UNION OF INDIA AND ANR. versus BRIJ FERTILIZERS PVT. LTD.

Citation: [1993] 3 S.C.R. 760 · Decided: 14-05-1993 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Dismissed

Judgment (excerpt)

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UNION OF INDIA AND ANR. 
v. 
BRIJ FERTILIZERS PVT. LTD. & ORS. 
[A.M. AHMADI AND R.M. SAHAI, JJ.] 
MAY 14, 1993 
Ferrilizer(Control)Order J985-Cla11se (2) (qJSched11les 1 and II-Payment 
of subsidy 10 small scale 111a1111facwrers-Held, cannot be with-held 011 rhe basis 
of repon of a Research Organisation prepared behind the back of 
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respondents-High Court may imerfere at the srate of slww cause notice where 
manufacturers would be in peril if it did not-Essemial Commodities Act,J 955. 
The respondents were small scale manufactures of fertilizers. '.fhey 
were entitled to payment of subsid~· on meeting prescribed standard in the 
manufacture of single super· phosphate (SSP). 'the Government of Madhya 
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Pradesh requested PDIL, a consultancy and R.&D Organisation, to test the 
rock phosphate at Hirapur mines for determining disability allowance pay-
able to SSP producers. On the basis of this report, the payment of subsidy was 
withheld, and a show cause notice issued to the respondents. 
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A writ petition filed in the High Court was allowed by a Division Bench 
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which quashed the show cause notice and ordered that the subsidy be paid. It 
found that the PDIL report had been made without notice to the manufactur-
ers or inviting their participation and that the laboratory reports furnished 
b~,. the manufacturers on which the payment of subsidy was dependent had 
not been questioned. 
On appeal before this Court, the questions to be decided were whether 
the withholding of' payment of' subsidy to the respondent was justified; 
whether the High Court committed any error in interfering at the stage of 
show cause in exercise of its extra-ordinary jurisdiction; and whether the 
report of PDIL, prepared behind the back of the respondents couJd be used 
to reject the standard fertilizer of' the respondent. 
It was contended for the appellants that a detailed teclmical examination 
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was pending and the subsidy worked out had only been provisional, and that 
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PDIL had carried outthe ~xamination. PDIL being independentand reputed, 
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it was not required to here the manufacturers. Further, the non-release of 
760 
U.I.O. v. BRIJ FERTILIZERS 
761 
subsidy was also on the basis of input cost data • .It was urged that the High A 
Court was not justified in quashing the show cause notice and issuing 
directions for paying the subsidy without giving the department an opportu-
nity to verify ifthe respondents had in fact compiled with the Control Order. 
Dismissing the appeal, this Coor!_, 
HELD : 1. PDIL was engaged to find out the grade of pb()~phate from 
Hirapur mines to enable the manufacturers to claim disability allowance, and 
not whether they were producing fertiliser in accordance with the standard 
provided in the Control Order. The purpose being entirely different, the 
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report could not he utilised for a different purpose. (767-G) 
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2. There is no evidence to doubt the authority of the reports submitted 
by the inspectors appointed under the Control Order that the fertiliser 
produced was of specified standard. (768-B) 
3. On facts, in the absence of any reliable data or any material the 
inference drawn by the appellants in the notice that the fertiliser was not of 
a specified standard was baseless. The entire exercise was therefore vitiated 
being tainted with arbitrariness. (770-F-G) .. 
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4. The High Court should normally not interfere at the stage of show E 
cause notice. But where, from the facts it is apparent that there was no 
material available with the department to doubtthe statement on behalfofthe 
respondent, it would be failing to exercise jurisdiction if the Court does not 
discharge its constitutional obligation of protecting the manufacturers who 
are in perilous condition as they are not able to meet their liabilities to pay to 
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financial inst;tutions and various other authorities and are facing proceed-
ings on various counts and have virtually closed their unit. The authorities did 
not realise either the purpose of granting subsidy or the harassment to which 
the manufacturers have been exposed. Entire litigation appears to be a sad 
plight for those who have. set up small scale units in the hope that they will 
stand on their own on the subsidy given by the Government as admittedly the G 
price of manufacturing fertilisers is much more than the price fixed by the 
Government for which it assured to pay subsidy. (771-B-D) 
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762 
SUPREME COURT REPORTS 
[1993] 3 S.C.

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