Union of India Vs. M/S Krimpex Synthetics Ltd  Insc 438 (24 August 2005)
Bhan & S.B. Sinha
CIVIL APPEAL NO.5272 OF 2005 (arising out of SLP) No. 22036 of 1997) BHAN, J.
granted in SLP No. 22036 of 1997.
order shall dispose of the two appeals which are in the nature of cross appeals
against the same order dated 26/27.11.1996 of the High Court of Bombay in Writ
Petition No. 245 of 1991. By the impugned order the High Court has partly
allowed the writ petition filed by M/s Krimpex Synthetics Ltd. Respondent in
Civil Appeal No. 2865 of 1998 filed by the Union of India and the appellant in
the Civil Appeal No..................of 2005 (@ SLP (C) No. 22036 of 1997.
Parties shall be referred to as per their status in Civil Appeal No. 2865 of
view to promote the growth of industries in certain selected less developed
districts and areas, the Government of India introduced the Central Outright
Grant or Subsidy Scheme, 1971 (for short "the Scheme") for the
industrial units under notification dated 26th August, 1971 published in the
Gazette of India, extra-ordinary, Part I, Section-1. Along with the scheme, a
manual was issued setting out the detailed working of the Scheme. Respondent
filed a writ petition in the High Court of Bombay seeking quashing of orders at
Exs. E and F of the petition. Exhibit E was a communication to the respondent
informing that in view of the Ministry of Industry Government of India's
decision under letter No. 45 (2)/89-DBA-II dated 28.6.1990 the claim of the
respondent for Central Investment Subsidy was rejected. Exhibit F was a
communication from the Government of India to the Administration of Dadra and Nagar
Haveli informing that the claim of Rs. 1,63,28,848/- under the Central
Investment Subsidy Scheme in respect of units which were sanctioned investment
subsidy after cut off date, i.e., 30.9.1988 as per the provisions contained in
Ministry's letter dated 21.7.1988 is returned.
case was disposed of by the High Court vide its judgment and order dated
22.10.1992. Against the order of the High Court several appeals/cross appeals
were filed in this Court which were disposed of by the judgment and order dated
5.12.1995. The said judgment and order of this Court may for convenience is
reproduced as under:
grievance of the industries arrayed in these appeals is that they have not been
disbursed the subsidy to which they are entitled to, under the Central Outright
Grant or Subsidy Scheme, 1971 for industrial units to be set up in the selected
of the industries have already received the subsidy consequent upon the
impugned order of the High Court. The claims of the industries are of various
categories. It is not necessary for us to go into further details.
of the view that it would be in the interest of justice to direct all the
industries concerned to make a representation before Mrs. Pratibha Karan, Joint
Secretary, Ministry of Industry under Department of Industrial Development, Udyog
Bhavan, either jointly or severally within three weeks from today. (the name
has been suggested by learned Additional Solicitor General after consulting
Government of India).
representations shall be decided within eight weeks thereafter. The learned
Additional Solicitor General states that Mrs. Karan shall have the assistance
of officers from the Ministry of Finance and Law.
may, if so advised, hear the representatives of the industries. She shall
decide the representations without taking into consideration the earlier
decision/letters issued by the Government of India from time to time. We,
however, make it clear that it will be open to her to take into consideration
the 1971 Scheme, as modified from time to time. Meanwhile we stay the operation
of the impugned judgment of the High Court till further orders. Needless to say
that the brief reasons shall be given in support of the decision of the
representations. The decision shall be placed before this Court within one week
of the date it is announced. It will be open to Mrs. Karan to give decision on
individual representations or category-wise or a common order." Pursuant
to the above quoted order Mrs. Pratibha Karan, Joint Secretary, Ministry of
Industry has passed the order dated November 16, 1995. Copy of the order has been placed
on the file of this case. WE are of the view that so far as the cut off date is
concerned, the Joint Secretary, has taken a fair and just stand.
agree with her that all the applications filed upto September 30, 1988 should be considered for grant of Central Investment
Subsidy provided the said applications were complete in terms of the scheme
dated August 26, 1971 as modified from time to time. In
this view of the matter we set aside the judgment of the High Court and remand
the case for fresh decision. All the applications filed before September 30, 1988 may be considered for grant of the
Central Investment Subsidy provided the applications were complete under the
scheme. The High Court may keep in view the order passed by the Joint Secretary
but shall take its own decision on merits of the case.
Joint Secretary in her order has found 12 industries mentioned in para 19 of
the order to be eligible for grant of subsidy. We direct that subsidy be
disbursed to these industries as per the decision of the Joint Secretary if not
already disbursed. The appeals and the special leave petitions are disposed of.
No costs." It is apparent from the reading of the above quoted order that
in pursuance to the directions issued by this Court several concerns including
the respondent herein made representations to Mrs. Karan, Joint Secretary,
Ministry of Industry and Mrs. Karan gave her decision on indivudal
representation. After perusing the same this Court observed that it agrees with
Mrs. Karan that all the applications filed upto September 30, 1988 should be
considered for grant of Central Investment Subsidy provided the said
applications were complete in terms of the scheme dated 26th August 1971 as
modified from time to time. This Court set aside the judgment of the High Court
and remanded back the matter for fresh decision with the directions that all
applications filed before 30.9.1988 may be considered for grant of Central
Investment Subsidy provided the applications were complete in all respect under
the scheme. It was further observed that the High Court shall take its own
decision on merits on each case but may keep in view the order passed by the
decision taken by Mrs. Karan, Joint Secretary, was placed before the High
Court. The High Court by the impugned order has disposed of the petition after
the remand by this Court.
against which the present appeals have been filed by both the Union of India as
well as the respondent.
High Court has come to the conclusion that the respondent made an application
for registration of its company on 25.2.1987 and the registration was granted
to it on 18.3.1987. Thereafter, Respondent made an application for grant of
subsidy on 10.12.1987. By communication dated 23.12.1987 further details in
support of the claims were called for which were supplied by reply dated
vide its subsequent communication dated 15.3.1988 made a claim for some
28.7.1988 the respondent furnished fresh statement of fixed assets upto
10.6.1988. The respondent furnished the Chartered Accountant's certificate for
the plant and machinery affixed upto 30.9.1988 on 24.11.1988.
with the form while applying for the grant of subsidy, the units were supposed
to file the following documents:
Details of scheme including the details the fixed assets to be acquired.
Sanction letter from the financial institutions sanctioning the loan or loans.
the project is under implementation a certificate from the Chartered
Accountants regarding capital expenditure incurred on the project and a
certificate from an Engineer certifying the civil work done."
in para 18 of her order, mentioned that for deciding as to whether an application
is complete in material particulars, recourse has to be had to the provisions
of the Manual for the Central Investment Subsidy Scheme. The application was
required to be made in the prescribed form as per annexure II of the Manual and
filed with details/documents mentioned in clauses (a); (b), (c) and (d) of para
2.3 of the Manual which lays down the procedure for claiming subsidy.
Ultimately, Mrs. Karan had annexed a statement in respect of individual
claimants and the name of the respondent appeared as Srl. No. 4. It was held by
Mrs. Karan that the application by the respondent for subsidy was not complete
in all respects and the deficiencies pointed out by her are as follows:
Certificate regarding plant and machinery bank certificate, details of
unloading etc. on 18.1.1988;
Invoices of additional fixed assets on 12.3.1988;
c. C.A. certificate for plant and machinery on 11th April, 1989." After taking into
consideration the order passed by Mrs. Karan as was observed by this Court in
the order remitting the case back, the High Court came to the conclusion that
the only point to be decided by it was as to whether the decision of Mrs. Karan
rejecting the claim of the respondent was right on the grounds stated by her.
the course of hearing before the High Court respondent filed an additional
affidavit showing that respondent had expended more than Rs. 100 lacs in fixed
assets before the cut off date and therefore the respondent was entitled to the
maximum subsidy of Rs. 25 Lacs. This contention has been rejected by the High
Court by observing that material which had not been placed before Mrs. Karan
could not be taken into consideration because as per remand order the High
Court was to keep in view the order passed by the Joint Secretary, though the
High Court could take its own decision on merit of the case. It was observed
that since the respondent had not placed the material before the Joint
Secretary which was sought to be produced before the High Court the same could
not be taken into consideration. The only material which could be taken into
consideration was the material which had been placed before Mrs. Karan. After analysing
the order of Mrs. Karan the High Court came to the conclusion that Mrs. Karan
had erred in rejecting the claim of the respondent in its entirety. It was held
that the respondent was entitled to subsidy of 25% on the sum of Rs. 50,72,258/-
The respondent has filed the Special Leave Petition No. 22036 of 1997 claiming
the maximum subsidy for the sum of Rs. 25 lacs. It was submitted by Shri Gopal
Jain, learned counsel appearing for the respondent, that the respondent was
entitled to maximum subsidy available under the scheme to the tune of Rs. 25 lacs.
Mr. Jain, fairly conceded before us that the material which was placed along
with the additional affidavit before the High Court had not been placed before
Mrs. Karan, Joint Secretary. We agree with the view taken by the High Court
that the only material which could be taken into consideration was the one
which was produced before the Joint Secretary as this Court had remanded the
case to the High Court to take the final decision keeping in view the order
passed by the Joint Secretary. From the remand order it can be deciphered that
the High Court was not supposed to entertain any fresh material. An opportunity
was given to the claimants to file their representations to the Joint Secretary
along with the material on the basis of which decision was taken by the Joint
Secretary regarding the eligibility of the claimant to get the subsidy. The
material which was sought to be produced before the High Court should have been
produced before the Joint Secretary and it was for the Joint Secretary to take
the decision on the same. Since the material had not been placed before the Joint
Secretary the same could not be taken into consideration by the High Court and
the contention raised by the respondent to the contrary has rightly been
of India has filed the appeal with the averment that premises of the
respondent-Company were closed and the Company seems to have gone in
liquidation. According to the counsel for the Union of India as per scheme a
Company which went out of production within the period of 5 years of the start
of production was not entitled to the subsidy under the Scheme. Apart from the
averment that Company seems to have gone into liquidation no other material was
placed before the High Court to show that in fact the company had gone into
liquidation or that the liquidator had been appointed. Counsel appearing for
the respondent in the High Court had fairly brought to the notice of the Court
that ICICI and other financial institutions on the original side of the Bombay
High Court had filed the suit bearing O.S. No. 1595 of 1989 and the Court had
appointed Court Receiver in respect of the land, building, plant and machinery
etc. The receiver had been appointed under Order 40 Rule 1 CPC. No order of
winding up of the Company was passed. No official liquidator had been appointed
to take over the assets of the Company.
Mr. Gopal Jain, learned counsel appearing for the respondent, the receiver had
appointed the respondent as its agent. According to him, the Company did not
close down and remained in production. From the material which had been placed
before the High Court and even before us it cannot be concluded that the
Company had gone into liquidation or had closed down. Contention raised by the
counsel for the Union of India that the respondent were not entitled to any
subsidy thus cannot be accepted.
other point was raised.
Jain submitted before us that the respondent had entered into a settlement with
the ICICI Ltd. and the Industrial Finance Corporation of India. The consent
terms were filed before the Debt Recovery Tribunal II, Mumbai in Recovery
Proceeding No. 54 of 2001 [Original Application No. 156 of 2001] and that the
respondent had already made the payment to the ICICI Ltd. and IFCI as per
consent terms. He prayed that instead of depositing the amount of subsidy in
Court as directed by the High Court the Union of India be directed to make the
payment to the respondent directly along with interest. It was conceded before
us, that the suit referred to by the High Court in its order is still pending.
Under the circumstances we direct that the subsidy amount which was supposed to
be deposited by the Union of India within three months from the date of the
order of the High Court, i.e., 26/27th November, 1996 and which has not been
deposited be deposited within three months from this day in the Court along
with simple interest @ 9% per annum from the date of the passing of the order
by the High Court till deposit of the amount. Respondent would be at liberty to
apply to the Court for release of the amount deposited, if it has already
settled its dispute with the ICICI and IFCI. The Court shall pass an order on
such an application on its own merit in accordance with law.
the reasons stated above, the appeals filed by the Union of India as well as by
the respondent are dismissed. There shall be no order as to costs.