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2007 DIGILAW 340 (CAL)

Somani Food Product v. STATE OF WEST BENGAL

2007-05-06

SADHAN KUMAR GUPTA, TAPEN SEN

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Judgment : TAPEN SEN, J. (1). THIS appeal is directed against an Order dated 5/4/2006 passed by a learned Single Judge of this Court in W.P. No. 1464 (W) of 2005 disposing of the Writ Petition by directing the Respondent No. 3 to consider the grievances of the Appellants qua non-payment of subsidies on account of installation charges of the Plant and Machinery and also qua non-payment of electricity subsidy with a further direction to consider the matter and pass appropriate Orders within 8 weeks from the date of communication of the Order. So far as the claim for interest was concerned, the learned Single Judge held that the Appellant was not entitled to any subsidy qua soft loan but in respect of the other items of claim, the concerned Respondent was directed to consider the same. (2). THE facts of this case, as pleaded in the Writ petition, was that the Petitioner is a proprietary concern dealing with manufacture of food and has a Unit situated at Tulsipara, P.O. and P.S. Raiganj, uttar Dinajpur. The said Unit manufactures "atta and Maida" and for purposes for setting up of a manufacturing Unit, an Application was made on 1.8.2001 addressed to the West Bengal Financial Corporation seeking financial assistance whereupon by their letter dated 9.11.2001, the said Corporation informed the appellants that a loan amounting to Rs.13.69 lakhs had been sanctioned under three heads namely:- i) Term loan of Rs.20.40 lakhs; ii) Working Capital Term loan of Rs.12.76 lakhs; and iii) Soft loan of Rs. 4 lakhs under certain terms and conditions. (3). IT was stated in the Writ Petition that subsequently the proprietress of the Appellant Unit acquired some more land and building adjacent to her own manufacturing Unit and thereafter, prepared a scheme for the proposed manufacturing Unit for the manufacture of "atta" and "maida". Quotations for Plant and Machinery were submitted along with the scheme to the Office of the Respondent No. 3 for verification and approval and on 24.5.2002 the said authority informed that her Scheme for the manufacturing unit was technically feasible. Thereafter the Unit was registered as a Small Scale industry and a permanent SSI Registration Certificate was issued. The further case of the Appellant, before the Writ Court, was that the Unit was to be in the category of a "tiny" Enterprise valid up to 28.11.2007. Thereafter the Unit was registered as a Small Scale industry and a permanent SSI Registration Certificate was issued. The further case of the Appellant, before the Writ Court, was that the Unit was to be in the category of a "tiny" Enterprise valid up to 28.11.2007. The further case of the Petitioner was that by a notification dated 13.2.2001 published in the Calcutta Gazette on 14.2.2001, the government of West Bengal, Department of Commerce and Industries, notified a scheme known as "the West Bengal Incentive Scheme, 2000" providing certain incentives to industries (large, medium and small scale industries) for their promotion. According to the Appellants, they were entitled to the benefits under the 2000 Scheme referred to above and therefore, made an Application in the prescribed form together with a covering letter dated 30.12.2002 addressed to the general Manager, praying for incentives. (4). MR. Om Narain Rai, learned counsel appearing for the Appellants submitted, at the very outset, that the Appellants claim with which this Appeal is concerned is confined only to the incentives on installation charges on the Plant and Machinery and the interest subsidy on soft loan. Learned Counsel, during the course of arguments, produced for our perusal a typed calculation sheet and submitted, with reference thereto, and with reference to the page 86 of the Paper Book, that the claim of the Appellants with regard to the installation charges was Rs. 92,000/-only based on the cost of the Plant and Machinery which was claimed by them at Rs. 16.37 lakhs. He submitted that out of the claim of Rs. 16.37 lakhs, the Respondents considered only the sum of Rs. 13,95,273/- and based on that, they granted a subsidy of only Rs. 3,48,818/-as would be evident from the Affidavit-in-opposition (the relevant portion whereof is at Page 140 of the paper book ). According to him, the Respondents have not considered the Plant and Machinery factor as claimed and the amount not considered came to Rs. 2,41,727/- (Rs. 16,37,000- Rs. 13,95,273= Rs. 2,41,727 ). (5). LEARNED Counsel then submitted that the explanation that the Respondents have given between pages 143 to 146 of the paper-book regarding Plant and Machinery, can at best, explain the sum of Rs.1,72,619/- and therefore, the difference between Rs. 2,41,727/- and Rs. 1,72,619 being Rs. 69,108/-, has not been considered. (6). 2,41,727/- (Rs. 16,37,000- Rs. 13,95,273= Rs. 2,41,727 ). (5). LEARNED Counsel then submitted that the explanation that the Respondents have given between pages 143 to 146 of the paper-book regarding Plant and Machinery, can at best, explain the sum of Rs.1,72,619/- and therefore, the difference between Rs. 2,41,727/- and Rs. 1,72,619 being Rs. 69,108/-, has not been considered. (6). LEARNED Counsel submitted that so far as the installation charges are concerned, the claim whereof was assessed by the appellants at Rs. 92,000/-, the same has not been considered at all and therefore, the total amount which remains to be paid by the authorities under the scheme of 2000 comes to Rs. 1,61,108/- (Rs. 92,000+rs. 69,108 ). (7). LEARNED Counsel submitted that based on the aforesaid grievances, the Appellants had filed the Writ Petition for a direction upon the Respondents to disburse the subsidies/incentives which are already approved and also for a direction upon them to approve the incentives/subsidies claimed by them on the interest on soft loan taken by the Appellants. They also prayed for a direction for disbursement of subsidies on installation charges. According to the Appellants, they were entitled to 25% of subsidy together with other subsidies but the Respondents, by their letter dated 6.8.2004 as contained in Annexure-P13 erroneously rejected the claim of subsidy towards installation charges and also erroneously rejected their claim relating to interest subsidy against soft loan. The letter dated 6.8.2004 addressed to the Petitioner by the respondent No.3 reads as follows:- (8). LEARNED counsel submitted that the respondents, by writing the said letter, acted illegally and mechanically. He submitted that in terms of the definition of the words "fixed Capital Investment" as defined under Clause 3 (xx) of the Scheme (Annexure-P4), the said "fixed capital investment" means the investment made in Plant and Machinery as well as equipment installed and the same, read with Clause (C) of the Explanation appearing after Clause 3 (xx), would mean to include the costs of the Plant and machinery as erected at the approved location and would also include installation charges relating thereto. According to the learned Counsel, "approved location" as per Clause 3 (xv) means the location of the approved project and therefore, reading all these provisions together, the only interpretation would be that an eligible Unit would be entitled even to the "cost" of the "installation" of the "plant and machinery" at the "approved location" and therefore, the "installation charges" should be deemed to mean and include the "fixed capital investment". The relevant portions of Clause 3 of the Scheme referred to by the learned Counsel (as contained in Annexure-P4) read as follows:-"3. Definitions: in the 2000 Scheme, unless the context otherwise requires, (xv)"approved Location" means the location of the approved project registered with the concerned authority of the central Government /the State Government (xx)"fixed Capital Investment" means investment made in land, building, plant and machinery and equipment installed for pollution control measurers of the approved project of the eligible unit on or after the 1st April, 1999 subject to other conditions laid down in paragraph 6 of the 2000 Scheme. Explanation : the "fixed capital investment" shall be calculated as follows: a) Land: actual price or premium paid for the land freehold or leasehold as deemed necessary for the approved project at the approved location by the authorised agent. b) Building: the actual expenditure incurred for construction of the office building, factory sheds etc. as necessary for the approved project at the approved location but not residential quarters. c) Plant and Machinery: the fixed capital investment in plant and machinery shall be calculated as below:-The cost of plant and machinery as erected at the approved location, including the cost of productive equipment such as jigs, dies, moulds etc. and items pertaining to pollution abetment measures but excluding the cost of any second hand plant and machinery as also plant and machinery purchased and installed under hire purchase agreement. In the case of plant and machinery taken on lease, the leasing fee/charge shall be taken into account, provided that on the expiry of the leasing contract, the said plant and machinery become the property of the unit. " (Quoted as it appears from the Paper book) (9). LEARNED Counsel submits that since Clause 8. 2 entitles an eligible Industrial Unit to be entitled to State Capital Investment subsidy @ 25% of the Fixed Capital Investment subject to a limit of Rs. " (Quoted as it appears from the Paper book) (9). LEARNED Counsel submits that since Clause 8. 2 entitles an eligible Industrial Unit to be entitled to State Capital Investment subsidy @ 25% of the Fixed Capital Investment subject to a limit of Rs. 250 lakhs and since the manner of calculation of the "fixed Capital Investment" qua "plant and Machinery" as provided under Explanation "c" appearing after Clause 3 (xx)of the Scheme (quoted above) and which lays down that the Fixed Capital investment in plant and machinery shall be calculated by considering the cost of the plant and machinery as erected at the approved location, it would therefore mean to include the installation charges and therefore, the Appellants would be entitled to 25% of subsidy not only on the fixed capital investment which relates to the investment pertaining to the land and building but also with regard to plant and Machinery as well as the cost of installation thereof. Learned Counsel then submits that the letter dated 6. 8. 2004 is also erroneous because by using words like "soft loan", they cannot render the provisions relating to payment of interest subsidy in terms of clauses 9.1 and 9.2 otiose. The same reads as follows:-"9.1 An eligible Industrial unit for its approved project will be entitled to interest Subsidy to the extent of 50% of the annual interest liability on the loan borrowed from a commercial bank/financial Institution/nbfc approved by Reserve Bank of India, for implementation of the approved project, subject to a limit of Rs. 100.00 lakhs per year depending on the location of the unit as follows:-i) Group b area : 5 years. ii) Group c area : 7 years. 9. 2 the Interest Subsidy will be payable annually subject to submission of a statement/certificate by the lending Banks financial Institution/nbfc so as that the unit has paid the due interest to the institutions on the due dates. " (Quoted as it appears in the Paper book) (10). LEARNED Counsel then draws attention of this court to the Affidavit-in-opposition which was filed by the Respondents and submits, with reference to Para-7 thereof (relevant at running page 140 of the paper-book) that the Respondents have accepted a claim of Rs. 13,95,273/- only as against the claim of the Appellants towards Plant and Machinery being Rs. 17.37 lakhs as would be evident from the form of Application enclosed to annexure-P5. 13,95,273/- only as against the claim of the Appellants towards Plant and Machinery being Rs. 17.37 lakhs as would be evident from the form of Application enclosed to annexure-P5. He submits, that on the basis of the aforementioned sum of Rs. 13,95,273/-, the Respondents calculated 25% thereof and came to the conclusion that a sum of Rs. 3,48,818/-would be payable without considering the whole amount claimed (i.e. Rs. 17.37 lakhs). According to him, if they had taken the full amount, then the payable subsidy would have been proportionately higher. His next contention is that so far as the installation charges are concerned and which the Appellants had claimed at Rs. 92,000/-, the Respondents have not considered the same. Learned Counsel submits that these aspects have not been looked into either by the concerned authorities or by the learned Single Judge. (11). MRS. Husn Ara Begum, learned Counsel for the respondents submits, that the Order and/or communication made by the respondent No. 3 by his letter dated 6.8.2004 (Annexure-P13) is correct and needs no interference. She submits that there is no provision for subsidy against installation charges as well as against "soft loan". We find force in the submission of Mrs. Husn Ara begum inasmuch as upon a perusal of the relevant provisions of the Scheme, we notice that the same nowhere defines nor provides for subsidy to be paid on "installation charges". It is true that under the heading "plant and Machinery" as defined under Clause 3 (c), the Scheme has referred to the mode of calculation to be resorted to qua the cost of Plant and Machinery but the same does not mean that the payment of subsidy would include the charges which are incurred in installing the Plant and Machinery or erecting the Plant and Machinery on the approved location. The object of payment of subsidy has been indicated at the very outset of the Scheme in the opening paragraphs of the Notification dated 13.2.2001 itself (Annexure-P4) and it is indicative of the fact that in pursuance of a national policy, the sales tax incentives were withdrawn w. e. f. 1.1.2000 and then, the State Government considered it expedient to extend new types of incentives for the promotion of Industries in the State of West Bengal. It is therefore an Incentive for the promotion of Industries and not an assurance of installing the industry by payment of subsidy qua the installation charges. Any such expectation, in the opinion of this Court, is based on misconceived notions and/or illogical expectations. (12). WE are therefore of the view that the respondents did not commit any illegality nor did they make any erroneous observations when they said that there is no provision of any subsidy against installation charges. Consequently, we are of the view that the Respondent No. 3 is not required to consider any further grievances of the Appellants with regard to non-payment of subsidies on account of installation charges on the Plant and machinery. (13). SO far as non-payment of Electricity subsidy is concerned and as has been referred to by the learned Single Judge, we have not been called upon to go into that aspect because Mr. Rai, learned counsel for the appellant, at the very outset, confined his arguments only to the claim of the installation charges with regard to the Plant and Machinery and with regard to the non-payment of the interest subsidy against soft loan. (14). HOWEVER, so far as the claim for interest on soft loan is concerned, we find that the learned Trial Judge was absolutely correct when he held that the Petitioner/appellant was not entitled to the same because even we do not find, under the Scheme or under Clauses 9.1 and 9.2 thereof, that an eligible Unit will be entitled to interest subsidy on "soft loan". There is therefore no provision under Clauses 9.1 or 9.2 on the basis whereof the appellants can claim payment of subsidy towards soft loan. (15). WE are therefore of the view that no interference with the Order of the learned Single Judge is required save and except to observe that the only grievance which appears to be reasonable to this Court is the non-consideration of the total claim of the cost of Plant and Machinery which the appellants had claimed at Rs. 16.37 lakhs and out of which the Respondents have considered only Rs. 13,95,273/- without giving any reasons as to why the full amount of Rs. 16.37 lakhs was not considered. (16). 16.37 lakhs and out of which the Respondents have considered only Rs. 13,95,273/- without giving any reasons as to why the full amount of Rs. 16.37 lakhs was not considered. (16). WE are therefore of the view that the Order of the learned Single Judge is correct in so far as it gives a direction upon the concerned authority to consider the matter but in view of our reasons given above, we are of the view that such consideration will be limited only to the extent of non-consideration of the full amount of the cost of Plant and Machinery as stated above. The Respondents are not required to consider the grievances with regard to non-payment of subsidies on account of installation charges as we have held that there is nothing in the Scheme that provides for payment of subsidies on installation charges of Plant and Machinery. Since we have not been called upon to apply our mind on the question of non-payment of Electricity subsidy as the learned Counsel had confined his arguments in the manner indicated above, we are therefore not going into that aspect in this Appeal but we leave it to the Authority to consider the same in accordance with law. The Appeal is accordingly disposed of and allowed in part.