relief claimed by the petitioners, except in case of the first petitioner Mangaiyarkarasi in W.P.No.14829 of 2007 and the sixth petitioner Paneerselvam in W.P.No.41313 of 2006, cannot be countenanced by this court.
30.In the light of the above, W.P.No.14829 of 2007 in respect of the first petitioner, (i.e. P.Mangaiarkarasi) alone and W.P.No.41313 of 2006 in respect of the 6th petitioner, (i.e. C.Pannirselvam) alone are allowed. W.P.No.14829 of 2007 and W.P.No.41313 of 2006 in respect of others and all other writ petitions will stand dismissed. No costs. Consequently, connected miscellaneous petitions also stand dismissed.
vvk
To
1.The Secretary,
Ministry of Petroleum,
Oil and Natural Gas,
Government of India,
New Delhi.
2.The Chairman,
Hindustan Petroleum Corporation
Limited,
Petroleum House,
No.17,J.Tata Road,
Mumbai-400 020.
3.The General Manager-South Zone,
Hindustan Petroleum Corporation Ltd.
4th Floor,
Thalamuthu Natarajan Building,
No.8, Gandhi Irwin Road,
Egmore,
Chennai-600 008.
4.The Senior Regional Manager,
Coimbatore Regional Office,
Hindustan Petroleum Corporation Ltd.,
333,Cross Cut Road,
Coimbatore-641 012.
5.The Chairman,
IBP Co. Limited,
Nirmal Chandra Street,
Kolkatta-700 013.
6.The General Manager-South Region
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031.
7.The Senior Marketing Manager,
Tamil Nadu Region,
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031.
8.The Deputy Manager,
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031.
9.The Divisional Manager,
IBP Co Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet,
Chennai-600 031.
10.The Managing Director,
IBP Co. Limited,
Nirmal Chandra Street,
Kolkatta-700 013.
11.The General Manager
IBP Co Limited,
Tamil Nadu State Office,
No.39,Nungambakkam High Road,
Chennai.
12.The Divisional Manager,
IBP Co Limited,
No.8/1079, Avinasi Road,
Coimbatore-16.
13.Deputy General manager,
(Marketing),
I.B.P. Company Limited,
Head Office, Mumbai.
14.The Deputy General Manager,
Chennai Region,
IBP Company Limited,
No.10, Mayor V.R.Ramanathan Road,
Chetpet, Chennai-600 031.
15.The Indian Oil Corporation Ltd.,
Nungambakkam High Road,
India Oil Bhavan,
Madras
