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2008 DIGILAW 281 (PAT)

Sai Iron (India) Limited v. State Of Bihar

2008-02-08

NAVANITI PRASAD SINGH

body2008
Judgment 1. How Industrial Units are allured in the State on incentive promises and once they come and risk their capital in the State how effectively the bureaucracy sabotage the very incentives available to them, is illustrated by this case. What is more regrettable is that an officer of the State as senior as Commissioner-cum-Secretary, Department of Industries issues general orders effectively nullifying industrial policy and how another Senior Officer, the Director of Industries ignoring the object of incentives in the Industrial Policy does everything to deprive industries of their legitimate claims under the incentive policy, is illustrated herein. The facts only lead this Court to observe that if either because of any executive necessity or the grant of incentives being found inpalatable by the bureaucracy, the incentive entitlements are not though proper to be granted to Industrial Units claiming then the Government should have the courage and conviction to take a stand in the matter and amend or rescind the industrial policy incentives but so long as the industrial incentive policy continues to be valid, the bureaucracy cannot take upon itself to deny the benefits thereof to the units who are otherwise entitled to it. 2. This is the third round before this Court of the petitioner claiming Power Subsidy Entitlement as an incentive under the 1993 Industrial Policy of the State and this is what makes it all the more regrettable. 3. The State Government, with the intention of alluring industries to set up units in the State for the development of the State, came out with Industrial Policy 1993. The said policy provided, inter alia that all units, which are set up within the five years period of the Industrial Policy, would be entitled for certain industrial incentives in the shape of exemptions from sales tax and other benefits including a Power Subsidy whereby irrespective of the rate at which industries pay at the power, for the units consumed in any particular period, the unit would be entitled to a subsidy of 18 paise per unit consumed. This claim has to be lodged by the industrial unit before the District Industries Centre who has to verify the same and sanction the same. After the sanction by the General Manager, District Industries Centre, funds are sought and on the funds being allocated by the Department of Industries, the same is to be paid to the industrial unit. 4. This claim has to be lodged by the industrial unit before the District Industries Centre who has to verify the same and sanction the same. After the sanction by the General Manager, District Industries Centre, funds are sought and on the funds being allocated by the Department of Industries, the same is to be paid to the industrial unit. 4. This industrial policy of the year 1993, as stated above, was to expire on 31st of March 1998 but in the meantime in 1995, the State Government came up with a new Industrial Policy. Thus, for the periods 1995 to 1998, in effect, there were two industrial policies operative, one the Industrial Policy of the year 1993 and the second the Industrial Policy 1998. As such, a provision was made that a person on giving into effect the 1995 Industrial Policy would have to give an undertaking under which policy, it would claim the incentives because it was the policy of the Government that no person could claim benefits under both the policies or partial under one and partial under the other. Obviously, this contingency would not arise, of giving undertaking, where a unit became fully entitled and started availing benefits under the 1993 policy itself because having availed of some benefits under the 1993 policy even on an undertaking it could not avail any further benefits under the 1995 policy. 5. Another noticeable aspect of the matter would be that if a person started setting up of a unit in view of the 1993 Industrial Policy which unit went into production before 1995 Policy, for example in February 1995 it went into production, then it would be entitled to incentives under the 1993 policy upto March 2000 and naturally the claims would arise for the period upto February 2000 and subsequent thereto. Similarly, if a unit though started to be set up under the 1993 Industrial Policy but was set up and started production after the 1995 Industrial Policy came into being, it could opt for either of the two policies. In case adopted for the 1995 Industrial Policy and ultimately started production in 1998, it would be entitled to the incentives upto the year 2003. The policy period is only indicative of the period within which entitlement arises but the entitlement goes ahead and is carried on beyond the period of the policy. In case adopted for the 1995 Industrial Policy and ultimately started production in 1998, it would be entitled to the incentives upto the year 2003. The policy period is only indicative of the period within which entitlement arises but the entitlement goes ahead and is carried on beyond the period of the policy. To put it shortly, if the unit goes into commercial production on one day before the end of the policy notwithstanding the policy ending a day later, the entitlement to incentives crystallized as a matter of right and would be available to the unit for the next five years notwithstanding the policy period being over. I have dwelled upon these aspects of the matter only to show as to how misconceived the actions of the bureaucracy is and how it is attracted to deny legitimate incentives granted by the Government to the Industry. 6. The petitioners claim for Power Subsidy was examined by the General Manager, District Industries Centre, Patna. For the period 1996 to March 1998, the petitioner was found entitled to Power Subsidy of Rs 3,30,958/-. For the period 1998 to December 2000, the petitioner was found entitled to Power Subsidy of Rs 4,69,547/-. Thus, the total entitlement of the petitioner was found to be Rs 8,00,505/- and it was, accordingly, sanctioned by. the General Manager, District Industries Centre on 28.02.2002 and copies of the sanction orders were forwarded to various authorities including the respondent-Director of Industries. The matter having been sent to the Director of Industries, it was expected that it being an industrial incentive, the Director of Industries would have acted promptly in arranging for its disbursement immediately. Regrettably rather than the incentive there being to the industrial unit on its own as a matter of right, the Department of Industries slept and the petitioner had to move this Court by filing CWJC No 11426 of 2002 for a mere direction to the Industries Department to wake up and consider the claim of the petitioner and take a decision thereon. Such a wake up call was issued by this Court while disposing of the said writ application on 21.11.2002 (Annexure-2). The then Director of Industries woke up and on directions of this Court assumed his responsibility and passed an order on 21.02.2003 (Anncxure-3) denying the entitlement to the petitioner. There were two grounds taken for refusing to grant the incentive to the petitioner. The then Director of Industries woke up and on directions of this Court assumed his responsibility and passed an order on 21.02.2003 (Anncxure-3) denying the entitlement to the petitioner. There were two grounds taken for refusing to grant the incentive to the petitioner. Firstly, it was held by the Director of Industries that as required, the petitioner had not submitted within the prescribed period his option in writing as to whether he would avail of benefits under the 1993 Industrial Policy or 1995 Industrial Policy and that option not having been given, it would, by default, mean that he would not be taking benefit under the 1993 Industrial Policy and that being so, the Power Subsidy, which was available only under the 1993 policy and not 1995 policy, would not be available to the petitioner. The second ground was that the 1993 policy expired on 31.03.1998 and as per departmental circular letter No 2616 dated 11.07.2000, if claims were not duly made till December 2000, authorities were prohibited from sanctioning any grant under the 1993 Industrial Policy. Here the sanction itself was 28.02.2002 which disentitles the petitioner in view of the circular letter dated 11.07.2000, as referred to above. 7. This brought the petitioner before this Court for the second time in CWJC No 3872 of 2003 which was then heard and allowed by judgment and order dated 06.08.2003. Both the grounds on which Power Subsidy incentive was denied to the petitioner were found to be misconceived. It was specifically held that so far as first ground is concerned that the petitioner-unit was availing all other benefits under the 1993 policy and, as such, the question of option being exercised did not arise because partial benefit under one and another was not possible. So far as the second ground for rejection being the circular letter No 2616 dated 11.07.2000 is concerned, that was also specifically considered and their Lordships, referring to the judgment in the case of Kamper Concast Limited V/s. State of Bihar & Others since, 2004 3 PLJR 309 where that letter had been subject matter of decision, rejected the stand of the State. While doing so, their Lordships pointed out that the incentive was available for a period of five years from the day unit goes into production. Those five years period could end much after the end of the policy period. While doing so, their Lordships pointed out that the incentive was available for a period of five years from the day unit goes into production. Those five years period could end much after the end of the policy period. For example, as given earlier, the 1993 policy was valid upto 1998 and if a unit went into production in February 1998, its entitlement would be upto February 2003 but if the circular letter, referred to above, was to be literally implemented, the effect was that even though a unit was entitled as a matter of right to industrial units upto February 2003 if its claim were not made or sanctioned by December 2000, the same would not be entertained. This Court in the case of Kamper Concast Limited (supra) clearly held that such an interpretation would render the circularly clearly bad for attempting to curtail the Industrial Policy of the Government. It, thus, rejected both the grounds as given by the Director of Industries. The matter was then remanded back to the Director of Industries for a fresh consideration in accordance with law and in light of this judgment. 8. The matter was then again heard and decided by the then Director of Industries who again rejected the claim of the petitioner by his order dated 29.10.2003 which is appended as Annexure-5 to this writ application. Regrettably, a plain reading of the order impugned makes a very sorry reading especially when it comes from a person who holds the office of the Director of Industries, Government of Bihar. It is normally expected that such a Senior Officer would work in aid of the Industrial Policy of the Government and encourage industries to the maximum permissible in law but the order only shows otherwise in all aspects. The order notices the earlier two writ applications and the orders passed therein by this Court. It is normally expected that such a Senior Officer would work in aid of the Industrial Policy of the Government and encourage industries to the maximum permissible in law but the order only shows otherwise in all aspects. The order notices the earlier two writ applications and the orders passed therein by this Court. It quotes from the judgment of Kamper Concast Limited (supra) as quoted in petitioners second writ judgment and again basing on the same very argument that was considered and rejected by this Court in the second round of petitioner before this Court, he again holds that in view of the circular letter No 2616 dated 11.07.2000, the General Manager, District Industries Centre, Patna having sanctioned the Power Subsidy on 28.02.2002 that is after the said circular letter was issued, the sanction was wrong and could not be acted upon and the petitioner was, thus, not entitled to the incentive as claimed. To say the least, this order verges on contempt. 9. This entire contention has been first considered in the case of Kamper Concast Limited (supra) and it was held that the circular letter was misconceived and if interpreted in the manner, the Department had sought, it would be illegal and unenforceable. That was the specific finding of this Court in the case of Kamper Concast Limited (supra). This issue was then specifically answered as between the Director of Industries and the petitioner by this Court in the second writ application of the petitioner as against the Director of Industries and the same very Director of Industries had the impunity to virtually hold that this Court was wrong and reiterates his order which has already been set aside. This indeed is a sorry state of affairs and especially when it comes from senior and assumedly responsible officer of the State. 10. I have perused the circular letter once again. Circular letter No 2616 dated 11th July 2000 and as still some confusion arises in the minds of authority, I hold that claims in respect of the industrial policy, if otherwise validly entitled, cannot be curtailed by an executive letter and claims based on entitlement within three years of the period of entitlement shall be entertained by the State and cannot be refused because in.refusing the same would be contrary to the very Industrial Policy itself. In this connection, I may refer to the judgment of State of Bihar & Others V/s. M/s Suprabhat Steel Limited & Others, 1999 1 PLJR (SC). In that judgment, the Supreme Court, while interpreting Industrial Policy and its effect and implementation, in no uncertain terms, held that it is the duty of everybody to enforce the Industrial Policy being the policy of the Government and any action by any person under the Government whether executive or otherwise denying the incentives had to be rejected. There, under the relevant Sales Tax Law, the State Government had a right to grant exemptions subject to such terms and conditions as may be prescribed. In exercise of those statutory powers, exemption notifications implementing industrial polices were issued but while doing so, the proviso was added which effectively destroyed the exemption. The plea of exercise of statutory power was rejected and that part of notification was struck down being contrary to the Industrial Policy. In my view, if that is the position so far as statutory power is concerned then the position of the Executive Government to issue circular is worse. By a circular, it could not amend the Governmental policy itself. 11. Thus, it is found that now the only ground that was given for disentitling the petitioner is not only misconceived but verging on contempt, leaves no scope for this Court but to hold and declare that the petitioner is legally entitled to the Power Subsidy as was sanctioned by the General Manager, District Industries Centre, Patna and the same is liable to be paid to the petitioner. In view of the unnecessary and totally avoidable delay, this Court is inclined to grant interest in addition to the same. The respondents would be liable to pay interest from the date of sanction to the date when the amounts are actually paid at the rate of 8% per annum over the amount due and payable. The respondent-Director of Industries, Bihar, Patna would ensure that the payment is made within one month from the date of production of a copy of this order before him. 12. With these directions, the impugned order is set aside and the writ application is allowed.