Calcutta High Court
Ballyfabs International Limited ... vs National Jute Board on 16 October, 2023
In the High Court at Calcutta
Constitutional Writ Jurisdiction
Original Side
The Hon'ble Justice Sabyasachi Bhattacharyya
WPO/2222/2022
BALLYFABS INTERNATIONAL LIMITED & ANR.
VERSUS
NATIONAL JUTE BOARD
WPO/2250/2022
KELVIN JUTE LIMITED & ANR.
VERSUS
NATIONAL JUTE BOARD
WPO/2252/2022
BALLY JUTE COMPANY LIMITED & ANR.
VERSUS
NATIONAL JUTE BOARD
WPO/2255/2022
AMBICA JUTE MILLS LIMITED & ANR.
VERSUS
NATIONAL JUTE BOARD
For the petitioners : Mr. Suddha Satva Banerjee, Adv.,
Mr. Pradip Kumer Sarawgi, Adv.
For the respondent no.2 : Mr. Aniruddha Chatterjee, Adv.,
Mr. Joydip Banerjee, Adv.,
Mr. Rahul Karmakar, Adv.,
Mr. Surya Prasad Chattopadhyay, Adv.,
Hearing concluded on : 25.09.2023
Judgment on : 16.10.2023
Sabyasachi Bhattacharyya, J:-
1. The petitioners have moved this Court against the refusal of the
respondent-Authority to grant to the petitioners the benefit of two
Incentive Schemes for acquisition of plant and machinery floated by
the respondent.
2. The first Scheme related to the period between October 1, 2013 and
March 31, 2017 and the second between April 1, 2017 and March 31,
2020. Under Scheme 1, the incentive to be granted was twenty per
cent and under Scheme 2, thirty per cent of the costs for acquisition
for MSME units. The petitioners are MSME units.
3. Learned counsel for the petitioners argues that the benefits of the
Schemes were refused on erroneous principles by the respondent.
4. At the outset, dealing with the objection taken by the respondent that
the Union of India is a necessary party to the writ petitions, it is
contended that the Schemes have been floated and issued by the
National Jute Board that is the respondent. The applications for
getting benefit of the same were submitted to the respondent. The
examination, processing and disposal of the applications, under the
Schemes, was also to be done by the respondent.
5. In the present case, the inspection was to be conducted by the
respondent or its duly authorised representative or any other agency
to be identified by the technical committee. The disbursal of funds
under the Schemes to the eligible candidates is also by the
respondent.
6. In fact, if the incentive is found to have been falsely obtained, the
applicants are liable to refund the incentive availed of along with
interest to the respondent itself, as per the clauses of the schemes.
7. Thus, the Union of India has no role to play. The respondent is a body
corporate created under the National Jute Board Act, 2008
(hereinafter referred to as, "the 2008 Act") and may sue or be sued in
its own name under the said Act.
8. It is further contended that suits have been filed by the respondent
and the respondent claims to have adjusted the amount payable
under the Scheme to the petitioner with disbursal made to a different
company. Thus, the Union of India is not a necessary party merely
because the respondent pleads that the funding is done by it.
9. With regard to the question of limitation, also raised by the
respondent, it is argued that such objection is restricted only to
Scheme 1. The applications of the petitioners under the Scheme 2
have been made within the period stipulated therein. The second
Scheme ranged from the period between April 1, 2017 and March 31,
2020, whereas the second application of the petitioners, which is the
relevant application, was made on February 22, 2018. Insofar as the
first Scheme is concerned, learned counsel distinguishes between the
dates of submission of application for getting benefit of the Scheme
and the dates of submission of the actual claims under the Scheme.
10. As per the Scheme, an application for making claims under the
Scheme is to be submitted within one year from the date of issue of in-
principle approval, only after installation and completion of
modernisation process. The date of installation is taken as the cut-off
date for such claims.
11. The revised guidelines, it is argued, for own-source funding, as is the
case of the petitioners under Scheme 1, clearly provides the procedure
to be followed for making an application and for making claims and
permit a unit to approach with LOI (Letter of Interest) and complete
the purchase within nine months from the date of the LOI.
12. Thereafter, on completion of purchase and installation, the unit is to
approach with its claim application.
13. It is evident from the inspection report of the respondent that the date
of LOI was December 1, 2016 and the date of claim was August 21,
2017, which is within the stipulated time. It is contended that the
initial application for the Scheme was made during pendency of the
Scheme itself.
14. Thus, the applications are not barred by limitation, or beyond the
scope of the Scheme.
15. Addressing the third question, whether the petitioners are disentitled
to disbursal of funds on the basis of recommendation made by the
Public Accounts Committee (PAC) of the Parliament, learned counsel
for the petitioners contends that the plea of the respondent on such
score, on the basis of the documents disclosed in the respondent‟s
supplementary affidavit dated June 23, 2023, are not tenable. Those
are extracts of documents, the veracity of which cannot be
ascertained. In fact, from the letter dated May 2, 2022 and the
previous letter dated March 24, 2022, it appears that observations
from the respondent were awaited.
16. Secondly, CBI appears to have recommended blacklisting of one of the
companies and the documents and communications annexed to the
supplementary affidavit of the respondent appears to be internal notes
and letters issued by the respondent on October 20, 2020 and October
13, 2020.
17. It is contended that the respondent has forwarded by its letter dated
August 25, 2020, some cases for being taken up for investigation by
the CBI-ACB, inter alia, involving two of the petitioner-companies,
namely Ambica Jute Mills Limited and Bally Jute Company Limited
which are part of the group companies. In any event, Ballyfabs
International Limited, the petitioner no.1 in WPO No. 2222 of 2022, is
not mentioned in the list. Secondly, no FIR, criminal case and/or
criminal investigation has been initiated by the CBI even against
Ambica Jute Mills Limited or Bally Jute Company Limited, although
the recommendation was made three years back.
18. The only CBI case initiated is against one MPL Corporation Limited
and Awanti Kumar Kancaia. The investigation in the said case was
stayed by this Court by an order dated September 22, 2022.
19. It is argued that there is no order of blacklisting against any of the
group companies or the promoters or directors of Ballyfabs or the
other petitioners, which have any bearing on the eligibility of the
petitioners to claim under the present two Schemes.
20. The respondent has filed a money-suit against Usha (formerly MFL
Corporation Limited) for recovery of an amount which was alleged to
be fraudulently obtained by MFL/Usha Corporation in respect of a
different Scheme. The recommendation of the committee is to
blacklist all involved in the irregularity from availing any benefit under
any Scheme of Government in future, as per the Annexure dated April
21, 2022 at page 7 of the supplementary affidavit.
21. The petitioners claim incentive in respect of Schemes in regard to
which they were found eligible on inspection. Hence, the future
blacklisting, even if any, cannot prevent the petitioners from getting
the benefit of the present Schemes.
22. It is argued that no suit has been filed against the petitioners for
recovery of any amount. Further, it is contended that a company is a
separate juristic entity and the respondent cannot withhold the
benefits of the present Schemes by deeming the same to be adjusted
against the amounts recoverable against a different company.
23. It is acknowledged by the respondent that the only legally valid
process of recovery is institution of a suit; yet, it contends that the
amounts that the petitioner is entitled to under the present Scheme
stand adjusted by extra-legal means and the claim made in the suit
against MFL stands reduced. Such action is de hors the law, it is
argued.
24. The respondent, it is argued, is not entitled to withhold disbursal
under the Schemes on grounds extraneous to the Schemes. In
support of such contention, learned counsel for the petitioner cites
Venkateshwara Wires (P) Ltd. v. District Level Committee, reported at
1991 SCC OnLine Raj 395.
25. All decisions on behalf of the Union of India, it is argued, are to be
taken in accordance with Article 77 of the Constitution of India in the
name of the President of India. Inter-departmental recommendations
or communications are not justiciable nor can be the basis for grant
or refusal of any legitimate claim in law. In such context, learned
counsel for the petitioner cites Shanti Sports Club and Another v. Union
of India and others, reported at (2009) 15 SCC 705.
26. Learned counsel for the respondent argues that the Government of
India is a necessary party. Even if orders were passed in favour of the
petitioners, the same could not be carried out in the absence of the
Government. Both the Schemes-in-question contemplate the
respondent to be only an operating agency in Clause 5 of each of the
same. Clause 11 of the Scheme stipulates that the entire funding is
made by the Ministry of Textiles, Government of India.
27. The National Jute Board (respondent) is governed by the 2008 Act as
framed by the Ministry and enacted by the Parliament on February
12, 2009. The Board engages in research and human resources
development programmes to explore innovative use of jute to enable
both the organised as well as the decentralised sector to compete and
increase the global share of Indian jute goods‟ consumption and, to
augment such position of strength, the Board implement programmes.
The constitution of the Board is such that the entire decision-making
process lies with the Government of India. Although the respondent is
an autonomous body, it does not have self-revenue generation system
but is basically a disbursal agency of the Government of India.
28. Hence, the disbursal of the funds on account of subsidy provided
under the Schemes rests with the Ministry of Textiles, Government of
India, as admitted by the writ petitioners in their representations.
29. The PAC, it is argued, had issued a recommendation indicating the
involvement of the Kankaria Group of Companies in fraud perpetrated
on the Government of India for obtaining subsidies under the Mini
Mission-IV Scheme (MM-IV Scheme). The disparities were galore and
the office of the Principal Director of Commercial Audit and ex officio
member had approved such allegations to be included in the Audit
Report (Civil), 2017. The petitioners are group companies of the
Kankaria Group as per declarations made before their own banker to
obtain subsidy under the present Schemes. Extracts of the report of
the PAC shows that the PAC, in its 39th report, had recommended
legal actions including recovery of amounts found to be defalcated by
the Kankaria Group of Companies. Pursuant to such
recommendation from PAC and as per the direction of Ministry of
Textiles, Government of India, steps were taken against the writ
petitioners as they are companies under the Directorship of the
promoters of Bally Jute and Ambica Jute Mills, to recover money by
adjusting the subsidy.
30. The Rules of Procedures and Conduct of Business in Lok Sabha, along
with the 5th report of the PAC, are relied on to substantiate the powers
of the PAC. The same is not only a recommendatory body but has a
substantive say to check and balance the operation of the
Government. Thus, the entire action taken by the respondent is in
consonance with the directions issued by the Government of India to
whom the funds belong. As such, it is reiterated that the writ petition
ought to fail for non-joinder of the Government of India, which is a
necessary party.
31. The writ petitioners are the alter egos of the other companies, it is
argued, which have been involved in defalcated public money and no
equitable remedy can be granted to the petitioners on the ground of
separate juristic entities. Lifting of corporate veil in such matters is a
mandate as nobody can be permitted to defalcate public money using
different names in the garb of a company.
32. Moreover, it is argued that the writ petition seeks to include claims
under two Schemes in a single writ petition. The claim under the first
Scheme is time-barred since the application for the same was made
after March, 2017 and hence, the application with respect to Scheme
1 was incurably defective. Thus, it is argued that the writ petitions
should be dismissed.
33. Heard learned counsel for the parties. Insofar as the issue of non-
joinder is concerned, a perusal of the Schemes indicates that those
were floated entirely by the respondent-Board. The respondent,
National Jute Board, is a statutory authority constituted under the
2008 Act. In the Scheme itself, it is indicated that the same was
floated by the National Jute Board, the respondent. The respondent
was to operate the Scheme. The subsidy was to be disbursed by the
respondent and in case the incentive was found to be availed by false
information, the amount of subsidy was to be refunded to the
respondent itself along with interest. The rate of interest, as per the
Scheme, shall be the prime lending rate of the respondent‟s banker at
the time of invoking penal clause. All applications were to be made
before the respondent and the respondent was to sanction the same
and disburse funds to the eligible candidates under both the Schemes.
34. Thus, merely on the ground that funding was to be provided by the
Government, it cannot be said that the writ petitions are bad for non-
joinder of the Government of India as a party.
35. All along, the impugned decision was communicated by the
respondent to the petitioner. Hence, the respondent cannot now shy
away by citing the Government of India as the necessary party. Thus,
the objection as to non-joinder of party is turned down.
36. Insofar as Scheme 1 is concerned, the same was to operate between
October 1, 2013 and March 31, 2017. The Letter of Interest (LOI) was
presented on December 1, 2016, that is, within the period of the
Scheme. The claim was made on August 21, 2017, that is, within
nine months from the date of LOI, also in terms of the clauses of the
Scheme.
37. Clause 9(b) of Scheme 1 provides that for own source of finance (as in
the case of the petitioners), the applicant was required to submit
claims within one year (to be extended to 18 months under special
circumstances) from the date of issue of the In-Principle Approval,
which was done in the present case.
38. Clause 3(e) stipulates that the claims can be made only after
installation and completion of modernisation process and accordingly
the date of installation shall be taken as the cut-off date for the
claims, provided other eligible criteria are fulfilled.
39. The eligibility of the petitioners under both the Schemes is admitted.
The inspection team, upon holding due inspection under the purview
of the Schemes, held the petitioners to be eligible for the Schemes.
40. Clause 3(l) of Scheme 1 stipulates that the claim application shall be
submitted within one year from the date of issue of In-Principle
Approval to the upgradation/modernisation proposal or during
continuation of the Scheme, whichever is earlier. Read in conjunction
with Clause 9(b), for own source of finance, a line of distinction has to
be drawn between submission of an application under the Scheme
and submission of claims. Taking into consideration the time-lines in
the present case, particularly since the date of claim was within nine
months from the date of LOI, there cannot be any reason for the
petitioners being deprived of the benefits of the Scheme.
41. Insofar as Scheme 2 is concerned, there is no such dispute regarding
the period of the Scheme having expired.
42. In fact, the respondent has virtually admitted the entitlement of the
petitioners to get the subsidies under the Schemes by alleging that the
subsidy amounts were adjusted with claims against a purported group
company. The moment such allegation is made, it is implicit that the
petitioners were otherwise entitled to the subsidy, since there cannot
be any „adjustment‟ unless the subsidy was payable in the first place
to the petitioners. Only an amount which is payable to the petitioners
could be adjusted against other claims. Thus, the objection of the
respondent as to the entitlement of the petitioners to get the subsidy
under the Schemes is misplaced and not tenable.
43. The modus operandi in which the respondent seeks to „adjust‟ the
subsidy amounts payable to the petitioners with different and
separate claims is not sanctioned anywhere in the Schemes or in the
scheme of things as such.
44. Even if the respondent or the Government of India has a claim against
a third party, be it a sister concern of the petitioners, a group
company of the petitioners or otherwise, the respondent does not have
a lien on the subsidy amount vis-a-vis the claim made against such
third party.
45. The respondent had to establish duly before a competent court of law,
following due process of law, its entitlement and only after obtaining a
decree from the Civil Court in its money suit against the third party,
could the entitlement of the respondent to the said sum arise. Since
the claim against the third party is sub judice, it cannot be said that
the respondent is entitled at all to the said sum, let alone to adjust it
from the subsidy amount payable to the petitioners under different
Schemes.
46. Hence, the adjustment of the subsidy of the petitioners under two
specific Schemes in lieu of an inchoate claim of the respondent
against a third party, group company or otherwise, is palpably illegal
and de hors the Schemes as well as the law.
47. The respondent has also cited the purported recommendations made
by the PAC.
48. Nothing has been produced to indicate that the PAC recommendation
has a binding effect to override the specific liability of the respondent
under the Schemes-in-question. If it were to be so, all public
authorities would cite PAC recommendations to avoid their liabilities
under specific Schemes and contracts.
49. The PAC "recommendations", as suggested by the name, are mere
recommendations for blacklisting companies of a certain group. Such
general recommendations do not have any bearing whatsoever upon
the specific claims of the petitioners under specific Schemes, for which
they were accepted as eligible by the respondent itself.
Recommendations, unless fructified in orders passed by competent
legal forums/courts, do not have any bearing on the claims of the
petitioners under unrelated subsidy Schemes, for which the
petitioners have already been accepted as eligible by the respondent
itself and on the basis of which the petitioners have already acted and
invested resources.
50. Once found eligible and having made valid claims, the respondent
could not resile from its position and refuse to disburse the amount.
The position might have been otherwise if the petitioner had not
participated and/or acted upon the subsidy or had not been found
eligible, in which case the respondent might have argued that nobody
has any right to assert against a public authority, compelling the
public authority to float a scheme or to act upon a scheme.
51. Contrary to such hypothetical situation, in the present case the
petitioners have been found eligible by the respondent under the
Schemes and have specifically invested huge amounts under the
Scheme and have made valid claims.
52. The respondent implicitly accepted the entitlement of the petitioners
to get such subsidy by saying that the amounts were adjusted with a
third party claim.
53. Hence, at this juncture, the respondents cannot plead vague PAC
recommendations to deny their liability to disburse the amounts
under the Schemes. The recommendation of blacklisting by CBI in
respect of other companies, not being the petitioners, is utterly
irrelevant for the present purpose. Recommendations by the CBI are
not convictions. The CBI is merely an investigating agency and its
recommendations do not have any binding effect to negate specific
terms of Schemes floated by the respondent, which is an autonomous
body, particularly after the Scheme has been accepted and acted upon
by eligible participants.
54. In such view of the matter, the petitioners are entitled to the entire
amounts of subsidies which are due to the respective petitioners in
terms of Scheme 1 and Scheme 2.
55. Accordingly, WPO/2222/2022, WPO/2250/2022, WPO/2252/2022
and WPO/2255/2022 are allowed, thereby directing the respondent
therein to disburse the sums respectively due under the two Schemes-
in-question to the petitioners in each of the writ petitions at the
earliest, positively within December 31, 2023.
56. It is made clear, however, that the observations made herein are
restricted to the entitlement of the petitioners to the subsidies under
the schemes-in-question and shall not create any special legal right,
equity or immunity in favour of the petitioners which the petitioners
do not otherwise have in law.
57. There will be no order as to costs.
58. Urgent certified server copies, if applied for, be issued to the parties
upon compliance of due formalities.
( Sabyasachi Bhattacharyya, J. )
