My photo




Sunday, July 21, 2013

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                                                   


                        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


UNION OF INDIA & ANR.                  ...RESPONDENTS


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
C.A. No.5236/2013 @ S.L.P.(C) NO.7229/2008
C.A. No.5237/2013 @ S.L.P.(C) NO.7234/2008
C.A. No.5238/2013 @ S.L.P.(C) NO.7237/2008
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


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.  
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
Clause 3 of the scheme provided that  the  dealership  of  such
COCO outlets would first be offered to the landlord, provided he  was  found
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

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
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

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

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
   (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
(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

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.

                                                             (ALTAMAS KABIR)

                                                            (J. CHELAMESWAR)

New Delhi
Dated: July 8, 2013.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.