- (1.) THIS writ petition has been filed against the refusal to sanction the subsidy of Rs. 5. 65 lacs. The submission of the learned counsel for the petitioner in this regard is that in pursuance of the promise given by the respondents the petitioner has established a new industrial undertaking and is eatitled for the grant of subsidy in accordance with the Scheme as it was prevaleat during the relevant time and the action of the respondents in not granting the subsidy is violative of the principles of promissory estoppel. It is submitted that the petitioner purchased an industrial plot in Bhiwadi Industrial Area on 11. 05. 1988 and the lease-deed was executed on 6. 06. 1988. The petitioner was registered under the provisions of the Sales Tax Laws on 13-7-1988 and with the Director of Industries on 10-5-1988. A sum of Rs. 4,48,291. 41 was invested in the construction of factory building before 30-9-1988 and a sum of Rs. 16,76,857 was invested in purchasing and installing the machinery before 30-9-1988. The application for grant of 15% of subsidy was submitted to the government on 30-6-1988. The financial institutions approved the scheme of the petitioner and the Rajasthan Financial Corporation has granted the loan of Rs. 28 lacs and have taken the subsidy of Rs. 5. 65 lacs into consideration while preparing the cost of the preject. It is submitted that the sanction of the loan was given by the Rajasthan Financial Corporation on 19. 12. 1988. The petitioner approached the respondents for grant of subsidy and was informed vide letter dated 16-12-1989 that the subsidy could be granted only to those entrepreneurs where the same has been sanctioned till 30. 09. 1988.
(2.) THE submission of the learned counsel for the respondents is that the Scheme of subsidy under the Central Investigation Subsidy Scheme, 1971 was originally introduced with effect from 26. 08. 1971 during the fourthfive year plan and was extended from time to time. As per Notification dated 2. 05. 1985, the Scheme was modified and new concessions were given to promote the industrialization in the backward areas. This modified scheme came into force from 1. 04. 1983 and continued till 31. 03. 1985. THE scheme for the grant of the subsidy was extended for six months from 1-4-1988 to 30-9-1988 vide Notification dated 3-5-1988 and ceased to be inoperative from 1-10-1988. It is submitted that no promise was given by the non-petitioners and the payment of subsidy was not given as a right but it was a concession which was subject to certain terms and conditions as laid down in the Scheme. According to the Scheme the subsidy has to be sanctioned by the State Level Committee or the District Level Committee as the case may be during the operation of the scheme and if the sanction has not been given during the said period no right can accrue on the petitioner. THE State Level Committee or the District Level Committee has not sanctioned the subsidy. It is also alleged that it was after the issuance of the notification dated 10-5-1988 that the petitioner has made investment in purchasing the land. It was known to the petitioner that the Scheme shall remain in force till 30-9-1988 and was intended to be implemented through the State Government. THE Scheme contemplated the reimbursement and disbursement of the subsidy to the eligible units by the State government or its disbursing agencies and subsequently the reimbursement was to be made by the Central Government. THE matter with regard to the scrutinizing the application was to be undertaken by the State government through the State Level Committee or the District Level Committee and since in the present case all the formalities with regard to the application were not complete the subsidy was not sanctioned. It has also been submitted that no industry has been granted any subsidy under the Scheme after 30. 09. 1988. I have considered the arguments of both the learned counsel. In accordance with the Central Outright Grant/subsidy Scheme, 1971 for Industrial Units to be set up in selected backward districts/areas as published in the Gazette of India dated 26. 08. 1971 it has been provided that the Scheme is applicable to industrial units in selected districts/areas whose total fixed capital investment would not exceed Rs. 1 crore and cases involving total fixed capital investment exceeding Rs. 1 crore would be considered on a selective basis. The Industrial Unit has been defined as an industrial undertaking and suitable servicing unit other than that run departmentally by Government. The benefit of the subsidy is available to the industrial units of the selected district/ areas if they get, themselves registered with the State Government concerned prior to taking effective steps for setting up new unit or undertaking substantial expansion of the existing units and indicate their assessment of the total additional fixed capital likely to be invested by them. The new industrial units have been defined as such industrial units for the set up of which effective steps were not taken prior to 1-10-1970 while existing industrial units have been defined to mean the industrial units for setting up of which effective steps were taken prior to 1-10-] 970 and substantial expansion has been defined as where the increase in the value of fixed capital investment of an industrial unit by not less than 25% for the purpose of expansion of capacity/modernisation etc. The 'effective steps' has also been defined to mean one or more than one of the steps given in the definition clause according to which 60% or more of the capital issued for the industrial unit has been paid up or a substantial part of the factory building has been constructed or a firm order has been placed for a substantial part of the plant and machinery required for the industrial unit. The procedure for distribution of the outright grant or subsidy has been given, according to which the State Government has to set up a committee which has to decide the eligibility and quantum of the subsidy. In the Notification dated 3. 05. 1988 the Scheme was extended for a period of six months with effect from 1-4-1988 to 30-9-1988. In the present matter the loan was sanctioned on 19-12-1988 and the mortgaged deeds were executed on 23-1-1989. The various authorities which have been referred to me are as under :- The Gujrat State Financial Corporation vs. M/s. Lotus Hotels Pvt. Ltd. (1 ). In this case the Gujarat State Financial Corporation entered into an agreement to advance loan to a company and on the basis of that undertaking the company proceeded to execute the projest for setting up a 4-Star Hotel and huge expenses and liabilities were incurred. It was held that "principle of promissory estoppel could be involved in such a circumstance". Reliance has also been placed on the judgment M/s. Toshniwal Udyog Vs. State of Raj. (2), wherein this Court following the judgments in cases of M/s. Khemka Cement Pvt. Ltd. Vs. State of Rajasthan (3) following M/s. Ganesh Foundary Vs. State of Rajasthan (4) held that, petitioners are entitled for the grant of subsidy". The judgment in Khemka Cement Pvt. Ltd. , V. State of Raj. (supra) has been challenged before Hon'ble Supreme Court and it is submitted that the matter is still pending and some stay has been granted. Reliance has also been placed on the decision Government of India Vs. M/s. Dhanalakshmi Paper and Board Mills (5), on the point that the date 30. 09. 1989 has arbitrarily been fixed. In this case, the manufacturers of paper and paper-boards and allied products, had obtained a lease of certain premises in June, 1963 and put up a structure of the units in August, 1963. The necessary machineries were however, received in April, 1964 and the application for licence was filed on 27-4-1964. The licence was granted on 6-5-1964 and the production started from 7-5-1964. It was claimed that during the period from 7-5-1964 to June, 1966 concessional rate was allowed by the Notification and the benefit of this Notification was denied on the ground that the factory did not come into existence on or before the 9th day of N-ve-mber, 1963, i. e. on the date mentioned in the Notification. It was held by the Apex Court that "the benefit of concessional rate was bestowed upon the entire group of assessees i. e. the manufactures of the paper boards by the said Notification has divided into two classes the manufacturers without adopting any differentia having a rational relation to the object of the Notification and the benefit to one class was withdrawn while retaining it in favour of the other. In these circumstances, the Notification was declared ultra vires and the benefit which was allowed to the other class was held applicable to the entire group". In the present case the benefit has been denied to all and, therefore, the Judgment relied upon is of no assistance to the petitioner.
(3.) RELIANCE has also been placed on the decision of M/s. J. K. Industries Ltd. V. Union of India (6), wherein it was held that "the doctrine of promissory estoppel is applicable to all executive actions of the Government and this is to avoid injustice being perpetrated to the other party which has acted upon the promise. The relief in excise duty which was given by the Central Government and on the basis of which the petitioner has acted made investment cannot be allowed to revoke the exemption for the period it was granted. In the present case the subsidy was available only upto 30-9-1988 and, therefore, it cannot be said that the revoking of the concession from a particular date has created any right in favour of the petitioner. This judgment was confirmed by the Division Bench in 1989 (2) RIR 662 (supra ). Reliance has also been placed on the case Sabarkantha Jilla Ru Utpadakoni Co-operative Spinning Mills Ltd. , Sabarkantha V. The General Manager (7), wherein it was held that "in pursuant to the promises given by the Authorities of the State Government for grant of subsidy for setting up an industry an application was processed and detailed report was submitted and the same was considered by the appropriate Authority and the cash subsidy was sanctioned and the decision was acted upon at par and the amount had already been paid, it was held to be a case where the society relying upon the promises held oat in the scheme, the doctrine of promissory estoppel was attracted and the authorities were directed to pay the balance of the sanctioned amount. In the present case neither there was any sanction nor the payment of part amount was made and, therefore, this judgment is of no assistance to the petitioner. Mr. M. Rafiq appearing on behalf of the Union of India and Mr. K. S. Rathore, Additional Govt. Advocate appearing on behalf of the State of Raj. and Raj. Financial Corporation have submitted that this matter was considered by the Madras High Court in the case of Jaiyakar Fire Works v. Union of India (8) and it was held on 30-8-90 that "the right accrues to the petitioner for grant of subsidy only when a decision is taken by the State Level Committee and the sanction letter is issued to the eligible industrial unit. This judgment of the learned single Judge taken in the letters patent appeal No, 1075 of 1990 and 1076 of 1990 dated 2-11-90 wherein it was held that "the doctrine of promissory estoppel is a principle evolved by equity to avoid injustice and the basis of the doctrine i. e. if any party has by his work or conduct made to the other party an unequitable promise or representation by word or conduct which is intended to create legal relations or effect legal relationship to arise in the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made or has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back on it. It was further observed that the industrial units should get them registered and after registration has to make an application for grant of subsidy and such application have to be considered on merit as to whether a particular industrial unit qualifies for grant of subsidy and also the extent of the subsidy admissible to the unit. In this case the applications were filed and subsidy was never sanctioned and mere filing of application for grant of subsidy was held not safficient to entitle the appellants to obtain the subsidy unless they were found eligible and doctrine of promissory estoppel was not attracted merely on filing of the application as no right is conferred upon by filing the application. ;