IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 5546 of 2008(I)
1. MECKAMALIL POLYMERS PVT.LTD.,
... Petitioner
Vs
1. THE DIRECTOR OF INDUSTRIES & COMMERCE,
... Respondent
2. GENERAL MANAGER,
3. THE STATE OF KERALA, REPRESENTED
4. THE MONITORING AND TECHNOLOGY
For Petitioner :SRI.ABRAHAM VAKKANAL (SR.)
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice V.GIRI
Dated :17/10/2008
O R D E R
V.GIRI, J.
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W.P.(C).No.5546 of 2008
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Dated this the 17th day of October, 2008.
JUDGMENT
The petitioner company, incorporated
under the Companies Act, is engaged in the
manufacture of plastic moulded Goods, PET
preforms and PET Bottles etc. The unit started
functioning on 7.3.2001.
2. Ext.P2 is a scheme which was floated
by the Government in order to encourage small
scale unit holders to increase productivity by
upgrading technology, by providing a credit
capital subsidy. The scheme, inter alia,
comprehended existing SSI units registered with
the Directorate of Industries and Commerce,
which upgrades to State-of-art technology with
or without expansion. The scheme provided that
the existing units which undertake a technology
upgradation by improving productivity or quality
of the products or resulting in reduction of
cost of production would entitle the unit for
subsidy. The scheme further states that subsidy
@ 12% of loan amount sanctioned and disbursed by
the financial institutions will be given. The
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further terms and conditions, under which the
subsidy could be availed of, are also mentioned
in Ext.P2. The technology, if it is deployed by
the unit which is reported as eligible for the
capital subsidy scheme, will have to be approved
and monitored by a Monitoring and Technology
Approval Board. The Board is to be headed by
the Principal Secretary of Industries
Department. The Technical Expert in the
relevant field would be co-opted to the Board by
the convener. The maximum eligibility would be
12% of the loan amount. The scheme was brought
into force with effect from 2.1.2003 as is
evidenced by G.O.NO. 2/2003/ID.
3. The petitioner contends, inter alia,
that, on the strength of the capital subsidy
scheme floated as per Ext.P2, it had decided to
upgrade the technology. Accordingly it availed
financial facility from the UTI bank, now
renamed as Axis Bank, which is also a financial
institution in terms of Ext.P2. It is also the
case of the petitioner, which does not seem to
be controverted by the respondent, that the last
instalment of the loan availed was disbursed on
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29.3.2007. This is sought to be substantiated
by Ext.P1 statement issued from the bank. It is
seen from Ext.P1 that the first instalment was
availed on 18.1.2007.
4. Ext.P2 scheme further provided that
the unit, which claims eligibility in terms of
Ext.P2, is to file an application for subsidy
within three months from the date of availing
the last instalment from the financial
institution. Accordingly, the petitioner had
time till 29.6.2007 to submit the application.
It submitted the application Ext.P4 on 6.6.2007.
The said application was met with Ext.P5
communication from the 2nd respondent intimating
that the 1st respondent had rejected the
application on the premise that Ext.P2 scheme
was discontinued with effect from 1.4.2007.
Thereafter the petitioner, on enquiries, came to
know that Ext.P2 scheme was discontinued with
effect from 1.4.2007 and orders in this regard
were issued as per Government Order dated
20.6.2007. It is in the wake of this, the
petitioner has filed this writ petition,
challenging Ext.P5. He also sought for
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consideration of the application for subsidy in
terms of Ext.P2 scheme.
5. A counter affidavit has been field by
the respondents affirming that Ext.P2 scheme was
discontinued with effect from 1.4.2007; that
the petitioner’s application was originally
processed and recommended to the respondent and
thereafter the application was rejected on the
basis of Ext.P7 Government Order issued by the
Government. It is affirmed that applications
received after 1.4.2007 will not be considered
in the light of the GO.
6. I heard learned senior counsel for
the petitioner Sri.Abraham Vakkanal and learned
Senior Government Pleader.
7. That the petitioner had availed a
loan from a financial institution listed in that
behalf under Ext.P2 is not a matter in dispute.
The petitioner’s case is that it had acted on
Ext.P2 scheme and it is, therefore, that it had
upgraded its technology. The respondents have
rejected the petitioner’s application on the
ground that the petitioner had submitted an
application for the benefit of the scheme only
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on 6.6.2007 and that by Ext.P7 order the
Government had accepted the recommendations
made by the Monitoring Committee to discontinue
the scheme with effect from 1.4.2007. The
scheme contemplated availing of financial
facility from scheduled/nationalised financial
institutions and deploying of the same by the
small scale industrial units. In other words,
if an industrial unit is to avail the benefit of
the scheme, it should first upgrade its
technology and the said upgradation of the
technology should have entailed a capital
investment. It should further have made
upgradation by availing a credit facility from
the financial institutions. Once it is done,
then it is entitled to apply for financial
assistance under the scheme. The competent
Board under the scheme should evaluate whether
the technology has been upgraded by the
industrial unit. Thereafter the competent
authority is to consider the amount which the
unit is entitled to.
8. What is crucial in the present
context is whether the petitioner had acted on
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the strength of the scheme as it existed and
whether it had, in pursuance of the said scheme
availed a financial facility from the financial
institution and deployed the technology. Going
by Ext.P1 and as per the stand taken in the
counter affidavit, the last among the
instalments from the UTI bank was drawn by the
petitioner on 29.3.2007. In such circumstances,
there is prima facie material to show that the
petitioner had acted on the strength of the
scheme as is listed in Ext.P2. There does not
seem to be any serious dispute on this aspect on
the part of the respondents.
9. If therefore the petitioner had acted
under the scheme as it existed, the mere fact
that the petitioner had applied only on 6.6.2007
should not act in derogation of the petitioner’s
eligibility to avail the benefit under Ext.P2
scheme. After all, the question of applying for
the benefit under the scheme is only a
consequential action to avail the benefit
available under the scheme. In such
circumstances, the reason afforded in Ext.P5
does not seem to be sustainable.
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10. The Government is entitled to
withdraw a scheme offered to industrial units.
If therefore, the Government decides to put an
end to a scheme with reference to a report of
the Monitoring committee as done in Ext.P5,
there is nothing wrong in doing that. But if any
unit, which has acted in accordance with the
scheme, that was already in existence, the
benefit which would have otherwise gone to it
cannot be taken away with retrospective effect.
This is the law that has been consistently laid
down by the Apex Court. The law has been
reiterated in Kusumam Hotels (P) Ltd. v. KSEB
2008(KHC 792}. In other words, if the
petitioner had acted on the strength of Ext.P2
scheme, it is entitled to the benefits
thereunder. Such benefit cannot be withdrawn on
the strength of Ext.P7 Government order.
11. For all these reasons, I find that
the petitioner is entitled to succeed. Ext.P5
is quashed. Respondents 1 and 2 shall consider
the petitioner’s application Ext.P4 with
reference to Ext.P2 scheme. If the petitioner
is found eligible in terms of Ext.P2 scheme, the
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amount which it is entitled to, by way of
subsidy in terms of Ext.P2 shall be disbursed to
it. Appropriate decision, in this regard, shall
be taken within three months from the date of
receipt of a copy of this judgment.
Writ petition is allowed as above.
Sd/-
(V.GIRI)
JUDGE
sk/
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