Holding

A report prepared for determining disability allowance cannot be used to assess compliance with fertilizer standards, and in the absence of reliable data the withholding of subsidy is arbitrary; therefore the High Court correctly quashed the show‑cause notice.

Summary

The respondents, small‑scale manufacturers of single super‑phosphate (SSP) fertilizer, were entitled to a government subsidy provided they met the standards prescribed in the Fertilizer (Control) Order, 1985 under the Essential Commodities Act, 1955. The Government of Madhya Pradesh commissioned Project Development India Ltd (PDIL) to test rock‑phosphate from Hirapur mines to determine a disability allowance, and PDIL’s report concluded that the indigenous rock was of low grade and required blending with imported rock. On the basis of this report, the Union withheld the subsidy and issued a show‑cause notice to the respondents. The Delhi High Court quashed the notice, holding that the PDIL report was prepared without notice to the manufacturers and was unrelated to the compliance test required under the Control Order. On appeal, the Supreme Court affirmed that the PDIL report could not be used to reject the respondents’ compliance, that there was no evidence to doubt the inspectors’ certificates, and that the withholding of subsidy was arbitrary; consequently, the High Court’s interference at the show‑cause stage was proper. The appeal was dismissed with costs.

Issues considered

Whether the withholding of the subsidy to the respondents was justified.
Whether the High Court erred in exercising its extraordinary jurisdiction to interfere at the stage of the show‑cause notice.
Whether a report prepared by PDIL behind the back of the respondents could be relied upon to reject the prescribed standard of fertilizer.

Legislation cited

Subjects

subsidyfertilizer control orderessential commodities actshow cause noticeadministrative lawarbitrarinesshigh court jurisdictionPDIL reportsmall scale manufacturers

Judgment

A UNION OF INDIA AND ANR.

v.

BRIJ FERTILIZERS PVT. LTD. & ORS.

[A.M. AHMADI AND R.M. SAHAI, JJ.]
B
MAY 14, 1993

Ferrilizer(Control)Order J985-Cla11se (2) (qJSched11les 1and II-Payment
of subsidy 10 small scale 111a1111facwrers-Held, cannot be with-held 011 rhe basis

c
of repon of a Research Organisation prepared behind the back of
respondents-High Court may imerfere at the srate of slww cause notice where
manufacturers would be in peril if it did not-Essemial Commodities Act,J 955.

The respondents were small scale manufactures of fertilizers. '.fhey
-
were entitled to payment of subsid~· on meeting prescribed standard in the
manufacture of single super· phosphate (SSP). 'the Government of Madhya
D Pradesh requested PDIL, a consultancy and R.&D Organisation, to test the
rock phosphate at Hirapur mines for determining disability allowance pay-
able to SSP producers. On the basis of this report, the payment of subsidy was
withheld, and a show cause notice issued to the respondents.

E A writ petition filed in the High Court was allowed by a Division Bench
which quashed the show cause notice and ordered that the subsidy be paid. It
found that the PDIL report had been made without notice to the manufactur-
ers or inviting their participation and that the laboratory reports furnished
b~,. the manufacturers on which the payment of subsidy was dependent had
not been questioned.
F
On appeal before this Court, the questions to be decided were whether
the withholding of' payment of' subsidy to the respondent was justified;
whether the High Court committed any error in interfering at the stage of
show cause in exercise of its extra-ordinary jurisdiction; and whether the
G report of PDIL, prepared behind the back of the respondents couJd be used
to reject the standard fertilizer of' the respondent.

It was contended for the appellants that a detailed teclmical examination
was pending and the subsidy worked out had only been provisional, and that ....
PDIL had carried outthe ~xamination. PDIL being independentand reputed,
H it was not required to here the manufacturers. Further, the non-release of
760
U.I.O. v. BRIJ FERTILIZERS 761

subsidy was also on the basis of input cost data •.It was urged that the High A
Court was not justified in quashing the show cause notice and issuing
directions for paying the subsidy without giving the department an opportu-
nity to verify ifthe respondents had in fact compiled with the Control Order.

Dismissing the appeal, this Coor!_,
B

HELD : 1. PDIL was engaged to find out the grade of pb()~phate from
Hirapur mines to enable the manufacturers to claim disability allowance, and
not whether they were producing fertiliser in accordance with the standard
provided in the Control Order. The purpose being entirely different, the
report could not he utilised for a different purpose. (767-G) C

2. There is no evidence to doubt the authority of the reports submitted
by the inspectors appointed under the Control Order that the fertiliser
produced was of specified standard. (768-B)
D
3. On facts, in the absence of any reliable data or any material the
inference drawn by the appellants in the notice that the fertiliser was not of
a specified standard was baseless. The entire exercise was therefore vitiated
being tainted with arbitrariness. (770-F-G) ..

4. The High Court should normally not interfere at the stage of show E
cause notice. But where, from the facts it is apparent that there was no
material available with the department to doubtthe statement on behalfofthe
respondent, it would be failing to exercise jurisdiction if the Court does not
discharge its constitutional obligation of protecting the manufacturers who
are in perilous condition as they are not able to meet their liabilities to pay to F
financial inst;tutions and various other authorities and are facing proceed-
ings on various counts and have virtually closed their unit. The authorities did
not realise either the purpose of granting subsidy or the harassment to which
the manufacturers have been exposed. Entire litigation appears to be a sad
plight for those who have. set up small scale units in the hope that they will
stand on their own on the subsidy given by the Government as admittedly the G
price of manufacturing fertilisers is much more than the price fixed by the
Government for which it assured to pay subsidy. (771-B-D)

H
A
762 SUPREME COURT REPORTS

CIVIL APPELLATE JURISDICTION: Civil appeal Nos. 1450-51of1993.
[1993] 3 S.C.R.

--
From theJudgmentand Order dated 16.7 .92. of the Delhi High Court in Civil
Writ Petition No. 1780of1992 and Civil Misc. No. 3485of1992.

B K.T.S. Tulsi, Addi. Solicitor General and S.N. Terdol for the Appellants.

Kapil Sibal, Vikas Singh, L.R. Singh, Yun us Malik and Gopal Singh for the ·
Respondents.

The Judgment of the Court was delivered by
c
R.M. SAHAI, J. Was there any valid justification for the appellants, the
Union of India, to withhold the payment of subsidy to the respondents, the small
scale manufacturers offertiliser, is the main question that arises for consideration
in this appeal directed against the judgment and order of the Delhi High Court?
D Two other questions that arise in this connection are if the High Court committed
any error in exercise of its extraordinary jurisdiction to interfere at the stage of
show cause and if a report prepared by the Project Development India Limited (in
brief 'PDIL') behind the back of the respondents could be relied for rejecting the
specification of standard fertilizer produced by the respondents.

E
Before adverting to these issues we consider it necessary to mention that the
payment of subsidy to manufacturers of fertilisers was introduced in 1982 under
a scheme framed by ~e Government of India in pursuance of which every
manufacturer was required to give a written undertaking to the President of India.
In 1985 Government of India issued a Fertilizer (Control) Order under the
F · Essential Commodities Act. Sub-clause (h) of Clause (2) of the order defines
'fertilizer' to mean,

'any substance used or intended to be used as a fertiliser of the soil
and/or crop and specified in Part-A of Schedule I and includes a
mixture of fertiliser, mixtures of micro-nutrient fertilisers and
G special mixture of fertilisers'.

Sub-clause (q) of the same ciause explains 'prescribed standard of fertilizer'
as under:

"Prescribed standard" means
...
H (i) in relation to fertiliser included in Colµmn 1 of Part A of
U.I.0. v. BRIJ FERTILIZERS [R.M. SAHAI, J] 763

Schedule-I, the standard set out in the corresponding entry in A
Column 2, subject to the limits of permissible variation as specified
in Part B of that Schedule; and

(ii) in relation to a mixture of fertilisers, the standard set out in
respect of that mixture under sub-clause (I) of Clause 13 by the B
Central Government, subject to the limits of permissible variation
as specified in Part B of Schedule- I;

(iii) in relation to a [mixture of NPK fertilisers, mixture of micro-
nutrient fertilisers and combination thereof), the standard set out in
respectofthatmixtureundersub-clause(2)ofClause 13 by the State C
Government, subject to limits of permissible variation as specified
in Part B of Schedule L;"

And standard specified of single super phosphate (SSP) sulphur manufac-
tured by the respondents is described in Schedule I of the Order as under : D

"Single Super Phosphate (16% P2 0 5 Granulated)-
(i) Moisture, per cent by weight, maximum

(ii) free phosphoric acid (as P 2 0 5) per cent by weight, maximum E
(iii) Water soluble phosphates (as P 2 0 5 per cent by weight ,
maximum
(iv) Particle size-Not less than 90 per cent of the material shall pass
through 4 mm IS sieve and shall be retained on 1 mm IS sieve. Not
more than 5 per cent shall pass through 1 mm IS sieve ... F

The Control Order further deals in detail with price control, distribution, restriction
on manufacturers and sale etc. of fertiliser. Chapter VII deals with enforcement
authorities. Paragraph 27 empowers the State Government and the Central
Government to appoint inspectors of fertilisers. Paragrapn 28 empowers the
inspectors to secure compliance of the Order by requiring the wholesaler or retail G
dealerto give any information in his possession with respect to manufacture, draw
samples of any fertiliser, enter upon and search any premises etc. How the sample
has to be analysed has been provided by Schedule II of the Order.

The basic raw material for manufacture of fertiliser is rock phosphate. There u
764 SUPREME COURT REPORTS [1993] 3 S.C.R.

are various mines spread all over the country from where these rocks are obtained.
They are canalised through State mineral corporations. One of such mines is
located in Hirapur in the State of Madhya Practesh. The Government of the State
requested the PDIL to undertake laboratory test of these rocks and submit a report
for determining disability allowance payable to SSP producers. The conclusion of
the report is eJ5,tracted below :
B

"The world reserve of good quality rock phosphate is gradually
depleting making the use of non-standard and low grade phosphate,
in the manufacture of phosphatic fertiliser as essential. In India,
compared to other countries, the availability of usable quality rock
c phosphate is rather limited, though available in abundance.

This study was made, at the request of Madhya Pradesh
Government with a view to effectively utilise, to the extent possible
the lower grade indigenous rock phosphate from HIRAPUR MINES
D for SSPproduction. Experiments in PDIL laboratory has shown that
this rock phosphate cannot be processed in the conventional route
to produce SSP, as such, and it is imperative to make blends with any
standard rock phosphate.

The report establishes that the rock phosphate available in our country whether it
E is in Madhya Pradesh or Jaipur appears to be incapable of producing SSP unless
it is blended with imported rock. Proportion of the two depends on the strength of
rock obtained from different mines. The PDIL conducted the test for those rocks
whose strength varied from 29% P 205 and 25% P 2 05 and opined that blending
of rock with 24% should be in proportio.n of 20% and 80%. The extract from the
F · report runs as under :

"The chemical analysis has shown 24.85% P 2 0 5 and
30.03% Silica plus insoluble besides other impurities like high R 2
O 3 compared to 32.4% P 2 0 5, 4.56% Silica plus insoluble and
0.75% R2 03 in standard Jordon variety. Many proportions of
G blends were tried in laboratory to find out the optimum blend which
would produce SSP of specification laid down by F.C.O. and finally
it was concluded that a blend of 20% Hirapur rock matrix and 80
Senegal will be a suitable proportion. This was confirmed even in
pilot plant trials where for a comparison purpose two blends were
tested e:g. 30:70 and 20:80 for Hirapur; Senegal rock phosphates. It
H
U.1.0. v. BRIJ FERTILIZERS [R.M. SAHA!, J) 765

was found from analytical results that 20:80 proportion was most A
suited. Accordingly study was concentrated towards this 20:80
Hirapur: Senegal blend."

We now tum to the various issues that arise in this case. Relying on these
reports the subsidy Payable to the manufacturers was withheld and they were B
required by a letter dated 20th April 1990 to explain as to how they were able to
achieve· the standard specification. The letter reads as under:

"It is generally observed from the quarterly cost date being submit-
ted by your company that you are either using only low grade rock
phosphate for manufacture the P2 05 content of which is less than C
30%, or in large proportion thereof. Please therefore intimate how
you are manufacturing SSP of standard specification i.e. of 16% P2
05 content, SSP as required under the specification laid down on the
F.C.O ...

D
Both the assumptions in the_ letter were without any foundation.We shall examine
it in detail later. It was at this stage that the mapufacturers approached the High
Court. They claimed that the fertiliser manufactured by them having been checked
and verified by the inspectors appointed under the Control Order the opposite
parties were not justified either in withholding the subsidy or issuing any notice.
In the counter affidavit filed in the High Court the reason for issuing notice was E
explained as under :

;'Thatin reply to Paras 15 and 16 of the Petition, it is submitted
that upto 1.4.1992 imported Rock Phosphate was being procured by
the SSP units, including the petitioners through the Minerals & F
Metals Trading Corporation (MMTC) which was a canalising
agency. Rock Phosphate is also available through the State owned
indigenous sources such as Rajasthan State Mineral Development
Corporation (RSM DC), Rajas than State Mines & Minerals Limited
(RSMML), Uttar Pradesh State Minerals Development Corpora-
tion (UPSMDC), Madhya Pradesh State Mining Corporation G
(MPSMC) and Hindustan Zinc Limited (HZL), and SSP is manu~
factured by using rocks of standard grade. The quality of indigenous
rock phosphate from the above mentioned State owned sources
varies considerably from low grade rock of 14% to 16% P2 05
content to high degree rock of+31 % P2 05 content. For producing H
766 SUPREME COURT REPORTS [1993] 3 S.C.R.

A· SSP of 16% W.S. P2 05 the rock phosphate used should contain a
minimum of+31%P205 artd the conversion effibency of the rock
should be more than 91 %. SSPof 16% W.S. P205 can be produced
by using low grade rocks only after suitably blending it With
standard/high grade rock phosphate to have a feed conforming to
the above mentioned minimum specifications of +31%P205.
B
That in reply to Para 17 of the Petition it is submitted that
indigenous rock phosphate is being procured by the SSP Units from
Madhya Pradesh State Mining Corporation, Uttar Pradesh Sate
Minerals Development Corporation, Rajasthan State Mining De-
c velopment Corporation and Rajasthan Mines and Minerals limited.
Since detailed technical examination of the various grades of
indigenous rock phosphate available from sources other than
RSMML was not available, the SSP Units were informed that
pending detailed technical examination, the prices of such indig-
enous, rock phosphate would be reimbursed at par with RSMML
D price for rock phosphate (having +31 % P2 05) on a provisional
basis only. A copy of the circular letter issued by the Office of the
FICC dated 29th September 1986 to all manufacturers of SSP is at
Annexure-1. Subsequently, Projects and Development India Ltd
(PDIL), Sindri, which is a Consultancy and R & D organisation for
E fertilisers in the public sector, which had conducted an evaluation
ofMPSMC Rock Phosphate of Hirapur and JhabuaMines, submit-
ted its report, which indicated that taking into account the P2 05
content and the impurities present in bothJhabua and Hirapur Rock,
it is unsuitable to make SSP of 16% W.S. P2 05 content, unless it
is blended with minimum of70% high grade imported Senegal rock
F with 30% low grade Jhabua rock and minimum of 80% high grade
Senegal rock with 20% low grade Hirapur rock ...

After considering this a Division Bench of the High Court allowed the writ petition
and issued a direction to the appellant to pay the subsidy which was payable to
G respondents after determining it in accordance with the terms of the scheme under
which it was payable within the period specified in the order. The direction was
issued as the Bench found that the basis for denying the subsidy was the report
submitted by PDIL prepared behind the back of the manufacturers without issuing
any notice to them or inviting their participation. After excluding the report the
bench held that since the payment of subsidy was dependent on basis oflaboratory (-

H reports furnished by the manufacturers and these reports had been furnished by
0

U.1.0. l'. BRIJ FERTILIZERS [R.M. SAHA!, J] 767

them and they had not been questioned at any time by the appropriate authorities A
it was not open to opposite parties either to withhold the subsidy or to initiate the
proceedings by issuing show cause notices.

To assail the finding on merits the learned Additional Solicitor General
launched a two pronged attack. He urged that subsidy under the scheme of 1982 B
was payable only if the fertiliser conformed to specification of 16% water soluble
phosphoric penta-oxide. The learned counsel submitted that under the scheme the
•
Department ofFertilisers was entitled to conduct survey and check the quality and
the manufacturers were required to give an undertaking-that they were to supply
prescribed information along with the monthly claim for subsidy. According to
learned counsel claim for subsidy. According to learned counsel under the said C
scheme a circular was issued on September 29, 1986 to all the manufacturers of
SSP wherein it was clarified that the indigenous rock phosphate being obtained by
the manufacturers from sources other than Udaipur was pending a detailed
technical examination. He urged that the circular further stated that the prices were
to be worked out on the basis of rock phosphate having plus 31%P205. Therefore, D
pending completion of detailed technical examination the subsidy worked out was
'Jrovismnal. And when the technical examination conducted by the PDIL indi-
cated that on the admitted figures furnished by the manufacturers in their quarterly
invoices the standard specification could not have been achieved the notice were
issued, therefore, the High Court was in error in quashing it. According to him it
was open to the department to get it ascertained from an authentic source if the E
manufacmrcrs of fertiliser were using proper material and achieving the specified
standard. He urged that the PDIL being independent and reputed body it was not
required to issued any show cause notice. We do not consider it necessary to
express any opinion if the PDIL report could have been discarded for want of show
cause notice or for being ex-party as there are .certain features about the report
F
wtlich obviate the necessity of considering its validity on this ground. From the
counter affidavit filed by Managing Director of M/s Brij Fertilizers Pvt Ltd it
appears that the manufacturers of SSP have been using rock phosphate which is
of hard quality but in order to encourage use of indigenous rock phosphate and to
avoid loss of foreign exchange the Government of Madhya Pradesh directed the
PDIL laboratory to undertake laboratory test to find out the g~ade of phosphate G
from Hirapur mines to enable the manufacturers to claim disability allowance. The
_report, therefore, was not concerned with finding out whether any of the manufac-
turers who were engaged in producing fertilizer were doing so in accordance with
standard provided in the Control Order. In the circumstances it may be that it was
not necessary to issue any notice to the manufacturers.
H
768 SUPREME COURT REPORTS 11993) 3 S.C.R.

A Yet the question is, could it furnish material for rejecting the claim of
respondents and withholding their subsidy? The learned Additional Solicitor
General urged that the non-release of subsidy was not based, solely, on report of
PDIL but on basis ofinput cost data supplied by the manufacturers which indicated
that on basis of analysis of raw material input provided by the respondents the
manufacturers could not have produced SSP of 16% water soluble P2 05. This
B
assumption appears to be unfounded for more than one reason. Under the Control
Order there is a detailed procedure provided for carrying out test to find out if the
fertiliser produced was of specified standard. It is not disputed that no such test as -.
provided was ever carried by any authority. Rather the report submitted by the
inspectors appointed under the Control Order, indicates that the fertiliser manufac-
c tured by the respondents was standard.We are not willing to accept the submission
of the Additional Solicitor General that these reports were incorrect and have been
obtained through the connivance of the official machinery. There is no material on
record to indicate that the Government at any point of time doubted the correctness
of the reports or initiated any proceedings against any inspector or any Officer for
giving a wrong or' incorrect certificate. In the absence of any evidence on record
it is not possible to draw an inference against the authenticity of the reports which
have been given by the authority empowered under the order. It is not the claim of
department that at any pointoftime priorto submission of the PD IL report any step
was taken or the government ever required the inspectors to find out if the
manufacture carried on by respondents was in accordance with law and rules. To
E discard the certificate issued by the inspector in the circumstances would be
arbitrary without any valid reason. ·

With this we may now examine the PDIL report itself. As has.been seen
earlier the purpose of getting the rock tested was to pay disability allowance. The
purpose being entirely different it could not be utilised for a different purpose. How
F risky it is to embark on such exercise shall be clear when the result of report
obtained by the PDIL is applied to the dates of respondents relied by appellant to
justify their action of issuing show cause notice. From paragraph two of the
conclusions of the PD IL, extracted earlier, it is clear that the study was made at the
request of Madhya Pradesh Government with a view to effectively utilise to the
G extent possible the lower grade indigenous phosphate from Hirapur mines for SSP
producti~n. The report concludes, that experiments in PDIL laboratory has shown
that this rock phosphate cannot be processed in the conventional route to produce

H
SSP, as such, it is imperative to make blends with any standard rock phosphate.
The objection of the department is not that the rock phosphate should not be
blended with imported one but that on the proportion shown along with the
--
strength of indigenous rock used the standard as provided could not have been
U.I.0. v. BRIJ FERTILIZERS [R.M. SAHAI, J] 769

achieved. From the analysis of rock phosphate purchased by the manufacturers as A
per their invoices and attempt was made to demonstrate that if the figures
mentioned therein were taken as correct and they are compared with the calcula-
tion given by the PDIL it would be clear that the standard specification could not
have been achieved. It is necessary to mention at this stage that the rock phosphate
found in Hirapur mines was of three grades. That is clear from the Jetter of
Assistant General Manager, Mines to the Joint Director, Fertiliser Coordination B
Committee. Relevant part of the letter reads,

"We were selling Hirapur Phosphorite for so many Fertiliser
S.S.P. manufactures since starting of the mining and were never
found any CO!l}plaint regarding its suitability to manufacture SSP C
Fertiliser. We have learnt form Fertiliser Manufacturing Units that
our Phosphorite is suitable for SSP Fertiliser manufacturing but in
caseofF0203 contents increases in Phosphorite the Wear and Tear
of the plant increases. We had also been directed by Joint Director
(F&A) FICC, vide their letter dated 31.8 .89 to sale our Phosphorite D
in category 'A' to SSP Units. This further certifies the suitability of
otir Phosphorite for SSP manufacturing of requisite grade. The
material supplied to these units are of32% category 'A' and not 25%
as given in PDIL report hence the question of blending with other
Rock Phosphate does not require to Manufacture the requisite grade
SSP. E

The M.P.S.M.C. was selling Hirapur Phosphorite in different
percentages P2 05 grades and not in mix condition. Out grades and
other specifications indicated as below:-

F

Before 5.3 1991 From 6.3. 1991
I. 1st (A) 1st (A)
P2 05 + 30%, Sio2 P2 05 + 29%-31 %,
+ 15%18% Sio2 + 15%-18% G
F0203 below 4.5% Fo203 below 24%
A.+ 1/2" - 2.1/2" Size A)+ 1/2" _ 2. 1/2" size
B. R.O.M. B. R.O.M.
2. 1st (B) 1st (B)
P205+ 28%-30% Pr05 + 27%-29% Sio2+ 18%
H
770 SUPREME COURT REPORTS (1993] 3 S.C.R.

A Sio2+22% Fo203 F 203 above 4.5%
above4.5%
A) -1/2" size A) -1/2" size
B) ROM. B)R.O.M.
C) By Product Dust
3. IlGrade
B P205 + 22% - 25% Sio2
and Fo203 No grantee.
R.O.M." ,-_
Further no rock phosphate has been or could be purchased by any manufacturer
except through corporation of the State. This fact is admitted in the counter
c affidavit of the appelant extracted earlier. It is also clear from the letter of Assistant
General Manager that Brij Fertilisers did not use any rock except Grade 'A'. It is
claimed by the respondents that on a technical assessment conducted by Bhabha
Research Institute for Lalitpur rocks that the water soluble in rock phosphate w.ith
P2 05 with 29 to 32% is more than 16%. Even if this report is ignored the letter
of Assistant Mines Inspector establishes that water soluble phosphate in Hirapur
D mines of grade 'A' was 16%. Each respondent has filed details of rock phosphate
consumed by its unit from various corporations. The average grade mentioned is
31 %. Not one has used grade II. Even Avadh Fertiliser has not used rock phosphate
below 27%. From the chart appended in respect ofHirapur mines the blending in
proportion of 50% indigenous and 50% indicates that even with rock of 30.66%
E the water soluble actually was 17.57%. These figures could not be disputed in the
reply filed on behalf of Union of India. From the PDIL report it is clear that it had
undertaken test of rock with 24.85% P2 05 and 30.03% Silica and suggested that
most suited blend with such rock was 20% indigenous and 80% imported. It could
not furnish any guideline or material to reject the rock phosphate used by the
respondents which varies between 27% P2 05 to 31 % P2 05. In absence of any
F reliable data or any material the inference drawn by the appellants in the notice was
baseless. The counter affidavit filed in the High Court by the appellant did not
explain the basis for concluding that for producing SSP of 16% or P2 05 the rock
phosphate should contain a minimum of 31%P205. It is contrary to the letter of
Assistant General Manager Mines. In any case PDIL could not furnish any basis
for it. In absence of any valid justification the entire exercise undertaken by the
G
appellant was vitiated being tainted with arbitrariness.

Failing in his effort to assail the order on merits the learned Additional
Solicitor General vehemently urged that the department was not precluded form
issuing show cause notice and requiring the manufacturers to appear and explain
H their claim. It was urged that the High Court was not justified in quashing the show
LI.LO."· BRIJ FERTILIZERS [R.M. SAHA!. JJ 771

- cause notice and issuing the directions for paying the subsidy without giving an A
opportunity to the department to verify if the respondents had in fact complied with
Control Order. True, the High Court should normally not interfere at the stage of
show cause notice. But where, from the facts it is apparent that there was no
material availal1k with the department to doubt the statement on behalf of the
respondents and their own officers at every point of time had issued the certificate
B
the correctness of which-eould not be disputed or doubted except by raising
unfounded suspicion or drawing -0n imagination it would be failing to exercise
jurisdiction if the Court does not discharge its constitutional obligation of
protecting the manufacturers who, as is apparent from the counter affidavit filed
in this Court and the various letters issued from different authorities are in perilous
condition as they are not able to meet their liabilities to pay to financial institutions C
and various other authorities and are facing proceedings on various-accounts and
have virtually closed their unit. We are pained to say that the authorities did not
realise either the purpose of granting subsidy or the harassment to which the
manufacturers have been exposed. Entire litigation appears to be a sad plight for
those who have set up small scale units in the hope that they will stand on their own
D
on the subsidy given by the government as admittedly the price of manufacturing
fertilizers is much more than the price fixed by the government for which it assured
to pay subsidy.

In the circumstance the High Court did not commit any error in quashing the
show cause notice issued by the appellants and issuing the directions to pay the E
subsidy. The appeals fail and are dismissed with costs which is assessed at Rs.
10,000 one set.

U.R. Appeal dismissed.