Beneficiary Cannot Be Denied Subsidy Due to Bank's Procedural Delay in Filing Claim: Gauhati High Court - 2025-10-11

Gauhati High Court Upholds Entrepreneur's Subsidy Right, Rules Against Penalizing Beneficiary for Bank's Delay

Guwahati: In a significant ruling reinforcing the rights of beneficiaries under government welfare schemes, the Gauhati High Court has held that an individual cannot be deprived of a subsidy due to procedural delays on the part of the financing bank. Justice Devashis Baruah, delivering the judgment, directed the National Bank for Agriculture and Rural Development (NABARD) and the State Bank of India (SBI) to release the full subsidy amount to an entrepreneur who had successfully completed his project under a central government scheme.

The court ordered the immediate release of the advance subsidy of ₹16,03,800, which was being held by SBI, and directed the authorities to disburse the final subsidy amount within four months.

Background of the Case

The case was brought by Kamlesh Kumar Surana, who, under the Union Government's "Integrated Scheme of Agricultural Marketing" (ISAM), sought to build a rural godown in Darrang, Assam. He secured a term loan of ₹80 lakh from the State Bank of India (SBI) for the project, which had a total cost of ₹1.2 crore. The loan was sanctioned on November 11, 2016, and the first installment was disbursed on December 29, 2016.

Under the ISAM guidelines, the financing bank (SBI) was required to apply for an advance subsidy from NABARD on behalf of the beneficiary. While the scheme's operational guidelines stipulated a 90-day window for this application, a subsequent circular from NABARD set a final cut-off date of January 31, 2017, for all such claims.

SBI submitted Mr. Surana's claim on March 28, 2017. Despite the application being filed after the deadline, NABARD "inadvertently" released the advance subsidy of ₹16,03,800 on October 25, 2017. However, a High Power Committee later deemed the claim ineligible due to the delayed submission and initiated steps to recall the funds, prompting Mr. Surana to file a writ petition.

Arguments from Both Sides

Petitioner's Stance: Mr. Surana, represented by Advocate S. Sancheti, argued that he had fulfilled all his obligations by taking the loan, completing the godown construction, and making it commercially operational. He contended that the delay was solely attributable to the Respondent Bank (SBI) and that he, as the beneficiary, should not be penalized for the bank's procedural lapse. He further argued that the circular setting a cut-off date could not override the scheme's main operational guidelines, which were designed to protect beneficiaries from such delays.

Respondents' Stance: NABARD and the Union Government, represented by Senior Advocate Sishir Dutta and CGC C. K. S. Baruah respectively, maintained that the claim was invalid as it was submitted after the stipulated cut-off date of January 31, 2017. They argued that the government reserved the right to modify the terms of the scheme and that the circular was a binding directive. The initial release of the advance subsidy was described as an error, which they were rightfully trying to correct by recalling the amount.

Interestingly, SBI, in its affidavit, admitted to submitting the claim within the 90-day period mentioned in the original guidelines and confirmed that Mr. Surana had completed the project successfully and was entitled to the subsidy. An additional affidavit confirmed that Mr. Surana had fully repaid the entire loan amount of ₹80 lakh by March 2024.

Court's Analysis and Key Findings

Justice Devashis Baruah systematically analyzed the objectives and clauses of the ISAM scheme, noting its purpose was to promote agricultural infrastructure and support farmers. The court established three key points for determination: 1. Whether the petitioner was entitled to the subsidy under the scheme. 2. Whether he could be deprived of it due to the bank's delay. 3. What relief he was entitled to.

Answering the first point, the court found that Mr. Surana was an eligible beneficiary who had met all criteria outlined in the ISAM's operational guidelines.

On the second and most crucial point, the court observed that the operational guidelines themselves contained a mechanism to address delays by financial institutions. Clause 3.10.1 of the guidelines specified that the State Level Banker’s Committee should review such delays to ensure they do not recur. The court interpreted this to mean that the scheme's framework intended to hold the financial institution accountable, not the beneficiary.

In a pivotal observation, the court stated:

"This makes it very clear that in the circumstance, the Financial Institutions have delayed, the beneficiary of the subsidy should not be penalized on account of lapses on the part of the Financial Institutions."

The court also noted that the petitioner was never officially notified of the revised cut-off date. It held that a right promised under a scheme, based on which the petitioner had "changed and altered his position," could not be taken away in such a manner.

Final Judgment and Directions

The Gauhati High Court ruled decisively in favor of the petitioner. Concluding that Mr. Surana was fully entitled to the subsidy, the court disposed of the writ petition with the following directions:

• Immediate Release: SBI must release the advance subsidy of ₹16,03,800, currently held in the petitioner's account, within 15 days.
• Final Subsidy Disbursal: The authorities, including NABARD and SBI, must ensure the final subsidy amount is disbursed to the petitioner within four months.
• Government Compliance: The Union of India was directed to do the needful to ensure the petitioner receives the full subsidy amount he is entitled to.

The court vacated the interim order that had prevented the recall of the funds, effectively solidifying the petitioner's right to the subsidy. This judgment serves as a crucial precedent, safeguarding the interests of citizens participating in government schemes against administrative and procedural errors by intermediary institutions.