Fairness in public dealings by public authority.

Wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair opportunity of competition.

To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like spectrum, etc. it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest.

Jurisprudentially thus a public authority 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. Any decision or action contrary to these functional precepts would be at the pain of invalidation thereof. The State and its instrumentalities, be it a public authority, either as an individual or a collective has to essentially abide by this inalienable and non-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. Such outrages would clearly be unconstitutional and extinctive of the rule of law which forms the bedrock of the constitutional order.

Adverting to the facts of the case, to recapitulate, the dealership of the respondent had been cancelled being vitiated by favourtism due to exercise of fanciful discretion of the Departmental Minister, which was neither approved nor condoned. Nevertheless, the Corporation visibly did not act in terms of the judgment and order of the High Court of Delhi in initiating the fresh process for auction. This led to the challenge to the faulty advertisement dated 05.10.1998 and the corrigendum dated 13.10.1998, the operation whereof to start with was stayed and thereafter the respondent was permitted to continue with the dealership and eventually she was directed to be awarded a fresh dealership by converting the existing dealership under its policy dated 12.02.2004. The dealership of the respondent having been cancelled w.e.f. 01.12.1997, though the operation of the auction notice and the corrigendum thereto had been stayed and she had been allowed to run the outlet, we fail to comprehend as to how all these could be construed to signify that her dealership did subsist from the date of the impugned judgment and order. There was thus no scope for conversion of the existing dealership to a new dealership as ordered. In addition thereto, we are of the unhesitant opinion that the direction to award the new dealership under the prevalent policy dated 12.02.2004, having regard to the backdrop of adjudication undertaken by the Delhi High Court would amount to perpetuation of the undue benefit, earlier bestowed on her by a method held to be illegal, dubious, arbitrary and transgressive of public interest. In other words, the award of new dealership to the respondent in the prevailing facts and circumstances, in our estimate, would amount to allowing the respondent to enjoy the premium of the illegality and arbitrariness resorted to in granting her the earlier dealership and reward her as a beneficiary of unlawful administrative patronage. In our view, the award of new dealership to the respondent would wholly undermine the purpose of cancelling her earlier dealership and annihilate the very objective 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, to state the least, the defaults and derelictions of the Corporation and its functionaries are writ large and deserve to be strongly deprecated. The omissions and commissions do have the potential of suggesting pre-determined perceptions and motivations in aid of the respondent, resulting in such disagreeable culmination in her favour. The time lag, according to us, per se cannot purge the vitiation of the award of dealership originally granted to the respondent, to entitle her to the relief granted by the impugned judgment and order, by way of a boon for the inexplicable faults and remiss in duty of the functionaries of the Corporation. In supervening public interest and to uphold the rule of law as well as imperative of administrative fairness, transparency and objectivity, we are thus not inclined to sustain the impugned judgment and order. It is, therefore set aside so far as it holds that the respondent is entitled to a new dealership at her location under the Policy dated 12.02.2014. We hereby reiterate that the dealership of the respondent at her present location stands cancelled w.e.f. 01.12.1997. The Corporation would now take immediate steps to this effect as permissible in law without fail. The Corporation would also initiate a fresh process for award of new distributorship/dealership in the area and at a location to be determined by it, if it considers it necessary in public interest strictly in conformity with law and the constitutionally recognized norms of transparency, objectivity and fairness.

[Source: Indian Oil Corporation Ltd.. vs Shashi Prabha Shukla, decided by SC on 15 December, 2017]
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