THE HONOURABLE MR. JUSTICE D.BHARATHA CHAKRAVARTHY WP(MD). No.3449 of 2026 M/s.One World Industrial Textile Private Limited, Represented by its Director, Mr.Shyam Prakash Fatehpuria, Having its Registered Office at BS-18, SIDCO Industrial Estate, Kappalur, Madurai-625 008 … Petitioner Vs. 1.Union of India, Represented by the Secretary, Ministry of Msme, Kartavya Bhawan, Building No.03, Kartavya Path, New Delhi-110001. 2.The Director, Ministry of Textiles, Office of the Textile Commissioner,
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dated : 23.06.2026
CORAM
THE HONOURABLE MR. JUSTICE D.BHARATHA CHAKRAVARTHY
WP(MD). No.3449 of 2026
M/s.One World Industrial Textile Private Limited,
Represented by its Director,
Mr.Shyam Prakash Fatehpuria,
Having its Registered Office at
BS-18, SIDCO Industrial Estate,
Kappalur, Madurai-625 008 … Petitioner
Vs.
1.Union of India,
Represented by the Secretary,
Ministry of Msme,
Kartavya Bhawan,
Building No.03, Kartavya Path,
New Delhi-110001.
2.The Director,
Ministry of Textiles,
Office of the Textile Commissioner,
Post Bag No.11500, Mumbai 400020.
3.The Deputy Director (ATUFS),
Office of the Textile Commissioner,
Post Bag No.11500, Mumbai 400 020.
4.The Deputy Director and Officer-in-Charge,
Regional Office of the Textile Commissioner,
Mettupalayam Road,
R.S.Puram, Coimbatore-641002. … Respondents
PRAYER :-
Writ Petition, filed under Article 226 of the Constitution of India, praying this court to issue a Writ of Mandamus, directing the respondents to sanction and release the ATUFS subsidy of Rs.55,39,272/-, as approved by the Joint Investigation Team (JIT) vide their Certification of Installation and Commissioning of Machinery dated 27.09.2024; and Declare the respondents’ actions in disregarding the JIT said certification and conducting parallel verification as arbitrary, illegal, and violative of Article 14 and ATUFS Guidelines.
For Petitioner : Mr.Y T Asraf
For Respondents : Mr.Niranjan S.Kumar
for Mr.C.Nandagopal for R1 to R3
No Appearance for R4
ORDER
The writ petition is filed for a Mandamus, directing the respondents to sanction and release the ATUFS subsidy of Rs.55,39,272/- as approved by the Joint Investigation Team (JIT) vide their Certification of Installation and Commissioning of Machinery dated 27.09.2024, and for other reliefs.
2.Upon hearing the learned counsel for the petitioner and perusing the material records of the case, the case of the petitioner is that the petitioner was started on 04.02.2020 and is a new MSME start-up. It was established with bank finance availed under the Amended Technology Upgradation Fund Scheme (ATUFS) of the Government of India, Ministry of Textiles, dated 02.08.2018. As per the same, the start-ups such as the petitioner are provided with a subsidy of 15% of the investment in machinery, which is aimed at promoting Make in India, import substitution and contribution to foreign exchange savings for the country. As a matter of fact, the petitioner had availed a term loan of Rs.307 lakhs from Canara Bank. The petitioner has already purchased the machineries and installed the same. As per clause 10.3.7, the procedure for the Government to sanction the subsidy is to cause a joint inspection within 88 days of the application. In the case of the petitioner, the Joint Investigation Team conducted the inspection within the stipulated time and also made its recommendation vide its report dated 27.09.2024. The Joint Investigation Team, after verifying the credentials, recommended the sanction of a subsidy of Rs.55,39,272/-. Even thereafter, the subsidy has not been sanctioned. By repeated communications, the authorities are delaying the matter, and therefore, the petitioner is before this Court. It is the further case of the petitioner that the authorities have not even heard the petitioner.
3.Per contra, the stand of the learned counsel for the respondents 1 to 3 is categorically contained in paragraphs 6 and 7 of the counter affidavit and the same is extracted hereunder for ready reference:
“..6.It is submitted that the petitioner, M/s. One World Industrial Textiles Pvt. Ltd., applied for a UID under ATUFS on 13.01.2022, and the UID was generated on 02.03.2022 through the i-TUFS portal. Thereafter, the petitioner applied for Joint Inspection on 17.07.2024 after installation and commissioning of the machinery. Pursuant thereto, the Regional Office of the Textile Commissioner, Coimbatore, constituted a Joint Inspection Team, which conducted physical verification of the machinery on 27.09.2024 and uploaded the prescribed Format-6 certificate on the i-TUFS portal, recommending an eligible subsidy amount of *55,39,272/-.
7. It is further submitted that during scrutiny of the JIT report and supporting documents, the Regional Office noticed certain discrepancies, namely that the model number was not available on the machine name plate and that the serial number mentioned in the invoice did not match the serial number found on the machine. Clarifications were therefore sought from both the petitioner and the Original Equipment Manufacturer (OEM). While the petitioner furnished certain technical details of the machinery, the OEM informed that the total machine cost was Rs.5,40,08,366/-, out of which only Rs.4,96,99,388/- had been paid, leaving an outstanding balance of Rs.43,08,978/-. It was further noticed that the deficit payment exceeded the permissible limit of 5% prescribed under the applicable TAMC decision.”
4. The learned counsel appearing on behalf of the respondents 1 to 3 would also submit that as per the scheme, the petitioner is entitled for 15% of the subsidy, which is already spent. However, the Joint Investigation Team’s recommendation is not the sole criterion, and the appropriate authority has to consider the genuineness of the claim before releasing the subsidy. Firstly, upon verification of the petitioner’s claim to have incurred and expenditure of Rs.5,40,08,366/-, when a communication was made to M/s.Harish Textile Engineers Limited, who are said to be the suppliers of the petitioner, they replied that, towards the supply of machinery, they had received only a sum of Rs.4,96,99,388/- and a sum of Rs.43,08,978/- is due. In this regard, the issue was under consideration by the Technical Advisory-cum-Monitoring Committee (TAMC). Several times, the exact invoice amount, which is utilized for claiming the subsidy was found not to be reflected in the actual transaction. This was discussed in detail by the said TAMC, and it was found that, though the original intention was to allow discrepancies about 1%, in many cases, the difference was vast. Therefore, a general decision was taken in the 19th meeting of TAMC to have an upper cap of 5%. Therefore, if there is a discrepancy of 5% or more with reference to the amount actually paid and the amount claimed in the invoice, it was decided not to entertain such a claim for subsidy. Therefore, in the case of the petitioner, since Rs.43,08,978/- out of Rs.5,40,08,366/- had not been paid, the same amounts to 7.98% , and therefore, on the said ground, the competent authority rejected the claim of the petitioner. With reference to the other ground also, the learned counsel would point out to the earlier communication, which specifically points out the serial number and the defect, and would submit that the petitioner did not seek to clarify the same.
5. In reply thereof, the learned counsel for the petitioner would submit that no specific show cause notice was issued calling upon the petitioner to furnish the details. In any event, the learned counsel, by pointing out the Joint Inspection Report, which is in the form of Appendix to Format 6, more specifically Row Nos.7, 8 and 9, would submit that the make, model, year of manufacture, and machine serial number are mentioned in the said report itself. According to the learned counsel for the petitioner, the same perfectly tallies with the machinery, inasmuch as the photographs can be verified with the invoice and the report, and all the three will tally. The learned counsel would also point out page No.31, where copies of the photographs of the label on the machinery are enclosed. As far as the discrepancy is concerned, the learned counsel would submit that, since some of the machinery supplied, to the tune of Rs.43,08,978/-, was defective, the petitioner is withholding the payment. The dispute between the petitioner and the supplier is not as if, without procuring the machinery, the petitioner were seeking for subsidy.
6. I have considered the rival submissions made on either side and perused the material records of the case.
7. There is no dispute with reference to the eligibility of the petitioner under the ATUFS Scheme. The petitioner had also duly applied, and the procedure that is framed under the Scheme, namely, conducting a joint inspection within 88 days, has also been completed. The team appointed by the respondents has also found that the petitioner is eligible for the subsidy. At the same time, it is for the authorities to ensure that the petitioner has actually incurred the expenses before granting 15% subsidy thereon. It now transpires that, even though the petitioner claimed 15% subsidy for Rs.5,40,08,366/-, in view of the dispute with the third-party supplier, only a sum of Rs.43,08,978/-, has not so far been paid. As far as the present communication issued by the respondents are concerned, no exception can be taken, because the same are in tune with the minutes of the 19th meeting of TAMC dated 23.12.2020, whereby, it was decided not to entertain or grant subsidy where the discrepancy is more than 5%. But however, upon a detailed perusal of the minutes that is produced before this Court, the TAMC was considering cases where naturally there were discrepancies with reference to the actual payment made and the invoices etc. The specific case with reference to withholding of part payment on account of specific machinery being defective was not expressly considered by the TAMC in that meeting. In the instant case, it is clear from the records that the petitioner is not trying to give false particulars or make a bogus claim. What transpires is that, out of the total expenditure towards machinery amount to Rs.5,40,08,366/-, the petitioner had also ordered the machinery and had also procured the same. But, however, payment of a sum of Rs.43,08,978/- has been withheld on account of defects in the machinery, which only fortifies the genuineness in the claim of the petitioner. At the same time, without incurring the expenditure, there is no question of getting the subsidy also. Therefore, I am of the view that eventhough, the authorities have taken a view, by sending communications, to totally reject the case of the petitioner, when the petitioner is a start-up actually engaging in business and when the Government of India has framed the Scheme so as to encourage manufacturing in India, the entire issue has to be considered empathetically, keeping in mind the object and purpose of the subsidy. This Court had considered the issue in Stanes Amalgamated Estates Limited Vs. Tea Board of India by following the law laid down by the Hon’ble Supreme Court of India in Sivanandan C.T. and Others Vs. High Court of Kerala and Others and held that the authorities cannot act arbitrarily and shall act as per the intention of the scheme. Useful reference can be made to paragraph No.24 of the Judgment.
8. In view thereof, I am of the view that, though the respondents did not act arbitrarily, still considering the Scheme, they ought to have considered the total amount actually made and spent by the petitioner, namely, Rs.4,96,99,388/-, and ought to have released the applicable subsidy. As far as the identity of the machinery is concerned, it is now asserted across the Bar before this Court that there is no discrepancy at all, and even the photograph of the machinery tallies with the invoices, and the same are also contained in the Appendix as referred to supra.
9. In view thereof, I am of the view that the writ petition is allowed on the following terms:-
i. Within two weeks from the date of receipt of a web copy of this order, the petitioner shall make a fresh representation duly indicating that a sum of Rs.43,08,978/- has been withheld on account of the nature of the dispute, setting out the nature of the defect in the machinery, the date of procurement of the machinery and the invoices thereto, and all other details;
ii. With reference to the identity of the machineries and the serial numbers with reference to the machinery worth Rs.4,96,99,388/-, copies of the photographs, invoices and the Appendix can also be enclosed;
iii. It is also to be noted that the joint inspection has already been done within the limitation period of 88 days, and the Joint Investigation Team had already made its recommendation;
iv. The representation of the petitioner shall be considered by giving an opportunity appearing of hearing to the petitioner, and the authorities shall consider the claim relating to the sum of Rs.4,96,99,388/- and accordingly recalculate the total subsidiary, that is eligible for the petitioner and pass orders relating to release of the same;
v. The aforesaid excise shall be completed as expeditiously as possible within 10 weeks from the date of making the representation of the petitioner;
vi. It is made clear that, since the original application is made through the online portal, no fresh online application shall be insisted upon;
vii. In view of the extraordinary situation, the authorities shall consider the claim of the petitioner and release the subsidiary due, as otherwise, repeatedly protracting the matter on technical considerations in the case of a start-up would defeat the very purpose of the Scheme.
viii. No costs.
23.06.2026
NCC : Yes/No
sji
TO
1.the Secretary
Union of India,
Ministry of MSME,
Kartavya Bhawan,
Building No.03, Kartavya Path,
New Delhi-110001.
2.The Director,
Ministry of Textiles,
Office of the Textile Commissioner,
Post Bag No.11500,
Mumbai 400020.
3.The Deputy Director (ATUFS),
Office of the Textile Commissioner,
Post Bag No.11500, Mumbai 400 020.
4.The Deputy Director and Officer-in-Charge,
Regional Office of the Textile Commissioner,
Mettupalayam Road,
R.S.Puram, Coimbatore-641002.
D.BHARATHA CHAKRAVARTHY, J.
sji
ORDER
IN
WP(MD) No.3449 of 2026
Date : 23/06/2026
