406 IN THE HIGH COURT OF PUNJAB AND HARYANA AT n1 n e1 CHANDIGARH Ire Civil Writ Petition N017028 of2009 Dateofdecisionl 19042010 Mls FerozshahAgroPrivateLimited etitioner versus j StateofPunjaband others e e 0 C I CORAM HONBLE MRe JUSTICE K KANNAN C I Present Mr Nilesh BhardwajAdvocate for Z Mr Harsh BungerAdvocate for thepetitioner lvlr Manohar Lall Additional Advocate General Punjab C 1 Whetherreporters oflocal papersmay be allowed to see the 08 YeSe 00 2 To be referredto thereporters or not2 Yese 3 Whetherthejudgment should be reported in thedigest2YeSe 7 Z ICKannan 1 Thepetitioner seeksfor a direction againstthe for releaseof sum of Rs39695001 purporting to represent the amount on account of 300Ioinvestment incentives offered under the Punjab 1 IndustrialIncentive Code under the Industrial Policyof 1992 The claim is made on the basis that a production unit was establishedin the border district of Ferozepur lnjab9and the Government had floated a policyto encourageinvestmentin the border districtswheretheyhad rampant Clause 60fthe Policy Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document 407 8 Civil Writ Petition Nol7028 of2009 1 V V floatedin theyear 1992provided as followsl 6 Investmentincentive il Industrial units that are set up in the A category areas shall be eligiblefor investment incentives 300Ioof capitalinvestment CI9subjectto a maxnum of Rs0 lacs 4 i In the B categoryareas the new industrial units m except the items included in the NegaUvelist shall be Q eligible for investmentincentilIes200Ioof theirjlxedcapital 0 investmenFCI subject to a maximumofRs30lacs 0 iii9 Selflnancedunlts will be ineligible for investmenl I incentiveprovided that new units which are fundedby C I mobilization offundsfrom the CapitalMarket through lssuance ofshares debentures bonds etc sholloe eligible Z for the investment incentive iv Investmentincentivesshall be disbursedonlyafterthe C new industrial unit goes into commercialproduction 31 I a5 2 Clause72 of the Code is also relevant for theydetermine QO thequantumofentitlement It is as underl 7 Z 72 Quantum to theprovisionscontained in Rule 7 investment incentiveshall be to the eligible as per the following scalee A Categoryarea 300Iooffixedcapitalinvestmentsubjectto a maximum ofRsO lacs B Categoryarea 20Ioof8xedcapitalinvestment subjectto a maximumofRs30 lacs 53 3 On thebasisofthe aforesaidscheme thepetitioner claimed thathe was found entitledto the investment incentive by therespondents Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document 408 1 Civil Writ Petition Noe17028of2009 3e through a sanctionorder issued on 25061999 The amount was to be given through PunjabStateIndustrial Corporation Limited from which thepetitioner had availed of a loan facilityof Rs151acs 4 The mode of disbursal of the amount determined as incentiveis provided under Clause75 which is as followsle Mode a The incentive may be claimed by a unit and sanctioned onlyafterthe unit has gone into commercial The disbursementwill be made throughthe nancial institutionlbanks The jlnancialinstitutionlbank shall execute a Bond in favourof the State Governmentln theprescribedproforma as givenin l at the tilne of release offundsfor the disbursementof investmentto the unit b The jlnancial institutionlbank shall disburse the amount of investmentincentive released to them to the concernedeligibleunits within aperiod0f15daysfromthe dateofreleaseoffundsbythePunjabGovernmentand send utilization certUlcateln respectof the amount releasedldisbursedevery quarterwithin 15 daysof the closure ofthequarterin theprescribed proformagivenin I e C Theinancial institutionlbankshall actuallydisburse theinvestmentincentiveto theeligibleunits and ln no case adjust thesame againstthe duesfrom the unit d1 In the event of the concerned flnancial institutionIBanknot complyingwith the condition of disbursementthe investmentincentive would be disbursed directlyto the unit 33 Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document 1 409 1 Civil Writ Petition No17028 of2009 4 nr 1 5 It is not in disputethat the petitionerhad started an industrial unit and staked his claim for the releaseof the benefit The petitionerhad issued a legalnotice on 24082004 to which replyhad also beenissued on 23092004 when it was informedthat the Punjab Govemment has formulateda scheme to clear the backlogof the sanctionedsubsidy cases It is to mention that even at the time when the replywas made the Director of Industriesc Commerce j C was only to the fact that the claims were all beingprocessed 0 and to ajudgment ofthis Court in CivU WrPen No12861 0 I of 2001 in Mls NavodvaFabrics Ludh Versus Skue of Puab it C5 I was soughtto contend that the Government was within its rightsto Z unpose the condition of availability of funds and the in the seniority for releaseof the sanctionedamount This Court had observed r that no could demand the release of subsidy or incentive I within a time frame and the Statecould organize its own financesto m copewith its obligations and of the welfare scheme 111 7 Z themanner that it thought fit 6 It appearsthat the Statewhich providedfor incentives had alwayssome resource crunch to pleadwhenever enforcement of the schemehad beenmade as is evidencedfrom the fact that therehad been periodicalschemes of enforcement throughresorts of writ petitions before this Court by various industrial units Mls Ganesh Trading of Ferozepurhad soughtthe interventionof this Court in Civil Writ Petition N017175 of 2005 and Border District Industries Association VersusStateofPunjabin Civil Writ Petition NoS719 of Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document 410 J Civil Writ Petition No17028 of2009 5 2002 hadalso been earlier led and decided by this Court The said Civil WritPetition No8719 of2002 had been oftakingnote of thedecision of the council of ministersthat the StateGovemment had addressedthematter with the Ministryof Finance Governmentof India to issue bonds for the liabilitycreatedunder subsidies announcedfromtime to time It appearsthat the Statehad undertakena of over 100 crores per annum from the year 20061 and that it 1 wouldbe wipedout over a of time The releaseof the 0 as per the statedpolicyhas still met with many an obstacle 0 I 7 The has made a claim for the release of the C3 I through Civil Writ Petition N01872 of 2009 when this Court haddirectedthat a shall be made to the and Z them to consider the same and take decision The m had made such a on 19022009 when the I c6 Director ofthe Director ofIndustries8 CommerceDepartment rn when the meetingshad been held on 28082006 and had 7 Z 1312007 underthe of Chief Secretary of Punjabthat no duecertiflcateand workingreportofthe rice shellerswere to be obtained and a report runningof the unit by the Director Food Civil and Consumer Affairs had allegedlyinformed that the unit was not runningduringthe year 200708 Takingnote of the fact that the had committeddefault in makingsome to Markfedand that as a defaulter he did not qualifyfor any and award of contract by Markfed in subsequent years the claim ofthe petitioner had beenrejectedA written statement filed by Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document 3 411 t Civil Writ Petition Nol7028 of2009 6 the reaffirmsthe contentionsraisedin the replyand makes to theletter ofthe GeneralManagerDistrictIndustriesCentre which revealed that at the time when inspection was carried out on30102009 theelectricity connection had been disconnectedand theunit remainedclosed Reply dated19052009 also refersto the fact thatthe claim for had been by the office letter of the Director on 21012009 The letter however has not been filed 1 in this case 0 8 While the contention of the petitioner is that the unit still 0 I the contentionof the is that in the year 0 I 2009 when had been carried out it was found that the unit notworkingIn my view the issue whether the unit is still running Z was or not must be examinedwith referenceto the expressclauses in the C schemeitself the Division Bench of this Court in M I c6 Fabrics Ludhiana ipral had laid down that it shall not be C for any to demandthe releaseof subsidyin a time 7 bound manner the said decision cannot be understoodas enablingthe ll to keepchanging the eligibilitycriteria for the benefitunder the scheme The scheme was intendedto promoteindustrial activity and employment in border areas The offer of subsidy 1S a manner ofprovidingincentive for such investmentand an that assumes a business risk in investment is entitled to believethat theschemeis not an emptypromise but rooted on a sound govemmentpolicy that falls within its macro flscal outlayThe manner of disbursalofthesubsidycould againbe a matter ofsome adjustment by Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document rr 412 a Civil Writ PetitionNoe17028of2009 7 2 issue of bonds for in payments but it could not be defeatedby constant of the scheme that may come to nothingfora person who after severalyearsof operation of his industry has to close down his business by the onlyreasonthat the assured did not reachhim A promise for a subsidyis another way of a promisefor certain liquidity A businessman that makes investment andgoes to market for borrowalis entitledto assume that a 1 C of his debt could be servicedby some benefitswhich he would 0 have obtained State subsidy In this case the petitioners 0 I to the schemehad not been deniedand when communication C5 I wasmade in theyear 1999 the were onlystatingthat they the list of eligibleof entrepreneursand the amounts Z were a2 would be paidin due course If it was possible for the to that on an inspection in 2009 the unit had remainedclosedand I 08 it was not possible to disbursethe money it couldonlybe bya QO that the Statewould decideon when to make the paymentand it 7 could beany uncertainfutureperiodIt could justas well be at a time Qw whenthe unit itself has some problem a closure if there had been an industrialunrest and the remainedclosed it could still afford to the an excuse not to releasethe It would be absurdto press for libertyto the state distancedas it is from logic The entitlementto obtain the claim cannotbe made to depend on factorsthat had no to the initial investment decision to start the unit When the industrialunitwas Rllly61nctionaland from thestaringofthe scheme Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document 1 413 1 1 1 J 7 Civil Writ Petition Noe17028of2009 a8 6 e thepetitioner had more than 15 years of continuous operation even a 1 closureofthe unit after 15 years cannot be a groundfor rejection of the unlessthe scheme sucha 9 I have outlinedthe relevantportions of the scheme byextracting clauses and clause 7 casts a complete code on how to determinethequantumand how the amount shall be disbursed While it shallbe relevant that the disbursal could be OnlYtO a rUnnin shouldagainbe on assessmentwithina reasonabletime From unit it 0 thetimewhen the unit was establishedin the year 1992 to the date when 0 I the have deniedthe benefit of the policyin 2009 on the C5 I ground of closure of the unit in 2009 more than17 yearshave rolled by and it 1S for the to denythe Z entitlement for that would mean annihilating the very of the scheme In a case of withdrawalof some tax exemption I c6 incentives bythe State throughexecutive instructions the Honble m Court held in ofAa Ph Versus GeS DaU 0 mm Z FlourMills 1992 ll SumlSCC 150 that if the terms of exemption are tl clear an executive to annulthe benefit shall be barredby promissory In Kusum Hotds Ltd Versus IC SEB 20081 13 SCC 213 the SupremeCourt while holdingthat the Stateor its functionarieshave a full rightto withdraw subsidies or benefltsgiven through certalll still held that if such withdrawalwas from a date theprinciple ofpromissory estoppel would apply 10 The of the claim of the petitionerthoughthe letterdated19052009 is quashedThe are 4i Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document 414 1J2 Civil Writ Petition Noe17028of2009 9 directedto consider the petitioners claim as fullyjustified and rank him asone of the personseligiblefor disbursementandplacehis name in the order of seniorityand release the amount when his seniorityposition reaches orif any person lower in the order of seniorityhasbeen already issued with the investment the same shall be for the to releasethe subsidy to the petitionerThe exacttime when such a releaseof subsidywould be issued will depend 1 r on the of beneficiariesof subsidythat had been already 0 drawn pursuantto the communication issued by the Director of 0 and Commerceon 25061999 The decision shall be takenby t9 theDirector of Industries and Commerce and communicatedto the within a periodof 8 weeks from the date of the receiptof the Z copyofthe order 11 The writpetitionis allowedon the aboveterms with costs of 08 Rs10ooopayable to thepetitioner bythe m 7 KKANNANI Z JUDGE a 1902010 sanJeev r e 9r 1 01 Ir Uma 2014.04.11 14: 34 Scanned True Copy of Original PHHC,Chandigarh Sahil Soni 2016.03.21 12:27 I attest to the accuracy and integrity of this document