2026 Supreme(SC) 582

SUPREME COURT OF INDIA
J.B. Pardiwala, K.V. Viswanathan, JJ.
State of Himachal Pradesh & Ors. – Appellants
Versus
M/s Kundlas Loh Udyog – Respondent
Civil Appeal No. 8155 of 2026 (Arising out of Special Leave Petition No. 26731 of 2025)
Decided On : 25-05-2026

Industrial policy incentives are subject to interpretation based on stated categories; overlapping benefits are not presumed. Clarificatory amendments apply retrospectively to reflect original policy intent, and the doctrine of promissory estoppel cannot be invoked to enforce entitlements contrary to the policy's distinct classification of industrial enterprises.

Headnote:(A) Industrial Policy - Incentive Schemes - Concessional electricity rates - Interpretation of policy provisions regarding eligibility - Whether benefits intended for new enterprises are applicable to existing units undergoing substantial expansion. (Paras 9, 11, 44-47)

(B) Doctrine of Promissory Estoppel - Scope and Applicability - Sovereign power to modify or withdraw fiscal benefits - Doctrine cannot be invoked to circumvent policy objectives or claim overlapping benefits where policy categorizes distinct classes of enterprises. (Paras 54-57, 62-63)

(C) Clarificatory Amendments - Legislative intent - Amendments aimed at correcting drafting errors or clarifying the scope of beneficiaries without extinguishing substantive vested rights operate retrospectively as they reflect the original intent of the policy. (Paras 50-51)

Facts of the case:
A manufacturing enterprise performing substantial expansion sought to claim specific concessional electricity charges designated for new industrial entities under an industrial policy. The regulatory authorities contended that the policy distinguished between new enterprises and existing units undergoing expansion, offering separate tariff benefits to each. The enterprise claimed it was entitled to the incentive for new units based on its eligibility status and argued that subsequent amendments clarifying these categories could not apply retrospectively to it.

Findings of Court:
The court observed that the policy structure clearly intended to incentivize new investment through specific tariff concessions while offering a separate rebate mechanism for expanding existing units. Allowing an enterprise to claim both would lead to an unintended overlapping of benefits not contemplated by the policy framework. The notification issued to specify the categories was deemed clarificatory, aiming to restore the policy's original objective, and thus applicable retrospectively.

Issues: (i) Whether the electricity tariff incentive was intended for both new enterprises and existing units undergoing substantial expansion. (ii) Whether the doctrine of promissory estoppel prevents the state from clarifying policy terms to prevent the grant of double or unintended benefits.

Ratio Decidendi: Policy incentives are defeasible and subject to modification in the public interest. Where a policy establishes distinct categories of industrial enterprises, courts must interpret incentives in light of their specific objectives. Promissory estoppel cannot be used to create rights or entitlements which are inconsistent with the core scheme of the policy or to secure overlapping fiscal benefits not intended by the executive branch. Clarificatory amendments serve to define the existing intent and apply back to the date of the primary instrument.

Result: Appeal allowed.