Cold Storage Subsidy Cannot Be Withdrawn When Unit Was Completed and Beneficiary Repeatedly Sought Final Inspection

Held: The Supreme Court held that the appellant, Agriculture Produce Market Committee, Deesa, could not be denied the benefit of subsidy under the National Horticulture Board scheme when the record showed that repeated efforts had been made through its financing bank for release of the remaining subsidy and for further inspection. The Court held that the authorities were not justified in withdrawing the subsidy already released and refusing the final instalment merely on the ground that the cold storage facility had later suffered fire damage, particularly when the Joint Monitoring Visit Report itself recorded that the unit was completed and commissioned and could be considered for final subsidy as per NHB/NABARD guidelines.

Summary: The appellant had constructed a cold storage facility after obtaining a loan of INR 1 crore from Gujarat State Co-operative Agriculture and Rural Development Bank Ltd. and applied for subsidy under the scheme titled “Capital Investment Subsidy For Construction/Expansion/Modernization of Cold Storages/Storage of Horticultural Produce”. An advance subsidy of INR 25 lakh was released, but after a joint monitoring visit on 19 November 2008, the remaining subsidy was kept pending because the unit was found at minimum capacity utilisation and certain clarifications were sought. The facility was later let out and suffered fire due to short circuit on 3 May 2011, after which NABARD decided to withdraw the subsidy and recover the amount already paid, a decision supported by NHB. The Single Judge of the Gujarat High Court set aside the withdrawal and held the appellant entitled to subsidy, but the Division Bench reversed that decision. The Supreme Court examined the Scheme and the correspondence table on pages 7–8 of the judgment, which recorded repeated communications from 17 June 2009 to 8 April 2011 seeking release of subsidy, re-inspection and joint monitoring visit. On this basis, the Court found that the appellant and its bank had indeed made sufficient efforts before the fire incident and that the authorities had failed to act on those requests.

Decision: The Supreme Court allowed the appeal, set aside the judgment of the Division Bench of the Gujarat High Court, and restored the judgment of the Single Judge. The Court directed that if the subsidy amount already released had been repaid by the appellant, the entire subsidy amount should now be released in its favour; and if the original amount had not yet been repaid, then the final instalment of subsidy must be released. All pending applications were disposed of.