1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR ORDER (1) Hirni Dhani Gram Vs. State of Rajasthan & ors. Sewa Sahkari Samiti S.B.CIVIL WRIT PETITION NO.1802/2005 (2) Hirni Dhani Gram Vs. State of Rajasthan & ors. Sewa Sahkari Samiti S.B.CIVIL WRIT PETITION NO.428/2005 Date of Order : 10th May 2007 PRESENT HON'BLE MR.JUSTICE DINESH MAHESHWARI Mr.Sangeet Lodha with Mr.A.S.Rathore for the petitioner Mr.M.R.Singhvi with Mr.Girish Joshi ) Mr.S.K.Vyas with Mr.H.R.Soni and ) Mr.B.L.Bhati ) for the respondents BY THE COURT: These two writ petitions, CWP No.428/2005 and CWP No.1802/2005 filed by the same petitioner one after another, essentially relating to the same subject matter of dealing in public distribution system concerning essential commodities, have common and inter-related facts and issues; hence, were heard together and are taken up for disposal by this common order. 2 The petitioner, Hirani Dhani Gram Sewa Sahakari Samiti (hereinafter referred to as 'the petitioner'/'the petitioner Society') contends in these writ petitions that its right to deal in essential commodities is sought to be taken away by circuitous methods and the impugned governmental actions are intended only to extend undue advantage and benefit to the respondent-Nagaur Sahakari Upbhokta Wholesale Bhandar Limited (hereinafter referred to as 'the Bhandar'). In the past, there had been rounds of litigations concerning the legal rights and the area of operation of the petitioner Society that culminated in Division Bench judgment of this Court dated 09.10.2003 in favour of the petitioner. The facts leading to the said Division Bench decision forming prelude to the submissions of the petitioner in these writ petitions could be noticed thus: According to the petitioner, it was registered as a Co-operative Society under the provisions of the Rajasthan Co-operative Societies Act, 1965 ('the Act of 1965') that stands repealed by the Rajasthan Co-operative Societies Act, 2001 ('the Act of 2001'); and the societies registered under the Act of 1965 are deemed to be registered under the Act of 2001 by virtue of its Section 127 (3). The petitioner has averred that it was initially registered with its area of operation limited to Gram Panchayat, Kherwa (District Nagaur); that it was primarily transacting business of 3 agricultural credit and was also transacting non-credit business particularly that of distribution of essential commodities at fair price; that by resolution dated 30.10.1994 the petitioner society resolved to amend the bye-laws to extend its area of operation beyond Gram Panchayat, Kherwa and to the entire Nagaur District in respect of non-credit business; that proposal of the petitioner Society for amendment of its bye-laws was rejected by the Assistant Registrar, Co-operative Societies, Nagaur by his order dated 30.03.1995; that however, the said order dated 30.03.1995 was set aside in appeal by the Additional Registrar, Co-operative Societies, Jodhpur on 30.05.1996 and the Assistant Registrar was directed to decide the case afresh in accordance with law. The petitioner has pointed out that by the order dated 25.10.1996 the Assistant Registrar, Co-operative Societies approved the proposal made by the petitioner but with some modification; and the area of operation for non-credit business was permitted to be extended not to the entire Nagaur District but restricted to its Degana Tehsil; and the amended sub-clause (2) of clause (1) of the bye-laws of the petitioner Society reads as under:- ''The area of operation of the Society will be limited upto Gram Panchayat, Kherwa, but for non-credit business, it will be Tehsil area Degana'' 4 The Assistant Registrar, Co-operative Societies, Nagaur issued a notice under Section 14(1) of the Act of 1965 on 29.10.1996 inviting objections, if any, within a period of 15 days with regard to amendment brought about by the petitioner and ultimately by the order dated 22.11.1996, the Assistant Registrar registered the aforesaid amendment in the bye-laws of the petitioner Society. The petitioner contends that in view of the said amendment, it has acquired jurisdiction to carry on non-credit business in the area of Tehsil Degana within District Nagaur. According to the petitioner, non-availability of wholesale outlet of Sahakari Upbhokta Wholesale Bhandar for Degana area was causing inconvenience in retail distribution of levy sugar and wheat. Therefore, keeping in view the convenience of general public and to ensure quick and quality distribution of essential commodities, on 18.07.1998 the Collector (Supplies), Nagaur recommended for assignment of wholesale business of levy sugar and wheat for Tehsil Degana to the petitioner Society in the interest of public; and consequent thereto, the Department of Food and Civil Supplies, by its communication dated 14.08.1998 allowed the work of distribution of levy sugar to the petitioner Society and necessary licence was issued in its favour; and the Deputy Commissioner, Department of Food and Civil Supplies by his 5 order dated 05.10.1998 allotted quota of sugar to Nagaur Sahakari Upbhokta Bhandar, Nagaur by reducing the same from 228 MT to 125 MT; and by the same order, 103 MT of sugar was allotted to the petitioner Society. The petitioner has pointed out that validity of the order dated 31.10.1998 was assailed by the respondent Nagaur Sahakari Upbhokta Bhandar, Nagaur in Writ Petition No.3354/1998 that was dismissed by this Court on 16.11.1998 after hearing the parties; the Bhandar took the matter in intra- court appeal (SAW No.1115/1998) but then withdrew the appeal as well as the writ petition on 14.01.1999. The petitioner has alleged that after withdrawal of the aforesaid special appeal, a device was planned to nullify the order of grant of wholesale business of levy sugar to the petitioner Society at the administration level by propagating that the petitioner has no right to do the non-credit business beyond Gram Panchayat, Kherwa. The petitioner has referred, inter alia, to the letter dated 16.01.1999 sent by the Assistant Registrar, Co-operative Societies, Nagaur to the District Supply Officer, Nagaur (DSO) suggesting that the area of operation of the petitioner was only within the jurisdiction of Gram Panchayat, Kherwa; letter dated 09.02.1999 sent by the Registrar, Co-operative Societies, Jaipur to the District Collector, Nagaur recommending re-transfer of the wholesale 6 business to the Bhandar, again stating that area of operation of the petitioner Society was only Gram Panchayat, Kherwa; further communication dated 07.05.1999 by the Joint Registrar (Consumer) to the Additional Commissioner, Department of Food and Civil Supplies that jurisdiction of the petitioner Society was restricted to Gram Panchayat, Kherwa and recommending that the Bhandar be appointed as wholesale dealer; and yet another communication dated 01.06.1999 of the Assistant Registrar, Nagaur stating to the Collector, Nagaur that area of operation of the petitioner was limited to Gram Panchayat, Kherwa. According to the petitioner, officers of the Department of Co-operative Societies succeeded in misleading the Collector (Supply), Nagaur who, by the order dated 23.10.2000, while allowing the petitioner Society to deal with levy sugar and wheat already allotted to it, directed that future wholesale business be again handed over to the respondent Bhandar. It has been alleged that in this manner, after getting cancelled the wholesale dealership of the petitioner, the Assistant Registrar, Co-operative Societies, Nagaur issued a notice under Section 14(1) of the Act of 1965 proposing amendment in the bye-laws of the petitioner Society so as to bring about restriction of its area of operation to Gram Panchayat, Kherwa only; that the Manager of the petitioner 7 Society attempted to put objections (against the proposed amendment) but the same were not taken on record for want of authority; that the Assistant Registrar proceeded with a prior conclusion to amend the bye-laws of the petitioner Society and after recording that the President of the petitioner Society has not sent any proposal proceeded to order amendment of bye-laws by his order dated 28.11.2000. Aggrieved by the said orders dated 23.10.2000 and 28.11.2000, the petitioner Society preferred a writ petition (CWP No.4732/2000) before this Court that was dismissed by the learned Single Judge on 05.10.2001 on the ground of availability of alternative remedy of preferring an appeal; and aggrieved by the order dated 05.10.2001 passed by the learned Single Judge, an appeal was taken to the Division Bench being D.B.Civil Special Appeal (Writ) No.872/2001. After hearing the parties, the said special appeal preferred by the petitioner Society was allowed on 09.10.2003 and the impugned orders were quashed; and the Special Leave Petition preferred by the Bhandar has since been dismissed by the Hon'ble Supreme Court on 19.11.2004. The petitioner has averred that while passing the aforesaid judgment dated 09.10.2003 the Division Bench of this Court arrived at a conclusion that wholesale business was awarded to the petitioner Society in public interest by speaking 8 order and that recommendation to re-transfer was not founded on public interest but appear to be of petty interest of one of the Co-operative societies working under the supervision of Registrar, Co-operative Societies but was not providing efficient service in furtherance of distribution of levy sugar and wheat in Degana Tehsil and Parbatsar Tehsil of Nagaur District. The petitioner has reproduced in writ petition No.1802/2005 the observations made by the Division Bench of this Court while pronouncing against the stand of the Officers of the Co-operative Department which led the Food and Civil Supplies Department in handing over the wholesale business to the Bhandar. The petitioner has pointed out that this Court held that the impugned order not only suffers from malice in law but also suffers from arbitrary and capricious exercise of power without fulfilling the conditions precedent required for exercise of such powers and accordingly, the order passed by the Assistant Registrar on 28.11.2000 registering the amendment in bye-laws of the petitioner Society and so also the order passed by the Collector (Supply) on 23.10.2000 whereby the wholesale dealership was ordered to be handed over to the Bhandar were quashed by this Court. The petitioner has also pointed out that after the decision of this Court, its wholesale dealership for the entire Tehsil Degana was restored. 9 Coming to the cause of present litigation, in petition No.428/2005 it has been averred that the respondents have made yet another attempt to deny the petitioner from the wholesale dealership of levy sugar and wheat by a planned device. According to the petitoner, this time the Secretary, Department of Food and Civil Supplies, ignoring the judgment dated 09.10.2003 wrote a letter dated 26.07.2004 to the District Collector (Supply), Nagaur stating that Hirni Dhani Gram Sewa Sahakari Samiti (the petitioner Society) is not a Government Co-operative Society and, therefore, authority letter of the petitioner should be cancelled forthwith and the work of the area should be handed over to any nearby co- operative society and if such society was not in a position to work regularly, then the same may be handed over to it temporarily and thereafter procedure for inviting tenders should be initiated. It has been contended that the petitioner Society and so also the respondent Bhandar are the societies registered under the provisions of the Act of 2001 and are operating their business under the control of the State Government according to their respective bye-laws; and the petitioner Society as well as respondent Bhandar and so also all other societies registered under the Act of 2001 engaged in distribution of the commodities concerned are at par and by no 10 stretch of imagination, it could be said that the petitioner Society is not the one that is not controlled and administered by the State Government. The petitioner has referred to the letter dated 18.08.2004 sent by the District Supply Officer, Nagaur to the Secretary, Food and Civil Supplies Department pointing out that the work was handed over to the petitioner Society in view of the decision of this Court and a copy of the aforesaid judgment dated 09.10.2003 was endorsed to the Secretary concerned. However, the Secretary, Department of Food and Civil Supplies in his response dated 28.09.2004 stated that decision of the High Court (aforesaid judgment dated 09.10.2003) essentially deals with the area of operation of the petitioner Society but according to the Department Circular dated 21.09.2004 issued for allotment of wholesale dealership of levy sugar and wheat, preference has to be given to the Society controlled and administered by the State Government and, therefore, stated that earlier order dated 26.07.2004 be complied with immediately. The petitioner has also referred to the aforesaid circular dated 21.09.2004 and has submitted that from perusal of the communication dated 26.07.2004 and 28.09.2004 it appears that the circular dated 21.09.2004 was issued by the State Government so as to give strength to the stand taken by the 11 Department of Food and Civil Supplies in its earlier letter dated 26.07.2004. The petitioner has averred that aggrieved of the communication dated 26.07.2004 and 28.09.2004 whereby Secretary, Department of Food and Civil Supplies had directed the District Supply Officer, Nagaur to cancel the authority letter of the petitioner Society, a representation was made to the Minister for Food and Civil Supplies on 04.10.2004; that the DSO did not choose to take any action for cancelling dealership of the petitioner Society, obviously for the reason that he was aware about correct position of law and about import of the Division Bench decision of this Court; that the Secretary, Food and Civil Supplies was, however, out and out to extend undue favour to the respondent Bhandar and, therefore, issued yet another communication dated 18.12.2004 whereby it was specifically ordered that the petitioner Society be relieved from the work of handling and transport agent and, instead, for the remaining period of the financial year, the respondent Bhandar may be appointed; that the petitioner on coming to know of such order, again made a representation but in vain; and that under the persistent persuasion of the Secretary, Food and Civil Supplies, the District Collector (Supply) Nagaur has issued a letter dated 10.01.2005 whereby in place of the petitioner Society, respondent Bhandar has 12 been authorised as wholesale dealer for the area. The petitioner has challenged the orders dated 10.01.2005, 18.12.2004, 26.07.2004 and 28.09.2004 in writ petition No.428/2005 (marked therein as Annexures 16, 14, 9 and 10 respectively) on the ground that the orders impugned have been passed on non-existent facts; that the petitioner and the respondent Bhandar are the societies standing at par; that the Secretary while directing re-transfer of wholesale dealership to the respondent Bhandar has acted in perfunctory manner and has not provided any opportunity of hearing to the petitioner Society; that the judgment dated 09.10.2003 has deliberately been ignored though there had been categorical observations of this Court that dealership was given to the petitioner Society in the public interest whose cancellation was not founded in public interest but was made on petty business interest only of one Co-operative Society (the respondent Bhandar) which was not providing efficient service. The petitioner has contended that the respondent No.2 Secretary has ignored the judgment of this Court rather with impunity; and, relying upon the findings aforesaid of this Court that cancellation of the dealership of the petitioner was ordered in arbitrary and capricious manner and was aimed only at extending undue favour to the respondent Bhandar, the order passed by the respondent No.3 has been assailed. 13 According to the petitioner, it has the entitlement to carry on its business in conformity with the bye-laws and the provisions of the Act of 2001; and the respondents have no authority to impose any restriction on its trade and business contrary to law and none of the rules or orders governing the allotment of wholesale dealership of the co-operative societies permit such restriction being imposed on allotment of dealership to the Society like the petitioner. Thus, maintaining that the public authorities were seeking to extend undue favour to the respondent Bhandar, the petitioner has prayed for the relief of quashing the impugned orders by appropriate writ, order, or direction. This writ petition No.428/2005 was considered by this Court on 01.02.2005; and after hearing the petitioner and the respondent Bhandar appearing in caveat this Court passed the order admitting the writ petition and staying operation and effect of the order dated 10.01.2005 and the respondents were directed to restore the position as existing before 10.01.2005 treating as if no order was passed on 10.01.2005. The next petition, CWP No.1802/2005, came to be filed by the petitioner on 28.03.2005 wherein, after reiterating all the background facts and the orders leading to writ petition No.428/2005 and the stay order passed by this Court, the petitioner submitted that appointment of handling and transport 14 agent to transport and distribute food grains including wheat and wheat products on wholesale basis for the year 2005-2006 having become due, letters were issued by the District Collector (Supply) Nagaur to all the existing handling and transport agents on 15.01.2005 asking for their consent for continuing the work in future; and the petitioner Society submitted its consent letter to work as transport and handling agent on the existing rates for the entire Tehsil Degana by communication dated 19.01.2005 and also submitted an agreement duly signed as required by the respondent Authority who informed the Secretary, Food and Civil Supplies about consent of all the co-operative societies having been obtained for the financial year 2005-2006. However, according to the petitioner, the respondents were out and out to deprive the petitioner Society from the wholesale dealership and now a device was planned so as to deny the petitioner of the wholesale dealership of foodgrains and sugar for Tehsil Degana for the year 2005-2006; and acting in perfunctory manner and ignoring decision of this Court, the Additional Registrar, Co-operative Societies issued a letter dated 13.02.2005 to the District Collector (Supply), Nagaur stating that as per the letter of Food and Civil Supplies Department dated 10.12.2004 while appointing wholesale dealers under the Public Distribution System, preference should be given to 15 the societies associated with RAJFED, CONFED and RAJSANGH and the conditions laid down in the letter dated 21.09.2004 be also complied with; that in the letter dated dated 08.10.2004 issued by the Joint Registrar, Co-operative Societies, Ajmer the petitioner Society was stated to be in category of such Societies for appointment as wholesaler dealer but the said letter (dated 08.10.2004) was not in accord with the instructions issued by the Food and Civil Supplies Department; and only the Bhandar falls in such category. The petitioner has averred that under the pressure of higher authorities, the Joint Registrar, Co-operative Societies, Ajmer Division, Ajmer has also issued a communication dated 22.02.2005 to the District Collector, Nagaur stating that as per the directions of Department of Food and Civil Supplies issued under various letters for Tehsil Degana, District Wholesale Sahakari Upbhokta Bhandar falls in the category for appointment as wholesale dealer and that the work of Gram Sewa Sahakari Samities was mainly to deal in agricultural debt, agricultural gins and retail dealership. Stating the cause for filing this latter Writ Petition No.1802/2005, the petitioner has alleged that respondents- authorities of the Department of Food and Civil Supplies were hand-in-gloves with the authorities of Department of Co- operative Societies and were bent upon depriving the 16 petitioner Society from wholesale dealership of food grain and sugar for Tehsil Degana and, according to the petitioner, it has come to know that under the pressure of the authorities, the respondent No.3 [District Collector (Supply), Nagaur] was not going to continue wholesale dealership of food grain and levy sugar for Degana Tehsil in favour of the petitioner for the financial year 2005-2006. It has been contended that the petitioner Society and all other societies registered under the Act of 2001 engaged in the wholesale distribution of sugar, wheat and other consumer items are at par and it cannot be said that the petitioner was not a Society controlled and administered by the State Government; that there is no concept of government and non- government institution so far the provisions of the Act of 2001 are concerned; that such concept of government controlled and administered institutions and other institutions was only a creation of the respondent No.2 so as to extend undue favour to the respondent Bhandar. The petitioner has submitted that it felt advised to assail validity of the aforesaid circulars and, therefore, filed the said writ petition No.1802/2005 challenging the orders dated 21.09.2004 and 10.12.2004 (Annexures 13 and 21) issued by the Secretary, Department of Food and Civil Supplies, Jaipur and so also the communication dated 13.02.2005 (Annexure 22) sent by the Additional Registrar, 17 Co-operative Societies, Jaipur and the communication dated 22.02.2005 (Annexure 23) sent by the Joint Registrar, Co- operative Societies, Ajmer Division, Ajmer to the District Collector, Nagaur. This writ petition was taken up by this Court for consideration on 29.03.2005 and while issuing notice for final disposal, this Court by way of interim order directed that licence in question shall not be granted by the respondents to anybody else except the petitioner for the entire Tehsil Degana till further orders. The respondent-Bhandar who was initially not impleaded a party in this writ petition was permitted to join as respondent No.7 on its application. In the reply submitted on behalf of respondents Nos.1,2 and 3, i.e. the State of Rajasthan, the Secretary, Department of Food and Civil Supplies and the District Collector (Supply), Nagaur, the averments of the petitioner Society regarding recommendations of the District Collector (Supply) dated 18.07.1998, have not been disputed. However, according to the answering respondents, in the State of Rajasthan door- step procedure was effective under which wholesale dealers were putting up wheat from Food Corporation and directly supplying it to fair price shops and so far sugar is concerned, the retailer is being paid to put the same from the godown of the wholesaler and, thus, the question of inconvenience as suggested by the petitioner does not arise. It has been 18 suggested that as per amended clause (ii) of clause (1) of the bye-laws of the petitioner Society, its area of operation is only within the Gram Panchayat, Kherwa and for non-credit business, it is Tehsil area Degana. In relation to the averments about the Division Bench decision of this Court dated 09.10.2003, it has been submitted that the said order was not applicable or attracted to the instant case. The respondents have submitted that in view of the aforesaid door- step system, the headquarter of wholesale dealer does not affect the supply nor causes any inconvenience to the public. The respondents have admitted that the District Supply Officer, Nagaur by the communication dated 05.05.2004 informed that according to the letter received from the Assistant Registrar, Co-operative Societies, respondent-Bhandar and the petitioner Society both were the Co-operative institutions and both were registered under the provisions of the Act of 1965; and with regard to respondent Bhandar it was intimated that it was a central institution and on the post of its Chief Executive, the Inspector of the Co-operative Department was working and on the post of Administrator, the Director, Central Co-operative Bank, Nagaur was working; whereas the petitioner being primary co- operative institution, its Manager was of bank level and it was not having any administrator and was controlled by the Management Committee. According to the respondents, the 19 questioned letter dated 26.07.2004 was written on the basis of such information. The respondents have maintained that merely for being a co-operative, it does not authorise any Society to do the business of wholesale dealership; since there are departmental provisions to provide preference to the co- operative societies in the wholesale dealing and where these societies show their unwillingness, then open competitive tenders are invited. It has been maintained that for the purpose of putting restrictions on the illegal working of various co- operative societies, the State has issued certain directions on 14.10.2002 to the effect that only State Government's co- operative societies may be sanctioned the work on the departmental rates without inviting tenders. The respondents have submitted that all the societies are registered under the provisions of the Act of 1965 and, therefore, for the purpose of making distinction and to define the State's Co-operative Societies, after thorough consideration, it was decided that the State's Co-operative Society is