Sudhir Kumar Katriar, J.
1. This Writ petition has been preferred with the prayer to quash order No. 1(1)/97-PC/98, dated 30.9.99 (Annexure-9), whereby the petitioner has been declared ineligible for the incentive under the Sugar Incentive Scheme 1973 (hereinafter referred to as ‘the Scheme’) as a restructured unit, and the consequential relief of an appropriate direction to the respondent-authorities to issue certificate for free sale of sugar at 100% under the scheme.
2. The petitioner is an existing company with its registered office at 12, Government Place East, Calcutta, and has its sugar factory at Motihari in the district of East Champaran where it manufactures sugar through vaccuum pan process. The sugar factory was established in 1932. and it installed capacity in the year 1964-65 was 3000 tonnes of cane crushing per day (hereinafter referred to as TCD). The capacity of the factory was expanded from 1000 TCD to 1500 TCD during 1967-68.
3. The Government of India introduced the Scheme. (Annexure-1), with the object to augment indigenous sugar production and mitigate the hardship of the entrepreneurs involved in the execution of high cost sugar projects, as well as to enable them to become viable by utilising surplus funds generated through higher free sale quota for repayment of term loans advanced by the Central Financial institutions and the Sugar Development Fund. Insofar the provisions of the Scheme relevant in the present context are concerned, the “Restructured Sugar Factory” shall mean a factory having the capacity ranging from 1250 TCD to 1500 TCD, to expand their capacities to a level of 2500 TCD subject to the condition that the factory’ should not have carried out any expansion of the capacity within a period of 25 years prior to the date of commencement of production at the expanded capacity. In order to be entitled to the incentive under the Scheme, the factory must complete its restructuring between 7.9.90 to 31.3.94 incurring a minimum expenditure of Rs. 1,100 lacs. The incentive under the Scheme shall be available in the shape of higher per centage of free-sale quota including the normal free sale quota of sugar in accordance with the scale indicated in the Scheme. The basic cost of plant and machinery of Rs. 1,100 lakh, shall, besides the plant and machinery cost, on F.O.R., basis, should also include expenses incurred on foundation and civil works connected with the erection of plant and machinery. The Scheme states that the beneficiaries of the incentive scheme that shall ensure that the surplus funds generated through sale of the incentive sugar are utilised for re-payment of term loans, if any, outstanding from the Central Financial Institutions/Sugar Development Funds. That distinction between a restructured unit and an expansion project within the meaning of the Scheme insofar as relevant in the present context is that in the case of a restructured unit as the petitioner is the incentive is of 100% free sale of sugar for a period often years, whereas the incentive of lesser per centage of free sale of sugar is allowed for lesser number of years in the case of an expansion project. The petitioner claims to be a restructured unit, whereas the authorities are now treating it as an expansion project. To summarise the position, a restructured unit must satisfy the following conditions in order to be entitled to the benefit of the Scheme:
(i) Its installed capacity should be between 1250 TCD to 1500 TCD on the eve of restructuring.
(ii) It should be restructured to the level of 2500 TCD.
(iii) The process of restructuring should have been completed during the period 7.9.90 to 31.3.94.
(iv) The investment should have been not less than Rs. 1,100 lacs which would include the basic cost of plant and machinery of F.O.R, basis, and will also include the expenses incurred on foundation and civil work connected with the erection of plant and machinery.
(v) Once the aforesaid conditions are satisfied, the restructured unit becomes entitled to the benefit of the incentive of free sale sugar at 100% for a period often years.
4. After the Scheme was promulgated, the petitioner submitted its application dated 12.7.93 for grant of licence to restructure its sugar unit at Motihari. The respondent-authorities did not take a decision on its application in time. Therefore, the petitioner preferred Writ Petition No. 1439 of 1994 Hanuman Sugar Industries and Anr. v. Union of India and Ors. before the High Court of Delhi for an appropriate direction to consider the petitioner’s application before the last date, i.e. 31.3.94, expires. The letter of intent was ultimately granted on 29.6.94, i.e. during the pendency of the Writ petition. The same was disposed of by a Division Bench of Delhi High Court by its judgment dated 17.4.96, (Annexure-4), whereby the Writ petition was allowed and it was held that “… the petitioner would be entitled to the benefit under the Scheme as if letter of Intent had been issued up to 31st March, 1994. Under these circumstances, we declare that the Letter of Intent dated 29th June, 1994, should be deemed to be issued prior to 31st March, 1994, and the petitioner would be entitled to benefit of the scheme referred to above.” The petitioner then started its restructuring project but was once again baulked in its efforts by order dated 6.2.98 (Annexure-5), of the respondent authorities stating that crushing rate per 24 hours of the petitioner was more than 1500 TCD and, therefore, it was not possible for the Directorate to treat the petitioner as engaged in restructuring from 1500 TCD to 2500 TCD. In other words, the respondent-authorities by that order treated the petitioner to have installed capacity of 1750 TCD on the eve of restructuring, The petitioner challenged the same before the Delhi High Court by preferring Civil Writ Petition No. 981 of 1998 Shree Hanuman Sugar and Industries Ltd. v. Union of India which was disposed of by a Division Bench by its judgment dated 15.5.98 (Annexure-6), whereby it was held that the petitioner’s TCD was 1500 TCD and, therefore, the benefit of the Scheme should be allowed. In that view of the matter, the Delhi High Court granted the interim relief of benefit of free sale of sugar consistently with the Scheme till such time the respondent authorities took a final decision. In other words, the respondents had to take a decision, inter alia, whether or not the basic cost of restructuring was not less than Rs. 1,100 lacs.
5. In spite of the order of the Delhi High Court, the respondents did not pass the final order, and granted the benefit of free sale sugar at 100% on provisional basis for three months only. Hence, the present Writ petition. By order 13.12.99, this Court by way of interim relief directed that the petitioner shall be allowed the benefit of 100% free sale in accordance with the Scheme, During the pendency of the Writ petition, the respondent-authorities have passed the impugned order dated 30.9.99 (Annexure-9), whereby Rs. 685.65 lacs has been determined to be the basic cost, of restructuring which is less than the prescribed limit of Rs. 1,100 lakhs. Therefore, the petitioner is not entitled to the incentive as a restructured unit, but its claim as an expansion project is under consideration. The said order dated 30.9.99 (Annexure-9), has been allowed to be challenged in this Writ petition by amendment of pleadings.
6. While assailing the validity of the impugned order, learned Counsel for the petitioner submitted that the same is without reasons and, therefore, bad in law. The respondent-authorities have tried to explain the position by assigning reasons in its counter-affidavit which is impermissible in law. Learned Counsel next submitted that the Government’s interpretation of “basic cost”, as envisaged by the Scheme, is erroneous. The emphasis under the Scheme is on investment, rather than on legal ownership. In any case, the dispute as to ownership as raised by the respondent-authorities really does not arise in the present case. He lastly submitted that the object of the scheme is to augment the sugar production in view of depressed industrial and commercial climate in the country and to meet the high cost of expansion by giving the benefit of 100% free sale sugar. In that view of the matter, a liberal construction has to be put on the wordings of the Scheme and the authorities should lean in favour of the petitioner in case of doubt or difficulty.
7. Learned Addl. Standing Counsel for the Central Government submitted that the Scheme is applicable in the petitioner’s case, and the controversy is only with respect to computation of the basic cost. If cost of the desired level within the meaning of the Scheme is not incurred in restructuring the unit, the incentive of the desired level would not be available. In his submission, the respondent-authorities have on facts found that the petitioner has incurred only Rs. 500 lakhs as a term loan, the further sum of Rs. 185.65 lakhs has been incurred under other permissible heads of the Scheme, and the balance of Rs. 500 lakhs has been incurred under the Equipment Lease Scheme (in short, ‘ELS”), which does not qualify for addition towards the basic cost. He has relied on the definitions of Lease’ & ‘Ownership’ occurring in Black’s Law Dictionary. He next submits that the petitioner has by the impugned order not. been wholly denied the incentive under the scheme. Its case for incentive as an expansion project is still under consideration. He lastly submits that the impugned order has to be read with the statements made in the counter-affidavit read with Annexure-B thereto. If so done, the impugned order is supported by valid reasons.
8. I would first of all like to consider the first argument advanced on behalf of the petitioner, namely, the impugned order does not state reasons in support of the conclusion that the petitioner’s investment has been to the tune of Rs. 685.65 lacs, which is far less than the prescribed limit, of rupees 1100 lakhs for restructuring the unit. learned Counsel for the petitioner has, therefore, relied on the judgment of the Supreme Court reported in A.I R 1978 S.C. 851 Mohinder Singh Gill v. The Election Commissioner of India, in support of the proposition that the impugned order must stand on its own, and cannot be allowed to be supplemented by reasons appearing in the counter-affidavit. The petitioner’s contention, is fit to be upheld primarily for the reason that the respondents’ eifort to justify its conclusion in the impugned order by assigning reasons in. the counter-affidavit is based on a communication from the Industrial Development Bank of India (hereinafter referred to as ‘the I.D.B.I.’), the financing Bank of the petitioner, to the respondent-authorities, the substance of which is that the I.D.B.I, had granted financial assistance aggregating to rupees one thousand lacs to the petitioner’s company under the E.L.S. only half of which has been converted to Asset Credit Scheme (a Term Loan Scheme). The balance continues to be under E.L.S. which means that the plant, machinery and equipment, to the extent of rupees five hundred lacs is still on lease which is hypothecated to the I.D.B.I, and, therefore, the petitioner Company does not to that extent has ownership of the same which vests in I.D.B.I. Therefore, according to the respondent, a sum of rupees five hundred lacs does not qualify for addition towards the basic cost. I shall deal with the merit of this contention at a later stage. Suffice it to say at the present stage that these reasonings could not have been in the minds of the respondent-authorities when the impugned order was passed. The impugned order is dated 30.9.99 (Annexure-9), whereas the aforesaid letter of the I.D.B.I, is dated 16.3.2000 (Annexure-B). In that view of the matter, the proposition of law enunciated by the Supreme Court in the case of Mohinder Singh Gill v. Union of India (supra) applies to the facts and circumstances of the present case. The proposition of law would have possible been inapplicable if the respondents had placed on record evidence showing consideration of the materials incorporated in the aforesaid letter dated 16.3.2000 (Annexure-B) while passing the impugned order.
8.1. Once it is held that the impugned order cannot in the facts and circumstances be allowed to be explained by the materials stated in the counter-affidavit read with the aforesaid letter dated 16.3.2000 (Annexire-B), it follows as a matter of corollary that the same is unsupported by reasons and, therefore, becomes arbitrary and violative of Article 14 of the Constitution of India. “The giving of reasons”, as Lord Denning stated in Breen v. Amalgamated Engineering Union (1971) 1 All E.R. 1148″ is one of the fundamentals of good administration. The Supreme Court observed in Khudi Ram v. State of West Bengal in a government of laws, there is nothing like unfettered discretion immune from judicial reviewability”. The Supreme Court observed in Govt. Branch Press v. D.B. Belliappa that “…the executive, no less than the judiciary, is under a general duty to act fairly. Indeed, fairness founded on reason is the essence of the guarantee epitomised in Articles 14 & 16 (1).”
8.2. In my view, the reliance placed by the learned Counsel for the petitioner on the judgment of this Court in Hindeutsch Impex Pvt. Ltd. 2000 (2) P.L.J.R. 141 is inappropriate for the reason that the respondent-authorities in that case had with inexorable obduracy refused to disclose the reasons in support of the impugned order. Paragraph 9.1. of the said judgment is relevant in the present context and is set out hereinbelow for the facility of quick reference:
This Court expresses its strong displeasure on the approach of the respondent authorities in confronting this Court with their conclusion, rather than making a sincere effort to justify their action by placing full materials before the Court, enabling the Court to reach its own conclusions. Reference may be made to the judgments reported in 1973 (2) SLR 659 Prern Praveen v. Union of India as well as 1980 (1) SLR 788 P.C. Saxena v. State of M.P. This Court is thus not convinced about the mode and manner in which the respondent-authorities have reached the conclusion which is unsupported by cogent logic In fact, the Court gets an impression that the respondent authorities were in an undue anxiety to reject the petitioner’s claim, providing only an apology for reasoning for the reason that it was faced with the order dated 19.1.96 of this Court (Annexure-15).
On the other hand, in the present case, the respondent authorities have not refused to disclose the reasons in support of the impugned order. They have tried to illumine the impugned order by reasons stated in the counter-affidavit which were not contemporaneous, but post-dated, and, therefore, as held hereinabove, impermissible in view of the law laid down by the Supreme Court in the case of Mohinder Singh GUI (supra), apart from other factors.
8.3. In that view of the matter, I am of the view that the impugned order is unsupported by reasons and, therefore, bad in law.
9. Learned Counsel for the petitioner is right in submitting that the Government’s interpretation of the expression “basic cost” occurring in the Scheme is incorrect. I am for the purpose of consideration of this contention taking into account the reasonings assigned by the respondents in the counter-affidavit and the aforesaid communication dated 16.3.2000 (Annexure-B). In order to enjoy the benefit of free-sale of sugar to the extent of 100% under the Scheme, the. petitioner’s investment should not have been less than the prescribed limit of Rs. 1,100 lacs. The respondents by the impugned order have excluded the sum of Rs. 500 lakhs under the E.L.S. and have come to the conclusion that rupees five hundred lacs converted into term loan scheme plus further sum of rupees 185.65 lacs spent over the other items contemplated by the Scheme has been included. Insofar as the said sum of rupees 500 lacs still under the ELS is concerned; annexure to the said letter dated 16.3.2000 (Annexure-B) says that I.D.B.I, is the legal owner of the plant and machinery provided on lease to the company. It further states that subject to the company observing the terms and conditions stipulated in the Master Lease Agreement, all plant and machinery acquired by the company under ELS would continue to remain with the company. It is manifest from a plain reading of the counter-affidavit and the said communication dated 16.3.2000 (Annexure-B), that the I.D.B.I, had sanctioned Rs. 1,000 lacs by way of financial assistance for purchase of plant, machinery and equipments which were installed in the petitioner’s factory for the purpose of restructuring the unit, and have as a measure of security of the loan been hypothecated in favour of the I.D.B.I. It is in that narrow sense that the respondent-authorities have taken the most hair-splitting approach that the ownership is not with the petitioner and, therefore, the same does not qualify for inclusion in the basic cost. In that view of the matter, learned Counsel for the petitioner has rightly relied on the definition of “ownership” occurring in Stroud’s Judicial Dictionary (4th Edn.) Vol. 3, the relevant portion of which is set out hereinbelow:
1. the “owner” or “proprietor” of a properly is the person in whom (with his or her assent) it is for the time being financially vested, and who has the occupation, or control, or usufruct of it; e.g. a lessee, during the term, the owner of the property demised.
9.1. Larned Counsel is equally right in placing reliance on the judgment of the House of Lords reported in 1935 All ELR 533 Birmingham Corporation v. Barnes 1935 Appeal Cases 292. Lord Atkin in his unanimous opinion has observed that – “…I entirely agree with the submission of the Attorney-General that you must not restrict the plain words of a remedial section so as to apply them only to the mischief which occasioned the enactment. But you may look at the mischief as one of the elements assisting you to construe the words of the remedy. You may also look at the use of the same words in relation to the same subject-matter in the same enactment… Here there are no qualifying words, and I think the phrase guides one to the conclusion that expenditure on capital improvements by the person regardless of source will be the same as actual cost to the person also regardless of source. No doubt, you must give the whole phrase its full meaning…”.
9.2. Learned Counsel for the petitioner is equally right in placing reliance on the judgment of the Supreme Court reported in 1975 Taxation Law Reports 40 : Challapalli Sugar Ltd. v. Commissioner of Income Tax paragraph 15 of which is relevant in the present context and is set out hereinbelow for the facility of quick reference:
15. It would appear from the above that the accepted accountancy rule for determining the cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition. In case money is borrowed by a newly-started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalised and added to the cost of the fixed assets which have been created as a result of such expenditure. The above rule of accountancy should, in our view, be adopted for determining the actual cost of the assets in the absence of any statutory definition or other indication to the contrary.
9.3. Taking an overall view of the matter, I should think that the respondent-authorities have taken a very narrow, unrealistic, and hair-splitting view of the expression “basic cost” occurring in the Scheme, which completely overlooks the aim and object of the Scheme. The emphasis of the Scheme is on investment and expenditure, whereas the respondent have artificially and illogically read into it ownership of the plant, machinery and equipment in a most hyper-technical sense. Government of India noticed that production of sugar in the country was declining, and the position in Bihar appeared to be alarming. At the time of Independence, there were 29 sugar factories operating in Bihar, only four or five of those are now dragging their feet and are on the verge of closure. The sugar industries of Bihar were well organised and nearly 20% of the national production of sugar was from Bihar State, it reduced to 3.45% in 1989, and thereafter it has further declined to 2.31% in 1999. In order to promote the production of sugar, the Government of India formulated the Scheme and decided to allow free sale of sugar depending on the level of investment. In other words, the entire emphasis is on investment, and the financial burden in raising the installed capacity of the unit. In that view of the matter, this Court is in no doubt that such hair-splitting contentions as Equipment Lease Scheme has no place within the four corners of the Scheme. The petitioner’s contention is, therefore, upheld and the impugned order is set aside.
10. Lastly, learned Counsel for the petitioner is right in submitting that in view of the object of the Scheme, being in the nature of a beneficial provision, a liberal, purposive, and meaningful construction should be put on its wordings, and the respondent-authorities should in case of doubt or difficulty lean in favour of the petitioner. learned Counsel has rightly placed reliance on the judgment of the supreme Court B.P Khemka Pvt. Ltd. v. Birendra Kumar paragraph 14 of which is relevant in’ the present context and is set out hereinbelow for the facility of quick reference:
14. Even if the proviso is viewed in a limited sense as being attracted only to those cases where there has been full and complete compliance with the provisions of Sub-section (1) or (2) or (2A) of Section 17 and will not apply to a case as the one on hand, the appellant cannot be denied relief because the words “shall order the defence against delivery of possession to be struck out” occurring in Section 17(3) have to be construed as a directory provision and not a mandatory provision as the word “shall” has to be read as “may”. Such a canon of construction is warranted because otherwise the intendment of the Legislature will be defeated and the class of tenants for whom the beneficial provisions were made by the Ordinance and the amending Act will stand deprived of them. We may only refer to two decisions of this Court on this aspect of the matter. In Govindlal Chhagganlal Patel v. Agricultural Produce Market Committee Godhra , Chandrachud C.J. speaking for the Court approved the following passage in Crawford on ‘Statutory Construction’ (Ed. 1940, Article 261, p.516) :
The question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also while considering its nature, its design, and the consequences which would follow construing it the one way or the other.
10.1. Learned Counsel for the petitioner is further right in placing reliance of the judgment of the Supreme Court Central Railway Workshop Jhansi v. Vishwanath paragraph 11 of which is set out hereinbelow for the facility of quick reference.
11. The Factories Act was enacted to consolidate and amend the law regulating labour in factories. It is probably true that all legislation in a Welfare State is enacted with the object of promoting general welfare; but certain types of enactments are more responsive to some urgent social demands and also have more immediate and visible impact on social vices by operating more directly to achieve social reforms. The enactments with which we are concerned, in our view, belong to this category and, therefore, demand an interpretation liberal enough to achieve the legislative purpose, without doing violence to the language. The definition of “worker” in the Factories Act,therefore, does not seem to us to exclude those employees who are entrusted solely with clerical duties, if they otherwise fall within the definition of the word “worker”. Keeping in view the duties and functions of the respondents as found by the learned Additional District Judge, we are unable to find anything legally wrong with the view taken by the High Court that they fall within the definition of the word “worker”. Deletion of the word “whatsoever” on which the appellant’s counsel has placed reliance does not seem to make much difference because that word was, in our view, redundant.
10.2. Learned Counsel for the petitioner has rightly relied on the aforesaid judgment of the House of Lords, relevant portion of which is being repeated:
…I entirely agree with the submission of the Attorney-General that you must not restrict the plain words of a remedial section so as to apply them only to the mischief which occasioned the enactment. But you may look at the mischief as one of the elements assisting you to construe the words of the remedy. You may also look at the use of the same words in relation to the same subject-matter in the same enactment….
10.3. In that view of the matter, I have no manner of doubt that the terms of the Scheme do not admit of any doubt or difficulty. Its entire emphasis is on investment and expenditure for increased production and, therefore, it was not open to the respondent authorities to restrict the meaning of “basic cost” resulting in exclusion of the Equipment Lease Scheme. This kind of lease is a usual mode and manner of securing the loan. However, in case the respondent authorities felt any difficulty while dealing with the petitioner’s case, it ought to have leaned in favour of the petitioner to advance the object of the scheme, rather than engaging itself in this kind of arbitrary action.
11. Before I part with this judgment, I would like to record my feeling of uneasiness and displeasure on the consistently negative approach of the respondent-authorities. They have at every stage set their faces against the petitioner, and it had to approach the Court again and again. They had at the inception held that the petitioner’s case was hit by delay, little realising that the petitioner’s application had been filed well in time on 12.7.93, and the application was granted belatedly on 29.6.94 which was entirely attributable to the respondent-authorities. In that view of the matter, the Delhi High Court had to set right the injustice done to the petitioner, and had held that petitioner’s application shall be deemed to have been issued prior to 31.3.94. Thereafter, the respondent-authorities again impeded the progress by holding that installed capacity was 1750 TCD, thereby disqualifying the petitioner under the Scheme. The petitioner had again to move the Delhi High Court and injustice was undone by the aforesaid judgment dated 15.5.98 (Annexure-6), whereby it was held that the petitioner’s TCD was 1500 on the eve of restructuring. The Delhi High Court, therefore, directed the respondent-authorities to dispose of the petitioner’s case in the light of the Scheme in question treating the petitioner’s restructuring from 1500 TCD to 2500 TCD and had, in the meantime, as an interim measure, directed that the petitioner shall be entitled to the benefit of free sale in accordance with the Scheme till such time the respondent-authorities had passed the final order. The respondent-authorities by order dated 8.2.99 (Annexure-7) had granted free sale of sugar at 100% on provisional basis for three months only, and had also delayed in passing the final order on the question of entitlement of the benefit of free sale sugar all in violation of the letter and spirit of the judgment of the Delhi High Court. The petitioner, therefore, preferred the present Writ petition, and this Court by its order dated 13.12.99 had directed that the petitioner shall be allowed the benefit of 100% free sale in accordance with the Scheme until further orders of this Court which is still in operation. This Court had also directed the respondent-authorities to pass a final order expeditiously which was passed on 13.9.99 (Annexure-9), during the pendency of this Writ petition. The Court does not appreciate this kind of unfriendly attitude towards the industries in the country which are really the centres of production, which generate the wealth and employment opportunities in the nation. It appears to this Court that some force was working against the petitioner which harassed it at every stage.
12. In the result, this Writ petition is allowed, the impugned order dated 30.9.99 (Annexure-9), issued under the signature of the Chief Director (Sugar), Ministry of Food & Consumer Affairs, Department of Sugar & Edible Oils, Directorate of Sugar, Krishi Bhawan, New Delhi, is hereby set aside. It is hereby held that the respondent-authorities have wrongly excluded the sum of Rs. 500 lakhs from the computation of basic cost on the unacceptable plea that it was covered by the Equipment Lease Scheme. It is hereby declared that the petitioner is entitled to the benefit of incentive of free sale of sugar to the extent of 100% for the period of 10 years after excluding the benefit so far enjoyed by the petitioner. Let copies of this judgment be forwarded to the Secretaries, Ministry of Industries, as well as Ministry of Food & Consumer Affairs, Department of Sugar & Edible Oils, Government of India, New Delhi, for a meaningful approach towards its industries.