Dharmendra Kumar Patidar vs Indian Oil Corporation Ltd.

S.C. Sharma, J.—1. Parties through their Counsel.

The petitioner before this Court who is a person belonging to backward class has approached this Court being aggrieved by the order dated 13/03/2015 (Annexure P-18) passed by Indian Oil Corporation Limited (herein after referred as ''IOCL'') by which IOCL has cancelled the LPG distributorship awarded by the petitioner.

The facts of the case reveal that an advertisement was issued for allotment of LPG distributorship in respect of location "Sarwaniya Maharaj", Tehsil Javad, District Neemuch on 08/09/2013. The petitioner applied for the same in the prescribed format and the respondent IOCL vide letter dated 18/11/2013 has informed the petitioner that the land offered by him is in Village Kalepur where as the retail outlet has to be established at Sarwaniya Maharaj as per the requirement.

The petitioner immediately offered the land in respect of village Sarwaniya Maharaj to the respondent/IOCL and the respondent with open eyes has accepted the petitioner''s application and has upheld the petitioner''s entitlement for consideration. The petitioner was informed on 24/12/2013 that a draw will take place at Bhopal and finally a draw took place and the petitioner was selected for allotment of distributorship. A letter of intent was issued by the respondent on 15/01/2014 directing the petitioner to deposit Rs. 20,000.00 and the petitioner completed all the formalities in the matter. Thereafter, finally the respondent/IOCL has issued a LOI on 24/02/2014. The petitioner was required to complete the construction of godown within four months and the petitioner got his layout approved from Petroleum and Explosives Safety Organization on 04/03/2014. The petitioner after obtaining the approval, as he was required to complete the construction, has completed the construction. A godown has been constructed having capacity of 8,000 kg at Khasra No. 892/3 MI, Village Sarwaniya Mahraj, Tehsil-Jawad, District-Neemuch.

The petitioner has also applied for grant of sanction from the Town & Country Planning Department and the same was also accorded. Petitioner also got the land diverted as provided under Section 172 of the M.P. Land Revenue Code. The petitioner''s contention is that on 22/5/2014, a letter was issued by the IOCL directing the petitioner not to carryout the construction of the godown, as a complaint was received that there is no access road to the godown and thereafter, the Revenue authorities in presence of the Officer of IOCL have prepared a map which provides for access from the main road to the godown. The petitioner''s grievance is that now the respondents have passed an order based upon the vigilance report cancelling the awarded distributorship.

A detailed and exhaustive reply has been filed in the matter by the IOCL and the stand of the respondent is that a complaint was received by the Oil Company and it is an admitted fact that the petitioner at the first instance has offered the land in respect of some other village. Later on the petitioner has offered the land in respect of Village "Sarwaniya Maharaj" and the same could not have been done as the land has to be offered at the first instance while submitting the application form. It has also been stated that as the petitioner was not eligible, he was not entitled to participate in the process of draw as held by the DGM, Vigilance Corporate Office report. The letter of intent issued in favour of the petitioner dated 24/02/2014 has been withdrawn vide letter dated 13/03/2015. The respondents have prayed for dismissal for the writ petition.

The respondents have also stated that the diversion permission was subsequently granted in the matter and the petitioner could not have constructed the godown before grant of diversion permission as required under Section 172 of the M.P. Land Revenue Code and therefore, merely because the petitioner has constructed the godown, it is not going to help the petitioner. The respondents have prayed for dismissal of the writ petition.

Learned counsel for the respondent - IOCL has drawn the attention of this Court towards page No. 25 and the contention of the learned Counsel for IOCL is that the DGM, Vigilance has recommended imposition of minor penalty upon three officers and warning for fourth officer, however, he is not aware of the fact whether later on any charge-sheet has been issued to any officer or not?

This Court has carefully gone through the entire record of the case. The admitted facts are that the petitioner is a member of other backward class community. He has applied for distributorship and initially he has offered land situated in village Kalepur. The respondent-Indian Oil Corporation was having a power at that juncture to reject the application of the petitioner at the threshold. The IOCL opted not to reject the application of the petitioner and on the contrary issued a letter dated 18/10/2013 that the land required has to be situated in Village "Sarwaniya Maharaj". The petitioner immediately forwarded the documents of his land situated in village Sarwaniya Maharaj. The Oil Company has accepted the land offered by the petitioner after field verification report and the Oil Company has also held the petitioner entitled to participate in the draw. The petitioner was declared as the winner in the process of draw and letter of intent was issued on 24/02/2014. The LOI reflects that the petitioner was required to complete the construction within four months. The petitioner has completed the entire construction by borrowing money and by spending whatever little capital was available with him. The IOCL for the first time has informed the petitioner on 22/05/2014 to stop construction on the ground that there is no access road to the godown. The petitioner''s contention is that his construction was almost over by 22/05/2014, however, the matter was looked into by the Officer of the Oil Company and on 06/05/2014, a report was prepared in presence of the revenue authorities holding that there is a straight way and the road is available for approaching the godown. The letter dated 22/05/2014 reflects that there was a complaint filed by some one Annexure R/3 dated 18/03/2014 and the complaint which is on record reveals that objection was only in respect of the approach road. However, the petitioner has constructed the godown and has claimed that it was constructed prior to 22/05/2014. Based upon the vigilance report which also forms part of the reply, the selection has been cancelled and the only reason assigned is that the petitioner has offered land in some other village at first instance and it was only after IOCL informed him, he has offered the land in Village "Sarwaniya Maharaj". It has been argued before this Court by the IOCL that before diversion construction, if any, made by the petitioner was illegal and it does not create any right or equity in favour of the petitioner.

This Court has carefully gone through the stand taken by the Deputy General Manager, Vigilance. It was not the petitioner who is at fault in the facts and circumstances of the case. No irregularity of any kind was committed by the petitioner. Whatever he has done, has done in view of the directions issued by the IOCL. Subsequently, he has offered land in Sarwaniya Maharaj, only because it was the IOCL who has informed him about the land offered by him and subsequently the other land offer was accepted by the IOCL and he was found eligible to participate in the process of draw. The petitioner has been selected through a process of selection and he has constructed a godown also. The petitioner has obtained permission from the Petroleum and Explosives Safety Organization on 04/03/2014. He has obtained no objection certificates from all authorities and the godown is functional for all purposes except for the impugned order passed by IOCL.

In the present case, this Court is of the opinion that as earlier stated, the petitioner was not at fault and land offered by the petitioner was accepted with open eyes by the IOCL and it is the petitioner who has been made the scapegoat on account of irregularity, if any, committed by the Offices of the Oil Company.

Resultantly, this Court is of the considered opinion that the petitioner has been able to make out a case for interference. Not only this, the respondent before cancelling the LOI has not sought any explanation from the petitioner.

Learned Counsel for the Indian Oil Company was gracious enough to accept in open Court that the Oil Company has not issued any show-cause notice at any point of time, while cancelling the LOI issued in favour of the petitioner, meaning thereby, after issuance of LOI a right has accrued in favour of the petitioner and the same has been taken away from the petitioner without following the basic principles of natural justice and fair play.

This Court in the case of Smt. Kansa w/o Ratansingh v. State of Madhya Pradesh (W.P. No. 2258/2015, decided on 18/6/2015) has held as under:

"In the present case, no such procedure has been followed by the respondents and no enquiry with the participation of the petitioner was conducted by the employer. The employer has even failed before this Court to establish that they have issued notice to the petitioner. The respondents have violated the principles of natural justice and fair play.

In India there is no statute which prescribes the minimum procedure which administrative agencies or quasi judicial bodies must follow while taking decisions which affect the rights of the individuals. Nonetheless, they are bound by the principles of natural justice. The principles of natural justice signify the basic minimum fair procedure which must be followed while exercising decision making powers. Natural justice forms the very backbone of a civilized society.

The wheels regarding the application of principles of natural justice to administrative and quasi-judicial proceedings started turning from 1963 when the House of Lords in the United Kingdom delivered the landmark and oft-quoted judgment of Ridge v. Baldwin [1963] UKHL 2. An order for dismissal of a Constable was quashed because he was not provided any opportunity to defend his actions. Presently, in our country, the principles of natural justice are applicable in totality to administrative and quasi-judicial proceedings. This is consistent and in line with the rapidly increasing role, functions and jurisdiction of such bodies in a welfare state like ours.

The below-mentioned passages by the Hon''ble Supreme Court in the case of Uma Nath Pandey v. State of U.P. , AIR 2009 SC 2375 exhaustively explain natural justice and deserve to be quoted in full in the context of the current dispute:

"6. Natural justice is another name for commonsense justice. Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. Natural justice is the administration of justice in a commonsense liberal way. Justice is based substantially on natural ideals and human values. The administration of justice is to be freed from the narrow and restricted considerations which are usually associated with a formulated law involving linguistic technicalities and grammatical niceties. It is the substance of justice which has to determine its form.

The expressions "natural justice" and "legal justice" do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law. As Lord Buckmaster said, no form or procedure should ever be permitted to exclude the presentation of a litigants'' defence.

The adherence to principles of natural justice as recognized by all civilized States is of supreme importance when a quasi-judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences is in issue. These principles are well settled. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice. It is after all an approved rule of fair play.....

Principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice.

Lord Wright referred to the leading cases on the subject. The most important of them is the Board of Education v. Rice (1911 AC 179:80 LJKB 796), where Lord Loreburn, L.C. observed as follows: "Comparatively recent statutes have extended, if they have originated, the practice of imposing upon departments or offices of State the duty of deciding or determining questions of various kinds. It will, I suppose usually be of an administrative kind, but sometimes, it will involve matter of law as well as matter of fact, or even depend upon matter of law alone. In such cases, the Board of Education will have to ascertain the law and also to ascertain the facts. I need not and that in doing either they must act in good faith and fairly listen to both sides for that is a duty lying upon everyone who decides anything. But I do not think they are bound to treat such a question as though it were a trial....The Board is in the nature of the arbitral tribunal, and a Court of law has no jurisdiction to hear appeals from the determination either upon law or upon fact. But if the Court is satisfied either that the Board have not acted judicially in the way I have described, or have not determined the question which they are required by the Act to determine, then there is a remedy by mandamus and certiorari".

Lord Wright also emphasized from the same decision the observation of the Lord Chancellor that the Board can obtain information in any way they think best, always giving a fair opportunity to those who are parties to the controversy for correcting or contradicting any relevant statement prejudicial to their view". To the same effect are the observations of Earl of Selbourne, LO in Spackman v. Plumstead District Board of Works (1985 (10) AC 229:54 LJMC 81), where the learned and noble Lord Chancellor observed as follows:

"No doubt, in the absence of special provisions as to how the person who is to decide is to proceed, law will imply no more than that the substantial requirements of justice shall not be violated. He is not a judge in the proper sense of the word; but he must give the parties an opportunity of being heard before him and stating their case and their view. He must give notice when he will proceed with the matter and he must act honestly and impartially and not under the dictation of some other person or persons to whom the authority is not given by law. There must be no malversation of any kind. There would be no decision within the meaning of the statute if there were anything of that sort done contrary to the essence of justice".

Lord Selbourne also added that the essence of justice consisted in requiring that all parties should have an opportunity of submitting to the person by whose decision they are to be bound, such considerations as in their judgment ought to be brought before him. All these cases lay down the very important rule of natural justice contained in the oft-quoted phrase ''justice should not only be done, but should be seen to be done''.

Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the fact and circumstances of that case, the frame-work of the statute under which the enquiry is held. The old distinction between a judicial act and an administrative act has withered away. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. Expression ''civil consequences'' encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life.

Natural justice has been variously defined by different Judges. A few instances will suffice. In Drew v. Drew and Lebura (1855(2) Macg. 1.8, Lord Cranworth defined it as ''universal justice''. In James Dunber Smith v. Her Majesty the Queen (1877-78(3) App.Case 614, 623 JC) Sir Robort P. Collier, speaking for the judicial committee of Privy council, used the phrase ''the requirements of substantial justice'', while in Arthur John Specman v. Plumstead District Board of Works (1884-85(10) App.Case 229, 240), Earl of Selbourne, S.C. preferred the phrase ''the substantial requirement of justice''. In Vionet v. Barrett (1885(55) LJRD 39, 41), Lord Esher, MR defined natural justice as ''the natural sense of what is right and wrong''. While, however, deciding Hookings v. Smethwick Local Board of Health (1890 (24) QBD 712), Lord Fasher, M.R. instead of using the definition given earlier by him in Vionet''s case (supra) chose to define natural justice as ''fundamental justice''. In Ridge v. Baldwin (1963(1) WB 569, 578), Harman LJ, in the Court of Appeal countered natural justice with ''fair-play in action'' a phrase favoured by Bhagawati, J. in Maneka Gandhi v. Union of India (, 1978 (2) SCR 621). In re R.N. (An Infant) (1967 (2) B 617, 530), Lord Parker, CJ, preferred to describe natural justice as ''a duty to act fairly''. In Fairmount Investments Ltd. v. Secretary to State for Environment (1976 WLR 1255) Lord Russell of Willowan somewhat picturesquely described natural justice as ''a fair crack of the whip'' while Geoffrey Lane, LJ. In Regina v. Secretary of State for Home Affairs Ex Parte Hosenball (1977 (1) WLR 766) preferred the homely phrase ''common fairness''.

How then have the principles of natural justice been interpreted in the Courts and within what limits are they to be confined? Over the years by a process of judicial interpretation two rules have been evolved as representing the principles of natural justice in judicial process, including therein quasi-judicial and administrative process. They constitute the basic elements of a fair hearing, having their roots in the innate sense of man for fair-play and justice which is not the preserve of any particular race or country but is shared in common by all men. The first rule is ''nemo judex in causa sua'' or ''nemo debet esse judex in propria causa sua'' as stated in (1605) 12 Co.Rep.114 that is, ''no man shall be a judge in his own cause''. Coke used the form ''aliquis non debet esse judex in propria causa quia non potest esse judex at pars'' (Co.Litt. 1418), that is, ''no man ought to be a judge in his own case, because he cannot act as Judge and at the same time be a party''. The form ''nemo potest esse simul actor et judex'', that is, ''no one can be at once suitor and judge'' is also at times used. The second rule is ''audi alteram partem'', that is, ''hear the other side''. At times and particularly in continental countries, the form ''audietur at altera pars'' is used, meaning very much the same thing. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, namely ''qui aliquid statuerit parte inaudita alteram actquam licet dixerit, haud acquum facerit'' that is, ''he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right'' (See Bosewell''s case (1605) 6 Co.Rep. 48-b, 52-a) or in other words, as it is now expressed, ''justice should not only be done but should manifestly be seen to be done''.

What is known as ''useless formality theory'' has received consideration of this Court in M.C. Mehta v. Union of India (, 1999(6) SCC 237). It was observed as under:

"Before we go into the final aspect of this contention, we would like to state that case relating to breach of natural justice do also occur where all facts are not admitted or are not all beyond dispute. In the context of those cases there is a considerable case-law and literature as to whether relief can be refused even if the court thinks that the case of the applicant is not one of ''real substance'' or that there is no substantial possibility of his success or that the result will not be different, even if natural justice is followed (See Malloch v. Aberdeen Corpn: (1971)2 All ER 1278, HL) (per Lord Reid and Lord Wilberforce), Glynn v. Keele University: (1971) 2 All ER 89; Cinnamond v. British Airports Authority: , (1980) 2 All ER 368, CA) and other cases where such a view has been held. The latest addition to this view is R v. Ealing Magistrates'' Court, ex p. Fannaran (1996 (8) Admn. LR 351, 358) (See de Smith, Suppl. P.89 (1998) where Straughton, L.J. held that there must be ''demonstrable beyond doubt'' that the result would have been different. Lord Woolf in Lloyd v. McMohan (1987 (1) All ER 1118, CA) has also not disfavored refusal of discretion in certain cases of breach of natural justice. The New Zealand Court in McCarthy v. Grant (1959 NZLR 1014) however goes halfway when it says that (as in the case of bias), it is sufficient for the applicant to show that there is ''real likelihood-not certainty- of prejudice''. On the other hand, Garner Administrative Law (8th Edn. 1996. pp.271-72) says that slight proof that the result would have been different is sufficient. On the other side of the argument, we have apart from Ridge v. Baldwin (1964 AC 40: (1963) 2 All ER 66, HL), Megarry, J. in John v. Rees (1969 (2) All ER 274) stating that there are always ''open and shut cases'' and no absolute rule of proof of prejudice can be laid down. Merits are not for the court but for the authority to consider. Ackner, J has said that the ''useless formality theory'' is a dangerous one and, however inconvenient, natural justice must be followed. His Lordship observed that ''convenience and justice are often not on speaking term''. More recently, Lord Bingham has deprecated the ''useless formality theory'' in R. v. Chief Constable of the Thames Valley Police Forces, ex p. Cotton (1990 IRLR 344) by giving six reasons (see also his article ''Should Public Law Remedies be Discretionary?'' 1991 PL. p.64). A detailed and emphatic criticism of the ''useless formality theory'' has been made much earlier in ''Natural Justice, Substance or Shadow'' by Prof. D.H. Clark of Canada (see 1975 PL.pp.27-63) contending that Malloch (supra) and Glynn (supra) were wrongly decided. Foulkes (Administrative Law, 8th Edn. 1996, p.323), Craig (Administrative Law, 3rd Edn. P.596) and others say that the court cannot prejudge what is to be decided by the decision-making authority. De Smith (5th Edn. 1994, paras 10.031 to 10.036) says courts have not yet committed themselves to any one view though discretion is always with the court. Wade (Administrative Law, 5th Edn. 1994, pp.526530) says that while futile writs may not be issued, a distinction has to be made according to the nature of the decision. Thus, in relation to cases other than those relating to admitted or indisputable facts, there is a considerable divergence of opinion whether the applicant can be compelled to prove that the outcome will be in his favour or he has to prove a case of substance or if he can prove a ''real likelihood'' of success or if he is entitled to relief even if there is some remote chance of success. We may, however, point out that even in cases where the facts are not all admitted or beyond dispute, there is a considerable unanimity that the courts can, in exercise of their ''discretion'', refuse certiorari, prohibition, mandamus or injunction even though natural justice is not followed. We may also state that there is yet another line of cases as in State Bank of Patiala v. S.K. Sharma (, 1996 (3) SCC 364), Rajendra Singh v. State of M.P. (, 1996 (5) SCC 460) that even in relation to statutory provisions requiring notice, a distinction is to be made between cases where the provision is intended for individual benefit and where a provision is intended to protect public interest. In the former case, it can be waived while in the case of the latter, it cannot be waived.

We do not propose to express any opinion on the correctness or otherwise of the ''useless formality theory'' and leave the matter for decision in an appropriate case, inasmuch as the case before us, ''admitted and indisputable'' facts show that grant of a writ will be in vain as pointed by Chinnappa Reddy, J."

Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice."

With regard to the disputed nature of the useless formality test as discussed in the M.C. Mehta case (see supra), it is important to note that in the instant petition, the petitioner and other similarly placed petitioners, were dismissed by a cyclostyle order. The order for dismissal for the Anganwadi workers is identical word by word in all the 84 cases. Only the name of the village has been changed in the orders. In such circumstances, this Court is of the view that following audi alteram partem will most definitely not be a useless formality.

The principles of natural justice are firmly grounded in Article 14 and Article 21 of the Constitution of India. Article 14 of the Constitution guarantees equality before law and equal protection of law. Through the process of interpretation, procedural safeguards have been read into Article 14 by the Courts. In Delhi Transport Corporation v. DTC Mazdoor Union, , AIR 1991 SC 101, the Hon''ble Supreme Court has held that "the audi alteram partem rule, in essence, enforce the equality clause in Art 14 and it is applicable not only to quasi-judicial bodies but also to administrative order adversely affecting the party in question unless the rule has been excluded by the Act or Regulation or Rule." Not giving any hearing results in decisions which are arbitrary in nature. Arbitrariness and equality are antithesis of each other. Similarly under Article 21 of the Constitution, no person can be deprived of his life or liberty except according to the procedure established by law. Audi alteram partem forms a part of the procedural due process under the Indian Constitution. Procedure established by law must be just, fair and reasonable and not oppressive, unreasonable or arbitrary."

In light of the aforesaid, as the respondents have not followed the principles of natural justice and fair play and it is not the petitioner who is at fault in the matter of allotment of LPG distributorship and as he has offered the land subsequently on account of the instructions issued by the Indian Oil Corporation Ltd., can not be made to suffer, specially when he has invested his entire earnings in establishing the LPG distributorship and therefore, the impugned order dated 13/03/2015 is hereby quashed. As the petitioner is already having permission from all departments, the Indian Oil Corporation Ltd., is directed to execute the agreement within a period of 10 days from today and to permit the petitioner to carryout the profession as a distributor of LPG in respect of location Sarwaniya Maharaj.

No order as to costs.

Certified copy as per rules.