The court upheld the principles of promissory estoppel and legitimate expectation, ruling that the government must honor its prior subsidy commitments under the Transport Subsidy Scheme despite cancellations.

1. The petitioner, Hira Industries Limited, which is a public limited company, registered under the Companies Act, 1956 having its registered office at 572 - Urla Industries Area, Urla, Raipur, Chhattisgarh State, being aggrieved by the action of the Government of Chhattisgarh and its authorities, the respondents herein, in not releasing the transport subsidy payable to them under the "Madhya Pradesh Transport Subsidy Scheme", has filed this writ petition.

2. The facts of the case, in brief, are as follows:
The petitioner - Company is engaged in manufacture and production of cement. The petitioner - Company was initially doing its business in the name and style of "Jai Bajrang Cement Pvt. Ltd." That name of the petitioner - Company was subsequently changed as Hira Industries Ltd. in the year 1991. The districts of Bastar and Surguja in the undivided State of Madhya Pradesh and now part of the newly - formed Chhattisgarh State are industrially most backward districts having mainly tribal population. The Government with a view to promote and develop these districts industrially through the Department of Commerce and Industries, in the year 1978, floated a scheme called "Transport Subsidy Scheme" (TSS) dated 1-4-1978 to promote establishment of industrial units in Bastar and Surguja districts. For establishment of industrial units the basic amenities like raw - materials and transport facilities by Rail were not available in these districts. The Government, therefore, under the TSS promised to provide subsidy on transportation charges. This was done as an incentive to the industrial units if they are established in the backward areas. In terms of the TSS, the transportation charges which were incurred by the Industrial Units for a distance between the Industrial Unit and the Railway Head are to be reimbursed by respondents 2 to 4 - Authorities. The petitioner - Company taking advantage of the TSS and incentive offered by the respondents established its Cement Plant in Pandripani village, Tahsil Jagdalpur, District Bastar, and the nearest Railway Head under the TSS as mentioned in Clause (4) of R.6 of the Rules for Transportation Subsidy Scheme is Raipur.

3. The petitioner's Unit commenced its commercial production on 18-10-1986. After commencement of commercial production, the petitioner - Company was eligible for transport subsidy for a period of five years, that is to say, up to 17-10-1991, as per the TSS Rules. After commencement of the commercial production, the petitioner - Company raised its claim for transport subsidy before the respondents 2 to 4. Initially, the respondents 2 to 4 released the amount of transport subsidy in part and that too only in respect of goods transported within the undivided State of Madhya Pradesh. The petitioner - Company under the circumstance made a representation to the General Manager, District Industries Centre, Jagdalpur, the 4th respondent herein, for release of subsidy for transportation of goods outside the State also. The 4th respondent, having appreciated the legitimate claim of the petitioner - Company, recommended to the Commissioner, Department of Commerce and Industries, the 3rd respondent herein, for grant of subsidy for transportation of goods outside the State also. The 3rd respondent accepting the recommendation of the 4th respondent, in his letter to the Government dated 16-9-1994, recommended for grant of subsidy to the petitioner - Company for transportation of goods outside the State. The Government of undivided State