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SUPREME COURT OF INDIA
J.B. Pardiwala, R. Mahadevan, JJ.
IFGL Refractories Ltd. - Appellant
Versus
Orissa State Financial Corporation & Ors. - Respondents
Civil Appeal No. 66 of 2026 (Arising out of Special Leave Petition (C) No. 7013 of 2019)
Decided On : 06-01-2026
Key Points: - The judgment holds that MM Plant unit satisfies "new industrial unit" criteria under Clause 2.7, with post-effective-date fixed capital investment and separate registration, location, and production (!) (!) (!) . - It concludes MM Plant was a new industrial unit, not merely an expansion, based on tests from Textile Machinery, Indian Aluminium, Bajaj Tempo, Orient Paper, etc., including separate licensing, separate sheds, separate outputs, and independent viability (!) (!) (!) (!) . - The court finds that the state’s retrospective scope limiting CIS/E/M/D subsidies to overall financial limits does not apply to new industrial units, which are entitled to fresh subsidies under 1989 policy (Clause 4.1) with unit-wise caps (Clause 5.1, Clause 11.4.4) (!) (!) (!) (!) . - The state’s promissory estoppel/legitimate expectation doctrines apply to public assurances of subsidies, and the respondents are bound to disburse the sanctioned amounts upon unequivocal representations (e.g., letters of 05.11.1998, 10.04.2003, 19.04.2003, 24.03.2007, 23.08.2007) (!) (!) (!) . - The High Court’s rejection was set aside; the appeal allowed; respondents directed to disburse Rs 11,14,750/- with interest to IFGL Refractories Ltd. within 3 months (!) (!) .
| Table of Content |
|---|
| 1. overview of the parties involved in the appeal. (Para 3 , 4 , 5 , 6) |
| 2. context and provisions of the industrial policy. (Para 8 , 9 , 10 , 12) |
| 3. definitions and conditions of 'new industrial unit'. (Para 49 , 50 , 51 , 52) |
| 4. the appellate court's ruling on subsidy entitlements. (Para 135 , 136) |
JUDGMENT :
J.B. PARDIWALA, J.
For the convenience of exposition, this judgment is divided into the following parts:-
INDEX
| A. | PARTIES TO THE APPEAL | |
| B. | FACTUAL MATRIX | |
| C. | SUBMISSIONS ON BEHALF OF THE APPELLANT | |
| D. | SUBMISSIONS ON BEHALF OF THE RESPONDENTS | |
| E. | ISSUES FOR DETERMINATION | |
| F. | ANALYSIS | |
| (I). | Whether the MM Plant unit set up by Indo Flogates could be termed as a new industrial unit in accordance with the terms of industrial policy of 1989? | |
| (II). | If the answer to the issue no. (I) is in the affirmative then, whether the respondents were justified in rejecting the capital investment subsidy and DG Set subsidy respectively for MM Plant unit on the ground that both Indo Flogates and the appellant company had already exhausted the overall subsidy limit under the previous industrial policies? | |
| (III). | Whether the respondents are estopped from refusing to disburse the capital investment subsidy and DG Set subsidy respectively for the MM Plant unit to the appellant company? | |
| G. | CONCLUSION | |
1. Leave Granted.
2. This appeal arises from the judgment and order dated 07.12.2018 passed by the High Court of Orissa in the W.P. (C) No. 17398 of 2008 by which the High Court rejected the writ petition filed by the appellant company and thereby, denied the sanctioned incentives of capital investment subsidy and DG Set subsidy under industrial policy of 1989 in favour of industrial setup namely, Magneco Metrel Plant (“MM Plant Unit”) as claimed by the appellant company on the ground that the incentive of subsidy under industrial policy of 1989 could have been granted only once.
A. PARTIES TO THE APPEAL
3. The appellant is a company registered under the provisions of the Companies Act, 1956, having its registered office at Sector A, Shed Nos. 7 and 8, Kalunga Industrial Estate, Sundergarh (Orissa) and is engaged in the manufacturing, processing, trading, and selling of specialized refractory products and equipment for the iron and steel industry, such as magnesia carbon and high-alumina bricks, castables, and moulding systems, etc. The appellant company was amalgamated with one Indo Flogates Limited (“Indo Flogates”) with effect from 01.04.1999. Upon amalgamation, all the properties, rights, and powers of Indo Flogates, including the rights, title, interest, and subsidies in one of the units of Indo Flogates namely, MM Plant unit came to be transferred in favour of the appellant company.
4. The respondent no. 1 is the Orissa State Financial Corporation (OSFC). The OSFC is a statutory corporation established under the State Financial Corporations Act, 1951 with an object to lend and advance financial assistance to the small & medium scale industries and to recover its dues. Under the industrial policy of 1989, applications for subsidies in case of small scale industries were required to be submitted to the respondent no. 1 directly, whereas in case of medium / large scale industries applications were to be submitted to the respondent no. 1 through the respondent no. 2 authority. In the said policy, the main function of the respondent no. 1 was to act as a disbursing agency for all subsidies granted therein to all industrial units. Further, the respondent no. 1 is also one of the members of the state level committee and the respondent no. 4 sub-committee respectively for sanctioning the investment subsidies.
5. The respondent no. 2 is the Director of Industries, Cuttack (DIC). Respondent no. 2 is established as an administrative and executive wing of the Industries Department, Government of Odisha. The main functions of resp
A new industrial unit under the industrial policy of 1989 is established if fixed capital investments occur post-effective date, independent from existing units; prior subsidies do not limit new unit....
The absence of a cut-off date in the Special Mega Package allows entitlement to incentives regardless of the commercial production start date relative to the previous policy's expiry.
Strict interpretation of subsidy schemes and the burden of proving eligibility lies with the petitioner.
Point of Law : Notification cannot be construed as having retrospective or retroactive effect to whittle down the accrued rights in favour of the Respondent units which were entitled to rebate.
Existing units commencing production before new industrial policy but not availing prior incentives eligible under amended transitional Clause 8(b); prior clearances create vested rights invoking pro....
The principle of estoppel prevents authorities from withdrawing subsidies once granted, especially when businesses have acted on the original policy.
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