M/S PAMPAR OVENFRESH FOODS PVT LTD v. UNION OF INDIA & ORS.

(m) Directions on the Respondent authorities to quash and/or set aside the outcome of the meeting of Inter- Ministerial Approval Committee dated May 28, 2019 recorded in the minutes of the meeting and consequential e-mail dated September 15, 2021 and any proceeding thereunder and/or in relation thereto and/or being continued by the authorities therefrom since the said outcome of the meeting dated May 28,, 2019 and subsequent e-mail dated September 15, 2021 are bad in law; (n) Directions on the Respondent authorities to immediately pay the petitioner the balance sum of grant in aid amounting to Rs. 69.995 lakhs along with accrued interest thereon since the petitioner has fulfilled its obligations under the scheme in its true spirit and has completed the expansion work for which the scheme was floated; (o) Directions on the Respondents to permit the petitioner to transfer the operation of the scheme from Unit-I to Unit II since the said unit-II is ready for operation and the said permission would tantamount to fulfilment of the scheme in issue and may bring the dispute to a closure; (p) Injunction restraining the Respondent authorities from proceeding with the email dated January 1, 2020 or the email dated September 15, 2021, and to act in 18:43 ( q) Injunction restraining the Respondent authorities from proceeding with the various notices pertaining to the recovery of first instalment of grant in aid amounting to Rs.69.995 lakhs along with accrued interest released in favour of the petitioner issued by the respondent authorities; including the certificate officer, Howrah, the respondent No. 10 hereinabove and/or any proceeding in relation thereto or thereunder or touching there upon and to act in (r) Ad interim reliefs in terms of the prayers made above; (s) Grant costs to the Petitioner; (t) Pass such other or further order(s) in favour of the Petitioner and against the Respondents, as this Hon'ble Court may deem fit and proper in the nature and circumstances of the case. (u) That the petitioner was not received any reference Board minutes meeting dated 28.05.2019 and E-mail dated 19.12.2019, even the concerned authorities were not served by E-mail or any other mode of service to the petitioner.”

6. It is stated by the learned Counsel for the Petitioner that the impugned Order shows no application of mind by the Respondents. He states that the impugned communication is a verbatim reproduction of the earlier order and the detailed representation given by the Petitioner has not at all been considered by the Respondents which shows complete non-application of mind on the part of the Respondents. Learned Counsel for the Petitioner 18:43 further states that the Order dated 05.02.2024 states that no fresh facts have been provided by the Petitioner in its representation which is completely contrary to the record as the Petitioner had provided supporting material along with its detailed representation which was given to the Respondents. He states that a mere lip-service has been carried out by the Respondents and the Order dated 29.08.2023 passed by this Court has not been given effect to by the Respondents. He states that in the representation given by the Petitioner, the Petitioner had shown that on the day when the fire broke out in the factory of the Petitioner, the Petitioner was proceedings with the implementation of the Scheme much ahead of the schedule given in the Scheme and the project of the Petitioner was on the verge of completion when the fire broke out. It is stated that the Petitioner had claimed insurance from the insurance company and had also requested the Respondents for extension of time by 18 months for completion of the project. He states that extension of time could be provided to the Petitioner under Clause 13 of the Scheme. He further states that the Respondents have completely failed to appreciate that the Petitioner had given documents to show that Leave and License Agreement for machineries, which were gutted in the fire, was taken only 45 days before the incident from M/s Gopal Consumer World for implementation of the Scheme. He further states that the Petitioner had also filed a sub-lease deed entered into by the Petitioner with M/s Connect Multipurpose Storage Private Limited and the Petitioner had also given proof to show that the machineries were purchased so that the project can be revived.

7. Learned Counsel for the Petitioner states that the amounts have been 18:43 spent by the Petitioner from its pockets. It is stated that a sum of Rs.30 lakhs was paid as security deposit and invoices were issued for purchase of plant and machinery for a total sum of Rs.8,85,12,240/-. It is stated by the learned Counsel for the Petitioner that these additional facts show the bona fide of the Petitioner that the Petitioner has taken all the steps required to put the factory back on track and the same have not been taken into account by the Respondent at all. He, therefore, states that the decision taken by the Respondent to recover the Grant-in-aid given to the Petitioner is completely arbitrary and ought to be set aside. He states that the very fact that no fresh fact has been stated in the impugned Order shows non-application of mind on the part of the Respondents. He states that the documents submitted by the Petitioner have not been considered at all by the Respondent and the Respondent has merely stated that no fresh fact has been given in its representation. The Petitioner also places reliance on the Judgment of the Co-ordinate Bench of this Court in Shakti Industries v. Union of India, 2022 SCC OnLine Del 129, wherein in identical circumstances, this Court has held that the Scheme in question was beneficial in nature and, therefore, has to be interpreted in a purposive manner and keeping in mind the objective behind the scheme, which was to promote small scale industries by granting them financial assistance, and the act of rejecting a legitimate claim, simply on the account of a technicality, would cause grave and irreparable harm, not only to the petitioner but also the faith of general public in these welfare schemes.

8. Per contra, learned Counsel for the Respondent contends that pursuant to the Order passed by this Court, a representation dated 18:43 14.09.2023 was received by the Respondent. A joint inspection was carried out on 19.10.2023 by a joint inspection team at the site and the joint inspection team submitted its report. He states that the detailed report submitted by the Committee shows that the steps taken by the Petitioner were not adequate and, therefore, the claim of the Petitioner has been rejected. He further states that the Petitioner had given more or less the very same facts which were available with the Respondent before W.P.(C) 10771/2023 was filed and disposed of by this Court. He states that no further documents from the date of the disposal of the representation to the date of the joint inspection report has been submitted which would have persuaded the Respondent to change their mind.

9. Heard the Counsels for the parties and perused the material on record.

10. The short issue which arises for consideration in the present Writ Petition is as to whether the decision taken by the Respondents to recover the amount of grant in aid given by the Respondents to the Petitioner for implementation of the Scheme in question requires interference by this Court under Article 226 of the Constitution or not.

11. This Court on 29.08.2023, after hearing the parties and the plea of the Petitioner that the Petitioner has taken steps to ensure that the project is put back on track, had permitted the Petitioner to give a detailed representation. The Petitioner gave a detailed representation to the Respondents. A joint Inspection team went to the site and after assessing the site has given its report. Relevant portions of the Joint Inspection Report is being reproduced herein and the same reads as under: “Current Status of the project site: 18:43 A physical site visit of the project was conducted by a Joint Inspection Team (JIT) comprising of representatives from Ministry and PMA on 19 October 2023, The following are the observations made by the MoFPI:

(i) Flavourite flavouring drum- installed and found

(iii) Radiant Coil of thermal heat fluid - not in use

(iv) Fryer-not in use

(v) Potato grader not in use e) Finished good shed:

IA informed JIT, that the finished good shed was a component under the approved project that got fire damaged. IIT found that it was dumped with cartoon packs and the unused P&M components.

There is no specific demarcation of area and Plant and Machineries between the existing and expansion project in the new premises. Hence, JIT could not be able to differentiate the space/ area as well as the plant and machineries meant for existing and expansion projects at the new premises.” (emphasis supplied)

12. Based on the Joint Inspection Report, it was found by the Respondents that no physical progress has been shown by the Petitioner. The Joint Inspection Team consisted of the officers of the Ministry of Food Processing Industries, A Senior Associate of Ernst & Young LLP, which is the Project Management Agency, and the representatives of the Petitioner. This Court has not reason to come to the conclusion that the purport of the Joint Inspection Team was to deny the benefit of the Scheme to the Petitioner or it was done as a mere lip service to the Orders of this Court.

13. Clause 13 of the Scheme which is relevant for the case is being 18:43 reproduced herein and the same reads as under:

14. No doubt, the Scheme provides that in exceptional circumstances and for reasons beyond the control of the promoters the implementation period of the Scheme may be extended with approval of the IMAC. However, in the facts of the present case, looking at the Joint Inspection Report this Court is of the opinion that steps have not been taken by the Petitioner after the fire incident to ensure that project can be put back on track even after giving additional time. Therefore, the claim of the Petitioner on the ground of 18:43 legitimate expectation cannot be accepted.

15. The law of legitimate expectation has been crystallized by the Apex Court in several judgments. It has been held that for a legitimate expectation to arise, the decision of the authority must affect such person by (a) altering rights or obligations of that person which are enforceable by or against him in private law, or (b) depriving him of some benefit or advantage which he has conferred upon him in the past by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until some rational ground for withdrawing the benefit has been communicated to him and he has been given an opportunity to comment thereon, or he has received assurance from the decision-maker that the benefit will not be withdrawn without giving him an opportunity of advancing reasons for contending that they should not be withdrawn. The Apex Court in Sethi Auto Service Station v. DDA, (2009) 1 SCC 180, has explained the concept of legitimate expectation as under:

18:43 Service Unions v. Minister for Civil Service [1985 AC 374: (1984) 3 WLR 1174: (1984) 3 All ER 935 (HL)], a locus classicus on the subject, wherein for the first time an attempt was made to give a comprehensive definition to the principle of legitimate expectation. Enunciating the basic principles relating to legitimate expectation, Lord Diplock observed that for a legitimate expectation to arise, the decision of the administrative authority must affect such person either (a) by altering rights or obligations of that person which are enforceable by or against him in private law, or (b) by depriving him of some benefit or advantage which either: (i) he has in the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until some rational ground for withdrawing it has been communicated to him and he has been given an opportunity to comment thereon, or (ii) he has received assurance from the decision-maker that they will not be withdrawn without first giving him an opportunity of advancing reasons for contending that they should be withdrawn.

26. In Attorney General of Hong Kong v. Ng Yuen Shiu [(1983) 2 AC 629: (1983) 2 WLR 735: (1983) 2 All ER 346 (PC)], a leading case on the subject, Lord Fraser said: (All ER p. 351g-h) “… when a public authority has promised to follow a certain procedure, it is in the interest of good administration that it should act fairly and should implement its promise, so long as implementation does not interfere with its statutory duty.”

27. Explaining the nature and scope of the doctrine of legitimate expectation, in Food Corporation of India v. 18:43 Kamdhenu Cattle Feed Industries [(1993) 1 SCC 71], a three-Judge Bench of this Court had observed thus: (SCC p. 76, para 8)

28. The concept of legitimate expectation again came up for consideration in Union of India v. Hindustan Development Corpn. [(1993) 3 SCC 499] Referring to a large number of foreign and Indian decisions, including in Council of Civil Service Unions [1985 AC 374: (1984) 3 WLR 1174: (1984) 3 All ER 935 (HL)] and Kamdhenu Cattle Feed Industries [(1993) 1 SCC 18:43 71] and elaborately explaining the concept of legitimate expectation, it was observed as under: (Hindustan Development Corpn. case [(1993) 3 SCC 499], SCC p. 549, para 35) “35. … If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the grounds to consider but the court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognised general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case. It follows that the concept of legitimate expectation is „not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits‟, particularly when the element of speculation and uncertainty is inherent in that very concept.” Taking note of the observations of the Australian High Court in Attorney General for New South Wales v. Quinn [(1990) 64 Aust LJR 327: (1990) 18:43 170 CLR 1] that “to strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism”, speaking for the Bench, K. Jayachandra Reddy, J. said that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected. The caution sounded in the said Australian case that the courts should restrain themselves and restrict such claims duly to the legal limitations was also endorsed.

29. Then again in National Buildings Construction Corpn. v. S. Raghunathan [(1998) 7 SCC 66: 1998 SCC (L&S) 1770], a three-Judge Bench of this Court observed as under: (SCC p. 75, para 18)

18:43

30. This Court in Punjab Communications Ltd. v. Union of India [(1999) 4 SCC 727], referring to a large number of authorities on the question, observed that a change in policy can defeat a substantive legitimate expectation if it can be justified on “Wednesbury” reasonableness. The decision-maker has the choice in the balancing of the pros and cons relevant to the change in policy. Therefore, the choice of the policy is for the decision-maker and not for the court. The legitimate substantive expectation merely permits the court to find out if the change in policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made. (Also see Bannari Amman Sugars Ltd. v. CTO [(2005) 1 SCC 625].)

31. Very recently in Jitendra Kumar v. State of Haryana [(2008) 2 SCC 161: (2008) 1 SCC (L&S) 428] it has been reiterated that a legitimate expectation is not the same thing as an anticipation. It is distinct and different from a desire and hope. It is based on a right. It is grounded in the rule of law as requiring regularity, predictability and certainty in the Government's dealings with the public and the doctrine of legitimate expectation operates both in procedural and substantive matters.

32. An examination of the aforenoted few decisions shows that the golden thread running through all these decisions is that a case for applicability of the doctrine of legitimate expectation, now accepted in the subjective sense as part of our legal jurisprudence, arises when an administrative body by reason of a representation or by past practice or conduct aroused an expectation which it would be within its powers to fulfil unless some overriding 18:43 public interest comes in the way. However, a person who bases his claim on the doctrine of legitimate expectation, in the first instance, has to satisfy that he has relied on the said representation and the denial of that expectation has worked to his detriment. The Court could interfere only if the decision taken by the authority was found to be arbitrary, unreasonable or in gross abuse of power or in violation of principles of natural justice and not taken in public interest. But a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles.

33. It is well settled that the concept of legitimate expectation has no role to play where the State action is as a public policy or in the public interest unless the action taken amounts to an abuse of power. The court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended. Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. Therefore, a legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. (Vide Hindustan Development Corpn. [(1993) 3 SCC 499] )” (emphasis supplied)

16. The purport of this Court behind remanding back the matter to the 18:43 Respondents was to see as to whether the Petitioner’s project can be put back on track within a reasonable time or not. The Joint Inspection Report belies the contentions raised by the Petitioner.

17. The scope of judicial review in administrative Order is well described by the Apex Court in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 has held as under:

18:43 succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”;

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."

18. The Apex Court in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818 has held as under:

18:43 matters such as the present. There are several reasons for this, one of them being that there could be occasions (as in the present appeals) where an eligible bidder could bring to the notice of the owner or employer of the project that the ineligible bidder was ineligible for additional reasons or reasons that were not within the contemplation of the owner or employer of the project. It was brought to our notice by Afcons Infrastructure in these appeals that GYT-TPL JV did not have any experience in the construction of a viaduct by the segmental construction method and that the translations of documents in Mandarin language filed in the High Court were not true English translations. Submissions made by the learned counsel for Afcons Infrastructure in this regard are important and would have had a bearing on the decision in the writ petition filed in the High Court but since Afcons Infrastructure was not a party in the High Court, it could not agitate these issues in the writ petition but did so in the review petition which was not entertained. It is to avoid such a situation that it would be more appropriate for the constitutional courts to insist on all eligible bidders being made parties to the proceedings filed by an unsuccessful or ineligible bidder."

19. The Apex Court in Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489 has held as under:

18:43 mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer."

20. The Apex Court in N.G. Projects Ltd. v. Vinod Kumar Jain, (2022) 6 SCC 127 has held as under:

18:43 requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a mala fide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present day Governments are expected to work."

21. In the present case, the Joint Inspection Report has found that the progress of the Petitioner is not satisfactory and, therefore, the Respondents have to decide not to change the original decision taken by them to recover the grant-in-aid given by the Respondents to the Petitioner. This Court does not find any reason to interfere with the decision taken by the Respondents.

22. Accordingly, the Writ Petition is dismissed along with the pending applications, if any.

SUBRAMONIUM PRASAD, J JULY 30, 2024 18:43