3 Aadhaar cards, 697 ration beneficiaries: Allahabad HC upholds fair price shop licence cancellation

The Allahabad High Court has upheld the cancellation of a fair price shop licence in Ghaziabad after finding that the dealer failed to satisfactorily explain how rations meant for 697 cardholders were withdrawn using only three Aadhaar numbers during the July 2018 transition to the electronic public distribution system.

The bench of Justice Arun Kumar dismissed a writ petition filed by Smt. Shahin Begum, who had challenged the January 2019 order cancelling her fair price shop dealership and the September 2019 appellate order affirming the cancellation.

The case arose from a statewide exercise undertaken in mid-2018 when the Uttar Pradesh government began transitioning from manual distribution of essential commodities to Aadhaar-based authentication through electronic point-of-sale (E-PoS) machines. In August 2018, the Food Commissioner flagged irregularities across 43 districts, noting that rations meant for multiple cardholders had been withdrawn using the same Aadhaar numbers.

Following this communication, an ex parte enquiry was conducted by the supply department, and an FIR was lodged against the petitioner and others under provisions of the Information Technology Act and the Essential Commodities Act. The petitioner’s fair price shop was first suspended and later cancelled on allegations of black marketing and manipulation of the E-PoS system.

Before the high court, the petitioner argued that she had no technical capability to manipulate Aadhaar data or the E-PoS machine. She claimed that no spot inspection had been carried out, that stock registers were never verified, and that the alleged NIC report forming the basis of the action was never supplied to her. She also contended that the E-PoS machine was periodically deposited with the district supply office for servicing, making manipulation impossible at her end.

The petitioner further relied on affidavits of 162 cardholders stating that they regularly received rations from her shop, and argued that mere registration of an FIR could not form the basis for cancellation of a fair price shop licence.

The State, however, defended the action, arguing that the cancellation was not based solely on the criminal case but on administrative findings under the U.P. Essential Commodities (Regulation of Sale and Distribution Control) Order, 2016. The Additional Advocate General submitted that the relationship between a fair price shop dealer and the State was in the nature of a statutory agency, and that only a summary enquiry consistent with principles of natural justice was required.

Significantly, the State relied on earlier judicial findings which had examined, in detail, the functioning of E-PoS machines during the July 2018 transition period. Those findings recorded that Aadhaar data feeding took place in a “dynamic mode” during the day, allowing edits until final authentication occurred in the evening. According to the State, dealers exploited this window to withdraw rations meant for dormant or inactive cardholders by repeatedly using a limited set of Aadhaar numbers.

The high court accepted this explanation and noted that the petitioner had failed to offer any credible justification for the use of only three Aadhaar numbers for 697 cardholders. Court also observed that while the petitioner had filed affidavits from 162 cardholders, there was no material to show that these affidavits related to the specific cardholders whose rations were alleged to have been siphoned off.

Distinguishing earlier judgments where cancellations were set aside, court held that those cases either involved later government orders or did not consider the detailed technical findings regarding E-PoS manipulation during the transition phase. Court further noted that the petitioner had not made any specific allegations of mala fides against named officials, weakening her claim that the irregularities were the result of official misconduct or technical glitches.

Holding that the petitioner had not discharged the burden of explaining the irregular transactions, court found no merit in the challenge and dismissed the writ petition, thereby affirming the cancellation of the fair price shop dealership.

Case Title: Smt. Shahin Begum and 9 others vs. State of U.P. and 5 others

Judgment Date: November 21, 2025

Bench: Justice Arun Kumar