Madan Mohan Chaturvedi vs State Of U.P. Thru. Secy. Food And Civil Supplies

1. Heard learned counsel for the petitioner, learned Standing Counsel for the State-respondents as well as Sri Mukul Kumar Sharma, learned counsel who had filed his caveat on behalf of Rajnish Kumar.

2. Under challenge is the order dated 27.03.2018 whereby the appeal preferred by the petitioner against the order dated 05.07.2016 by virtue of which the fair price shop agreement executed in favour of the petitioner has been cancelled and set aside.

3. The submission of learned counsel for the petitioner is that on the basis of an alleged telephonic complaint, it is alleged that the State-respondents allegedly made some inspections and inquiries and found that the petitioner was indulging in malpractice regarding distribution of food-grains.

4. It is urged that no rules or the procedure as prescribed in the Government Order dated 29.07.2004 have not been followed nor any opportunity of hearing was granted. Only on the basis of conjectures, the order impugned dated 05.07.2016 was passed by the respondent no. 3.

5. The petitioner preferred an appeal and even the Appellate Court who did not enter into the issues which were raised by the petitioner rather in a mechanical manner and without adverting to the material available on record, has dismissed the appeal.

6. It is urged that it was a specific case of the petitioner that no proper inquiry was held. There was no complaints and in a shoddy manner, the entire proceedings have been done only to cause prejudice to the petitioner whose fair price shop license/agreement was cancelled and there was no material on record even before the Appellate Court upon which a satisfaction could have been 2 WRIC No. 19918 of 2018 recorded that the procedure as contemplated in law had been followed and thus even the appellate order is bad.

7. The learned Standing Counsel while refuting the aforesaid submissions has referred to the counter affidavit and specifically taken the Court to the paragraphs 4 and 5 of the counter affidavit to suggest that several card holders have levelled charges. Their statements were recorded and by following the procedure as provided in law, it was found that the petitioner had committed illegalities while distributing the food-grains and as such the order impugned does not suffer from any material error which may persuade this Court to interfere.

8. Having considered the aforesaid submissions and from the perusal of the material on record, at the outset it may be noticed that this Court had the occasion to consider the entire scheme of the fair price shop licenses as well as the manner in which the inquiries are to be held and dealt with. In a Division Bench decision in Shankar Prasad v. State of U.P. and others; MANU/UP/3630/2021, this Court has noticed the issue regarding the enquiry to be held and it was held as under:- “42. The efforts made by the Government from time to time is clearly to establish an accepted procedure and manner in which the enquiries regarding suspension/cancellation of a fair price shop is to proceed. In the aforesaid context, it would be seem that the Full Bench in Puran Singh (supra) has clearly held that the fair price shop licenses are not akin to the right by doing business as protected under Article 19(1)(g) of the Constitution of India and noticing the provisions of the Government Order of July 2004 where there is an elaboration regarding issuance of a show cause notice which must contain the material and findings surfaced in the preliminary enquiry to enable the licensee to know the charge against him so that he can reply to the same which sufficient particularity. It also contemplates the conclusion of the enquiry within a period of one month and it is incumbent upon the competent authority to give its decision by a speaking order. It is in this context that the Full Bench used the word full fledged enquiry specifically relating to Clause 4 and 5 of the Government Order of July 2004.

43. The process of grant of opportunity of hearing and holding a fair and just enquiry is inbuilt in the provision of Government Order dated 29th of July, 2004. With the advent of the Government Order of October 2014 and December 2015 as noticed above. It further 3 WRIC No. 19918 of 2018 clarifies the position that the licensee must be made aware of the violation and irregularities which have been found, upon which it is proposed to move against the licensee, either for suspension or cancellation so that he can place his reply with sufficient particularity which must be decided by a speaking order and order- sheet of the proceeding is also to be maintained scrupulously to bring in transparency and fairness in the enquiry so held.

44. Rules of natural justice are not rigid or immutable rules and they are not to be applied in a straight-jacket formula rather these are rules which are flexible to meet the exigencies of a situation. The Apex Court in the case of A.S. Motors Private Limited v. Union of India and others, (2013) 10 SCC 114 in Paragraphs 7 and 8 in reference to cancellation of contract viz-a-viz. violation of principles of natural justice has held as under:- "7. It was argued on behalf of the appellant that the termination of the contract between the parties was legally bad not only because the principles of natural justice requiring a fair hearing to the appellant were not complied with but also because there was no real basis for the respondent Authority to hold that the appellant had committed any breach of the terms and conditions of the contract warranting its termination. We find no merit in either one of the contentions. The reasons are not far to see.

8. Rules of natural justice, it is by now fairly well settled, are not rigid, immutable or embodied rules that may be capable of being put in straitjacket nor have the same been so evolved as to apply universally to all kind of domestic tribunals and enquiries. What the courts in essence look for in every case where violation of the principles of natural justice is alleged is whether the affected party was given reasonable opportunity to present its case and whether the administrative authority had acted fairly, impartially and reasonably. The doctrine of audi alteram partem is thus aimed at striking at arbitrariness and want of fair play. Judicial pronouncements on the subject have, therefore, recognised that the demands of natural justice may be different in different situations depending upon not only the facts and circumstances of each case but also on the powers and composition of the tribunal and the rules and regulations under which it functions. A court examining a complaint based on violation of rules of natural justice is entitled to see whether the aggrieved party had indeed suffered any prejudice on account of such violation. To that extent there has been a shift from the earlier thought that even a technical infringement of the 4 WRIC No. 19918 of 2018 rules is sufficient to vitiate the action. Judicial pronouncements on the subject are legion. We may refer to only some of the decisions on the subject which should in our opinion suffice."

45. At this stage, it will be relevant to notice that after the promulgation of the Control Order 2016, the matter is governed by the said control order which also notices the agreement which is signed between the parties i.e. the licensee and the State Government which partakes the nature of a statutory contract and is nothing but a contract of agency where the licensee conduct activities on behalf of the State, distributing food grains and in return is entitled to a commission and it is clearly a contract of agency, as known in law.

46. The requirement of entering into an agreement between licensee and the State is also provided in the Distribution Order of 2004. Thus, the position of a licensee remains that of an agent of the State who is appointed to carry out the functions as entrusted to him in terms of the Distribution Order of 2004 and now under the Control Order of 2016 and is governed by the said Control Order and the terms of the agreement. Accordingly, it cannot be said that the enquiry as required to be held against the licensee for suspension or cancellation is akin to a disciplinary enquiry which is against a government servant. Neither the agreement nor the Distribution Order of 2004 or the Control Order of 2016 envisage an elaborate enquiry nor the same can be claimed by the licensee.

47. Thus, we answer the reference as under:- (i) It is held that the parameters for an enquiry to be conducted against the licensee for the irregularities committed by the licensee in terms of the Distribution of Essential Commodities is on broad principles of natural justice where the competent authority shall provide a show cause notice to the licensee indicating the violations irregularities committed by licensee with sufficient particularity to enable him to respond to the same and after affording an opportunity of hearing, the decision can be taken by the competent authority by a reasoned and a speaking order. The enquiry envisaged is summary in nature and does not entail a detailed hearing, akin to a departmental enquiry; (ii) It is held that the words "full fledged enquiry" as used by the Full Bench of this Court in the decision of Puran Singh (supra) has to be read in context with paras 4 and 5 of the Government Order of July 2004 and the scheme therein which merely requires adherence 5 WRIC No. 19918 of 2018 to the principles of natural justice and does not provide for a detailed enquiry involving various stages and steps as are required to be met in disciplinary enquiry against a government servant.” Considering the aforesaid facts and circumstances as well as the fact that the averments made by the petitioner regarding not following the procedure as prescribed has not been rebutted rather in paragraph nos. 4 and 5 of the counter affidavit, vague assertions without any material to support the same has been taken which cannot be appreciated nor it can be relied upon. Accordingly, in light of the law laid down by a Division Bench of this Court in Shankar Prasad (Supra), this Court is of the clear view that the orders dated 05.07.2016 and 27.03.2018 are per se bad, arbitrary and cannot be sustained, accordingly, the same are quashed and set aside. Accordingly, the writ petition is allowed. Consequences to follow. October 7, 2025 Asheesh (Jaspreet Singh,J.)

1. Heard learned counsel for the petitioner, learned Standing Counsel for the State-respondents as well as Sri Mukul Kumar Sharma, learned counsel who had filed his caveat on behalf of Rajnish Kumar.

2. Under challenge is the order dated 27.03.2018 whereby the appeal preferred by the petitioner against the order dated 05.07.2016 by virtue of which the fair price shop agreement executed in favour of the petitioner has been cancelled and set aside.

3. The submission of learned counsel for the petitioner is that on the basis of an alleged telephonic complaint, it is alleged that the State-respondents allegedly made some inspections and inquiries and found that the petitioner was indulging in malpractice regarding distribution of food-grains.

4. It is urged that no rules or the procedure as prescribed in the Government Order dated 29.07.2004 have not been followed nor any opportunity of hearing was granted. Only on the basis of conjectures, the order impugned dated 05.07.2016 was passed by the respondent no. 3.

5. The petitioner preferred an appeal and even the Appellate Court who did not enter into the issues which were raised by the petitioner rather in a mechanical manner and without adverting to the material available on record, has dismissed the appeal.

6. It is urged that it was a specific case of the petitioner that no proper inquiry was held. There was no complaints and in a shoddy manner, the entire proceedings have been done only to cause prejudice to the petitioner whose fair price shop license/agreement was cancelled and there was no material on record even before the Appellate Court upon which a satisfaction could have been 2 WRIC No. 19918 of 2018 recorded that the procedure as contemplated in law had been followed and thus even the appellate order is bad.

7. The learned Standing Counsel while refuting the aforesaid submissions has referred to the counter affidavit and specifically taken the Court to the paragraphs 4 and 5 of the counter affidavit to suggest that several card holders have levelled charges. Their statements were recorded and by following the procedure as provided in law, it was found that the petitioner had committed illegalities while distributing the food-grains and as such the order impugned does not suffer from any material error which may persuade this Court to interfere.

8. Having considered the aforesaid submissions and from the perusal of the material on record, at the outset it may be noticed that this Court had the occasion to consider the entire scheme of the fair price shop licenses as well as the manner in which the inquiries are to be held and dealt with. In a Division Bench decision in Shankar Prasad v. State of U.P. and others; MANU/UP/3630/2021, this Court has noticed the issue regarding the enquiry to be held and it was held as under:- “42. The efforts made by the Government from time to time is clearly to establish an accepted procedure and manner in which the enquiries regarding suspension/cancellation of a fair price shop is to proceed. In the aforesaid context, it would be seem that the Full Bench in Puran Singh (supra) has clearly held that the fair price shop licenses are not akin to the right by doing business as protected under Article 19(1)(g) of the Constitution of India and noticing the provisions of the Government Order of July 2004 where there is an elaboration regarding issuance of a show cause notice which must contain the material and findings surfaced in the preliminary enquiry to enable the licensee to know the charge against him so that he can reply to the same which sufficient particularity. It also contemplates the conclusion of the enquiry within a period of one month and it is incumbent upon the competent authority to give its decision by a speaking order. It is in this context that the Full Bench used the word full fledged enquiry specifically relating to Clause 4 and 5 of the Government Order of July 2004.

43. The process of grant of opportunity of hearing and holding a fair and just enquiry is inbuilt in the provision of Government Order dated 29th of July, 2004. With the advent of the Government Order of October 2014 and December 2015 as noticed above. It further 3 WRIC No. 19918 of 2018 clarifies the position that the licensee must be made aware of the violation and irregularities which have been found, upon which it is proposed to move against the licensee, either for suspension or cancellation so that he can place his reply with sufficient particularity which must be decided by a speaking order and order- sheet of the proceeding is also to be maintained scrupulously to bring in transparency and fairness in the enquiry so held.

44. Rules of natural justice are not rigid or immutable rules and they are not to be applied in a straight-jacket formula rather these are rules which are flexible to meet the exigencies of a situation. The Apex Court in the case of A.S. Motors Private Limited v. Union of India and others, (2013) 10 SCC 114 in Paragraphs 7 and 8 in reference to cancellation of contract viz-a-viz. violation of principles of natural justice has held as under:- "7. It was argued on behalf of the appellant that the termination of the contract between the parties was legally bad not only because the principles of natural justice requiring a fair hearing to the appellant were not complied with but also because there was no real basis for the respondent Authority to hold that the appellant had committed any breach of the terms and conditions of the contract warranting its termination. We find no merit in either one of the contentions. The reasons are not far to see.

8. Rules of natural justice, it is by now fairly well settled, are not rigid, immutable or embodied rules that may be capable of being put in straitjacket nor have the same been so evolved as to apply universally to all kind of domestic tribunals and enquiries. What the courts in essence look for in every case where violation of the principles of natural justice is alleged is whether the affected party was given reasonable opportunity to present its case and whether the administrative authority had acted fairly, impartially and reasonably. The doctrine of audi alteram partem is thus aimed at striking at arbitrariness and want of fair play. Judicial pronouncements on the subject have, therefore, recognised that the demands of natural justice may be different in different situations depending upon not only the facts and circumstances of each case but also on the powers and composition of the tribunal and the rules and regulations under which it functions. A court examining a complaint based on violation of rules of natural justice is entitled to see whether the aggrieved party had indeed suffered any prejudice on account of such violation. To that extent there has been a shift from the earlier thought that even a technical infringement of the 4 WRIC No. 19918 of 2018 rules is sufficient to vitiate the action. Judicial pronouncements on the subject are legion. We may refer to only some of the decisions on the subject which should in our opinion suffice."

45. At this stage, it will be relevant to notice that after the promulgation of the Control Order 2016, the matter is governed by the said control order which also notices the agreement which is signed between the parties i.e. the licensee and the State Government which partakes the nature of a statutory contract and is nothing but a contract of agency where the licensee conduct activities on behalf of the State, distributing food grains and in return is entitled to a commission and it is clearly a contract of agency, as known in law.

46. The requirement of entering into an agreement between licensee and the State is also provided in the Distribution Order of 2004. Thus, the position of a licensee remains that of an agent of the State who is appointed to carry out the functions as entrusted to him in terms of the Distribution Order of 2004 and now under the Control Order of 2016 and is governed by the said Control Order and the terms of the agreement. Accordingly, it cannot be said that the enquiry as required to be held against the licensee for suspension or cancellation is akin to a disciplinary enquiry which is against a government servant. Neither the agreement nor the Distribution Order of 2004 or the Control Order of 2016 envisage an elaborate enquiry nor the same can be claimed by the licensee.

47. Thus, we answer the reference as under:- (i) It is held that the parameters for an enquiry to be conducted against the licensee for the irregularities committed by the licensee in terms of the Distribution of Essential Commodities is on broad principles of natural justice where the competent authority shall provide a show cause notice to the licensee indicating the violations irregularities committed by licensee with sufficient particularity to enable him to respond to the same and after affording an opportunity of hearing, the decision can be taken by the competent authority by a reasoned and a speaking order. The enquiry envisaged is summary in nature and does not entail a detailed hearing, akin to a departmental enquiry; (ii) It is held that the words "full fledged enquiry" as used by the Full Bench of this Court in the decision of Puran Singh (supra) has to be read in context with paras 4 and 5 of the Government Order of July 2004 and the scheme therein which merely requires adherence 5 WRIC No. 19918 of 2018 to the principles of natural justice and does not provide for a detailed enquiry involving various stages and steps as are required to be met in disciplinary enquiry against a government servant.” Considering the aforesaid facts and circumstances as well as the fact that the averments made by the petitioner regarding not following the procedure as prescribed has not been rebutted rather in paragraph nos. 4 and 5 of the counter affidavit, vague assertions without any material to support the same has been taken which cannot be appreciated nor it can be relied upon. Accordingly, in light of the law laid down by a Division Bench of this Court in Shankar Prasad (Supra), this Court is of the clear view that the orders dated 05.07.2016 and 27.03.2018 are per se bad, arbitrary and cannot be sustained, accordingly, the same are quashed and set aside. Accordingly, the writ petition is allowed. Consequences to follow. October 7, 2025 Asheesh (Jaspreet Singh,J.)