Legitimate claim under welfare scheme floated by Ministry of Food Processing Industries to promote small scale industries by grant of financial assistance, can’t be dismissed on account of technicality: Delhi HC

Read Judgment: Shakti Industries V. Union of India

Pankaj Bajpai

New Delhi, January 17, 2022: The Delhi High Court has opined that the Scheme for Technology Upgradation/ Establishment/ Modernization (TUEM Scheme) floated by Ministry of Food Processing Industries (MOPFI) being beneficial in nature, it has to be interpreted in a purposive manner keeping in mind the objective to promote small scale industries by granting them financial assistance.

The Bench of Justice Rekha Palli therefore observed that the TUEM Scheme was been issued with the objective of development and upgradation of certain food processing industries and the respondent’s refusal to release the amount of the second installment will be contrary to the said objective.

To dismiss a legitimate claim, simply on the account of a technicality, would cause grave and irreparable harm to the faith of general public in these welfare schemes, added the Single Judge.

Going by the background of the case, the Ministry of Food Processing Industries (MOFPI – Respondent) launched the TUEM Scheme, with a view to advance the technology used in the industry by reducing the wastage of agricultural and horticultural produce, for the purpose of assisting entrepreneurs to set up food processing units. All eligible food processing units under various sectors were to be provided financial assistance of 25% of the cost of the plant, machinery and technical civil works, subject to a ceiling of Rs 50.00 lakh in general areas and of 33.33%, in difficult and North-Eastern areas with a ceiling of Rs 75.00 lakh.

Shakti Industries (petitioner), a registered partnership firm involved in the business of producing Khachighani Mustard oil, being eligible applied under the TUEM Scheme for grant-in-aid of Rs.24,53,000/- for the purpose of carrying out expansion work, which was sanctioned and approved and the amount was payable in two installments. Since, first installment of Rs.12,26,500/- was released, the petitioner, armed with a utilization certificate, applied for the second installment, through its nodal bank (Punjab National Bank). However, communicating certain deficiencies in the petitioner’s application, the amount was not released. The petitioner was later informed that since the TUEM Scheme already stood closed w.e.f from April 1,2012 its request could not be processed any further at this stage. Hence, present petition.

After considering the submissions, the High Court found that neither has the respondent been able to point out any overriding larger public interest to deny the petitioner the amount it was entitled to receive as grant-in-aid nor was there, any inordinate delay on the part of the petitioner so as to deprive it of the second installment under the TUEM Scheme.

It is an admitted fact, that the petitioner has spent the amount received as the first installment to make certain changes, in the nature of expansion, to its Oil Mill, in furtherance of the terms of the TUEM Scheme, added the Court.

Justice Palli referred to the decision of the Apex Court in case of Bannari Amman Sugars Ltd. v. CTO , wherein it was observed that while the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. 

It was also opined therein that the wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play.

“Once it is the respondent’s own stand that despite the TUEM Scheme having come to an end on 01.04.2012, the respondent required the petitioner to submit the necessary documents on 27.03.2018, it is evident that the respondent was well aware that merely because the aforesaid TUEM Scheme was no longer in operation, the beneficiaries like the petitioner, who had already been registered thereunder could not be deprived of their entitlement in terms of the TUEM Scheme. Even otherwise, once the respondent, after having received the request for release of the second installment on 27.03.2017, itself took one year, to communicate the deficiencies to the petitioner’s bank on 27.03.2018, cannot now be allowed to claim that the response from the petitioner, having been received belatedly, on 15.11.2018, no cognizance was required to be taken thereof”, added the Single Judge.

Accordingly, the High Court directed the respondent to consider the petitioner’s claim on its own merits and pass a reasoned and speaking order.