Punjab-Haryana High Court
Print Well Unit-Ii vs State Of Punjab And Others on 30 June, 2014
Author: Ritu Bahri
Bench: Ritu Bahri
C.W.P. No. 10093 of 2010 [ 1 ]
IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH
C.W.P. No. 10093 of 2010
Date of Decision: 30.6.2014
Print Well Unit-II, Quality Offset Printers, Amritsar
through its partner S.Ravinder Singh ...............Petitioner
Versus
State of Punjab and others .................. Respondents
Coram: Hon'ble Ms. Justice Ritu Bahri
1.To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
Present: Mr. S.S.Bahl, Advocate
for the petitioner.
Mr. Rupam Aggarwal, DAG, Punjab.
...
RITU BAHRI, J.
This writ petition is for quashing the order dated 27.1.2005 (Annexure P6) and order dated 22.7.2005 (Annexure P8) vide which the claim of the petitioner for investment incentive under the Industrial Policy 1996 has been rejected. The petitioner is also seeking issuance of a writ of mandamus directing the respondents to consider his case for the grant of investment incentive as per Industrial Policy 1996 (Annexure P4).
Kaur Rupinder2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh
C.W.P. No. 10093 of 2010 [ 2 ] The petitioner is a partnership firm with two partners namely, Gurinder Singh son of Gurbax Singh and Ravinder Singh son of Gurbax Singh. The said partnership firm was registered with the Registrar of Firms Punjab in the year 2001-2002. The firm was established to carry on the business of printing of all types of books, papers, diaries etc. under the name and style of M/s Printwell lUnit No.II, 146, Focal Point, 1st Floor, Amritsar. After the registration of the above said firm, permission to establish the Unit No.2 on plot No.146, Focal Point, Amritsar was granted by respondent No.3 (General Manager, District Industrial Centre, Amritsar) on 8.1.2002 (Annexure P2). A Certificate of Importer and Exporter Code (IEC) was given on 22.1.2002 (Annexure P3). The Industrial Policy 1996 (Annexure P4) was prevalent at that time and investment incentives were granted to the industrial units that came into production under the said policy. As per Clause 2.9 of the said policy the new unit means a unit which came into commercial production on or after 1.4.1996.
The petitioner firm after making an investment of `12750839.50 made a claim of investment incentive to the tune of `3825251.85 when the firm went into production on 3.1.2003. A representation in this regard was made on 26.6.2003 to respondent No.3 (Annexure P5). The Director, Department of Industries and Commerce-respondent No.2 Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 3 ] vide letter dated 27.1.2005 (Annexure P6) informed respondent No.3 that the Government had stopped considering the cases of investment incentives of those units which went into production after 4.6.2002. Since the petitioner had gone into production on 24.10.2002, the claim was rejected.
Vide letter dated 2.5.2005 (Annexure P7) petitioner firm again wrote to the Deputy Director- respondent No.2 that they had installed major machines prior to 4.6.2002, therefore again a request for sanction of investment incentive as per Industrial Policy 1996 was made. Even though they had gone into production on 3.6.2002 their case for sanction of investment incentive as per Industrial Policy 1996 was rejected vide order dated 22.7.2005 (Annexure P8).
The respondents made a new Industrial Policy 2003 which was made applicable to those Units which came into production on or after 1.4.2003.
The petitioner-Unit came into production on 3.1.2003. As per the old Industrial Policy 1996 those industrial units which came into production on or before 4.6.2002 were eligible. The case of the petitioner is that the industries which came into production after 4.6.2002 and before 1.4.2003 have been left out from any incentives which is arbitrary, erroneous and violative of Articles 14 and Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 4 ] 16 of the Constitution.
On notice, written statement has been filed by respondents No. 1 to 3. The stand taken in the written statement is that the industrial unit of the petitioner came into production on 3.1.2003. However, the Punjab Government as per notification issued by the Punjab Government dated 3.6.2002 (Annexure R1) kept the provisions of grant of subsidy in abeyance. The claim for subsidy was made by the petitioner on 26.6.2003 whereas it went into production on 3.1.2003, therefore, the Unit was not eligible for grant of subsidy. In the written statement it is not being denied that the new Industrial Policy 2003 was applicable to only those units which came into production on or after 1.4.2003.
The State of Punjab with an object of giving encouragement to Industrialists to set up industries in Punjab framed an Industrial Policy in the year 1996. Certain incentives were granted to the Industrial Units who had established the industries after investing and after fulfilling certain conditions of the policy dated 20.3.1996 (Annexure P4). Pursuant to this policy of 1996 (Annexure P4) petitioner sought necessary permission to establish the Unit No.2 on Plot No. 146, Focal Point, Amritsar. Permission was granted by respondent No.3 vide letter dated 8.1.2002 (Annexure P2) and Government of India, Ministry of Commerce issued a Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 5 ] Certificate of Importer-Exporter Code (IEC) on 22.1.2002 (Annexure P3). After making an investment of Rs.12750839.50 he made a claim for investment incentive to the tune of Rs.3825251.85. The Unit went into commercial production on 3.1.2003. As per the facts above with effect from the date of permission i.e. 8.1.2002 till the date of production i.e. 3.1.2003 the petitioner had made the entire investment. However, his claim for grant of investment incentive under the Industrial Policy 1996 was rejected by the Department of Industries and Commerce vide letter dated 27.1.2005 (Annexure P6) and the reason given is as under:-
"In this regard, you are hereby being informed that the Government has stopped considering the Investment incentive cases of those units that has come into production after 4.6.2002. The date of coming into production of this unit is 24.10.2002. Therefore, the claim case of this unit is rejected."
Subsequently, on a representation made by the petitioner, another order dated 22.7.2005 (Annexure P8) was passed. In this order the date of commercial production was taken to be 3.1.2003. Pursuant to the Policy dated 20.3.1996 (AnnexureP4) the petitioner took the following steps to set up its unit:-
"a) That land was taken on lease from the sister Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 6 ] concern i.e. M/s Printwell on 2.4.2002 for more than 10 years to fulfil the condition of rule 5.2 of the policy.
b) That an amount of Rs.7,27,105.00 was incurred on the construction of building.
c)That we have purchased/installed plant and machinery worth Rs.79,12,031.00 prior to 4.6.2002 against the project cost of Rs.98.50 lacs. This also shows that more than half of the plant and machinery required for the unit has been purchased/installed.
d) That against the sanctioned amount of term
loan of Rs.83.00 lacs, we have availed
Rs.76,30,873.00 upto 14.3.2002.
The above facts clarify that the petitioner had taken all the effective steps to set up the unit as required as per Rule 2.9 of the Industrial Policy 1996. The machinery was purchased and installed. It was only due to some technical problems that good quality of end products could not be produced, therefore, after overcoming the hurdles the first batch of commercial production was despatched on 3.1.2003. The necessary conditions with respect to Rule 2.9 of the Industrial Policy 1996 are as under:-
"2.9 'Effective Steps' would mean taking of any one of the following steps by an industrial unit: Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh
C.W.P. No. 10093 of 2010 [ 7 ]
i) that more than half of the factory building for the project has been constructed.
ii) That a firm order has been placed for more than half of the plant and machinery required for the industrial unit.
iii)That 60% or more of the capital issued for the industrial unit has been paid up.
iv)That Term Loan has either been sanctioned for its project, or an applicatin for the same is under consideration of th All India/State Level financial Institutions/Banks."
And commercial production as per Rule 2.10 is described as under:-
"2.10 'Commercial Production' means commencement of commercial sale of product for which the unit has been set up."
A perusal of the steps taken by the petitioner company after it was registered on 8.1.2002 as detailed above show that all the conditions as per Clause 2.9 i.e. 'Effective Steps' pursuant to the Industrial Policy 1996 were taken by the petitioner unit which includes taking the land on lease, investment made on construction of building, installing of plant and machinery and sanction of term loan. The situation went against the petitioner when the Punjab Government issued a notification on 3.6.2002 (Annexure R1) Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 8 ] whereby the Punjab Government decided to keep in abeyance the provisions in respect of capital subsidy and interest subsidy with immediate effect. As per the notification (Annexure R1) the provisions with respect to capital subsidy and interest subsidy were kept in abeyance as under:-
"In partial modification of Punjab Industrial In Code under the Industrial Policy, 1996, notified vide No. 5IB/4176, dated 1st June, 1996 (Amended upto 26-4-2000) Incentives for the development of Electronic Industry notified vide No. 15/43/96/5IB/5951 dated 13th August, 1996, additional incentive to the defined Agro Industries notified vide No. 15/58/98/5IB 5405, dated 11th August 1998 and "special package" of Including for the units to be set up in and around Rural Focal points, notified vide No. 15/51/98/5IB/4091 dated 17th June 1998, the Govt. of Punjab is pleased to keep in abeyance the provisions in respect of Capital Subsidy and Interest Subsidy, with immediate effect."
As is clear from the contents of the notification the incentives for development of Electronic Industry, additional incentives to Agro Industries and special package to Industrial Units in and around Industrial Focal Points were to Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 9 ] be kept in abeyance and they were not to be granted capital subsidy. The petitioner's unit i.e. 146, Focal Point, Amritsar does not fall in either of the three categories which were made not eligible for grant of capital subsidy and interest subsidy. The petitioner unit has been established to carry on the business of printing of all types of books, papers, diaries etc. As per the Certificate of Importer-Exporter dated 22.1.2002 (Annexure P3) since the industry of the petitioner does not fall in either of the categories for which the capital subsidy has been kept in abeyance the respondents were not justified in rejecting the case of the petitioner for grant of subsidy as per the notification (Annnexure R1) dated 3.6.2002. On this ground alone, the order dated 27.1.2005 (Annexure P6) and order dated 22.7.2005 (Annexure P8) are liable to be set aside.
It is not the case of the respondents that the Industrial Policy, 1996 (Annexure P4) was kept in abeyance with respect to all types of Industries. Moreover, the State of Punjab vide notification dated 26.3.2003 (Annexure P-13) formulated an Industrial Policy to facilitate the development of industry. As per Clause 12.3 the said Policy was made applicable with effect from 1.4.2003. The petitioner unit had set up a second Industrial Unit when the Industrial Policy 1996 was prevalent. It had got its permission and Registration Certificate (Annexures P2 and P3) pursuant to Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 10 ] the Industrial Policy, 1996. The petitioner had made all the necessary investment prior to 1.4.2003. Even the application for grant of subsidy under the Industrial Policy was made vide Annexure P5 dated 26.6.2003. The claim is being rejected on the ground that the new policy (Annexure P3) was made applicable from 1.4.2003 and the petitioner's case had to be kept in abeyance as per the notification dated 3.6.2002. Once the notification (Annexure R1) is not applicable as the petitioner industry is neither an Electronics Industry nor Agro Food Industry, not it is an Industry set up in and around Rural Focal Points, the decision of the Government has only to be examined whether after making all the investment as per Industrial Policy 1996 the claim of the petitioner could be rejected on the ground that a new Industrial Policy had come on 26.3.2003 (Annexure P13).
At this stage, reference can be made to the judgment passed by the Supreme Court in M/s Jai Beverages Pvt. Ltd. v. State of Jammu & Kashmir and others 2006 (5) SCC 772. In this case, M/s Jai Beverages Limited had set up a unit for manufacturing of cold drinks. This unit was declared "Prestigious Unit" by the Government. In this case, the Government of Jammu & Kashmir had taken a conscious decision to grant the package of incentives to the Industrial Units being set up by M/s Print Well (petitioner) provided it went into commercial production by the end of March 2000. Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh
C.W.P. No. 10093 of 2010 [ 11 ] The Unit was to make the necessary investment of Rs.25 crores by the end of March 2000. the Unit made the necessary investment of Rs.27 crores upto September 30,2000. These investments were made on the conscious decisions taken by the Government incorporated in the Memorandum of Understanding. The Supreme Court held that the incentive package could not be denied by the State Government merely on the ground that the investment was not made upto March 2000 but was made by September 2000. The Supreme Court upheld the claim made by the unit that it was entitled to the package of benefits promised under the New Industrial policy of the State of Jammu & Kashmir read with various notifications pursuant thereto. In paragraph 36 the Supreme Court observed as under:-
"36. We, therefore, find no substance in the objection of learned senior counsel appearing on behalf of the State of Jammu and Kashmir that the appellant had not fulfilled the requirement of making the investment of `25 crores or more by the date it went into commercial production. As we have noticed the Government itself was of the view that within the framework of the policy formulated by it, it was permissible to prescribe a time schedule within which the investment of `25 crores or more was to be made. Accordingly it Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh C.W.P. No. 10093 of 2010 [ 12 ] required the appellant to invest a sum of `25 crores or more before September 30,2000 which the appellant did. We have also not been shown anything in the Policy or in the Notifications issued pursuant thereto, prescribing any date for the capital investment of `25 crores or that within the framework of the policy, the State Government was not entitled to prescribe a date by which the investment of `25 crores or more should be made."
In the present case, pursuant to the Industrial policy of 1996 (Annexure P4) as per Clause 2.9 the petitioner after registration on 8.1.2003 (Annexure P2) had made all the necessary investments with regard to taking the land on lease, construction of building, installing of machinery and taking of loan. Hence, the claim for grant of incentives cannot be declined on a technical ground that the unit started its commercial production on 3.1.2002. For the purpose of claiming the incentives under the 1996 Industrial Policy, the petitioner unit had made all the investments before it went into commercial production. The petitioner has stated in Annexure P9 in a review appeal that after making the necessary investment production has started prior to 4.6.2002. It was due to some technical problems that good quality of end products could not be produced. Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh
C.W.P. No. 10093 of 2010 [ 13 ] Therefore, after overcoming the hurdles the first batch of commercial production was despatched on 3.1.2003. Moreover, the notification dated 3.6.2002 (Annexure R1) cannot be applied to reject the case of the petitioner as discussed in detail above.
Following the law laid down by the Supreme Court in M/s Jai Beverages' case (supra), this petition is being allowed. The order dated 27.1.2005 (Annexure P6) and order dated 22.7.2005 (Annexure P8) are set aside and a direction is given to the respondents to consider the case for grant of industrial incentive to the petitioner as per Industrial Policy 1996 in accordance with law within a period of four months from the date of receipt of a certified copy of this order.
( RITU BAHRI ) JUDGE 30.6.2014 rupi Kaur Rupinder 2014.07.02 12:03 I attest to the accuracy and integrity of this document Chandigarh