U.P. & Ors Vs. M/S.
S.K. Theatre Productions & Ors  Insc 118 (9 February 2007)
S. B. Sinha & Markandey Katju
(arising out of Special Leave Petition (CIVIL) No.5310 of 2006) MARKANDEY
This appeal has been filed against the impugned judgment of the Allahabad
High Court (Lucknow Bench) dated 7.12.2005 in Writ Petition No.3281 (MB) of
2004. Heard learned counsels for the parties and perused the record.
The facts of the case are that to promote film production in the State of
U.P. the State Government constituted a Society named Film Bandhu in the year
2001 which was registered under the Societies' Registration Act.
Various Government orders were issued to give facilities for film production
in U.P. and a film policy was made. Various incentives were also declared to be
given to the films made in regional languages in U.P. such as Avadhi, Bhojpuri
and Braj etc. These various incentives are mentioned in the booklet entitled
'Uttar Pradesh Film Policy 2001', copy of which has been supplied to us. These
include trade tax exemptions, tax incentives, subsidy, two weeks' compulsory
exhibitions of regional films, etc.
The respondents claim subsidy under clause 23.3 of the Film Policy.
The said clause 23.3 states :- "23.3 Subsidy : A subsidy of 25% of the
cost of production, subject to a maximum limit of Rs.10 lac, will be provided
to films made in the State in any one of the above mentioned languages. This
subsidy will be paid to film processing labs for the expenditure actually
incurred in the making of the film. In the first three years this subsidy can
be paid to laboratories situated outside Uttar Pradesh.
However, after three years regional films will be able to avail this scheme
only if the processing of their films is done by labs situated in U.P. This
provision will hopefully stimulate the growth of such lab facilities within the
State. Besides, far promotion of such Hindi films also, over 75% shooting of
which has been completed in the State, a proportionate grant shall be given or
the amount of grant will be adjusted with rates of interest of institutional
finance for films."
The respondent (the writ petitioner) had decided to produce a Hindi film
entitled 'Pani Re Pani Tera Rang Kaisa' in U.P. For this purpose the petitioner
submitted his application to the Film Bandhu on the prescribed format, copy of
which is Annexure-5 to the writ petition. He also submitted copy of the script
with a Bank draft of Rs.2,500/- as processing charges. It is alleged that the
script of the film was approved by the expert committee, whose recommendations
were approved by Film Bandhu vide approval letter dated 27.5.2003, Annexure-6
to the writ petition. Thereafter, the respondent made various arrangements and
shot the entire feature film in Lucknow.
The petitioner claimed the subsidy under the film policy and is aggrieved by
the order dated 29.4.2004, Annexure 13 to the writ petition issued by the
Directorate of Information, U.P. by which the subsidy to the petitioner has
been restricted to 25% of the processing charges only, and not 25% of the
entire cost of producing the film. The petitioner prayed for quashing of the
order dated 29.4.2004 and for a mandamus directing the respondent to make the
payment of Rs. 8, 94, 591/- being the remaining amount claimed by him as
subsidy, i.e., over and above the amount already paid to him as 25% of the
processing cost in the lab.
By the impugned judgment the writ petition was allowed and hence this
Learned counsel for the appellant submitted that under clause 23.3 of the
film policy the subsidy payable was only 25% of the cost involved in the
processing of the film in the laboratory (subject to a maximum of Rs.10 lacs).
He submitted that the purpose of the subsidy was that film labs were situated
outside U.P. and hence a subsidy was granted in relation to the film processing
in the labs which were outside U.P. but this subsidy was restricted to only
On the other hand, learned counsel for respondent submitted that other film
producers had been granted 25% of the entire cost of production of the film.
We are of the opinion that if other film producers were granted subsidy of
25% of the cost of production of the film (subject to a maximum limit of Rs.10
lacs) then the writ petitioners should also be given the same benefits.
However, if that was not done then the subsidy should be 25% of the cost of
film processing in the lab (subject to a maximum of Rs.10 lacs) and not the
entire cost of the film production.
It is well settled that a relevant factor for interpretation if there is
some ambiguity in a circular is how the circular has been understood by the
department itself which issued it. This is particularly so when there are two
interpretations possible, as is in the present case.
In these circumstances, we set aside the impugned judgment and remand the
matter to the High Court for a fresh consideration after calling for the
relevant material in order to understand how clause 23.3 of the Film Policy was
understood by the department itself and what subsidies have been given to other
For the reasons given above, we allow the appeal, set aside the impugned
judgment and remand the matter to the High Court. No cost.