Madras High Court
M/S. N.M.Hashim & Co vs Government Of India on 21 December, 2024
Author: C.V.Karthikeyan
Bench: C.V.Karthikeyan
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 10.12.2024
PRONOUNCED ON : 21.12.2024
CORAM
THE HONOURABLE MR. JUSTICE C.V.KARTHIKEYAN
W.P.No. 25067 of 2021
And
W.M.P.No. 26408 of 2021
M/s. N.M.Hashim & Co.
Rep. by its Partner
Mr.N.Fuzail Ahmed
1, Kumarappa Street
Periamet, Chennai – 600 003. ... Petitioner
..Vs..
1. Government of India
Rep. By its under Secretary
Ministry of Commerce and Industry
Department for Promotion of Industry and Internal Trade (DPIT)
Udyog Bhawan, New Delhi – 110 011.
2. The Managing Director
Footwear Design and Development Institute (FDDI)
A-10/A Sector -24, Noida – 201 301.
3. State Bank of India
Represented by Relationship Manager
SME Leather and International
Branch, No.157, 1st floor, Anna Salai,
Adjacent of LIC Building, Chennai – 600 002.
[R3-impleaded as per order dated 22.02.2024 in
W.M.P.No. 1946 of 2024 in W.P.No. 25067 of 2021]
... Respondents
https://www.mhc.tn.gov.in/judis
2
PRAYER: Petition under Article 226 of the Constitution of India,
praying for the issue of a Writ of Certiorarified Mandamus calling for
the record of the first respondent in rejecting the Application No.
FD2K190277 (Addon-I) dated 07.10.2021 and quash the same and
further direct the respondents to disburse the grant of
Rs.30,30,862.50 to the petitioner.
***
For Petitioner :: Mr. S.R.Sundar
For RR 1 & 2 :: Mr. S.Sathish Rajan
Central Government Standing Counsel
For 3rd Respondent :: Mr. S.Rajesh
ORDER
The Writ Petition has been filed in the nature of a Certiorarified Mandamus seeking records of the first respondent, rejecting the Application No. FD2K190277 (Addon-I) dated 07.10.2021 and quash the same and direct the respondents to disburse the grant of Rs.30,30,862.50 to the petitioner.
2. In the affidavit filed in support of the Writ Petition, it had been stated that the petitioner, a partnership firm is in the business of manufacturing and exporting leather shoes, boots and other foodwears. The petitioner is classified as a Small Enterprise in the https://www.mhc.tn.gov.in/judis 3 MSME sector. It had been further stated that the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry had announced a scheme called Integrated Development of Leather Sector (IDLS) scheme as a sub-scheme of India Footwear, Leather and Accessories Development Programme. It was introduced with the object to provide assistance for modernisation, upgradation and development of leather industries. It had been stated that the scheme was applicable to the units undertaking technology upgradation / modernisation programs either through bank loan or self-financing.
3. The petitioner further stated that the IDLS Scheme provided for constitution of a Steering Committee under the DPIIT with authority to approve and sanction the benefits under the scheme. The second respondent was the Project Implementation Unit (PID) / Nodal Agency appointed under the scheme to scrutinise the applications and to place them before the first respondent.
4. The petitioner stated that to avail the benefit of the scheme, they had imported 13 machineries under the self financing category. The cost of investment was Rs.1,01,02,875/-. By way of the scheme, the financial assistance to the extent of 30% should be granted. Therefore, the petitioner claimed that they were eligible under the IDLS scheme for a sum of Rs.30,30,862.50. https://www.mhc.tn.gov.in/judis 4
5. The third respondent had conducted a survey of the business of the petitioner and issued a report and certificate dated 18.12.2020. The petitioner also executed an agreement for financial assistance under the IDLS Scheme with the third respondent and the second respondent. The petitioner uploaded its application dated 24.12.2020 with all supporting documents in the IDLS Portal on 28.12.2020. An Official of the second respondent visited the unit of the petitioner on 18.2.2021 and issued a report. It had been stated that the operation of the scheme was extended till 31.03.2021 and that applications could be received till 31.12.2020 and the applicatios would be placed before the Steering Committee on or before 31.01.2021.
6. The petitioner had uploaded its application on 28.12.2020, before the deadline. But the Official of the second respondent visited the petitioner unit only on 18.02.2021 for inspection. The petitioner was awaiting grant of the subsidy. Thereafter, the petitioner sent an E-mail on 04.10.2021 enquiring the status of the application. The second respondent replied by E-mail dated 07.10.2021 that the petitioner's application was reviewed and resubmitted for final approval on 25.03.2021 but was rejected by the first respondent on the ground that the scheme had come to an end. This rejection by the first respondent had been questioned in this Writ Petition. https://www.mhc.tn.gov.in/judis 5
7. The petitioner claimed that the petitioner was not at fault and that the second respondent had delayed in inspecting the unit of the petitioner and it was for that reason that the second respondent had placed the application of the petitioner with delay before the first respondent. It was therefore contended that the Writ Petition should be allowed and the benefit of the scheme should be granted to the petitioner.
8. A counter affidavit had been filed on behalf of the first and second respondents wherein it had been sated that after satisfying the object and scope of the scheme, all Associations were requested to ensure submissions of applications from industrial units on IDLS portal on or before 31.12.2020. The last date to scrutiinise the application was fixed as 31.03.2021.
9. It was stated that the petitioner had submitted an Add on-I application on 28.12.2020 wherein they had stated that 477 employees were in roll. It had been observed that the number of employees had been reduced from 340 to 218. There was a mismatch in the employment generation data. It was contended that the application was not found suitable for placing it before the Steering https://www.mhc.tn.gov.in/judis 6 Committee. The application was resubmitted only on 25.03.2021. It was stated that it was not possible to scrutinise the application received on 25.03.2021. It was therefore stated that since the scheme had expired on 31.03.2021, the applications submitted on or after 24.03.2021 were returned. It was stated that a uniform policy had been adopted by the respondents. It was therefore stated that the Writ Petition is misconceived.
10. A rejoinder was filed on behalf of the petitioner wherein it had been contended that the scheme envisaged purchase of machineries towards modernisation and technology upgradation and therefore, the petitioner had purchased 13 machineries and sought subsidy to the extent of 30%. This was not connected with activity expansion wherein employment should generated. The petitioner again reiterated that the delay was only on the part of the second respondent, who inspected the unit of the petitioner only on 18.02.2021 and had placed the applications of the petitioner much later on 25.03.2021. The petitioner claimed that the petitioner should not suffer owing to the procedural delay on the part of the respondents.
11. A counter affidavit had also been filed by the third https://www.mhc.tn.gov.in/judis 7 respondent wherein it had been stated that the third respondent had recommended the petitioner for financial assistance taking into consideration the provisions of the guidelines of the special scheme. It had been stated that the petitioner had purchased machineries worth Rs.1,01,02,875/- under self finance and claimed subsidy of 30% namely, Rs.30,30,862.50. It had been stated that the third respondent had examined the financial status of the petitioner.
12. This Court by an order dated 02.01.2024 had directed the first and second respondents to file an additional affidavit explaining the reason for the rejection of the application of the petitioner. However, in the additional affidavit, the first and second respondents had only repeated the statements made in the counter affidavit. The petitioner also filed a response to the additional affidavit once again reiterating that there was no fault on their part and that the delay was only owing to the second respondent.
13. Heard arguments advanced by Mr.S.R.Sundar, learned counsel for the petitioner, Mr.S.Sathish Rajan, learned Central Government Standing Counsel for the first and second respondents and Mr.S.Rajesh, learned counsel for the third respondent. https://www.mhc.tn.gov.in/judis 8
14. Mr.S.R.Sundar, learned counsel for the petitioner took the Court through the facts of the case and argued that the petitioner was eligible for grant of subsidy under the scheme. The only requirement was that there should be purchase of machineries towards modernisation and in this regard, learned counsel stated that the third respondent, State Bank of India had also conducted financial appraisal of the petitioner herein and it was a fact that the petitioner had purchased 13 machineries for a total sum of Rs.1,01,02,875/-. The learned counsel for the petitioner stated that the petitioner was entitled for subsidy at 30%. The learned counsel stated that the last date for uploading of the application was 31.12.2020 and the petitioner had uploaded the application completed all formalities by 28.12.2020. It was contended that the official of the second respondent inspected the petitioner company only on 18.02.2021 and that was the reason for the delay in putting up the application of the petitioner for consideration before the first respondent. The learned counsel stated that the petitioner cannot be denied the subsidy when the petitioner had satisfied with all requirements.
15. Mr.S.Sathish Rajan, learned Central Government Standing Counsel for the first and second respondents however pointed out that https://www.mhc.tn.gov.in/judis 9 the object of the scheme was to extend subsidy for modernisation and also upgradation. The learned Standing Counsel pointed out that the petitioner was granted subsidy for the upgradation components. With respect to the modernisation component, the learned Standing Counsel stated that the application of the petitioner was uploaded at the last minute and therefore since the scheme was to come to an end on 31.03.2021, the applications received for scrutinise till 24.01.2024 alone were taken into consideration and the petitioner's application having been placed for consideration on 25.03.2021 had to be necessarily rejected.
16. Mr.S.Rajesh, learned counsel for the third respondent pointed out that the third respondent had conducted financial appraisal of the firm of the petitioner and affirmed that the petitioner had purchase machineries for a total cost of Rs.1,01,02,875/- under self financing scheme.
17. I have carefully considered the arguments advanced and perused the materials available on records.
18. The petitioner is a partnership firm. The first respondent had introduced a scheme called Integrated Development of Leather https://www.mhc.tn.gov.in/judis 10 Sector (IDLS) Scheme. There were two components in the said scheme. The first component was with respect to employment generation. The petitioner was granted subsidy on that ground. The second component was modernisation, technology and upgradation.
19. The issue in this Writ Petition is with respect to denial of subsidy for modernisation and technology, upgradation. The petitioner had purchased 13 machineries under the self finance category. As a fact, this has been affirmed by the third respondent / State Bank of India. The total cost of the machineries was Rs.1,01,02,875/-. The petitioner was eligible for grant under IDLS scheme to an extent of 30% which would indicate that the petitioner should be granted subsidy of Rs.30,30,862.50. The petitioner had to upload the application form in the platform of the IDLS. The second respondent was the Project Implementation Unit. They had the obligation to scrutinise the application and thereafter, to place the applications before the Steering Committee for approval. The Steering Committee is responsible to grant approval. There were specific time limits for uploading the application. That was till 31.12.2020. The petitioner had uploaded its completed application on 28.12.2020. Thereafter, there was an obligation on the second respondent to depute an Official to visit the factory premises of the petitioner to verify about https://www.mhc.tn.gov.in/judis 11 the purchase of the machineries. This Official had visited the unit of the petitioner only on 18.02.2021. The second respondent had put up the application of the petitioner before the Steering Committee much later, only on 25.03.2021. Again no explanation has been given as to why the second respondent had delayed in putting up the application of the petitioner from 18.02.2021 till 25.03.2021.
20. In the counter affidavit, an explanation had been given about the fresh appointment of employees by the petitioner. But the subsidy with respect to employment generation alone required additional employees to be employed. The petitioner had been granted subsidy under the employment generation component. The application of the petitioner was under modernisation and technology upgradation. This required purchase of new machineries. The petitioner is therefore eligible for the subsidy.
21. The only aspect to be examined is whether the petitioner had actually purchased the machineries. This was verified by the third respondent. The official of the second respondent inspected the uit of the petitioner on 18.02.2021. Thereafter, the application of the petitioner had been put up before the Steering Committee only on 25.03.2021.
https://www.mhc.tn.gov.in/judis 12
22. In the counter affidavit, it had been sated that all applications which had been put up for consideration till 24.03.2021 had been taken into consideration for grant or otherwise of the subsidy. I hold that there is no rationale behind such stand taken by the first respondent. If the last date of the scheme 31.03.2021 then every application received till 31.03.2021 should be considered and everybody, who had applied should be treated equally. Even otherwise, it was the second respondent, which had put up the application of the petitioner before the Steering Committee. Therefore, the delay was on the part of the second respondent and not on the part of the petitioner. The first respondent should have understand that aspect. They cannot deny subsidy because the second respondent had delayed in putting up the application belatedly. The petitioner is otherwise eligible for the subsidy. There is no statement made that the petitioner had not purchased the machineries. There is no statement made that the petitioner is not eligible for the subsidy. The only statement made in the impugned order is that the scheme had come to an end on 31.03.2021. However, it had not been stated that the applications put up for consideration on and from 25.03.2021 have not been considered and would not be considered. https://www.mhc.tn.gov.in/judis 13
23. In Mohinder Singh Gill V. The Chief Election Commissioner, New Delhi, reported in AIR 1978 SC 851 : (1978) 1 SCC 405 wherein it had been held as follows:-
“8. The second equally relevant mater is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out ..... Orders are not like old wine becoming better as they grow older.”
24. Thus, the respondents cannot expand the reasons beyond what had been sated in the impugned order. The impugned order in this case is bereft of reasons. The application of the petitioner should not have been rejected by an one line order. I am not inclined to accept the reason given. There was no rationale behind accepting applications put up for consideration till 24.03.2021 alone and rejecting every other application which had been put up for consideration on and after 25.03.2021 particularly when the last date for scrutinizing application was 31.03.2021.
https://www.mhc.tn.gov.in/judis 14
25. I hold that the respondents have rejected the application of the petitioner for reasons which cannot be sustained and cannot withstand the scrutiny of the Court.
26. The impugned order is set aside. This Writ Petition stands allowed. Consequently, connected Miscellaneous Petition stands closed. No order as to costs.
27. It is declared that the petitioner is entitled for subsidy as claimed. A direction is issued to the first respondent to release the subsidy within a period of three months from the date of receipt of a copy of this order.
21.12.2024 vsg Index: Yes/No Internet: Yes/No Speaking / Non Speaking Order To The Secretary Government of India Ministry of Commerce and Industry Department for Promotion of Industry and Internal Trade (DPIT) Udyog Bhawan, New Delhi – 110 011.
https://www.mhc.tn.gov.in/judis 15 C.V.KARTHIKEYAN, J., vsg Pre-Delivery Order made in W.P.No. 25067 of 2021 And W.M.P.No. 26408 of 2021 21.12.2024 https://www.mhc.tn.gov.in/judis