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2008 DIGILAW 1000 (RAJ)

Chetak AluPvt. Ltd. v. State of Rajasthan

2008-04-09

VINEET KOTHARI

body2008
JUDGMENT 1. - This petition has been filed by the petitioner aggrieved of the impugned decision of the State Government to recover back the subsidy of Rs. 3,58,400/- granted to the petitioner under the State Capital Investment Subsidy Scheme, 1990 (hereinafter referred to as the Scheme of 1990). The said subsidy was given to the petitioner for setting up of a new industrial unit for manufacture of alum ferric a sort of chemical. The said subsidy was disbursed by the Rajasthan Financial Corporation (for short the RFC) out of its funds. After the said subsidy was sanctioned by the District Level Committee in its meeting held on 14.7.1998, the sanction letter in this regard was issued to the petitioner, which is Annex.2 on record. 2. The question of recovering back the aforesaid disbursed subsidy arose because of the provisions contained in Clause 4(h) of the said Scheme which stipulated that the date of commencement of the commercial production will be the 61st day after the day on which the raw material is for first time put in the process of production including the trial production. It would be appropriate to reproduce Clause 4(h) of the Subsidy Scheme in its entirety for the present purpose : "4(h) "New Industrial Units" means an industrial unit set up during the operative period of.this Scheme. The industrial unit will be deemed to have been set up during the operative period of the scheme if it commences commercial production on or after 1.4.1990 and is found eligible under this scheme. Date of commencement of the commercial production will be the 61st day after the day on which the raw material is for the first time put in the process of production including trial production. However, a unit making investment of atleast 25% of the project cost before the closing date of the scheme and starting commercial production within a period of 3 years after the closing date of the scheme would also be a new industrial unit for the purpose of the scheme and would be entitled for capital investment subsidy as per the provisions of the scheme provided the unit is otherwise eligible for the scheme." 3. The decision of District Level Committee in this regard was taken on 27.8.2001 vide Annex. The decision of District Level Committee in this regard was taken on 27.8.2001 vide Annex. R-2 produced with the reply of the State Government in which the case of the petitioner and three other industrial units was considered by the District Level Committee and it was held that since 61st day for ascertaining the date of commencement of commercial production in these four cases fell beyond and after the cut off date 30.9.1998 upto which date the said Scheme remained in operation, therefore, these units were wrongly sanctioned the said subsidy and it was required to be recovered back from them. For the case of the petitioner, it was found that since the raw material for commencement of commercial production was purchased vide Annex.R-1 vide invoice dated 22.9.1998 from M/s. Tushar Mineral Industries, Jamnagar, therefore, 61st day after the said date would be somewhere in November, 1998 which is beyond the cut off date of 30.9.1998. Though the said DLC noted in its meeting that the Permanent Registration Certificate issued by the District Industries Department to the petitioner (Ampex. 3 on record) indicated that the date of commencement of commercial production was 28.9.1998, which was before the cut off date 30.9.1998, yet since the DLC had no power to relax the Rules in this regard, namely, the clause relating to deeming fiction in clause 4(h) quoted above and only the State Government has such power, the said DLC decided to cancel the sanction of the subsidy disbursed to the petitioner and three other industrial units. 4. Aggrieved of the communication of the said decision vide Annex.10 letter dated 29.8.2001, and communication dated 25.2.2003 Annex. 11 of the RFC, the petitioner approached this Court by way of present writ petition. 5. Mr. Vikas Balia, the learned counsel for the petitioner urged in the first instance that not only the petitioner commenced the trial production from the said industrial unit and the first purchase of raw material sulphuric acid in this regard took place on 20.7.1998 vide Annex.6 and another purchase of bauxite powder vide Annex.7 on 22.7.1998 and therefore, the unit can be said to have commenced trial production on the said dates as production cycle of said process is only 24 hrs. secondly, he submitted that there is no reason to disbelieve the date of commencement of commercial production given in the Permanent Registration Certificate issued by the District Industries Centre, Chittorgarh, a State Government Department only as 28.9.1998 vide Annex.3. He also pointed out that same certificate further indicates that investment made upto that date in the said industrial undertaking was Rs. 18.75 lacs which is much more than 25% of the project cost for said unit. He submitted that the date of commencement of commercial production as per deeming fiction contained in clause 4(h) of the Subsidy Scheme, 1990 cannot override ignoring the actual date of commencement of commercial production as given in the Permanent Registration Certificate issued by the District Industries Centre, which is issued after the due verification of the fact that the commercial production has been commenced by the industrial unit in question. He also relied upon the Division Bench judgment of this Court in the case of Ganpati Tubes and Fabricators Pvt. Ltd. v. State of Rajasthan and Ors., D.B. Civil Special Appeal No. 1029/2003, decided on 16.7.2004 . He therefore prayed for quashing of impugned decision of the State Government as well as RFC to recover back the said amount of subsidy from the petitioner. 6. On the side opposite, the learned counsel appearing for the State Mr. R.R. Kanwar and Dr. Rakesh Sinha for RFC urged that the Subsidy Scheme, 1990 254 is independent and therefore, as per the definition of "New Industrial Unit" as given in the said Scheme, the date of commencement of commercial production has to be taken only as 61st day from the date when the raw material is first time put in the process of production which in the present case according to the respondents was 20.9.1998. They also submitted that since the State Government did not relax the said condition in any manner in any of the cases including that of the petitioner, the DLC was justified in cancelling the sanction of the subsidy in favour of the petitioner. They also submitted that since the State Government did not relax the said condition in any manner in any of the cases including that of the petitioner, the DLC was justified in cancelling the sanction of the subsidy in favour of the petitioner. They also relied upon another judgment of this Court in the case of RFC v. The Earnest Industrial Cases Private Ltd. and another, reported in 2000 (1) RLR 581 in support of the submission that the subsidy under the old Central Investment Subsidy Scheme, 1971 was held to be merely a concession and no right vested in the industrial unit about the subsidy and in the said Division Bench Judgment, the direction of the learned Single Judge awarding interest to the petitioner - Company on the amount of subsidy was set aside. 7. I have heard the learned counsels for the parties and given my thoughtful consideration to the relevant facts and the case laws cited at the Bar. 8. A close scrutiny of the definition of "new industrial unit" given in clause 4(h) of the Subsidy Scheme 1990 shall indicate that in the first part of the definition, it has been made clear by the State Government that the new industrial unit would mean an industrial set up during the operative period of this Scheme and an industrial unit will be deemed to have been set up during the operative period of the scheme, if it commences commercial production on or after 1.4.1990 and is found eligible under this scheme. There is no dispute that the said Scheme remained in force upto 30.9.1998. The second part of the definition that the date of commencement of the commercial production will be the 61s' day after the day on which the raw material is, for the first time put in the process of production including trial production introduces a deeming clause for fiction in the said definition where normal gestation of period for production or average gestation period of 61 days has been incorporated in the said definition. Thus deeming fiction part of definition in the considered opinion of this Court, can be applied only if the real date of commencement of commercial production is not available before the competent Committee, which considered the case of the petitioner for sanction of subsidy in question. Thus deeming fiction part of definition in the considered opinion of this Court, can be applied only if the real date of commencement of commercial production is not available before the competent Committee, which considered the case of the petitioner for sanction of subsidy in question. Deeming the date of commencement of commercial production on the basis of its deeming fiction cannot be preferred ignoring or in preference over the real date of commencement of commercial production. The Permanent Registration Certificate issued to the petitioner by the District Industries Centre, Chittorgarh Annex.3 on record shows that the date of commencement of production in the case of petitioner is 28.9.1998. There is nothing in the Subsidy Scheme, 1990 which is in conflict with or in derogation with the provisions under which said Permanent Registration Certificate is issued by the District Industries Centre which is issued after due and proper verification of the fact of commencement of commercial production. The Subsidy Scheme has also been announced by the State Government and the District Industries Department is also another wing of same State Government, the contention of the learned counsel for the respondents that provisions of Subsidy Scheme 1990 are independent and therefore, the date of commencement of production mentioned in the certificate issued by the District Industries Centre is of no relevance surprises this Court. The contention is too queer and curious to be rejected out of hand. The State Government or the authority of the State Government cannot simply ignore the said certificate. To put the deeming clause over and above the real date of production would really make mockery of Subsidy Scheme itself if the contention of the learned counsel for the respondents is held to be true. 9. There is yet another aspect of the matter. The proviso or second part of the definition of new Industrial Units as contained in clause 4 (h) of the Scheme introduced in the said Scheme w.e.f. 3.2.1998 clearly stipulated that if a unit making investment of atleast 25% of the project cost before the closing date of the Scheme and starting commercial production within a period of 3 years after the closing date of the Scheme would also be considered as a new unit for the purpose of said Scheme. The intention of the Legislature is more than clear. The intention of the Legislature is more than clear. A unit which invested only 25% of the its project cost is given further three years' period even after closing date of the scheme to still retain the status of new industrial unit under the said Scheme and be given subsidy. How can a unit which made full eligible investment and commenced commercial production before the cut off date of 30.9.1998 like the present petitioner be put in a more disadvantageous position than such units also invested only 25% of project cost before the cut off date. This cannot be permitted. 10. Even if the argument of the learned counsel for the respondents that the deeming clause should be applied to the case of the petitioner ignoring the certificate issued by the District Industries Centre accepted, 61st day from the first time when the raw material is put in the process for trial production in the present case vide invoice Annexs. 6 and 7 produced by the petitioner dated 20.7.1998 and 22.7.1998 would be before the cut off date of 30.9.1998. The words "trial production" in the deeming clause of the said definition also cannot be ignored. 11. Thus viewed from any angle, this Court finds no justification for impugned decision of the respondents of recalling subsidy given to the petitioner. Almost in similar circumstances the Division Bench of this Court in the case of Ganpati Tubes & Fabricators Pvt. Ltd. v. State of Rajasthan and Ors. (supra) has held as under:- "On admitted facts, if the certificate of the District Industrial Centre is taken into consideration, the commercial production commenced on 29.9.1998. If it is taken that the new material was put in the process of production for the first time on 29.9.1998 and production is deemed to have started from 28.11.1998, this date also fell within three years from the date of expiry of the operative period of the Scheme. There is no dispute about the fact that the appellant - petitioner had invested more than 25% of the total capital cost prior to the period of scheme and had started commercial production within three years of the closing date of the scheme it was entitled to claim subsidy under clause 4(h) of the scheme. There is no dispute about the fact that the appellant - petitioner had invested more than 25% of the total capital cost prior to the period of scheme and had started commercial production within three years of the closing date of the scheme it was entitled to claim subsidy under clause 4(h) of the scheme. On admitted facts of the respondents, the assessee fulfilled both the conditions when it was deemed to have commenced commercial production on the expiry of 61st day from 29.9.1998 i.e. on 28.11.1998 and that the investment in the plant before 30.9.1998 was more than 25% of the total cost. Therefore, the petition could not have been rejected only on the ground of raising disputed question of fact when the plain reading of the scheme shows that the respondent has wrongly denied the benefit of the scheme to the applicant petitioner in this appeal. xxx xxx xxx In the result, the appeal is allowed and the consequently, the writ petition is also allowed. The respondents are directed to allow the petitioner-appellant subsidy under the Scheme of 1990. No costs. 12. For the reasons given above, this writ petition is allowed and the impugned decision of DLC dated 27.8.2001, communication to the petitioner Annex.10 dated 29.8.2001 and Annex.11 dated 25.2.2003 of RFC are hereby quashed. No order as to cost.Writ petition allowed. *******