Delhi High Court
K.C. Fibers Limited vs Union Of India & Ors. on 30 May, 2024
Author: Sudhir Kumar Jain
Bench: Sudhir Kumar Jain
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: February 05, 2024
Decided on: May 30, 2024
+ W.P. (C) 7886/2013
K.C. FIBERS LIMITED ..... Petitioner
Through: Mr. Shiv Charan Garg,
Mr. D. Khan, Advocates
V
UNION OF INDIA & OTHERS ..... Respondents
Through: Ms. Monika Arora, CGSC
with Mr. Subhrodeep Saha
and Mr. Ranjit, Advocates
for UOI
CORAM
HON'BLE DR. JUSTICE SUDHIR KUMAR JAIN
JUDGMENT
1. The present petition is filed by K.C. Fibers Limited (hereinafter
referred to as the "petitioner") under Article 226 of the Constitution
for issuance of writ of certiorari for quashing of letter bearing no.
IDBI.HO.TUFS.343 dated 21.09.2010 (hereinafter referred to as the
"impugned letter no.1"), letter no IDBI.HO.TUFS.437 dated
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 1
18.11.2010 (hereinafter referred to as the "impugned letter no.2")
and letter bearing no. 50(8)/2011/IMS/190 dated 16.01.2013
(hereinafter referred to as the "impugned letter no.3") issued by
Office of Textile Commissioner, Ministry of Textiles, Government of
India (hereinafter referred to as the "respondent no.2") and IDBI
Bank Limited, TUFS Cell (hereinafter referred to as the "respondent
no.3") and writ in the nature of mandamus directing the respondents
to grant interest reimbursement subsidy on Rupee Term Loan
(hereinafter referred to as the "RTL") of Rs.2,75,75,000/- for eligible
machinery imported under the Technology Upgradation Fund
Scheme (hereinafter referred to as the "TUFS") enacted by the
Ministry of Textiles.
2. The factual background of the case is that the respondent
no. 1/Union of India through Secretary, Ministry of Textiles enacted
TUFS vide Government Resolution (GR) no. 28/1/99-CTI dated
24.03.1999 with an intent to promote technological advancement and
modernization of textile industry. TUFS was initially enacted for a
period of five years with effect from 01.04.1999 and was
subsequently extended to 31.03.2007 and further extended to
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31.03.2012. Part III, Clause (1) (a) of TUFS provides that loan
sanctioned by the lending agency till last date of the duration of
TUFS would be eligible under the scheme and the reimbursement
would continue to be available till loan is repaid as per normal
lending period of nodal agency and accordingly a 5% interest
reimbursement subsidy was provided on RTL as per the terms of
TUFS. The respondent no. 3/IDBI Bank Limited was designated as
the Nodal Agency for Textile Industry (excluding Small Scale
Industry sector) and was allowed to co-opt State Industrial
Development Corporations (SIDCs) for sanction and disbursement of
the loan under the TUFS. The respondent no. 4/Haryana State
Industrial & Infrastructural Development Corporation Ltd. (HSIIDC)
was co-opted for sanctioning and disbursement of RTL. Inter-
Ministerial Steering Committee (IMSC) headed by the Secretary
(Textiles) was established for providing a monitoring and appraisal
mechanism under TUFS and is competent to lay down norms for
efficient implementation of TUFS. Technical Advisory and
Monitoring Committee (TAMC) was formed to consider
representations from units/manufacturers/associations regarding the
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implementation and amendments of TUFS and thereafter used to
forward these representations to IMSC for consideration. The
minutes of the meetings of TAMC and IMSC used to be recorded and
points agreed upon in the meetings were issued in form of Circulars
by respondent no.2. Part II Clause 5 of TUFS also provided to obtain
view of TAMC in case Nodal Agency raised any question of
clarification or interpretation regarding the eligibility of any unit or
machinery unit under TUFS. TUFS under Part II clause 3.2 (2) (i)
allowed the import of second hand projectile shuttleless looms by the
eligible applicant subject to a maximum expired (vintage) life of 5
years as reckoned from the year of manufacture and a residual life of
10 years. The petitioner was sanctioned RTL of Rs.3,00,00,000/- on
30.03.1999 under TUFS for import and installation of 24 projectile
shuttleless looms in 1998-1999 for manufacturing cotton grey and
these projectile shuttleless looms were having a residual life of 10
years with an expired (vintage) life of 9 years as reckoned from the
year of manufacture. RTL was disbursed after 01.04.1999 and project
was completed in March 2000.
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2.1 IMSC on basis of representations of the industry which were took
up in TAMC considered issue of modification of TUFS and to
increase vintage life of projectile looms from 5 years to 10 years.
IMSC in its 5th Meeting held on 23.03.2000 increased vintage life of
looms from 5 years to 10 years under TUFS and benefit of TUFS.
The respondent no. 1 issued circular no 1 (2000-2001 series) dated
17.04.2000 on basis of decision of IMSC whereby TUFS was
modified to include looms with vintage life of 10 years. TAMC in its
15th Meeting held on 23.05.2002 decided that the effective date of
eligibility of interest reimbursement under TUFS consequent to the
amendments/modifications approved by IMSC from time to time will
be first disbursement of RTL on or after 01.04.1999. It was further
decided that in specific cases, if needed TAMC/IMSC may specify
effective date of eligibility under TUFS. IMSC in its 12th meeting
held on 05.07.2002 discussed the "effective date of eligibility of
interest reimbursement under TUFS consequent to the
amendments/modifications of TUFS from time to time approved by
the IMSC" and approved that whenever new machines or equipments
which are equal or superior than the bench marked equipments or
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 5
machines already included in the existing list of items of the GR, is
made eligible under TUFS and TUFS benefits for such equipments
may be extended for the loans disbursed after 01.04.1999. It was
further decided that in case inclusion of any machinery/equipment is
due to relaxation of norms laid down in the GR of TUFS, the
effective date of eligibility of interest reimbursement would be
applicable from the date of the meeting. The respondent no 2 based
on the decision of the IMSC issued a circular no. 3 (2002-2003
series) dated 31.07.2002 wherein it was clarified that the effective
date of eligibility of interest reimbursement consequent to
amendments/modification approved by IMSC from time to time,
would be from the date of the meeting.
2.2 The petitioner after paying last instalment of RTL on 28.04.2006
applied for TUFS benefit to the respondent no. 4 on 15.05.2006
within the time limit prescribed to file application for the interest
reimbursement subsidy, however the respondent no 3 vide letter
dated 16.04.2008 had rejected eligibility of the petitioner for benefit
under TUFS on the ground of delay. The petitioner filed an online
appeal before Textile Commissioner on 05.04.2009 and Textile
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Commissioner vide letter dated 09.06.2009 held that the delay was
on part of the lending agency i.e. the respondent No. 4. The
respondent no 2 vide letter dated 04.03.2010 clarified and condoned
the delay in filing the claim and instructed the respondent no. 4 to
lodge the claim for interest reimbursement with IDBI. The
respondent no 4 again lodged the claim of the petitioner vide letter
dated 19.03.2010 and the respondent no 3 vide letter dated
13.08.2010 sanctioned the claim for the interest reimbursement
subsidy for RTL of Rs. 24,25,000/- out of the total RTL of
Rs. 3,00,00,000/- for machinery other than projectile shuttleless
looms and rejected the remaining claim of Rs. 2,75,75,000/-. The
petitioner exchanged correspondences dated 20.08.2010 and
07.09.2010 with the respondent no 3 and 4 for seeking reasons for
rejection of the remaining amount of interest reimbursement subsidy.
The respondent no 3 vide letter bearing no IDBI.HO.TUFS.343 dated
21.09.2010 i.e. the impugned letter no 1 rejected the claim of the
petitioner for interest reimbursement subsidy on the ground that when
the petitioner purchased/imported the looms, the essential eligibility
condition under TUFS for projectile shuttleless looms was a residual
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 7
life of 10 years and a maximum vintage life of 5 years but vintage
life of the purchased/imported looms of the petitioner was 9 years.
The respondent no. 3 on representations preferred by the petitioner
again rejected the claim of the petitioner vide letter no.
IDBI.HO.TUFS.437 dated 18.11.2010 i.e. the impugned letter
no. 2. The petitioner and the respondent no 4 in response to letter
dated 18.11.2010 issued by the respondent no. 3 preferred
representations but no satisfactory response was received by the
petitioner. The respondent no 2 vide letter no. 50(8)/2011/IMS/190
dated 16/18.01.2013 i.e. the impugned letter no.3 informed the
respondent no 4 that the petitioner is not eligible for the benefit of
TUFS and that the contents of Circular No. 1 (2000-2001 series)
dated 17.04.2000 are only applicable to cases where the term loan has
been sanctioned after the 5th IMSC Meeting held on 23.03.2000 and
the respondent no 4 communicated the said decision of the
respondent no 2 was communicated to the petitioner vide letter dated
11/28.02.2013. The rejection of claim of the petitioner for interest
reimbursement subsidy by the respondents was perverse, arbitrary
and illegal being contrary to TUFS and circulars issued by the
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respondent no 2. The petitioner in present petition challenged legality
of the decision of the respondents on grounds and prayed as under:-
(a) Issue a Writ of Certiorari or a Writ in the nature of
Certiorari or any other appropriate writ, order or direction
to quash the impugned Letter No. IDBI.HO.TUFS.343
dated 21.09.2010, Letter No. IDBL.HO.TUFS.437 dated
18.11.2010 and Letter No. 50(8)/2011/IMS/190 dated
16/18.01.2013 issued by Respondent No. 2 and 3.
(b) Issue a Writ of Mandamus or a Writ in the nature of
Mandamus or any other appropriate writ, order or
direction ordering and directing the Respondent No. 1,2
and 3 to allow the claim of interest reimbursement subsidy
of the Petitioner.
(c) Grant costs of the Petition and orders thereon; and
(d) Grant such further and other relief as this Hon'ble
Court may deem fit and proper in the nature and
circumstances of the case.
3. The respondents filed counter affidavits to oppose claim of the
petitioner. The respondent no 1 and 2 in counter affidavit primarily
stated that the respondent no 1 to facilitate modernization and
technological upgradation of the Textile Mills has launched TUFS for
Textile and Jute Industries with effect from 01.04.1999 which was
initially valid for a period of 5 years and was subsequently extended
up to 31.03.2007 with modifications. TUFS was a bank driven
scheme wherein the application for TUFS benefit was submitted by
the industrial unit to the lending agency/bank and the eligibility of
loan for grant of TUFS subsidy was established by the nodal
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bank/agencies. The subsidy thereafter is released by the Ministry of
Textiles to the concerned nodal agencies/lending agencies which in
turn provides the same to the beneficiary. The grievance of the
petitioner about rejection of its subsidy claim under TUFS on part of
term loan sanctioned by the respondent no 4 on 31.03.1999 was
wholly incorrect and misconceived. The respondent no. 3 was not
granted eligibility for second hand imported shuttleless looms with a
vintage life of 9 years for which the disputed subsidy claim was made
by the petitioner. The imported machinery as per Part II.3.2(2)(i) of
G.R. on TUFS (01.04.1999 to 31.03.2007) should have maximum
expired life (vintage) of 5 years as reckoned from the year of
manufacture and with a minimum residual life of 10 years. The loans
sanctioned by the lending agencies till the last date of duration of
TUFS period were eligible under TUFS and the reimbursement was
continued to the beneficiary till the eligibility period of the
repayment of the loan sanctioned under the TUFS and the benefit of
interest reimbursement was provided subject to fulfilment of all
conditions under TUFS. The respondent no 3/IDBI Bank being Nodal
Agency co-opted the respondent no 4 for sanction and disbursement
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of loan. The circulars issued under TUFS from time to time were to
convey the decisions of TAMC and IMSC to the stakeholders of
TUFS. The import of second hand projectile shuttleless looms with
maximum expired life (vintage) of 5 years as reckoned from the year
of manufacture and with a minimum residual life of 10 years as per
Section 11.3.2 (2)(i) of G.R. on TUFS from 01.04.1999 to
31.03.2007 was eligible for subsidy benefit. IMSC in its 5th meeting
held on 23.03.2000 increased the vintage period from 5 years to 10
years with a minimum residual life of 10 years and effective date of
eligibility of interest reimbursement was decided to be from the date
of IMSC meeting. Accordingly for the term loans sanctioned prior to
23.03.2000, the benefit of TUFS was available for imported second
hand projectile shuttleless loom, subject to, maximum expired life
(vintage) of 5 years as reckoned from the year of manufacture and
within a minimum residual life of 10 years. The term loan sanctioned
under TUFS on or after 23.03.2000 would be eligible for machine
subject to maximum expired life (vintage) of 10 years as reckoned
from the year of manufacture with a minimum residual life of 10
years. IMSC in its meeting held on 05.07.2002 took a decision that in
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case inclusion of any machinery/ equipment is due to relaxation of
norms laid down in the G.R. of TUFS, the effective date of eligibility
of interest reimbursement would be applicable from the date of IMSC
meeting. The respondent no 2 also filed additional counter affidavit
wherein primarily stated that the petitioner imported 24 projectile
shuttleless looms with a vintage of 9 years and residual life of 10
years. The projectile shuttleless looms with a vintage of 9 years and
residual life of 10 years as per Para 3.2 (1) of GR No. 28/1/99-CTI
dated 24.03.1999 were held to be ineligible for benefit of TUFS by
the respondent 3/IDBI Bank vide impugned letters dated 21.09.2010
and 18.11.2010. The decision taken by the respondent no 3 was
confirmed by the impugned letter dated 18.01.2013 issued by the
Textile Commissioner i.e. the respondent no 2., IMSC in the 12th
meeting held on 05.07.2002 approved that whenever a new machine
or equipment which is equal or superior than the bench marked
equipments or machines already included in the list of items in GR
was made eligible under TUFS and TUFS benefits for such
equipments may be extended for the loans disbursed after 01.04.1999
and the effective date of eligibility of interest reimbursement for
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inclusion of any machinery/equipment due to relaxation of norms
laid down in the GR of TUFS would be applicable from the date of
meeting. The projectile shuttleless looms with 10 years vintage
became eligible from date of meeting of IMSC and not from the date
of disbursal. The term loan of the petitioner was disbursed before the
date of meeting i.e. 23.03.2000, therefore, the petitioner was not
eligible for benefit of TUFS. The respondents no 3 and 4 also filed
respective counter affidavit on similar lines.
4. The petitioner filed rejoinder to counter affidavit filed on behalf of
the respondent no 1 and 2 and a counter affidavit of the respondent
no 2.
5. The petitioner filed additional affidavit wherein stated that
Technical Advisory-Gum-Monitoring Committee (TAMC) in its 15th
Meeting of TUFS held on 23.05.2002 wherein granted benefit to
another unit whose claim was also similar to claim of the petitioner.
6. It is reflecting that the respondent no 1 has launched TUFS for
Textile and Jute Industries vide Government Resolution (GR) no.
28/1/99-CTI dated 24.03.1999 to facilitate their modernization and
technological upgradation with effect from 01.04.1999 which was
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initially valid for a period of 5 years and was subsequently extended
up to 31.03.2007 and further extended to 31.03.2012. TUFS was a
bank driven scheme where under industrial units were required to
submit the applications for benefit to the lending agency/bank and
eligibility for grant of loan was to be established by the nodal
bank/agencies. The Ministry of Textiles was responsible for release
of subsidy to the concerned nodal agencies/lending agencies which in
turn to be released to the beneficiary. Part III, Clause (1) (a) of TUFS
provides that loan sanctioned by the lending agency till last date of
the duration of TUFS would be eligible under the scheme and the
reimbursement would continue to be available till loan is repaid as
per normal lending period of nodal agency. Accordingly a 5%
interest reimbursement subsidy was provided on RTL. The
respondent no 3 was designated as the Nodal Agency for Textile
Industry and Nodal Agency and was allowed to co-opt State
Industrial Development Corporations for sanction and disbursement
of the loan and accordingly the respondent no 4 was co-opted to
sanction and disburse the loan. IMSC was established to monitor and
appraisal mechanism and laid down norms for efficient
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implementation of TUFS. TAMC used to consider representations
from units/manufacturers/associations regarding the implementation
and amendments of TUFS and then these representations were
forwarded to IMSC for consideration. The points agreed upon in the
meetings of TAMC and IMSC were issued in form of Circulars
issued by the respondent no.2. The eligible applicants under Section
II clause 3.2 (2) (i) were allowed to import second hand projectile
shuttleless looms subject to a maximum expired (vintage) life of 5
years as reckoned from the year of manufacture and a residual life of
10 years. The petitioner was sanctioned RTL of Rs. 3,00,00,000/-
(Rupees Three Crores) on 30.03.1999 under TUFS and was disbursed
after 01.04.1999. The petitioner imported projectile shuttleless looms
having a residual life of 10 years with an expired (vintage) life of 9
years as reckoned from the year of manufacture. IMSC in 5th Meeting
held on 23.03.2000 concluded to increase vintage life of looms under
TUFS from 5 years to 10 years and benefits of the scheme should be
extended to eligible applicants. The circular no 1 (2000-2001 series)
dated 17.04.2000 was issued by respondent no 1 for modification of
TUFS to include looms with vintage life of 10 years. TAMC in 15th
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Meeting held on 23.05.2002 decided that the effective date of
eligibility of interest reimbursement under TUFS consequent to the
amendments/modifications would be first disbursement of term loan
on or after 01.04.1999. IMSC in its 12th meeting held on 05.06.2002
approved that whenever new machines or equipments which are
equal or superior than the bench marked equipments or machines
already included in the existing list of items of the GR, is made
eligible under TUFS and TUFS benefits for such equipments may be
extended for the loans disbursed after 01.04.1999. It was further
decided that in case inclusion of any machinery/equipment is due to
relaxation of norms laid down in the GR of TUFS, the effective date
of eligibility of interest reimbursement would be applicable from the
date of the meeting. The respondent no 2 thereafter issued a circular
no. 3 (2002-2003 series) dated 31.07.2002 to clarify effective date of
eligibility of interest reimbursement consequent to
amendments/modification would be from the date of the meeting.
The petitioner repaid last instalment of RTL on 28.04.2006 and
applied for TUFS benefit to the respondent no. 4. The respondent no
2 vide letter dated 04.03.2010 clarified and condoned issue of delay
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in filing the claim and instructed the respondent no. 4 to lodge the
claim for interest reimbursement with the respondent no 3/IDBI. The
respondent no 3 vide letter dated 13.08.2010 only sanctioned the
claim of Rs. 24,25,000/- (Rupees Twenty Four Lacs Twenty Five
Thousand only) for the interest reimbursement subsidy for RTL out
of the total RTL of Rs. 3,00,00,000/- for machinery other than
projectile shuttleless looms and rejected the remaining claim of
Rs. 2,75,75,000/- (Rupees Two Crores Seventy Five Lacs Seventy
Five Thousand only) on RTL. The respondent no 3 vide the
impugned letter no 1 dated 21.09.2010 rejected the claim of the
petitioner for interest reimbursement subsidy on the ground that at
the time of import/purchase of looms by the petitioner, the essential
eligibility condition for projectile shuttleless looms was a residual life
of 10 years and a maximum vintage life of 5 years but vintage life of
the purchased/imported looms of the petitioner was 9 years. The
respondent no. 3 on representation again rejected the claim of the
petitioner vide the impugned letter no. 2 dated 18.11.2010 on ground
that the vintage life of the looms was 9 years and not 5 years as
required under TUFS when the machinery was imported. The
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respondent no 2 vide impugned letter no. 3 dated 16/18.01.2013
informed the petitioner that the petitioner is not eligible for the
benefit of TUFS and that the contents of Circular No. 1 (2000-2001
series) dated 17.04.2000 are only applicable to cases where the term
loan has been sanctioned after the 5th IMSC Meeting held on
23.03.2000.
7. Sh. Shiv Charan Garg, Advocate for the petitioner argued that the
petitioner had purchased the projectile shuttleless looms on which the
respondent no 1 had given subsidies by issuing Government
Resolution (GR) no. 28/1/99 CTI dated 24.03.1999 and the issue
involved in present petition is that whether the petitioner is
entitled/eligible for interest reimbursement under TUFS and whether
TUFS was applicable on the date of disbursement of loan. The
petitioner purchased projectile Shuttleless loan in August, 1998 and
approached to HSIDC i.e. the respondent no 4 for RTL which was
sanctioned on 30.03.1999 and released after 01.04.1999. He further
argued that IMSC in its 5th Meeting held on 23.03.2000 approved
second hand projectile and rapier looms with 10 years vintage and
with a residual life of minimum 10 years eligible under TUFS based
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on TAMC recommendations. Accordingly Circular no.1 (2000-2001)
dated 17.04.2000 was issued. TAMC in its 15th Meeting held on
23.05.2002 discussed the issue in detail including the views of Nodal
Agencies and decided that the effective date of eligibility of interest
reimbursement under TUFS consequent to the amendments/
modifications approved by the Inter Ministerial Steering Committee
(IMSC) of TUFS from time to time will be first disbursement of term
loan or after 01.04.1999. However, in specific cases, if needed, the
TAMC/IMSC may specify the effective date of eligibility under
TUFS. He further argued that the respondents no 1 and 2 have
changed their stand in new counter affidavit from previous counter
affidavit which was based on meeting held on 23.05.2002 and
referred paras no 8 to 10 of previous affidavit and paras no 2 to 4 of
new affidavit. It was argued that the present petition be allowed. Ms.
Monika Arora, the CGSC for the respondent no.1/U.O.I argued to the
contrary.
8. The perusal of TUFS which was issued by the respondent no 1
vide Government Resolution (GR) no. 28/1/99 CTI dated 24/03/1999
reflects that Part II of TUFS deals with eligibility criteria for
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assistance. Clause 3.2 of Part II eligible types of machinery and
Clause 3.2.1 provides that under TUFS generally only new
machinery would be permitted. However as per Clause 3.2.2 import
of certain machinery which also included projectile shuttleless looms
with a minimum residual life of 10 years was permitted subject to
maximum expired life (vintage) life of 5 years as reckoned from the
year of manufacture. Part III Clause 1(a) deals with duration of
TUFS and provides that TUFS would be in operation for the period of
five years from 01.04.1999 to 31.03.2004 and loans sanctioned by the
lending agency till the last date of the duration of the scheme period
would be eligible under TUFS and the reimbursement would
continue to be available till the same is repaid as per the normal
lending period of the nodal agency. TUFS was also extended for
further period. The petitioner purchased projectile Shuttleless looms in
August, 1998 and the respondent no 4 sanctioned RTL in favour of the
petitioner on 30.03.1999 and was released after 01.04.1999.
Admittedly, the petitioner imported and installed projectile looms
which had a residual life of 10 years with an expired life (vintage) of
9 years as reckoned from the year of manufacture. It is also not in
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dispute that IMSC in its 5th Meeting held on 23.03.2000 approved
second hand projectile and rapier looms with 10 years vintage and
with a residual life of minimum 10 years. Thereafter, Circular No 1
(2000-2001 Series) was issued incorporating decision of IMSC taken
in its 5th Meeting held on 23.03.2000. The relevant portion of
Circular No 1 (2000-2001 series) reads as under:-
The decision taken by the Inter Ministerial Steering
Committee (IMSC) in its 5th meeting with regard to norms
relating to TUFS are as follows:
1. The following second hand machinery for jute & textile
sector would be eligible under TUFS:
i) ------
ii) -----
iii) Projectile and Rapier looms with 10 years' vintage
and with a residual life of minimum 10 years.
iv) ----
8.1 IMSC in its meeting held on 23.03.2000 in case of second hand
projectile looms has increased vintage life of 10 years with a residual
life of minimum 10 years. TAMC in its 15th Meeting held on
23.05.2002 considered effective date of eligibility of interest
reimbursement under TUFS consequent to the
amendments/modifications approved by IMSC of TUFS from time to
time. It was decided as under:-
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The Committee discussed the issue in detail including the
views of Nodal Agencies and decided that the effective date
of the eligibility of interest reimbursement under TUFS
consequent to the amendments/modifications approved by
the Inter Ministerial Steering Committee (IMSC) of TUFS
from time to time will be first disbursement of term loan on
or after 01.04.1999, however, in specific cases, if needed, the
TAMV/IMSC may specify the effective date of eligibility
under TUFS.
8.2 IMSC in its 12th Meeting held on 05.06.2002 clarified and
discussed the effective date of eligibility of interest reimbursement
under TUFS consequent to the amendments/modifications approved
by the IMSC of TUFS from time to time. It was decided as under:-
IMSC approved that whenever a new machines or
equipments which is equal or superior than the bench
marked equipments or machines, already included in the
existing list of items of the GR, is made eligible under
TUFS, the TUFS benefits for such equipments may be
extended for the loans disbursed after 01.04.1999. In case
inclusion of any machinery/equipment is due to relaxation
of norms laid down in the GR of TUFS, the effective date of
eligibility of interest reimbursement would be applicable
from the date of the meeting.
Accordingly as per clarification given by IMSC in its 12th Meeting
that effective date of eligibility of interest reimbursement for any
machinery/equipment included for relaxation in norms as per TUSF
would be applicable from the date of meeting i.e. 23.03.2002. The
projectile shuttleless looms with vintage life of 10 years with
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minimum residual life of 10 years were made eligible for 5% interest
subsidy from 23.03.2000 as IMSC on 23.03.2000 approved second
hand projectile and rapier looms with 10 years vintage and with a
residual life of minimum 10 years. The respondent no 2 in pursuance
of decision taken by IMSC issued a Circular No. 3 (2002-2003
series) dated 31.07.2002. The petitioner paid last instalment of RTL
28.04.2006.
8.3 The petitioner applied for TUFS benefit to the respondent no 4 on
15.05.2006 in prescribed form T-1 and T-2. The respondent no 3 vide
letter dated 13.08.2010 sanctioned the claim of the petitioner for Rs.
24,25,000/- for the interest reimbursement subsidy for machinery
other than Projectile Shuttleless Looms and rejected the remaining
claim of Rs. 2,75,75,000/- on RTL. The respondent no 3 vide letter
no. IDBI.HO.TUFS.343 dated 21.09.2010 i.e. the impugned letter
no 1 rejected the claim of the petitioner for interest reimbursement
subsidy on the ground that essential eligibility condition under TUFS
for projectile shuttleless loom was a residual life of 10 years and a
maximum vintage life of 5 years when the petitioner
purchased/imported the looms. The relevant contents of impugned
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 23
letter 1 issued by Assistant General Manager, TUFS Cell, LCG
reproduced as under:-
Please refer to your letter
no.HSIIDC.FIN:2010:6334,&t.07.09.2010 on the captioned
subject. In this connection, it is observed that the term loan
of Rs.300 lakh was sanctioned to the company or 30.03.1999
and the project was completed in March 2000. In terms of
the para no.3.2(2)(i) "TYPE OF TEXTILE MACHINERY
ELIGIBLE" of G.R. under TUFS (01-04-1999 to 31-03-
2004) import of second hand projectile shutteless loom with
a minimum residual life of 10 years by the eligible applicant
unit will be permitted subject to maximum expired life
(vintage) of 5 years as reckoned from the year of
manufacture.
In view of the above imported second hand projectile
shuttless looms having 9 years of vintage period procured
by M/s K.C. Machine Works Ltd are considered ineligible
under TUFS.
We suggest, you may please peruse book viz. Technology
Upgradation Fund Scheme For Textile and Jute Industries
published by Office of the Textile Commissioner and/or
visit website of Office of the Textile Commissioner
[www.txcindia.com] for details on TUFS.
8.3.1 The petitioner after rejection of claim vide impugned letter 1
again preferred representations justifying the availability of the
benefit under TUFS by highlighting contents of Circular No. 1 (2000-
2001 series) dated 17.04.2000 issued by the respondent no 2.
However, the respondent no 3 vide letter no. IDBI.HO.TUFS.437
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 24
dated 18.11.2010 i.e. the impugned letter no. 2 again rejected the
claim of the petitioner. The relevant contents of impugned letter 1
issued by Assistant General Manager, TUFS Cell, LCG reproduced
as under:-
Please refer to your letter, no.HSIIDC:FIN:2010:7479,
dt.04.11.2010 and HSIDC:FIN:2010:6334,dt.07.09.2010 on
the captioned subject. In this connection, it may be noted
that term loan Rs.300 lakh was sanctioned on 30-Mar-1999.
In terms of para no.3.6(b) of Government Resolution on
TUFS, "Whenever a new machine or equipment which is
equal or superior than the bench marked equipments or
machines, already included in the existing list of items of
the GR, is made eligible under TUFS, the TUFS benefits for
such equipments may be extended for the loans disbursed
after 1-4-1999. In case inclusion of any
machinery/equipment is due to relaxation of norms laul
down in the GR of TUFS, the effective date of eligibility of
interest reimbursement would be applicable only from the
date of the meeting."
HSIIDC may please note that relaxation viz. "Projectile
and Rapier looms with 10 years' vintage and with a
residual life of minimum 10 years" was introduced vide
circular no.1(2000-2001 series) dated 17-Apr-2000 by Office
of The Textile Commissioner. Accordingly, imported
second hand projectile shuttles looms having 9 years of
vintage period with sanction of term loan Rs.300 lakh by
HSIIDC on 30-Mar-1999 are ineligible under TUFS.
We suggest, you may please peruse book viz. Technology
Up-gradation Fund Scheme for Textile and Jute Industries
published by Office of the Textile Commissioner and/or
visit website of Office of the Textile Commissioner
(www.txcindia.com) for details on TUFS.
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 25
8.3.2 The respondent no 3 vide letter no. 50(8)/2011/IMS/190 dated
16/18.01.2013 i.e. the impugned letter no 3 informed the respondent
no 4 that the petitioner is not eligible for benefit of TUFS. The
relevant portion of the impugned letter no.3 is verbatim reproduced
as under:
Please refer to your letter No. HSIIDC:APP:2012:3142
dated 6-7/12/2012 forwarding representation by M/s K.C.
Fibres Ltd dt. 6.11.2012 regarding eligibility of imported
second hand Projectile shuttless loom having 9 years of
vintage period, From the documents enclosed with the
letter, it appears that term loan was sanctioned on
30.3.1999 and was disbursed after 1.4.1999 and IDBI has
rejected the interest subsidy under TUFS on the ground
that with the company purchased looms the essential
eligibility condition was 5 years whereas the looms
purchased by the company were of 9 years vintage.
In this connection, it is informed that as per TUFS
guidelines (1.4.1999 to 31.3.2004) para 3.2 of G.R. on page 6
( copy of the page 6 enclosed for ready reference) imported
second hand projectile shuttless loom will be permitted
subject to maximum expired life (vintage) of 5 years as
reckoned from the year of manufacture. Vide Circular 1
(2000-2001) dated 17.04.2000 the condition of vintage
increased from 5 years to 10 years. However, the Circular 1
(2000-2001) is applicable to cases where term loan has been
sanctioned after the 5th IMSC meeting. Since the term loan
in the instant case has been sanctioned on 30.3.1999 and
disbursed on 1.4.1999 the condition of 5 years vintage is
applicable to your case: Hence the investment in imported
projectile shuttles loom made as referred by you is not
eligible for interest reimbursement under TUFS.
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 26
8.4 The respondent no 1 and 2 in counter affidavit also stated that
import of second hand projectile shuttleless looms as per erstwhile
TUFS i.e. from 01.04.1999 to 31.03.2007 was eligible for subsidy
benefit subject to maximum expired life (vintage) of 5 years as
reckoned from the year of manufacture and with a minimum residual
life of 10 years. However, IMSC in its 5th meeting held on
23.03.2000 increased the vintage period from 5 years to 10 years with
a minimum residual life of 10 years and effective date of eligibility of
interest reimbursement would be applicable only from the date of
meeting. The benefit of TUFS was available for imported second
hand projectile shuttle loom having maximum expired life (vintage)
of 5 years as reckoned from the year of manufacture and with a
minimum residual life of 10 years RTL on loans sanctioned prior to
23.03.2000. RTL sanctioned under TUFS on or after 23.03.2000 was
eligible for machine having maximum expired life (vintage) of 10
years as reckoned from the year of manufacture with a minimum
residual life of 10 years. The respondent no 2 also filed another
counter affidavit in addition to counter affidavit earlier filed on
behalf of the respondents no 1 and 2 wherein stated that the petitioner
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 27
imported 24 projectile shuttleless looms with a vintage of 9 years and
residual life of 10 years but projectile shuttleless looms with a
vintage of 5 years and residual life of 10 years were eligible for
benefit of TUFS. Accordingly, 24 projectile shuttleless looms with a
vintage of 9 years and residual life of 10 years were not found
eligible for benefit of TUFS by the respondent 3/IDBI Bank vide
impugned letters dated 21.09.2010 and 18.11.2010 i.e. the impugned
letters 1 and 2. The respondent no 3 in counter affidavit stated that
the respondent no 4 in terms of the TUFS (1999-2004) sanctioned
RTL of Rs.300 lakh to the petitioner on 30.03.1999 for import and
installation of 24 projectile shuttleless loom. The first disbursement
of RTL was made after 01.04.1999 i.e. on 21.05.1999 to the
petitioner and entire process of disbursement was completed in
March, 2000. TUFS provided 5% interest reimbursement subsidy on
RTL and to claim benefit under TUFS, the eligibility condition for
second hand projectile shuttleless looms was minimum residual life
of 10 years and a maximum vintage life of 5 years as reckoned from
the year of manufacture. The Circular 1 (2000-2001) dated
17.04.2000 was applicable only to cases where term loan was
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 28
sanctioned after the 5th IMSC meeting. The condition of 5 years
vintage life was applicable in case of the petitioner since the
relaxation was introduced vide circular no. l dated 17.04.2000 and the
loan was sanctioned on 30.03.1999. The respondent no 3 assessed the
eligibility of the petitioner and found amount of Rs. 24.25 lacs
eligible under TUFS out of the total amount of Rs. 300 lakh. The
respondent no 4 in counter affidavit also took similar pleas.
9. It is established that the petitioner imported 24 projectile
shuttleless looms with vintage life of 9 years as reckoned from the
year of manufacture and with a minimum residual life of 10 years
which were not eligible for 5% subsidy reimbursement as per
relevant clauses of TUFS as detailed hereinabove. The vintage life
was increased from 5 years to 10 years in view of circular no 1 which
was made applicable from 23.03.2000 only and as such petitioner
was not entitled to claim said benefit. Even the petitioner is not
entitled to claim 5% subsidy reimbursement from 23.03.2000. The
respondent no 3 was justified in rejection of claim of the petitioner
vide impugned letters. The arguments advanced by the counsel for
the petitioner are as mentioned hereinabove are considered in right
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 29
perspective but are meritless. The respondents no 1 and 2 have not
taken contrary stand in counter affidavits and did not show any
discrimination against the petitioner. The respondents have acted as
per contents of TUFS and subsequent amendments/ modifications in
TUFS. The present petition is devoid of any merit. The petitioner is
not entitled to relief as prayed for. Hence petition is dismissed along
with pending application if any.
DR. SUDHIR KUMAR JAIN
(JUDGE)
MAY 30, 2024
AM/ABK/AK
Signing Date:31.05.2024 W.P.(C) 7886/2013 Page 30
