SANJAY KISHAN KAUL, J.

( 1 ) PETITIONER No. 1 is a limited company engaged in the business of manufacture of fertilizers and other related activities. The petitioners are aggrieved by the action of the respondents in formulating the retention price for fertilizers manufactured by the petitioner company thereby affecting the subsidy element. The petitioner company claims hostile discrimination and violation of policy, which has resulted in the petitioner company being deprived of subsidy running into crores of rupees.

( 2 ) RESPONDENT No. 1 / Union of India has promulgated The Fertilizer (Control) order, 1957 (hereinafter to be referred to as, "the said Order") exercising powers under The Essential Commodities Act, 1955 (hereinafter to be referred to as, "the said Act" ). The price of urea is controlled under the said Order. Thus, there is a statutory fixation of the price at which the fertilizer can be sold to farmers. The unit manufacturing the fertilizer is granted subsidy in view of the price, which is fixed statutorily to ensure due return to the manufacturing unit. In order to determine the quantum of subsidy, a retention price is fixed for each of the unit and the difference between the retention price and the price at which urea is sold to the farmers is reimbursed to each unit as a subsidy. The retention price takes into consideration various factors like the actual costs of raw material, utilities, conversion cost, capital related charges and marketing cost. The capital related charges are stated to cover interest on borrowed funds, depreciation and a 12% return on the net worth at normative level of capacity utilization. The norms for fixation of this retention price are stated to be broadly prescribed vide Government Resolution dated 01. 11. 1977.

( 3 ) THE Government of India issued a Letter of Intent to M/s. Oswal Agro Mills ltd. on 12. 07. 1989 for grant of industrial licence for setting up a gas-based fertilizer plant at Shahjahanpur in Uttar Pradesh. This Letter of Intent was subsequently transferred to M/s. Bindal Agro Chemicals Ltd. , which changed its name to M/s. Oswal Chemicals and Fertilizers Ltd. , petitioner No. 1 herein. The industrial licence prescribed a number of conditions and additional conditions. The relevant additional conditions are reproduced hereunder:" (v) The promoters share capital contribution in the new company shall not be less than 10% of the project cost; (vi) The debt equity ratio for this project will be 2. 5:1 as agreed to by the company; (xv) The subsidy payable to the unit would be subject to the capital cost of Rs. 695 crores as proposed and the further increase in the subsidy will be agreed to. However, the new Government policy regarding the normative retention price for the new gas based plants as and when it is notified would be applicable to this Unit also. "

( 4 ) THE project was undertaken by the petitioner company, but there were delays in the project. The petitioner company alleges that the reasons for delay were solely attributable to the Government, which included delay in - grant of deemed export benefits, grant of special imprest licence, issue of customs notification for import of duty exempt material; allocation of foreign exchange; permissions to the petitioner company to open Letters of Credit; and issue of bulk import licence. Representations are stated to have been made by the petitioner company on 26. 07. 1991 and 18. 05. 1992 bringing forth these issues.

( 5 ) THE petitioner company received a communication dated 07. 01. 1993 from respondent No. 1 / UOI in response to the request of the petitioner company dated 18. 05. 1992 for revision in capital cost, which was original fixed at rs. 695 crores. The said communications are as under:"may 18, 1992 revision in Capital Cost - Shahjahanpur fertilizer Project i would like to thank you for the kind courtesy extended to me when I called on you on 14. 05. 1992 to discuss the matter of revision of capital cost in res

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