The children, a 14-year-old boy and his 12-year-old sister, alleged that they were refused the subsidised ration by the dealer at Olavar village last Sunday.
However, the retailer, Ananta Behari, denied the charge, saying, "I only told them to come later."
The district administration has ordered a probe into the matter. Besides, a joint inquiry by the local block officials, health department and the Integrated Counselling and Testing Centre, run by the state Aids Control Society, has been ordered into the shocking incident.
The siblings in a petition addressed to the district magistrate and collector charged that they were ridiculed for being HIV/AIDS carriers.
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"The incident took place last Sunday when I had gone to the ration shop along with my sister. I was suffering from cold. This irritated the ration shop owner. He told us to keep distance ... Virus would contract him as I was coughing. Finally we returned empty-handed as ration was denied to us," the boy said.
Moved by the letter, President Kalam had dispatched a draft of Rs 20,000 in June, 2005 and also spurred the local administration to come to the rescue of the siblings.
Chairman of the Child Welfare Committee Sushil Kumar Routray said an FIR would be lodged against the accused after an inquiry.