2026 INSC 534 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026

(Arising out of Special Leave Petition No. 26731 of 2025)

STATE OF HIMACHAL

PRADESH & ORS.

…APPELLANT S

VERSUS

M/S KUNDLAS LOH UDYOG

…RESPONDENT

J U D G M E N T

Special Leave Petition No. 26731 of 2025 Page 1 of 40

J.B. PARDIWALA, J.:

For the convenience of exposition, this judgment is divided into the

following parts:-

INDEX

A. PARTIES TO THE APPEAL ...................................................... 2

B. FACTUAL MATRIX ................................................................. 3

C. SUBMISSIONS OF THE APPELLANTS ................................... 16

D. SUBMISSIONS OF THE RESPONDENT .................................. 18

E. ISSUES FOR THE DETERMINATION ..................................... 19

F. ANALYSIS ............................................................................ 19

(I). Whether the incentive in the form of concessional rate of electricity

charges under Clause 16(a) of the Industrial Policy of 2019, read

with Rule 16(i)(a) of the 2019 Rules, was ever intended be

provided to the existing industrial enterprises undergoing

substantial expansion, and what effect the amendment

notification dated 29.04.2022 has on the applicability of the said

clauses? ...................................................................................... 19

(II). Whether the doctrine of promissory estoppel applies in favour of

the respondent company? ........................................................... 29

G. CONCLUSION ....................................................................... 38

Special Leave Petition No. 26731 of 2025 Page 2 of 40

1. Leave Granted.

2. This appeal arises from the judgment and order dated 07.05.2025

passed by the High Court of Himachal Pradesh in Civil Writ Petition

No. 1667 of 2021 preferred by the respondent herein by which the

High Court directed the appellants herein to issue the enabling

notification in terms of the incentives under the Clause 16(A) of the

Himachal Pradesh Industrial Policy, 2019 (“Industrial Policy of

2019”) with effect from the date of commercial qua the respondent

company, and set aside Clause 5B of Industrial Policy of 2019 as

well as Rules 4(B) and 4(F) respectively of the Rules regarding grant

of incentives, concessions, facilities for investment promotion in

Himachal Pradesh, 2019 (“2019 Rules”) to the extent of their

inconsistency with the Industrial Policy, 2019.

A. PARTIES TO THE APPEAL

3. The appellant no. 1 is the State of Himachal Pradesh through its

Director, Department of Industries. The Department of Industries

is responsible for the implementation of various industrial

development policies and other Governmental policies. Under the

Industrial Policy of 2019 and the corollary 2019 Rules respectively,

the Department of Industries inter alia aims at assisting projects by

providing grants, issuing commencement of commercial production

certificate (“COP Certificate”) and is responsible for receiving

reimbursement claims.

4. The appellant no. 2 is the State of Himachal Pradesh through its

Additional Chief Secretary, Department of MPP & Power . The

Department of MP & Power mainly handles energy policy, planning,

Special Leave Petition No. 26731 of 2025 Page 3 of 40

and hydro-power development in the State of Himachal Pradesh.

Under the Industrial Policy of 2019, the Department of MP & Power

is tasked with issuing an enabling notification for concessions in

electricity.

5. The appellant no. 3 is the State of Himachal Pradesh through its

Chief Secretary, Shimla.

6. The appellant no. 4 is the Himachal Pradesh State Electricity Board

(HPEB). The appellant no. 4 was constituted in accordance with the

provisions of the Electricity Act, 1948, and is responsible for

promoting coordinated development of power potential, generation,

transmission, and distribution of electricity within the State of

Himachal Pradesh. Under the Industrial Policy of 2019, the

appellant no. 4 notifies the incentives of a concessional rate of

electricity charges in the Schedule of Tariff for Himachal Pradesh

on a year-to-year basis.

7. The respondent is a manufacturer engaged in industrial metal

processing and stamping. The respondent has undertaken a

substantial investment in 2020.

B. FACTUAL MATRIX

8. The appellant no. 1 vide its notification dated 16.08.2019, notified

the Industrial Policy of 2019 in the State of Himachal Pradesh,

along with the said Rules, with an intent to make available the

incentives, subsidies, and infrastructure to industrialists and to

attract industrial investment in the State. The policy objectives

inter alia aimed to create a congenial investment climate, to attract

further investment and boost employment in the State.

Special Leave Petition No. 26731 of 2025 Page 4 of 40

9. Clause 5 of the Industrial Policy of 2019 provides for eligible

enterprises that may avail the incentives under the policy. As per

Clause 5(A), all new industrial enterprises (except a few industries

as listed in the policy) and all existing industrial enterprises

undertaking substantial expansion (except a few industries as

listed in the policy) will be eligible for the incentives, concessions,

and facilities announced under the Industrial Policy of 2019,

subject to the following conditions:

(i) Fulfilment of the eligibility criteria and conditions as stated

in the 2019 Rules;

(ii) Employment of a minimum of 80% bonafide Himachalis out

of the additional employment generated due to the

substantial expansion

10. As per Clause 5(B), the incentives provided under the Industrial

Policy of 2019 will be admissible from the date of commencement

of the commercial production or from the date on which the

respective administrative department issues an enabling

notification to operationalise the incentives notified in the policy,

whichever is later.

11. Clause 16 of the Industrial Policy of 2019 deals with the

concessional rate of electricity charges. As per Clause 16(a), the

eligible enterprises were to receive a 15% discount on the approved

energy charges for the respective category for a period of 3 years.

Whereas, according to Clause 16(b), for the existing industrial

consumers, a rebate of 15% on energy charges was applicable for

additional power consumption beyond the level of the preceding

financial year (FY). However, it was further provided that the

Special Leave Petition No. 26731 of 2025 Page 5 of 40

incentives for concessional rate of electricity charges would be

notified by the issuance of a tariff order on a year-to-year basis by

appellant no. 4 and that it would not be binding upon the appellant

no. 1 during the applicability of the policy. The relevant clauses of

the Industrial Policy of 2019, including its vision statement and

objectives, read thus:

“1. Introduction

[…] The severe climatic conditions, topographical and

geographical severities throw challenges in the process of

industrialization. In such a scenario, the benefits made

available in the form of incentives and subsidies, as well as

the creation of appropriate infrastructure, become the main

instruments to attract industrial investment in the State.

With substantial investment in infrastructural facilities, the

State has been able to offset the location and geographical

disadvantages to a considerable extent. Factors like low

cost quality power, harmonious industrial relations, low

cost of land and clean environment, investor friendly

administration, attractive incentives and tax concessions,

accessibility to Northern markets - all contribute towards

creating a healthy investment climate in our State […]

2. Vision Statement

To create an enabling ecosystem to enhance the scale of

economic development & employment opportunities; ensure

sustainable development & balanced growth of industrial

& service sectors to make Himachal as one of the preferred

destination for investment

3. Objectives

This policy aims to:-

i) serve as a guideline to create a congenial investment

climate for existing industries to grow as well as to attract

further investment in the State for creating employment

opportunities for local youth and to ensure development of

Industrial & Service Sector throughout the State.

xxx xxx xxx

Special Leave Petition No. 26731 of 2025 Page 6 of 40

vii) recognize and encourage the role of large investment to

enhance the scale of economic development, employment

opportunities, ancilliarisation, revenue generation and

remunerative prices to local resources.

xxx xxx xxx

5. Eligible Enterprises for availing incentives under

this Policy:-

(A) All “New Industrial Enterprises” except Industrial

Enterprises engaged in manufacturing activities specified

in the “Negative List” annexed with this policy;

AND

New Enterprises engaged in “Specified Category of Service

Activities” annexed with this policy;

AND

All Existing Industrial Enterprises undertaking Substantial

Expansion except Industrial activities as specified in the

Negative List;

AND

All Existing Service Enterprises engaged in Specified

Category of Service Activities undertaking Substantial

Expansion:

will be eligible for incentives, concessions and facilities

announced under this Policy, subject to:-

Ø fulfilment of the eligibility criteria & conditions as

defined under the ‘Rules regarding Grant of Incentives,

Concessions & Facilities to Industrial & Service

Enterprises in Himachal Pradesh-2019’.

Ø employment of minimum 80% Bonafide Himachalies, at

all levels, directly on regular, contractual, daily basis,

etc. or through contractor or outsourcing agencies at the

time of commencement of commercial

production/operation as well as for the time period it

remains in commercial production/operation in the State

by the New Enterprise set up under this Policy. In case

of Existing Enterprises undertaking substantial

expansion, out of additional employment generated due

to Substantial Expansion employment to atleast 80% of

Bonafide.

(B) Incentives provided under this policy will be admissible

from the date of commencement of commercial

production/operation or from the date on which respective

Special Leave Petition No. 26731 of 2025 Page 7 of 40

administrative department issues enabling notification

under the relevant statute/law to operationalize incentives

notified under this policy, whichever is later.

xxx xxx xxx

16. Concessional rate of electricity charges: (excluding

any surcharge, peak load exemption charge, winter charge,

fuel adjustment charge, service charge, GST or any other

charge under any name in the Tariff Schedule):-

(a) Eligible enterprises would be charged energy charges

15% lower than the approved energy charges for the

respective category for a period of 3 years.

(b) Existing industrial consumers, a rebate of 15% on energy

charges shall be applicable for additional power

consumption beyond the level of the preceding financial

year.

Incentives for concessional rate of electricity charges would

be notified in the Schedule of Tariff for Himachal Pradesh

on a year to year basis by the HP State Electricity Board

and that it would not be binding upon the State Government

during the applicability of this Policy.”

(Emphasis Supplied)

12. Furthermore, in order to complement the Industrial Policy of 2019,

the appellant no. 1 had also notified the 2019 Rules. Rule 4 therein

dealt with the provisions of eligibility of industrial enterprises for

the purpose of availing the incentives under the Industrial Policy of

2019. Rule 4(B) provided that all existing industrial enterprises

undertaking substantial expansion (except a few industries as

stated in the policy) will be eligible for incentives, concessions, and

facilities under the 2019 Rules, subject inter alia to the following

conditions:

(i) Fulfilment of such requirements as specified under Clause 4;

(ii) The incentive provided under the 2019 Rules would be

admissible from the date of undertaking substantial expansion

Special Leave Petition No. 26731 of 2025 Page 8 of 40

taken on record by the Department of Industries or from the

date on which the respective administrative department issued

enabling notification under the relevant statute/law to

operationalize incentives notified under this policy, whichever

was later. In case of an existing enterprise having undertaken

subsequent expansions after the first substantial expansion,

the same would be taken on record for the purpose of

incentives, concessions, and facilities provided under the 2019

Rules for additional investment;

(iii) In the case of employment generated due to substantial

expansion, it would have to employ 80% bonafide Himachalis;

(iv) The incentives, concessions, and facilities under the 2019

Rules were to be provided under the discretionary powers of

the appellant no. 1, and would not create any claim/right

against them and are not enforceable in any court of law. The

appellant no. 1 was empowered in its wisdom to decide to

amend, alter, delete or revise any or all of the incentives

notified under the 2019 Rules and no claim on account of such

a decision would be entertained.

13. The relevant provisions of the 2019 Rules read thus:

“4. Eligibility:-

xxx xxx xxx

B) All Existing Industrial Enterprises undertaking

substantial Expansion (except Industrial activities specified

in the Negative List) and Existing Service Enterprises

undertaking substantial Expansion will be eligible for

incentives, concessions and facilities under these Rules,

subject to:

a) Fulfilment of such requirements as specified under clause

4A (a to f).

Special Leave Petition No. 26731 of 2025 Page 9 of 40

b) Condition that incentive provided under these Rules will

be admissible from the date of undertaking Substantial

Expansion taken on record by the Department or from the

date on which respective administrative department issues

enabling notification(s) under the relevant statute/law to

operationalize incentives announced under these Rules,

whichever is later. In case existing enterprise undertakes

subsequent expansion(s) after first Substantial Expansion,

same would be taken on record for the purpose of

incentives, concession & facilities provided under these

Rules for additional investment.

c) Condition that in case employment is generated due to

Substantial Expansion, it will employ 80% Bonafide

Himachal directly or regular contractual, daily basis etc. or

through contractor or outsourcing agencies.

C) Eligible MSME Enterprises fullfilling the Eligibility Criteria

would be entitled to avail incentives and concessions

provided under these Rules.

D) Eligible Large Enterprises fulfilling the Eligibility Criteria

would be entitled to avail incentives and concessions

provided under these Rules.

E) Eligible Anchor Enterprises fulfilling the Eligibility Criteria

would be entitled to avail incentives and concessions

provided under these Rules.

F) Incentives, concession & facilities under these Rules are

provided under the discretionary powers of the State

Government, do not create any claim /right against the

Government and are not enforceable in any court of law. The

Government in its wisdom may decide to amend, alter,

delete or revise any or all of the incentives notified under

these rules and no claim on account of such a decision will

be entertained.

xxx xxx xxx

16(i) Concessional rate of electricity charges:

(excluding any surcharge, peak load exemption charge,

winter charge, fuel adjustment charge, service charge, GST

or any other charge under any name in the Tariff Schedule):-

a) Eligible enterprises would be charged energy charges

15% lower than the approved energy charges for the

respective category for a period of 3 years

b) Existing industrial consumers, a rebate of 15% on energy

charges shall be applicable for additional power

consumption beyond the level of preceding financial year.

Special Leave Petition No. 26731 of 2025 Page 10 of 40

Incentives of concessional rate of electricity charges would

be notified in the Schedule of Tariff for Himachal Pradesh

on year to year basis by the H.P. State Electricity Board and

it would not be binding upon the State Government during

the applicability of Policy.

(Emphasis Supplied)

14. Upon the introduction of the Industrial Policy of 2019, the

appellant no. 4 – Himachal Pradesh State Electricity Board, passed

the tariff order for the FY 2019-20, inter alia, with the following

conditions:

(i) For the existing industrial consumer, a rebate of 15% on

energy charges shall be applicable for the additional power

consumption beyond the level of FY 2018-19, and

(ii) For new industries coming into production after 01.07.2019,

the energy charges shall be 15% lower than the approved

energy charges for the respective category for a period of 3

years.

15. Pursuant to the introduction of the Industrial Policy of 2019 and

tariff order for FY 2019-20, the respondent company, on

01.06.2020, applied for the expansion of its manufacturing unit

vide application bearing no. 16562 addressed to the appellant no.

1 authority.

16. On 06.06.2020, the appellant no. 4 passed the tariff order for FY

2020-21, inter alia, with the following conditions:

(i) For existing industries that have undergone expansion in the

FY 2018-19 onwards and/or shall be undergoing expansion

in the FY 2020-21, energy charges shall be 10% lower than

the approved energy charges corresponding to the respective

Special Leave Petition No. 26731 of 2025 Page 11 of 40

category for a period of 3 years for the quantum of energy

consumption corresponding to a proportionate increase in

contract demand. Provided that such expansion i s

undertaken during 1.07.2019 to 31.05.2020, the energy

charges shall be 15% lower than the approved energy charges

for the respective category for a period of 3 years for the

quantum of energy consumption corresponding to a

proportionate increase in contract demand.

(ii) For new industries coming into production after 01.06.2020,

the energy charges shall be 10% lower than the approved

energy charges for the respective category for a period of 3

years.

17. The respondent company addressed a letter dated 11.06.2020 to

the Chief Minister of the State of Himachal Pradesh for the

redressal of its grievances with respect to the incentives promised

under the Industrial Policy of 2019. In this letter, the respondent

company highlighted that the tariff fixed under the tariff order for

FY 2020-21 for the existing industrial enterprises undergoing

expansion was not in consonance with the incentives as assured in

the Industrial Policy of 2019 in as much as for the existing

industries that were undergoing expansion in the FY 2018-19

onwards, the energy charges were fixed at 10% lower than the

approved energy charges, whereas as per the Industrial Policy of

2019, it should have been 15% lower than the approved energy

charges.

18. In response to the letter referred to above, the Additional Chief

Secretary to the appellant no. 1 addressed a communication dated

11.06.2020 to the respondent inter alia stating that the enabling

Special Leave Petition No. 26731 of 2025 Page 12 of 40

notification related to the tariff incentive was to be notified by

appellant no. 2 and that the same was being processed.

19. On 13.07.2020, the application for expansion submitted by the

respondent was approved by the State Single Window Clearance &

Monitoring Authority in its 13

th Meeting.

20. The appellants thereafter amended the Industrial Policy of 2019

and also the 2019 Rules respectively on 07.10.2020 to insert the

provisions relating to the duration of the Industrial Policy of 2019

by inserting inter alia Clause 5(C) therein, which stated that

incentives under the Industrial Policy of 2019 will remain in force

for existing enterprises undertaking substantial expansion which

start commercial production on or before 31.12.2025. Clause 5(C)

reads as under:

“5(C) Duration:- Incentive provided under this Policy will

remain in force for new enterprises which commence

commercial production/ operation on or before 31.12.2025.

Incentive provided under this Policy will remain in force for

existing enterprises undertaking substantial expansion

which start commercial production/ operation after

expansion on or before 31.12.2025.”

(Emphasis Supplied)

21. On 12.02.2021, the appellant no. 1 issued a certificate of

substantial expansion certifying that the respondent expanded its

unit. The COP Certificate stated as follows:

(a) The respondent unit had commenced the commercial

production on 11.04.2006;

(b) The respondent was registered with appellant no. 1 on a

permanent basis as a Small Enterprise since 17.11.2008;

Special Leave Petition No. 26731 of 2025 Page 13 of 40

(c) The expansion proposal of the respondent was approved by the

State Single Window Clearance & Monitoring Authority in its

13

th Meeting dated 13.07.2020;

(d) The respondent unit implemented the expansion proposal and

was promoted to a Large & Medium Scale unit;

(e) The certificate will be subject to the eligibility of the respondent

unit regarding any incentives as per the guidelines, rules,

regulation of the concerned department.

22. On 17.02.2021, the respondent sent a communication to the

appellant no. 3 wherein it was informed that the respondent and

similarly situated persons were feeling cheated by the State, as the

State Government failed to notify the incentive of concessional rates

of electricity charges as given to eligible enterprises under the

Industrial Policy of 2019. The respondent stated in the said

communication that the appellant no. 4 had orally communicated

to it that they would not be in position to grant the said incentive

in the respondent’s favour, as no communication or direction to

implement the said incentive had been received from the State

Government.

23. The respondent, thereafter on 15.03.2021, filed a Writ Petition

before the High Court inter alia seeking the issuance of an enabling

notification for the incentive of a concessional rate of electricity

charges in terms of Clause 16(a) of the Industrial Policy of 2019.

The respondent also prayed for the quashing of Clause 5B of the

Industrial Policy of 2019, along with Rules 4B(b) and 4F of the 2019

Rules respectively.

Special Leave Petition No. 26731 of 2025 Page 14 of 40

24. Post the aforesaid, the appellant no. 4 on two occasions, i.e. on

31.05.2021 and 06.06.2020, passed the tariff order for FY 2021-22

and FY 2022-23 respectively, inter alia, with the conditions that the

existing enterprises which have undergone expansion during

01.04.2018 to 30.06.2019 and/or during 01.06.2020 to

31.05.2021, the energy charges will be 10% lower than the

approved energy charges corresponding to the respective category

for a period of three years for the quantum of energy consumption

corresponding to the proportionate increase in contract demand.

Provided that, such expansion, if undertaken during 1.07.2019 to

31.05.2020 and/or shall be undergoing expansion on or after 01.06

2021, the energy charges shall be 15% lower than the approved

energy charges for the respective category for a period of 3 years for

the quantum of energy consumption corresponding to the

proportionate increase in contract demand.

25. During the pendency of the proceedings before the High Court, the

appellant State, on 29.04.2022, amended the Industrial Policy of

2019 along with the 2019 Rules. Among various amendments,

Clauses 16 of the Industrial Policy of 2019 and 2019 Rules were

also amended, wherein the expression “eligible enterprises” was

changed to “new enterprises” in Clause 16(a) and Rule 16(i)(a). It

is argued by the appellants that this amendment in Clause 16(a)

and Rule 16(i)(a) was clarificatory in nature and thus applied

retrospectively. As per Clause 4 of the amendment notification, the

amended provisions in the amendment notification were to be

enforced with immediate effect. The amended Clause 16 and Rule

16 are stated as under:

“16. Concessional rate of electricity charges: (excluding any

surcharge, peak, load exemption charge, winter charge, fuel

Special Leave Petition No. 26731 of 2025 Page 15 of 40

adjustment charge, service charge, GST or any other charge

under any name in the Tariff Schedule):

a) New enterprises would be charged energy charges 15%

lower than the approved energy charges for the respective

category for a period of 03 years,

b) Existing industrial consumers undertaking

substantial expansion as per these Rules would be

eligible for a rebate of 15% on energy charges for additional

power consumption beyond the level of preceding financial

year for a period of 03 years […]

xxx xxx xxx

16(i) Concessional rate of electricity charges: (excluding any

surcharge, peak load exemption charge, winter charge, fuel

adjustment, charge, service charge, GST or any other charge

under any name in the Tariff Schedule):-

a) New enterprises would be charged energy charges 15%

lower than the approved energy charges for the respective

category for a period of 03 years.

b) Existing industrial consumers undertaking

substantial expansion as per these Rules would be

eligible for a rebate of 15% on energy charges for additional

power consumption beyond the level of the preceding

financial year for a period of 03 years. […]”

(Emphasis Supplied)

26. Pursuant to the above, the High Court passed the impugned

judgment and directed the appellant s to issue the enabling

notification in terms of the incentive under Clause 16(a) of the

Industrial Policy of 2019 to the respondent and simultaneously set

aside Clause 5B, along with Rules 4(B)(b) and 4F of the 2019 Rules

respectively.

27. In such circumstances referred to above, the appellants are here

before us with the present appeal.

Special Leave Petition No. 26731 of 2025 Page 16 of 40

C. SUBMISSIONS OF THE APPELLANTS

28. Mr. P Chidambaram, Mr. Kapil Sibal, and Mr. Anup Rattan, the

learned senior counsel, along with Mr. Vaibhav Srivastava, the

learned AAG, appeared for the appellants. They submitted that in

the Industrial Policy of 2019 and 2019 Rules respectively, the

“eligible enterprises” were classified into (i) new industrial

enterprises and (ii) existing industrial enterprises. The policy

granted several benefits to each of them, one of which is a

concessional rate of electricity charges. As per Clause 16 of the

unamended Industrial Policy of 2019, in sub-clause (a), the eligible

enterprises were to be charged energy charges 15% lower than the

approved energy charges for a period of 3 years, and in sub-clause

(b), the existing industrial consumers were to be provided a rebate

of 15% on energy charges for additional consumption beyond the

level of the preceding financial year. It also provided that incentives

of concessional rate of electricity charges would be notified in the

schedule of tariff for the State of Himachal Pradesh on a year to

year basis by the appellant no. 4. In this background, the learned

counsel submitted that the word “eligible” in Clause 16(a) was a

drafting error. Rather, the same should have been replaced with

the word “new”. The same error occurred in Rule 16(i)(a) of the

2019 Rules as well. Another error occurred in Rule 16(i)(b) of the

2019 Rules, where the words “substantial expansion” were

inadvertently omitted. These errors were corrected vide the

amendment notification dated 29.04.2022 wherein the word

“eligible” in Clause 16(a) of the industrial policy of 2019 was

replaced with the word “new” and the phrase “substantial

expansion” was inserted in Rule 16(i)(b) of the 2019 Rules. Thus,

Special Leave Petition No. 26731 of 2025 Page 17 of 40

the amended language of Rule 16 stated that in the case of new

industrial enterprises, energy charges will be levied 15% lower than

the approved energy charges for 3 years and that in the case of

existing industrial enterprises undergoing expansion, a rebate of

15% would be given on ener gy charges for additional power

consumption beyond the level of preceding financial year for 3

years.

29. On the basis of this, the learned counsel argued that the

respondent was an existing industry being set up in 2005 itself. A

substantial expansion was carried out by the respondent by

making an application dated 01.06.2020, approval by the Single

Window System on 13.07.2020, and issuance of the COP Certificate

on 12.02.2021, respectively. The total cost of additions was Rs.

807.80 Lakh. Thus, admittedly, the respondent is an existing

industry, and for this reason, it cannot be given incentives that

were meant for the new industry.

30. The learned counsel argued that the respondent’s claim that it is

both “existing” as well as “eligible” in terms of Clause 16 is illogical.

The learned counsel argued that the amendment notification was

merely clarificatory and, thus, would apply retrospectively.

31. The learned counsel further argued that the r espondent has

already been duly given the rebate incentive of 15% on the energy

charges for additional power consumption as per Clause 16(b) of

the Industrial Policy of 2019, and Rule 16(i)(b) of the 2019 Rules.

Thus, having received the rebate incentive as an existing industrial

enterprise undertaking substantial expansion under Clause 16(b)

of the policy, the respondent now cannot claim further benefit

under Clause 16(a) as it will amount to double benefit.

Special Leave Petition No. 26731 of 2025 Page 18 of 40

D. SUBMISSIONS OF THE RESPONDENT

32. Mr. Navin Pahwa, the learned senior counsel, appeared for the

respondent, wherein he submitted that the appellants are bound

by the doctrine of promissory estoppel as in terms of the Industrial

Policy of 2019, the respondent had acted upon and undertook

substantial expansion in the plant & machinery to the extent of

88.69%, far exceeding the minimum requirement of 25% mandate

prescribed under the Industrial Policy of 2019. He further argued

that the respondent, having altered its position based on the

representations and assurances made by the appellants in the

policy and in communications, became entitled to the incentive

under the Industrial Policy of 2019 on 12.02.2021 when the

respondent was issued the COP Certificate by the appellant State.

He argued that till the date of issuance of the certificate, i.e.

12.02.2021, no amendment in Clause 16 was effectuated. Further,

he submitted that the subsequent modification of Clause 16(a) vide

amendment notification dated 29.04.2022, wherein the words

“eligible enterprise” were substituted with “new enterprises”, is

inconsequential as Clause 4 of the amendment notification

expressly states that the amended provisions shall come into force

with “immediate effect” of the notification, thus, providing for

prospective operation for the amended Clauses. Thus, the amended

Clause 16(a) of the Industrial Policy of 2019 would not affect the

entitlement of the respondent, as the respondent’s rights stood

crystallised on 12.02.2021 when the appellant issued the COP

Certificate.

33. The learned counsel further submitted that, without prejudice to

the above submission, the amendment notification dated

Special Leave Petition No. 26731 of 2025 Page 19 of 40

29.04.2022 has no bearing on the issue involved in the present lis

as the respondent’s entitlement to concession stood crystallised on

12.02.2021, much before the amendment notification, when the

respondent was issued the COP Certificate by the appellant State.

E. ISSUES FOR THE DETERMINATION

34. Having heard the learned counsel appearing for the parties and

having gone through the materials on record, the questions that

fall for our consideration are as follows:

(I). Whether the incentive in the form of concessional rate of

electricity charges under Clause 16(a) of the Industrial Policy

of 2019, read with Rule 16(i)(a) of the 2019 Rules, was ever

intended to be provided to the existing industrial enterprises

undergoing substantial expansion, and what effect the

amendment notification dated 29.04.2022 has on the

applicability of the said provisions?

(II). Whether the doctrine of promissory estoppel apply in favour

of the respondent company?

F. ANALYSIS

(I). Whether the incentive in the form of concessional rate of

electricity charges under Clause 16(a) of the Industrial Policy

of 2019, read with Rule 16(i)(a) of the 2019 Rules, was ever

intended to be provided to the existing industrial enterprises

undergoing substantial expansion, and what effect the

amendment notification dated 29.04.2022 has on the

applicability of the said clauses?

Special Leave Petition No. 26731 of 2025 Page 20 of 40

35. As discussed above, Clause 5 of the Industrial Policy of 2019 is the

eligibility clause, which provides various categories of eligible

enterprises that may avail the incentives under the policy.

According to Clause 5(A), all new industrial enterprises and all

existing industrial enterprises undertaking substantial expansion,

respectively (except a few industries as listed in the policy itself),

are eligible for the incentives, concessions, and facilities announced

under the Industrial Policy of 2019, subject to the fulfilment of two

conditions, i.e. (i) meeting the eligibility criteria and conditions as

stated in the 2019 Rules and (ii) ensuring employment of a

minimum of 80% bonafide Himachalis out of the additional

employment generated due to the substantial expansion.

36. According to Clause 16(a) of the Industrial Policy of 2019, which

deals with the concessional rate of electricity charges, the eligible

enterprises were to receive a 15% discount on the approved energy

charges for the respective category for a period of 3 years. Whereas,

according to Clause 16(b), the existing industrial consumers are

given a rebate of 15% on energy charges for additional power

consumption in comparison to the consumption of the preceding

year. Under Clause 16, the appellant no. 4 was obliged to notify the

incentives for concessional rate of electricity by the issuance of a

tariff order on a year-to-year basis.

37. Rule 2(XII) of the 2019 Rules defines the term “eligible enterprise”

as an enterprise that fulfils the eligibility criteria as per Rule 4 of

the 2019 Rules. The extract of the relevant definition is as under:

“2(XII) “Eligible Enterprise” means an enterprise fulfilling

the eligibility criteria as per the provisions made under para

5 [sic] of these Rules.”

Special Leave Petition No. 26731 of 2025 Page 21 of 40

38. Further, Rule 2(XIII) of the 2019 Rules defines the term “existing

industrial enterprise” as an industrial enterprise engaged in the

manufacturing of goods and registered/acknowledged/taken on

record by the Department of Industries as such and has

commenced the commercial production before the appointed date.

The “appointed date” is defined in Rule 2(IV) to mean the date on

which the 2019 Rules have come into force, i.e., 16.08.2019. Rule

2(XXXIX) also defines the term “substantial expansion” to mean an

increase of at least 25% in the value of plant and machinery by an

existing enterprise for the purpose of expansion of capacity or

modernisation, or diversification, and taken on record by the

Department of Industries. The extracts of the relevant definitions

are as under:

“2(IV) “Appointed date” means date on which these Rules

come into force.

xxx xxx xxx

2(XIII) “Existing Industrial Enterprise” means an Industrial

Enterprise engaged in manufacturing of goods and

registered/acknowledged/taken on record by the

Department and has commenced commercial production

before the Appointed Date.

xxx xxx xxx

2(XXXIX) “Substantial Expansion” means an increase by

not less than 25% in the value of Plant and Machinery by

Existing and new Enterprise for the purpose of expansion of

capacity or modernization diversification, and taken on

record by the department.”

(Emphasis Supplied)

39. It is pertinent to note that the respondent was established in the

year 2006, and it commenced commercial production on

11.04.2006, i.e. well before the appointed date, which is

16.08.2019. Additionally, the respondent had been registered with

Special Leave Petition No. 26731 of 2025 Page 22 of 40

the Department of Industries on a permanent basis as a Small

Scale Enterprise since 17.11.2008. The expansion proposal was

approved by the Single Window Clearance Agency of the

Department of Industries on 13.07.2020, post which the

respondent was granted the status of Large Scale Enterprise. Thus,

there is no doubt that the respondent company is an existing

industrial enterprise within the definition as provided in Rule

2(XIII) of the 2019 Rules. Further, a bare perusal of the COP

Certificate would indicate that the respondent had undertaken

expansion in plant and machinery to the extent of overall 88.69%,

which by far exceeds the required threshold of a minimum 25% as

provided in Rule 2(XXXIX) of the 2019 Rule to qualify as undergoing

substantial extension and that the additional employment is

generated to the tune of 80% by employing additional 21 persons,

out of which 17 are Himachalis. Further, the total employment

provided by the respondent is also to the tune of 80%, wherein a

total of 342 persons have been so far employed, out of which 275

are bona fide Himachalis. Thus, on conjoint reading of unamended

Clause 5(A) along with Rule 2(XIII) and 2(XXXIX) respectively, there

is no doubt that the respondent, for purposes of the Industrial

Policy of 2019, would be an “eligible enterprise” having undertaken

a substantial expansion.

40. In the present case, a considerable part of the controversy centres

around the true scope, scheme, and interplay of Clauses 16(a) and

16(b) of the Industrial Policy of 2019, read with Rule 16(i) of the

2019 Rules. The principal question that arises for our

consideration is whether Clause 16(a), as it originally stood prior to

the amendment dated 29.04.2022, was intended to extend the

benefit of concessional energy charges to all eligible enterprises,

Special Leave Petition No. 26731 of 2025 Page 23 of 40

including existing industrial enterprises undertaking substantial

expansion, or whether the said clause was always intended to

operate exclusively in respect of new industrial enterprises, with

enterprises undergoing substantial expansion being confined to the

distinct rebate benefit contemplated under Clause 16(b). Since the

respondent admittedly falls within the category of an existing

industrial enterprise undertaking substantial expansion and has

already availed the benefit contemplated under Clause 16(b), it

becomes necessary to closely examine the structure of Clause 16,

the nature of the incentives contemplated under Clauses 16(a) and

16(b), the contemporaneous tariff orders issued by the appellant

no. 4, and the effect of the amendment notification d ated

29.04.2022. It is only upon such an examination that the true

intent underlying the Industrial Policy of 2019 and the validity of

the respondent’s claim for concessional energy charges under

Clause 16(a) can be properly determined.

41. With respect to Clause 16, it is pertinent to note that under the

Industrial Policy of 2019, incentives of a concessional rate of

electricity charges were to be notified by the appellant no. 4 by

issuing tariff orders on an annual basis. The respondent, being a

large industrial unit, fell within the tariff category of “Large Industry

Power Supply (LIPS)”.

42. It is significant to note that various tariff orders and schedules of

rates issued by the appellant no. 4 for the large industrial

consumers till the year 2017 only provided for the benefit of night-

time concessions, i.e. a concession on night-time consumption of

energy from 10:00 PM to 06:00 AM. However, for FY 2018-19, the

appellant no. 4 issued a tariff order consisting of (i) a benefit of 10%

Special Leave Petition No. 26731 of 2025 Page 24 of 40

rebate on additional power consumption beyond the level of FY

2017-18 for existing industrial consumers; (ii) a benefit of 10%

lower energy charges than the approved energy charges for new

industries coming into production after 01.04.2018; and (iii) night-

time concessions for consumption of energy at night. Thereafter,

for FY 2019-20, the appellant no. 4 issued a tariff order consisting

of (i) an incentive of 15% rebate on additional power consumption

beyond the level of FY 2018-19 for existing industrial consumers;

(ii) an incentive of 10% lower energy charges than the approved

energy charges for new industrial consumers coming into

production after 30.06.2019 and an incentive of 15% lower energy

charges than the approved energy charges for new industrial

consumers coming into production after 01.07.2019; and (iii) same

night-time concession as above. The tariff orders for FY 2018-19

and FY 2019-20 were applicable from 01.04.2018 and 01.07.2019.

43. Following the above, the Industrial Policy of 2019 was introduced

on 16.08.2019 (i.e. after the issuance of the above-mentioned tariff

orders), wherein Clause 16 was inserted carrying the verbatim

language of the benefits as was provided in the tariff order for FY

2018-19 and FY 2019-20, but with an inadvertent error of stating

a benefit that was meant for new industries in the tariff order now

inadvertently employed for both new industrial enterprises as well

as existing industrial enterprises in Clause 16(a) and Rule 16(i)(a).

Thereafter, the appellant no. 4 issued the tariff order for FY 2020-

21, consisting of (i) For existing industries which have undergone

expansion in the FY 2018-19 and FY 2020-21, energy charges shall

be 10% lower for 3 years on the increased contract demand from

the previous year; (ii) For existing industries which have undergone

expansion in the FY 2019 -20 i.e., between 01.07.2019 to

Special Leave Petition No. 26731 of 2025 Page 25 of 40

31.05.2020, energy charges shall be 15% lower for 3 years on the

increased contract demand from the previous year; (iii) For new

industries coming into production after 01.06.2020 , energy

charges shall be 10% lower for 3 years; and (iv) same night-time

concession as above. The said tariff order for FY 2020-21 was

applicable from 01.06.2020.

44. It is also significant to note that the Industrial Policy of 2019

introduced a wide range of incentives, concessions, subsidies, and

fiscal facilities primarily for two distinct categories of enterprises as

recognised under Clause 5 thereof, namely: (i) new industrial

enterprises, and (ii) existing industrial enterprises undertaking

substantial expansion. The entire structure of the policy appears to

proceed on the basis of this clear classification. On a conjoint

reading of Clause 16 along with the contemporaneous tariff orders

issued by the appellant no. 4, it becomes evident that Clause 16(a)

was intended to operate in respect of new industrial enterprises

alone, under which such enterprises were to be granted the benefit

of energy charges at rates 15% lower than the approved energy

charges for a period of three years from the commencement of

production.

45. Clause 16(b), on the other hand, was intended to incentivise

existing industrial enterprises undertaking substantial expansion

by granting a rebate of 15% on additional power consumption over

and above the consumption level of the previous year. Thus, while

Clause 16(a) contemplated a general concessional tariff structure

for newly established industries, Clause 16(b) contemplated an

incremental consumption-linked rebate for already existing units

expanding their production capacity.

Special Leave Petition No. 26731 of 2025 Page 26 of 40

46. If the contention of the respondent were to be accepted, namely,

that the expression “eligible industrial enterprises” occurring in

Clause 16(a) included not only new industrial enterprises but also

existing industrial enterprises undergoing substantial expansion,

then such expanding units would become entitled to claim both the

concessional energy charges under Clause 16 (a) as well as the

rebate on additional consumption under Clause 16(b). Such an

interpretation would necessarily result in a situation where the

same class of industrial enterprises undergoing substantial

expansion would receive a dual or overlapping benefit in respect of

electricity charges. In our considered view, neither the scheme of

the Industrial Policy of 2019 nor the contemporaneous tariff orders

indicates that the State ever intended to confer such double

benefits upon the same category of enterprises.

47. Such an interpretation would also lead to an anomalous

consequence whereby a benefit specifically intended for new

industrial enterprises, i.e., concessional lower energy charges for a

period of 3 years aimed at encouraging the establishment of fresh

industrial units within the State, would stand extended even to

existing industrial enterprises merely because they had

undertaken expansion. The very object underlying the distinction

between new industrial enterprises and existing industrial

enterprises undergoing substantial expansion would thereby stand

obliterated. The Policy consciously contemplated separate

categories of incentives for distinct classes of industries depending

upon their nature and stage of industrial activity. While new

industrial enterprises were sought to be incentivised by

concessional energy charges so as to attract fresh industrial

investment into the State, existing industrial enterprises

Special Leave Petition No. 26731 of 2025 Page 27 of 40

undertaking substantial expansion were separately incentivised

through a rebate on incremental consumption so as to encourage

improvement of existing industrial capacity.

48. Accepting the interpretation canvassed by the respondent would

therefore not only disturb the internal scheme and classification

underlying Clause 16, but would also result in an unintended fiscal

burden upon the State by permitting overlapping concessions in

favour of one class of enterprises. Such a construction, in our

opinion, would run contrary to the larger public interest underlying

the Policy, which was to ensure balanced and rational distribution

of incentives, concessions, facilities amongst different categories of

industrial enterprises, and not to disproportionately enrich one

category by extending cumulative benefits never contemplated in

the Policy itself. In our view, it is precisely to preserve this

distinction and remove the ambiguity created by the inadvertent

use of the expression “eligible enterprises” in Clause 16(a) and Rule

16(i)(a) that the amendment dated 29.04.2022 came to be issued.

49. Having examined the scope of the provisions of the Policy, it now

becomes necessary to consider the effect of the amendment

notification dated 29.04.2022, which the appellants rely upon in

support of their contention. According to the appellants, the

amendment to Clause 16 was merely clarificatory and, therefore,

retrospective in nature, with the result that the respondent would

stand disentitled from claiming the concession under Clause 16(a).

The respondent, on the other hand, contends that the amendment

has a prospective operation as Clause 4 of the amendment

notification dated 29.04.2022, expressly stipulated that the

amended provisions shall come into force with “immediate effect”.

Special Leave Petition No. 26731 of 2025 Page 28 of 40

50. For this, it is important to understand that the amendment

notification was issued clarifying the inadvertent error wherein the

word “eligible” in Clause 16(a) and Rule 16(i)(a) was replaced with

the word “new” and the phrase “substantial expansion” was

inserted in Clause 16(b) and Rule 16(i)(b). Since various other

Clauses and Rules were amended by the said amendment

notification, the appellants inserted a ‘Note’ therein stating that

“provisions amended have been highlighted as Italic and

Underlined”. It is pertinent to mention that none of the

amendments clarified in Clause 16 and Rule 16 vide amendment

notification was italicised or underlined which further indicates

that the amendment to Clause 16 and Rule 16 was regarded by the

appellants as clarificatory in nature as the benefits therein were

always intended to be made available to two classes of industries

i.e., new industrial enterprise and existing industrial enterprise

undergoing expansion, respectively. At this juncture, it becomes

equally important to notice that one amendment, which was in fact

introduced substantively for the first time, namely, the stipulation

limiting the duration of the benefit under Clause 16(b) and Rule

16(i)(b) to a period of three years, was specifically italicised and

underlined in the amendment notification.

51. Therefore, there can be no manner of doubt that although several

amended provisions introduced by the amendment notification

dated 29.04.2022 may have prospective application by virtue of

Clause 4 thereof, which stipulated that the amended provisions

shall come into force with “immediate effect”, the amendments

carried out in Clause 16 and Rule 16, except to the limited extent

whereby the duration of the benefit under Clause 16(b) and Rule

Special Leave Petition No. 26731 of 2025 Page 29 of 40

16(i)(b) was prescribed for the first time, were merely clarificatory

in nature. The substitution of the word “eligible” with the word

“new” in Clause 16(a) and Rule 16(i)(a), and the insertion of the

expression “substantial expansion” in Clause 16(b) and Rule

16(i)(b), did not introduce any new class of beneficiaries, nor did it

create or extinguish any substantive right. Rather, the amendment

merely clarified what was always intended by the appellants,

namely, that the concessional lower energy charges contemplated

under Clause 16(a) were confined to new industrial enterprises,

whereas the rebate on additional power consumption under Clause

16(b) was intended for existing industrial enterprises undergoing

substantial expansion. Being clarificatory in character, the

amendment would necessarily relate back to and operate as part of

the original policy.

(II). Whether the doctrine of promissory estoppel applies in favour

of the respondent company?

52. The respondent has contended that even assuming that the

amendment notification dated 22.09.2022 was held applicable, the

appellants would nevertheless be precluded from denying the

benefit under Clause 16(a) by virtue of the doctrine of promissory

estoppel. According to the respondent, the appellants held out a

clear and unequivocal representation to the respondent that

eligible enterprises would be entitled to the promised incentives,

and acting upon such representation, the respondent altered its

position by making substantial investments and commencing

commercial production. The respondent further argues that the

appellants had approved its proposal for expansion on 13.07.2020,

and issued the COP Certificate dated 12.02.2021 in favour of the

Special Leave Petition No. 26731 of 2025 Page 30 of 40

respondent. The appellants, on the other hand, argued that Rule

4(F) of the 2019 Rules specifically provided that incentives,

concessions, and facilities under these Rules were provided under

the discretionary powers of the State Government and that they

could, in their wisdom, decide to amend, alter, delete or revise any

or all of the incentives notified under the Policy and Rules. The

appellants contended that privileges under the policy can be

withdrawn by the State Government at any time, considering the

measures of fiscal policy.

53. Although we have come to the conclusion that the concessional

benefit contemplated under Clause 16(a) of the Industrial Policy of

2019, read with Rule 16(i)(a) of the 2019 Rules, was always

intended exclusively for new industrial enterprises and not for

existing industrial enterprises undergoing substantial expansion,

and that the amendment notification dated 29.04.2022, insofar as

Clause 16 and Rule 16 are concerned, was merely clarificatory in

nature, we nevertheless deem it appropriate to examine the law

relating to the doctrine of promissory estoppel, particularly with a

view to doing complete justice between the parties and for the

definitive settlement of all questions arising in the present lis.

54. It is a well-established principle that the Government has the power

to grant, modify, alter, or withdraw fiscal benefits in the public

interest. In the case of Shree Sidhbali Steels Ltd. v. State of

U.P., reported in (2011) 3 SCC 193, the State Government, under

its industrial policy dated 30.04.1990, had assured to new

entrepreneurs a hill development rebate to the extent of 33.33% on

the total electricity charges for a period of five years. The said

benefit was thereafter extended for a further period of five years in

Special Leave Petition No. 26731 of 2025 Page 31 of 40

respect of new industrial units established up to 31.03.1997.

Subsequently, by notifications dated 18.06.1998 and 25.01.1999,

a uniform electricity tariff was introduced, resulting in the rebate

being curtailed to 17%. Thereafter, by a further notification dated

07.08.2000, the hill development rebate came to be withdrawn

altogether. A challenge to the aforesaid notifications was rejected

by this Court, which held that the State Government was

competent, in exercise of its statutory powers, to modify or

withdraw the rebate in public interest, and that the doctrine of

promissory estoppel would not prevent such withdrawal where the

concession was granted under statutory authority, subject to the

Government’s continuing power. While considering the doctrine,

this Court placed reliance upon the previous two decisions of this

Court in State of Rajasthan v. J.K. Udaipur Udyog Ltd. ,

reported in (2004) 7 SCC 673, and Arvind Industries v. State of

Gujarat, reported in (1995) 6 SCC 53.

55. In paragraph no. 25 of J.K. Udaipur Udyog Ltd. (supra), it was

observed that the recipient of a concession acquires no legally

enforceable right against the Government except to avail the

concession during the currency of its grant, such right being

defeasible inasmuch as it may be taken away in exercise of the very

power under which the exemption was conferred. However, we are

of the view that this observation must necessarily be read along

with paragraph no. 26 of the same decision, wherein this Court

clarified that what has been granted may indeed be withdrawn in

public interest, unless the Government is precluded from doing so

on the ground of promissory estoppel, a doctrine which itself

remains subject to considerations of equity and public interest.

Special Leave Petition No. 26731 of 2025 Page 32 of 40

56. Similarly, in Arvind Industries (supra), it was claimed by the

Government that the notification giving a concession did not

contain any promise that the benefits given to the new industry

would not be altered from time to time. While rejecting the claim of

the industry as not tenable, this Court has held that the

Government is entitled to grant exemption to industries having

regard to the industrial policy of the Government, but it is equally

free to modify its industrial policy and grant, modify or withdraw

fiscal benefits from time to time. What is important to notice is that

this Court has held that in such circumstances the principle of

promissory estoppel would not be attracted.

57. Thus, what boils down from above is that the Government, in

exercise of the very power under which an exemption, incentive or

other fiscal benefit is granted, remains competent to amend,

modify, or withdraw the same in public interest, and such benefits

are, by their very nature, defeasible. This power, however, is not

unqualified. Where a clear and unequivocal representation has

been made, intended to induce action, and the promisee has, acting

upon such representation, altered his position, the n the

Government may be precluded from resiling therefrom. In such a

case, the doctrine of promissory estoppel would step in, and the

statutory power to withdraw or modify must yield, unless the State

is able to establish an overriding public interest or other equitable

considerations warranting a departure from its earlier promise.

58. Furthermore, in a recent decision of this Court in IFGL

Refractories Ltd. v. Orissa State Financial Corporation ,

reported in 2026 SCC OnLine SC 28, wherein one of us, J.B.

Pardiwala, J., was a part of the Bench, had occasion to consider

Special Leave Petition No. 26731 of 2025 Page 33 of 40

the doctrine of promissory estoppel at considerable length. This

Court in IFGL Refractories Ltd. (supra) considered the following

authorities:

(a) Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P.,

reported in (1979) 2 SCC 409;

(b) Pawan Alloys & Casting (P) Ltd. v. U.P. State Electricity

Board, reported in (1997) 7 SCC 251;

(c) Gujarat State Financial Corpn. v. Lotus Hotels (P) Ltd. ,

reported in (1983) 3 SCC 379;

(d) Tata Metals and Strips Ltd. v. State of Gujara t, reported

in 1991 SCC OnLine Guj 220 ;

(e) Camma Textile Industries v. State of Orissa , reported in

1994 SCC OnLine Ori 207; and

(f) The State of Jharkhand and Ors. v. Brahmputra Metallics

Ltd, Ranchi and anr., reported in (2023) 10 SCC 634.

59. Upon a conspectus of the above authorities discussed in IFGL

Refractories Ltd. (supra) and other cases as dealt above, the

following principles governing the doctrine of promissory estoppel

may be regarded as well-settled:

(i) The doctrine of promissory estoppel is a principle evolved by

equity to avoid injustice. It operates not in the realm of

contract, nor within the technical confines of estoppel under

the law of evidence, but upon the broader considerations of

fairness, justice and good conscience;

(ii) Where one party, by words or conduct, makes to another a

clear, unequivocal and unambiguous promise, intended to

create legal relations or affect a legal relationship to arise in

Special Leave Petition No. 26731 of 2025 Page 34 of 40

the future, knowing or intending that it would be acted upon,

and it is in fact so acted upon, the promise becomes binding

upon the promisor;

(iii) The doctrine of promissory estoppel is a doctrine whose

foundation is that an unconscionable departure by one party

from the subject matter of an assumption which may be of

fact or law, present or future, and which has been adopted by

the other party as the basis of some course of conduct, act or

omission, should not be allowed to pass muster. And the relief

to be given in cases involving the doctrine of promissory

estoppels contains a degree of flexibility which would

ultimately render justice to the aggrieved party;

(iv) The doctrine is not merely defensive in nature. Under Indian

law, it may itself furnish a cause of action and can be

affirmatively enforced where equity so requires;

(v) It is not necessary, in order to attract the doctrine, that the

promisee should prove actual detriment. It is sufficient that

the promisee has altered his position, acting in reliance upon

the promise;

(vi) The alteration of position may consist in making substantial

investments, incurring liabilities, establishing industrial

infrastructure, entering into agreements, or otherwise

rearranging one's affairs on the faith of the representation;

(vii) The doctrine applies with full force against the State, its

departments, statutory corporations and instrumentalities,

including authorities falling within Article 12 of the

Constitution, which cannot arbitrarily resile from a solemn

representation upon which another has acted;

(viii) Where the State or its instrumentalities frame industrial or

fiscal incentive schemes with the avowed object of attracting

Special Leave Petition No. 26731 of 2025 Page 35 of 40

investment and establishing industries, the representations

contained therein are intended to induce entrepreneurs to act

upon them, and such representations are enforceable. Once

an entrepreneur, relying upon such representation,

establishes an industrial unit, commences commercial

production, or otherwise satisfies the eligibility conditions

during the currency of the scheme, and the State agencies

recognise them as being eligible, the promise crystallises, and

an enforceable equity arises in its favour. Whether a benefit

has accrued or not in such cases depends on the facts and

circumstances of each case;

(ix) The grant of an exemption, concession or incentive under a

statutory scheme is ordinarily defeasible, and the

Government is competent to modify or revoke the same in

exercise of the very power under which it was granted. Thus,

what is granted can ordinarily be withdrawn. However, the

Government may be precluded from doing so on the ground

of promissory estoppel, which principle itself remains subject

to considerations of equity and public interest.

(x) Where a specific sanction or approval of incentive, or

eligibility certificate has been issued in favour of an individual

enterprise, and the enterprise has acted thereon by making a

substantial investment, the promisor is all the more firmly

bound by its representation;

(xi) The doctrine rests upon the larger constitutional principle

that State action must be fair, non-arbitrary, and consistent;

governmental assurances are not empty declarations, but

solemn representations on the faith of which citizens regulate

their affairs; and

Special Leave Petition No. 26731 of 2025 Page 36 of 40

(xii) The ultimate object of the doctrine is to prevent manifest

injustice and to ensure that a party, particularly the State,

does not act inconsistently to the prejudice of one who has

relied upon its promise and altered his position irretrievably.

60. Now, adverting to the facts of the present case, it is not in dispute

that the respondent had undertaken a substantial expansion in its

industrial unit, and was issued a COP Certificate dated 12.02.2021

by the appellants. However, the issuance of the said COP Certificate

merely recognised the respondent as an existing industrial

enterprise having undertaken substantial expansion within the

meaning of the Industrial Policy of 2019 and the 2019 Rules. The

COP Certificate, by itself, did not amount to a sanction or grant of

the concessional tariff benefit contemplated under Clause 16(a)

read with Rule 16(i)(a). In this regard, Rule 27 of the 2019 Rules

assumes significance inasmuch as it provides that incentives,

concessions and facilities under the Rules are to be sanctioned and

disbursed by the Director of Industries (appellant no.1 herein) upon

the recommendation of the committee notified by the State

Government. Admittedly, no such sanction or approval in respect

of the concessional tariff benefit under Clause 16(a) was ever

granted in favour of the respondent. In our considered view,

therefore, the respondent cannot contend that any vested or

crystallised right accrued in its favour under Clause 16(a) merely

on the basis of the issuance of the COP Certificate.

61. At best, the issuance of the COP Certificate could have only

constituted a recognition by the appellants that the respondent

belonged to the category of existing industrial enterprises

undergoing substantial expansion and was consequently entitled

Special Leave Petition No. 26731 of 2025 Page 37 of 40

to such incentives as were otherwise lawfully available to that class

of industries under the Policy and the Rules. As discussed by us

hereinabove, the benefit intended for such a class of enterprises

was the rebate mechanism contemplated under Clause 16(b ) read

with Rule 16(i)(b), and not the concessional tariff benefit under

Clause 16(a), which was always intended exclusively for new

industrial enterprises. We have also been apprised by the learned

counsels for both parties that the respondent has already been

extended the benefit contemplated under Clause 16(b) on account

of its having undertaken substantial expansion.

62. Viewed thus, even assuming that the respondent was entitled to

invoke the doctrine of promissory estoppel, the same could not be

stretched so as to create or found an entitlement contrary to the

true scope and intent of the Industrial Policy of 2019. The doctrine

of promissory estoppel cannot be invoked to compel the State to

grant a benefit which was never intended for the class of industry

to which the respondent belonged. Once it is held that Clause 16(a)

was never meant to extend the concessional tariff benefit to existing

industrial enterprises undergoing substantial expansion, the very

foundation of the respondent’s plea substantially falls.

63. More importantly, when the respondent has already received the

benefit available to its category under Clause 16(b), no case of

inequity can be said to survive, warranting the invocation of the

equitable doctrine of promissory estoppel. Any interpretation to the

contrary would effectively result in conferring a dual benefit upon

the same category of industrial enterprises, something which

neither the scheme of the Policy nor the contemporaneous tariff

orders ever contemplated. Such an interpretation would not only

Special Leave Petition No. 26731 of 2025 Page 38 of 40

run contrary to the true intent of the Policy, but would also operate

against the larger public interest and fiscal discipline governing the

grant of industrial incentives by the State. As observed in J.K.

Udaipur Udyog Ltd. (supra) and other cases as discussed above,

what is granted under an incentive scheme may ordinarily be

withdrawn or regulated in public interest unless the Government

is precluded from doing so on the ground of promissory estoppel.

In the facts of the present case, we find no satisfactory ground of

enforcing equity under promissory estoppel in favour of the

respondent.

G. CONCLUSION

64. In view of the foregoing and considering the totality of the

circumstances, our conclusion on each issue is as follows:

(i) Clause 16(a) of the Industrial Policy of 2019 and Rule 16(i)(a)

of the 2019 Rules were always intended to apply to the “new

industrial enterprises” and not to the “existing industrial

enterprises undergoing substantial expansion ”. The

conglomeration of the contemporaneous tariff orders issued

prior to and subsequent to the Industrial Policy of 2019, the

overall scheme of the Policy, and the structure of Clause 16

itself clearly indicate that the concessional tariff benefit under

Clause 16(a) was meant only for new industrial enterprises,

whereas the rebate benefit under Clause 16(b) was intended

for existing industrial enterprises undergoing substantial

expansion.

Special Leave Petition No. 26731 of 2025 Page 39 of 40

(ii) The amendment notification dated 29.04.2022, insofar as

Clause 16 and Rule 16 respectively are concerned, was merely

clarificatory in nature and, therefore, retrospective in

operation. The substitution of the word “eligible” with “new” in

Clause 16(a) and Rule 16(i)(a) respectively, as also the insertion

of the expression “substantial expansion” in Clause 16(b) and

Rule 16(i)(b) respectively, did not alter the substance of the

Policy but merely clarified the true intent and scope of the

provisions as they always stood. However, the amendment

introducing, for the first time, the limitation of duration of

benefit under Clause 16(b) and Rule 16(i)(b) respectively for a

period of three years was substantive in nature and therefore

prospective in operation.

(iii) The respondent, being an existing industrial enterprise having

undergone substantial expansion, was entitled only to the

rebate benefit contemplated under Clause 16(b) read with Rule

16(i)(b) respectively, which benefit has already been

indisputably extended to it by the appellants. Mere issuance of

the COP Certificate dated 12.02.2021 did not confer any vested

or accrued right upon the respondent to claim the concessional

tariff benefit under Clause 16(a), particularly when no sanction

or approval of such incentive was ever granted by the Director

of Industries in accordance with Rule 27 of the 2019 Rules.

(iv) The doctrine of promissory estoppel has no application to the

facts of the present case. Once it is held that Clause 16(a),

properly construed, was never intended to extend the

concessional tariff benefit to existing industrial enterprises

undergoing substantial expansion, the respondent cannot

Special Leave Petition No. 26731 of 2025 Page 40 of 40

invoke the equitable doctrine of promissory estoppel to create

an entitlement contrary to the true scope and intent of the

Policy itself. More importantly, when the respondent has

already received the benefit legitimately attachable to its

category under Clause 16(b), no enforceable equity survives in

its favour. Any interpretation to the contrary would result in

conferring a double benefit upon the same category of

industries, contrary to the scheme of the Policy, public

interest, and fiscal discipline governing industrial incentives.

65. In view of the above, the appeal succeeds and is hereby allowed.

Accordingly, the impugned judgment and order of the High Court

is hereby set aside.

66. Pending applications, if any, shall stand disposed of.

....................................... J.

(J.B. Pardiwala)

....................................... J.

(K.V. Viswanathan)

New Delhi;

25

th May, 2026.