Opening New Fair Price Shops is a Policy Decision, Existing Licensees Cannot Claim Monopoly: Rajasthan High Court - 2025-09-12

Rajasthan High Court Upholds State's Right to Open New Fair Price Shops, Dismisses Plea by Existing Licensees

JODHPUR: The Rajasthan High Court, in a significant ruling, has affirmed that the establishment of new fair price shops (FPS) is a policy decision within the exclusive domain of the State Government. Justice Sunil Beniwal dismissed a batch of writ petitions filed by existing FPS licensees, holding that they have no vested right to claim a monopoly over their operational areas or challenge the government's decision to expand the public distribution network.

Case Background

The case, led by Mohammad Salim vs. State of Rajasthan , involved numerous writ petitions from existing FPS license holders. They challenged a government advertisement dated June 25, 2025, which proposed opening new ration shops in their localities. The petitioners argued that this move would make their businesses economically unviable by reducing the number of ration card holders attached to their shops, potentially below the 500-card minimum suggested in various government guidelines and the Justice Wadhwa Committee report.

Petitioners' Arguments

The counsel for the petitioners contended that the State's action was arbitrary and illegal on several grounds: * Violation of Guidelines: The proposal allegedly contravened mandatory government circulars which prohibit establishing new shops where existing ones serve 500 or fewer ration card holders. * Lack of Assessment: The government failed to conduct any survey or study to justify the need for new shops. * Economic Viability: Citing the Justice Wadhwa Committee report, they argued that a minimum number of consumers is essential for an FPS to remain viable and prevent malpractices. * Political Motivation: The petitioners alleged the entire exercise was politically motivated, undertaken at the behest of local MLAs and Ministers. * Violation of Rights: The move was claimed to violate their fundamental right to carry on business under Article 19(1)(g) of the Constitution.

To support their case, the petitioners relied on a series of earlier judgments, including Babushyam & Ramphool v. State of Rajasthan , which had directed authorities to adhere to the 500-card norm.

State's Counter-Arguments

The State of Rajasthan, representing the respondents, countered that the petitioners had no legal standing to challenge the policy decision. Their key arguments were: * Policy Prerogative: Determining the number and location of fair price shops is a policy matter for the State, aimed at ensuring effective public distribution. * No Vested Right: Existing licensees cannot claim a monopoly or an exclusive right to operate in a particular area. * Guidelines are Directory, Not Mandatory: The government circulars, including a recent one from May 10, 2025, are executive instructions. The latest circular explicitly allows for relaxation of the 500-card norm based on geographical conditions and in the larger public interest. * Overriding Precedents: The respondents cited a definitive Division Bench judgment in Hari Om Meena & Anr. v. State of Rajasthan , which held that neither the Justice Wadhwa Committee report nor the government guidelines are legally binding on the State. This view was subsequently followed in cases like Neeraj Sharma & Anr. v. State of Rajasthan .

Court's Analysis and Ruling

After examining the conflicting lines of judicial precedent, Justice Sunil Beniwal sided with the legal position established by the Division Bench in the Hari Om Meena case. The Court concluded that the earlier judgments relied upon by the petitioners did not reflect the settled law.

In its detailed order, the High Court observed:

"The position of law which can be concluded... is as follows: (i) The establishment/allotment of fair price shops is a policy matter therefore, the State Government has sole authority to decide as to the number of fair price shops in an area; (ii) the guidelines or executive/administrative instructions... are neither mandatory in nature nor confer any right upon the existing fair price shops holders..."

The Court dismissed the allegations of political motivation as baseless, stating that public representatives are entitled to recommend the opening of new shops based on public demand, but the final decision rests with the State. It further held that a pre-decision survey is not an indispensable requirement, as the State can act based on public demand.

Regarding the argument of discrimination, the Court stated:

"...the main purpose of fair price shop is not to provide business but to ensure distribution of essential commodities to marginalized members of society and, therefore, allegation of arbitrariness or discrimination is not sustainable."

Final Decision and Implications

Ultimately, the High Court found no grounds to interfere with the State's policy decision. It held that the petitioners, many of whom have been operating their shops for over two decades, cannot claim a perpetual monopoly. The Court underscored that the government's priority is the welfare of the public and ensuring efficient distribution of essential commodities.

The writ petitions were dismissed, clearing the way for the government to proceed with the establishment of new fair price shops as per its advertisement.