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Ch. Prashanth Reddy

Hyderabad , Aug 11

A DIVISION Bench of the Andhra Pradesh High Court dismissed the writ petition filed by Nagarjuna Fertilizers and Chemicals Ltd (NFCL) against the operation of VII and VIII pricing period.

The petition contended that the introduction of VII and VIII pricing period and fixation of Retention Price with retrospective effect "are highly arbitrary, irrational and without any authority of law".

On June 4, 2002, the Union Government retrospectively notified the VII and VIII pricing period with effect from July 1, 1997 to March 31, 2000 and April 1, 2000 to March 31, 2003 or till the new pricing policy was announced, whichever was earlier. It brought about changes in relation to the capacity utilisation being increased by 5 per cent and withdrawal of Vintage Allowance of 5 per cent.

As a result plant 1 of NFCL, which had completed 10 years in 2002, had lost the vintage allowance. At the same time its retention price had increased from 90 per cent to 95 per cent capacity utilisation. The retrospective implementation of these changes had resulted in huge recoveries of Rs 225 crore being notified by the Union Government. Hence, NFCL approached the AP High Court against retrospective implementation of the pricing periods.

Nevertheless, NFCL authorities told Business Line that the recovery amount arising from the dismissal of the writ petition had already been incorporated in the accounts of the company for the year ended March 31, 2003, when NFCL declared a loss of Rs 170.52 crore. In view of this, there would not be any outflow of funds from the company.

NFCL is now waiting for a certified copy of the judgement in the writ petition and proposes to discuss with its legal counsel, Mr K. Parasaran, the implications of the verdict before taking any further action on the matter.

NFCL had also filed a second writ petition pertaining to various issues, which had remained outstanding with the Union Government and were yet to be considered. In the second petition, the company had contended that it had to receive Rs 596.72 crore from the Government on account of delay in finalisation of Retention Price in accordance with the norms and procedures and also towards interest for delayed payment by the Government.

The Division Bench, which heard the second petition along with the first petition, indicated that "interest of justice requires the Government of India dispose off claims which are pending for considerably long time and such disposal be completed within a period of three months from the date of this Order".

In view of this judgement, NFCL is hopeful that the Government will consider various claims filed by the company. Even in this case, the company is proposing to review the matter with its senior counsel for their view before proceeding on the next phase of legal action.

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