M/S Riflex Industries Pvt.Ltd v. The Lt.Governor And Others

IN THE HIGH COURT AT CALCUTTA

CONSTITUTIONAL WRIT JURISDICTION [CIRCUIT BENCH AT PORT BLAIR] ******** PRESENT: HON'BLE JUSTICE HARISH TANDON WPA/950/2023 M/S RIFLEX INDUSTRIES PVT. LTD.

AND ANOTHER ... PETITIONERS

VERSUS

THE LIEUTENANT GOVERNOR AND OTHERS ... RESPONDENTS For the Petitioners : Ms. Anjili Nag For the respondents : Mr. Shatadru Chakraborty Mr. Dibesh Dwivedi Heard on : 26.09.2023 Judgment on : 29.09.2023 HARISH TANDON, J.

1.

The petitioner has assailed the order passed by the Lieutenant Governor on 4th July, 2023 refusing to exercise the power to relax the clauses or the conditions of Andaman and Nicobar Islands Infrastructure Subsidy for Micro, Small & Medium Enterprises, 2017.

2.

The dispute relates to extending the benefit of the aforesaid scheme providing the subsidy for the investment on infrastructure which could be extended to the MSME provided

the commercial production commences on or before 31st March, 2020.

3.

The dispute arose when the petitioner claimed the commencement of commercial production on 4th June, 2020 and lodged the claim of subsidy on 16th October, 2020. According to the petitioner, the commercial production could not commence within the outer limit set forth in the said scheme because of the lockdown having declared in the country and, therefore, the Administrator, Andaman and Nicobar Islands, who is vested with the power to relax any conditions or clauses of the said scheme should extend such benefit in admitting the claim of the petitioner.

4.

In the first round of litigation when the petitioner challenged the decision of the committee by which the claim was rejected, the Single Bench, by an order dated 18th August, 2022 passed in WPA/261/2021, set aside the decision of the committee dated 6th August, 2021 and directed the authorities to consider the application of the petitioner within four weeks from the date in the following:

"WPA/261/2021 is accordingly disposed of by directing the respondent authorities to consider the application of the petitioners for the subsidy under the Scheme within a period of four weeks from date and to dispose of the same by way of a reasoned order which shall be communicated to the petitioners within an outer limit of six weeks from today. The direction is subject to the fact that the concerned

Scheme is still in existence. The impugned order dated 6th August, 2021 is set aside."

5.

Although the Single Bench set aside the order dated 6th August, 2021 and directed the reconsideration of the application but the petitioner felt aggrieved with the observations recorded by the Single Bench that such direction is subject to the fact that the concerned Scheme is still in existence and filed the mandamus appeal being MAT No.8 of 2022 before the Division Bench. The Division Bench held that the said Scheme was operative till 31st March, 2020 and clause 5(v) postulates that such claim of subsidy can be availed of within one year from the date of commencement of commercial production which leads to an escapable conclusion that the claim made on or before 31st March, 2021 is maintainable which further leads to an another conclusion that the operation of the said Scheme was extended till 31st March, 2021.

6.

The Division Bench noticed that the lockdown was declared from 22nd March, 2020 which not only impedes the normal life but the commercial activities within the country and, therefore, the authority ought to have considered the same in pragmatic manner more particularly while exercising the power of relaxation provided under the said Scheme.

7.

Ultimately, the direction was passed upon the Lieutenant Governor, being Administrator, A & N Islands, to reconsider the

issue and pass a reasoned order. The Lieutenant Governor, by the impugned order, declined to exercise the power of relaxation on the following:

"And whereas, after careful study of the subsidy claim of the Applicant, his averments during the personal hearing and the records he produce thereafter and the comments of the Department thereon, the following is observed: (a) That the said scheme 'Andaman and Nicobar Islands Infrastructure Subsidy for Micro, Small & Medium Enterprise, 2017' came into effect from the date of publication of the notification i.e. from 25th October, 2017 and remained in operation until 31st March, 2020 and the scheme has not been extended further.

(b) That the benefits under the said scheme were applicable to those Industrial Establishments that were set up and commenced commercial production before the expiry of the scheme i.e. 31.03.2020.

(c) That the subsidy claim dated 24th September, 2020 submitted by the applicant cannot be considered under the extant scheme since the unit was set up and commenced commercial production from 04.06.2020 which is much after the expiry of the scheme.

(d) That DPHT, Ministry of Commerce & Industry Govt. Of India notified a similar scheme christened "Lakshadweep and Andaman and Nicobar Industrial Infrastructure Development Scheme (LANIIDS), 2018" vide notification dated 01st January, 2019. The scheme came into effect from 01.04.2018 and remained in force upto 31.03.2020 with committed liabilities upto 31.03.2025 for units registered upto 31.03.2020. The scheme was further extended by DPHT, Ministry of Commerce and

Industry upto 31.03.2020 with committed liabilities accrued upto 31.03.2028 for unit registered upto 31.03.2023.

(e) M/s Reflex Industries (P) Ltd (unit-V) had also shown interest to avail benefit under the LANIIDS 2018 scheme and submitted an online application vide No. 1011 dated 15.02.2021 for registration under the said scheme. The application, after scrutiny by MHA in consultation with various Ministries/Departments was returned to the applicant since it was incomplete and had shortfalls.

The Applicant firm has not resubmitted the application after attending to the observation/shortfalls.

(f) The Hon'ble High Court in the order dated 28.09.2022 had directed to consider the application for subsidy in the light of the observations made herein above and take a decision whether by extending the time period fixed under the said scheme for commencing commercial production for availing subsidy, the benefit can be given to Appellants'. In this regard, the issue was re-examined and it is my view that if such extension for time limit fixed by Govt. of India under the scheme for commercial production is to be considered, the same has to be made applicable across the Board to whole lot of such Units who would have set up and applied for similar benefits under the scheme but were not considered at that point of time, and not to a particular individual Unit selectively.

Further, such extension of time limit should have been considered well before the notified date of closure of the scheme and re-notified well in advance Selective extension of date to consider a particular firm, that too post-facto, is illegal and arbitrary and would have prevented other units from availing such benefits.

(g) Further, during the personal hearing, the Appellant was asked to produce documents if any, to at least enable demonstrate his intention to commence the operation before 31.03.2020. The Applicant stated that he had submitted some documents to the above effect in February 2020 to the concerned authority.

On going through the records, particularly the cited letter of the Applicant in February 2020, it is revealed that contents were totally different and no such intention was placed before the concerned authority at that time that he was genuinely prevented from starting commercial production before 31.03.2020 and also that he wanted to start the commercial production before the closure of the scheme."

8.

It is contended by the learned advocate for the petitioner that the commercial production could not commence because of the lockdown having declared in the country though the petitioner was prepared to commence the production on or before 31st March, 2020.

It is further submitted that the communication through air was stopped from 19th March, 2020 because of the Covid intervention which could only resume on 25th May, 2020.

9.

It is further submitted that the Lieutenant Governor, in the impugned decision, has not taken into account the aforesaid fact and proceeded to reject the application solely on the ground that it would open a pandora box for all and sundry which would frustrate the object and purpose behind the framing of such Scheme.

10.

It is further submitted that the Lieutenant Governor ought to have considered that the Scheme is benevolent and welfare piece of legislature and must also take into account the hard realities of the Covid and there is no fetter on the part of the authorities to extend the outer limit and placed reliance of the judgment of the Telengana High Court in the case of M/s Sri Yadadri Lifesciences P. Ltd vs. M/s State Bank of India (Writ Petition No.9408 of 2020 decided on 02.07.2020) 11.

On the other hand the respondents submits that the court should seldom interfere with the policy or the scheme framed by the government in exercise of power of judicial review and placed reliance of the Apex Court in the case of State of Haryana and others vs. Mahbir Vegetable Oils Private Limited reported at (2011) 3 SCC 778.

12.

It is further submitted that extension of the Scheme beyond its outer limited will open a pandora box for all such MSMEs who have been denied the subsidy in a similar circumstances.

13.

It is, thus, submitted that the order passed by the Lieutenant Governor does not warrant any interference and the writ petition should be dismissed.

14.

Undeniably, clause 13 of the Scheme bestowed power upon the Administrator, Andaman and Nicobar Administration,

to relax any clause under the said scheme/programme which imbibe within itself clause pertaining the duration of the said Scheme.

15.

Even the Lieutenant Governor did not observe in the impugned order that such power is exercised in a limited compass and does not cover the duration thereof. The rejection is founded on the ground as quoted hereinabove, and the main thrust appears to have been based upon the ground that if the benefit is granted to the petitioner, it would be unjust and unreasonable to the others who might claim the same under the similar circumstances.

16.

It is further observed that the petitioner ought to have intimated the Administration and prayed for an extension of time and having not done, the post-facto approval is illegal and arbitrary.

17.

It is further observed that the documents placed before him does not corroborate the stand of the petitioner that he was ready to commence the commercial production on or before 31st March, 2020.

18.

At the first blush the reason assigned in the impugned order by the Lieutenant Governor appears to be logical and reasonable taking into account of the facts that the petitioner commenced the commercial production on and from 4th June,

2020 immediately after the resumption of the flight operation from 25th March, 2020. The time taken for commencement of the commercial production was nearly 9 days and therefore, the said authority ought to have considered the same that if the petitioner had a time till 31st March, 2020, the flight operation which was stopped from 19th March, 2020 impedes such commercial production.

19.

This court do not find any justification in the reason that the petitioner ought to have prayed for extension of time for commencement of the commercial production when it is apparent from the stand and the records that such commercial production ensued within nine days from the resumption of flight operation. It is impossible for any human being to foresee such disaster struck globally and in anticipation thereof will apply for extension of time for commencement of commercial production. 20.

Even the Division Bench in an earlier round of litigation observed that the authority would consider the hard realities that the lockdown was observed on and from 22nd March, 2020 and flight operation was completely stopped from 19th March, 2020. 21.

The power of relaxation is provided in the scheme itself which should be exercised in a reasonable and rational manner and any pedantic approach should be eschewed. Though it is within the competence of the authority upon whom the power of

relaxation is conferred upon to take an informed decision but such decision much with stand on the Wednesbury principle i.e. principle of reasonableness as opposed to capricious and arbitrary exercise of power.

22.

The judgment rendered by the Telengana High Court in M/s Sri Yadadri Lifesciences P.Ltd (supra) is in relation to one time settlement scheme and the Division Bench of the Telengana High Court noticed the impediment created by the Covid-19 in the following:

"5. In this case, it is to be seen that the Apex Court has extended the limitations under several statutes, where there is no provision for condonation of delay also, till further orders or till the lockdown is lifted. The Hon'ble Full Bench of this Court also extended interim orders taking into consideration of the prevailing Covid-19. No doubt, as contended by the learned Standing Counsel for the respondent Bank that the OTS is a special scheme and time for payment under said scheme is provided and same as extended to the petitioner, and same cannot be again extended as it will violate the very scheme itself. But the situation is extraordinary affecting the entire humanity and judicial notice has already been taken of the same. Learned Standing Counsel could not dispute the situation due to Covid-19 prevailing in the country."

23.

There is no quarrel to the proposition laid down by the Supreme Court in Mahbir Vegetable Oils Private Limited (supra) that the claim of concession is not an legally enforceable right in the following:

28. An exemption is nothing but a freedom from an obligation which an assessee is otherwise liable to discharge. In a fiscal statute, an exemption has been held to be a concession granted by the state so that the beneficiaries of such concession are not required to pay the tax or the duty they are otherwise liable to pay under such

statute. The beneficiary of a concession has no legally enforceable right against the government to grant a concession except to enjoy the benefits of the concession during the period of its grant. The right to exemption or concession is a right that can be taken away under the very power in exercise of which the exemption was granted.

24.

The aforesaid case is not applicable in the instant case for the reason that the claim was laid by the respondent therein relying on the principle of promissory estoppel. An exemption was sought in relation to tax and duties otherwise payable under the statute but before any investment is done by the respondent the government decided to amend, rescind and/or revoke the said policy and therefore the Apex Court held that it shall not tantamount to altering the position nor creates a vested right upon the investor to claim the concession of tax and the duties. 25.

The instant case is founded upon the power to relax any of the clauses or the conditions under the said scheme. The petitioner approached the court seeking the direction upon the authority to invoke such powers and it admits no ambiguity that such invocation of power must with the stand on the principle of reasonability and rationality. It is within the competence of the authority upon whom the power of relaxation is vested upon either to relax or refuse to relax any of the clauses or the conditions of the scheme but such decision must be reasonable and not arbitrary.

26.

It appears that the Lieutenant Governor has not taken into account the fact that the moment the petitioner commenced the commercial activities within nine days from the date of the lifting of the restriction imposed for Covid-19, had there not been any lockdown declared on 22.03.2020 or at least the operation of the flight would not have been stopped from 19.03.2020, the petitioner may have been in a position to commence the commercial production.

27.

Such factors have to be considered in the light of the relevant documents to be produced in this regard and the infrastructure having put in place on or before 19.03.2020. 28.

Since the power of relaxation is conferred upon the Lieutenant Governor, the Court should be slow in usurping such power and grant the relief to the petitioner. 29.

In view of the above, the order dated 4th July, 2023 passed by the Lieutenant Governor is hereby set aside. 30.

The matter is remitted back to him to consider the said application afresh after taking into consideration whether the infrastructures prior to the stoppage of the flight operation was such which would in the event of lockdown having not declared enures the petitioner to commence the commercial production on or before 31.03.2020.

31.

With the above observations the writ petition is disposed of.

32.

No order as to costs.

33.

Urgent Photostat certified copies of this order, if applied for, be made available to the parties subject to compliance with requisite formalities.

(HARISH TANDON, J.)