Aftab Alam, J.
1. All these writ petitions raise a common question of law and seek the same relief(s) on behalf of the respective petitioners. These cases were, therefore, heard together and are being disposed of by this common judgment.
2. The petitioners in all the five writ petitions are wholesale kerosene dealers. They hold dealerships from different petrol companies and carry on their business on the basis of wholesale kerosene dealer's licences issued under the provisions of the Bihar Trade Articles (Licenses Unification) Order, 1984 (hereinafter referred to as the Unification Order). They are aggrieved by the direction for cancellation of their licences issued by the Commissioner and Secretary, Department of Food, Supplies and Commerce, Government of Bihar under his circular letter No. 3281, dated 6-8-2002 (Annexure-8 in C. W.J.C. 9944 of 2002). It is contended on behalf of the petitioners that the direction issued by the Commissioner, Food, Supplies and Commerce is illegal and invalid and cannot form the basis for cancellation of their statutory licences issued under the Unification Order.
3. The material facts that are beyond any controversy are brief and can be stated thus.
4. Smt. Veena Devi the sole petitioner in C.W.J.C. No. 9944 of 2002 is one of the two partners in a partnership firm that has got wholesale kerosene dealership from the Indian Oil Corporation Limited. The dealership was initially granted in 1967 to one Ram Chandra Prasad, the father-in-law of the petitioner. But at present the dealership stands in the name of a firm of which the petitioner and his brother-in-law Dr. Arvind Kumar are the two partners.
5. In C.W.J.C. No. 9945 of 2002 the dealership from I.B.P. Company Limited is in the name of the sole petitioner. The dealership was granted in the year 1963 and it remains subsisting continuously and uninterruptedly for all these years.
6. In C.W.J.C. No. 9947 of 2002 the sole petitioner has the dealership from the Indian Oil Corporation. The dealership was granted to him in the year 1984 and remains subsisting since then.
7. In C.W.J.C. No. 13061 of 2002 the sole petitioner has the dealership from the Indian Oil Corporation Limited. The dealership was granted to him in the year 1989.
8. In C.W.J.C. No. 13061 of 2002 the dealership stands in the trade name of M/s. Nandini Kerosene Oil Depot of which petitioner No. 2 is the sole proprietor. The dealership is from the Indian Oil Corporation Limited and it was granted in the year 1991.
9. In C.W.J.C. No. 515 of 2003 the sole petitioner got his dealership from the I.B.P. Company Limited on 11-5-1994.
10. Needless to say that in all these cases the petitioners/dealers also hold the statutory licenses issued in the name of the petitioners/dealers under the Unification Order.
11. It may further be noted that in C.W.J.C. No. 9944 of 2002 one of the two partners in the dealership firm, namely, Dr. Arvind Kumar was elected as Ward Commissioner of Dighwara Nagar Panchayat in the elections held in the year 2002; in C.W.J.C. No. 9945 of 2002 the younger brother of the sole petitioner was elected as the Chairman, Dighwara Nagar Panchayat; in C.W.J.C. No. 9947 of 2002 the petitioner himself was elected as the Chairman of Marhowrah Nagar Panchayat. In C.W.J.C. No. 13061 of 2002 the petitioner himself was elected as the Ward Commissioner of Purnea Nagar Panchayat and in C.W.J.C. No. 515 of 2003 the petitioner was elected as a member of the Zila Parishad, West Champaran.
12. It is the election of the petitioners themselves or their relatives or in one case, of one of the partners in the dealership firm that has rendered their licenses liable to cancellation in terms of the impugned direction issued by the Commissioner, Food Supplies and Commerce Department, Government of Bihar.
13. But before examining the impugned circular dated 6-8-2002 it would be appropriate to take a look at some earlier circulars in the series.
14. It is common knowledge that elections for the three-tier Panchayat system in this State were held, on the intervention of this Court, after more than two decades and the Panchayat bodies at different levels came into existence after a very long gap. The formation of Panchayat bodies at different levels necessitated legal and administrative adjustments having regard to the authorities, powers and functions of the Panchayats at different levels. In that connection the Commissioner-cum-Secretary, Food, Supplies and Commerce first issued certain directions under his circular letter No. 5107, dated 6-12-2001 (Annexure-4 in C.W.J.C. No. 13061 of 2002). The circular contained directions with regard to licenses for the Public Distribution System held by persons who either themselves or whose close relatives were elected as Mukhiya, Sarpanch, Ward Member in the Gram Panchayat elections. It was stated in that circular that under Section 22 of the Bihar Panchayat Raj Act, 1993 the work of monitoring the Public Distribution System was one of the functions of the Gram Panchayat and hence, a conflict of Interests was likely to arise in case a person holding licence under the Public Distribution System either himself occupied the position of Mukhiya, Sarpanch or Ward Member or anyone of his close relatives was elected to that position. Therefore, the circular went on to direct that the agreements under the Public Distribution System with all such persons would be cancelled, till their tenure in office.
15. The direction contained in circular No. 5107, dated 6-12-2001 was challenged before this Court in C.W.J.C. No. 1314 of 2002 (Surendra Sharma v. State of Bihar). But a Division Bench, presided over by the Hon'ble the Chief Justice, upheld the validity of the direction and dismissed the writ petition by judgment and order, dated 25-1-2002, reported in 2002 (2) PLJR 44 : AIR 2002 Patna 87.
16. Then came circular letter No. 1543, dated 4-4-2002 (Annexure 7 in C.W.J.C. No. 9944 of 2002) being second in the series. In this circular, it was noted that the earlier circular No. 5107, dated 6-12-2001 was upheld by this Court in the case of Surendra Sharma. It was further noted that the earlier circular, dated 6-12-2001 did not refer to Panchayat Samities and Zila Parishads nor did it contain any directions with regard to wholesale licence holders of Kerosene oil etc. The circular then went on to refer to Sections of the Bihar Panchayat Raj Act under which Panchayat Samities and Zila Parishads were constituted and also referred to the composition of these bodies. It was further stated in this circular that the direction contained in the departmental circular No. 5107, dated 6-12-2001 shall equally apply to members of Zila Parishads and Panchayat Samitis and also that persons dealing in fixed price commodities and holding wholesale Kerosene dealer's licences who either themselves became members of Panchayats/Panchayat Samitis/Zila Parishads or whose close relatives got elected to those bodies would also be governed by the earlier circular, dated 6-12-2001. The circular then went on to define family and laid down that mother, father, brother, brother's wife, husband, wife, son, daughter-in-law, paternal uncle (in case, the family was undivided) would be deemed to be members of the family for the purpose of the circular.
17. Then came the Impugned circular No. 3281, dated 6-8-2002, being the third and the last in the series (Annexure 8 in C.W.J.C. No. 9944 of 2002). In this circular, it was stated that disqualification from holding an agency under the public distribution system, a Thela vend and a wholesale Kerosene oil dealer's licence would also apply to those who had either themselves been elected as Ward Commissioner, Vice-Chairman or Chairman of Nagar Panchayat (erstwhile notified area committee), Nagar Parishad (erstwhile Municipality) and Municipal Corporation or members of whose family were elected to those positions. In the impugned circular, it is further stated that the direction is to be enforced with immediate effect.
18. In C.W.J.C. No. 515 of 2003, the District Magistrate, West Champaran, Bettiah has already issued the consequential order, dated 30-8-2002 by which the wholesale Kerosene dealers licence of the petitioner in that case was cancelled. The licences of the petitioners in the other four cases is saved on the basis of an interim order passed by this Court in those cases.
19. On behalf of the State, the validity of the direction contained in the impugned circular, dated 6-8-2002 was defended primarily on the basis of the Division Bench order in Surendra Sharma (supra).
20. Mr. K.P. Yadav, Standing Counsel No. V, appearing for the respondents, submitted that monitoring the public distribution system was among the responsibilities and functions of the Gram Panchayat, the Panchayat Samiti and the Zila Parishad. He referred to Section 22 of the Bihar Panchayat Raj Act dealing with the functions of Gram Panchayat and submitted that monitoring the public distribution system was one of the functions of the Gram Panchayat as enumerated in Clause XXIII (2) of that section. He also referred to Section 45 dealing with the functions and powers of Panchayat Samiti, Clause XXIV of which, includes public distribution system as one of functions of the Samiti. He also referred to Section 71(1)(6) to show that the distribution of essential commodities was within the functions and powers of the Zila Parishad.
21. Mr. Yadav submitted that as the public distribution system and the distribution of essential commodities fell within the powers and functions and powers of the aforementioned Panchayat bodies, there was every likelihood of conflict of interests if dealers under the public distribution system or wholesale Kerosene oil dealers or their close relatives sat on these bodies as members or office bearers. Hence, in order to avoid any such clash of interests and to ensure that the public distribution system and the distribution of essential commodities worked effectively and meaningfully, it was necessary that no one having any commercial interests in those dealership should be allowed to sit on those bodies as member or office bearer and it was with that object that the impugned direction was issued.
22. Mr. Yadav relied heavily on the Division Bench decision in Surendra Sharma for defending the validity of the impugned direction as contained in the last circular, dated 6-8-2002.
23. It may be noted here that out of the five cases only in one case, C.W.J.C. No. 515 of 2003, the petitioner was elected as member of the Zila Parishad, West Champaran. In the remaining four cases, the election is to Nagar Panchayats. It was not shown to the Court that monitoring of public distribution system or supervision of distribution of essential commodities fell within the functions and responsibilities of the Nagar Panchayat. But, that apart, it appears to me that any parallel between a dealership under the public distribution system and a wholesale dealership of Kerosene oil granted by a petrol company is quite misconceived and the reliance placed on the Division Bench decision in Surendra Sharma for defending the impugned direction contained in the latter circular, dated 6-8-2002 is ill founded.
24. First, it is to be kept in mind that any dealership in foodgrains or any other essential commodities has twin requirements. A dealership would first require a dealership agreement between the agent and the principal. Besides, the dealer would also necessarily require a licence issued under the Unification Order in the absence of which he would be legally prohibited from dealing in foodgrains or any other trade articles either in retail or in wholesale.
25. Thus, a dealership under the public distribution system would require a dealership agreement between the dealer and the principal, which in this case is the State. A standard agreement for the public distribution system is on record as Annexure 5 in C.W.J.C. No. 13061 of 2002. From a perusal of the terms and conditions of the agreement, it becomes evident that it is essentially a contract of agency in which the retailer is the agent and the principal is the Government of Bihar. In terms of the agreement, the Government would supply the food grains to the retails to be sold on commission, at prices fixed by the principal and to consumers identified by the principal. But for carrying on the business of receiving from the Government and selling the food grains to the consumers, the retailer would necessarily require a retail foodgrains dealer's licence under the Unification Order and he can operate the dealership under the public distribution system only on obtaining a retail foodgrains dealer's licence under the Unification Order. This aspect of the matter was discussed by this Court in Md. Ehsan v. State of Bihar, 1999 (2) PLJR 621.
26. It is seen above that a dealership under the public distribution system operates on the basis of an agreement with the State Government. That agreement can, therefore, be revoked for violation of any of the terms and conditions contained in the agreement or for any other valid or reasonable cause as may be the direction issued in the first circular No. 5071, dated 6-12-2001.
27. But, to stretch the analogy of a dealership under the public distribution system and to make the direction/disqualification applicable in case of a wholesale dealership in Kerosene oil appearers to me to be wholly misconceived. In the case of wholesale Kerosene dealership the parties to the agreement are the dealer and the petrol company and the State Government or any of its officials are complete strangers to that agreement. Further, as in the case of a dealership under the public distribution system a wholesale dealer of Kerosene oil must obtain a wholesale Kerosene dealer's licence under the Unification Order and on the basis of that licence alone he can carry on the whole-sale business in kerosene. The grant and revocation of licence is regulated by the provisions of the Unification Order and a licence Issued under the Unification Order can by no means be cancelled by directions contained in executive instructions.
28. Looking at the matter in slightly greater detail, the wholesale dealership in Kerosene oil is granted by petrol companies on the basis of selection, following an open advertisement. The selection Is made by a well defined mode prescribed by the Government of India, Ministry of Petroleum. The guidelines laid down by the Government of India contain detailed provisions relating to eligibility criteria, reservations for different groups and sections of people and the selection process. Once a candidate is selected for the grant of dealership, a letter of intent is Issued in his favour by the petrol company. Then starts the process of investigation regarding the suitability of the land site for storage of kerosene oil in large quantities. After the site offered by the selected candidate is approved by the petrol company, the company obtains a no-objection certificate from the District Magistrate with regard to the storage site. On the basis of the no-objection certificate, the petrol company obtains a licence under the Explosives Act from the competent authority under that Act. Then the dealership agreement is executed between the selected candidate and the petrol company.
29. In the mean while the dealer must also obtain a wholesale kerosene dealer's licence under the provisions of the Unification Order.
30. Now, it is one thing for the Government to cancel a dealership under the public distribution system which operates on the basis of an agreement between the retailer and the Government itself. But it is quite different to purport to cancel a dealership agreement between the dealer and the petrol company to which the Government is no party at all. I am unable to envisage a situation where on the basis of an executive instruction the Government should acquire the right to cancel an agreement entered into between two private parties and to which the Government is no party at all.
31. Connected with the above is the question of revocation of the wholesale Kerosene oil dealer's licence. It is seen above that the wholesale Kerosene oil dealer's licence is issued under the Unification Order which is a complete and self-contained statutory scheme for the grant of licences. The order contains provisions not only for grant of licence but also provides the grounds on which and the process by which the licence can be cancelled. It is well settled that the provisions of a statutory licensing order cannot be supplanted by executive instructions. In State of U. P. v. Daulat Ram Gupta, AIR 2002 SC 1633 : (2002 All LJ 1146) in paras 11 and 12 of the judgment the Supreme Court observed and held as follows :
'11. It is not disputed that the method of grant of licence as well as the conditions of licence and its renewal are provided in the statutory order framed under the Essential Commodities Act. Clause 2 (d) of the statutory order provides that dealer means a person engaged in the business of purchase, sale or storage or sale of High Speed Diesel Oil or Light Diesel Oil or both but does not include an oil company. Clause 2 (h) of the Statutory Order provides that the 'licensee' means a dealer holding a licence granted under the provisions of this Order. Clause 4 of the Statutory Order further provides that for grant or renewal of a licence an application in Form 'B' attached to the order, shall be given to the Licensing Authority. Every licence granted or renewed under this Order shall be in Form 'C' and shall be subject to the conditions specified therein. Clause 8 of the Statutory Order further provides that the licensing authority may, for reasons to be recorded in writing, suspend or cancel any licence if it is satisfied that the licensee has contravened any provisions of this Order or the conditions of the licence or any direction issued thereunder. It is not disputed that the respondent was granted licence under the Statutory Order. Form 'B' attached to the Statutory Order does not show that the licence to vend Diesel Oil can be refused if the applicant has place of business within the radius of 5 Kms. of a retail outlet. Similarly, neither Clause 4 nor Form 'C' attached to the Statutory Order provides that no licence shall be renewed if the place of business of a licensee falls within a radius of 5 kms. of a Government retail outlet.
'12. It is, therefore manifest from the provisions of the Statutory Order that in so far as conditions of grant of licence for sale of Diesel Oil and its renewal are concerned, the Statutory Order is a complete code in itself and there is no provision in the Statutory Order under which a Licensing Authority could refuse to renew a licence if licensee's place of business falls within a radius of 5 kms. of a Government run retail outlet.'
32. In view of the discussions made above, I come to the irresistible conclusion that the direction contained in the circular, dated 6-8-2002 in so far as It relates to cancellation of the dealership and wholesale trade licences for kerosene oil is bad, illegal and fit to be quashed.
33. As the writ petitions are to be allowed on this point itself, I do not propose to discuss here some other points raised on behalf of the petitioners.
34. For the reasons discussed above, the circular, dated 6-8-2002 in so far as it directs for cancellation of dealership and wholesale trade licences for kerosene oil is quashed. Consequently the order, dated 30-8-2002 passed by the District Magistrate, West Champaran, Bettiah (Annexure 7 in C.W.J.C. No. 515 of 2003) is also quashed.
35. Before parting with the records of this case, it may be observed that the object and intent of the authorities may be quite correct but the manner in which the object is sought to be achieved is quite illegal and is bound to attract the intervention by the Court. In case the authorities really want to achieve their object and purpose, they would be well advised to consider making appropriate amendments in the Bihar Panchayat Raj Act and the Rules or in the Unification Order or they may even try to persuade the Central Government to make suitable amendments in the guidelines for selection and appointment of wholesale kerosene dealer by the petrol companies.
36. In the result, these writ petitions are allowed, but with no order as to costs.