Mr. Chidambaram, Clause 5(A) of the Policy says that 'existing industrial enterprises undertaking substantial expansion' are eligible for incentives under the Policy. Clause 16(a) says 'eligible enterprises' will get a 15% concession. Why should the respondent not be considered an eligible enterprise under Clause 5(A) and therefore entitled to Clause 16(a)?

My Lord, Clause 5(A) is a general eligibility clause. It lists which enterprises can apply for incentives under the Policy. Clause 16 then provides specific incentives. Clause 16 is divided into sub-clauses (a) and (b). Sub-clause (a) provides a concessional rate, and sub-clause (b) provides a rebate on additional consumption. The structure of Clause 16 itself indicates that sub-clause (a) was intended for new enterprises, and sub-clause (b) was intended for existing enterprises undergoing expansion. Moreover, the contemporaneous tariff orders consistently treat new and existing industries differently. A general eligibility clause cannot override the specific classification within the incentive clause itself.

The amendment notification says the amended provisions shall come into force with 'immediate effect'. How can you argue that the amendment is retrospective?

My Lord, the phrase 'immediate effect' does not determine whether an amendment is clarificatory or substantive. A clarificatory amendment can be given retrospective effect even if it is stated to come into force immediately, because it merely clarifies what the law always was. The test is whether the amendment changes the substance of the provision or merely corrects an error. Here, the substitution of 'eligible' with 'new' does not change the substance — it merely clarifies that the benefit was always meant for new enterprises. This is evident from the contemporaneous tariff orders. Moreover, other amendments in the same notification that were substantive (such as the introduction of a three-year duration limit) were italicised and underlined. The absence of such formatting for Clause 16 indicates that the State treated it as clarificatory.

The respondent has made substantial investments based on the representation in the Policy. Does the doctrine of promissory estoppel not apply to prevent the State from resiling from its promise?

My Lord, the doctrine of promissory estoppel does not apply for several reasons. First, the representation was not clear and unequivocal — the Policy itself is ambiguous. Second, the respondent was issued only a Certificate of Commercial Production, not a specific sanction of the concessional rate under Clause 16(a). Rule 27 of the 2019 Rules requires specific sanction by the Director of Industries. Third, the respondent has already received the benefit intended for its category — the rebate under Clause 16(b). There is no inequity. Fourth, the doctrine cannot be invoked to claim a benefit that was never intended for the respondent's category. In IFGL Refractories, the Court applied promissory estoppel because a specific sanction had been issued. Here, no such sanction exists.

The High Court struck down Clause 5B and Rules 4(B)(b) and 4F as being inconsistent with the Policy. Do you challenge that finding?

My Lord, the petitioners have challenged the entire impugned judgment, including the setting aside of Clause 5B and Rules 4(B)(b) and 4F. However, our primary submission is that the respondent's claim under Clause 16(a) fails regardless. Clause 5B merely states that incentives are admissible from the date of commencement of commercial production or from the date of enabling notification, whichever is later. Even if that clause were set aside, the respondent's claim would still fail because Clause 16(a) was never intended to apply to it. The High Court's decision to strike down those provisions was based on its erroneous interpretation of Clause 16(a). Since we are setting aside that interpretation, the setting aside of Clause 5B and Rules 4(B)(b) and 4F must also be set aside.

For PetitionerCommercial Premium

Clause 16(a) Intended Only for New Industrial Enterprises — (2026) INSC 534

Clause 16(a) of the Industrial Policy, 2019 was always intended to apply exclusively to new industrial enterprises, not to existing enterprises undertaking substantial expansion.

State of Himachal Pradesh v. M/S Kundlas Loh Udyog — (2026) INSC 534

Core Argument

Clause 16(a) of the Industrial Policy, 2019 was always intended to apply exclusively to new industrial enterprises, not to existing enterprises undertaking substantial expansion. The subsequent amendment substituting 'eligible' with 'new' was clarificatory and retrospective. The respondent, being an existing enterprise, is only entitled to the rebate under Clause 16(b), which it has already received.

Key Precedents

State of Rajasthan v. J.K. Udaipur Udyog Ltd. (2004) 7 SCC 673 — Held that the recipient of a concession acquires no legally enforceable right against the Government except to avail the concession during its currency, and the right is defeasible in public interest.
Arvind Industries v. State of Gujarat (1995) 6 SCC 53 — Held that the Government is entitled to modify its industrial policy and grant, modify or withdraw fiscal benefits from time to time.
Shree Sidhbali Steels Ltd. v. State of U.P. (2011) 3 SCC 193 — Held that the State Government was competent to modify or withdraw electricity rebate in public interest, and the doctrine of promissory estoppel would not prevent such withdrawal.

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