- (1.) Was there any valid justification for the appellants, the Union of India, to withhold the payment of subsidy to the respondents, the small-scale manufacturers of fertiliser, is the main question that arises for consideration in this appeal directed against the judgment and order of the Delhi High court Two other questions that arise in this connection are if the High court committed any error in exercise of its extraordinary jurisdiction to interfere at the stage of show cause if a report prepared by the Project Development India Limited (in brief 'pdil') behind the back of the respondents could be relied for rejecting the specification of standard fertiliser produced by the respondents.
(2.) Before adverting to these issues we consider it necessary to mention that the payment of subsidy to manufacturers of fertilisers was introduced in 1982 under a scheme framed by the government of India in pursuance of which every manufacturer was required to give a written undertaking to the President of India. In 1985 government of India issued a Fertiliser (Control) Order under the Essential Commodities Act. Sub- clause (h) of Clause (2 of the Order defines 'fertiliser' to mean, "Any substance used or intended to be used as a fertiliser of the soil and/or crop and specified in Part-A of Schedule I and includes a mixture of fertiliser, mixtures of micro-nutrient fertilisers and special mixture of fertilisers. "sub-clause (q) of the same clause explains 'prescribed standard of fertiliser' as under: " 'prescribed standard' means - (I) in relation to fertiliser included in Column I of Part A of Schedule I, the standard set out in the corresponding entry in Column 2, subject to the limits' of permissible variation as specified in Part B of that Schedule; and (ii) in relation to a mixture of fertilisers, the standard set out in respect of that mixture under sub-clause (1 of Clause 13 by the central government, subject to the limits of permissible variation as specified in Part B of Schedule 1; (iii) in relation to a (mixture of NPK fertilisers, mixture of micro-nutrient fertilisers and combination thereof) , the standard set out in respect of that mixture under sub-clause (2 of Clause 13 by the State government, subject to limits of permissible variation as specified in Part B of Schedule 1;"and standard specified of single super phosphate (SSP) sulphur manufactured by the respondents is described in Schedule I of the Order as under: "Single Super Phosphate (16% P 2o Granulated) (i) Moisture, per cent by weight, maximum 566 (ii) Free phosphoric acid (as P2o5 per cent by weight, maximum (iii) Water soluble phosphates (as P2o5 per Cent by weight, maximum (iv) Particle size Not less than 90 per cent of the material shall pass through 4 mm IS sieve and shall be retained on 1 mm IS sieve. Not more than 5 per cent shall pass through 1 mm IS sieve. "the Control Order further deals in detail with price control, distribution, restriction on manufacturers and sale etc. of fertiliser. Ch. VII deals with enforcement authorities. Paragraph 27 empowers the State government and the central government to appoint inspectors of fertilisers. Paragraph 28 empowers the inspectors to secure compliance of the Order by requiring the wholesaler or retail dealer to give any information in his possession with respect to manufacture, draw samples of any fertiliser, enter upon and search any premises etc. How the sample has to be analysed has been provided by Schedule II of the Order.
(3.) The basic raw material for manufacture of fertiliser is rock phosphate. There are various mines spread all over the country from where these rocks are obtained. They are canalised through State mineral corporations. One of such mines is located in Hirapur in the State of Madhya Pradesh. The government of the State requested the PDIL to undertake laboratory test of these rocks and submit a report for determining disability allowance payable to SSP producers. The conclusion of the report is extracted below: "The world reserve of good quality rock phosphate is gradually depleting making the use of non-standard and low grade phosphate, in the manufacture of phosphatic fertiliser as essential. In India, compared to other countries, the availability of usable quality rock phosphate is rather limited, though available in abundance. This study was made, at the request of Madhya Pradesh government, with a view to effectively utilise, to the extent possible the lower grade indigenous rock phosphate from Hirapur Mines for SSP production. Experiments in PDIL laboratory has shown that this rock phosphate cannot be processed in the conventional route to produce SSP, as such, and it is imperative to make blends with any standard rock phosphate. "the report establishes that the rock phosphate available in our country whether it is in Madhya Pradesh or Jaipur appears to be incapable of producing SSP unless it is blended with imported rock. Proportion of the two depends on the strength of rock obtained from different mines. The PDIL conducted the test for those rocks whose strength varied from 20% P2o5 to 25% P2o5 and opined that blending of rock with 24% should be in proportion of 20% and 80%. The extract from the report runs as under: "The chemical analysis has shown 24.85% P2o5 and 30. 03% Silica plus insoluble besides other impurities like high R2o3 (sic) compared to 32.4% P2o5, 4.56% Silica plus insoluble and 0. 75% R2o3 (sic) in standard Jordon variety. Many proportions of blends were tried in laboratory to find out the optimum blend which would produce SSP of specification laid down by FCO and finally it was concluded that a blend of 20% Hirapur rock matrix and 80% Senegal will be a suitable proportion. This was confirmed even in pilot plant trials where for a comparison purpose two blends were tested e. g. 30:70 and 20:80 for Hirapur: Senegal rock phosphates. It was found from analytical results that 20:80 proportion was most suited. Accordingly study was concentrated towards this 20:80 Hirapur: Senegal blend. ";