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Appointment of dealers for superior kerosene oil and light diesel oil (SKO-LDO) – whether, on the cancellation of the allotment of a dealership or distributorship for petroleum products in favour of the first ranked or first empanelled candidate, there is an automatic allotment in favour of the second ranked or second empanelled candidate, subject to fulfillment of the conditions of allotment. Apex court held that In our opinion, in view of the decisions of this Court, if the allotment is tainted due to political connections or patronage or other extraneous considerations, the entire selection process is vitiated and, therefore the second ranked or second empanelled candidate is not entitled to an automatic allotment of a dealership or distributorship in his or her favour.= CIVIL APPEAL NO. 8980 OF 2014 (Arising out of S.L.P. (Civil) No. 313 of 2012) Chairman cum Managing Director Indian Oil Corporation Ltd. and Ors. ….Appellants Vs. Sunita Kumari & Anr. ….Respondents =2014- sept, month- http://judis.nic.in/supremecourt/imgst.aspx?filename=41934

Appointment of dealers for superior kerosene oil and light diesel  oil  (SKO-LDO) – whether,  on  the  cancellation  of  the allotment of a dealership  or  distributorship  for  petroleum  products  in favour of the first ranked  or  first  empanelled  candidate,  there  is  an

automatic allotment in favour of the  second  ranked  or  second  empanelled candidate, subject to fulfillment of the conditions  of  allotment. Apex court held that In  our opinion, in view of the  decisions  of  this  Court,  if  the  allotment  is tainted due to  political  connections  or  patronage  or  other  extraneous considerations, the entire selection process is vitiated and, therefore  the second  ranked  or  second  empanelled  candidate  is  not  entitled  to  an automatic allotment of  a  dealership  or  distributorship  in  his  or  her favour.=

On 10th July 2000, an advertisement  was  issued  by  the  appellants,

that is, Indian Oil Corporation Ltd. (for short ‘IOC’) for  the  appointment

of dealers for superior kerosene oil and light diesel  oil  (SKO-LDO).   The

appointment was reserved for women belonging to  Scheduled  Castes  and  was

for Warisnagar, District Samastipur (Bihar).

4.    Several applications appear to have been received in response  to  the

advertisement and on 24th July, 2001, a panel  of  selected  candidates  was

prepared by the IOC in order of merit.  The panel was as follows:-

Smt. Neelam Kumari

Smt. Sunita Kumari (respondent no.1 herein)

Kumari Anju Chaudhary

5.    Sometime in the beginning of August, 2002 a news item appeared on  the

front page of the Indian Express to the effect that all over the country,  a

large number of dealerships or distributorships were allotted in respect  of

several petroleum products  to persons  close  to  political  functionaries.

The news item implied that the allotments were not on merits but on  account

of political considerations to favour the allottees.

6.    The news item resulted in a public outcry and on 5/9 August, 2002  the

Government  of  India  passed  an  order  cancelling  all   allotments   for

dealerships in  petroleum  products  with  effect  from  1st  January,  2000

including of SKO-LDO dealerships.=

The allotment of dealerships in respect of  the  State  of  Bihar  was

considered by this Court Mukund Swarup Mishra v. Union of  India[3]  in  the

light of the Report given by the Committee. It was  held  therein  that  the

allotment made to Neelam  Kumari  was  not  on  merits  but  for  extraneous

considerations.  As  a  result  the  allotment  made  in  her  favour  stood

cancelled.

11.   Following the cancellation  of  the  allotment  in  favour  of  Neelam

Kumari, a writ petition was filed by Sunita Kumari in the Patna  High  Court

being CWJC No. 7186 of 2008 next in the list of selected candidates for  the

SKO-LDO dealership in Warisnagar.   In  her  writ  petition,  Sunita  Kumari

claimed that since she was the second ranked selected  candidate,  the  SKO-

LDO dealership should be awarded to her after  the  cancellation  of  Neelam

Kumari’s dealership.=

Decision of the High Court

12.   The writ petition filed by Sunita Kumari  was  allowed  by  a  learned

Single Judge of the Patna High Court by his judgment and  order  dated  15th

April, 2009.  While allowing the writ  petition  the  learned  Single  Judge

held that Sunita Kumari was entitled to be treated as the  first  empanelled

candidate upon the cancellation  of  the  dealership  in  favour  of  Neelam

Kumari.

13.   Feeling aggrieved by the  decision  rendered  by  the  learned  Single

Judge, a Letters Patent Appeal being LPA No. 307 of 2010  was  preferred  by

the IOC before the Division Bench of the Patna High Court. By  the  impugned

judgment and order dated 10th February, 2011 the  Division  Bench  dismissed

the appeal of IOC and upheld the decision of the learned Single Judge.

14.   It is under these circumstances, that the present appeal has  come  up

before us.

=

The controversy has now been set at  rest  in  Awadesh  Mani  Tripathi

where a three-judge Bench has taken the view that if the  selection  process

is  vitiated  due  to  political  considerations  or  patronage   or   other

extraneous considerations, there is no automatic allotment in favour of  the

second empanelled candidate when  the  selection  of  the  first  empanelled

candidate is cancelled. This is because the entire  selection  process  gets

vitiated and not just one selection or allotment. If the  selection  process

is itself vitiated,  there  is  no  question  of  going  down  the  list  of

empanelled candidates. We respectfully accept and follow this view. We  make

it clear that if an individual selection is cancelled  on  merits,  such  as

lack of eligibility or erroneous calculation of marks that  is  cancellation

for reasons other  than  political  considerations  or  patronage  or  other

extraneous considerations, then the entire selection process  would  not  be

vitiated and the law laid down in Raj Bala would be applicable.

27.   Under these circumstances, in our opinion, the decisions  rendered  in

Raj Bala and Anil Kumar Singh  fall  in  one  category  since  they  do  not

concern themselves with mass cancellations or  have  any  reference  to  the

Committee as in the present case  and  also  because  the  entire  selection

process was not vitiated by political considerations or patronage  or  other

extraneous considerations. These cases dealt with one-off cancellations.  On

the other hand, Ramesh Chand Trivedi and Awadesh Mani  Tripathi  fall  in  a

different category altogether. The decision in Ritu Mahajan is  contrary  to

Awadesh Mani Tripathi and so we must hold that it  does  not  lay  down  the

correct  law  with  regard  to  the  allotment  of   a   dealership   or   a

distributorship in favour  of  the  second  empanelled  candidate  in  cases

concerning blanket cancellations or in cases when the  allotment  in  favour

of the first empanelled candidate is cancelled, the  allotment  having  been

made  for  political  considerations  or  patronage  or   other   extraneous

considerations.

  Since the present case concerns itself  with  the  mass  cancellations

and the Report of the Committee, we are bound by the decision taken  by  the

three-Judge Bench in Awadesh Mani Tripathi.  Accordingly we hold,  following

that decision that when the allotment of the dealership  or  distributorship

in favour of the first empanelled candidate is cancelled as a result of  the

Report of the Committee appointed in Onkar Lal Bajaj, which Report has  been

accepted by this Court, the selection process itself is  vitiated.  In  such

an event, there is no question of  the  second  empanelled  candidate  being

automatically granted the dealership or  distributorship  in  place  of  the

first empanelled candidate.  The entire panel of  selected  candidates  must

stand cancelled and a fresh selection process must be initiated.

29.   In view of our conclusion,  the  impugned  order  of  the  High  Court

directing allotment of the dealership in SKO-LDO in favour of Sunita  Kumari

is quashed. The appeal is allowed. No costs.

2014- sept, month- http://judis.nic.in/supremecourt/imgst.aspx?filename=41934

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8980 OF 2014
(Arising out of S.L.P. (Civil) No. 313 of 2012)
Chairman cum Managing Director
Indian Oil Corporation Ltd. and Ors. ….Appellants

Vs.
Sunita Kumari & Anr. ….Respondents
WITH
S.L.P. (Civil) No. 31006 of 2012

Rajesh Kumar Tiwary …Petitioner

Vs.
The Union of India & Ors.
….Respondents
J U D G M E N T

Madan B. Lokur, J.
Leave granted in S.L.P. (Civil) No. 313 of 2012.
The question for consideration is whether, on the cancellation of the
allotment of a dealership or distributorship for petroleum products in
favour of the first ranked or first empanelled candidate, there is an
automatic allotment in favour of the second ranked or second empanelled
candidate, subject to fulfillment of the conditions of allotment. In our
opinion, in view of the decisions of this Court, if the allotment is
tainted due to political connections or patronage or other extraneous
considerations, the entire selection process is vitiated and, therefore the
second ranked or second empanelled candidate is not entitled to an
automatic allotment of a dealership or distributorship in his or her
favour.
The facts
3. On 10th July 2000, an advertisement was issued by the appellants,
that is, Indian Oil Corporation Ltd. (for short ‘IOC’) for the appointment
of dealers for superior kerosene oil and light diesel oil (SKO-LDO). The
appointment was reserved for women belonging to Scheduled Castes and was
for Warisnagar, District Samastipur (Bihar).
4. Several applications appear to have been received in response to the
advertisement and on 24th July, 2001, a panel of selected candidates was
prepared by the IOC in order of merit. The panel was as follows:-
Smt. Neelam Kumari
Smt. Sunita Kumari (respondent no.1 herein)
Kumari Anju Chaudhary

5. Sometime in the beginning of August, 2002 a news item appeared on the
front page of the Indian Express to the effect that all over the country, a
large number of dealerships or distributorships were allotted in respect of
several petroleum products to persons close to political functionaries.
The news item implied that the allotments were not on merits but on account
of political considerations to favour the allottees.
6. The news item resulted in a public outcry and on 5/9 August, 2002 the
Government of India passed an order cancelling all allotments for
dealerships in petroleum products with effect from 1st January, 2000
including of SKO-LDO dealerships.
7. The blanket cancellation led to a spate of writ petitions being filed
all over the country since several thousand allottees were affected. Soon
thereafter, transfer petitions were filed to transfer the cases pending in
various High Courts to this Court. These transfer petitions were allowed
and the writ petitions taken up for consideration.
8. This Court then heard the allottees as well as the Government of
India and in Onkar Lal Bajaj v. Union of India[1] it was observed that the
news item and subsequent news items in the Indian Express made a specific
reference to 413 allegedly tainted dealership or distributorship
allotments. After considering all aspects of the case, this Court
appointed a Committee of two retired judges to examine these 413 allotments
and determine, on a preliminary examination of the facts and records, if
the allotments were made on merits and not as a result of political
connections or patronage or other extraneous considerations.
9. The Committee examined the records of the allotments made and also
heard the aggrieved parties and submitted its Report to this Court.
Objections were filed to the Report and they were considered and rejected
in Mukund Swarup Mishra v. Union of India.[2] This Court also considered
the allotment of dealerships made in respect of some States and passed
appropriate orders. The case was then adjourned for taking up the
allotments made in other States including the State of Bihar.
10. The allotment of dealerships in respect of the State of Bihar was
considered by this Court Mukund Swarup Mishra v. Union of India[3] in the
light of the Report given by the Committee. It was held therein that the
allotment made to Neelam Kumari was not on merits but for extraneous
considerations. As a result the allotment made in her favour stood
cancelled.
11. Following the cancellation of the allotment in favour of Neelam
Kumari, a writ petition was filed by Sunita Kumari in the Patna High Court
being CWJC No. 7186 of 2008 next in the list of selected candidates for the
SKO-LDO dealership in Warisnagar. In her writ petition, Sunita Kumari
claimed that since she was the second ranked selected candidate, the SKO-
LDO dealership should be awarded to her after the cancellation of Neelam
Kumari’s dealership.

Decision of the High Court
12. The writ petition filed by Sunita Kumari was allowed by a learned
Single Judge of the Patna High Court by his judgment and order dated 15th
April, 2009. While allowing the writ petition the learned Single Judge
held that Sunita Kumari was entitled to be treated as the first empanelled
candidate upon the cancellation of the dealership in favour of Neelam
Kumari.
13. Feeling aggrieved by the decision rendered by the learned Single
Judge, a Letters Patent Appeal being LPA No. 307 of 2010 was preferred by
the IOC before the Division Bench of the Patna High Court. By the impugned
judgment and order dated 10th February, 2011 the Division Bench dismissed
the appeal of IOC and upheld the decision of the learned Single Judge.
14. It is under these circumstances, that the present appeal has come up
before us.

Discussion
15. It was submitted by learned counsel for the IOC that in view of the
decisions of this Court in Awadesh Mani Tripathi v. Union of India[4] and
Bharat Petroleum Corporation Ltd. v. Ramesh Chand Trivedi[5] when the
allotment of a dealership is cancelled due to an illegality in selecting
and preparing the panel of successful candidates, the entire selection
process is vitiated. Therefore, merely because the first empanelled
candidate is found ineligible or the allotment in his or her favour is
otherwise cancelled, it would not automatically result in the allotment of
the dealership in favour of the next empanelled candidate.
16. Learned counsel for Sunita Kumari on the other hand relied on Ritu
Mahajan v. Indian Oil Corporation[6], Raj Bala v. Union of India[7] and
Anil Kumar Singh v. The Chairman, Dealers Selection Board.[8] It was
contended, on the basis of these decisions that when the allotment in
favour of the first empanelled candidate is cancelled, the next empanelled
candidate is entitled to an automatic allotment.
17. Raj Bala was the first such case in which the second empanelled
candidate was awarded the dealership on its cancellation in respect of the
first empanelled candidate. That case, however, did not deal with blanket
cancellations such as the one we are concerned with. In that sense, that
case is somewhat dissimilar to the present case. The facts in Raj Bala were
that the first empanelled candidate was held eligible for an allotment of a
distributorship of petroleum products by the High Court but this finding
was set aside in appeal by a three-judge Bench of this Court. It was then
held:
“Having regard to the ineligibility of the 7th respondent, who was placed
first on the merit list, the distributorship ought to have been awarded to
the appellant, who was second in the merit list. Having regard to what has
transpired, we think it appropriate to direct that the 7th respondent
should cease to act as a dealer for the 2nd respondent, pursuant to the
award of the dealership to him as aforesaid, on and from 1st September,
1995 and that on and from that date the 2nd respondent should award the
dealership to the appellant who would be entitled to conduct business by
reason thereof from that date. The appellant shall, of course, be obliged
to fulfil all necessary conditions to the satisfaction of the second
respondent.”

18. Anil Kumar Singh also did not pertain to blanket cancellations made
by the Government in 2002 nor did it pertain to the case referred to the
Committee. However, a Bench of two learned Judges relied upon Raj Bala and
held that once a person to whom the allotment is made has become
ineligible, the distributorship must be awarded to the person who is second
in the merit list.
19. In Ritu Mahajan a two-Judge Bench dealt with the allotment of a
retail outlet dealership arising out of an advertisement issued by the IOC
on 22nd June, 2000. It had been alleged that the allottee (Rani Gauba) was
illegally given the allotment. The allotment was one of the many in the
blanket cancellations and was a case referred to the Committee set up by
this Court in Onkar Lal Bajaj. The Committee found that the allotment in
favour of Rani Gauba was indeed illegal and that view was upheld by this
Court. Ritu Mahajan then claimed a right to the allotment in place of Rani
Gauba. In the final paragraph of the judgment, her prayer was accepted and
it was held as follows:-
“In that view of the matter, the selection of the fifth respondent for
allotment of retail outlet dealership at Dhariwal is set aside and Indian
Oil Corporation Respondent 1 is hereby directed to make allotment of the
said retail outlet dealership at Dhariwal in favour of the appellant
immediately. The appeal is allowed accordingly.”

20. It will be seen that this Court proceeded on the basis that there was
an entitlement for an automatic allotment in favour of Ritu Mahajan after
the retail outlet dealership in favour of Rani Gauba was cancelled.
21. These three decisions proceed on the basis that when an allotment is
cancelled in favour of the first empanelled candidate, there is an
automatic allotment in favour of the second empanelled candidate. The first
two decisions did not deal with blanket cancellations while the third one
did.
22. In Ramesh Chand Trivedi a two-judge Bench dealt with a case referred
to the Committee and took the view that when the allotment in favour of the
first person in the panel is set aside due to some irregularity in the
selection and preparation of the panel, the decision taken to have a fresh
selection does not call for interference. This view was taken on the basis
that the select panel is itself vitiated. Therefore, the two-judge Bench
declined to make the allotment of the distributorship to the next eligible
applicant as prayed for by Ramesh Chand Trivedi.
23. Awadesh Mani Tripathi concerned itself with blanket cancellations
that were referred to the Committee set up by this Court. In that case, a
three-judge Bench took the view that “when the merit list prepared by the
Selection Board was found to be vitiated due to the influence of extraneous
considerations, the petitioner who was placed at no. 2 cannot seek a
mandamus for allotment of LPG distributorship. Any such direction by the
Court would amount to perpetuation of the illegality committed by the
Selection Board.”
24. It is clear from a perusal of the decisions mentioned above that the
view taken by this Court is that when the selection of the first empanelled
candidate for the allotment of a dealership or a distributorship is
cancelled, the next empanelled candidate ought to be automatically given
the allotment subject to the fulfillment of all necessary conditions. This
is clear from the decisions rendered by this Court in Raj Bala in 1995,
Anil Kumar Singh in 2003 and Ritu Mahajan in 2009.

25. This Court has, however, taken a different view particularly in the
case of mass cancellations which were dealt with by the Committee set up by
this Court. The view taken by a two-judge Bench was that if the allotment
of the dealership or distributorship in favour of the first empanelled
candidate is cancelled then the second empanelled candidate is not
automatically entitled to the allotment (Ramesh Chand Trivedi contrary to
Ritu Mahajan).

26. The controversy has now been set at rest in Awadesh Mani Tripathi
where a three-judge Bench has taken the view that if the selection process
is vitiated due to political considerations or patronage or other
extraneous considerations, there is no automatic allotment in favour of the
second empanelled candidate when the selection of the first empanelled
candidate is cancelled. This is because the entire selection process gets
vitiated and not just one selection or allotment. If the selection process
is itself vitiated, there is no question of going down the list of
empanelled candidates. We respectfully accept and follow this view. We make
it clear that if an individual selection is cancelled on merits, such as
lack of eligibility or erroneous calculation of marks that is cancellation
for reasons other than political considerations or patronage or other
extraneous considerations, then the entire selection process would not be
vitiated and the law laid down in Raj Bala would be applicable.
27. Under these circumstances, in our opinion, the decisions rendered in
Raj Bala and Anil Kumar Singh fall in one category since they do not
concern themselves with mass cancellations or have any reference to the
Committee as in the present case and also because the entire selection
process was not vitiated by political considerations or patronage or other
extraneous considerations. These cases dealt with one-off cancellations. On
the other hand, Ramesh Chand Trivedi and Awadesh Mani Tripathi fall in a
different category altogether. The decision in Ritu Mahajan is contrary to
Awadesh Mani Tripathi and so we must hold that it does not lay down the
correct law with regard to the allotment of a dealership or a
distributorship in favour of the second empanelled candidate in cases
concerning blanket cancellations or in cases when the allotment in favour
of the first empanelled candidate is cancelled, the allotment having been
made for political considerations or patronage or other extraneous
considerations.
28. Since the present case concerns itself with the mass cancellations
and the Report of the Committee, we are bound by the decision taken by the
three-Judge Bench in Awadesh Mani Tripathi. Accordingly we hold, following
that decision that when the allotment of the dealership or distributorship
in favour of the first empanelled candidate is cancelled as a result of the
Report of the Committee appointed in Onkar Lal Bajaj, which Report has been
accepted by this Court, the selection process itself is vitiated. In such
an event, there is no question of the second empanelled candidate being
automatically granted the dealership or distributorship in place of the
first empanelled candidate. The entire panel of selected candidates must
stand cancelled and a fresh selection process must be initiated.
29. In view of our conclusion, the impugned order of the High Court
directing allotment of the dealership in SKO-LDO in favour of Sunita Kumari
is quashed. The appeal is allowed. No costs.

Special Leave Petition (Civil) No. 31006 of 2012

30. In this case, the allotment of LPG dealership/distributorship was
advertised for Bihiya, District Bhojpur (Bihar).
31. After completing the selection process, the IOC prepared a panel
consisting of the following applicants in order of merit:-
Kameshwar Prasad Singh
Rangi Lal Rai
Rajesh Kumar Tiwary (Petitioner herein)
32. The allotment of the dealership/distributorship was in favour of
Kameshwar Prasad Singh but it was quashed, pursuant to the decision of this
Court in Mukund Swarup Mishra.
33. Rajesh Kumar Tiwary claimed that Rangi Lal Rai was not eligible for
an allotment and therefore being the third empanelled candidate the
allotment should be made in his favour. On this basis he filed a writ
petition in the Patna High Court being CWJC No. 18809 of 2008. A learned
Single Judge of the High Court dismissed Rajesh Kumar Tiwary’s writ
petition by following the decision rendered in another case, that is, CWJC
No. 9362 of 2009 and Mukund Swarup Mishra.
34. In appeal, being LPA No. 1291 of 2012 the High Court followed the
decision rendered by this Court in Ramesh Chand Trivedi and found no merit
in the appeal by the impugned judgment and order dated 13th September,
2012.
35. In view of our discussion in Sunita Kumari (supra) there is no merit
in this petition and it is accordingly dismissed. No costs.

.………………………J
( Madan B. Lokur )

New Delhi; ……………….……J
September 18, 2014 ( C. Nagappan )

———————–
[1] (2003) 2 SCC 673
[2] (2007) 2 SCC 536
[3] (2008) 15 SCC 243

[4] (SLP (C) No. 34226/2009 decided on 23rd April, 2013)
[5] (Civil Appeal No. 8586 of 2010 decided on 4th October, 2010)
[6] (2009) 3 SCC 506
[7] (Civil Appeal No.7718 of 1995 decided on 23rd August, 1995)
[8] (Civil Appeal Nos.2012-2014 of 2003 decided on 3rd March, 2003)

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