Capt Sharma discretionary quota case
HC orders auction of petrol pumps

NEW DELHI, Sept 13 (UNI) — The Delhi High Court has rejected the demand of the four major petroleum companies for selection of dealers and distributors through oil selection boards (OSB) for reallocation of the cancelled petrol pumps, standard kerosene outlets (SKOs) and LPG dealerships, and has ordered a public auction by the end of this year.

The high court had last year struck down the allotments of more than 130 petrol pumps, SKOs and LPG dealerships made by the former Union Petroleum Minister, Capt Satish Sharma, from his discretionary quota.

A Division Bench comprising Mr Justice Y.K. Sabharwal and Mr Justice D.K. Jain said, "under the circumstances of the case, the public auction is the best mode to determine the valuation of the cancelled dealership and distributorship and not its evaluation by a committee as suggested by some of those whose dealership was cancelled. The public auction provides an objective criteria for valuation."

The judges said the public auction of the cancelled dealership should take place within the next three months and the new allottees or dealers shall be put into possession by January 1 next year.

The Bench, however, allowed the petroleum companies — Bharat Petroleum Corporations Ltd (BPCL), Hindustan Petroleum Corporations Ltd (HPCL), Indian Bharat Petroleum Co Ltd (IBP) and Indian Oil Corporations Lt. (IOC) — to incorporate various eligibility criteria as conditions to participate in the public auction.

In a 13-page judgement, the Bench said the corporations were also free to include in the terms and conditions of auction ample safeguards to dispel their apprehensions that highest bidders, who may be granted the dealership, may indulge in sharp and underhand practices to make quick money.

The companies were allowed to run the dealership till the auction was complete.

"It can be provided that the contravention of the terms and conditions would result in cancellation of dealership or distributorship," the order said.

The oil corporations had stated that in case of sale by public auction and not selection through OSB, the best and most suitable person to undertake the job of distribution and sale of oil and gas may not come forth as the monetary consideration would be the paramount criteria in case of public auction.

They further expressed apprehensions that the public auction may affect the right of the corporations to terminate the agency on non-fulfilment of requisite conditions by highest bidders and that the highest bidder may ultimately resort to malpractices with a view to making good the returns on the bid amounts which may be very heavy.

Not agreeing with the submissions of the oil companies, the judges said, "we do not find much substance in the apprehension that highest bidder may indulge in malpractices and sharp practices simply because he has not been selected by the OSB."

"The oil companies have not brought to our notice a single instance of sharp practices having been adopted by those who had been granted discretionary allotment although these persons had not been selected by the OSB," they said.

The Bench also quoted the judgement of the Supreme Court which said that the sale of cancelled dealership should be done through public auction.

The Division Bench had in its order of cancellation ruled that the dealerships were allotted without any proper verification of their claims by the Petroleum Ministry.

The process of cancellations started on August 29 last year when the court scrapped the allotments of 69 petrol pumps, SKOs and LPG dealerships affecting 77 persons, some of them relatives of senior politicians and bureaucrats, friends of the minister and the voters of Amethi, the constituency of Captain Sharma.