Judgment: ABID HUSSAIN CHATTHA, J. This single Judgment shall decide the titled as well as connected Writ Petitions No. 81486 & 81502 of 2022 since the same are based on common set of facts and involve identical question of law.
2. The Petitioners have assailed the vires of clause VII of notification No. SO (F-1) 3-46/2020(W.E) dated 19.05.2022 (the "Notification") issued by the Secretary Food, Government of the Punjab, Lahore. The Notification regulates the supply of wheat stock to flour mills to ensure uninterrupted supply of wheat flour and to stabilize its price in the market. The Notification is reproduced below for ready reference:- "...
2. Now, THEREFORE, in exercise of powers conferred under Section 3 of the Punjab Foodstuffs (Control) Act, 1958, Government of the Punjab is pleased to promulgate the following Wheat Release / Milling Policy 2022-23: I. Issuance of wheat may be made to the approved functional flour mills having valid food grain license.
II. Functionality of flour mills as a going business concern shall be determined by the respective District Food Controller (DFC) as per the SOPs issued by the Director Food.
III. Issue price of wheat shall be Rs. 1765 / 40 kgs (including bardana cost) and flour mills shall be bound to sell flour bags at following ex-mill and retail price: Ex-mill prices a. 20 kg flour bag Rs. 950 b. 10 kg flour bag Rs. 475 Retail Prices a. 20 kg flour bag Rs. 980 b. 10 kg flour bag Rs. 490 IV. Agreement shall be executed for observance of Policy and process between the DFC concerned and the flour mills prior to commencement of wheat release.
V. Wheat shall be released for each district on the basis of the need of the targeted population of that district (Annex-1). The released quantity of wheat for each district shall be distributed among the flour mills of that district that qualify under the SOPs issued under clause II of this notification.
VI. Grinding capacity of already approved flour mill shall remain frozen at the already approved roller bodies and no enhancement shall be allowed.
VII. No new flour mill getting a license during the current release season shall be issued wheat from public stock for the purpose of grinding.
VIII. Flour mills getting wheat from Punjab Food Department shall also be entitled to grind their private wheat stocks. Flour mills getting wheat from Punjab Food Department shall be bound to deliver minimum 25% flour obtained from their private wheat stocks in their respective Districts.
IX. Flour mills shall observe extraction ratio of 70:18:12 (flour, fine, bran) in respect of public wheat stocks.
X. To ensure accounting of public wheat stocks being released to flour mills, the flour mills getting wheat from Punjab Food Department shall be bound to obtain permits from concerned DFC in respect of their wheat products produced from private wheat stocks for out of District and Province movement. In case of failure to do so action shall be taken under the Standard Operating Procedures (SOPs) issued by Food Department as amended from time to time.
XI. Flour mills shall be bound to upload wheat purchase, wheat grinding and flour supply details on Flour Ledger Management Information System (FLMIS) on daily basis.
XII. If flour mill found involved in less grinding of public wheat stocks at any stage, the concerned flour mill shall be held responsible to deposit recovery @ notified rates of Food Department and its license may be suspended / cancelled as per SOPs issued by the Director Food amended from time to time.
XIII. Wheat to defaulter flour mills (which have not deposited their outstanding dues) shall not be issued from Government stocks.
XIV. Rawalpindi Division, Gujranwala Division except District Narowal, Lahore Division except District Nankana Sahib and District Faisalabad shall be treated as deficit areas.
XV. Flour mills of deficit Divisions / Districts shall lift atleast 25% of their authorized quota from the allocated Districts notified by Food Directorate.
XVI. Stocks shall be shifted from the surplus regions to the deficit regions of Lahore, Gujranwala and Rawalpindi on need basis.
XVII. District Administration shall monitor sale of flour at notified retail price.
3. All other departmental instructions along with legal, codal and procedural formalities and advance deposit of price and issuance of wheat shall be strictly adhered to.
4. This wheat release policy shall be reviewed after a period of one month."
(Underlining in clause VII is mine)
3. Brief facts of the titled and connected Writ Petitions are that the flour mills of the Petitioners were duly established after obtaining all the relevant no objection certificates from the concerned Departments and they have been validly issued Foodgrains Licenses under the Foodgrains (Licensing Control) Order, 1957 for the purposes of purchase, grinding, sale or storage of Foodgrains and manufacturing of value added products. Thereafter, the Petitioners applied for the release of wheat from public stock to the Food Department, Government of the Punjab, Lahore. Due inspections were carried out with respect to the verification of installed machinery and grinding capacity of the flour mills. However, the request of the Petitioners for release of wheat from public stock was denied by citing the impugned provision contained in Clause VII of the Notification.
4. Learned counsel for the Petitioners contended that clause VII of the Notification is beyond the powers conferred under Section 3 of the Punjab Foodstuffs (Control) Act, 1958 (the "Act") and the restriction contained therein offends Articles 8, 18 & 25 of the Constitution of the Islamic Republic of Pakistan, 1973 (the "Constitution"). He apprised that Khyber Pakhtunkhwa has removed a similar provision from policy in vogue as is depicted from the notification dated 23.09.2022. He explained that instead of encouraging the newly established or newly functional flour mills, the Department has imposed a condition upon such mills regarding non-supply of wheat from public stock which discriminates the newly established or newly functional mills vis--vis the existing mills, thereby, making them non-compatible with existing mills. No reasonable and intelligible criteria was evolved in prescribing the condition, whereby, two separate classes were created with respect to newly established and existing flour mills for release of wheat quota. He vociferously argued that after the issuance of Foodgrains license and due inspection in terms of installed machinery and grinding capacity of the flour mills, there was no justification to impose restriction to release the public wheat stock in the next season and as such, the Notification was arbitrary, capricious, confiscatory and unjust, hence, the same was liable to be set aside. He relied upon cases titled, "Government of N.W.F.P. through Secretary and 3 others v. Mejee Flour and General Mills (Pvt.)
Ltd., Mardan and others" (1997 SCMR 1804); and "Suresh Kumar and others v. Province of Sindh through Chief Secretary Sindh and others" (2022 MLD 1862).
5. The report and parawise comments were submitted by the concerned Respondents. It was admitted that Punjab Food Department had issued Foodgrains licenses to the Petitioners. However, it was submitted that the Petitioners being newly established or newly functional mills are not entitled for the release of wheat from public stock in terms of restriction as envisaged in Clause VII of the Notification.
6. Learned Law Officer contended that the Department had vested right to formulate policies and regulate the release of wheat from public stock in larger public interest. The rational for incorporating the restriction in the Notification is that the distribution policy can be kept stagnant and adhered to without any disruption and frequent changes. The Petitioners are not debarred from grinding the wheat after procuring the same from the private sector and would become eligible for release of wheat from the public stock after the next harvest season. The restriction allows the Department to distribute the wheat quotas allocated to the existing flour mills smoothly and if every new entrant is extended benefit of the policy, a new distribution quota would be required to be devised after incorporation of every new entrant which is not only impractical but would also hinder the smooth and uninterrupted supply of wheat to the existing flour mills. He also submitted that formulation of policy falls within the exclusive domain of the Executive which does not require any interference by this Court. Even otherwise, the restriction does not offend the reasonable classification permissible under Article 25 of the Constitution since newly established or newly functional flour mills in the existing season are being treated alike. Moreover, the Department has the constitutional power to regulate the supply of public wheat stock as envisaged under Article 18 of the Constitution through the Act. Hence, the titled Petitions are liable to be dismissed.
7. Arguments heard. Record perused.
8. The Act was promulgated in the public interest to provide for the exercise of powers to control the supply, distribution and movement of, and trade and commerce in, foodstuffs in the Province of the Punjab. Section 3 of the Act confers the powers to control the supply and distribution of foodstuffs. Sub Section (1) thereof provides that the Government so far as it appears to be necessary or expedient for maintaining supplies of any foodstuff or for securing its equitable distribution and availability at fair prices, may by notifying order, provide for regulating or prohibiting the keeping, storage, movement, transport, supply distribution, disposal, acquisition, use or consumption thereof and trade and commerce therein. Sub Section (2) thereof, without prejudice to the generality of the powers conferred by Sub Section (1), inter alia, stipulates specific powers such as for regulating the licenses, permits or otherwise the manufacture of any article of food from any foodstuffs; for controlling the prices of any foodstuffs; for regulating by licenses, permits or otherwise, the storage, transport, distribution, disposal, acquisition, use or consumption of any foodstuff; for prohibiting the withholding from sale of any foodstuff primarily kept for sale; for requiring any person holding stock of any foodstuff to sell the whole or a specified part of the stock to such persons or class of persons or in such circumstances as may be specified in the order; and other ancillary powers contained therein.
9. It follows, therefore, that the Act provides vast, broad and wide ranging powers of regulating the distribution of foodstuffs to achieve the basic purpose of equitable distribution and availability of foodstuffs at fair prices. There is no cavil to the proposition that the regulatory framework envisioned in the Act is based on the underlying principle of equity which in turn requires that trade and commerce for foodstuff must be regulated in a manner that not only it achieves the purpose of the Act but is also fair and just with respect to eligible stakeholders.
10. The Notification was primarily issued to ensure uninterrupted supply of wheat stock to the flour mills in order to stabilize the prices of flour in the market. The mandatory condition prescribed in this behalf is that wheat can be supplied to the approved functional flour mills having valid Foodgrains License. This mandatory condition is fulfilled by the Petitioners. The grinding capacity has been duly determined by the Department as per prescribed Standard Operating Procedures.
Clause 4 of the Policy contained in the Notification unequivocally stipulates that the Policy is subject to review after a period of one month. This indicates the need for periodic adjustment to cater the ever-changing market conditions. In this context, the only justification of imposing the impugned restriction appears to be the convenience of the Department so that it may not have to frequently redistribute wheat quotas amongst the eligible flour mills. By doing so, the Department has created two distinct classes of flour mills in terms of existing flour mills and newly established flour mills although both types of flour mills are otherwise eligible to receive the wheat quotas from public stock from the Department in terms of their functionality and licenses. Thus, it is manifestly clear that newly established flour mills as a class have been discriminated vis-a-vis the existing flour mills without any rational or intelligible criteria that can withstand the test of permissible classifications in terms of Article 25 of the Constitution. There is no doubt that the Department has the constitutional right to regulate the release of wheat from public stock under Article 18 of the Constitution and the provisions of the Act but at the same time, the power to regulate is subject to law and structured discretion which in turn must be just, equitable and transparent.
11. In Mejee Flour and General Mills (Pvt.) Ltd. case (supra), the Apex Court, analyzed the allocation of wheat quota in view of the ban imposed by the Government on the issuance of wheat quota to the new flour mills in the light of Articles 18 & 25 of the Constitution. It was held therein that the Court is conscious of the settled principle inherent under Article 25 of the Constitution that mere differentiation or inequality of treatment does not per se amount to discrimination but it is also necessary to show that selection or differentiation is not unreasonable or arbitrary. In this context, it was importantly observed in paragraph No. 10 of the said Judgment as follows:- "10. In his Treatise 'Discretionary Powers' which is Legal Study of Official Discretion D.J. Galligan has acknowledged that "the general principles that discretionary decisions should be made according to rational reasons means: (a) that there be findings of primary facts based on good evidence, and (b) that decisions about the facts be made for reasons which serve the purposes of the statute in an intelligible and reasonable manner". According to the celeberated author, the actions which do not meet these threshold requirements are arbitrary, and may be considered a misuse of powers. In Amnaullah Khan and others v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad and others (PLD 1990 SC 1092) Shafiur Rahman, J. who was sitting in the Full Bench has very ably propounded by now well-known doctrine of "Structuring the discretion' in the following paragraph of the report at 1147:- "Wherever wide-worded powers conferring discretion exist, there remains always the need to structure the discretion and it has been pointed out in the Administrative Law Text by Kenneth Clup Davis (page 94) that the structuring of discretion only means regularising it, organizing it, producing order in it so that decision will achieve the high quality of justice. The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents and fair informal procedure. Somehow, in our context, the wide- worded conferment of discretionary powers or reservation of discretion, without framing rules to regulate its exercise, has been taken to be an enhancement of the power and it gives that impression in the first instance but where the authorities fail to rationalise it and regulate it by Rules, or policy statements or precedents, the Courts have to intervene more often than is necessary, apart from the exercise of such power appearing arbitrary and capricious at times."
12. In case titled, "Director Food, N.-W.F.P. and another v. Messrs Madina Flour and General Mills (Pvt.) Ltd. and 18 others" (PLD 2001 Supreme Court 1), the Apex Court was again seized with the issue of supply of wheat quota and a similar provision of law was scrutinized which stipulated that no flour mill, other than an existing mill, shall be entitled to be supplied wheat save as determined by the Government with reference to Articles 18 & 25 of the Constitution and ratio of Mejee Flour and General Mills (Pvt.) Ltd. case (supra) was again followed. Similarly, in case titled, "Ibrahim Flour and General Mills, District Sheikhupura through Chief Executive v. Government of Punjab through Secretary to the Government of the Punjab, Food Department, Lahore and another"
(PLD 2008 Lahore 184), the principle of equitable distribution of wheat quota was upheld and the arbitrary and perverse classification with respect to wheat quota was declared unlawful. Moreover, in case titled, "Messrs Ibrar Flour Mills (Pvt.) Ltd., Multan through Chief Executive v. Province of Punjab through Secretary to Government of Punjab, Food Department, Lahore and 3 others"
(1997 MLD 2184), the discretionary power of allotment of special quota by the Food Minister in preference to other flour mills was declared illegal.
13. In view of the above, it is explicitly evident that the impugned restriction contained in clause VII of the Notification prohibiting the supply of wheat to newly functional mills having valid licenses granted by the Food Department is unreasonable, arbitrary and capricious and is not based on any intelligible criteria. It does not withstand the test of structured discretion and therefore, in order to correct the legality in procedural impropriety, in exercise of judicial review, clause VII of the Notification is struck down and is declared as unconstitutional and unlawful. Consequently, the titled and connected Petitions are allowed.