Full Text
HIGH COURT OF DELHI
Date of Decision: 27th MAY, 2024 IN THE MATTER OF:
MS ASANDAS AND SONS PVT LTD. ..... Petitioner
Through: Mr. Sujit Ghosh, Sr. Advocate
Through: Mr. Asheesh Jain, CGSC
Ms. Manisha Agarwal and Mr. Chandan Kumar Jha, Advocates for
R-2.
JUDGMENT
1. Challenging the decision taken by the Respondents on 03.12.2021 capping the benefit under the Production Linked Incentive Scheme (hereinafter referred as “PLI Scheme”) for Food Processing Industry at 15% of the Compounded Annual Growth Rate (CAGR) in sales over the base year, the Petitioner has approached this Court primarily contending that the rules of the PLI Scheme for Food Processing Industry are being changed midway. The Petitioner is also aggrieved that the Petitioner had committed an investment of Rs.810 crores under the PLI Scheme hoping that the Petitioner would be entitled to the maximum of the incentive which was initially fixed by the Respondents from 5% to 25% and in that category in which the Petitioner was investing, the benefit could be extended by further 5%. It is stated that the Petitioner would not have invested such a huge amount of money had it been earlier announced by the Respondents that the benefit under the PLI Scheme would be capped at 15% of CAGR. In this context, the Petitioner is also challenging the Communication dated 11.01.2022 whereby the Petitioner has been directed to furnish a Bank Guarantee of 3% of the investment of Rs.810 crores as committed by the Petitioner.
2. The facts, in brief, leading to the filing of the instant writ petition are reads as under: i. The Ministry of Food Processing Industries introduced a “Production Linked Incentive Scheme (PLI)” for food processing industry vide Notice dated 09.04.2021 with a total outlay of Rs.10,900 crores and the said amount was to be divided amongst various segments which were to be given benefit under the PLI Scheme. The objective of the PLI Scheme was to support creation of global food manufacturing champions; support Indian brands of value-added food products in the international markets; increase employment opportunities for off-farm jobs, ensuring remunerative prices of farm produce and higher income to farmers. The PLI Scheme had promised incentives to manufacturers which were further divided in the following four segments:
(i) Ready to Cook/ Ready to Eat (RTC/RTE) including millet based foods,
(ii) Processed Fruits & Vegetables,
(iii) Marine Products, &
(iv) Mozzarella Cheese.
ii. Under the PLI Scheme, the incentive was to be given to small and medium enterprises in the four segments who manufacture innovative and organic products. The PLI Scheme was also to provide grants to companies for branding and marketing abroad to incentivize emergence of strong Indian global brands. The PLI Scheme provided that food manufacturing entities who wanted to take benefit of the scheme should be willing to make a minimum stipulated investment for expansion of processing capacity under the Scheme. The minimum eligibility of the applicants under the PLI Scheme for food processing industry was enumerated in Annexure-I of the PLI Scheme which reads as under: iii. The PLI scheme also provided that the committed investment should be made in the product segment that the entity has been selected for in the years 2021-22 and 2022-23 and the investments already made in the year 2020-21 was also to be included for the purpose of determining the eligibility of the applicant. As far as, Small & Medium Enterprises (SME) with Innovative/ Organic products were concerned, the eligibility was to be based on the nature of the product, stage of product and market development, business plan and potential for scalability as specified in their project proposal. iv. A perusal of the PLI Scheme also indicates that the incentives were to be paid on the incremental sales over the base year from 2021-22 to 2026-27 which is for six years. The base year for calculation of incremental sales was 2019-20 for the first 4 years and for the 5th and 6th years, the base year was supposed to be 2021-22 & 2022-23 respectively. The applicants were required to achieve the minimum Compounded Annual Growth Rate (CAGR) each year to be eligible to receive the incentive. The rates of incentives on sales over the various years were enumerated in Annexure-II of the PLI Scheme which reads as under: v. The segment-wise indicative outlay of Rs.10,900 crores amongst various components under the PLI Scheme was enumerated in Annexure-III of the PLI Scheme which reads as under: vi. Pursuant to the approval of the PLI Scheme, the operational guidelines were brought out on 02.05.2021. The operational guidelines were brought out after consultations/meetings with industry players, various comments received from industry associations and other stakeholders including the concerned ministries and the NITI Aayog. A perusal of the operational guidelines shows the eligibility criteria in terms of the total sales of food products for different categories of applicants and the same was given in Appendix-A of the guidelines which reads as under: vii. A perusal of the guidelines indicates that the committed investment was a relevant factor for selection of the applicants, and their subsequent ranking for calculating the amount of incentives that the applicants will be eligible for. The higher the committed investment, the higher the chance of being included under the PLI Scheme. Appendix-A of the PLI Scheme which has been extracted above, shows the minimum amount of fresh investment which an applicant was required to make under the PLI Scheme. The selection process provided that all eligible applicants would be linked on the basis of criteria which was that 33.3% weightage was to be given on total sales (domestic and exports) of food products listed in the application for coverage under the PLI Scheme, export sales of the said items and committed investment. viii. The PLI Scheme also indicated that the number of selected applicants would be limited by the budget availability and the total allocation for the segment. The PLI Scheme also indicated that it was mandatory to complete the committed investment year wise, failing which, 10% of the incentive due for the first and second year of the PLI Scheme would be deducted. After the committed investment is completed for the second year, the amount deducted for the first year would be paid to the company and if the committed investment was not completed for the third year, then the selected applicant would be taken out from the PLI Scheme for grant of incentives by the Ministry. ix. It is pertinent to mention that the PLI Scheme indicated that no company selected for a segment would get as an incentive, more than 25% of the total budget for that segment and no company would get less than 5% of the segment outlay. In the processed Fruits and Vegetables segment, the requirement of minimum incentive at 5% of the budget outlay for the segment could be relaxed. The PLI Scheme also stated that the Empowered Group of Secretaries (EGOS) chaired by the Cabinet Secretary will monitor the implementation of the Scheme and undertake periodic review of the outgo to ensure that the expenditure is within the prescribed outlay. The operation guidelines of the PLI Scheme could be amended/ modified at any time during the continuance of the Scheme and such amendment/ modifications would be binding to all the applicants, including the selected applicants, during the tenure of the Scheme. x. The Petitioner vide its application dated 23.06.2021 applied under the PLI Scheme for food processing industries. The Petitioner committed investment of 810 crores projecting a CAGR growth of 33% in sales. xi. The Approval Committee in its meeting held on 14.09.2021 having regard to the number of applications received to avail incentives under the PLI Scheme, took a decision to cap the maximum incentive per applicant to 15% from 25% in the Fruits and Vegetables segment. This decision resulted in the selection of 19 applicants. It is pertinent to mention that earlier 8 applicants had been selected. Similarly, the Approval Committee in its meeting held on 29.01.2021 decided that the maximum outgo for an applicant under the fruit and vegetables segment would be capped at 8% of the total outlay and the CAGR was further capped at 15% in the processed fruit andvegetables segment. Accordingly, an approval letter dated 03.12.2021 was sent to the Petitioner wherein the Petitioner was conveyed the approval of its application by the competent authority under the PLI Scheme. A perusal of the approval letter indicates that the incentive payable to the Petitioner would be capped at maximum CAGR of 15%(nonspices) and 12%(spices) in sales over the base year and that no additional incentive would be payable to the Petitioner under the PLI Scheme and the upper cap of the incentive was capped at 8% of the segment outlay i.e., Rs.286.56 crores. xii. It is the case of the Petitioner that by virtue of this decision, the maximum incentive cap of the Petitioner has been brought down from Rs.895.[5] crores (25% of 3582 Crores) to 286.56 crores. The petitioner is also aggrieved by the act of the respondents of capping the growth rate of every applicant company at 15% per annum which means that even if the Petitioner makes sales over and above 15% per annum, it will not get any benefit of the sales made over and above 15% per annum in calculating the incentive payable under the scheme. It is the case of the Petitioner that when the Petitioner applied for the Scheme, it had a projected rate of 33% of CAGR and that it would get incentive on the basis of 33% of the sales over and above the base year which will result in getting higher chunk of total outlay earmarked for this particular segment. xiii. Vide the approval letter, the Petitioner was asked to submit the signed duplicate copy along with requisite documents within 15 days accepting the terms and conditions. The approval letter also stated that if the Petitioner does not submit the signed duplicate copy along with requisite documents within 15 days accepting the terms and conditions, the project will be canceled. xiv. On 17.12.2022, the Petitioner submitted the signed copy of the approval letter dated 03.12.2021 accepting the terms and conditions of the said letter along with a signed copy of an undertaking. It is stated that the approval letter dated 03.12.2021 had stated that the Petitioner had to submit a Bank Guarantee of 3% of the committed investment i.e., 810 crores under clause 15.1.[9] of the Guidelines dated 02.05.2021 which the Petitioner has not submitted. xv. The Petitioner, thereafter, has approached this Court by filing the instant writ petition challenging the decision taken by the Respondents capping the benefit under the Production Linked Incentive Scheme (PLI Scheme) for Food Processing Industry at 15% of the Compounded Annual Growth Rate (CAGR) in sales over the base year and limiting the total incentive payable 8% of the segment budget allocation. xvi. Pleading are compete in the matter.
3. Learned Senior Counsel appearing for the Petitioner states that the policy stated that the maximum incentive payable under the scheme was 25% of the segment outlay based on the committed investment and the growth rate of the applicant, thereby providing a higher incentive on a higher investment and growth rate, lured by which the Petitioner had committed a sum of Rs.810 crores while proposing a growth rate of 33%. It is stated that after making such a commitment, it was not open for the Respondents to change the policy by reducing the maximum incentive payable for the processed fruit and vegetable segment and limiting the growth rate used to calculate the incentive to a meager 15% without putting any information on public domain or informing the applicants. It is also stated that such an amendment can only be brought in either by legislation or in the form of an Executive Order. It is stated that the PLI Scheme as framed was not one for inclusivity and there could not be any change in the policy after the PLI Scheme was announced.
4. It is the contention of the learned Senior Counsel for the Petitioner that the PLI Scheme as framed was to promote investments in the domestic markets which the applicants were prepared to make for which the returns were to be commensurate with the investment so committed by the applicants. It is stated that if the decision is taken by the Respondents to cap the CAGR at 15%, then the Respondents must also be given an opportunity to the Petitioner to reduce their commitments and bring down their investments. It is contended that the promise by the Respondents as per the earlier policy was that incentive would be purely based on the percentage of sales which was to be over and above the investment. It is stated that capping such incentives afterwards while calculating the growth rate at 15% of CAGR without there being any amendment to the policy is not permissible. It is stated that the policy has a source of law as it is an executive action under Article 73 of the Constitution of India and amendment to that could only be done through such a law made by the Parliament.
5. Per contra, it is the contention of the learned Counsel appearing for the Respondents that the purpose of commitment was only for the purpose of ranking and it did not have a direct correlation to the incentives to be paid to the applicants. It is stated that the PLI Scheme does not provide that the incentive payable to any applicant will be higher simply by the virtue of the applicant making a high committed investment and the same was only for ranking the applicants to be selected under the scheme. It is stated that the PLI Scheme was subject to further deliberations by the EGoS and the Committee and that the Petitioner was wrong in understanding that the PLI Scheme was not one for inclusivity. It is stated that the purpose of the PLI Scheme was to encourage the industry and not to restrict the benefit only to a few persons. It is stated that the Petitioner could not end up taking away a big chunk of the allocation to the exclusion of other applicants who have applied under the PLI Scheme for the same segment. It is stated that fixing of incentives at 8% of the segment outlay while capping the growth rate for calculating the incentive payable at 15% of the CAGR is within the ambit of the scheme and therefore, no fault can be found with the Respondents while exercising their powers under the scheme. It is stated that the said decision was taken to avoid concentration of the incentives in a few hands, which is a policy decision and therefore the same cannot be interfered with.
6. It is further stated by the learned Counsel for the Respondents that it was open for the Petitioner not to accept the approval letter and walk out of the PLI Scheme. It is stated that after having accepted the approval letter, the Petitioner then cannot turn around and challenge the very same approval letter which it has accepted vide letter dated 17.12.2022. It is stated that after accepting the approval letter, the Petitioner cannot request to change the committed investment from 810 crores to 325 crores. It is stated that the selection of the Petitioner was only on the basis of the amount invested by the Petitioner and, therefore, the Petitioner cannot be permitted to wriggle out to the commitment made by it. It is stated that the Doctrine of Promissory Estoppel is not applicable in the present case for the reason that there was no promise at all on the part of the Respondents which the Petitioner claims is to be due to him.
7. Heard learned Counsel appearing for the Parties and perused the material on record.
8. The Ministry of Food Processing Industries introduced a “Production Linked Incentive Scheme (PLI)” for the food processing industry with a total outlay of Rs.10,900 crores. The said outlay was to be divided amongst three broad components. The first component relates to provision of fiscal incentives to select large manufacturers of food products who commit to make prescribed minimum investments and achieve increase in sales as per the prescribed growth rates in all the four segment i.e., (i) Ready to Cook/ Ready to Eat (RTC/RTE) including millet based foods; (ii) Processed Fruits & Vegetables; (iii) Marine Products; and (iv) Mozzarella Cheese. The second component was for providing support to small and medium enterprises in the four segments who manufacture innovative/organic products. The third component of the scheme was to provide grants to companies for branding and marketing abroad to incentivize emergence of strong Indian global brands. The Petitioner herein intended to make investment in the processed fruits and vegetables segment, and therefore, this Court is not inclined to delve into other two components i.e., the second and the third components.
9. The Ministry of Food Processing Industries on 02.05.2021 brought out operational guidelines for the PLI Scheme. A perusal of the guidelines indicates that the object of the PLI Scheme was to support the creation of global food manufacturing champions; promote Indian brands of food products; increase employment opportunities for off-farm jobs, ensure remunerative prices of farm produce and higher income to farmers. A perusal of the object indicates that the PLI Scheme was broad based and was not to limit the benefits of the Scheme to a few persons which is inclusive in nature. The tenure of the PLI Scheme was for six years from Financial Year 2021-22 to Financial Year 2026-27. The incentive payable for a particular year was to be due for payment in the following year. The support under the Scheme was to be provided only to the applicants engaged in manufacturing of food products in India and sales of such products covered under the target segments. Clauses 5, 6, 8, 9, 13, 14, 15, 17, 18.[8] of the guidelines read as under: “5. Eligibility 5.[1] Support under the scheme shall be provided only to the Applicants engaged in manufacturing of food products in India & sales of such products covered under the target Segments. SME Applicants should engage in such activities for innovative/ organic food products. 5.[2] Eligibility criteria, in terms of total Sales of food products and Minimum Investment for different Categories of Applicants, are given in the Appendix-A. An applicant shall have total sale of food products above minimum sales given in Appendix A in the Base Year. For the purpose of minimum sales here the food products mean any food product sold in consumer packs including the food products included in four segments given in Appendix-B. An applicant shall agree to undertake minimum investment as given in Appendix-A. However, if more applicants are there than the number to be selected finally in a segment, then the selection criteria includes committed investment that the selected company proposes to make by the end of year 2022-23. The committed investment shall be greater than the Minimum investment given in Appendix-A. 5.[3] Product Groups/ Products covered under different Segments for selection of Applicants are given in the Appendix-B. 5.[4] The Applicants shall indicate the Segment and the Product Groups in that Segment in the Application for coverage under the Scheme. 5.[5] The Applicant may also include those products which the Applicant is not manufacturing currently but intends to manufacture during the project period. If a selected entity starts manufacturing a new product, covered in the Segment approved for the Applicant, the same could be added later after notifying the same to MOFPI/ PMA. 5.[6] The entire chain of manufacturing processes, including primary processing, of the food products of the relevant segment applied for coverage under the scheme shall take place in India. However, for additives, flavours and edible oils this condition would not apply 5.[7] The entire chain of manufacturing process of food products, starting for raw materials, shall be specified in the Application in respect of food products I included in the Application and having sales above Rs 50 crore per annum. 5.[8] Applicants are eligible to apply for one or more Segments under Category!. However, such Applicants will be required to make separate Applications for each of the product segments and meet minimum Sales and investment criteria for each of the Segments applied for.
5. 9 The Applicant should not have been declared as bankrupt or wilful defaulter or defaulter or reported as fraud by any bank or financial institution or nonbanking financial company. The Applicant/ Promoters should not appear in the SEBI Debarred List.
6. Investment: 6.[1] Investment: Investment shall mean expenditure incurred on the installation of new plant & machinery, technical civil work and associated infrastructure by the Applicant and its contract manufacturers. All Non creditable Taxes & duties included in expenditure. 6.[2] Technical Civil work: This shall include expenditure on construction of building where new plant and machinery are installed. 6.[3] Associated Infrastructure: This shall include expenditure on infrastructure including internal roads, storage, testing laboratory and compound wall. However, the expenditure on the associated infrastructure shall be limited to 20% of the investment in new plant & machinery. 6.[4] Minimum Investment: The minimum amount of fresh investment which the Applicant shall be required to make under the scheme provision. Minimum investment as indicated in Appendix-A shall only be on Plant & machinery, Technical civil works and Associated infrastructure. 6.[5] Committed Investment: The Committed Investment of an Applicant is the investment which the Applicant commits to invest for coverage under the scheme while applying. Committed Investment would include minimum investment, investment over and above Minimum Investment (if any) and investment in Branding & marketing abroad (for the first two years of the scheme). 6.[6] If the Applicant proposes to set up a new plant in premises of an existing production facility, the Applicant may utilise existing ancillary facilities viz. ETP, quality control lab, warehousing area and other facilities of the existing production facility, for the manufacture of eligible product. However, the investment already made in the ancillary facilities shall not qualify for the purpose of the Committed Investment to be made under the Scheme. 6.[7] Committed and Minimum Investment shall be made for manufacture of food products that the Applicant chooses for PUS at the Application stage. 6.[8] Committed Investment requirement should be met by selected Applicant either directly and/ or in combination with contract manufacturers. Investment by contract manufacturer could only be counted towards committed investment if 100% of the manufactured output of that contract manufacturer would be supplied to the Applicant. 6.[9] Investments are required to be made in two years ie. in 2021-22 and 2022-23. However, investments in plant & machinery already made in the year 2020- 21 would also be counted for calculations of Minimum and Committed Investment.
6.10 The Applicant shall indicate the investment made in 2020-21 and the amount of investment to be made in 2021-22 and 2022-23 in the Application Form.
6.11 The investment shall be a Greenfield project or expansion of the existing manufacturing unit.
6.12 Plant & Machinery and Equipment should be purchased/ leased in the name of the Applicant and its contract manufacturers. In cases where these are being leased, the lease should be in the nature of a financial lease within the meaning of Accounting Standard 19- Leases or Indian Accounting Standard (Ind-AS) -116 Leases, as may be applicable to the Applicant, as notified by Ministry of Corporate Affairs or any other appropriate authority from time to time. Finance lease should lead to the Applicant and its contract manufacturers owning the plant after payment of the lease amount.
6.13 For compliance of Minimum/ Committed Investment, the installation of Plant & machinery, construction of technical civil work and commencement of commercial production should be between 1.4.2020 and 31.3.2023.
6.14 The PMA will rely on certificates of Chartered Engineers (CE) [CE (Civil) for technical civil work and CE. (Mechanical) for plant & machinery and equipment] registered with the Institute of Engineers India (IEI) for the assessment of the compliance of Committed Investment by the Applicant.
6.15 The Chartered Engineer/s shall, inter alia, verify the documents from the Applicants as may be necessary to establish the value of P&M, date of installation of P&M, commencement/ completion of Technical civil work, measurement and estimated value.
6.16 PMA shall evaluate the assessment made by the Chartered Engineer and may carryout physical inspection of the plant/ sites, check date of commercial production, and make recommendation to MoFPI on the compliance of Committed Investment by the Applicant.
6.17 Expenditure incurred on Land: The expenditure incurred on land required for the project/ unit shall not be considered for determining minimum/ Committed Investment.
6.18 No second hand/ used/ refurbished plant, machinery, equipment, utilities, or research and development equipment shall be considered for inclusion under Committed Investment.
6.19 Expenditure on guest house building, recreational facilities, office building, residential colonies, and similar structures shall not be considered for determining the Committed Investment.
6.20 Expenditure on consumables and raw material used for manufacturing shall not be considered as Investment. xxx
8. Selection Process. 8.[1] All eligible Applicants shall be 'ranked on the basis of marks obtained in the evaluation criteria as given in Appendix-E. The Applicant securing the highest marks for a segment applied for shall be ranked first, followed by Applicant securing second highest marks and so on. The selection of the Applicants shall be in the order of their ranks. 8.[2] Two or more waitlisted Applicants, if available, would be maintained along with selected Applicants for each eligible product segment. 8.[3] The number of selected Applicants shall be limited by the budget availability and allocation for the Segment. 8.[4] No company selected for a segment would get as an incentive, more than 25% of the total budget for that segment and no company would get less than 5% of the segment outlay. In the case of Fruits & Vegetables segment, the requirement of minimum incentive at 5% of outlay may be relaxed. 8.[5] Inter-segment allocation of funds would be permitted on the condition that allocation for Fruits and Vegetables Segment and for Branding & Marketing abroad would not be reduced but may be increased.
9. Computation and Payment of Incentive 9.[1] The Incentive payable for a selected Applicant for a particular year shall be computed as follows: Incentive= Incremental Sales in Approved Product Segment x corresponding Rate of Incentive as in Appendix-C. 9.[2] Incentive is payable from the year of selection up to the end of the Scheme period. 9.[3] Selected Applicants are required to achieve minimum CAGR in Sales over the base year, as given in Appendix-D and illustration thereon, to claim Incentive. 9.[4] Minimum growth in terms of CAGR over base year to be eligible to receive Incentive would be calculated for all the Products Group of the Segment selected by the Applicant for inclusion in PUS. 9.[5] In the event industry in any segment faces lower growth due to Force Majeure or for any other reasons, the EGoS may review the prescribed minimum growth rate for the segment. 9.[6] Applicant shall complete the Committed Investment, year-wise, as proposed in the Application. 10% of the Incentive due for Yl and Y[2] will be deducted- if they fail to complete the investment as Committed. However, if at the end of Y[2], the Committed Investment is completed, then the amount deducted for Y[1] would be paid to the company. By the end of Y[3], if the Committed Investment is not completed, the selected Applicant will be taken out from PUS for Sales-based Incentive by MoFPI. 9.[7] The bank guarantee shall be invoked in such case following which the offer letter issued would stand cancelled. 9.[8] Applicant entities selected for multiple product segments would be required to meet minimum growth in Sales and investment segment-wise. 9.[9] The assessment of incremental Sales shall be based on statutory filings with Government Departments/ Agencies and audit reports and other documents as required by the PMA from time to time, for processing the claims.
9.10 Incentives under the scheme for a particular year will be disbursed in the following year.
9.11 Eligibility under the Scheme shall not affect eligibility for Incentive or any other benefits under any other scheme and vice versa.
13. Empowered Group of Secretaries (EGOS) The Empowered Group of Secretaries (EGOS) chaired by the Cabinet Secretary will monitor the implementation of the Scheme and undertake periodic review of the outgo to ensure that the expenditure is within the prescribed outlay. The EGoS, will also carry out changes in the modalities of the scheme to address issues arising during the course of its implementation, within the contours of Cabinet approval and overall financial outlay of Rs 10,900 crore
14. Committees 14.[1] A Committee will be constituted by MoFPI, under the Chairmanship of Minister, FPI or as decided subsequently, for taking necessary decisions within the mandate of the Ministry viz approval of scheme Guidelines and their amendments including eligibility criteria, selection criteria, composition of products in different Segments, inter-component/ segment allocation of outlay, minimum required growth rate to become eligible for incentive, fix/ relax norms on number of companies, selection of Applicants, sanction & release of funds as incentives provided that the expenditure shall be restricted to the approved outlay. MoFPI shall not change the approved rate of incentives for different segments of food products. 14.[2] MoFPI will also constitute Technical Committee/s, as required, to render advice on issues related to product classification, the inclusion of products with different levels of Millets, manufacturing processes, Innovative I Organic Products, Branding & Marketing etc.
15. Approval 15.[1] Approval Process: 15.1.[1] On receipt of Applications, the PMA should share relevant information with the concerned Committees for their advice as decided by MOFPI. 15.1.[2] The PMA would process the Applications and make appropriate recommendations to the MoFPI for approvals under the Scheme. 15.1.[3] The MoFPI would consider Applications, as recommended by PMA for approval under the Scheme. 15.1.[4] All the Applications should be finalized within 90 days from the date of closure of Application window, subject to completeness of documents from the Applicants, as required, for evaluation. 15.1.[5] After receiving approval from MoFPI, the PMA should issue a~ letters to the selected Applicants within 5 working days, communicating approval under the Scheme. 15.1.[6] The approval letter shall clearly state the following:
(i) Name of Applicant
(ii) Eligible Product Segment & Food products to be manufactured
(iii) Specification on the chain of manufacturing processes of the food products, if any
(iv) Base Years for calculation of Incentives
(v) Base Year 2019-20 Sales as informed by the
(vi) Projected Incremental Sales for Y1-Y[6]
(vii) Year-wise Rate of Incentives
(viii) Committed Investment and expenditure in B&M, as applicable, Yearwise
(ix) Scheduled date of commencement of commercial
(x) Other specification, if any.
15.1.[7] In case, an Applicant is selected for multiple eligible product segments, separate approval letters would be issued and all the requirements shall be complied separately for each case by the Applicant. 15.1.[8] The aforesaid approval letter(s) shall not be construed as a guarantee for disbursement of Incentive as the same would be dependent upon verification of eligibility for Incentive after submission of disbursal claim and other criteria defined in these Guidelines. 15.1.[9] The selected Applicants shall submit, within two weeks of date of issuance of approval letter by the PMA, a performance bank guarantee of an amount equivalent to 3% of the Committed Investment in favour of MoFPI, valid for three years or till MoFPI releases such Guarantee, whichever is later. 15.1.10 If a selected Applicant is found to be ineligible at any stage, or if it has not complied with notifications, orders, Guidelines etc. issued under the Scheme, or declines the offer of the approval under the scheme at any stage, for any reason, the Incentive claim of such selected Applicant shall be forfeited. The bank guarantee shall be invoked following which the offer letter issued shall stand cancelled. 15.1.11 In such case, the offer may be extended to the waitlisted Applicant provided a minimum of 3 years' residual period under the scheme is available. 15.[2] Post Approval 15.2.[1] PMA should monitor the progress of the project made by the selected Applicants, as and when required with respect to investment Committed. 15.2.[2] PMA should monitor the rollover of the bank guarantees and shall take timely action for releasing / invoking the bank guarantees as per these Guidelines. xxx
17. Review 17.[1] Periodic reviews will be undertaken by the MoFPII EGoS with respect to progress and performance of the Scheme. 17.[2] All approved Applicants shall furnish selfcertified Quarterly Review Reports (QRRs) within 30 days from the end of each quarter in the format I provided in Annexure-6 of these Guidelines. xxx 18.[8] These guidelines shall be amended/ modified at any time during continuance of the Scheme and such amendment/ modifications shall be binding to all the Applicants, including the Selected Applicants, during the tenure of the Scheme. (emphasis supplied)
10. A perusal of the abovementioned clauses indicates that the criteria of committed investment were relevant for ranking of an applicant. There is nothing in the PLI Scheme which indicates that the committed investment is connected to the incentive payable to an applicant and it was to range between 5% to 25%. The minimum investment has been specified in Appendix-A of the PLI Scheme and as far as the Petitioner herein is concerned, the minimum investment was to be 50 crores. The applicants were to commit to invest an amount not less than 50 Crores to take the benefit of the Scheme. The higher the investment, the higher the marks awarded to the applicant under the selection process. The eligible applicants were to be ranked on the basis of marks awarded to them. The evaluation criteria for awarding marks was given in Appendix-E of the PLI Scheme which was based on total sales, export sales and committed investment. The relevant portion of the Appendix-E reads as under:
11. Clauses 8.[3] and 8.[4] indicate that the number of selected applicants shall be limited by the budget availability and allocation for the segment and no person selected for a segment would get as an incentive, more than 25% of the total budget for that segment and no company would get less than 5% of the segment outlay. Therefore, the contention of the learned Senior Counsel for the Petitioner that since the Petitioner has committed a higher amount of investment and therefore, it should get a higher amount of incentive cannot be accepted. It was always open for the Respondents to fix the incentive which an applicant would get which depended on a number of other factors.
12. Clause 9.[1] lays down the incentive payable for a selected applicant for a particular year which was to be computed by multiplying Incremental Sales in Approved Product Segment with corresponding Rate of Incentive given for that particular year as provided under Appendix-C(Incremental Sales in Approved Product Segment x corresponding Rate of Incentive). Perusal of the method employed for calculation of the incentive payable under the scheme also indicates that the committed investment of any applicant had no bearing after the applicant had been considered a successful applicant under the scheme.
13. The PLI Scheme was to be monitored by the Empowered Group of Secretaries (EGOS) chaired by the Cabinet Secretary under Clause 13 which was to undertake a periodic review of the outgo to ensure that the expenditure is within the prescribed outlay. Further, Clause 14 indicates that a Committee constituted by the ministry may take necessary decisions on various subjects, including eligibility criteria, selection criteria, composition of products in different Segments, inter-component/ segment allocation of outlay, minimum required growth rate to become eligible for incentive, fix/ relax norms on number of companies, selection of Applicants, sanction and release of funds as incentives provided that the expenditure would be restricted to the approved outlay.
14. Clause 18.[8] also provided that the guidelines could be amended and modified at any point of time during the operation of the PLI Scheme.
15. A decision has been taken by the Respondents in the approval committee meeting dated 29.11.2021 to cap the incentives payable at 8% of the total segment outlay and the CAGR at 15%. Meaning thereby, even if the incremental sales is higher than 15% per annum, the incentive which would payable to the applicant under the scheme will only take a maximum of 15% growth rate in sales while computing the incentive, and any sale over and beyond the maximum amount of CAGR would not be included for determining the incentive.
16. The impugned decision has been taken by the Respondents to extend the benefit of PLI Scheme to a large number of applicants. As stated earlier, there is nothing in the PLI Scheme to state that the Scheme was to be for a limited number of applicants. The objective of the scheme was to support creation of global food manufacturing champions; support Indian brands of value added food products in the international markets; increase employment opportunities for off-farm jobs ensuring remunerative prices of farm produce and higher income to farmers. The objective of the PLI Scheme was itself inclusive in nature and not to restrict the benefits only to those persons who bring in huge amounts of investment.
17. Further, it is stated by the Respondent No.1 in its counter affidavit that after issuance of expression of interest, a large number of representations were received from the industry to enlarge the scope of the Scheme to ensure larger participation from industries. Since the total outlay was limited in nature, the Respondents took a decision to cap the growth rate on sales at 15% of CAGR and also restrict the total amount of outlay available to each of the applications at 8% of the total segment outlay. Therefore, it cannot be said that the decision taken by the Respondents is without any basis or is arbitrary, especially, when the PLI Scheme does not bring out any promise that the incentive would be made available depending upon the total amount of investment. There was no promise on the part of the Respondents that the total investment would mean a larger chunk of the total outlay was to be paid as an incentive which is the case as projected by the Petitioner herein. Further, Clause 18.[8] clearly indicates that the guidelines are subject to further deliberations and the same could be amended/modified at any time during continuance of the Scheme in order to achieve the object of the Scheme.
18. The decision of the Respondents to make the scope of the PLI Scheme wider cannot be said to be so arbitrary or capricious which requires interference under Article 226 of the Constitution of India. In any event, the Petitioner has accepted the offer given by the Respondents vide letter dated 03.12.2021 and the Petitioner vide letter dated 17.12.2022 had accepted the offer given by the Respondents and thereby, the contract was complete. The Petitioner, therefore, cannot wriggle out from its obligations of the contract by saying that it must be permitted to reduce the amount of investment committed by the Petitioner. The Petitioner has secured a higher rank on the basis of investment and the Petitioner, therefore, cannot be permitted to reduce the amount of investment committed by it as it would affect the entire selection process to the detriment of other applicants.
19. The reliance placed by the learned Senior Counsel for the Petitioner on the Doctrine of Promissory Estoppel is not applicable to the facts of the present case. It is well settled that the Doctrine of Promissory Estoppel is attracted only when a person alters his own position on the basis of promise made to him by the Government and in that case the Government is not permitted to go back from his promise except if it is in conformity with the Policy shift in the Government which has been brought out in Public Interest. The Apex Court in a catena of decisions has considered the issue regarding the inapplicability of Doctrine of Promissory Estoppel. The Apex Court in Kasinka Trading v. Union of India, (1995) 1 SCC 274 has observed as under: “12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority “to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make”. There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the doctrine. In our opinion, the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must for ever be present to the mind of the court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation. xxx
21. The power to grant exemption from payment of duty, additional duty etc. under the Act, as already noticed, flows from the provisions of Section 25(1) of the Act. The power to exempt includes the power to modify or withdraw the same. The liability to pay customs duty or additional duty under the Act arises when the taxable event occurs. They are then subject to the payment of duty as prevalent on the date of the entry of the goods. An exemption notification issued under Section 25 of the Act had the effect of suspending the collection of customs duty. It does not make items which are subject to levy of customs duty etc. as items not leviable to such duty. It only suspends the levy and collection of customs duty, etc., wholly or partially and subject to such conditions as may be laid down in the notification by the Government in “public interest”. Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. The supersession or revocation of an exemption notification in the “public interest” is an exercise of the statutory power of the State under the law itself as is obvious from the language of Section 25 of the Act. Under the General Clauses Act an authority which has the power to issue a notification has the undoubted power to rescind or modify the notification in a like manner. From the very nature of power of exemption granted to the Government under Section 25 of the Act, it follows that the same is with a view to enabling the Government to regulate, control and promote the industries and industrial production in the country. Notification No. 66 of 1979 in our opinion, was not designed or issued to induce the appellants to import PVC resin. Admittedly, the said notification was not even intended as an incentive for import. The notification on the plain language of it was conceived and issued on the Central Government “being satisfied that it is necessary in the public interest so to do”. Strictly speaking, therefore, the notification cannot be said to have extended any „representation‟ much less a „promise‟ to a party getting the benefit of it to enable it to invoke the doctrine of promissory estoppel against the State. It would bear repetition that in order to invoke the doctrine of promissory estoppel, it is necessary that the promise which is sought to be enforced must be shown to be an unequivocal promise to the other party intended to create a legal relationship and that it was acted upon as such by the party to whom the same was made. A notification issued under Section 25 of the Act cannot be said to be holding out of any such unequivocal promise by the Government which was intended to create any legal relationship between the Government and the party drawing benefit flowing from of the said notification. It is, therefore, futile to contend that even if the public interest so demanded and the Central Government was satisfied that the exemption did not require to be extended any further, it could still not withdraw the exemption. xxx
23. The appellants appear to be under the impression that even if, in the altered market conditions the continuance of the exemption may not have been justified, yet, Government was bound to continue it to give extra profit to them. That certainly was not the object with which the notification had been issued. The withdrawal of exemption “in public interest” is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the “public interest”. The courts, do not interfere with the fiscal policy where the Government acts in “public interest” and neither any fraud or lack of bona fides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilisation of finances and to act in the public interest while issuing or modifying or withdrawing an exemption notification under Section 25(1) of the Act.”
20. In Sales Tax Officer and Another vs. Shree Durga Oil Mills, (1998) 1 SCC 572, the Apex Court has observed as under: “21. Moreover withdrawal of notification was done in public interest. The Court will not interfere with any action taken by the Government in public interest. Public interest must override any consideration of private loss or gain. xxx
24. In our opinion, the plea of change of policy trade on the basis of resource crunch should have been sufficient for dismissing the respondent's case based on the doctrine of promissory estoppel. Public interest demanded modification of the earlier IPR.
25. Moreover, as it has been noted earlier that the IPR itself had not granted any exemption but had indicated that orders will be issued by various departments for granting the exemptions. The exemption order under sales tax could only be issued under Section 6 which could be amended or withdrawn altogether. This is expressly provided by Section 6. If the respondent acted on the basis of a notification issued under Section 6 it should have known that such notification was liable to be amended or rescinded at any point of time, if the Government felt that it was necessary to do so in public interest. That is exactly what has happened in this case.”
21. In Shrijee Sales Corpn. v. Union of India, (1997) 3 SCC 398, the Apex Court has held as under: “7. The next question is whether the fact that the Notification No. 66 mentioned the period during which it was to remain in force, would make any difference to the situation. In other words, could it be said that an exemption notified without specifying the period within which the exemption would remain in force, would be withdrawn in public interest but not the one in which a period has been so specified? Once public interest is accepted as the superior equity which can override individual equity, the principle should be applicable even in cases where a period has been indicated. The Government is competent to resile from a promise even if there is no manifest public interest involved, provided, of course, no one is put in any adverse situation which cannot be rectified. To adopt the line of reasoning in Emmanuel Ayodeji Ajayi v. Briscoe [(1964) 3 All ER 556] quoted in M.P. Sugar Mills [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409: 1979 SCC (Tax) 144: AIR 1979 SC 621: (1979) 2 SCR 641] even where there is no such overriding public interest, it may still be within the competence of the Government to resile from the promise on giving reasonable notice which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position, provided, of course, it is possible for the promisee to restore the status quo ante. If, however, the promisee cannot resume his position, the promise would become final and irrevocable.”
22. The aforesaid Judgments have been followed with approval by the Apex Court in State of Rajasthan v. Mahaveer Oil Industries, (1999) 4 SCC
357.
23. In Shree Sidhbali Steels Ltd. v. State of U.P., (2011) 3 SCC 193, the Apex Court has held as under: “33. Normally, the doctrine of promissory estoppel is being applied against the Government and defence based on executive necessity would not be accepted by the court. However, if it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promisee and enforce the promise against the Government. Where public interest warrants, the principles of promissory estoppel cannot be invoked. The Government can change the policy in public interest. However, it is well settled that taking cue from this doctrine, the authority cannot be compelled to do something which is not allowed by law or prohibited by law. There is no promissory estoppel against the settled proposition of law. Doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law, because none can be compelled to act against the statute. Thus, the Government or public authority cannot be compelled to make a provision which is contrary to law.”
24. The Apex Court in Union of India v. Unicorn Industries, (2019) 10 SCC 575, after relying on all the above mentioned Judgments, has held as under: “26. It could thus be seen that, it is more than well settled that the exemption granted, even when the notification granting exemption prescribes a particular period till which it is available, can be withdrawn by the State, if it is found that such a withdrawal is in the public interest. In such a case, the larger public interest would outweigh the individual interest, if any. In such a case, even the doctrine of promissory estoppel would not come to the rescue of the persons claiming exemptions and compel the State not to resile from its promise, if the act of the State is found to be in public interest to do so.”
25. A perusal of the abovementioned Judgments shows that any Scheme can be altered in larger public interest as larger public interest always outweighs the individual interest and therefore, the Doctrine of Promissory Estoppel does not come to the aid of the Petitioner. As stated earlier, in the present case, this Court does not find any promise given by the Respondents to the Petitioner stating that the incentive would always be calculated based on the committed investment of the petitioner and that there is no power with the Respondents to cap the incremental sales while calculating the incentive payable under the scheme. Even assuming that there was such a promise on the part of the Respondents, it was always open for the Respondents to get over the promise because there was a power with the Committee under the guidelines to amend/modify the operational guidelines at any time during the continuance of the PLI Scheme. This Court is of the opinion that the quantum of incentive was never fixed and it was dependent on a number of factors and any decision taken by the Committee under Clause 18.[8] of the guidelines.
26. The Doctrine of Legitimate Expectation also cannot be made applicable to the facts of the present case. The Doctrine of Legitimate Expectation states that a person can expect that the Government will follow an established practice and will not deviate from an established practice which is unreasonable or illogical. The Doctrine of Legitimate Expectation can never override a decision taken by the authorities in public interest and the plea of Doctrine of Legitimate Expectation cannot be taken when the decisions taken by the authorities are bonafide and taken in a larger public interests [Refer: Union of India v. Hindustan Development Corpn., (1993) 3 SCC 499].
27. The expectation of the Petitioner that it will be able to garner a major chunk of total outlay cannot be based on legitimate expectation, especially, taking into account the objective of the PLI Scheme. It cannot be stated that the petitioner should be able to pocket a major chunk of the incentive earmarked for the segment, leaving the other applicants who have also applied under the scheme high and dry merely because the petitioner has decided to commit a higher amount of incentive. Counter affidavit filed by Respondent No.1 specifically states that representations were received from a large number of persons pleading that the base of eligible applicants under the PLI Scheme must be increased and therefore, the Respondents in larger public interest and in order to make the PLI Scheme applicable to more number of applicants. The respondents, keeping in mind the objective of the Scheme, took a decision to cap the CAGR at 15% for calculating the incentives to be given under the Scheme and also took a decision that total amount available to an applicant should not exceed a sum of Rs.286.56 crores which is 8% of the total outlay of the Processed Fruits and Vegetables segment under the PLI Scheme which cannot be said to be so arbitrary or capricious which requires interference under Article 226 of the Constitution of India.
28. In any event, the quantum of incentive available to any person was not fixed and it was not as if a person could take the major portion of the incentive just because he would be in a position to bring in a huge amount of investment. This was never the intention of the PLI Scheme and the understanding of the Petitioner was, therefore, erroneous right from the beginning.
29. The contention of the Petitioner that the PLI Scheme could only be altered either by legislation or in the form of an Executive Order and what the Respondents have done is actually violative of Article 73 of the Constitution of India also cannot be accepted. The PLI Scheme only stated that the incentive would be fixed for successful applicants between 5% and 25%. The decision to give the benefit of sales only up to 15% cannot be said outside the PLI Scheme, as the respondents had enough powers under Clause 13, 14 and 18.[8] of the scheme to do so. This Court is of the opinion that the PLI Scheme has not been altered and more so when there was a power given to the Committee to alter or modify the guidelines. The fixing of incentive at 15% of CAGR under the PLI Scheme cannot be said to be an amendment to the PLI Scheme but the said decision has been taken for effective implementation of the PLI Scheme in order to make it more broad based. Therefore, the contention raised by the Petitioner that the PLI Scheme could only be altered either by legislation or in the form of an Executive Order cannot be accepted. There was no right accrued in favor of the Petitioner to claim that the Petitioner is entitled to a particular amount of incentive and that the argument that the outlay should be depended upon the total amount of committed investment of an applicant cannot be accepted.
30. This Court is also of the opinion that after the Petitioner has accepted the offer given by the Respondents, the Petitioner cannot wriggle out from the commitment of providing Bank Guarantee of 3% of the total committed investment. The demand of the Respondents to provide Bank Guarantee of 3% of the total committed investment cannot be found fault with. The Petitioner is, therefore, directed to give a Bank Guarantee of 3% of Rs.810 crores investment committed by the Petitioner to the Respondents as per the PLI Scheme.
31. In view of the above, the writ petition is dismissed, along with pending application(s), if any.
SUBRAMONIUM PRASAD, J MAY 27, 2024