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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Ritu Bahri, ACJ, Nidhi Gupta, J.
M/s Nufab Technical Textiles Pvt. Ltd. - Petitioner
Versus
State of Haryana and others - Respondents
Civil Writ Petition No.23529 of 2019
Decided On : 04-01-2024
(A) Enterprises Promotion Policy, 2015 – Notifications dated 21.12.2018 and 09.01.2019 – Writ of certiorari sought to set aside the order declining subsidy – The petitioner established a small-scale unit under the policy and claimed power tariff subsidy – The court held that the respondents cannot deny the subsidy based on subsequent notifications as the units were set up under the earlier policy. (Paras 1, 20, 22)
(B) Estoppel – The principle of estoppel applies as the petitioner had a legitimate expectation of receiving the subsidy based on the policy in effect at the time of establishment. (Paras 13, 21)
Facts of the case: The petitioner, a small-scale unit, sought subsidy under the Enterprises Promotion Policy, 2015, but was denied based on later notifications limiting eligibility. The unit was operational since May 2017 and had complied with all conditions for subsidy.
Findings of Court: The court ruled that the denial of subsidy was unjustified and set aside the order declining the subsidy, directing payment as per the original policy.
Issues: Whether the subsequent notifications could retroactively affect the subsidy entitlement of units established under the earlier policy.
Ratio Decidendi: The court emphasized that the principle of estoppel prevents the respondents from withdrawing benefits once granted, especially when the petitioner acted on the original policy.
Result: Writ petition allowed, and the order declining subsidy was set aside.
JUDGMENT :
Ritu Bahri, ACJ.
1. Petition is seeking issuance of a writ of certiorari for setting aside the order dated 28.05.2019 (Annexure P-21) passed by respondent No.3-Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) declining the grant of subsidy to the petitioner. Further direction for setting aside the Notification dated 21.12.2018 (Annexure P-14) and Notification dated 09.01.2019 (Annexure P-18) seeking to amend the policy for grant of subsidy being against the law and contrary to the Enterprises Promotion Policy, 2015.
2. The petitioner-company is engaged in manufacturing of non-woven fabrics and is a small scale unit employing the latest technical knowhow for the manufacturing of fabrics. Respondent No.2 made an effort to promote the industries, framed an industrial policy providing incentives to the industry and for its upliftment known in the name of ‘Enterprises Promotion Policy-2015’ (Annexure P-1). The object of the policy was to encourage set-up the industry in the State to create large scale employment. Special emphasis has been laid on MSMEs (Micro, Small and Medium Enterprises) and also SMEs (Small Medium Enterprises). The criteria for granting the subsidy was discussed in terms of geographical division wherein the State was divided into four categories of development blocks i.e. A,B,C and D. Blocks B, C and D needs special incentives and micro and small enterprises in category C and D requires special attention in terms of subsidies. Further a medium enterprises had been defined as an enterprise wherein the investment in Plant and Machinery is more than five crores but does not exceed 10 crores. A small enterprise, where the investment is more than 25 lacs but does not exceeding 05 crores is amended under MSMED Act, 2006. A copy of the Notification dated 17.10.2017 showing the categorization of blocks notified on 02.06.2016 is Annexure P-2.
3. Chapter 10 of the policy discusses with types of industries mentioning regarding textile/apparel industry. In Clause 10.3 it is stated that Haryana is the fourth largest cotton producer in the country and inspite of large number of textile industries further thrust is required. As per Clause 4 there are various incentives as in Investment Subsidy on VAT, Employment Generation Subsidy, Interest Subsidy, Stamp Duty Refund, Exemption of EDC Charges, Power Tarrif Subsidy, Electricity Duty exemption. VAT exemption on Cotton Yarn and exemption from Transfer Property Tax. The grievance of the petitioner is qua number of incentives/subsidies which finds mention in the policy and subsequent Annexure 10.
4. Keeping in view the abovesaid policy, the petitioner decided to set up a small-scale technical textile unit in Village Khera Gani, Tehsil Shahzadpur, District Ambala, which falls in Block-C and was duly covered under the policy.
5. As per the Certificate dated 20.06.2018 (Annexure P-3) issued by the Chartered Accountant, the Unit of the petitioner was having an investment of more than Rs.25 lakhs and less than Rs.05 crores and was qualified to be termed as small-scale Unit.
6. The Unit of the petitioner came into commercial production on 03.5.2017 and the power connection was energized on 18th March, 2017 as per the first commercial invoice (Annexure P-4). The commercial production started on 3rd of May, 2017 and the first power bill was received by the petitioner in June 2017 as per the Electricity bill (Annexure P-6). The bill was of Rs.1,07,100/-.
7. Annexure P-5 (colly.) is the Udyog Aadhar Registration Certificate alongwith the Certificate of Incorporation given to the petitioner.
8. The petitioner has placed on record the Certificate of the Chartered Accountant containing the complete details of electricity consumption alongwith Annexure P-7. The petitioner made an application claiming subsidy (Annexure P-8) in June 2017. A huge amount of Rs.31.91 lakhs became due and payable upto 31st of March, 2018 by the respondents.
9. The Government of Haryana issued a policy dated 12.6.201
The principle of estoppel prevents authorities from withdrawing subsidies once granted, especially when businesses have acted on the original policy.
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.
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 doctrine of promissory estoppel prevents the State from withdrawing tax exemptions promised under the Industrial Policy, 2004, even after the de-notification of backward areas.
The court established the binding nature of Operational Guidelines as supplements to the Policy, emphasizing that guidelines remain effective until modified by the competent authority.
The court affirmed that companies meeting criteria under the Bihar Industrial Incentive policies are entitled to interest subsidies from the commencement of commercial production, irrespective of pri....
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....
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