MAHESHWARI, J. - (1.) THE petitioner, Highway Tyre Retread Pvt. Ltd. is a Private Limited Company engaged in the business of retreading of tyres. THE petitioner applied for a loan to the Rajasthan Financial Corporation which was sanctioned to the tune of Rs. 13. 1 lacs. THE petitioner also applied for the sanction of investment subsidy under a scheme called "the State Capital Investment Subsidy Scheme For New Industries, 1990" (hereinafter referred to as `the Scheme/the Subsidy Scheme' ). THE application of the petitioner for grant of subsidy was allowed and the petitioner was sanctioned an amount of Rs. 2,09,600/- being 20% of the amount of fixed capital investment as admissible for the grant of capital investment subsidy under the aforesaid scheme on 16. 3. 1991 in the first meeting of the District Level Committee (`dlc' for short) held on 16. 3. 1991. An agreement was executed between the petitioner and the respondents State of Rajasthan and Rajasthan Financial Corporation (`rfc' for short) on 31. 5. 1991 and an amount of Rs. 1,57,200/- was disbursed towards the sanctioned subsidy by way of a cheque dated 21. 6. 1991.
(2.) IT appears that the fifth meeting of State Level Committee (`slc' for short) was held on 26. 6. 1991 in which a question raised by RFC as to whether the tyre retreading units could be considered for subsidy under the scheme was taken up for consideration and the SLC decided that these units were not eligible for subsidy. In pursuance to this decision, the Directorate of Industries instructed the RFC on 30. 9. 1991 to recover back the amount paid to the petitioner and for this purpose, the RFC issued letters and reminders to the petitioner and finally informed the petitioner by letter dated 15. 3. 1993 that the petitioner had been requested and reminded to refund the subsidy alongwith update interest and as the petitioner had failed to do so, the RFC had debited his account with the disbursed subsidy amount alongwith interest totaling Rs. 2,05,571/ -. The petitioner has submitted this writ petition questioning the legality of such action on the part of the respondents in recalling the subsidy already sanctioned and paid to it and has prayed for quashing of the orders dated 9. 7. 1992 (Annex. 4), 10. 9. 1992 (Annex. 6), 30. 6. 1993 (Annex. 7) and 15. 7. 1993 (Annex. 8) by which the petitioner was asked to refund the amount of subsidy. The petitioner has also prayed for a declaration that it be held entitled to the grant of subsidy and that the sanction had rightly been accorded and for ancillary reliefs. The petitioner has averred in the writ petition that in the tyre retreading process old and worn out tyres are processed and prepared in such a way that the same tyre could be used again almost as a new one. The worn out tyres are given firstly the surface treatment to make the tyre even and thereafter rubber is applied to it by the process of heat treatment and thus, tyre retreading process in one sense may be treated as manufacturing process and in another sense, it is also a service industry or service unit. The petitioner has submitted that the loan was applied to RFC for Rs. 18 lacs but the same was sanctioned to Rs. 13. 1 lacs. The petitioner also applied for sanction of investment subsidy under the aforesaid subsidy scheme being eligible therefor. The industry of the petitioner became operational on 30. 6. 1990. The subsidy was notified by the State Government on 5. 9. 1990 by issuing issuing a notification and the scheme was made operational with effect from 1. 4. 1990 so to remain in force upto 31. 3. 1995. The scheme gives out eligible industries as stated in Annex. A to the notification, whereas, a list of industries not eligible for this subsidy has been given out in Annex. B. This negative list of Annex. B at item No. 17 excludes `service Units' as being ineligible for the subsidy. However, four exceptions to Item No. 17 have been given which include "heat treatment/surface treatment units". The petitioner has claimed that its unit was engaged in manufacturing process and another sense, it was also a service unit but entitled for the grant of investment subsidy. According to the petitioner, under the aforesaid scheme, the DLC headed by the Collector is the competent authority for sanctioning the subsidy for the industrial units having eligible fixed capital investment below Rs. 25 lacs, whereas, for other industrial units, the subsidy is to be sanctioned by SLC headed by the Commissioner and Secretary to the Government, Industries Department. A detailed procedure for recovery has also been provided under the scheme and guidelines issued under the scheme and according to the petitioner, none of the conditions requisite for recovery of the subsidy already sanctioned and disbursed are applicable to the case of the petitioner. The petitioner was sanctioned subsidy of Rs. 2,09,600/- by the DLC on 16. 3. 1991 (Annex. 1) and formal sanction order was also issued on that very day (Annex. 2 ). A formal agreement was also executed on 31. 5. 1991 (Annex. 3 ). Para 3 in the agreement recites that the State Government has agreed to grant the said subsidy on the terms and conditions contained therein. The petitioner had been advanced only the amount of Rs. 1,57,200/- as subsidy against the sanctioned amount of Rs. 2,09,600/ -. This amount instead of being given in cash to the petitioner had been adjusted in the loan account. The petitioner received an order dated 9. 7. 1992 (Annex. 4) informing that subsidy has been called back by the Director of Industries and the petitioner was advised to deposit the disbursed subsidy amount within seven days, else the same would be debited in its loan account. The petitioner protested against calling back of the subsidy and requested the RFC to supply copy of letter received from the Director of Industries so that it could make representations and till the matter was finally decided, the subsidy amount be not mixed up with the loan account and also requested for disbursement of the balance loan. However, the RFC repeated its order directing the petitioner to deposit the disbursed subsidy amount by the letters dated 10. 9. 1992 (Annex. 6) and 30. 6. 1993 (Annex. 7 ). As the petitioner still failed to deposit the amount, the RFC sent the letter dated 15. 7. 1993 (Annex. 8) stating thus:- " Please refer to our Regd. A/d. letter No. 1900 dt. 9. 7. 1992 & subsequent reminders dt. 10. 9. 1992 & dt. 30. 6. 1993 and personal discussions had with your goodself in number of times in which we have requested you to refund the subsidy alongwith upto date interest as Govt. has rejected your subsidy claim on the ground that unit is not entitled for subsidy under the State Capital Investment Subsidy Scheme, 1990. As you have failed to refund the subsidy alongwith upto date interest, we have debited your A/c. with disbursed subsidy of Rs. 1. 57 lacs plus upto date interest of Rs. 48571/- Total Rs. 2,05,571/ -. " The petitioner has challenged this action coupled with stoppage of disbursement of further loan amount by the RFC by way of this writ petition. This petition was admitted on 1. 11. 1993 and by an interim order, the recovery of subsidy amount was stayed on the condition of the petitioner furnishing surety in the like amount to the satisfaction of the Branch Manager, RFC, Udaipur. This stay order was later on confirmed to last till the decision of the writ petition on 2. 11. 1995.
(3.) THE respondents Rajasthan Financial Corporation and the State of Rajasthan have submitted separate replies to this writ petition. On behalf of RFC, it has been submitted that tyre retreading was not a manufacturing process; that of course the petitioner applied for loan and subsidy but the RFC has no concern with the grant of subsidy which is under the competence of DLC only. In case, any grant is made by mistake, the amount can always be recovered and in the present case, as the tyre retreading was not found to be a manufacturing process, so the amount granted by mistake can be recovered. The allegation of direct adjustment of the subsidy amount in the loan account has been denied with the submissions that cheque No. 081590 dated June 21, 1990 amounting to Rs. 1,57,200/- of the amount of subsidy was handed over to the petitioner but the petitioner on his own endorsed the said cheque in favour of RFC for depositing it in the loan account. It may be clarified at this juncture itself that during the course of hearing an incongruity, so far as this date of cheque is concerned was noticed. The date of cheque had been stated in the reply of RFC as well as of State to be 21. 6. 1990. However, learned counsel for the respondent-RFC has clarified the same to be a typographical error only and has produced on record a receipt dated 21. 6. 1991 for the aforesaid cheque signed on behalf of the petitioner. Learned counsel for the petitioner has also admitted that the cheque was given to the petitioner on 2. 6. 1991. ;