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of <h1>Court Upholds FICC Decision on Cost Disallowance, Orders Reevaluation</h1> <h3>Deepak Fertiliser & Petroleum Chemicals Corpn Ltd Versus Union of India</h3> Deepak Fertiliser & Petroleum Chemicals Corpn Ltd Versus Union of India - TMI Issues Involved:1. Project cost disallowance2. Reimbursement of Taluja-Tromway transport cost3. Interest due to delay in making payments by FICCDetailed Analysis:i) Project Cost Disallowance:The petitioners argued that the delay in commencing commercial production was due to factors beyond their control, such as delays in gas supply by ONGC, electricity supply issues by MSEB, a crane accident, and strikes/lockouts in major suppliers' units. They claimed discrimination, citing that Nagarjuna Fertilisers Ltd. was allowed a delay of more than 9 years by FICC. FICC allowed a cost overrun for five and a half months out of the 14 months delay, attributing the remaining eight and a half months to the petitioners. The court found that the apportionment of the 14 months delay by FICC was based on a thorough examination of facts and did not involve any irrelevant considerations. The court held that the decision of FICC was neither unfair, unjust, nor arbitrary. Regarding the claim of discrimination, the court noted that the delay for Nagarjuna Fertilisers Ltd. was 9 months, not 9 years, and was due to natural impediments in gas supply, which was beyond their control. The court concluded that the petitioners failed to make a case of discrimination and upheld FICC's decision.ii) Reimbursement of Transport Cost:The petitioners claimed reimbursement of the actual cost of transportation of ammonia from Taluja to Tromway, which was initially approved at Rs. 103 per metric tonne and later revised to Rs. 121 and Rs. 143 per metric tonne. The petitioners argued that the actual cost was Rs. 235 per metric tonne in 1983-84, based on a cost-plus basis with their promoter company, Deepak Nitrite Ltd., due to the lack of independent contractors. The court noted that the petitioners had a legitimate expectation of reimbursement of actual transportation costs, as indicated in the letter dated 2nd June 1984 from the Ministry of Chemicals and Fertilisers. The court found that FICC did not examine the reasonableness of the claimed transportation costs and directed FICC to refix the transportation cost after examining the petitioners' claims and documents. FICC was given three months to fix the cost and one month to reimburse any additional amount, failing which interest at 18% per annum would be payable.iii) Interest:The petitioners sought interest on the delayed payments, arguing that the Scheme provided for interest at 16% per annum for delays. However, the court noted that the Scheme did not provide for interest payments to units whose retention price was higher than the ex-factory price and who were entitled to receive the difference from the Fund Account. The court referenced a similar case, Ram Ganga Fertiliser vs. Union of India, where it was held that compelling reasons were required to award interest in the absence of a specific stipulation. The court found no compelling reasons in this case and denied the petitioners' request for interest.Conclusion:The court allowed the petition to the extent of directing FICC to refix the transportation cost and denied the claims for project cost disallowance and interest. The rule was made absolute to the extent indicated, with each party bearing its own costs.
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