Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Mad) 4732

IN THE HIGH COURT OF JUDICATURE AT MADRAS
D.BHARATHA CHAKRAVARTHY, J.
Stanes Amalgamated Estates Limited (Kotada Estate) - Appellant
Versus
Tea Board of India - Respondent
W.P.Nos.12963, 12968, 12966, 12979, 12985, 12981, 12988, 13331, 13350, 13345, 13341, 16406, 16427, 16424, 16618, 16693, 16692, 16691, 16661, 18440, 18453, 18450, 18446, 18442, 23403, 23512, 23509 and 23416 of 2024 and W.M.P.Nos.25712 and 25580 of 2024
Decided on : 02-06-2025

Advocates:
Advocate Appeared:
For the Appellant : Mr.Srinath Sridevan, Senior Counsel for Mr.Roshan Balasubramanian
For the Respondent: Mr.AR.L.Sundaresan, Additional Solicitor General of India, Asstd. by Mr.Prasad Vijayakumar, Senior Panel Counsel

State bodies must adhere to principles of transparency and equality when administering subsidies; arbitrary denial of financial assistance for compliance with scheme terms violates constitutional rights.

Headnote:(A) Tea Act, 1953 - General Financial Rules, 2017 - Claim for subsidy under Orthodox Production Subsidy Scheme - The Tea Board rejected claims, stating non-availability of budget allocation as the scheme ended. The court ruled the Board’s arbitrary criteria for fund distribution violated Article 14 of the Constitution. (Paras 2-30)

(B) Promissory Estoppel - Doctrine can be invoked when parties acted on promises made by the State, requiring fulfillment of commitments made under the subsidy scheme. (Paras 14-16)

(C) Budgetary Limitations - Lack of funds cannot be a defense for the State once the scheme was operational and commitments made. (Paras 26-30)

Facts of the case:
The petitioners sought subsidies for tea production under a scheme operational from 2017 to 2020; despite timely applications and inspections being conducted, their claims were rejected due to budgetary constraints. (Paras 2-10)

Findings of Court:
The court found the Tea Board had not followed a consistent and transparent process in denying subsidies, which resulted in treating equals unequally. The claims were valid, and the subsidies must be disbursed. (Paras 20-30)

Issues: Whether the petitioners were entitled to subsidies under the scheme when claims were rejected based on lack of budgetary allocation and criteria for distribution. (Paras 20-21)

Ratio Decidendi: The court ruled that the Tea Board acted arbitrarily, disregarding equitable treatment and failing to substantiate its budgetary claims; thus, it mandated the payment of subsidies to the petitioners. (Paras 20-30)

Result: Writ Petitions allowed. Orders denying subsidy claims were quashed; payments to be made within three months.

Table of Content
1. subsidy claim conditions and status (Para 2 , 3 , 4 , 5)
2. implementation details and application requirements (Para 6 , 8 , 9)
3. arguments on entitlement and discrimination in subsidy distribution (Para 10 , 11)
4. doctrine of promissory estoppel (Para 14 , 19)
5. criteria for subsidy distribution and arbitrariness (Para 20 , 21 , 22 , 23)
6. order for payment of subsidies (Para 30)

ORDER :

D.BHARATHA CHAKRAVARTHY, J.

All these Writ Petitions address similar grievances and are therefore taken up together and disposed of by this common order.

2. The petitioners grow and manufacture tea. By the separate orders challenged in the individual Writ Petitions, the first respondent, namely the Tea Board of India, rejected the petitioners' claim of subsidy amount under the Orthodox Production Subsidy Scheme for the years 2018, 2019, and 2020. The impugned orders state that the scheme itself clearly mentions that mere submission of applications does not guarantee financial assistance; eligibility depends on full compliance with the scheme's guidelines and the availability of financial resources. The scheme ended on 31.03.2021 and was no longer in existence, along with the budgetary allocations. Therefore, in the absence of budgetary allocation, as per the GENERAL FINANCIAL RULES , 2017, specifically Rule 26, the Tea Board of India could not make the payment of subsidy as claimed by the petitioners, and hence, their claim was rejected. Challenging such individual impugned orders and consequently seeking a mandamus directing the respondents to release the subsidy amount, these Writ Petitions have been filed.

3. The following table depicts the writ petition number, the name of the petitioner industry, the subsidy amount they claimed under the orthodox tea planting and replanting schemes, as well as the status of inspection:

S.No	WP No.	Petitioner	Subsidy payable	Status of scheme process
1.	WP 24303/24 Neelamalai	Agro Industries Ltd	Rs.1,37,13,555 (OTP)	Inspections complete for Rs.73,99,689/- vide Inspxn Reports dt.01.01.2020.
				Inspections pending for Rs.63,13,866/-, vide Applications dt. 25.01.2020, 24.07.2020 & 28.01.2021.
			Rs.20,42,364 (Replanting)	Inspection complete for Rs.12,25,358/- vide Inspxt Report dt. 27.03.2019.
				Inspection pending for Rs.8,16,906/- vide Application dt. 06.04.2017, NOC dt. 20.06.2017 & Completion Report dt. 24.01.2019.
2.	WP 23509/24	Parry Agro Industries Ltd. (Iyerpadi Factory)	Rs.13,71,618 (OTP)	Inspections complete for Rs.13,71,618/-, vide Inspxn Reports dt. 28.09.2021.
3.	WP 12979/24 Maris	Agro Products Pvt. Ltd.	Rs.93,81,855 (OTP)	Inspections complete for Rs.68,29,887/-, vide Inspxn Reports dt. 07.02.2020 & 24.11.2020.
				Inspections pending for Rs.25,51,968/-, vide Applications dt. 23.07.2019 & 26.01.2021.
4.	WP 12981/24 Nilgiri	Agro Agencies Pvt. Ltd.	Rs.56,23,092/- (OTP)	Inspections complete for Rs.9,61,473/-, vide Inspxn Report dt. 31.12.2020.
				Inspections pending for Rs.46,61,619/- vide Applications dt. 19.01.2019, 25.07.2019, 22.01.2020, 28.07.2020 & 22.01.2021.
5.	WP 16424/24 Matheson	Bosanquet Enterprises Pvt. Ltd. (Coonoor Tea Estate Factory)	Rs.1,13,18,193/-	Inspections complete for Rs.53,99,382/- vide Inspxn Reports dt. 23.12.2019 & 30.12.2019.
				Inspections pending for Rs.59,18,811/- vide Applications dt. 30.01.2020, 29.07.2020 & 30.01.2021.
6.	WP 16427/24	Glenmorgan Tea Estate Co. Ltd.	Rs.26,52,957/- (OTP)	Inspections pending for Rs.26,52,956/- vide Applications dt. 25.01.2019, 22.01.2020, 18.08.2020 & 10.02.2021.
7.	WP 12985/24	Southern Tree Farms Ltd.	Rs.33,77,208/- (OTP)	Inspections complete for Rs.20,10,654/- vide Inspxn Reports dt. 14.02.2020 & 26.11.2020.
				Inspections pending for Rs.13,66,554/- vide Application dt. 28.01.2021.
8.	WP 12988/24	The Nonsuch Tea Estates Ltd.	Rs.22,15,962/- (OTP)	Inspections pending for Rs.22,15,962/- vide. Applications dt. 30.07.2018, 28.02.2019, 30.07.2019, 30.01.2020 & 29.07.2020.
9.	WP 13331/24	Havukal Tea & Produce Co. Pvt. Ltd.	Rs.1,89,68,244/- (OTP)	Inspections complete for Rs.1,89,68,244/- vide Inspxn Repo

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2025 Supreme(Mad) 4732

State bodies must adhere to principles of transparency and equality when administering subsidies; arbitrary denial of financial assistance for compliance with scheme terms violates constitutional rights.

Cases Referred (6)

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