Existing Shop-Owners Can't Monopolize An Area: Rajasthan High Court Rejects Pleas Against State's Proposal To Open New Fair Price Shops

While rejecting petitions challenging government proposal to allot new Fair Price Shops in an area, Rajasthan High Court held that opening new FSPs was a policy decision in the prerogative of the State, and those running FSPs for about 20 years could not claim monopoly over an area.

The bench of Justice Sunil Beniwal further opined that some FSPs having less than 500 ration card holders, as compared to other FSPs having more than 500 ration card holders, did not by itself made the proposal of the government discriminatory since the main purpose of FSP was not to provide business but to ensure distribution of essential commodities to marginalized citizens.

“Due to rise in population and other factors, if the State Government thought it fit to open new fair price shops, that too looking to the welfare of the public of the area in question, cannot be questioned as the same is nothing but a policy decision of the State Government.”

The petitioner was allotted the FSP in 2000 in the concerned area in relation to which the State issued an advertisement proposing establishment of new FSPs on recommendation of a local MLA. The petition was filed against this proposal arguing that the additional FSPs would overlap with their areas of operations.

It was submitted by the petitioners that certain guidelines were issued by the State government for opening of FSPs and one such guideline prohibited establishment of new FSP in an area where the number of ration card holders attached to an existing shop were 500 or less. It was argued that in certain areas that had more than 1000 consumers, no FSP was proposed, and hence, the act was discriminatory.

Reference was made to the report of Justice Wadhwa Committee which suggested that minimum consumers must be ensured for FSPs so that they get reasonable commission. It was further submitted that no survey was conducted by the government to assess the need for such new FSPs, and the exercise was politically motivated undertaken at the behest of the MLA.

On the contrary, the State submitted that allotment of FSPs was State's prerogative, and the petitioners could not claim monopoly over a particular area. Further the norms regarding such allocation were not absolute, and the State was empowered to relax the same wherever necessary.

Further, it was argued that public representatives were entitled to highlight the need for such shops, while the ultimate decision rested on the consideration of larger public interest. Hence, such suggestion could not be said to be politically motivated.

After hearing the contentions, the Court perused the history of judicial developments on the matter and concluded that, allotment of FSPs was a policy matter, in which State had sole discretion. And that existing FSP holders had no inherent/contractual/legal right against the decision to allot new FSP.

The Court further held that the guidelines or executive/administrative instructions issued from time to time were not mandatory in nature, neither conferred any right on the existing FSP holders. Further the report of Justice Wadhwa committed was merely suggestive in nature, to be seen as a guide.

In this background, the Court accepted the arguments put forth on behalf of the State, highlighting that no material was placed on record to indicate that the proposal was at the instance of the local MLA. An MLA, being a public representative could always make such recommendations which would not automatically indicate that it was meant to unduly benefit someone.

The Court further stated that even without conducting any survey to assess the need the state could decide opening of new FSPS.

“Even if the ratio of maintaining minimum 500 ration cards for each fair price shops is not followed, the same would not give rise to any cause for the petitioners as such requirement itself is directory and the report of Justice Wadhwa Committee is merely suggestive.”

Accordingly, the petitions were dismissed.

Title: Mohammad Salim v State of Rajasthan & Ors., and other connected petitions

Citation: 2025 LiveLaw (Raj) 311

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