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A change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria: High Court of Delhi

A person may have a “legitimate expectation” of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. A change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. To dismiss a legitimate claim, simply on the account of a technicality would cause grave and irreparable harm to faith of general public in welfare schemes. These were stated by High Court of Delhi, consisting Justice Rekha Palli in the case of Shakti Industries vs. Union of India [W.P.(C) 6916/2020] on 13.01.2022.

The facts of the case are that on 10.04.2007, the MOFPI launched the TUEM Scheme, with a view to advance the technology used in the industry by reducing the wastage of agricultural and horticultural produce for the purpose of assisting entrepreneurs to set up food processing units. As per the guidelines, issued under the TUEM Scheme, the Banks/Financial Institutions were assigned the responsibility of receiving the application of grants-in-aid. The petitioner, a registered partnership firm involved in the business of producing Khachighani Mustard oil, being eligible applied under the TUEM Scheme. The said application for grant-in-aid was of Rs 24,53,000. This amount was payable in two instalments, and based on the petitioner’s application, the first instalment of Rs 12,26,500/- was released in the favour of the petitioner on 16.02.2017. The petitioner then, armed with a utilization certificate dated 27.03.2017, in respect of the first instalment as per the terms of the TUEM Scheme applied for the second instalment, through its nodal bank (Punjab National Bank) on 28.03.2017. After a period of one year, the respondent communicated certain deficiencies in the petitioner’s application, with a direction to rectify the same within a period of 45 days. The bank after seeking certain clarifications from the petitioner, submitted its reply to the respondents after rectification of the deficiencies. However, since the amount of the second instalment was not released, the petitioner made representations to the respondent on 27.07.2019, 12.08.2019, 29.08.2019, 10.09.2019 but received no response thereto. Finally the petitioner sent a legal notice on 20.12.2019, in response whereto the impugned communication, rejecting the petitioner’s prayer, was issued. The petitioner was informed that since the TUEM Scheme already stood closed.

The learned Counsel for the petitioner submitted that once the petitioner’s application for ‘grant-in-aid’ for setting up a food processing unit was approved on 09.04.2009 before the TUEM Scheme was closed, the petitioner’s prayer for release of the second instalment could not be rejected on the ground that the TUEM Scheme stood closed. Furthermore, the respondent having itself released the amount towards the first instalment on 16.02.2017, it could not have refused to process the petitioner’s application for the second instalment, on the ground that it was submitted after the closure of the said TUEM Scheme on 01.04.2012. He, further submitted that the petitioner had after approval of its application under the TUEM Scheme expanded its Mustard Oil unit and therefore, the respondent could not refuse to release the amount already sanctioned in its favour, merely on the ground of purported delay.

The learned Counsel for the respondent submitted that once the TUEM Scheme had already come to an end, the respondent had no obligation to consider the petitioner’s claim at such a belated stage. He, therefore, contended that the impugned communication rejecting the petitioner’s claim was rightly passed and the present writ petition is liable to be dismissed.

The High Court of Delhi held that there was absolutely no merit in the respondent’s plea as despite the TUEM Scheme came to an end on 01.04.2012, the respondent required the petitioner to submit the necessary documents on 27.03.2018, thus, it is evident that the respondent was well aware that merely because the aforesaid TUEM Scheme was no longer in operation, the beneficiaries like the petitioner who had already been registered there under could not be deprived of their entitlement in terms of the TUEM Scheme. TUEM Scheme 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. A change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. To dismiss 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. The respondent was therefore, directed to consider the petitioner’s claim on its own merits as petitioner’s claim cannot be rejected solely on the ground of delay. The petition was accordingly allowed in the aforesaid terms.

Judgment reviewed Shristi Suman. Read Judgment

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