THE FERTILISER ASSOCIATION OF INDIA vs. UNION OF INDIA & ORS.

THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 06.01.2015
+ W.P.(C) 4898/2013 & CM No. 11109/2013
THE FERTILISER ASSOCIATION OF INDIA ..... Petitioner
versus
UNION OF INDIA & ORS. ..... Respondents
Advocates who appeared in this case:
For the Petitioner : Mr Amit Sibal, Sr. Advocate with
Ms Kaveta Wadia & Mr Shashank Tripathi.
For the Respondents : Mr Saqib.

CORAM:-
HON’BLE MR JUSTICE VIBHU BAKHRU

JUDGMENT

VIBHU BAKHRU, J
1. The petitioner is an association of fertilizer manufacturers/importers
and has filed the present petition impugning:
1.1 Clauses 5 & 6 of the Office Memorandum (hereafter ‘OM’) dated
03.05.2013 (hereafter ‘OM-1’) whereby the fertilizer
manufacturers/importers were directed to reduce the Maximum Retail
Price (MRP) of other grades of Phosphatic and Potassic (P&K)
fertilizers to the extent of the amount mentioned in the OM-1. The
fertilizer manufacturers/importers were further warned that action
would be taken against the entities who did not comply with the price
reduction.

W.P.(C) 4898/2013 Page 1 of 23




1.2 Clauses (ii) and (iii) of another OM dated 03.05.2013 (hereafter ‘OM-
2’)
1.3 OM dated 21.06.2013, which required the fertilizer
manufacturers/importers to submit certified cost data alongwith their
claims of subsidy in order to check the reasonableness of MRP of the
fertilizers. The said OM also indicated that the subsidy would be
restricted if it is established that the MRP of fertilizers is unreasonable.
1.4 OM dated 26.06.2013 whereby reference MRPs of other grades of
P&K fertilizers were specified.
OM-1, OM-2, OM dated 21.06.2013 and OM dated 26.06.2013 are
hereafter collectively referred as ‘impugned notifications’.
2. According to the petitioner, the impugned notifications are
unreasonable, arbitrary and are inherently in conflict with the rationale of
the Nutrient Based Subsidy Scheme (hereafter 'NBS Scheme') as introduced
in 2010.
Submissions
3. The learned senior counsel appearing for the petitioner submitted that
in terms of clause 4 of OM-1, the fertilizer manufacturers/importers were
allowed to fix MRP of P&K fertilizers at reasonable level in conformity
with the rationale of the NBS Scheme, however, the effect of clause 5 & 6
of OM-1 is to indirectly control and regulate the MRP of P&K fertilizers by
directing price reduction in MRP and providing reference MRPs of other

W.P.(C) 4898/2013 Page 2 of 23




grades of P&K fertilizers. He submitted that this was contrary to the
underlying rationale of providing nutrient based subsidy.
4. He contended that the impugned notifications have resulted in the
fertilizer manufacturers/importers ceasing to have any control over the
price of fertilizers and since the manufacturers/importers do not have any
control over the cost of fertilizer, the impugned notifications have disabled
the fertilizer manufacturers/importers from recovering any adverse
fluctuations in their costs.

5. He further submitted that the reference MRPs indicated under the
impugned OM dated 26.06.2013 are unreasonable as the same have been
made applicable retrospectively. He further submitted that the goods
produced or imported between 01.04.2013 and 26.06.2013 would have to
be sold at less than the cost as no lead time was provided and the
mandatory reduction in MRP for the products imported in advance is
arbitrary and irrational. He also urged that the reference MRPs indicated in
the impugned notifications, were below the actual prices as prevalent on
31.03.2013.
6. The learned senior counsel for the petitioner relied upon the
decisions of the Supreme Court in Union of India v. Dinesh Engineering
Corpn. : (2001) 8 SCC 491, Sindhi Education Society v. Govt. (NCT of
Delhi) : (2010) 8 SCC 49 and Tata Cellular v. Union of India : (1994) 6
SCC 651 in support of his contention that a policy decision, which suffers
from non-application of mind and is made without considering the relevant
facts, is amenable to judicial review. He also relied upon the decision of a

W.P.(C) 4898/2013 Page 3 of 23




Division Bench of this Court in Southern Petro Chemical Industries
Corporation Ltd. v. Union of India : LPA No.231/2008, decided on
23.11.2009 to contend that the principles of promissory estoppel,
proportionality and legitimate expectation are applicable in the present
case.
7. He further contended that the impugned notifications violated Article
14 and 19(1)(g) of the Constitution of India and were also contrary to
Article 300A of the Constitution of India. The learned counsel for the
petitioner relied upon the decision of the Supreme Court in K.T. Plantation
(P) Ltd. v. State of Karnataka : (2011) 9 SCC 1 in support of his
contention.
8. The learned counsel for the respondents submitted that the
government had found that the price of fertilizers had not fallen despite a
fall in the international prices and had accordingly issued the impugned
notifications to ensure that subsidy is available only to
manufacturers/importers who sold the fertilizers at reasonable prices and
did not indulge in profiteering.
9. It was submitted that the impugned notifications have been issued in
public interest and legitimate expectation does not come in way of public
interest. Reliance was placed on Union of India & Anr. v. International
Trading Co. & Anr. : AIR 2003 SC 3983 . It was further contended that
judicial review of economic decisions is limited and the courts would
interfere only when it is established that the decision is violative of
constitutional/legal limits of power or abhorrent to reason. Reliance was

W.P.(C) 4898/2013 Page 4 of 23




placed on BALCO Employees Union (Regd.) v. Union of India & Ors. :
AIR 2002 SC 350.
10. It was submitted on behalf of the respondent that retrospective
revision of the subsidy scheme is permissible. Reliance was placed on
Duncan Industries Ltd. v. Union of India : (2006) 3 SCC 129 .
Analysis, reasoning and conclusion
11. At the outset it is relevant to note that the government has not
notified the MRP of P&K fertilizers under the Fertilizer Control Order,
1985 and all the letters/communications of the Department of Fertilizers
regarding the NBS for P&K fertilizers are neither issued under the Essential
Commodities Act/Fertilizer Control Order, nor are they notified in the
Official Gazette.
12. Before proceeding further, it is relevant to examine the policy with
regard to fertilizer pricing and subsidy. In 1957, the Government notified
fertilizers (including urea) as an “essential commodity”, under the Essential
Commodities Act, 1955 (hereafter the 'Act'); the Fertilizer Control (Order),
1957 enabled the government to fix the MRP of fertilizers. In 1977, the
government introduced the Retention Price Scheme whereby the difference
between the cost of production and/or acquisition and MRP of the
fertilizers, were offset by the government by providing subsidy to the
fertilizer companies. The Fertilizer Control (Order), 1957 was superseded
by the Fertilizer Control (Order), 1985.

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13. Thereafter, on the recommendations of the Joint Parliamentary
Committee setup by the government in 1991, the prices of P&K fertilizers
were de-controlled w.e.f. 25.08.1992. Subsequent thereto, the Department
of Agriculture & Cooperation introduced a product based subsidy regime
for the de-controlled P&K fertilizers on ad-hoc basis w.e.f. 01.10.1992.
Under the said scheme the MRP of fertilizers was determined/fixed by the
government and the difference between the MRP and the cost of production
and/or acquisition was fully offset by a subsidy. The said scheme was
continued by the government upto 31.03.2010, albeit , the parameters were
changed from time to time.
14. By a Notification dated 04.03.2010, the Department of Fertilizers,
Government of India introduced the NBS Scheme for P&K fertilizers w.e.f.
01.04.2010. As per the NBS Scheme, the government would fix a rate of
subsidy - on per kg basis - on nutrients namely Nitrogen, Phosphorus,
Potash and Sulphur (hereafter collectively referred as 'NPKS') contained in
P&K fertilizers. The subsidy rates on per kg basis would be converted into
per metric tonne basis for various other grades of P&K fertilizers. An Inter-
Ministerial Committee was constituted, which was charged with the
function to recommend subsidy rates before the start of the financial year
for the decision of the government. The market price of subsidized
fertilizers was to be determined on demand-supply basis.
15. The object of the introduction of the NBS Scheme was to ensure the
availability of innovative fertilizer products in the market at reasonable
prices. In this context, the budget speech delivered by the then Finance
Minister on 06.07.2009 is relevant and its extract is reproduced below:-

W.P.(C) 4898/2013 Page 6 of 23




“In the context of the nation's food security, the declining
response of agricultural productivity to increased fertilizer
usage in the country is a matter of concern. To ensure balanced
application of fertilizers, the Government intends to move
towards a nutrient based subsidy regime instead of the current
product pricing regime. It will lead to availability of innovative
fertilizer products in the market at reasonable prices. This
unshackling of the fertilizer manufacturing sector is expected to
attract fresh investments in this sector. In due course it is also
intended to move to a system of direct transfer of subsidy to the
farmers.”
16. Under the NBS Scheme for the year 2010-11 and 2011-12, the
fertilizer companies were allowed to fix the MRP of P&K fertilizers and
subsidy rates were notified by the government. The government considered
the prices of Urea, DAP, MOP and Sulphur prevailing at that time as
benchmark prices for determining the subsidy rates for the 1st year i.e.
2010-2011.
17. Apparently, the fertilizer manufacturers/importers increased the
prices of fertilizers, from the last quarter of 2010-11. Therefore, a
notification dated 08.07.2011 was issued by the government with respect to
the NBS for the year 2011-12 whereby the fertilizer companies were
allowed to fix the MRP of P&K fertilizers, however, it was specified that
MRP would be fixed at reasonable levels.
18. By a notification dated 29.03.2012, the government notified the
subsidy rates for the year 2012-13 and the fertilizer companies were
allowed to fix the MRP of the P&K fertilizers at reasonable levels based on
demand-supply dynamics. The subsidy rates under the NBS Scheme for the
year 2012-13 were fixed on the basis of the prevailing international prices

W.P.(C) 4898/2013 Page 7 of 23




of the fertilizers, landed prices in the country, exchange rate, inventory
levels in the country and affordability of the farmers. The comparison of
benchmark prices was done away with by the government as the
benchmark prices were revised on two occasions while fixing the subsidy
rates for the year 2011-12 and the price adopted for fixation of subsidy
rates were also taken as minimum price of P&K fertilizers in the
international market.
19. By OM-1, the government notified the subsidy rates for the year
2013-14 and provided reference MRPs of the fertilizers with the provision
of minimum price reduction in the MRP of the fertilizer for the year 2013-
14. According to the respondent, the fertilizer companies had fixed the
MRP of DAP and MOP corresponding to the international price of USD
580 PMT and USD 490 PMT respectively. And, since the prices of DAP
and MOP had shown a downward trend in the international market since
December 2012, it was found that the concerned entities could contract
import of DAP and MOP at the international prices of around USD 520
PMT and USD 420 PMT respectively. It was asserted that the government
had taken note of the international prices prevailing between January 2013
and March 2013 and due to the reduction in international prices of DAP
and MOP by USD 60 PMT and USD 70 PMT respectively, it was estimated
that the procurement cost of DAP and MOP would come down
approximately by ` 3500 PMT and ` 4000 PMT respectively. Keeping in
view that the prevailing international prices of DAP and MOP were USD
580 PMT and USD 490 PMT respectively and the MRPs of DAP and MOP
in the country were found to be around ` 24000 PMT and ` 17000 PMT

W.P.(C) 4898/2013 Page 8 of 23




respectively, the government concluded that there was scope for reduction
in prices by minimum of ` 1500 PMT and ` 1000 PMT from the prevailing
level of MRPs of DAP and MOP.
20. Therefore, the government - with the recommendation of an Inter-
Ministerial Committee and approval of Cabinet Committee on Economic
Affairs - decided that the prices of the fertilizers ought to be reduced to
reasonable levels. This was to maintain the balance between the MRPs and
subsidy rates and to ensure that the benefit of the reduction in the
international prices were passed through to the farmers.
21. The challenge laid to the impugned notifications has to be viewed in
the backdrop of the aforesaid facts and policy framework. The controversy
that needs to be addressed is whether the respondents are precluded from
insisting that fertilizers be sold at indicative prices in order to avail the
nutrient based subsidy. And, whether the reference MRPs of fertilizers
fixed by the respondents are reasonable.
22. At this stage, it is necessary to refer to the relevant clauses and
contents of the impugned notifications, which are impugned by the
petitioner. Clauses 5 & 6 of OM- 1 are quoted below:-
“5. At the level of subsidy announced for the year
2013-14, the fertilizer companies are required
to reduce the MRP of DAP and MOP by a
minimum of Rs 1500 PMT and Rs 1000 PMT
respectively. For the purpose of reduction in
MRP, the reference MRP of DAP and MOP
shall be Rs 24000 PMT and Rs 17000 PMT
respectively. A commensurate minimum

W.P.(C) 4898/2013 Page 9 of 23




reduction in MRP in other grades of fertilizers
covered under the scheme shall be as under:-

6. In case the MRP of P&K fertilizers are not
reduced as indicted in para 5 and the
companies are found to be indulging in undue
profiteering, the IMC will review and
recommend suitable measures for action by
DOF. The action may include, recovery of
subsidy to the extent of unreasonableness on
that particular grade of fertilizer, removal of
any grade/grades of fertilizers of a particular

W.P.(C) 4898/2013 Page 10 of 23




company or the fertilizer company itself from
the NBS scheme and also reduction in the
NBS rates.”
The petitioner also impugns Clauses (ii) & (iii) of OM-2, which read
as under:-
“ii) It shall be mandatory for all the fertilizer
companies to submit, along with their claims
of subsidy, certified cost data in the prescribed
format and as per the requirement for the
purpose of monitoring of MRPs of P&K
fertilizers fixed by the fertilizer companies.
iii) In cases, where after scrutiny,
unreasonableness of MRP is established or
where there is no correlation between the cost
of production or acquisition and the MRP
printed on the bags, the subsidy may be
restricted or denied even if the product is
otherwise eligible for subsidy under NBS. In
proven case of abuse of subsidy mechanism,
DOF, on the recommendation of IMC may
exclude any grade/grades of fertilizers of a
particular company or the fertilizer company
itself from the NBS scheme.”
23. By the impugned OM dated 26.06.2013, the respondent specified
that the reference MRP of DAP & MOP would be taken as ` 24,000 PMT
and ` 17,000 PMT respectively. Accordingly, the respondent had also
indicated the reference MRP of other grade of P&K fertilizers. The
impugned OM dated 21.06.2013 called upon the fertilizer

W.P.(C) 4898/2013 Page 11 of 23




manufacturers/importers to ensure that the data as required by OM- 2 is
submitted to the concerned authorities.
24. Essentially, the respondents have called upon the fertilizer
manufacturers/importers to reduce the MRPs of the fertilizers, by specified
amounts and further asked the fertilizer manufacturers/importers to provide
the necessary cost data.
25. The learned senior counsel for the petitioner assails the impugned
notifications as unreasonable and contrary to the fundamental rationale of
the NBS Scheme. According to the petitioner, there is no scope for the
government to fix the MRP under the new policy (NBS Scheme)
whereunder the subsidy is fixed on the basis of nutrients and the
manufacturers/importers have no control over the costs. It was contended
that in the circumstances fixing MRP for fertilizers would render the entire
NBS Scheme unviable as the manufacturers/importers would have no
control over any of the components, namely, cost, MRP or the subsidy. It is
urged that this would render the manufacturing of fertilizers unviable.
26. There are three facets to the challenge laid by the petitioner; the first
being, whether the policy of indicating a reference MRP is, per se, contrary
to the NBS Scheme; the second being, whether the impugned notifications
are, per se, unreasonable, arbitrary and uninformed by reason; and lastly,
whether the reference MRPs fixed are unreasonable and arbitrary, which
render manufacture/import of fertilizers unviable.
27. Insofar as the first facet is concerned, that is, whether the respondents
are precluded from fixing MRP of fertilizers under the NBS Scheme, I am

W.P.(C) 4898/2013 Page 12 of 23




unable to accept the contention that fixing or indicating the MRP is
inherently contrary to the NBS regime and is thus, arbitrary or
unreasonable. The theme of the NBS Scheme is to provide a fixed subsidy
based on the nutrients. The government felt that the earlier policy of
providing subsidy to fill the gap between cost and MRP, did not incentivize
innovation and efficiencies in production. Thus, the NBS Scheme was
adopted which provided for a fixed subsidy. The paradigm shift in the new
policy (NBS Scheme) was to avoid variable subsidies, which were
calculated to compensate the difference between the cost and the MRP of
fertilizers. The NBS Scheme provides for a fixed subsidy thus compelling
fertilizer manufacturers/importers to reduce their costs and increase
efficiencies. Although the manufacturers were free to fix the MRPs of their
respective products, it would be inaccurate to state that the same formed the
substratal theme of the NBS Scheme or that precluded the respondents from
examining the MRPs charged by various manufacturers or importers.
28. Indisputably, the purpose of providing subsidy is to ensure that
fertilizer is available to the farmers at a reasonable price; payment of
subsidies to fertilizer manufacturers/importers is to subsidize the costs to
the farmers. This being the principal object, it is obvious that monitoring of
MRPs charged from farmers is not extraneous to ensuring that the subsidies
are passed on to the farmers. Therefore, in my view, the contention that the
government authorities cannot monitor the MRPs under the NBS Scheme
or that the fixing of MRPs of fertilizers is repugnant to the NBS Scheme,
must be rejected. It is incumbent upon the respondents to ensure that
fertilizer manufacturers/importers do not profiteer or make unreasonable

W.P.(C) 4898/2013 Page 13 of 23




profits as that would imply that the subsidies granted by the respondents
have ended up enriching the fertilizer manufacturers/importers instead of
subsidizing the costs to the farmers. I find no intrinsic conflict between
monitoring the MRPs of fertilizers to ensure that the same are maintained at
reasonable level and the NBS Scheme.
29. The learned counsel for the respondent had emphasised that fertilizer
companies have no control over any of the variables i.e. cost of
production/acquisition, MRP or the subsidy and this would strike at the
viability of the members of the Petitioner Association. In my view, this
contention is also fundamentally flawed. The cost of production/acquisition
has various components; efficiencies in manufacturing, management of the
holding costs, better supply chain management etc. are areas where
fertilizer manufacturers could reduce their costs. It cannot be disputed that
the costs of production/acquisition of a well managed company would be
lower than those entities which are not as well managed. Thus, if the MRP
is fixed at reasonable level, efficient and well managed entities would be
viable and would be able to make reasonable profits by increasing their
efficiency. Thus, it is not possible to accept that there is a conceptual flaw
in the action of the respondents in insisting that reasonable MRPs be fixed.
The impugned notifications providing reference MRPs to ensure that there
is no profiteering or that no unreasonably exaggerated profits are made by
the fertilizer companies, cannot be assailed as being arbitrary. This does not
militate against the policy of providing a fixed subsidy (i.e. under the NBS
Scheme).

W.P.(C) 4898/2013 Page 14 of 23




30. The second facet of the challenge relates to the alleged
unreasonableness of the reference MRPs. The petitioner contended that the
subsidy is fixed in the beginning of the year and the input costs and
exchange rate fluctuates during the production cycle and renders the cost of
manufacturing/import variable. Since this can only be recovered from the
sale price, the respondents could not fix the same. It was urged that the
action of the Government in fixing a MRP would expose the manufacturers
to increase in the cost of production/increase in input cost and to adverse
exchange rate fluctuations. It was contended that subjecting the
manufactures/importers to such vagaries is unreasonable and arbitrary.
31. It cannot be disputed that if the respondents fix the subsidy as well as
the MRP of the fertilizers, the manufactures/importers have no recourse to
recover any increase in costs on account of adverse exchange fluctuations.
However, no complaint in this regard can be made if the MRPs are fixed in
a reasonable manner taking into account the relevant data relating to costs.
Obviously, no grievance could be made on account of the action of the
respondents in insisting on a reasonable MRP if the MRPs are fixed to
provide a reasonable profit to a reasonably well managed fertilizer
manufacturer/importer. In the present case, it is asserted by the respondents
that the necessary data was taken into account before insisting that the
MRPs be reduced. It is difficult to accept that, conceptually, there is any
infirmity with the respondents insisting in reduction of MRPs, if it is found
that the MRPs are resulting in exaggerated profits or that the subsidies are
not passed through to the farmers.

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32. The petitioner contended that the reference MRPs provided under the
impugned OM dated 26.06.2013 would have a retrospective effect
inasmuch as the prices would also be applicable to unsold stocks imported
prior to the said impugned OM. However, the respondents claim that they
had considered the international prices prevailing between January 2013
and March 2013 before notifying the reference MRPs. It is noted that the
subsidy is payable on the sale of fertilizers and given the statement of the
respondents that prices prevailing between January 2013 and March 2013
had been considered; the petitioner’s contention that the impugned
notifications have a retrospective effect and are, therefore, unreasonable is
without merit.
33. It is well settled that the judicial review of the policy decision is very
limited and the courts will not interfere unless the decision is arbitrary,
mala fide or is in clear violation of the statute or a constitutional provision.
The Supreme Court in Federation of Rly. Officers Assn. v. Union of
India : (2003) 4 SCC 289 held as under:-
“ 12. ….. On matters affecting policy and requiring technical
expertise the court would leave the matter for decision of those
who are qualified to address the issues. Unless the policy or
action is inconsistent with the Constitution and the laws or
arbitrary or irrational or abuse of power, the court will not
interfere with such matters.”
34. The Supreme Court in Bajaj Hindustan Ltd. v. Sir Shadi Lal
Enterprises Ltd. : (2011) 1 SCC 640 held that the Government would take
diverse factors for formulating the policy in the overall larger interest of the
economy of the country and if the Government is satisfied that change in

W.P.(C) 4898/2013 Page 16 of 23




the policy was necessary in the public interest it would be entitled to revise
the policy and lay down a new policy. It was further held that the courts
give a large leeway to the executive and the legislature in the matters of
economic policy. The relevant portion of the judgment is as under:-
“40. Economic and fiscal regulatory measures are a field where
Judges should encroach upon very warily as Judges are not
experts in these matters. The impugned policy parameters were
fixed by experts in the Central Government, and it is not
ordinarily open to this Court to sit in appeal over the decisions
of these experts. We have not been shown any violation of law
in the impugned notification or press note.
41. The power to lay policy by executive decisions or by
legislation includes power to withdraw the same unless it is by
mala fide exercise of power, or the decision or action taken is in
abuse of power. The doctrine of legitimate expectation plays no
role when the appropriate authority is empowered to take a
decision by an executive policy or under law. The court leaves
the authority to decide its full range of choice within the
executive or legislative power . In matters of economic policy, it
is settled law that the court gives a large leeway to the
executive and the legislature. Granting licences for import or
export is an executive or legislative policy. The Government
would take diverse factors for formulating the policy in the
overall larger interest of the economy of the country. When the
Government is satisfied that change in the policy was necessary
in the public interest it would be entitled to revise the policy
and lay down a new policy.
xxxx xxxx xxxx xxxx xxxx
45. In our opinion there should be judicial restraint in fiscal and
economic regulatory measures. The State should not be
hampered by the Court in such measures unless they are clearly
illegal or unconstitutional. All administrative decisions in the
economic and social spheres are essentially ad hoc and

W.P.(C) 4898/2013 Page 17 of 23




experimental. Since economic matters are extremely
complicated this inevitably entails special treatment for distinct
social phenomena. The State must therefore be left with wide
latitude in devising ways and means of imposing fiscal
regulatory measures, and the Court should not, unless
compelled by the statute or by the Constitution, encroach into
this field.
46. In our opinion, it will make no difference whether the
policy has been framed by the legislature or the executive and
in either case there should be judicial restraint. The Court can
invalidate an executive policy only when it is clearly violative
of some provisions of the statute or Constitution or is
shockingly arbitrary but not otherwise.”

35. The Supreme Court in Prag Ice & Oil Mills v. Union of India :
(1978) 3 SCC 459 held that in the economic matters such as price fixation,
the interference of the court is limited. The relevant portion of the judgment
reads as under:-
“24. … We do not think that it is the function of this Court or of
any court to sit in judgment over such matters of economic
policy as must necessarily be left to the Government of the day
to decide. Many of them, as a measure of price fixation must
necessarily be, are matters of prediction of ultimate results on
which even experts can seriously err and doubtlessly differ.
Courts can certainly not be expected to decide them without
even the aid of experts.”
36. In Duncan Industries Ltd. (supra) , the Supreme Court stated the
above principle, in the context of the retention price of fertilizers fixed by
Fertilizer Inter-coordination Committee, as under:
“ 35. 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

W.P.(C) 4898/2013 Page 18 of 23




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. [See e.g. BALCO Employees' Union
(Regd.) v. Union of India , (2002) 2 SCC 333 at pp. 362-63
(paras 46, 47), pp. 381-82 (paras 92, 93); Bhavesh D.
Parish v. Union of India , (2000) 5 SCC 471 at pp. 484-85 (para
23); Peerless General Finance and Investment Co.
Ltd. v. Reserve Bank of India , (1992) 2 SCC 343 at p. 397
(paras 69 and 70); State of M.P. v. Nandlal Jaiswal , (1986) 4
SCC 566 at pp. 605-06 (para 34); Premji Bhai Parmar v. Delhi
Development Authority , (1980) 2 SCC 129 at pp. 137-39 (para
9).] 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 … the 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.” [ Noble State Bank v. Haskell , 219 US 575 at p.
580 (1910).]
36. 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 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 Associated Provincial
Picture Houses Ltd. v. Wednesbury Corpn. , (1948) 1 KB 223 :
(1947) 2 All ER 680 (CA)] sense. Neither the High Court nor
have we 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.”

W.P.(C) 4898/2013 Page 19 of 23




37. Clearly, the approach of the respondents to fix a reasonable
reference MRP is not a decision that can be assailed as unreasonable in the
sense as explained in Wednesbury Corpn (supra) .
38. The next issue to be examined is whether the direction to reduce
MRPs and indicating reference MRPs (at the specified values) is
unreasonable. According to the petitioner, the reference MRPs fixed are
unreasonable and are below the actual prices as were prevalent on
31.03.2013. It has been contended that the respondents have fixed the
reference MRPs without taking into account that the raw materials had been
imported at higher costs prior to January-March, 2013 after the
commencement of the NBS Scheme in April, 2012. This was disputed by
the respondents and it was asserted that the government had taken note of
the international prices prevailing between January 2013 and March 2013.
It was contended that international prices of DAP and MOP had fallen by
USD 60 PMT and USD 70 PMT respectively. This would translate to fall in
the procurement cost of DAP and MOP by approximately ` 3500 PMT and
4000 PMT, respectively. Keeping this view the government concluded
`
that reduction in prices by minimum of ` 1500 PMT and ` 1000 PMT from
the prevailing level of MRPs of DAP and MOP would be reasonable.
39. In my view, the challenge to the reasonableness of the reference
MRPs cannot be considered without reference to the relevant cost data
pertaining to a manufacturer/importer. The question whether the reference
MRP is unviable in respect of a particular manufacturer or certain
manufacturer(s) cannot be examined in a vacuum without reference to the
financial particulars of the concerned manufacturer(s)/importer(s).

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40. It is relevant to note that none of the fertilizer manufacturers or
importers have complained or challenged the reference MRPs fixed by the
respondents. It is also relevant to note that the respondents have sought to
collect data by the impugned notifications. Indisputably, this is for the
purposes of enabling respondent no.2 to take an informed decision. The
respondents have called upon the fertilizer manufacturers/importers to
provide the necessary data so as to ensure that the reference MRPs are
reasonably fixed.

41. The respondents have also affirmed that a meeting of representative
of the fertilizer industry was held on 06.05.2013, which was attended by the
CEOs of leading fertilizer companies. It is asserted that the participants had
expressed their satisfaction with the functioning of the policy. Clearly,
fixing of a reasonable MRP has to be an interactive exercise, inter alia,
based on the cost sheets and inputs that are provided by various fertilizer
manufacturers/importers. It is not possible to entertain a challenge to the
price fixation without such particulars. The fundamental premise on the
basis of which the petitioner is seeking to challenge the reasonableness of
the MRPs fixed is that the same have rendered the manufacturing and
import of fertilizers as unviable. However, no empirical date has been
provided which would indicate that the cost of manufacturing/import of
fertilizers is higher than the sum of the subsidy and the MRP fixed by the
respondents.
42. The decision of a Division Bench of this Court in Southern Petro
Chemical Industries (supra), relied upon by the petitioner, is also not
applicable. In the said case, the Government had announced increase in the

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concession of ` 750 per tonne, ` 100 per tonne and ` 500 per tonne for DAP,
SSP and MOP respectively. The petitioners therein had shown that it had
acted on such representation and placed orders for import for the entire
year. In the present case, there is no material to indicate that the petitioner
had acted to its detriment on the basis of any declaration made by the
respondent. In the present case, the challenge is regarding reasonableness of
the MRP and that can only be determined on facts of a particular
manufacturer or importer. The petitioner also relied upon the principles of
promissory estoppel as explained by the Supreme Court in Motilal
Padampat Sugar Mills Co. Ltd. v. State of U.P. : ( 1979) 2 SCC 409 and
MRF Ltd., Kottayam v. Assistant Commissioner : (2006) 8 SCC 702 . It is
relevant to note that the doctrine of promissory estoppel is based on the
principle that a party ought not be permitted to resile from a representation
that has been accepted by the other party and the other party has acted to its
prejudice relying on such representation. It is, thus, essential that the party
claiming such relief plead the necessary facts for recourse to this principle.
The parties who are stated to have acted to their prejudice
(manufacturers/importers) are not before this Court. The petitioner is a
company incorporated under Section 26 of the Companies Act, 1913 with
the object to promote and protect the fertilizer industry in India and to
promote the common business interest of its member companies. In my
view, it would not be possible to consider this aspect of the challenge,
without a particular manufacturer/importer pleading the relevant facts and
substantiating its claim.

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43. The petition and pending application are, accordingly, dismissed. No
order as to costs.

VIBHU BAKHRU, J
JANUARY 06, 2015
MK/RK

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