HARI FERTILIZERS Vs. UNION OF INDIA

JUDGEMENT

(1.) We have heard the learned counsels for the parties.

(2.) This writ petition has been filed against the impugned order dated 30.7.1996 Annexure-1 to the writ petition and for a mandamus directing the respondent no. 1 to pay the alleged balance of subsidy claimed by the petitioner amounting to Rs.1312.17 lakhs with interest. The petitioner is a unit of Orissa Cement Ltd. and this company is registered under the Indian Companies Act which was engaged in the manufacture and sale of Ammonium Chloride, a fertilizer and Soda Ash from its factory situate at Sahupuri, Varanasi, U.P. The controversy in this case relates to fixation of the correct retention price for the period 18.4.1985 to 4.1.1989 and consequently grant of subsidy to the petitioner for the said period.

(3.) In paragraph 3 of the writ petition it is stated that in order to introduce a rational system of pricing of fertilizers with a view to making the same available to consumers at a low prices and at the same time to ensure reasonable return on the investment to the manufacturers and facilitate healthy development and growth of the fertilizer industry, the government of India set up a Committee under the chairmanship of Shri S.S. Marathe the then Chairman of the Bureau of Industrial Costs and Prices (BICP), respondent no. 2 in this petition. In May 1977 this Committee submitted a report recommending to the Central Government that the price of fertilizers should be kept low by fixing the selling price under the Fertilizer (Control) Order, and in order to compensate the manufacturers for selling the fertilizers at the controlled low prices a subsidy scheme should be evolved. The recommendation of the committee was that the Government should fix a low consumer price under the Fertilizer (Control) Order and simultaneously a retention price scheme should be introduced under which a fair ex-factory retention price per tonne of finished product would be given to provide for a just return of 12% on the manufacturers investment. The difference between the selling price fixed under the Fertilizer (Control) Order and the retention price was to be paid by the government to the manufacturer by way of subsidy. The Government accepted the recommendation of the Committee and published its resolution dated 1.11.1977 in the Gazette of India, copy of which is Annexure 8 to the writ petition. The scheme which was introduced by the Government of India vide its resolution dated 1.11.1987 was to be administered by the Fertilizer Industry Coordination Committee (FICC) and one representative of the industry was to be a member of the Committee. The retention price provided for periodical revisions in the retention price to neutralize the increase in the cost of raw material / inputs and cost of transportation. The aforesaid scheme was initially made applicable only to urea but Ammonium Chloride was brought under the scheme from 19.4.1985. There were three manufacturers of Ammonium Chloride, namely, Hari Fertilizers, Punjab National Fertilizers and Chemicals Ltd. (PNFC) and Tuticorin Alkalies and Chemicals Limited (TAC). It is alleged that all the said producers also produced Soda Ash as joint product with Ammonium Chloride. Soda Ash is altogether a different marketable product with different chemical and physical properties and was manufactured as a co-product.