Varinder Agro Chemicals Ltd. And ... vs Union Of India (Uoi) And Ors.
1999 Latest Caselaw 439 Del

JUDGMENT

C.M. Nayar, J.

1. This petition has been filed under Article 226 of the Constitution of India for issuance of a writ to the respondents to release all outstanding payments of subsidy of Rs. 48.45 lakhs for the fertiliser already supplied by the petitioner and regular monthly subsidy claim bills for the months of May/June, 1989 which have already been submitted as well as for payment of interest on account of delayed payments.

2. The petitioner is a Unit manufacturing Single Super Phosphate fertiliser (SSP). In the manufacturing process the petitioner utilises rock phosphate and sulphuric acid as the raw material for the manufacture of SSP. The Fertiliser (Control) Order, 1985 was enacted under the Essential Commodities Act, 1955 to ensure that fertilisers were available to the farmers at a subsidised rates. The claim for subsidy is based on the ground that in pursuance to the Fertiliser (Control) Order, 1985 the petitioner is supposed to sell fertiliser manufactured at a price lower than the cost of manufacturing the same in order to supply the fertiliser to the farmers at subsidised rates. The subsidy is, therefore, the difference in amount between the cost of manufacture plus a reasonable profit of 12 per cent minus the selling price which is lower than the cost of manufacturing. It is, therefore, stated that the payment of subsidy is merely reimbursement of the expenses that the petitioner incurs in supplying fertiliser to the farmers. Prior to 23rd May, 1982 there was a system of having a flat rate of subsidy for all manufacturing Units in the country which underwent a change from May 23,1982 when the flat rate of subsidy was abolished and it was decided by the respondents to have a uniform price to supply SSP to consumers. Thus a scheme was framed for payment of differential rate of subsidy based on ex-factory price worked out separately for each manufacturing unit on normative basis. A scheme was introduced vide circular dated June 19, 1982 and each unit was asked to submit details as per proforma enclosed with the circular.

3. The present petition was filed in April, 1994 and it is stated that during the pendency of the petition the principal amount of subsidy was released to the petitioners on July 14, 1994. The challenge is, therefore, confined to payment of interest as it is contended that numerous communications were sent to the respondents on August 31,1989, November 26,1991 and February 22,1992. Therefore, the respondents, it is contended, are liable to pay interest with effect from May, 1989 to July 14,1994. It is argued that the respondents are liable to pay interest in pursuance to the provisions as contained in the Scheme dated November 11, 1982 framed for payment of subsidy to Single Super Phosphate manufacturing unit. The learned Counsel for the petitioner contends that paragraph 8 of the Scheme provides that in case any payment is made to the petitioners over and above than the payment due on the basis of the final prices, repayment of excess amount drawn would have to be made to FICC within a period of 15 days and in case it is not made interest at the rate 21 1/2% above the ruling bank rate for working capital loans would have to be paid on the amount drawn in excess of the amount due. Therefore, on the same analogy the petitioners are also entitled to interest. Paragraph 8 of this circular reads as follows:

"8. The rate of subsidy indicated in Col. 6 of the Table under para 1 given in application only for the despatches made upto 30th September, 1982. The rate of subsidy for the period 1.10.82 to 31.12.1982 is under review and will be notified shortly. In order to prevent and liquidity problems to the units, the Government have decided to take provisional payment of subsidy w.e.f. 1.10.1982 at the rates indicated in Col. 6 of the Table above less Rs. 60/- M.T. The payment will be purely provisional and will be subject to adjustment from the bills to be prepared on the basis of final prices, to be notified by this Ministry for the period from 1.10.82 onwards. In the event of the provisional payment above being more than the payment due on the basis of final prices, repayment of excess amount drawn would have to be made to FICC within a period of 15 days from the date of revised prices are notified by the Government. In case, the payment is not made within 15 days, interest at the rate of 2 1/2% above the ruling bank rate for working capital loans will have to be paid on the amount drawn in excess of the amount due on the basis of the final prices for each day of delay including the date of payment."

4. Reliance is placed on the judgment of the Supreme Court as reported in Mahant Narayana Dasjee Varu and Ors. v. Board of Trustees, The Tirumalai Tirupathi Devasthanam and Ors., by learned Counsel for the petitioners to state that interest has to be allowed in computation of mesne profit.

5. The learned Counsel for the respondents has contended that the subsidy has to be worked out on the basis of the material and documents which are required to be supplied by the petitioners. The process required some time and the subsidy was paid to the petitioners on verification during the pendency of the writ petition. The claim for interest will also require investigation of facts which cannot be properly gone into in a petition under Article 226 of the Constitution of India.

6. In the present case, the communication dated November 11, 1982 no doubt prescribes rate of interest as payable by the petitioners when there is excess payment made by the respondents. This, however, does not imply that the petitioners shall also be entitled to interest on the same basis when there is no specific provision which will permit payment of interest to the petitioners as well. The Division Bench of this Court in a judgment reported as Deepak Fertilizer & PetroChemicals Corporation Ltd. v. Union of India, has clearly held as follows:

"(iii) Interest

Petitioners submit that the respondent shall also be directed to pay the amount which may become payable to them in 1983 with interest as the respondent has wrongfully withheld the amount due to the petitioners. Petitioners submit that

under the Scheme the delay in payment of the excess amount attracts payment of interest at the rate of 16% p.a. by the unit whose retention price is lower than the ex-factory price. That may be so but it has to be borne in mind that Scheme does not provide for payment of interest to the units whose retention price under the Scheme is higher than the ex-factory price and who are entitled to receive difference from the Fund Account on submission of claim. The Scheme thus does not contemplate payment of interest by FICC. The fixation of price is a time consuming process and that may be the reason that Scheme does not postulate payment of interest from the Fund. Reference may also be made to the decision of one of us (D.K. Jain, J.) in Ram Ganga Fertiliser etc. v. Union of India and Ors., C.W. 2062/93 decided on 30th July 1993=49 (1993) DLT 130 holding that where a specific stipulation for payment of interest by petitioners to respondent exists in the Scheme and such a stipulation for payment of interest to the petitioner is absent, there have to be compelling reasons to award interest for which facts of each case have to be seen. The position is similar in the present case. Having regard to the facts and circumstances of the case, in our view, the petitioners are not entitled to payment of any interest. We find no compelling reasons to award interest in favour of the petitioners."

7. Similarly, the learned Single Judge in the judgment reported as Ram Ganga Fertilizers Ltd. etc. v. Union of India and Ors., has held in paragraph 10 as follows:

"My attention was drawn by learned Counsel for the petitioners to the stipulations in the Scheme to the effect that if the petitioners failed to credit to the account of FICC the excess amount of the subsidy received within a particular period they were made liable to pay interest to the respondents @ 2.5 per cent over and above the bank's rate of interest for the working capital. Learned Counsel, therefore, submitted that on the same parity of reasoning the respondents should also pay interest to the petitioners when there is inordinate delay on their part to pay the subsidy. In my view, though on a parity of reasoning and analogy, absence of such a stipulation in favour of the petitioners at first sight may seem to be odd and in congruities but the fact remains that whereas a specific stipulation for payment of interest by the petitioners to the respondents exists in the scheme, it has been avoided in favour of the petitioners. Therefore, in the absence of such a stipulation, for payment of interest by the respondents, there have to be compelling reasons, for which facts of each case have to be seen."

8. The Supreme Court has dealt with the question of delay in reimbursement of medical benefits in the judgment reported as Om Prakash Gargi v. State of Punjab and Ors., to hold that it is inexpedient and not proper to direct the State to pay interest for delay in payment of the reimbursement amount. Paragraph 4 of the judgment makes the following reading:

"We do not find any force in the contention. It is true that but for the benefit of reimbursement of the amount granted by the Government, the petitioner has no right to claim reimbursement. The question is whether on account of delay in reimbursing the amount incurred towards medical expenses, the State should be liable to pay also interest on the delayed payment? We are of the view that it is in expedient and not proper to direct the State to pay interest for delay in payment

of the reimbursement amount. It requires verification of the amounts spent by the petitioner and similar person. His right only is to get reimbursement and it does not follow that for the delay in the payment of medical reimbursement, he should also be entitled to interest thereon. The order passed by this Court on an earlier occasion was to the effect of dismissing the special leave petition in limine. Therefore, it does not furnish any ratio decidendi for following the same. Under these circumstances, we do not think that it would be proper to direct payment of interest on the delayed reimbursement of the medical expenses incurred by a Government servant."

9. The claim for interest has to be adjudicated by appreciating the evidence on record to determine the cause or causes of delay in payment. The claim of the petitioners required verification and respondents have paid the amount during the pendency of the writ petition. The questions of fact which will arise for consideration cannot be examined in exercise of powers under Article 226 of the Constitution of India. Therefore, the claim of the petitioners fails. The writ petition, as a consequence, is dismissed. Rule is discharged. There will be no order as to costs.