Mr. Pahwa, Clause 16(b) provides a 15% rebate for existing industrial consumers on additional power consumption. If the respondent is also entitled to Clause 16(a), it would get a double benefit — both the concessional rate on all consumption and a rebate on additional consumption. Is that not an anomaly?

My Lord, there is no anomaly. Clause 16(b) provides a rebate on additional power consumption beyond the level of the preceding financial year. Clause 16(a) provides a concessional rate on all consumption for 3 years. These are two different benefits. The Policy does not prohibit an enterprise from availing both. If the State intended to exclude existing enterprises from Clause 16(a), it would have said so. It did not. The respondent is willing to give up Clause 16(b) if granted Clause 16(a). The respondent is not seeking double benefit; it is seeking the benefit that was promised to eligible enterprises. The State cannot rely on an internal inconsistency in its own policy to deny a benefit that was clearly promised.

The contemporaneous tariff orders issued by the Electricity Board consistently treated new and existing industries differently. For new industries, they provided lower energy charges; for existing industries, they provided rebates on additional consumption. Does this not indicate the true intent?

My Lord, the tariff orders are separate documents issued by the Electricity Board under its own statutory powers. They cannot override the Industrial Policy issued by the State Government. The Policy is the primary document. If there is a conflict between the Policy and the tariff orders, the Policy must prevail. Moreover, the tariff orders for FY 2020-21 specifically provided that for existing industries that underwent expansion during 1 July 2019 to 31 May 2020, energy charges would be 15% lower for 3 years. The respondent's expansion was approved on 13 July 2020, just outside that window. The tariff orders do not uniformly exclude existing industries from concessional rates. The interpretation is not as clear as the State suggests.

The COP issued to the respondent on 12 February 2021 states that it is 'subject to the eligibility of the respondent unit regarding any incentives as per the guidelines, rules, regulation of the concerned department.' Does this not indicate that the COP itself did not grant any vested right?

My Lord, the COP is a certificate issued by the State itself recognising that the respondent has undertaken substantial expansion. The words 'subject to eligibility' are standard boilerplate language. They do not mean that the respondent is not eligible. The respondent's eligibility must be determined by the Policy itself, not by a subsequent clarification. At the time the COP was issued, the Policy had not been amended. The respondent was eligible under the plain language of the Policy. The State cannot retrospectively amend the Policy to take away that eligibility. The COP, coupled with the investments made, created a legitimate expectation that the respondent would receive the promised incentives.

Rule 27 of the 2019 Rules requires that incentives be sanctioned and disbursed by the Director of Industries. No such sanction was ever issued for Clause 16(a). How can you claim a vested right without sanction?

My Lord, Rule 27 deals with the procedure for disbursal, not with eligibility. The State cannot use procedural rules to defeat substantive rights. The respondent's eligibility is determined by the Policy, not by the administrative convenience of the State. The State cannot delay issuing sanction notifications and then argue that the respondent has no rights because no sanction was issued. Moreover, the respondent made repeated representations to the State seeking the benefit. The State's inaction cannot be used against the respondent. The doctrine of promissory estoppel applies precisely in such situations — where the State makes a promise, the party acts on it, but the State then procrastinates on implementation.

For RespondentCommercial Premium

Policy Intended for All Eligible Enterprises Including Existing Ones — (2026) INSC 534

Clause 5(A) of the Industrial Policy, 2019 explicitly states that existing industrial enterprises undertaking substantial expansion are eligible for incentives.

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

Core Argument

Clause 5(A) of the Industrial Policy, 2019 explicitly states that existing industrial enterprises undertaking substantial expansion are eligible for incentives. Clause 16(a) uses the word 'eligible enterprises' without distinction. The respondent, having been issued a Certificate of Commercial Production on 12 February 2021 before the amendment, is entitled to the 15% concessional rate. The amendment substituting 'eligible' with 'new' is substantive and prospective only.

Key Precedents

Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. (1979) 2 SCC 409 — Established the doctrine of promissory estoppel, holding that the Government is bound by its promises and cannot resile from them if a party has acted upon them to its detriment.
IFGL Refractories Ltd. v. Orissa State Financial Corporation 2026 SCC OnLine SC 28 — Applied the doctrine of promissory estoppel where a specific sanction of incentive had been issued and acted upon, holding that the State cannot arbitrarily withdraw it.

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