Raghuveer Singh Gond v. Union of India WRIT PETITION N0.5 & Ors.

06/09/2005 Sd/- Chief Justice l-'i^ :fc 's :B- \~ ^- K ^:. ^^ l-^^ (; 32S 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 of Chhattlsgarti 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. l|BB1^^^—^-5' m WRIT PETITION N0.260e OF 2005 BastarZila Thok Upbhokta Bhandar Maryadit Vs. The State of Chhattlsgarh and others 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.. Present: Thakur Vijay Singh, Assistant Solicitor General for the Union of India. Mr. Prashant Mishra, Additional Advocate General, State of ChhatBsgarh. for the 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 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 •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 ^ 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, 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 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 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 '^kf- M^.: y ll . d ,-f £ 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 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 •'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 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 'rt others, A1R 1986 SC 8S9, in which has been hetd that a classification adopted by Uie legislature in the statute which is not in tune with the socialist ^ 33f 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 V- violative of Article 14 of the Constitution.

(8) Mr. Rajiv Shrivastava learneci counsel appearing for 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 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 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 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 ^. 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 a' 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 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 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 to its earlier decisions on the true meaning, Kw ^^ Page13oT63 scope and effect of Article 14 of the Constitution, quoted the foilowing passage from its eartier decision Mohd. Hanif Qureshi Vs. State of Bihar, AtR 1958 SC 731: legislation and that forbid reasonabie oiassification for *lt is now well established that while Artiole 14 forbids class legis.'ation jt does not in order to pass the test of puiposes of permissible classification two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible differentia wtiioh distingujshes persons or things thet'are grouped together from others left out of the group and (ii) such differentia must ^ave a rational relation to the object sought to be aishieved by the statute it has been held, may be founded in question.

The classificatjon, on different basis, namely, geographically or according to objects or the occupations or the like and what is necessary js that there must be a nexus between the basis of classiflcation and the object of the Act under consideration. The pronouncemerrts of this Court further establish amongst other things, that there is always a presumption in favour of the constitutionality of an ena'itment and that ^i. bufden is upon him, who attacks it to show ?hat there has been a clear violation of the oonstitutJonal principles. the legislature underetands and accepted, must presume that correctly appreciates the needs of its own pecple, that its laws are directed to problems made manjfest by expenenoe and that discriminations are based on adequate ground?. in mind that the legislature is free to recognize degrees of harm and It must be borne The Courts, may confine its restrictions to those case where the need is constitutionality deemed to be the clearest and finally that in order to sustain the presumption consfcleration mattere of common knowledge, matters of common the history of the times and may assume every state oi report, facts which can be conceived existing at the time of legislation.

" the Court may Thus, the law laid down by the Supreme Court is that equal protection of Article 14 of the Constitution forbids class legislation but does not forbid reasonable classffication for the purposes of legislation and that in order to pass the test of permissible classification two conciitions must be fulfilled; (i) the classification must be founded on an inteiligible differentia which l't<. Page14of63 distinguishes persons or things that are groiiped together frorr; others left out of the group and (ii) such differentia must has?e a rational nexus to the object sought to be achieved by the statute in queaEion. These propositions have been reiterated in the judgment of the Gujrat High Court in Ramanlal Nagardas and Others Vs. M.S. Palnitkar & another (supra) cited by Mr. Prashant Jayaswal, and it has been further explained in the said decision of the Gujrat High Court that sometimes the iaw itself may not make the classification but may lay down a policy and vest a discretion in the executive to make a classification for the purpose of administering the law and in such cases the power given to the executive wou!d import a duty on it to classify the subject matter of the legislation in accordar'ce with the policy indicated in the statute and the discretion has to be exei'cised in accordance with the policy to effectuate which the discretion is given and it is in relation to that i policy that the propriety of the classjficatifi-; has to be tested and if the executive proceeds to classify persons or things on a basis which has no rational relation to the policy of the legislature, its action can certainly be struck down as offending against the equal protection clause.

In the said decision, the Gujrat High Court further held that in the Act the legislature has laid down the legislative policy and has lefl it io the Central Government or the State Govemment to work out the details of that policy within the framework to be found in the four corners of the Act and accordingly make orders under Section 3 of the Act in accordancc with the policy laid down in the Act. The obsen/ations of Bhagwati, J who aeliveresd the said judgment of the Gujrat High Court on behalf ofthe Division Bench is quoted herein below: "Whether this olassifioation can siand the test of Article 14 must depend on various factors suon as the background against which the State adion has been taken, the nature and character of the commodity and business sought to be regulated by such action and the object which the legislature in the execution or had in view in enaoting the said Act II Page15of63 administration of which the classification has been made When we tum to the provisions of th.s said Act we find that the ambit and character of the said Act is such that Legislature can do no more than lay down the legislative policy and leave it to the executive to work out the details of that pplicy within the framework to be found in the four corners ofthe said Act, for the executivB v/ould be in a better position to Judge the needs and exigenoies of the situation.

The preamble and the body of the sections clearly formulate the legislative policy and the details of that policy are left to be worked out by delegating them to the Central Government or the State Government or other subordinate officere or authorities within the framework of that polioy. The the executlve in the exercise of Legislature has in the preamble and the body of the Sections declared the policy of the law and the legal principle which is to guide and control powers under the provisions of the said Act or any Orders made under the said Act. That principle is the maintenance or jncrease in supply of essential cornmodities and securing their equitable distribution and availabiiity at fair prices. This is the objective indicated in the said Act and whenever the executive in exercise of its powers unaer the provisions of the said Act or any orders made under the said Act or any orders made under the said Act makes a classification, .propriety of the classification must bs tested in relation to that objective.

Whatever is done by the executive in in exercise of pursuance of or provisions of the said Act o any Ordei' made under the said and must derive its Act is ultimately traceable to the said its powers under ~Act sustenanoe and foroe from the said A.;t and must, ther&fore, be in conformit/ with the legislative policy or principle or objeotive formulated in the said Act. The classification made by the State in the present case must, therefore, in order to successfully meet the challenge of Article 14, bear a just and rational relation to the object sought to be achieved by the said Act, namely, the maintenance or increase in suppty of essential commcxJities securing equitable distribution and availability at fair prices. " 3^, Page16of63 (14) Applying the aforesaid law as has been lucidly enunciated by Bhagwati, J in the said judgment of the Gujrat High Court Ramanlal Nagardas and Others Vs. M.S. Patnitkar & another (supra), the Order 2004 has been made for achieving the objects mentioned in Section 3(1) of the Act and therefore the challenge to the Order 2004 under Article 14 of the Constitution in these writ petitions have to be c.xamined by reference to the objects mentioned in Section 3(1) of the Act.

If the ctassification made by the Order 2004 has no rational nexus with the said ubjects mentioned in Section 3(1) ofthe Act, the ctassification would be an urireasonable classification and would have to be struck down by the Court as ultra vires the Article 14 of the Constitution. On the other hand, if the classification made by the Order 2004 has a rab'onal nexus with the said objects mentionsd in Section 3 (1) of the Act, the classification has to be held as reasonable classification and not hit by the equal protection clause in Article 14 of the Constitution of India. Further more, as has been held by the Gujrat High Court in the aforesaid case whether the classification made by the Order 2004 can stand the test of Article 14 would depend upon various factors such as the background in which the Order 2004 has been issued and the nature and character of the commodities and business soughtto be regulated.

(15) For finding out the background in which the Order 2004 has been issued by the State Govemment of Chhattisgarh, we have to refer to the retum filed on behalf of the State Government of Chhattisgarh. It is stated in the said retum that before the commencement of the Scheme 2001, fair price shops could be allotted to Co-operative Socseties only, as per the provisions of the Madhya Pradesh Sarvajanik Nagrik Scheme, 1991. It is further stated in the return filed on behalf of the State Govemment that in the year 2001 the State Government decided to extend the Public Distribution System network but due to the financial constraints the Co-operative s:9'^. 345 Societies were not in a position to run the aciditional fair pricSe shops and hence a provision was made in the Scheme 2001 for allotment of fair price shops to private persons. After the allotment of fair price shops to private persons, however, the number of cases of irregutarities registered against fair price shops increased enormously.

Along with the return statements showing the number ofcases registered in the years 2001-2002, 2002-2003 and 2003-2004 against fair price shops run by Co-operative Societies and against fair price shops run by private peisons has been annexed as Annexure-R/1. We find from the said statemor.ts in Annexure-R/1 annexed to the return of. the State Government the total number of cases registered against fair price shops run by private persons and different agencies during the years 2001-2002, 2002-2003 and 2003-2004 are as follows: Year Private Persons Co-operative Societies Panchayat Upbhokta Bhandar 2001-2002 133 2002-2003 357 54 54 2003-2004 710 167 o o 1 28 1 16 Marketing Society o o 4 It will be clear from the figures indicated in the chart above that the number of complaints of irregularities against fair price shops run by private persons was 133 in the year 2001-2002, 357 in the year 2002-2003 and 710 in the year 2003-2004.

The aforesaid chart will a!so show that the number of complaints against fair price shops run by other agencies such as Co- operative Societies, Panchayat, Consumer Co-operative and Marketing Societies have been comparatively less. Thus, the number of complaints of irregularities against fair price shops run by private persons is not only much more than the number of complaints received against other agencies such as Page18of63 Co-operative Socieb'es, Panchayat, Consumer Co-operatives and Marketing Societies, but such number of complaints against fair price shops run by private persons have been increasing manifo!d year by year. (16) In the return filed on behalf of the State Government of Chhattisgarh it is also ststed that in Writ PeStion No. 196 of 2001, People's Union fbr Civil Uberties Vs. Union oflndia and others the Supreme Court has been monitoring the implementation of the Public Distribution System and other welfare schemes through its appointed Commissioners and by order dated 2 of May 2003 the Supreme Court has directed that the licences of fair price shop keepers be cancelled if they do not keep their shops open throughout the month during the stipulated period, fail to provide grain to BPL and Antyodaya families sfrictly at fixed rates ar.d no higher, keep the cards of BPL households with them, make false entries in the BPL and Antyodaya cards, engage in black marketing, siphon away of grains to the open markets hand over such ration shops to other perso,''is/functionaries, or BPL and Antyodaya are not supplied food grains as pertdeir entitlement.

It is further stated in the retum that Mr. Biraj Patnaik, State Advisor to the Commissioner appointed by the Supreme Court made extensive visits throughout State, interacted with the beneficiaries and thereafter submitted a report to the Commissioner appointed by the Supreme Court and the Commissioner appointed by the Supreme Court sent a comrriunication dated 20/04/2004 to the Chief Secretery, Govt. of Chhattisgarh, mentioning therein that advisor has hightighted several irregularities in ;hc* implementation of mid-day meal and Tribal Development Projects CTDPs). The relevant portion of the report dated 03/04/2004 of the Advisor of the Commissioner, Mr. Biraj Patnaik regarding the Public Distribution System in the State of Chhattisgarh is reproduced herein below: •p < *?/ ' d<r / Page19of63 "Public Distribution Svstem: The situation with regard to the PDS is cjistressing in the entire district and as the reports that 1 hsl/e enclosed as annexures reflect a breakdown of the systeni due to lack of 1 had in my earlier reports and in my pereonal monitoring. briefings appraised you about the positive steps which the State Government had taken including the creation of a food security fund and the increase in the subsidy given to the lead societies and commission to the PDS shops.

While [hat unless the welcoming this, 1 had however cautionec! governance issues in the districts are addressed, progressive step would have minimal impact. The situation in Manendragarh is a testimony of this failure. I am enclosing the complaints and a set of affidavits that 1 have received with regard to the PDS shops in the panchayats - Ghagra, Charwahi, Badkabehera, Tarabehera, Kachhod, Garudol, Pendri and Biharpur. Mahai, Kelua, It is clear from the aforesaid extract on the Pubiic Distribution System in Manendragarh Block of Korea district that in Manendragarh Block Public Distribution System had broken down and this finding of the Advisor was based on complaints and the set of affidavite that the said Advisor had received with regard to the PDS shops ii) Ghagra, Charwahi, Kelua, Badkabehera, Mahai, Tarabehera, Kachhod, Garudol, Pendri and Biharpur Panchayats. The copies of the said complaints and afRdavits have also been annexed to the retum along with Annexure-R/6 and a reading of the said ^•'fc complaints and afRdavits would show that lot cf irregularities were being committed by the fair price shops. -The aforesaid report relates to Manendragarh Block of Korea district but'was 3 sample before the State Govemment as to how badly the fair price shops were being run.

In paragraph 38 of the retum it is stated that the State Government received information that there are flagrant violation of the terms and conditions of the grant as well as other provisions of the Scheme and the fair price shop owned by private individuals were opened we!! ager the appointed time and 1E 34£ closed well before the appointed time and the consumers are finding it difficult toobtain their rations and further that individual private shop keepers do not maintain sufficient stocks and siphon away the food grains of the fair price shops to shops of traders. It is.this unhappy experience of allowing individual private persons to run fair price shops in the State of Chhattisgarh during the years 2001-2002, 2002-2003 and 2003-2004 which had prompted the State Govemment to exc'rde private persons altogether from running fair price shops under the Order 2004. Section 3(1) read with the order of delegation under Section 5 of the Act enables the State Government to make an order for securing the equitable distribution of any essential commodity and their availability at fair prices and a plain reading of the Order 2004 also shows that the object of ffie Order 2004 is to distribute foodstuffs and other essential commodities to ration card hotders through fair price shops under Public Distribution System and if the experience in the State of Chhattisgarh is that the aforesaid objeet cannot be achieved through fair price shops owned by private persons, exciusion of private persons from running fair price shops under the Order 20C4 has rational nexus with the object sought to be achieved by the Act as well as the Order 2004.

The contention of the petitioners, therefore, that the classification in the Order 2004 excluding pnvate persons altogether from running fair price shops while allowing other agencies specified therein to run the fair price shops is unreasonable and is hit by Article 14 of the Constitution has no merit. (17) In Ramanlal Nagardas and Others Vs. M.S. Palnitkar & another cited by Mr. Prashant Jayaswal, the State has decided as a matter of policy to entrust wholesale distribution of sugar to Co-operative Societies to the exclusion of other licence-holders and this decisionof the State was challenged by the petitioners in that case "n the ground that it was discriminatory and violative of the equal protection clause of Article 14 of the Page21 of63 Constitution. The contention of the petitioner in the said case was that the classification of licence-holders into those who are Co-operative Societies and those who are not for the purpose of whc-lesale distribution of sugar was unrelated to the policy or object of the Act.

The ciassification was sought to be justified in that case in the reply filed by thr:; Collector on the ground that the State had decided to entrust wholesale distribution of sugar to Co- operative Societies to the exclusion of other iicsnce-holders in order to put the distribution of sugar on more satisfactory basis and to promote and encourage the work of Co-operative Societies. The Supreme Court held that the promotion and encouragement of the work of Co-operative Societies cannot afford a reasonable basis for classification as it would have no nexus with the policy or object of the Act which is to maintain or increase supplies of sugar and to secure its equitable distribution apd availability at fair prices. The Supreme Court also held that putting dsstribution of sugar on more satisfactory basis may afford a reasonable basis for classification, but the State had not indicated to the Court in the offidavit as to how.and in what manner the wholesale distribution of sugar through the Association formed of the licence-holders was unsatisfactory and how and in what way it will put the distribution of sugar on more satisfactory basis if it is entrusted only to Co- operative Societies to the exclusion of other licence-holders.

The Supreme Court in particular held that the State had not placed any facts before the Court on the basis of which it could be said trict wholesale distribution of sugar would be put on more satisfactory basis by entrusting it to Co- operative Societies in preference to other license-holders. in the present case, on the other hand, the State in its return has given facts and figures to show that the whole experiment of entrusting fair price shops to private owners during the yeare 2001-2002, 2002-2003 and 2003-2004 has not been at all happy and there have been large number &f complaints by ration card m' "^s^" •;?'!'' S^tt- 5C holders of irregularities committed by fair piice shops ownsd by private persons. The facts of the present case, the?efore, are distinguishable from the facts of the aforesaid decision of the Gujrat High Court in Ramanlal Nagardas and Others Vs. M.S. Palnitkar & another (supra).

The exclusion of private persons from running fair price shops in the facts of the present case has a rational nexus with the object of Section 3 (1) of the Act as well as the Order 2004 namety, the distribution of foodstuffs and other essential commodities in equitable manner at fair prices to ration card holders. (18) For the aforesaid conclusion, we firi.i support in the judgment of the Supreme Court in Madhya Pradesh Ration Vikreta Sangh Society and others Vs. State of Madhya Pradesh and others (supra). The facts ofthat case are that the M.P. Foodstuffs (Distribution) Control Order, 1 £80provided running of fair price shops through retai! dealers and the State Government of Madhya Pradesh on 31 of October, 1980 amended the said Control Order by deleting the provisions relating to running of fair price shops ^"^ K' through retail dealers and providing for running ihs fair price shop s under a Govemment scheme.

On 20th of March 1981 the State Goverhment promulgated the ^4.P. (Foodstuffs) Civil Supplies Public Distribution Scheme, 1981 under which preference was to be given to Co-operative Societies in appointment of agents for running fair price shopc. The M.P. Ration Vikreta Sangh Society and others challenged the said piovision of the scheme for giving preference to Co-operative Societies on the ground that the same was violative of Article 14 of the Constitution of India. The Madhya Pradesh High Court upheld the said provision in the M.P. (Foodstuffs) Civil Supplies Public Distribution Scheme, 1981 for giving preference to consumer Co-operative Societies in appointment as agents for running fair price shops. The judgment of the Madhya Pradesh High Court war- chsllenged by M.P. Ration Vikreta Sangh Society and others before the Supreme Court and the ®. 351 Supreme Court rejected the challenge under Article 14 ofthe Constitution of India with the following reasons: "We have given a brief outline of the impugned scheme and it cannot be said that it suffers from grbitrariness or irrational to the object sought to be achieved.

The State iook a responsible Government after due deliberation, decision to run the fair price shops djrecity being satisfied it was necessary to do with the objeut 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 Ste.te Government by executive action under Art. 162 of the Constitution with a view to ensuring equitable distribution of foodstufl's 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 afid had become wholly unworkable due to flagrant violations of the provisions of the Control Orcler by the retail dealere. The action of the State Government in entrusting the distribution of foodstuffs to consumers' co-operative societies, though drastic, was an inevitable step taken in the interests of the general public.

The State Government was not bound to Qive the fair price shops to the retail dealers under a Government soheme. The governmental aotjon in giving preference to consumers' co-operative societies cannot be construed to be arbitrary, irrational or irrelevant. " It will be clear from the aforesaid decision of the Supreme Court that once the Court found that the system of distribution of foodstuffs through appointment of retail dealers was an utter faiiure and had become wholly unworkable due to flagrant violations of the controi order by retail dealers, the Court held that the action of the State Gcvsrnment in entrusting the distribution of foodstuffs to consumers' co-operaSve societies could not be said to be arbitrary or irrational or unrelated to the object sought to be achieved. In the present case, as we have seen, the experimeni of allowing private persons to run fair price shops has been an utter failure inasmuch as complaints had been received in large numbers from the ration card-holders against the private persons who run the fair price shops and such complaints are growing every year duringthe years 2001-2002, 2002-2003 and 2003- 2004 and for this reason the State Government had in the Order 2004 decided not to entrust the running of fair priw shops to individual private persons and instead to other agencies specified in the Order 2004.

The exclusion of individual private persons from running fair price shops in the Order 2004 cannot in the facts and circumstanses of the case be held to be % arbitrary, irrational or unregisonable. :»< (19) The contention of Mr. Kanak Tiwari, learned Sr. Advocate, for the petitioner, however, is that under the Madhya Pradesh (Foodstuffs) Civil Supplies Public Distribution Scheme, 2001 private persons were not altogether excluded from running fair price shops but preference was to be given to consumer co-operatives for running fair price shops and this would mean that in any area if consumers' co-operai've society is not available to run a fair price shop or the consumers' co-operative society refuses to run a fair price shop an individual private person can be allowed to run the fair price shop by the State Government. He sybmitted that such a provision would not be arbitrary but would be reasonab!~> and thus would not be hit by Article 14 of the Constitution.

As we have ?ound above, during the years 2001-2002, 2002-2003 and 2003-2004 a !arge number of complaints of irregularities against fair price shops owned by private persons from the ration card-holders have been received and such complaints have been growing in number every year and on thess facts, is for the State Govemment to decide as to whether preference is only to be given to Co- operative Societies and other agencies to run fair price shops and entrust such fair price shops to private individuals in .irsas where such Co-operative 353 Page25of63 Societies or other specified agencies are not available or whether altogether prohibit allotment of fair price shops to the private individuals. This decision to give preference to Co-operative Societies or to aitogether discontinue running of fair price shops by private individuals is a policy decision within the domain of the State Govemment.

Once we have found that the classification in the Order 2004 in between private persons, on the one hand, and Co-operative Societies & othsr agencies specified in the Order 2004, on the other, has a rational nexus with the object sought to be achieved by Section 3 (1) of the Act as well as the Order 2004 namely distribution of foodstuffs and in particular esseniial commodities at fair prices to the ration card-holders, the Court will have to uphold the classification as valid and reasonabte and not violative of Articla 14 of the Constitution and it is not within the domain of the Court thereafter to suggest that instead of excluding private persons altogether from ru.'ining fair price shops only preference should have been given to Co-operative Societies and other agencies specified in the Order 2004 for running fair price shops individua! private persons could also be considered for allotment of fair price shops wherever such Co-operative Societies and other specified agencies were not willing to run fair price shops or were not available.

The decision in this regard, in our considered opinion, can that be of the Legislature or the Govemment and not of the Court. In State of West Bengal Vs. Anwar Ali Sirkar and another, AIR 1952 SC 75 cited by Mr. Prashant Mishra, Bose, J observed in para 83: This, however, does not mean that judges are to determine what is for the good of the people and substitute their individual and personal opinions for that of the govemment of the day, or that they may usurp the functions of the iegislature. That , is not their province and though there must al'-vays be a narrow '.vill always be margin within which judges, who are human, jnfluenced by subjecth/e factors their training and their tradition r / It is, and what results whatever makes the main body of their decisions speak with the same their personal is the function of voice and reaoh impersonal predilections or their individual backgrounds the legislature alone, headed by the governrnent of the day, determine what is not, good and proper for the people of the land; and they must be given the widest latitude to exercise their functions within the ambit of their powere, else all progress is barred.

But, because of the Constitution, there are limits beyond which they cannot go and even though it falls to the lot of judges to determine where those limits iis, the basis of their decision cannot be whether the Court thi.-ii's the law is for the benefit of the people or not. Class of this type must be decided solely on the basis whether the Constitution forbids it. " (20) We may now deal with the novel argument of Mr. Rajesh Pandey, learned counsel for the petitioner that the classification in the Order 2004 is inconsistent with the socialist goals set out in the Preamble and the Directive Principles enumerated in Part IV of th®Constitution inasmuch as it excludes private persons to earn their livelihood by running fair price shops and for this reason the Order 2004 is violati\'s of the right to the equal ^.L' protection of law under Article 14 of the Con-stitution. In support of the submission, he relied onthe following observations of Chinappa Reddy, J in Atam Prakash Vs.

State of Haryana and others (supra): is that we seek to "Whatever article of the Constitution it interpret, whatever statute it js whose constiti.'tional validity is sought to be questioned, we must strive to give such an interpretation as will promote the march and progress towards a Socialistic Demooratic State. For example, when we consider the question whether a statute offends Article 14 • the Constitution we must also oonsider whether a the legislature may have made is classification that oonsistent with the socialist goals set out ir! the Preamble and the Directive Principles enumerated ir' Part IV of the Constitution. A classification which is not Constitution is per se unreasonable and cannot be !i'i tune with the permitted. " Fir(.... Page27of63 In the aforesaid observations Chinnappa Reddy, J has held that when we consider the question as to whether the statute offends Article 14 of the Constitution, we must also consider whether a classification that legislature may have made is consistent with the socialist goals set out in the Preamble and the Directive Principles enumerated in Part !V. The Preamble the Constitution seeks "to secure to al! its citizens" justice, social, economic and political.

The expression "al! ics citizens" in the preamble of the Constitution means not onty the private persons running fair price shops but also the ration card-hoiders under the Ord^r 2004 including persons or families below the poverty line and Antodaya families (the poorest families identified by the State Government) and destitute families. Hence, social and economic justice in the Preamble of the Constitution would mean that essential commodities and in particular foodstuffs are distributed to such ration card-holders at fair prices and not at prices beyond their reach. The Directive Principle in Articie 47 of the Constitutiyn mandates that the State shall regard the raising of the level of nutrition and ;he standard of iiving of its people as among its primary duties. Hence, it is psri ofthe duty ofthe State to ensure that the foodstuffs and other essentiai commodities are made available to the people at fair prices and not at pnces beyond their reach.

If the State Government has found that during thc i:hree years from 2001 to 2004 a large number of complaints have been recejved of irregularities and malpracbces adopted by the fair price shops owned by private persons and such complaints have been growing in.number year by year, the State Govemment was justified in providing in the Order 2004 that private persons will not be allowed to run fair price shops as agents of the State Government and such a provision in the Order 2004 would be consistent with the socialist goals in the Preamble of the Constitution and such a classification in the .•.. '? c; Order 2004 excluding private persons from running fair price shops would not be violative of Article 14 of the Constitution. (21) The contention of Mr. Manindra Shrivastava, Mr. Rajesh Pandey, Mr. Rajeev Shrivastava, Mr. Yash'.vant Tiwari and Mr. Sudhir Verma, however, is that the data given by the State Government in its retum as well as Annexutre-R/4 relating to number of cases registered against fair price shops run by private persons and fair price shops run by Co-operative Societies and other agencies should not bs relied upon by the Court as the said data does not disclose the total number of fair price shops owned by private persons and the total number of fair price shops owned by Co- operative Societies and other agencies and in the absence of figures of the total number of fair price shops owned by private persons and the total number of fair price shops owned by Co-operative Societies, it is difRcult for the Court to find out as to what proportion of fair price shops in either category have resorted to malpractices and irregularities.

This contention overlooks the law laid down by the Apex Court in a series of the decisions including Mohd. Hanif Qureshi and others Vs. State of Bihar quoted above that there is always a presumption ;p. favour of the statute and the burden is upon him, who attacks it to show that there has been a clear violatjon of the Constitution and that the Courts must presume that legislature understands and correctly appreciates the needs of its own people and that its laws are directed to problems made manifest by experience and that its discriminations are bases on adequate grounds. We must presume, therefore, that the State Government while making the Order 2004 has correctly understood and appreciated the failure of the public distribution system through fair price shops run by private persons and has accordingly made the Order 2004 excluding such private persons from running fair price shops through which essential commodities and in 35'; particular foodstuffs are to be distributed to the ration card-holders.

If the data furnished in the return ofthe State Government as well as in Annexure- R/1 on which such understanding and appreciation of the State Government was based was incomplete or incorrect, onus was on the petitioners to furnish additional data before the Court ar.d rebut the presumption of constitutionality in favour of the Order 2004. On whatever materials have been placed before us by the State Government in its reply as well as Annexure-R/1, we have no doubt in our mind that exclusion of private persons from running fair price shops and the Order 2004 cannot be held to be discriminatory and violative of Article 14 of tne Constitution. (22) Mr. Kanak Tiwari learned counsel for the petitioner in Writ Petition No.1397 of 2005 which is a coniiumer Co-operative Society submitted that Sub Clause (3)(a) of Clause 9 of the Order 2004 provides that allotment of fair price shops in ITDP areas shall be done in order of priority to the following agencies: (i) (ii) Large Aadim Jati Multipurpose Co-operative Societies (LAMPS).

Gram Panchayats (iii) Women's Self help groups (iv) (v) (vi) Primary credit co-operative societies Forest protection committees- Other co-operative societies, He submitted that similarly Sub clause 4 (a) 01" Clause 9 of the Order 2004 provides that allotment of fair price shops in oiher areas shall be in order of priority to the following agencies: (i) (ii) Gram Panchayats Women's Self help groups 35? (iii) (iv) Primary credit co-operative societies Other co-operative societiss He submitted that consumer Co-operative Societies fall under the category "other Co-operative Societies" and have thus been placed at the bottom of the priority list for allotment of fair price shops both in ITDP areas and other areas. He submitted that Sub-clause 3(b) of Clause 9 provides for allotment of only 10% of the shops to other Co-operativs Societies in ITDP areas and for giving top priority to Co-operative Societies of ex-sen/iceman Co- operative Societies and also 33% reserv'ation for Forest Protection Committees and Women's Self help groups.

He pointed out that similarly Sub-clause 4(b) of Clause 9 of the Order 2004 provides for reservation of 33% of the fair price shops in other areas for Women's Seif help groups or other Co-operative Societies run by women and for allotment of fair price shops to Co-operative Societies of ex-servicetiian on top priority basis. He vehemently argued that these provisions have been made in the Order 2004 by the State Govemment mechanically following the recommendations of Mr. Biraj Patnaik, State Advisor to the Commissioner appointed by the Supreme Court, without any application of mind as to whether such resen/ation and SiK priority is permissible under Article 14 of the Ccnstitution. He submitted that the object of Section 3 of the Act and the Order 2004 is to distribute essential commodities at fair prices to ration card-holders and in particular to ensure food security to atl vulnerable citizens in the Sfate of Chhattisgarh and the Madhya Pradesh High Court in Madhya Predesh Ration yikreta Sangh, Jabalpur and others Vs.

State of Madhya Pradesh, Bhopal and others, ^' AIR 1961 MP 203, as well as in Sarkari Sasta Anaj Vikreta Sangh, Tehsil Bemetra and others Vs. State of Madhya Pradesh and others, AIR 1981 SC 2030, the Madhya Pradesh and the Suprerne Court, respectively, have upheld the Madhya Pradesh Food-stuffs (Civi! Supply Distribution) Scheme 5C Page31 of63 (1981) providing for giving priority to consum&f Co-operatives in the matter of allotment of fair price shops. But this position of law has been ignored altogether the State Government , while accepting recommendations of Mr. Biraj Patnaik. He su&rnitted that the petitioner being a consumer Co-operabve is apprehensi'.'e! that on account of such reservations and priorities made in Clause 9 of the Order 2004 the petitioner will not be allotted any fair price shop. In this context he submitted that in M.P. Ration Vikreta Sangh Society and others Vs. State of Madhya Pradesh and others (supra) the Supreme Court has further held that there can be no quarrel with the principles laid down in the Airport Authon'ty case (AIR 1979 SC 1628) that if the governmental action disclosed arbitrariness, it would be liable to be invalidated as offendirifl against Article 14 of Constitution.

He submitted that the provisions in Clause 9 of Order 2004 giving priority and making reservations in favou? of the Women's Self Help Groups, Forest Protection Committees, Co-operative Societies of ex- servicemen are absolutely arbitrary and have nc nexus whatsoever with the object sought to be achieved by Section 3 of the Act as well as the Order

2004. Mr. Tiwari also referred to the provisions of Chhattisgarh Co-operative Societies Act, 1960 to show that only LAMPS and consumer Co-operatives are authorized to sell essential commodities in fair price shops and that the Primary Credit Co-operative Societies are not authorized under provisions of the said Act to sell essential commodities at fair prices. (23) Mr. Prashant Mishra, learned Additional Advocate General, on the other hand, submitted that it is for the legislaturs and the Government to choose the agencies which are to be allotted fair price shops for selling the essential commodities including foodstuffs to the rgt'on cardholders and if the State Government has in the Order 2004 decided as to which of the ageneies •- 3 6 C should be allotted fair price shops and on what priority, the Court should not interfere with the choice of such agencies in the Order 2004. (24) Mr. Prashant Mishra is right that it is for the Government and the legislature to choose the agencies which are to be allotted fair price shops for selling the essential commodities including foodstuffs to ration cardholders, but such power of the legislature and the Government to choose the agencies is subject to Article 14 of the CGnstitution.

Articte 14 of the Constitution provides that the State shall not deny to any person equality before the law or the equal protection of the laws. Hence, the State Government while making an order under Section 3 of the Act may choose the persons, natural or legal, which are to by allotted fair price shops in seliing essenb'al commodities including foodstuff? to ration cardhalders, but it cannot discriminate between such persons. If has, however, been held by the Supreme Court that Article 14 forbids class l&aislation but does not forbid reasonable classincation and that in order to pass the test of permissible classification two conditions must be fulfilled (i) the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out from the group and (ii) such differentia must have a rational nexus sought to be achieved by the legislature.

The obj'ect sought to be achieved by the Order 2004 is to distribute essential commodities including foodst'iffs at fair prices to ration cardholders. There is no material placed before ;;:e Court to show that this object can be better achieved by fair price shops run by the LAMPS, Gram Panchayats, Women's Self Help Groups, primary credit co-operative societies, Forest Protection Committees than thoso run by Consumer Co- operative Societies categorized under "Other Co-operative Societies. Thus, there is no reason for giving priority to LAMPS, Gram Panchayats, Women's Self Help Groups, primary credit co-operative societies and Forest Protection ^ ^"^1''- .^^- Vie' "- 36} Committees over Consumer Co-operative Societies falling under "Other Co-operative Societies" in the motSer of allotment of fair price category shops either in ITDP areas or other areas. There is, therefore, no rational basis for the classification of the agencies meritioned in Sub-clause (3)(a) of Clause 9 and Sub-clause (4) (a) of Clause 3 of the Order 2004 for the purpose of giving priority in the matter of allytrnent of fair price shops.

The classification made in the said Sub-clauses (3)(a) and (4)(a) of Clause 9 of the Order 2004 of the agencies for the purpose of giving priority in allotment of fair price shops is thus unreasonable and t'ne provision regarding priority in the said Sub-clause (3)(a) and (4)(a) of Clause 9 of the Order 2004 is thus discriminatory and viotab've of Article 14 of the Constitution. Similarly, there is no rational basis for providing in Sub-clause (3)(b) of Clause 9 for giving priority to Co-operative Societies of Ex-serviceman and for providing 33% reservation for Forest Protection Committees ai-.'! Women's Sslf Help Groups in Sub-clause (3)(b) of Clause 9 and Sub-ciause 4(b) of Clause 9 of the Order 2004 as no material has been placed b&t'ore us to shov/ that the Co- operative Societies of Ex-serviceman or Forest protection Committees and Women's Self Help Groups can achieve the ob|ect of distribution of essential commodities including foodstuffs at fair pricss to ration cardholders better than the Consumer Co-operative Societies faSSing under "Other Co-operative Societies".

In our considered view the s&ecified agencies are to be considered for allotment of fair price shops without any priority or reservation in favour of any category of specified agenci.as and the only consideration that should weigh with the authorities for mai; ing the allotment of fair price shops in any area should be as to which spr-cified agency would be able So best achieve the object of Section 3 of Lhe r:::: and the Order 2004 namely distribution of essential commodities includir; gfoodstuffs at fair prices to the ration cardholders. The provisions in Sub-ciarses (3)(a) & (3)(b) and (4)(a) & 35 (4)(b) of Clause 9 of the Order 2004 providing for priority amongst specified agencies and reservation in favour of some of specified agencies are liable to be struck down as ultra vires Articie 14 of the Constitution. (25) The power to make legislation under Section 3 read with Section 5 ofthe Act is also subject to the law that may be enforced.

Section 2 ofthe Chhattisgarh Co-operative Societies Act, 1960 contains definitions of the different types of Co-operative Societies and a reading of the different provisions of Section 2 defining different types of Co-operative Societies would show that different types of Co-operative Societies have been defined keeping in mind the object for which the Co-operative Societies are formed. Section 10 (1) of the said Act further provides that the Registrar shall classify all societies under one or more of the heads mentioned therein and Section 10(1-a) further provides that the Registrar may further classify the societies falling under any of the heads specified in sub section (1) as Apex Society, Central Society or Primary Society. Section 31 of the said Act also provides the registration of the Co-operative Society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal, and with powsr to hold property, enter into contracts, institute and defsnd suits and other legal proceedings and to do all things for the purposes for which it was constituted.

Hence, unless a Co- operative Society is constituted with the objsct of distributing or selling essential commodities to its members and to other people in the area, and is registered and classified as such under the said Act, such a Co-operative Society will not be authorized under law to distribute or sell the essential commodities at fair price shops to the ration cardholders. Sub clause (3) and (4) of Clause 9 of the Order 2004 provide for aliotment of fair price shops to primary Credit Co-operative Societies and othor Co-operative Societies even though primary Credit Co-operative Societies and some of the other Co-

36.^. operative Societies are not authorized as per tn° provisions of the said Act to carry on the activity of distributing orselling essential commodities to ration cardholders and to that extent are illegal. (26) Mr. Kanak Tiwari, learned counsel for the petitioner further submitted that in sub-Clause 3(c) of Clause 9 of the Order 2004 a provision has been made that sales persons of all fair price shops operating in ITDP areas shall be appointed from the BPL families of local tribal communities and sub-Clause 3(d) of Clause 9 of the Order 2004 provides that 33% of all salespersons in ITDP area should be tribat women. He pointed out that similarly sub-Clause (7) of Clause 9 of the Order 2004 provides that the Scheduled Caste and Other Backward Caste have to be given priority jn making appointments of sales person and at least 33% of all the sales persons have to be women and 10% have to be disabled.

Hs vehemently argued that the fair price shop owner is the empioyer of the sales persons for the fair price shops and the State Government cannot by an order made under Section 3 of the Act force the employer to employ tribal women, Scheduled Caste persons, Other Backward Caste persons and disabled persons as salesmen in the fair price shops. He submitted that in any case such provisions for employing all sales perscns of fair price shop in ITDP area from among the BPL families of local tribal communities and all sales persons of fair price shops in other areas from amongst Scheduled Caste and Other Backward Classes are contrary to the law laid down by the Suprenie Court that there cannot be 100% ressrvation in employment favour of Scheduled Caste, Scheduled Tribe and Other Backward Class. In support of this submission, he cited the decision of the Supreme Court in Indra Sawhney Vs. Union of India, 1992 Supp.

(3) SCC 217. t w:^i: % K »: K 'ss'-: %•' W-. ^c~: (27) Mr. Prashant Mishra, learned Additional Advocate General, on the other hand, submitted that the objective of the provisions in said sub- Clauses (3), (4) and (7) of Clause 9 of the Order 2004 for employing sales pereons from among the BPL families of loca! ii'ibal communities, Scheduled Caste community, OBC. community, women and disabled persons is not to make any reservation in their favour in empjoyment but to ensure that the interest of tribals, Scheduled Caste, OBCs. women and disabled are protected while operating the public distribution system. (28) The Government may make provisions in the Order 2004 for employing sales persons from BPL families, Scheduled caste community, OBC community, women and disabled persons so that the interest of these vulnerable sections of the society are protected while operating the public distribution system, but such provisions in the Order 2004 cannot be discriminatory andviolative of Article 14 ofthe Constitution.

We find it difficult to accept that employment of any sales persons in an ITDP area who does not belong to the trihal communities and of any sales person in other areas who does not belong to the Scheduled Caste or OBC communities would be detrimental to the operati'on ofthe public distribution system in the ITDP or other areas. Jeevan Reddy, J has held in Indra Sawhney Vs. Union of India (supra) thatthe principal aim of Articles 14 and 16 ofthe Constitution is equality and equality of opportunity and that clause (4) of Article 16 is a means of achieving the very same objective. Paragraphs 808, 809 and 810 of the judgmentof Jeevan Reddy, J which are ,'elevant are quoted herein below: "808. It needs no emphasis to say that ihe principal aim of Articles 14 and 16 is equality and equality qf opportunity and that clause (4) of Article 16 is but a means of achi'eving the very same is a special provision - though not an objective.

Clause (4) exception to clause (1). Both the provisions ha'/e to be hannonized keeping in mind the fact that both are but ti'e re-statements of the principle of equality enshrined in Article 14. The provision under Article 16(4) - conceived in the interest of certain sections of society - should be balanced against the guarantee of equality enshrined in clause (1) of Article 16 which js a guarantee held out .t is relevant to point out to every' citizen and to the entire society. that Dr. Ambedkar himself contemplated reservation "confined to a minority of seats" (See his speech in Constituent assembly, set out in para 693). No other mernber ofthe Constituent It is, thus, clear that reservation of assembly suggested otherwise. a majority of seats was never envisaged by the Founding Fathers. Nor are we satisfied that the present context requires us to depart from that concept.

From the above discussion, the irresistible oonclusion that follows is that the reservations oontemplated in clause (4) of Article 16 shoukJ not exceed 50%.

While 50% shall be the rule, it is necessary not to put out of consideration certain extraordinary situations inherent in the It might happen that great diversity of this oountry and the peop'e. in farflung and remote areas the population inhabiting those areas might, on account of their being out of the .mainstream of national life and in view of conditions peculiar to and characteristical them, need to be treated in a different way, some relaxation in this In doing so, extreme caution is striot rule may become imperative. to be exereised and a special case made out. " Even though employment under the fair piice shops owned by private agencies and not State agencies may not be covered under Article 16 of the Constitution, any provision made by the State for employment of sales persons in fair price shops run by private or state agencies under the public distribution system of the State Government cannot be discriminatory and -4^,'^ violative of Article 14 of the Constitution.

Licensing: - (1) The procsdure for issue 'of licenses or authorization to ihe fair price shops for the distribution of essential commodities under Public Distribution System and responsibillties of the fair price shop owners shall be as per paragraph 5 of the Arinexe to this Order duties Annexe TO THE PUBLIC DISTRIEUTION SYSTEM (CONTROL) ORDER, 2001

Ucensing: - State Govemments shgli under section 3 of the Act for regulating the sale and issue an ordsr distritiution of the essentiat oommodKfes. The llcenses to the fair price shop owner shall be issued under the said lay down and the duties responsibilities of the fair price shop owner. The responsibilities and duties of fair price shop owners shall include, interalia: (i) sale of essential commcxjr'ies as per the entitlement of ration card holders at retail issue prices fixed Py' State Government fhe concerned the Public Distnbution System: (ii) display df information cn a notice at a prominent place in the shop on daily basis regarding (a) (b) (c) (d) (e) (f) (g) (h) BPL Antodaya beneficiaries, entitiement oi' essential commodities, scale of issue, retail issue prices, timings of opening and closing of the fair price shop, essent;y.l commodities received during the month opening closing essential commodities and authority redressal grievances/lodging somplaints with to quality a;-id quantity of respect essential commodities under Pt.blic Distribution S'/stem; (iii) maintenance of records of ration card holders (APL, BPL and Antyodaya), stock register, issue or sale register; (iv) furnishing copies specified documents, namely, ration uard register, stock register, sale register ;o the office of the Gram Panchayat or Ndgar Palika or Vigilance Committee or ar^i other body authorized by State Governments for the purpose; \ .•-. 378 (v) (vi) fsodgrains being display of samples of supplied through the fair c'ise shop; production of books and records relating to the allotment and distribution of essential commodities to the inspeciing agency and furnishing of such inforrngtion as may be called for by the designated authority; (vii) accountal of the actuaj distribution of stock at the end of essential commodities and the balance the month to the designated authority oi the concerned State Government with a uopy to the Gram (viii) Panchayat; opening and closing of the fair price shop as per the prescribed timings displayed on the notice board.

(39) In reply, Mr. Prashant Mishra. iearned Additional Advocate General submitted that the Order 2004 is not an order under sub-Section (2)(c) and (d) of Section 3 of the Act but is an order under sub-Section (1) of Section 3 of the Act for distribution and sale of sssential commodities at fair prices through fair prices shops and hence no prior concurrence of Central Government was required before msking the Order 2004. He submitted that sub-Section (2) (c) of Sectioii 3 of the Act provides for an order for controlling the price at which any essential commodity may be bought or sold, but the Order 2004 does not make any pro'/ision for conlrolling the price at v.'hich any essential comr;K>dities a;s bought or sold. He further pointed' out that sub-Section 2 (d) o';' C-.'ction 3 of ihe Act provides for an order for regulating by licences, permits or other',vise tiansport of any essential commodity.