- 1 - NC: 2025:KHC:11192 WP No. 1482 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 1482 OF 2020 (GM-RES) BETWEEN: M/S FLUID POWER ENTERPRISES NO.22 DUGGALAMMA TEMPLE ROAD, 8TH MAIN, 3RD PHASE PEENYA INDUSTRIAL ESTATE BANGALORE-560 058 REP PROPRIETOR A PRASAD SHETTY …PETITIONER (BY SRI. PAVANA CHANDRA SHETTY H.,ADVOCATE) AND: 1. THE DEVELOPMET COMMMISSIONER MINISTRY OF MICRO SMALL AND MEDIUM (MSME) GOVERNMENT OF INDIA NIRMAN BHAVAN NEW DELHI-110001 2. DEPUTY GENERAL MANAGER GOVERNMENT SCHEME CELL SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA SIDI TOWER 15 ASHOK MARG LUCKNOW-226001 3. THE REGIONAL MANAGER STATE BANK OF MYSORE SME DIVISION BANGALORE BRANCH AVENUE ROAD, BANGALORE-560 002 Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:11192 WP No. 1482 of 2020 4. THE BRANCH MANAGER STATE BANK OF MYSORE SME PEENYA INDUSTRIAL ESTATE PEENYA BANGALORE-560 058 …RESPONDENTS (BY SRI. ARUN K.S. ADVOCATE FOR R1; SRI. PRASHANTH N. HEGDE., ADVOCATE FOR R2; R3 & R4-SERVED) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE OFFICIAL LETTER ISSUED BY THE R-4 DATED 06.11.2019 PRODUCED AT ANNEXURE-A AND ETC. THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SURAJ GOVINDARAJ ORAL ORDER 1. The petitioner is before this Court seeking for the following reliefs: i. Quash the Official letter issued by the R4 bearing its No. SMECC/2019-20/313, dated 06.11.2019 produced at Annexure-A ii. Direct the R2 and R4 Authorities to provide subsidy amount to the Petitioner herein as per the Scheme introduced by the R1 Authority under Credit Linked Capital Subsidy Scheme (CLCSS) since, petitioner purchased CNC Vertical machine under the said scheme. iii. Issue any other writ, order or direction and such other order or direction as this Hon’ble Court may deem fit to grant in the facts and circumstances of the case. - 3 - NC: 2025:KHC:11192 WP No. 1482 of 2020 2. The petitioner is a small-scale industry involved in manufacturing of Hydraulic Components Honing. The petitioner had, in the month of June 2011, approached respondent No.4 for borrowing a sum of Rs.12,00,000/- for the purchase of the CNC vertical machine. The loan having been sanctioned on 14.01.2012 was disbursed on 25.01.2012, an order for the said CNC machine having been placed on 30.01.2012 came to be delivered and installed on 01.02.2012 3. In the meanwhile, a scheme of subsidy under the Credit Linked Capital Subsidy Scheme (for short hereinafter referred to as “CLCS Scheme”) had been introduced by respondent No.1. The petitioner on 10.03.2012 made an application for sanction of such subsidy giving out the details of the loan, machinery purchased and other requirements under CLCS scheme which had been introduced by way of the 5th supplement on 16.01.2012. - 4 - NC: 2025:KHC:11192 WP No. 1482 of 2020 4. The petitioner submitted the documents and the declarations, the State Bank of Mysore who had sanctioned the loan with whom the petitioner had entered into an agreement had also issued certificates and made a request to respondent No.2 for release of the capital subsidy. The State Bank of Mysore has issued a certificate of due diligence, certifying that the petitioner would be entitled for the subsidy in terms of CLCS Scheme as indicated the amount spent on the machine, the invoice date, installation date, the amount of subsidy, etc., in Annexure-1 to 4 submitted by the said Bank to the respondent No.2. 5. The said Bank having corresponded with respondent No.2 having received a reply from respondent No.2 vide its letter dated 06.06.2012 had written to the petitioner that the claim of the petitioner had been rejected, since the scheme had come into operation only on 16.1.2012, whereas the loan was sanctioned prior to that on 14.01.2012. - 5 - NC: 2025:KHC:11192 WP No. 1482 of 2020 6. The petitioner thereafter gave a representation on 07.11.2014 to respondent No.3 to consider the sanction of the subsidy, no action has been taken the petitioner had approached this Court in WP No. 59639- 59640/2014 which came to be disposed on 30.08.2019 directing respondent therein to consider the representation of the petitioner and pass appropriate orders within a period of 8 weeks. 7. Thereafter, vide order dated 06.11.2019 the State Bank of Mysore which has been merged with State Bank of India had informed the petitioner that SIDBI being Nodal Agency appointed by Government of India for releasing of the capital subsidy had re-examined the said request or representation of the petitioner and as per letter dated 23.01.2012 informed that the CLCS Scheme was applicable with effect from 16.1.2012, the loan having been sanctioned on 14.01.2012, the petitioner would not be eligible for the - 6 - NC: 2025:KHC:11192 WP No. 1482 of 2020 subsidy. It is challenging the same, the petitioner is before this Court seeking for the aforesaid reliefs. 8. The submission of Sri.Pavana Chandra Shetty., learned counsel for the petitioner is that; 8.1. Though the loan had been sanctioned on 14.01.2012 the order for the machine was placed subsequently, the invoice issued on 30.01.21012 the delivery and installation having occurred on 01.02.2012. These aspects have not been taken into consideration, the mere sanction of the loan without disbursement of the loan and/or without installation machinery could not have been considered to deprive the petitioner of the subsidy Scheme. 8.2. His submission is that subsidy Scheme having been introduced to facilitate the entrepreneur to purchase and install such machinery, the respondent should have acted as per the intent and purport of the Scheme and not to contend - 7 - NC: 2025:KHC:11192 WP No. 1482 of 2020 that because there was a two day earlier sanctioning of the loan, the petitioner would not be entitled for the said subsidy. 9. Sri.Prashanth N.Hegde., learned counsel for respondent No.2-SIDBI would submit that; 9.1. SIDBI has examined the application of the petitioner in terms of the 5th Supplement on revised guidelines pertaining to Credit Linked Capital Subsidy Scheme, the cut-out date being fixed as 16.01.2012 the loan has been sanctioned on 14.01.2012 prior to the cut-off date. He submits that the petitioner would not be entitled for the subsidy. 9.2. The petitioner having availed the loan on 14.01.2012 has after coming to know of the scheme applied for the sanction of subsidy which could not be accepted or recommended by the respondent No.2 to the respondent No.1 for release of the said funds. - 8 - NC: 2025:KHC:11192 WP No. 1482 of 2020 9.3. Respondent No.2 being only the nodal agency has implemented the 5th Supplement in its true letter and spirit, the loan being two days earlier, the petitioner is not entitled for the subsidy. 9.4. Lastly, he submits that insofar as the order dated 30.8.2019 in Writ Petitions in WP No.59639- 2014 respondent No.1-herein was not a party therein and as such respondent No.1 has not considered in the said matter. 10. Heard Sri.Pavana Chandra Shetty., learned counsel appearing for the petitioner and Sri.Prashanth N.Hegde., learned counsel appearing for respondent No.2. None appears for respondent No.1 today. Perused papers. 11. The short question that would be required to be considered by this Court is; “Whether the petitioner can be said to be entitled for the subsidy in terms of the 5th Supplement on Revised Guidelines on Credit Linked Capital Subsidy Scheme (CLCSS) or be denied the subsidy on account of the loan having been sanctioned prior to the subsidy scheme coming into effect”. - 9 - NC: 2025:KHC:11192 WP No. 1482 of 2020 12. The 5th Supplement had been introduced on 23.01.2012 with effect from 16.01.2012 entitling entrepreneurs to claim subsidy in terms of the items prescribed therein, one of them being a CNC vertical machining center which is the subject matter of the present petition. 13. The fact that such a Scheme had been introduced on 23.01.2012, making it retrospectively applicable from 16.01.2012 would categorically indicate the intention behind such a Scheme being implemented to enable the entrepreneurs to claim such benefit and while doing so, enhance the manufacturing capacity of the Country. A Subsidy Scheme is introduced normally to promote the manufacturing industry and/or any other industry towards which the subsidy is given in this particular case, more particularly when the petitioner is a small-scale industry who has invested an amount of Rs.24,89,937/- for the machine and would have been entitled for capital subsidy of 15% of the same - 10 - NC: 2025:KHC:11192 WP No. 1482 of 2020 amounting to Rs.3,73,490/-. It was therefore required of the Nodal Agency to have applied the said scheme in its true spirit and intent and if there was any doubt to seek clarification from respondent No.1. 14. Instead of doing so, merely on the ground that the loan was sanctioned and 14.01.2012 and scheme came into operation on 16.01.2012, the request of the petitioner was rejected. This is the only reason for rejection. Respondent No.2 has also not taken into consideration the fact of the disbursal of the loan being subsequent, the invoice being issued in respect to said machine being on 30.01.2012 and the installation of the machine came to be made on 01.02.2012. 15. The mere reliance on the date of approval of the loan has led to the above situation. In my considered opinion, respondent No.2 should have taken into consideration other points reflected above, which would indicate that the machine was purchased subsequent to the Scheme having been brought into - 11 - NC: 2025:KHC:11192 WP No. 1482 of 2020 force even after 23.01.2012, since the invoice date is 30.01.2012. 16. It is expected of a nodal agency to be more circumspect and to take into consideration the object and intent of a subsidy scheme and to implement the same in its true letter and spirit as indicated, which, in the present matter, I find to be lacking. In that view of the matter, I pass the following; ORDER i. The writ petition is allowed. iv. The letter of respondent No.4 bearing its No.SMECC/2019-20/313, dated 06.11.2019 at Annexure-A is quashed. ii. Respondent No.2 is directed to recommend the grant of CLCSS subsidy in favour of the petitioner in terms of documents submitted by respondent No.4 within a period of 30 days from the date of receipt of a copy of this order. iii. If the information Technology Systems or the Software System does not provide for it, - 12 - NC: 2025:KHC:11192 WP No. 1482 of 2020 respondent No.2 shall forward a copy of the recommendation in a hard copy in physical format to respondent No.1. iv. In the event of the scheme having already been closed, the order having been passed accepting the application filed by the petitioner in the year 2012, and the delay from 2012 being on account of respondent No.2, the petitioner cannot be deprived of the subsidy to which it is entitled on account of respondent No. 2's improper actions. v. Once the recommendation is received by respondent No.1, respondent No.1 shall release the amount standing to the entitlement of the petitioner as per the documents furnished within a period of 30 days thereafter. SD/ (SURAJ GOVINDARAJ) JUDGE SR List No.: 1 Sl No.: 54