Supreme Court Directs CBI Investigation and Awards Exemplary Damages in Illegal Petrol Pump Allotment Case. Arbitrary and Mala Fide Distribution of Public Property by a Minister Violated Article 14 and Warranted Independent Criminal Inquiry and Rs 50 Lakh Damages.

Case Note & Summary

The matter arose from a public interest litigation filed by Common Cause, a registered society, before the Supreme Court under Article 32 of the Constitution, challenging the allotment of retail outlets for petroleum products (petrol pumps) by the then Minister of State for Petroleum and Natural Gas, Capt. Satish Sharma. In the main judgment dated September 25, 1996, the Court held that 15 allotments made by the minister were arbitrary, discriminatory, mala fide, wholly illegal and liable to be quashed. The Court found that the allotments were made in a cloistered manner, without advertisement, without receipt entries, and without any criteria or guidelines. The allottees included relations of the minister's personal staff, sons of ministers, and members of the Oil Selection Boards themselves. The Court observed that the minister had acted in utter violation of the law laid down by the Supreme Court and had infringed Article 14, betraying the trust reposed in him by the people under the Constitution. Consequently, the Court issued a show cause notice to Capt. Satish Sharma asking why a direction should not be issued to the appropriate police authority to register a case and initiate prosecution for criminal breach of trust or any other offence, and why he should not be made liable to pay damages for his mala fide action. In response, the minister filed an affidavit and was represented by Mr. Harish Salve. The legal issues before the Court were whether an independent investigation should be directed and whether exemplary damages should be awarded. Mr. Salve argued that this was not a case for compensatory or exemplary damages and that nominal damages would meet the ends of justice. He further contended that Capt. Sharma was part of a system where such wrongs were committed earlier on the assumption of subjective satisfaction, and that since the concept of absolute liability of public servants for misfeasance was of recent origin, leniency should be shown in awarding damages. The Court referred to Nilabati Behera to affirm its power to award damages under Article 32. It also discussed Rookes v. Barnard, A.B. v. South West Water Services, and Broome v. Cassell & Co. to conclude that exemplary damages can be awarded for oppressive, arbitrary or unconstitutional action by servants of the government. Applying these principles, the Court held that Capt. Satish Sharma's actions were wholly arbitrary, mala fide and unconstitutional as already found in the main case, and therefore he was liable to pay exemplary damages. The Court directed the Central Bureau of Investigation to register a case against Capt. Satish Sharma in respect of the allegations dealt with and findings reached in the Common Cause case. The investigation was to proceed in accordance with law without any limit on its power, scope and sphere, and the CBI was directed not to be influenced by any observations or findings made by the Court. The investigation was to be completed within three months of the receipt of the order, with an interim report filed by January 20, 1997, and the matter listed on January 22, 1997 before a Bench of which Justice Faizan Uddin was a member. On damages, after considering the facts and circumstances, the Court directed Capt. Satish Sharma to pay a sum of Rs. 50 lakh as exemplary damages to the Government Exchequer, to be deposited with the Secretary, Ministry of Finance, Government of India within nine months from the date of the order. If not paid, the amount was to be recoverable as arrears of land revenue. The Court placed on record its appreciation for Mr. Harish Salve's fair and independent assistance.

Headnote

Issue of Consideration

Final Decision

The Supreme Court directed the Central Bureau of Investigation to register a case against Capt. Satish Sharma in respect of the allegations dealt with and findings reached in the Common Cause case. The CBI was to hold investigation and proceed in accordance with law without any limit on power, scope and sphere, and was directed not to be influenced by the Court's observations or findings. The investigation was to be completed within three months of receipt of the order, and the CBI was to file an interim report by January 20, 1997, with the matter listed on January 22, 1997. The Court held Capt. Satish Sharma liable to pay exemplary damages and directed him to pay a sum of Rs. 50 lakh to the Government Exchequer, to be deposited with the Secretary, Ministry of Finance, Government of India within nine months. The amount, if not paid, was to be recoverable as arrears of land revenue.

Law Points