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2003(8) Supreme 588
SUPREME COURT OF INDIA
(From Allahabad High Court)
P. Venkatarama Reddi and AR. Lakshmanan, JJ.
M/s Sun Beverages (P) Ltd. -Appellant
versus
The State of Uttar Pradesh & Ors. -Respondents
Civil Appeal No. 4617 of 1996
Decided on 28-11-2003
Counsel for the Parties :
For the Appellant : Kailash Vasdev. Senior Advocate, Sanjay K. Shandilya, Mrs. V.D. Khanna, Advocates.
For the Respondents : R.K. Singh and Ashok K. Srivastava, Advocates.
Held : The appellant was registered as a DGTD Unit on 21-10-1983 and the said registration continued. Thereafter, in the year 1985, there have been some changes in the definition of the Small Scale Industries by the Development Commissioner, Government of India by which the definition of a Small Scale Industries Unit has been amended and the limit of investment in the plant and machineries has been extended from Rs. 20 lacs to Rs. 35 lacs. It has also been made clear that while computing the value of the machineries, only the value of those machineries will be considered which are directly involved in the production, while the other accessories and other machineries which are used in the manufacturing process but are not directly involved in the process of manufacture were not to be included for considering the unit as Small Scale Industry unit. In this view of the matter, even though the investment of the appellant in the machineries was more than Rs. 35 lacs, but the machineries which are utilised for manufacturing was less than Rs. 35 lacs i.e. Rs. 32,15,861/-, hence the appellant was compelled to get it registered as Small Scale Industry unit, instead of a DGTD Unit. Thereafter, the appellant applied for registration as Small Scale Industry Unit and the requisite registration certificate was granted to the appellant by the General Manager, District Industries Centre, Agra, registering the appellant as a Small Scale Industry Unit. It is also pertinent to notice that the respondents without issuing any show cause notice to the appellant as to why the said recovery be not made against the appellant and without affording any opportunity to show cause, a call notice dated 15-9-1987 has been issued to the appellant for recovering that amount and again followed by a recovery certificate from the office of the Commissioner and Director of Industries for recovering the sum of Rs. 18,72,821.92 as the arrears of land revenue. In our opinion, the entire recovery proceedings initiated against the appellant by the respondents as arrears of land revenue is absolutely illegal and in gross violation of the principles of natural justice. (Paras 19 & 20)
We have carefully perused the entire Scheme which goes to show that the cash subsidy would be granted to the unit which is a Pioneer Unit i.e. having an investment of more than Rs. 1 crore and which has been established after 1-10-1982 and at the time of grant of cash subsidy, the said Unit should be registered as DGTD Unit. Nowhere it provides that the said industry should remain as a DGTD Unit for a period of five years as mentioned in clause 4 of the call notice. A perusal of the scheme further goes to show that it has been provided in the scheme that the production should not be stopped for a period of five years but it nowhere provides that the unit should remain as a DGTD Unit for a period of five years. In fact, the appellant had been compelled to get the registration under the Small Scale Industries Unit on account of the change in the definition of the Small Scale Industries Unit by the Central Government and not on account of any inaction of the appellant. Hence, if on account of the change in the definition of the Small Scale Industries Unit, the appellant was de-recognised as DGTD Unit then the appellant could not be denied the benefit of cash subsidy. (Para 23)
A perusal of the pleadings would reveal that there is no allegation regarding playing of fraud or mis-representation in obtaining the sanction/eligibility. The argument of the learned counsel for the respondents that the appellant on his own freewill applied for de-registration vide letter dated 12-6-1987 and that the appellants were no more entitled to be registered under DGTD and since the constitution of the Company had undergone change and under the changed conditions the respondents were entitled to recover the subsidy given to the appellant cannot at all be countenanced. (Para 25)
JUDGMENT
Dr. AR. Lakshmanan, J.-The present appeal was filed against the judgment dated 19-5-1995 pronounced by the Division Bench of the High Court of Judicature at Allahabad by which the writ petition of the appellant bearing No. 1607 of 1988 was dismissed. The writ petition was filed by the appellant to issue a writ prohibiting the respondents from recovering Rs. 18,72,821.92 constituting cash subsidy plus interest thereon from the appellant-Company as arrears of land revenue after quashing notice dated 15-9-1987 (Annexure 8 to the petition) and recovery certificate dated 31-10-1987 (Annexure 11 to the petition).
2. The sequence of facts and events leading to the filing of this civil appeal are as follows :-
By an order dated 30-9-1982, the Government of Uttar Pradesh formulated a scheme known as Capital Grant Scheme (hereinafter referred to as Scheme ) for the grant of subsidies to various industrial units for giving as impetus to the industrialisation of the backward areas i.e. zero industrial areas of the State.
In the said Scheme, Pioneer Unit has been defined as :
"Such industrial units to be set up during the period from 1-10-1982 to 31-3-1985 firstly in any part of the Tehsil or at Tehsil level where no heavy industry is established prior to 1-10-1982 and that those capital investment is more than Rs. one crore shall be treated as a Pioneer Unit."
3. In view of the aforesaid incentive Scheme, Shri Rajan Sethi (since deceased) and his wife decided to incorporate a Company for bottling of aerated waters in the backward area of the District Agra. The Company was incorporated under the Companies Act on 1-10-1983 and it had entered into a franchise agreement with M/s Campa Beverages Private Limited on 6-5-1983 for bottling various brands of aerated waters. For the purpose of becoming entitled to the cash subsidy under the aforesaid Scheme, the appellant purchased land and building and made an investment of Rs. 17,11,845.95. The Company made further investment on installing plant and machinery in the unit. The total investment made by the appellant in establishing this unit amounted to Rs. 1,07,78,368.34 with the location of the industrial unit in a zero industrial area. According to the appellant, because of the total investments made, the appellant became entitled to cash subsidy under the aforesaid Scheme as a pioneer unit.
4. The aforesaid Scheme prescribed the following two conditions for grant of cash subsidy to industrial units -
(i) That it will be a Pioneer Unit within the terms of the Scheme.
(ii) That it is registered with the Director General of Technical Development.
5. Under the Notification issued by the Government of India, in the year 1983, a Small Scale Industry has been defined under the Industries Development Regulation Act, 1948 as one which had made an investment of up to Rs. 20 lacs in plant and machinery alone apart from other assets. As a Small Scale Industry, the appellant was liable to be registered with the Government and as a Medium Scale Industry, the appellant was entitled to be registered with the Director General of Technical Development (in short the DGTD ), Government of India. The investment of the appellant in the plant and machinery exceeded Rs. 20 lacs. The DGTD was obliged to register the appellant industry as a Medium Scale Industry since the investment in the plant and machinery exceeded Rs. 20 lacs. The appellant accordingly applied to the Director General of Industries for registration and the appellant was registered on 28-11-1984 with the DGTD as a Medium Scale Industry for the manufacture of 43.2 million bottles of soft drinks per annum. The appellant applied for cash subsidy to the Government of U.P. as it fulfilled both the above stated conditions under the Scheme. The Government of U.P., 31-3-1986, sanctioned a subsidy of Rs. 15 lacs to the appellant and this subsidy was paid to the appellant in two instalments. An agreement was entered in
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