2024 (5) TMI 737 - HC - Indian Laws

Special Package of Incentives - Imposition of cap on the total IPA allowable in respect of a unit based on Fixed Capital Investment - Whether the Special Package of Incentives granted in favour of ACL stipulated any overall financial cap based on Fixed Capital Investment for release of IPA? - HELD THAT - ACL claims to have commenced its commercial production with effect from May 31, 2007. Eligibility Certificate for Incentives for Mega Project under the WBIS, 2000 appears to have been issued on May 18, 2010 by WBIDS in favour of ACL. Clause (b) of the Eligibility certificate dated May 18, 2010 states that the IPA @ 75% of VAT and CST paid in the previous year for which IPA would be released for five years and two months from the date of commencement of commercial production i.e., 31.05.2007, without any cap - This Court, therefore, holds that the special package approved for ACL does not stipulate any overall financial cap based on Fixed Capital Investment for release of IPA. The finding of the Additional Chief Secretary is based on irrelevant materials as the observation of the Finance Department relates to WBIS, 2004 which does not have any manner of application to the case on hand. That apart the finding is based on incorrect interpretation of the relevant clauses of the order dated 02.03.2006. The findings of the Additional Chief Secretary in his order dated 14.02.2019, suffer from perversity. In the case on hand, the State upon being satisfied that ACL is entitled to Special Package of Incentives as a Mega Project, issued the order dated 02.03.2006. Admittedly, IPA was released in favour of ACL for a considerable length of time. The State thereafter did not disburse IPA of the subsequent period(s), which prompted ACL to approach this Court. The stand of the State that IPA has a financial cap as reflected in the order of the Additional Chief Secretary, has not been accepted by this court as will be evident from the observation made herein before. ACL approached the writ court seeking to enforce the order dated 02.03.2006. The said action cannot be said to be tainted with illegality. There is no pleading in support of the stand of the State that certain terms are opposed to public policy. Except the submission advanced at the Bar, no materials in support thereof have been produced before this Court. The Additional Chief Secretary, in his order dated 14.02.2019, only stated that the interpretation should not be contrary to the public policy of the State without disclosing as to how release of IPA over and above FCI limit would be opposed to public policy. This court is not inclined to accept the argument of the learned Advocate General that release of IPA over and above the FCI limit would be opposed to public policy and that the same is against public interest - The learned Single Judge was right in holding that the attempt of the authorities of the State was mala fide and arbitrary and designed to defeat ACL s legitimate claim for the balance amount under Special Package. The appeal stands dismissed.

Summary

Issues Involved:
1. Whether the Special Package of Incentives granted to ACL stipulated any overall financial cap based on Fixed Capital Investment for release of IPA.
2. Whether the State's contention that IPA over and above FCI is opposed to public policy is valid.

Summary:

Issue 1: Financial Cap on IPA

The Court examined the Special Package of Incentives granted to ACL under the West Bengal Incentive Scheme, 2000 (WBIS, 2000). The package provided Industrial Promotion Assistance (IPA) at 75% of VAT and CST paid in the previous year without any financial cap. The State's argument that total incentives should not exceed 100% of Fixed Capital Investment (FCI) was rejected. The Court held that the special package did not stipulate any overall financial cap based on FCI for the release of IPA. The Court emphasized that any restrictive clause should have been explicitly included in the special package, which was not the case.

Issue 2: Public Policy and IPA Over FCI

The State argued that granting IPA over and above FCI would be against public interest, citing Section 23 of the Indian Contract Act, 1872. The Court found no evidence to support the claim that the terms of the Special Package were unreasonable or unfair to the extent that they would shock the Court's conscience. The Court noted that the State had acted upon the order dated 02.03.2006 for a considerable period and should not be allowed to unilaterally resile from its commitments. The argument that releasing IPA over FCI would be opposed to public policy was not substantiated with adequate material or pleading.

Conclusion:

The appeal by the State of West Bengal was dismissed, and the Single Judge's order directing the State to disburse the balance amount of IPA to ACL was upheld. The Court found the State's attempt to impose a financial cap on IPA and its public policy argument to be without merit.