Arbitrary Allotment of Petrol Pumps …SC

Though overruled by SC in a later decision in 1999 – this decision is highly public oriented – wherein the ministers, rightly, were held to be repositories of public trust, liable for breach of trust in case of arbitrary allotment of petrol pumps. 
Common Cause A Regd. Society vs Union Of India And Ors on 4 November, 1996
Author: S L.J.
Bench: K Singh, F Uddin






DATE OF JUDGMENT: 04/11/1996







The question before this Court in Common Cause Vs. Union of India and Ors. Writ Petition (C) No. 26/95 was whether the allotments of retail outlets for petroleum products (Petrol Pumps) were illegal and as such liable to the quashed. This Court by the judgment dated September 25, 1996 came to the conclusion that the allotments made by Capt. Satish Sharma were arbitrary, discriminatory, mala fide, wholly illegal and as such were liable to be quashed. This Court reached the said findings on the following reasoning :

“All the 15 allotments – discussed

above – have been made by the

Minister in a stereotyped manner.

The Petroleum Ministry. There is

no receipt – entry on any of the

applications. The applicants seem

to have approached dealt with in

any of the branches of the

Ministry. There is nothing on the

record to indicate that the

Minister kept any criteria in view

while making the allotments. How

the applicants came to know about

the availability of the petrol

pumps is not known. No

advertisement was made to invite

the applications. There is nothing

on the record to show that any

other method of the inviting

applications was adopted. There is

no indication in the allotment-

orders or any where in the record

to show that the Minister kept any

guidelines in view while making

these allotments. The allotments

have been made in a cloistered

manner. The petrol pumps – public

property – have been doled out in a

wholly arbitrary manner.” …..

“All these allotments are wholly

arbitrary nepotistic and are

motivated by extraneous



“We have no hesitation in holding

that Capt. Satish Sharma in his

capacity as a Minister for

Petroleum and Natural Gas

deliberately acted in a wholly

arbitrary and unjust manner. We

have no doubt in our mind that

Capt. Satish Sharma knew that the

allottees were relations of his

personal staff, sons of Ministers,

Selection Boards and the members of

the Oil Selection Boards

themselves. The allotments made by

him were wholly mala fide and as

such cannot be sustained.

We are further of the view that

Capt. Satish Sharma acted in a

wholly biased manner inasmuch as he

unfairly regarded with favour the

cases of 15 allottee before him.

The relevant circumstances

available from record and discussed

by us leave no manner of doubt in

our mind that Capt. Satish Sharma

deliberately acted in a biased

manner to favour these allottees

and as such the allotment orders

are wholly vitiated and are liable

to be set aside.”

“Mr. Satish Sharma has acted in

utter violation of the law laid-

down by this Court and has also

infarcted Article 14 of the

Constitution of India. As already

stated in a minister in the

Central Government is in a position

of a trustee in respect of the

public property under his agencies

are a kind of wealth which the

Government must distribute in a

bona fide manner and in conformity

with law. Capt. Satish Sharma has

betrayed the trust reposed in him

by the people under the


One of the directions issued by

this Court was an under :

“5. Capt. Satish Sharma shall show-

cause within two weeks why a

direction be not issued to the

appropriate police authority to

register a case and initiate

prosecution against him for

criminal breach of trust or any

other offence under law. He shall

further show-cause within the said

period why he should not, in

addition, be made liable to pay

damages for his mala fide action in

allotting petrol pumps to the above

mentioned fifteen persons.”

Pursuant to the above quoted direction, a show cause notice was issued to Capt. Satish Sharma. He has filed affidavit in reply to the show cause notice. We have heard Mr. Salve, learned counsel appearing for Capt. Satish Sharma. There are two parts of the directions quoted above. This Court has called upon Capt. Satish Sharma to show cause why a direction be not issued to the appropriate police authority to register a case and initiate prosecution against him for criminal breach of trust or any other offence under law.

The findings of this Court, quoted above, and the conclusion reached in the Common Cause case, leave no manner of doubt that an investigation by an independent authority is called for in this case. We, therefore, direct the Central Bureau of Investigation (CBI) to register a case against Capt. Satish Sharma in respect of the allegation dealt with and the findings reached by this Court in the Common Cause case. The CBI shall hold investigation and proceed in accordance with law. There shall be no limit on the power, scope and sphere of investigation by the CBI. We, however, make it clear that the CBI shall not be influenced by any observations made by this Court or the findings reached in Common Cause case, for reaching the conclusion as to whether any prima facie case for prosecution/trial is made out against Capt. Sharma. It shall have to be decided on the basis of the material collected and made available with the CBI as a result of the investigation. We direct the CBI to complete the investigation within three months of the receipt of this order. The CBI shall file interim report to indicate the compliance of this order. This shall be to indicate the compliance of this order. This shall be done by January 20, 1997 and this matter shall be listed on January 22, 1997 before a Bench of which Mr. Justice Faizan Uddin is a member.

Mr. Harish Salve has addressed elaborate arguments on the question of damages. We place on record our appreciation for Mr. Harish Salve for assisting this Court in a very fair and independent manner.

According to Mr. Salve this is not a case where compensatory or exemplary damages should be imposed. According to him nominal damages would meet the ends of justice.

This Court has authoritatively laid down in Nilabati Behera (Smt.) Alias Lalita Behera Vs. State of Orissa and Ors. 1993 (2) SCC 746 that damages can be awarded by this Court in proceedings under Article 32 of the Constitution of India. Mr. Salve has taken us through the Privy Council judgment in Rookes Vs. Barnard and Ors. 1964 Appeal Cases 1129. Lord Devlin in his opinion has held that exemplary damages can be awarded for “oppressive, arbitrary and unconstitutional action by the servants of the Government”. Mr. Salve has also taken us through the judgment of the Court of Appeal in A.B. and Ors. Vs. South West Water Services Ltd. 1993 Queen’s Bench 507. Broome’s case elaborately discussed and relied upon in this judgment. It would be useful to quote the relevant part of the opinion by Stuart-Smith L.J.

“This first category is “oppressive, arbitrary or unconstitutional action by the servants of the government.” It is common ground that this category of persons is not limited to the servants of central government, but includes servants of local government and the police. In Broome v. Cassell & Co. Ltd. (1972) A.C. 1027, 1077- 1078, Lord Hailsham of St. Marylebone L.C. said : “… I would be surprised if it included only servants of the Government if the strict sense of the word. It would, in my view, obviously apply to the police … and almost as certainly to local and other officials exercising improperly rights of search or arrest without warrant, and it may be that in the future it will be held to include other abuses of power without warrant by persons purporting to exercise legal authority.”

Lord Reid said, at pp. 1087-88 :

“With regard to the first I think that the context shows that the category was never intended to be limited to Crown servants. the contrast is between “the Government” and private individuals. Local government is as much government as national government, and the police and many other persons are exercising governmental functions. It was unnecessary in Rookes v. Barnard to define the exact limits of the category. I should certainly read it as extending to all those who by common law or statute are exercising functions of a governmental character.” Lord Wilberforce said at p.1120 :

“There is not perhaps much difficulty about category 1 : it is well based on the cases and on a principle stated in 1703 – ‘if public officers will infringe men’s rights, they ought to pay greater damages than other men to deter and hinder others from the like offences:’ Ashby v. White (1703) 2 Id. Raym. 938, 956, per Holt C.J. Excessive and insolent use of power is certainly something against which citizens require as much which I understand your Lordships to endorse would correspond with Holt C.J.’s ‘public officers’ and would partly correspond with modern needs.” Lord Diplock said of the first category, at p.1130 : “It would embrace all persons purporting to exercise powers of government, central or local, conferred upon them by statute or at common law by virtue of the official status or employment which they held.”

In the said case Thomas Bingham M.R. further elaborated the concept in the following words : “In the first category there had

been what he variously described as

an “arbitrary and outrageous use of

executive power:’ (see p. 1223) and

” oppressive, arbitrary or

unconstitutional action by the

servants of the government:” see p.

1226. Minute textual analysis of

these expressions is inappropriate.

This was a judgment, not a statute.

But there can be no doubt What

Lord Devlin was speaking about. It

was gross misuse of power,involving

tortious conduct, by agents of

government. According to the

traditional classification of the

law of tort, such misuse of power

could give rise to any one of a

number of causes of action, which

Lord Devlin was not at pains to


The Court of Appeal also relied upon the judgment of the House of Lords in Broome Vs. Cassell & Co. Ltd. 1972 Appeal Cases 1027.

We are of view that the legal position that exemplary damages can be awarded in a case where the action of a public servant is oppressive, arbitrary or unconstitutional is unexceptionable. The question for consideration, however, is whether the action of Capt. Satish Sharma makes him liable to pay exemplary damages. In view of the findings of this Court in Common Cause Case – quoted above – the answer has to be in the affirmative. Satish Sharma’s actions were wholly arbitrary, mala fide and unconstitutional. This Court has given clear findings to this effect in the Common Cause case. We, therefore, hold that Capt. Satish Sharma is liable to pay exemplary damages.

We have heard Mr. HN Salve on the question of quantum. Mr. Salve has vehemently contended that Capt. Sharma was a part of the system which was operating before his joining as a Minister. According to him the types of wrongs were being committed even earlier on the assumption subjective satisfaction. He has further contended that since the concept of absolute liability of public servants for misfeasance has been of recent origin in this country even while awarding exemplary damages leniency should be shown. There is some plausibility in the contentions raised by Mr. Salve. After examining all the facts and circumstances of this case and giving thoughtful consideration to this aspect, we direct Capt. Satish Sharma to pay a sum of Rs. 50 lac as exemplary damages to the Government Exchequer. Since the property with which Capt. Sharma was dealing was public property, the Government which is “by the people” has to be compensated. We further direct Capt. Sharma to deposit the amount with the Secretary, Ministry of Finance, Government of India within nine months from today. The amount if not paid, shall be recoverable as arrears of land revenue.

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