Case: Union of India and Another Vs. Messrs Brij Fertilizers Private Limited and Others

rock phosphate purchased by the manufacturers as per their invoices an 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, Miner to the Joint Director, Fertiliser Coordination Committee. Relevant part of the letter reads "We are selling Hirapur Phosphorite for so may Fertiliser SSP manufacturers since starting of the mining and we never found any complaint regarding its suitability to manufacture SSP Fertiliser. We have learnt from Fertiliser Manufacturing Units that our Phosphorite is suitable for SSP Fertiliser manufacturing but in case of FO2O3 content increase 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 31-8-1989 to sell 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 is not required to manufacture the requisite grade SSPThe M.P.S.M.C. was selling Hirapur Phosphorite in different percentages P2O5 grades and not in mix condition. Our grades and other specifications are indicated belowBefore 5-3-1991 From 6-3-19911. 1st (A) 1st (A)P2O5 + 30%, SiO2 + 15% - 18% P2O5 + 29% - 31%, SiO2 + 15%FO2O3 below 4.5% 18%FO2O3 below 4%A. +1 1/2"-2 1/2" size A. +1/2"-21/2" sizeB. R.O.M. B. R. O. M2. 1st (B) 1st (B)P2O5 + 28%-30% SiO2 + 22% PrO5 + 27% SiO2 + 18%FO2O3 above 4.5% FO2O3 above 4.5%A. -1/2" size A. 1/2" sizeB. R.O.M. B. R.O.MC. By Product Dust3. II GradeP2O5 + 22% SiO2 and FO2O3No grantee R. O. M." Further no rock phosphate has been or could be purchased by any manufacturer expect through a 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 P2O5 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 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 31%. No 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% P2O5 and 30.03% Silica and suggested that the 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% P2O5 to 31% P2O5. 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% W.S. P2O5 the rock phosphate should contain a minimum of 31% P2O5. 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 arbitrariness8. Failing in his effort to assail the order on merits the learned Additional Solicitor General vehemently urged that the department was not precluded from issuing show-cause notice and requiring the manufactures to appears and explain their claim. It was urged that the High Court was not justified in quashing the show-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 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 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 counts 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 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

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Further no rock phosphate has been or could be purchased by any manufacturer expect through a 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 P2O5 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 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 31%. No 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% P2O5 and 30.03% Silica and suggested that the 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% P2O5 to 31% P2O5. 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% W.S. P2O5 the rock phosphate should contain a minimum of 31% P2O5. 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 arbitrariness8. Failing in his effort to assail the order on merits the learned Additional Solicitor General vehemently urged that the department was not precluded from issuing show-cause notice and requiring the manufactures to appears and explain their claim. It was urged that the High Court was not justified in quashing the show-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 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 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 counts 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 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