Prakash Chand Srivastava v. State of U. P — 1982 DIGILAW 1361 (ALL)

JUDGMENT A.N. Varma, J. - This bunch of writ petitions is being disposed of by a common judgment as the controversies raised therein are identical By means of these petitions the petitioners have assailed the legality and the constitutionality of a Government Order dated 18th Dec., 1980, whereby the Government have purported to replace private retail distributors appointed for the sale of `Government foodgrains and other Essential Articles' by Co-operative Societies. The petitioners were appointed as `authorised distributors' for the sale of the aforesaid articles such as foodstuffs, sugar and keorosin etc. by the District Magistrates of their respective districts under an agreement executed by them in pursuance of the U. P. Foodgrains and other Essential Articles Distribution Order, 1977 (Distribution Order of 1977, for short) which itself was made under S.3 of the Essential Commodities Act with the object of ensuring a fair distribution of foodstuffs at fair prices through fair price shops. 2. The petitioners were appointed as retail distributors under identical terms, except as, regards duration of their agency, for the sale of Government Foodgrains and other Essential Articles by the District Magistrates. Under clause 16 of the said agreement, the District Magistrate was specifically authorised to terminate the agreement at any time without assigning any reason. 3. On 18-12-1980, the State Government decided to replace the aforesaid scheme of distribution of Government foodgrains and other essential articles through retail dealers by a new scheme whereunder fair price shops were to be run by Co-operative Societies. In pursuance of this decision, the impugned Government Order was issued on 18-12-1980 directing the District Magistrates of all the districts to terminate the existing agreements in favour of private retail distributors and for the period beginning from 1-1-1981 to appoint in their place Co- operative Societies for running the Government fair price shops. 4. The petitioners have assailed the legality of the aforesaid Government Order dated 18-12-1980 on a variety of grounds most of which have been repelled by a Division Bench decision of this Court dated 29th Jan., 1981 in Writ Petition No. 77 of 1981 connected with large number of other petitions. By this decision the Division Bench disposed of a large number of writ petitions in which identical contentions were raised. Some of the petitioners assailed the correctness of that decision before the Supreme Court, but their Special Leave Petitions were dismissed. By this decision the Division Bench disposed of a large number of writ petitions in which identical contentions were raised. Some of the petitioners assailed the correctness of that decision before the Supreme Court, but their Special Leave Petitions were dismissed. We now proceed to deal with the various contentions raised in these petitions. 5. The first contention raised on behalf of the petitioners was that the petitioners held a statutory appointment having been appointed as authorised distributors under and in pursuance of cl. 2 (b) of the Distribution Order of 1977. That being so, it was urged, the termination of the agreement executed by them could not legally affect their statutory appointment. 6. We find no merit in the above contention. The submission was considered at some length by two Division Benches of this Court, one by which the above mentioned bunch of Writ Petition No. 77 of 1981 and other was disposed of and the other reported in 1981 All LJ 261 Raj Kumar Sheo Kumar v. Addl. District Magistrate (Civil Supplies). Both these Division Benches relied on a Supreme Court decision in the case of S. Chandra Shekharan v. Govt. of Tamil Nadu reported in AIR 1974 SC 1543 and a Full Bench decision of this court in Shital Prasad v. M. Saidullah reported in AIR 1975 All 344 , in both of which it was held that the appointment of retailers as authorised distributors for selling essential commodities was governed by the terms and conditions of the agreement under which the appointment was made and that consequently the rights claimed by such retailers were essentially contractual in nature. It was held that such retailers when replaced, by the Government by Co- operative Societies in pursuance of any policy decision so as to ensure a more equitable and fair distribution of essential commodities through Government fair price shops have no legal right to continue to act as agents of the Government so as to be able to claim reliefs either under Article 32 or 226 of the Constitution. 7. 7. The preponderating view of this court thus seems to be that the appointment of a dealer as an authorised distributor of Government foodgrains and other essential commodities is regulated and controlled by the terms and conditions of the agreement under which the dealers were appointed as authorised distributor and consequently the relationship between the Government and such dealers is purely contractual. 8. We, however, do not rest our decision only on this narrow ground namely that the petitioners' appointment was purely contractual in natural, though the Division Bench decision of this court in Writ Petition No. 77 of 1981 (supra) has been affirmed by the Supreme Court. For, in our opinion, even if it be assumed that the petitioners' appointment was statutory in character being relatable to clause 2 (b) of the Distribution Order of 1977, that would not invalidate the termination of the appointment of the petitioners. 9. Cl. 2 (b) of the Distribution Order of 1977 reads thus : "authorised retail distributor" means a person appointed as `Agent (Retail)' by the District Magistrate,. City Magistrate or Sub- Divisional Magistrate - for sale of Government foodgrains and other essential articles." From a perusal of the various provisions of the Distribution Order 1977 it is apparent that whereas cl. 2 (b) provides for appointment by the District Magistrate of "authorised retail distributors" as "Agents" for the sale of Government foodgrains and other essential commodities, the Distribution Order does not provide the manner in which an authorised distributor shall be appointed. Nor does the Distribution Order lays down the procedure for cancellation or suspension of the appointment made by the District Magistrates under cl. 2 (b). 10. Appointment in the case of the petitioners was, however, made by the District Magistrate of the various districts in the manner and form laid down by an Administrative Order issued by the Government on 11th Mar., 1977. The petitioners executed identical agreements in the same proforma which contained the terms and conditions under which they were required to function as the agents of the Government for the sale of the Government foodgrains etc. This Administrative Order dated 11th Mar. 1977 was issued to give effect to a corresponding provision regarding the appointment of authorised distributors for the sale of Government foodgrains etc under the predecessor Distribution Order of 1975. This Administrative Order dated 11th Mar. 1977 was issued to give effect to a corresponding provision regarding the appointment of authorised distributors for the sale of Government foodgrains etc under the predecessor Distribution Order of 1975. The Distribution Order of 1977 came into force on 3rd Dec., 1977 replacing the earlier Distribution Order of 1975. The Government, however, continued to make appointments of authorised distributors under the Distribution Order of 1977 under cl. 2 (b) thereof in the same manner as was provided by the Administrative Order dated 11th Mar. 1977. As no mode is specifically provided for appointment of the authorised distributors under the Distribution Order of 1977. No exception could possibly be taken to the Government's adopting the procedure and making appointments in the form and manner prescribed by the Administrative Order dated 11th Mar., 1977. These agreements laid down the terms and conditions under which the petitioners were to function as the agents of the Government. It is in accordance with the mode prescribed by the Administrative Order dated 11th Mar., 1977 that all the petitioners executed agreements, clause 16 of which lays down that their appointment could be terminated by the District Magistrate at any time without assigning any reasons. 11. It will thus be seen that the agreements executed by the petitioners were part and parcel of the statutory scheme envisaged under the Distribution Order of 1977. The agreements were executed by the various petitioners in furtherance of the statutory scheme whereby the District Magistrate was authorised to make appointment of authorised distributors. The terms and conditions laid down in the agreement, in our opinion, were an integral part of the appointment of the petitioners. Consequently if the petitioner's appointment was statutory in character, the terms and conditions specified in the agreement under which the petitioners were appointed would also assume statutory status. Clause 16 of the agreement which provides for termination of the appointment of the authorised distributors was hence clearly available to the Government for putting an end to the appointment of the petitioners at any time. 12. The aforesaid discussion leads inevitably to the conclusion that the appointment of the petitioners was liable to be terminated in terms of clause 16, irrespective of whether the appointment was statutory or a matter of mere contract. 13. The same conclusion is reached by another process of reasoning. 12. The aforesaid discussion leads inevitably to the conclusion that the appointment of the petitioners was liable to be terminated in terms of clause 16, irrespective of whether the appointment was statutory or a matter of mere contract. 13. The same conclusion is reached by another process of reasoning. The Distribution Order of 1977 does not, as mentioned above, contain any provision as to how the appointment of the agents shall be terminated. Section 16 of the General Clauses Act provides that where by any Central Act power to make an appointment is conferred, then unless a different intention appears, the authority competent to make the appointment shall have power to suspend or dismiss any person in exercise of that power. Consequently, the District Magistrate was clearly empowered as the appointing authority to terminate the appointment, as we find nothing in the Distribution Order of 1977 which might disclose a different intention. We, therefore, find no merit in the first contention raised on behalf of the petitioners. 14. The next contention raised on behalf of the petitioners was that even if the Government could terminate the appointment of the petitioners, the action of the Government is replacing the petitioners by Co-operative Societies is completely arbitrary and unjustified. We cannot agree. The Division Bench in Writ Petition No. 77 of 1981 and other connected. petitions (supra) had occasion to consider - an identical contention and on an elaborate scrutiny of the circumstances placed on the record on behalf of the Government which had impelled it to replace the old system of distribution by a new scheme of distribution of Essential Commodities through Co- operative Societies, it rejected the contention with a finding that the Government had sound and valid reasons for taking the impugned action and the court could see no fault with the policy decision of the Government. 15. We do not consider it necessary to repeat the various observations made by the said Division Bench in this connection as we find ourselves in complete agreement with the conclusion reached by it. Moreover, the decisions of that Division Bench has been affirmed by the Supreme Court while dismissing a bunch of Special Leave Petitions Nos. 2052 to 2058 of 1981. Moreover, the decisions of that Division Bench has been affirmed by the Supreme Court while dismissing a bunch of Special Leave Petitions Nos. 2052 to 2058 of 1981. The Supreme Court observed thus : "Having considered Sri Gupta's submissions carefully and the decisions cited by him we are of the opinion that there is no substance in these Special Leave Petitions. We concur in the reasons given by the High Court for upholding the impugned orders by the Government of Uttar Pradesh in order to "gradually replace all the existing Fair Price Shops". Accordingly, we confirm the judgment of the High Court and dismiss the S. K. Ps." (Emphasis added) 16. In view of the Division Bench decision of this court in Writ Petition No. 77 of 1981 (supra) and the order passed by the Supreme Court affirming that decision, we do not consider it necessary to dilate on this point further, We may, however, add that similar actions taken by other State Government in regard to the system of distribution and sale of essential commodities have received the approval of the Supreme Court both in the case of S. Chandra Sekharan ( AIR 1974 SC 1543 ) (supra) as well as in the case-of Madhya Pradesh Ration Vikreta Sangh Society v. State of Madhya Pradesh reported in AIR 1981 SC 2001 . Counsel, however, sought to distinguish the decision of the Supreme Court reported in AIR 1981 SC 2001 , but we are not satisfied that there is any real point of distinction relevant to the controversy. In any case, the Supreme Court itself has now while deciding Special Leave Petition No. 329 of 1981 repelled that contention as follows : "The contentions advanced by him are fully covered by two decisions of this Court, namely Sarkari Sasta Anaj Vikreta. Sangh, Tahsil Bemetra v. State of Madhya Pradesh (1981) 4 SCC 471 : ( AIR 1981 SC 2030 ) and Madhya Pradesh Ration Vikretra Sangh Society v. State of Madhya Pradesh, (1981) SCC 535 : ( AIR 1981 SC 2001 ). Mr. Sangh, Tahsil Bemetra v. State of Madhya Pradesh (1981) 4 SCC 471 : ( AIR 1981 SC 2030 ) and Madhya Pradesh Ration Vikretra Sangh Society v. State of Madhya Pradesh, (1981) SCC 535 : ( AIR 1981 SC 2001 ). Mr. Ravi Prakash tried to distinguish these two decisions on the ground that they had been given in relation to Madhya Pradesh Food Stuffs (Distribution) Control Order, 1960 and Scheme framed by the Madhya Pradesh Government giving preference to consumer Co-operative Societies in the matter of allotment of fair price shops and they had no application in the present case which related to an order No. 1216-29-Food (Khadya) dated 18th December, 1980 issued by the Government of U. P. But we fail to see any point of distinction between these two cases and the present case." (Emphasis supplied). 17. The next contention was that the impugned action violates Article 14, in that it suffers from unwarranted discrimination between the retailers in rural areas and those in the urban areas. In support of this contention learned counsel placed reliance on the Government Order dated 27th July 1981 which was sought to be brought on the record by means of an amendment application. This subsequent Administrative Order is a communication addressed to all the District Magistrates of the State. It says that keeping in view of the degree of success of the Scheme of replacement of private retailers by Co-operative Societies in the rural areas, it has been decided that in urban areas, the scheme should be introduced gradually according to the availability of efficient Co-operative Societies. Learned counsel placed strong reliance on this Administrative Order dated 27th July, 1981 and contended that there does not exist any nexus between the object sought to be achieved by the scheme and the classification. 18. We find no merit in the above contention. By a series of decisions of the Supreme Court and of the other courts it is now firmly established that regional differences do not necessarily connote discrimination and laws may be enacted or enforced by the State for selected areas in different ways depending on the peculiarities and problems prevailing in the areas selected or excluded from application of laws as well as on the infrastructure of the Government and its agencies (See State of Nagaland v. Ratan Singh AIR 1967 SC 212 at pages 224 and 225). We are hence not persuaded that the action of the Government can be impugned as discriminatory merely because the Government have decided to eliminate the private sector from the rural areas with immediate effect while not doing so in the case of urban areas. 19. The conditions in rural areas are generally widely different from those existing in urban areas. Be that as it may the policy decision taken by the Government seems to be that so far as the rural areas are concerned having regard to the functioning of Co-operative Societies there, the change- over would be feasible immediately whereas in the urban areas the scheme may be introduced gradually depending on the availability of sufficient number of efficiently run Co-operative Societies. 20. Further, an identical submission was raised but repelled by the Supreme Court in the case of S. Chandra Sekharan ( AIR 1974 SC 1543 ) (supra). The situation arising in that case for consideration was in pari materia with that prevailing in the present case. There, the Government of Tamil Nadu had purported to replace the existing retailers appointed to distribute and sell levy sugar by model shops and Co-operative Societies. In some areas, however, some of the existing retailers had been left untouched which gave rise to an argument founded on Article 14. Repelling this submission, the Supreme Court observed thus (Para 15) : "The petitioners contended that there were 160 dealers selling levy sugar and out of 160, 24 dealers like the petitioners have been discriminated. The. State issued instructions that preference should be given to Co-operative. The State is taking steps to replace the private retailers wherever Co- operatives are available and Government retail shops can be established. In Tiruchirapalli Town two model shops have been opened by the Tamil Nadu Civil Supplies Corporation. Some of the private retailers in that town were replaced. As and when more shops are opened, the private retailers in other places will be eliminated. There is no discrimination. The agency agreements have been terminated.". 21. The same view was reiterated by the Supreme Court in the case of Madhya Pradesh Ration Vikreta Sangh Society ( AIR 1981 SC 2001 ) (supra). Their Lordships observed that Consumers Co-operative Societies form a distinct class by themselves. There is no discrimination. The agency agreements have been terminated.". 21. The same view was reiterated by the Supreme Court in the case of Madhya Pradesh Ration Vikreta Sangh Society ( AIR 1981 SC 2001 ) (supra). Their Lordships observed that Consumers Co-operative Societies form a distinct class by themselves. Benefits and concessions granted to them ultimately go to the persons of small means and promote social justice in accordance with the Directive Principles. In this view, it cannot be said that Article 14 is in any way infringed by the impugned Government action. 22. In any case, the plea based on Article 14 too was considered by the Division Bench in Writ Petition No. 77 of 1981 and its decision has been affirmed by the Supreme Court in the order dismissing the Special Leave Petitions Nos. 2052 to 2058 of 1981 quoted above. 23. We, therefore, reject the contention of the petitioner that the impugned action of the Government is repugnant to Article 14 of the Constitution. 24. For the petitioners it was also urged that the impugned 'Government Order dated 18th of December, 1980 directing the District Magistrate to cancel the appointment of the petitioners violates the principles of natural justice, in that it provides for termination of the petitioners appointment without affording any opportunity to them to show cause. 25. We find no substance in the above contention either. We have already held above that the petitioner's appointment was liable to be terminated in terms of clause 16 of the agreement which was part and parcel of their appointment. The Division Bench decision of this court in the case of Raj Kumar Sheo Kumar (1981 All LJ 261) (supra) repelled an identical submission relying on the Full Bench decision of this court in the case of Shital Prasad ( AIR 1975 All 344 ) (supra) and held that in these circumstances, it cannot be said that the principles of natural justice are in any way violated. We are in full agreement with the view expressed by that Division Bench. It may also be added that the termination of the petitioners appointments was not the result of any charge or complaint against any individual. It was, as already noted above, the result of a policy decision to take over gradually the' task of distribution from the private sector and to hand it over to the Co-operative Sector. It may also be added that the termination of the petitioners appointments was not the result of any charge or complaint against any individual. It was, as already noted above, the result of a policy decision to take over gradually the' task of distribution from the private sector and to hand it over to the Co-operative Sector. Further the Supreme Court in the case of M.P. Ration Vikreta Sangh Society ( AIR 1981 SC 2001 ) (supra) as well as in the case of S. Chandra Sekharan ( AIR 1974 SC 1543 ) (supra) had observed that there is no right in any one to be appointed as an agent of a fair price shop under a Government Scheme and that the question whether fair price shops should be run under a Government Scheme through the instrumentality of the Co-operative Societies as its agents or by retail dealers is essentially a matter of policy with the court is not concerned. 26. For all these reasons we have no hesitation in holding that no breach of any principles of natural justice was involved in the present case. 27. Yet another submission advanced in support of the petition was that the impugned Government Order dated 18th Dec., 1980 completely controls the discretion of the District Magistrate vested in him under cl. 2 (b) of the Distribution Order 1977. In that it directs the District Magistrates to cancel the appointment of the petitioners. 28. The submission is devoid of any merit. In the facts of the present case, there is no question of the Government's usurping the discretionary powers of the District Magistrate. The Government has merely formulated a new scheme of distribution of essential articles. The Government action is not aimed at or directed against any individual authorised distributor. The Government has not attempted to interfere with the discretion of the District Magistrate but only spelled out a policy within the framework of which the District Magistrate is to appoint authorised distributors. 29. For the same reason, the cases cited by the petitioners counsel namely AIR 1961 SC 93 , 1970 All LJ 768 are distinguishable as in those cases, the complaint was that the Government had purported to control the discretion vested in certain authorities in dealing with the individual cases. Those were not the cases in which implementation of any policy decision was involved. Those were not the cases in which implementation of any policy decision was involved. In the present case within the framework of the scheme formulated by the Government, the District Magistrate has been left free to make appointments of agents. 30. The petitioners also contended that the Distribution Order of 1977 has been made by the State Government after the concurrence of the Central Government had been obtained under the provisions of the Essential Commodities Act and consequently, inasmuch as, the Government Order dated 18th Dec., 1980 purported to alter the scheme of things under the Distribution Order of 1977, the same must be held to be void, not having been issued with the concurrence of the Central Government. 31. The contention has no merit. The Administrative Order dated 18th Dec., 1980 does not purport to alter the provisions of Distribution Order of 1977. Indeed, it has been issued in furtherance of the provisions of cl. 2 (b) of the Distribution Order, which provides for appointment of authorised retail distributors. By the impugned Administrative Order, the Government have merely purported to formulate a scheme of appointing Societies as its agents in place of private retailers. The action of the Government being within the framework of the already existing Distribution Order of 1977. No further concurrence of the Central Act was required. 32. Moreover, every instrumentality appointed under a statute to perform certain functions and duties must be deemed to be clothed with all such ancillary and incidental powers which are necessary for the effective exercise of the powers expressly vested in it. The change of agents is, in our opinion nothing but the exercise of powers which were already vested in the Government under the present Order of 1977. 33. Lastly learned counsel urged that in view of the aforesaid Government Order dated 27-7-1981 directing the District Magistrates to introduce the new scheme in urban areas only in phases and gradually, this court should issue a direction to the Government to review the cases of all the petitioners who were functioning as retail distributors in urban areas. 34. We cannot agree. The petitioners have been held to have no right to continue as authorised retail distributors. The validity of the Government Order dated 18th Dec., 1980 has been upheld both by this Court as well as by the Supreme Court. 34. We cannot agree. The petitioners have been held to have no right to continue as authorised retail distributors. The validity of the Government Order dated 18th Dec., 1980 has been upheld both by this Court as well as by the Supreme Court. From the Government Notifications which have been issued on the subject from time to time, it seems evident that the policy of the Government is to take over the task of distribution of Government foodgrain through the Co-operative gradually according to the availability of efficient Co operative Societies in the urban areas. In this view, we see no ground for interfering with the action of the Government. Nor do we find any justification for directing the State Government to review the petitioners' cases as the agencies of the petitioners have been lawfully terminated. 35. Two other subsidiary points urged by counsel for the petitioners remain to be noticed. The first was that in a few cases out of this bunch of petitions no agreements were executed by the retail distributors and consequently cl. 16 of the agreement was not available to the District Magistrate to terminate the appointments of such petitioners. The second point was that in some cases agreements were not executed simultaneously with the appointment but subsequently to the making of the appointments by the District Magistrate. 36. We find no merit in either of the two contentions. In regard to the first contention the position is that if in some cases the District Magistrate allegedly made appointments of authorised distributors without getting the prescribed agreements executed by the appointees, the appointment itself would be void ab initio, having been made in violation of the procedure prescribed by the Government by the Administrative Order of 1977. Secondly, the District Magistrate would be entitled to terminate the appointment under section 16 of the General Clauses Act for the reasons already mentioned, even if cl. 16 of the agreement was not available to him. 37. The second point is equally devoid of merit. Secondly, the District Magistrate would be entitled to terminate the appointment under section 16 of the General Clauses Act for the reasons already mentioned, even if cl. 16 of the agreement was not available to him. 37. The second point is equally devoid of merit. Assuming that in some cases the agreements were not executed simultaneously with the appointment of the authorised dealers, but they were executed later on, that would not make any material difference as, in our opinion, as discussed above the agreements executed by the appointees or prospective appointees regulating the terms of their appointment were but part of the same transaction, i.e. they constituted an integral part of the appointment in virtue of the Administrative Order of 1977 issued by the Government. 38. The learned Standing Counsel brought to our notice an Administrative Order dated 28th Aug., 1982 which was issued in connection with the impugned Administrative Order dated 18th Dec., 1980, whereby certain guidelines have been mentioned for the implementation of the Administrative Order dated 18th Dec., 1980 so as to ensure an improved working of the new scheme of distribution through the co- operative societies in rural areas. It has been stressed in this Administrative Order dated 28th Aug., 1982 that the District Magistrate should ensure that essential commodities are made available at the fair price shops run by the co-operative societies in rural areas so that the consumers are not put to inconvenience or hardship. It has also been laid down in this order that wherever it is not practicable to arrange the sale and distribution of essential articles through the Co-operative Societies, the District Magistrate would be entitled to arrange for the running of fair price shops through any other agency so that the work of supply of essential articles is not in any way hampered. 39. The latest Administrative Order dated 28th Aug., 1982 is thus also calculated to ensure fair and equitable distribution of Government foodgrains and other essential articles through the medium of Co- operative Societies wherever they are available. Consequently for the reasons for which the validity of the Government Order dated 18th Dec., 1980 was upheld both by this Court as well-as the Supreme Court, this Government Order must also be held to be valid, constitutionally and otherwise. 40. Consequently for the reasons for which the validity of the Government Order dated 18th Dec., 1980 was upheld both by this Court as well-as the Supreme Court, this Government Order must also be held to be valid, constitutionally and otherwise. 40. To sum up, our conclusions are that the Administrative Orders dated 18th Dec., 1980, 27th July, 1981 as well as 28th Aug., 1982, are all valid and proper and the appointments of the petitioners have been lawfully terminated. The petitioners are hence entitled to none of the reliefs claimed in the writ petitions. 41. In view of the conclusions reached by us on the points raised in the writ petitions, the various miscellaneous applications filed therein by the petitioners are also liable to be dismissed. 42. In the result, all these petitions fail and - are dismissed with costs. The miscellaneous applications filed by the petitioners therein are also hereby dismissed.