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PETITIONER: UNION OF INDIA AND ANR.

       Vs.

RESPONDENT: BRIJ FERTILIZERS PVT.  LTD. & ORS.

DATE OF JUDGMENT14/05/1993

BENCH: SAHAI, R.M. (J) BENCH: SAHAI, R.M. (J) AHMADI, A.M. (J)

CITATION:  1993 SCR  (3) 760        1993 SCC  (3) 564  JT 1993 (3)   403        1993 SCALE  (2)902

ACT: Fertilizer (Control) Order 1985-Clause(2)(q)Schedules I  and II-payment  of subsidy  to small  scale  manufactures--Held, cannot  be  with-held on the basis of report of  a  Research Organisation  prepared behind the back of   respondents-High Court may interfere at the state of show cause notice  where manufactures  would  be in peril if  it  and  not--Essential Commodities Act, 1995

HEADNOTE: The   respondents   were   small   scale   manufactures   of fertilizers.   They were entitled to payment of  subsidy  on meeting  prescribed standard in the  manufacture  of  single super  phosphate  (SSP).  The Government of  Madhya  Pradesh requested  PDIL,  a consultancy and R.& D  Organisation,  to test  the  rock phosphate at Hirapur mines  for  determining disability allowance payable to SSP producers.  On the basis of  this report, the payment of subsidy was withheld, and  a show cause notice issued to the respondents. A  writ  petition filed in the High Court was allowed  by  a Division  Bench  which  quashed the show  cause  notice  and ordered  that the subsidy be paid.  It found that  the  PDIL report had been made without notice to the manufacturers  or inviting   their  participation  and  that  the   laboratory report--;  furnished  by  the  manufacturers  on  which  the payment (of subsidy was dependent had not been questioned. On  appeal  before this Court, the questions to  be  decided were  whether the withholding of payment of subsidy  to  the respondent  was justified; whether the High Court  committed any  error  in  interfering at the stage of  show  cause  in exercise of its extraordinary jurisdiction; and whether tile report of PDIL, prepared behind the back of the  respondents could  be  used  to reject the standard  fertilizer  of  the respondent. It  was  contended  for  the  appellants  that  a   detailed technical examination was pending and the subsidy worked out had  on in been provisional, and that PDIL had  carried  out the examination.  PDIL being independent and reputed, it was not  required to here the manufacturers.  Further, the  non- release of 761 subsidy  was also on the basis of input cost data.   It  was

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urged that the High Court was not justified in quashing  the show  cause  notice and issuing directions  for  paying  the subsidy  without  giving the department  an  opportunity  to verify  if  the respondents had in fact  compiled  with  the Control Order. Dismissing the appeal, this Court HELD  :  1.  PDIL  was engaged to  rind  out  the  grade  of phosphate from Hirapur mines to enable the manufacturers  to claim  disability  allowance,  and  not  whether  they  were producing   fertilizer  in  accordance  with  the   standard provided  in the Control Order.  The purpose being  entirely different, the report could not be utilised for a  different purpose. (767-G) 2.  There  is  no evidence to doubt  the  authority  of  the reports  submitted  by the inspectors  appointed  under  the Control Order that the fertilizer produced was of  specified standard. (768-B) 3.  On  facts, in the absence of any reliable  data  or  any material the inference drawn by the appellants in the notice that  the  fertiliser was not of a  specified  standard  was baseless.  The entire exercise was therefore vitiated  being tainted with arbitrariness. (770-F-G) 4. The High Court should normally not interfere at the stage of  show  cause  notice.  But where, from the  facts  it  is apparent  that  there  was no material  available  with  the department   to  doubt  the  statement  on  behalf  of   the respondent, it would be failing to exercise jurisdiction  if the  Court does not discharge its constitutional  obligation of   protecting  the  manufacturers  who  are  in   perilous condition as they are not able to meet their liabilities  to pay to financial institutions and various other  authorities and  are  facing  proceedings on  various  counts  and  have virtually  closed  their  unit.   The  authorities  did  not realise  either  the  purpose of  granting  subsidy  or  the harassment  to  which the manufacturers have  been  exposed. Entire  litigation appears to be a sad plight for those  who have  set  up small scale units in the hope that  they  will stand on their own on the subsidy given by the Government as admittedly  the price of manufacturing fertilisers  is  much more  than  the price fixed by the Government for  which  it assured to pay subsidy. (771-B-D) 762

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil appeal Nos. 1450-51  of 1993. From the Judgment and Order dated 16.7.92.of the Delhi  High Court  in  Civil Writ Petition No. 1780 of  1992  and  Civil Misc.  No. 3485 of 1992. K.T.S.  Tulsi, Addl.  Solicitor General and S.N. Terdol  for the Appellants. Kapil Sibal, Vikas Singh, L.R. Singh, Yunus Malik and  Gopal Singh for the Respondents. The Judgment of the Court was delivered by R.M.  SAHAI,  J. Was there any valid justification  for  the appellants,  the Union of India, to withhold the payment  of subsidy to the respondents, the small scale manufacturers of fertiliser,   is   the  main  question   that   arises   for consideration  in this appeal directed against the  judgment and order of the Delhi High Court?  Two other questions that arise in this connection are if the High Court committed any error  in  exercise  of its  extraordinary  jurisdiction  to interfere  at  the  stage  of show cause  and  if  a  report

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prepared by the Project Development India Limited (in  brief ’PDIL’)  behind the back of the respondents could be  relied for  rejecting  the  specification  of  standard  fertilizer produced by the respondents. Before adverting to these issues we consider it necessary to mention  that  the payment of subsidy  to  manufacturers  of fertilisers was introduced in 1982 under a scheme framed  by the  Government  of  India  in  pursuance  of  which   every manufacturer  was required to give a written undertaking  to the President of India.  In 1985 Government of India  issued a Fertilizer (Control) Order under the Essential Commodities Act.   Sub-clause  (h) of Clause (2) of  the  order  defines ’fertilizer’ to mean,               any substance used or intended to be used as a               fertiliser   of  the  soil  and/or  crop   and               specified in Part-A of Schedule I and includes               a  mixture of fertiliser, mixtures  of  micro-               nutrient  fertilisers and special  mixture  of               fertilisers’. Sub-clause  (q)  of  the same  clause  explains  ’prescribed standard of fertilizer’ as under:               "Prescribed standard" means               (i)  in  relation to  fertiliser  included  in               Column 1 of Part A of 763               Schedule-1,  the  standard  set  out  in   the               corresponding  entry in Column 2,  subject  to               the   limits  of  permissible   variation   as               specified in Part B of that Schedule; and               (ii)in  relation to a mixture of  fertilisers,               the  standard  set  out  in  respect  of  that               mixture  under sub-clause (1) of Clause 13  by               the Central Government, subject to the  limits               of permissible variation as specified in  Part               B of Schedule-1;               (iii)in   relation  to  a  [mixture   of   NPK               fertilisers,    mixture    of    micronutrient               fertilisers  and  combination  thereof],   the               standard  set out in respect of  that  mixture               under sub-clause (2) of Clause 13 by the State               Government,  subject to limits of  permissible               variation  as specified in Part B of  Schedule               1.;" And  standard  specified  of single  super  phosphate  (SSP) sulphur  manufactured  by the respondents  is  described  in Schedule I of the Order as under:               "Single    Super   Phosphate   (16%   P    205               Granulated)-               (i) Moisture, per cent by weight, maximum               (ii)  free  phosphoric acid (as P 2 0  5)  per               cent by weight, maximum               (iii)  Water soluble phosphates (as P 205  per               cent by weight , maximum               (iv) Particle size-Notless than 90 per cent of               the material shall pass through 4 nun IS sieve               and  shall be retained on 1 mm IS sieve.   Not               more  than 5 per cent shall pass through 1  mm               IS sieve."                The  Control  Order further deals  in  detail               with  price control,  distribution,restriction               on manufacturers and sale etc. of  fertiliser.               Chapter    VII    deals    with    enforcement               authorities.  Paragraph 27 empowers the  State               Government  and  the  Central  Government   to               appoint inspectors of fertilisers.   Paragraph

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             28   empowers   the   inspectors   to   secure               compliance  of  the  Order  by  requiring  the               wholesaler  or  retail  dealer  to  give   any               information in his possession with respect  to               manufacture,  draw samples of any  fertiliser,               enter  upon and search any premises etc.   How               the  sample  has  to  be  analysed  has   been               provided by Schedule 11 of the Order.               The  basic  raw material  for  manufacture  of               fertiliser is rock phosphate.  There               764               are various mines spread all over the  country               from where these rocks are obtained.  They are               canalised through State mineral  corporations.               One of such mines is located in Hirapur in the               State  of Madhya Pradesh.  The  Government  of               the  State  requested the  PDIL  to  undertake               laboratory  test of these rocks and  submit  a               report  for determining  disability  allowance                             payable  to SSP producers.  The  conclusion  o f               the report is extracted below :               "The  world  reserve  of  good  quality   rock               phosphate  is gradually depleting  making  the               use  of non-standard and low grade  phosphate,               in the manufacture of phosphatic fertiliser as               essential.    In  India,  compared  to   other               countries, the availability of usable  quality               rock  phosphate  is  rather  limited,   though               available in abundance.               This study was made, at the request of  Madhya               pradesh Government with a view to  effectively               utilise,  to  the extent  possible  the  lower               grade  indigenous rock phosphate from  HIRAPUR               MINES for SSP production.  Experiments in PDIL               laboratory has shown that this rock  phosphate               cannot be processed in the conventional  route               to produce SSP, as such, and it is  imperative               to   make  blends  with  any   standard   rock               phosphate.               The report establishes that the rock phosphate               available  in  our country whether  it  is  in               Madhya   Pradesh  or  Jaipur  appears  to   be               incapable  of  producing  SSP  unless  it   is               blended with imported rock.  Proportion of the               two  depends on the strength of rock  obtained               from different mines.  The PDIL conducted  the               test  for  those rocks whose  strength  varied               from  29%  P 2 05 and 25% P 2 0 5  and  opined               that  blending of rock with 24% should  be  in               proportion  of 20% and 80%.  The extract  from               the report runs as under :               "The chemical analysis has shown 24.85% P 2  0               5  and  30.03% Silica plus  insoluble  besides               other impurities like high R 2 0 3 compared to               32.4% P 2 0 5, 4.56% Silica plus insoluble and               0.75% R2 03 in standard Jordon variety.   Many               proportions of blends were tried in laboratory               to  find  out the optimum  blend  which  would               produce  SSP  of specification  laid  down  by               F.C.O.  and  finally it was concluded  that  a               blend  of  20%  Hirapur  rock  matrix  and  80               Senegal  will be a suitable proportion.   This               was confirmed even in pilot plant trials where               for  a  comparison  purpose  two  blends  were

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             tested  e.g.  30:70  and  20:80  for  Hirapur,               Senegal rock phosphates.  There 765               was  found from analytical results that  20:80               proportion was most suited.  Accordingly study               was    concentrated   towards    this    20:80               Hirapur:Senegal blend." We  now turn to the various issues that arise in this  case. Relying  on  these  reports  the  subsidy  Payable  to   the manufacturers  was  withheld  and they were  required  by  a letter dated 20th April 1990 to explain as to how they  were able  to  achieve the standard  specification.   The  letter reads as under:               "It  is generally observed from the  quarterly               cost date being submitted by your company that               you  are  either  using only  low  grade  rock               phosphate for manufacture the P2 05 content of               which is less than 30%, or in large proportion               thereof.   Please therefore intimate  how  you               are    manufacturing    SSP    of     standard               specification  i.e. of 16% P2 05 content,  SSP               as required under the specification laid  down               on the F. C. 0. " Both  the  assumptions  in  the  letter  were  without   any foundation.  We shall examine it in detail later.  It was at this stage that the manufacturers approached the High Court. They claimed that the fertiliser manufactured by them having been checked and verified by the inspectors appointed  under the  Control Order the opposite parties were  not  justified either in withholding the subsidy or issuing any notice.  In the counter affidavit filed in the High Court the reason for issuing notice was explained as under:               "That  in  reply  to Paras 15 and  16  of  the               Petition,  it is submitted that upto  1.4.1992               imported Rock Phosphate was being procured  by               the  SSP  units,  including  the   petitioners               through   the   Minerals  &   Metals   reading               Corporation  (MMTC)  which  was  a  canalising               agency.   Rock  Phosphate  is  also  available               through  the  State owned  indigenous  sources               such  as Rajasthan State  Mineral  Development               Corporation  (RSMDC), Rajasthan State Mines  &               Minerals Limited (RSMML), Uttar Pradesh  State               Minerals  Development  Corporation   (UPSMDC),               Madhya   Pradesh  State   Mining   Corporation               (MPSMC) and Hindustan Zinc Limited (HZL),  and               SSP is manufactured by using rocks of standard               grade.    The  quality  of   indigenous   rock               phosphate from the above mentioned State owned               sources  varies  considerably from  low  grade               rock  of  14%  to 16% P2 05  content  to  high               degree  rock  of +3 1 % P2  05  content.   For               producing 766               SSP of 16% W.S. P2 05 the rock phosphate  used               should  contain a minimum of +3 1% P2  05  and               the  conversion efficiency of the rock  should               be more than 9 1 %. SSP of 16% W.S. P2 05  can               be  produced  by using low  grade  rocks  only               after suitably blending it with  standard/high               grade rock phosphate to have a feed conforming               to the above mentioned minimum  specifications               of +31% P2 05.               That in reply to Para 17 of the Petition it is               submitted  that indigenous rock  phosphate  is

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             being  procured by the SSP Units  from  Madhya               Pradesh   State  Mining   Corporation,   Uttar               Pradesh Sate Minerals Development Corporation,               Rajasthan State Mining Development Corporation               and  Rajasthan  Mines  and  Minerals  limited.                             Since  detailed  technical examination  of  th e               various  grades of indigenous  rock  phosphate               available  from sources other than  RSMML  was               not  available,  the SSP Units  were  informed               that  pending detailed technical  examination,               the prices of such indigenous, rock  phosphate               would  be reimbursed at par with  RSMML  price               for rock phosphate (having +3 1 % P2 05) on  a               provisional   basis  only.   A  copy  of   the               circular  letter issued by the Office  of  the               FICC   dated  29th  September  1986   to   all               manufacturers   of  SSP  is   at   Annexure-1.               Subsequently,  Projects and Development  India               Ltd (PDIL), Sindri, which is a Consultancy and               R  &  D organisation for  fertilisers  in  the               public   sector,   which  had   conducted   an               evaluation of MPSMC Rock Phosphate of  Hirapur               and Jhabua Mines, submitted its report,  which               indicated  that taking into account the P2  05               content  and  the impurities present  in  both               Jhabua  and Hirapur Rock, it is unsuitable  to               make SSP of 16% W.S. P2 05 content, unless  it               is  blended  with minimum of 7O%  which  grade               imported  Senegal  rock  with  30%  low  grade               Jhabua  rock  and minimum of  80%  high  grade               Senegal rock with 20% low grade Hirapur rock." After  considering this a Division Bench of the  High  Court allowed  the  writ petition and issued a  direction  to  the appellant   to  pay  the  subsidy  which  was   payable   to respondents  after  determining it in  accordance  with  the terms  of the scheme under which it was payable  within  the period specified in the order.  The direction was issued  as the  Bench found that the basis for denying the subsidy  was the report submitted by PDIL prepared behind the back of the manufacturers without issuing any notice to them or inviting their  participation.  After excluding the report the  bench held  that  since the payment of subsidy  was  dependent  on basis  of laboratory reports furnished by the  manufacturers and these reports had been furnished by 767 them  and  they had not been questioned at any time  by  the appropriate authorities it was not open to opposite  parties either   to  withhold  the  subsidy  or  to   initiate   the proceedings by issuing show cause notices. To  assail  the  finding on merits  the  learned  Additional Solicitor  General launched a two pronged attack.  He  urged that  subsidy under the scheme of 1982 was payable  only  if the  fertiliser  conformed  to specification  of  16%  water soluble   phosphoric  penta-oxide.   The   learned   counsel submitted   that   under  the  scheme  the   Department   of Fertilisers  was  entitled to conduct survey and  check  the quality  and  the  manufacturers were required  to  give  an undertaking that they were to supply prescribed  information along  with  the monthly claim for  subsidy.   According  to learned  counsel  claim for subsidy.  According  to  learned counsel  under  the  said scheme a circular  was  issued  on September  29, 1986 to all the manufacturers of SSP  wherein it  was clarified that the indigenous rock  phosphate  being obtained  by  the  manufacturers  from  sources  other  than

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Udaipur  was pending a detailed technical  examination.   He urged that the circular further stated that the prices  were to be worked out on the basis of rock phosphate having  plus 3  1%  P2  05.  Therefore, pending  completion  of  detailed technical   examination   the   subsidy   worked   out   was provisional.  Anti when the technical examination  conducted by the PDIL indicated that on the admitted figures  famished by  the  manufacturers  in  their  quarterly  invoices   the standard  specification  could not have  been  achieved  the notice  were issued, therefore, the High Court was in  error in  quashing  it.   According  to him it  was  open  to  the department to get it ascertained from an authentic source if the  manufacturers of fertiliser were using proper  material and  achieving  the specified standard.  He urged  that  the PDIL being independent and reputed body it was not  required to  issued  any show cause notice.  We do  not  consider  it necessary  to express any opinion if the PDIL  report  could have  been  discarded for want of show cause notice  or  for being  ex-party  as  there are certain  features  about  the report  which  obviate  the  necessity  of  considering  its validity  on this ground.  From the counter affidavit  filed by  Managing  Director of M/s Brij Fertilizers  Pvt  Ltd  it appears  that the manufacturers of SSP have been using  rock phosphate which is of hard quality but in order to encourage use  of  indigenous  rock phosphate and  to  avoid  loss  of foreign  exchange the Government of Madhya Pradesh  directed the PDIL laboratory to undertake laboratory test to find out the  grade  of phosphate from Hirapur mines  to  enable  the manufacturers  to claim disability allowance.   The  report, therefore, was not concerned with finding out whether any of the  manufacturers who were engaged in producing  fertilizer were  doing so in accordance with standard provided  in  the Control  Order.  In the circumstances it may be that it  was not necessary to issue any notice to the manufacturers. 768 Yet the question is, could it furnish material for rejecting the claim of respondents and withholding their subsidy?  The learned  Additional  Solicitor General urged that  the  non- release of subsidy was not based, solely, on report of  PDIL but   on   basis  of  input  cost  data  supplied   by   the manufacturers  which indicated that on basis of analysis  of raw   material  input  provided  by  the   respondents   the manufacturers  could  not  have produced SSP  of  16%  water soluble P2 05.  This assumption appears to be unfounded  for more  than one reason.  Under the Control Order there  is  a detailed  procedure provided for carrying out test  to  find out  if the fertiliser produced was of  specified  standard. It  is not disputed that no such test as provided  was  ever carried  by any authority.  Rather the report  submitted  by the inspectors appointed under the Control Order,  indicates that  the  fertiliser manufactured by  the  respondents  was standard.   We are not willing to accept the  submission  of the  Additional  Solicitor General that these  reports  were incorrect  and have been obtained through the connivance  of the  official machinery.  There is no material on record  to indicate  that the Government at any point of  time  doubted the  correctness of there ports or initiated an  proceedings against  any  inspector  or  any officer  for    it  is  not possible  to draw an inference against the  authenticity  of the reports which have been given by the authority empowered under the order.  It is not the claim of department that  at any point of time prior to submission of the PDIL report any step   was  taken  or  the  government  ever  required   the inspectors  to  find out if the manufacture  carried  on  by respondents  was  in  accordance with  law  and  rules.   To

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discard  the  certificate  issued by the  inspector  in  the circumstances would be arbitrary without any valid reason. With this we may now examine the PDIL report itself.  As has been seen earlier the purpose of getting the rock tested was to  pay  disability allowance.  The purpose  being  entirely different it could not be utilised for a different  purpose. How  risky it is to embark on such exercise shall  be  clear when the result of report obtained by the PDIL is applied to the  dates  of respondents relied by  appellant  to  justify their  action of issuing show cause notice.  From  paragraph two of the conclusions of the PDIL, extracted earlier, it is clear  that  the  study was made at the  request  of  Madhya Pradesh Government with a view to effectively utilise to the extent  possible the lower grade indigenous  phosphate  from Hirapur  mines  for SSP production.  The  report  concludes, that experiments in PDIL laboratory has shown that this rock phosphate  cannot be processed in the conventional route  to produce  SSP, as such, it is imperative to make blends  with any   standard  rock  phosphate.   The  objection   of   the department  is  not that the rock phosphate  should  not  be blended  with imported one but that on the proportion  shown along with the strength of indigenous rock used the standard as provided could not have been 769 achieved.  From the analysis of rock phosphate purchased  by the manufacturers as per their invoices and attempt was made to  demonstrate that if the figures mentioned  therein  were taken as correct and they are compared with the  calculation given  by  the  PDIL it would be  clear  that  the  standard specification could not have been achieved.  It is necessary to  mention at this stage that the rock phosphate  found  in Hirapur  mines was of three grades.  That is clear from  the letter  of  Assistant General Manager, Mines  to  the  Joint Director, Fertiliser Coordination Committee.  Relevant  part of the letter reads,               "We  were selling Hirapur Phosphorite  for  so               many  Fertiliser  S.S.P.  manufactures   since               starting  of the mining and were  never  found               any  complaint  regarding its  suitability  to               manufacture  SSP Fertiliser.  We  have  learnt               form  Fertiliser Manufacturing Units that  our               Phosphorite  is  suitable for  SSP  Fertiliser               manufacturing  but in case of  F0203  contents               increases in Phosphorite the Wear and Tear  of               the   plant  increases.   We  had  also   been               directed  by Joint Director (F&A)  FICC,  vide               their   letter  dated  31.8.89  to  sale   our               Phosphorite  in  category ’A’  to  SSP  Units.               This further certifies the suitability of  our               Phosphorite for SSP manufacturing of requisite               grade.   The material supplied to these  units               are  of 32% category ’A’ and not 25% as  given               in PDIL report hence the question of  blending               with other Rock Phosphate does not require  to               Manufacture the requisite grade SSP.               The M.P.S.M.C. was selling Hirapur Phosphorite               in different percentages P2 05 grades and  not               in  mix  condition.   Out  grades  and   other               specifications indicated as below:-      Before 5.3 1991           From 6.3. 1991      1.1st (A)                 1st (A)      P2 05 + 30%, Sio2         P2 05 + 29%-3 1 %,      + 15%18%                  Sio2 + 15%- 1 8%      F0203 below 4.5%          Fo203 below 24%      A. +1/2"  2.1/2" Size    A)+ 1/2"2. 1/2" size

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    B. R.O.M.                 B. R.O.M.      2. 1st (B)                1st (B)      P205+ 28%-30%             PrO5 + 27%-29% Sio2 + 18% 770 Sio2+22% Fo203                  F 203 above 4.5% above 4.5% A)  1/2" size                   A)  1/2" size B) R.0 M.                       B)R.O.M. C)   By Product Dust 3.   II Grade P205 + 22%  25% Sio2 and Fo2O3 No grantee.  R.O.M." Further no rock phosphate has been or could be purchased  by any  manufacturer except through corporation of  the  State. This  fact  is  admitted in the  counter  affidavit  of  the appellant  extracted  earlier.  It is also  clear  from  the letter  of Assistant General Manager that  Brij  Fertilisers did not use any rock except Grade ’A’.  It is claimed by the respondents  that  on a technical  assessment  conducted  by Bhabha Research Institute for Lalitpur rocks that the  water soluble in rock phosphate with P2 05 with 29 to 32% is  more than  16%.   Even if this report is ignored  the  letter  of Assistant  Mines  Inspector establishes that  water  soluble phosphate  in  Hirapur  mines of grade ’A’  was  16%.   Each respondent  has filed details of rock phosphate consumed  by its  unit  from  various corporations.   The  average  grade mentioned  is 3 1 %. Not one has used grade II.  Even  Avadh Fertiliser has not used rock phosphate below 27%.  From  the chart  appended in respect of Hirapur mines the blending  in proportion  of  50% indigenous and 50% indicates  that  even with  rock of 30.66% the water soluble actually was  17.57%. These  figures could not be disputed in the reply  filed  on behalf of Union of India.  From the PDIL report it is  clear that  it had undertaken test of rock with 24.85% P2  05  and 30.03% Silica and suggested that most suited blend with such rock  was  20% indigenous and 80% imported.   It  could  not furnish  any  guideline  or  material  to  reject  the  rock phosphate  used by the respondents which varies between  27% P2  05 to 3 1 % P2 05.  In absence of any reliable  data  or any  material the inference drawn by the appellants  in  the notice  was  baseless.  The counter affidavit filed  in  the High  Court by the appellant did not explain the  basis  for concluding  that for producing SSP of 16% or P2 05 the  rock phosphate  should contain a minimum of 3 1 % P2 05.   It  is contrary  to the letter of Assistant General Manager  Mines. In  any  case PDIL could not furnish any basis for  it.   In absence  of  any  valid justification  the  entire  exercise undertaken by the appellant was vitiated being tainted  with arbitrariness. Failing  in  his effort to assail the order  on  merits  the learned  Additional Solicitor General vehemently urged  that the  department  was not precluded form issuing  show  cause notice and requiring the manufacturers to appear and explain their  claim.   It  was urged that the High  Court  was  not justified in quashing the show 771 cause  notice  and  issuing the directions  for  paying  the subsidy  without giving an opportunity to the department  to verify if the respondents had in fact complied with  Control Order.   True, the High Court should normally not  interfere at  the  stage of show cause notice.  But  where,  from  the facts  it is apparent that there was no  material  available with the department to doubt the statement on behalf of  the respondents  and their own officers at every point  of  time had  issued the certificate the correctness of’ which  could

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not  be  disputed  or doubted except  by  raising  unfounded suspicion  or drawing on imagination it would be failing  to exercise  jurisdiction if the Court does not  discharge  its constitutional  obligation of protecting  the  manufacturers who, as is apparent from the counter affidavit filed in this Court   and  the  various  letters  issued  from   different authorities  are in perilous condition as they are not  able to  meet their liabilities to pay to financial  institutions and various other authorities and are facing proceedings  on various  accounts and have virtually closed their unit.   We are  pained  to  say that the authorities  did  not  realise either the purpose of granting subsidy or the harassment  to which   the   manufacturers  have  been   exposed.    Entire litigation appears to he a sad plight for those who have set up  small  scale units in the hope that they will  stand  on their  own  on  the  subsidy  given  by  the  government  as admittedly  the price of manufacturing fertilizers  is  much more  than  the price fixed by the government for  which  it assured to pay subsidy. show  cause notice issued by the appellants and issuing  the directions  to  pay the subsidy.  The appeals fail  and  are dismissed  with  costs which is assessed at Rs.  10,000  one set. U. R.                    Appeal dismissed. 772