A bank cannot withdraw credited PMEGP subsidy without scheme-authorized or competent-authority approval.

The petitioner obtained a loan of ₹5,00,000 from Indian Bank on 7 March 2012 under the Pradhan Mantri Employment Generation Programme (PMEGP), under which eligible beneficiaries may receive subsidy subject to prescribed conditions, including timely repayment.

He claimed to have repaid the loan within three years and to have become entitled to a subsidy of ₹1,75,000.

According to the petitioner, the subsidy was credited or received on 11 March 2022 but was neither communicated nor released to him and was subsequently returned by the Bank without notice or explanation.

He made repeated requests and representations to the Bank and the authorities, and also approached the Consumer Disputes Redressal Commission, but his claim was rejected on the ground that it did not concern a “service” under consumer-protection law.

The petitioner thereafter approached the High Court seeking consideration of his pending representation and appropriate relief.

The State submitted that the Bank was required to disclose the reasons for withdrawal of the subsidy.

Whether the petitioner’s representation concerning the withdrawal or return of the PMEGP subsidy was required to be considered and decided by the competent authority.

Whether the Bank could withdraw or return a subsidy once granted or credited to the petitioner without authority under the applicable PMEGP provisions or directions of the competent authority.

Whether the petitioner was entitled to an opportunity of hearing before any adverse decision concerning the subsidy was taken.

The Court applied the governing provisions and conditions of the PMEGP scheme, under which subsidy is available subject to fulfilment of prescribed eligibility and repayment requirements.

It further applied the principle that an authority or Bank cannot withdraw or return a benefit once granted or credited unless such action is supported by the applicable statutory or scheme provisions or by a direction of the competent authority.

The Court also applied the principles of reasoned decision-making and natural justice, requiring the authority to record specific reasons and afford the affected person a reasonable and effective opportunity of hearing before taking an adverse decision.

The Court found that the record did not disclose any specific or cogent reason for the withdrawal or return of the subsidy.

Since it was unclear whether the subsidy had been validly credited and, if so, under what authority it was subsequently withdrawn, the Court considered it inappropriate to determine the petitioner’s substantive entitlement at the writ stage.

Instead, it directed the Collector, as the competent authority, to examine whether the Bank had legal or scheme-based authority to withdraw or return the subsidy and, if withdrawal was permissible, to record the reasons for such action.

The Court also required that the petitioner be given an effective opportunity of hearing before any adverse decision.

The Collector was directed to consider and decide the representation in accordance with law within 30 days of its receipt, specifically examining the authority and reasons for withdrawal or return of the subsidy and providing a hearing before any adverse decision.

The Court expressed no opinion on the merits of the petitioner’s claim, leaving all issues open for independent determination by the authorities.