Delhi High Court
Union Of India vs Ambika Resorts on 2 May, 2012
Author: Rajiv Shakdher
* THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on : 20.03.2012
% Judgment delivered on: 02.05.2012
+ W.P.(C) 7150/2011
M/S HOTEL WAMAN ..... Petitioner
versus
UNION OF INDIA ..... Respondent
+ LPA 952/2011
UNION OF INDIA ..... Appellant
versus
RAMDEV KUMAR CHITTLANGIA & SONS & ORS. ..... Respondents
+ LPA 33/2012
UNION OF INDIA ..... Appellant
versus
MAHIPAL SINGH ..... Respondent
+ LPA 34/2012
UNION OF INDIA ..... Appellant
versus
MADHU SINGH ..... Respondent
+ LPA 35/2012
UNION OF INDIA ..... Appellant
versus
RAGHU RAJ SINGH SISODIA ..... Respondent
+ LPA 36/2012
UNION OF INDIA ..... Appellant
versus
SHYAM LAL KABRA ..... Respondent
+ LPA 74/2012
UNION OF INDIA ..... Appellant
versus
AMBIKA RESORTS ..... Respondent
Advocates appeared in this case:
For the Petitioner: Mr Krishna Kumar Singh & Mr Jamesh Daniel David, Advs. for Mr. S. Udaya
K. Sagar, Adv. for the Petitioner in WP(C) No. 7150/2011.
For the Appellants: Mr A.S. Chandhiok, ASG with Mr Neeraj Chaudhari, CGSC in LPA No.
952/2011; Mr B.V. Niren, CGSC in LPA Nos. 33/2012, 34.2012, 35/2012,
36/2012; Mr Jatan Singh, CGSC in LPA No. 74/2012 and Mr Praveen
Chakroborti, Assistant Director, Ministry of Tourism.
For the Respondents: Mr A.S. Chandhiok, ASG with Mr Jatan Singh, CGSC in WP(C) No.
7150/2011.
Mr Ajay Talesra, Mr Brajesh Kumar & Mr Varun Nischal, Advs. in LPA Nos.
952/2011, 33/2012, 35/2012 and 36/2012.
Mr Hitesh Malik & Ms Nupur Chaudhary, Advs. in LPA no. 34/2012.
Mr M.J. Michael, Mr Pradeep Jain, Mr Dveep Ahuja & Mr Abhas Mishra,
Advocates in LPA no. 74/2012.
CORAM:-
HON'BLE MR JUSTICE SANJAY KISHAN KAUL
HON'BLE MR JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J
1. In respect of the captioned matters, we have before us two points of view
expressed by two single judges of this court. The six (6) LPAs being LPA Nos.
952/2011, 33/2012, 34/2012, 35/2012, 36/2012 & 74/2012, are directed against
order dated 02.06.2011 passed by Dr. Justice S. Muralidhar, while WP(C) No.
7150/2011 has been referred to us for adjudication vide order dated
27.09.2011 by virtue of an order passed by Mr Justice Rajiv Sahai Endlaw.
2. In so far as Dr. Justice S. Muralidhar is concerned, he allowed the writ
petitions from which the present six (6) LPAs arise vide his order dated
02.06.2011, while Mr Justice Rajiv Sahai Endlaw having differed with the
view of Dr Justice S. Muralidhar, as indicated above, after recording short
reasons referred the said writ petition to the division bench for a final view in
the matter.
3. The facts pertaining to the formation and the evaluation of the scheme
promulgated by the Government of India (in short GOI), Department of
Tourism (in short DOT) fall in a narrow compass. What really bedevils the
litigant before us, is the applicability of the provisions of the scheme to the
facts obtaining in each case. We shall deal with relevant facts of each case, in
so far as they are, in our view, pertinent to in their applicability to the provisions
of the scheme put in place by the DOT, as we go along with our judgment.
SCHEMES IN PLACE IN 2003-04
4. We are in these matters concerned with a scheme formulated on
07.12.2007 (in short the 2007 scheme) by the DOT, under aegis of the GOI.
However, in order to appreciate the provisions of the 2007 scheme, one would
have to broadly advert to the earlier schemes put in place since, the 2007
scheme is only, a revised version of the earlier schemes; the general terms and
conditions remaining the same. Therefore, firstly, we intend to indicate
the broad background in which the 2007 scheme came to be formulated.
4.1 It appears that the DOT between August, 2003 to June, 2004 had
issued a series of notifications to encourage the growth of budget hotel
accommodation for tourism in the country. The notifications issued in this
behalf bore the same number, i.e., no. N.14-TH.II(3)/2002. They were,
however, issued on different dates these being: 22.08.2003, 02.12.2003 and
07.06.2004. The schemes, thus formulated, were directed towards grant of
"Incentive to Accommodation Infrastructure" vis-à-vis newly approved
hotel projects in the category of first, second and third star, as also, in the
heritage (basic) category. The schemes, as notified in the aforementioned
notifications of 2003-04, were applicable throughout the country except in
the four (4) metropolitan cities of Delhi, Mumbai, Kolkata and Chennai.
4.2 The aforementioned three (3) notifications were superseded by a fourth
(4th) notification bearing no. N.14-TH.II(3)/2002 dated 30.09.2004 (in short the
2004 scheme). The broad provisions of the 2004 scheme were as follows:
2004 SCHEME
(i) The 2004 scheme was to remain effective throughout the tenth (10th) five
year plan, i.e., between 01.04.2002 to 31.03.2007.
(ii) The scheme was to apply to all hotels in one, two and three star, and
heritage (basic) category in respect of those hotel projects which were
"completed" and "classified" during the tenth (10th) plan period.
(iii) The incentives were to be given in the form of a capital grant at the rate of
10% of the total principal loan amount taken from a designated financial
institutions subject to a limit of Rs 25 lacs for one star hotel, Rs 50 lacs for two
star hotel, and Rs 75 lacs for a three star and a heritage (basic) hotel.
Therefore, the applicant hotel was entitled to a capital grant of 10% of the
principal loan amount or the limits prescribed, whichever was less.
(iv) The scheme specifically prohibited grant of incentives on additional loans
taken for creation of additional facilities, accommodation/escalation etc. The
benefits were also not available if a loan was taken for refinancing an
earlier loan.
(v) In so far as heritage hotels were concerned where investment was required
only for refurbishment of existing building, which included creation of additional
facility and accommodation, the incentive was available only on the "main
loan" and not on any additional loan taken.
(v) The scheme adverted to the designated financial institutions, which included
Scheduled banks, situated in all places except the four (4) metropolitan cities, i.e.,
Delhi, Mumbai, Kolkata and Chennai.
(vi) The incentives were to be routed through the designated financial
institutions and scheduled banks, after, the completion of the project and
approval of its classification. The DOT, had also stipulated the criteria for
approval of such hotel projects and their classification. In this connection
general terms and conditions and formats of application both for approval at the
project level and the classification of hotels was also provided. We will
advert to the general terms and conditions a little later.
4.3 The 2004 scheme evolved under the 30.09.2004 notification which
superseded the three (3) notifications issued between August, 2003 and June,
2004, brought the incentivitisation scheme to an end on 30.03.2007, which
was co-terminus with the expiry of the tenth (10th) Five year plan.
5. Consequently, a hiatus was created as the revised scheme (which is
the 2007 Scheme) was notified by the government of India only on 07.12.2007
vide notification no. 14-TH.II(I)/2007. The vacuum, so to say, was attempted
to be filled up by the DOT by bringing into force, the notification dated
07.12.2007, w.e.f. 01.04.2007. The DOT, however, made it clear that the
2007 scheme would run, that is, will be effective only for the first year of the
Eleventh (11th ) five year plan, i.e., upto 31.03.2008 and that too on an
"experimental basis". Interestingly, this scheme was made applicable
throughout the country. The exceptions carved out under the 2004 scheme were
given a go-by, in so far as the four metropolitan cities were concerned. Since
the claims for grant of capital subsidy under the 2007 scheme are pivoted on
certain clauses of the scheme, which are not too many in number, we propose
to extract the same.
2007 SCHEME
"(i) The scheme would apply to all new hotels in 1 to 3 star and
heritage (basic) category 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.
(ii) The incentive will be in the form of capital grant of Rs 2.00
lakh per room subject to a maximum of Rs. 30 lakhs to one star
hotel. Rs. 3.00 lakh per room subject to a maximum of 75.00 lakh
to two star hotel, Rs. 3.00 lakh per room subject to a mazimum of
Rs. 100.00 lakhs to three star category hotel projects.
(iii) 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 only for the lowest category, i.e., Heritage (Basic)
of Rs 3.00 lath per room subject to the maximum of Rs 100.00
lakh.
(iv) The amount of incentive will be released to the concerned
hotel after completion of its classification in the said category.
(iv) Hotels availing the capital subsidy under the Scheme can
apply for upgradation in classification beyond three star category
and Heritage (basic) only after a period of eight years from the date
of initial classification."
6. The above apart, at this stage it would also be useful to refer to the general
terms and conditions which were made applicable to the aforementioned
schemes, both for approval of the hotel project and its classification post the
operability of the applicant-hotel.
6.1 Importantly, during the course of the arguments, there was no portrayal
whatsoever that the general terms and conditions stipulated by the GOI, had not
continued to operate since the inception of the scheme, that is, between 2003 and
2004. Therefore, there is no dispute before us, that the said terms and conditions
would also apply to the 2007 scheme. In this regard, we propose to cull out
hereinbelow, some of the relevant conditions:
"Approval at project level:
1. The Department of Tourism approves hotels at project
stage based on documentation which enables the hotels to
get certain benefits from the govt. as announced from
time to time. The documents required for project approvals
are listed below.
2. Project approvals are valid for 5 years. Project approvals of
the Govt. of India, Department of Tourism cease 3 months
from the date that the hotel becomes operational even if all
its rooms are not ready. The hotel must apply for
classification within these 3 months.
3. x x x x
4. Application form, this covers
i. Proposed name of the note,
xxxx xxxx
vii. Details of the project
xxxx
xxxx
5. xxxx
6. xxxx
7. The hotel must immediately inform the Department of
the date from which the hotel becomes operational and
apply for classification within 3 months of this date.
8. xxxx
9. The promoters must forward regular progress reports for
each quarter failing which the project approval would be
considered withdrawn.
10. All documents must be valid at the time of application
and a Gazetted Officer or Notary must duly certify copies
furnished to the Department. Documents in local
language should be accompanied by a translation in
English/ official language and be duly certified.
11. xxxx
12. xxxx
13. xxxx
14. xxxx
HOTEL CLASSIFICATION
1. Classification for newly operational hotels must be sought
within 3 months of completion of approved hotel projects.
Operating hotels may opt for classification at any stage.
However, hotels seeking re-classification should apply for
reclassification one year prior to the expiry of the current
period of classification.
2. If the hotel fails to reapply 1 year before the expiry of the
classification order, the application will be treated as a fresh
classification case.
3. Once a hotel applies for classification/re-classification, it should
be ready at all times for inspection by the HRACC. No requests
for deferment of inspection will be entertained.
4. Classification will be valid for 5 (five) years from the date of
issue of orders or in case or reclassification from the date of
expiry of the last classification provided that the application has
been received within the stipulated time mentioned above, along
with all valid documents. Incomplete applications will not be
accepted.
5. xxxx
6. Hotels applying for classification must provide the following
documentation.
a. application form detailing
i. Name of the hotel.
xxxx
xxxx
v. Date on which the hotel became operational.
xxxx
vii. Details of the hotel
xxxx
xxxx
viii. Certificates/ No objection certificate's (attested copies)
a. Certificate/ licence from Municipality/ Corporation to
show that your establishment is registered as a hotel.
b. Certificate/ licence from concerned Police
Department authorizing the running of a hotel.
c. Clearance Certificate from Municipal Health
Officer/ Sanitary Inspector giving clearance to your
establishment from sanitary/ hygienic point of view.
d. No objection certificate with respect to fire fighting
arrangements from the Fire Service Department (local
Fire Brigade Authorities)
e. Public liability insurance.
f. Bar Licence (necessary 4*, 5* and 5*--D only)
g. Money Changers Licence (necessary for 4*, 5* and 5*-D
only).
h. Sanctioned building plans/ occupancy certificates
i. If classified earlier, a copy of the earlier certificate
of classification issued by Department of Tourism.
j. For heritage property, certificate from the local
authority stating age of the property and showing new
and old built up areas separately.
k. Any other local authority as may be required.
l. Approval/NOC from AAI for projects located near
Airports.
m. Please indicate whether a few rooms or all rooms are to
be let out on a time-share basis.
n. Application fees.
The above-mentioned approvals/No Objection Certificates
are the responsibility of the owners/promoters/concerned
company as the case may be. The Department's approval is
no substitute for any statutory approval and the approval
given is liable to be withdrawn without notice in case of any
violations or misrepresentation of facts.
p. 7. All applications for classification or re-classification must be
completed in all respects -- application form, application fee,
prescribed clearances, NOCs, certificates etc. -- incomplete
application is liable to be rejected.
8. Hotels will qualify for classification as Heritage Hotels
provided a minimum 50% floor area was built before 1935
and no substantial change has been made in the façade. Hotels,
which have been classified/ re-classified under Heritage categories
prior to issue of these guidelines will continue under
Heritage categories even if they were built between 1935-1950.
9. xxxx
10. xxxx
11. Hotels will be classified following a two stage procedure
a. the presence of facilities and services will be evaluated
against the enclosed checklist.
i. New projects will be required to adopt environment
friendly practices and facilities for physically
challenged persons.
ii. Existing hotels being classified will need to conform
to a phased plan for adding eco-friendly practices
and facilities for physically challenged persons,
which should be completed by 31st December.
b. the quality of facilities and services will be evaluated
against the mark sheet.
12. xxxx
13. Any deficiencies/ rectifications pointed out by the
HRACC must be complied with within the stipulated time,
which has been allotted in consultation with the hotel
representatives during inspection. Failure to do so will result in
rejection of the application.
14. xxxx
19. Incomplete applications will not be considered. All
cases of classification would be finalized within three months of
application being made." (emphasis is ours)
7. It is not in dispute that all applicant-hotels had commenced operation
within the tenure of the scheme, i.e., 01.04.2007 to 31.03.2008; save and except
one hotel, to which we will make a reference when we discuss individual cases.
It is also not in dispute that the applicant -- hotels have been classified by the
designated authority; albeit after 31.03.2008. In some cases applications have
been made for classification within the prescribed period i.e., 01.04.2007 to
31.03.2008, whereas in others, application has been made after 31.03.2008. We
must mention here that, there is one case, in which, application for classification
was received prior to 01.04.2007. There are also some cases where on inspection
certain shortcomings were noticed, in respect of which, corrective measures were
asked to be taken.
7.1 There are, therefore, on facts cases, which fall in different slots.
Whether, and to what extent, such differences ought to lead to denial of grant of
capital subsidy will be analysed by us hereinafter, when we deal with individual
cases. But before that, we propose to encapsulate the arguments of both sides.
SUBMISSION OF COUNSELS
8. The Union of India (UOI), which is the appellant in the six (6) LPAs,
referred to above, were represented by Mr A.S. Chandhiok, the learned ASG
instructed by Mr. Neeraj Chaudhari, Mr B.V. Niren and Mr Jatan Singh,
CGSCs. On behalf of the applicant-hotels, which include the respondents in the
six (6) LPAs and the petitioner in WP(C) No. 7150/2011, arguments were
advanced by Mr Krishna Kumar Singh and Mr. Jamesh Daniel David,
Advocates in the writ petition; Mr Ajay Talesara, Advocate in LPA Nos.
33/2012, 35/2012, 36/2012 and 952/2011; Mr Hitesh Malik and Ms Nupur
Chaudhary, Advocates in LPA No. 34/2012 and Mr. M.J. Michael, Mr. Pradeep
Jain, Mr. Dveep Ahuja and Mr. Abhas Mishra, Advocates in LPA No. 74/2012.
9. On behalf of the UOI it was argued that the impugned judgment of the
learned Single Judge was flawed for the following reasons:
(i) It failed to take into account that, as per clause 3 of the 2007 scheme,
which was in vogue at the relevant point in time, both commissioning as well as
classification of the applicant-hotels had to be carried out within the validity
period of the scheme, i.e., 01.04.2007 to 31.03.2008.
(ii) It was contended that the policy, in particular, clause 3 of the 2007 scheme,
was unambiguous in this regard, and hence there could have been no occasion to
stipulate an outer date by which applications for classifications had to be
made, as was observed by the learned Single Judge. The contention being that
it was inherent in the stipulation of the validity period and the wordings of
clause 3 that not only had the application to be made prior to 31.03.2008,
but that, the classification by the designated authority had to be obtained prior
to the said date.
(iii) The impugned judgment erroneously granted benefit to all such applicant-
hotels, which had made applications prior to 31.03.2008, but had obtained the
necessary classification only thereafter. In this connection it was submitted
that, the effect of such an interpretation by the learned Single Judge, had led to
grant of financial benefit under the 2007 scheme well beyond the time
frame prescribed thereunder. The 2007 scheme being valid only for a period
of one year had thus been extended much beyond that period.
(iv) The terms and conditions of the scheme required the applicant-hotels to
submit applications for classification which were complete in all respects. The
learned Single Judge failed to notice that shortcomings had come to light
during the course of inspection by the designated authority and, it was only
upon the necessary corrections being carried out that, the applicant-hotels
were granted their request for classification. In this regard, our attention was
drawn by way of example, to the facts obtaining in : WP(C) no. 7150/2011
(Re: Hotel Waman) and LPA No. 74/2010 (Re. Ambika Resorts Pvt. Ltd). As
a matter of fact, in respect of, Ambika Resorts Pvt. Ltd., we were informed that
the said hotel was inspected by the designated authority on 13.02.2008. The
areas of concern were communicated to the concerned persons vide email dated
18.02.2008. The said applicant-hotel was given a time frame of three (3)
months to carry out the necessary improvements. The said applicant hotel was
thereafter re-inspected on 27.04.2008. On re-inspection, it was recommended
for being categorized as a two-star hotel as against three star. It is not in
dispute that the said applicant-hotel as a matter of fact finally accepted the
two star categorization/rating accorded by the designated authority vide its
letter dated 21.05.2008.
(v) It was also quite vehemently argued before us by the learned ASG, that the
grant of classification was an exercise which had various benefits attached to it,
including the grant of subsidy. In other words, it was the learned ASG's
contention that the fact that, the designated authority carried out the exercise of
classification post 31.03.2008 had, in a sense, no connection with the grant of
capital subsidy. The learned ASG in this regard adverted to a part of the
annexure (appended at page 72 of the paper book filed in LPA No. 952/2011),
which read as follows:
"Classifieds hotels/approved projects are eligible for various
concession and facilities that are announced by the Government
from time to time besides getting worldwide publicity through the
India Tourism Offices located in India and abroad."
(vi) The contention of the learned ASG was therefore that, the classification by
itself has many pluses which, included free world wide publicity as also
benefits of grant of capital subsidy. The latter, as the learned ASG put it, was
available if the classification was carried out within the time frame prescribed,
i.e., between 01.04.2007 to 31.03.2008.
(vii) The learned ASG pointed out instances where application for classification
was made just prior to the expiry of the scheme, i.e., 01.04.2007 to 31.03.2008;
making it practically impossible to carry out inspection for the purposes of
classification prior to 31.03.2008. Amongst others, instances to which specific
reference was made were as follows: (a) LPA No. 952/2011
(HotelVikramaditya): the application in this case was dated 20.03.2008,
which was, received on 25.03.2008; (b) LPA No. 35/2011 (Re. Tiger Valley
Resort): the application was made on 18.03.2008; (c) LPA No. 36/2012 (Re.
Shreenath Inn Hotel & Restaurant) : application dated nil was received on
28.03.2008.
(viii) In this context, it was contended by the learned ASG that the designated
authority would require at least three (3) months, in the normal course, to
categorize and rate the applicant-hotels. The time frame accorded by the
applicant-hotels being too short, there was no way that the classification could
have been done prior to 31.03.2008, and hence, the applicant -hotels had
automatically, so to say, excluded themselves from the fray.
10. On behalf of the applicant-hotels the following submissions were made:
LPA No. 36/2012 (Sreenath Inn Hotel)
(i) Mr Ajay Talesara submitted that the 2007 scheme being a
beneficial
scheme, it had to be construed liberally keeping in mind the spirit with which the
scheme was formulated. In this regard, our attention was specifically drawn to
clause 3 and clause 6 of the 2007 scheme. Clause 3 as indicated above deals
with the tenure of the scheme, while clause 6 stipulates that the capital subsidy
would be released only after the classification of the hotel is carried out. It
was contended that the scheme did not stipul ate a cut-off date for either
the application or release of the incentive. According to the learned counsel,
the 2007 scheme only indicated that commissioning and classification had to
be carried out during its tenure. The learned counsel drew our attention to the
fact that the inspection in one of cases he represent's, i.e., Shreenath Hotel was
carried out after a delay of nearly five (5) months. It was pointed out that the
scheme was applicable, based on the classification ultimately accorded by the
concerned authority, and not, on the basis of the category applied for by the
applicant-hotel. Therefore, the fact that the applicant-hotel had applied for a
higher category, which was not accepted by the designated authority, would
not, exclude the applicant-hotel from the ambit of the scheme to the extent it
was applicable to a two-star hotel; which was the classification accorded to
it. Learned counsel submitted that since the 2007 scheme was notified only
on 07.12.2007, and thereafter, expired on 31.03.2008, the applicability of the
three (3) month period as stipulated in clause 19 of the general terms and
conditions under the sub-head of "classification" would make the scheme
onerous, impractical and cumbersome. Mr Talesara, invoked the doctrine
of promissory estoppel and legitimate expectation to advance his case for grant
of capital subsidy.
LPA No. 952/2011 (Re. Hotel Vikramaditya)
(ii) Since, Mr Talesara was also the counsel representing the respondent in
LPA no. 952/2011 (Re. hotel Vikramaditya), he adopted the same arguments
except to point out that applicant-hotel was granted classification in the very first
instance, without any anomalies being pointed out. It was also submitted that the
arguments advanced on behalf of the UOI that more than one inspection was
carried out, on shortcomings being pointed out, was not based on the record filed
before the learned Single Judge. In other words, neither any averments were
made to that effect before the learned Single Judge nor, were any arguments
advanced in that behalf. As a matter of fact, it was contended, that there were no
such grounds taken even in the letters patent appeal. The letter of rejection dated
02.07.2010 issued by the DOT, denying the grant of capital subsidy was based,
only on the ground that the classification had been carried out by the designated
authority after 31.03.2008, when according to the DOT, the 2007 scheme had
expired. Mr Talesara, thus argued, that all other submissions now advanced on
behalf of the UOI were de hors the record.
LPA 35/2012 (Re. Tiger Valley Resort)
(iii) In connection with this case, Mr Talesara submitted that an application for
classification was made on 18.03.2008. The application for classification was
complete in all respects and was submitted alongwith all necessary documents.
The applicant was not communicated any shortcoming, or that, its application
was incomplete in any respect. Furthermore, no such plea was also raised
before the Single Judge or in the counter affidavit filed before the single judge
or even in the grounds taken in the letters patent appeal. It was
submitted that clarificatory document, if any, submitted, would not
render the original application either incomplete or ineligible. It was re-
emphasized that the eligibility for grant of incentive was based on the
classification granted, and not, on the category - classification requested by an
applicant-hotel. The other submissions made were common to the previous
cases argued by Mr Talesara.
LPA No. 33/2012 (Re. Sardargarh Heritage Hotel)
(iv) The last case, in which, Mr Talesara appeared was LPA No. 33/2012 (Re.
Sardargarh Heritage Hotel). In this case the following facts were alluded to, by
Mr Talesara. The respondent had applied for classification on 12.02.2007
when, the 2004 scheme was in vogue. In the said application, the applicant-
hotel had indicated the proposed date of commissioning as,
04.04.2007. Vide communication dated 26.02.2007, Ministry of Tourism
(in short MOT) had pointed out defects, in the application. The applicant-
hotel removed the defect and furnished necessary documents on 15.03.2007. The
applicant-hotel was thus commissioned on 04.04.2007, by which time, the
2007 scheme had kicked-in. The criteria for eligibility under the 2007
scheme was commissioning and classification as against completion and
classification under the 2004 scheme. The applicant-hotel was inspected by
the designated authority after a delay of fifteen (15) months i.e., on 04.06.2008.
It was granted classification as a heritage (basic) category, on 18.06.2008.
Immediately, thereafter, the applicant-hotel made an application for grant of
capital subsidy, i.e., on 21.07.2008. Mr Talesara contended that, the application
for classification was made on 12.02.2007, as even though, the hotel was
completed, it was not commissioned by the said date. Therefore, the proposed
date for commissioning was indicated as 04.04.2007. The date of
commissioning having fallen within the tenure of the 2007 scheme, it was
entitled to the capital subsidy. The delay, in classification of fifteen (15)
months, despite having submitted all relevant and necessary documents is,
unexplained. The allegations with regard to tariff cards filed for the period
August, 2006 to September, 2007, were attempted to be refuted, by contending
that, this was an aspect which was not urged before the learned Single Judge, and
therefore, the applicant-hotel had no opportunity to rebut this aspect of the
matter. It was, however, contended that the applicant-hotel was situate in a rural
area of Rajasthan where, men and material were not easily available, and
hence, the delay in execution of the project. The tariff cards were, according
to Mr Talesara, printed in anticipation of the hotel being completed and
commissioned by June, 2006. Since, that did not happen, and it got
completed in February, 2007, the said information was disclosed in its
application for classification dated 12.02.2007. Mr Talesara submitted that, as
indicated above, since the hotel was commissioned on 04.04.2007, which was a
date falling within the tenure of 2007 scheme, the applicant-hotel in this case as
well, should be accorded the benefit of the capital subsidy. The delay of
fifteen (15) months in granting the classification, was solely attributable to
the designated authority.
LPA No. 74/2012 (Re. Ambika Resorts)
(v) The learned counsel appearing in the LPA no. 74/2012 , submitted that its
project received approval of the MOT for a three star category hotel, pursuant
to an application made in that regard on, 19.01.2007. It was contended that
all approvals were sought by the applicant-hotel based on the fact that, its
project had received approval for a three star hotel. The applicant-hotel
completed and commissioned its hotel on, 01.09.2007. There appears to be no
dispute though, that the hotel was inspected on, 13.02.2008 when, as
noticed hereinabove, improvements were suggested through email dated
18.02.2008. Evidently, the applicant-hotel after removing the deficiencies
submitted a compliance report.
There is, however, no dispute about the fact that, the applicant-hotel was re-
inspected on 27.04.2008 and granted a classification, albeit in a lower
category, i.e., two star category, as against its application for a three star
category. It was contended that the designated authority took around one year
and seven months, and that too, after several reminders, to take a decision on its
application for grant of capital subsidy. The fact that the inspection was
delayed by more than five (5) months is the reason that the applicant-
hotel could not remove the deficiencies pointed out, much prior to
31.03.2008 as it would have otherwise desired. In these facts, it was submitted
that, the applicant-hotel ought to get the capital subsidy as per the recommended
two star category.
WP(C) 7150/2011 (Re. Waman Hotel Orient Crown)
(vi) The learned counsel appearing for the petitioner submitted that the hotel
was commissioned on 30.04.2007. An application for classifying its hotel, as a
three star hotel, was submitted on 20.02.2008. It appears by a communication
dated 28.02.2008, the DOT called upon the writ petitioners to furnish certain
documents, such as, the NOC from the police and the fire department, and to
place on record, a check-list of services and facilities available. Before the
needful could be done, on 14.03.2008, a communication was received from the
designated authority, conveying that their hotel would be inspected for the
purposes of classification, on 21.03.2008. In the meanwhile, the writ petitioners
submitted copies of the requisite certificates and documents demanded by DOT
vide its letter dated 18.03.2008. After the inspection was completed on
21.03.2008, on the same date, the writ petitioners made an application for the
grant of capital subsidy. While this application was under consideration, the writ
petitioners received an intimation on 15.04.2008 that, it had been granted a
three star category w.e.f. 15.04.2008. Despite, the application for
classification and inspection having been made prior to 31.03.2008, DOT
vide letter dated 03.12.2010, rejected the writ petitioner's request for grant of
capital subsidy.
OUR ANALYSIS
11. Having heard the learned counsels for the parties and perused the record
there are broadly two aspects which arise for our consideration in the matter. The
first, as to the manner in which the 2007 scheme needs to be construed, and the
second, the applicability of the 2007 scheme to the facts of each case.
12. In so far as the 2007 scheme is concerned, it is quite evident that, it is a
continuation of such schemes, which had been in place since 2003-2004. The
2004 scheme, which was brought into effect by virtue of notification dated
30.09.2004, was co-terminus with the tenth (10 th) Five Year Plan, which ran
between 01.04.2002 till 31.05.2007.
13. As discussed above, the measure of benefits under the 2004 scheme was,
different to that under the 2007 scheme. Under the 2007 scheme, the grant of
capital subsidy, was dependent on the number of rooms in a hotel, which was
in-turn tied-in with the rate of subsidy, as prescribed, per room, depending on
the category in which, the hotel stood classified.
14. Importantly, under clause 4 of the 2004 scheme the release of the incentive
was tied-in with the "completion" of the project and the "classification" of the
applicant-hotel in the category, in which, it was approved.
15. Both, under the 2004 scheme and the 2007 scheme, the applicant-hotel was
required to make an application for initial approval of the project. Under the
general terms and conditions, quarterly reports were required to be sent to the
concerned department of the GOI. The applicant-hotel was also required to
inform the DOT, as soon as the hotel project was completed, for which a time
frame of five (5) years was given. Failure to do so meant that, the approval
for the project would stand withdrawn.
16. It was also a part of the general terms and conditions which, required the
applicant-hotel to apply for classification within three (3) months from the
date of its functioning [See condition nos. 1(v) to (viii) of l etter dated
20.01.2006 issued by India Tourism, Govt. Of India appended at page 63-64
of the paper book filed in LPA No. 952/2011]
17. Therefore, when on 07.12.2007 a revised scheme was introduced it carried
forward the 2004 scheme with the necessary amendments. The particular
amendments, which have a bearing on the 2007 scheme were as follows: (a) the
2007 scheme was made to run on an "experimental" basis in the first year of the
eleventh (11th) five year plan and, therefore, was necessarily required to
terminate on 31.03.2008; (b) While the categories for classification remained
the same, i.e., one, two, three star and heritage (basic), the measure for grant of
incentives changed; (c) the 2007 scheme applied to those applicant-hotels
whose projects were commissioned and classified by the MOT, GOI within the
defined period, i.e., 01.04.2007 to 31.04.2008 [see clause (3) of the 2007
scheme]; (d) The incentive, i.e., the capital subsidy was to be released only after
completion of the classification exercise qua an applicant-hotel [see clause 6 of
the 2007 scheme].
18. Under clause 7 of the general terms and conditions under the sub-head
approval of projects (hereinafter referred to as clause 7 of the G.T.C) each
applicant-hotel was required to immediately inform the DOT, the date from
which its hotel became operational and was required to apply for classification
within three (3) months of that date. What is also noticeable is that under
clause 19 of the general terms and conditions under the sub-head
classification, (hereinafter referred to as clause 19 of G.T.C), the designated
authority was required to finalize the applications for classification within a
period of three (3) months. It is interesting to note that, the 2007 scheme was
notified only on 07.12.2007; though with retrospective effect, i.e.,
01.04.2007. Since it expired on 31.03.2008, the time frame between the date of
the notification of the 2007 scheme and its expiry was approximately three (3)
months and three (3) weeks. If one were to apply clause 7 of the G.T.C
(having regard to the argument advanced by the UOI, that the scheme
would automatically expire on 31.03.2008) the applicant-hotels would
necessarily have had a window of three weeks broadly, i.e., between 07.12.2007
and 31.12.2007 within which to inform of its completion where completion
took place prior to 07.12.2007. This would obviously render the 2007 scheme
unworkable as application for classification could be made within three (3)
months of such information.
18.1 Since the scheme was given retrospective effect, that is, it was made
effective from 01.04.2007, we would have to construe it, as we have, in a manner
which makes sense of the terms and conditions stipulated in the 2007 scheme
including the general terms and conditions which remained intact through
2003-07. Therefore, it would be in order to apply the 2007 scheme to pending
projects which were commissioned within the period stipulated under the 2007
scheme, i.e., 01.04.2007 and 31.03.2008. Thus, there could be instances
(and, there is one such instance, which has been pointed out by us
hereinabove), that a hotel project was completed prior to 01.04.2007 but was
commissioned only on or after 01.04.2007. There is in fact no dispute, with
regard to the fact that, all applicant-hotels before us, were commissioned on or
after 01.04.2007. There is also no dispute before us that all applicant -
hotels have been granted classification; albeit post 31.03.2008.
18.2 In these circumstances, what has to be kept in mind is, the
requirement, that the application for classification had to be made within the
stipulated period, i.e., three (3) months from the date of operation of the hotel.
Since clause 7 of the G.T.C., does not use the expression "commissioning", we
would construe the word 'operational' which finds mention in clause 7, as
equivalent to the word "commissioning". The other requirement under the
G.T.C., in particular, under clause 6, are the details to be provided in the
application form as per the provisions contained therein. In this regard, a
specific term is contained in clause 6(viii) (a) to (1) of the G.T.C., which
requires the applicant-hotel to obtain the enumerated approvals/ NOCs. The
responsibility for obtaining the necessary approvals/ NOCs is placed solely on
the applicant-hotel.
18.3 Therefore, in our opinion, the applicant-hotels would have discharged
their onus for grant of capital subsidy under the 2007 scheme if, they fulfilled the
twin conditions which is: (i) the commissioning of their hotel within the
validity period of the 2007 scheme, i.e., between 01.04.2007 to 31.03.2008; (ii)
the filing of a complete application with relevant information, approvals/
NOCs in accordance with the terms and conditions provided under the 2007
scheme. The consequences of the failure to file complete applications in all
respects, (i.e., with prescribed clearances, NOCs, certificates along with the
application fee as provided in other clause 7 under the sub-head hotel
classification in the G.T.C.), entailed rejection of the application.
18.4 The argument advanced on behalf of the UOI that, the exercise of the
classification had also to be completed before 31.03.2008, is an argument,
which is patently fallacious in view of the provisions of clause 19 of the G.T.C.
which provides for a period of three (3) months for completion of such an
exercise. Therefore, if clause 19 has to be construed harmoniously with clause
7 of the G.T.C. it cannot be said that the capital subsidy will not be available,
in cases, where classification is carried out by the designated authority post
31.03.2008. A harmonious construction of the 2007 scheme would clearly
indicate that, as long as, the commissioning as against completion was brought
about, in a given case, within the validity period of the 2007 scheme, i.e.,
01.04.2007 to 31.03.2008 and an application for classification was made within
three (3) months of that date the applicant-hotel would have discharged its onus
for claim of capital subsidy, provided the classification application was
complete in all respects.
19. In the light of the aforesaid, we would have to see where each case
would fall. For this purpose, we have, for the sake of convenience
synopsised the details with respect to the aforesaid aspects in a tabular form
given hereinbelow:
Case No. LPA 33/12 LPA 34/12 LPA 35/12 LPA 36/12 LPA 74/12 LPA WP(C) 7150/
952/11 II
Name of the Hotel Sardargarh Grand Haveli Tiger Valley Shreenath Inn Ambika Hotel Waman's
Heritage & Resort, Resort, Hotel & Resorts Pvt. Vikramdity Hotel Orient
Hotel Nawalgarh, Kumbhalgarh Restaurant, Ltd., a Sri Crown,
Rajsamand Jhunjhunu Rajasthan Nathdwara, Amritsar, Ganganagar Kolhapur,
Rajasthan Rajasthan Rajasthan Punjab , Rajasthan Maharashtra
Date of the 04.04.07 31.12.07 27.12.07 22.09.07 01.09.07 15.03.08 30.04.07
Commissioning
Date of 12.02.07/ 24.01.08/ 18.03.08 28.03.08 26.09.07 20.03.08/ 20.02.08/
Application for 20.02.07 14.02.08 25.03.08 25.02.08
classification/ and
its receipt
Date of 18.06.08 23.10.08 23.02.09 23.02.09 02.07.08 05.12.08 15.04.08
classification
Date of 21.07.08 24.03.08 19.05.08 01.09.08 16.03.08/ 28.01.09 / 21.02.08
Application for 17.03.08 03.02.09
capital subsidy/
and the date of its
receipt if any
The category Heritage Heritage Basic 3 star 3 star 3 star 2 star 3 star
applied for Grand (not
eligible for
capital
subsidy)
Category Heritage Heritage Basic 2 star 2 star 2 star 2 star 3 star
recommended Basic
(eligible for
capital
subsidy)
Whether any No. Yes Yes Yes Yes No Yes
Discrepancy or
Shortcomings
found by the
Designated
inspection
authority
The nature of NA Application Found suitable Found suitable kitchen to be NA Application
discrepancies/ did not for 2 star and for 2 star and redone missed
short comings have copy of not 3 star not 3 star Cutlery documents
money changer and crockery pertaining to
and bar licence need to fire NOC,
be replaced in Polic e
uniformity NOC
with 3 star & checklist
Of facilities
The date on which NA 05.03.08 19.12.08 19.12.08 18.02.08 NA 28.02.08
discrepancies/
short comings
were intimated
The date on which NA 05.05.08 letter 15.01.09 12.01.09 25.03.08 NA 18.03.08
rectification was sought 20 received on received on received on
communicated days for 27.01.09 23.01.09 (hotel 19.03.08
rectification (hotel accepted accepted for
for classification
classification under 2 star
under 2 star category)
category)
20. To be noted the information contained in the aforementioned table,
which has been put-in, based on the information supplied by the UOI; the
copies of which were handed over to the counsel for the applicant-hotels.
20.1 The dates of the documents supplied or, their receipt, has not been
disputed before us; though the common argument was that, this is not the stand
which the UOI took either before the learned single judge or, in the grounds
of appeal before us. We could have perhaps taken the easier route of remanding
the matter to the learned Single Judge. This would have delayed the matters
further, according to us. Since the dates of the documents and, broadly
what was contended in the note of the UOI, were not disputed, we propose to deal
with the information in the context of the provisions of the scheme as understood
by us.
21. We, therefore, would take up the facts contained in the table qua each LPA
in seriatim.
LPA No. 33/2012
22. In this behalf, as would be noticed, the application for classification was
filed in 12.02.2007 when, the 2007 scheme was not even in existence. Though,
as indicated above, the 2007 scheme was made effective with retrospective
date, i.e., 01.04.2007. The UOI's stand before us, in the note filed in court, is
that, since the application for classification was incomplete - vide
communication dated 26.02.2007, the applicant-hotel was requested to
furnish copies of mandatory documents/ NOCs required for classification.
The details of the mandatory documents and NOCs, have not been set out in
the note. The UOI, however, admits that the necessary documents were
supplied on 20.03.2007; albeit before the commencement of the 2007 scheme.
The argument of the UOI for denying capital subsidy to the applicant-hotel is
that, in their classification application of 12.02.2007, it has been indicated that
they were "fully operational" and to establish the same the applicant-hotel had
also enclosed a copy of their tariff card, for the period August, 2006 to
September, 2007. It is, therefore, the say of the UOI that, since the applicant-
hotel had been commissioned prior to the scheme even having commenced, the
applicant-hotel was not entitled to the benefit of the scheme on this ground
alone. Besides this, it is also the stand of the UOI that the inspection was
conducted on 04.06.2008, and a recommendation for classifying the applicant-
hotel in the heritage (basic) category was accorded on 18.06.2008, for a
period of five (5) years from the said date, i.e., till 17.06.2013. Since the
period of classification also fell outside the tenure of the scheme, this was an
additional ground on which the benefit under the scheme was not to be made
available to the applicant-hotel.
22.1 We have considered the aforesaid arguments. In our view, the letter
accompanying the application for classification has to be construed as a whole to
ascertain as to what the applicant-hotel was attempting to convey. No doubt, the
covering letter dated 12.02.2007 conveys that the applicant-hotel was desirous of
being classified being fully operational as they wanted to be part of the DOT's
apparent advertising campaign "incredible India", to attract tourists - the
application accompanying the said letter clearly adverted to the following:
"Proposed date on which the hotel may become operational --
04.04.2007."
22.2 It is undoubtedly true that no one was aware of the fact that the GOI
would bring out a revised scheme to incentivize, "accommodation
infrastructure" in December, 2007 and that too with retrospective effect
from 01.04.2007. Therefore, it cannot be said that the date of 04.04.2007,
referred to in the application filed, was slipped-in to somehow come within
the ambit of the scheme. If that be so, we are inclined to accept the
explanation of the learned counsel appearing for the applicant-hotel that the use
of the term "operational" in the letter dated 12.02.2007 meant completion,
whereas the date of 04.04.2007 as indicated in the application gave the actual
date of commissioning.
22.3 There is, however, the other issue of submission of a tariff card which
bears the period August, 2006 to September, 2007. The explanation offered
is that the applicant expected the hotel to be completed in 2006; since the hotel
is located in a remote village where men and material are difficult to reach, the
date of completion had to be postponed, though the tariff cards were
printed in anticipation of its early completion, and hence, got appended to the
application. In other words, much ought not to have been made of the dates
printed on the tariff cards.
22.4 In our opinion, the dates on the tariff cards by themselves are not sufficient
material to deny capital subsidy to the applicant-hotel, once an explanation has
been offered in respect of the same. It would be difficult for the applicant-
hotel to prove the negative. If the UOI were serious about its charge now made
for the first time before the Division Bench, it could always have called for
more information by way of books of accounts and income tax returns
etc., to ascertain as to whether, the applicant-hotel had been commissioned
prior to 01.04.2007. Since, none of this has been done, and there is no material
to hold to the contrary except the dates printed on the tariff card, we are not
persuaded to deny what would otherwise be due to the applicant-hotel.
Therefore, in our view, LPA No. 33/2012 would have to be rejected.
LPA No. 34/2012
23. Undeniably in this case the applicant-hotel was commissioned on
31.12.2007, which is a date falling within the tenure of the 2007 scheme.
Similarly, the application for classification was also made within the tenure of the
scheme, under the heritage (basic) category, i.e., on 24.01.2008. The UOI,
admits that it received said application on 14.02.2008. In this case, application
for capital subsidy was made on 24.03.2008, once again, a date falling within the
tenure of the scheme. Interestingly, the designated authority vide a
communication dated 05.03.2008 trotted up irrelevant objections, such as,
unavailability of money changers and bar licenses. The applicant-hotel vide
letter dated 05.05.2008, responded to the said communication. Evidently, the
applicant-hotel sought time to obtain the licenses, being unaware that such
licenses, were not required for hotels which fell in the category of heritage
hotels.
23.1 The inspection of the hotel in this case, was carried out on 05.10.2010.
The applicant-hotel was classified in the category of heritage (basic) on
13.10.2008, for a period of five (5) years ending on 12.10.2013. The argument
advanced on behalf of UOI, in this case, for denying the benefit under the 2007
scheme was that the hotel had been classified after 31.03.2008. In our view, this
was one of the grossest case, as the applicant-hotel is sought to be excluded, on
grounds, which were completely irrelevant and inapplicable to it. Clause 6 (viii)
(f) & (g), clearly provide that, bar and money changers licenses are necessary
only for hotels falling in categories four star, five star and five star deluxe. The
fact that the applicant-hotel had been commissioned and had applied for
classification within the tenure of the scheme is, not in doubt. The ground now
taken for exclusion is that, classification took place on a date outside the
tenure of the scheme, i.e., 23.10.2008 (w.e.f. 21.10.2007 to 20.10.2012). As
noticed hereinabove by us, the application was made within the time frame of
three (3) months from the date the applicant-hotel was commissioned. This was
the only requirement under the scheme. From then on, i.e., 24.01.2008 (under
the terms and condition of the 2007 scheme) the designated authority was
required to finalize the scheme within a period of three (3) months. This case
shows that if the time frame provided clause 19 of the G.T.C. is applied one
need not have categorised the applicant-hotel by 31.03.2008. This case also
demonstrates that it was never intended that the classification had to take place
before 31.03.2008. The fact that it actually took the designated authority nine
(9) months to inspect, is another regrettable aspect with which we are not
necessarily concerned in this matter. The point, however, still remains that
if the scheme allows the designated authority time beyond 31.03.2008 to
arrive at a final conclusion vis-a-vis a request for classification, could the
applicant-hotel be denied the benefit of 2007 scheme. In our view, it cannot be
so, therefore, we are of the view that LPA 34/2012 should also be dismissed.
It is ordered accordingly.
LPA NO. 35/2012
24. In this case the hotel was commissioned on 27.12.2007. The applicant
hotel initially applied for being categorized as three star hotel vide its application
dated 18.03.2008. Evidently, a second undated application was received by the
designated authority on 21.05.2008, whereby the applicant hotel supplied
copies of the approved map of the hotel duly signed by the sarpanch of the
village alongwith a NOC from the Nagar Palika, Rajsmand. It is the say of the
UOI that, the application for classification got completed only on the said
documents being supplied. It is also not disputed that the inspection in this
case was carried out on 02.09.2008. The designated authority recommended a
two star classification in this case. Communication in this regard was sent to
the applicant-hotel on 19.12.2008, followed by a reminder dated 13.01.2009.
By these communications the applicant-hotel was called upon to convey its
acceptance to the two star classification recommended in its case. Evidently,
vide letter dated 15.01.2009, which was received by the concerned authority
on 27.01.2009, the applicant-hotel accepted this proposition. The applicant-
hotel was classified as a two star hotel w.e.f. 10.02.2009 for a period of five (5)
years. We were informed that this classification was communicated on
23.02.2009, as indicated in our table above. There is no dispute also about the fact
that, in this case, the application for capital subsidy was filed on 19.05.2008. In
these facts, it is argued on behalf of the UOI that, even though the
commissioning took place within the tenure of the scheme, the application for
classification, which was filed on 18.03.2008, was deficient, and the
deficiency, was cured, only post the tenure of the scheme. Therefore,
according to the UOI, the applicant-hotel cannot be granted benefits under the
2007 scheme.
24.1 On the other hand Mr Talesara has argued that the first application
dated 18.03.2008 was complete, in as much as, a copy of the approved map as
also the certificate from the gram panchayat was enclosed. He has
alluded to the covering letter dated 18.03.2008 as also the application form. He
has drawn our attention to information supplied in paragraph 10 (a) and (h) of
the application form. What is not, however, refuted that an undated
application was filed on 21.05.2008. The copy of the said undated application
is not on record. During the course of the arguments as well as in his written
submissions, Mr Talesara has taken the stand that a clarificatory document, if
any, submitted would not make the initial application incomplete or ineligible.
24.2 In our view, while Mr Talsera has not disputed the fact that a second
undated application was filed, which was received by the concerned authority on
21.05.2008, he has chosen not to place the said document on record. If, as
contended by Mr Talesara, the said documents were already on record then,
where was the need to re-file them with the second undated application for re-
classification. Mr Talesara's explanation that the application was clarificatory in
nature could have been accepted if, he had demonstrated that both documents
were on record. The said documents are in power and possession of the
applicant-hotel and it was for Mr Talesara to bring the said documents on record.
This is specially so, in the circumstances that we had made it clear in our order
dated 20.03.2012 that the learned counsel for applicant-hotels should respond to
the note submitted by the UOI. Furthermore, Mr.Talesara's written response
does not even remotely suggest as to what clarifications were provided qua the
documents purportedly filed earlier. In view of the G.T.C. being applicable
to the 2007 scheme, in particular, clause 6 (viii), it was incumbent on the
applicant-hotel to file alongwith its application for classification, all
approvals/NOCs required in the matter. The terms and conditions, as noticed
by us hereinabove, quite clearly, stated that the application for classification would
be rejected if, the necessary approvals/NOCs did not accompany it. In this case,
the applicant will have to bear the blame, as it has not been able to satisfy
us, as regards its submission that the aforementioned documents along with the
initial application for classification, was filed on 18.03.2008. Therefore, the only
inference one can draw is that a complete application for classification
was filed beyond 31.03.2008. Having concluded so, we would have to agree
with the UOI that this LPA would have to be allowed. It is ordered accordingly.
LPA No. 36/2012
25. In this case the applicant-hotel was commissioned on 22.09.2007;
within the tenure of the 2007 scheme. By an undated application, which was
received by the designated authority on 28.03.2008, the applicant -hotel
sought classification under three star category. We must point out though, in
the list of dates filed with the writ petition, from which this LPA arises, it is
indicated that the applicant-hotel became operational on 28.04.2007, and that,
the application for classification was dated 27.03.2008. Either way, it would
not make much difference as, both sets of date fall within the tenure of the 2007
Scheme.
25.1 Reverting to narrative, the applicant-hotel was inspected for the purpose of
classification on 01.09.2008 whereupon, it was recommended for
classification as a two star hotel. A communication dated 19.12.2008 was sent
in that regard, followed by a reminder dated 13.01.2009, whereby the
applicant-hotel's acceptance qua the recommended classification was sought.
The applicant-hotel conveyed its acceptance of the recommendation made,
vide letter dated 12.01.2009, which was, received by the concerned
authority on 23.01.2009. Thus, the applicant-hotel received a two star
classification vide communication dated 23.02.2009 w.e.f. 10.02.2009 for a
period of five (5) years ending on 09.02.2014. The applicant-hotel filed an
undated application for capital subsidy, which was received by the concerned
authority on 01.09.2008. In this case, the UOI contended that capital subsidy
could not be granted to the applicant-hotel as, it was classified after 31.03.2008.
In addition, it was also argued that even the application for capital subsidy was
submitted post 31.03.2008 and, therefore, the benefits under the scheme could
not be made available to the applicant-hotel. Apart from the above, the
learned ASG also adverted to clause 19 of the G.T.C., to contend that
classification had to be completed within a period of three (3) months, which
could not have been done as, the application for classification was submitted
belatedly.
25.2 In our view, the first two grounds put forth by the UOI deserve to be
rejected. The fact that classification took place after 31.03.2008 or that the
application for capital subsidy was filed after 31.03.2008 cannot simplicitor
form the basis for denying benefits under the 2007 scheme de hors other terms
and conditions of the 2007 scheme to which we will advert shortly. The third
ground has to be dovetailed with clause 7 of the G.T.C. In terms of the
provisions of the said clause the applicant-hotel has to submit the application
for classification within three months from it becoming operational.
Admittedly, the applicant-hotel was commissioned on 22.09.2007, and the
application for classification was made on 28.03.2008, well beyond the period
of three (3) months. Had the applicant hotel made the application for
classification within the time frame accorded under the terms and conditions
of the scheme, it could hardly be said that delay beyond three months in
finalization of the classification by the designated authority could be used to
exclude it from the benefit of the 2007 scheme. However, in this case the
applicant-hotel is to blame itself for delay in the submission of the application
for classification. Had the applicant-hotel done the needful, the fact that the
classification was carried out after 31.03.2008, could not have been used to
deny it, the benefit under the scheme. But, as stated hereinabove, it is the
lapse on the part of the applicant-hotel which has caused, at least, some part of
the delay in classification being carried out beyond 31.03.2008. For this
reason, we are of the view that the appeal will have to be allowed. It is ordered
accordingly.
25.3 Qua this case one would also notice that even though the applicant
had applied for classification under three star category, the designated
authority had recommended that the applicant-hotel be classified as two
star hotel after inspecting the hotel premises and the facilities available therein.
LPA No. 74/2012
26. In this case the applicant-hotel was commissioned on 01.09.2007.
On 26.09.2007 application for classification was made by the applicant-hotel.
The applicant-hotel applied for a three star rating. It appears that an inspection
was carried out by the designated authority of the applicant-hotel on,
13.02.2008. Thereupon, a deficiency notice was sent to the applicant-hotel
which included, defects with regard to the kitchen; requiring its re-doing and,
the suggested change of cutlery and crockery provided in the hotel. The
applicant-hotel evidently on 25.03.2008, submitted its compliance report qua
the deficiencies pointed out.
26.1 By a letter dated 16.04.2008, it was communicated to the applicant-
hotel that re-inspection would be carried out on 27.04.2008. Upon re-inspection
of the hotel, the sub-committee appointed by the designated authority
noticed the following discrepancies:
"1. The kitchen flooring has been done partly. The work of
working tables is still pending. Refrigerators have not been
provided as per 3-star requirements. Storage has not been
provided in conformity with 3-star.
2. Old cutlery and crockery have not been replaced with new
one in conformity with3-star."
26.2 Based on the above, a recommendation was made that, the applicant-
hotel be classified as two star hotel as against its request for classification as a
three star hotel. In view of the findings of the sub-committee, a communication
dated 28.05.2008 was sent to the MOT to the same effect, recommending a
two star rating for the applicant-hotel. This was followed by a letter of the
chairman of the designated authority, conveying its concurrence to the
communication dated 28.05.2008. Accordingly, on 02.07.2008 a formal
order was issued in that behalf, according a two star rating to the applicant-
hotel, for a period of five (5) years, i.e., from 13.06.2008 to 12.06.2013.
26.3 The aforesaid facts have not been refuted before us, by the learned
counsel for the applicant-hotel. In this case even though the applicant-hotel
had been commissioned within the tenure of the scheme, and the first inspection
had been carried out also within the tenure of the scheme, i.e., on 13.02.2008
there were several deficiencies noticed. Despite, the compliance report having
been filed by the applicant-hotel on 25.03.2008, as noticed hereinabove by us, the
deficiencies remained outstanding which, on re-inspection were made known to
the applicant-hotel. It is because of these facts that the applicant -hotel
was finally recommended for a rating of two star against the desired rating of
a three star hotel. Given these facts, we are of the opinion that the applicant-
hotel could not have contended that it had fulfilled the criteria for
classification within the prescribed date. As a matter of fact the objection taken
on re-inspection clearly indicated that even on 25.03.2008 when, it had submitted
a compliance report the shortcomings pointed out had not been attended to. The
argument that it should get subsidy at least as per the rating granted, cannot be
countenanced in this case, as till the last date of the expiry of the scheme the
applicant-hotel was contending that it ought to be granted the higher rating of
three star hotel. It is only after re-inspection that the designated authority came
to the conclusion that the rating sought could not be granted to the applicant-
hotel.
26.4 In our view, the applicant-hotel cannot contend that its application for
classification was complete in all respects, within the designated time frame, and
when it is found not to be so, it could still seek the benefits under the scheme. If
this argument is accepted then, the scheme would run interminably. As noticed
by us hereinabove, the 2007 scheme was co-terminus with the first year of the
eleventh (11 th ) Five Year plan and that too on an experimental basis.
Subsidization by the State, has to find sources for financing such schemes. While
such schemes should be construed liberally, at the same time it cannot be
construed, in a manner, which would stretch the resources of the State way
beyond the time frame envisaged; specially when, the blame for not adhering to
this time frame falls squarely on the claimant. The LPA in this case would also
have to be allowed. It is ordered accordingly.
LPA 952/2011
27. In this particular case the applicant-hotel was purportedly
commissioned on 15.03.2008. The applicant-hotel applied for classification
within five (5) days of its claimed commissioning, i.e., 20.03.2008. This
application was received in the office of the MOT on 25.03.2008. The
applicant-hotel was inspected by the designated authority on, 06.11.2008. On
02.12.2008, the designated authority recommended a two star classification
qua the applicant-hotel. This was communicated to the applicant-hotel vide
a letter dated 05.12.2008; stating therein, that the classification would be
valid for a period commencing on 01.12.2008 and ending 30.11.2013. On
28.01.2009, the applicant-hotel made an application for grant of capital subsidy.
This application was received apparently in the MOT on 03.02.2009. By an
order dated 02.07.2010, which was impugned in the writ petition filed before
the learned Single Judge, the applicant-hotel's request for grant of capital
subsidy was rejected. It is contended on behalf of the UOI that, the capital
subsidy could not be granted to the applicant-hotel for the reason that, the
application for classification was filed on 20.03.2008, which was received only on
25.03.2008 and hence, leaving very little time for the designated authority to
complete the exercise of classification before 31.03.2008.
27.1 This apart, two additional submissions were advanced. The first one
being that, the application for grant of the subsidy was filed as late as
28.01.2009. The second submission was that even the application for
classification was not complete in all respects as the mandator y
clearance from the health officer/sanitary inspector had not been received
on the date of filing of the application. Therefore, the claim of the applicant-
hotel that, it had actually been commissioned on 15.03.2008, according to
learned ASG, was very much in doubt.
27.2 In rebuttal, Mr Talesara argued that, as long as the application was made
before 30.03.2008, it should suffice. The allegation with regard to the fact that,
approval/certificate of the municipal health inspector/sanitary inspector was not
available, was not refuted by Mr Talesara. It was, however, submitted that, the
applicant-hotel was granted classification on the very same application without
any objection having been raised, in the first instance. As a matter of fact, our
attention was drawn to the letter of rejection dated 02.07.2010, which did not
advert to this aspect of the matter. As regards the objection of the UOI to the
grant of capital subsidy, based on delay in filing the application for grant of the
said subsidy, Mr Talesara submitted that firstly, there was no period
prescribed for filing such an application, and secondly, clause 6 of the 2007
scheme made it quite clear that, the capital subsidy would be released to an
applicant-hotel only after the classification exercise was completed. Mr Talesara
submitted that, the communication vis-à-vis classification having been sent
only on 05.12.2008, there was no delay in making an application for release of
capital subsidy.
27.3 Having examined the arguments and the documents, we are of the
view that while the applicant-hotel is right in its contention that the grant of
capital subsidy cannot be denied only for the reason that enough time was not
available to carry out the inspection, and the consequent classification before
31.03.2008, the fact remains that the application for classification was not
complete in all respects as per the provisions of the 2007 scheme. Clause 6
(viii) (c) of G.T.C. under the head 'hotel classification' quite clearly
mandated the filing of a clearance certificate from the municipal health
inspector/ sanitary inspector, giving clearance to the applicant-hotel from the
sanitary/ hygiene point of view. The fact that an application had been made in
this regard is not in dispute as, in the classification application filed, against
information sought under (X)(c), the applicant-hotel has clearly indicated
that it had, at the relevant point of time, 'applied' for such a certificate.
27.4 Mr Talesara is, however, right in contending that the order of rejecti on
dated 02.07.2010 does not advert to this aspect of the matter. The impugned
order of rejection proceeds on the basis that the classification was carried out post
31.03.2008. It appears that this ground was not taken by the UOI before the
learned Single Judge or even in the grounds of appeal before us. Though the
point raised by the UOI is valid, since the issue involved relates to use of public
funds, it would be appropriate for the concerned authorities under the UOI to
revisit the issue and ascertain as to whether, the applicant-hotel was actually in
operation as claimed on 15.03.2008, when it admittedly did not have requisite
clearance from the municipal health inspector/ sanitary inspector. Therefore, the
best course, according to us in these circumstances would be, to set aside the
impugned order dated 02.07.2010 and, direct the MOT, GOI to carry out a de
novo exercise on this aspect of the matter and thereafter, pass a suitable order
on the applicant-hotel's request for grant of capital subsidy.
WP(C) 7150/2011
28. In this case the applicant-hotel was commissioned on 30.04.2007.
An application dated 20.02.2008 was filed with the designated authority
for classification by the applicant-hotel under three star category. Since,
the application was incomplete, vide communication dated 28.02.2008, the
following documents were sought on an urgent basis, to enable further
processing of the matter:
"1. A copy of the No Objection Certificate from the local
authority in respect of fire fighting arrangements in your hotel.
2. Licence from the Police Department authorizing the
running of the hotel.
3. Checklist for facilities/ service available under 3 star
category, as per copy enclosed."
28.1 This information was sought by the India Tourism Department, under the
MOT, GOI. It appears that on 14.03.2008, another communication was issued,
once again, by the India Tourism Department of the MOT, GOI intimating that
they would inspect the hotel premises on, 21.03.2008. Under the cover of a
communication dated 18.03.2008, the applicant-hotel supplied the deficient
documents. It is not in dispute that an inspection report concerning the applicant-
hotel was forwarded under the cover of the letter dated 25.03.2008, to the MOT
which was received by it on, 01.04.2008. Consequent thereto, the applicant-hotel
was classified as a three star hotel for a period of five years w.e.f. 15.04.2008 till
14.04.2013; by a communication dated 15.04.2008.
28.2 In these circumstances, on behalf of UOI, it was argued that since the
classification was carried out post 31.03.2008, the applicant-hotel was not
entitled to grant of capital subsidy. In this case also recourse was taken to the
provisions of clause 19 of the G.T.C., to contend that, the time frame for
finalization of classification was three (3) months and because the application for
classification was incomplete, in no way the designated authority could have
completed the classification before 31.03.2008. It was further contended that in
this particular case, the designated authority had completed the classification as a
matter of fact within less than one month of the deficient information being
supplied. Therefore, the argument was -- had the first application for
classification been complete in all respects, perhaps the exercise for classification
could have been completed before 31.03.2008.
28.3 There appears to be merit in the argument of the UOI, though as indicated
hereinabove, the timelines in our view operate in a different manner. Clause 7
of the G.T.C. required the applicant-hotel to file their application for
classification within three (3) months of its hotel having been commissioned.
Undisputedly, the hotel was commissioned on 30.04.2007, and after nearly nine
(9) months the first application for classification was made, i.e., on
20.02.2008. In this case, even if we were to assume in favour of the applicant-
hotel that the 2007 scheme was notified only on 07.12.2007, a complete
application ought to have been filed on or before 07.03.2008. The application
which was filed on 20.02.2008, was wholly deficient. The deficiency was
cured on 18.03.2008, even though, in the communication dated 28.02.2008,
it was made clear that the deficient information/documents should be
supplied pro-tanto. It was only after the applicant-hotel was informed vide
communication dated 14.03.2008 that an inspection of the hotel would take
place on 21.03.2008, that the deficient information was supplied by the
applicant-hotel under the cover of letter dated 18.03.2008. Therefore, then to
expect that, the filing of the application in these circumstances, even though
deficient, should enable it to obtain capital subsidy for itself would, in our
view, be going contrary to the construct of the 2007 scheme. The designated
authority was entitled to take three (3) months from the date a complete
application being filed with it. As a matter of fact, they completed the
exercise within less than a month, though post 31.03.2008. Therefore, denial
of capital subsidy to the applicant-hotel in this case, to us, is in order. The writ
petition is accordingly dismissed.
29. Having examined each case, the final result is as follows:
(i) WP(C) No. 7150/2011 -- Dismissed.
(ii) LPA No. 952/2011 -- Impugned order dated 02.07.2010 is set aside
and the concerned agency under GOI is directed to carry out a de
novo exercise and pass a suitable order on the applicant-hotel's
request for grant of capital subsidy.
(iii) LPA No. 33/2012 -- Dismissed.
(v) LPA No. 34/2012 -- Dismissed.
(vi) LPA No. 35/2012 -- Allowed.
(vii) LPA No. 36/2012 -- Allowed.
(viii) LPA No. 74/2012 -- Allowed.
30. The appeals and the writ petition are disposed of in terms of the directions
set out above.
31. The parties, however, shall bear their own costs.
RAJIV SHAKDHER, J
SANJAY KISHAN KAUL,J
MAY 02, 2012
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