Delhi High Court
Mahipal Singh vs Ministry Of Tourism on 2 June, 2011
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: May 18, 2011
Decision on: June 2, 2011
W. P. (C) 5007/2010
MAHIPAL SINGH ..... Petitioner
Through: Mr. Ambar Qamaruddin with
Mr. Ajay Talesara, Advocates.
versus
MINISTRY OF TOURISM ..... Respondent
Through: Mr. B.V. Niren, CGSC with
Mr. Parikshit Singh Shekhawat,
Advocate.
W. P. (C) 5006/2010
MADHU SINGH ..... Petitioner
Through: Mr. Hitesh Malik, Advocate.
versus
MINISTRY OF TOURISM ..... Respondent
Through: Mr. B.V. Niren, CGSC with
Mr. Parikshit Singh Shekhawat,
Advocate.
W. P. (C) 5009/2010
SHAYM LAL KABRA ..... Petitioner
Through: Mr. Ambar Qamaruddin with
Mr. Ajay Talesara, Advocates.
versus
MISNISTRY OF TOURISM ..... Respondent
Through: Mr. B.V. Niren, CGSC with
Mr. Parikshit Singh Shekhawat,
Advocate.
W. P. (C) 5010/2010
RAGHU RAJ SINGH SISODIA ..... Petitioner
Through: Mr. Ambar Qamaruddin with
Mr. Ajay Talesara, Advocates.
versus
W.P. (C) No. 5007 of 2010 & Batch Page 1 of 7
MINISTRY OF TOURISM ..... Respondent
Through: Mr. B.V. Niren, CGSC with
Mr. Parikshit Singh Shekhawat,
Advocate.
AND
W. P. (C) 1218/2011
RAMDEV KUMAR CHITTLANGIA
AND SONS AND ORS ..... Petitioners
Through: Mr. Ambar Qamaruddin with
Mr. Ajay Talesara, Advocate.
versus
MINISTRY OF TOURISM ..... Respondent
Through: Mr. Neeraj Chaudhari, CGSC with
Mr. Khalid Arshad, Advocate.
CORAM: JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? No
3. Whether the judgment should be reported in Digest? No
JUDGMENT
02.06.2011
1. The common issue in all these petitions concerns the interpretation of certain
clauses of the revised scheme of "Incentive to Accommodation Infrastructure"
announced by a notification dated 7th December 2007 of the Department of Tourism
(„DOT‟), Government of India.
2. The background to the above scheme is that the DOT had been issuing notifications
in 2003 and 2004 to encourage growth of Budget Hotel Accommodation for
promotion of tourism in the country. In supersession of those notifications, the DOT
issued on 30th September 2004 a notification announcing the scheme of "Incentive to
Accommodation Infrastructure". The objective of the scheme was to provide
incentives to newly approved hotel projects in 1 to 3 Star and Heritage (Basic)
categories in the country except the four metropolitan cities of Delhi, Mumbai,
Kolkata and Chennai. The said scheme for grant of capital subsidy was to be effective
for the whole 10th Five Year Plan from 1st April 2002 to 31st March 2007. The scheme
would apply to all hotels in 1 to 3 Star and Heritage (Basic) categories "where the
hotel projects have been completed and classified during the 10th Plan Period." The
incentive was to be in the form of "capital grant of 10% of the total principal loan
taken from designated financial institutions or upto Rs. 25 lakhs to one star, Rs. 50
lakhs to two star and Rs. 75 lakhs to three star and the heritage basic category projects
which is less". It was inter alia clarified that "in the case of heritage hotels where the
investment is required mainly for refurbishment of existing building, which includes
creation of additional facilities and accommodation, the incentive will be available on
the main loan only and not towards any additional loan".
3. The scheme announced by the further notification was later revised by a notification
dated 7th December 2007 which made available the scheme for grant of capital
subsidies to all new hotels in the 1 to 3 star and heritage basic categories "where the
hotel projects have been commissioned and classified by the Ministry of Tourism,
Govt. of India with effect from 01.04.2007 to 31.03.2008. The incentive was to be in
the form of capital grant of Rs. 2 lakh per room subject to a maximum of Rs. 30 lakhs
to a one star hotel, Rs. 3 lakh per room subject to a maximum of Rs. 75 lakhs to a two
star hotel, Rs. 3 lakh per room subject to a maximum of Rs. 100 lakhs to three star
category hotel projects. In case of heritage hotels, where the investment was required
for refurbishment of the existing building, the incentive will be available only for the
lowest category, i.e., Heritage (Basic) of Rs. 3 lakh per room subject to the maximum
of Rs. 100 lakhs. In para 6, it was stated that "the amount of incentive will be released
to the concerned hotel after completion of its classification in the said category". The
hotels availing the capital subsidy under the scheme could apply for upgradation of the
classification beyond the three star category and Heritage (Basic) categories only after
a period of eight years from the date of initial classification.
4. In Writ Petition (Civil) No. 5007 of 2010, the Petitioner applied for classification of
his heritage hotel set up at Sardargarh, District Rajsamand, Rajasthan on 12th February
2007 indicating in the application that the hotel would become operational on 4th April
2007. On 26th February 2007, the Ministry of Tourism („MOT‟) called upon the
Petitioner to furnish certain documents which he did by a letter dated 15th March 2007.
Thereafter it was only on 3rd June 2008 that the Petitioner was informed that the hotel
would be inspected on 4th June 2008 at 12.30 p.m. After the inspection took place by
a letter dated 18th June 2008, the MOT informed the Petitioner that on the
recommendation of the Hotel & Restaurant Approval & Classification Committee
(„HRACC‟), the Sardargarh Heritage Hotel was classified as a heritage hotel for a
period of five years from 18th June 2008 to 17th June 2013. The Petitioner thereafter
applied for the capital subsidy under the revised scheme for an amount of Rs. 63 lakhs
on 21st July 2008. Despite representations made by the Petitioner on 29th July 2009,
30th November 2009 and 16th December 2009, no response was received. Thereafter
the present petition was filed on 17th July 2010. The case of the Petitioner is that in
light of the revised scheme, the Petitioner made a huge investment of Rs. 304 lakhs in
the project for which a loan of Rs. 195 lakhs was also taken. The Petitioner had
applied well in time and for no fault of the Petitioner the classification was delayed by
the MOT and, therefore, could not be completed before 31st March 2008.
Consequently, the Respondents should be directed to release the capital subsidy in
terms of the scheme.
5. In Writ Petition (Civil) No. 5006 of 2010, the Petitioner‟s heritage hotel named
"Hotel Grand Haveli & Resort" at Nawalgarh, District Jhunjhunu, Rajasthan, became
fully operational on 31st December 2007. The Petitioner made an application for
classification on 24th January 2008. After inspection the HRACC on 23rd October
2008 granted the Petitioner the Heritage (Basic) status for a period of five years with
effect from 21st October 2007. Thereafter the Petitioner made an application on 24th
March 2008 for release of the capital subsidy in the sum of Rs. 90 lakhs. The MOT
later issued a further order dated 18th February 2009 classifying the hotel with effect
from 21st October 2007. Here again, on account of non-release of capital subsidy the
Petitioner has filed the present petition.
6. In Writ Petition (Civil) No. 5009 of 2010, the Petitioner‟s hotel "Shreenath Inn" at
Nathdwara, District Rajsamand, Rajasthan became fully operational on 28th April
2007. The Petitioner applied for classification under the three star category on 27th
March 2008. After inspection, the hotel was granted a two star category hotel on 23rd
February 2009 for a period of five years with effect from 10th February 2009.
Thereafter the Petitioner made an application for capital subsidy on 20th March 2009.
7. In Writ Petition (Civil) No. 5010 of 2010, the Petitioner‟s hotel "Tiger Valley
Resort" at Fort Road, Kumbhalgarh, District Rajsamand, Rajasthan became fully
operational on 15th December 2007. The Petitioner applied for classification under the
three star category on 18th March 2008. After inspection, the hotel was granted a two
star status by an order dated 23rd February 2009 of the MOT with effect from 10th
February 2009. In the meanwhile, the Petitioner on 15th April 2008 made an
application for capital subsidy in the sum of Rs. 36 lakhs.
8. In Writ Petition (Civil) No. 1218 of 2011, the Petitioner‟s hotel "Vikramaditya" at
Sri Ganganagar, Rajasthan was made fully operational on 15th March 2008. The
Petitioner applied for classification under the two star category on 20th March 2008.
After inspection, the hotel was granted a two star category status for a period of five
years with effect from 1st December 2008. This was communicated by an order dated
5th December 2008. Thereafter the Petitioner made an application for capital subsidy
on 28th January 2009 in the sum of Rs. 54 lakhs.
9. The common defence of MOT in all these cases is that the notification dated 7th
December 2007 required both the commissioning and the classification to be
completed during the relevant period, i.e., 1st April 2007 to 31st March 2008. It is
submitted that in all these cases although the hotels in question may have been
commissioned prior to 31st March 2008, the classification took place only thereafter.
It is submitted that since one of the essential conditions for grant of capital subsidy
was not fulfilled, the MOT was justified in declining the Petitioners‟ application for
release of capital subsidy.
10. On the other hand, the submission by counsel for the Petitioners is that each of
them applied for classification before 31st March 2008 and as long as the hotels were
commissioned prior to that date the object of the scheme stood satisfied. The delay in
granting classification was on account of the MOT and the Petitioners cannot be made
to suffer on that score. It is further submitted that each of the Petitioners had spent
considerable sums of money in the refurbishment of their heritage hotels in
anticipation of the release of the capital subsidy and, therefore, the MOT was estopped
from denying them capital subsidy. It is further pointed out that till the classification
was not accorded, the Petitioners‟ case for release of capital subsidy could not be
considered.
11. The above submissions have been considered. The very purpose of the scheme in
question was to encourage growth of budget hotel accommodation. The objective was
to encourage the setting up of 1 to 3 star hotels and heritage hotels in non-metropolitan
cities. While the earlier scheme was operational up to 31st March 2007, the revised
scheme was operational for the period 1st April 2007 to 31st March 2008. As long as
the hotels in question were ready and commissioned before 31st March 2008, one of
the major objectives of the incentive scheme stood satisfied. The scheme itself does
not indicate the outer date within which a hotel had to seek classification under the
scheme. In each of these cases the application for classification was made before 31st
March 2008. It is also not in dispute that in each of these cases the hotels in question
were commissioned prior to 31st March 2008. Therefore, from the side of the
Petitioners they had complied with the requirement for their respective hotels to be
commissioned prior to 31st March 2008 and applied for classification prior to that date.
It must be recalled that in terms of para 6 of the notification dated 7th December 2009,
the amount of incentive would not be released till the classification was complete.
Therefore, it did not matter that none of the Petitioners applied for release of the
capital subsidy itself prior to 31st March 2008. In any event, that was not the reason for
rejection of the applications for release of capital subsidy.
12. The only reason given by the Respondents for rejecting the Petitioners‟
applications was that the classification of each of their hotels in terms of the
Notification dated 7th December 2007 was not completed prior to 31st March 2008.
However, this was not a factor in the control of the Petitioners. In each of these cases,
although the applications for classification were made prior to 31st March 2008, the
MOT took its own time to send an inspection team and, thereafter, to grant
classification. None of the Petitioners was however refused classification. They were
only granted it belatedly. In none of the cases has the inspection team found that the
hotel in question was not made operational before 31st March 2008. It is also not the
case of the Respondents that the classification did not hold good as on the dates of
commencement of the hotels in question. Consequently, the two essential
requirements of the Notification dated 7th December 2007 stood satisfied. That the
inspection of the hotels and the consequential issue of the certification for
classification got delayed beyond 31st March 2008 was not something the Petitioners
could have anticipated. Also, in the absence of any clause in the Notification dated 7th
December 2007 requiring the Petitioners to apply before a certain date for
classification, their subsequent plea for release of capital subsidy could not have been
turned down as long as each of their applications were prior to 31st March 2008.
13. In the case of Writ Petition (Civil) No. 5006 of 2010 (Madhu Singh v. Ministry
of Tourism), a further factor is that after granting classification with effect from 21st
October 2007, i.e., during the period 1st April 2007 to 31st March 2008, the MOT
unilaterally revised the date to 21st October 2008 without giving any reasons
whatsoever. Also the grant of classification in other cases from a date, long after the
actual date of inspection is also inexplicable. The inspection team was supposed to
examine if as on the date of the making of the application for classification the
Petitioner could be classified under 1 to 3 star category or Heritage (Basic) category.
In the absence of anything to the contrary in the report of the inspection team, it must
be presumed that the classification held good as on the date of making the application
for the classification. Consequently, this Court finds no merit in the submission of the
Respondents that in each of the cases, the Petitioners did not qualify for release of the
capital subsidy amount.
14. For the above reasons, the writ petitions are allowed. The letters dated 31st March
2010 and 2nd July 2010 of the MOT rejecting the applications by Mrs. Madhu Singh
[Petitioner in W.P. (C) No. 5006 of 2010] and M/s. Ramdev Kumar Chittlangia &
Sons [Petitioner in W.P. (C) No. 1218 of 2011] respectively for release of capital
subsidy are hereby set aside. A direction is issued to the MOT to process the
applications for release of capital subsidy made by each of the Petitioners in terms of
the notification dated 7th December 2007 and pass appropriate orders for release of
capital subsidy within a period of twelve weeks from today. The writ petitions are
disposed of in the above terms with no order as to costs.
S. MURALIDHAR, J
JUNE 2, 2011
ha
