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Monday, May 7, 2018

Rajasthan   Public   Service   Commission= (1) The Rajasthan Public Service Commission is directed to revise the result of all the candidates including all the appellants on the basis of Report of the Expert Committee constituted in pursuance of our order dated 16.01.2018 and publish the revised result. 28 (2) While carrying the above exercise the Commission need not revise the result of all those candidates whose names were included in the Select List earlier published. We having already pointed out that the appointments shall not be affected by this exercise, there is no necessity to revise their result. Thus, this exercise shall be undertaken excluding all the candidates who are included in the Select List. (3) The Commission shall also publish the cut off marks of the last selected candidates in the respective categories who were included in the Select List on the basis of which appointments have been made by the Commission. (4) On the basis of the revised result, those candidates who achieve equal or more marks in their respective categories shall be offered appointments against 1045 vacancies as has been mentioned by the Commission in paragraph 7 of the affidavit, noted above. (5) The entire exercise of revising the result and making recommendations for appointments shall be completed by 29 the Commission within a period of three months from today. The State shall take necessary consequential steps thereafter.

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REPORTABLE
  IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4695­4699 OF 2018
(Arising out of SLP (C) No(s). 14306­14310/2017)
RICHAL & ORS. ETC.ETC. … APPELLANT(S)
VERSUS
RAJASTHAN PUBLIC SERVICE COMMISSION  … RESPONDENT(S)
& ORS. ETC. ETC.
WITH
Civil   Appeal   Nos.   4722­4725   of   2018   (arising   out   of
SLP(C) Nos. 19151­19154/2017)
Civil Appeal No. 4702 of 2018 (arising out of SLP(C) No.
14481/2017);
Civil   Appeal   Nos.   4700­4701   of   2018   (arising   out   of
SLP(C) Nos. 14356­14357/2017);
Civil   Appeal   Nos.   4711­4712   of   2018   (arising   out   of
SLP(C) Nos. 14593­14594/2017);
Civil   Appeal   Nos.   4707­4710   of   2018   (arising   out   of
SLP(C) Nos. 14581­14584/2017);
Civil Appeal No. 4703­4706 of 2018 (arising out of SLP(C)
No. 14522­14525/2017);
Civil Appeal No. 4726 of 2018 (arising out of SLP(C) No.
19157/2017);
Civil   Appeal   Nos.   4713­4720   of   2018   (arising   out   of
SLP(C) Nos. 14947­14954/2017)
Civil Appeal No. 4721 of 2018 (arising out of SLP(C) No.
18982/2017)
Civil Appeal No. 4727 of 2018 (arising out of  SLP(C) No.
21506/2017)
Civil Appeal No. 4730 of 2018 (arising out of SLP(C) No.
29556/2017)
Civil Appeal No. 4728 of 2018 (arising out of SLP(C) No.
24264/2017)
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Civil Appeal No. 4729 of 2018 (arising out of SLP(C) No.
28724/2017)
Civil Appeal No. 4731 of 2018 (arising out of SLP(C) No.
32467/2017)
C.A.No.4754   of   2018   (arising   out   of   SLP(C)No.11674/2018
(Diary No(s). 9579)2018
J U D G M E N T
ASHOK BHUSHAN, J.
Delay Condoned. Leave granted.
2. This   batch   of   appeals   questions   the   judgment
delivered by Special Appeal Benches of the Rajasthan High
Court. The Special Appellate judgment of Rajasthan High
Court dated 08.03.2017 delivered at Jodhpur and Judgment
dated 13.04.2017 delivered at Jaipur Bench, affirming the
judgments   of   learned   Single   Judge   dismissing   the   writ
petitions filed by the appellants are under challenge.
3. The appellants had appeared in School Lecturer Exam –
2015   conducted   by   Rajasthan   Public   Service   Commission
(hereinafter referred to as “Commission”), in which they
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could   not   be   declared   successful.     Brief   facts   giving
rise to these appeals are:­
(i) The   Rajasthan   Public   Service   Commission
vide   its   advertisement   dated   16.10.2015   advertised
13,000 posts of School Lecturers for various subjects
under  Secondary  Education  Department,  Government  of
Rajasthan.  The examination consisted of two papers –
Paper­I – General Awareness and General Studies, and
Paper­II of respective subjects.  The examination was
conducted on 17.07.2016.  On 12.08.2016, answer keys
were   published   inviting   objections   regarding   the
answer   key.     Many   candidates   submitted   objections
with   regard   to   different   subjects,   with   regard   to
Paper­I   as   well   as   Paper­II.     On   22.09.2016,   the
Commission declared the result, against which several
writ petitions were filed questioning various answers
as per final answer key.   The learned Single Judge
vide its judgment and order dated 08.11.2016 in Writ
Petition No. 15028/2016   ­  Arvind Kumar & Ors. Vs.
RPSC   &   Ors.  disposed   of   the   writ   petition   with
various   directions.   One   of   the   directions   was   to
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upload the revised answer key along with report of
Experts on the website within one week.  In pursuance
of   directions   of   learned   Single   Judge   dated
08.11.2016,   final   answer   key   was   published   on
18.11.2016 and 18 questions in Paper­I were deleted.
Second   round   of   litigations   was   started   by   filing
various   Writ   Petitions   by   the   candidates   raising
various objections to the answer key.   The learned
Single   Judge   vide   its   judgment   dated   08.02.2017   at
Jodhpur dismissed the bunch of writ petitions after
considering   the   objections   raised   by   several   writ
petitioners.     Learned   Single   Judge   accepted   the
Expert Committee's report on various answers. 
(ii)   Against   the   judgment   dated   08.02.2017,   writ
appeals were filed by various candidates at Jodhpur.
The Division Bench vide its judgment dated 08.03.2017
dismissed the writ appeals confirming the judgment of
learned   Single   Judge.     While   dismissing   the   writ
appeals,   various   directions   were   issued   by   the
Division   Bench   to   the   Commission   with   regard   to
preparation and publication of answer key and action
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to be taken against those who are entrusted with the
preparation   of   key   answers.     At   Jaipur   also,   writ
petitions were dismissed, against which writ appeals
were   filed   and   vide   judgment   dated   13.04.2017,
following the judgment dated 08.03.2017 delivered at
Jodhpur,   the   Division   Bench   also   dismissed   the
different writ appeals.
(iii)   Following   judgment   dated   08.03.2017,   the
Division Bench both at Jodhpur and Jaipur dismissed
several other writ appeals.   Before us, the appeals
filed   against   the   judgment   dated   08.03.2017   and
judgment dated 13.04.2017 and various other judgments
following   earlier   judgments   have   been   filed.   The
judgment dated 08.03.2017 delivered at Jodhpur Bench
is the main judgment which has been followed by the
High   Court   in   several   judgments   for   deciding   this
batch of appeals.  It shall be sufficient to refer to
and   consider   the   Division   Bench   judgment   dated
08.03.2017   giving   rise   to   the   Civil   Appeal   arising
out of SLP (C) Nos. 14306­14310 of 2017 –  Richal &
ors.   etc.etc.   Vs.   Rajasthan   Public   Service
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Commission & ors. etc. etc.  for deciding this batch
of appeals.
4. In   this   batch   of   appeals,   various   applications   for
impleadment and intervention have been filed.   We allow
all   the   impleadment   and   intervention   applications.   This
Court after hearing the matter on 16.01.2018 passed the
following order:­
“The Rajasthan Public Service Commission
(RPSC) had issued an advertisement for filling
up   of   more   than   13,000   posts   of   school
lecturers   in   the   State   of   Rajasthan.   The
written test  was conducted pursuant thereto.
The   key   to   the   answers   was   also   published.
Some   of   the   candidates   questioned   that   the
aforesaid key does not give correct answers to
some of the questions. It was mentioned that
few questions were not even correctly framed.
On that basis, a writ petition was filed in
the   High   Court.   Learned   Single   Judge   after
going   into   the   said   grievances   of   those
candidates gave a direction 4 for constituting
the Expert Committee to examine as to whether
the key to the answers is correct. The Expert
Committee   gave   its   report   recommending
deletion   of   18   questions   which   according   to
the Expert Committee were not correctly framed
and, therefore, needed to be deleted. It also
corrected the answers to some other questions.
This led to second round of litigation as
the   petitioners   herein   (who   were   the   writ
petitioners in the High Court) submitted that
even   the   aforesaid   report   of   the   Expert
Committee   was   not   correct.   It   was   submitted
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that   13   questions   were   wrongly   deleted.   In
support of this, the petitioners refer to the
text   books   of   the   NCRT   as   per   which   those
questions were rightly framed and there was no
question to delete them. It was also submitted
that five questions were still wrongly framed,
which needed to be deleted or correct answers
as   suggested   by   the   Expert   Committee   be
corrected. The High Court has dismissed this
writ petition. It has inter alia observed that
the   matter   be   given   quietus   inasmuch   as   it
would be in the public interest not to delay
the   appointment   of   13,000   teachers   in   the
State of Rajasthan.
We are informed that after declaration of
the result, successful candidates have already
been given appointment. It is pointed out by
the learned counsel for the petitioners that
many   posts   are   still   lying   vacant.   They
further submit that they have no objection if
the   candidates   who   have   already   been
appointed, their appointment is not disturbed
and at the same time the grievances as pointed
out by the petitioners be looked into by the
Expert   Committee   again   and   if   it   finds
justification   in   the   claim   of   the   5
petitioners, fully or partially, only cases of
other candidates who have not been appointed
be re­examined on the basis of the report that
would   be   given   by   the   Expert   Committee's
recommendations on these aspects. The learned
counsel   for   RPSC   wants   some   time   to   take
instructions in this behalf.
List the matters on 06.02.2018.”
5. In pursuance of our directions dated 16.01.2018, an
Expert   Committee   was   appointed   to   re­examine   the
grievances of writ petitioners/appellants.   An affidavit
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dated 14.04.2018 sworned by Ramdev Siroya has been filed
by the Commission.  It is stated in the affidavit that on
the basis  of  reports  of Experts,  overall  22 answers in
all   the   nine   subjects   for   which   these   Experts   were
appointed   has   been   re­examined   and   the   answers   were
revised.  It shall be useful to extract Paragraphs 5 and
6 of the affidavit, which is to the following effect:­
"5. On the basis of reports of Experts,
overall   22   answers   in   all   the   nine
subjects   for   which   these   experts   were
appointed   to   re­examine   claims   of
petitioners, were reported to be revised.
6. In the subjects of General Knowledge
(Paper­I) answers to five questions were
required   to   be   revised;   in   Paper­II
(subject)   in   commerce   answers   of   three
questions   were   required   to   be   revised;
three questions in subject Geography, Two
Questions   in   subject   Hindi   (Teaching
method); in subject History one question;
in   subject   Political   Science   four
question; and in subject Rajasthani three
questions were reported to be revised. A
chart   showing   question   numbers   subject,
answer in final key and new Expert Report
is   being   filed   herewith   and   marked   as
ANNEXURE A­1 (Pages 5)  True and correct
copies   of   reports   of   Experts   in   nine
subjects   is   being   filed   herewith   and
marked as ANNEXURE A­2 (Pages 6­46).   It
is stated that identity of Experts is not
being   disclosed.     That   on   the   basis   of
reports   of   the   experts   the   result   of
candidates   who   have   not   been   appointed
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was   revised   by   the   Rajasthan   Public
Service Commission.”
6. In the affidavit, it has also been stated that out of
total number of posts in all the subjects, 729 candidates
who were offered appointment did not join.  Further, 316
candidates   who   were   although   selected   but   their
candidature   were   rejected.     Thus   in   all   1045   posts
remained vacant.   A detailed chart subject wise showing
all the details of posts advertised, candidates selected
and   recommended   and   appointments,   number   of   candidates
who did join and such candidates whose candidatures were
rejected   etc.   has   also   been   annexed   alongwith   the
affidavit.   It has been further stated in the affidavit
that in the present batch of appeals, there are in all
311   candidates.     It   is   stated   in   the   revised   results
prepared after Report by Experts Committee 48 petitioners
from all the Special Leave Petitions are found to be in
merit for selection, which candidates are spread over in
nine subjects.
7.  A   reply   affidavit   to   the   affidavit   filed   by
Commission dated 14.04.2018 has also been filed in Civil
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Appeal of Richal & Ors.   In the reply affidavit, it has
been   stated   that   the   Commission   has   not   disclosed   the
actual   marks   secured   by   the   last   selected   candidate   in
terms of the first selection in various categories.    It
was stated that the Commission is required to prepare a
Revised   Notional   Select   List   of   candidates   presently
selected in light of the revision undertaken by Experts
based   on   actual   marks   secured   by   the   last   selected
candidates   in   various   categories.     The   appellants   have
also brought on record the copy of representation dated
23.01.2018   submitted   by   them   after   the   order   of   this
Court dated 16.01.2018.
8. We have heard the learned counsel for the appellants
at  length  as  well  as  learned  counsel  appearing  for  the
Commission,   learned   counsel   appearing   for   the   State   of
Rajasthan   and   learned   counsel   seeking   impleadment   and
intervention.
9. Learned   counsel   for   the   appellants   submits   that
although substantial grievances raised by the appellants
in these appeals stand satisfied by the Expert Committee
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Report,   which   was   appointed   in   pursuance   of   direction,
there are still few grievances after revision carried out
by the Experts.   It is submitted that in revision also,
certain   mistakes   have   not   been   corrected.     Learned
counsel for the appellants in support of their submission
has   referred   to   few   questions   of   Paper­I   including
question No. 58 and certain other questions.
10. One of the submissions raised by the learned counsel
for   the   appellants   is   that   the   marks   of   18   questions
which were deleted from paper No.1 were redistributed in
the rest of the questions whereas the marks should have
been   allocated   to   only   those   candidates   who   have
attempted such questions. Those candidates, who even did
not   attempt   those   questions,   were   allocated   the   marks
which  was  not  in  accordance with  law.  The  marks should
have   been   allocated   only   to   those   candidates   who
attempted   deleted   questions,   in   alternative,   it   is
submitted   that   full   marks   with   regard   to   18   deleted
questions ought to have been given to all the candidates.
11. Learned   counsel   for   the   Commission   refuting   the
submissions of the appellants submitted that almost all
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the grievances  having  been  taken  care  of  by the Expert
Committee   and   the   result   of   non­selected   candidates
having been revised, nothing more needs to be considered
in   these   appeals.   It   is   submitted   that   Experts   having
revised   the   key   answers   and   having   now   submitted   a
Report, which has been accepted by the Commission, this
Court shall not permit the appellants to re­challenge the
decision of Expert Committee.   It is submitted that out
of all the Special Leave Petitioners, only 48 have been
found selected.
12. We   have   considered   the   submissions   of   the   learned
counsel for the parties and perused the records.
     
13. The issue which has been canvassed in this batch of
appeals relates to correctness of final   key answers as
uploaded   by   the   Commission   after   considering   objections
thereto.   The   appellants'   case   is   that   the   treatment   of
the objections by the Expert Committee was not based on
authoritative   text   books   on   the   subject   and   several
errors crept into the answer key vitiating the merits of
the candidates affecting the entire selection.
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14. The issue pertaining to scope of judicial review of
correctness   of   key   answer   had   been   considered   by   this
Court   time   and   again.   This   Court   had   entertained   such
challenges   on   very   limited   ground   and   has   always   given
due weight  to  the  opinions  of  subject  experts.  A  three
Judge Bench of this Court in  Kanpur University, through
Vice­Chancellor   and   others   vs.   Samir   Gupta   and   others,
1983 (4) SCC 309,  had occasion to consider a case where
challenge   was   made   to   the   key   answers   supplied   by   the
paper­setter   with   regard   to   multiple   choice   of   the
objective   type   test   for   admission   in   medical   courses
through combined Pre­Medical Test. The High Court while
considering   the   challenge   of   the   candidates   to   various
key   answers   accepted   the   challenge   to   different
questions. With regard to some of the questions the High
Court held that the key answer is not the correct answer.
This   Court   repelling   the   challenge   made   the   following
observations in paragraphs 15 and 16:
“15.  The findings of the High Court
raise a question of great importance to
the   student   community.   Normally,   one
would be inclined to the view, especially
if   one   has   been   a   paper­setter   and   an
examiner,   that   the   key   answer   furnished
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by the paper­setter and accepted by the
University   as   correct,   should   not   be
allowed   to   be   challenged.   One   way   of
achieving   it   is   not   to   publish   the   key
answer at all. If the University had not
published the key answer along with the
result   of   the   Test,   no   controversy
would have arisen in this case. But that
is not a correct way of looking at these
matters   which   involve   the   future   of
hundreds   of   students   who   are   aspirants
for admission to professional courses. If
the key answer were kept secret in this
case,   the   remedy   would   have   been   worse
than   the   disease   because,   so   many
students   would   have   had   to   suffer   the
injustice in silence. The publication of
the key answer has unravelled an unhappy
state of affairs to which the University
and   the   State   Government   must   find   a
solution.   Their   sense   of   fairness   in
publishing the key answer has given them
an opportunity to have a closer look at
the   system   of   examinations   which   they
conduct.   What   has   failed   is   not   the
computer but the human system.
16.Shri   Kacker,   who   appears   on
behalf of the University, contended that
no challenge should be allowed to be made
to   the   correctness   of   a   key   answer
unless, on the face of it, it is wrong.
We   agree   that   the   key   answer   should   be
assumed to be correct unless it is proved
to   be   wrong   and   that   it   should   not   be
held   to   be   wrong   by   an   inferential
process of reasoning or by a process of
rationalisation.   It   must   be   clearly
demonstrated to be wrong, that is to say,
it must be such as no reasonable body of
men well­versed in the particular subject
would   regard   as   correct.   The   contention
of   the   University   is   falsified   in   this
15
case   by   a   large   number   of   acknowledged
textbooks,   which   are   commonly   read   by
students in U.P. Those textbooks leave no
room for doubt that the answer given by
the   students   is   correct   and   the   key
answer is incorrect.”
12. Following   the   above   judgment   in  Kanpur   University
(supra)  this   Court   in  Manish   Ujwal   and   others   vs.
Maharishi   Dayanand   Saraswati   University   and   others,
2005(13) SCC 744,  reiterated the principle in following
words in paragraphs 9 and 10:
“9.  In  Kanpur   University  v.  Samir
Gupta considering a similar problem, this
Court   held   that   there   is   an   assumption
about the key answers being correct and
in   case   of   doubt,   the   Court   would
unquestionably prefer the key answers. It
is   for   this   reason   that   we   have   not
referred to those key answers in respect
whereof there is a doubt as a result of
difference   of   opinion   between   the
experts.   Regarding   the   key   answers   in
respect whereof the matter is beyond the
realm of doubt, this Court has held that
it   would   be   unfair   to   penalise   the
students  for not  giving an answer which
accords with the key answer, that is to
say, with an answer which is demonstrated
to   be   wrong.   There   is   no   dispute   about
the   aforesaid   six   key   answers   being
demonstrably   wrong   and   this   fact   has
rightly   not   been   questioned   by   the
learned   counsel   for   the   University.   In
this   view,   students   cannot   be   made   to
16
suffer   for   the   fault   and   negligence   of
the University.
10.  The   High   Court   has   committed   a
serious   illegality   in   coming   to   the
conclusion that “it cannot be said with
certainty   that   answers   to   the   six
questions given in the key answers were
erroneous   and   incorrect”.   As   already
noticed, the key answers are palpably and
demonstrably   erroneous.   In   that   view   of
the   matter,   the   student   community,
whether the appellants or intervenors or
even those who did not approach the High
Court   or   this   Court,   cannot   be   made   to
suffer on account of errors committed by
the University. For the present, we say
no   more   because   there   is   nothing   on
record as to how this error crept up in
giving the erroneous key answers and who
was negligent. At the same time, however,
it   is   necessary   to   note   that   the
University and those who prepare the key
answers   have   to   be   very   careful   and
abundant   caution   is   necessary   in   these
matters   for   more   than   one   reason.   We
mention few of those; first and paramount
reason being the welfare of the student
as a wrong key answer can result in the
merit being made a casualty. One can well
understand   the   predicament   of   a   young
student   at   the   threshold   of   his   or   her
career if despite giving correct answer,
the student suffers as a result of wrong
and   demonstrably   erroneous   key   answers;
the second reason is that the courts are
slow   in   interfering   in   educational
matters   which,   in   turn,   casts   a   higher
responsibility   on   the   University   while
preparing   the   key   answers;   and   thirdly,
in   cases   of   doubt,   the   benefit   goes   in
favour   of   the   University   and   not   in
17
favour of the students. If this attitude
of   casual   approach   in   providing   key
answers   is   adopted   by   the   persons
concerned,   directions   may   have   to   be
issued   for   taking   appropriate   action,
including   disciplinary   action,   against
those   responsible   for   wrong   and
demonstrably   erroneous   key   answers,   but
we   refrain   from   issuing   such   directions
in the present case.”
               
13. To   the   same   effect,   this   Court   in    Guru   Nank   Dev
University vs. Saumil Garg and others, 2005(13) SCC 749,
had directed the University to revaluate the answers of 8
questions with reference to key answers provided by CBSE.
This   Court   also   disapproved   the   course   adopted   by   the
University which has given the marks to all the students
who had participated in the entrance test irrespective of
whether someone had answered questions or not.
14. Another   judgment   which   is   referred   to   is  Rajesh
Kumar and others vs. State of Bihar and others, 2013 (4)
SCC 690, where this  Court  had occasion to consider the
case pertaining to erroneous evaluation using the wrong
answer key. The Bihar Staff Selection Commission invited
applications against the posts of Junior Engineer(Civil).
Selection process comprised of a written objective type
18
examination.   Unsuccessful   candidates   assailed   the
selection.   Single   Judge   of   the   High   Court   referred   the
“model answer key” to experts. Based on the report of the
experts, Single Judge held that 41 model answers out of
100   are   wrong.     The   Single   Judge   held   that   the   entire
examination was liable  to  be  cancelled  and  so  also  the
appointments   so   made   on   the   basis   thereof.   The   Letters
Patent Appeal was filed by certain candidates which was
partly allowed by the Division Bench of the High Court.
The   Division   Bench   modified   the   order   passed   by   the
Single   Judge   and   declared   that   the   entire   examination
need  not  be cancelled.  The  order  of Division  Bench  was
challenged wherein this Court in paragraph 19 has held:
“19.  The   submissions   made   by   Mr   Rao
are not without merit. Given the nature
of the defect in the answer key the most
natural and logical way of correcting the
evaluation of the scripts was to correct
the   key   and   get   the   answer   scripts   reevaluated
  on   the   basis   thereof.   There
was, in the circumstances, no compelling
reason for directing a fresh examination
to be held by the Commission especially
when   there   was   no   allegation   about   any
malpractice,   fraud   or   corrupt   motives
that   could   possibly   vitiate   the   earlier
examination to call for a fresh attempt
by   all   concerned.   The   process   of   reevaluation
  of   the   answer   scripts   with
19
reference   to   the   correct   key   will   in
addition   be   less   expensive   apart   from
being quicker. The process would also not
give   any   unfair   advantage   to   anyone   of
the candidates on account of the time lag
between the examination earlier held and
the one that may have been held pursuant
to   the   direction   of   the   High   Court.
Suffice it to say that the re­evaluation
was and is a better option, in the facts
and circumstances of the case.”
15. The key answers prepared by the paper­setter or the
examining   body   is   presumed   to   have   been   prepared   after
due   deliberations.   To   err   is   human.   There   are   various
factors which  may  lead  to  framing  of  the  incorrect  key
answers.   The   publication   of   key   answers   is   a   step   to
achieve   transparency   and   to   give   an   opportunity   to
candidates to assess the correctness of their answers. An
opportunity   to   file   objections   against   the   key   answers
uploaded by examining body is a step to achieve fairness
and perfection in the process. The objections to the key
answers are to be examined by the experts and thereafter
corrective   measures,   if   any,   should   be   taken   by   the
examining  body. In  the  present  case we  have noted  that
after considering the objections final key answers were
published   by   the   Commission   thereafter   several   writ
20
petitions were filed challenging the correctness of the
key   answers   adopted   by   the   Commission.   The   High   Court
repelled   the   challenge   accepting   the   views   of   the
experts. The candidates still unsatisfied, have come up
in this Court by filing these appeals.
16. This Court while hearing the appeals found substance
in   some   of   the   submissions   raised   before   us   and
appellants   having   satisfied   this   Court   that   certain
questions   need   re­examination   by   experts,   this   Court
issued directions on 16.01.2018. As noted above, pursuant
to the directions of this Court the Expert Committee reexamined
  the   questions   with   regard   to   which   objections
were   raised   in   these   appeals.   After   the   order   of   this
Court   dated   16.01.2018   the   Commission   adopted   Expert
Committee   Report   which   re­examined   the   questions   with
regard to which objections were raised before us in these
appeals. An affidavit dated 17.04.2018 has been filed by
the   Commission.   The   affidavit   contains   the   following
statements:
(i)   on   the   basis   of   the   Report   of
Experts, Answers to 22 Questions across
9   subjects   were   corrected   and   revised.
21
[p.2­3   pr.6   of   Affidavit   ]   [Chart   has
been annexed at p.5]
(ii) A perusal of the Revision conducted
by   Experts  w.r.t.  Questions  in   Paper   I
(General Awareness & General Studies) as
per   Chart   [p.5   of   Affidavit]   reveals
that:
(a)  Experts   accepted  Petitioner’s 
Representation   and   retained   3 
questions (Q Nos. 53, 57,  60) of 18
earlier deleted questions.
(b)  Experts   accepted  Petitioners’ 
Representation   and   corrected   the 
answer of 1 question  (Q.No.3) in
     the  remaining 57 questions.
    (c)  Experts   rejected  Petitioners’ 
Representation seeking  correction
of answer of 5 questions  (Q. Nos.
     25,  28, 33,  49, 58).
(iii)   RPSC   has   stated   that   out   of   the
total number of Advertised posts(13,098)
1045   vacancies   in   the   post   of   School
Lecturers   still   exist.   [p.3   pr.7   of
Affidavit]  [Chart   has   been   annexed   at
p.47]
(iv)   RPSC   has   stated   that   48   of   311
Special   Leave   Petitioners   before   this
Hon’ble   Court   are   within   merit   for
selection   as   School   Lecturers   after
revision of their answer scripts.[p.3­4
pr.8 of Affidavit]
17. By our order dated 02.04.2018, we have directed to
supply   the   Report   of   the   Expert   Committee   to   all   the
parties.   The   copies   of   the   Report   have   been   supplied.
22
During   the   course   of   hearing,   learned   counsel   for   the
appellants   submitted   that   substantial   grievances   raised
in   these   appeals   have   been   redressed   by   the   Expert
Committee.   The   representations   made   by   the   appellants
have been substantially accepted as noted above. However,
learned   counsel   for   the   appellants   have   contended   that
certain answers given by the Expert Committee are still
not   correct.   Before   us   certain   questions   have   been
pointed   out   which   according   to   the   appellants   have   not
been satisfactorily dealt with by the Expert Committee.
It shall suffice to refer to the question No.58 of paper
No.1. Learned counsel for the appellants submit that the
Expert   Committee   has   accepted   option   No.4   as   correct
option   whereas   correct   option   is   option   NO.3.   Learned
counsel for the appellants has to make his point home has
placed before us the following  chart:
Question
No.58
Option
Answers
RPSC
Answer
Expert
Report
(p.15)
Petitioner
Answer
Evidence in support
Minimum
Number
of
Working
Hours
per week
for the
teacher
(1) 35
Teaching
Plus
Preparation
Hours
(2) 40
Teaching
plus
Option
4
Option
4
Option
3
1. The RTE Act
specifies that
“Minimum number of
working hours per
week for the
teacher : Forty
Five including
preparation hours”
23
in RTE
Act,
2009 is
preparation
hours
(3) 45
Teaching
Hours
(4) 45
Teaching
plus
preparation
hours
2. RPSC asked same
question in School
Lecturer Exam 2013
and considered “45
Teaching Hours” as
correct Answer.
Expert Committee
has itself at p.15
quoted the RTE Act,
2009 quoted the
minimum teaching
hours as “45
Teaching including
Preparation Hours”
18. At the time of hearing on 24.04.2018, at the first
blush,  we  also  observed that  there  may  be  substance in
what   is   contended   by   the   learned   counsel   for   the
appellants with regard to question No.21, however, when
we thoroughly examined the question and its answer given
by  the  Expert  Committee,  we are inclined  to agree  with
the answer given by the Expert Committee. The reason for
our accepting the opinion of the Expert Committee is as
follows: The question No.58 which was asked  was:“Minimum
Number of Working Hours per week for the teacher in RTE
Act, 2009 is”.
19. Thus   answer   had   to   indicate   the   number   of   working
hours.   Notification   has   been   issued   under   the   RTE   Act
24
where minimum teaching hours for a week is mentioned as :
“45   Teaching   including   Preparation   Hours”.   Thus   minimum
number of working hours per week has been provided as 45
which   figure   includes   both   teaching   and   preparation
hours.   The   statutory   provision   uses   the   word  teaching
including preparation hours whereas answer uses the words
teaching plus preparation hours. There is no dispute that
figure 45 is a correct figure only issue is with regard
to whether option No.3 is correct or option No.4. Option
No.3   mentions   “45   Teaching   Hours”.   The   answer   No.3   is
obviously   not   according   to   the   statutory   prescription
which provides “45 Teaching including Preparation Hours”.
Correct answer, thus, is option No.4 which mentions  “45
Teaching   plus   preparation   hours”.   Instead   of   using   the
word including  as used in statutory provision the answer
uses word  plus. When the figure 45 includes teaching as
well as preparation hours the use of word teaching plus
preparation hours connotes the same meaning. We, thus do
not find any substance in the above submission.
20. Learned counsel for the appellants have also pointed
out several other questions in paper No.1 which according
25
to the learned counsel for the appellants have not been
correctly   answered   by   the   Expert   Committee.   We   have
considered few more questions as pointed out and perused
the answers given by the Expert Committee and we are of
the view that no error can be found with the answers of
the Expert Committee with regard to three more questions
which   have   been   pointed   out   before   us.   The   Expert
Committee,  constituted to validation of answer key, has
gone through every objection raised by the appellants and
has satisfactorily answered the same. The Commission has
also accepted the Report of the Expert Committee and has
proceeded to revised the result of 311 appellants before
us. We, thus, are of the view that Report of the Expert
Committee which has been accepted by the Commission need
to be implemented.
21. One of the submissions raised by the appellants is
that  marks  of  deleted  questions ought  not  to  have  been
redistributed   in   other   questions.   It   is   submitted   that
either   all   the   candidates   should   have   been   given   equal
marks   for   all   the   deleted   questions   or   marks   ought   to
26
have been   given only to those candidates who attempted
those questions.
22. The questions having been deleted from the answers,
the question  paper  has  to  be  treated  as containing  the
question   less   the   deleted   questions.   Redistribution   of
marks with regard to deleted questions cannot be said to
be arbitrary or irrational. The Commission has adopted a
uniform method to deal with all the candidates looking to
the number of the candidates. We are of the view that all
the candidates have been benefited by the redistributed
of marks in accordance with the number of correct answers
which have been given by them. We, thus, do not find any
fault with redistribution of marks of the deleted marks.
The High Court has rightly approved the said methodology.
23. In   the   affidavit   filed   by   the   Commission   it   is
mentioned  that  the  result  has  been  revised  of  only  311
appellants who are before this Court. We are of the view
that key answers having been corrected, merit of all the
candidates   except   those   who   have   already   been   selected
needs to be redetermined. In our order dated 16.01.2018
it is mentioned that this exercise shall not affect those
27
who have already been selected. We, thus, are of the view
that   the   Commission   should   revise   the   entire   result   of
all   the   candidates   except   those   who   have   been   selected
on   the   basis   of   the   report   of   Expert   Committee   and
publish revise result of all the candidates. When the key
answers are correct of the candidates who appeared in the
examination,   they   are   entitled   for   revision   of   their
result, since, fault does not lie with the candidates but
lies with the examination body. It shall not be equitable
to  not  extend  the  benefit  to  those  candidates  who  have
not   come   to   the   Court   being   satisfied   with   the   steps
taken by the Commission and its earlier Expert Committee
which was given the task of revising the key answers.
24. In view of the foregoing discussions, we dispose of
these appeals with the following directions:
(1) The Rajasthan Public Service Commission is directed
to revise the result of all the candidates including all
the   appellants   on   the   basis   of   Report   of   the   Expert
Committee   constituted   in   pursuance   of   our   order   dated
16.01.2018 and publish the revised result.
28
(2) While carrying the above exercise the Commission need
not revise the result of all those candidates whose names
were   included   in   the   Select   List   earlier   published.   We
having   already   pointed   out   that   the   appointments   shall
not be affected by this exercise, there is no necessity
to   revise   their   result.   Thus,   this   exercise   shall   be
undertaken excluding all the candidates who are included
in the Select List.
(3) The Commission shall also publish the cut off marks
of   the   last   selected   candidates   in   the   respective
categories  who  were included  in the Select  List on  the
basis   of   which   appointments   have   been   made   by   the
Commission.
(4) On the basis of the revised result, those candidates
who   achieve   equal   or   more   marks   in   their   respective
categories   shall   be   offered   appointments   against   1045
vacancies   as   has   been   mentioned     by   the   Commission   in
paragraph 7 of the affidavit, noted above.
(5) The entire exercise of revising the result and making
recommendations   for   appointments   shall   be   completed   by
29
the   Commission   within   a   period   of   three   months   from
today. The State shall take necessary consequential steps
thereafter. 
..........................J.
( A.K. SIKRI )
..........................J.
    ( ASHOK BHUSHAN )
NEW DELHI,
MAY 03,2018.

Medical Council of India (MCI) issued the Postgraduate Medical Education (Amendment) Regulations, 2018. = It is clear from the record that the Medical Council of India decided to make certain changes to the method of admissions to the Postgraduate Courses to arrest the blocking of seats by certain candidates which was detrimental to the interest of meritorious candidates in the All India Quota. There is material on record to suggest that devious methods were adopted by certain candidates to block the seats in the All India Quota and resign thereafter from those seats later which resulted in reversion of the All India Quota seats to the State Quota. The Medical Counselling Committee identified about thousand candidates who were indulging in such illegal practice and proposes to take action against them after a thorough inquiry. 8. There is no infringement of any legal right of the Petitioners in the change of the method of Counselling made by the notice dated 09.04.2018. Reduction of chances of admission does not entail in violation of any right. If the change in the method of Counselling was due to the circumstances mentioned above, we see no reason to interfere. Further, the Petitioners have participated in the second round of Counselling for up-gradation. We are informed that the second round of Counselling for All India Quota is completed. No interference is warranted at this stage in respect of the All India Quota. In view of the completion of the second round of Counselling of the All India Quota, we see no reason to entertain the Writ Petitions. The order dated 20.04.2018, staying the reversion of seats from the All India Quota to the State Quota is vacated. According to the schedule for online Counselling, the second round of Counselling of the State Quota should be completed by 26.04.2018. The second round of State Counselling has to be conducted after taking into account the reverted seats on completion of the second round of the All India Quota. We are informed that some States and Deemed/Central Institutions completed the second round of Counselling without waiting for the reversion of the unfilled seats in the second round of Counselling of the All India Quota. As this could not have been done, we direct that such States and Deemed/Central Institutions shall conduct the second round of Counselling again after reversion of the unfilled seats in the second round of Counselling of the All India Quota. As we have vacated the order dated 20.04.2018, the concerned authority will report the unfilled seats in the second round of the All India Counselling to the respective States by 05.05.2018. The second round of Counselling for the State Quota shall be conducted and completed by 10.05.2018. The Mop-up-round for the State Quota which is scheduled to be 7 completed by 08.05.2018 is extended to 15.05.2018.

Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
Writ Petition (C) No. 357 of 2018
RACHIT SINHA & ORS.
………PETITIONER (S)
Versus
UNION OF INDIA & ORS.
……..RESPONDENT (S)
With
Writ Petition (C) No. 361 of 2018
Writ Petition (C) No.366 of 2018
Writ Petition (C) No.424 of 2018
O R D E R
1. By a Notification dated 20.02.2018, the Medical Council of India
(MCI) issued the Postgraduate Medical Education (Amendment)
Regulations, 2018. The admission schedule for the year
2018-2019 as per the said Regulations is as follows:-
Sr. No. Schedule for
Admission
Central
Counselling
State Counselling
All India Quota Deemed +
Central Institute
1 Conduct of
Exam
By 10th January
2 Declaration of
Result
By end of January
3 1
st Round of
Counselling
12th March –
24th March,
12th March –
24th March,
25th March –
5
th April
4 Last date of
joining
3
rd April, 3
rd April 12th April
5 2
nd round of
counselling
6
th April –
12 April
6
th April –
12th April
15th April –
26th April
6 Last date of
joining
22nd April 22nd April 3
rd May
7 Mop up Round 12th May – 4
th May –
1
22nd May 8
th May
8 Late date of
joining
26th May 12th May
9 Forwarding the
list of students
in order of merit
equalling to ten
times the
number of
vacant seats to
the Medical
Colleges by the
Counselling
Authority.
27th May 13th May
10 Last date of
joining
31st May 18th May
2. The first round of Counselling of All India Quota was completed on
07.04.2018. We are informed that the first round of Counselling
for the State quota was also completed in the first week of April,
2018. The process for the second round of Counselling for the All
India Quota commenced on 13.04.2018 and the last date for
reporting was 23.04.2018. Admission to Postgraduate Courses,
according to the Regulations, is on the basis of the merit of the
candidates in the National Eligibility-cum-Entrance Test (NEET-PG)
conducted every year. 50 per cent of the seats are earmarked for
All India Quota and the remaining 50 per cent for the State Quota.
3. On 05.04.2018, a Notification was issued by the Medical Council
of India by which Clause 9A(4) was added to the Postgraduate
Medical Education Regulations, 2000 which is in the following
terms:-
“9A(4) In order to prevent seat blocking in common Counselling
for admission to Postgraduate Courses and permissibility to
exercise fresh choice during Counselling, forfeiture of fee shall be
in accordance with the matrix contained in appendix-III.”
2
4. A notice dated 09.04.2018 was issued by Medical Counselling
Committee (MCC) which conducts the Counselling for the All India
Quota in which it was clarified that a candidate who had
participated in the first round of Counselling and was allotted a
seat but did not report can participate for the second round of
Counselling as per their earlier registered details. It was also
mentioned in the said notice that the candidates who reported
after the first round of Counselling but resigned from the allotted
Institutions were also eligible to participate in the second round of
Counselling without any fresh registration/payment. The
candidates were further informed that candidates who joined in
the allotted seats after the first round of Counselling but could not
get up-gradation in the second round of Counselling shall be
allowed to resign from the first round seat within two days from
the publication of the second round results of the All India Quota
with forfeiture of fees.
5. The Petitioners in the above Writ Petitions who participated in the
first round of Counselling for the All India Quota seats for
admission to the Postgraduate Courses in medicine are aggrieved
by the changes that are made in the method of Counselling by the
notice dated 09.04.2018. The grievance of the Petitioners is that
candidates who were ineligible for the second round of
3
Counselling according to the earlier procedure were made eligible
as per the notice dated 09.04.2018. Another complaint of the
Petitioners pertains to permission granted to the allottees in the
first round of Counselling to retain their seats for two days after
the announcement of results of the second round of Counselling.
The Petitioners’ complained of their being forced to resign from
their allotted seats in the first round of Counselling.
6. By an order dated 20.04.2018, we permitted the Petitioners to
retain the seats allotted to them in the first round of Counselling.
We also stayed the reversion of the seats from the All India Quota
to the State Quota. The procedure followed for admission to
Postgraduate Courses is that there will be two rounds of
Counselling for the All India Quota. At the end of second round of
Counselling, the seats that are unfilled will be reverted to the
State Quota. The first round of the All India Quota is conducted
on the basis of merit of the candidates in the NEET-PG exam.
Doubts are expressed by several candidates regarding the
eligibility of candidates to participate in the second round of
Counselling for the All India Quota. Such doubts are cleared by
the Medical Council of India by providing answers to the
frequently asked questions. Candidates who could not secure any
seat in the first round as well as those who have secured
admission in the first round, reported/joined in the allotted
4
Institutions and submitted their willingness for participating in the
second round were eligible for the second round of Counselling.
Candidates who did not report at the allotted Institutions after the
seat allotment in the first round and those who reported and
withdrew (resigned) from Counselling at the allotted Institutions
were not eligible for the second round of Counselling. In addition,
candidates who did not opt for up-gradation and those who
became ineligible due to change of category were also not
permitted to participate in the second round of Counselling. This
was the practice followed at the time of issuance of the
Notification for admission to the Postgraduate Courses for
2018-2019. The change made by the notice dated 09.04.2018
are to the effect that even if a candidate is allotted a seat in the
first round but did not report, he would be entitled to participate
in the second round of Counselling. A candidate who had
reported but resigned was also made eligible to participate in the
second round of Counselling, contrary to the position that existed
prior to 09.04.2018. According to the Petitioners, the competition
for the second round of Counselling would increase as the above
two categories of candidates who were not eligible to participate
in the second round of Counselling earlier were permitted to
compete for admissions in the second round of Counselling. They
contend that this change should not have been made after the
5
commencement of admissions for this year.
7. It is clear from the record that the Medical Council of India
decided to make certain changes to the method of admissions to
the Postgraduate Courses to arrest the blocking of seats by
certain candidates which was detrimental to the interest of
meritorious candidates in the All India Quota. There is material
on record to suggest that devious methods were adopted by
certain candidates to block the seats in the All India Quota and
resign thereafter from those seats later which resulted in
reversion of the All India Quota seats to the State Quota. The
Medical Counselling Committee identified about thousand
candidates who were indulging in such illegal practice and
proposes to take action against them after a thorough inquiry.
8. There is no infringement of any legal right of the Petitioners in the
change of the method of Counselling made by the notice dated
09.04.2018. Reduction of chances of admission does not entail in
violation of any right. If the change in the method of Counselling
was due to the circumstances mentioned above, we see no
reason to interfere. Further, the Petitioners have participated in
the second round of Counselling for up-gradation. We are
informed that the second round of Counselling for All India Quota
is completed. No interference is warranted at this stage in
respect of the All India Quota.
6
9. In view of the completion of the second round of Counselling of
the All India Quota, we see no reason to entertain the Writ
Petitions. The order dated 20.04.2018, staying the reversion of
seats from the All India Quota to the State Quota is vacated.
According to the schedule for online Counselling, the second
round of Counselling of the State Quota should be completed by
26.04.2018. The second round of State Counselling has to be
conducted after taking into account the reverted seats on
completion of the second round of the All India Quota. We are
informed that some States and Deemed/Central Institutions
completed the second round of Counselling without waiting for
the reversion of the unfilled seats in the second round of
Counselling of the All India Quota. As this could not have been
done, we direct that such States and Deemed/Central Institutions
shall conduct the second round of Counselling again after
reversion of the unfilled seats in the second round of Counselling
of the All India Quota. As we have vacated the order dated
20.04.2018, the concerned authority will report the unfilled seats
in the second round of the All India Counselling to the respective
States by 05.05.2018. The second round of Counselling for the
State Quota shall be conducted and completed by 10.05.2018.
The Mop-up-round for the State Quota which is scheduled to be
7
completed by 08.05.2018 is extended to 15.05.2018.
Writ Petition (C) No.424 of 2018
In I.A. No.62831 of 2018 in W.P. (C) No.357 of 2018, no order is
required to be passed in view of fact that some of the Applicants
have filed Writ Petition (C) No.424 of 2018 for the same relief. Writ
Petition (C) No.424 of 2018 is disposed off in terms of the order in
Writ Petition (C) No.357 of 2018.
 ........................................J.
 [S.A. BOBDE]

 ........................................J.
 [L. NAGESWARA RAO]
New Delhi,
3
rd May, 2018.
8

the Arbitration and Conciliation Act,= Single Judge dismissing the application filed under Section 8 of the Arbitration and Conciliation Act, 1996 (the ‘Act’) by holding that the agreements between the parties are not inter-connected with the principal agreement dated 05.03.2012 and therefore, the parties cannot be referred to arbitration as per the decision in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and another (2003) 5 SCC 531.= both parties have consciously proceeded with the commercial transactions to commission the Photovoltaic Solar Plant at Dongri, Raksa, District Jhansi, U.P. The first respondent has proceeded to procure the materials, entered into agreement with Juwi India for engineering, installation and commissioning and the sale and purchase agreement with Astonfield, were all the conscious steps taken in the commercial understanding to commission the Solar Plant at Dongri, Raksa, District Jhansi, U.P. Even though Juwi India and Astonfield are not parties to the main agreement - Equipment Lease Agreement (14.03.2012), all the agreements/contracts contain clauses referring to the main agreement. It is the duty of the Court to impart the commercial understanding with a “sense of business efficacy” and not by the mere averments made in the plaint. The High Court was not right in refusing to refer the parties on the ground of the allegations of fraud levelled in the plaint. 34. It is only where serious questions of fraud are involved, the arbitration can be refused. In this case, as contended by the appellants 29 there were no serious allegations of fraud; the allegations levelled against Astonfield is that appellant no.1 - Ameet Lalchand Shah misrepresented by inducing the respondents to pay higher price for the purchase of the equipments. There is, of course, a criminal case registered against the appellants in FIR No.30 of 2015 dated 05.03.2015 before the Economic Offences Wing, Delhi. The appellant no.1 – Ameet Lalchand Shah has filed Criminal Writ Petition No.619 of 2016 before the High Court of Delhi for quashing the said FIR. The said writ petition is stated to be pending and therefore, we do not propose to express any views in this regard, lest, it would prejudice the parties. Suffice to say that the allegations cannot be said to be so serious to refuse to refer the parties to arbitration. In any event, the Arbitrator appointed can very well examine the allegations regarding fraud. 35. Main agreement - Equipment Lease Agreement (14.03.2012) for leasing and commissioning of Solar Plant at Dongri, Raksa, District Jhansi, Uttar Pradesh contains arbitration clause (Clause 29). As discussed earlier, other three agreements - two agreements between Rishabh and Juwi India (01.02.2012) and Sale and Purchase Agreement (05.03.2012) between Rishabh and Astonfield are integrally connected with the commercial understanding of commissioning the Solar Project at Dongri, Raksa, District Jhansi, Uttar Pradesh and to resolve the dispute 30 between the parties, they are to be referred to arbitration. The order of the High Court declining to refer the parties to arbitration cannot be sustained and is liable to be set aside.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4690 OF 2018
(Arising out of SLP(C) No.16789 of 2017)
AMEET LALCHAND SHAH AND OTHERS …Appellants
Versus
RISHABH ENTERPRISES AND ANOTHER ...Respondents
J U D G M E N T
R. BANUMATHI, J.
Leave granted.
2. This appeal arises out of the judgment dated 17.04.2017 passed by
the Delhi High Court in FAO(OS) (COMM) No.85 of 2017 in and by which
the Division Bench affirmed the order of the Single Judge dismissing the
application filed under Section 8 of the Arbitration and Conciliation Act,
1996 (the ‘Act’) by holding that the agreements between the parties are
not inter-connected with the principal agreement dated 05.03.2012 and
therefore, the parties cannot be referred to arbitration as per the decision
in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and another (2003)
5 SCC 531.
3. Brief facts which led to filing of this appeal are as follows:-
1
On 01.02.2012, the first respondent – Rishabh Enterprises (the
‘Rishabh’), the sole proprietorship concern of the second respondent –
Dr. A.M. Singhvi entered into two agreements with M/s Juwi India
Renewable Energies Pvt. Ltd. (Juwi India) namely:- (i) Equipment and
Material Supply Contract for purchase of power generating equipments to
the tune of Rs.8,89,80,730/-; and (ii) Engineering, Installation and
Commissioning Contract for installation and commissioning of the Solar
Plant for Rs.2,20,19,270/-. Both these agreements contain arbitration
clause.
4. The first respondent - Rishabh entered into Sale and Purchase
Agreement dated 05.03.2012 with the second appellant company –
Astonfield Renewables Private Limited (Astonfield) for purchasing CIS
Photovoltaic products to be leased to appellant No.3 – Dante Energy Pvt.
Ltd. (Dante Energy) to be installed at the Solar Plant at Dongri, Raksa,
District Jhansi, Uttar Pradesh. As per the agreement, these products
were valued for Rs.25,16,00,000/-. The second appellant – Astonfield
received Rs.21,40,49,999/- from the respondents under various cheques
issued by the Rishabh. This agreement dated 05.03.2012 does not
contain the arbitration clause. According to the appellants, an amount of
Rs.10,00,00,000/- by cash was paid back to the sons of Dr. A.M. Singhvi
i.e. Rs.2,50,00,000/- to Mr. Avishkar Singhvi and Rs.7,50,00,000/- to
2
Mr. Anubhav Singhvi. An Equipment Lease Agreement (ELA) dated
14.03.2012 was entered into between the Rishabh and Dante Energy
whereby Dante Energy agreed to pay the Rishabh Rs.13,50,000/- as
lease rent for March, 2012 and from April, 2012 onwards, the said rent
payable was Rs.28,26,000/-. The Solar Plant at Jhansi has been
commissioned and energized on 16.03.2012.
5. Gist of the agreements are as under:-
S.No. DATE OF
CONTRACT
CONTRACTING
PARTY
PURPOSE OF CONTRACT ARBITRATION
AGREEMENT
1. 01.02.2012 Rishabh
Enterprises
entered into two
agreements with
M/s. Juwi India
Renewable
Energies Pvt.
Ltd.
(i) Rishabh to purchase
power generating
equipments -
Rs.8,89,80,730/-
(ii) Engineering, Installation
and commission of the
plant at Jhansi -
Rs.2,20,19,270/-
Both agreements
contain arbitration
clause - Parties
agreed that the seat
of arbitration shall be
at Bombay
2. 05.03.2012 Rishabh entered
into agreement
with M/s. Aston
Renewables
Pvt. Ltd.
(appellant no.2)
(i) Purchasing CIS
Photovoltaic products to
be leased to Dante Energy
(Appellant no.3) for
energizing solar plant
installed at Jhansi -
Rs.21,40,49,999/-
This agreement
does not contain
arbitration clause.
3. 14.03.2012 Rishabh entered
into agreement
with M/s. Dante
Energy Pvt. Ltd.
(appellant no.3)
Dante agreed to pay
Rs.13,50,000/- as lease rent
for the equipment for March,
2012 and from April, 2012
onwards, Rs.28,26,000/- per
month.
This agreement
contains arbitration
clause. Parties have
agreed that the seat
of arbitration shall be
at Bombay.
6. Dispute arose between the parties when respondents alleged that
appellant No. 3 – Dante Energy has defaulted in payment of rent and that
Astonfield committed fraud by inducing the Rishabh to purchase the
Photovoltaic products by investing huge amount. The respondents have
3
also alleged that the appellants have committed misrepresentation and
criminal breach of trust so far as the equipments procured and leased to
Dante Energy. The respondents have also filed a criminal complaint
before the Economic Offences Wing at Delhi against the appellants,
based on which, FIR No. 30 of 2015 was registered. The appellants
have filed writ petition bearing CWP No.619 of 2016 before the High
Court of Delhi seeking quashing of the said FIR which is sub judice.
There was also an enquiry by the Income Tax Authorities seeking
explanation from the appellants regarding transfer of money to the sons
of Dr. A.M. Singhvi i.e. Rs.2,50,00,000/- to Mr. Avishkar Singhvi and
Rs.7,50,00,000/- to Mr. Anubhav Singhvi. Appellant No.1 – Ameet
Lalchand Shah was summoned by the Income Tax Authorities seeking
explanation with regard to transfer of the said money to the sons of Dr.
A.M. Singhvi.
7. Owing to the dispute between the parties, appellant No.3 – Dante
Energy issued notice dated 13.02.2016 invoking arbitration clause and
nominated Justice Sujata Manohar, former Judge, Supreme Court of
India as the Arbitrator. The respondents namely the Rishabh and its sole
proprietor preferred a Civil Suit (Commercial) No.195 of 2016 before the
High Court on 11.03.2016 against all the appellants levelling various
allegations including fraud and misrepresentation. In the suit, multiple
4
reliefs were claimed:- (i) for a declaration that Sale and Purchase
Agreement dated 05.03.2012; Equipment and Material Supply Contract,
Engineering, Installation and Commissioning Contract both dated
01.02.2012 and Equipment Lease Agreement dated 14.03.2012 are
vitiated by serious fraud committed by the appellants and that the
agreements are void; (ii) for recovery of a sum of Rs.32,22,80,288/-
which the appellants are jointly and severely liable to pay to the
respondents; (iii) to pay a sum of Rs.19,31,74,804/- as the interest on the
aforesaid amount of Rs.32,22,80,288/- at the rate of 18% per annum
from the date of the agreement i.e. 01.02.2012 till the date of the
realization; and (iv) to pay arrears of lease rent.
8. On receipt of notice and summons in the suit, the
appellants/defendants preferred application I.A. No.4158 of 2016 under
Section 8 of the Act seeking for reference of the dispute between the
parties to arbitration pertaining to all the four agreements. The appellants
sought for reference to arbitration of all the four agreements by
contending that the Sale and Purchase Agreement (05.03.2012) is the
main agreement and that other three agreements are inter-connected as
they are executed between the same parties and the obligations and the
performance of the terms of the agreements are inter-connected viz.
commissioning of the Photovoltaic Solar Plant at Dongri, Raksa, District
5
Jhansi, U.P. The respondents Rishabh and Dr. A.M. Singhvi resisted the
application by contending that the suit is for declaration that the
agreements are vitiated due to fraud and misrepresentation and while so,
the matter cannot be referred to arbitration. It was further averred that
the suit is neither concerned about the agreement dated 01.02.2012 with
Juwi India nor concerned about Equipment Lease Agreement
(14.03.2012); whereas the suit is concerned about the false assurances
and fraud played by the appellants Ameet Lalchand Shah and Dante
Energy regarding which a criminal case has also been registered and
hence, the dispute is not referable to arbitration.
9. The learned Single Judge by order dated 15.03.2017 dismissed the
application filed under Section 8 of the Act holding that the Equipment
Lease Agreement (14.03.2012) between Rishabh and Dante Energy
cannot be treated as the mother/principal agreement and the agreements
between the respondents and Astonfield and Juwi India cannot be said to
be ancillary agreements to the same. The learned Single Judge further
held that not only the respondents accuse the appellants of fraud but
appellants also accuse the respondents of fraud, concealment and
suppression of material facts and that there was also a registration of a
criminal case based on the complaint filed by the respondents and also
the enquiry by the Income Tax Authorities regarding transfer of
6
Rs.10,00,00,000/- to the sons of Dr. A.M. Singhvi and when there are
such serious issues between the parties, they cannot be referred to
arbitration.
10. Being aggrieved by the dismissal of the application, the appellants
preferred appeal before the Division Bench which came to be dismissed.
The Division Bench pointed out the difference in the language between
Section 8 and Section 45 of the Act and after referring to Chloro
Controls India Private Limited v. Severn Trent Water Purification Inc.
and others (2013) 1 SCC 641, observed that Sukanya Holdings was
not overruled. The Division Bench further pointed out that in spite of
amendment brought in under Section 8, since the main/principal
agreement–Sale and Purchase Agreement (05.03.2012) does not contain
an arbitration clause, the matter cannot be referred to arbitration. After
referring to A. Ayyasamy v. A. Paramasivam and others (2016) 10
SCC 386, the Division Bench held that in view of serious allegations of
fraud, arbitration of such dispute is excluded.
11. We have heard Mr. Shanti Bhushan, learned senior counsel
appearing for the appellants and Mr. Kapil Sibal, learned senior counsel
appearing for the respondents. Upon consideration of the rival
submissions, the following points arise for consideration in this appeal:-
7
1. Whether all the four agreements viz. – (i) Equipment and
Material Supply Contract (01.02.2012) between Rishabh and
Juwi India; (ii) Engineering, Installation and Commissioning
Contract (01.02.2012) between Rishabh and Juwi India;
(iii) Sale and Purchase Agreement (05.03.2012) between
Rishabh and Astonfield; and (iv) Equipment Lease Agreement
(14.03.2012) between Rishabh and Dante Energy are interconnected
to refer the parties to arbitration though there is no
arbitration clause in the Sale and Purchase Agreement
(05.03.2012) between Rishabh and Astonfield?
2. Whether reference of the dispute between the parties to
arbitration is to be refused on the ground of allegations of fraud
levelled against the appellants by the respondents in the plaint
or whether the agreements ought to be taken as commercial
undertaking of the parties “with a sense of business efficacy”
as held in Ayyasamy case?
12. First, the Rishabh entered into two agreements with Juwi India
dated 01.02.2012:- (i) Equipment and Material Supply Contract; and (ii)
Engineering, Installation and Commissioning Contract. The first
agreement-Equipment and Material Supply Contract (01.02.2012)
contains arbitration clause (Clause 19.4). The second agreement –
8
Engineering, Installation and Commissioning Contract (01.02.2012) also
contains arbitration clause (Clause 25). Sale and Purchase Agreement
(05.03.2012) between Rishabh and Astonfield for Rs.25,16,00,000/- does
not contain the arbitration clause. The fourth agreement namely
Equipment Lease Agreement (14.03.2012) between Rishabh and Dante
Energy contains arbitration clause (Clause 29). A careful perusal of all
the four agreements that is:- (i) Equipment and Material Supply Contract;
(ii) Engineering, Installation and Commissioning Contract; (iii) Sale and
Purchase Agreement; and (iv) Equipment Lease Agreement shows that
all the four agreements were for the single purpose to commission 2
MWp Photovoltaic Solar Plant at Dongri, Raksa, District Jhansi, Uttar
Pradesh to be purchased by Rishabh and leasing the equipments to
Dante Energy.
13. The averments in the plaint also prima facie indicate that all the
four agreements are inter-connected and that appellant No.1 – Ameet
Lalchand Shah is stated to be the promoter and controlling man of both
Astonfield as well as Dante Energy. We may usefully refer to the relevant
averments in the plaint which read as under:-
“Defendant No.1, Mr. Ameet Lalchand Shah, is the Promoter of
the Defendant Nos. 2 and 3 Companies. Through his other
group companies, Defendant No.1 is also the controlling
shareholder of Defendant Nos. 2 and 3. He is involved in
running the day to day affairs of the said companies and it is
9
on his instructions and directions and under his overall
control and dictation that the said companies are run. He is
the co-founder and the co-chairman of the “Astonfield Group”
consisting of various companies incorporated both outside of
and in India (www.astonfield.com). Defendant No.1 is the main
brain behind the serious fraud that has been perpetuated upon the
Plaintiffs and the prima donna, mind, body, soul and controlling
entity of all other defendants to this suit. If the corporate veil is
lifted by this Hon’ble Court (and, this is an appropriate case for
lifting of the corporate veil), it will be found that it is, in fact,
Defendant No.1 only who is the real entity behind all the other
defendants and it is on his directions that the others have made,
played their respective roles in and/or participated in the
transactions in question……. Further, Defendant No.1 has also
been corresponding with the plaintiffs on behalf of Defendant Nos.
2 and 3. ……… The said Defendant No.1 is also responsible for
running the day to day affairs of this Company which is run on
his directions and under his control. Defendant No.2 entered
into a Sale and Purchase Agreement with the Plaintiffs, the
transaction under which is vitiated by serious fraud. ……”
Though there are two agreements, individual parties to the Sale and
Purchase Agreement (05.03.2012) and the Equipment Lease Agreement
(Dante Energy) are one and the same,. Though Juwi India is not the
defendant, as discussed infra, Equipment and Material Supply Contract
and Engineering, Installation and Commissioning Contract with Juwi India
itself were for the purpose of commissioning Photovoltaic Solar Plant at
Dongri, Raksa, District Jhansi, Uttar Pradesh.
14. The clauses in the Equipment and Material Supply Contract
(01.02.2012) between Rishabh and Juwi India clearly indicate that the
Rishabh has entered into Lease Agreement with Dante Energy and that
the Rishabh proposes to source Photovoltaic products/panels etc. and
similar Solar Power generating equipments for onward lease of those
10
goods to Dante Energy. The following clauses in the said Equipment and
Material Supply Contract would clearly establish the link of Equipment
and Material Supply Contract with the main Lease Agreement with Dante
Energy:-
“This Equipment and Material Supply contract is between
M/s Rishabh Enterprises………….. (the ‘Client’)
AND
Juwi India Renewable Energies Private Limited ……..(the
‘Supplier’)
Whereas:-
A. The Client (Rishabh) is entering into Lease Agreement
with M/s Dante Energy Pvt. Ltd. (‘Lessee’) and the
Lessee (Dante Energy) has necessary authorizations to
develop, own, operate and commercially exploit a 2
MWp thin-film photovoltaic solar plant at Dongri, Raksa,
District-Jhansi, UP (Plant Site), transmission line from
power plant to the Grid Substation, bay extension work at
the Grid Substation, including all of the infrastructure and
relevant installations required to connect the electricityproducing
equipment to the distribution/transmission grid at
the Grid Substation in UP, India (the ‘Facility’).
B. The Client (Rishabh) proposes to source Photovoltaic
Products/Panels, Inverters, Transformers and similar
solar power generating equipments, etc. for sale of
goods to the Client (Rishabh) and the Client (Rishabh)
will onward lease these goods to M/s Dante Energy Pvt.
Ltd. (Lessee).
C. The Client (Rishabh) wishes to engage the Supplier (Juwi
India) for supply of Equipment (as defined below) and
materials with respect to the development of the Solar Park.
D. The M/s Dante Energy Private Limited (Lessee) will have the
right to inspect the respective goods to be sourced by the
Client (Rishabh) and based on the confirmation from the M/s
Dante Energy Private Limited (Lessee), the respective goods
will be purchased by the Client (Rishabh) for onward sale to
M/s Dante Energy Private Limited (Lessee) and will be
consigned to the project site.
11
E. The Supplier (Juwi India) is aggregable to supply the
Equipment and Materials to the Client (Rishabh) in
accordance with the terms of this Contract.”
15. Likewise, clauses in the agreement for Engineering, Installation
and Commissioning Contract between Rishabh and Juwi India
(01.02.2012) also clearly indicate that the agreement was entered into for
the purpose of commissioning Photovoltaic Solar Plant at Dongri, Raksa,
District Jhansi, Uttar Pradesh. Clause (A) of the agreement that the
Rishabh has entered into Equipment Lease Agreement with M/s Dante
Energy (Lessee) reiterates that the second agreement with Juwi India for
engineering, installation and commissioning is integrally connected with
Equipment Lease Agreement (14.03.2012). The relevant clauses in the
agreement read as under:-
“This Engineering, Installation and Commissioning Contract
Agreement is between
M/s Rishabh Enterprises……….. (the ‘Client’)
AND
Juwi India Renewable Energies Pvt. Ltd………(the ‘Contractor’)
Whereas:-
A. The Client (Rishabh) is the owner of certain Photovoltaic
products/Panels, Inverters, Transformers and similar
solar power generating equipments etc. and is entering
into an Equipment Lease Agreement with M/s Dante
Energy Pvt. Ltd. (Lessee).
B. The Lessee (Dante Energy) has necessary authorizations
to develop, own, operate and commercially exploit a 2
MWp thin-film photovoltaic solar plant at Dongri, Raksa,
District-Jhansi, UP (Plant Site), transmission line from
12
power plant to the Grid Substation, bay extension work at
the Grid Substation, including all of the infrastructure and
relevant installations required to connect the electricityproducing
equipment to the distribution/transmission grid at
the Grid Substation in UP, India (the ‘Facility’).
C. The Client (Rishabh) proposes to purchase the Client’s
Equipment as required by the Lessee (Dante Energy) for
onward lease to the Lessee (Dante Energy).
D. The Lessee (Dante Energy) requires the services for design,
engineering, construction, erection, testing, commissioning
and handing over of the Facility to the Client (Rishabh) and
accordingly the Client (Rishabh) has agreed to identity the
competent Contractor (Juwi India) for undertaking the
above work.
E. The Contractor (Juwi India) has represented to the Client
(Rishabh) and the Lessee (Dante Energy) that the
Contractor (Juwi India) has the requisite experience,
expertise, resources and skills for undertaking and
performing all the activities and services required for design
engineering, construction, erection, testing, commissioning
and handing over of the Facility and has submitted an offer
to the Client (Rishabh) in response to the Technical
Specifications as set out by the Client (Rishabh).
F. Based on the offer submitted by the Contractor (Juwi India)
and relying on the Contractor’s representations and
warranties herein, and on the concurrence and approval of
the Lessee (Dante Energy), the Client (Rishabh) wishes to
appoint the Contractor (Juwi India) to undertake the
Services and (except for purchase of the Client’s
Equipments) to perform all the activities and services
required for design, engineering, construction, erecting,
testing, commissioning and handing over of the Facility
and the Contractor (Juwi India) has agreed to such
appointment and to undertake such other duties and
obligations as mentioned in this Contract.”
The above clauses in the very commencement of the agreement with
Juwi India dated 01.02.2012 clearly state that the agreement itself was
for the purpose of commissioning Photovoltaic Solar Plant at Dongri,
Raksa, District Jhansi, Uttar Pradesh for which Dante Energy (Lessee)
has necessary authorizations. The above quoted clauses in the
13
Engineering, Installation and Commissioning Contract (01.02.2012)
establish that this agreement is inter-connected with Equipment Lease
Agreement (14.03.2012) with Dante Energy.
16. Equally, the Sale and Purchase Agreement (05.03.2012) between
M/s Astonfield and Rishabh is also for the purpose of onward leasing of
goods to Dante Energy as seen from the following clauses:-
“Sale and Purchase Agreement
Astonfiled Renewable Pvt. Ltd. ……….. (Seller) AND Rishabh
Enterprises…….. (Buyer) agree to sell and to purchase the
following products, which are required for onwards leasing of goods
by the Buyer (Rishabh) to Dante Energy Private Limited.……………
(Lessee) under the terms and conditions stated below
(Transaction), effective as of the date of last signature below
(Effective Date):-
1. Buyer:Rishabh Enterprises
2. Seller: Astonfield Renewables Private Limited
3. Transaction: The parties agree that this Transaction shall be
governed by this Sale and Purchase Agreement and its
apendices.
The products under this Agreement shall be used for the 2
MWp grid connected solar PV power project being set up by the
Lessee (Dante Energy) at Dongri, Raksa, District-Jhansi, Uttar
Pradesh (Plant Site)
The Buyer (Rishabh) is purchasing the above goods for
onward supply/lease to lessee (Dante Energy). Lessee (Dante
Energy) will have the right to inspect the respective goods and
based on the confirmation from the Lessee (Dante Energy), the
respective goods will be purchased by the Buyer (Rishabh) for
onward sale to Lessee (Dante Energy) and will be consigned to
the Project Site.”
Though the Sale and Purchase Agreement (05.03.2012) does not have
any arbitration clause, by the above clauses, it is clearly linked with the
14
main agreement - Equipment Lease Agreement (14.03.2012). Sale and
Purchase Agreement was entered into between Astonfield and Rishabh
only for the purpose of onward transmission of leasing of the goods by
Rishabh to Dante Energy. There is no merit in the contention that the
Sale and Purchase Agreement is not connected with the Equipment
Lease Agreement with Dante Energy.
17. Equipment Lease Agreement (14.03.2012) between Rishabh and
Dante Energy is only a follow-up of all the above three agreements as is
clear from the various clauses in the Equipment Lease Agreement. The
relevant clauses of Equipment Lease Agreement (14.03.2012) are as
under:-
“Equipment Lease Agreement
M/s Rishabh Enterprises………. (Lessor) AND M/s Dante
Energy Pvt. Ltd……….. (Lessee) is setting up a 2 MWp grid
connected solar PV power project at Dongri, Raksa, DistrictJhansi,
Uttar Pradesh (Plant Site)……
Whereas the Lessor (Rishabh) is the owner of certain
Photovoltaic products/Panels, Inverters, Transformers and
similar solar power generating equipments etc. (herein
referred to as “Equipments”), more particularly described in
the First Schedule hereunder written.
And whereas the Lessee (Dante Energy) has necessary
authorizations to develop, own, operate and commercially exploit a
2 MWp thin-film photovoltaic solar plant on the Site (“SPY Power
Plant”), transmission line from power plant to the Grid Substation,
bay extension work at the Grid Substation, including all of the
15
infrastructure and relevant installations required to connect the
electricity-producing equipment to the distribution/transmission grid
at the Grid Substation in Jhansi, Uttar Pradesh, India as specified in
the Second Schedule (“Facility”) and for this purpose, they are in
requirement of the Equipments as mentioned in the First Schedule
hereunder written.
And whereas the Lessee (Dante Energy) being desirous of
obtaining from the Lessor (Rishabh) on lease the specified nature
of Equipments more particularly described in the First Schedule
hereunder written, has approached the Lessor (Rishabh) and has
requested the Lessor (Rishabh) to lease out the Equipments to the
Lessee (Dante Energy) on the terms, covenants and conditions
herein contained/specified.
…………
Article 4
Delivery, Commencement and disbursement:
(i) It is expressly understood by the Lessee (Dante Energy) and
Lessor (Rishabh) that in the present case, the respective
Equipments are being sourced from the supplier of Solar
Photovoltaic Modular-located in the State of Maharashtra i.e.
Astonfield Renewables Private Limited and supplier of other
solar power generating equipments like inverters,
transformers, etc. in the State of Karnataka i.e. Juwi India
Renewable Energies Private Limited. These goods have
been inspected by the Lessee (Dante Energy) and are found
suitable for its commercial use of the same.
(ii) Pursuant to this lease agreement, the respective
Equipments, will be purchased by the Lessor (Rishabh) from
the respective Supplier and accordingly, the Equipments will
be consigned directly to the project site in the State of Uttar
Pradesh. Accordingly, in the present case, the delivery of
respective Equipments will be effected by Endorsement of
the consignment Note in the favour of Lessee (Dante
Energy) by the Lessor (Rishabh).
………
(v) Irrespective of how and by whom the delivery is
effected, it is hereby agreed that the entire risk, cost or
any outgoing pertaining to the said delivery and
installation shall be at the cost and risk of the Lessor
(Rishabh).”
The above extracted clauses clearly demonstrate that all the four
agreements are inter-connected. Clause (v) in Article 4 in the Equipment
16
Lease Agreement that delivery and installation shall be at the cost and
risk of Rishabh (Lessor) is clearly linked with the Engineering, Installation
and Commissioning Contract between Rishabh and Juwi India.
18. The High Court placed reliance upon Sukanya Holdings for
dismissal of the application filed under Section 8 of the Act. In Sukanya
Holdings, the suit was filed for dissolution of the partnership firm and
accounts and inter alia challenged the conveyance deed executed by the
partnership firm in favour of M/s West End Gymkhana Limited. An
application filed under Section 8 of the Act was opposed by respondent
No.1 thereon by contending that the subject matter of the suit was not
between the contracting parties and that the reliefs claimed are not only
against respondents No. 1 and 2 who are the contracting parties but are
claimed against the remaining twenty-three parties who are the
purchasers/tenants of disputed flats. This Court held that if all the parties
to the suit are not parties to the agreement then the matter cannot be
referred to arbitration since there is no provision in the Act for partly
referring the dispute to arbitration. This Court noted that the buyers were
not parties to the arbitration agreement and that the non-signatories
cannot be referred to arbitration. In Sukanya Holdings in paras (15) and
(16), this Court held as under:-
17
“15. The relevant language used in Section 8 is: “in a matter which
is the subject of an arbitration agreement”. The court is required to
refer the parties to arbitration. Therefore, the suit should be in
respect of “a matter” which the parties have agreed to refer and
which comes within the ambit of arbitration agreement. Where,
however, a suit is commenced — “as to a matter” which lies outside
the arbitration agreement and is also between some of the parties
who are not parties to the arbitration agreement, there is no
question of application of Section 8. The words “a matter” indicate
that the entire subject-matter of the suit should be subject to
arbitration agreement.
16. The next question which requires consideration is — even if
there is no provision for partly referring the dispute to arbitration,
whether such a course is possible under Section 8 of the Act. In our
view, it would be difficult to give an interpretation to Section 8 under
which bifurcation of the cause of action, that is to say, the subjectmatter
of the suit or in some cases bifurcation of the suit between
parties who are parties to the arbitration agreement and others is
possible. This would be laying down a totally new procedure not
contemplated under the Act. If bifurcation of the subject-matter of a
suit was contemplated, the legislature would have used appropriate
language to permit such a course. Since there is no such indication
in the language, it follows that bifurcation of the subject-matter of an
action brought before a judicial authority is not allowed.”
19. Mr. Sibal, learned senior counsel for the respondents submitted
that the High Court rightly relied upon Sukanya Holdings as it relates to
Part-I of the Act that the parties who are not signatories to the arbitration
agreement (in this case, Astonfield under Sale and Purchase Agreement)
cannot be referred to arbitration. It was further submitted that Chloro
Controls arises under Part-II of the Act and was rightly distinguished by
the High Court and Sukanya Holdings was not overruled by Chloro
Controls and hence, the appellants cannot rely upon Chloro Controls.
It was contended that the Sale and Purchase Agreement (05.03.2012)
under which huge money was parted with, is the main agreement having
18
no arbitration clause cannot be referred to arbitration. It was submitted
that the subject matter of the suit cannot be bifurcated between the
parties to arbitration agreement and others.
20. In Chloro Controls, this Court was dealing with the scope and
interpretation of Section 45 of the Act - Part-II of the Act and in that
context, discussed the scope of relevant principles on the basis of which
a non-signatory party also could be bound by the arbitration agreement.
Under Section 45 of the Act, an applicant seeking reference of disputes
to arbitration can either be a party to the arbitration agreement or any
person claiming through or under such party. Section 45 uses the
expression “….at the request of one of the parties or any person claiming
through or under him…..” includes non-signatory parties who can be
referred to arbitration provided they satisfy the requirements of
Sections 44 and 45 read with Schedule I of the Act. In para (73) of
Chloro Controls, this Court held as under:-
“73. A non-signatory or third party could be subjected to arbitration
without their prior consent, but this would only be in exceptional
cases. The court will examine these exceptions from the touchstone
of direct relationship to the party signatory to the arbitration
agreement, direct commonality of the subject-matter and the
agreement between the parties being a composite transaction. The
transaction should be of a composite nature where performance of
the mother agreement may not be feasible without aid, execution
and performance of the supplementary or ancillary agreements, for
achieving the common object and collectively having bearing on the
dispute. Besides all this, the court would have to examine whether
a composite reference of such parties would serve the ends of
19
justice. Once this exercise is completed and the court answers the
same in the affirmative, the reference of even non-signatory parties
would fall within the exception afore-discussed.” (Underlining
added)
21. In a case like the present one, though there are different
agreements involving several parties, as discussed above, it is a single
commercial project namely operating a 2 MWp Photovoltaic Solar Plant
at Dongri, Raksa, District Jhansi, Uttar Pradesh. Commissioning of the
Solar Plant, which is the commercial understanding between the parties
and it has been effected through several agreements. The agreement –
Equipment Lease Agreement (14.03.2012) for commissioning of the
Solar Plant is the principal/main agreement. The two agreements of
Rishabh with Juwi India:- (i) Equipment and Material Supply Contract
(01.02.2012); and (ii) Engineering, Installation and Commissioning
Contract (01.02.2012) and the Rishabh’s Sale and Purchase Agreement
with Astonfield (05.03.2012) are ancillary agreements which led to the
main purpose of commissioning the Photovoltaic Solar Plant at Dongri,
Raksa, District Jhansi, Uttar Pradesh by Dante Energy (Lessee). Even
though, the Sale and Purchase Agreement (05.03.2012) between
Rishabh and Astonfield does not contain arbitration clause, it is integrally
connected with the commissioning of the Solar Plant at Dongri, Raksa,
District Jhansi, U.P. by Dante Energy. Juwi India, even though, not a
party to the suit and even though, Astonfield and appellant No.1 – Ameet
20
Lalchand Shah are not signatories to the main agreement viz. Equipment
Lease Agreement (14.03.2012), it is a commercial transaction integrally
connected with commissioning of Photovoltaic Solar Plant at Dongri,
Raksa, District Jhansi, U.P. Be it noted, as per clause(v) of Article 4,
parties have agreed that the entire risk, cost of the delivery and
installation shall be at the cost of the Rishabh (Lessor). Here again, we
may recapitulate that engineering and installation is to be done by Juwi
India. What is evident from the facts and intention of the parties is to
facilitate procurement of equipments, sale and purchase of equipments,
installation and leasing out the equipments to Dante Energy. The dispute
between the parties to various agreements could be resolved only by
referring all the four agreements and the parties thereon to arbitration.
22. Parties to the agreements namely Rishabh and Juwi India:- (i)
Equipment and Material Supply Agreement; and (ii) Engineering,
Installation and Commissioning Contract and the parties to Sale and
Purchase Agreement between Rishabh and Astonfield are one and the
same as that of the parties in the main agreement namely Equipment
Lease Agreement (14.03.2012). All the four agreements are interconnected.
This is a case where several parties are involved in a single
commercial project (Solar Plant at Dongri) executed through several
agreements/contracts. In such a case, all the parties can be covered by
21
the arbitration clause in the main agreement i.e. Equipment Lease
Agreement (14.03.2012).
23. Since all the three agreements of Rishabh with Juwi India and
Astonfield had the purpose of commissioning the Photovoltaic Solar Plant
project at Dongri, Raksa, District Jhansi, Uttar Pradesh, the High Court
was not right in saying that the Sale and Purchase Agreement
(05.03.2012) is the main agreement. The High Court, in our view, erred
in not keeping in view the various clauses in all the three agreements
which make them as an integral part of the principal agreement namely
Equipment Lease Agreement (14.03.2012) and the impugned order of the
High Court cannot be sustained.
Amendment to Section 8 of the Arbitration and Conciliation Act, 1996
24. Arbitration and Conciliation (Amendment) Act, 2015 has brought in
amendment to Section 8 to make it in line with Section 45 of the Act. In
view of the observation made in Sukanya Holdings, Law Commission
has made recommendation for amendment to Section 8 of the Act.
Consequent to 2015 Amendment Act, Section 8 is amended as under:-
“8. Power to refer parties to arbitration where there is an
arbitration agreement. - (1) A judicial authority before which an
action is brought in a matter which is the subject of an arbitration
agreement shall, if a party to the arbitration agreement or any
person claiming through or under him, so applies not later than
when the date of submitting his first statement on the substance of
the dispute, then, notwithstanding any judgment, decree or order of
22
the Supreme Court or any court refer the parties to arbitration
 unless it finds that prima facie no valid arbitration agreement exists.
(2) The application referred to in sub-section (1) shall not be
entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof
Provided that where the original arbitration agreement or a certified
copy thereof is not available with the party applying for reference to
arbitration under sub-section (1), and the said agreement or
certified copy is retained by the other party to that agreement, then,
the party so applying shall file such application along with a copy of
the arbitration agreement and a petition praying the Court to call
upon the other party to produce the original arbitration agreement
or its duly certified copy before that Court.
(3) Notwithstanding that an application has been made under
sub-section (1) and that the issue is pending before the judicial
authority, an arbitration may be commenced or continued and an
arbitral award made.
25. “Principally four amendments to Section 8(1) have been introduced
by the 2015 Amendments - (i) the relevant "party" that is entitled to apply
seeking reference to arbitration has been clarified/amplified to include
persons claiming "through or under" such a party to the arbitration
agreement; (ii) scope of examination by the judicial authority is restricted
to a finding whether "no valid arbitration agreement exists" and the nature
of examination by the judicial authority is clarified to be on a "prima facie"
basis; (iii) the cut-off date by which an application under Section 8 is to be
presented has been defined to mean "the date of" submitting the first
statement on the substance of the dispute; and (iv) the amendments are
expressed to apply notwithstanding any prior judicial precedent. The
proviso to Section 8(2) has been added to allow a party that does not
23
possess the original or certified copy of the arbitration agreement on
account of it being retained by the other party, to nevertheless apply
under Section 8 seeking reference, and call upon the other party to
produce the same.” (Ref: Justice R.S. Bachawat’s Law of Arbitration
and Conciliation, Sixth Edition, Vol. I (Sections 1 to 34) at page 695
published by LexisNexis).
26. Amendment to Section 8 by the Act, 2015 are to be seen in the
background of the recommendations set out in the 246th Law
Commission Report. In its 246th Report, Law Commission, while
recommending the amendment to Section 8, made the following
observation/comment:-
“LC Comment: The words “such of the parties…. to the arbitration
agreement” and proviso (i) of the amendment have been proposed
in the context of the decision of the Supreme Court in Sukanya
Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr. (2003) 5 SCC 531,
- in cases where all the parties to the dispute are not parties to the
arbitration agreement, the reference is to be rejected only where
such parties are necessary parties to the action – and not if they
are only proper parties, or are otherwise legal strangers to the
action and have been added only to circumvent the arbitration
agreement. Proviso (ii) of the amendment contemplates a two-step
process to be adopted by a judicial authority when considering an
application seeking the reference of a pending action to arbitration.
The amendment envisages that the judicial authority shall not refer
the parties to arbitration only if it finds that there does not exist an
arbitration agreement or that it is null and void. If the judicial
authority is of the opinion that prima facie the arbitration agreement
exists, then it shall refer the dispute to arbitration, and leave the
existence of the arbitration agreement to be finally determined by
the arbitral tribunal. However, if the judicial authority concludes that
the agreement does not exist, then the conclusion will be final and
not prima facie. The amendment also envisages that there shall be
24
a conclusive determination as to whether the arbitration agreement
is null and void.
(2) The application referred to in sub-section (1) shall not be
entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof or a copy accompanied
by an affidavit calling upon the other party to produce the original
arbitration agreement or duly certified thereof in circumstances
where the original arbitration agreement or duly certified copy is
retained only by the other party.
LC Comment: In many transactions involving Government bodies
and smaller market players, the original/duly certified copy of the
arbitration agreement is only retained by the former. This
amendment would ensure that the latter class is not prejudiced in
any manner by virtue of the same” (Ref: 246th Law Commission
Report, Government of India)
27. The language of amendment to Section 8 of the Act is clear that
the amendment to Section 8(1) of the Act would apply notwithstanding
any prayer, judgment, decree or order of the Supreme Court or any other
Court. The High Court laid emphasis upon the word ".....unless it finds
that prima-facie no valid agreement exists". The High Court observed
that there is no arbitration agreement between Astonfield and Rishabh.
After referring to Sukanya Holdings and the amended Section 8 and
Section 45 of the Act, the High Court pointed out the difference in
language of Section 8 and Section 45 of the Act. The High Court
distinguished between Sukanya Holdings and Chloro Controls, and
observed that Sukanya Holdings was not overruled by Chloro
Controls. In para (23) of the impugned judgment, it was held as under:-
"23. ......The change in Section 8 is that the Court is to - in cases
where arbitration agreements are relied on- to refer the disputes in
the suit, to arbitration, "notwithstanding any judgment, decree or
25
order of the Supreme Court or any Court, refer the parties to
arbitration unless it finds that prima facie no valid arbitration
agreement exists". The Court is of opinion that Sukanya is not per
se overruled, because the exercise of whether an arbitration
agreement exists between the parties, in relation to the disputes
that are the subject matter of the suit, has to be carried out. If there
are causes of action that cannot be subjected to arbitration, or the
suit involves adjudication of the role played by parties who are not
signatories to the arbitration agreement, it has to continue because
"prima facie no valid arbitration agreement exists" between such
non parties and others, who are parties."
28. Re: contention: allegations of fraud disable an arbitration:- Yet
another ground based on which the High Court declined to refer the
parties to arbitration is the allegations of fraud levelled by
respondents/plaintiffs in their plaint against Astonfield and appellant no.1.
The High Court held that the respondents levelled allegations of fraud
against the appellants which raise serious triable issues of fraud and
hence, the matter cannot be referred to arbitration.
29. According to the respondents, it is not a case where “fraud is
alleged merely to disable an arbitration”. Mr. Sibal, learned senior
counsel for respondents contended that the plaint is based on the
averments that from inception, the intention of appellants/defendants was
to cheat the respondents and the respondents were made to part with
large sums of money on the basis of the misrepresentation made by the
appellants. It was submitted that alternative prayer in the plaint will not
convert the fraud suit to a regulatory suit because of alternative prayer
since alternative prayer – ‘lease rental’ has been projected only as an
26
alternative remedy. Placing reliance upon Arundhati Mishra (Smt) v. Sri
Ram Charitra Pandey (1994) 2 SCC 29, it was submitted that it is
settled law that it is open to the parties to raise mutually inconsistent
pleas and the relief could be granted on the alternative plea so raised.
30. Refuting the above contentions, Mr. Shanti Bhushan, learned
senior counsel for the appellants placed reliance upon Ayyasamy case
to contend that there are no serious allegations in the plaint to decline
reference of the matter to arbitration. It was submitted that mere
allegations of fraud were not sufficient to detract from the performance of
the obligation of the parties in terms of the agreement and refer the
matter to arbitration.
31. Under the Act, an arbitration agreement means an agreement
which is enforceable in law and the jurisdiction of the arbitrator is on the
basis of an arbitration clause contained in the arbitration agreement.
However, in a case where the parties alleged that the arbitration
agreement is vitiated on account of fraud, the Court may refuse to refer
the parties to arbitration. In Ayyasamy case, this Court held that mere
allegation of fraud is not a ground to nullify the effect of arbitration
agreement between the parties and arbitration clause need not be
avoided and parties can be relegated to arbitration where merely simple
allegations of fraud touched upon internal affairs of parties is levelled.
27
Justice A.K. Sikri observed that it is only in those cases where the Court
finds that there are serious allegations of fraud which make a virtual case
of criminal offence and where there are complicated allegations of fraud
then it becomes necessary that such complex issues can be decided only
by the civil court on the appreciation of evidence that needs to be
produced. In para (25) of Ayyasamy case, Justice Sikri held as under:-
“25…..Therefore, the inquiry of the Court, while dealing with an
application under Section 8 of the Act, should be on the aforesaid
aspect viz. whether the nature of dispute is such that it cannot be
referred to arbitration, even if there is an arbitration agreement
between the parties. When the case of fraud is set up by one of the
parties and on that basis that party wants to wriggle out of that
arbitration agreement, a strict and meticulous inquiry into the
allegations of fraud is needed and only when the Court is satisfied
that the allegations are of serious and complicated nature that it
would be more appropriate for the Court to deal with the subjectmatter
rather than relegating the parties to arbitration, then alone
such an application under Section 8 should be rejected.”
32. While concurring with Justice Sikri, Justice D.Y. Chandrachud
pointed out that the duty of the Court is to impart “sense of business
efficacy” to the commercial transactions pointing out that mere
allegations of fraud were not sufficient to decline to refer the parties to
arbitration. In para (48) of Ayyasamy case, Justice D.Y. Chandrachud
held as under:-
“48. The basic principle which must guide judicial decisionmaking
is that arbitration is essentially a voluntary assumption of
an obligation by contracting parties to resolve their disputes
through a private tribunal. The intent of the parties is expressed in
the terms of their agreement. Where commercial entities and
persons of business enter into such dealings, they do so with a
28
knowledge of the efficacy of the arbitral process. The
commercial understanding is reflected in the terms of the
agreement between the parties. The duty of the court is to
impart to that commercial understanding a sense of business
efficacy.” (Underlining added)
33. When we apply the aforesaid principles to the facts of the present
case, as discussed earlier, both parties have consciously proceeded with
the commercial transactions to commission the Photovoltaic Solar Plant
at Dongri, Raksa, District Jhansi, U.P. The first respondent has proceeded
to procure the materials, entered into agreement with Juwi India for
engineering, installation and commissioning and the sale and purchase
agreement with Astonfield, were all the conscious steps taken in the
commercial understanding to commission the Solar Plant at Dongri,
Raksa, District Jhansi, U.P. Even though Juwi India and Astonfield are not
parties to the main agreement - Equipment Lease Agreement
(14.03.2012), all the agreements/contracts contain clauses referring to
the main agreement. It is the duty of the Court to impart the commercial
understanding with a “sense of business efficacy” and not by the mere
averments made in the plaint. The High Court was not right in refusing to
refer the parties on the ground of the allegations of fraud levelled in the
plaint.
34. It is only where serious questions of fraud are involved, the
arbitration can be refused. In this case, as contended by the appellants
29
there were no serious allegations of fraud; the allegations levelled against
Astonfield is that appellant no.1 - Ameet Lalchand Shah misrepresented
by inducing the respondents to pay higher price for the purchase of the
equipments. There is, of course, a criminal case registered against the
appellants in FIR No.30 of 2015 dated 05.03.2015 before the Economic
Offences Wing, Delhi. The appellant no.1 – Ameet Lalchand Shah has
filed Criminal Writ Petition No.619 of 2016 before the High Court of Delhi
for quashing the said FIR. The said writ petition is stated to be pending
and therefore, we do not propose to express any views in this regard,
lest, it would prejudice the parties. Suffice to say that the allegations
cannot be said to be so serious to refuse to refer the parties to arbitration.
In any event, the Arbitrator appointed can very well examine the
allegations regarding fraud.
35. Main agreement - Equipment Lease Agreement (14.03.2012) for
leasing and commissioning of Solar Plant at Dongri, Raksa, District
Jhansi, Uttar Pradesh contains arbitration clause (Clause 29). As
discussed earlier, other three agreements - two agreements between
Rishabh and Juwi India (01.02.2012) and Sale and Purchase Agreement
(05.03.2012) between Rishabh and Astonfield are integrally connected
with the commercial understanding of commissioning the Solar Project at
Dongri, Raksa, District Jhansi, Uttar Pradesh and to resolve the dispute
30
between the parties, they are to be referred to arbitration. The order of
the High Court declining to refer the parties to arbitration cannot be
sustained and is liable to be set aside. The four agreements namely:- (i)
Equipment and Material Supply Contract (01.02.2012) between Rishabh
and Juwi India; (ii) Engineering, Installation and Commissioning Contract
(01.02.2012) between Rishabh and Juwi India; (iii) Sale and Purchase
Agreement (05.03.2012) between Rishabh and Astonfield; and (iv)
Equipment Lease Agreement (14.03.2012) between Rishabh and Dante
Energy and the parties thereon are referred to arbitration.
36. As per the terms of Equipment Lease Agreement (14.03.2012),
appellant No.3 - Dante Energy has to pay lease rentals of Rs.13,67,500/-
for the month of March, 2012 and with effect from April, 2012 to pay
lease rentals of Rs.28,26,000/- per month for a period of fifteen years.
Learned Senior Counsel for respondents, Mr. Sibal has submitted that
appellant No.3 - Dante Energy has not paid the rentals as per the terms
and conditions of Equipment Lease Agreement. Mr. Sibal has also drawn
our attention that Astonfield Solar Rajasthan Pvt. Ltd. has transferred
99.99% of its shares to ARRL (Mauritius) Ltd. (Holding Company) and
Ameet Lalchand Shah has only one share (0.01%). Our attention was
also drawn to Astonfield Solar Gujarat Pvt. Ltd., which has also
transferred 99.99% of its shares to ARRL (Mauritius) Ltd. (Holding
31
Company) and that Ameet Lalchand Shah has only one share (0.01%). It
was also submitted that the appellant No.1 - Ameet Lalchand Shah was
subsequently removed from the Board of Directors of Astonfield Solar
Gujarat Pvt. Ltd. by the shareholders by EGM dated 17.12.2016. We do
not propose to go into the merits of this contention; however, keeping in
view that Astonfield has transferred its shareholdings qua Rajasthan and
Gujarat Solar Power units, in our view, the interest of the respondents is
to be protected till the matter is resolved by the arbitrator by directing the
appellants to pay the arrears of lease rent and also to pay the future
lease rent for the equipments at the rate of Rs.28,26,000/- per month.
37. The impugned order of the High Court is set aside and this appeal
is allowed. All the aforesaid four agreements and the parties thereon are
referred to arbitration. By notice dated 13.02.2016, appellants have
nominated Justice Sujata Manohar, former Judge of the Supreme Court
of India as their Arbitrator. We leave it open to the parties as to the
choice of the Arbitrator. If the parties are not in a position to arrive at
consensus as to the Arbitrator, the parties shall approach the appropriate
High Court for appointment of the Arbitrator. Appellants are jointly and
severely liable to pay the arrears of lease rent and also to pay the future
lease rent for the equipments of the PV Solar Power Plant at Dongri,
Raksa, District Jhansi, Uttar Pradesh at the rate of Rs.28,26,000/- per
32
month till the disposal of the arbitration proceedings. Such payment of
lease rent shall be without prejudice to the contentions of both parties
and shall be subject to the final outcome of arbitration proceedings.
Since parties are referred to arbitration, commercial Suit No.85 of 2017
filed by the respondents on the file of Delhi High Court shall stand
disposed of. No cost.
.…….…………...………J.
 [RANJAN GOGOI]
…………….……………J.
 [R. BANUMATHI]
New Delhi;
May 03, 2018
33

The principles of damages in public law have to, however, satisfy certain tests. In Nilabati Behera v. State of Orissa5 , it was observed that public law proceedings serve a different purpose than private law proceedings. In that context, it was observed as under: “The purpose of public law is not only to civilize public power but also to assure the citizen that they live under a legal system which aims to protect their interests and preserve their rights. Therefore, when the court molds the relief by granting ‘compensation’ in proceedings under Articles 32 or 226 of the Constitution seeking enforcement or protection of fundamental rights, it does so under the public law by way of penalising the wrongdoer and fixing the liability for the public wrong on the State which has failed in its public duty to protect the fundamental rights of the citizen. The payment of compensation in such cases is not to be understood, as it is generally understood in a civil action for damages under the private law but in the broader sense of providing relief by an order of making ‘monetary amends’ under the public law for the wrong done due to breach of public duty, of not protecting the fundamental rights of the citizen. The compensation is in the nature of ‘exemplary damages’ awarded against the wrong doer for the breach of its public law duty and is independent of the rights available to the aggrieved party to claim compensation under the private law in an action based on tort, through a suit instituted in a court of competent jurisdiction or/and prosecute the offender under the penal law.”- On a conspectus of the aforesaid facts including the number of pilgrims for whom the petitioners would have been entitled to arrange the Hajj pilgrimage, an amount of Rs.5 lakh per petitioner would be adequate compensation for the loss suffered by them and sub-serve the ends of justice. We are conscious of the fact that there is no quantification based on actual loss, but then the award by us is in the nature of damages in public law. The amount for each of the petitioners be remitted by the respondents within two months from the date of this order failing which the amount would carry interest @ 15 per cent per annum apart from any other remedy available to the petitioners. It will be open to the respondents to recover the amount of damages and costs from the delinquent officers responsible for passing such unsustainable orders.

 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO.631 OF 2016
UNITED AIR TRAVEL SERVICES
Through ITS PROPRIETOR
A.D.M. ANWAR KHAN ….PETITIONER
Versus
UNION OF INDIA
Through SECRETARY
(MINISTRY OF EXTERNAL AFFAIRS) ….RESPONDENT
WITH
Writ Petition (Civil) No.636 of /2016
Writ Petition (Civil) No. 634 of 2016
Writ Petition (Civil) No. 934 of 2016
Writ Petition (Civil) No. 941 of 2016
Writ Petition (Civil) No. 938 of 2016
Writ Petition (Civil) No. 11 of 2017
Writ Petition (Civil) No. 94 of 2017
1
J U D G M E N T
SANJAY KISHAN KAUL, J.
1. A batch of writ petitions raises the issue of Private Tour
Operators (for short ‘PTOs’) who are, inter alia conducting the travel
business for Hajj and Umrah being disqualified for grant of
registration for the year 2016 for the Hajj pilgrimage. The prayer is for
quashing the identical communications dated 27.7.2016 issued by the
respondent rejecting the application of the petitioners for registration
and allocation of quota for the Hajj 2016 on the ground that they have
not complied with certain clauses of the policy for the PTOs as laid
down by this Court.
2. The issue relating to the Hajj policy and the registration of these
PTOs has resulted in two judicial pronouncements by this Court in
Union of India v. Rafique Shaikh Bhikan1
 and Al Ismail Haj Tour v.
Union of India2
. The policy presented on behalf of the Government
was approved by this Court with slight modifications and was annexed
as Appendix-I to the order in Union of India v. Rafique Shaikh
1(2013) 4 SCC 699
2(2016) 15 SCC 246
2
Bhikan3
 case referred to aforesaid to be called as ‘Policy for Private
Tour Operators for hajj 2013 – 2017’. The policy was to remain valid
for a period of five years and was not to be questioned in any court or
authority. The petitioners were all eligible to be qualified as PTOs for
the year 2015 for Hajj pilgrimage but in the process of draw of lots
dated 7.8.2015, luck did not favour them and they thus did not get
quota. The relevant extract of the policy is as under:
“Appendix I
Ministry of External Affairs
(Gulf and Haj Division)
***
Registration of Private Tour Operators — Haj 2013
The Government of Saudi Arabia has notified that Private Tour
Operators (PTOs) registered with the Government of India and
involved in the preparation of the Haj Pilgrimage will be eligible
for grant of Haj group visas subject to fulfilment of other terms
and conditions as laid down by the Saudi Authorities.
2. Applications are invited from eligible PTOs for registration
for Haj 2013. The eligibility criteria are at Annexures A and B.
The applications must be submitted in the prescribed format
(Annexure C) directly to MEA or any other agency appointed by
it.
3(supra)
3
3. It is to be noted that the Government of Saudi Arabia has
stipulated that effective Haj 2013, a PTO should facilitate at
least 150 pilgrims. Accordingly, the PTO Policy has been
reframed. For registration and allotment of quota of Haj seats for
Haj 2013, interested PTOs may apply under the following two
categories:
Category I PTOs registered with MEA and facilitated Hajis
at least for 7 Haj operations or more.
Category II PTOs registered with MEA and facilitated Hajis
for at least for 1 to 6 Haj operations and PTOs
which have facilitated at least 50 umrah pilgrims
in a year for any five years.
4. 70% of the overall quota of seats will be allocated to eligible
PTOs under Category 3(I) and 30% to eligible PTOs under
Category 3(II). Distribution of seats among qualified PTOs will
be done as follows:
(a) 70% of the Haj 2013 PTO seats (31,500) will be allocated to
eligible PTOs under Category 3(I) at the rate of 150 seats per
PTO. In case the number of PTOs exceeds 210, the allocation of
seats will be done on draw of lots. If the number of qualified
PTOs is less than 210, each PTO will be allocated 150 seats and
surplus seats, if any, will be distributed equally among them.
(b) 30% of Haj 2013 PTO seats (9000) will be allocated to
eligible PTOs under Category 3(II) at the rate of 150 seats per
qualified PTO. If the number of qualified PTOs exceeds 90, the
allocation of seats will be done by draw of lots. In case the
number of PTOs is less than 90, each PTO will be allocated 150
seats. Balance seats, if any, will be transferred to Category I and
distributed equally among them. A qualified PTO which fails to
get selected under the draw of lots in any year will be allocated
150 seats in the ensuing year without qurrah if it remains a
qualified PTO.
4
5. This Policy is expected to remain valid for five years 2013-
2017 unless there are substantive developments which affect it.
The allocation of seats to qualified PTOs in each category will
be done every year on the basis of the overall quota of PTO seats
specified in the Annual India-Saudi Arabia Haj Agreement and
the number of qualified PTOs remaining in each category. The
policy envisages cross-category upward movement of PTOs
from Category II to Category I. A qualified PTO shall remain
qualified unless it is otherwise disqualified either by the
Government of India or by the Government of Saudi Arabia for
valid reasons. It is to be noted that the PTOs who do not wish to
take a minimum of 150 Hajis or are unable to do so, need not
apply.
6. Last date for receipt of applications which should be
addressed to the MEA or any other agency appointed by it.
(emphasis supplied)
3. In terms of the aforesaid policy since the qualified PTOs
exceeded 90, a draw of lots was held. Further, since the petitioners
were not successful in the draw of lots, they were entitled, under clause
4(b) of the policy aforesaid, to be allocated 150 seats in the ensuing
year without Qurrah if they remain qualified as PTOs. We may note at
this stage that as per the submissions advanced, in view of certain
changes in the policy of the Saudi Government, the number of seats to
be allocated for 2016 would have been 50.
4. It is also apparent from the Press Release of 7.8.2015 giving the
5
list of PTOs who have qualified but did not get quota, that the
petitioners figured in the said list.
5. On 29.4.2016, the Ministry of External Affairs published the
norms for registration of PTOs for Hajj 2016. Para 3 of this reads as
under:
“3. All the terms and conditions laid down in Annexure A & B
will also apply on PTOs that qualify under Category-II by virtue
of facilitating a minimum of 50 Umrah pilgrims in a year for any
5 years, but with the exception of the terms and conditions
contained under Clause (vii), (x), (xi) and (xii) of Annexure A.
In addition, these PTOs are also required to submit the proof of
payment made through banking or any other authorised channels
towards purchase of tickets and hiring of accommodation in
Makkah and Madinah in respect of Umrah pilgrims facilitated
by them in support of their claim.”
6. The aforesaid, thus, provided that persons like the petitioners
who had qualified for the year 2015 but were not successful in the
draw of lots would have the benefit of exemption of terms and
conditions contained in clauses (vii), (x), (xi) and (xii) of Annexure A.
7. For purposes of completion of record, we enumerate
hereinbelow the said clauses of Annexure A:
“ANNEXURE-A
Terms and Conditions for Registration of
Private Tour Operators (PTOs) for Haj-2016
6
Each PTO should establish that it is a genuine and established
Tour Operator having experience in sending tourists/pilgrims
abroad for which it should produce the following documents:
Sl. No. Terms and Conditions
vii Proof of payment made through banking (Bank
Statement) or other authorized channels towards
purchase of tickets and hiring of accommodation in
Makkah/Madinah for the financial year 2013-14
(Haj2013) or 2014-15 (Haj 2014). Payments towards
purchase of tickets, hiring of accommodation for
pilgrims in Makkah/Madinah, by any other means,
would not be accepted.
x Copies of Registration Certificate issued to the PTO
in support their aim-wise and PTO-wise.
xi Contract for hiring of buildings for pilgrims and
“Tasreeh” together with English translations PTO
category wise. (Please enclose rental receipts and a
copy of lease deed, duly signed with the Saudi owners
for Haj.
xii Copy of Munazzim Card and relevant Haj visa pages
of the Passport of the Proprietor/Owner.
8. The petitioners, however, faced identical rejection letters of
26.7.2016 (sent through e-mail dated 27.7.2016), the contents of which
are as under:
“Subject: Intimation regarding non-allocation of quota to Private
Tour Operators (PTOs) for Haj-2016.
Dear Sirs,
This has reference to your application regarding registration for
Haj 2016.
7
2. On scrutiny of your application submitted for Haj-2016, your
firm has not been found eligible for registration and allocation of
quota for Haj 2016 on the following grounds:
PTO has not complied with clause vii, x, xi and xii of Annexure
A of PTO.
Policy as laid down by Hon’ble Supreme Court for any one of
the Haj year.
3. Your ineligibility for registration and allocation of quota for
Haj 2016, however, does not prejudice your right to debar you
from applying for registration for Haj 2017 on the basis of the
required conditions for Haj 2017.”
9. A bare perusal of the aforesaid letter would show that the reason
cited for disqualification was non-compliance of the very clauses of
which exemption had been granted to the petitioners.
10. Learned Additional Solicitor General appearing for the
respondents could not dispute the aforesaid position but sought to
canvas that the reasons were wrongly communicated in the rejection
letter, and there was actually, some other reason for the rejection. The
aforesaid plea can hardly be countenanced in view of the reasons
referred to and communicated.
11. Learned counsel for the petitioner has, thus, rightly drawn our
attention to the Constitution Bench judgment of this Court in
8
Mohinder Singh Gill v. Anr. v. The Chief Election Commissioner,
New Delhi & Ors.4
 to submit that such a plea cannot be accepted. We
may note that this is a well settled legal position in many judicial
pronouncements of this Court, but it is not necessary to revert to the
same. In para 8 of the aforesaid judgment, V.R. Krishna Iyer, J, in his
inimitable style states as under:
“8. The second equally relevant matter is that when a statutory
functionary makes an order based on certain grounds, its validity
must be judged by the reasons so mentioned and cannot be
supplemented by fresh reasons in the shape of affidavit or
otherwise. Otherwise, an order bad inthe beginning may, by the
time it comes to Court on account of a challenge, get validated
by additional grounds later brought out. We may here draw
attention to the observations of Bose, J. in Gordhandas Bhanji:
“Public orders, publicly made, in exercise of a statutory
authority cannot be construed in the light of explanations
subsequently given by the officer making the order of
what he meant, or of what was in his mind, or what he
intended to do. Public orders made by public authorities
are meant to have public effect and are intended to affect
the actings and conduct of those to whom they are
addressed and must be construed objectively with
reference to the language used in the order itself.
Orders are not like old wine becoming better as they grow
older.”
12. The aforesaid legal position, thus, makes the stand of the
4(1978) 1 SCC 405
9
respondent unsustainable, resulting in the quashing of the impugned
letters of rejection.
13. The question, however, rises what relief can be granted in such a
situation. The passage of time has made certain reliefs infructuous.
The time period for conducting Hajj tours for 2016 as well as 2017 is
over. Thus, even the alternative relief prayed for 2017 has become
infructuous. In three of the writ petitions, i.e., WP (C) Nos.631/2016;
634/2016 & 636/2016, there is a specific alternative plea for
compensation to the petitioners for the loss accrued due to non-grant of
registration for the Hajj of 2016. While there is no such specific plea
in the other writ petitions, given the identical situation, we are of the
view that the same principle ought to be applied in all these cases. The
petitioners cannot be left remediless. The mindless action of the
respondents in rejecting the eligibility of the petitioners for the year
2016 on the very grounds on which they were exempted necessitates
that the petitioners should be entitled to damages in public law so that
they are compensated, at least, to some extent for not having been able
to carry on with their business on account of illegal action of the
respondents.
10
14. The principles of damages in public law have to, however,
satisfy certain tests. In Nilabati Behera v. State of Orissa5
, it was
observed that public law proceedings serve a different purpose than
private law proceedings. In that context, it was observed as under:
“The purpose of public law is not only to civilize public power
but also to assure the citizen that they live under a legal system
which aims to protect their interests and preserve their rights.
Therefore, when the court molds the relief by granting
‘compensation’ in proceedings under Articles 32 or 226 of the
Constitution seeking enforcement or protection of fundamental
rights, it does so under the public law by way of penalising the
wrongdoer and fixing the liability for the public wrong on the
State which has failed in its public duty to protect the
fundamental rights of the citizen. The payment of compensation
in such cases is not to be understood, as it is generally
understood in a civil action for damages under the private law
but in the broader sense of providing relief by an order of
making ‘monetary amends’ under the public law for the wrong
done due to breach of public duty, of not protecting the
fundamental rights of the citizen. The compensation is in the
nature of ‘exemplary damages’ awarded against the wrong doer
for the breach of its public law duty and is independent of the
rights available to the aggrieved party to claim compensation
under the private law in an action based on tort, through a suit
instituted in a court of competent jurisdiction or/and prosecute
the offender under the penal law.”
It was also emphasized that it is a sound policy to punish the
wrongdoer and it is in that spirit that the courts have molded the relief
5 (1993) 2 SCC 746
11
by granting compensation in exercise of writ jurisdiction. The
objective is to ensure that public bodies or officials do not act
unlawfully. Since the issue is one of enforcement of public duties, the
remedy would be available under public law notwithstanding that
damages are claimed in those proceedings.
15. The aforesaid aspect was, once again, emphasized in Common
Cause, a Registered Society v. Union of India6
. We may also usefully
refer to N. Nagendra Rao & Co. v. State of A.P.7
qua the proposition
that the determination of vicarious liability of the State being linked
with the negligence of its officer is nothing new if they can be sued
personally for which there is no dearth of authority.
16. In the facts of the present case, the arbitrariness and illegality of
the action of the authority is writ large. The petitioners have been
deprived of their right to secure the quota on a patently wrongful order
passed for reasons, which did not apply to them and for conditions,
which had been specifically exempted. What could be a greater
arbitrariness and illegality? Where there is such patent arbitrariness
and illegality, there is consequent violation of the principles enshrined
6 (1999) 6 SCC 667
7 (1994) 6 SCC 205
12
under Article 14 of the Constitution of India. The facts of the present
case are, thus, undoubtedly giving rise to the satisfaction of parameters
as a fit case for grant of compensation.
17. On a conspectus of the aforesaid facts including the number of
pilgrims for whom the petitioners would have been entitled to arrange
the Hajj pilgrimage, an amount of Rs.5 lakh per petitioner would be
adequate compensation for the loss suffered by them and sub-serve the
ends of justice. We are conscious of the fact that there is no
quantification based on actual loss, but then the award by us is in the
nature of damages in public law.
18. The amount for each of the petitioners be remitted by the
respondents within two months from the date of this order failing
which the amount would carry interest @ 15 per cent per annum apart
from any other remedy available to the petitioners. It will be open to
the respondents to recover the amount of damages and costs from the
delinquent officers responsible for passing such unsustainable orders.
13
19. The writ petitions are allowed in the aforesaid terms with costs
quantified at Rs.10,000 per petition.
..….….…………………….J.
 [J. Chelameswar]
 ...……………………………J.
 [Sanjay Kishan Kaul]
New Delhi.
May 07, 2018.
14