Allowed

Rama Phosphates Ltd. v. State and Anr.

Rajasthan HC6 Dec 2017CW/4479/1999

Case brief

AI extract

What is this about?

The High Court allowed a writ petition challenging the denial of state capital investment subsidy. It held that the 25% investment criterion was absent in the scheme and struck down the rejection on scale classification as unsupported by the State Level Committee.

What did the court decide?

Impugned orders set aside; respondents directed to reconsider application treating unit as not large scale.

Rama Phosphates Ltd. Vs State and Anr. — Pension and Retirement Benefits | Rajasthan HC (2017)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Civil Writ Petition No. 4479 / 1999

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Rama Phosphates Ltd., 192, Chankyapuri, Sector 4,

Hiran Magri, Udaipur

----Petitioner

Versus

State of Rajasthan, through the Director of Industries, Udhyog Bhawan, Tilak Marg, Jaipur.

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State Level Screening Committee constituted under the State Capital Investment Subsidy Scheme for New Industries through its Member Secretary, Director of Industries, Udhyog Bhawan, Tilak Marg, Udaipur

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Joint Director, District,

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District Industries Center, Udaipur

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----Respondent

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_____________________________________________________ For Petitioner(s) : Mr Sharad Kothari

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For Respondent(s) : Mr N.S.Rajpurohit

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HON'BLE MR. JUSTICE VIJAY BISHNOI

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Judgment / Order

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06/12/2017

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The petitioner, which is a company duly constituted

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under the provisions of Indian Companies Act has filed this writ petition seeking following reliefs:

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“It is, therefore, most respectfully prayed that this writ petition may kindly be allowed with costs and by an appropriate writ, order or direction:-

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(i) the impugned decision dated 5.7.1999 taken by the State Level Screening Committee and the communication dated 31.7.1999 (Annex.10 may kindly be quashed and set aside by issuing a writ or certiorari.

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(ii) it may be declared that the petitioner-

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(2 of 9)

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[CW-4479/1999]

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company is a medium scale industrial undertaking and thus entitled for all the benefits sponsored by the State of Rajasthan for the medium scale industrial units.

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(iii) the respondent may be directed to disburse a sum of Rs.25 lacs as a subsidy scheme of new industry, 1990 immediately.

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(iv) any other appropriate relief which this Hon’ble Court deems just and proper in the facts and circumstances of the case, in favour of the petitioner, may kindly be granted to the petitioner.”

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The case as set up by the petitioner is this that the State of Rajasthan has promulgated a scheme vide notification dated 05.09.1990 known as State Capital Investment Subsidy Scheme for New Industries, 1990 (hereinafter to be referred as ‘Subsidy Scheme, 1990’).

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Being influenced by the Subsidy Scheme, 1990, the petitioner-company established a unit at village Kanpur, Tehsil Girva, District Udaipur with an estimated cost of Rs.12.6 crore. By 31.01.1997, the petitioner-company invested a sum of Rs.10.38 crore and started its commercial production on 16.10.1996.

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On 22.03.1997, the petitioner-company filed an application for availing the benefit under the Subsidy Scheme, 1990 with a claim for grant of State Capital Investment Subsidy amounting to Rs.25 lac on investment of fixed capital. The petitioner-company was in receipt of a letter dated 15.03.1999 issued by the Chief Accounts Officer from the Office of Director, Industries, Government of Rajasthan, Jaipur informing the petitioner that its application for granting of subsidy under the

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(3 of 9)

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[CW-4479/1999]

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Subsidy Scheme, 1990 has been rejected by the State Level Screening Committee. The State Level Screening Committee rejected the application of the petitioner on following two grounds:

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(i) the petitioner unit is a large scale industrial unit, which is not the first large scale unit in the concerned Panchayat Samiti. (ii) the unit had not invested 25% of the project cost by 31.03.1995.

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The petitioner-company thereafter filed an application for review vide its letter dated 05.04.1999 claiming that the petitioner is not a large scale industrial unit as the investment in the plant and machinery of the petitioner – company is less than Rs.5 crore. It has relied on the definition given by the Government of India and claimed that the petitioner is entitled to receive the subsidy of Rs.25 lac as it is not a large scale unit.

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The petitioner – company has placed reliance on circular dated 09.04.1997 issued by the Commissioner of Industries, Industries Department, Industrial Unit while claiming that as per the said circular an industrial unit, which has invested an amount of 25% of the estimated project cost by 30.04.1997 is eligible for availing benefits of subsidy under the Subsidy Scheme, 1990.

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The State Level Screening Committee asked the petitioner to appear before it on 03.06.1999 and pursuant to that, representative of the petitioner-company appeared before the said committee, however, State Level Screening Committee rejected the review application of the petitioner – company on 05.07.1999 on the following two grounds:

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(4 of 9)

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[CW-4479/1999]

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(i) The fixed capital assets of the petitioner-company are more than Rs.5 crore as the unit was large scale industrial unit, which is not the first large scale industrial unit in the said Panchayat Samiti.

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(ii) The petitioner-company has not invested amount to the extent of 25% of its project cost by 31.3.1995.

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The said decision of the State Level Screening Committee was communicated to the petitioner vide letter dated 31.07.1999 through Chief Accounts Officer, Industries. Being aggrieved with the impugned orders, the petitioner has filed this writ petition seeking reliefs as quoted above.

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Learned counsel for the petitioner has submitted that as per clause 4 (L) of the Subsidy Scheme, 1990, the State of Rajasthan has adopted the definition of Small Scale Industries/Ancillary/Medium/Large Scale Units as defined by the Government of Rajasthan from time to time. It is contended that at the relevant time, the Government of India defined the large scale unit as a unit with investment in plant and machinery of more than 50 million.

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It is further contended that the petitioner-company invested in its unit the plant and machinery while spending a cost of Rs.216.85 lac only up to 31.01.1997 which is much less than 50 million and, therefore, it cannot be termed as large scale industry. It is also contended that other grounds for rejecting the application of petitioner-company for grant of subsidy to the effect that the unit has not invested 25% of project cost by 31.03.1995 are without any basis as in the Subsidy Scheme, 1990, there is no

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(5 of 9)

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[CW-4479/1999]

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provision of this effect that if a unit has not invested 25% of the project cost by 31.03.1995, it is not entitled for grant of subsidy.

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Learned counsel has further argued that the

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respondents in its reply to the writ petition has claimed that the State Level Screening Committee took a decision in its meeting in May, 1976 that the benefit of subsidy can only be given to the industrial unit on the basis of Sales Tax Incentive Scheme, 1989, however, the same ground is not the basis for rejecting the application of the petitioner for granting subsidy to it as evident from the impugned orders. Learned counsel for the petitioner submitted that it is settled that when statutory functionary makes an order, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise.

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Learned counsel for the petitioner has placed reliance on decision of this Court in Mohinder Singh Gill & Anr. vs. The Chief Election Commissioner, New Delhi & Ors. reported in (1978) 1 SCC 405 and argued that the stand taken by the respondents for not granting subsidy to the petitioner is liable to be rejected.

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Per contra, learned counsel appearing for the respondents has argued that there is no illegality in the action of the respondents of rejecting the application of the petitioner for grant of subsidy under the Subsidy Scheme, 1990 as the unit established by the petitioner-company is a large scale unit and it has also invested 25% of the project cost by 31.03.1995.

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Heard learned counsel for the rival parties and perused

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(6 of 9)

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[CW-4479/1999]

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the material available on record.

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I propose to deal with the second ground first, on the basis of which the application of the petitioner for grant of subsidy has been rejected. The respondents are claiming that as the unit has not invested 25% of project cost by 31.03.1995, it is not entitled to get subsidy under the Subsidy Scheme, 1990. I have failed to understand how the State Government can deny the benefit of subsidy to industrial unit, which has not invested 25% of project cost by 31.03.1995 when the Subsidy Scheme, 1990 does not speak about any such disqualification. Learned counsel for the respondents has failed to show any of the provisions of the Subsidy Scheme, 1990, which provides that if an industrial unit has not invested 25% of the project cost by 31.03.1995, it is not entitled for benefit of subsidy.

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In such circumstances, the second ground on which the petitioner-company is denied the subsidy under the Subsidy Scheme, 1990 is unsustainable. Hence, the same is rejected.

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So far as another ground on which the respondents have denied the benefit of subsidy to the petitioner-company while treating the unit of the petitioner-company as large scale unit is concerned, it would be beneficial to note down the definition of the small scale unit as provided in the Subsidy Scheme, 1990, which is as follows:

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“4.Definitions…

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(l) SSI/Ancillary/Medium/Large Scale units would have the same meaning as contained in the definitions given by the Government of India from time to time.”

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(7 of 9)

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[CW-4479/1999]

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So as per the above definition is concerned, a large scale unit would have the same meaning as contained in the definitions given by the Government of India from time to time.

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The petitioner is claiming that at the relevant time, the Government of India had defined the large scale unit as under:

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“A unit with investment in plant and machinery of more than Rs.50 million.”

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The respondents are not disputing the definition of ‘large scale unit’ as defined by the Government of India but are claiming that the State Level Screening Committee in its meeting dated 17.05.2006 took a decision that the benefit of subsidy is given to the industrial unit on the basis of Sales Tax Incentive Scheme, 1989, which has defined that a large scale unit means a unit of which the project cost exceeds Rs.5 crore. The respondents are also not disputing the fact that the petitioner has invested an amount of Rs.216.85 lac only on plants and machinery in its unit, which is much less than Rs.5 crore.

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I have failed to understand how the State Level Screening Committee has acquired the jurisdiction to amend the provisions of Subsidy Scheme, 1990, which provides a different definition of large scale unit.

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In my opinion, the State Level Screening Committee cannot adopt or endorse a definition of small and large scale industries as given in a Sales Tax Incentive Scheme, 1989. It is

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(8 of 9)

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[CW-4479/1999]

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not the case of the respondents that the State Government has

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amended the provisions of the Subsidy Scheme, 1990. Hence, till the definition of the large scale unit as prescribed in the Subsidy Scheme, 1990 exists and no amendment has been made in the said definition, the State Level Screening Committee has no jurisdiction to adopt or endorse any other definition of any other scheme.

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It is also to be noticed that the application of the petitioner-company for granting subsidy was dismissed on two grounds i.e. the unit established by the petitioner-company is not a large scale unit and the petitioner-company has not invested 25% of project cost by 31.03.1995.

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However, in the reply and the rejoinder to the reply, the State Government has come out with different reason justifying the denial of benefit of subsidy to the petitionercompany, which in my opinion, cannot be accepted in view of the law laid down by this Court in Mohinder Singh Gill & Anr. vs. The Chief Election Commissioner, New Delhi & Ors. (supra), wherein this Court has held as under:

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“8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose J. in Gordhandas Bhanji A.I.T. 1952 S.C. 16:

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(9 of 9)

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[CW-4479/1999]

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“Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to effect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. Orders are not like old wine becoming better as they grow older.”

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In view of the above discussions, this writ petition is allowed. The impugned orders are set aside. The respondents are directed to consider the application of the petitioner for grant of subsidy under the Subsidy Scheme, 1990 while not treating it as large scale unit afresh within a period of two months from the date of production of certified copy of this order. If the petitioner is found entitled for the benefit of subsidy under the Subsidy Scheme, 1990, the same may be advanced to it along with interest at the rate of 6% per annum from the date, it is due.

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There shall be no order as to costs.

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(VIJAY BISHNOI)J.

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m.asif/PS

Rama Phosphates Ltd. v. State and Anr.

Case brief

What is this about?

What did the court decide?

Rama Phosphates Ltd. v. State and Anr.

Case brief

What is this about?

What did the court decide?

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