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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
TARLOK SINGH CHAUHAN, SUSHIL KUKREJA, JJ.
M/s. Kundlas Loh Udyog - Appellant
Versus
State of H.P. & ors. - Respondents
CWP No. 1667 of 2021
Decided on : 07-05-2025
(A) Himachal Pradesh Industrial Investment Policy, 2019 - Clause 5B and Clause 16(a) - Petition for mandamus to issue enabling notification for incentives under the Industrial Policy - Petitioner claimed entitlement to incentives after substantial expansion of its industrial unit - Respondents failed to issue notification despite assurances - Court held that the doctrine of promissory estoppel applies, compelling the State to fulfill its commitments. (Paras 43, 44)
(B) Administrative Law - Promissory Estoppel - The State cannot resile from its promise once a policy decision has been made, and failure to issue a notification is arbitrary. (Paras 32, 42)
Facts of the case:
The petitioner, an existing industrial enterprise, undertook substantial expansion based on the assurances of the State regarding incentives under the Industrial Policy, but the enabling notification for such incentives was not issued.
Findings of Court:
The court directed the State to issue the enabling notification for incentives under Clause 16(a) of the Industrial Policy 2019, affirming the petitioner's entitlement based on substantial expansion.
Issues: The main issues were whether the petitioner was entitled to incentives under the Industrial Policy and the validity of the State's failure to issue the enabling notification.
Ratio Decidendi: The court ruled that the State's failure to issue the enabling notification was arbitrary and that the petitioner was entitled to the promised incentives based on the doctrine of promissory estoppel.
Result: Petition allowed.
JUDGMENT :
Tarlok Singh Chauhan, J.
The instant petition has been filed for grant of the following substantive reliefs:-
(i) That the writ in the nature of mandamus or any other appropriate writ directing the Respondent No.2 to issue the enabling notification in terms of Incentives under Clause 16(a) of the Industrial Policy, 2019 w.e.f. the date of commercial production, within stipulated period qua petitioner;
(ii) That the writ in the nature of Mandamus or any other appropriate writ quashing Clause 5B of the Industrial Policy 2019 alongwith Incentive Rule 4B(b) and 4F of the Rules regarding grant of Incentives, Concessions and facilities for investment promotion in Himachal Pradesh 2019 to the extent they are inconsistent with the Industrial Policy, 2019 granting incentives w.r.t. the Electricity from the date of Commercial Production qua petitioner;
(iii) That the writ in the nature of Mandamus or any other appropriate writ declaring the respective tariff orders for the years 2020-2021; 2021-2022 & 2022-2023 for the Large Industrial Power Supply (LIPS) to be read in consonance with the Industrial Policy of the respondent-State in this regard and to declare contrary provisions in such tariff orders to be ineffective in the case qua petitioner.”
2. During the course of hearing, learned counsel for the petitioner at the outset submitted that he would not be pressing for relief No.3 and confining his claim to reliefs No.1 and 2.
3. It is averred in the petition that it was the State itself, which on 16.8.2019 notified a Policy under the name “The Himachal Pradesh Industrial Investment Policy, 2019” (hereinafter referred to as ‘the Industrial Policy’). Under the said Industrial Policy, it was assured to the eligible enterprises that they would be charged 15% less the energy charges in case they do substantial expansion in accordance with the “Rules regarding Grant of Incentives, Concessions and Facilities for Investment Promotion in Himachal Pradesh-2019” (hereinafter referred to as the ‘Incentive Rules).
4. After the enactment of the Industrial Policy on 29.6.2019, the tariff order for the year 2019-2020 was passed by the Himachal Pradesh Electricity Regulatory Commission (HPERC) relating to Large Industrial Power Supply. The petitioner thereafter acting on the representation held out by the State Government applied for expansion of the manufacturing unit before respondent No.1 by filing a common application form 16562 dated 1.6.2020.
5. Later on, HPERC on 6.6.2020 issued a tariff order for the year 2020-2021, whereby the tariff fixed was not as per the representation held out by respondent No.1 and Industrial Policy 2019. Accordingly, the petitioner, vide its letter dated 11.6.2020 addressed to the Hon’ble Chief Minister of the State, sought redressal of its grievance regarding the non-implementation of the incentives held out in the Industrial Policy, 2019.
6. Respondent No.1 vide its letter dated 3.7.2020 informed the petitioner that the enabling notification relating to tariff incentive is to be notified by the Department of MPP and Power (respondent No.2). In the meanwhile, the expansion of the Unit was carried out by the petitioner and the same was approved by the State Single Window Clearance & Monitoring Authority in its 13th meeting held on 24.7.2020. To this effect, respondent No.2 itself issued a certificate of substantial expansion dated 12.2.2021 and the said expansion was more than the one stipulated in the Industrial Policy.
7. Since the tariff incentives had yet not been announced by the respondents, therefore, the petitioner vide its letter dated 17.2.2021 addressed to respondent No.3 (Chief Secretary, State of Himachal Pradesh) intimated that the petitioner and the similarly situated persons felt cheated by the State, as notification qua incentives relating to electricity was not being issued.
8. Thereafter on 31.5.2021, the tariff order for the year 2021-2022 was passed by the HPERC and later on 29.3.2022, the tariff or
The State is bound by its promises under the Industrial Policy, and failure to issue enabling notifications for incentives constitutes arbitrary action, invoking the doctrine of promissory estoppel.
Section 3(B)(b) of Act enables levy of electricity duty upon cancellation of exemption.
Arbitrary State - State is bound to act fairly, in a transparent manner in its action. This is an elementary requirement of the guarantee against arbitrary state action which Article 14 of the Consti....
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.
The principle of estoppel prevents authorities from withdrawing subsidies once granted, especially when businesses have acted on the original policy.
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.
The main legal point established in the judgment is that the State Government is bound by the principle of Promissory Estoppel and cannot arbitrarily withdraw promised benefits, especially when indiv....
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