The Delhi High Court ruled that judicial review under Article 226 of the Constitution, in matters involving price fixation, industrial policy, and expert economic determinations, does not extend to re-evaluating the correctness of technical or economic conclusions reached by expert bodies, absent manifest illegality, mala fides, or perversity.
Explaining that the Single Judge has meticulously appraised the fixation of the FRP by the FICC in accordance with the applicable policy framework, the Debt-Equity Ratio (DER), the assessment of capital cost, and the linkage of appellants’ unit with other comparable fertilizer units, the Court dismissed the appeal and upheld the demand of Rs. 109 crores towards interest payable on the delayed repayment of the principal amount of the excess subsidy earlier disbursed.
While emphasising that the Fertilizer Industry Coordination Committee (FICC), being a specialized and expert body operating within the policy framework of the Government of India, is vested with the exclusive mandate to determine parameters such as retention price and subsidy, the Court pointed out that these determinations involve complex, technical, and sector-specific considerations that lie squarely within the domain of expert assessment.
When the FICC has duly exercised this mandate, and the appellants have voluntarily accepted the policy structure, participated in its implementation, and given explicit undertakings to abide by it, the Court observed that they cannot now seek to renege from their earlier position or urge to replace well-settled technical determinations. The law does not permit such retreat from express commitments nor such substitution of expert judgment with judicial opinion absent demonstrable arbitrariness, which is wholly lacking here.
The Court clarified that the jurisdiction of the Appellate Court in Letters Patent Appeals is correspondingly confined to examining the legality and correctness of the jurisdiction actually exercised by the Court, and does not extend to enlarging or substituting that jurisdiction beyond what the lower Court was competent to exercise.
The Division Bench comprising Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar observed that the linkage of the appellants’ Final Retention Price (FRP) with other comparable units was both rational and consistent with the uniform policy framework adopted by the Government.
The Bench stated that the objective of such linkage was to ensure parity and maintain a level playing field across similar plants, and this methodology, being rooted in objective and industry-wide criteria, cannot, by any measure, be characterised as arbitrary, discriminatory, or contrary to established policy considerations.
Regarding the Debt-Equity Ratio (DER) for the project, the Bench found that the contemporaneous record decisively demonstrates, upon which the Single relied and concluded that the appellants had themselves, through their letters, unequivocally agreed to the adoption and application of a DER of 2.5:1.
From a careful examination of the record, the Bench noted that the appellants’ objections to the computation are rooted entirely in their own assumptions about how the FDR should have been calculated. The appellants’ challenge is not based on any demonstrable error in the calculations undertaken by the expert body, but rather on their disputed views regarding the correct DER and the capital-cost base, issues that have already been considered in depth and rejected by the Single Judge.
Briefly, the respondent authorities issued a Letter of Intent (LOI) in favour of the Appellant company for setting up a fertilizer manufacturing unit, of which the important stipulation is that the Debt-Equity Ratio (DER) for the project “will be 2.5:1”. The capital cost of the project was initially fixed at Rs. 695 crores under the LOI. Subsequently, the Appellants sought relaxation of this ceiling, which was allowed by the Government, subject to the stipulation that the subsidy & retention price would be determined by the Fertilizer Industry Coordination Committee (FICC) as per the principles applicable to other fertilizer units at that time.
The appellants, however, contended that due to various external circumstances, delays, and additional investments, the DER of 2.5:1 ought to be treated as an upper ceiling and not as a fixed ratio. The respondents did not accept this contention, maintaining that the 2.5:1 ratio was specifically agreed to and formed the basis for issuance of the LOI and subsequent subsidy computations.
Between 1993 and 2000, a series of representations and correspondences took place, and the respondents issued a letter inviting the appellants for a hearing, following which decisions were taken regarding fixation of Final Retention Price (FRP). Accordingly, the determination process, methodology, and the decisions of the FICC were challenged as being arbitrary and violative of Article 14 of the Constitution. The Single Judge held inter alia that the DER clause in the LOI was expressed as 2.5:1 and was rightly treated as an operative parameter; Further, it was held that the FICC, as the expert body, had applied a rational and uniform methodology in assessing project cost and retention price.
Appearances:
Advocates Akshit Pradhan, Muskan Goyal, Surekha Raman, Yashwant Sanjenbam, and Shreyash Kumar, for the Appellant
Advocate Rakesh Kumar and Sunil, for the Respondent
