'Let No One Die Of Hunger': Allahabad HC Quashes UP Govt Order Providing Preference To Self-Help Groups In Allotment Of Fair Price Shops

The Allahabad High Court has quashed an order dated July 7, 2020, issued by the UP Government to give preference to self-help groups in allotment of fair price shops, to the exclusion of all other categories of persons.A Single Bench of Justice Attau Rahman Masoodi held that the impugned GO seeks to create a "monopoly" in favour of the Self-help Groups that generally have a "weak legal identity" for the purposes of fixing accountability and thus, any such body is susceptible to "worsen" the objects of Public Distribution System instead of bringing about any reform.It observed that the rural population has already suffered much on account of non-supply of food grains leading to food scams. It thus opined that preference of a self-help groups, which it dubbed as "loosely packed" institutions, in allotment of fair price shops, would be "counterproductive" and shall not serve the real purpose. "The State Government has not projected any clarity in the matter of Self-help groups except that they are granted a unique identity number by some agency known as 'National Rural Livelihood Development Mission'. Mere allotment of a unique ID by National Rural Livelihood Development Mission for the purposes of grant of licence to run a fair price shop on behalf of the State is not enough. Registration of Self-help groups and their functioning under well defined aims, objects and bye-laws coupled with the criteria of credibility are the relevant dimensions to fix accountability," the High Court opined.It clarified that its observations do not intend to suggest that the Self-help Groups are ineligible but, what the law aims at is an accountable Self-help Group that has a legal existence in the eye of law, i.e., a body, which can sue and be sued besides 27 having a functional identity above that of an individual.Accountability of Self-Help GroupsThe High Court noted that for the purpose of preference to public institutions or public bodies, as contemplated under Section 12 of the National Food Security Act, Self-Help groups need to qualify as 'legal entities'. It held that Self-help Groups, whose identity for want of registration or any such foundation is doubtful, cannot be termed as juristic persons within the meaning of public bodies or public institutions.In the present case, the Court stated, the self help groups projected by the State lack the sanctity of a public body/public institution, in as much as, the associations are neither registered under any statute nor have they any perpetual succession. They can neither sue nor be sued. There are no bye-laws legally crystallized, hence the trappings of a public body or public institution are lacking for any reformative objects as envisaged under Section 12(2)(e) of the National Food Security Act, 2013."This Court may note that incentive payable to the fair price shop owner is a State largesse. The Self-help Groups, whose identity for want of registration or any such foundation is doubtful, cannot be termed as juristic persons within the meaning of public bodies or public institutions...Even if the services rendered by a so-called Self-help Group are voluntary, yet the relationship of agency between a self help group and State, must have a legal sanctity."Cannot erode competition in a level playing field The Court also emphasized that the law does not conceive application of the rule of preference by eroding competition in a level playing field. "The government order dated 7.7.2020 undoubtedly is violative of Article 14 of the Constitution of India, once it excludes the participation of eligible village residents and other juristic persons such as cooperative societies or Gram Panchayats at par with the Self-help Groups. The individual's right of consideration as compared to that of a juristic person for employment or grant of licence by the State stands on equal footing and no one can be eliminated or ousted in order to promote a monopoly in favour of any particular category of persons like the situation at hand," the Court held. It observed that normally, eligibility of a fair price shop dealer is dependent upon his being a resident of the same village and the process of selection is through an open meeting of the Gaon Sabha for which the resolution is passed by the registered voters of the same village by majority. Further, Section 12(2)(e) of the National Food Security Act, 2013 enables the competent authority to give preference to the public institutions or public bodies only when there is an impasse between a person and a public body/institution or two public bodies/institutions on account of the support of villagers being equal. Thus, self-help groups are eligible for participation in the selection process of fair price shop dealership. However, to apply the rule of preference exclusively in terms of impugned GO is unconstitutional, the Court held. "The rule of preference is...

'Let No One Die Of Hunger': Allahabad HC Quashes UP Govt Order Providing Preference To Self-Help Groups In Allotment Of Fair Price Shops

Akshita Saxena

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