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CASE NO.: Appeal (civil)  2865 of 1998

PETITIONER: Union of India                                                    

RESPONDENT: M/s Krimpex Synthetics Ltd.                               

DATE OF JUDGMENT: 24/08/2005

BENCH: ASHOK BHAN & S.B. SINHA

JUDGMENT: J U D G M E N T With

CIVIL APPEAL NO.5272 OF 2005 (arising out of SLP ) No. 22036 of 1997)

BHAN, J.

       Leave granted in SLP ) No. 22036 of 1997.         This 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. \026  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 1998.

       With  a 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 \026 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.

       The case was disposed of by the High Court vide  its judgment and order dated 22.10.1992.  Against

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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:

"The 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 backward units/areas.   Some 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.   We are 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).   The 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.   Mrs. Karan  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

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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.   We 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.

The 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

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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 Joint Secretary.

       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.    Aggrieved against which the present appeals have  been filed by both the Union of India as well as the  respondent.

       The 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 18.1.1988.   Respondent vide its subsequent communication dated  15.3.1988  made a claim for some additional amount.   On 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.  

Along with the form while applying for the  grant of subsidy, the units were supposed to file  the following documents:

"a.    Project report.

b.      Details of scheme including  the details the fixed assets  to be acquired. c.      Sanction letter from the  financial institutions  sanctioning the loan or  loans. d.      If 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."

Mrs. Karan, 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  

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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:

"a.     Certificate regarding plant  and              machinery  bank certificate, details of  unloading etc. on 18.1.1988;

b.      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.

       During 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

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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 rejected.

Union 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.   As per 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.

No other point was raised.

Mr.  Gopal 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 \026 II, Mumbai in Recovery  Proceeding No. 54 of 2001 [Original Application No.  156 of 2001] and that the respondent had already

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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.

For 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.