M.C. MEHTA v. UNION OF INDIA AND ORS. RE: INDER MOHAN BENSIWAL RE: BHARAT PETROLEUM CORPORATION LTD.

The Judgment of the Court was delivered by

M. JAGANNADHA RAO, J. The applicant in IA No. 481 is Sri Inder Mohan Bensiwal who is an allottee of a retail outlet dealership for Petrol from H

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' A the Hindustan Petroleum Ltd. (8th respondent) (hereinafter called 'HPCL') under a letter dated 16.11.1993. I.A. 481 is filed by him for restoration of the San Marten Marg plot as a dealer of HPCL. The contesting party in the IA.481 is Bharat Petroleum Co. Ltd. and it has filed an independent IA also for quashing the order dated 10.3. 1999 on the ground of violation of principles B of natural justice.

The facts of the case are as follows:

Initially the HPCL wrote to the Land & development Officer, Ministry of Urban Development for allotment of suitable site to the HPCL on 17.11.1993 and 24.1.1994 and an order was passed by the Deputy Land & Development C Officer on 7.9. 1994 allotting a site described as Site B. But finally by order dated 10.7.1996 a site at San Martin Marg, Chanakyapuri, New Delhi was allotted by the Land & Development Officer to HPCL for the purpose of the petrol station of the applicant.

D But, the order of this Court in a public interest case changed the tum of events. On 28.4.1997, this Court passed an order in the public interest litigation relating to maintenance of environment in the Ridge area, for shifting the Bagga Link Road Filling Station (not party before us) who is a dealer with Bharat Petroleum Corporation from the Ridge area. consequent thereto the

E Urban Development Department passed an order on 30.1.91, allotting the plot at San Martin Marg to Bharat Petroleum Corporation. That Plot was already ·- allotted to HPCL as stated above. It is an admitted fact that the department did not give any notice to HPCL nor to the applicant before taking away the San martin plot and allotting it to Bharat petroleum. To the order of this C<>urt dated 28.4.1997 in the PIL case, HPCL and the applicant were not parties . .F

- However. in a review petition filed by Bagga Link Road Filling Station in IA 185 in IA 18, this Court on 7.4.1998 recalled the order dated 28.4.1997 and allowed the said dealer to continue where he was previously conducting his

G business at the Ridge area. It was also ordered that the "alternative space allotted to the filling station (i.e. San Martin Mars) be withdrawn," and it was . directed that "The Land & Development Officer may retain possession of the land which was proposed to be allotted to it (i.e Bagga Link Filling - · Station)." It is the case of Bharat Petroleum Corporation that pursuant to the order of the Government of India dated 30. 7. 1997, it was put in possession on 1.9.1997. --- Soon after the passing of the order of the Supreme Court dated 7 .4.1998, H recalling its earlier order dated 28.4.97, the HPCL wrote to the Land &

' --< M.C.MEHTA~. U.O.I.RE:l.M.BENSIWALRE:B.P.C.LTD.[M.JAGANNADHARAO,J.) 1177 .._' Development Officer on 20.4.1998 for restoration of status quo ante, namely A for restoration of the San Martin plot to the HPCL so that it could be given back by its dealer, the a'pplicant, as originally contemplated. The applicant also made representation on 18.5.1998. and 26.l l.1998. In the meantime, without noticing the latter order of the Supreme Court, the joint Director (New Leases allotted a site in Dwarka to HPCL on 26.11.98 for allotment to the HPCL in substitution of the plot at San Martin Marg, for being given to the applicant. B It was not noticed that Bharat Petroleum Corporation's plot at the Bagga Link- Road Filling Station was to be restored to it and consequently HPCL could get back its plot at san Martin Marg. But after the order of this Court dated 7.4.98 recalling its earlier order dated 28.4.97, Bharat Petroleum Corporation started resisting the restoration of the status quo anate and wanted to retain c the San Martin Marg plot as well as the one at Ridge area. That has resulted in the present dispute.

The Government realised that once the order of the Supreme Court dated 28.4.1997 was recalled on 7.4.1998, Bharat Petroleum could ~ot lay any claim to San Martin Marg plot because its dealer, Link Filling Stat1on could D retain the Ridge area location. Therefore, the Land & Development officer passed another order on 10.3.1999 restoring the status quo ante before 28.4.1997 and also restoring the original allotment dated l 0. 7 .1996 to HPCL for the purpose of the business of the applicant, who was HPCL's dealer. This order was reiterated on 18.3.1999. This order was passed unfortunately without notice to Bharat Petroleum Corporation. The Land & Development Officer E delivered back possession to HPCL on 24.3.1999. It may also' be noted that on 6.4.1999 the alternative site allotted to HPCL at Dwarka on 26.11.1998 was Withdrawn because HPCL was getting back San Martin Marg plot.

On the ground that no notice was given to it, when the order dated 10.3.1999 was passed, Bharat Petroleum corporation filedC\VP No. 1689 of F 1999 in the Delhi High Court impleading the Union Government, the Land & Development Officer and the HPCL but the same was dismissed by a speaking ' ... """ order on 24.3.1999 holding that the impugned order dated 10.3.1999 of the Government restoring status quo ante was based upon the second order of . the Supreme Court dated 7.4.1998 recalling its earlier order dated 18.4.1997 and G that the High Court of Delhi could do nothing to allow Bharat Petroleum corporation to retain San Martin Marg plot. SLP (c) No. 5502of1999 filed by the said Bharat Petroleum corporation was also dismissed by this Coun on 19.4.1999.

Then Bharat Petroleum corporation filed an IA(unnumbered) on 26.3.1999 H

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A in this Court for quashing the order dated 10.3.1999 as having been passed ..__. in breach ofnatural justice. It has also filed an affidavit in IA 481 on 5.5.1999 opposing the applicant's claim for restoration of San Martin Marg plot of the HPCL. This unnumbered IA has been tagged on with IA 481 filed by the applicant, the dealer of HPCL. ...... B We have heard learned senior counsel Sri S.S. Ray for the Bharat Petroleum corporation and Sri Gopal Subramanyam, learned senior counsel for the HPCL, and Sri A. Sharan for the applicant (the dealer of HPCL) i.e. Sri Inder Mohan Bensiwal.

Learned senior counsel for the Bharat Petroleum corporation Sri S.S.Ray C contended that by .order dated 30. 7.1997 his clients were allotted the plot at San Martin Marg, and that the said plot could not have been cancelled on 10 .3 .1999 and allotted on 24 .3 .1999 to the HPCL in cancellation of the order dated 30. 7.1997 without issuing show cause notice to Bharat Petroleum corporation. Learned senior counsel also submitted that after his clients were allotted this plot on 30.7.1997 at San Martin Marg, HPCL was given a plot at Dwarka on 26.11.1998 in lieu of San Martin Marg plot and that HPCL could not claim the plot at Dwarka as well the plot at San Martin Marg. An order passed in violation of principles of natural justice was void and there was no need to go into any question of prejudice and the Court had no discretion to refuse relief. The fact that later on Bharat Petroleum corporation was allowed to retain the plot at the. Ridge for the Bagga Filling station by this court was not relevant while dealing with the question of breach of principles of natural justice.

On the other hand, learned senior counsel for the HPCL Sri Gopal Subramanyam contended that this was not a fit case where this court should · F exercise discretion in favour of the Bharat Petroleum inasmuch as no de facto prejudice had been shown. In the light of the admitted or indisputable facts, even if fresh opportunity was given, it would not have made any difference to the result because of the following facts : HPCL had an earlier allotment -· . to the plot at San Martin Marg dated 10.7.1996 and when consequent to order G in a PIL case that was withdrawn and allotted on 30.7.97 to Bharat Petroleum corporation, no notice was given to HPCL or to its dealer, the applicant. Further, the order of the Government dated 30.7.1997 in favour of Bharat Petroleum corporation was passed as a consequence ofthe first order of this Court dated 28.4.97 in the PIL case and when this Court, on 7.4.98, had withdrawn the order dated 28.4.97, the order dated 30.7.97 of allotment to H Bharat Petroleum would also fall alongwith the order of this Court dated

J M.C.MEHTAv. U.0.1.RE:l.M.BENSIWALRE:B.P.C.LTD.(M.JAGANNADHARAO,J.) 1179 I

=..."- .. 28.4.97. Bharat Petroleum Corporation suffered no prejudice because it retained its original allotment of plot at the Ridge. The said Corporation could not lay claim for two plots, one at the Ridge and the other at San Martin Marg. Further, learned senior counsel made an alternative Submission, namely, that the Court had a duty to pass an order in the nature of restitution so that all consequences of its earlier order dated 28.4.1997 (which was recalled ) were set at naught. Learned senior counsel also pointed out that after the impugned order dated 10.3.1999 was passed restoring San Martin Marg plot to HPCL, possession was also delivered to HPCL on 24.3.1999, that the allotment of plot Dwarka dated 26.11.1998 to HPCL was also cancelled in view of the restoration of the plot at San Martin Marg. HPCL could not be a loser of its plot at San Martin Marg and also the one at Dwarka. The IA of the Bharat Petroleum c corporation was, therefore, liable to be dismissed and IA 481 of the applicant was to be allowed issuing appropriate directions.

On the above submissions, the following points arise for consideration:

(1) Whether this Court, in exercise of powers under Article 32 (or the D High courts, generally under Article 226) is bound to declare an order of government passed in breach of principles of ,natural justice as void or whether the court can refuse to grant relief on the ground that the facts of the case do not justify exercise of discretion to interfere or because de facto prejudice has not been shown? E (2) Whether the court is not bound under Article 32 (or High Courts under Article 226) to quash an order of government on ground of breach of natural justice if such an action will result in the restoration of an earlier order of government which was also passed in breach of natural justice or which was otherwise illegal? F

Points 1&2 :

- These two points are connected and can be taken up together. G From the facts set out above, it is clear that the HPCL had an allotment from the Government on 10.7.1996 of the San Martin Marg plot to be given to its dealer, Sri Inper Mohan Bensiwal, the applicant in IA 481. That order stood virtually set aside when the Government allotted the same plot on 30.7.1997 to Bharat Petroleum Corporation and this was done without notice to HPCL nor to Inder Mohan Bensiwal. The background of the order dated H

1180 SUPREME COURT REPORTS .. {1999) 3 S.C.R.

A 30.7.1997 of the Government was that it was the result of certain directions of this Court dated 28.4.1997 in a public interest case whereby a certain dealer of the Bharat Petroleum near the Ridge area was to vacate that area. That resulted in that dealer being allotted the San Martin Marg plot on 30.7.97 which was earlier allotted to HPCL. Later this Court on 7.4.1998 recalled its \ , B order dated 28.4.1997 in the public interest case. Consequently, the Government has now by order dated 10.3.1999 given back San Martin Marg plot to HPCL but, no doubt, without notice being given to Bharat Petroleum to whom this plot was allotted on 30.7.1997. In essence, the earlier order dated 30.7.97 against HPCL and the impugned order dated 10.3.99 against Bharat Petroleum were both without notice to the respective affected parties. c It is true that, whenever there is a clear violation of principles of natural justice, the Courts can be approached for a declaration that the order is void or for setting aside the same. Here the parties have approached this Court because the orders of the department were consequential to orders of this Court. Question however is whether the Court in exercise of its discretion under Article 32 or Article 226 can refuse to exercise discretion on facts or on the ground that no de facto prejudice is established. On the facts of this case, can this Court not take into consideration the fact that any such declaration regarding the 10.3.1999 order will restore an earlier order dated

30. 7 .1997 in favour of Bharat Petroleum Corporation which has also been passed without notice to HPCL and that if the order dated 10.3.1999 is set aside as being in breach of natural justice, Bharat Petroleum will be getting two plots rather than one for which it has no right after the passing of the latter order of this Court dated 7.4.98?

Courts are not infrequently faced with a dilemma between breach of the rules of natural justice and the Court's discretion to refuse relief even though rules of natural justice have been breached, on the ground that no real prejudice is caused to the affected party. We shall initially refer to two cases where discretion was exercised not to grant relief and the first one was a case where relief was refused even - G though there was breach of natural justice. The first one is Gadde Venkteswara Rao v. Government ofAndhra Pradesh and others, [1966] 2 SCR 172. There the Panchayat Samithi, in exercise of its statutory powers passed a resolution on 25.8.1960 to locste a primary health centre at Dharmajigudem. Later, it passed another resolution on 29.5.1961 to locate it at Lingapalem. On a representation by villagers of Dharmajigudem, government passed orders on H 7.3.1962 setting aside the second resolution dated 29.5.1961 and thereby

M.C. MEHTA v. U.O.l. RE: I.M. BENSIWALRE: B.P.C. LTD. [M. JAGANNADHA RAO,J.) 1181 restoring the earlier resolution dated 25.8.1960. The result was that the health centre would continue at Dharmajigudem. Before passing the orders dated 7.3.62, no notice was given to the Panchayat Samithi. This Court traced the said order of the government dated 7 .3 .1962 to Section 62 of the Act and if that were so, notice to the Samithi under section 62(1) was mandatory. Later; upon a review petition being filed, government passed another order on· 18.4.1963 cancelling its order dated 7 .3 .62 and accepting the shifting of the primary centre to Lingapalem. This was passed without notice to the villagers ofDharmajigudem. This order of the government was challenged unsuccessfully by the villagers of Dharmajigudem in the High Court. On appeal by the said villagers to this Court, it was held that the latter order of the government dated 18.4.1963 suffered from two defects, it was issued by Government C without prior show cause notice to the villagers of Dharmajigudem and government had no power of review in respect of government orders passed under section 62(1). But that there were other facts which disentitled the quashing of the order dated 18.4.63 even though it was passed in breach of principles of natural justice. This Court noticed that the setting aside of the latter order dated. 18.4.63 would restore the earlier order of Government dated D 7.3.62 which was also passed without notice to the affected party, namely, the Panchayat Samithi. It would also result in the setting aside of a valid resolution dated 29.5.61 passed by the Panchayat Samithi. This Court refused relief and agreed that the High Court was right in not interfering under Article 226 even if there was violation of natural justice. Subba Rao, J (as he then was) E observed (p.189) as follows :

"Both the orders of the government, namely, the order dated March 7, 1962 and that dated April 18, 1963, were not legally passed: the former, because it was made without giving notice to the Panchayat Samithi and the latter, because the Government had no power under F section 72 of the Act to review an Order made under section 62 of the Act and also because it did not give notice to representatives of Dharmajigudem village.

His Lordship concluded as follows : G "In those circumstances, was it a case for the High Court to interfere in its discretion and quash the order of the government dated April 18, 1963? If the High Court had quashed the said order, it would have restored an illegal order it would have given the Health Centre to a village contrary to the valid resolutions passed by the Panchayat Samithi. The High Court, therefore, in our view, rightly refused to H

1182 SUPREME COURT REPORTS [1999] 3 S.C.R, I A exercise its extraordinary discretionary power in the circumstances of the case."

The above case is clear authority for the proposition that it is not always necessary for the Court to strike down an order merely because the order has been passed against the petitioner in breach of the natural justice. B The Court can under Article 32 or Article 226 refuse to exercise its discretion of striking down the order if such striking down will result in restoration of another order passed earlier in favour of the petitioner and against the opposite party, in violation of principles of natural justice or is otherwise not in accordance with law. c We would next refer to anoth.er case, where, though there was no breach of principles of natural justice, this Court held that interference was not necessary, if the result of interference would be the restoration of another order which was 11ot legal Tn Mohammad Swalleh & Others v. Third Addi. District Judge, Meerut and Another, [1988] 1 SCC 40, which arose under the 1 D U.P. Urban Buildings (Regulations of letting, Rent and Eviction) Act, 1972, the prescribed authority dismissed an application filed by the landlord and this was held clearly to be contrary to the very purpose of section 43(2)(rr) of the Act. The District Court, entertained an appeal by the landlord and allowed the landlord's appeal without noticing that such an appeal was not maintainable. The tenant filed a writ petition in the High Court contending that the appeal E of the landlord before the District Court was not maintainable. This was' a correct plea. But the High Court refused to interfere. On further appeal by·thc: tenant, this Court accepted that though no appeal lay to the District Court, the refusal of the High Court to set aside the order of the District Judge was correct as that would have restored the order of the prescribed authority, p which was illegal.

Learned senior counsel for Bharat Petroleum contended that once natural justice was violated, the Court was bounc! to strike down the ordt<rs +d there was no discretion to refuse relief and no other prejudice need be proved.

G It is true that in Ridge v. Baldwin, (1964) AC 40, it has been'held that breach of principles of natural justice is in itself sufficient to grant relief and that no further de facto prejudice need be shovvn. It is also true that the said . principles have been followed by this Court in several cases but we might .A

point out that this Court has not laid down any absolute rule. This is c-lear from the judgment of Chinnappa Reddy, J. in S.L. Kapoor v. Jagmohan; H [1980] 4 sec 379. After stating (p. 395) that 'principles ofnaturaljustice kno~

M.C.MEHTAl'. U.0.1.RE:I.M.BENSIWALRE:B.P.C.LTD.[M.JAGANNADHARAO,J.) 1183

of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed' and that 'non-observance of natural justice is itself prejudice to a man and proof of prejudice independently of proof of denial of natural justice is unnecessary', Chinnappa Reddy J also laid down an important qualification (p.395) as follows :

"As we said earlier, where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the Court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because Courts do not issue futile writs."

It is, therefore, clear that if on the admitted or indisputable factual position, only one conclusion is possible and permissible, the Court need not issue a writ merely because there is violation of principles of natural justice.

Before we go into the final aspects of this contention, we Wo_uld like to state that cases relating to breach of natural justice, do also occur where all facts are not admitted or are not all beyond dispute. In the context of those cases there is a considerable case law and literature as to whether relief can be refused even it the court thinks that the case of the applicant is not one of "real substance" or that there is no substantial possibility of his success or that the result will not be different, even if natural justice is followed. See Malloch v. Aberdeen Corporation, (1971) l WLR 1578, (per Lord Reid and E Lord Wilberforce), Glynn v. Keele University, (1971) WLR 87, Cinnamond v. - British Airport Authority, (1980) l WLR 582 and other cases where such a view has been held. The latest addition to this view is R. v. Ealing Magistrates' court exp. Fannaran, (1996) 8 Admn. L.R. 351 (358) (See Desmith, Suppl..) {l 998) where Straughton L.J. held that there must be 'demonstrable beyond doubt' that the result would have been different. Lord Woolf in Lloyd v. F McMohan, (1987) 2 WLR 821 (862) has also not disfavoured refusal of discretion in certain cases of breach of natural justice. The New Zealand Court in McCarthy v. Grant, (1959) NZLR 1014, however, goes halfway when it says that (as in the case of bias), it is sufficient for the applicant to show that there is 'real likelihood-not certainty-of prejudice'. On the other hand, G Garner Administrative Law (8th Edition 1996, PP. 271-272) says that slight proof that the result would have been different is sufficient. On the Other side of the argument, we have apart from Ridge v. Baldwin, Megarry J. in Johcn v. Rees, (1969) 2 WLR 1294 stating that there are always 'open and s}.ut cases' and no absolute rule of proof of prejudice can be laid down. Mr;rits are not for the Court but for the authority to consider. Ackner, J. has saiiJ that H

1184 SUPREME COURT REPORTS [1999) 3 S.C.R.

G We do not propose to express any opinion on the correctness or otherwise of the "useless formality" theory and leave the matter for decision in an appropriate case, inasmuch as, in the case before us, "admitted and indisputable" facts show that grant of a writ will be in vain as pointed out by Chinnappa Reddy, J.

H In our view, on the admitted and indisputable facts set out above,

M.C.MEHTAv.U.0.1.RE:l.M.BENSIWALRE:B.P.C.LID.(M.JAGANNADHARAO,J.) 1185 namely, the recall of our earlier order of the Court, it becomes mandatory for A -the court to restore the status quo ante prevailing on the date of its first order. Restitution is a must. Further Bharat Petroleum having got back its plot at the Ridge it cannot lay further claim to the one at San Martin Marg which was given to it only'lieu of the Ridge plot. Similarly, HPCL has to get back its plot in San Martin Marg inasmuch, otherwise, it will have none and Bharat Petroleum will have two. Bharat Petroleum cannot retain the advantage which it got from B an order of this Court which has since been withdrawn. Thus what is permissible and what is possible is a single view and case on hand comes squarely within the exception laid down by Chinnappa Reddy, J. in S.L. Kapoor v. Jagmohan.

For the aforesaid reasons IA 481 is allowed and the unnumbered IA of c Bharat Petroleum is dismissed. In the circumstances, there will be no order as to costs.

v.s.s. I.A. No. 481 allowed. I.A. of Bharat Petroleum Corpn. Ltd. dismissed. D