Bombay High Court
M/S. Chinteshwar Steel Pvt. Ltd., ... vs State Of Maha., Thr. Sect. ... on 7 April, 2017
Bench: B.P. Dharmadhikari
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION No. 1010 OF 2016.
1. M/s. Chinteshwar Steel Private Limited,
a company registered under the
Companies Act, having its registered
office at 226, Central Avenue Road,
Lakadganj, Nagpur - 440008.
Through its Director Mr. Digganth N. Soni.
2. Mr. Digganth s/o Naresh Soni,
Director and Share Holder of
Petitioner no.1 Company, aged about 30
Years, resident of Wardhaman Nagar,
Nagpur. ....PETITIONERS.
VERSUS
1. State of Maharashtra,
through Secretary, Industries, Engery
and Labour Department,
Mantralaya, Mumbai - 400 032.
2. The State of Maharashtra,
through Secretary, Geology and
Mining Department,
Mantralaya, Mumbai - 400 032.
3. Directorate of Industries,
New Administrative Building, Second
Floor, Opposite Mantralaya,
Madam Cama Road, Mumbai - 400 032
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through Additional Director
of Industries.
4. The Joint Director of Industries,
Office of the Joint Director of Industries,
Udyog Bhavan, Civil Lines,
Nagpur 440001.
5. The Senior Deputy Director, Regional
Office, Geology and Mining
Directorate, 27, Khanij Bhavan, 4th Floor
Cement Road, Shivaji Nagar,
Nagpur. ....RESPONDENTS
.
-----------------------------------
Mr. R.M. Bhangde, Advocate for Petitioners.
Ms. T. Khan, Asstt. Govt. Pleader for Respondents.
------------------------------------
CORAM : B.P. DHARMADHIKARI &
MRS. SWAPNA JOSHI, JJ.
Date of Reserving the Judgment : 22.03.2017.
Date of Pronouncement : 07.04.2017.
JUDGMENT. (Per B.P. Dharmadhikari, J)
1. Petitioner no. 1 is a Company while petitioner no. 2 is its Director.
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They seek a direction to respondents to consider their claim for refund of
royalty for year 2011-2012 under Package Scheme of Incentives, 2007 by
ignoring the condition prescribing the limitation for raising it. There is
prayer also to set aside the orders of rejection dated 24.12.2013 passed by
Respondent no. 4 Joint Director of Industries (Western region), dated
18.01.2014 by the Respondent no. 5 Senior Deputy Director, and final
rejection on 20.11.2015 by the Respondent no. 3 Additional Director of
Industries. Limitation has been provided for the first time vide the
government circular date 17.06.2011 and the Writ Petition contains a
prayer to quash it or to declare that it can not apply in the case of petitioners
as their eligibility certificate is dated 22.04.2009.
2. Government Resolution dated 30.3.2007 is that Package Scheme
of Incentives, 2007. It is referred to as "scheme" hereafter. The fact that
petitioner no. 1 Unit is governed by this scheme or its entitlement to claim
royalty refund in terms thereof is also not in dispute. It is eligible for period
of 60 months from the certificate dated 22.04.2009. Respondent nos. 1, 3
and 4 plead in their reply that Implementing Agency sanctioned the refund
claim of petitioner for years 2009-2010 and 2010-2011 on 28.04.2014.
Claim of the petitioners for year 2011-2012 was filed by them on 07.12.2013
and is rejected, as it is beyond the time limit for seeking refund mentioned
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in Government Circular issued on 17.06.2011.
3. We have heard learned Shri R.M. Bhangde, learned counsel for
the petitioners and Ms. T. Khan, learned Assistant Government Pleader for
the respondent State and its officers. Considering the issue and order of
this Court dated 07.03.2017, matter has been argued finally by both the
sides. Accordingly, We issue Rule and make it returnable forthwith by the
consent of the parties.
4. Submission in short is, introducing in the scheme, the concept of
limitation by the circular dated 17.06.2011 defeats the vested right of the
petitioner as it operates retrospectively. Other contention is, period of
limitation is introduced by the subordinate authority and since it militates
with the substantive provision for refund in the scheme, it is excessive.
Lastly, it is urged that in absence of any clause for condoning the delay in
genuine cases, in present matter, the entire clause prescribing limitation is
rendered oppressive and arbitrary. To buttress these submissions, Shri
R.M. Bhangde, learned counsel draws support from (1971) 2 SCC 860 --
(Bharat Barrel and Drum Mfg. Co. Ltd. v. ESI Corpn). and (2007) 8 SCC
189- (State of Orissa & Others vs. Tata Sponge Iron Ltd.)
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5. Respondents do not deny the facts. They urge that petition as
presented suffers from the vice of delay and latches. On merits, they point
out that the scheme only contains an outline or a framework. Niceties or
details are to be worked out by the Committee as stipulated in clause 7 of
the Government Resolution dated 30.3.2007. The procedure worked out by
said Committee enjoys same status as that of 2007 Scheme. No inconsistency
can therefore exist between 2007 Scheme and procedure stipulated in
government circular dated 17.06.2011. Ms. T. Khan, learned A.G.P. also
relies on Bharat Barrel and Drum Mfg. Co. Ltd. v. ESI Corpn. (supra).
6. Both sides have relied upon the law laid down by the Hon'ble Apex
Court in Bharat Barrel and Drum Mfg. Co. Ltd. v. ESI Corpn., (supra).
Discussion therein shows absence of delegation. Hon'ble Apex Court notes
that in the latest case the Andhra Pradesh High Court also following the
earlier decision of Madhya Pradesh, Madras and Punjab held that the State
Government had exceeded its powers to frame Rule 17 as no such power to
prescribe limitation under the provisions of Section 96(1)(a) or under
Section 78(2) of ESI Act,1948 can be said to have been delegated to the
State Government. However, Hon'ble Apex Court found that Section 78(2)
does not delegate any power to the Government, to make rules which only
requires the Insurance Court to follow such procedure as may be prescribed
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by rules made by the State Government, which rules can only be made under
Section 96 of the Act. In the view taken, it was unnecessary to examine the
question whether legislative practice lead to the same conclusion though in
the Madras and the Punjab decisions that was also one of the grounds given
in support of their respective conclusions. The contrary view expressed by a
Bench of the Allahabad High Court was held not good law. Hon'ble Apex
Court points out that the Legislature has since chosen to specifically
prescribe three years as limitation period by addition of sub-section (1-A) to
Section 77 while deleting Section 80. Section 77(1-A) provides that every
such application shall be made within a period of three years from the date
on which the cause of action arose. By this amendment the claim under
clause (d), as well as the one under clause (f) of sub-section (2) of Section
75, which provides for the adjudication of a claim by the Insurance Court for
the recovery of any benefit admissible under the Act for which a separate
limitation was fixed under Section 80, is to be made within three years from
the date of the accrual of the cause of action. This amendment is also held to
confirm the view taken by Hon'ble Apex Court that the power under Section
96(1)(b) does not empower the Government to prescribe by rules, a period
of limitation for claims under Section 75. Thus, the correct interpretation of
the statutory provisions and design therein which is determinative.
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7. State of Orissa v. Tata Sponge Iron Ltd., (supra) upholds the view
of the Orissa High Court. High Court has held that the operational
guidelines being in the nature of a subordinate sub-delegated legislation, the
same must be in consonance with the IPR and by reason thereof no other or
further condition could have been stipulated so as to prevail over the policy
decision itself holding. The operational guidelines provided a limitation or
time period for sales tax incentives, High Court found that by sub-delegated
legislation, a delegatee can not effectively amend or supplant legislation.
Operational guidelines and the terms thereof clearly indicated that the
stipulations regarding time period find mention in Clause 5 of the
operational guidelines. Said stipulation relate only to industries covered
under Paras 7.3 and 7.4 of IPR, 1992 and apply to those industries only for
which time periods have been stipulated in IPR itself and not to the
industries/activities covered under Paras 7.2 and 7.5. Since the petitioner's
industry was covered in the EMD category under Para 7.5 of IPR, 1992 read
with Entry 44 of SRO No. 1091 of 1992, Clause 5 of the operational
guidelines did not apply to it. High Court was of the view that Clause 5 of
the operational guidelines and stipulation in the eligibility form (the
eligibility certificate), to the extent it provided for a period of time were not
in consonance with IPR, 1992, and without jurisdiction/without sanction of
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law and ultra vires IPR, 1992. High Court also held that the operational
guidelines and/or instructions were made for administration of incentive
contained in the policy and not for the purpose of imposing any new
stipulation and/or conditions alien to and/or not in consonance with the
passing of the 1992 Policy. It cannot in law be read into and allowed to
operate since it would frustrate the very objective sought to be achieved by
the 1992 Policy Declaration. This view of the High Court is affirmed in
paragraphs 19 to 21 of the reported judgment.
8. In present matter, the petitioner no. 1 industry is eligible for
royalty refund for period of five years from the date of commencement of
commercial production as per clause 5.5 of the government resolution dated
30.03.2007. This Government resolution is further execution of policy in
force since 1964 known as Package Scheme of Incentives. Clause 3.12
thereof explains Procedural Rules to mean and include rules as laid down
under GR Industries,Energy and Labour Department dated 11.08.1980 as
amended from time to time. If there be any conflict, the provisions in GR
dated 30.03.2007 are to prevail. Neither petitioners nor the Respondents
have drawn our attention to the GR dated 11.08.1980 and no arguments on
inconsistency are advanced in that backdrop. As noted supra, Petitioner tries
to urge inconsistency between Scheme and government circular dated
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17.06.2011. In view of clause 3.12 dealing with the procedural rules and
taking care of inconsistency, the effort of the petitioner must fail.
9. Clause 7 of the GR dated 30.03.2007 i.e. Scheme reads as under :-
"7. Committee.
A Committee as constituted comprising of the following
members shall be authorities to interpret and decide all
the issues involving the PSI 2007 and earlier Scheme.
1.Secretary, Industries Department Chairman.
2.Secretary (Finance) Member.
3.Commissioner of Sales Tax. Member.
4.Development Commissioner
(Industries) Member.
5.Joint Director of Industries (PSI) Member
Secretary.
The Committee may if it so desires seek the
advise of expert from relevant field before taking
decision on the subject matter.
The decisions taken by the Committee will be
implemented only after the approval of the Government
at appropriate level."
Thus, the Committee is empowered to interpret and decide all
issues involving the scheme. It is competent to seek expert's assistance also.
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Power of interpretation is obviously with a view to practically implement the
scheme. As disclosed expressly in the preamble of the scheme, it outlines the
eligibility criteria, quantum of incentives and monitoring mechanism for
administering the incentives. When this outline in preamble is juxtaposed
with the clause 7 supra, it follows that the niceties are to be worked out by
the Committee only. Object of making a wide provision in the shape of
clause 7 in scheme is to iron out the creases and resolve the difficulties in
actual implementation. Therefore only, the decision of the Committee
needs to be implemented after approval of the Government at appropriate
level. This arrangement in clause 7 envisages a possibility of conflict in
such a decision taken by the Committee and the scheme itself. The decision
of the Committee may be case specific or then issue based and therefore
having wider ramifications. It may be a policy decision warranting a uniform
adherence.
10. Government Circular dated 17.06.2011 incorporates the decision
of this Committee. This circular deals with various facets of royalty refund
and therefore appears to be a more comprehensive decision on that subject.
Because of its this nature, it has been issued by order of in the name of the
Governor of Maharashtra. We, therefore, find that this decision dated
17.06.2011 styled as Government Circular is in no way subordinate to the
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Government Resolution dated 30.03.2007. On the contrary, it is
complimentary to it and mandates adherence similarly. In view of this
arrangement and object inherent in 2007 Scheme, the exercise of the
committee dated 17.06.2011, though styles as circular, can contain both
procedural and substantive provisions. The Committee functioning under
Clause 7 has to understand and meet the problems faced while translating
the 2007 Scheme into practical. It can take all necessary decisions in the
public interest subject only to rider that such decisions must be ratified by
the competent authority. There is no challenge to this arrangement and it
needs to be honoured as it is neither unconstitutional nor arbitrary.
11. Eligibility certificate of the petitioner dated 22.04.1989, vide its
condition 17(iv) obliges it to comply with all terms, conditions and
provisions of 2007 Scheme, all stipulations as may be made from time to
time as also the procedure prescribed thereunder and in force from time to
time. Thus, petitioners have already subjected themselves to such
stipulations and procedure or change therein. We have already found that
whether exercise in government circular dated 17.06.2011 is procedural or
substantive can not form the bone of contention in as much as the scheme
and later circular stand at same pedestal as far as the petitioners are
concerned. The circular does not extinguish the right to claim refund but
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regulates it in larger public interest by prohibiting the stale claims. When the
refund has to be out of public revenue, verification of the records and
documents at various levels is must. Similarly, the Government must know
the liabilities to be discharged within reasonable time so as to rule out any
manipulations and other mischief. When the arrangement and
appropriation of the funds is always a problem and transparency is desired,
time bound processing of such cases is the only solution. Petitioners do not
even state why period of one year or outer limit of one year for filing refund
claim is arbitrary. At the end of production year, raw material consumed is
matter of record. Hence, choice of this period of one year as period of
limitation after expiry of financial year does not seem to be either arbitrary
or unreasonable. Petitioners have not taken any pains to demonstrate how or
why this period is insufficient. In fact, there are no arguments on these lines.
Legally, we do not see any prejudice caused to any industry by prescribing
this limitation. Contention that benefit of refund of royalty is being taken
away by the government circular dated 17.06.2011 therefore, is, wholly
erroneous and misconceived. We find that said benefit is to be availed by
the petitioners as per 30.03. 2007 Scheme read with government circular
dated 17.06.2011.
12. Claim for benefit of royalty refund for year 2011-2012 ought to
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have been filed by them by 31.12.2013 but, it came to be filed on
07.12.2013. In the meanwhile, petitioners did not challenge the government
circular dated 17.06.2011 for about 2 years. The challenge is therefore
belated. We find substance in the contention of Ms. Khan, learned A.G.P.
that this delay has not been explained.
13. The refusal to refund due to expiry of period of limitation is not
questioned by pointing out that some dispute about availability of the
benefit or about eligibility of raw material consumed by the petitioners, was
then pending and hence, no refund was claimed. The respondents in reply
point out that refund for years 2009-2010 and 2010-2011 got delayed due
to lack of some documents as quantity of coal shown as consumed was
found excessive. This assertion by the respondents of alleged non-
compliance by the petitioners is not dealt with and not in dispute before us.
Late clearance of refund proposal by itself can not be a ground for non-
submission of the further claims within time. Justification therefor pleaded
in paragraph 8 of the writ petition does not advance the case and cause of
the petitioners. Petitioners having submitted the claims earlier can not raise
any challenge to the prescription of time limit on 17.06.2011. Claim for year
2011-2012 was to be submitted within one year from 31.03.2012 i.e., by
31.03.2013. Though their claim has been declined by the reasoned orders,
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petitioners do not plead or point out any difficulty or inability for their
failure to submit it within time. They do not care to explain why it could not
be filed before 31.03.2013 or before 07.12.2013.
14. As a result of this discussion, We find that the petitioners have
failed to substantiate the challenge. No case is made out warranting the
intervention by this Court. Writ Petition is therefore dismissed. Rule is
discharged. No costs.
JUDGE JUDGE
Rgd.
