SC Orders Release of Pending Cold‑Storage Subsidy; Single Judge Order Restored

A bench of Justices Sanjay Karol and Augustine George Masih heard an appeal concerning whether the Agricultural Produce Market Committee, Deesa was entitled to a capital investment subsidy for the construction and operation of a cold storage facility, and whether the decision of NABARD and the National Horticulture Board to withdraw the subsidy and seek recovery was justified. The challenge to the withdrawal had earlier been advanced before the High Court under Article 226 of the Constitution of India, 1950, and the present appeal arose out of a Letters Patent Appeal against that order.

The Court allowed the appeal and restored the Single Judge’s order directing the release of the subsidy after compliance verification. The Court summarised that the Scheme governing release of the subsidy required an advance release of fifty percent followed by a final release only after a monitoring inspection, and that the record showed repeated and documented efforts by the appellant and its lending bank to secure the requisite inspection and release. 

The Court, in its reasoning, observed: "It is clear from the above that efforts were indeed made by the appellant through its bank to have the money released, as per the Scheme’s requirement reproduced above, but the same was to no avail. Had the inspections requested been carried out or the money as requested released, this dispute would not have dragged on thus far. When the matter stood at the stage of exchange of letters, the fire referred to above took place and, thereafter, NABARD issued instructions to respondent no.4 to withdraw the subsidy amount from the appellant. Not only did they not release the final amount but also asked for a refund of the amount already paid. Reasons for having taken such a stand, we may record are best known to them for the above table demonstrates there were plenty of efforts." The Court also noted the monitoring report’s statement that "the unit is completed and commissioned", and observed that no reasons had been assigned for withholding the final instalment once eligibility was not disputed.

Background

The dispute arose when the Agricultural Produce Market Committee, Deesa obtained a loan to construct a cold storage and applied for the NHB/NABARD capital investment subsidy, claiming expenditure and seeking 50% advance payment. NABARD released the advance instalment, and a joint monitoring visit on 19 November 2008 recorded completion but low capacity utilisation (about 20%), recommending re‑inspection and confirmation of measurements. The lending bank, Gujarat State Co‑operative Agriculture and Rural Development Bank Ltd., and the appellant repeatedly wrote to NABARD and NHB requesting the joint monitoring visit and release of the final instalment, and a series of communications dated between June 2009 and April 2011 were placed on record.

While the exchange of letters and requests for re‑inspection were pending, the cold storage unit suffered a fire on 3 May 2011. Thereafter NABARD instructed recovery of the subsidy already paid and withheld the final amount. The appellant challenged that decision under Article 226 of the Constitution of India, 1950, and a Single Judge set aside the withdrawal and directed release of the remaining subsidy after verification of compliance with the Scheme. A Division Bench reversed that order, holding that the appellant had not fulfilled conditions and had not made efforts in the interim. The Supreme Court examined the Scheme provision requiring advance release and a monitoring inspection before final disbursement, reviewed the chronology and the voluminous correspondence from the bank and the appellant seeking inspection, and found that the appellant had made sufficient efforts as contemplated by the Scheme.

Applying the record to the Scheme, the Court concluded that the Division Bench’s view was unsustainable and that the Single Judge’s direction ought to be restored. The final result was that the Division Bench judgment was set aside and the Single Judge’s order was restored: if the subsidy already taken from the appellant had been repaid, the full subsidy amount was to be released to the appellant; if the subsidy already paid had not been repaid, the final instalment was to be released. The appeal was allowed and pending applications were disposed of. The Court granted no separate interim directions beyond directing release or adjustment of the subsidy in accordance with the outcome.

Case Details:
NeutralCitation: 2026 INSC 385
Case Title: AGRICULTURE PRODUCE MARKET COMMITTEE, DEESA v. NATIONAL HORTICULTURE BOARD & ORS.

Source: 2026 CaseBase(SC) 336