RAM KUMAR versus STATE OF UTTAR PRADESH AND ORS.

[2022] 7 S.C.R. 231

RAM KUMAR

STATE OF UTTAR PRADESH AND ORS.

(Civil Appeal No. 4258 of 2022)

SEPTEMBER 28, 2022

[B. R. GAVAI AND C. T. RAVIKUMAR, JJ.]

Public Distribution – Fair Price shop – Cancellation oflicence – Subsequent allottment during pendency of legalproceedings at the instance of the earlier allottee – Subsequentallottee, if necessary party – Fair Price Shop licence of respondentno.9 cancelled – Appeal dismissed by Appellate Authority – In themeantime, licence to run the said fair price shop was granted infavour of appellant – Order passed by Appellate Authoritychallenged by respondent no.9, writ petition allowed by High Court– On appeal, held : necessary party is person in whose absenceno effective decree could be passed by the Court – In the presentcase, the appellant was appointed as Fair Price Dealer throughregular allotment, during the pendency of the appeal before theAppellate Authority, on recommendation of the Tehsil LevelSelection Committee – Even if subsequent allottee does not havean independent right, he/she still has right to be heard and tomake submissions defending the order of cancellation – Appellantwas necessary party to the proceedings before High Court –Further, respondent no.9 has not only suppressed the fact aboutthe subsequent allotment of the fair price shop to the appellant butalso tried to mislead the High Court that her fair price shop wasattached to another fair price shop holder – Judgment/decreeobtained by fraud is nullity – Impugned order of High Court setaside – Order passed by Deputy Collector cancelling the Fair PriceShop licence of respondent no.9 and that of the Appellate Authoritydismissing her appeal are affirmed – Party – Fraud.

Party – Necessary party – Who is – Discussed – PublicDistribution.

Fraud – Held: Non-disclosure of the relevant and materialdocuments with view to obtain an undue advantage would amountto fraud.231

APawan Chaubey v. The State of Uttar Pradesh & Ors.Decision of Supreme Court dtd.May 6, 2022 in C.A.No.3668 of 2022; Mumbai International Airport PrivateLimited v. Regency Convention Centre and HotelsPrivate Limited and Others (2010) 7 SCC 417 : [2010]B7 SCR 790; S.P. Chengalvaraya Naidu (Dead) By LRs.v. Jagannath (Dead) by LRs and Others (1994) 1 SCC1 : [1993] 3 Suppl. SCR 422 – relied on.

Puran Singh v. State of U.P. and Others (2010) SCCOnLine All 2707; Poonam v. State of Uttar PradeshCand Others (2016) 2 SCC 779 : [2015] 14 SCR 565;Smt. Urmila Devi vs. State of U.P. & 6 Others (2015)SCC OnLine All 3910; Jagannath Upadhyay vs. Stateof U.P., through Principal Secretary, Food & CivilSuppies Decision of High Court of Judicature atDAllahabad in Misc. Bench No.10373 of 2011; SumitraDevi v. State of U.P. & Ors. Decision of Supreme Courtdtd. 8th October 2014 in C.A. Nos. 9363-9364 of 2014– referred to.

Case Law Reference

From the Judgment and Order dated 21.02.2019 of the High Courtof Judicature at Allahabad in Writ No. 29832 of 2018.G

Udayaditya Banerjee, Ms. Parul Shukla, Advs. for the Appellant.

S.R. Singh, Sr. Adv., Ajay Yadav, Ankur Prakash, Abhinav Agrawal,Irshad Ahmad, Advs. for the Respondent.

The Judgment of the Court was delivered by

B. R. GAVAI, J.

1.This appeal challenges the judgment and order of the High Courtof Judicature at Allahabad dated 21[st ]February 2019 thereby allowingthe writ petition filed by respondent No. 9 herein, setting aside the orderdated 18[th]November 2017 passed by the Deputy Collector, Rasoolabadcancelling the fair price shop licence of respondent No. 9 and the orderdated 20[th ]July 2018 passed by the Additional Commissioner (Judicial),Kanpur Division, Kanpur, (hereinafter referred to as “the AppellateAuthority”) dismissing the appeal of respondent No.9 and restoring theFair Price Shop licence to the respondent No.9 forthwith.

2. The facts, in brief, giving rise to the present appeal are as under:

2.1 Respondent No. 9 herein-Kiran Devi (the original writpetitioner) was granted licence for running fair price shop at GramPanchayat Anta, Tehsil Rasoolabad, District Kanpur Dehat. Variouscomplaints were received by the Sub-Divisional Officer, Rasoolabad,District Kanpur Dehat (hereinafter referred to as “the SDO”), with regardto malpractices committed by the said fair price shop dealer. As such, asite inspection of the fair price shop was done on 3[rd ]June 2017 throughthe Regional Supply Inspector. In the site inspection also, variousirregularities and malpractices were found in the running of the said fairprice shop. As such, show cause notice came to be issued to respondentNo.9 by the SDO on 7[th ]July 2017. Initially, on the date fixed, respondentNo.9 did not file her explanation. Subsequently, she submitted herexplanation on 16[th ]August 2017.

2.2 Thereafter, an inquiry was conducted by the SDO. Variousstatements were recorded. At the conclusion of the inquiry, the SDOfound the charges to be proved and as such, vide order dated 18[th]November 2017, cancelled the Fair Price Shop licence of respondentNo.9.

2.3 Being aggrieved by the order passed by the SDO, respondentNo.9 carried an appeal to the Appellate Authority. The said appeal alsocame to be dismissed by the Appellate Authority vide order dated 20[th]July 2018.

A2.4 It is to be noted that, in the meantime, licence to run the saidfair price shop was granted in favour of the present appellant-Ram Kumarvide order dated 15[th ]May 2018. This was done on the basis of the decisiontaken by the Tehsil Level Selection Committee dated 19[th] April 2018.This fact was specifically noted in the order of the Appellate Authoritydated 20th July 2018.B

2.5 Being aggrieved by the aforesaid order passed by the AppellateAuthority, respondent No.9 preferred writ petition before the High Courtof Judicature at Allahabad being Civil Misc. Writ Petition No. 29832of 2018.

C2.6 The High Court came to finding that the cancellation of theFair Price Shop licence of respondent No.9 was done without followingthe full-fledged inquiry process and, therefore, relying on the Full Benchdecision of the Allahabad High Court in the case of Puran Singh vs.State of U.P. and others[1], allowed the writ petition as aforesaid.D2.7 Being aggrieved thereby, the present appeal.

3. We have heard Mr. Udayaditya Banerjee, learned counselappearing on behalf of the appellant and Mr. S.R. Singh, learned SeniorCounsel appearing on behalf of respondents Nos. 1 to 7, Mr. AbhinavAgrawal, learned counsel appearing on behalf of respondent No.8 andEMr. Irshad Ahmad, learned counsel appearing on behalf of respondentNo.9.

4.Mr. Udayaditya Banerjee, learned counsel, submits that thoughrespondent No.9 was very well aware that during the pendency of theappeal before the Appellate Authority, the licence to run the fair priceFshop was allotted to the present appellant, she has not only suppressedthe said fact in the writ petition but has also made statement which istotally false to her knowledge. It is submitted that, on this short groundof non-joinder of the appellant in the proceedings before the High Court,the present appeal deserves to be allowed. He relies on the judgment ofthis Court in the case of Pawan Chaubey vs. The State of Uttar PradeshG& Ors.[2]in support of his submission that the appellant being the subsequentallottee was necessary party and as such, the impugned judgmentand order of the High Court, without impleading him as party, is notsustainable in law.

1 (2010) 2 UPLBEC 947 = 2010 SCC OnLine All 2707

2 Civil Appeal No.3668 of 2022, decided on May 6, 2022

5. Mr. Irshad Ahmad, learned counsel, on the contrary, submitsthat this Court in the case of Poonam vs. State of Uttar Pradesh andothers[3]has held that an allottee during the pendency of the legalproceedings at the instance of the earlier allottee is not necessaryparty and as such, the impugned judgment and order, which is passedwithout impleading the appellant cannot be assailed on that ground.

6. He also relies on the judgment of this Court in the case ofMumbai International Airport Private Limited vs. RegencyConvention Centre and Hotels Private Limited and others[4]in supportof the proposition that the relief could have been granted in the absenceof the appellant and as such, he was not necessary party before theHigh Court.

7. Mr. Irshad Ahmad, learned counsel, also submits that theproceedings against respondent No.9 were initiated on account of politicalrivalry. He submits that in view of this, no interference is warranted inthe present matter.

8. This Court in the case of Mumbai International AirportPrivate Limited (supra) had an occasion to consider as to who is anecessary party to the proceedings. It will be relevant to refer toparagraph 15 of the said judgment, which reads thus:

“15. “necessary party” is person who ought to have beenjoined as party and in whose absence no effective decree couldbe passed at all by the court. If “necessary party” is notimpleaded, the suit itself is liable to be dismissed. “proper party”is party who, though not necessary party, is person whosepresence would enable the court to completely, effectively andadequately adjudicate upon all matters in dispute in the suit, thoughhe need not be person in favour of or against whom the decreeis to be made. If person is not found to be proper or necessaryparty, the court has no jurisdiction to implead him, against thewishes of the plaintiff. The fact that person is likely to secure aright/interest in suit property, after the suit is decided against theplaintiff, will not make such person necessary party or properparty to the suit for specific performance.”

3 (2016) 2 SCC 779

4 (2010) 7 SCC 417

236SUPREME COURT REPORTS

A9. It could thus be seen that necessary party is person inwhose absence no effective decree could be passed by the Court. It hasbeen held that if “necessary party” is not impleaded, the suit itself isliable to be dismissed.

10. Another aspect that needs to be taken into consideration isBthat, Full Bench of the Allahabad High Court in the case of Smt.Urmila Devi vs. State of U.P. & 6 others[5], had an occasion to consideran issue as to whether, upon suspension or cancellation of licence of aFair Price Shop, it was permissible for the State to make an interim ortemporary arrangement by the appointment of new fair price shopholder. The Full Bench of the Allahabad High Court held that the viewCtaken by the Division Bench of the said High Court in the case ofJagannath Upadhyay vs. State of U.P., through Principal Secretary,Food & Civil Suppies[6]that till statutory appeal is decided, the fairprice shop should not be allotted on an ad hoc basis and should beattached only to some other neighbouring fair price shop, did not layDdown correct position of law. It has been held that the State Governmentwas empowered to make regular allotment during the pendency of theappeal filed by the earlier allottee against the cancellation or suspensionof the licence.

11.It is to be noticed that in the present case, during the pendencyEof the appeal before the Appellate Authority, on recommendation ofthe Tehsil Level Selection Committee dated 19[th] April 2018, the presentappellant, through regular allotment, was appointed as Fair Price Dealeron 15[th] May 2018.

12. Insofar as the judgment of this Court in the case of PoonamF(supra), on which strong reliance is placed by Mr. Irshad Ahmad, learnedcounsel, is concerned, this Court in the case of Pawan Chaubey (supra)had an occasion to consider the aforesaid judgment in the case of Poonam(supra). This Court in the case of Pawan Chaubey (supra) also noticedits earlier decision in the case of Sumitra Devi vs. State of U.P. &Ors.[7]Noticing both these judgments, this Court observed thus:G

“Our attention has been drawn to the judgment of this Court inPoonam vs. State of Uttar Pradesh & Ors. reported in (2016) 2

5 2015 SCC OnLine All 3910

6 Misc. Bench No.10373 of 2011

H7 Civil appeal Nos. 9363-9364 of 2014, decided on 8th October 2014.

SCC 779. Relying on the aforesaid judgment, learned counselappearing 3 on behalf of the Respondent No.4 contended that theappellant need not be heard. She had no right or locus to beimpleaded.

In Poonam (supra), the subsequent allottee had actually beenheard at all stages. What the Court held was that the subsequentallottee had been trying to establish her right independently. Shecontended that she had an independent legal right. This Courtfound that it was extremely difficult to hold that she had anindependent legal right.

In Sumitra Devi vs. State of UP & Ors. (Civil Appeal Nos.9363-9364 of 2014), Bench of coordinate strength of this Courtcomprising Hon’ble Ms. Justice Ranjana Prakash Desai andHon’ble Mr. Justice N.V. Ramana (As His Lordship then was)passed an order dated 08.10.2014, the relevant parts whereof areextracted hereinbelow:

“The appellant being the subsequent allottee filed an applicationfor impleadment in the writ petition on 17.10.2008. Thatapplication was neither entertained nor allowed.

xxx xxx xxx

Learned counsel for the appellant urged and, in our opinion,rightly that the High Court should have heard the appellant beforerestoring the licence of respondent no.6 as the appellant wasthe subsequent allottee and his rights were affected by therestoration of licence of respondent no.6. We are entirely inagreement with learned counsel for the appellant. In our opinion,the High Court could not have restored the licence of respondentno.6 without hearing the appellant as his rights were certainlyaffected by such order.”

Even if subsequent allottee does not have an independentright, he/she still has right to be heard and to make submissionsdefending the order of cancellation.

It is true that the order of appointment of the appellant readsthat the order is subject to the outcome of the proceedings pendingin court. This does not disqualify the appellant from appearing andcontesting the proceedings by trying to show that the order of

[2022] 7 S.C.R.

Acancellation had correctly been passed against the RespondentNo.4.”

13. It could thus be seen that this Court had held that, even if asubsequent allottee does not have an independent right, he/she still has aright to be heard and to make submissions defending the order ofBcancellation.

14. It is further to be noticed that in the said case, i.e., PawanChaubey (supra), the order of appointment of the appellant therein wassubject to the outcome of the proceedings pending in court. The case athand stands on much better footing. The appellant herein had beenCselected by the Tehsil Level Selection Committee in its meeting dated19[th ]April 2018 and thereafter, he was appointed as Fair Price Dealervide order of the Competent Authority dated 15[th ]May 2018, on regularbasis.

15.In this background, we find that the appellant was necessaryDparty to the proceedings before the High Court. The present appealdeserves to be allowed on this short ground. However, there is anothermore serious ground on which the present appeal deserves to be allowed.

16. The Appellate Authority in its order dated 20[th ]July 2018 hascategorically observed thus:

“At present, new dealer Sh. Ram Kumar Singh s/o Chhote Singhhas been approved as Fair Price Dealer, village Anta TehsilRasoolabad, Kanpur Dehat vide District Magistrate’s order dated15.05.2018. In the end, prayer has been made that the appealbeing devoid of merits, may be dismissed.”

F17. It has further been observed thus:

“As per the proposal made by Block Development Officer in thepublic interest, an open meeting was called on ………2018 forthe selection of Fair Price Dealer at Gram Panchayat, Anta, inwhich the name of Sh. Ram Kumar Singh s/o Sh. Chhote Singh,Gresident of Gram Panchayat Anta, Tehsil Rasoolabad, KanpurDehat was taken into consideration and after discussion, in viewof the decision taken by the Tehsil Level Selection Committee,dated 19[th ]April 2018, as per the order of District Magistrate,Rasoolabad, Kanpur Dehat dated 15.05.2018, Sh. Ram KumarSingh S/o Sh. Chhote Singh, resident of Gram Panchayat Anta,

Tehsil Rasoolabad, Kanpur, Dehat has been appointed as newKotedar in accordance with the orders issued by the Dy.Commissioner (Food) Kanpur Division and Hon’ble High Court,Allahabad.”

18. It could thus be seen that respondent No. 9 was very wellaware that during the pendency of the proceedings, the appellant wasappointed as Fair Price Dealer on 15[th ]May 2018. The order of theAppellate Authority has been passed on 20[th ]July 2018. Even this beingthe position, respondent No.9 has been bold enough to aver thus in thememo of the writ petition:

“33. That it is also noteworthy to mention here that during thependency of the Fair Price Shop, no third party allotment wasmade and as per the direction of this Hon’ble Court, the shopof the petitioner was attached to another Fair Price Shop Holder.”

19. It could thus be seen that, though respondent No.9 wasvery well aware that during the pendency of the proceedings before theAppellate Authority, an allotment was done in favour of the presentappellant, she has averred in her writ petition that no third party allotmentwas made. She has further gone on to state that, as per the directions ofthe High Court, the fair price shop of respondent No.9 was attached toanother fair price shop holder. The statement is factually incorrect tothe knowledge of respondent No.9. The same has been reiterated in theGround thus:

“N. Because during the pendency of the Fair Price Shop, no thirdparty allotment was made as per the direction of this Hon’ble Court,the shop of the petitioner was attached to another Fair Price ShopHolder.”

20. It is thus clear that respondent No.9 has not only suppressedthe fact about the subsequent allotment of the fair price shop to theappellant herein but has also tried to mislead the High Court that the fairprice shop of respondent No.9 (the writ petitioner before the High Court)was attached to another fair price shop holder.

21. This Court, in the case of S.P. Chengalvaraya Naidu (Dead)By LRs. Vs. Jagannath (Dead) by LRs and others[8]has held thatnon-disclosure of the relevant and material documents with view to

8 (1994) 1 SCC 1

Aobtain an undue advantage would amount to fraud. It has been held thatthe judgment or decree obtained by fraud is to be treated as nullity. Wefind that respondent No.9 has not only suppressed material fact buthas also tried to mislead the High Court. On this ground also, the presentappeal deserves to be allowed.

B22. In the result, the appeal is allowed. The impugned order of theHigh Court dated 21[st] February 2019 is quashed and set aside. The orderdated 18[th] November 2017 passed by the Deputy Collector, Rasoolabadcancelling the Fair Price Shop licence of respondent No. 9 and orderdated 20th July 2018 passed by the Additional Commissioner (Judicial),Kanpur Division, Kanpur dismissing the appeal of respondent No.9 areCaffirmed.

23. Pending applications, if any, shall stand disposed of. No orderas to costs.

DDivya Pandey

(Assisted by : Roopanshi Virang, LCRA)

Appeal allowed.