Judgment

R.M. SAHAI, J.

(1) WAS there any valid justification for the appellants, the Union of India, to withhold the payment of subsidy to the respondents, the small-scale manufacturers of fertiliser, is the main question that arises for consideration in this appeal directed against the judgment and order of the Delhi High court? Two other questions that arise in this connection are if the High court committed any error in exercise of its extraordinary jurisdiction to interfere at the stage of show cause if a report prepared by the Project Development India Limited (in brief PDIL) behind the back of the respondents could be relied for rejecting the specification of standard fertiliser produced by the respondents.

(2) BEFORE adverting to these issues we consider it necessary to mention that the payment of subsidy to manufacturers of fertilisers was introduced in 1982 under a scheme framed by the government of India in pursuance of which every manufacturer was required to give a written undertaking to the President of India. In 1985 government of India issued a Fertiliser (Control) Order under the Essential Commodities Act. Sub- clause (h) of Clause (2 of the Order defines fertiliser to mean,

"ANY substance used or intended to be used as a fertiliser of the soil and/or crop and specified in Part-A of Schedule I and includes a mixture of fertiliser, mixtures of micro-nutrient fertilisers and special mixture of fertilisers."

Sub-clause (q) of the same clause explains prescribed standard of fertiliser as under: " prescribed standard means -

(I) in relation to fertiliser included in Column I of Part A of Schedule I, the standard set out in the corresponding entry in Column 2, subject to the limits of permissible variation as specified in Part B of that Schedule; and (ii) in relation to a mixture of fertilisers, the standard set out in respect of that mixture under sub-clause (1 of Clause 13 by the central government, subject to the limits of permissible variation as specified in Part B of Schedule 1; (iii) in relation to a (mixture of NPK fertilisers, mixture of micro-nutrient fertilisers and combination thereof), the standard set out in respect of that mixture under sub-clause (2 of Clause 13 by the State government, subject to limits of permissible variation as specified in Part B of Schedule 1;"

And standard specified of single super phosphate (SSP) sulphur manufactured by the respondents is described in Schedule I of the Order as under:

"SINGLE Super Phosphate ( 16% P 2O Granulated) (i) Moisture, per cent by weight, maximum (ii) Free phosphoric acid (as P2O5 per cent by weight, maximum (iii) Water soluble phosphates (as P2O5 per Cent by weight, maximum (iv) Particle size Not less than 90 per cent of the material shall pass through 4 mm IS sieve and shall be retained on 1 mm IS sieve. Not more than 5 per cent shall pass through 1 mm IS sieve."

The Control Order further deals in detail with price control, distribution, restriction on manufacturers and sale etc. of fertiliser. Ch. VII deals with enforcement authorities. Paragraph 27 empowers the State government and the central government to appoint inspectors of fertilisers. Paragraph 28 empowers the inspectors to secure compliance of the Order by requiring the wholesaler or retail dealer to give any information in his possession with respect to manufacture, draw samples of any fertiliser, enter upon and search any premises etc. How the sample has to be analysed has been provided by Schedule II of the Order.

(3) THE basic raw material for manufacture of fertiliser is rock phosphate. There are various mines spread all over the country from where these rocks are obtained. They are canalised through State mineral corporations. One of such mines is located in Hirapur in the State of Madhya Pradesh. The government of the State requested the PDIL to undertake laboratory test of these rocks and submit a report for determining disability allowa