PDS licence cancellation requires reasoned consideration of the dealer’s explanation and a speaking order.

The petitioner was a fair-price-shop dealer whose licence was cancelled by the Sub-Divisional Officer on allegations of irregularities in the operation of his PDS shop, including non-production and non-maintenance of registers, failure to display stock and price details, short supply, charging of excess price, and collection of consumers’ coupons for three months while supplying foodgrains for only two months.

The petitioner contended that the commodities had ultimately been supplied, that the coupons had been retained with the consumers’ consent, and that there was no black-marketing or consumer complaint.

The petitioner’s earlier challenge resulted in a remand for fresh consideration on the ground that the principles of natural justice had not been properly followed.

After remand, the petitioner submitted his explanation and produced relevant records, but the S.D.O. again cancelled the licence by order dated 30 March 2013.

The Collector dismissed the statutory appeal on 7 April 2016, and the Divisional Commissioner dismissed the revision on 11 April 2017.

Whether the order cancelling the petitioner’s fair-price-shop licence was sustainable when the Licensing Authority failed to adequately consider the petitioner’s explanation regarding retention of coupons and subsequent supply of foodgrains and kerosene oil?

Whether the appellate and revisional authorities had passed legally sustainable orders by failing to address the specific grounds raised by the petitioner?

Whether the matter should be remanded to the Licensing Authority for fresh consideration after affording the petitioner an opportunity of hearing and requiring a reasoned order?

Whether the petitioner was entitled to immediate resumption of PDS supply during the pendency of the fresh consideration?

The Court applied Clause 7(ii) of the PDS (Control) Order, 2001, under which the Licensing Authority may cancel a licence for contravention of the Order, the licence conditions, the dealer’s duties and responsibilities, or an order of the State Government.

The Court also applied the principles of natural justice and the requirement that an administrative or quasi-judicial authority pass a reasoned and speaking order after fairly considering the affected party’s explanation.

It relied on the coordinate Bench decisions in Pradip Kumar Shrivastav @ Pradip Shrivastav v. State of Bihar & Ors., CWJC No. 5896 of 2025, and Shiv Prasad Singh v. State of Bihar & Ors., CWJC No. 20985 of 2025, which required remand for fresh consideration, an opportunity of hearing, and a reasoned decision.

The Court held that although retention of consumers’ coupons could constitute a serious irregularity capable of facilitating black-marketing, the Licensing Authority was required to examine the petitioner’s specific explanation that the coupons had been retained voluntarily and that the corresponding foodgrains and kerosene oil were subsequently supplied.

The cancellation order did not adequately evaluate that explanation or provide cogent reasons for rejecting it.

The appellate and revisional orders likewise failed to address the petitioner’s specific grounds and therefore did not cure the defect.

Consequently, the orders suffered from inadequate application of mind and failure to pass a reasoned order, warranting judicial interference and remand for fresh adjudication in accordance with natural justice.

However, because the licence had been cancelled in 2013 and the shop might have subsequently been allotted to or operated by a third party, the Court declined to direct immediate resumption of PDS supplies.

The orders of the Divisional Commissioner dated 11 April 2017, the Collector dated 7 April 2016, and the Licensing Authority dated 30 March 2013 were set aside.

The petitioner’s licence was restored for the limited purpose of remitting the matter to the S.D.O., Patna, who was directed to reconsider the petitioner’s explanation and materials, afford him an opportunity of hearing, and pass a reasoned and speaking order within three months of receipt or production of the judgment.

The Court did not direct immediate resumption of PDS supply, but granted the petitioner liberty to apply to the competent authority for such resumption.