Holding

A subsequent allottee of a Fair Price Shop is a necessary party who must be heard, and the High Court's order is set aside as it was obtained by fraud and without proper impleadment of the appellant.

Summary

The appellant, Ram Kumar, was allotted a Fair Price Shop licence during the pendency of an appeal by the earlier licence holder, Kiran Devi (respondent No.9), whose licence had been cancelled by the Deputy Collector. Kiran Devi challenged the cancellation in the High Court, which set aside the cancellation, holding that the cancellation process was defective and that no third‑party allotment had been made. The Supreme Court found that the appellant, as a subsequent allottee, was a necessary party whose rights were affected and who was entitled to be heard, even though he did not have an independent legal right. The Court also held that Kiran Devi had deliberately suppressed material facts about the appellant’s allotment, amounting to fraud that rendered the High Court’s decree a nullity. Consequently, the Supreme Court quashed the High Court order, affirmed the cancellation of Kiran Devi’s licence and the dismissal of her appeal, and allowed the appeal of the appellant.

Issues considered

Whether a subsequent allottee of a Fair Price Shop is a necessary party to proceedings challenging the cancellation of the earlier licence.
Whether the High Court erred in setting aside the cancellation order without hearing the subsequent allottee.
Whether the non‑disclosure of material facts by the earlier licence holder constitutes fraud rendering the decree void.

Subjects

necessary partyfair price shoppublic distribution systemlicence cancellationfraudprocedural fairnessright to be heard

Judgment

[2022] 7 S.C.R. 231 231

RAM KUMAR A
v.
STATE OF UTTAR PRADESH AND ORS.
(Civil Appeal No. 4258 of 2022)
SEPTEMBER 28, 2022 B
[B. R. GAVAI AND C. T. RAVIKUMAR, JJ.]
Public Distribution – Fair Price shop – Cancellation of
licence – Subsequent allottment during pendency of legal
proceedings at the instance of the earlier allottee – Subsequent
C
allottee, if a necessary party – Fair Price Shop licence of respondent
no.9 cancelled – Appeal dismissed by Appellate Authority – In the
meantime, licence to run the said fair price shop was granted in
favour of appellant – Order passed by Appellate Authority
challenged by respondent no.9, writ petition allowed by High Court
– On appeal, held : A necessary party is a person in whose absence D
no effective decree could be passed by the Court – In the present
case, the appellant was appointed as Fair Price Dealer through
regular allotment, during the pendency of the appeal before the
Appellate Authority, on a recommendation of the Tehsil Level
Selection Committee – Even if a subsequent allottee does not have
E
an independent right, he/she still has a right to be heard and to
make submissions defending the order of cancellation – Appellant
was a necessary party to the proceedings before High Court –
Further, respondent no.9 has not only suppressed the fact about
the subsequent allotment of the fair price shop to the appellant but
also tried to mislead the High Court that her fair price shop was F
attached to another fair price shop holder – Judgment/decree
obtained by fraud is a nullity – Impugned order of High Court set
aside – Order passed by Deputy Collector cancelling the Fair Price
Shop licence of respondent no.9 and that of the Appellate Authority
dismissing her appeal are affirmed – Party – Fraud.
G
Party – Necessary party – Who is – Discussed – Public
Distribution.
Fraud – Held: Non-disclosure of the relevant and material
documents with a view to obtain an undue advantage would amount
to fraud. H
231
232 SUPREME COURT REPORTS [2022] 7 S.C.R.

A Pawan 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 Private
Limited v. Regency Convention Centre and Hotels
Private Limited and Others (2010) 7 SCC 417 : [2010]
B 7 SCR 790; S.P. Chengalvaraya Naidu (Dead) By LRs.
v. Jagannath (Dead) by LRs and Others (1994) 1 SCC
1 : [1993] 3 Suppl. SCR 422 – relied on.

Puran Singh v. State of U.P. and Others (2010) SCC
OnLine All 2707; Poonam v. State of Uttar Pradesh
C and 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. State
of U.P., through Principal Secretary, Food & Civil
Suppies Decision of High Court of Judicature at
D Allahabad in Misc. Bench No.10373 of 2011; Sumitra
Devi v. State of U.P. & Ors. Decision of Supreme Court
dtd. 8th October 2014 in C.A. Nos. 9363-9364 of 2014
– referred to.

Case Law Reference
E
[2015] 14 SCR 565 referred to Para 5

[2010] 7 SCR 790 relied on Para 6

[1993] 3 Suppl. SCR 422 relied on Para 21
F
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4258
of 2022.

From the Judgment and Order dated 21.02.2019 of the High Court
of Judicature at Allahabad in Writ C 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.

H
RAM KUMAR v. STATE OF UTTAR PRADESH AND ORS. 233

The Judgment of the Court was delivered by A

B. R. GAVAI, J.

1. This appeal challenges the judgment and order of the High Court
of Judicature at Allahabad dated 21 st February 2019 thereby allowing
the writ petition filed by respondent No. 9 herein, setting aside the order B
dated 18th November 2017 passed by the Deputy Collector, Rasoolabad
cancelling the fair price shop licence of respondent No. 9 and the order
dated 20th July 2018 passed by the Additional Commissioner (Judicial),
Kanpur Division, Kanpur, (hereinafter referred to as “the Appellate
Authority”) dismissing the appeal of respondent No.9 and restoring the
C
Fair 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 writ
petitioner) was granted a licence for running a fair price shop at Gram
Panchayat Anta, Tehsil Rasoolabad, District Kanpur Dehat. Various D
complaints were received by the Sub-Divisional Officer, Rasoolabad,
District Kanpur Dehat (hereinafter referred to as “the SDO”), with regard
to malpractices committed by the said fair price shop dealer. As such, a
site inspection of the fair price shop was done on 3 rd June 2017 through
the Regional Supply Inspector. In the site inspection also, various
irregularities and malpractices were found in the running of the said fair E
price shop. As such, a show cause notice came to be issued to respondent
No.9 by the SDO on 7th July 2017. Initially, on the date fixed, respondent
No.9 did not file her explanation. Subsequently, she submitted her
explanation on 16th August 2017.
2.2 Thereafter, an inquiry was conducted by the SDO. Various F
statements were recorded. At the conclusion of the inquiry, the SDO
found the charges to be proved and as such, vide order dated 18 th
November 2017, cancelled the Fair Price Shop licence of respondent
No.9.
2.3 Being aggrieved by the order passed by the SDO, respondent G
No.9 carried an appeal to the Appellate Authority. The said appeal also
came to be dismissed by the Appellate Authority vide order dated 20 th
July 2018.

H
234 SUPREME COURT REPORTS [2022] 7 S.C.R.

A 2.4 It is to be noted that, in the meantime, licence to run the said
fair price shop was granted in favour of the present appellant-Ram Kumar
vide order dated 15th May 2018. This was done on the basis of the decision
taken by the Tehsil Level Selection Committee dated 19 th April 2018.
This fact was specifically noted in the order of the Appellate Authority
dated 20th July 2018.
B
2.5 Being aggrieved by the aforesaid order passed by the Appellate
Authority, respondent No.9 preferred a writ petition before the High Court
of Judicature at Allahabad being Civil Misc. Writ Petition No. 29832
of 2018.
C 2.6 The High Court came to a finding that the cancellation of the
Fair Price Shop licence of respondent No.9 was done without following
the full-fledged inquiry process and, therefore, relying on the Full Bench
decision of the Allahabad High Court in the case of Puran Singh vs.
State of U.P. and others1, allowed the writ petition as aforesaid.

D 2.7 Being aggrieved thereby, the present appeal.
3. We have heard Mr. Udayaditya Banerjee, learned counsel
appearing on behalf of the appellant and Mr. S.R. Singh, learned Senior
Counsel appearing on behalf of respondents Nos. 1 to 7, Mr. Abhinav
Agrawal, learned counsel appearing on behalf of respondent No.8 and
E Mr. Irshad Ahmad, learned counsel appearing on behalf of respondent
No.9.
4. Mr. Udayaditya Banerjee, learned counsel, submits that though
respondent No.9 was very well aware that during the pendency of the
appeal before the Appellate Authority, the licence to run the fair price
F shop was allotted to the present appellant, she has not only suppressed
the said fact in the writ petition but has also made a statement which is
totally false to her knowledge. It is submitted that, on this short ground
of non-joinder of the appellant in the proceedings before the High Court,
the present appeal deserves to be allowed. He relies on the judgment of
this Court in the case of Pawan Chaubey vs. The State of Uttar Pradesh
G & Ors.2 in support of his submission that the appellant being the subsequent
allottee was a necessary party and as such, the impugned judgment
and order of the High Court, without impleading him as a party, is not
sustainable in law.
1
(2010) 2 UPLBEC 947 = 2010 SCC OnLine All 2707
2
H Civil Appeal No.3668 of 2022, decided on May 6, 2022
RAM KUMAR v. STATE OF UTTAR PRADESH AND ORS. 235
[B. R. GAVAI, J.]

5. Mr. Irshad Ahmad, learned counsel, on the contrary, submits A
that this Court in the case of Poonam vs. State of Uttar Pradesh and
others3 has held that an allottee during the pendency of the legal
proceedings at the instance of the earlier allottee is not a necessary
party and as such, the impugned judgment and order, which is passed
without impleading the appellant cannot be assailed on that ground.
B
6. He also relies on the judgment of this Court in the case of
Mumbai International Airport Private Limited vs. Regency
Convention Centre and Hotels Private Limited and others 4 in support
of the proposition that the relief could have been granted in the absence
of the appellant and as such, he was not a necessary party before the
High Court. C

7. Mr. Irshad Ahmad, learned counsel, also submits that the
proceedings against respondent No.9 were initiated on account of political
rivalry. He submits that in view of this, no interference is warranted in
the present matter.
D
8. This Court in the case of Mumbai International Airport
Private Limited (supra) had an occasion to consider as to who is a
necessary party to the proceedings. It will be relevant to refer to
paragraph 15 of the said judgment, which reads thus:
“15. A “necessary party” is a person who ought to have been E
joined as a party and in whose absence no effective decree could
be passed at all by the court. If a “necessary party” is not
impleaded, the suit itself is liable to be dismissed. A “proper party”
is a party who, though not a necessary party, is a person whose
presence would enable the court to completely, effectively and
adequately adjudicate upon all matters in dispute in the suit, though F
he need not be a person in favour of or against whom the decree
is to be made. If a person is not found to be a proper or necessary
party, the court has no jurisdiction to implead him, against the
wishes of the plaintiff. The fact that a person is likely to secure a
right/interest in a suit property, after the suit is decided against the G
plaintiff, will not make such person a necessary party or a proper
party to the suit for specific performance.”

3
(2016) 2 SCC 779
4
(2010) 7 SCC 417 H
236 SUPREME COURT REPORTS [2022] 7 S.C.R.

A 9. It could thus be seen that a necessary party is a person in
whose absence no effective decree could be passed by the Court. It has
been held that if a “necessary party” is not impleaded, the suit itself is
liable to be dismissed.
10. Another aspect that needs to be taken into consideration is
B that, a Full Bench of the Allahabad High Court in the case of Smt.
Urmila Devi vs. State of U.P. & 6 others5, had an occasion to consider
an issue as to whether, upon suspension or cancellation of a licence of a
Fair Price Shop, it was permissible for the State to make an interim or
temporary arrangement by the appointment of a new fair price shop
holder. The Full Bench of the Allahabad High Court held that the view
C taken by the Division Bench of the said High Court in the case of
Jagannath Upadhyay vs. State of U.P., through Principal Secretary,
Food & Civil Suppies6 that till a statutory appeal is decided, the fair
price shop should not be allotted on an ad hoc basis and should be
attached only to some other neighbouring fair price shop, did not lay
D down a correct position of law. It has been held that the State Government
was empowered to make a regular allotment during the pendency of the
appeal filed by the earlier allottee against the cancellation or suspension
of the licence.
11. It is to be noticed that in the present case, during the pendency
E of the appeal before the Appellate Authority, on a recommendation of
the Tehsil Level Selection Committee dated 19 th April 2018, the present
appellant, through regular allotment, was appointed as Fair Price Dealer
on 15th May 2018.
12. Insofar as the judgment of this Court in the case of Poonam
F (supra), on which strong reliance is placed by Mr. Irshad Ahmad, learned
counsel, 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 noticed
its 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 in
Poonam vs. State of Uttar Pradesh & Ors. reported in (2016) 2

5
2015 SCC OnLine All 3910
6
Misc. Bench No.10373 of 2011
7
H Civil appeal Nos. 9363-9364 of 2014, decided on 8 th October 2014.
RAM KUMAR v. STATE OF UTTAR PRADESH AND ORS. 237
[B. R. GAVAI, J.]

SCC 779. Relying on the aforesaid judgment, learned counsel A
appearing 3 on behalf of the Respondent No.4 contended that the
appellant need not be heard. She had no right or locus to be
impleaded.
In Poonam (supra), the subsequent allottee had actually been
heard at all stages. What the Court held was that the subsequent B
allottee had been trying to establish her right independently. She
contended that she had an independent legal right. This Court
found that it was extremely difficult to hold that she had an
independent legal right.
In Sumitra Devi vs. State of UP & Ors. (Civil Appeal Nos. C
9363-9364 of 2014), a Bench of coordinate strength of this Court
comprising Hon’ble Ms. Justice Ranjana Prakash Desai and
Hon’ble Mr. Justice N.V. Ramana (As His Lordship then was)
passed an order dated 08.10.2014, the relevant parts whereof are
extracted hereinbelow:
D
“The appellant being the subsequent allottee filed an application
for impleadment in the writ petition on 17.10.2008. That
application was neither entertained nor allowed.
xxx xxx xxx
Learned counsel for the appellant urged and, in our opinion, E
rightly that the High Court should have heard the appellant before
restoring the licence of respondent no.6 as the appellant was
the subsequent allottee and his rights were affected by the
restoration of licence of respondent no.6. We are entirely in
agreement with learned counsel for the appellant. In our opinion, F
the High Court could not have restored the licence of respondent
no.6 without hearing the appellant as his rights were certainly
affected by such order.”
Even if a subsequent allottee does not have an independent
right, he/she still has a right to be heard and to make submissions
G
defending the order of cancellation.
It is true that the order of appointment of the appellant reads
that the order is subject to the outcome of the proceedings pending
in court. This does not disqualify the appellant from appearing and
contesting the proceedings by trying to show that the order of
H
238 SUPREME COURT REPORTS [2022] 7 S.C.R.

A cancellation had correctly been passed against the Respondent
No.4.”
13. It could thus be seen that this Court had held that, even if a
subsequent allottee does not have an independent right, he/she still has a
right to be heard and to make submissions defending the order of
B cancellation.
14. It is further to be noticed that in the said case, i.e., Pawan
Chaubey (supra), the order of appointment of the appellant therein was
subject to the outcome of the proceedings pending in court. The case at
hand stands on a much better footing. The appellant herein had been
C selected by the Tehsil Level Selection Committee in its meeting dated
19th April 2018 and thereafter, he was appointed as Fair Price Dealer
vide order of the Competent Authority dated 15th May 2018, on a regular
basis.
15. In this background, we find that the appellant was a necessary
D party to the proceedings before the High Court. The present appeal
deserves to be allowed on this short ground. However, there is another
more serious ground on which the present appeal deserves to be allowed.
16. The Appellate Authority in its order dated 20th July 2018 has
categorically observed thus:
E “At present, new dealer Sh. Ram Kumar Singh s/o Chhote Singh
has been approved as Fair Price Dealer, village Anta Tehsil
Rasoolabad, Kanpur Dehat vide District Magistrate’s order dated
15.05.2018. In the end, prayer has been made that the appeal
being devoid of merits, may be dismissed.”
F 17. It has further been observed thus:
“As per the proposal made by Block Development Officer in the
public interest, an open meeting was called on ………2018 for
the selection of Fair Price Dealer at Gram Panchayat, Anta, in
which the name of Sh. Ram Kumar Singh s/o Sh. Chhote Singh,
G resident of Gram Panchayat Anta, Tehsil Rasoolabad, Kanpur
Dehat was taken into consideration and after discussion, in view
of the decision taken by the Tehsil Level Selection Committee,
dated 19th April 2018, as per the order of District Magistrate,
Rasoolabad, Kanpur Dehat dated 15.05.2018, Sh. Ram Kumar
Singh S/o Sh. Chhote Singh, resident of Gram Panchayat Anta,
H
RAM KUMAR v. STATE OF UTTAR PRADESH AND ORS. 239
[B. R. GAVAI, J.]

Tehsil Rasoolabad, Kanpur, Dehat has been appointed as new A
Kotedar 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 well
aware that during the pendency of the proceedings, the appellant was B
appointed as a Fair Price Dealer on 15 th May 2018. The order of the
Appellate Authority has been passed on 20 th July 2018. Even this being
the position, respondent No.9 has been bold enough to aver thus in the
memo of the writ petition:
“33. That it is also noteworthy to mention here that during the C
pendency of the Fair Price Shop, no third party allotment was
made and as per the direction of this Hon’ble Court, the shop
of the petitioner was attached to another Fair Price Shop Holder.”
19. It could thus be seen that, though respondent No.9 was
very well aware that during the pendency of the proceedings before the D
Appellate Authority, an allotment was done in favour of the present
appellant, she has averred in her writ petition that no third party allotment
was made. She has further gone on to state that, as per the directions of
the High Court, the fair price shop of respondent No.9 was attached to
another fair price shop holder. The statement is factually incorrect to
the knowledge of respondent No.9. The same has been reiterated in the E
Ground thus:
“N. Because during the pendency of the Fair Price Shop, no third
party allotment was made as per the direction of this Hon’ble Court,
the shop of the petitioner was attached to another Fair Price Shop
Holder.” F
20. It is thus clear that respondent No.9 has not only suppressed
the fact about the subsequent allotment of the fair price shop to the
appellant herein but has also tried to mislead the High Court that the fair
price shop of respondent No.9 (the writ petitioner before the High Court)
was attached to another fair price shop holder. G
21. This Court, in the case of S.P. Chengalvaraya Naidu (Dead)
By LRs. Vs. Jagannath (Dead) by LRs and others8 has held that
non-disclosure of the relevant and material documents with a view to
8
(1994) 1 SCC 1 H
240 SUPREME COURT REPORTS [2022] 7 S.C.R.

A obtain an undue advantage would amount to fraud. It has been held that
the judgment or decree obtained by fraud is to be treated as a nullity. We
find that respondent No.9 has not only suppressed a material fact but
has also tried to mislead the High Court. On this ground also, the present
appeal deserves to be allowed.
B 22. In the result, the appeal is allowed. The impugned order of the
High Court dated 21st February 2019 is quashed and set aside. The order
dated 18th November 2017 passed by the Deputy Collector, Rasoolabad
cancelling the Fair Price Shop licence of respondent No. 9 and order
dated 20th July 2018 passed by the Additional Commissioner (Judicial),
Kanpur Division, Kanpur dismissing the appeal of respondent No.9 are
C affirmed.
23. Pending applications, if any, shall stand disposed of. No order
as to costs.

D Divya Pandey Appeal allowed.
(Assisted by : Roopanshi Virang, LCRA)

E

F

G

H