Sharath T. vs Indian Oil Corporation

B.S. Patil, J.—Petitioner has applied "for award of LPG distributorship at Challakere in Chitradurga District. After scrutiny of the applications, he was found to be eligible and was selected in the draw conducted on 30.01.2013. Subsequently, after field verification, petitioner''s candidature has been rejected on the ground that as per the requirement stipulated in the brochure, minimum amount of Rs. 2.5 lakhs to be found in the account of the petitioner as balance on the last date of submission of the application was found in Nyayamitra Sahakara Bank Niyamita, which was not a scheduled bank. Aggrieved by this communication vide Annexure-B - letter dated 23.01.2014, petitioner has approached this Court.

Learned Counsel for the petitioner contends that petitioner was informed on 09.01.2013 as per Annexure-A after undertaking scrutiny of his application, that he was qualified for selection of distributorship and therefore, he was asked to be present personally along with photo identity card for draw at 2.30 p.m. on 30.01.2013 at Woodlands Hotel, Bangalore. He urges that had there been any deficiency and if the authorities had found that balance in Nyayamitra Sahakara Bank Niyamita, did not satisfy the requirement stipulated in the brochure, the respondent would have, in terms of Clause 8.5 of the brochure produced by the respondent along with the statement of objections vide Annexure-R2, called upon the petitioner to rectify the deficiency within a specified period of time. The fact that such communication was not sent to the petitioner implies that the said deficiency if at all any was not taken serious note and therefore, it was not open for the 1st respondent to subsequently at the time of field verification raise the said question and cancel the selection of the petitioner.

He further invites the attention of the Court to the Clause 7 of the brochure containing that guidelines for selection of regular LPG distributors, to urge that selected candidates for the location reserved under SC & ST category had the option to avail financial assistance as per the scheme, wherein the 1st respondent has been obligated to extend financial assistance by way of secured loan towards money that may be required to facilitate selected candidate to obtain by way of loan for the purpose of providing LPG god own, showroom and LPG cylinder delivery infrastructure. The margin money for which financial assistance to be required by the Oil Manufacturing Companies is limited to Rs. One lakh and Rs. 60,000/- for urban-rural and rural market distributorship respectively. He, therefore, contends that when the whole scheme is intended to facilitate the successful candidate by extending financial assistance, it is unfair and unreasonable on the part of the respondent to reject the candidature of the petitioner on the ground that at the time of field verification, it was found that the account held by the petitioner was not in the scheduled bank, but was in a cooperative bank. He has placed reliance on the judgment of the Apex Court in the case of Tata Iron and Steel Co. Ltd. Vs. Union of India and Others, , to contend that the respondent owed a duty to act fairly and the doctrine of fairness has been developed in the administrative law to ensure the rule of law and to prevent failure of justice.

He has also invited the attention of the Court to the decision of the Apex Court in the case of Sajeesh Babu K. Vs. N.K. Santhosh and Others, , wherein the Apex Court has held in the facts of the said case which also pertained to selection for LPG distributorship that no evaluation on land and financial capabilities was warranted in case of distributorship reserved for SC category applicants.

Counsel for the respondent strongly refutes the aforesaid contentions and urges that as per guideline No. 6.1(vi) of the brochure, an applicant who applies for LPG distributorship under urban-rural locality, has to show that a sum of Rs. 2.5 lakhs was in his account as the closing balance on the last date for submission of application in any scheduled bank. Although petitioner had a sum of Rs. 5.3 lakhs in Nyayamitra Sahakara Bank Niyamita, as it was not a scheduled bank, the respondent was constrained to reject the selection of the petitioner once the same was noticed at the stage of field verification. He further invites the attention of the court to guideline No. 10(c), to contend that if any information was found to be in variance with the original documents and if that information affects the eligibility of the candidate, then a letter would be sent by Registered Post AD/Speed Post pointing out the discrepancy. The candidature of the selected candidate in such a case will be cancelled and 10% applicable security deposit remitted by the selected candidate before field verification of credentials was done would be forfeited. He, therefore, justifies the action of the respondent.

Having heard the learned Counsel for the parties and on consideration of the entire materials on record, I find that it cannot be disputed that one of the eligibility criteria for individual applicants is to have a minimum of Rs. 2.5 lakhs as closing balance on the last date of submission of the application in any scheduled banks/post office, free and un-encumbered fixed deposits in scheduled banks, etc.

Petitioner while filing the application has specifically stated that he has Rs. 5.3 lakhs in his account in Nyayamitra Sahakara Bank Niyamita. It is not the case of the respondent corporation that petitioner has suppressed any information or misrepresented any facts. Indeed requirement as per the guidelines found in the brochure, particularly guideline No. 8.5 reads as under:

"8.5 Procedure for receipt of application. Application would be received in sealed envelope only. After application is received, serial number would be put on the envelope and also recorded in a Register. Acknowledgment for applications received will be sent to the applicants.

In case deficiencies are found in the application, a letter would be sent to the applicant to rectify the deficiencies within a specified period of time."

Guideline No. 9 deals with procedure for draw. Guideline No. 9.2 states that, selection will be done by draw of lot out of all eligible applicants. All applicants satisfying the eligibility criteria will be eligible for the draw.

As per guideline No. 9.13, ''the result of the draw would be displayed on the notice board of the venue immediately and at company office. It would also be hosted on the website of the Company within 7 days from the date of draw''. Guideline No. 9.14 mandates that, ''candidate selected in the draw will have to submit a demand draft for Rs. 50,000/- i.e., 10% of the security deposit of Rs. 5 lakhs''. Guideline No. 9.15 stipulates for field verification credentials of selected candidates which would be undertaken only after the demand draft was submitted.

Guideline No. 10 pertains to field verification of credentials. It provides for verification of the information given in the application by the applicant with the original documents and with the issuing authorities, meaning thereby in case the documents furnished along with the application on verification of the originals with the issuing authority were to be found inconsistent with each other, then action for cancellation of the candidature would be taken. After field verification, if the information is found to be correct, then a letter of intent will be issued with the approval of the competent authority. If the information given in the application is found to be at variance with the original documents and such information affected the eligibility of the candidate, then a letter would be sent by Registered Post/Speed Post pointing out the deficiency. Guideline No. 10(c) also provides that candidature of selected candidate in such a case will be cancelled and 10% of the security deposit remitted by the selected candidate would be forfeited, if false/incorrect/misrepresented information has been given in the application.

A conjoint reading of the procedure provided at the time of scrutiny of application and at the time of field verification of credentials keeping in mind the requirement mentioned in guideline No. 8.5 obligating the 1st respondent to convey the deficiencies found in the application before the draw of lot is taken up, would show that a fair and transparent process is conceived and envisaged as per the brochure. Even if some discrepancy is found in the application, the applicant is given opportunity to correct the same.

The applicant has not suppressed nor as he misrepresented any fact. The applicant belongs to scheduled tribe category. His father had an account in Nyayamitra Sahakara Bank Niyamita. As on the last date for filing the application, the closing balance has been shown as Rs. 5.3 lakhs in his account. This factual aspect is not in doubt. The 1st respondent which has undertaken the scrutiny of the application with regard to the eligibility condition, was required to inform the petitioner, in case Nyayamitra Sahakara Bank Niyamita was not a scheduled bank and the petitioner had not satisfied the eligibility criteria of having his account in the scheduled bank. In that event petition would have certainly shown or made a mention of the other bank accounts in other scheduled bank or would have taken any other step to rectify the mistake, if any. On the other hand, without raising any objection, he was selected. Petitioner participated in the draw and emerged successful.

The procedure prescribed at the time of field verification is for verification of the information given in the application with the original documents. There is no variance between the original documents and the information given by the petitioner. Therefore, there was nothing to show that the information given in the application was in variance with the original documents which affected his eligibility. The authorities, therefore, should have acted in a fair and reasonable manner, particularly after the petitioner emerged a successful candidate in the draw, more particularly when he had not suppressed or misrepresented any facts.

It is not as if the amount was not available on the date of field verification in the bank, nor is there any financial insecurity on the part of the petitioner that has been noticed. Therefore, as rightly submitted by the learned Counsel for the petitioner, in such circumstances, administrative action has to be carried out informed by the principles of fairness and there is a duty cast to act fairly so as to prevent failure of justice.

Although learned Counsel for the petitioner has placed reliance on the judgment in the case of Sajeesh Babu K. Vs. N.K. Santhosh and Others, , wherein the Apex, Court has held that LPG distributorship reserved for SC category was not required to be evaluated on the basis of land and financial capability, the said judgment may not be strictly applicable to this case, because there is no such similar clause contained in the guidelines produced at Annexure-R2. However, fact remains that in the brochure at Annexure-R2, the scheme of financial assistance to SC/ST category distributorship mentioned at Guideline No. 7 gives an ample indication that so far as candidates belonging to the this category, there is an obligation cast on the 1st respondent to extend some financial assistance and also ensure that the bank provides financial assistance so as to facilitate the selected candidate to obtain loan to provide LPG godown, showroom and LPG cylinder delivery infrastructure. This scheme also shows that in case of candidates belonging to SC/ST, they have to be financially encouraged. Therefore, having regard to the overall facts and circumstances of this case and in the light of the reasons stated hereinabove, I am of the view that rejection of the candidature of the petitioner vide Annexure-B cannot be sustained.

Hence, this writ petition is allowed. Annexure-B is set aside. It is submitted by the Counsel for the petitioner that petitioner has already opened an account in the name of his father in State Bank of Mysore and he has deposited an amount of Rs. 2.5 lakhs in the said account. This is evidenced by Annexure-F. The respondent is directed to consider the same and take appropriate decision in accordance with law, in the light of the observations made and directions issued above. Writ petition is accordingly allowed.