[Cites 9, Cited by 0]
Bombay High Court
Agriculture Produce Marketing ... vs National Bank For Agriculture And Rural ... on 29 April, 2026
2026:BHC-NAG:6649-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
WRIT PETITION No.4105/2015
Agricultural Produce Marketing : PETITIONER
Committee, Amgaon, Tah. Amgaon,
Dist. Gondia, Through Administrator
Shri Anil Bhaiyalal Goswami,
Asst. Registrar, Co-operative Societies
Amgaon, Tah. Amgaon, Dist. Gondia
Vs.
1. National Bank for Agricultural and Rural : RESPONDENTS
Development (NABARD), Maharashtra
Regional Office Through Chief General
Manager, NABARD Maharashtra Region,
54 Wellesley Road, Shivaji Nagar, Pune
- 411 005
2. Assistant General Manager,
State Bank of India, Regional Business
Office - 3, Zonal Office S.V. Patel Marg,
Post Box No. 37, Nagpur 440001
3. State of Maharashtra,
Through Secretary, Department of Co-
operative, Marketing and Textile,
Mantralaya, Mumbai - 32
4. Director of Marketing, Maharashtra
State, Central Building, Pune - 01
5. Agricultural Marketing Board,
Maharashtra State Through General
Manager, Market Yard, Gultekdi, Pune
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6. Union of India,
Through Deputy Agriculture Marketing
Advisor, Govt. of India, Ministry of
Agriculture, Department of Agriculture
Marketing and Cooperation,
Directorate of Marketing and
Inspection, Head Office, NH-IV,
Faridabad - 121001
7. State Bank of India,
Through Bank Manager, Amgaon
Branch, Amgaon, Tah. Amgaon, Dist.
Gondia
8. Branch Manager,
State Bank of India,
Amgaon Branch, Branch Amgaon,
Tah. Amgaon, Dist. Gondia
Mr. A.M. Ghare, Advocate for the petitioner
Mr. S.S. Hulke, AGP for Respondent / State
Mrs. Radhika Bajaj, Advocate for Respondent No.1
Ms. Neerja Chaubey, Advocate for Respondent No.6
CORAM: URMILA JOSHI PHALKE AND
NIVEDITA P. MEHTA, JJ.
Date of reserving the judgment : 21.04.2023
Date of pronouncing the judgment : 29.04.2026
JUDGMENT (PER : NIVEDITA P. MEHTA, J.)
1. By the present petition, the petitioner has sought declaration
that respondent No. 1 - National Bank for Agricultural and Rural
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Development (NABARD), cannot withdraw 25% subsidy of Rs.
22,41,000/- which was agreed in principle to be released to the
petitioner - Committee for the project of construction of 57 commercial
shops on the doctrine of "promissory estoppel" and also that the
respondent Nos.1 and 6 to release 25% subsidy of Rs. 22,41,000/- to
the petitioner - marketing committee in pursuance of their earlier
sanction.
2. Brief facts of the case are as under:
The Petitioner Agricultural Produce Marketing Committee,
Amgaon is a statutory body constituted under Section 11 of the
Maharashtra Agricultural Produce Marketing (Development and
Regulation) Act, 1963 (In short, APMC Act), entrusted with the
development and regulation of agricultural markets within its
jurisdiction. The Petitioner resolved to construct a commercial complex
consisting of 57 shops at the total cost of Rs. 89,64,000/-. The proposal
was duly approved by the Respondent no. 4 Director of Marketing,
Pune and necessary sanction under Section 12(1) of the APMC Act was
granted on 02.02.2011.
3. For financing the project, the Petitioner vide Resolution No. 7/9
dated 21/10/2020 resolved to raise 50%, i.e., Rs. 66,00,000/- of the
cost through a term loan from the State Bank of India, 25% by way of
subsidy from Respondent no. 1-NABARD under the AMIGS Scheme,
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and the remaining 25% from its own resources. Respondent No.1
sanctioned subsidy of Rs. 22,41,000/- and disbursed the first
instalment of Rs. 11,20,000/-, which was credited to the loan account
of the Petitioner. Acting upon such sanction, the Petitioner completed
the construction on 31.03.2012.
4. The Petitioner further submitted its proposal to claim for the
balance subsidy amount, which was also forwarded to Respondent no.
1 by Respondent no. 8. The claim was not rejected; instead, Respondent
no. 1, by communication dated 14.03.2014, sought compliance to
forward a joint inspection report along with supporting certificates.
Despite repeated requests by the petitioner, the joint inspection was not
conducted by the concerned authorities. Thereafter, the respondent
No.1 relying upon the communication dated 25.02.2010 pertaining to
non-waiver of market fee on perishable horticultural commodities,
directed recovery of the subsidy already released and withheld the
balance amount. The first instalment was accordingly recovered on
31.03.2015.
Aggrieved by the recovery of the subsidy already released and
denial of the balance subsidy, the petitioner has filed the present
petition by invoking the writ jurisdiction of this Court.
5. Mr. A.M. Ghare, learned Counsel appearing for the petitioner
made the following submissions :
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The respondent No.1 having sanctioned and partly disbursed
the subsidy, induced the petitioner to undertake and complete the
project. The petitioner has altered its position to its detriment by
incurring substantial financial liability. The respondents are, therefore,
estopped from withdrawing the subsidy and refusing the balance
amount. The recovery of subsidy already disbursed without any fault
attributable to the petitioner and in absence of compliance failure on
its part is arbitrary and unreasonable.
6. He further submitted that the requirement of joint inspection as
stipulated by respondent No.1 was not fulfilled due to the inaction on
the part of the respondents themselves. The petitioner cannot be
penalized for such administrative lapse. The ground of recovery
namely, non waiver of market fee on perishable horticultural
commodities is wholly inapplicable to the petitioner committee, as no
such commodities are traded in its market area and, therefore, the
action of the respondent is based on irrelevant considerations.
7. It is further contended that the sanction and partial release of
subsidy created the legitimate expectations in favour of the petitioner
that the entire subsidy would be released upon completion of the
formalities. The impugned action defeats such expectations without
justification. The petitioner being a statutory body with limited
resources and had no source and no grant-in-aid had suffered serious
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financial redress due to withdrawal of the subsidy which was factored
into the project financing. The learned counsel further submits that
there is no allegation of any misrepresentation or suppression on the
part of the Petitioner, and in absence thereof, recovery of the amount
already disbursed is wholly unwarranted. The learned counsel,
therefore, prays that the impugned action of recovery be set aside and
the Respondents be directed to release the balance subsidy amount.
In support of these submissions, the learned Counsel for the petitioner
has relied upon the following judgments:
i. State of U.P. v. Birla Corporation Ltd., (2020) 20 SCC
320;
ii. Sheth Developers v. Municipal Corporation of Greater
Mumbai, 2024 (2) Mh.L.J. 262.
8. Per contra, Mrs. Radhika Bajaj, learned Counsel for Respondent
no.1 opposed the petition and supported the impugned action. She
submits that the challenge raised in the present petition is
misconceived and devoid of merit. It is urged that the subsidy in
question was governed by the Agricultural Marketing Infrastructure,
Grading and Standardization (AMIGS) Scheme, the implementation of
which is subject to the guidelines and directions issued by the
Government of India through Respondent No. 6. In this regard, it is
submitted that as early as 25.02.2010, Respondent No. 6 had made it
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clear that subsidy under the scheme would be available only to those
Agricultural Produce Marketing Committees where the State
Government had waived market fee on perishable horticultural
commodities.
9. It is submitted that the Petitioner does not dispute that the term
loan in the present case was sanctioned subsequent to the said
communication dated 25.02.2010. It is, therefore, contended that the
Petitioner was not eligible for subsidy under the scheme from the
outset. It is further submitted that Respondent No. 6, by its
communication dated 01.12.2014, specifically directed that no fresh
subsidy claims be entertained in such cases and that subsidy already
released shall be recalled where the loans had been sanctioned after
25.02.2010. The said communication, also specifically referred to the
present petitioner.
10. It is further contended that Respondent No. 1 acts merely as a
channelizing agency for disbursement of subsidy and is bound by the
guidelines and directions issued by the Government of India. It is
submitted that Respondent No. 1 has no independent discretion to
grant or continue subsidy in cases declared ineligible by Respondent
No. 6. In such circumstances, the action of recalling the subsidy already
released and declining the balance claim was taken strictly in
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compliance with binding directions and cannot be termed as arbitrary
or illegal.
11. It is also contended that the submission of the Petitioner that
no cess is levied on perishable horticultural commodities within its
jurisdiction is of no consequence, as the condition under the scheme
relates to waiver of market fee by the State Government and not to the
actual collection thereof by a particular APMC. It is, therefore,
submitted that the Petitioner cannot claim exemption from the
applicability of the said condition.
12. Learned counsel further submits that the approval of the
project by the competent authorities or sanction of loan by the bank
has no bearing on the eligibility of subsidy under the AMIGS Scheme,
as grant of subsidy is subject to fulfilment of the conditions prescribed
under the scheme and the directions issued by the Government of India
from time to time. It is urged that the decision to recall the subsidy
already released and to decline the balance claim has been taken in
pursuance of the specific directions issued by Respondent No. 6 and in
conformity with the governing policy framework. It is further
submitted that mere sanction or partial disbursement does not confer
any vested right upon the Petitioner. In that view, it is contended that
the impugned action cannot be regarded as arbitrary or contrary to the
applicable guidelines, and no fault can be attributed to Respondent No.
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1. Therefore, the petition being devoid of merit, deserves to be
dismissed and no interference is warranted.
13. Ms. Neerja Chaubey, learned counsel appearing for the
respondent no. 6 submitted that AMIGS is a central sector scheme
introduced by the Government of India with an objective of
strengthening the agricultural marketing infrastructure. The scheme is
reformed in and envisages for development of official market systems
by encouraging structured reforms in State APMC laws, including the
provisions for direct marketing, contract farming and private sector
participation. The eligibility under the scheme is not absolute but
conditional. Initially, the State of Maharashtra became eligible for
implementation of the scheme upon amendment of the APMC Act.
However, by subsequent policy decision dated 25.02.2010, the
Government of India introduced an additional mandatory condition
that the assistance under the AMIGS would be available only to those
States, which have waived the market fees on perishable horticultural
commodities. The communication dated 25.02.2010, issued by the
Department of Agriculture and Cooperation pursunt to binding policy,
directed Government disbursement of subsidy under the scheme. The
term loan of the petitioner's project was sanctioned on 30.06.2011. i.e.
subsequent to the issuance of the policy directed dated 25.10.2010.
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14. It is further contended that although the State of Maharashtra
was eligible under the Scheme prior to the said communication, such
eligibility stood restricted thereafter in absence of compliance with the
aforesaid condition. The respondent no.6 being the nodal authority for
implementation of the scheme issued a specific communication dated
01.12.2014, clarifying that the project in the State of Maharashtra,
whether requisite reform had not been undertaken, were ineligible for
subsidy and directing the subsidy already released in such cases be
recalled. The said communication is in the nature of the policy
clarification and is binding upon the respondent No.1.
15. It is an admitted position that the joint inspection as
contemplated under the scheme was not carried out. Even assuming
that the petitioner has addressed the communications, seeking such
inspection, the fact remains that the essential condition precedent for
release of the balance subsidy was not satisfied.
16. The reliance has been placed on the subsequent amendments
and ordinance issued by the State of Maharashtra in the year 2016,
purportedly bringing the State framework in line with reformed
condition envisaged under the scheme. However, such subsequent
developments cannot retrospectively confer eligibility upon the
projects, which were at the relevant time ineligible under the governing
policy. In view of such condition, policy nature of subsidy scheme and
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in absence of compliance with both substantive and principal
requirements, the petitioner cannot assert any enforceable right to
either retention of the subsidy or disbursement or release of the balance
amount.
17. Having heard the learned counsel for the parties and upon a
careful consideration of the pleadings and material placed on record,
this Court finds that the core issue for consideration is whether the
respondents are justified in recalling the subsidy already sanctioned
and partly disbursed instalment to the Petitioner under the AMIGS
Scheme and in refusing to release the balance amount, primarily on the
basis of the communication dated 25.02.2010 issued by the
Government of India, despite prior sanction and completion of the
project.
18. It is not in dispute that the petitioner's project was duly
approved by the competent authorities and that the respondent No.1
sanctioned subsidy of Rs. 22,41,000/- out of which Rs. 11,20,000/- was
actually disbursed. The petitioner - Committee acting upon such
sanction and representation, proceeded to undertake and complete the
project by incurring substantial financial liability, including availing
institutional finance. Thus, the conduct of the respondent unmistakably
created a clear representation that the petitioner was eligible for
subsidy under the scheme. The petitioner completed construction of
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the commercial complex on 31.03.2012. The entire project was
executed on the strength of the financial structuring, which included
the subsidy component. The petitioner, therefore, altered its position
irreversibly based on the assurance extended by the respondent no.
1 , The withdrawal of the subsidy not only defects the financial viability
of the project, but also causes manifest prejudice to a statutory body
discharging public functions.
19. The respondent No.1 itself required a joint inspection as a pre-
condition for release of the balance subsidy. However, such inspection
was admittedly not carried out. The petitioner had called upon the
authorities to undertake the inspection vide communication dated
01.01.2015 yet the respondents failed to act. The petitioner cannot be
penalized for inaction or administrative lapse attributable entirely to
the respondent No. 1. A party cannot take advantage of its own wrong
to defeat the legitimate claim.
20. The respondent Nos.1 and 6 have relied upon the policy
directives requiring waiver of marketing fees on perishable
horticultural commodities at the State level. However, two aspects
assume significance, viz., (1) Respondent Nos.1 & 6 themselves
processed, sanctioned and partly disbursed the subsidy after issuance
of the said directives, (2) At no stage prior to sanction / disbursement
the petitioner was declared ineligible on the ground of waiver of
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marketing fees. This conduct amounts to conscious decision by the
implementing agency to treat the petitioner as eligible under the
scheme. Nay, creating legitimate expectations in the petitioner. Having
done so, treating the petitioner as eligible and extending benefit, it is
not open to the respondents to retrospectively apply the condition to
the detriment of the petitioner.
21. The law does not permit a public authority to adopt a position
which is inconsistent with its own earlier conduct, particularly when
such conduct has induced a party to act to its detriment. The Petitioner,
in the present case, has not merely relied upon a promise but has acted
upon it and completed the project. The consequences of withdrawal
have caused the Petitioner with serious prejudice.
22. In this context, the doctrine of promissory estoppel, as well as
legitimate expectation, assumes critical importance.
The doctrine of promissory estoppel, as evolved in judicial
precedents, rests upon the principle that where one party has, by its
representation, induced another to alter its position, it would be
inequitable to permit the former to retract from such representation. In
the present case, the elements necessary to attract the doctrine are
clearly satisfied. The representation was definite, the reliance was real,
and the alteration of position is evident from the completion of the
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project. No overriding public interest has been demonstrated by the
Respondents which would justify a departure from this principle.
Closely related to this is the doctrine of legitimate expectation.
The consistent conduct of the Respondents in processing, sanctioning,
and partly disbursing the subsidy created a reasonable expectation in
favour of the Petitioner that, the benefit would be continued and com-
pleted in accordance with the scheme. Such expectation, once created,
cannot be defeated arbitrarily or without adequate justification. In the
present case, the subsequent withdrawal of the subsidy, without any
change in the underlying factual matrix, defeats such expectation and
renders the action of the Respondents unfair and arbitrary inasmuch as
it creates a false assurance and deprives the Petitioner of fair treat-
ment.
The principle laid down in M/s Motilal Padampat Sugar Mills Co.
Ltd. vs. State of U.P. & Ors., 1971 AIR 621 applies with full force,
wherein it was held that the Government is bound by its promise once
the promisee has acted upon it. Similarly, in Pawan Alloys & Casting
Pvt. Ltd. Meerut vs. U.P. State Electricity Board & Ors. , AIR 1997 SC
3910 it has been held that a concession once granted and acted upon
cannot be withdrawn to the prejudice of the beneficiary in the absence
of overriding public interest.
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Similarly, recently, the Apex Court in IFGL Refractories Ltd. v.
State of West Bengal CIVIL APPEAL NO. 66 OF 2026 (Arising out of
Special Leave Petition (C) No. 7013 of 2019), held that once incentives
are extended and acted upon, their withdrawal in a manner prejudicial
to the beneficiary would be impermissible. The relevant paragraphs are
reproduced herewith for reference:
115. According to this Court, the true principle of
promissory estoppel seemed to be that where one party
has, by his words or conduct, made to the other a clear
and unequivocal promise which is intended to create
legal relations or effect a legal relationship to arise in the
future, knowing or intending that it would be acted upon
by the other party to whom the promise is made. Where
it is in fact so acted upon by the other party, the promise
would be binding on the party making it, and he would
not be entitled to go back upon it, if it would be
inequitable to allow him to do so, having regard to the
dealings which have taken place between the parties.
This would be so irrespective of whether there is any pre-
existing relationship between the parties or not.
116. It was further observed that it is not necessary, in
order to attract the applicability of the doctrine of
promissory estoppel, that the promisee, acting on the
promise, should suffer any detriment. What is necessary
is only that the promisee should have altered his position
in reliance on the promise. This Court was of the view
that the doctrine of promissory estoppel is also applicable
against the government, where the government makes a
promise knowing or intending that it would be acted
upon by the promisee. Where, in fact, the promisee,
acting on it, alters his position, the government would be
held bound by the promise. The promise would be
enforceable against the government at the instance of the
promisee, notwithstanding that there is no
consideration for the promise and the promise is not
recorded in the form of a formal contract.
xxxxx
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133. This litigation is a fine specimen of the
bureaucratic lethargy. It is this bureaucratic lethargy
which gave rise to this long drawn litigation. This Court
in many of its decisions has reminded various State
Governments that if the object of formulating the
industrial policy is to encourage investment, employment
and growth, the bureaucratic lethargy of the State
apparatus is clearly a factor which will discourage
entrepreneurship.
134. The State must abandon the colonial conception of
itself as a sovereign dispensing benefits at its absolute
discretion. Policies formulated and representations
made by the State generate legitimate expectations that
it will act in accordance with what it proclaims in the
public domain. In the exercise of all its functions, the
State is bound to act fairly and transparently, consistent
with the constitutional guarantee against arbitrariness
enshrined in Article 14 of the Constitution of India. Any
curtailment or deprivation of the entitlements of private
citizens or private business must be proportional to a
requirement grounded in public interest. This
understanding of the limits of State power has been
recognised and reiterated by this Court in a consistent
line of decisions. As an illustration, we would like to
extract this Court's observations in National Buildings
Construction Corporation (supra):
"The Government and its departments, in administering
the affairs of the country are expected to honour their
statements of policy or intention and treat the citizens
with full personal consideration without any iota of abuse
of discretion. The policy statements cannot be
disregarded unfairly or applied selectively. Unfairness in
the form of unreasonableness is akin to violation of
natural justice."
(See: The State of Jharkhand and Ors. v. Brahmputra
Metallics Ltd, Ranchi and anr., reported in (2023) 10 SCC
634)
23. Such expectation, once created, cannot be defeated arbitrarily
or without adequate justification. In the present case, the subsequent
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withdrawal of the subsidy, without any change in the underlying factual
matrix, defeats such expectation and renders the action of the
respondents unfair and arbitrary inasmuch as it creates a false
assurance and deprives the petitioner of fair treatment.
24. Learned counsel for the Petitioner has placed reliance upon State
of U.P. v. Birla Corporation Ltd., and the decision of this Court in Sheth
Developers v. Municipal Corporation of Greater Mumbai , to contend
that the State is bound by its representation where a party has acted
upon it. This Court finds that the principles emerging from the
aforesaid decisions squarely apply to the facts of the present case, and
the reliance placed by the Petitioner is well founded.
25. The recall of subsidy already disbursed after lapse of suitable
time and after completion of project is manifestly arbitrary and
incoherent with settled jurisprudence in this regard. The petitioner is
a statutory body with limited financial resources has been subjected to
a financial hardship due to shifting stands of the authority.
26. In matters of policy, the Government undoubtedly retains the
authority to modify or withdraw incentives prospectively. However,
such power must be exercised in a manner that does not unsettle
completed transactions or operate to the prejudice of parties who have
already acted upon the earlier policy. The balance between policy
discretion and fairness must be maintained. In the present case, the
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impugned action tilts the balance in favour of policy at the cost of
fairness, which cannot be sustained.
27. The petitioner has specifically asserted that it does not levy
marketing fees on perishable horticultural commodities, as such
commodities are not traded within its jurisdiction. This assertion has
not been effectively controverted. In such circumstances, stringent
application on the State whether the condition, without examining its
actual applicability to the petitioner, results in unjust and mechanical
denial of benefit.
28. It is also relevant that the State of Maharashtra, has in due
course undertook the amendment in the year 2016 with the policy
requirements. This reinforces the position that the scheme was
intended to promote reforms rather than to penalize the completed
projects retrospectively. Denying subsidy in the present case would
defeat the very object of infrastructure development under the scheme.
The petitioner is a statutory market committee functioning for the
benefit of the agriculturalist. The project in question has already
been completed and is serving the public purposes / interest. On the
other hand, denial of subsidy does not advance any over riding public
interest and merely results in financial hardship to the petitioner.
Equity, therefore, clearly tilts in favour of the petitioner.
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29. In view of the aforesaid analysis, this Court is of the considered
opinion that the action of respondent Nos.1 and 6 having sanctioned
and partly disbursed the subsidy are bound by their representation and
cannot withdraw the same to the prejudice of the petitioner. The
petitioner having completed the project based on such representation,
the doctrine of promissory estoppel is squarely applicable. The failure
to conduct joint inspection is attributable to the respondent Nos.1 and
6 and cannot be used to deny the petitioner to its legitimate
entitlements. The recall of subsidy already disbursed and refusal to
pay balance amount is arbitrary, unreasonable and violates Article 14
of the Constitution of India. The policy condition relied upon by the
respondents cannot be applied retrospectively in the facts of the
present case.
30. Accordingly, writ petition is allowed with the following
directions.
i. The action of the respondent No.1 in recalling the subsidy
amount of Rs. 11,20,000/- is quashed and set aside;
ii. The respondents are directed to refund the recovered amount
Rs. 11,20,000/- within a period of 12 weeks from the date of
this judgment;
iii. The respondents are further directed to process and release
the balance subsidy amount of Rs. 11,40,000/- to the
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petitioner subject to verification of the condition of
completion of formalities within a period of 12 weeks.
No order as to costs.
Rule is made absolute in the above terms.
(NIVEDITA P. MEHTA, J.) (URMILA JOSHI PHALKE, J.)
MP Deshpande
Signed by: Mr. M.P. Deshpande
Designation: PA To Honourable Judge
Date: 29/04/2026 17:11:13
