The Government can be bound by the principles of promissory estoppel when it tries to wriggle out of the promises made by it through the announcements of Schemes for providing incentives to the entrepreneurs to open Industries in backward areas.

( 1 ) THE order passed in this case shall also govern the disposal of Misc. Petition No. 1559/90. The petitioner/company carries on the business of extraction of oil by the solvent extraction process. According to the petitioner they have set up a Company in Dhar Distriction in the State of Madhya Pradesh allured by a Scheme framed by the Government of India in the year 1971 for grant of subsidy to Industrial Units set up in selected backward Districts Areas, one of which was Dhar District of Madhya Pradesh. 'the Scheme was initially published in the Gazette of India, Extraordinary dated 26-8-1971. The Scheme was called 10% Central Outright Grant of Subsidy Scheme, 1971. The Scheme was amended from time to time. The amount of subsidy was also raised by amendment from 10% to 25%. The duration of the Scheme was also extended from time to time and the last such extension' extended the operative period of the Scheme up to 30/09/1988.

( 2 ) THE petitioner purchased land for its plant on 14-10-1987, constructed a factory building thereon and set up a plant and machinery. The plant was fully set up and commercial production was commended from 13-4-1988. The petitioner-company got itself registered as a Small Scale Industrial Unit with the District Industries Centre, Dhar and a permanent registration as Small Scale Industrial Unit was issued to it on 23-5-1988. Being eligible for obtaining 25% subsidy under the said Scheme, the petitioner applied for the same on 25-6-1988. The application was forwarded by the District Industries Centre, Dhar to the State Level Committee on 27-8-1989. Meanwhile, the Government of India, Ministry of Industries issued a circular dated 21-7-1989, holding that all those Units, whose cases were not decided by the State Level Committee and to whom the subsidy was not sanctioned prior to September, 1988, were not entitled to the subsidy as the Scheme had lapsed on 30/09/1988. The petitioners are aggrieved by this decision and have filed this petition, challenging the decision depriving them of grant of subsidy.

( 3 ) IN the return filed in the case the stand taken is that the Scheme having lapsed on 30/09/1988 and by which time the petitioners' case had not been sanctioned by the State Level Committee, the petitioners were not entitled to subsidy.

( 4 ) WE have heard Shri G. M. Chaphekar, Senior Advocate who appeared with Shri R. Saboo for the petitioners; Shri B. G. Neema, the learned standing counsel for the Union of India and Shri T. N. Singh, the learned Additional Advocate-General. It was contended on behalf of the petitioners that they had set up the industry in the backward area only because of the representation of the Union and the State Governments that 25% subsidy would be available to the Units. But for such a representation contained in the Scheme, the petitioners would not have set up the Unit in a backward District. The petitioners have now altered their position irrevocably because of the representation as now after having set up the Unit, they cannot shift it to any other convenient place. The whole calculations of the financial liability of the Unit were based on receiving 25% Investment Subsidy. On the principle of promissory estoppel, the petitioners cannot now be told that they shall not be eligible for the grant of subsidy. According to the learned counsel, all that had to be done for obtaining the subsidy had been done by the petitioners and for no fault of theirs, they are being deprived of the subsidy. According to the learned counsel all those who are eligible for grant of subsidy whether their applications were sanctioned or not by the State Level Committee prior to 30/09/1988, were entitled to receive the Central Government Subsidy despite the lapse of the Scheme on 30/09/1988. Shri Chaphekar relied on the decisions of the Supreme Court in Pournami Oil Mills v. State of Kerala, AIR 1987 SC 590; Assistant Commissioner Commercial Taxes, Dharwar v. Dharmendra Trading C