M/S. Sonai Food Marketing Pvt. Ltd ... vs State Of West Bengal & Ors
2021 Latest Caselaw 4409 Cal

                     IN THE HIGH COURT AT CALCUTTA
                      CIVIL APPELLATE JURISDICTION
                             APPELLATE SIDE


      PRESENT:

      HON'BLE JUSTICE SUBRATA TALUKDAR
                     AND
      HON'BLE JUSTICE SAUGATA BHATTACHARYYA


                            M.A.T. 562 of 2021
                                   With
                              CAN 1 of 2021

                 M/s. Sonai Food Marketing Pvt. Ltd & Anr.
                                    vs.
                        State of West Bengal & Ors.



For the Appellants                 :       Mr. Kalyan Bandopadhyay
                                           Mr. Ram Anand Agarwal
                                           Ms. Nibedita Pal
                                           Mr. Ramesh Dhara
                                           Mr. Ananda Gopal Mukherjee

For the State                       :      Mr. Susovan Sengupta


Heard on                            :      30/07/2021



Judgment on                            :   26/08/2021


Subrata Talukdar, J.:

      Under challenge in this appeal is the Judgement and Order of the

Hon'ble Single Bench passed in the writ petition numbered as WPA 4928 of

2021 dated the 30th of April 2021. The Appellants/ the Company was the writ
                                           2


petitioner. The issue before the Hon'ble Single Bench, which is also the issue in

this appeal, relates to whether the Appellant/ the Company fulfills the

eligibility criteria to apply for a MR distributorship in Jamalpur Block, District

Purba Barddhaman under the Notification of the Food and Supplies

Department     which   has    permitted   Self-Help    Groups   (SHG)/    Registered

Cooperative   Societies/     Semi   Government      bodies/individuals/   group   of

individuals as an entity to be eligible to apply.


      The State took the position that the writ petitioner/ the Appellant/ the

Company does not qualify to be a group of individuals as an entity and hence is

disqualified from applying for the said MR Distributorship. The State

respondents relied on a communication of the District Controller, Food &

Supplies (F&S), Purba Barddhaman addressed to the Director of the Appellant/

the Company which purports to disqualify the Appellant/ the Company from

applying on the ground that the company cannot be treated to be in the nature

of a group of individuals as an entity.

The Hon'ble Single Bench vide its Judgement and Order dated the 30th of

April 2021 agreed with the stand taken by the State respondents, inter alia,

holding that the expression group of individuals as an entity used in the West

Bengal Public Distribution System (Maintenance and Control) Order, 2013 (for

short referred to as the 2013 Control Order) was intended to be applied in its

literal sense and not in its legal, special or technical sense. The Hon'ble Single

Bench held that since the word Company was deliberately not used in the 2013

Control Order, it cannot be used in favour of the appellants for bringing the

Company into the zone of consideration. When the expression group of

individuals as an entity is read in its natural or ordinary sense, according to

the Hon'ble Single Bench, the Appellant/ the Company stood automatically

debarred from applying.

Thus, the only question which has been tossed back and forth in this

appeal is the construction of the expression group of individuals as an entity.

While Mr. Kalyan Bandopadhyay, Learned Senior Counsel appearing for the

Appellant/ the Company, would assert that when a group of individuals is

configured to be an entity, the Appellant/ the Company would qualify to be

considered as an entity in the juristic sense, on the other hand, Mr. Susovan

Sengupta, Learned Senior Government Advocate, would assert that the

eligibility criteria of a group of individuals as an entity would only apply to

natural persons and not to artificial persons such as the Appellant/ the

Company.

The essential arguments addressed by Mr. Bandopadhyay may be

summarised as follows :-

a) That it is beyond doubt that the Appellant/ the Company is a

juristic entity registered by a specific group of individuals acting

as its shareholders and Directors. Such position has been

legally cemented by the authority of decisions of the Hon'ble

Supreme Court reported in AIR 1963 SC 1811 ( at paragraph

29) and 2012 (2) SCC 89 (at paragraphs 31 to 35)

b) If other legal entities such as Registered Co-operative Societies,

Self-Help Groups and Semi-Government bodies can be treated

to be eligible to apply, the same treatment must be extended to

the Appellant/ the Company. It is beyond lawful comprehension

that legal entities such as registered co-operative societies,

Semi-Government bodies and Self-Help Groups would be

treated as natural persons or an assembly of natural persons

whereas the appellant/ the Company would be treated as an

artificial person.

c) Therefore, the 2013 Control Order cannot be construed to bar

the Appellant/ the Company from applying and, the expression

group of individuals as an entity, has been deliberately

misconstrued by the communication of the District Controller

(F&S), Purba Barddhaman, dated 28th of June 2021 (supra)

with the intention of discriminating against the Appellant/ the

Company.

d) Referring to the Notification published for grant of the said MR

Distributorship dated the 12th of July 2018, Mr. Bandopadhyay

submits that the fulfillment of the eligibility criteria of an

applicant requiring such applicant to be a citizen of India and a

permanent resident of the concerned District stands confined

only to those applicants who are applying individually. Norms of

citizenship and permanent residence cannot, by any stretch of

imagination, apply to a legal entity such as Registered Co-

operative Societies, Semi-Government bodies or Self-Help

Groups and equally excludes the Appellant/ the Company being

a juristic entity.

e) Taking this Court to two back-to-back orders of the Hon'ble

Single Bench dated the 8th of August 2019 in WP 15409 (W) of

2019 and the 18th of December 2020 in WPO 359 of 2020 with

WPO 360 of 2020, Mr. Bandopadhyay submits that in none of

the said two orders, the Appellant/ the Company was excluded

at the threshold from applying.

f) By the first order dated the 8th of August 2019, the Hon'ble

Single Bench directed the Principal Secretary (F&S) Government

of West Bengal to expedite and conclude the process of selection

of the MR Distributorship within the specific period mentioned

in the order.

g) The directions in the order dated 8th of August 2019 (supra)

culminated in an order of the Principal Secretary (F&S) dated

the 2nd of November 2019. The order dated 2nd of November

2019 had, inter alia, granted liberty to the Appellant/ the

Company to apply afresh against any vacancy which may be

notified by the Department in future since, on matters of policy,

the earlier vacancy Notifications were sought to be substituted.

Therefore, Leaned Senior Counsel for the appellants submits

that the reasoned order dated 22nd November 2019 does not at

all preclude the Appellant/ the Company from applying.

h) Next, referring to the Judgement and Order dated 18th

December 2020, Learned Senior Counsel points out that the

Hon'ble Single Bench found the reasons stated in the order of

the Principal Secretary (F&S) dated 22nd of November 2019 to

be unacceptable since such reasons were apropo a previous

order dated 17th of August 2019 which was held to be arbitrary

by the Hon'ble Division Bench in FMA 913 of 2020 ( MAT 617 of

2020) with CAN 1 of 2020 in the matter of M/s. Kultali Food

Marketing Limited and another Vs. State of West Bengal and

others. The Hon'ble Division Bench by a Judgement and Order

dated 9th of October 2020 had struck down the refusal on the

part of the concerned respondent authority to grant

distributorship in favour of M/s. Kultali Food Marketing

Limited. Therefore, the Hon'ble Division Bench in its Judgement

and Order dated 18th December 2020 held that the present

Appellant/ the Company being similarly circumstanced as M/s.

Kultali Food Marketing Pvt. Limited, directed the State

respondents to process the application of the present appellants

for engagement as MR distributors.

i) Mr. Bandopadhyay thus submits that the order of the District

Controller (F&S) Purba Barddhaman dated the 28th of January

2021 has now come up with a new reason to disqualify the

Appellant/ the Company with a view to frustrate the back-to-

back solemn orders of the two Hon'ble Single Benches dated the

8th of August 2019 and the 18th of December 2020. It is also

submitted that the Hon'ble Single Bench vide the Judgement

and Order dated 30th of April 2021 impugned in this appeal

accepted a novel reasoning of the State respondents which falls

foul of the two judicial orders (supra), as well as the ultimate

intention vide the order of the Principal Secretary (F&S) dated

the 2nd of November 2019 granting absolute liberty to the

present Appellant/ the Company to apply afresh against any

vacancy.

j) It is submitted that if M/s. Kultali Food Marketing Limited,

being a registered company, can be granted a licence to apply

for a MR Distributorship as held by the order dated 18th of

December 2020, the present Appellant/ the Company is equally

entitled to apply for the said MR Distributorship. It is submitted

that the definition of a Distributorship under Clause-2 of the

2013 Control Order does not exclude the Appellant/ the

Company from applying in terms of Form-G of the 2013 Control

Order.

k) It is further submitted that the Appellant/ the Company was

not held to be excluded by the conditions attached to Form-G

(supra). Even an enquiry held by the relevant Sub-Divisional

Controller (F&S), Purba Barddhaman at the godown premises of

the Appellant/ the Company, no defects connected to the

eligibility particulars furnished by the Appellant/ the Company

were found.

l) Therefore, Mr. Bandopadhyay points out that the reason offered

for rejection of the candidature of the Appellant/ the Company

vide the order of the District Controller (F&S) dated 28th of

January 2021 is rather unique. Such reasoning has been

erroneously upheld by the Hon'ble Single Bench by placing

emphasis on a literal/ natural/ ordinary construction of the

expression group of individuals as an entity. On the contrary,

the emphasis ought to have been placed on a purposive

interpretation/ construction of the expression since the

intention of the Notification inviting applications was to attract

the best possible agency and not to arbitrarily discriminate and

exclude the Appellant/ the Company from applying. In support

of his arguments of the non-discriminatory role to be played by

the State respondents in matters of State contracts, reliance is

placed by Learned Senior Counsel on the authority of 2011 (7)

SCC 639 (at Paragraphs 71, 72 and 73).

m) It is submitted that the micro-classification in matters

connected to State awarded contracts which bears no rational

nexus to the object of the Notification for award of MR

Distributorship requires to be struck down as both irrational

and unconscionable. In the absence of a nexus which can

justify the exclusion of the Appellant/ the Company for grant of

the said MR Distributorship, this appeal must succeed and the

Appellant/ the Company should be declared eligible to apply.

Per contra, Mr. Susovan Sengupta, Learned Senior Government Advocate,

submits that no challenge has been thrown by the Appellants/the Company

to the Notification inviting applications as being inconsistent with Article 14

of the Constitution of India. The Appellants/the Company were free to apply

on the basis of the criteria laid down. The orders dated 8th of August, 2019

and 20th of December, 2020 do not bar the notifying F&S Authority from

treating a group of individuals as an entity as not to be in the nature of a

Company.

It is submitted that the tender was intended to be confined to natural

persons as distinguished from artificial persons. The conditions in the tender

relating to citizenship and permanent residence of the applicants clarified

the position further that such conditions would apply to only natural

persons aggregating as a group of individuals. It is submitted that the

Company was deliberately left out of the ambit of the Notification inviting

applications. Accordingly, there could be no question of including the

concept of a company as a registered juristic entity distinct from a group of

individuals to be included within the scope of the tender.

The Company being in the nature of a single registered juristic entity was

eligible to participate in tenders prior to the coming into force of the 2013

Control Order. However, the concept of a company eligible to participate as a

single registered juristic entity was omitted altogether. Instead, the

Notification in issue used the expression group of individuals as an entity or,

in other words, acting as an entity comprising natural persons eligible to

participate in the tender.

Mr. Sengupta asserts that by throwing open the tender to natural

persons as distinguished from artificial persons, the scope of participation

in the tender was sought to be given a more equitable mode. The State

Respondents, by doing so, are seeking to create greater personal

accountability in the area of allotment of MR distributorships. Not only

natural persons can be held to be more accountable, by doing so, the State

has endeavored to offer the opportunity to participate in the tender to a

larger segment of the population. The State has also sought to eliminate the

stranglehold of powerful companies such as the Appellants/the Company

who were hitherto monopolising MR distributorships. Taking this Court to

the definition of a company as understood in law, it is submitted that a

Company cannot be a citizen of India nor enjoy a permanent residential

address. However, both the criteria of citizenship and permanent residence

would apply to a natural aggregation of a group of individuals.

It is submitted that none of the conditions incorporated in the tender

Notification are inconsistent with the 2013 Control Order which has

statutory flavour. By way of amplifying the facts connected to his

arguments, Mr. Sengupta relies on statistics compiled by way of a Chart

with copies served on the Learned Advocates for the Appellants/the

Company. The Chart, inter alia, purports to show that several eligible groups

of individuals as an entity were found qualified to apply.

Learned State Counsel relies on the authority of AIR 1963 SC 1811 at

Paragraph 29 to demonstrate the distinction between a Company registered

as an artificial juristic entity and a group of individuals collaborating as a

natural entity.

Having heard the parties and considering the materials placed, this

Court arrives at the following findings:-

I) First, the back-to-back orders of the two Hon'ble Single Benches

respectively dated the 8th of August, 2019 and the 20th of

December, 2020 adequately underscore the position that the

Appellants/the Company is entitled to apply against vacancies for

MR distributorships. Taking the second order dated 20th

December, 2020 first, this Court finds that it is no more res integra

that the Appellants/the Company shall be treated on an equal

footing with another similar registered juristic entity namely, M/s.

Kultali Food Marketing Ltd.

It is not in dispute that M/s. Kultali Food Marketing Ltd. is already

operating on the basis of a licence for running a MR

Distributorship. Therefore, the order dated 20th December, 2020

having attained finality with M/s. Kultali Food (supra) is already

holding a licence of MR Distributorship on such basis, there is no

reason why the Appellants/the Company should be denied equal

status being on the same legal footing.

II) Next, turning to the first order dated 8th of August, 2019 directing

the Principal Secretary (F&S) to take the selection process to a

logical conclusion, this Court has already taken notice of the fact

that the Principal Secretary (F&S) had permitted the

Appellants/the Company to apply afresh against any vacancy,

meaning thereby that, the restrictions on applying as imposed by

the communication dated 28th January, 2021 amounts to

unreasonable curtailment of the liberty granted (supra) by the

Principal Secretary (F&S) pursuant to an order of Court.

III) It must be also noticed that in the said order of the Principal

Secretary (F&S) dated 22nd November, 2019, it was, inter alia,

observed as follows:-

"(ii) Norms and Specifications of godowns; (iii) number of Cards to be tagged with the Distributor, etc. After detailed examination, the State Govt. in Food & Supplies Dept. had

taken a policy decision to cancel all these MR distributor vacancy notifications and had decided to notify these vacancies denovo after adopting revised norms and guidelines regarding financial solvency and godown specifications afresh and public interest. Accordingly, the Department had issued a GO vide No. 3316-

FM/Sect/Sup/4M-33/2019 dated 07.08.2019 with a direction to the concerned DCF&S to cancel the vacancy notification(s) of distributors."

IV) It was again observed by the said order of dated 22nd November,

2019 as follows:-

"Approval and cancellation of vacancy is within the realm of policy decision by the State Government and is not in contravention of any law Statute. The State Government has taken a general decision to cancel all the 35 vacancies for which advertisement had been published. The said decision was made in public interest for a number of reasons concerning matters of policy and was in no way aimed at prejudicing the petitioner alone. Therefore no mala fide intention, or any attempt to infringe upon the fundamental rights or other rights of the petitioner or any other person can at all be deduced."

V) From a collective interpretation of the reasons disclosed in the

order dated 22nd November, 2019 (supra), this Court does not find

any restraint on entities recognized by law to be ineligible to apply

for a MR Distributorship. It was only contemplated that the

vacancies of MR Distributorship were to be notified following the

norms of financial solvency and godown specifications in public

interest.

It is not the case of the State Respondents that the Appellants/the

Company has failed to meet the policy specifications norms set

forth in public interest. To the mind of this Court, the exclusion of

the Appellants/ the Company by way of a novel logic disclosed in

the communication dated 28th January, 2021 and reiterated in the

arguments of the State Respondents, goes against the very grain of

the observations made by the Principal Secretary, F&S that there

was no mala fide intention to curtail the rights of the

Appellants/the Company to apply for a MR Distributorship.

VI) Although, it is an admitted position available from the record that

the order of the Principal Secretary (F&S) dated 22nd November,

2019 stood set aside by the judgment and order dated 20th

December, 2020 on the basis of a different line of reasoning

pertaining to the arbitrary exclusion of M/s. Kultali Food

Marketing Limited from the zone of consideration, the consistent

holistic interpretation of the two judicial orders dated 8th August,

2019 and 20th December, 2020 keeping the single administrative

order dated 22nd November, 2019 in context, is that the

Appellants/the Company could not be excluded from the zone of

consideration of eligible applicants for the MR Distributorship.

VII) Additionally this Court finds the rationale behind the stand of the

State Respondents that a distinction is to be drawn between

natural and artificial persons in a tender relating to grant of MR

distributorships to be an ambitious legal exercise. The objective of

the tender policy was to find out the best bid on the platform of

financial solvency, godown space and relevant parameters.

Therefore, the State is duty bound to seek out the most eligible

candidates for the MR Distributorship. That Judicial Review in

tender matters may be restricted but, not excluded, finds trite

expression at Paragraph 11 of In Re: Monarch Infrastructure (P) Ltd.

Versus Commissioner, Ulhasnagar Municipal Corporation and

Others, (2000) 5 SCC 287 which, reads as follows:

"11. Broadly stated, the courts would not interfere with the

matter of administrative action or changes made therein,

unless the Government's action is arbitrary or discriminatory

or the policy adopted has no nexus with the object it seeks to

achieve or is mala fide. "

VIII) It is hence incomprehensible that tender specifications should be

designed in a manner construing a group of individuals as an entity

as limited to eliminating the Appellants/the Company. It is equally

incomprehensible that the construction of the expression a group

of individuals as an entity has been argued as limited to natural

persons whereas the legal grundnorm persuades this Court to hold

otherwise by purposively interpreting the expression to include

within its scope, ambit and meaning juristic entities constituted by

a group of individuals. To the mind of this Court such a condition

in the tender stands out to be ex facie discriminatory and since

such a tender condition fails to provide a level playing field, the

exclusion of the Appellants/the Company is liable to be struck

down.

IX) It is also difficult for this Court to appreciate the concept of a group

of individuals as an entity restricted only to a fluid aggregation of

so-called natural persons. To the mind of this Court, the

expression group of individuals as an entity or, in other words,

acting as an entity could also relate to a juristic entity such as the

Company formed out of a group of individuals being its promoters,

shareholders and Directors.

X) In the event, the expression natural persons is to be applied to the

tender notice, it must be applied across the board to the other

categories of applicants such as Registered Co-Operative

Societies/Self Help Groups and Semi-Government Bodies which,

by their very own configuration, are ineligible to be treated as

natural persons. Carrying the above discussion further, this Court

is left in doubt whether the meaning given to group of individuals

as an entity by the communication dated 28th January, 2021

although not so appearing from the Notification itself, could be

designed to act in a particular manner to eliminate the

Appellants/the Company from applying at the threshold itself and,

the Hon'ble Single Bench, with respect, could have perceived that

the so called literal/ordinary meaning of the expression group of

individuals as an entity is not a legal contextual meaning at all.

Since, the so-called literal/ordinary meaning carries no legal

context at all having regard to the present facts and

circumstances, this Court must resort to a purposeful construction

which must negate such legal absurdity.

In the backdrop of the above discussion, the order impugned of the

Hon'ble Single Bench stands set aside.

The application for MR Distributorship of the Appellants/the Company

shall be now processed in accordance with law.

There shall be no order as to costs.

Parties shall be entitled to act on the basis of a server copy of this

Judgement and Order placed on the official website of the Court.

Urgent Xerox certified photocopies of this judgment, if applied for, be

given to the parties upon compliance of the requisite formalities.

I agree.

(Saugata Bhattacharyya, J.) (Subrata Talukdar, J.)

26.08.2021 Later:

After pronouncement of this Judgement and Order, Mr. Sengupta,

Learned State Counsel, prays for stay of operation of the Order.

The prayer for stay is opposed by Learned Counsel for the Appellants/the

Company.

Heard.

Considered.

The prayer for stay stands rejected.

Parties shall be entitled to act on the basis of a server copy of this

Judgement and Order placed on the official website of the Court.

Urgent Xerox certified photocopies of this judgment, if applied for, be

given to the parties upon compliance of the requisite formalities.

I agree.

(Saugata Bhattacharyya, J.) (Subrata Talukdar, J.)