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Company Owned Company Operated outlets (COCO) as a means to enable National Oil Companies to run and operate their own outlets which were to be run as model retail outlets.= Although, the Appeals have been filed on account of the denial to the land owners of the grant of dealership in respect of the lands demised by them to the Oil Companies, = the doctrine of promissory estoppel and legitimate expectation, as canvassed on behalf of the Appellants and the Petitioners, cannot be made applicable to these cases where the leases have been granted by the land owners on definite terms and conditions, without any indication that the same were being entered into on a mutual understanding between the parties that these would be temporary arrangements, till the earlier policy was restored and the claim of the land owners for grant of dealership could be considered afresh. On the other hand, although, the nominees of the lessors were almost in all cases appointed as the M&H Contractors, that in itself cannot, in our view, convert any claim of the land owner for grant of a permanent dealership. As has been indicated hereinbefore, even the M&H Contractor had to submit an affidavit to the effect that he did not have and would not have any claim to the dealership of the retail outlet and that he would not also obstruct the making over possession of the retail outlet to the Oil Company, as and when called upon to do so. – the entire focus has shifted to COCO outlets on account of the fresh lease agreements entered into by the Appellants with the Oil Companies which has had the effect of obliterating the claim of the land owners made separately under earlier lease agreements. The claims of the Appellants/Petitioners in the present batch of matters have to be treated on the basis of the agreements subsequently entered into by the Oil Companies, as submitted by the learned Attorney General.- The four Transfer Petitions, being T.P.(C) Nos. 971-973 of 2010 and T.P.(C) No. 1260 of 2011, which were heard along with these Appeals and Petitions, are allowed. These Appeals and Petitions must, therefore, fail and are dismissed.However, it will be open to the Appellants and the Petitioners to approach the proper forum in the event they have suffered any damages and loss, which they are entitled to recover in accordance with law.

 published in    http://judis.nic.in/supremecourt/imgst.aspx?filename=40540   

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5228 OF 2013
(Arising out of SLP(C) NO. 5849 OF 2008)
MOHD. JAMAL …APPELLANT

Vs.

UNION OF INDIA & ANR. …RESPONDENTS
WITH
C.A. No.5229/2013 @ S.L.P.(C) No.8658/2008
C.A. No.5230/2013 @ S.L.P.(C) No.27299/2008
W.P.(C) No.459/2009
W.P.(C) No.528/2008
C.A. No.5231/2013 @ S.L.P.(C) No.5756/2008
C.A. No.5232/2013 @ S.L.P.(C) No.5349/2008
C.A. No.5233/2013 @ S.L.P.(C) No.5643/2008
C.A. No.5234/2013 @ S.L.P.(C) No.7167/2008
C.A. No.5235/2013 @ S.L.P.(C) NO.7176/2008
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C.A. No.5239/2013 @ S.L.P.(C) NO.8664/2008
C.A. No.5240/2013 @ S.L.P.(C) NO.8681/2008
C.A. No.5241/2013 @ S.L.P.(C) NO.8685/2008
C.A. No.5242/2013 @ S.L.P.(C) NO.8722/2008
C.A. No.5243/2013 @ S.L.P.(C) No.8765/2008
C.A. No.5244/2013 @ S.L.P.(C) No.8956/2008
C.A. No.5245/2013 @ S.L.P.(C) No.9010/2008
C.A. No.5246/2013 @ S.L.P.(C) No.9027/2008
C.A. No.5247/2013 @ S.L.P.(C) No.9051/2008
C.A. No.5248/2013 @ S.L.P.(C) No.9920/2008
C.A. No.5249/2013 @ S.L.P.(C) No.5596/2009
C.A. No.5250/2013 @ S.L.P.(C) No.5903/2009
C.A. No.5251/2013 @ S.L.P.(C) No.5909/2009
C.A. No.5252/2013 @ S.L.P.(C) No.6350/2009
C.A. No.5253/2013 @ S.L.P.(C) No.8241/2009
C.A. No.5254/2013 @ S.L.P.(C) No.8297/2009
C.A. No.5255/2013 @ S.L.P.(C) No.11000/2009
C.A. No.5256/2013 @ S.L.P.(C) No.10346/2009
C.A. No.5257/2013 @ S.L.P.(C) No.16711/2008
C.A. No.5258/2013 @ S.L.P.(C) No.16922/2008
C.A. No.5259/2013 @ S.L.P.(C) No.9655/2010
T.C.(C) No.88/2013 @ T.P.(C) No.971 of 2010
T.C.(C) No.89/2013 @ T.P.(C) No.972 of 2010
T.C.(C) No.90/2013 @ T.P.(C) No.973 of 2010
C.A. No.5260/2013 @ S.L.P.(C) No.11540/2009
C.A. No.5261/2013 @ S.L.P.(C) No.11541/2009
C.A. No.5262/2013 @ S.L.P.(C) No.16377/2009
C.A. No.5263/2013 @ S.L.P.(C) No.30226/2008
C.A. No.5264/2013 @ S.L.P.(C) No.22891/2008
C.A. No.5265/2013 @ S.L.P.(C) No.20908/2011
C.A. No.5266/2013 @ S.L.P.(C) No.21794/2011
C.A. No.5267/2013 @ S.L.P.(C) No.21911/2011
C.A. No.5268/2013 @ S.L.P.(C) No.21914/2011
C.A. No.5269/2013 @ S.L.P.(C) No.22016/2011
C.A. No.5270/2013 @ S.L.P.(C) No.22017/2011
C.A. No.5271/2013 @ S.L.P.(C) No.22018/2011
C.A. No.5272/2013 @ S.L.P.(C) No.22019/2011
C.A. No.5273/2013 @ S.L.P.(C) No.22020/2011
C.A. No.5274/2013 @ S.L.P.(C) No.22021/2011
C.A. No.5275/2013 @ S.L.P.(C) No.22028/2011
C.A. No.5276/2013 @ S.L.P.(C) No.22029/2011
C.A. No.5277/2013 @ S.L.P.(C) No.22440/2011
C.A. No.5278/2013 @ S.L.P.(C) No.22355/2011
C.A. No.5279/2013 @ S.L.P.(C) No.22363/2011
C.A. No.5280/2013 @ S.L.P.(C) No.22831/2011
C.A. No.5281/2013 @ S.L.P.(C) No.22637/2011
C.A. No.5282/2013 @ S.L.P.(C) No.22691/2011
C.A. No.5283/2013 @ S.L.P.(C) No.22704/2011
C.A. No.5284/2013 @ S.L.P.(C) No.22737/2011
C.A. No.5285/2013 @ S.L.P.(C) No.22861/2011
C.A. No.5286/2013 @ S.L.P.(C) No.22899/2011
C.A. Nos.5287-88/2013 @S.L.P.(C)Nos.25721-25722/2011
C.A. Nos.5289-90/2013 @ S.L.P.(C)Nos.25934-25935/2011
C.A. No.5291/2013 @ S.L.P.(C) No.22742/2011
C.A. Nos.5292-93/2013 @S.L.P.(C)Nos.27235-27236/2011
C.A. Nos.5294-95/2013 @S.L.P.(C)Nos.28112-28113/2011
C.A. No.5296/2013 @ S.L.P.(C) No.32096/2011
C.A. No.5297/2013 @ S.L.P.(C) No.33698/2011
C.A. No.5298/2013 @ S.L.P.(C) No.138/2012
C.A. No.5299/2013 @ S.L.P.(C) No.1535/2012
C.A. No.5300/2013 @ S.L.P.(C) No.1142/2012
T.C.(C) No.91/2013 @ T.P.(C) No.1260 of 2011
C.A. Nos.5301-02/2013 @ S.L.P.(C)Nos.24315-24316/2008

J U D G M E N T
ALTAMAS KABIR, CJI.
1. Special Leave Petition (Civil) No. 5849 of 2008 filed by one Mohd.
Jamal, has been heard along with several other matters where the same issue
has been raised and the reliefs prayed for are similar.

2. Leave granted in all the matters. During the hearing of these
matters, Mohd. Jamal’s case was taken up as the lead matter.

3. From the facts as disclosed in the several Special Leave Petitions
(now Appeals), there are three groups of matters included in these Appeals.
The first group relates to the State of Karnataka, where the Union of
India is the Petitioner/Appellant. The second group involves matters filed
by the private parties where the jurisdiction is that of Delhi. The third
group deals with the similar question in regard to the States of Gujarat
and Madhya Pradesh.

4. All the private Appellants were and are aspirants for dealership in
respect of retail outlets of the Indian Oil Corporation and the IBP, which
merged with the Indian Oil Corporation on 2nd May, 2007. The genesis of
the claim for dealership arises out of policy guidelines, being Policy/MDPM
No.319/02 dated 8th October, 2002, for selection of retail outlet dealers,
published by the Indian Oil Corporation after the distribution of petroleum
product had been deregulated. The said guidelines dealt with the procedure
for locations outside Marketing Plans and also stipulated that for the
purpose of selection, the dealership would be categorised as indicated in
the guidelines and all retail outlets would be developed only on A/C Sites
basis which finds place in clause 2 of the guidelines dealing with the
common guidelines for all categories.

5. Appearing for the Appellant in SLP(C)No.5842/2008 (now appeal), Mr.
Pradip Ghosh, learned Senior Advocate, submitted that after nationalisation
of Oil Companies in 1976, the sale and distribution of petroleum and
petroleum products were under the control of the Central Government and
regulated by the provisions of the Essential Commodities Act, 1955. On and
from 1978 the Central Government allowed the Public Sector Oil Companies to
set up retail outlets through an Oil Selection Board, which was
subsequently renamed as Dealer Selection Board. Mr. Ghosh submitted that
the Central Government devised a methodology of setting up of retail
outlets, by constituting the Industrial Meeting Committee which would
decide distribution of outlets region-wise in respect of each petroleum
company. Till 1998, the production and marketing of petroleum and
petroleum products were under the control of the Ministry of Petroleum and
Natural Gas and were executed through Public Sector Oil Companies. In
1998, the Central Government decided to partly deregulate the production,
supply and distribution of petroleum and its products and indicated 2002 as
a cut-off year to completely deregulate the production and supply of
petroleum and petroleum products. The Central Government, therefore, again
took steps to meet such objectives and in that connection decided to make
certain changes with regard to the functioning of natural oil and gas
companies under the Market Driven Pricing Regime and to workout the
modalities of setting up petrol pumps on National and State Highways.

6. This led to the creation of the concept of Company Owned Company
Operated outlets (COCO) as a means to enable National Oil Companies to run
and operate their own outlets which were to be run as model retail outlets.
Mr. Ghosh submitted that the scheme thus devised was to extend and cater
to all National and State Highways and has certain salient features which
need to be spelt out in order to appreciate future developments, which form
the subject matter of the various appeals being heard by us.

7. One of the more important objectives which the scheme hoped to
achieve was to develop the retail outlets on relatively large plots of land
measuring 5 acres or so on the Highways. Such land would be under the
control of the marketing company either by way of purchase or on long-term
lease basis. Such retail outlets would also have facilities and amenities
to be developed by the Dealer in line with the norms laid down by the Oil
Companies on a standardised purchase. Such retail outlets were to be
developed outside the Marketing Plan in a transparent manner, subject to
observance of ban on multiple dealership. Mr. Ghosh submitted that the
said scheme was to be executed in two phases. Phase I would enable the Oil
Companies to launch the scheme on pilot project basis for setting up COCO
outlets which might serve as models for future outlets. The second phase
would be based on the experience of the first phase and the rest of the
scheme would be taken up and completed within a period of three years.

8. Mr. Ghosh submitted that apparently a decision had been taken by the
oil companies to convert the COCO outlets into regular dealerships. A
uniform policy was formulated for manning and controlling of Jubilee Retail
Outlets and, pursuant to such policy, the Government approved the Indian
Oil Corporation’s (IOC) decision to run 83 outlets for which sites had been
taken over and facilities installed on COCO basis under certain guidelines.
Mr. Ghosh urged that it has subsequently come to light that in respect of
the said 82 outlets, 77 dealers or those holding Letters of Intent, had
been allotted dealership.
9. However, on 1st April, 2000, the Government of India notified its
policy for operation of COCO outlets through contractors. In February,
2002, the Indian Oil Corporation purchased 33.58% of Equity Shares of IBP
Ltd. Till 31st March, 2002, no oil company could by itself select its
dealers or award its dealership to them. The Government appointed Dealer
Selection Boards, who were entrusted with the task of selection of dealers
for all oil companies. It was only from 1st April, 2002, that the
Administered Price Mechanism was dismantled and the Dealer Selection Boards
were dissolved. The Oil Companies were, thereafter, given a certain amount
of freedom to frame their own policies, relating to the setting up of the
retail outlets by selection of dealers.

10. On 8.10.2002, IBP Ltd. devised and/or formulated its policy and
framed guidelines, inter alia, for selection of retail outlets in the
deregulated scenario. In line with the change in policy formulated by the
Government of India, guidelines were framed which recognised the rights of
the land owners as a category of persons entitled to dealership, subject to
conditions. Clause 3 of the scheme provided that the dealership of such
COCO outlets would first be offered to the landlord, provided he was found
suitable. In case the landlord declined to accept the dealership, it would
be offered to Maintenance and Handling Contractors (M&H). In the event,
the Maintenance and Handling Contractor also declined to accept the
dealership, the same would be offered to the best candidate available.

11. Mr. Ghosh submitted that on 14th January, 2003, in line with the
Respondent’s policy guidelines for selection of retail outlet dealers in
the aftermath of deregulation vide Memo Reference Policy/MDPM No.319/02
dated 8.10.2002, and a subsequent clarification of the General Manager (M),
MHO dated 14.12.2002, the Appellant, Mohd. Jamal, applied for a retail
outlet dealership for his land in the land owner’s category. Such
application was made pursuant to an advertisement issued by the oil company
and the Appellant was also called upon by the oil company to obtain
Dealership Agreement Form from the Divisional Office by depositing Rs.1000/-
. After obtaining such Form, the Appellant submitted the same to the
company. Mr. Ghosh submitted that on 15th January, 2003, the Committee on
Dealer Selection found the Appellant’s land suitable for developing a
retail outlet, on National Highway No.28, Sadatpur PS, Muzaffarpur Road,
Bihar. The company even sought prior approval for the said site from the
Joint Chief Controller of Explosives, East Circle, Calcutta. Based on the
recommendation made by the Dealer Selection Committee dated 15.1.2003, on
25th January, 2003, the General Manager (ER) of the Respondent No.2 Company
recommended that the dealership be given to the Appellant and directed that
a Letter of Intent be issued in his favour on receipt of the explosive
licence. Mr. Ghosh submitted that while the Appellant’s matter for grant
of dealership was at the final stage, on 5th February, 2003, the Policy
adopted on 8.10.2002 was suspended. It has, of course, been claimed on
behalf of the Appellant that the suspension of the policy was never
communicated to the land owners, including the Appellant, Mohd. Jamal.

12. It is also the Appellant’s case that it was mutually agreed that till
the issuance of the Letter of Intent, as an interim arrangement, a nominee
of the Appellant would be appointed as the Maintenance and Handling
Contractor to run the petrol pump, provided that an affidavit in the
prescribed form would be furnished by the Contractor. According to Mr.
Ghosh, relying on such assurance, the Appellant offered his land on lease
to the Oil Company on 14.3.2003, subject to the condition that the monthly
rental of the land would be Rs.27,000/- and would commence from the date of
registration of the documents. Further to the said understanding on 29th
March, 2003, a contract for Maintenance and Handling was executed between
the Oil Company and Mohd. Ishtiaq Alam, the brother and nominee of the
Appellant, for running the said petrol pump. Before Mohd. Ishtiaq Alam was
appointed as M&H Contractor, on anticipation of the Oil Company that he
would be granted dealership, invested a sum of about Rs.25 lakhs to set up
infrastructure. Ultimately, on 31st March, 2003, the petrol pump was
commissioned and started operating.

13. Mr. Ghosh submitted that in the above circumstances, the Appellant
executed a lease deed in favour of the Oil Company for a period of 15
years, with a clause for further periods of renewal.

14. Mr. Ghosh submitted that the aforesaid arrangement was understood by
all the parties to be of temporary duration, as would be evident from the
fact that the rent initially settled at Rs. 27,000/- per month in respect
of the Appellant’s land at Sadatpur was reduced to Rs. 21,000/- per month
after negotiation, which upon calculation comes to approximately 50 paise
per square feet, which in terms of the valuation made, was abysmally low.

15. Mr. Ghosh submitted that various other decisions were taken both by
the Oil Company as well as the Ministry concerned by which fresh guidelines
were also framed for selection of retail outlets and SKO-LDO (Super
Kerosene Oil – Light Diesel Oil) dealers. Learned counsel submitted that
by a policy circular No. 05/0405 dated 30.3.2005, introduced by the Oil
Company, existing land owners of the concerned Jubilee Retail Outlets and
the Company Owned and Company Operated Outlets were disqualified from being
appointed as dealers, although, the same was never communicated to the
Appellant. Mr. Ghosh submitted that, in the meantime, the temporary
arrangement which had been arrived at in the case of the Appellant, Mohd.
Jamal, has been continuing on the strength of orders passed by this Court.
Mr. Ghosh also urged that on 6th September, 2006, the Oil Company
formulated a new policy whereby the concept of offering dealership to land
owners was abandoned to the prejudice of the land owners whose Letters of
Intent for dealership were pending and where lands had also been taken on
long term lease by the Oil Company at low rates of rent, on the assurance
that dealership under the land owners category would be given to them. By
virtue of the new policy, the Oil Company proposed to run outlets on their
own and/or through Labour Contractors, in supersession of all earlier
policy guidelines.

16. Mr. Ghosh submitted that one of such land owners filed Writ Petition
No. 358 of 2006 – N.K. Bajpai Vs. Union of India and Others, challenging
the changed policy. While disposing of the Writ Petition, the learned
Single Judge of the Delhi High Court, inter alia, held that Oil Companies
cannot assign the running of petrol pumps on the land of the writ
petitioners without their consent. Mr. Ghosh submitted that aggrieved by
the said Notification dated 6.9.2006, the Appellant also filed Writ
Petition No. 2392 of 2007, before the Delhi High Court for quashing of the
said Notification and to restrain the respondents from
terminating/cancelling the arrangement arrived at regarding the running of
the retail outlet on the Appellant’s land through his nominee, or in the
alternative, to return the land to the Appellant if the dealership was not
granted to the Appellant. Mr. Ghosh submitted that the learned Single
Judge of the Delhi High Court referred the matter to a Division Bench for
hearing and on 8.2.2008, the Delhi High Court disposed of a bunch of Writ
Petitions, while retaining 11 such Writ Petitions, which, it felt needed
further consideration since the said Writ Petitions projected an implied
promise and/or understanding having been reached between the land owners
and the Oil Companies concerned having regard to the low lease rentals for
the lands offered by the land owners to the companies for establishing
their retail outlets. Learned counsel submitted that the Appellant’s Writ
Petition was among those bunch of petitions, which were dismissed by the
High Court, although, the Appellant’s case was the same as that of the 11
Petitioners, whose matters had been retained by the High Court for further
consideration. Mr. Ghosh submitted that it is at that stage that this
Court admitted the Appellant’s Special Leave Petition (Civil) No. 5849 of
2008, on 31st July, 2008, and passed an order whereby the parties were
directed to maintain status-quo as on that day, with liberty to the
respondents to apply for variation and/or modification of the order, if so
advised.

17. The main ground of challenge canvassed by Mr. Ghosh on behalf of the
Appellant, Mr. Jamal, and other similarly placed Appellants, was that
having acted on the basis of a policy by which the Respondent Oil Companies
had offered full dealership to land owners and having caused such land
owners to alter their position to their disadvantage, the Oil Companies
were now estopped from going back on their promise. Mr. Ghosh urged that
the decision to discontinue the grant of dealership and to introduce the
new concept of COCO outlets, to be run by the Maintenance and Handling
contractors, could not be used to the disadvantage of those land owners in
whose favour a decision had already been taken to issue Letters of Intent
for grant of dealership. Mr. Ghosh submitted that these cases were
clearly covered by the doctrine of promissory estoppel, inasmuch as, in
these cases the land owners had altered their positions to their detriment
in several ways. Mr. Ghosh submitted that in most cases the rates of rents
at which the lands were offered to the Oil Companies were extremely low and
did not reflect the market rental of such lands, which is one of the
indications that a promise had been made to the land owners that they would
be granted dealerships in respect of the said lands, which was in tune with
the policy, which had been declared by the Oil Companies earlier.

18. Mr. Ghosh submitted that in other cases the landlords had invested
large sums of money, as in the case of Mohd. Jamal, in preparing the land
offered for operating the retail outlets of petroleum and petroleum
products, ostensibly on the promise that they would be granted dealership
for running the said outlets. Mr. Ghosh submitted that acting on such
promise the Appellant, Mohd. Jamal, spent more than Rs.27 lakhs to prepare
the site for running the retail outlet and it would not be unreasonable to
accept the case made out on his behalf that such expenditure was incurred
in lieu of such promise. In certain other cases, the land owners had been
persuaded to enter into long term lease agreements, again at nominal rents,
on the assurance that their nominees would be appointed as Maintenance and
Handling Contractors of the different COCO units, pending the decision to
grant full dealership in respect of such retail outlets, in keeping with
the earlier policy of reducing the number of COCO units and retaining a few
to be run by the Oil Companies as model outlets.

19. Mr. Ghosh submitted that in these circumstances, the Oil Companies
and the Union of India are estopped by the promises made by them to grant
dealerships to the land-owners on the basis of the policy existing prior to
5th February, 2003 and 6th September, 2006.

20. Mr. Ghosh submitted that one of the earliest decisions of this Court
regarding the doctrine of promissory estoppel was in Union of India Vs.
M/s. Indo-Afghan Agencies Limited [(1968) 2 SCR 366], wherein it was held
that even though the case did not fall within the scope of Section 115 of
the Evidence Act, it was still open to a party who had acted on a
representation made by the Government to claim that the Government should
be bound to carry out the promise made by it, though not recorded in the
form of a formal contract.

21. Reference was then made to the celebrated decision in Motilal
Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others [(1979)
2 SCC 409], commonly known as the “M.P. Sugar Mills case”, wherein a Bench
of Two Judges went into a detailed enquiry regarding the doctrine of
promissory estoppel and equitable estoppel and observed that the doctrine
of promissory estoppel is not really based on the principle of estoppel,
but is a doctrine evolved by equity in order to prevent injustice. It has
also been observed that there is no reason as to why it should be given a
limited application by way of defence and that it could also be the basis
of a cause of action and all that was necessary for attracting the said
doctrine was that the promisee should have altered his position in relying
on the promise. It was emphasized that it was not necessary that the
promise should suffer any detriment as well.

22. Mr. Ghosh submitted that a somewhat different view had been taken
also by a Bench of Two Judges in Jit Ram Shiv Kumar Vs. State of Haryana
[(1981) 1 SCC 11], but the differing view expressed in the said case was
overruled by a Bench of Three Judges in Union of India and Others Vs.
Godfrey Philips India Limited [(1985) 4 SCC 369], wherein the decision in
the M.P. Sugar Mills case (supra) was pronounced as being the correct law.
23. Various other decisions have also been cited in support of the
aforesaid doctrine of promissory estoppel or equitable estoppel, but it
will suffice to refer to one of the latest decisions in this regard in
State of Bihar Vs. Kalyanpur Cement Limited [(2010) 3 SCC 274], wherein it
was emphasized that in order to invoke the aforesaid doctrine, it has to be
established that a party had made an unequivocal promise or representation
by word or conduct, to the other party, which was intended to create legal
relations or affect the legal relationship to arise in the future, and that
the party invoking the doctrine has altered its position relying on the
promise.

24. Mr. Ghosh submitted that having held out a promise to grant a
dealership to the Appellant and the other Appellants in the connected
matters, in respect of the lands offered by them for setting up retail
outlets for the sale of petroleum and petroleum products and having acted
thereupon just prior to the stage of grant of Letters of Intent, it was no
longer available to the Oil Companies to renege on their promise,
particularly when the aspirants for dealership had altered their position
and had spent enormous sums of money to make the sites ready for setting up
the retail outlets. As was observed in the M.P. Sugar Mills case (supra),
it was not even necessary for the land owners to have suffered any
prejudice on account of such alteration. It was sufficient that, pursuant
to the promise made of grant of dealership, they had altered their position
and had spent large sums of money to make the sites ready for occupation.

25. To bolster his submissions, Mr. Ghosh referred to the Single Bench
decision of the Karnataka High Court dated 28th July, 2009, in Writ
Petition No. 1016 of 2007, filed by one Shri Y.T. Narendra Babu and other
connected Writ Petitions, wherein the facts identical to the facts in these
cases were in issue. In fact, SLP(C) No. 9655 of 2010 (now Appeal) has
been filed by the Indian Oil Corporation Limited against Y.T. Narendra
Babu, against the appellate order of the Karnataka High Court dated
19.11.2009, in Writ Appeal No. 3248 of 2009, endorsing the judgment of the
learned Single Judge in the Writ Petition. In the same set of facts, where
lands had been taken on lease on the assurance that the land owners would
be appointed as dealers in due course and that till then the retail outlet
would be treated as a COCO unit to be run by a nominee of the land owner,
the learned Single Judge was of the view that in view of the assurance
given to the land owners and notwithstanding the change in policy
guidelines regarding the allotment of dealership in favour of the land
owners, the doctrine of promissory estoppel and of legitimate expectation
would apply to the case. The learned Single Judge, therefore, allowed the
Writ Petition and directed the Respondents to process the applications
filed by the Petitioners or their nominees for grant of dealership on a co-
terminus basis with the period of the lease of the land on which the retail
outlets are established. As indicated hereinbefore, the said views were
approved by the Division Bench, which did not interfere with the decision
or the directions given consequent thereto by the learned Single Judge.

26. Mr. Ghosh then turned to another aspect, which had been considered in
the cases heard and determined by the Gujarat High Court, namely, the
issuance of Comfort Letters in several cases where the lease deed had been
executed prior to 8th October, 2012, assuring the land owners of the
demised plots that they would enjoy the right of first refusal if COCO
outlets set up on their lands were to be converted into dealerships. Mr.
Ghosh pointed out that some of the Comfort Letters addressed to the land
owners issued on behalf of the IBP Company Limited, by its Divisional
Manager, have been annexed to the Special Leave Petitions (now Appeals),
filed by those aggrieved by the judgment of the Division Bench of the
Gujarat High Court, setting aside the orders of the learned Single Judge.
Upon holding that the Comfort Letters issued to individual land owners
could not be relied upon, as being a policy decision of the Company, the
Division Bench came to the conclusion that the learned Single Judge was in
error in giving a finding of fact in a Writ Petition under Article 226 of
the Constitution, particularly when the facts were disputed and the entire
evidence was yet to be disclosed. Mr. Ghosh submitted that, while allowing
the Writ Appeals filed by the Oil Companies, the Division Bench of the
Gujarat High Court had misconstrued the submissions made with regard to the
doctrine of promissory estoppel, which would be available from the
surrounding facts and circumstances, even if the same had not been
explicitly spelt out.

27. In support of his submissions, Mr. Ghosh referred to the decision of
this Court in Yomeshbhai Pranshankar Bhatt Vs. State of Gujarat [(2011) 6
SCC 312], wherein the learned Judges, while considering the scope of the
Supreme Court’s jurisdiction under Article 142 of the Constitution, held
that even during a final hearing the Supreme Court was not precluded from
considering the controversy in its entire perspective and that the power
under Article 142 was to do complete justice, unless there was an express
provision of law to the contrary. Mr. Ghosh urged that this Court had
always held that technical objections should not come in the way of the
Supreme Court doing complete justice to the parties.

28. Mr. Ghosh submitted that in the light of the above, the Oil Companies
should either be directed to act in terms of the promise made to grant
dealerships or in the event of their unwillingness to do so, they may be
directed to restore possession of the lands leased out to them in
accordance with the doctrine of restitution.

29. Mr. Rana Mukherjee, who appeared for some of the Petitioners (now
Appellants) in this batch of cases and had also assisted Mr. Pradip Ghosh,
while reiterating the submissions made by Mr. Ghosh, referred to some of
the factual differences in the individual Writ Petitions and urged that,
being in a dominant position, the Government cannot act arbitrarily. Having
made a promise to grant dealership licences to some of the land owners, who
had on the basis of such assurances demised their lands to the Oil
Companies for rents which were markedly lower than the existing rents in
the area and had also spent large amounts in making such sites ready, the
Oil Companies could not go back on such assurances on the plea that there
had been a change in the policy for grant of dealership. Mr. Rana
Mukherjee submitted that the window period, which had been identified by
this Court, between 8th October, 2002 and 5th February, 2013, was a period
when the policy to grant dealerships was in full force and the applications
received and processed during the said period would have to be treated
differently from the applications made thereafter, after the change in the
policy. Mr. Mukherjee, in fact, contended that in some of the cases, where
applications had been made for grant of dealership pursuant to
advertisements published in the Press, but in whose cases the decision to
issue Letters of Intent had been kept in abeyance prior to 8th October,
2002, were also entitled to the same benefits in keeping with the doctrine
of promissory equity.

30. Mr. Mukherjee, who also appeared in SLP(C) No. 5756 of 2008 (now
Appeal), filed by one Khurshid Ahmed Chippa, submitted that this Court in
Kumari Shrilekha Vidyarthi Vs. State of U.P. [(1991) 1 SCC 212], wherein
the doctrine of natural justice fell for consideration, and it was held
that every State action, in order to survive, must not be susceptible to
the vice of arbitrariness, which forms the essence of Article 14 of the
Constitution. While interpreting Article 14 of the Constitution, this
Court has consistently held that non-arbitrariness is a necessary
concomitant of the rule of law and is, in substance, fair play in action.
In the said decision, it was further observed that whether an impugned act
is arbitrary or not, is ultimately to be decided on the facts and
circumstances of each case, but an obvious test to apply is to see whether
there is any discernible principle emerging from the impugned act and, if
so, does it satisfy the test of reasonableness. It was further observed
that every State action must be informed by reason and it follows that an
act, uninformed by reasons, is arbitrary.

31. Mr. Mukherjee also referred to the decision of this Court in
Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay
[(1989) 3 SCC 293] and Mahabir Auto Stores Vs. Indian Oil Corporation
[(1990) 3 SCC 752], wherein similar views have consistently been expressed.
Mr. Mukherjee also prayed for the same reliefs as prayed for by Mr. Pradip
Ghosh, learned Senior Advocate, on behalf of some of the Appellants.

32. Mr. Jitender Mohan Sharma, learned Advocate who appeared with Mr.
Pradip Ghosh, learned Senior Advocate, in some of the Appeals, also
appeared individually for some of the other Appellants, such as Tirath Ram
Chauhan, Sohan Singh, etc. In facts which were similar to that of the
facts in Mohd. Jamal’s case and in almost all the other cases, Mr. Sharma
repeated and reiterated the submissions made by Mr. Ghosh in general and
reiterated Mr. Ghosh’s submissions with regard to the doctrine of
promissory estoppel, since the Appellants in all the cases in which Mr.
Sharma appeared, had altered their position after being given an assurance
that they would be given dealership in respect of the retail outlets to be
established on the demised lands. In their cases interim arrangements were
required to be made as the grant of dealerships were likely to take some
time. Mr. Sharma also urged that the decision of the Respondents to alter
their policy regarding grant of dealership, when matters had almost reached
the final stage of allotment of dealership, was against all norms of fair
play and was liable to be quashed.

33. Mr. Sanjay Sharawat, learned Advocate appearing for some of the
Respondents, also adopted the submissions made by Mr. Ghosh and pointed out
that the lease deeds executed by the land owners and the Maintenance and
Handling Contracts were kept separate, since it was the intention of the
Oil Companies that in terms of the policy of the Indian Oil Corporation
dated 23.7.2003, despite the two contracts being separate, as and when the
Policy permitted, dealership would be awarded to the land owners or their
nominees. It was, however, pointed out that in all the cases it had been
decided to grant Maintenance and Handling Contracts to nominees of the land
owners to enable them to run the retail outlets till a final decision was
taken in the matter. Mr. Sharawat submitted that the very fact that in the
Policy of the Indian Oil Corporation dated 23.7.2003, the Company had
specifically permitted the land owners to nominate anyone from the family
or from outside the family for being appointed as the Maintenance and
Handling Contractor, was sufficient indication that it was the intention of
the Respondents to grant permanent dealership to the land owners once a
clarification had been received in the matter.

Mr. Sharawat submitted that the problem had been created only on
account of the decision of the Oil Companies to go back on their promise
which brought all these cases squarely within the doctrine of promissory
estoppel.

34. Much the same arguments were advanced by Mr. Rajiv Dutt, learned
Senior Advocate appearing for the Writ Petitioner, Tirath Ram Chauhan, in
Writ Petition (Civil) No.528 of 2008. Mr. Dutt urged that pursuant to the
advertisement issued by IBP Oil Company on 12th April, 2001, the Petitioner
(now Appellant) had offered his land on NH-1A Jalandhar-Pathankot, but no
decision had been taken by the Respondents on such offer. On the other
hand, on 8th October, 2002, the Company introduced a Policy regarding
allotment of retail outlets under the land owners category. Thereafter, as
in the other cases, on the Appellant’s land being found suitable a lease
deed was executed and the Appellant’s nominee was appointed as the
Maintenance and Handling Contractor to run the outlet on 16.12.2002. On
30.11.2002, the pump began operational. Operations were continued in the
retail outlet by virtue of the said contract, which was extended annually.
35. While the aforesaid arrangement was continuing, on 6.9.2006, the
Ministry of Petroleum and Natural Gas issued a Notification directing all
the marketing companies to phase out the existing COCO retail units within
a year.

36. Mr. Dutt submitted that the Writ Petitions which had been filed before
the Delhi High Court for quashing the said Policy dated 6.9.2006 were
dismissed by the High Court on 8.2.2008 against which the several Special
Leave Petitions were filed. As far as the Writ Petitions are concerned, the
present Writ Petition was filed under Article 32 of the Constitution and
was entertained by this Court on 28.11.2008, when this Court issued Notice
and directed the parties to maintain status-quo, which order is still
subsisting. Mr. Dutt also relied on the decisions which had been cited by
Mr. Pradip Ghosh and in addition he also relied on the often cited decision
of this Court in Ramana Dayaram Shetty Vs. International Airport Authority
of India & Ors. [(1979) 3 SCC 489], wherein a question had arisen regarding
the right of the Petitioner to challenge the actions of the International
Airports Authority of India, which was an instrumentality or agency of the
Government. It was held that where the Corporation is an instrumentality or
the agency of the Government, it would be subject to the same
constitutional or public law limitations as the Government, which cannot
act arbitrarily and enter into a relationship with any person it likes at
its sweet will, but its action must be in conformity with some principle
which meets the test of reason and relevance. Reference was also made to
the decisions of this Court in the cases of E.P. Royappa Vs. State of Tamil
Nadu [(1974) 4 SCC 3] and Maneka Gandhi Vs. Union of India [(1978) 1 SCC
248], wherein it was held that Article 14 strikes at arbitrariness in State
action and ensures fairness and equality of treatment. It requires that
State action must not be arbitrary, but must be based on some rational and
relevant principle which is non-discriminatory.

37. In some of the other cases, learned counsel appeared and pointed out
that the applications for dealership had been made during the window period
between 8.10.2002 and 5.2.2003, making them eligible for being considered
for grant of dealership on the strength of the Policy, which was then
prevalent and was subsequently stayed on 5.2.2003 and was replaced by the
decision taken on 6.9.2006 to phase out the existing COCO Units.

38. Special Leave Petition (C) No.9010 of 2008 (now Appeal) arising out
of Writ Appeal No.2445 of 2007, from the Delhi High Court is a case similar
to that of Mohd. Jamal. Appearing on behalf of the Appellant, Satyanarayan
Kumar Singh, Mr. Ravi Shankar Prasad, learned Senior Advocate, repeated the
submissions made by Mr. Pradip Ghosh. Mr. Prasad submitted that although
the Appellant had applied for full dealership, the COCO unit was thrust
upon him and the same had to be reconverted into the Appellant’s claim for
full dealership.

39. Appearing for two of the Appellants in respect of Civil Appeal
@SLP(C)No.20908 of 2011 (Kamar Ahmed Yusuf Lulat & Ors. Vs. IBP Co. Ltd. &
Ors.) and Civil Appeal @SLP(C)No.22831 of 2011 (Jaswantsinh A Rana (D) by
LRs. & Ors. Vs. IBP Co. Ltd. & Ors.), Mr. Sunil Gupta, learned Senior
Advocate, also based the claim of the Appellants on the doctrine of
promissory estoppel. In fact, the case of the two Appellants is the same
as the case of most of the Appellants and Writ Petitioners, where the
learned Single Judge had allowed the Writ Petitions while the Division
Bench reversed the same on the ground that all the writ petitions had been
disposed of by a common reasoning. Mr. Gupta contended that the new policy
formulated on and from 10th August, 2002, was really a culmination of the
earlier policy of the Oil Companies dated 31.5.2001, which provided for
grant of full dealership in respect of the lands offered by new applicants.
As in the case of the other claimants, the claim of the Appellant did not
fructify on account of the change in policy and was kept in abeyance also,
as there was a further change in the policy by which the Oil Companies
decided to phase out the COCO units which were being run by Maintenance and
Handling Contractors. Mr. Gupta referred to the “comfort letters”, which
had been provided by the Government, assuring the land owners that the
decision to run the COCO units with the help of the Maintenance and
Handling Contractors, was only a temporary arrangement and as soon as it
would be possible, the land owners would be given the first option for
dealership in respect of the retail outlet. Mr. Gupta also relied on the
decisions of this Court on the doctrine of promissory estoppel and
legitimate expectation cited by Mr. Pradip Ghosh, Mr. Rana Mukherjee and
the other learned counsel and urged that the directives issued by the Oil
Company on 6.9.2006 were liable to be quashed.

40. Appearing for several of the claimants for dealership, Mr. Jaideep
Gupta, learned Senior Advocate, submitted that the facts in all these cases
were similar to the matters in which submissions had earlier been made.
However, in some of the matters, Mr. Gupta urged that the decision to grant
dealership had been taken before 8.10.2002 and nowhere in the Letters of
Intent, is there any indication that the retail outlets were COCO Units.
However, after the change in policy, the concept of COCO Units was
introduced and the nominees of the land owners were appointed as
Maintenance and Handling Contractors to run the said outlets. Thus, there
was a tenuous connection between the execution of the lease documents and
the grant of Maintenance and Handling Contracts. Mr. Gupta submitted that
apparently, the separation of the lease from the Maintenance and Handling
Contracts, was done with the deliberate intention that the land owners
would not have any role to play with the running of the outlet till the
matter relating to dealership of the retail outlet was settled.

41. Mr. Gupta also adopted the submissions made by Mr. Pradip Ghosh,
learned Senior Advocate for the Appellants and urged that the decision
taken by the Oil Companies not to grant dealerships in respect of the COCO
Units ran counter to the fact situation which would indicate that the Oil
Companies had intended to grant dealership to the land owners, which would
be evident from the following summary of facts :-
(a) While in most cases, the issuance of the Letters of Intent
were pending, Maintenance and Handling Contracts were given to
run the retail outlets to the nominee and/or near relation of the
land owners.
(b) The rents initially asked for by the land owners for grant of
lease for the lands offered for setting up the retail
outlets were substantially reduced when the lease deeds were
executed.
(c) The investments made by the landlords in making the plots
ready for setting up the petrol pumps.
(d) Correspondence exchanged between the parties.
(e) Existence of the policy to offer the land owners the right of
first refusal for the Maintenance and Handling Contracts
prior to grant of dealership.
(f) Annual grant of dealership.

42. Mr. Gupta urged that the lease deeds executed between the parties do
not represent the totality of the matter, but is only a part of the
transaction. Mr. Gupta submitted that the cases of the claimants were
clearly covered by the doctrine of promissory estoppel and as had been
urged by Mr. Ghosh and the other learned counsel, the decision of the Oil
Companies arrived at on 6.9.2006 not to grant any further dealership but to
operate through COCO Units, was bad and was liable to be quashed.

43. In all the other cases, the fact situations were almost identical as
were the submissions advanced on their behalf. The Gujarat matters which
were taken up in the said bunch were not very different from the other
matters wherein also applications for grant of dealership had been made
within the window period when the Policy relating to grant of dealership
was subsisting and steps similar to those taken in the other matters were
also taken with regard to the Special Leave Petitions filed against the
change in Policy contained in the Notification dated 6.9.2006.

44. Appearing for the Indian Oil Corporation, the learned Attorney
General confined his submissions to the legal issues raised during the
hearing of this batch of Appeals and left it to Ms. Meenakshi Arora,
learned Advocate, to deal with the factual aspect.

45. On the question of the common grounds taken on behalf of the
Appellants and the Writ Petitioners that their respective cases were
covered by the doctrine of promissory estoppel, the learned Attorney
General submitted that such a stand was entirely misconceived. Once an
Agreement is entered into, the parties are bound by the terms of the said
Agreement which extinguishes any claim of promissory estoppel, which may
have arisen prior to the signing of the Agreement. Referring to the
application made by the Appellant, Mohd. Jamal, on 14th March, 2003,
providing the specifications of the land and indicating that the same,
including the building thereupon, had been made ready and that there was no
problem in giving the same to the Company for running the petrol pump in
any manner it liked, the learned Attorney General submitted that the same
destroyed any promise that may have been made before the aforesaid offer
was made by the Appellant. The learned Attorney General pointed out that
in the said letter, while offering the land and structures thereon in
question to the Oil Company to establish a petrol pump and to run it in any
manner it liked, certain terms and conditions had been indicated by the
Appellant, including the monthly rental and the increments thereof after
every 5 years, together with the period of the lease with an option of
renewal. The learned Attorney General submitted that once such an offer
had been made, which was supported by an affidavit affirmed and filed by
the land owner’s nominee for being awarded the Maintenance and Handling
Contract, wherein it was undertaken that the said nominee would have no
claim on the retail outlet dealership at any time and would not seek any
legal help at a future date to stall smooth handing over of the site as and
when desired, nothing remained of the promise, if such an offer had at all
been made and the same could be construed to be an offer which attracted
the doctrine of promissory estoppel or equitable estoppel.

46. The learned Attorney General submitted that the aforesaid letter was
written by the Appellant at a point of time when the Policy dated 8.10.2002
had already been suspended. Further, the said letter had not only been
suppressed but had even been disowned by the Appellant. Even after
disowning the said letter, the Appellant has again relied on the same in
order to make out a case that he had agreed to make the said offer on the
assurance given by the Oil Company that he would be granted full dealership
once the proceedings before the Court were cleared. The learned Attorney
General pointed out that in none of the documents executed between the
Appellants had any foundation been laid in support of the assertion that a
compromise had been made that a dealership would be given to land owners
and that the awarding of Maintenance and Handling contracts was only an
interim measure. The learned Attorney General submitted that given the
disputed nature of the claim, the matter cannot be gone into in a Writ
Petition which was, therefore, misconceived. In this regard, the learned
Attorney General referred to the decision of this Court in A.P. Transco Vs.
Sai Renewable Power (P) Ltd.[(2011) 11 SCC 34], in which while considering
the doctrine of promissory estoppel and legitimate expectation in regard
to various communications extending certain incentives to producers of
electricity from non-conventional energy resources, it was held that the
parties had voluntarily signed the Power Purchase Agreements by which they
were governed and neither the doctrine of promissory estoppel nor
legitimate expectation could, therefore, have any application in regard to
the correspondence exchanged between the parties, whereby the Government
had extended certain incentives to the producers of electricity from non-
conventional energy resources. The learned Attorney General also referred
to the decision in Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer
[(2005) 1 SCC 625]; State of Himachal Pradesh Vs. Ganesh Wood Products
[(1995) 6 SCC 363]; Kasinka Trading Vs. Union of India [(1995) 1 SCC 274]
and Sethi Auto Service Station Vs. D.D.A. [(2009) 1 SCC 180],wherein the
same doctrine had been considered.

47. Supplementing the submissions made by the learned Attorney General,
Ms. Meenakshi Arora, learned Advocate, submitted that the cases being heard
in this batch of matters can be divided into four categories, namely:
(i) Agreements entered into between the Oil Companies and the land owners
prior to 8.10.2002;
(ii) Maintenance and Handling contracts signed between 8.10.2002 and
5.2.2003;
(iii) Offers made by land owners and lease Agreements executed within the
aforesaid period;
(iv) Petrol pumps commissioned upon lease being executed after the new
Policy came into existence on 5.2.2003.

48. Ms. Arora submitted that prior to the Policy No. 319 dated 8.10.2002,
the Oil Companies granted dealership in respect of retail outlets on the
basis of applications invited for the said purpose. Several land owners
had responded to the said applications and had offered their lands to the
Oil Companies for setting up retail outlets on main Highways. However, the
Oil Companies were also considering a scheme whereby they would be able to
retain control over the various retail outlets by operating them as Company
Owned and Company Operated (COCO) units, which provided for retail outlets
to be owned fully by the Oil Companies, but the operation thereof was
outsourced to M&H contractors, who would not have any right to dealership
of the outlet.

49. Ms. Arora submitted that the cases of the applicants in the third
category would have to be treated differently from applicants whose claims
were based on decisions to grant dealership which had been arrived at prior
to 8.10.2002. In certain cases, on the basis of the leases granted, petrol
pumps had already been commissioned and were functioning, but with the help
of M&H contractors. Ms. Arora submitted that once the policy to grant full
dealerships was suspended and the new policy was adopted in September,
2003, barring a few cases no further dealerships were given in respect of
the retail outlets and all the units were, thereafter, run as Company Owned
and Company Operated units where the Company retained control of the
outlets, but left the day to day management thereof to the contractors.

50. Taking the case of Mohd. Jamal, Ms. Arora submitted that, as was
submitted by the learned Attorney General, the Appellant, whose application
for grant of Letters of Intent was pending, entered into a separate
Agreement with the Oil Company on 14.3.2003, when the earlier policy had
already been discontinued and after execution of the lease, named his
brother, Mohd. Ishtiaq Alam, as his nominee, to function as the M&H
contractor in respect of the outlet established on his land. Ms. Arora
submitted that Mohd. Ishtiaq Alam was found suitable to act as M&H
contractor and a Agreement was, therefore, executed on 29.3.2003, which
also included an affidavit affirmed by Mohd. Ishtiaq Alam. Pointing to the
contents of the said letters, which had been referred to by the learned
Attorney General, Ms. Arora submitted that the Appellant executed the lease
Agreement, being fully aware of the consequences thereof, and so was the
nominee who affirmed an affidavit clearly indicating that he was only
managing the unit and had no claim to the dealership of the said outlet in
lieu of being awarded the contract.

51. Ms. Arora urged that once Policy No.MDPM-319/02 dated 8.10.2002, was
replaced by the new Policy dated 19.9.2003, all future transactions between
the Appellants/Petitioners and the Oil Companies would have to be
considered in the light of the new policy, which dealt with COCO outlets
only. Ms. Arora submitted that as the lease agreement between Md. Jamal
and the Oil Company was executed after the policy dated 8.10.2002 was
suspended, it was a clear indication that the land owner was aware of his
actions in offering his land to the companies for establishing a petrol
pump thereupon, without any conditions attached except for the rental and
period of the lease. Even, if Ms. Arora’s submission that the appointment
of M&H Contractors was connected with the signing of the lease agreement is
to be accepted, even then the land owner could have no claim to the
dealership in respect of the said retail outlet being operated as a COCO
unit. Ms. Arora submitted that as has already been indicated hereinbefore,
the concept of COCO units was that the land and the infrastructure would
either be owned or taken on long-term lease by the oil company but the
operation of the petrol pump would be outsourced to a M&H Contractor, who
submitted an affidavit affirmed by him while applying for the M&H Contract
that he neither had nor would in future have any claim to the dealership of
the said retail outlet.

52. Ms. Arora submitted that the case made out by the land owners after
the grant of M&H Contracts, was not bona fide, and, in any event, could not
be related to the transactions under the earlier policies which had been
replaced by fresh agreements entered into by the parties on the basis of
the new policy. Ms. Arora urged that neither was the doctrine of
promissory estoppel nor legitimate expectation applicable in the instant
case where there was no foundation for such a claim. Ms. Arora reiterated
her submissions that Policy No. MDPM-319/02 dated 8.10.2002, was related to
selection of dealers and not to COCO outlets and it was denied that the
Appellant had leased out the property upon any understanding that he or his
nominee would be allowed to run the retail outlet. On the other hand, the
land owner was not even eligible to be appointed as the M&H Contractor.

53. Ms. Arora lastly submitted that since the present batch of matters
related to COCO outlets, the question of returning the demised land to the
land owner did not also arise. Ms. Arora submitted that the entire
exercise was nothing but an attempt on the part of the land owners, who had
consciously entered into lease agreements, to try and resile from the
contract once it became evident that there was no likelihood of a further
change in the policy for grant of dealership in respect of the COCO units.
54. Referring to the decision of this Court in Sethi Auto
Service Station (supra), Ms. Arora urged that the doctrine of legitimate
expectation, had been considered in the said case where the Appellant’s
claim was based on an old policy and it was held that the Appellant merely
had an expectation for being considered for resitement. It was also held
that a person basing his claim on the doctrine of legitimate expectation
has to establish that he had relied on the said representation and had
altered his position and that denial of such expectation worked to his
detriment. The Courts can interfere only if the decision taken by the
authority is found to be arbitrary, unreasonable or in gross abuse of power
or in violation of principles of natural justice and contrary to public
interest. It was also reiterated that the concept of legitimate
expectation has no role to play where said action is a matter of public
policy or in the public interest, unless, of course, the action taken
amounted to an abuse of power. It was further emphasized that in order to
establish a claim of promissory estoppel, it must be proved that there was
such a definite promise and not any vague offer which could not be
enforced. In this regard, Ms. Arora also submitted that the “comfort
letters” referred to by learned counsel for the Appellants, purported to
have been issued by the State of Gujarat, would have no avail as a promise
made in such a letter does not constitute a promise which could be
enforced. Ms. Arora submitted that the Appeals and Petitions were liable
to be dismissed with costs.

55. Learned Additional Solicitor General, Mr. P.P. Malhotra, appearing
for the Union of India, submitted that the dispute involved in this batch
of matters was between the Oil Companies and the land owners with whom
agreements had been entered into by the Oil Companies. The learned ASG
submitted that the Union of India has little to do with the dispute between
the parties, except to the extent that it has been given a supervisory
function to ensure proper distribution of petrol and petroleum products.
Mr. Malhotra urged that anything which was not in public interest, but was
likely to affect the public interest, cannot be retained and has to be
quashed. As will be evident from the submissions made on behalf of the
respective parties, the case of the Appellants and the Writ Petitioners, in
most of the cases, is based on the doctrine of promissory estoppel on the
basis of a promise apparently made by the Respondents to the land owners
that they would be granted dealerships in lieu of the lands offered by them
for setting up of the retail outlets. From the facts as disclosed, there
is sufficient evidence to indicate that initially negotiations had been
conducted by the Oil Companies with aspiring land owners that in lieu of
the lease to be granted they would be provided with dealerships. The
applications made pursuant to the advertisement published by the Oil
Companies were also duly processed and were acted upon. However, it is
only the suspension of the Policy dated 8.10.2002, which prevented such
dealerships for being given to the various applicants.

56. Upon deregularisation of the distribution of petroleum products, the
Oil Companies issued guidelines dealing with the procedure for locations
outside the marketing plans. It was also stipulated that for the purpose of
selection, the dealerships would be categorised as indicated in the
guidelines and all retail outlets would be developed only on A/C sites
basis, which finds place in Clause (2) of the guidelines.

57. The said guidelines referred to grant of dealership which is
completely different from the grant of long-term leases by the land owners
to the Oil Companies upon the condition that the same could be used by the
lessees in any way they liked, which included the right to sublet the
demised plot. The concept of Company Owned and Company Operated outlets
was sought to be introduced on 6.9.2003, in supersession of Policy No.MDPM-
319/02 dated 8.10.2002 and the two cannot be co-related unless a link can
be established by the Appellants that they had entered into the lease
agreements with the Oil Companies upon the understanding that once the
earlier policy was restored, the land owners would be given the option of
having the COCO units converted into regular retail outlets.

58. In order to appreciate the difference between the two concepts, it
has to be understood that the concept of a dealership in respect of a
retail outlet is completely alien to the concept of a COCO unit. While the
former deals with the right of the dealer to independently operate the
retail outlet, in the case of a COCO unit, the entire set up of the retail
outlet is owned by the Oil Companies and only the day-to-day operation
thereof is outsourced to a M&H Contractor. With the discontinuance of the
earlier policy of granting dealerships in respect of retail outlets and the
introduction of a new policy awarding M&H Contracts in respect of the COCO
outlets, in our view, the land owners who had entered into fresh lease
agreements after the policy to grant dealerships had been suspended, cannot
now claim any right on the basis of the earlier policy in the absence of
any Letter of Intent having been issued thereunder. Had any Letter of
Intent, which tantamounts to grant of dealership, been issued and then in
respect of the same lands COCO units were established, the situation would
have been different. Placed in such a position, the land owners cannot
claim any relief in these proceedings and, if any loss or damages have been
suffered by them on account of the assurance earlier given regarding grant
of dealership, particularly in making the sites ready therefor, the remedy
of such applicants would lie elsewhere. The policy guidelines and, in
particular, Clauses 1.2 and 1.2.2 thereof are not available to the
Appellants and the Petitioners in these proceedings, which are concerned
mainly with COCO units which have no connection with the concept of
dealership.

59. We are inclined to hold that the doctrine of promissory estoppel and
legitimate expectation, as canvassed on behalf of the Appellants and the
Petitioners, cannot be made applicable to these cases where the leases have
been granted by the land owners on definite terms and conditions, without
any indication that the same were being entered into on a mutual
understanding between the parties that these would be temporary
arrangements, till the earlier policy was restored and the claim of the
land owners for grant of dealership could be considered afresh. On the
other hand, although, the nominees of the lessors were almost in all cases
appointed as the M&H Contractors, that in itself cannot, in our view,
convert any claim of the land owner for grant of a permanent dealership.
As has been indicated hereinbefore, even the M&H Contractor had to submit
an affidavit to the effect that he did not have and would not have any
claim to the dealership of the retail outlet and that he would not also
obstruct the making over possession of the retail outlet to the Oil
Company, as and when called upon to do so. The decisions cited on behalf
of the Appellants/Petitioners, are not, therefore, relevant for a decision
in these cases. Although, the Appeals have been filed on account of the
denial to the land owners of the grant of dealership in respect of the
lands demised by them to the Oil Companies, the entire focus has shifted to
COCO outlets on account of the fresh lease agreements entered into by the
Appellants with the Oil Companies which has had the effect of obliterating
the claim of the land owners made separately under earlier lease
agreements. The claims of the Appellants/Petitioners in the present batch
of matters have to be treated on the basis of the agreements subsequently
entered into by the Oil Companies, as submitted by the learned Attorney
General.

60. These Appeals and Petitions must, therefore, fail and are dismissed.
The four Transfer Petitions, being T.P.(C) Nos. 971-973 of 2010 and T.P.(C)
No. 1260 of 2011, which were heard along with these Appeals and Petitions,
are allowed. The Writ Petitions, which are transferred as a consequence
thereof, are also dismissed along with other matters. Accordingly, the
Transferred Cases, arising out of T.P.(C) Nos. 971-973 of 2010 and T.P.(C)
No. 1260 of 2011, are disposed of. However, it will be open to the
Appellants and the Petitioners to approach the proper forum in the event
they have suffered any damages and loss, which they are entitled to recover
in accordance with law.

61. Having regard to the peculiar facts of these cases, the parties are
left to bear their individual costs.
……………….CJI.
(ALTAMAS KABIR)
…………………J.
(J. CHELAMESWAR)

New Delhi
Dated: July 8, 2013.

 

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