Saturday, April 18, 2026

Where a subsidy scheme requires inspection for release of final installment, and the beneficiary has completed the project and made repeated bona fide efforts to secure such inspection, failure of authorities to conduct inspection cannot be used to deny or withdraw subsidy; such denial is arbitrary and liable to be set aside. (Paras 7–11)

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Subsidy Scheme – Withdrawal of subsidy – Entitlement – Compliance with conditions – Efforts for inspection – Arbitrary denial – Judicial review

Capital Investment Subsidy Scheme (Cold Storage) – Clause 6 – Release of subsidy – Requirement of inspection by Monitoring Committee

A. Subsidy – Entitlement despite non-release of final installment – Proof of compliance

Where the unit was completed and commissioned, and eligibility was never disputed, denial of subsidy is unjustified.
Authorities cannot deny subsidy without assigning reasons, particularly when eligibility stands admitted.
→ Held, appellant entitled to subsidy (Paras 5, 10, 11)

B. Scheme compliance – Requirement of inspection – Failure attributable to authorities

Scheme mandates inspection by Monitoring Committee before release of final 50% subsidy.
Where inspection was not conducted despite repeated requests, the beneficiary cannot be penalized.
→ Failure of authorities cannot defeat substantive entitlement (Paras 7, 8, 9)

C. Evidence – Documentary record – Repeated representations

Multiple communications by appellant/bank seeking inspection and release of subsidy establish bona fide compliance efforts.
Documentary evidence disproves allegation of inaction.
→ Finding of “no effort” held perverse (Paras 8, 9, 10)

D. Administrative action – Arbitrariness – Withdrawal of already granted subsidy

Withdrawal of subsidy already released, without justification and despite compliance efforts, is arbitrary.
→ Administrative decision liable to be set aside (Paras 2, 9, 11)

E. Appellate interference – Restoration of Single Judge order

Division Bench erred in ignoring documentary evidence of compliance.
Supreme Court restored Single Judge’s order granting subsidy.
→ Appeal allowed (Paras 6, 11)

ANALYSIS OF FACTS

The appellant (APMC Deesa) established a cold storage facility with financial assistance and applied for subsidy under the NHB scheme. (Para 3)
50% subsidy was released, but the remaining 50% was withheld after a joint inspection noted:
- Low capacity utilization
- Certain deficiencies
- Need for re-inspection (Para 3)
Authorities kept the matter pending and sought clarification regarding operational status. (Para 4)
Crucially, extensive correspondence (2009–2011) showed:
- Requests for inspection
- Confirmation that unit was operational
- Repeated reminders for release of subsidy
  (Para 8 – tabulated evidence)
Before resolution, fire accident occurred in 2011. (Para 4)
Thereafter:
- NABARD withdrew subsidy
- NHB justified withdrawal
- Single Judge allowed writ petition
- Division Bench reversed it
- Matter reached Supreme Court (Para 2)

ANALYSIS OF LAW

1. Scheme Interpretation (Para 7)

Subsidy structure:
- 50% advance
- Remaining 50% after inspection
Inspection is procedural requirement, not a ground to defeat entitlement when:
- Unit is completed
- Beneficiary seeks inspection

2. Doctrine Applied – “No fault of beneficiary”

Court implicitly applies principle:

A person cannot be prejudiced for failure of authorities to act.
Here:
- Inspection not conducted
- Requests ignored
  → Therefore, beneficiary cannot be penalized

3. Administrative Law – Arbitrariness

Withdrawal of subsidy:
- Without reasons
- Ignoring evidence
  → Violates fairness and reasonableness

4. Evidentiary Evaluation

Supreme Court relied heavily on:
- Documentary correspondence (Para 8)
Held:
- Division Bench ignored material evidence
- NHB’s claim of “no effort” contradicted by record (Para 10)

5. Judicial Review under Article 226

Single Judge correctly:
- Examined eligibility
- Found no valid reason for denial
Supreme Court:
- Restored this reasoning

RATIO DECIDENDI