2024 (8) TMI 1322 - HC - Indian Laws

Export subsidy of Rs. 8 crores released for milk powder exports under Government Resolution dated July 31, 2018

Parag Milk Foods Ltd., Pune Versus The State of Maharashtra Through Department of Agricultural, Animal Husbandry, Dairy Development and Fisheries and Ors.

Bombay HC directed release of export subsidy of Rs. 8,08,50,000/- to petitioner for milk powder exports. Court found petitioner exported 1617 metric ... Seeking release of export subsidy of Rs. 8,08,50,000/- - Respondent No. 2 submitted a report confirming that the Milk Powder exported by the Petitioner, i.e., 1617 metric tonnes, is out of the stock which was in existence on 30th June 2018 and hence the Petitioner was entitled to receive the export subsidy under the Government Resolution dated 31st July 2018 - HELD THAT:- It is observed that once a party like Indapur, who was similarly placed like the Petitioner, was in receipt of such subsidy, which is certainly in the nature of a State largesse, all attributes of reasonableness and fairness emanating from Article 14 of the Constitution of India would stare at the Respondents in similar treatment to be meted out to a person like the Petitioner who was identically placed. A different treatment being meted to the Petitioner would result in breach of the basic rights of the Petitioner of non-discrimination guaranteed to the Petitioner under Article 14 of the Constitution. The subsidy scheme in question is a welfare scheme and which was fully implemented and acted upon in the case of Indapur. Thus, no technical argument would prevent this Court from recognizing such Constitutional rights as conferred on the Petitioner as also recognized by the Scheme. So far as the judgements of the Supreme Court in the case of M/S. VISHAL PROPERTIES PVT. LTD. VERSUS STATE OF U.P. & ORS [2007 (10) TMI 647 - SUPREME COURT] relied upon by the Respondents in the context of negative equality are concerned, they lay down the proposition that Article 14 is not meant to perpetuate an illegality. They further lay down that Article 14 provides for positive equality and not negative equality and the Courts are not bound to direct any authority to repeat any wrong action done by it earlier. There can be no dispute about the proposition of law laid down in these judgements. However, these two judgements are squarely distinguishable on facts in the present case. In the present case, on identical facts, this Court has directed release of payment of Export Subsidy to Indapur. This Court has done so on the basis that Indapur was legally entitled to the same and that there was no illegality involved in making payment of the said Export Subsidy to Indapur. Therefore, the question, of any illegality or negative equality, does not arise in the present case. Thus, this Court has directed release of payment of export subsidy to Indapur on the basis that Indapur was legally entitled to the same. The Respondents are directed to release in favour of the Petitioner the export subsidy amount of Rs.8,08,50,000/- within a period of six weeks from the date of this order - petition allowed. Issues Involved:1. Fall in milk powder prices and subsequent reduction in milk procurement.2. Introduction and amendment of Export Subsidy Schemes.3. Petitioner's claim for export subsidy under the revised scheme.4. Non-disbursement of the subsidy despite orders and reports confirming entitlement.5. Respondents' contention regarding the non-approval of the scheme by the Finance Department.6. Court's orders directing the release of the subsidy and Respondents' failure to comply.Detailed Analysis:1. Fall in Milk Powder Prices and Subsequent Reduction in Milk Procurement:In 2018, there was a significant decline in the prices of Milk Powder both domestically and internationally, causing manufacturers to struggle to sell their products at break-even prices. As a result, manufacturers, including the Petitioner, reduced milk procurement from farmers, leading to an excess supply of milk in Maharashtra.2. Introduction and Amendment of Export Subsidy Schemes:Respondent No. 1 introduced a Scheme via Government Resolution dated 20th July 2018 to grant Export Subsidy to clear existing stock and restart milk powder production. The Scheme included two parts: Scheme A (subsidy for export) and Scheme B (subsidy for conversion into milk powder). A clarification later added stated that benefits under Scheme B would disqualify manufacturers from Scheme A subsidies. Due to implementation issues, an amended Government Resolution dated 31st July 2018 was issued, applicable only to the stock as of 30th June 2018, and the conflicting Clause B-3 was removed.3. Petitioner's Claim for Export Subsidy Under the Revised Scheme:The Petitioner claimed it had 2173 metric tonnes of stock as of 30th June 2018 and exported 1617 metric tonnes between 1st December 2018 and 5th January 2019. Based on the Government Resolution dated 31st July 2018, the Petitioner sought an export subsidy of Rs. 8,08,50,000/-. The Petitioner filed an application on 6th February 2019, providing detailed documentation to support the claim.4. Non-Disbursement of the Subsidy Despite Orders and Reports Confirming Entitlement:Despite the Petitioner's repeated requests and a detailed hearing on 7th October 2021, where it was confirmed that the Petitioner was entitled to the subsidy, the Respondents did not release the funds. The Court had previously ordered the Respondents to take a fresh decision and later confirmed the Petitioner's entitlement in an order dated 4th March 2022. A subsequent report on 26th May 2022 reaffirmed the Petitioner's entitlement, yet the payment was still withheld.5. Respondents' Contention Regarding the Non-Approval of the Scheme by the Finance Department:The Respondents argued that the Government Resolution dated 31st July 2018 lacked the necessary concurrence from the Finance Department and the Council of Ministers, as required by the Rules of Business under Article 166 (3) of the Constitution of India. They cited Supreme Court judgments to support their claim that such rules are mandatory and not directory, thus invalidating the Petitioner's claim.6. Court's Orders Directing the Release of the Subsidy and Respondents' Failure to Comply:The Court, in its orders dated 20th March 2023 and 26th April 2023, directed the State Government to release the subsidy without delay, rejecting the need for Cabinet approval. Despite these orders, the Respondents sought extensions, which the Court denied, emphasizing that the Finance Department could not override the Court's orders. The Court held that denying the Petitioner the subsidy, while another similarly placed entity (Indapur) received it, would violate Article 14 of the Constitution, ensuring equality before the law.Conclusion:The Court directed the Respondents to release the export subsidy amount of Rs. 8,08,50,000/- to the Petitioner within six weeks, emphasizing that non-compliance would result in enforcement actions. The issue of interest on the delayed payment was left open for future proceedings. The Court rejected the Respondents' request for a stay of the order, considering the prolonged deprivation of the Petitioner's funds.