LexARUN KUMAR AGRAWAL versus UNION OF INDIA & OTHERS
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{2013] 3 S.C.R. 508
ARUN KUMAR AGRAWAL
v.
UNION OF INDIA & OTHERS
(Writ Petition (Civil) No. 69 of 2012)
MAY 09, 2013
[K.S. RADHAKRISHNAN AND DIPAK MISRA, JJ.]
CONSTITUTION OF /NOIA, 1950:
Art. 32 - Writ petition challenging approval granted by
Government of India for acquisition of majority stake in GIL
and for a direction to ONGC to exercise its right of pre-
emption over sale of shares of GIL - Held: The decision taken
by ONGC not to exercise its RoFR was taken after elaborate
0 and due deliberations - ONGC and Government of India have
considered various commercial and technical aspects flowing
from PSC and also its advantages that ONGC would derive
if the Cairn and Vedanta deal was approved - Court cannot
sit in judgment over the commercial or business decision
taken by parties to the agreement after evaluating and
E assessing its monetary and financial implications, unless the
decision is in clear violation of any statutory provisions or
perverse or for extraneous considerations or improper motives
-On facts, as well as on law, ONGC and Government of India
have taken a prudent commercial and economic decision in
F public interest - It cannot be said that the decision is ma/a fide
or actuated by any extraneous or irrelevant considerations or
improper motive - Public interest litigation.
Arts. 298 and 299 - Power of Union or States to carry on
G trade and to enter into contracts - Held: State and its
instrumentalities can enter into various contracts which may
involve complex economic factors - State or State
undertaking being a party to a contract, have to make various
decisions which they deem just and proper - There is always
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508
ARUN KUM/\R AGRAWAL v. UNION OF INDIA &
509
OTHERS
an element of risk in such decisions -
But if the decision is A
taken bona fide and in public interest, the mere fact that
decisiot.• has ultimately proved to be a wrong one, that itself
is not a ground to hold that the decision was ma/a fide or taken
with uilterior motives.
Art. 151 - Reporls of Comptroller and Auditor General of
India - Status of - Explained - In the instant case, it is factually
and le9ally incorrect to suggest that any exploration carried
out beyond the stated date was beyond the provision of PSC
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- CAG·'s views on that aspect cannot be accepted -
Comptroller and Auditor General's (Duties, Powers and C
Conditions of Service) Act, 1971 - ss. 10, 13 and 16.
PUBLIC INTEREST LIT/GA TION:
Writ petition - Held: In the instant case, writ petition was · o
filed without appreciating or understanding the scope of the
decision or the decision making process concerning
economic and commercial matters which gives liberly to State
and its instrumentalities to take appropriate decision after
weighin,g advantages and disadvantages of the same -
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Constitw'ion of India, 1950 - Arl.32.
In the instant petition filed in public interest, the
petitionier challenged the approval granted by the
Government of India on 24.1.2012 for acquisition of
majority st:ake in Cairn India Limited (CIL) and for a
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direction te> Oil and Natural Gas Corporation of India
(ONGC) to exercise its right of pre-emption over of shares
of CIL oni the same terms without causing any loss or
profit to Cairn Energy as also for a direction to CBI · to
investigate the reasons for ONGC in not exercising its
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rights unide.r Right of First Refusal (RoFR) and giving
clearanc·e tu CAIRN-Vedanta Deal on the basis of the
existing right to share the royalty and cess on pro-rata
basis. It was contended for the appellant that, but for the
decisio1n, the State Exchequer would have benefited to
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SUPREME COURT REPORTS
[2013] 3 S.C.R.
A the tune of Rs.1,00,000 crores. It was also contended that
the Government has unlawfully granted extension to CIL
for carrying out exploration activities beyond the period
framed by Rajasthan Block Production Sharing Contract
(PSC), which was commented upon by the Comptroller
B and Auditor General of India (CAG).
Dismissing the writ petition, the Court
HELD: 1. State and its instrumentalities can enter into
various contracts which may involve complex economic
C factors. State or the State undertaking being a party to a
contract, have to make various decisions which they
deem just and proper. If the decision is taken bona fide
and in public interest, the mere fact that decision has
ultimately proved to be a wrong, that itself is not a ground
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