Full Judgment Text
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PETITIONER:
MADHYA PRADESH RATION VIKRETA SANGHSOCIETY & ORS. ETC. ETC.
Vs.
RESPONDENT:
STATE OF MADHYA PRADESH & ANR.
DATE OF JUDGMENT22/09/1981
BENCH:
SEN, A.P. (J)
BENCH:
SEN, A.P. (J)
PATHAK, R.S.
CITATION:
1981 AIR 2001 1982 SCR (1) 750
1981 SCC (4) 535 1981 SCALE (3)1420
CITATOR INFO :
D 1986 SC1527 (26)
ACT:
Constitution of India, 1950, Art, 14, and Madhya
Pradesh (Foodstuffs) Civil Supplies Public Distribution
Scheme, 1981-Distribution of foodstuffs at fair prices-
Scheme of running fair price shop through retail dealers-
Replacement of-Fair price shops by agents appointed by
Government with preference to co operative societies-Such
scheme whether valid .
Art. 14-Concept of equality-Equality before law-Unequal
treatment of equals-Whether permissible-Advocates whether
can form consumer’s cooperative society.
HEADNOTE:
The Madhya Pradesh Foodstuffs (Distribution) Control
order, 1960, was promulgated by the State Government, in
exercise of the powers conferred by section 3 read with s. 5
of the Essential Commodities Act, 1955, to enable the State
Government to distribute foodstuffs at fair prices through
fair price shops. In 1977, the State Government decided to
appoint unemployed graduates as retail dealers of Government
fair price shops. The whole system of distribution of
foodstuffs at fair price shops to the consumers collapsed
due to flagrant violations of the Control order by the
retail dealers.
In July 1980, the Government decided that the fair
price shops should be run by consumers’ cooperative
societies. Pursuant to this, on October 31, 1980, the State
Government amended the Control order by deleting the
provisions relating to fair price shops through retail
dealers and providing for running of the fair price shops
under a Government scheme. On March 20, 1981, the State
Government promulgated the Madhya Pradesh (Foodstuffs) Civil
Supplies Public Distribution Scheme, 1981, replacing the
earlier Scheme. The Scheme envisaged allotment of shops to
the public by inviting applications from it by notification,
giving preference to co-operative societies. The important
feature of the Scheme was that the fair price shops were to
be run under the direct control and supervision of the
Collector and that the fair price shop-keeper was required
to keep sufficient stocks of foodstuffs to prevent hardship
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and inconvenience to the consumers.
The petitioners filed writ petitions in the High Court,
contending that the introduction of the new scheme for
running of Government fair price shops by
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agents to be appointed under a Government scheme, giving
preference to co-operative societies, in replacement of the
earlier Scheme of running fair price shops through retail
dealers, was violative of Arts. 14 and 19 (l) (g) of the
Constitution. The contention was rejected and the writ
petitions dismissed.
In the Special Leave Petitions to this Court, it was
contended that although there was no objection to a State
monopoly in trade, the action of the Government should not
be arbitrary, irrational and irrelevant, and that
arbitrariness was writ large in the formulation of the
Scheme inasmuch as there was selection of co-operative
societies of all descriptions to run the fair price shops
and therefore the Scheme was, in fact, not being implemented
to carry out its professed object.
Dismissing the Special Leave Petitions,
^
HELD: 1. The Scheme in no way infringes the
petitioners’ right to carry on their trade in foodgrains.
They are free to carry on business as wholesale or retail
dealers in foodgrains by taking out licences under the
Madhya Pradesh Foodgrains (Licensing) order, 1964. There is
no fundamental right in any one to be appointed as an agent
of a fair price shop under a Government Scheme. [758F]
Sarkari Sasta Anaj Vikreta Sangh, Tehsil Bamatra and
Ors. v. State of Madhya Pradesh and Ors. WP No. 4186 of 81
decided on August 25, 1981 and R.D. Shetty v. Airport
Authority, [1979] 3 SCR 1014 at 1042 referred to.
2. The question whether fair price shops in the State
under a Government Scheme should be directly run by the
Government through the instrumentality of consumers’
cooperative societies as its agents or by retail dealers to
be appointed by the Collector is essentially a matter of
policy with which the Court is not concerned. [758 C]
3. The wider concept of equality before the law and the
equal protection of laws is that there shall be equality
among equals. Even among equals there can be unequal
treatment based on an intelligible differentia having a
rational relation to the objects sought to be achieved
Consumers’ cooperative societies form a distinct class by
themselves. [757 F]
4. The impugned scheme neither suffers from
arbitrariness nor is it irrational to the object sought to
be achieved It was evolved in exercise of the executive
power of the State Government under Art. 162 of the
Constitution after the earlier Scheme was found unworkable
as a result of flagrant violations of the provisions of the
Control order by unscrupulous retail dealers. Entrusting the
distribution of foodstuffs to consumers’ cooperative
societies was an inevitable step which was taken by the
Government in the interest of the general public. Giving
preference to the consumers’ cooperative societies could not
be said to be arbitrary, irrational or irrelevant. The
Scheme lays down detailed guidelines regulating the manner
of grant or refusal of such applications. [756 H-757 E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Special Leave Petition
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(Civil) Nos. 4034, 4350, 4270, 4536-38 and 5074 of 1981.
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From the judgment and order dated the 13th April, 1981
of the Madhya Pradesh High Court at Jabalpur in Misc.
Petition Nos. 723/80, 874/80, 797/80, 833/80, 91/81, 169/81
and 91/81 respectively.
Swaraj Kaushal for the petitioners in SLP Nos. 4270/81
and 4350/81
S.S. Khanduja for the petitioners in SLP Nos. 4536-
38181 and 507418 1 .
A.K. Sen, V.S. Dabir, Dr. N. M. Ghatate and S. V.
Deshpande for the petitioners in SLP No. 4034/81.
Gopal Subramanium, D.P. Mohanty and R.A. Shroff for the
Respondents in SLP Nos. 4270/81, 4350/81, 4536-38/81 and
5074/81
Gopal Subramnium, D.P. Mohanty and S.A. Shroff; for the
Respondent in SLP No. 4034/81.
The order of the Court was delivered by
SEN, J. The only question involved in this and the
connected Special Leave Petitions directed against a
judgment of the Madhya Pradesh High Court is whether the
Madhya Pradesh (Food-stuffs) Civil Supplies Public
Distribution Scheme, 1981, formulated by the State
Government under sub-cl.(d) of cl. 2 of the Madhya Pradesh
Foodstuffs (Distribution) Control order, 1960, introducing a
new scheme for running of Government fair price shops by
agents to be appointed under a Government scheme giving
preference to cooperative societies, in replacement of the
earlier scheme of running such fair price shops through
retail dealers appointed under cl. 3 of the order, is
violative of Arts. 14 and 19 (1) (g) of the Constitution.
To give a short resume. The Madhya Pradesh Foodstuffs
(Distribution) Control order, 1960 (hereinafter called the
’Control order’) was made by the State Government in
exercise of the powers conferred by s. 3 of the Essential
Commodities Act, 1955, read with Government of India,
Ministry of Food and Agriculture (Depart of Food), order No.
GSR 1088 dated November 15, 1958, to provide for
distribution of foodstuffs at fair prices under a Government
scheme The scheme of the Control order is that with a view
to
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distributing food-stuffs at fair prices through fair price
shops, the A Collector would, under the ’Government Scheme’,
appoint any person as a retail dealer in respect of
foodstuffs under cl. 3 of the Control order. The Control
order was designed to enable the State Government to
distribute foodstuffs at fair prices through fair price
shops. In 1977, as a matter of policy it was decided to
appoint unemployed graduates as retail dealers of Government
fair price shops. The whole system of distribution of
foodstuffs at fair price shops to the consumers, however,
collapsed due to flagrant violations of the Control order by
the retail dealers. It was found that the shops were opened
well after the appointed time, shops were closed well before
the time, the consumers were not able to obtain their ration
easily and very often the traders would withhold the
foodstuffs in stock and refuse to sell the same to the
consumers, causing serious inconvenience and harassment to
them. Another great drawback which the Government
experienced was that stocks which were required to be lifted
by the traders were not lifted within the time and more
often than not the stocks would become wasted and rendered
useless.
In July 1980, the Chief Minister called a Conference of
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high officials including the Director, Civil and Food
Supplies and the Collectors of various districts. The
Collectors narrated their experience about the
unsatisfactory manner of working of the then existing system
of running fair price shops through retail dealers and spoke
of the plight of the poor consumer. There was a meaningful,
close and in-depth discussion at the Conference and in the
light of the experience gained, the Government decided that
it was necessary to replace the existing system of running
fair price shops through retail dealers by the Government
directly running these fair price shops through agents
appointed by the Collector. It was also decided that these
fair price shops should be run by consumers’ cooperative
societies. In the wake of the changes to be brought about,
the State Government, on October 31, 1980, accordingly
amending the Control order by deleting the provisions
relating to running of fair price shops through retail
dealers and providing for running these shops under a
Government scheme. The expression ’fair price shop’ has been
defined by the newly added clause 2 (bb) to mean a shop set
up by the Government under the Government Scheme. On March
20, 1981, the State Government promulgated the Madhya
Pradesh (Foodstuffs) Civil Supplies Public Distribution
Scheme, 1981.
754
Under the impugned scheme, the Collector, by virtue of
cl. 3, was to establish fair price shops. In establishing
the fair shops, the Collector was to follow certain
guidelines. These are: (a) that a shop should be established
for each area with a population of 2,000 and the consumers
should not be required to travel more than 5 Km. for
purchasing foodstuffs, (b) in the urban areas for the
purpose of demarcation of areas, a Ward or a Mohalla is a
unit and in rural areas, the Panchayat is a unit, (c) the
location of fair price shop shall be, as far as possible, in
the centre of such area, for meeting the requirements of the
residence for which it is established. Clause 4 provided
that the fair price shops would be allotted by the Sub
Divisional officer and the allottee will have no legal
ownership over the fair price shops. Then a set of
guidelines was also issued for the purpose of regulating the
manner of allotment of fair price shops. In making the
allotment of fair price shops, cooperative societies were to
be given top priority. In the event of a cooperative society
in the area expressing its inability in writing to run a
fair price shop, or if there was no such cooperative society
in existence in such an area, the fair price shop may be
allotted to others. The allotment of a fair price shop was
to be made after publication of a notification inviting
applications for allotment from the public The applications
received were to be scruitinised on merits and the one who
fulfilled the maximum qualifications shall be allotted the
shop. Another set of principles was laid down dealing with
the manner of working of fair price shops, but they are
matters of detail. One important feature is that the fair
shops are to be run under the direct control and supervision
of the Collector and the other important feature is that the
fair price shop keeper was required to keep sufficient
stocks of foodstuffs as specified by the State Government or
the Collector in that behalf, to prevent hardship and
inconvenience to the consumers.
The validity of the impugned scheme has been unheld by
this Court in Sarkari Sasta Anaj Vikreta Sangh, Tehsil
Bamatra and Ors. v. State of Madhya Pradesh and Ors. decided
on August 26, 1981. The main challenge was that the scheme
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created a monopoly in trade in favour of cooperative
societies and was thus violative of Arts. 14 and 19 (1) (g)
of the Constitution. This Court, agreeing with the High
Court, rejected the contention in view of Mannalal Jain v.
State of Assam and Ors.(1) In that case, the question was
whether cl. 5 (e)
755
Of the Assam Foodgrains (Licensing and Control) order, 1961,
which provided for giving preference to cooperative
societies created a monopoly in trade in favour of
cooperative societies. On a construction of cl. 5 (e) which
merely embodied a rule of preference in favour of
cooperative societies, this Court in Mannalal Jain’s
case(supra) held that cl. 5 (e) did not have the effect of
creating a monopoly in favour of cooperative societies. In
upholding the validity of cl. S (e), the Court observed :(’)
We are of the view that by reason of the position
which cooperative societies may occupy in the village
economy of a particular area, it cannot be laid down as
a general proposition that sub-cl. (e) of cl. 5 of the
Control order, 1961, is unrelated to the objects
mentioned in s. 3 of the Essential Commodities Act,
1955 There may be places or areas where cooperative
societies are in a better position for maintaining or
increasing supplies of rice and paddy and even for
securing their equitable distribution and availability
at fair prices. D
The Court, therefore, repelled the contention that cl. 5 (e)
had no relation whatever to the objects mentioned in s. 3 of
the Act and went on to say :(2)
Sub-cl. (e) of cl. 5, we have already stated,
enables the licensing authority to give preference to a
cooperative society in certain circumstances; but it
does not create a monopoly in favour of cooperative
societies. The preference given has a reasonable
relation to the objects of the legislation set out in
s. 3 of the Act.
In the Sarkari Sasta, Anaj Vikreta Sangh case the impugned
scheme was also challenged on various other grounds but the
court negatived all the contentions raised and we need not
refer to them as they are not really relevant for our
purposes. Suffice it to say, the Court pointed out that the
scheme had been framed by the State Government in exercise
of its executive function under Art. 162 of the
Constitution; that under the scheme the fair price shops
were to be run by consumers’ cooperative societies; that the
scheme was framed by the State Government in public interest
With a view to securing equitable distribution of foodgrains
at fair prices to the
756
consumers, that the rule of preference to cooperative
societies does not create a monopoly in trade and is,
therefore, not violative of the petitioners’ fundamental
rights under Arts. 14 and 19(1)(g) of the Constitution; and
that no one had a fundamental right to be appointed a
Government agent for running a fair price shop which was a
matter of grant of privilege. The validity of the impugned
scheme has, therefore, been upheld in all its aspects.
In support of these petitions, learned counsel for the
petitioners contends that the real point was not pressed in
the Sarkari Sasta Anaj Vikreta Sangh’s case (supra). He
contends that there is no objection to a State monopoly in
trade, the action of the Government should not be arbitrary,
irrational and irrelevant. If the governmental action
disclose arbitrariness it is to be invalidated as violative
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of Art 14. In support of the contention, he places reliance
on certain observations of Bhagwati, J. in the Airport
Authority case(’). In dealing with the question, Bhagwati,
J. Observed:
It is now well settled .. that Art. 14 strikes at
arbitrariness in State action and ensure fairness and
equality of treatment. It requires that State action
must not be arbitrary but must be based on some
rational and relevant principle which is non-
discriminatory; it must not be guided by any extraneous
or irrelevant considerations, because that would be
denial of equality.. The State cannot, therefore. act
arbitrarily in entering into relationship, contractual
or otherwise with a third party, but its action must
conform to some standard or norm which is rational and
non-discriminatory.
The observations made by Bhagwati, J. in the Airport
Authority case (supra) have been quoted with approval in
Kasturi Lal v. State of J & K(2).
It is true that according to the rule laid down in the
Airport Authority case (supra) if governmental action
disclosed arbitrariness, it would be liable to be
invalidated as offending against Art. 14. There can be no
quarrel with the principles laid down in that case, but the
difficulty is about the application of those principles to
the facts and circumstances of the present case. We have
given a brief outline of the impugned scheme and it cannot
be said that it suffers from arbitrariness or is irrational
to the object sought to be achieved.
757
The State Government after due deliberation, took a
responsible decision to run the fair price shops directly,
being satisfied that it was necessary so to do with the
object of distributing foodstuffs at fair prices to the
consumers, after taking into consideration the fact that the
earlier experiment of running these shops through retail
dealers was an utter failure. The scheme has been designed
by the State Government by executive action under Art 162 of
the Constitution with a view to ensuring equitable
distribution of foodstuffs at fair prices. As already
stated, the Court has found in the Sarkari Sasta Anaj
Vikreta Sangh case (supra), the entire system of
distribution of foodstuffs had collapsed and had become
wholly unworkable due to flagrant violations of the
provisions of the Control order by the retail dealers. The
action of the State Government hl entrusting the
distribution of foodstuffs to consumers’ cooperative
societies, though drastic, was an inevitable step taken in
the interests of the general public. The State Government
was not bound to give the fair price shops to the retail
dealers under a Government scheme. The governmental action
in giving preference to consumers’ cooperative societies
cannot be construed to be arbitrary, irrational or
irrelevant. The impugned scheme does not confer arbitrary or
uncanalised power on the Collector in the matter of grant or
refusal of applications for appointment as agents for the
purpose of running fair price shops. The scheme lays down
detailed guidelines regulating the manner of grant or
refusal of such applications.
The wider concept of equality before the law and the
equal protection of laws is that there shall be equality
among equals. Even among equals there can be unequal
treatment based on an intelligible differentia having a
rational relation to the objects sought to be achieved.
Consumers’ cooperative societies form a distinct class by
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themselves. Benefits and concessions granted to them
ultimately benefit persons of small means and promote social
justice in accordance with the directive principles. There
is an intelligible differentia between the retail dealers
who are nothing but traders and consumers’ cooperative
societies. The position would have been different if there
was a monopoly created in favour of the later. The scheme
only envisages a rule of preference. The formulation of the
scheme does not exclude the retail traders from making an
application for appointment as agents. It is, however, urged
that the impugned scheme is not being implemented as to
carry out its avowed object. It was said that there was
arbitrariness in selection of cooperative societies of all
descriptions, not necessarily consumers’ cooperative
societies. There is no merit in the contention
758
that there was preferential treatment given to cooperative
societies in the matter of allotment of fair price shops.
Our attention was drawn to the fact that a fair price shop
has been allotted to Adhivakta (Advocates) Sangh, Jabalpur.
Advocates are also consumers and where is nothing to prevent
them from forming a consumers’ cooperative society for
lawyers as a class if they fulfil the conditions laid down
in the law. We have no reason to think that the State
Government was not actuated with the best of intentions in
bringing about a change in the system of distribution of
foodstuffs through fair price shops
The question whether fair price shops in the State of
Madhya Pradesh under a Government scheme should be directly
run by the Government through the instrumentality of
consumers’ cooperative societies as its agents or by retail
dealers to be appointed by the Collector under cl. 3 of the
Control order, is essentially a matter of policy with which
the Court is not concerned. The learned counsel for the
State reiterated the assurance given in the Sarkari Sasta
Anaj Vikreta Sangh case (supra), as was done by the learned
Advocate General before the High Court, that by the
expression "cooperative societies" hl the scheme, the
Government intended and meant "consumers’ cooperative
societies", and that if by mistake there was a wrong
allotment made to a ’cooperative society’ which was not a
"consumers’ cooperative society’, the Government would take
steps to cancel the allotment.
The constitutionality of the impugned scheme is also
challenged as abridging Art. 19(1)(g) of the Constitution.
The short answer to the challenge is that the scheme in no
way infringes the petitioners’ right to carry on their-
trade in foodgrains. They are free to carry on business as
wholesale or retail dealers in foodgrains by taking out
licences under the Madhya Pradesh Foodgrains (Licensing)
order, 1964. There is no fundamental right in any one to be
appointed as an agent of a fair price shop under Government
Scheme.
Accordingly, we dismiss the Special Leave Petitions
with costs.
N V.K. Petitions dismissed.
759