JUDGMENT
B.J. Shethna, J.
Whether the Rajasthan Financial Corporation (for short ‘the RFC’) being a disbursing authority is entitled to charge interest on a subsidy amount for the period from payment of subsidy amount to the petitioner till the receipt of the same amount by it from the State Government?
1. This important and identical question of law is arising in all these petitions, therefore, all these petitions are disposed of by common order.
2. Learned Counsel Mr. Vineet Kothari appearing on behalf of all the petitioners in these petitions vehemently submitted that in absence of any provisions either under the Act or Rules, the respondent-RFC is not entitled to charge interest on a subsidy amount disbursed by it to the petitioners. He also submitted that mere undertaking given by the petitioners will not be sufficient for the respondent-RFC to claim interest on a subsidy amount when there Is no such provisions under the law. In support of his submission, learned Counsel for the petitioner Mr. Vineet Kothari relied upon a judgment delivered by Constitutional Bench of the Hon’ble Supreme Court in case of V.V.S. Sugars v. Government of Andhra Pradesh and Ors. reported in 1999 (114) S.T.C. 47.
3. However, learned Counsel Mr. N.M. Lodha, Mr. Sangeet Lodha, Mr. R.P. Dave and Mr. S.G. Ojha appearing in different matters on behalf of the respondent-RFC vehemently submitted that the respondent-RFC was entitled to charge interest on a subsidy amount which was released by it in favour of the petitioners on an undertaking that till the amount is reimbursed from the State Government, the amount of interest will be borne by the petitioners and the same will be charged by the RFC. It is also submitted by the learned Counsel for the respondent-RFC that this being a contractual matter, this Court should not entertain these petitions in its extra-ordinary jurisdiction under Art.226 of the Constitution of India and it should relegate the petitioners to file a civil suit before competent civil court. In support of their submission, reliance has been placed on three judgments of the Hon’ble Supreme Court reported in (1) , (2) and (3) 1994 (2) S.C.C. (Suppl.) 108.
4. It is true that all the petitioners gave a similar undertaking to the respondent-RFC in all these cases to pay interest on an amount which was released by the respondent-RFC by way of subsidy and on their undertaking, the respondent-RFC released the amount which was later on reimbursed to it by the State Government. It is also true that it is the contract between the parties and ordinarily, this Court would to interfere in extra ordinary jurisdiction under Article 226 of the Constitution of India where the petitioners have alternative remedy of civil suit before competent civil courts.
5. But, in case of V.V.S. Sugars (supra), the Honb’el Supreme Court has clearly held that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf.
6. It may be stated that all the petitioners were entitled for subsidy amount and the subsidy was sanctioned in their favour by the State Government which was to be disbursed through its agency i.e. R.F.C. Unfortunately, there was undue delay on the part of the State Government in releasing that subsidy amount, therefore, all the petitioners being industrial units and likely to be closed down because of the subsidy amount not received by them well in time, pursuaded the R.F.C. to release the said amount by giving an undertaking to pay interest on the said amount. At this stage, it may be stated that there is no provision either under the Act or Rules to charge interest on subsidy amount. If the subsidy amount was released and disbursed through R.F.C. by the State Government in favour of the petitioner well in time then there would not have been any occasion for the petitioners to give an undertaking to R.F.C. to pay interest on such amount. Thus, therefore, though such undertaking was given by the petitioners to R.F.C. to pay interest on subsidy amount, the same will not be binding to them because it was against law.
7. It may be stated that all the learned Counsel for R.F.C. frankly conceded that the respondent R.F.C. was not entitled to charge any Interest on subsidy amount. In my considered opinion, any condition of the contract entered into between the parties, if it is against the law, then it being void or void ab-initio cannot be enforced. If at all any one is at fault then it is the State Government who has caused undue delay in releasing the amount of subsidy which was already sanctioned by it in favour of the petitioners. If the said amount was released immediately after it was sanctioned and disbursed through R.F.C. to the petitioners, then the petitioners would not have approached the R.F.C. for releasing the said amount by taking an undertaking that they will pay interest on the said amount till the same is received by the R.F.C. from the State Government.
8. In view of the above discussion, it must be held that the R.F.C. being a disbursing authority is not entitled to charge any interest on subsidy amount for the period from payment of subsidy amount to the petitioners till it received the said amount from the State Government. Once it is held that the R.F.C. is not entitled to charge any interest on subsidy amount, then it must be held that it is not entitled to charge or demand the interest on a subsidy amount from the petitioners on the basis of their undertaking given to it.
9. Before parting, I must state that two preliminary objections are raised by the learned Counsels Mr. N.M. Lodha, Mr. Sangeet Lodha, Mr. R.P. Dave and Mr. S.G. Ojha appearing for the respondent-RFC, (1) the petitioners made a false statement in their petitions that they were not given such undertaking and (2) State of Rajasthan which is a necessary party for the correct adjudication of the case is not joined as party respondents.
10. Having regard to the peculiar facts and circumstances of all these cases, I am of the opinion that the State of Rajasthan is neither a necessary party nor a proper party for the correct adjudication of these cases particularly, when the District Level Screening Committee constituted by the State of Rajasthan is very much there as party respondent No. 2 in all these cases.
11. Once this Court has held that the respondent R.F.C. is not entitled to charge or demand interest on subsidy amount from the petitioners on the undertaking given by them, then whether they made a false statement in the petitions that they have not given such undertaking loses all its significance.
12. In view of the aforesaid discussion, all these writ petitions are allowed and the impugned order dated 2.9.1998 (Annx. 6) in all these petitions passed by the respondent-RFC charging/demanding interest from the petitioners on the subsidy amount is hereby quashed and set aside.