Regular Second Appeal No.2610 of 1983 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Regular Second Appeal No.2610 of 1983 Date of decision: 07.07.2010 M/s Shree Saraswati Spinning Mills, situated at Tosham Road, Birla Colony, Bhiwani through its partner Sh. K.C. Makharia s/o P.D. Makaria, r/o Birla Colony, Bhiwani. ..... Appellant. Versus 1. Union of India through Secretary, Ministry of Industry Udyog Bhawan, New Delhi. 2.State of Haryana through Secretary, Industries Department, Chandigarh. 3.The Director of Industries, Haryana, 30 Bays Building Sector 17, Chandigarh. 4. The Collector , Union Territory of Chandigarh. 5. The District Collector, Mini Secretariat, Bhiwani. ..... Respondents. CORAM: HON'BLE MR. JUSTICE SHAM SUNDER Present:- Mr. J.L. Malhotra, Advocate for the appellant. Shri Kulvir Narwal, Additional Advocate General, Haryana, for respondent Nos. 2 to 5. Respondent no.1 ex-parte. Regular Second Appeal No.2610 of 1983 -2- Sham Sunder, J. This Regular Second Appeal is directed against the judgment and decree dated 25.11.1983, rendered by the Court of District Judge, Bhiwani, vide which it accepted the appeal against the judgment and decree dated 01.06.1983, rendered by the Court of Senior Sub Judge, Bhiwani, decreeing the suit. 2. The brief facts of the case, are that the Central Government launched a scheme of giving subsidy to the entrepreneurs. This scheme was called “The 10% Central outright Grant of Subsidy Scheme 1971 for industrial units to be set up in selected backward District/areas”. It made a distinction between new industrial units and existing industrial units. The 'new industrial units' were those for the setting up of which no effective steps were taken prior to 01.10.1970. The 'existing' ones were those for the setting up of which effective steps were taken prior to 01.10.1970. The effective steps were defined in clause 4(e) of the Scheme as under:- “'Effective steps' means one or more of the following steps. i) that 60 per cent or more of the capital issued for the industrial unit has been paid up; Regular Second Appeal No.2610 of 1983 -3- ii) that a substantial part of the factory building has been constructed; iii) that a firm order has been placed for a substantial part of the plant and machinery reputed for the industrial unit”. Both types of units were entitled to subsidy but the criteria for each was different. Yet another distinction was made in respect of investment of fixed capital made before 1.3.1973 and that made after that date, the rate of subsidy and the total limit of it for each being different. The State Level Committee was to decide the applications for the grant of subsidy. The Director of Industries of the State concerned was to be its Member- Secretary. He was the pivotal figure and inter-alia, he was to get maintained the records and accounts including the recovery of overpayments made. 2-A. The plaintiff-firm made an application Ex.D-1 dated 5.8.1974, for the grant of aforesaid subsidy.According to this application, the plaintiff was entitled to subsidy of Rs.13,15,447.30. In the said application, the plaintiff-firm described its unit, as the “existing” one and further stated that it had gone into production in August 1969. The aforesaid application filed by the plaintiff-firm was considered by the State Level Committee and, ultimately, a subsidy of Rs.10,30,270/- was granted to it. The said amount was Regular Second Appeal No.2610 of 1983 -4- disbursed to the plaintiff, and, in token thereof, it executed agreement Ex.D12. The Government of Haryana, issued two notices to the plaintiff-firm, out of which one was Ex.P-16 dated 25.9.1978 and the other was Ex.P-20 dated 21.12.1979. A refund of Rs.5,33,563/- was demanded from the plaintiff- firm by the defendants, on the ground that the said amount had been paid in excess. The reasons for payment of excess amount mentioned in notice Ex.P-16, were that the cost of machinery amounting to Rs.22,95,548/-stated in the third list, submitted by the plaintiff, was taken into account twice, while assessing its capital investment and that some items of machinery were second hand and the requisite certificate had not been furnished by the said firm. It was also mentioned therein that the plaintiff-firm was only entitled to subsidy to the tune of Rs.5,05,707/-, but on account of clerical mistake, subsidy of Rs.10,39,270/- was paid to it. It was in this view of the matter, refund of Rs.5,33,563/- with 10% interest w.e.f. 2.6.1977 was demanded from the plaintiff-firm. The last date given for the refund of amount, aforesaid, was 24,10,1978, whereafter, enhanced interest @ 18% per annum was to be charged. 2-B. The second notice Ex.P-20, reiterates the demand, made in the first notice, Ex.P-16. In notice, Ex.P-20, it was Regular Second Appeal No.2610 of 1983 -5- mentioned that according to the application of the plaintiff for the grant of the subsidy, Ex.D-1, it (plaintiff-firm) had gone into production on 20.08.1969 and, therefore, it was an “existing” unit. In fact Ex.P-20 was reply to a letter dated 21.09.1979, which was sent by the plaintiff-firm to the defendants. However, the defendants(respondents) dropped the excess amount of Rs.2,20,120/-, paid on account of some machinery, being second hand, because the plaintiff had furnished the necessary certificates and they(defendants) were satisfied with the same. After dropping the refund of the amount of Rs.2,20,120/-, the demand was scaled down to Rs.3,13,443/-. When the amount, aforesaid, was not paid, a certificate for recovery, under the relevant provisions of the Haryana Public Moneys (Recovery of Dues) Act, 1979, was issued. 2-C. The claim of the plaintiff was, however, to the effect, that in the application, Ex.D-1, it described its unit as “existing unit” by inadvertence and that in reality it was a “new unit”. It was further claimed by the plaintiff that the matter was fully investigated before the grant of subsidy and the amount of Rs.10,39,270/- was granted after the State Level Committee thoroughly satisfied itself. It was further stated that before issuing the notice for the refund of amount of Rs.3,13,443/-, no Regular Second Appeal No.2610 of 1983 -6- opportunity of personal hearing was given and, as such, the demand, raised was illegal, being violative of the principles of natural justice. It was further stated that even the contents of the notice regarding refund of amount, aforesaid, were vague as at one place it was stated by the defendants that it was on account of mistake due to clerical error and at the other place, it was stated that on account of some mis-calculation , the excess amount of subsidy was paid. The defendants were asked many a time, to withdraw the illegal notice(s), but to no avail. On their final refusal, left with no alternative, a suit for declaration and permanent injunction was filed. 3. In the written statement, filed by the defendants, they denied the allegations, contained in the plaint. It was, however, stated that since the plaintiff claimed excess amount of subsidy by mis-representing the facts that it was an “existing unit”, though it was a new unit, they were entitled to recover the amount of excess subsidy, obtained by it by way of mis-representation, as per the provisions of law. It was further stated that full opportunity was afforded to the plaintiff, by way of giving notice Ex.P-16 and reply to their notice Ex.P-20, stating therein all the details as how the excess subsidy was paid by them, on account of mis-representation made by it. It was further stated that the defendants were entitled as per the Regular Second Appeal No.2610 of 1983 -7- agreement to recover the amount of excess subsidy, obtained by way of mis-representation. It was also pleaded that the Civil Court had no jurisdiction; that the suit was not maintainable and that it was bad for want of service of notice under Section 80 CPC. The remaining averments, contained in the plaint, were denied. 4. From the pleadings of the parties, the following issues were framed by the trial Court :- “1- Whether the recovery being effected by the defendants from the plaintiff is illegal and void for the reasons stated in the plaint? Onus objected to 2- Whether the suit is bad for want of notice under Section 80 CPC ? 3- Whether the suit is not maintainable in the present form ? 4- Whether the suit is false and frivolous? 5- Whether the civil Court has no jurisdiction to entertain this suit? 6- Whether the written statement filed in this case has been signed by duly authorized person and if, not to what effect? 7- Relief.” Regular Second Appeal No.2610 of 1983 -8- 5. The parties led oral as well as documentary evidence in support of their case. After hearing the Counsel for the parties, and on going through the evidence, and record of the case, the trial Court decreed the suit of the plaintiff, holding that the notice was illegal and refund of subsidy could not be demanded. The trial Court, however, did not give any finding, as to whether, the plaintiff firm- was a new unit or existing unit, on the ground that the same was not necessary for the adjudication of controversy. 6. Feeling aggrieved, the defendants/ appellants filed an appeal, whereas the plaintiff/ respondent filed cross- objections. The Appellate Court vide its judgment and decree dated 25.11.1983 accepted the appeal, filed by the appellants/defendants and dismissed the cross-objections, filed by the respondent/plaintiff therein. 7. Feeling aggrieved, the instant Regular Second Appeal, has been filed, by the appellant/plaintiff. 8. I have heard the Counsel for the parties, and have gone through and perused the evidence and record of the case, carefully. 9. The following substantial questions of law, arise in this appeal for determination:- “1. Whether the First Appellate Court recorded perverse Regular Second Appeal No.2610 of 1983 -9- finding on account of mis-reading and mis-appreciation of evidence that the plaintiff mis-represented in the application, Ex.D-1 and other documents that it was an “existing unit” though in fact it was a “new unit” and on account of that reason, obtained excess subsidy? 2. Whether the First Appellate Court, recorded perverse findings, on account of mis-reading and mis-appreciation of evidence that without affording personal hearing to the plaintiff, but on the basis of notices and replies, the recovery of excess amount of subsidy could be effected, which was obtained on the basis of mis-representation by the plaintiff? 10. The Counsel for the appellant, submitted that, no doubt, in the application, Ex.D-1, it was mentioned by the plaintiff-firm, that it was an “existing unit”, yet it was only on account of inadvertence, and, as such, the correct amount of subsidy was granted in its favour. He further submitted that no opportunity of personal hearing was granted to the plaintiff firm before issuing the recovery certificate, and, as such, notice, Ex.P-16, was illegal, being violative of the principles of natural justice. He further submitted that the findings of the First Appellate Court, being perverse, are liable to be set aside. 11. On the other hand, the Counsel for respondent nos. 2 to 5, submitted that there was deliberate mis-representation, Regular Second Appeal No.2610 of 1983 -10- on the part of the plaintiff while moving an application,Ex.D-1, that it was an “existing unit”, whereas, it was not an existing unit and,as such,on account of the said mis-representation, excess amount of subsidy was granted to it. He further submitted that,in these circumstances,notice, Ex.P-16, detailing therein each and every fact, was served upon the plaintiff-firm, whereby it had been directed to refund the amount of excess subsidy to the tune of Rs.5,33,563/-which was scaled down to Rs.3,13,443/-,vide letter Ex.P-21 after some bills were submitted by the plaintiff. He further submitted that sufficient opportunity of being heard was granted to the plaintiff to explain its position by way of notice and, as such, the question of grant of personal hearing to it,did not at all arise, nor it was provided in the Manual, Ex.P-23. He further submitted that it was not an inadvertent mistake made by the plaintiff by mentioning in the application, Ex.D-1 that it was an “existing” unit, but a deliberate mis-representation was made with a view to get excess amount of subsidy. He further submitted that the notices and the certificate of recovery, being legal and valid and not violative of the principles of natural justice, the First Appellate Court was right in holding so. He further submitted that the judgment and decree of the First Appellate Court is liable to be upheld. Regular Second Appeal No.2610 of 1983 -11- 12. After giving my thoughtful consideration, to the rival contentions,advanced by the Counsel for the parties, in my considered opinion,the appeal deserves to be dismissed,for the reasons to be recorded hereinafter.In Madvan Nair Vs. Bhaskar Pillai (2005) 10, SCC, 533, Harjeet Singh Vs. Amrik Singh (2005) 12, SCC, 270, H.P. Pyarejan Vs. Dasappa, JT 2006(2), SC, 228, and Gurdev Kaur and others Vs. Kaki and others (JT 2006 (5) SC, 72,while interpreting the scope of Section 100 of the Code of Civil Procedure, the principle of law, laid down, was that the High Court, has no jurisdiction to interfere with the findings of fact, arrived at, by the first Appellate Court, even if, the same are grossly erroneous, as the Legislative intention, was very clear that the Legislature never wanted second appeal to become a “third trial on facts” or “one more dice in the gamble.”It was further held that the jurisdiction of the High Court, in interfering with the judgments of the Courts below, is confined only to the hearing of substantial questions of law. Ex.D-1, is the application dated 05.08.1974, moved by the plaintiff, for the grant of subsidy. In this document, the plaintiff showed its unit as an “existing” one. August 1968 was mentioned as the date of establishment and August 1969 was mentioned as the date of going into production. It was again re-iterated in the said application that Regular Second Appeal No.2610 of 1983 -12- the Mill originally went into production in August 1969. It was not that at one place the plaintiff-firm had shown itself to be an “existing”unit in the said application, but at so many places, it described it as such.In Ex.D-9,it was again mentioned that the subsidy was required for expansion of an existing unit. An affidavit, Ex.D-10 was also filed by Mr. K.C. Makharia, a partner and holder of a General Power of Attorney from the plaintiff-firm. In this document, it was, in clear-cut terms, stated that the plaintiff firm shall be liable to refund the amount of central investment subsidy with interest, as may be fixed by the Government,if it was found that it had been obtained by mis-representation as to an essential fact or by furnishing of false information.Another affidavit, Ex.D-11, was also filed by Mr. K.C. Makharia, aforesaid, to the effect that if the State Government was satisfied that the subsidy or grant to the plaintiff-firm had been obtained by mis-representation as to an essential fact, furnishing of false information or if the unit goes out of production within 5 years after commencement, it (State Government) may claim refund of the grant of subsidy from the firm,after giving it an opportunity of being heard. Ex.D-12 dated 02.06.1977, is another document, signed by all the partners, wherein such a stipulation was made. In para 4.8 of the Manual, Ex.P-23, it was in clear cut terms stated that if Regular Second Appeal No.2610 of 1983 -13- any over payment, was found to have been made by the disbursing agencies, that shall be recovered from the industrial unit.Mr.K.C.Makharia,a partner of the plaintiff-firm when appeared as PW-1,no doubt stated that in the application, Ex.D-1 on account of inadvertence,the plaintiff-firm was shown as an “existing unit”. He further stated that the same was due to a clerical mistake.He further stated that he did not remember that on 5.8.1974 any application was made by him, in which he had stated that the date of establishment of the Unit was August,1968 and the date of its going into production was August,1969.He further stated that the Inspectors of the respondent used to fill up the forms for subsidy and obtained his signatures.He further stated that if there was any entry anywhere to the effect that production had started in August, 1969, then such an entry was made by the Clerk of the Department and it was only a clerical mistake.No reliance on the evidence of such a person, could be placed when he denied the contents of the documents, signed by him.He is an educated person and signed these documents.It could not be said that he without going through the contents thereof,signed the same.Such a defence was concocted lateron by him,just with a view to wriggle out of the liability of refund of amount. Even Ex.P-1,letter dated 13.4.1971 of the Textile Regular Second Appeal No.2610 of 1983 -14- Commissioner, produced by the plaintiff showed that it (plaintiff-firm) was allowed to work 5000 only spindles which had already been acquired and installed. Ex.P-2, letter dated 13.1.1972, from the office of the Textile Commissioner, states that the plaintiff mill had been included as Spinning in the list of Cotton Textile Mills maintained by the office. Ex.P-3 is the document dated 18.11.1981, from the Bombay Mill Owners' Association, wherein it was mentioned that as per their record the name of the plaintiff mill was incorporated for the first time in the association's mill statement for the year ending 31st August, 1972. Ex.P-4 is the document dated 30.08.1971 from the Ministry of Foreign Trade giving the plaintiff “A” Class licence for the purchase of cotton etc. So the statement of Mr. K.C.Makharia, PW-1, a partner of the plaintiff-firm that it was only on account of inadvertence that it (plaintiff-firm) described it as an “existing” unit, is belied by the documentary evidence. It , therefore, could not be taken into consideration and was rightly discarded by the First Appellate Court. The First Appellate Court was right in holding that the plaintiff- firm was not entitled to the subsidy as an “existing unit” as it mis-represented this fact. The First Appellate Court was also right in holding that the plaintiff was liable to refund the excess amount of subsidy. The findings of the First Appellate Court, Regular Second Appeal No.2610 of 1983 -15- in this regard, being based on the correct reading and due appreciation of evidence, and law, on the point, do not suffer from any illegality or perversity and, thus, warrant no interference. 13. The second question that arises for consideration, before this Court, is as to whether, the plaintiff was condemned un-heard before issuance of recovery notices in the sum of Rs.3,13,443/-, it may be stated here that notice Ex.P-16 was given to the plaintiff in which, on account of two reasons, referred to above refund of Rs.5,33,563/- was demanded. The excess amount of subsidy was received by the plaintiff-firm by making mis-representation. However, lateron on production of the bills of second hand machinery, the refund of the amount of Rs.2,20,120/- was dropped vide letter Ex.P-21 and the refund of the amount of Rs.3,13,443/- was pressed. Reply was filed by the plaintiff. There are various letters, on the record, which were exchanged, between the plaintiff, and the defendants regarding the refund of excess amount of subsidy, obtained by the plaintiff-firm, by way of mis- representation. The details of the amount of excess subsidy, received by the plaintiff-firm were also mentioned in those documents. Thus, full opportunity was granted to the plaintiff, to explain its position as to why the amount of excess subsidy Regular Second Appeal No.2610 of 1983 -16- be not recovered from it. It, therefore, could not be said that the plaintiff was condemned un-heard. In Manual, Ex.P-23, there is no provision that an opportunity of personal hearing should be given to the industrial unit, before issuing the notice regarding refund of the amount of excess subsidy, received by it, on account of mis-representation. Even, as per the contents of the application , Ex.D-1 and affidavits Ex.D-9 and Ex.D-10 , the plaintiff-firm through its partners undertook to refund the amount of excess subsidy, obtained by it, by mis-representation etc. etc. On account of non-grant of personal hearing, which was not provided, in the Manual, it could not be said that the plaintiff was condemned unheard. The notices and recovery certificate, therefore, were rightly held to be legal and valid and not violative of the principles of natural justice by the First Appellate Court. The findings of the First Appellate Court, on this score also, being based on the correct reading and appreciation of evidence, and law, on the point, do not suffer from any illegality or perversity and, thus, warrant no interference. 14. In view of the above discussion, it is held that the judgment and the decree of the First Appellate Court do not suffer from any illegality or perversity, warranting interference by this Court. The same are liable to be upheld. Regular Second Appeal No.2610 of 1983 -17- The substantial questions of law are answered against the appellant, in the manner, depicted above. 15. For the reasons recorded above, the appeal, being devoid of merit, must fail and the same is dismissed with costs. ( Sham Sunder ) July 07, 2010 Judge dinesh