VARINDER AGRO CHEMICALS LIMITED Vs. UNION OF INDIA

JUDGEMENT

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

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

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