Eligible scheme beneficiaries cannot be denied subsidy due to inter-departmental administrative lapses.

The petitioners, agriculturists, were selected under a dairy development beneficiary scheme governed by Memo No. 299 dated 20 February 2014.

They obtained loans of ₹4.50 lakhs each from Madhya Bihar Gramin Bank, purchased the requisite milch cattle, and insured the animals.

Their subsidy claims were recommended and forwarded by the competent authorities and the Bank, but the subsidy was not released.

The petitioners alleged that similarly situated farmers had received the subsidy and challenged the non-release as arbitrary and discriminatory, invoking Articles 14 and 21 of the Constitution.

The Bank maintained that it had completed its obligations and forwarded the claims to the concerned authorities, but stated that the petitioners had not paid any loan instalments and that their accounts had become irregular.

The State attributed the delay to the Bank’s alleged failure to comply with the prescribed procedure and timelines, and contended that the scheme had closed on 15 August 2015 and the unutilised funds had been returned.

Whether the petitioners could be denied the admissible subsidy merely because of an inter se dispute between the Bank and the State authorities regarding procedural compliance and delay.

Whether subsequent closure of the scheme and return of unutilised funds defeated the petitioners’ claims, which had been processed during the currency of the scheme.

Whether the petitioners’ alleged default in repayment of the loan justified withholding the subsidy.

The Court applied the terms and procedural requirements of Memo No. 299 dated 20 February 2014 governing the dairy development subsidy scheme.

It further applied the constitutional principle under Article 14 that State action must not be arbitrary, discriminatory, or unreasonable, particularly where eligible beneficiaries have complied with the conditions of a public welfare scheme.

The Court relied on the principle of legitimate expectation: once beneficiaries satisfy the eligibility conditions, obtain the sanctioned loan, purchase the required cattle, and have their subsidy claims duly recommended and forwarded, they cannot be deprived of the expected benefit solely because of administrative lapses, procedural delay, or lack of coordination between public authorities.

It also held that loan recovery proceedings and entitlement to subsidy are independent matters.

No judicial precedent was cited in the judgment.

The Court found that the material facts were substantially undisputed: the petitioners had been selected under the scheme, their loans had been sanctioned and disbursed, the requisite cattle had been purchased, and their subsidy claims had been recommended and forwarded.

Although the Bank asserted that it had forwarded the claims and the State alleged procedural default by the Bank, this inter se dispute could not operate to the detriment of the petitioners, particularly when no material established that the petitioners themselves had caused the delay or failed to satisfy the scheme conditions.

The Court held that closure of the scheme after the petitioners’ claims had been processed could not retrospectively extinguish an otherwise lawful claim.

Similarly, the petitioners’ failure to repay the loan did not justify withholding the subsidy because recovery of the loan constituted a separate issue from subsidy eligibility.

The respondents were directed to jointly examine the petitioners’ claims and release the admissible subsidy, if otherwise payable under Memo No. 299 dated 20 February 2014, within three months from receipt or production of the order.

Any remaining procedural formalities were to be completed by the concerned authorities without compelling the petitioners to suffer on account of administrative lapses or inter-departmental correspondence.

Interlocutory applications, if any, were disposed of.