The Rajasthan High Court declined to grant relief to existing fair price shop (FPS) owners who had challenged a government proposal to allot new fair price shops in their areas. The petitioners were running FPSs for a long time—some since about the year 2000—and their objection was that opening new shops in the same areas would overlap with their business, effectively diminishing their capacity or income. They claimed that the government’s proposed allotment violated certain guidelines, including norms which suggest that no new FPS should be established in an area where the existing shop serves 500 or fewer ration card holders, and that the requirement of minimum consumers should be enforced so that shops get a reasonable commission.
The bench presided by Justice Sunil Beniwal examined these contentions and held that the opening of new fair price shops is a policy decision which rests in the prerogative of the State Government. The Court observed that existing FPS holders have no legal, contractual or intrinsic right to prevent the State from establishing new FPSs even if those shops are in close proximity or serve overlapping territories. The Court also noted that guidelines or administrative instructions issued by the State, such as those regarding consumer thresholds for FPSs, are not mandatory laws; rather, they are suggestive or directory in nature and do not confer enforceable rights on existing shop-owners.
One of the key submissions by the petitioners was that the state had published norms or a guideline prohibiting the opening of a new fair price shop in areas where the existing FPS has 500 or fewer ration card holders. They also contended that in certain areas having more than 1,000 consumers, no new FPS had been proposed, suggesting discrimination. A further allegation was that no proper survey or empirical study was undertaken before the decision, and that the decision was politically motivated—made at the behest of a local MLA.
The State, however, countered that the norms are not rigid, that the State may relax them wherever necessary, and that the decision to open new FPSs is motivated by larger public interest and welfare, particularly in light of rising population and other needs. The State also submitted that public representatives may make recommendations (such as MLAs doing so), but that does not necessarily imply undue favoritism or illegality. The State asserted that even without conducting a survey, it may validly decide to open new FPSs in view of welfare considerations.
The Court reviewed the Justice Wadhwa Committee report, which had suggested minimum consumer-thresholds for FPSs (so that existing shops are not unduly burdened and get sufficient commission). But the Court clarified that the Wadhwa-Committee’s report is merely suggestive: it may guide policy, but it is not binding or mandatory. Similarly, violating the guideline of “500 ration cards minimum consumers” does not per se render the new allotment action invalid if other relevant factors favour establishing new shops for public welfare.
The Court further held that the petitioners could not claim that they were aggrieved simply because their shop’s area may overlap with a new FPS. Overlap or proximity does not give rise to a legal entitlement to exclusivity. An FPS holder does not acquire a monopoly over an area. The State is free to evaluate public welfare, ensure distribution of essential commodities, and open additional shops where it finds need. The purpose of the FSP scheme is not, the Court noted, to provide business or profit to traders but to serve the public, especially vulnerable or marginalized groups, through the effective public distribution system.
In view of all these factors, the Court rejected the petitioners’ challenge. It held that the State’s proposal to open new fair price shops was within its discretion, and that no legal rule barred it from establishing additional FPSs even in areas already served by existing shops, regardless of the number of ration card holders. The petitions were dismissed.
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