Fair Price Shop License Dispute: A Legal Analysis of the Ram Kumar Case

This appeal concerns the legality of the cancellation of a Fair Price Shop licence and the subsequent appointment of a new licensee. The appellant, Ram Kumar, had been granted the Fair Price Shop licence in place of respondent No. 9, Kiran Devi, after her licence was cancelled by the Deputy Collector due to irregularities at her shop. Despite an initial order in favour of the appellant, the High Court of Allahabad set aside the cancellation and reinstated Kiran Devi’s licence. This judgment was challenged by Ram Kumar, who argued that the High Court had erred in its decision, particularly in not including him as a necessary party to the proceedings. The Supreme Court of India, in its judgment, reviewed the case and provided key insights into administrative law, the concept of necessary parties, and the implications of misleading statements in legal proceedings.

The events leading up to this appeal began when Kiran Devi, the respondent in this case, was granted a licence to run a Fair Price Shop at Gram Panchayat Anta in Tehsil Rasoolabad, District Kanpur Dehat. However, multiple complaints were received against her for malpractices at the shop, which led to an inspection by the Sub-Divisional Officer (SDO). The inspection revealed several irregularities, resulting in a show-cause notice being issued to Kiran Devi in July 2017. Despite her failure to submit a timely response, the SDO proceeded with an inquiry and found the charges to be substantiated. Consequently, Kiran Devi’s Fair Price Shop licence was cancelled in November 2017.

In response to the cancellation, Kiran Devi appealed to the Appellate Authority, which dismissed her appeal in July 2018. Meanwhile, Ram Kumar, the appellant, had been selected by the Tehsil Level Selection Committee on 19th April 2018 and was granted the Fair Price Shop licence on 15th May 2018. This appointment was made during the pendency of the appeal process. Despite this, Kiran Devi continued her legal battle by filing a writ petition before the Allahabad High Court. The High Court ruled in her favour, stating that the cancellation of her licence had not followed the proper procedure, citing a Full Bench decision of the same court.

Read also: https://judgmentlibrary.com/dispute-over-property-ownership-and-specific-performance-a-case-analysis/

The main issue before the Supreme Court was whether Kiran Devi’s actions in suppressing the fact of the new allotment to Ram Kumar and her false statements in the writ petition had affected the fairness of the proceedings. The appellant’s counsel, Mr. Udayaditya Banerjee, argued that the High Court’s decision was flawed because Ram Kumar, as the subsequent allottee, was a necessary party to the proceedings. He claimed that the High Court’s judgment, which did not include Ram Kumar as a party, was invalid. Mr. Banerjee also referred to the case of Pawan Chaubey v. State of Uttar Pradesh, where the court had established that subsequent allottees are necessary parties in such cases.

In contrast, Kiran Devi’s counsel, Mr. Irshad Ahmad, argued that the appellant was not a necessary party, citing the case of Poonam v. State of Uttar Pradesh, where the court had held that subsequent allottees do not need to be impleaded in ongoing legal proceedings. He further stated that the proceedings against Kiran Devi were politically motivated, and as such, no interference from the Supreme Court was warranted. He also cited the Mumbai International Airport Private Limited case, arguing that relief could have been granted in the absence of the appellant.

The Supreme Court, in its judgment, examined the issue of whether the appellant, Ram Kumar, was a necessary party. Referring to the judgment in Mumbai International Airport Private Limited, the Court reiterated that a necessary party is one who must be joined in the proceedings for the court to pass an effective decree. The Court emphasized that if a necessary party is not included, the proceedings may not be considered valid. It found that Ram Kumar was a necessary party because the outcome of the case directly affected his legal rights as the appointed licensee of the Fair Price Shop. The Court thus held that the High Court erred in not including him in the proceedings.

Another significant aspect discussed by the Court was the issue of false statements made by Kiran Devi in her writ petition. The appellant’s counsel pointed out that Kiran Devi had deliberately suppressed the fact that Ram Kumar had been appointed as the new licensee, claiming instead that the shop had been attached to another holder. The Supreme Court cited the case of S.P. Chengalvaraya Naidu v. Jagannath, where the Court held that non-disclosure of material facts in a legal proceeding amounts to fraud. The Court agreed with the appellant’s contention that Kiran Devi’s actions amounted to an attempt to mislead the Court, and on this ground, the appeal was allowed.

Read also: https://judgmentlibrary.com/supreme-court-denies-specific-performance-in-andhra-pradesh-property-dispute/

The Supreme Court further noted that the Full Bench of the Allahabad High Court had previously addressed the issue of interim allotment during the pendency of an appeal. It held that the State Government was empowered to make a regular allotment of the Fair Price Shop even while an appeal was pending, as was done in this case with the appointment of Ram Kumar. The Court emphasized that Kiran Devi’s claim that no third-party allotment had been made was false and constituted a suppression of material facts. Therefore, the Court concluded that the appeal should be allowed, and the High Court’s judgment was set aside.

In conclusion, the Supreme Court quashed the High Court’s decision and upheld the orders of the Deputy Collector and the Appellate Authority. It also reaffirmed that the appellant, Ram Kumar, had been duly appointed as the Fair Price Shop licensee and that the actions of Kiran Devi in the proceedings had been improper. The appeal was allowed on the grounds of the non-joinder of the appellant as a necessary party and the suppression of material facts by Kiran Devi.

Petitioner Name: Ram Kumar.
Respondent Name: State of Uttar Pradesh and Ors..
Judgment By: Justice B.R. Gavai, Justice C.T. Ravikumar.
Place Of Incident: Kanpur Dehat, Uttar Pradesh.
Judgment Date: 28-09-2022.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: ram-kumar-vs-state-of-uttar-prade-supreme-court-of-india-judgment-dated-28-09-2022.pdf