Appeal against Single Judge's dismissal of writ petition challenging Show Cause Notice for blacklisting under FAME-II. Court held jurisdiction to interfere at notice stage is exceptional and found no predetermined mind or bias. Dismissed appeal leaving merits open.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
versus
UNION OF INDIA ..... Respondent
Advocates who appeared in this case:
For the Appellants : Ms. Meenakshi Arora, Sr. Advocate with Mr. Manish Bishnoi, Mr. Anurag Bhatt, Mr. Lokesh Pathak, Mr. Vaibhav Vijayvargiya and Mr. Ankur Gupta, Advocates.
For the Respondent : Mr. N. Venkataraman, ASG with Mr. Amish Tandon, Ms. Anushree Kulkarni and Ms. Vaishnavi, Advocates with Mr. Amit Acharya, Govt. Pleader for UoI.
Mr. Anurag Ahluwalia, CGSC with Mr. Kaushal Jeet Kait, GP and Ms. Hridyanshi Sharma, Advocate for UoI.
CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
J U D G M E N T
TUSHAR RAO GEDELA, J.
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W.P.(C) No.12776/2024 whereby the appellants had challenged the Show Cause Notice dated 6th September, 2024 issued by the respondent/ Ministry of Heavy Industries and Public Enterprises, proposing the action of blacklisting the appellant.
(i) The appellant company participated in the Scheme namely Faster Adoption and Manufacturing of Electric Vehicles in India, Phase II (in short ‘ FAME-II Scheme’ ) floated by the respondent on 8th March, 2019 for promotion of electric and hybrid vehicles. As per the Phased Manufacturing Program Guidelines (in short ‘PMP Guidelines’ ), the manufacturers were required to indigenise the parts of their vehicle models in accordance with the guidelines issued from time to time, within the relevant dates so provided.
(ii) It is the case of the appellants that the appellant company complied with the FAME II Scheme and the PMP Guidelines issued by the respondent and accordingly claimed subsidy for sale of its vehicle models from the respondent from time to time. However, the respondent issued a letter dated 25th July, 2022 alleging non-compliance by the appellant company and directed it to submit supporting documents etc., as per the PMP Guidelines in support of its claim with effect from 1st April, 2021. Thereafter, vide letter dated 26th September, 2022, the respondent suspended the vehicle models of the appellant company from FAME II Scheme. Finally, in view of the findings of ARAI through strip down analysis alleging violation of localization norms/PMP Guidelines with regard to four components by the appellant company and otherwise, the Signature Not Verified Digitally Signed By:MADHU SARDANA Signing Da te:1 6.10.2024 LPA 957/2024 Page 2 of 11 12:45:46
respondent passed the order dated 9th October, 2023 de-registering the appellant company from the FAME II Scheme.
(iii) The appellants challenged the de-registration order dated 9th October, 2023 before the learned Single Judge by way of a writ petition being W.P.(C) 15125/2023 which is stated to be pending adjudication. It is the case of the appellant that on 24th November, 2023, since the learned Single Judge was granting an interim measure in favour of the appellants, learned ASG for the respondent gave an oral undertaking that no coercive action shall be taken against the appellant company.
(iv) Since the FAME II Scheme was coming to an end on 31st March, 2024, the learned Single Judge, on an application preferred by the appellant, passed an order dated 13th March, 2024 making it clear that the decision of the respondent will be subject to the outcome of the said writ petition. It was also made clear that even if the policy lapses, the amounts claimed would be subject to the final outcome of that writ petition. (v) Thereafter, since the said W.P.(C) 15125/2023 was not being heard due to very heavy position of the board and the investors were not willing to infuse funds in the appellant company as there was no interim protection in writing, the appellants moved an application before the learned Single Judge requesting to record the interim protection in writing. However, the said request was not accepted and an order dated 5th August, 2024 was passed observing that since the predecessor Bench had already considered the issue of interim relief and granted a limited relief, thus the prayer for interim measures now requested for by the appellants, cannot be granted. It was also noted therein that even if any oral understanding was in existence, the subsequent order dated 13th March, 2024 extinguishes the same.
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(vi) It is the case of the appellant that it was only after the order dated 5th August, 2024 was passed by the learned Single Judge that the respondent proceeded with issuing the impugned Show Cause Notice dated 6th September, 2024 to the appellant company. The said Show Cause Notice was challenged before the learned Single Judge in the underlying writ petition which was dismissed vide impugned order dated 11th September, 2024 passed therein.
(vii) Hence, the present appeal has been preferred challenging the order dated 11th September, 2024 passed in the underlying writ petition. 3. This Court has heard Ms. Meenakshi Arora, learned senior counsel for the appellants and Mr. N. Venkataraman, learned ASG for the respondent, perused the impugned order and considered the judgements relied upon.
until the outcome of the other writ petition wherein the de-registration order is under challenge.
(i) that the allegation of bias/targeting the appellants is unfounded as there are five (5) other companies whose claims for subsidy were not found to be genuine and similar action of recovering the subsidy have been taken against them as well.
(ii) that the appellant was afforded a reasonable opportunity of hearing previously, before passing the order of deregistration. Similarly, the principles of natural justice would be adhered to by the authorities while proceeding with the present Show Cause Notice too. He submitted that the apprehension of the appellants on that count is baseless.
(iii) that there is no impediment in conducting simultaneous proceedings which entail different consequences. In any case, there is no prejudice caused to the appellants in case the Show Cause Notice is proceeded with concurrently, as it would have the full opportunity to defend itself. He also stated that the authority would proceed with the Show Cause Notice, bearing in mind the distinct parameters and after proper application of mind, a decision would be taken in accordance with law.
(iv) that a plain reading of the Show Cause Notice does not evidence any predetermination of the proposed blacklisting. He also submitted that mere reference to the de-registration order in the Show Cause Notice would not lead to an assumption of predisposition towards imposition of order of blacklisting. He urged that in any case, it is a settled law that a cause of
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action, if any, would arise only after a final decision is taken by the authority.
“31. Normally, the writ court should not interfere at the stage of issuance of show-cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the authorities concerned and to satisfy the authorities concerned about the absence of case for proceeding against the person against whom the show-cause notices have been issued. Abstinence from interference at the stage of issuance of show-cause notice in order to relegate the parties to the proceedings before the authorities concerned is the normal rule. However, the said rule is not without exceptions. Where a show-cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice. The interference at the show-cause notice stage should be rare and not in a routine manner. Mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out.”
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concerned, which is mandated to decide the same in accordance with law. Law is well settled that interference by a Writ Court under Article 226 of the Constitution of India, at the stage of Show Cause Notice should only be in rare and exceptional cases, and not in a routine manner. (See: Union of India & Anr. Vs. Kunisetty Satyanarayana, (2006) 12 SCC 28 and State of U.P. v. Brahm Datt Sharma, (1987) 2 SCC 179) .
severe level of blacklisting, may be different. Merely because the appellant company has been de-registered by the respondent would not, ipso facto , imply that the Show Cause Notice intending blacklisting, would also be decided against the appellant. Moreover, the appellant would be afforded an opportunity to file its reply which would be considered by the Competent Authority in accordance with law. This Court has also perused the Show Cause Notice carefully and does not find the same to be predetermined. Apart from referring to the order of de-registration, the recitals do not betray the mind of the issuing authority. Since it appears that the background facts are similar, a reference to the de-registration order may have been made. Other than that, this Court does not find any palpable reason to conclude a ‘predetermined mind’. This conclusion is also clear from the ratio laid down by the Supreme Court in Siemens Ltd . vs. State of Maharashtra & Ors., (2006) 12 SCC 33 and Oryx Fisheries Private Limited vs. Union of India & Ors. , (2010) 13 SCC 427 as also noted by the learned Single Judge in para 7 of the impugned order. In those cases, the authority issuing the Show Cause Notice had clearly betrayed its findings and conclusion of guilt of the noticee. In the present case, no such determination is discernible. It can also not be assumed at this stage that a reasonable opportunity of defence would not be provided to the appellants. 11. As an analogy, in service jurisprudence, on the same set of facts, two sets of proceedings could be possible. One, in respect of disciplinary proceedings and the other could be the parallel proceedings initiated before the Criminal Court. It is trite that both proceedings could commence and be adjudicated simultaneously. These are two independent proceedings
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entailing two different consequences altogether. Though, at times, there could be exceptions to the above rule.
responsibilities in the same capacity. Merely because of such position and status, it cannot be inferred that there would be a natural bias, inbuilt or inherent. On the above principles, this Court does not find any reasons to interdict the Show Cause Notice at this stage. In any case, the appellants can raise all its contentions before the authority while filing the reply to the Show Cause Notice, taking all the objections that are possibly available with them.
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to be delayed on the premise that the earlier action or penalty levied, is under challenge. The action proposed to be now undertaken vide the Show Cause Notice is separate and distinct from the order of de-registration and thus, pendency of the writ challenging the de-registration order would not be an impediment to the issuance of Show Cause Notice for blacklisting. Suffice to state that this Court reiterates the reasoning rendered by the learned Single Judge in the aforementioned paragraph. Moreover, as observed above, the Show Cause Notice, in the present case, does not betray a predetermined mind as apprehended by the appellant.
TUSHAR RAO GEDELA, J
MANMOHAN, CJ
OCTOBER 16, 2024 /rl
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3 issues framed by the court
Whether writ court can interfere with issuance of Show Cause Notice challenging blacklisting under FAME-II Scheme
Whether authority issuing Show Cause Notice after de-registration order demonstrates predetermined mind or bias
Whether pending writ petition challenging de-registration order is an impediment to issuing Show Cause Notice for blacklisting
Colour shows how this judgement treated each authority
Union of India v. VICCO LaboratoriesExplained¶37
Union of India v. VICCO Laboratories, (2007) 13 SCC 270 · Who else cites this
Union of India & Anr. Vs. Kunisetty SatyanarayanaExplained¶41
Union of India & Anr. Vs. Kunisetty Satyanarayana, (2006) 12 SCC 28 · Who else cites this
State of U.P. v. Brahm Datt SharmaExplained¶41
State of U.P. v. Brahm Datt Sharma, (1987) 2 SCC 179 · Who else cites this
Siemens Ltd. vs. State of Maharashtra & Ors.Explained¶44
Siemens Ltd. vs. State of Maharashtra & Ors., (2006) 12 SCC 33 · Who else cites this
Oryx Fisheries Private Limited vs. Union of India & Ors.Explained¶44
Oryx Fisheries Private Limited vs. Union of India & Ors., (2010) 13 SCC 427 · Who else cites this
Prakash Atlanta JV & Ors. vs. National Highways Authority of India & Ors.Explained¶50
Prakash Atlanta JV & Ors. vs. National Highways Authority of India & Ors., 2010 SCC OnLine Del 471 · Who else cites this
National Building Construction Corporation Limited vs. New Delhi Municipal Council & Anr.Explained¶50
National Building Construction Corporation Limited vs. New Delhi Municipal Council & Anr., 2006 SCC OnLine Del 1435 · Who else cites this
Okinawa Autotech International Private Limited & Anr.
Union of India
Tushar Rao Gedela
Manmohan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
