INDIAN OIL CORPORATION LTD. & ORS. versus SHASHI PRABHA SHUKLA & ANR.

Citation: [2017] 13 S.C.R. 268 · Decided: 15-12-2017 · Supreme Court of India · Bench: N.V. RAMANA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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[2017] 13 S.C.R. 268 
INDIAN OIL CORPORATION LTD. & ORS. 
V. 
SHASHI PRABHA SHUKLA & ANR. 
(Civil Appeal No.5565 of2009) 
DECEMBER 15,2017 
(N.V. RAMANA AND AMITAVA ROY, JJ.] 
Public Dilstribution: Petrol pump - Retail outlet dealership -
Special Discretionary Quota - Allotment of retail outlet dealership 
to re.1ponde11t - PIL challenging allotment - High Court cancelled 
allotment on the ground that same was vitiated by favouritism -
High Court directed that in case the allottee whose allotment had 
been cancelled was unwilling to sell/part with a land on which the 
petrol pump was being operated, Corporation would auction the 
right to open petrol pump within close proximity of the existing 
location as may be determined by it depending upon the facts and 
circumstances of each case and the need of the public with the 
stipulation that the highest bidder would arrange for the land! 
superstructure for running petrol pump - The decision of High Court 
became final a>id binding on the parties - Accordingly, Corporation 
issued a notice of termination of dealership agreement to respondent 
- Respondent intimated that she was not interested in selling her 
land on which the petrol pump distributorship was underway -
Co1poration thereafter issued advertisement to auction the outlet 
hitherto allotted to respondent - Respondent challenged the 
advertisement - High Court stayed the operation of auction notices 
and directed Corporation to permit respondent to run the dealership 
until the auction was finalised - As the auction did not take place. 
the High Court considering the fact that the respondent was permitted 
to run the retail outlet since 1998, directed Corporation in view of 
its new policy to award fresh dealership to respondent and restrain 
G from interfering with her possession of the said premises - Appeal 
by Corporation - Held: The direction to award the new dealership 
to respondent amounted to perpetuation of the undue benefit, earlier 
bestowed on the respondent by a method held to be illegal, dubious, 
arbitrary and transgressive of public interest - The award of new 
dealership to the respondent wholly undermined the purpose of 
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268 
INDIAN OIL CORPORATION LTD. & ORS. v. SHASHI 
269 
PRABHA SHUKLA & ANR. 
cancelling her earlier dealership and annihilate the very objective A 
of securing transparency, fairness and non-arbitrariness in the 
matter of distribution of public contract - In taking the steps for 
initiating a fresh process of auction, the defaults and de-relictions 
of the Corporation and its fimctionaries are writ large and strongly 
deprecated - Dealership of respondent at her present location is 
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cancelled - Corporation directed to cause an in-house inquiry to 
fix the liability of the errant officials on the issue - Public 
functionary. 
Public functionary: State largesse - Role of Government as 
provider of services and benefits to the people - A public authority c 
in its dealings has to be fair, objective, non-arbitrary, transparent 
and non-discriminatory - The discretion vested in such an authority, 
which is a concomitant of its power is coupled with duty and can 
never be unregulated or unbridled -
The State and its 
instrumentalities, be it a public authority, either as an individual or 
a collective has lo essentially abide by this inalienable and non-
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negotiable prescriptions and cannot act in breach of the trust 
reposed by the polity and on extraneous considerations - In exercise 
of uncontrolled discretion and power, it cannot resort to any act to 
.fritter, squander and emasculate any public property, be it by way 
of State largesse or contracts etc. 
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Contract: Petrol pump - Retail outlet dealership - Grant of 
dealership to respondent to nm petrol pump on land purchased by 
respondent herself - Termination of dealership - Award the new 
. dealership to a third party on her land - Held: With the termination 
of the dealership, the lease between the parties also stood 
extinguished and therefore, the respondent being the owner of the 
land and she having expressed her disinclination to sell or part 
with it, the Corporation by no means could have contemplated to 
.award the new dealership to a third party on her land. 
Allowing the appeal, the Court 
HELD: 1. The failure of the Corporation to act in terms of 
the directions containing in the judgment and order of the High 
Court and in contending that the land of the respondent was 
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