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2018 DIGILAW 1001 (CAL)

Emami Agrotech Limited v. State Of West Bengal

2018-12-21

ABHIJIT GANGOPADHYAY

body2018
JUDGMENT : ABHIJIT GANGOPADHYAY, J. 1. The petitioner company for expansion of its edible oil unit wanted to get financial assistance under the West Bengal State Support for Industries 2. Scheme, 2008 (as amended up to 31.12.2010), (the scheme, in short, hereafter), for an amount of Rs.126.68 crores. 3. Such financial assistance was given as incentive to units registered under the scheme by way of various subsidies like fixed capital investment subsidy, interest subsidy, employment generation subsidy etc. as has been explained under clause 17.8 of the scheme. The expression incentive has been defined under clause 3.13 of the said scheme. 4. The subsidies under the said scheme were to be granted by the Government of West Bengal through West Bengal Industrial Development Corporation Limited (WBIDC, hereafter, in short) which has been authorised by State Government, as Stated in clause 3.4 of the scheme. WBIDC, considered the cost of Rs.117 crores approved by Financial Institution (defined in clause 3.11 of the said scheme) for such expansion though expenditure claimed by the petitioner was Rs.132.5 crores. Out of Rs.117 crores of Fixed Capital Investment (FCI, in short, hereafter), as defined in clause 3.12 in the scheme, WBIDC allowed financial assistance of Rs.66.7 crores to the petitioner and disallowed Rs.50.3 crores. 5. Against such disallowance the petitioner has filed the present writ application claiming, inter alia, for declaration that the petitioner is entitled to industrial promotional assistance of Rs.126.68 crores, for a declaration that the letter of The Executive Director of WBIDC fixing the industrial promotional assistance amount at Rs.6670.50 lacs is arbitrary, irrational and dehors the provision of said scheme and for a direction upon the said officer of WBIDC to re-fix the said assistance at Rs.126.68 crores in terms of clause 3.12 of the scheme. The scheme has been annexed to the writ application, as annexure P-1. 6. Clause 3.12 of the scheme is reproduced here in below. Clause: 3.12. “Fixed Capital investment” hereinafter referred to as FCI, means investment made in plant and machinery and also equipment installed for pollution control measures of the approved project by the eligible unit made during the last three years preceding the date of filing application. While making calculation of “Fixed Capital Investment”, investment made only on Plant & Machinery, as indicated below shall qualify. 3.12.1. While making calculation of “Fixed Capital Investment”, investment made only on Plant & Machinery, as indicated below shall qualify. 3.12.1. Cost of plant & machinery/ equipment including the cost of productive equipment such as jigs, dies, moulds, etc. required directly for the purpose of manufacture of goods and erected at the approved location; 3.12.2. Cost of equipment pertaining to pollution control measures; 3.12.3. Cost of second hand plat & machinery required directly for the purpose of manufacture as also cost of equipment pertaining to pollution control measures as above, when imported from outside India by the unit itself and not previously used in any State in India; 3.12.4. Cost of plant & machinery required directly for the purpose of manufacture will include the cost of erection/ installation of plant & machinery, cost of electrical accessories inside the plant and cost of generator set required directly for the purpose of manufacturing: provided that, cost of any second hand plant & machinery required directly for the purpose of manufacture and equipment installed for pollution control measures which are purchased from any place in India as well as cost towards purchase of land & development of such land construction of approach road, building, water supply, sanitation, drainage & sewerage, Railway siding and infrastructure for drawing power connection up to the plant from the feeder of any electricity distribution company, consultancy fess and any item other than that not specifically indicated in the scheme shall not from a part of fixed capital investment and therefore, shall not be taken into account for calculating the Fixed Capital Investment; 3.12.5. Advances paid to the supplies of plant and machinery for the approved project of the eligible unit on or after the 1st April 2007; 7. In the matter, affidavit-in-opposition and reply thereto have been filed by the parties. 8. On the prayer of the petitioner by an order dated December 15, 2016 passed by this Court a Chartered Accountant (empanelled in High Court) was appointed “for assessing the amount of FCI as per scheme made by the petitioner company on the basis of said clause 3.12 of the scheme for the expansion of the unit.” The CA was directed to file a report in the Court. Such report was to be filed on 16 January 2017 but it was filed on 24th April 2017 after the time to file the report was extended by the Court on 16 January 2017. 9. After filing of the report the respondents were given liberty by Court to take exception to the report which the respondents (Nos. 2,3,4,5) took by filing an affidavit (affirmed on July 06, 2017) to which affidavit-in-opposition (affirmed on 20th November, 2017.) was filed by the petitioner. 10. It is pertinent to mention that in this matter different orders were passed from time to time against which the above respondents preferred several appeals, all of which are pending, which are mentioned here in below. 11. Against order dated 11 September 2015, the respondents have filed appeal being MAT No. 850 of 2016. 12. Against order dated January 21, 2016 the respondents have filed appeal being FMA 2102 of 2016. 13. Against order dated December 15, 2016 (Appointing the Chartered Accountant) the respondents have filed MAT 231 of 2018 and 14. Against order dated January 12, 2018 (acceptance of the report of the said Chartered Accountant) the respondents have filed MAT 232 of 2018. 15. It has been stated above that all the appeals are pending. 16. However, by order dated January 13, 2018 it was made clear by the Writ Court that on the ground of pendency of the appeals no further adjournment would be granted. Though the appeals are pending the writ application has been heard finally. 17. I have heard the parties and perused all pleadings of the parties including the report of the said Chartered Accountant, and the exception taken thereto and the affidavit-in- opposition to the affidavit in exception. The parties have filed notes of argument/writ submission, which also I have perused. 18. I will deal with the said report of the Chartered Accountant, later. Before that I proceed to deal with contention of the parties. 19. The main grievance of the petitioner is against the disallowed expenditure of Rs.50.3 crores against FCI. The disallowance has been made by WBIDC. 20. In its affidavit-in-opposition respondents in a tabular form gave explanation for disallowance of different amounts of money, all in respect of FCI. Before that I proceed to deal with contention of the parties. 19. The main grievance of the petitioner is against the disallowed expenditure of Rs.50.3 crores against FCI. The disallowance has been made by WBIDC. 20. In its affidavit-in-opposition respondents in a tabular form gave explanation for disallowance of different amounts of money, all in respect of FCI. Such explanation given in the affidavit-in-opposition and the petitioner's reply thereto is the fundamental matter which is to be considered by this Court in this controversy, for deciding the writ application. 21. Now I take a look to the explanation given by the respondents in support of such disallowances and the reply of the petitioner thereto. (i) The respondents have disallowed Rs.7.5 crores as investment after date of commencement of commercial production. 22. In this regard the petitioner has contended that nowhere in the scheme it is indicated that investment made after date of commencement of commercial production would be disallowed and has referred to and relied upon clause 5.4 of the scheme. Relevant part of clause 5.4 of the scheme is reproduced here in below. Clause 5.4: “Eligible units having obtained RC in Part-I shall have to complete investment in the unit for obtaining RC in Part-II as per time period, counted from, the date of issuing RC in Part-I, as specified below:- (Emphasis mine) Scale of investment Time limit Scale-1 & 2 2 years Scale- 3 3 years Scale -4 4 years Else, this scheme will not be applicable to the unit, provided the unit shall have the option to register de novo under any successor scheme operative at that point of time.” 23. The unit of the petitioner comes within scale 2. 24. RC stands for Registration certificate. 25. The scheme provides that for getting benefits under the scheme a unit is to obtain Registration Certificate which is issued in two parts. 26. Approval and sanction of any financial Institution (as has been defined in paragraph 3.11 of the said scheme) is a pre condition for securing Registration Certificate. Registration certificate (RC, in short, hereafter) has been defined in clause 3.19 of the said scheme, and procedure for obtaining RC etc. has been laid down in clause 7 of the scheme. 27. 26. Approval and sanction of any financial Institution (as has been defined in paragraph 3.11 of the said scheme) is a pre condition for securing Registration Certificate. Registration certificate (RC, in short, hereafter) has been defined in clause 3.19 of the said scheme, and procedure for obtaining RC etc. has been laid down in clause 7 of the scheme. 27. On a plain, full and complete reading of the above clause 5.4 it is found that for obtaining RC- in Part- II a unit “shall have to complete” investment by two years from the date of issuing RC- in part I. Before proceeding further in this respect the following dates are to be noted. (a) 09-04-2012: Application for RC- I and RC- II made by the petitioner. (b) 05-07-2012: RC- I granted to the petitioner by Director of Industries of Government of West Bengal. (c) 30-07-2012: Intimation given by the petitioner to the Director of Industries as to starting of trial production in the plant. (d) 01-08-2012: commencement of commercial production as intimated by petitioner to the Director of Industries, by its letter dated 22.08.2012. (e) 19-02-2013: RC-II granted to petitioner by Director of Industries. 28. From the above it would be evident that the petitioner was able to complete the investment and was able to start commercial production after expansion and actually started the commercial production in less than two months from granting of RC- 1. It was expansion of the existing unit, not setting up a new unit for the first time. Starting of commercial production conclusively shows that investment was complete. Here, this matter is concerned with FCI i.e., Fixed Capital Investment. 29. I find that the expression is “shall have to complete investment” in clause 5.4 controls the clause. 30. It is wholly inconceivable that without completing investment a unit will start commercial production after exapansion. An unit can spend money after 'complete investment' and such expenditure may also be termed as investment but such an expenditure goes wholly against the intention of the state for which clause 5.4 has been mentioned in the scheme. If any investment is made after said 'complete investment' such investment shall not be eligible for getting the benefits under the scheme because of the abovementioned controlling expression. 31. If any investment is made after said 'complete investment' such investment shall not be eligible for getting the benefits under the scheme because of the abovementioned controlling expression. 31. The time period of 2 years is only an outer limit for completing investment; if it cannot be done by this time limit the scheme will not be applicable to the unit. 32. In its reply the petitioner has not denied that it made investment after date of commencement of commercial production. The petitioner's contention is, as RC part 1 was issued on 5th April 2012 all investments made up to 4th April 2014 are to be considered, is wholly incorrect as the controlling expression “shall have to complete investment” has been ignored by the petitioner and the time limit has been emphasised by him. A clause is required to be read as a whole to understand its meaning which has not been done by the petitioner. 33. Therefore, the objection of the petitioner that nowhere in the scheme it is indicated, investment made after commencement of commercial production would be disallowed, is wholly misconceived, and not accepted by this Court. 34. I decide that this amount of Rs.7.5 crores has been correctly disallowed by the respondents. (ii) The respondents have disallowed an amount of Rs.2.7 crores on the ground that bills were not submitted by the petitioner to which the petitioner has raised dispute by contending that the respondent is to indicate the bills which allegedly have not been submitted by the petitioner. Such allegation and counter allegation clearly gives rise to disputed question of facts as to whether the bills were submitted or not which may again give rise to other consequential and relevant disputed question of facts. With regard to disputed question of facts I refuse to exercise the jurisdiction of writ court. Writ Court is not the proper forum for adjudication of such disputed question of facts. (iii) The respondents have disallowed Rs.0.5 crores as the investment was made for fire fighting equipment/Weigh Bridge. Fire fighting equipment and Weigh Bridge are not required directly for the purpose of manufacture of goods as mentioned in clause 3.12 which can be known simply by reading the clause and I hold that this amount has been rightly disallowed by the respondent. (iv) The respondents have disallowed Rs.5.6 crores as proportional deduction on account of taxes/duties, freight, insurance etc. (iv) The respondents have disallowed Rs.5.6 crores as proportional deduction on account of taxes/duties, freight, insurance etc. In this respect the petitioner's reply is that net cost incurred for the project after adjusting certain credit on account of this tax is Rs.1.66 crores which has again been deducted from the net cost. This again gives rise to a disputed question involving certain facts and I decline to exercise the writ jurisdiction for adjudicating such disputed question of facts. (v) The respondent has disallowed Rs.12 crores due to installed capacity of 37955 MT tanks against Bank approved capacity of 55000 MT. For tank Rs.38.50 crore subsidy was earmarked for 55000 MT capacity. When the tank was of 37955 MT capacity proportionate deduction in subsidy has been made. I do not see any illegality in it. Subsidy is, cash payment given by way of assistance, here, to the petitioner. Decision was taken to give such assistance of Rs.38.50 crores for construction a 55000 MT capacity tank. The tank was built for a capacity of 37955 MT. For this the assistance has been proportionately curtailed - this is only natural and reasonable. The demand of the petitioner that for the lesser capacity tank the full monetary assistance is to be given to it by the government is wholly unreasonable, without any logic and devoid of any sense. This disallowance has been rightly made by the respondents. (vi) For civil structure (Cement, Sand, pilling etc.) the respondents have disallowed Rs.22 crores. From a reading of Clause 3.12 it becomes clear that civil structure of any nature, character and requirement cannot be included within the expression cost of erection/installation of plant and machinery. If such structure is required directly for the purpose of manufacturing, it may be considered for the subsidy. It cannot be said that all costs for the civil structure should be allowed for giving the subsidy. How far it is required directly for the purpose of manufacturing and how far it is to be allowed for giving subsidy become a disputed question of facts along with the question as to whether the disallowance has been made rightly or wrongly. I decline to exercise writ jurisdiction to adjudicate such disputed question of facts. 35. How far it is required directly for the purpose of manufacturing and how far it is to be allowed for giving subsidy become a disputed question of facts along with the question as to whether the disallowance has been made rightly or wrongly. I decline to exercise writ jurisdiction to adjudicate such disputed question of facts. 35. Therefore I hold that disallowances as discussed in paragraphs (i), (iii), (v) and (vi) above have been rightly made by the respondents and the disallowances as mentioned in paragraphs (ii) and (iv) involve disputed question of facts for which evidence, both oral and documentary, are to be adduced and I decline to exercise writ jurisdiction for the above purpose as the writ court is not the proper forum for it. 36. Now, the report of the CA where he has dealt with the claims against various heads are required to be scrutinised. (i) The CA has rejected the claim of Rs.2.7 crores for alleged non-submission of bills. Such decision cannot be taken by him so lightly. The petitioner demanded indication of missing bills. The parties should get fullest opportunity to adduce evidence in respect of the submission or non-submission of bills which cannot be done before the CA. It is the job of suit Court. Such observation and opinion of the CA is not accepted and rejected. (ii)The CA has rejected the claim of Rs.0.5 crores against fire equipment/weighbridge which has been done correctly as this fire equipment/ Weigh Bridge cannot come within the coverage of clause 3.12 as the same is not directly required for production. This decision can be arrived at by a plain reading of clause 3.12. (iii) The CA has allowed the claim of Rs.5.6 crores towards proportional deduction on account of taxes/duties, freight insurance etc. He has come to the conclusion that the said amount has already been deducted. But he has not given any calculation to show or has not indicated any document from which it can be seen that in fact the said amount has already been deducted from the net claim of the petitioner. Without evidence this claim cannot be allowed or disallowed. Whether such amounts have already been deducted or not requires documentary and oral evidence. This function of taking evidence cannot be performed by the CA. It is the job of a suit Court. Without evidence this claim cannot be allowed or disallowed. Whether such amounts have already been deducted or not requires documentary and oral evidence. This function of taking evidence cannot be performed by the CA. It is the job of a suit Court. The very claim by the petitioner and its denial by the respondents show existence of disputed question of facts. The view taken by the CA in his report in allowing the claim is baseless. Further It is found that for allowing the said claim of Rs.5.6 crores he has stated that it should be allowed as it has been approved by the bank. The CA has taken this view without considering the RC - part II conditions under the heading 'terms and conditions” No. 3 which says “actual FCI as per clause 3.12 and 6.12 of the scheme made by the unit will be determined by WBIDC at the time of disbursement of subsidy”. Thus whether the amount is approved by the bank or not is immaterial. What is material for the present purpose is whether such claim is allowable by WBIDC under the scheme. If WBIDC has made a mistake in disallowing this claim it can be corrected after considering evidence in this regard. This cannot be done by opinion expressed by CA. Such observation and opinion of CA allowing the claim in his report is not accepted and is rejected. (iv) The CA in his report has allowed the claim of Rs.7.5 crores of the petitioner which has been disallowed by the respondents. I have already discussed above why the decision of disallowance by the respondents of the said amount is correct. 37. The CA has misread the clause 5.4 and have formed of his opinion in favour of the petitioner. The CA in his report has observed that the said investment was approved by the Bank. From this observation it is clear that the CA has failed to read the terms and conditions given in RC Part-II. I repeat that it is immaterial whether the investment was approved by the bank or not in the facts and circumstances this case; what is material here is the relevant clause of the scheme. I have already discussed above as to why the decision of respondents is correct. I repeat that it is immaterial whether the investment was approved by the bank or not in the facts and circumstances this case; what is material here is the relevant clause of the scheme. I have already discussed above as to why the decision of respondents is correct. Therefore, the decision of the CA as to this claim of the petitioner is liable to be rejected and is rejected. (v) The CA in its report has allowed the claim of Rs.12 crores regarding installation of 37953 MT tank. I have already decided above as to why the decision of disallowance of the respondents in this regard is correct. The CA again has based his decision for allowing the assistance showing approval of bank without considering the “Terms and Conditions” given in RC-part-II. The CA has also failed to understand that for price escalation financial assistance could not be demanded, it is not in the scheme for giving subsidy. The CA has observed that petitioner has not claimed more than the approved cost but has failed to observe that the petitioner built a tank of lesser volume. The decision of the CA as to this claim of the petitioner is liable to be rejected and is rejected. (vi) The CA has allowed claim of Rs.22 crores for the Civil structure and while doing this he has proceed illegally as without any leave of the Court he engaged a Civil Engineer/architect. For this illegality this part of the report also cannot be accepted. I have already discussed this aspect of the matter above. 38. The CA was appointed by order dated December 15th, 2016 to dispose of the matter, for facilitating the final hearing as well as for ends of justice. None of the objectives for appointing the CA has been achieved. The report has created enough impediment to dispose of the matter. It has not facilitated to dispose of the matter. It has not facilitated the final hearing in any manner and the report with full of gross mistakes and illegality in acting without any leave of the court in appointing a Civil Engineer cannot be considered for ends of justice. The objective for appointing the CA has wholly failed. 39. It has not facilitated to dispose of the matter. It has not facilitated the final hearing in any manner and the report with full of gross mistakes and illegality in acting without any leave of the court in appointing a Civil Engineer cannot be considered for ends of justice. The objective for appointing the CA has wholly failed. 39. The CA has failed to assess the amount of FCI as per scheme made by the petitioner company on the basis of clause 3.12 of the scheme with regard to the expansion of the unit. 40. The report filed by CA is of no use and I declare that such a faulty and erroneous report which is illegal also in one particular aspect shall not be used in any forum for any purpose whatsoever. 41. The report of the CA was accepted by this Court by order dated January 12, 2018. Exception to the report was taken and after considering the exception and the objection-affidavit thereto and after hearing submission of the parties, the report was accepted but it is evident that without any closer scrutiny as to the content of the report and it is also evident that it was accepted without reading the report objectively along with the scheme and other documents already on re-rod. 42. The acceptance was by an order in a continuing proceeding. Such acceptance was in the interim stage of the proceeding. At the final hearing there is no bar for the Court to scrutinize the report closely along with the scheme and other documents on record and to decide whether the said report is correct or not. If on close scrutiny such serious defects come to light as to the report the same Court has the power to reject the said report even if it is accepted at an interim stage of the proceeding. As the proceeding was continuing and as the acceptance of the report was in an interim stage and as on a closer scrutiny serious defects have been found in the said report of the CA the same is required to be rejected not only for the interest of justice but also on the principles of justice, equity and good conscience. As the proceeding was continuing and as the acceptance of the report was in an interim stage and as on a closer scrutiny serious defects have been found in the said report of the CA the same is required to be rejected not only for the interest of justice but also on the principles of justice, equity and good conscience. Any party to the proceeding cannot say that such a report should be kept untouched once it is accepted despite the finding that the report is fully erroneous and when the report maker, (the CA) has committed illegality, at least in one aspect i.e. appointing a Civil Engineer without any leave of Court. 43. In this regard the petitioner have relied upon the judgment of National Insurance Company Limited versus Prnay Sethi and others reported in, (2017) 16 SCC 680 . 44. In that judgment the question of power of a Bench of a coordinate jurisdiction in calling an earlier decision as incorrect has been discussed relying upon a judgment delivered in State of Bihar versus Kalika Kuer reported in, (2003) 5 SCC 448 . 45. The above judgment is not applicable in the factual matrix of this case as there the question was when a decision cannot be said to be per incuriam. There it was laid down that an earlier decision of a coordinate Bench of the same High Court although appearing to be incorrect on the ground that possible aspect of the matter was not considered by or raised before the Court, merely for that reason it cannot be said to be rendered per incuriam. It is binding on a later coordinate bench. The later coordinate Bench must either follow or refer the matter to a larger Bench to examine the issue. 46. In the above case as aforesaid and in the case referred therein the question was between decision of two coordinate Benches and not in a later decision of the same Bench and not between an order of acceptance of a report in the interim stage and a later decision of the same Bench at the final hearing. The law laid down by the said judgment is not applicable here and the question of per incuriam does not arise. 47. After passing of the final order the order passed in the interim stage cannot have a separate existence. 48. The law laid down by the said judgment is not applicable here and the question of per incuriam does not arise. 47. After passing of the final order the order passed in the interim stage cannot have a separate existence. 48. On the basis of the discussion made above I dismiss the writ application. 49. No costs.