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CASE NO.:

Appeal (civil) 1073 of 2006

PETITIONER:

Duncan Industries Ltd. and Anr

RESPONDENT:

Union of India

DATE OF JUDGMENT: 10/02/2006

BENCH:

H. K. Sema & B.N. Srikrishna

JUDGMENT:

J U D G M E N T

(arising out of SLP (C) No. 6297/2004)

With

Civil Appeal No.1074/2006 @ SLP (C) No. /2006 @CC No.

12164/2004

SRIKRISHNA, J.

Delay condoned in the Special Leave Petition arising out of CC No.

12164 of 2004. Leave granted in both the Special Leave Petitions.

The question to be answered in this case is: whether the scheme of

subsidies (known as the "Retention Price Scheme") granted by the

Respondent-Union of India (hereinafter "the Government") to fertilizer

manufacturers, could be retrospectively modified to the detriment of these

manufacturers. In our view, this question needs to be answered in the

affirmative.

The Retention Price Scheme

M/s Duncan Industries Ltd. (hereinafter "the First Appellant") is

engaged in the business of manufacturing and selling urea (a fertilizer). In

1993, the First Appellant acquired the urea plant of M/s Indian Explosives

Ltd. (a unit of ICI India Ltd.). The Second Appellant is a shareholder in the

First Appellant-Company (hereinafter, collectively "the appellants").

In 1957, the Government notified fertilizers (including urea) as an

"essential commodity", under the Essential Commodities Act, 1955

(hereinafter "the EC Act"). The Fertilizer (Control) Order, 1957 (hereinafter

"the Fertilizer (Control) Order") was made in exercise of the powers

conferred by Section 3 of the EC Act. The Fertilizer (Control) Order has

been revised from time to time. Through the Fertilizer (Control) Order, the

Government was able to fix the maximum retail price of fertilizers, which

was to be complied with by dealers, manufacturers etc. However, since this

controlled-price mechanism resulted in losses for manufacturers, it was

suggested that the Government provide subsidies to make good the losses.

Accordingly, the Government constituted a Committee under the

Chairmanship of Mr. S.S. Marathe (hereinafter "the Marathe Committee") to

introduce a rational system for the pricing of fertilizers in the country. The

Marathe Committee was to suggest a mechanism that would ensure a

reasonable return on investment to manufacturers of fertilizer, facilitate the

healthy development and growth of the fertiliser industry, and also ensure

that the prices of fertilizer were kept within reasonable limits. To this effect,

the Marathe Committee made a detailed report suggesting an intricate

system of fertilizer subsidies known as the "Retention Price Scheme"

(hereinafter also mentioned as "the Scheme"). This report was considered in

detail by the Government, which decided to introduce the Retention Price

Scheme for units in the nitrogenous fertilizer industry (with effect from

1.11.1977).

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A brief outline of the Retention Price Scheme is necessary. The

Retention Price Scheme was devised with a view to determine the

appropriate subsidy for fertilizer manufacturers. The subsidy is calculated as

the difference between the "Retention Price" and the maximum retail price

fixed for fertilizers (under the Fertilizer (Control) Order). A detailed formula

prescribed under the Scheme determines the Retention Price for fertilizers.

The Retention Price was to be worked out by calculating the cost of

manufacture of urea per ton. The cost of manufacturing urea comprises three

types of costs: (i) Capital-related costs (ii) Conversion costs (or Fixed costs)

and (iii) Variable costs (or Input costs). Capital-related costs incurred by a

manufacturer were the total amount of capital invested, including loan and

equity. Conversion costs included salaries, overheads, chemicals and

consumables, repair and selling expenses, catalysts etc. Variable costs

included the costs of the feedstock (the feedstock may vary from unit to

unit), utilities costs, packaging etc. Also, this formula of Retention Price

provided a post-tax return of 12% on the net worth. The working of the

Scheme provided for a fair ex-factory Retention Price per ton of urea based

upon a capacity utilization of 80% to arrive at the Variable Cost. In this

manner, the Marathe Committee had worked out the Retention Price for

each of the twenty-one urea-manufacturing units. In summary, the

combination of Conversion costs, Variable costs and Capital-related charges

(including the 12% post-tax return) was styled as the Retention Price.

The Retention Price Scheme envisaged a Fertilizer Price Fund

Account for the payment of subsidies. In respect of those units where the

Retention Prices were lower than the maximum retail price, the units were

required to credit the difference to the Fertilizer Price Fund Account.

Conversely, units whose Retention Prices were higher than the maximum

retail price would receive the difference from the Fertilizer Price Fund

Account, as a subsidy.

The Scheme was to be administered by an inter-ministerial committee,

which also had representatives of the fertilizer industry. This committee was

called the Fertilizer Inter-Coordination Committee (hereinafter "the FIC

Committee"). The FIC Committee was to have an Executive Director and

adequate staff to maintain accounts, make and recover payments, undertake

costing, and collect and analyze production data, cost and other inputs, in

order to work out the Retention Price periodically and make appropriate

adjustments.

The Operation of the Retention Price Scheme

The Government's decision to introduce the Retention Price Scheme

was formally notified on 1.11.1977 in the Official Gazette. However, even

prior thereto, a letter (dated 24.10.1977) was written by the Government to

the Managing Director of M/s Indian Explosives Ltd. (later acquired by the

First Appellant), wherein the details of the Retention Price Scheme were

indicated. It was pointed out in this letter that:

"\005It is the intention of the Government to bring the scheme of

retention prices in respect of nitrogenous fertiliser into effect

from 1.11.1977 on the basis of voluntary agreements on the part

of individual units to participate in the scheme\005"

(emphasis supplied)

Accordingly, the Government asked for an undertaking to be signed

by a competent authority on behalf of each of the manufacturers and

enclosed a draft of the undertaking to be signed. Finally, the letter stated:

"\005your (M/s Indian Explosives Ltd.) willingness to participate

in the retention price scheme communicated, and undertaking

the enclosed form duly executed by a competent authority on

behalf of your company set so as to reach this Ministry before

29th October, 1977."

Ms/ Indian Explosives Ltd. gave such an undertaking on 10.12.1977,

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which was incidentally after the specified deadline. The undertaking,

addressed to the President of India, was in the following terms:

"Whereas the Government of India (hereinafter called the

"Government") have introduced and are operating, a scheme of

plant-wise retention price in respect of Nitrogenous and

Phsophetic (sic) fertilisers, with a view to ensuring that there is

a sustained and healthy development of the feertiliser (sic)

industry in view, particularly, of the statutory prices control

exercise (sic) by the Government over the selling prices of

fertilisers.

2. And whereas the retention price scheme envisages

determination of fair retention prices for each product

manufactured by each fertiliser unit taking into account the cost

of production based on norms, return on net-worth, etc. and that

the introduction of this Scheme has been rendered possible by a

contribution from the Government of India by way of removal

of excise duty/FPEC, payment of subsidy and/or otherwise;

3. And whereas the Government are also being (sic) freight

subsidy in respect of the Nitrogenous and Phsophetic (sic)

fertilisers with a view to covering the cost of transport of

fertilisers, as part of the retention price scheme;

4. And whereas the retention price scheme also provides for

periodical revisions in the retention prices so as to reflect the

changes in the cost of raw materials/ inputs, cost of

transportation of raw materials/ inputs, etc.;

5. And whereas Government have been fixing from time to

time a specified amount for tonne (hereinafter referred to as net

realisation) in respect of each product of each manufacturer

based on the prevailing statutory maximum retail selling price,

the rate of distribution margin, etc.;

6. And whereas it is a feature of the scheme that units

whose retention price as fixed under the scheme is lower than

the net realization, shall pay the difference to the Fertiliser

Industry Coordination Committee (hereinafter referred to as the

"Committee"), which has been set up by the Government to

administer the retention price scheme, and that units whose

retention price as fixed under the scheme is higher than the net

realisation, will receive the difference as subsidy from the said

Committee;

7. We, IEL Ltd., do hereby undertake that, in the event of

the retention price fixed for our unit(s)/product(s) being lower

than the net realisatin (sic), we shall credit every month to the

Committee in accordance with such instructions and procedures

as the Government/Committee may prescribe from time to time,

an amount calculated at a rate per tonne of the concerned

nitrogenous/phosphetic fertiiser (sic), equivalent to the

difference between the net realisation and the retention price

fixed for our unit/product on the quantity of the

nitrogenous/phosphetic fertiliser moved out of the factory every

month, within a period of 45 days from the last day of the

month to which the credit relates.

8. We further undertake that if the aforesaid amount is not

credited by us in the time limit specified above, we shall pay

interest @ 2.5% above the ruling bank rate for working capital

loans as now prescribed, or at such rate as may be prescribed

from time to time, by the Government (Ministry of Chemicals

and Fertilisers).

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9. We also undertake and promise to abide by the decision

of the Committee, which is final and binding on all matters

relating to the determination of retention price, net realisation,

equated freight, etc.

10. We also agree to make available to the Government, or

any person nominated for the purpose of inspection, all our

books of accounts and other records connected thereto. We also

agree to follow the procedure for submission of bills/ recoveries

in respect of Nitrogenous and Phsophetic (sic) fertilisers under

the retention price scheme as prescribed by the Government of

India, Ministry of Chemicals and Fertilisers from time to time."

(emphasis added)

Accordingly, the Retention Price Scheme was brought into operation.

The Retention Price fixed initially, was to be operative for the period

1.11.1977 to 31.3.1979. Thereafter, it was fixed for a period of three years

from 1.4.1979 to 31.3.1982. From time to time, the Retention Prices for five

pricing periods up to 31.3.1991 were notified. Since the calculation of the

Retention Prices and its approval by the Government involved

administrative delays, the approval of the policy and the computation of the

Retention Prices, though made subsequently, were made effective from the

beginning of the pricing period. The Sixth pricing period was to commence

from 1.4.1991 and remain in force up to 31.3.1994. However, the Retention

Price for this price period was actually approved in the Sixty-sixth meeting

of the FIC Committee on 16.12.1994, but made operative from 1.4.1991. It

is important to note that until the Retention Price fixed for this pricing period

was brought into force, the Retention Price that was fixed for the previous

year continued to operate. However, once the Retention Price for the Sixth

pricing period was notified, it was brought into effect from 1.4.1991.

The Retention Price fixed, which was to be operative only up to

31.3.1994, was actually continued beyond that date. It was initially extended

up to 31.3.1997, and finally to 30.6.1997 (hereinafter "the Six-A pricing

period"). The details of the policy parameters relating to the Sixth pricing

period (1.4.1991 to 31.3.1994) and the Six-A pricing period (1.4.1994 to

30.6.1997) were notified on 24.7.1997/ 5.8.1997. During the extended

period of the Sixth pricing period that is from 1.4.1994 to 30.6.1997 (i.e. the

Six-A period), the Retention Price and the subsidy amount were worked out

on the basis of the Sixth pricing period and payments made and recoveries

effected. All of these transactions were consistent with a continuing practice,

namely, that the Retention Price would be approved after the expiry of the

pricing period, but recoveries and payments would be done, and accounts

settled from the commencement of the pricing period.

During the continuance of the Seventh (1.7.1997 to 31.3.2000) and the

Eighth (1.4.2000 to 31.3.2003) pricing periods, the Retention Price for each

of the manufacturers was revised on account of changes, as well as,

variations in the different cost factors, the base year being the last year of the

previous pricing period.

In 2000-2001, complaints were voiced that fertilizer manufacturers

were misusing the Retention Price Scheme. For instance, it was alleged that

fertilizer manufacturers were actually consuming much lower quantities of

naphtha/furnace oil but were actually being compensated for higher

consumption, resulting in undue gains for them. The Government constituted

a committee chaired by Dr. Y.K. Alagh (hereinafter "the Alagh Committee")

for the purpose of reassessing the production capacity of such fertilizer units.

The Retention Prices were also reduced with effect from 1.4.2000, on an

interim basis. When the final statement of accounts of payments/ recoveries

arising from the implementation of the Seventh and Eighth pricing policies

were drawn, it was seen that an amount of Rs. 2303 crores had to be paid

while recoveries to the tune of Rs. 923 crores could be made.

In the process of finalizing the Seventh and Eighth pricing period,

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there were detailed discussions held in a meeting between the Government's

officials and authorized representatives of the fertilizer manufacturing units.

As far as the First Appellant was concerned, one such meeting was held on

7.8.2002 at 2:30 PM, which was attended by the Managing Director and

General Manager (Finance) of the First Appellant-Company. The Minutes of

this meeting show that the Executive Director of the FIC Committee broadly

explained the aspects on which the Retention Price had been worked out for

the Seventh and Eighth pricing periods to the representatives of the First

Appellant-Company. It was also pointed out in the meeting that Retention

Price fixation was subject to the reports of the committees that had been

constituted to examine certain pending issues. It was further pointed out that

the Retention Prices determined for the Seventh and Eighth pricing periods

were subject to further scrutiny of the repairs and maintenance charges and

capital additions allowed in the Retention Price. Thereafter, the

representatives of the First Appellant-Company were informed that based

upon information received by the FIC Committee, certain items of

expenditure were disallowed while finalizing the Retention Price for the

Seventh and Eighth pricing periods, as these were not related to urea

activity.

On 8.8.2002, the First Appellant addressed a letter to the FIC

Committee, giving particulars as to the repairs and maintenance charges

incurred for the years 1997-98 to 2000-01. It also raised the issue with

regard to disallowance of the bank charges for Base Years 1997-98 and

1999-2000. Apart from this, no other issue was raised in the said letter.

The Litigation

A Civil Miscellaneous Writ Petition No. 43934/2001 was moved by

the appellants in the High Court of Judicature at Allahabad to challenge the

interim revision of Retention Price made on 5.11.2001 and the consequent

demand raised upon the First Appellant on 13.11.2001 for recovery of

Rs.184.01 crores under the Scheme. Although, the appellants had filed the

Writ Petition sometime in 2001, it was actually moved in 2002, by which

time the Government had recovered Rs. 127.21 crores by way of

adjustments, leaving a balance of Rs. 56.80 crores.

A Civil Miscellaneous Application No. 40383/2002 was taken out by

the appellants for interim relief, which was disposed of by an agreed order.

A perusal of the agreed order made on 3.4.2002 does not indicate that there

was any challenge to the manner of computation of the Retention Price, but

only suggested that the recovery of the balance amount of Rs. 56.80 crores

be made in 10 monthly instalments, subject to disposal of a representation

made by the appellants. On the question of payment of subsidy for the

month of January 2002, it was stated in the order itself that it would be

subject to the Government's power of revision, review and recovery of

excess payment, if exercised, in the future.

The appellants challenged the working of the Retention Price Scheme

by Civil Miscellaneous Writ Petition No. 43042/2002. This Writ Petition

was dismissed by the High Court through the impugned judgment dated

7.11.2003. By another order dated 7.11.2003, following the impugned

judgment, the High Court also dismissed Civil Miscellaneous Writ Petition

No. 43934/2001.

The Contentions

The appellants impugn the judgment of the High Court under appeal,

on the following grounds:

Firstly, Dr. Rajeev Dhavan, learned Senior Counsel for the appellants,

contends that the Retention Price Scheme was a statutory scheme made

under the provisions of the EC Act read with the Fertiliser (Control) Order.

Dr. Dhavan contends that this being a delegated legislation could not have

been given retrospective effect to the detriment of the appellants.

Next, Dr. Dhavan contended that the High Court had misunderstood

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the operation of the Retention Price Scheme as being entirely ad hoc.

According to him, what was ad hoc was the periodic revision of the

subsidies payable or receivable on account of input particulars, but the

pricing policy determined for the pricing periods would remain constant. Dr.

Dhavan has thus, sought to differentiate the process for determining the

policy norms from the actual process of computing the Retention Price.

Third, learned counsel contends that there was a promise made out to

the manufacturers that there would be assured post-tax returns of 12%,

which has allegedly not been fulfilled as a result of the revision of the

pricing norms. Hence, according to Dr. Dhavan, the Government was

estopped from implementing any revision of the Retention Price Scheme,

which would take away the "vested right" of 12% post-tax returns.

Finally, Dr. Dhavan argued that the retrospective and adverse revision

of the pricing norms by the Government is "arbitrary", "unreasonable" and

violative of Article 14 of the Constitution, especially since the Government

fixes the maximum retail price of fertilizer.

The learned Additional Solicitor General, by reference to the

voluminous record, contended that the High Court was fully justified in its

conclusion, and that there was no substance in the Writ Petition.

The Nature of the Retention Price Scheme

The first contention of Dr. Dhavan is that the Retention Price Scheme

is a statutory scheme, and he accordingly contends that a delegated

legislation could not be retrospectively validated. This argument needs

consideration only if the Retention Price Scheme can be said to have

statutory flavour.

In our view, the High Court's finding that the Retention Price Scheme

is nothing but an administrative order, is correct. Evidently, there is nothing

in the EC Act that deals with Retention Prices. Indeed, Clause 3 of the

Fertiliser (Control) Order merely provides that it is open to the Government

to fix the maximum retail price of fertilizers. Therefore, fertilizer

manufacturers cannot sell fertilizer at a price exceeding the maximum price

fixed under the said clause.

On the other hand, there is no provision that deals with the grant of

subsidies for producing fertilizers. We repeatedly asked Dr. Dhavan as to

under which law the Government was obliged to make available subsidies to

fertilizer manufacturers. He fairly admitted that there was no such obligation

on the Government, and stated that if the Government decided to withdraw

the Scheme, it would only have to comply with the requirements of Article

14. Indeed, it must be remembered that the Retention Price Scheme is a

result of the Report of the Marathe Committee. It was intended to serve as a

measure of alleviation to fertilizer manufacturers, so that they were not hit

by the rising prices of inputs, especially since the retail price of the fertilizer

was itself controlled. Thus, it is evident that the Retention Price Scheme is

not linked to any statute in any manner whatsoever, but is a mere

administrative order.

Our conclusions are fortified by a judgment of this Court in Neyveli

Lignite Corporation Ltd. v. Commercial Tax Officer where the nature of

this very Scheme came to be considered, albeit in the context of a sales tax

case. This Court held that the Retention Price Scheme is:

"\005clearly an administrative decision of the Government of

India. It has been issued pursuant to the Ministry's resolution

and it enables a factory (sic)\005to receive subsidy from the

Government in case the retention price is more than the price

fixed under clause 3 of the Fertiliser (Control) Order."

The first contention of Dr. Dhavan must, therefore, fail since the

Retention Price Scheme is a mere administrative scheme without any

statutory flavour.

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Retrospectivity in the Scheme

At the outset, we must note that the Retention Price Scheme, both

conceptually and in its actual operation, has always had an element of

retrospectivity built-in. Indeed, the correspondence between the parties

indicates that the Retention Price was always fixed and made applicable ex

post facto from the beginning of the pricing period with adjustments to be

made towards payments and recoveries. However, Dr. Dhavan seeks to

differentiate the process for determining the policy norms from the actual

process of computing the Retention Price. According to learned counsel,

what was ad hoc and could be retrospectively changed were the subsidies

payable or recoverable in line with actuals. On the other hand, according to

him, the pricing norms (the formula for calculating Retention Prices) could

not be retrospectively changed. We cannot, however, accept this distinction.

At the outset, the First Appellant had voluntarily entered into the

undertaking dated 10.12.1977, where it promised inter alia:

"\005to abide by the decision of the Committee, which is final

and binding on all matters relating to the determination of

retention price, net realization, equated freight, etc."

(emphasis supplied)

Firstly, neither the above-mentioned undertaking, nor the evidence on

record, appears to indicate that there exists any distinction on the lines

suggested by Dr. Dhavan. Secondly, in our view, "\005all matters relating to

the determination of retention price\005" unambiguously includes the power to

determine the norms and policy that would be used for computing the

Retention Price. Also, as we have already mentioned, from its inception, the

Retention Price Scheme has always had an element of retrospectivity built-

in. Therefore, the undertaking entered into by the manufacturers clearly

allows the Government to retrospectively revise the pricing norms/policy for

the Retention Price Scheme. Further, as we shall see, the First Appellant was

at all stages fully aware of and party to the deliberations that went into

determining the norms for calculating the Retention Prices. Hence, in our

view, the distinction sought to be made between the norms for determining

Retention Price and the actual computation of the Retention Price is not

tenable.

Assured Returns

It is next contended by Dr. Dhavan that the Government is estopped

from formulating a scheme under which the Retention Price fixed would

deny the First Appellant the assured 12% post-tax returns. We do not agree.

At the outset, we notice that the Scheme was not the result of any

unilateral action on the part of the Government. Although the result of an

administrative decision, it was grounded in an agreement reached between

the Government and certain fertilizer manufacturers. Indeed, it was open to

the manufacturers to decline to enter into such arrangement. This is evident

from the letter of the Government dated 24.10.1977, which put forward the

Scheme. As discussed earlier, this letter requested M/s Indian Explosives

Ltd. (later acquired by the First Appellant) to enter into the Scheme as

suggested, so that it may get the subsidy. The subsidies were, of course,

subject to the provisions of the Retention Price Scheme, and subject to the

undertaking to be given. In response to the letter of 24.10.1977, M/s Indian

Explosives Ltd. gave a categorical undertaking dated 10.12.1977 in the

terms that we have already extracted. It is of significance that M/s Indian

Explosives Ltd., undertook and promised inter alia:

"\005to abide by the decision of the Committee, which is final

and binding on all matters relating to the determination of

retention price, net realization, equated freight, etc."

(emphasis supplied).

In the face of this undertaking, we are unable to accept the contention

of Dr. Dhavan that the Retention Price Scheme was something that was

compulsorily imposed on fertilizer manufacturers. Indeed, it is not as if the

manufacturers are challenging the maximum retail price fixed under the

Fertiliser (Control) Order. They are merely challenging the manner in which

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the Retention Price, which determines the subsidy payable under an agreed

arrangement, is determined. In fact, when we read the undertaking which

was extracted above, it appears to us that the manufacturers had agreed to

abide by the decision of the FIC Committee, on all matters relating to

determination of the Retention Price as being "final and binding" upon them.

In the light of this, the argument of estoppel is actually the boot on the other

foot.

Moreover, even if we were to assume for a moment that certain

returns have been assured, and that this assurance is binding on the

Government, we are not satisfied that this assurance has actually been

breached. We agree with the High Court that there are too many

imponderables and too many disputed questions of fact for an effective

decision in a writ proceeding on this issue. In our view, therefore, this

contention of the learned counsel for the appellants must also fail.

Reasonableness and Legitimate Expectation

Dr. Dhavan next contended that the retrospective application of the

new policy parameters by the FIC Committee is 'arbitrary', 'unreasonable'

and against the Doctrine of Legitimate Expectation. Learned counsel

contends that since the Government controls the retail price of fertilizer, it

would be 'unfair', 'unreasonable' and violative of Article 14 for them to

revise the scheme of subsidies, so that there would be losses caused to

fertilizer manufacturers. In our view, this contention has no merit for both

the facts and the applicable legal principles indicate that there is nothing

arbitrary or unreasonable in what the FIC Committee has done.

At the outset, the material placed on record clearly demonstrates that

the representatives of the First Appellant were party to the deliberations

before the FIC Committee, who explained the material particulars regarding

the manner of working out the Retention Price for the Seventh and Eighth

pricing periods. The minutes of the said discussions, read with the

correspondence between the parties pertaining to the Retention Price fixation

for the Seventh and Eighth pricing periods, leave no doubt that the First

Appellant was party to what was being done. Further, at no point, during the

discussions or in the subsequent correspondence, did the First Appellant

question the validity or correctness of the manner of fixation of the

Retention Price (except on some minor issue like bank interest charges).

Dr. Dhavan cited a number of authorities to support his argument.

However, these cases pertain to situations where tax exemptions, which

were already granted and pursuant to which transactions had been held, were

retrospectively withdrawn. Other authorities also pertained to setting up of

industries in backward areas on promises of rebate/ concessions. In our

view, none of these authorities is of any assistance for resolving the issue

before us, which is purely a consensual working arrangement between the

Government and fertilizer manufacturers. The argument of 'legitimate

expectation', in our view, cannot have application to the present case. As we

have said, the Scheme was a voluntary one, and having agreed to abide by

the decision of the Government, there is no question of the appellant's

'legitimate expectations' being belied.

Turning to the Article 14 argument, we emphatically reiterate the

now-accepted position that Article 14 does not require this Court to examine

the intricacies of an economic scheme or pricing policy for its merits or its

correctness, for that is in the domain of the executive or the legislative

branches of the Government. Indeed, even if the Scheme, as revised, is

"unwise" or even "unjust", there is no recourse before us for, as Justice

Holmes elegantly put it:

"We fully understand\005the very powerful argument that can be

made against the wisdom of the legislation, but on that point we

have nothing to say, as it is not our concern."

We are broadly in concurrence with the reasoning of the High Court

that in matters of administrative discretion it is not open to the courts to

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interfere in minute details, except on grounds of mala fides or extreme

arbitrariness. Interference should be only within very narrow limits, such as,

where there is a clear violation of a statute or a constitutional provision, or

extreme arbitrariness in the Wednesbury sense. Neither the High Court nor

we have found any of these vitiating factors in the administration of the

Retention Price Scheme and the consequent payments/ recoveries of the

subsidy amounts. Thus, in our view, the action of the FIC Committee to

adversely modify the subsidies framework, cannot be questioned on its

merits.

The Case of M/s Nagarjuna Fertilizers

The learned Additional Solicitor General brought to our notice that,

out of all the concerned fertilizer manufacturing units, only two units have

challenged the Retention Price Scheme for the relevant periods. One of these

is the First Appellant and the other was M/s Nagarjuna Fertilisers and

Chemicals Ltd. (hereinafter "Nagarjuna Fertilizers"). Nagarjuna Fertilizers

had filed SLP (Civil) No. 20721/2003 against the judgment of the High

Court of Andhra Pradesh dismissing its Writ Petition No. 18242/2002 (dated

25.7.2003). This SLP was, however, summarily dismissed by this Court

through order dated 17.11.2003. Although, we have carefully applied our

mind to the case of the First Appellant, independent of the outcome in the

case of Nagarjuna Fertilizers, we find that the two cases are actually

indistinguishable on facts and the present case should have also been

similarly dismissed. In any event, after a detailed examination, we have

arrived at the same result.

The Final Findings

Despite the bulky material and lengthy arguments presented to us, we

find that this is a case full of sound and fury, signifying nothing. Indeed, we

have found against the appellants on every point that they have chosen to

impugn the judgment of the High Court. In the result, these appeals must fail

and are hereby dismissed with no order as to costs.