Wnt Petitlon r*?,4^'5 Q005 RtaHfcerGcnd years, ..^1.^^.^ ^^€^v 'tAarciTto.l, Rajnandgaai (C.G.) -VTSUS- LMcn cf inda, Th-oiyh theSecr^ary. Mri^ry Of-Consumer /Wairs, Food & Rjblic Qstribition, htew DelN. aate of Otiattlsgarh, Of Food, Pu c QstribiAion & Consuner rdectten, Wtartraia^, teu Kah^n w/an, Raiptr (aThattisgarh). ,:f ,'•<?.Ci?t.A*> -?»r>?y/^<;°<«. <ft<s%y ^^- /- R^nandgaon (Chhattisgarh). 1U IIUW S-I-i^. /"^. Rajnanc^aQn (Chhattisgarh). WRIT PETmON USDB3 ARTiO.E 226 OF T GOhBnTUTION OF INDIA FOR i^WNCE OF A WRiT SN T hSATURE OF WWDfiSMQ, PROHBITSON. CB?T10RARt ETC.OR ANY OTHER DIRECTiON OR ORESR TO DO JUSTiCE IN TI-E MATTER. -D^alis cf the p^itton. 1. P/WTtOAAR OF THE PETITiOJSER: i^s per cause titte. /'4' 3Zs HIGH COURT OF JUDICATURE CHHATTISGARH: BILASPUR (Division Bench) CORAM: Hon'bte Shri A.K. Patnaik.CJ & Hon'ble Shri Sunil KumarSinha, J. WRIT PETITION N0. 445 OF 2005 WRITPETITION N0. S78 OF 2005 W@T PETITION N0.1034 <3F 2005 WRIT PETITION N0.1SS8 OF 2005 WRIT PETITION N0.1518 OF 2005 WRST^ETmON N0.2150 OF 2005 WRIT PETITION N0.2316 OF 2005 WRITPETITION N0.1397 OF-2005 WRIT PETITION N0.2600 OF 2005 ^rs ORDER FOR CONSIDER-ATION J tg ..»*:•'" -• ^^•.^''Y^. 'v'7 Sd/- Chief Justice ^ C<^rH- HON'BLESHRI SUNIL KUMAR StNI ^\~ Sd/- Sunil Kumar Sinha Judge yOST FOR ORDER: 06/09/2005 Sd/- Chief Justice ei^ l-^^ (; 32S l|BB1^^^—^-5' HIGH COURT OF JUDICATURE CHHATTISGARH: BILASPUR (Division Bench) CORAM : Hon'bte Shri A.K. Patnaik, CJ & Hon'ble Shri Sunil Kumar Sinha, J. WRIT PETITION N0.44S OF 2005 Raghuveer Singh Gond Vs. Union of India and others WRIT PETITION N0.578 OF 2005 Ambika Ptasad Rajwade and othere Vs. State of ChhatUsgarh anti others WRIT PETITION N0.1034 OF 2005 Ajay Mtshra and ottiers Vs. State of Chhattisgarh and others WRIT PETITION N0.1558 OF 2005 Ramnarayan Markandeyand others Vs. Union of Indla and others WRIT PETITION N0.1518 OF 2005 Kapil Dev and others Vs. State of Chhattisgarh and others WRIT PETITION N0.2150 OF 2005 Tulsi Ram and others vs. State ofChhattlsgarti ar.'i others WRIT PETITION N0.2318 OF 2005 Naln Das Gaikwad and others Vs. Unlon of India and others. WRIT PETITION N0.13S? OF 2005 Mahamaya Swayatt Sahkarita Prathniik Upbhokta Bhandar Vs. State of ChhatUsgarh and others. m WRIT PETITION N0.260e OF 2005 BastarZila Thok Upbhokta Bhandar Maryadit Vs. The State ofChhattlsgarh and others Present: Mr. Kanak Tiwari, Sr. Adv. with Mr. Rahul Jha, Mr. P.K.C. Thwari, Sr. Adv. with Mr. Shashibhushan, Mr. Prashant Jayaswal, Sr. Adv., with Mr. Ali Asgar, Mr. Manindra Shrlvastava, Sr. Adv. wlth Mr. Amrlto Das, Mr. Rajesh Pandey, Mr. Rajiv Shrivastava, Mr. Yashwant Tiwari and Mr. Sudhir Verma, learned counsel for the pstitioner.. Thakur Vijay Singh, Assistant Solicitor General for the Union of India. Mr. Prashant Mishra, Additional Advocate General, for the State of ChhatBsgarh. ORDER (Passed on 6tn of Septernber, 2005) The following Order of the Court was passed by A.K. Patnaik, CJ: - All these writ petitions under Article 226 of the Constiti'tion of India relate to the Chhattisgarh Public D'stribution System (Control) Order, 2004 made under the Essential Commodities Act, 1955 were heard analogously and are being disposed of by this common order. (2) Under Section 3 of the Essentia! Commodities Act, 1955 (for short fhe Act^ the Central Government has been vested with the power to make orders providing for regulating or prohibiting the production, supply and distribution of essential commodity and trade and commerce therein if the Central Govemment is of the opinion that it is necessary or expedient so to do for maintaining or increasing supplies of an.</ essential comrriodity or for securing their equitable distribution and availabi'ity at fair prices. The Central Govemment delegated this power to the State Giivernments under Section 5 ofthe Act by an order dated 9 of June, 1978 in reiation to food stuffs subject to such conditions as specified in the said order. On 23 of June 2001 the Page 4 of 63 •s^'-. ,E. and the fair price shops are proposed to be aiiotted to agencies specified in the said Order 2004. Aggrieved, the peiitioners have chaltenged the provisions of the Order 2004 on different grounds and/or the orders of the authorities proposing to cancel the licences cf the petitioners for running the fair price shops. (3) Mr. Prashant Jayaswal, Sr. Advocate, assisted by Mr. Ali Asgar leamed counsel appearing for the petitioner in Writ Petition No.445 of 2005 submitted that the petitioner is a private person and the agreement between the petitioner and the State Government relating to the fair price shop being run by the petitioner provided in Clause (15) that the agreement could be terminated only for breach of the conditions of the agreement by the petitioner and hence the allotment offair price shop to the petitioner and the licence of the petitioner for running the fair price shop cannot be cancelled by the State Government unless it is established that the petitioner has committed somebreach ofthe agreement. l-i®submitted that though there is no allegation that the petffioner has committed any breach of the agreement, the authorities are now proposing to cancel the allotment of fair price shop to the petitioner as well as the licence for the fair price shop of the petitioner under the Order 2004. Mr. Prashant Mishra, learned Additional Advocate General, for the State of Chhattisgarh, on the other hand, submitted that the allotment as well as the licence of the petitioner for running the fair price shop will have to be cancelled in accordance with the provisions of Clause 9 (1)0fthe0rder2004. (4) We are of the considered opinion that the cancellation of the fair price Shop is not to be made under Cfeuse (15) of the agreement between the petitioner and the State Governrtisnt for running :he fair price shop but because of supervening change of Taw. The Order 2004 is a Page 3 of 63 » State Govemment of Chhattisgarh made the Chhattisgarh (Khadya Padarth) Sarvajanik Nagrik Poorti Vitran Scheme; 2001 i>i exercise of such delegated power under Section 3 of the Act for distribution of different foodstuffs through fair price shops. Pursuant to saic Scheme of 2001 , the State Govemment entered into agreements with the petitioners and also issued licences in favour' of the petitioners for running fair price shops at different place in the State of Chhattisgarh. On 31st of August, 2001 the Central Govemment made the Public Disfribution System (Control) Order, 2001 under Section 3 ofthe Act providing for distribution offood grains through fair price shops and provided therein that the State Government shall issue an order under Section 3 of the Act for regulating the sale and distribution of essential commodities and shall issue the licences to the fair price shop owner under the said order laying down the duties and responsibilities of the fair price shop owners. Accordingly, the State Government made a fresh order under SecUon 3 of the Act by a notificstlon dated 23 of December, 2004 called the Chhattisgarh Public Distribution System (Control) order, 2004 (forshort the Oider2004°j. Clause 9 (1) ofthe Order 2004 makes provisions regarding allocation of fair price shops in the State of Chhattisgarh and is extracted hereunder: "9. Allocation offair price shops (1) Farr Price Shop run by Large Aadim jati Multipurpose Cooperative Societies (LAMPS), Primary credit cooperative societies, forest protection committees, self help groups, Gram Panchayats and other cooperative societies shall be continued but not run by the private persons. Within six months from oommencement of thls O'-der, Fair Price Shops run by the private persons shall be cancelled and allotted to the specified agencies mentionsd in sub rule (3) and (4) of rule 9.' In accordance with provisions of Clause 9(1) of the Order 2004, quoted above, the licences issued to the petitioners are proposed to be cancelled ^ Page 5 of 63 '^kf- M^.:y statutory order made under Section 3 of the Act and Clause 9 (1) of the Order 2004 inter alia provides that wtihin sb< months from the commencement of the Order, fair price shops run by the private persons shall be cancelled and allotted to the specified agencies mentioned in the order. Hence, the cancellation of the fair price shop of the petitioner who was a private person was to be done by virtue of the provisions in Clause 9 (1) of the Order 2004. tn other words, it is the change of law after the agreement was made between the petitioner and the State Government for running of the fair price shop by the petitioner on account of which the agreement has to be cancelled. Section 56 of the Indian Contract Act, 1870 provides that a contract do an act which, after the contract is made, become Impossible, or, by a reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Hence, the contract between ss petitioner and the State Government in so far as it provides for running of the fair price shop by the petitioner who is a private person would become unlawful after expiry of six months period from the date of enforeement of the Order 2004 and would therefore, become void and will have to be cancelled. This is thus not a case of cancellation of a fair price shop for breach of agreement but a case of cancellation offair price shop of the petitioner due to change of law. (5) Mr. Jayaswal, leamed counsel for fhe petitioner, next submitted that the Order 2004 is discriminatory and violative of Article 14 of the Constitution of In'dia inasmuch as it provides that private persons would not be allowed to run any fair price shop and orsly the agencies such as co- operath/e societies as specified in the Order 2004 would be allowed to run the fair price shops. He cited the decision of the Gujarat High Court in Ramanlal Nagardas and Others Vs. M.S. PaSnitkar & another, AIR 1961 Gujarat 38, in which it has been held that the decision of the State to entrust ll . d ,-f £ Page 6 of 63 wholesale distribution to the Co-operative Soc'eties to the exc'usion of other licence holders amounted to discrimination and could not be justified on any reasonable principles of classification and was. thus violab've of the provisions of Article 14 of the Constitution. He submitted that the only reason given in the retum filed by the State of Chhattisgarh for excluding private persons from mnning fair price shops and for entrusting fair price shops to Co- operative Societies and other agencies specified in the Order 2004 is that some complaints of malpractices and irregularities by fair price shops run by private persons have been registered in the Sfate of Chhattisgarh during the years 2001 - 2002, 2002-2003 and 2003- 2004. He submitted that the statements Annexure-R/1 annexed to the retum would show that cases have also been registered against Co-operative Societies and other agencies running fair price shops in the State of Chhattisgarh during the years 2001- 2002, 2002 - 2003 and 2003-2004. He argued that there was, therefore, no justification for excluding private persons from running fair price shops and at the same time allowing Co-operative Societies dnd other agencies specified in the Order 2004 to run fair price shops. He cited the judgment of the Gujrat High Court in Ramanlal Nagardas and C ,ers Vs. M.S. Palnitkar & another (supra) in which the Gujrat High Court has held that classification of indivkluals and Co-operative Societies and cancelling the licences of the individuals only has been held to be having no i-ational nexus with the obj'ect soughtto be achieved bythe Act. (6) Mr. Manindra Shrh/astava, Sr. Aciwcate assisted by Mr. Amrito Das, leaned counsel appearing for the petitionsr in Writ Petition No.578 of 2005, further submitted that the statistics given by the State Government in Annexure-R/1 annexed to the return regarding number of cases of malpractices and irregularities registered agai"?t fair price shops for the yeare 2001-2002, 2002-2003 and 2003-200^ are misleading, as these Page 7 of 63 •'i^;-* statistics do not disclose the number of private persons who have been running fair price shops during these three.years and the number of Co- operative Societies which have been running fair price shops during these three yeare. He argued that in the State of Chhattisgarh the number of fair price shops run by the private persons is mueh larger than the number of fair price shops run by the Co-operative Societies and, therefore, the number of complaints in the case of private persons running fair price shops are bound to be numerically more than the number of complaints against Co-operative Societies running the fair price shop s. He furtner argued that the State has not indicated in the retum whether the comp'aints against private persons ware examined and if so the resutt of the examination. He vehemently argued that the Court should not therefore reiy on the statistics given by the respondent/State in the statements annexed to '•he return as Annexure-R/1 . (7) Mr. Rajesh Pandey learned counsel appearing for the petitioner in Writ Petition No. 1034 of 2005 reiterated the aforesaid contenhon that the exclusion of private persons from running fair p<ice shops by the Order 2004 was discriminatory and violative of Article 14 of the Constitution. He submitted that one of the objects indicated in the preamble of the Constitution is social justice for the people of ''ndia and the classification adopted by the Order 2004 classifying private persons separately from Co- operative Societies and other agencies specifief in the Order 2004 is not consistent wtth this obj'ect of social justice mentic'ned in the preamble of the Constitution and is therefore irrational and the Order 2004 has to be held as violative of the right to equal protection of laws guaranteed under Article 14 of the Constitution of India. In support of this submission he relied on the decision of the Supreme Court in Atam Prakash Vs. State of Haryana and others, A1R 1986 SC 8S9, in which 'rt has been hetd that a classification adopted by Uie legislature in the statute which is not in tune with the socialist ^ 33f Page 8 of 63 V- goal set out in the Preamble and the Directive Principles enumerated in Part- IV of the Constitution and the Constitution is per se illegal and cannot be permitted. He also relied on the decision of the Supreme Court in LIC of India and another Vs. Consumer Education and Research Centre and others, AIR 1995 SC 1811. He vehemently argued that private persons in the State of Chhattisgarh have been excludfd from running fair price shops by the Order 2004 and thereby deprived of thsir only means of livelihood and such exclusion of private persons for running fair price shops was inconsistent with the goal of social justice in the Constitution and the Order 2004 was thus discriminstory towards individua! private persons and was violative of Article 14 of the Constitution. (8) Mr. Rajiv Shrivastava learneci counsel appearing for the petitioner in Writ Petition No.1558 of 2005 also rsiterated the submission that the provision made in the Order 2004 excluding private persons from running fair price shops is discriminatory and violative of Article 14 of the Consb'tution. He submitted that the classificanon is not only unreasonable but also unfair and has no nexus with the object of Section 3 (1) of the Act namely distribution of essential commodities at fair prices in an equitable manner. (9) Mr. Kanak Tiwari, Sr. Advocate, assisted by Mr. Rahul Jha leamed counsel appearing for the petitioner in Writ Petition No.1518 of 2005 submitted that a scheme for public distribution of essential commodities through fair price shops may give preference tc the Co-operative Societies but it should also provide that where Co-operative Societies are not available in any area, private persons can be allowed to ?'/ii fair price shops or where consumer Co-operative Society, available in a particular area, refuses to run the fair price shop, private persons in the area >*iay be ailowed to run a fair s® ^f • "!') PE>ge9of63'f'-1 price shop. He submitted that in M.P. Ration Vikreta Sangh, Jabalpur and others Vs. State of Madhya Pradesh and another, AIR 1981 MP 203, clause 2 of the Scheme framed by the Madhya Pradesh High Court in the year 1981 which provided that preference would be given to Co-operative Societies in the matter of appointment of agerits for running fair price shops was challenged on the ground that it was?»iolative of Article 14 of the Constitution and the DMsion Bench after taking note of the concession of the learned Advocate General that Cooperative $ocieties in clause 2 mean only a consumers' Co-operatives held that the scheme seeks to prefer the consumer societies in the matter of appointment of the agents for running fair price shops and it is only when such societies refuse to accept appomtment as agents that othere can be considered for appointment. He also cited the decision of the Supreme Court in Madhya Pradesh Ration v/ikreta Sangh Society and others Vs. State of Madhya Pradesh and others, AIR 1981 SC 2001, wherein the Supreme Court has he!d that the preference given to consrmers' co-operative societies for running fair price shops for distribution of food stuffs was not violative of Article 14 w the Constitution of India. He argued that the total exclusion of the private persons from consideration for appointment as agents for running fair price shops would be violative of Article 14 ofthe Constitution. (10) Mr. Yashwant Tiwari learned counsel appearing for the petitioners in Writ Petition No.2150 of 2005 submitted that no exercise has been undertaken by the State Government to find out how many private persons have actually resorted to by mal practices. He further submitted that most of the Co-operative Societies in the State of Chhattisgarh are running at a loss and therefore if the Co-operative Societiss in the State of Chhattisgarh are entrusted with the work of distribution of essential commodities through fair price shops, they wilt not be able to efficSently handle the said work. He 33 c' Page10of63 •^' argued that total exclusion of persons from carrying on the business of fair price shops is discriminatory and violative of Article 14 of the Constitution inasmuch as it affects the rights ofthe individuais to equality. (11) Mr. Sudhir Verma learned counse' appearing for the petitioner in Writ Petition No.2316 of 2005 submitted tha'tthose private persons who have indulged in mal practices while carrying 6n the business of fair price shops have now constituted new Co-operasve Societies and would be greatly benefited from the provision in clause (9) of the Order 2004 that the specified agencies including Co-operative Sucieties instead of private persons would be allowed to run fair price shops. He submitted that the classification made by Clause (9) of the Order 2004 between private persons and Co-operative Societies and other agencies specified in the Order 2004 is unreasonable inasmuch as there is no rational nexus between the intelligible differentia of such classification and the object of distributing food stuffs and other essential commodities through fair price shops at fair prices sought to be achieved by Order 2004. Mr. Verma su&nitted that the exclusion of individual private persons is therefore arbitrary, discriminatory and violative of Article 14 of the Constitution. He relied on the dwision of the Supreme Court in Onkar Lal Bajaj and others Vs. Union of .'?>dia and another, (2003) 2 SCC 673 to the effect that Article 14 guaranteer; to everyone equality in law and arbitrary exercise of executive powers can be quashed by the Court in exercise ofthe power ofjudicial review. (12) Mr. Prashant Mishra, Additional Advocate General, assisted by Mr. Sumesh Bajaj, leamed Dy. Govt. Advocate, tor the State of Chhattisgarh, on the other hand, relying on the reply filed on behalf of the State of Chhattisgarh in Writ Petition No.445 of 2005 submitted that befors the State of Chhattisgarh came into existence in No\>%n:i&er, 2000, the Madhya ?''!'- O <J ^. Page 11 of 63 « a' Pradesh Sarvajanik Nagrik Vitaran Scheme, 1991 was in force under which fair price shops were being allotted to Co-operative Societies for public distribution of essential commodities at fair pricas, but in the year 2001 when the State Government decided to extend t!ie Public Distribution System Network found that due to the financial constraints Co-operative Societies were not in a position to run the additional fair price shops and hence made a provision for allotment of fair price shops to private persons in the Scheme 2001 and such private persons were appointed to run fair price shops on the recommendations of the Minister of the Food Department, Government of Chhattisgarh by the Food Inspector. He submitted that after allotment of fair price shops to such private persons, however, there were complaints of mal practices by such private persons running fair pr'ce shops. He referred to the statementsannexed to the reply as Annexure-R/1 to show the numbers of cases registered against the fair price shops run by private persons in the years 2001-02, 2002-03 and 2003-04. He furfher pointed out that in a PIL Writ Petition (Ciyil) No.196 of 2001 filed by the People's Union for Civil Liberties, the Supreme Court also passed some orders on 28 of November, 2001, 8th of May 2002 and 2nd of May 2003. He submitted that by the order dated 2 of may 2003 the Supreme Court issusd some directions to evolve a system whereby eligible BPL families, which may not be on BPL list, are supplied food grains and to cancel the licences of those licences who do not keep their shops ppen throughout the month, fai! to provide food grain to BPL families strictly at BPL rates, keep the cards c? BPL households with them, make false entries in the BPL cards, engage in black-marketing, siphon away food grains to the open market or hand over such ration shops to such other person/organizations. He submitted that the State Govemment has a constitutional duty and obligation to protect the poor persons against malnutrition and hunger and to comply with the orders passed by the /. o '•1 Page126f63 Kw ^^ Supreme Court in the aforesaid case and since it came to the knowledge of the State Govemment that private persons running fair price shops are not distributing the commodities to the persons living below poverty line and are not providing essential commodities to Anthyodaya and Annapoorna beneficiaries as per their entitlement and were resorting to the mal practices mentioned in the aforesaid orders of the Supreme Court in Writ Petition (Civil) No.196 of 2001, the State Govemment took the view that a private individual should no longer be allowed to run a fair price shop and that fair price shops should be run by the Co-operative Societies and other agencies specified in the Order 2004. He submitted ti'.at such exclusion of private persons altogether from running fair price shops as agents of the State Govemment was based on a reasonable classification of private persons who were not suitable to run fair price shops and Co-operative Societies and other agencies specified in the Order 2004 who were suitable to run fair price shops is based pn an intelligible differentia having rational nexus with the object to be achieved by the Order 2004 namety distribution of food stuffs and other essential commodities at fair price shops through the Public Distribution System of the State Government. He cited the decision of the Supreme Court in In re Kerala Education Bill, 1957 for the proposition that while articte 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislatiors and submitted that the classification under the Order 2004 of private persons who have not been allowed to run fair price shops and Co-operative Societies and other agencies specified in the Order 2004 which have been allowed to run fair price shops is a reasonable classification and the Order 2004 is not hit by Article 14 of the Constitution. (13) In re Kerala Education Bill, 19E7 (supra) cited by Mr. Mishra the Supreme Court after refemng