1 IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO.435/2002. M/s Goenca Resorts Pvt. Ltd., a Company registered under the Companies Act, 1956 and having its registered office at 111, Hotel Orfil, Calangute, Bardez Goa and represented by its Director Shri Tito Goes Proenca. .. Petitioner. Versus. 1. Maharashtra State Financial Corporation, Panaji (Goa) Divisional Office, Lobo Building, IInd Floor, 18th June Road, Panaji-Goa. 2. Union of India, through the Secretary, Department of Tourism, New Delhi. 3. The Director (H & R), The Department of Tourism, Government of India, C-I Hutments, Dalhousie Road, New Delhi- 100 001. .. respondents Mr. Y. V. Nadkarni,Advocate for the Petitioner. Mrs. S.S.Naik with Ms S. Padiwal, Advocates for the respondent No.1. Mr. J. Vaz, Central Government Standing Counsel for the respondent Nos. 2 & 3. WITH MISCELLANEOUS CIVIL APPLICATION NO.603 OF 2004. Maharashtra State Financial Corporation .. Applicant 2 IN WRIT PETITION NO.435/2002. Coram :- S. C. DHARMADHIKARI & R. C. CHAVAN, JJ. Date : - 07 th August, 2008. ORAL JUDGMENT : ( PER S. C. DHARMADHIKARI, J) 1. By this petition under Article 226 of Constitution of India, the petitioner prays that two notices dated 10.12.2002 and 11.12.2002 Exh.P1 collectively be quashed and set aside and the respondents be directed by writ of Mandamus to grant to the petitioner 3 % enhanced subsidy accruing from 5.2.1997 on both loans which works out as per the calculations in prayer clause (B). 2. Although this is a widely worded prayer, ultimately, Mr. Nadkarni on instructions states that if the loan has been sanctioned by the Financial Corporation in two stages, then, benefit of the enhanced interest subsidy should be extended to the petitioner in respect of the sanction after 5.2.97. In other words, such of the loans which have been sanctioned after the date of approval from the Department of Tourism, Government of India, alone be taken into account for the enhanced interest subsidy and the petitioner would be satisfied with such 3 directions. 3. The facts lie in a very narrow compass. The petitioner approached first respondent Corporation requesting it to sanction loan facility for establishing and commencing a Hotel project known as 'Resort Marinha Dourado' at Arpora-Goa. The first respondent (Corporation, for short) is a State Financial Corporation set up under section 3 of the State Financial Corporation Act, 1951. The respondent Nos. 2 & 3 are respectively Union of India and Director of Tourism, Government of India. In the Department of Tourism, a scheme was promulgated on the subject of interest subsidy on Hotel loan. The respondent Nos. 2 & 3 have initiated the scheme and are implementing it and at their behest and directions, Corporation grants the benefit of enhanced interest subsidy. 4. The undisputed factual position before us is that, the Hotel project was for Rs.2 Crores and 15 Lacs. The petitioner approached the Corporation and requested for loan which came to be sanctioned and released phase wise. The first loan of Rs. 1.40 Crores was sanctioned by the Corporation on 29.4.1995 out of which Rs.1.38 lacs have been availed of by the Company during the period June 1995 to January 1996. The second loan of Rs.75 Lacs has been sanctioned on 25.4.97 out of which Rs.68.10 Lacs have been availed of during July 1997 to 4 March 1998. The balance loan has been cancelled. Respondent No.2 through respondent No.3 grants interest subsidy of 3 % to eligible Hotel projects. The scheme in that behalf is framed vide Letters/Circular dated 7.3.1989. All State Financial Corporations including the first respondent Corporation were issued set of guidelines for grant of interest subsidy. The said letter reads thus, “Eligibility “Only hotels of 1,2 and 3 star categories on the approved list of the Department of Tourism will be eligible for grant of interest subsidy at the enhanced rate of 3 %. As such State Financial Corporations may ensure that while sanctioning loans to the above mentioned categories of hotels, the letter from the Department of Tourism Govt. of India/Tourist Office approving the hotel project is produced at the time of submitting applications for loan. Further it may be noted that interest subsidy will be allowed to hotels who have been sanctioned loans on or after 6th July, 1988. Interest subsidy will be made available to those hotels who make payments of loan instalments (both principal and interest) on time as per the schedule. The defaulters will not be allowed interest subsidy. At the time of sanctioning loan to hotels in 1,2 and 3 star categories a copy of the sanction letter may be endorsed to the undersigned. Claim in respect of interest subsidy allowed to hotels should be sent to this Department quarterly on 15th January, 15th April, 15th July and 15th October. The payment of interest subsidy by this Department will be made to State 5 Financial Corporations on receipt of the claims along with the supporting documents.” 5. It is the contention of the petitioner that the loans were availed of. It duly constructed and completed the hotel project. Loan account No.I showed interest computed at the rate of Rs.20.5 % per annum which was reduced to 19 % in May, 1996. Loan account No.II was initially showing interest at the rate of Rs.20.5 % which was subsequently reduced to 19 % in July, 1997. The petitioner secured aforesaid loans by mortgaging various immovable properties as also the Plant and Machinery and giving collateral securities. It is undisputed before us that the petitioner applied to the Department of Tourism, Government of Goa for certificate of registration of Hotel. By a letter dated 22.2.96, the Director of Tourism, Government of Goa granted certificate in favour of the petitioner. 6. The petitioner also relies upon the certificate, copy of which is at Exh.P3 which is issued by the Regional Director of Tourism, Government of Goa and which demonstrates that the project of the petitioner/resort which is a 2 Star Hotel Project, has been classified as such, with effect from 5.2.1997. The case of the petitioner is that the certificates are issued only after the Hotel project is completed. The certificate has been issued and thereafter, renewed and was valid at the 6 relevant time. The petitioner, therefore, contends that terms of the scheme are to provide for automatic deduction of 3 % at point of collection so that benefit of the subsidy is available to the borrower petitioner and the small Hotel projects get encouragement and affordable Hotels are set up in tourists friendly States like Goa. He has relied upon the decision of Economic Development Corporation Ltd Goa which has been granting subsidies in terms of the Government of India Scheme. The petitioner, therefore, by his letter dated 26.6.2000 requested MSFC (respondent No.1) to grant 3% interest subsidy on both loan accounts in respect of instalment paid after 5.2.1997. However, in reply to this letter MSFC requested the petitioner to forward a copy of the approval of 2 star category from Department of Tourism, Government of India so as to process the case further. 7. The petitioner duly complied with the requisition contained in this letter and forwarded the approval. Despite receipt of this document, the respondent No.1 did not process the application and, therefore, another letter was addressed by the petitioner on 27.12.2001 requesting the respondent No.1 to grant interest subsidy. Exhibit annexure P8 is a copy of the letter. The petitioner has set out details of the repayment with regard to the loans in the petition and more particularly paragraph 7 and 8. The petitioner awaited some favourable response from the respondent No.1 but finding that there is no 7 communication with regard to grant of interest subsidy benefit, Finally, by a Lawyer's notice dated 31.7.2002, the petitioner called upon the respondent No.1 to grant interest subsidy. Once again, the Corporation replied that the claim and request was being processed and they would revert in short time. 8. On 7.11.2002, the Corporation's Lawyer informed the petitioner's Lawyer that the petitioner is not entitled for interest subsidy for the reason that the interest subsidy scheme guidelines contemplate that when the loan is being sanctioned, the petitioner must have an approval from the Department of Tourism, Government of Goa and such approval must be submitted at the time of filing the loan application itself. The subsidy is available by way of reimbursement. The petitioner's Hotel project has been classified as 2 Star category with effect from 5.2.1997 and the loans have been sanctioned on 29.4.1995 and 25.4.1997 but the project approval was not submitted at the stage of sanctioning of loan and, therefore, the petitioner will not be entitled to the benefit of interest subsidy is the stand of the Corporation. 9. Ultimately, correspondence ensued on the liability of the petitioner to pay balance sum and the petitioner approached this Court in writ jurisdiction. 8 10. Mr. Nadkarni,learned Counsel appearing for the petitioner contended that even in matters of grant of interest subsidies, authorities like MSFC who are Instrumentalities or Agencies of the State have to act fairly and reasonably. Their action must confirm to the mandate of Article 14 of the Constitution of India. They cannot deny benefit of welfare and beneficial schemes to the petitioner on the ground which are extraneous to their policies and the schemes itself. All their actions must be tested on the touchstone of the mandate of Equality enshrined under Article 14 of the Constitution of India. So tested, the reasons which are assigned for rejecting the claim, cannot be sustained. He submits that, only ground on which the Corporation has denied the benefit is that the Government of India's letter has been received by it directing it not to sanction the benefit. He hands over a copy of the said letter and submits that in the letter dated 26.8.2002, the respondent No.3 informs the first respondent that the available records show that the Hotel project was not approved in the project stage as is required, for obtaining interest subsidy and, therefore, it cannot be availed of by the petitioner. Mr.Nadkarni submits that when it is undisputed that the loan was sanctioned and disbursed in two stages, then, at least for the second stage, the benefit cannot be denied. Admittedly, the project was approved by the Government of India on 5.2.1997 and that loan came to be sanctioned and disbursed subsequent thereto. Insofar as this loan is concerned, the benefit is directly admissible and refusal to extend it, is 9 contrary to the policy and guidelines and, therefore, the reliefs as claimed by the petitioner be granted. 11. The Counsel appearing for the first respondent Corporation has invited our attention to the affidavit in reply and the scheme. She has contended that the Corporation was in receipt of a communication from the Government of India, Tourism office. That communication having stipulated that Hotel project was not approved when the loan application was made and the loan was sanctioned in the year 1995, then, no benefit under this scheme can be extended and the same has been rightly refused. This stand is adopted by the learned Counsel appearing for the respondent Nos. 2 & 3. 12. For properly appreciating the contentions raised by the petitioner, it would be worthwhile setting out the factual position. The undisputed factual position emerges from the avernments in the petition and more particularly in paragraph 2(ii). The said factual position has been reiterated in affidavit of the first respondent Corporation. A perusal of the paragraph 1 thereof, is clear. 13. Once, the Corporation does not dispute that it sanctioned the loan firstly in the year 1995 and secondly on 25.4.1997, then, in terms of the guidelines reproduced above, the petitioner must be 10 extended the benefits. Further undisputed factual position is that the approval from Government of India is dated 5.2.1997. The second loan is sanctioned on 25.4.1997. When the same was sanctioned, the approval was very much there. The first respondent's Counsel does not dispute that copy of the approval already granted on the date of sanction, can be produced subsequently for perusal and record of the Corporation but its grant is essential pre-requisite for availing of the interest subsidy. 14. What emerges from the same is that at least insofar as the second sanction is concerned, the petitioner is entitled to avail of the benefit of interest subsidy enhanced at the rate of 3 %. In such circumstances, denial of that benefit by the Government of India to the petitioner is erroneous. If the very purpose is to encourage setting up of small Hotels in tourist friendly States and providing loans for that purpose through Agencies and Instrumentalities of the State, then, the same can be defeated by resort to such devices. If the scheme is beneficial and provides encouragement, then, it must be given effect to the moment the requisite criteria laid down therein is satisfied. That having been satisfied in this case, we see no reason to sustain the letter dated 26.8.2002 and communication of the Corporation dated 7.11.2002 to the contrary. 11 15. In the result, the petition succeeds. Rule is made absolute in terms of prayer clause (A) and (B) to the extent that the petitioner would be entitled to avail of 3 % enhanced interest subsidy with regard to the loan sanctioned on 25.4.1997. The Corporation to recalculate the liability in terms of second loan by extending this benefit and needless to state that it would be permitted to withdraw the deficit sum, if any, from the amount already deposited in this Court after such recalculation of the amount. The Corporation is granted 6 weeks' time to do the needful. After the recalculation is being made and duly communicated to the petitioner, the parties can approach the registry. If there is no liability to pay any sum after the benefit is extended, then, needless to add that the petitioner would be entitled to withdraw the sum deposited with accrued interest. 16. The respondent No.1 states before us that the scheme contemplates reimbursement after the Corporation extends benefit. If the Re-imbursement is by respondent Nos. 2 and 3, then, the subsidy amounts should be reimbursed to that extent by the Government of India, if such a request is made by first respondent- Corporation. The respondent Nos. 2 & 3 are directed to process the application for Re- imbursement and to do the needful within 4 month from the date of request of reimbursement. 12 17. Petition is allowed as above. In the light of this judgment, Misc. Civil Application No.603/2004 does not survive and disposed of accordingly. S. C. DHARMADHIKARI, J R. C. CHAVAN, J SMA