Case: Tata Iron And Steel Co.Ltd Vs. Union Of India

Background Facts :3. By the Government Notification No. SC (A)-24 (113)/63 dated 29.2.1964 issued by the Department of Iron & Steel in the Ministry of Steel, Mines and Heavy Engineering, the Government of India to give effect to the proposal for fixation of steel prices for de-controlled categories, constituted the Joint Plant Committee consisting of representatives of all major producers of steel along with Government representative. It is the Joint Plaint Committee (hereinafter referred to as `JPC) with whose concurrence, the main producers, being its members control the price of similar categories of steel, though however, the same is restrictive in its application and is made applicable to supplies effected by the main steel producers only, viz. Tata Iron & Steel Co. Ltd., Indian Iron & Steel Co. Ltd. and Hindustan Steel Ltd. - (presently Steel Authority of India Ltd.).4. The records depict that consequent on the increase in excise duty in steel materials under Government of India Notification dated 17th March, 1972, the prices of steel materials were directed to be inclusive of JPC contribution to the re-roler Freight Differential Fund, Equalised Freight Element and provision for JPC Engineering Goods Export Assistance Fund. The inclusion of the above were made applicable to various categories of materials including Bar, Roads, Slabs Blooms, Coil, Billets etc. as appears from JPC announcement No. 81 dated March 20, 1972. It is, however, significant to note that by reason of the inclusion of the JPC price elements as above, the domestic price for iron and steel materials has always been higher than the international price of steel and resultantly demand for imported steel rather than the indigenous manufacture was on an ascending turned and it is to combat and curb such a trend and having regard to the higher domestic price structure, the Government of India introduced the International Price Reimbursement Scheme (hereinafter referred to as the `Scheme) so as to provide some protection to exporters of engineering goods who would otherwise by reason of user of domestic steel, would be exposed to an addition expenditure and thus suffer a loss for the price difference as noticed above. Incidentally, be it noted that the protection scheme came into force by reason of the price increase effected on 9.2.1981 by the Government of India, Ministry of Commerce Notification dated 23rd July, 1981. One redeeming feature of the Scheme however, is reimbursement (emphasised) and it is in this context that Clauses 2.4, 2.5, 2.7 and 2.8 of the Scheme are relevant and thus ought to be noticed in extenso and relevant extracts of which are as belowSupplies of Steel made under release orders issued by Iron & Steel Controller will be made at the prevailing plant/stockyard price. After the export are effected, price difference between its "domestic price" and the relevant "international price" will be reimbursed to the exporter. Contracts eligible for reimbursement under this scheme (including fresh contracts) would have to be got registered with the concerned Regional Office of the EEPC within 45 days from the date of the contract.2.5 For reimbursement purposes, the "domestic price" for these categories would be the "JPC plant price for those categories where JPC price control exists and SAIL price for other items prevailing on the date of exports. The domestic price will be exclusive of taxes like sales tax, octroi, etc.2.7 Procedure for Reimbursement :A) The application for reimbursement will be made to the Regional Offices of the EEPC, with whom the exporter is registered;B) The following documents will be submitted by the exporter for claiming the reimbursement of price difference between domestic and international prices of steel;(i) Application in the prescribed form marked Annexure-VI in triplicate;xxxxxxxxxxxxxx(vi) A claim will indicating category wise consumption of steel and the price difference payable based on domestic price prevalent on the date of export and the international prices for the second proceeding month as explained in paragraphs(Emphasis supplied).(vii) Sale voucher for purchase of steel/pig iron from Main Producers in original or the following documents :1. Auditor/chartered Accountants Certificate in the prescribed format to the effect that no imported steel/pig iron has been utilised in the goods exported by the company.2. An indemnity Bond in prescribed format indemnifying Government against any wrong payment on account of wrong calculation and/or for use of imported steel materials.C) ............the reimbursement benefit may be claimed by any one of the two parties provided the claimant is a registered exporter and otherwise eligible to get reimbursement benefit under this scheme :(Emphasised)2.8 .............v) The claim for reimbursement would be made only in respect of consumption of indigenous steel and pig iron procured from he main producer or other sources. Claims for reimbursement would not be admitted against consumption of Steel/pig iron imported against Advance License under the Duty Exemption Scheme and against impress/REP licence or under OGL. No claims will be admitted in case Customs duty refund has been claimed/will be claimed under brand rate of duty drawback for such steel/pig iron.(Emphasised)Further facts are as below :(a) Application paper being Annexure VI to the Scheme itself provides for furnishing of an undertaking recording therein an obligation to refund the amount of Bill in full or part against application for reimbursement of price difference between domestic and international prices in case the declaration/certificate furnished by the appellant against the claim are found to be incorrect at any time. The undertaking further recorded that the refund would be effected within a period of 10 days from the date of receipt of notice asking for the refund failing which the amount paid erroneously or in excess shall be recovered from the appellant or to be adjusted against any other claim.(a) Incidentally Annexure VI also contained an Indemnity Bond as well which records as below :"................................Such payments are to be made on demand and without demur. Our liability for payment under the bond being irrevocable and unconditional.(Emphasized).The Indemnity Bond further providesNow the condition of this bond is such that if as a result of the details scrutiny of the above said application (s) the amount finally payable to obliger is determined to be (the decision of the government being final and binding) nil/less because the obliger has been paid in excess on wrong calculations or has used imported steel/pig iron in the manufacture of items thus exported and also received the price difference claim from the Disbursing Authority, the eligibility of receiving further amounts by way of difference in the price between the domestic and international prices for steel/pig iron used in the manufacture of items exports, will be withdrawn and Government shall be at liberty to claim upon the obliger to return back the amount already paid by the disbursing authority within seven (7) days of the receipt of the notice from the disbursing authority failing which the government shall be free to take any action against the obliger without prejudice to the Government claim including security deposits and earnest money deposits lying with the other department of the Government or by attachment of our assets, shareholding and goodwill as also to stop all further payment/assistance to the obliger as available to thefacts in issue :5. The factual score depicts that in terms of the Scheme as above, the appellant claimed benefits on the basis thereof and payment have also been made to the extent of differential element involved in the price structure. The factual score however disclose that the appellant while exporting engineering goods did use its own manufactured steel items without involvement of any of the price element as declared by JPC and as noticed above. It is on this score however, the Engineering Export Promotion Council subsequently by its letter dated 23rd November, 1992 refused to recognise the appellants entitlement to avail of the benefit of the Scheme. The Council expressly communicated that a sum of Rs. 10,37,96,604/- was paid in excess under a bona fide mistake being discovered later. The Council in addition to the claim above-said also claimed interest at the rate of 18% per annum. The appellant however, in turn by its letter dated 19th January, 1993 while recording acceptance of the factum of user of `own materials placed on record that the JPC guidelines exempt main producers from having levies on steel manufactured of down stream products and this proves that the JPC had accepted the unique position of an integrated steel producers who also manufactures other down stream products and by reason of such an acceptance, the appellant is not precluded from deriving the benefits under the scheme.6. It has been the specific stand of the appellant that the Scheme for Price Reimbursement from the time of its introduction is applicable universally to all exporters since the export would not have been viable without the benefits under the Scheme. Further the appellant contended that the EEP Council did not find any fault with the claims lodged for all these years, evidently because the Council was also satisfied about the eligibility of the company, nor there was any violation or circumvention of any of the provisions of the Scheme.7. Subsequently, however, the Council by a letter dated 19th May, 1994 directed an adjustment of a sum of Rs. 10,37,96,604/- being the excess IPR - Scheme payment of the appellant herein and hence the writ petition before the High Court which was ordered in favour of the appellant herein by the learned Single Judge though however reversed in Letters Patient Appeal by the Appellate Bench of the High Court and hence the appeal before this Court.

Court's reasoning:
23. The contextual facts therefore is no unambiguous language depict that the four JPC price elements have not been paid by the appellant herein. Further factual score depicts recording of an undertaking to reply in the event of excess payments and on the wake of the findings as noticed hereinbefore, it would neither be fair nor reasonable or in consonance with the concept of justice, equity and good conscience directing entitlement of the appellant as is being claimed. Doctrine of fairness and the duty to act fairly is a doctrine developed in the administrative law filed to ensure the rule of law and to prevent failure of justice. It is a principle of good conscience and equity since the law courts are to act fairly and reasonably in accordance with the law. The correspondence unmistakably divulge an obligation to pay certain compensation in the event there is a payment of certain levy by the appellant herein : The appellant admittedly has not made the payment : Doctrine of unreasonabless is opposed to doctrine of fairness and reasonableness will have its play, if allowed. The happening of an event has not aken place, can it be said respective of such an event reimbursement is to be allowed ? The answer, however, cannot but in the negative.