Ms Kumar Cold Storage through Its Proprietor Subhas Kumar Vs National Horticulture Board through Its Managing Director

IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(C). No.582 of 2019

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M/s. Kumar Cold Storage, A proprietorship firm, having its unit at Kolghatti, P.O. Reformatory School, Hazaribagh, P.S. Sadar, through its proprietor, Subhas Kumar, Son of Sri Ram Kishore Prasad, Resident of Badam Bazar, Hazaribagh, P.O. & P.S. Kolghati, Dist. Hazaribagh … Petitioner

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Versus

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National Horticulture Board, Ministry of Agriculture & Farmers Welfare, Government of India, having its office at 85, Institutional Area, Sector-18, Gurugram (Gurgaon), Haryana, through its Managing Director.

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Deputy Director, National Horticulture Board, Ranchi, having its office at Laxmi Niwas, Krishi Bhawan, Kanke Road, Ranchi, P.O. and P.S. Kanke, Town and District Ranchi (Jharkhand).

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… Respondents

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------ For the Petitioner : Mr. Nitin Kr. Pasari, Advocate Mr. Shubham Gurung, Advocate Mr. Gaurav Kaushalesh, Advocate For the Respondents : Ms. Sonal Tiwari, Advocate

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P R E S E N T

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HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY

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By the Court:- Heard the parties.

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This Writ Petition has been filed under Article 226 of the Constitution of India for quashing the order dated 12/15.02.2018 Annexure-6 of this Writ Petition and to declare the benefit approved to the petitioner under the Scheme of the respondent No.1 which is “capital investment subsidy for construction,

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modernization, expansion of cold storage and storages”, is an entitlement of the petitioner.

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The brief facts of the case is that the petitioner being a propriety concern being desirous of setting up of cold storage having approximate capacity of 10,000 MT, purchased 1.17 acres of land for setting up of the cold storage for fruits and vegetables. The project required investment of approximately Rs.200 lakhs from own resource of petitioner and 600 lakhs investment was to be granted by Bank by way of term loan. The petitioner applied for issuance of LOI (Letter of Intent). As per the scheme on 29.08.2016, there were certain documents lacking and the respondents sought for the same from the petitioner vide letter dated 07.09.2016, the copy of which has been kept at Annexure-2 of this Writ Petition. The petitioner submitted the said documents on 17.03.2017. Vide letter dated 13.06.2017, copy of which has been kept at Annexure-4 of this Writ Petition, the petitioner was informed that there were certain documents lacking for issuance of LOI and the scheme of LOI has been substituted with the scheme of IPA (In Principal Approval) and the procedure is yet to be finalized and the same can take place only after term loan is sanctioned and kept the application alive/pending.

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The Bank sanctioned term loan of Rs.5,25,00,000/- in favour of the petitioner. Although the petitioner submitted all the documents as was required to be furnished, the petitioner received the communication vide letter dated 12/15.02.2018, the copy of which has been kept at Annexure-6 of this Writ Petition, by which the petitioner was informed that in terms of a preproject approval committee meeting, the petitioner’s application was rejected

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on the ground as per the revised guidelines effective from 01.04.2017, issuance of ‘In Principal Approval’ is mandatory for all projects to avail NHB assistance, and the respondent No.1 already stopped acceptance of IPA application in the month of September, 2017 due to limited budgets and pending liability of the NHB.

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It was also intimated that the lacking documents were received from the petitioner on 10.01.2018 and under the scheme, since the petitioner did not avail LOI nor did the petitioner had term loan sanctioned on or before 30.04.2016, the proposal of the petitioner is ineligible.

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Learned counsel for the petitioner submits that the act of respondents in rejecting application for LOI is illegal and arbitrary for the reason that they failed to take into consideration that the petitioner having already made an application for LOI which was pending, altered its position to construct the Unit and hence, at such a stage, on grounds of change of policy, his application could not have been rejected.

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Learned counsel for the petitioner relies upon the judgment of Hon’ble Supreme Court of India in the case of Pawan Alloys & Casting Pvt. Ltd, Meerut vs. U.P. State Electricity Board & Others reported in 1997 (7) SCC 251 and submits that therein the Hon’ble Supreme Court of India has observed that if a statutory authority functioning on behalf of the State in exercise of its legally permissible powers, has held out any promise to a party who relying on the same, has changed its position not necessarily to its detriment and if this promise does not offend any provision of law or does not fetter any legislative power inhering in the promisor, then on the principle of promissory estoppel,

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the promisor can be pinned down to the promise offered by it by way of representation containing such promise for the benefit of the promisee.

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Learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of Amrit Banaspati Co. Ltd. & Another vs. State of Punjab & Another reported in (1992) 2 SCC 411 and submits that the law of promissory estoppel furnished a cause of action to a citizen, enforceable in a court of law against the Government, if it extends any promise which creates legal relationship and it is acted upon by the promisee irrespective of any prejudice.

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Learned counsel for the petitioner further submits that a right has already accrued on the petitioner when the application for LOI was made and hence, the petitioner cannot be denied the benefit of subsidy by change in policy of the Scheme.

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Learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of State of Bihar & Others vs. Suprabhat Steels & Others reported in (1999) 1 SCC 31 wherein the Hon’ble Supreme Court of India while considering the 1993 Industrial Policy of the State of Bihar observed that pursuant to the Industrial Policy, the State Government can issue notifications but that notifications if imposes or negates the incentive and benefits available in the policy resolution, then this restriction to that extent is contrary and repugnant to the main provisions of the Industrial Policy and bad and therefore liable to be struck down.

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Learned counsel for the petitioner further submits that since the scheme

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was changed by the respondents and the application of the petitioner was

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rejected without showing any overriding public interest, so the same cannot be applied to the petitioner, more so, because of the promissory estoppel applicable to the respondents by their act of communicating the petitioner vide Annexure-4 letter dated 13.06.2017 requested the petitioner to furnish the certified copy of the Bank sanction letter for term loan from Bank along with the certified copy of Financial Bank Note.

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Learned counsel for the petitioner also relies upon the judgment of the Hon’ble Supreme Court of India in the case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Others reported in (1979) 2 SCC 409 and submits that therein the Hon’ble Supreme Court of India observed that the Government is competent to resile from the promise on giving reasonable notice which need not be a formal notice, giving the promisee a reasonable opportunity for resuming his position provided, of course, it is possible for the promisee to restore status quo ante . If, however, the promisee cannot resume his position, the promise would become final and irrevocable.

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Learned counsel for the petitioner then relies upon the judgment of Hon’ble Supreme Court of India in the case of Bangalore Development Authority & Others vs. R. Hanumaiah & Others reported in (2005) 12 SCC 508 and submits that the Hon’ble Supreme Court of India therein observed that where a party by his word or conduct makes a promise to another person in unequivocal and clear terms intending to create legal relations knowing or intending that it would be acted upon by the party to whom the promise is made and it is so acted upon by the other party, the promise would be binding

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on the party making it. It would not be entitled to go back on the promise made.

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It is next submitted by the learned counsel for the petitioner that the act of the respondents in rejecting the application of the petitioner is in violation of the provisions laid down in the policy which works as a promissory estoppel and the respondents cannot put their feet back and deny the incentives allowed for the policy.

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It is next submitted by the learned counsel for the petitioner, drawing the attention of this Court to page-152 of this Writ Application which is the Office Order dated 12.04.2017 bearing No.NHB/CC/Guidelines Revision/201617/218 that though as per the said office order, it was decided that NHB may return the LOI application which has still not been issued LOI with an advice to the promoter to resubmit it for issuance of IPA after getting loans sanctioned from the Bank/FI; but in violation of compliance of the said decision, the LOI of the petitioner was never returned and hence, the petitioner never submitted any application for IPA. It is then submitted that as the proposal of the petitioner was considered not eligible for issuance of IPA thereby the petitioner was deprived of the subsidy. Hence, it is submitted that the prayer as made in this Writ Petition be allowed.

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Learned counsel for the respondents on the other hand vehemently opposes the prayer made by the petitioner in this Writ Petition and submits that the forms of NHB Scheme, its guidelines and conditions are policy matter of the Government and the prayer made in the present Writ Petition, as alleged

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is for interfering with the policy decisions of the Government; which is not permissible in law.

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Learned counsel for the respondents further submits that the subsidy is a grant from the Government and no one can claim to get subsidy as a matter of right. Learned counsel for the respondents also submits that the application of the petitioner dated 29.08.2016 was received by the respondents but there were certain documents lacking which was required by the respondents on 23.03.2017, but thereafter vide circular dated 28.03.2017, the Government changed its policy of issuance of LOI and introduced a new system of issuing In Principle Approval (IPA) which may only be issued after sanction of term loan from the financing bank. Hence, it is submitted that this Writ Petition, being without any merit, be dismissed.

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On being asked by the Court as though there was a revised policy on 28.03.2017 by which practice of issuing LOI was stopped, then, under what circumstances on 13.06.2017 vide Annexure-4, the Joint Director (EZ) of the respondents requested the petitioner to furnish the certified copy of Bank Sanction letter for issuance of LOI; the learned counsel for the respondents submits that she has no instruction at present to explain the Annexure-4.

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Having heard the rival submissions made at the Bar and after carefully going through the materials available in the record, it is pertinent to mention here that undisputedly the petitioner applied for issuance of LOI and has submitted the necessary documents and he never applied for IPA. Vide Annexure-6, the letter dated 12/15.02.2018, it has been intimated to the petitioner that its proposal for issuance of IPA under the Scheme of NHB was

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not eligible. The respondents have not acted upon the said Office Order dated 12.04.2017, copy of which has been kept at Page No.152 of this Writ Petition, and never returned the LOI application with advice to the petitioner to resubmit it for issuance of IPA; as was required to be done on the part of the respondents, under the direction of the new guidelines. The veracity of Annexure-4 at Page-140, being letter dated 13.06.2017, is not in dispute. Though the respondents claim to have stopped accepting application for LOI from 28.03.2017, but the Annexure-4 shows that the respondents led the petitioner believe by the said communication vide Annexure-4 that they are going to consider his application for issuance of LOI.

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Under such circumstances, the act of the respondents in not considering the application for LOI without any rhyme or reason and keeping the petitioner in dark about the guidelines with effect from 01.04.2017; but ultimately having intimated him that his proposal is not eligible for issuance of IPA when the petitioner never submitted any application for issuance for IPA rather he submitted the application for issuance of LOI amounts to gross illegally and arbitrary exercise of power. Further, the action of the respondents in leading the petitioner believe, even after on 01.04.2017, vide communication dated 13.06.2017 that his application for issuance of LOI is under consideration and requesting the petitioner to furnish the certified copy of Bank Sanction Letter for term loan of which undisputedly, the petitioner has submitted but even then, depriving the petitioner of the subsidy when there was no fault on the part of the petitioner; is indefensible and is not sustainable in law; being an arbitrary exercise of power.

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In the considered opinion of this Court, the aforesaid arbitrary acts on the part of the respondents that is not sustainable in law and are contrary to tenets of law. Accordingly, the letter dated 12/15.02.2018, the copy of which has been kept at Annexure-6 of this Writ Petition, is quashed and set aside.

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Considering the facts and circumstances of this case, this Writ Petition is disposed of with liberty to the petitioner to file a fresh representation to the Managing Director (EZ) of the respondent No.1 along with the relevant documents and if such representation is made, the respondent No.1 is directed to consider such representation of the petitioner in accordance with law and to dispose of the same by a reasoned and speaking order within eight weeks of receipt/production of this judgment.

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This Writ Petition stands disposed of accordingly.

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(Anil Kumar Choudhary, J . )

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High Court of Jharkhand, Ranchi Dated the 2^nd of July, 2024 AFR/ Saroj

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W.P.(C). No.582 of 2019

Ms Kumar Cold Storage through Its Proprietor Subhas Kumar v. National Horticulture Board through Its Managing Director

Case brief

What is this about?

What did the court decide?

Ms Kumar Cold Storage through Its Proprietor Subhas Kumar v. National Horticulture Board through Its Managing Director

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

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