THE STATE OF MADHYA PRADESH AND ORS. versus M/S. BINDAL AGRO CHEMICAL LTD. AND ANR.

Citation: [1996] SUPP. 3 S.C.R. 754 · Decided: 19-07-1996 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
THE STATE OF MADHYA PRADESH AND ORS. 
v. 
M/S. BINDAL AGRO CHEMICAL LTD. AND ANR. 
JULY 19, 1996 
B 
[KVLD!P SINGH ANDS. SAGHIR AHMAD, JJ.] 
Jndusflial and Development Regulation Act, 1956: 
Indusuial development-Madhya Pradesh State ·Govel7!!1lent Notifica-
C tion dated 16. J0.198{r-Para XIII £-Incentives to entrepreneurs-Not avail-
able to new industlial units set up by transfcning, shifting, closing an existing 
unit-Held, the new unit set up by re.1pm1dent was by transfening/shifting the 
existing unit, and as sflch it lvas not entitled to the subsidy under the 
Notification. 
D 
The respondent-Company purchased a vanaspati factory, which was 
granted an industrial licence by the Central Government under the In-
dustrial (Development and Regulation) Act, 1956. Later, the respondent 
applied for and was granted permission by the Government to change the 
location of the factory from Dewas to Mandideep against the original 
E industrial licence dated 18.1.1981. 
The State Government of Madhya Pradesh in order to help in-
dustrialisation of backward areas, by Notification dated 16.10.1986 an-
nounced various incentives to the entrepreneurs. Ho\vever, para XIII E of 
the N otilication provided that the incentives would not be available to a 
F 
new industrial unit set up by transferring, shifting or dismentling or 
closing an existing unit within the State. The respondent, after setting up 
the unit at Mandideep, ap1ilied for an eligibility certificate under the 1986 
Notification, which was declined by the State Government on the ground 
that the respondent had shifted the unit from Dewas to Mandideep. 
G 
The respondent filed a writ petition before the High Court contend-
ing that plant/machinery of Dewas Unit was not shifted to Mandideep but 
after acquiring land at Mandideep the totality of the plant and machinery 
were newly purchased and as such the unit set up at Mandideep was a new 
industrial unit entitled to the subsidy under the Notification. It was 
H contended for the State that under the Act a vanaspati manufacturing unit 
754 
STJ\TEv.13!NDALAGROCHEMICJ\LLTD. [KULDIPSINGH,J.] 
755 
could not be set up without obtaining licence from the Central Govern· A 
rnent; no licence \Vas obtained for setting up a new industrial unit at 
J\1andideep w·hich \'\'as operating under the licence granted for De\l'as unit; 
since the Mandideep unit was set up by transferring/shifting the existing 
unit at Dewas, the respondent was not eligible for grant of subsidy in terms 
of pars Xlll E of the Notification. The High Court allowed the llTit petition. 
Aggrieved, the State Government tiled the appeal. 
Allowing the appeal, this Court 
B 
HELD : 1. The High Court was not Justified in holding that a new 
unit was set up at Mandideep. The Central Government permitted the C 
respondent to charge the location from lle\'\'aS to 1\-tandideep. The cor~ 
respondence beh\·een the respondent and the IB'o governments clearly 
shows that the respondent was fully aware that it would nnt be entitled to 
the subsidy in respect of the unit at Mandidecp. The respondent could not 
have set up the unit at Mandideep without obtaining licence from the 
Central Governrnent. No ne\v licence \\'as granted to the respondent for the D 
unit at l\tandidcep. The process of J\fanufacture of vanaspati at Dewas 
stopped with the transfer of the licence to the unit at Mandideep. The new 
unit set up at Mandideep was by transferring/shifting the unit at Dewas. 
The unit at De\\as was closed so far as the manufacture of vanaspati was 
concerned. [758-C; 759-C·E] 
E 
2. In case any subsidy has been availed by the respondent as a result 
of the High Court judgment the same may be recovered from the respon-
dent in instalments. [759-F-G] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9384-85 
f 
of 1996. 
From the Judgment and Order dated 9.10.90 of the Madhya Pradesh 
High Court in M.P. No. 1/88 and 4348 of 1989. 
A.K Chitale , Sakesh Kumar and S. K Agnihotri for the Appellants. G 
Kapil Sibal, Rajiv Dutta and Vipin Nair for the Respondents. 
The Judgment of the Court was delivered by 
KULDJP SINGH, J. Special leave 6'fanted. 
H 
756 
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R. 
A 
The question for consideration before the High Cou't was whether 
M/s. Bindal Agro Chemical Ltd., respondent in the appeals herein, was 
eligible and entitled to various incentives announced by the State Govern-· 
ment to the entrepreneurs setting up ne\v industries in the R

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