M/S. UDAIPUR PHOSPHATES FERTILIZERS LTD. versus UNION OF INDIA AND ANR.

Citation: [2007] 2 S.C.R. 31 · Decided: 31-01-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

M/S. UDAIPUR PHOSPHATES FERTILIZERS LTD. 
A 
v. 
UNION OF INDIA AND ANR. 
JANUARY 31, 2007 
(S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
B 
Subsidy-Subsidy of fertilizers-Determination of-Manufacturer 
applied for re-endorsement of the capacity of its unit on the basis of actual 
production between a specified period-Approval thereof after 3 years also C 
revising fixed cost and reducing the subsidy in view of the fact that 
manufacture was in excess of the endorsed capacity-Order challenged on 
the ground that when re-endorsement was granted, benefit of subsidy was not 
given-Single Judge as well as Division Bench of High Court rejecting the 
plea of manufacturer-On appeal held: Once re-endorsement takes place on 
the basis of actual manufacture, the fixed cost is bound to be revised and D 
hence subsidy bound to be reduced. 
Single Super Phosphate (SSP), was manufactured by the appellant. In 
1982, the product was brought under a formal price control known as Retention 
Price and subsidy Scheme for regulating the price and sale of SSP by 
Government of India. Under the Scheme the manufacturers were obliged to E 
sell their fertilizers at a subsidized price fixed by the Government which was 
below the cost of production. Government was to fix the retention price of the 
product The difference between the retention price and selling price as fixed 
by the Government was calculated and paid to the manufacturers as subsidy. 
Government issued Press Note No.1 whereby the capacity indicated in F 
the industrial licence could be reconsidered with reference to the highest 
production achieved during any of the previous 5 years plus I/3rd thereof 
provided that was within the licensed capacity plus 25% Thereafter Press 
Note No. 9 (1988) was issued which provided a Scheme for re-endorsement of 
higher capacity of the fertilizers units. In accordance with the Press Note G 
No.9, appellant-manufacturer applied for re-endorsement of the capacity of 
the appellant unit on the b_asis of actual production between 1.4.1988 and 
31.3.1990. Government accorded approval of re-endorsement in 1993 with 
retrospective effect from April 1990. Order indicated that in view of the higher 
31 
H 
32 
SUPREME COURT REPORTS 
[2007) 2 S.C.R. 
A capacity, the fixed charges had been recalculated from l.4.1990. It also 
demanded recovery on the basis of recalculation. 
Appellant filed Writ Petition challenging the re-calculation of the fixed 
Charges and recovery. Single Judge of High Court dismissed the Writ 
Petition. Division Bench of High Court also dismissed the Letters. Patent 
B Appeal. Hence the Present appeal. 
Dismissing the appeal, the Court 
HELD 1: Once the appellant's case falls within the criteria laid down 
in Press Note No.9 then the re-endoresement takes place automatically. Once 
C such re-E~ndorsement takes place on the basis of actual manufacture the fixed 
cost is bound to be revised and hence the subsidy is bound to be reduced. [Para 
15) [36-AJ 
2. The Press Note No. 9 at paragraph 2f clearly indicates that this 
scheme l'i in addition and not a substitution for the facilities already available 
D under any existing scheme. Hence, the grievance of the appellant that from 
the date of application for re-endorsement i.e. 8.8.1990 till 31.3.1993, when 
the re-endorsement was granted, the benefit of subsidy was not given is wholly 
untenable on account of the fact that the appellant overdrew the subsidies on 
account of the enhanced capacity which was on its own showing an admitted 
E fact [Para 16) [36-B-C) 
3. The appellant was duly informed that their capacity has been enhanced 
with retrospective effect from 1.4.1990 onwards. It is evident that the appellant 
produced more, and the appellant cannot say that no opportunity to actually 
manufacture in excess of the endorsed capacity was provided to them. The 
F order of approval has to be deemed to be an ex-post facto approval of the 
maximum production already achieved by the appellant The benefits in terms 
of the said scheme have already been availed of and drawn by the appellant 
company, and in fact some amount has been found to be overdrawn. [Para 17) 
(36-D-E) 
G 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6202 of2000. 
From the Final Judgment and Order dated 6.9.1999 of the High Court of 
Delhi at New Delhi in L.P.A. No. 375/1999. 
Paul Kaur Majithia (for Prashant Bhushan) for the Appellant. 
H 
Ashok Bhan, Kiran Bhardwaj and D.S. Mabra (for B. Krishna Prasad) 
UDAIPUR

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