Home / Politics / Policy /  Delhi high court dismisses Fertiliser Association of India plea

New Delhi: The Delhi high court (HC) on Wednesday dismissed an appeal by the Fertiliser Association of India (FAI), an industry lobby group, against a 6 January judgment by a single judge of the court upholding the government’s decision to fix the maximum retail price (MRP) of phosphatic and potassic (P&K) fertilizers.

A bench of chief justice G. Rohini and Rajiv Sahai Endlaw also imposed costs of 25,000 on FAI.

FAI approached the high court challenging notifications issued in 2013 by the department of fertilizers on the ground that they were in conflict with the rationale of the Nutrient Based Subsidy Scheme (NBS), 2010 as they allowed the government to indirectly control and regulate the MRP of P&K fertilizers.

According to FAI, it was the prerogative of the fertilizer companies to set the price.

The government also required fertilizer manufacturers and importers to submit certified cost data along with their subsidy claims, which would be restricted if their MRP was found to be unreasonable for 2013-14.

FAI also assailed the retrospective application of one of these notifications issued on 26 June 2013, but made effective from 1 April of that year. As a result, the companies could be denied subsidies for the fertilizers sold in the interim.

The court said that the only consequence of selling the fertilizer at a rate higher than the suggested rate would be to disentitle the fertilizer companies from receiving subsidy for that much quantity since they had already received the higher price from the farmers.

“After all, the fertilizer companies cannot on the one hand receive the higher price and on the other hand also receive subsidy, thereby themselves benefiting from the NBS (nutrient-based subsidy) scheme rather than the benefit thereof flowing to the farmer/consumer of fertilizer," the judgment adds.

The government argued that it issued the notifications in “public interest" because it had found that the price of fertilizers had not fallen despite a fall in the international prices. It said it wanted to ensure that subsidy is available only to manufacturers and importers who sold the fertilizers at reasonable prices and did not indulge in profiteering.

The government, with the recommendation of an inter-ministerial committee and approval of the cabinet committee on economic affairs, decided that the prices of the fertilizers ought to be reduced to reasonable levels to maintain the balance between the MRPs and subsidy rates and to ensure that the benefit of the reduction in the international prices were passed on to the farmers.

Justice Vibhu Bakhru had upheld the government’s circulars and rejected FAI’s contentions, holding, among other things, that it is incumbent upon the government to ensure that the subsidy does not end up enriching the fertilizer companies instead of subsidizing/reducing the cost of fertilizer to the farmers.

An email query sent to FAI remained unanswered.

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