Himachal Pradesh High Court
M/S. Kundlas Loh Udyog vs State Of H.P. & Ors on 7 May, 2025
Bench: Tarlok Singh Chauhan, Sushil Kukreja
( 2025:HHC:13047 )
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No. 1667 of 2021
Reserved on: 22.4.2025
Date of Decision 7 .5.2025
M/s. Kundlas Loh Udyog
…Petitioner
Versus
State of H.P. & ors.
…Respondents
Coram
Hon’ble Mr Justice Tarlok Singh Chauhan, Judge.
Hon’ble Mr Justice Sushil Kukreja, Judge.
Whether approved for reporting?1Yes
For the petitioner : Mr. Shrawan Dogra, Senior
Advocate with Mr. Manik Sethi,
Advocate.
For the Respondents : Mr. Anup Rattan, Advocate
General with Mr. Yashwardhan
Chauhan, Senior Additional
Advocate General, Mr. Ramakant
Sharma, Mr. Navlesh Verma, Ms.
Sharmila Patial, Additional
Advocates General, Ms. Swati
Draik and Mr. Shalabh Thakur,
Dy. A.G., for the respondents-
State.
Ms. Sunita Sharma, Senior
Advocate with Mr. Dhananjay
Sharma, Advocate, for
respondent No.4.
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes
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Tarlok Singh Chauhan, Judge
The instant petition has been filed for grant of the
following substantive reliefs:-
(i) That the writ in the nature of mandamus or any
other appropriate writ directing the Respondent
No.2 to issue the enabling notification in terms of
Incentives under Clause 16(a) of the Industrial
Policy, 2019 w.e.f. the date of commercial
production, within stipulated period qua
petitioner;
(ii) That the writ in the nature of Mandamus or any
other appropriate writ quashing Clause 5B of the
Industrial Policy 2019 alongwith Incentive Rule
4B(b) and 4F of the Rules regarding grant of
Incentives, Concessions and facilities for
investment promotion in Himachal Pradesh 2019
to the extent they are inconsistent with the
Industrial Policy, 2019 granting incentives w.r.t.
the Electricity from the date of Commercial
Production qua petitioner;
(iii) That the writ in the nature of Mandamus or any
other appropriate writ declaring the respective
tariff orders for the years 2020-2021; 2021-2022
& 2022-2023 for the Large Industrial Power
Supply (LIPS) to be read in consonance with the
Industrial Policy of the respondent-State in this
regard and to declare contrary provisions in such
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tariff orders to be ineffective in the case qua
petitioner.”
2. During the course of hearing, learned counsel for the
petitioner at the outset submitted that he would not be pressing for
relief No.3 and confining his claim to reliefs No.1 and 2.
3. It is averred in the petition that it was the State itself,
which on 16.8.2019 notified a Policy under the name “The
Himachal Pradesh Industrial Investment Policy, 2019” (hereinafter
referred to as ‘the Industrial Policy’). Under the said Industrial
Policy, it was assured to the eligible enterprises that they would be
charged 15% less the energy charges in case they do substantial
expansion in accordance with the “Rules regarding Grant of
Incentives, Concessions and Facilities for Investment Promotion in
Himachal Pradesh-2019” (hereinafter referred to as the ‘Incentive
Rules).
4. After the enactment of the Industrial Policy on
29.6.2019, the tariff order for the year 2019-2020 was passed by
the Himachal Pradesh Electricity Regulatory Commission (HPERC)
relating to Large Industrial Power Supply. The petitioner thereafter
acting on the representation held out by the State Government
applied for expansion of the manufacturing unit before respondent
No.1 by filing a common application form 16562 dated 1.6.2020.
5. Later on, HPERC on 6.6.2020 issued a tariff order for
the year 2020-2021, whereby the tariff fixed was not as per the
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representation held out by respondent No.1 and Industrial Policy
2019. Accordingly, the petitioner, vide its letter dated 11.6.2020
addressed to the Hon’ble Chief Minister of the State, sought
redressal of its grievance regarding the non-implementation of the
incentives held out in the Industrial Policy, 2019.
6. Respondent No.1 vide its letter dated 3.7.2020 informed
the petitioner that the enabling notification relating to tariff
incentive is to be notified by the Department of MPP and Power
(respondent No.2). In the meanwhile, the expansion of the Unit
was carried out by the petitioner and the same was approved by the
State Single Window Clearance & Monitoring Authority in its 13th
meeting held on 24.7.2020. To this effect, respondent No.2 itself
issued a certificate of substantial expansion dated 12.2.2021 and
the said expansion was more than the one stipulated in the
Industrial Policy.
7. Since the tariff incentives had yet not been announced
by the respondents, therefore, the petitioner vide its letter dated
17.2.2021 addressed to respondent No.3 (Chief Secretary, State of
Himachal Pradesh) intimated that the petitioner and the similarly
situated persons felt cheated by the State, as notification qua
incentives relating to electricity was not being issued.
8. Thereafter on 31.5.2021, the tariff order for the year
2021-2022 was passed by the HPERC and later on 29.3.2022, the
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tariff order for the year 2022-2023 also came to be issued by the
HPERC, wherein the incentives as promised to the petitioner were
not granted.
9. It is further averred that the State Government after
framing the Industrial Policy, 2019 had assured particular
incentives to the eligible industries (new or existing) and in terms
thereto, the State through respondent No.2 was therefore, under
obligation to show appropriate enabling/follow up notification to
effectually convey the incentives relating to the electricity to eligible
industrial units.
10. It is also averred that there cannot self-contradictory
statements in the Industrial Policy or the Incentives Rules and the
State is not only expected but bound to speak in one voice. Since
the State has not fulfilled its promise, Hence this petition.
11. Respondent No.1 has filed its reply, wherein it has been
averred that the petitioner is estopped from filing instant writ
petition on account of its own conduct, deed and acquiesces.
12. It is averred that basic objective of the policy was to
attract investment and provide employment to the people of the
State. The provision of various incentives such as concessional rate
of electricity duty, SGST reimbursement, rebate on stamp duty and
registration fee etc. have been made under the above Rules and in
order to claim the said incentives, the industrial unit has to fulfill
6
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the eligibility criteria, as laid down in Rule 4 of the said Rules
2019. Further Rule 4-A specifically provides that the incentives
provided under the Rules will be admissible from the date of
commencement of commercial production/operation or from the
date on which the respective administrative department issues
enabling notification under the relevant statute/law to
operationalise incentives notified under these Rules, whichever is
later.
13. It is further averred that Rule 4-F of the Incentives
Rules 2019 specifically provides that incentives, concession and
facilities under these Rules are provided under the discretionary
powers of the State Government and do not create any claim/right
against the Government and are not enforceable in any court of
law. The Government in its wisdom may decide to amend, alter,
delete or revise any or all of the incentives notified under these
Rules and no claim on account of such a decision will be
entertained. Therefore, the petitioner cannot claim incentive of
concessional rate of electricity charges under Rule 16(i)(a) as a
matter of right. Therefore, the present petition is not maintainable.
14. On merits, it has not been denied that the petitioner has
carried out substantial expansion and as per approval given by the
State Level Single Window Clearance & Monitoring Authority, the
proposed increase in investment approved was 932.85 lacs and the
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petitioner has carried out additional investment of Rs.870.90 lacs.
The additional employment proposed was 20 person and the Unit
had provided additional employment to 21 persons, out of which
17 are Himachalis (80%). The total employment provided by the
petitioner is 342 persons out of which 275 (80. 40%) are bona fide
Himachalis.
15. Respondents No.2 and 3 have filed their joint reply,
wherein it has been averred that as per provisions of Clause 16 of
the H.P Industrial Investment Policy, 2019, incentives of
concessional rate of electricity charges are to be notified in the
schedule of tariff for Himachal Pradesh on year to year basis by the
H.P State Electricity Board and it would not be binding upon the
State Government during the applicability of this Policy. Therefore,
the matter relating to grant of incentives were to be considered by
the H.P State Electricity Board.
16. The H.P State Electricity Board was subsequently added
as a party respondent vide order dated 24.5.2023, which reads as
under:-
“It appears that the Himachal Pradesh State Electricity
Board is a necessary party. Accordingly, Himachal Pradesh
State Electricity Board through its Executive Director is
impleaded as party and shall now reflect as respondent No.4
in these petitions.
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Issue notice to the newly added respondent. Mr. Tara
Singh Chauhan, Advocate, appears and waives service of
notice on behalf of respondent No.4 in these petitions.
As regards CWP No. 1667/2021, let respondent No.4
file an affidavit, within one week, clearly indicating therein
as to whether any benefit in the nature of
incentives/concessions was extended to the petitioner-unit
in terms of H.P. Industrial Investment Policy, 2019 and in
case the same has been provided, it be reflected in the
tabulated form clearly showing duration and amount of
concession separately. It goes without saying that the
respondent-Board while filing this affidavit would not
confuse the “rebate” as is otherwise admissible to other
industries as per the tariff fixed by the H.P. State Regulatory
Commission and shall confine only to the
incentives/concessions granted, if any, to the petitioner unit
under the H.P. Industrial Investment Policy, 2019. List on
31.5.2023.
As regards CWP No. 8523/2022, it be de-tagged. Reply
be filed within four weeks. List on 28.6.2023″
17. In compliance to the aforesaid order, respondent No.4
filed its affidavit, wherein it has been averred that the petitioner
has been granted the benefit of “rebate” on and w.e.f. 1.11.2019 to
1.10.2022 as per the provisions of tariff fixed by the State
Commission.
18. We have heard the learned counsel for the parties and
have gone through the material placed on records.
19. In order to better appreciate the controversy, one would
have to first refer to the Policy, 2019. The objectives of the Policy
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are found in the introduction of the policy, relevant portion whereof
reads as under:-
“Himachal Pradesh Industrial Investment Policy, 2019
1 Introduction
Himachal Pradesh consists of diverse terrains and
varied climatic zones. Economic strength of Himachal
Pradesh primarily lies in activities related to Agriculture,
Horticulture, Animal Husbandry, Limestone mines and allied
activities in the Primary Sector. Industrialization in the State
is a recent phenomenon. It only gained momentum after
getting Statehood. Before grant of Statehood in 1971, only a
few industrial units namely Nahan Foundry at Nahan, M/s
Mohan Meakins Breweries at Kasauli and Solan, Salt Mines
at Drang (Mandi), Rosin & Turpentine Factories at Nahan &
Bilaspur and four small gun factories at Mandi were the
main industrial units functioning in the State. “The State
Government recognized the importance of Industrial Policy
as an effective instrument to boost the confidence of
investors and catalyze industrial development. Incentives to
Industries were notified initially during 1971 and were
revised in the year 1980, 1984, 1991, 1996, 1999 and 2004,
which were amended in the year 2009, 2015 and 2017 in
response to the changing scenario.
The severe climatic conditions topographical and
geographical severities throw challenges in the process of
industrialization. In such a scenario, the benefits made
available in the form of incentives and subsidies as well as
the creation of appropriate infrastructure become the main
instruments to attract industrial investment in the State.
With substantial investment in infrastructural facilities, the
State has been able to offset the location and geographical
disadvantages to a considerable extent. Factors like low cost
10
( 2025:HHC:13047 )quality power, harmonious industrial relations, low cost of
land and clean environment, investor friendly
administration, attractive incentives and tax concessions,
accessibility to Northern markets – all contribute towards
creating a healthy investment climate in our State.
During the last few years, industrialization in the State
has made significant progress. The Share of industries and
Services Sector in the State Domestic Product has increased
from 1.1 & 5.9 percent in 1950-51 to 9.4 and 13 percent in
2010-11 and 29.2% and 43.3 % in 2017-18 respectively. The
period of Industrial Policy Package of Govt. of India has seen
Himachal Pradesh entering the take-off stage with a well-
diversified base of industries ranging from rural and
traditional Handloom Handicrafts, Cottage, Micro and SSI
units to modern Textile, Telecommunication equipment,
sophisticated Electronic units, Pharmaceuticals,
Engineering, High Quality Precision Tools, Food Processing
Page 3 of 60 industries etc. An investment of about Rs.
15000 Crore actually happened during the period of
Industrial Package. Up to 31st March, 2019 the State had
49532 Small Scale and 689 Medium & Large Scale industrial
units registered with the Industries Department with a total
investment of about Rs. 35449 Crore which were providing
employment to about 4.17 lakhs persons. This growth in
industrial sector could be achieved only because of forward
looking Industrial Policies which were in tendum with
changing needs and its proper implementation.
In Ease of Doing Business (EODB) ranking, the State
has improved its implementation score from 65.48% to
94.13% in 2017-18 and also emerged as the fastest growing
State in the EODB. In Start-up ranking 2018, the State has
emerged as the leading Hill State and aspiring leader and
also recognized as leader for regulatory change. The State
11
( 2025:HHC:13047 )has also recently topped in the ranking done by the NITI
Aayog as regards efforts being made to achieve the
Sustainable Development Goals.
2 Vision Statement
“To create an enabling ecosystem to enhance the scale of
economic development & employment opportunities; ensure
sustainable development & balanced growth of industrial &
service sectors to make Himachal as one of the preferred
destination for investment”
3 Objectives
This policy aims to:-
i) serve as a guideline to create a congenial investment
climate for existing industries to grow as well as to attract
further investment in the State for creating employment
opportunities for local youth and to ensure development of
Industrial & Service Sector throughout the State.
ii) specifically address issues impeding industrial growth
and ensure simplification of procedures, key physical and
social infrastructure, human resource development, access
to credit and market.
iii) promote Ease of Doing Business by digitization of all
processes and to promote self-certification.
iv) give impetus to food processing industry by establishing
effective forward and backward linkages; promoting Agro-
Horticulture and rural prosperity.
v) promote MSME sector for uniform sustainable growth of
service and industrial sector throughout the State to
facilitate generation of employment opportunities for local
youth and stakeholders.
vi) promote start-ups and entrepreneurship to create and
generate local entrepreneurial base.
vii) recognize and encourage the role of large investment to
enhance the scale of economic development, employment
12
( 2025:HHC:13047 )opportunities, ancilliarisation, revenue generation and
remunerative prices to local resources.
viii) uplift weaker sections of the society.
4 Strategy
The objectives of this policy would be achieved by:-
i) streamlining rules/procedures, introducing self-
certification, digitalization of all clearances in a time bound
manner to ensure Ease of Doing Business (EODB). ii)
creating and up gradation of existing industrial
infrastructure and creation of private Land Bank.
iii) ensuring the availability of quality power on competitive
rates.
iv) by rationalizing the provisions of incentives, concessions
and facilities having a direct impact to sustain and
accelerate investment in the State.
v) by providing graded fiscal incentives, facilities and
concessions to balance regional economic development. vi)
by providing incentives, facilities & concessions with
condition of employment to 80% Bonafide Himachlies at all
level. Enterprises employing above 80% Bonafide Himachlies
on regular basis are being incentivized on additional
employment generated over and above of 50 Bonafide
Himachlies.
vii) by focusing and providing an ideal eco system to boost
startups & entrepreneurship; environment to sustain
traditional cottage industries; technology up gradation,
ancilliarisation, industrial sickness, R&D and productivity to
increase competitiveness.
viii) by recognizing the importance of cottage Handloom &
Handicraft industry and other rural economy based critical
sectors such as food processing and provision of backward &
forward linkages with Agrohorticulture and Tourism.
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ix) by discouraging polluting industries to create a
responsible eco friendly environment and incentivize
adoption of cleaner production technologies.
x) by recognizing the role of specified services activities in
employment generation.”
20. Eligible enterprises for availing incentives under this
Policy are contained in Clause 5, which reads as under:-
“5 Eligible Enterprises for availing incentives under this
Policy:-
(A) All “New Industrial Enterprises” except Industrial
Enterprises engaged in manufacturing activities specified in
the “Negative List” annexed with this policy;
And
New Enterprises engaged in “Specified Category of Service
Activities” annexed with this policy;
And
All Existing Industrial Enterprises undertaking Substantial
Expansion except Industrial activities as specified in the
Negative List
And
All Existing Service Enterprises engaged in Specified
Category of Service Activities undertaking Substantial
Expansion
will be eligible for incentives, concessions and facilities
announced under this Policy subject to:-
Ø Fulfillment of the eligibility criteria & conditions as
defined under the ‘Rules regarding Grant of Incentives,
Concessions & Facilities to Industrial & Service Enterprises
in Himachal Pradesh-2019’.
Ø Employment of minimum 80% Bonafide Himachalies,
at all levels, directly on regular, contractual, daily basis etc.
14
( 2025:HHC:13047 )or through contractor or outsourcing agencies at the time of
commencement of commercial production/operation as well
as for the time period it remains in commercial
production/operation in the State by the New Enterprise set
up under this Policy. In case of Existing Enterprises
undertaking substantial expansion, out of additional
employment generated due to Substantial Expansion
employment to atleast 80% of Bonafide Himachalies.
B) Incentives provided under this policy will be admissible from
the date of commencement of commercial
production/operation or from the date on which respective
administrative department issues enabling notification under
the relevant statute/law to operationalize incentives notified
under this policy, whichever is later.”
21. Since the petitioner is an existing enterprise, it comes
under third para of Clause 5(a), which states as follows:-
“All Existing Industrial Enterprises undertaking substantial
expansion except industrial activities as specified in the
negative list.”
22. Clause 16 relates to concessional rate of electricity
charges, which reads as under:-
“16 Concessional rate of electricity charges: (excluding
any surcharge, peak load exemption charge, winter charge,
fuel adjustment charge, service charge, GST or any other
charge under any name in the Tariff Schedule):
a) Eligible enterprises would be charged energy charges
15% lower than the approved energy charges for the
respective category for a period of 03 years.
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b) Existing industrial consumers, a rebate of 15% on
energy charges shall be applicable for additional power
consumption beyond the level of preceding financial year.
Incentives of concessional rate of electricity charges
would be notified in the Schedule of Tariff for Himachal
Pradesh on year to year basis by the H.P. State Electricity
Board and it would not be binding upon the State
Government during the applicability of this Policy.”
23. Some of the Rules relating to the Grant of Incentives,
Concessions and Facilities for Investment Promotion in Himachal
Pradesh, 2019, which are relevant for the adjudication of this case,
are reproduced as under:-
“2 Definitions:-
VIII “Commencement of commercial production/
operation” means the date on which the Industrial or
Specified Category of Service Enterprise actually commences
commercial production or operations, as the case may be
and taken on record by the Director/ Joint /Deputy Director
of Industries/ General Manager, District Industries Centre/
Member Secretary, Single Window Clearance Agency or any
other officer authorized by the Director to do so.
IX “Department” means Department of Industries,
Government of Himachal Pradesh.
X “Director” means Director of Industries, Government of
Himachal Pradesh and will also include Commissioner of
Industries, Government of Himachal Pradesh, as the case
may be.
XII. “Eligible Enterprise” means an enterprise fulfilling the
eligibility criteria as per the provisions made under para 5 of
these Rules.
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XIII. “Existing Industrial Enterprise” means an Industrial
Enterprise engaged in manufacturing of goods and
registered/acknowledged/taken on record by the
Department and has commenced commercial production
before the Appointed Date.
XXXIX “Substantial Expansion” means an increase by not
less than 25% in the value of Plant and Machinery by
Existing and new Enterprise for the purpose of expansion of
capacity or modernization or diversification and taken on
record by the department.
4. Eligibility:-
B) All Existing Industrial Enterprises undertaking
substantial Expansion (except Industrial activities specified
in the Negative List) and Existing Service Enterprises
undertaking substantial Expansion will be eligible for
incentives, concessions and facilities under these Rules,
subject to:
a) fulfilment of such requirements as specified
under clause 4A (a to f).
b) condition that incentive provided under these
Rules will be admissible from the date of undertaking
Substantial Expansion taken on record by the Department
or from the date on which respective administrative
department issues enabling notification(s) under the relevant
statute/law to operationalize incentives announced under
these Rules, whichever is later. In case existing enterprise
undertakes subsequent expansion(s) after first Substantial
Expansion, same would be taken on record for the purpose
of incentives, concession & facilities provided under these
Rules for additional investment.
c) Condition that in case employment is generated
due to Substantial Expansion, it will employ 80% Bonafide
17
( 2025:HHC:13047 )Himachali directly or regular contractual, daily basis etc. or
through contractor or outsourcing agencies.
F) Incentives, concession & facilities under these
Rules are provided under the discretionary powers of the
State Government; do not create any claim /right against the
Government and are not enforceable in any court of law. The
Government in its wisdom may decide to amend, alter, delete
or revise any or all of the incentives notified under these
rules and no claim on account of such a decision will be
entertained.
16. Power Incentives: Concessional Rate of Electricity
Duty:
(i) Concessional rate of electricity charges: (excluding
any surcharge, peak load exemption charge, winter charge,
fuel adjustment charge, service charge, GST or any other
charge under any name in the Tariff Schedule):-
a) Eligible enterprises would be charged energy charges
15% lower than the approved energy charges for the
respective category for a period of 03 years.
b) Existing industrial consumers, a rebate of 15% on
energy charges shall be applicable for additional power
consumption beyond the level of preceding financial year.
Incentives of concessional rate of electricity charges
would be notified in the Schedule of Tariff for Himachal
Pradesh on year to year basis by the H.P. State Electricity
Board and it would not be binding upon the State
Government during the applicability of this Policy..
27. Incentives, concessions & facilities provided under
these Rules will be sanctioned and disbursed by the Director
or any officer authorized by him on the recommendation of
the committee(s) to be notified by the Government. For the
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operationlizing and implementation of these Rules, the
forms, procedure etc. will be prescribed by the Director on
online platform.”
24. It is not in dispute that the petitioner acted as per the
policy and did substantial expansion to the tune of 88.69% in the
plant and machinery and the eligibility though was only 25%
increase. It is also not in dispute that when the petitioner
addressed a communication dated 11.6.2020 inviting attention of
the Chief Minister to the huge investment made by the investors on
the basis of the Industrial Policy and requested the electricity tariff
to be fixed as per the industrial policy, it was the State Government
itself which vide letter dated 3.7.2020, who had re-assured the
petitioner that notification qua the Industrial Policy is in the
progressive stage and respondent No.2 would notify the same. It
shall be apt to reproduce the letter in its entirety, which reads as
under:-
“No. Ind-A(F)2-2/2019-1
Government of Himachal Pradesh
Department of Industries
(investment Cell)
From
Addl. Chief Secretary (inds), to the
Government of Himachal Pradesh
To
Kundlas Loh Udyog,
village Balyana, P.O. Barotiwala,
Tehsil Baddi, District Solan, H.P.
Dated Shimla-2 the 03rd July 2020
19
( 2025:HHC:13047 )Subject: Electricity Tariff for 2020-21 & Industrial
Policy, 2019.
Sir,
I am directed to refer to your letter dated
11th June 2020 on the subject captioned above and to
inform you that the H.P. Industrial Investment Policy
2019 was notified on 16th August 2019, whereas
corresponding provisions of the policy pertaining to
various departments were to be notified by the
concerned Department. Relevant provisions of
Electricity Duty and Electricity Tariff are to be notified
by the MPP & Power Department and is in a
progressive stage.
Yours faithfully,
Sd/-
(Abid Hussain Sadiq)
Special Secretary (Inds.) to the
Government of Himachal Pradesh
Ph No. 0177-2621902″
25. It is further not in dispute that the petitioner was given
the in-principle approval by respondent No.1 towards expansion as
is evident from the letter dated 24.7.2020 issued by the Single
Window Clearance System.
26. It is yet again not in dispute that it was respondent No.1
itself, who had issued the certificate of commercial production in
favour of the petitioner dated 12.2.2021, wherein it is certified that
the petitioner had invested in the plant and machinery and
substantial investment in plant and machinery by Rs.807.8 lacs
and made a total expansion of Rs.1718.62 lacs, which was to the
tune of 88.69% in the plain and machinery though the required
eligibility was only 25%.
27 Thus, what would be clear from the aforesaid is that
clause 16 of the Policy and Rule 16(i) of the Rules are pari
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materia and deal with the benefit of the “Electricity Charges” and
the same provide for two types of benefits:-
(A) To eligible enterprises, 15% lower energy charges.
(B) To existing enterprises (without thereby being any
condition of doing substantial expansion), 15 % rebate
upon additional power consumption.
28 The petitioner is agitating the benefit under clause A
and not under clause B. The petitioner is an eligible enterprises in
terms of clause 5 of the Policy being “existing enterprise” at the
time of policy. Therefore, by virtue of being an existing enterprise,
the benefit of clause B (rebate) has already been given to it and as
noted above, the petitioner is not agitating the same in the instant
petition. However, claim of the petitioner is qua clause A, where
the petitioner has admittedly carried out substantial expansion of
its industrial unit, which is evident from the substantial certificate
available on record and thus, once the petitioner becomes “Eligible
Enterprise”, it is entitled to 15% lower energy charges under
clause 16 (A) of the Policy.
29 It needs to be clarified that under Clause 5 (B) of the
Policy, the incentives under the policy are admissible from the date
of commencement of commercial production or from the date
the administrative department issues enabling notification,
whichever is later. The petitioner’s date of commencement of
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commercial production after substantial expansion is 12.02.2021
but the administrative department did not issue the “enabling
notification” despite positive assurance, this has compelled the
petitioner to file the instant petition challenging the action of the
State in not issuing enabling notification and also clause 5 (B) to
the extent of “whichever is later”.
30 No doubt, the State would place reliance on
amendment dated 29.04.2022, whereby the Policy and the Rules
came to be amended, however, Clause 4 of the Notification
specifically states that these amendments are prospective,
meaning thereby, the petitioner’s admissibility or entitlement for
the benefit under erstwhile clause 16 (A) stands crystallized on
12.02.2021 when the commencement of commercial production
certificate was issued in its favour in terms of clause 5 (B) of the
Policy.
31 Since the 2022 amendment (Annexure P-4) is
prospective by virtue of clause 4 of the amendment, it would not
affect or curtail the entitlement of the petitioner in terms of
erstwhile clause 16 (A) for a period of three years from the date of
commencement of commercial production i.e. 12.02.2021.
32 As observed above, it was the respondents themselves,
which after consideration with all the stakeholders, had issued the
H.P. Industrial Investment Policy 2019 and notified the same
22
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alongwith the Rules regarding Grant of Incentives, Concessions and
Facilities for Investment Promotion in Himachal Pradesh.
Therefore, the respondents are bound by the promise so held out
on the doctrine of “promissory estoppel”.
33 The petitioner admittedly did substantial expansion in
terms of the Policy, but the State has failed to issue the enabling
notification despite having promised to do so by virtue of words
“whichever is later” in clause 5 (B) of the Policy and till the
department is “not issuing” the enabling notification, the rights of
the petitioner under erstwhile clause 16 (A) is being withheld from
the petitioner, even though no reasons for the same are
forthcoming in the reply, which would only show bureaucratic
lethargy. Assurance has been given by the Department of
Industries being nodal agency for implementing the Policy in
terms of Rule 27.
34 The doctrine of “promissory estoppel” consists of
ingredients of promise and estoppel like equity. The doctrine has
been introduced to reduce the rigor of the common law as well as
the statutory law. Equitable estoppel yields a remedy in order to
prevent unconscionable conduct on the part of the party who,
having made a promise to another acts on it to his detriment, seeks
to resile from the promise.
23
( 2025:HHC:13047 )
35 The doctrine of promissory estoppel is firmly part of the
jurisprudence in this country. The judgment of Hon’ble Supreme
Court in Manuelsons Hotels Private Limited vs State of Kerala
(2016) 6 SCC 766, is a treaty on the subject, where there has
been comprehensive review and survey made by the Hon’ble
Supreme Court on promissory estoppel and, in that context and in
the context of administrative law, the scope of and grounds for
judicial review.
36 Facts in Manuelsons‘ case were that on 11.7.1986, the
State Government, by a Government Order (G.O.), accepted the
recommendations of the Government of India suggesting that
tourism be declared an “industry”. The fallout of this G.O. was that
this would enable those engaged in tourism promotional activities
to become automatically eligible for concessions/incentives as
applicable to the industrial sector from time to time. Apart from
various other concessions that were granted, exemption from
Building Tax levied by the Revenue Department was one such
concessions. It was stated in the said G.O. that action to amend the
Kerala Building Tax Act, 1975 will be taken separately. The G.O.
went on to state that persons eligible for such concessions will,
among others, be classified hotels i.e. from 1 to 5 stars. A
Committee was set up consisting of three government officers to
oversee the aforesaid scheme. Vide a letter dated 25.3.1987, the
24
( 2025:HHC:13047 )
Government of India approved the hotel project of the appellants
therein, being a 55 double room 3 star hotel project to be set up in
the city of Calicut.
36(i) Pursuant to the aforesaid G.O. dated 11.7.1986 and the
aforesaid approval, the appellants began constructing the hotel
building, which was completed in the year 1991. Notice for filing
returns under the Kerala Buildings Tax Act was issued to the
appellants on 5.9.1988. The appellants replied that they relied
upon the G.O. dated 11.7.1986 and stated that they were under no
obligation to furnish any return under the said Act as they were
exempt from payment of building tax.
36(ii) However, the State insisted upon the tax constraining
the appellants therein to challenge the notice dated 5.9.1988
before the Kerala High Court. This resulted in a judgment dated
30.8.1995 by which the appellants were relegated to the Committee
set up under the 1986 G.O. to pursue their claim. Till final orders
were passed by the Committee, the judgment stated that the
respondents would not take any coercive steps to recover any
building tax assessed on the building constructed by the
appellants.
36(iii) Vide letter dated 6.2.1997, the exemption so promised
by the G.O. of 1986 was denied to the appellants stating that as
Section 3A had been omitted w.e.f. 1.3.1993, the power to grant
25
( 2025:HHC:13047 )
exemption had itself gone and, therefore, no such exemption could
be given to the appellants.
36(iv) Pursuant to the aforesaid letter dated 6.2.1997, a notice
dated 28.4.1997 was issued by the authorities asking the
appellants to submit the necessary statutory return under the
Kerala Buildings Tax Act. This notice was, in turn, challenged
before the Kerala High Court and the writ petition was allowed by
the High Court directing the Committee to consider the matter
afresh in the light of the judgment of the Supreme Court in M/S
Motilal Padampat Sugar Mills v. State Of Uttar Pradesh & Ors.,
(1979) 2 SCR 641 and Shrijee Sales Corporation & Anr. v. Union of
India, (1997) 3 SCC 398.
36(v) Vide an order dated 4.2.1999, the authorities once
again rejected the appellant’s application for exemption from
property tax. This order was challenged by way of writ petition
before the Kerala High Court. The High Court essentially rejected
the aforesaid Writ Petition on two grounds. Firstly, it was stated
that as no exemption notification had, in fact, been issued under
Section 3A when it was in existence in the statute book, no claim
for exemption from payment of building tax would be allowed.
Secondly, it was held that mere promise to amend the law does not
hold out a promise of exemption from payment of building tax.
Finally, the High Court held that the question of now exempting the
26
( 2025:HHC:13047 )
appellants from building tax would not arise as Section 3A itself
had been omitted w.e.f. 1.3.1993.
36(vi) The discussion covers all the relevant case law on
promissory estoppel, Wednesbury unreasonableness and judicial
review including the celebrated cases of Associated Provincial
Picture Houses Ltd v Wednesbury Corporation, (1948) 1 KB
223; Union of India vs Anglo-Afghar Agencies AIR 1968 SC
718 ; Turner Morrisni & Co. Ltd. vs Hungerford Investment
Trust Ltd (1972) 1 SCC 857 ; and Motilal Padampat Sugar
Mills Co Ltd vs State of UP (1979) 2 SCC 409.
36(vii) The principle is enunciated in the context in that case, a
question of taxation. The Hon’ble Supreme Court held that where a
Government makes a promise knowing or intending that it would
be acted on by the promisee and, in fact, the promisee acting in
reliance on it, alters his position, the Government would be bound
by the promise. That promise is then enforceable against the
Government at the instance of the promisee and this is so even if
there is no consideration for the promise and even if that promise is
not formally recorded in a contract. The Hon’ble Supreme Court
placed this on a fundamental principle that in a republic governed
by the rule of law no one is above the law. The Government is no
exception to the application of the rule of law. The principle does
not demand that the petitioner must show that it has suffered any
27
( 2025:HHC:13047 )
detriment. It is enough for the invocation of the principle to show
that the petitioner relied on the promise or the representation that
was held out by the Government and altered its position relying on
this assurance.
36(viii) The Hon’ble Supreme Court held that issuing of
enabling notification is a ministerial act, which would not come in
the way of the petitioner therein for its entitlement. It shall be apt
to reproduce paras 14, 16 and 18 of the judgment, which reads as
under:-
14. It is important to notice that the necessary exemption
Notification in Motilal Padampat‘s case had not been issued
under Section 4 of the U.P. Sales Tax Act, 1948. Yet, this Court
held that sales tax for the period in question could not be
recovered. This was done presumably because promissory
estoppel is itself an equitable doctrine. One of the maxims of
equity is that one must regard as done that which ought to be
done. In this view of the matter, it is obvious that the High
Court judgment is incorrect when it holds that as no
exemption Notification was, in fact, issued by the Government
under Section 3A, the petitioner would have to be denied
relief. This judgment has been followed repeatedly and has
been applied to give the benefit of sales tax exemption in
similar circumstances in Pournami Oil Mills & Ors. v. State of
Kerala & Anr., (1986) Supp. SCC 728 at Paras 7 and 8.
16. In this background, the High Court held that the State
Government was bound by its promise and representation to
abolish purchase tax. According to the High Court, the
absence of a financial notification was no more than a
ministerial act which remained to be performed. As the
28
( 2025:HHC:13047 )respondents had acted on the representation made, they
could not be asked to pay purchase tax for the year 1996-
1997. The Writ Petition was allowed and the demand notice of
tax for the aforesaid year was struck down.
18. A perusal of this judgment would also show that relief
was not denied on the ground that no exemption notification
was, in fact, issued under Section 30 of the Punjab General
Sales Tax Act, 1948. In fact, this Court emphasized the
discretionary nature of the power to grant exemption. This
Court held that the State Government’s refusal to exercise its
discretion to issue the necessary notification abolishing or
exempting tax on milk was not reasonably exercised
inasmuch as it was bound by the doctrine of promissory
estoppel to do so. And the finding of the High Court that such
Notification would only be a ministerial act which had to be
performed was, therefore, upheld by this Court. This judgment
has been recently applied and followed in Devi Multiplex &
Ors. v. State of Gujarat & Ors., (2015) 9 SCC 132 at Para 20.
36(ix) The Hon’ble Supreme Court after applying the doctrine
of promissory estoppel against State of Kerala held that
notification under Section 3 (a) would be deemed to have been
issued. It shall be apt to reproduce para 36 of the judgment which
reads as under:-
36. In the present case, it is clear that no Writ of Mandamus is
being issued to the executive to frame a body of rules or
regulations which would be subordinate legislation in the
nature of primary legislation (being general rules of conduct
which would apply to those bound by them). On the facts of
the present case, a discretionary power has to be exercised on
facts under Section 3A of the Kerala Buildings Tax Act, 1975.
The non- exercise of such discretionary power is clearly
29
( 2025:HHC:13047 )
vitiated on account of the application of the doctrine of
promissory estoppel in terms of this Court’s judgments in
Motilal Padampat and Nestle (supra). This is for the reason
that non-exercise of such power is itself an arbitrary act which
is vitiated by non-application of mind to relevant facts,
namely, the fact that a G.O. dated 11.7.1986 specifically
provided for exemption from building tax if hotels were to be
set up in the State of Kerala pursuant to the representation
made in the said G.O. True, no mandamus could issue to the
legislature to amend the Kerala Buildings Tax Act, 1975, for
that would necessarily involve the judiciary in transgressing
into a forbidden field under the constitutional scheme of
separation of powers. However, on facts, we find that Section
3A was, in fact, enacted by the Kerala legislature by suitably
amending the Kerala Buildings Tax Act, 1975 on 6.9.1990 in
order to give effect to the representation made by the G.O.
dated 11.7.1986. We find that the said provision continued on
the statute book and was deleted only with effect from
1.3.1993. This would make it clear that from 6.9.1990 to
1.3.1993, the power to grant exemption from building tax was
statutorily conferred by Section 3A on the Government. And
we have seen that the statement of objects and reasons for
introducing Section 3A expressly states that the said Section
was introduced in order to fulfill one of the promises contained
in the G.O. dated 11.7.1986. We find that, the appellants,
having relied on the said G.O. dated 11.7.1986, had, in fact,
constructed a hotel building by 1991. It is clear, therefore, that
the non-issuance of a notification under Section 3A was an
arbitrary act of the Government which must be remedied by
application of the doctrine of promissory estoppel, as has been
held by us hereinabove. The ministerial act of non issue of the
notification cannot possibly stand in the way of the appellants
getting relief under the said doctrine for it would be
30
( 2025:HHC:13047 )
unconscionable on the part of Government to get away
without fulfilling its promise. It is also an admitted fact that no
other consideration of overwhelming public interest exists in
order that the Government be justified in resiling from its
promise. The relief that must therefore be moulded on the
facts of the present case is that for the period that Section 3A
was in force, no building tax is payable by the appellants.
However, for the period post 1.3.1993, no statutory provision
for the grant of exemption being available, it is clear that no
relief can be given to the appellants as the doctrine of
promissory estoppel must yield when it is found that it would
be contrary to statute to grant such relief. To the extent
indicated above, therefore, we are of the view that no building
tax can be levied or collected from the appellants in the facts
of the present case. Consequently, we allow the appeal to the
extent indicated above and set aside the judgment of the High
Court.
36(x) The doctrine of promissory estoppel, of necessity, is an
evaluation of the more common place rule of estoppel. No party
may resile from a commitment once made nor may that party
approbate and reprobate. The law will not allow an unconscionable
departure by one party from the subject matter of even an
assumption, whether that assumption is of fact or of law, is of the
present or of the future, if that assumption is the basis on which
the other party conducted itself. The relief to be fashioned in such
cases is necessarily flexible to ensure that justice is done to the
party aggrieved. The courts will not permit an unconscionable
31
( 2025:HHC:13047 )
departure from a promise solemnly made and which the other party
adopted, accepted, and acted on.
36(xi) The origins of the doctrine can probably be traced to the
legendary dictum of Lord Denning in Central London Property
Trust Ltd vs High Trees House Ltd, (1947) 1 KB 130, where a
promise was made which was intended to create legal relations and
which, to the knowledge of the person making the promise, was
going to be acted on by the person to whom it was made and which
was in fact so acted on, estoppel would apply. Many advances have
been made in that jurisprudence since then.
37 As observed above, estoppel is both a rule in equity and
a rule in evidence. Because it is foundationally in equity, it is
necessarily flexible. In India, our jurisprudence recognizes
promissory estoppel as a valid basis of an independent cause of
action and merely cannot only be used as shield but can also be
used as a sword. In pursuing such a cause of action, the petitioner
need not show actual prejudice or detriment. It is enough for the
party to show two things: (i) that a representation was made; and
(ii) that the party acted on that representation and altered its
position. Where there is a failure to abide by the representation
that is made, a writ court will necessarily step in and a mandamus
will necessarily be issued to compel the promisor Government to
fulfill its commitments and to perform what it said it would perform
32
( 2025:HHC:13047 )
and on the basis of which assurance the other party altered its
position.
38 Learned Advocate General would however argue that
since there is no enabling notification issued by the Government,
therefore, the petitioner has no cause of action. However, we find
no merit in this contention for the simple reason that enabling
notification is merely a ministerial act and what is enforceable
and otherwise entitlement of the petitioner is the promise set out
in clause 16 (A) of the Policy and Rule 16 of the Rules and in such
circumstances, as held by the Hon’ble Supreme Court in
Manuelsons‘ case (supra), notification would be deemed to have
been issued.
39 Even otherwise, the act of the State in not issuing the
enabling notification within reasonable time is arbitrary and in
coming to such conclusion we are duly supported by the judgment
of the Hon’ble Supreme Court in State of Bihar vs. Kalyan
Cement Limited, (2010) 3 SCC 274.
40 The facts there were that M/s Kalyanpur Cement Ltd.,
which was a public sector company incorporated, was engaged in
the business of cement manufacturing and marketing operations
since 1946. It had commenced production with a capacity of 46000
metric tonnes. It underwent a series of expansion in 1958, 1968
and 1980 and at the relevant time, the Company was operating
33
( 2025:HHC:13047 )
one-million- tonne cement plant. In view of the changes in the
technology worldwide, it had set up a brand new state-of-art `dry
process’ plant in 1994 at a capital cost of Rs. 250- 260 crores, for
which it took financial assistance from the World Bank and certain
other financial institutions. The Company claimed to be one of the
very few large scale surviving industrial units in the State of Bihar
and claimed that due to circumstances beyond its control such as
recession in the cement industry as well as Government related
problems; delayed decision in granting Sales Tax Deferment benefit
the Company began to suffer heavy losses. This was accentuated
by the non- availability of the sanctioned working capital from the
financial institutions in the absence of the sale tax exemption
under the Industrial Policy, 1995. There was continuous loss in
production for a number of years, which resulted in erosion of Net-
Worth of the Company, as the total Net-Worth of the Company was
less than its accumulated losses in December, 2002, it has
registered with Board for Industrial and Financial Reconstruction
(hereinafter referred to as BIFR’) as a sick unit and was actually
declared a sick Company by BIFR on 28.05.2002. The Company in
order to rehabilitate itself sought the assistance from financial
institutions for restructuring package. The Company’s proposal for
financial assistance and restructuring was approved by various
financial institutions. However, the same was made conditional on
34
( 2025:HHC:13047 )
certain preconditions being met. One of such conditions imposed
by the financial institutions was that the restructuring package
would be made available only on the Company obtaining a Sales
Tax exemption for a period of 5 years from the State Government,
in terms of Industrial Policy, 1995. Accordingly, Company
submitted an application to the State Government on 21.11.1997
for grant of Sales Tax exemption under the Industrial Policy, 1995
for a period of 5 years w.e.f. 01.01.1998. Thereafter, the matter
remained pending for consideration by the State Government and
the financial institutions. There were a series of joint meetings of
the Government, Financial Institutions and the Company, over the
next three years. In all these meetings, as well as correspondence
categoric assurances were given that the necessary Sales Tax
exemption notification would be issued shortly. However, no such
notification was issued causing great hardship to the Company. It
was, therefore, constrained to file the writ petition in the High
Court at Patna.
40(i) In this writ petition, the prayer was for issuance of the
writ in the nature of mandamus directing the State of Bihar to
issue necessary Notification under Clause 24 of the 1995 Policy.
The claim of the Company was that Notification under Clause 24 of
the Industrial Policy, 1995 ought to have been issued within one
month of the release/publication of the Policy in September, 1995.
35
( 2025:HHC:13047 )
Voluminous record was produced before the High Court in support
of the submission that the Company is entitled to exemption under
the 1995 Policy.
40(ii) The State of Bihar contested the writ petition by filing a
counter affidavit. Supplementary counter affidavit was filed on
behalf of the Government on 05.12.2000. In paragraph 5 of the
aforesaid affidavit it was stated as under:-
“5. That the Hon’ble Minister, Department of Commercial
Taxes has approved the proposal along with draft notification
regarding extension of Sales Tax related incentives to sick
industrial units.”
40(iii) In paragraph 8 of the affidavit, it was averred as under:-
“That the deponent states that it shall be possible to issue
necessary notification after approval of the proposal of the
relevant notification by the Hon’ble Chief (Finance) Minister of
the Cabinet.”
40(iv) It was also stated in the affidavit –
That the deponent has further requested the Secretary-cum-
Commissioner, Department of Finance, vide letter dated
28.11.2000 to take necessary approval earliest as the same
has to inform to the Hon’ble Court.”
40(v) Thereafter, yet another supplementary counter affidavit
dated 09.01.2001 was filed by the Assistant Commissioner,
Commercial Taxes, Bihar, wherein it was contended that the State
Government in a meeting under the Chairmanship of the Chief
Minister held on 06.01.2001 had decided upon due deliberation not
to grant any Sales Tax incentives to sick industrial units. Therefore,
36
( 2025:HHC:13047 )
the claim of the Company was rejected. The four stated reasons
justifying the aforesaid decision were as under:-
“(1) The period of Industrial Policy 1995 was from 1.9.1995 to
31.8.2000. Therefore, this policy is not effective to date.
(2) The question to provide facility to those sick units are
mentioned in clause 22 of the above policy. No notification has
been issued by the Government to provide facility of Sales Tax
till now, on whose basis, there could be right of any
specialized person/unit to get the facility.
(3) So far as the question of applicants’ Unit in petition No.
CWJC No.6838/2000 is concerned, his matter has not yet
been approved by the High Level Empowered Committee
under the Chairmanship of Chief Secretary under Clause
22(1) of Industrial Policy, 1995. It is worth mentioning here
that in absence of above mentioned, even approval cannot be
provided.
(4) Tax reforms at All India Level, which has been continuing
last one year it has been decided at the conference of Chief
Ministers that except States of Special Category Sales Tax
facility must be ended by rest all other States. The States
would not do this, there could be possibility of cut down the
payable Central Assistance to those States.”
40(vi) The Company accordingly amended the writ petition
and challenged the decision dated 06.01.2001 of the State
Government. The High Court allowed the writ petition and quashed
the decision dated 6.1.2001 and 5.3.2001 and further directions
were issued to the State Government, which are as under:-
“The departments and organizations concerned are hereby
directed to issue follow up notification to give effect to the
provisions of the policy within one month from today. After the
37
( 2025:HHC:13047 )notification is issued a Committee headed by the Industrial
Development Commissioner would be constituted to evolve
suitable measures for potentially viable non BIFR sick
industrial unit (the present petitioner) and the said Committee
would submit its recommendations before the State Level
Empowered Committee which in its turn shall place the said
recommendations before the Government. After receiving the
said recommendations from the State Level Empowered
Committee, the Government shall take final decision in the
matter. The petition is thus allowed.”
40(vii) The aforesaid decision was challenged by the State of
Bihar before the Hon’ble Supreme Court, which on 18.11.2002
passed the following orders:-
10. At this stage it would be appropriate to notice the orders
passed by this Court during the proceedings. On 18.11.2002,
following directions were issued:-
“Heard the learned counsel for the parties.
As an interim arrangement during the pendency of this
appeal, with a view to protect the interests of either side, we
direct the respondent to deposit an amount equivalent to the
sale tax payable by it as and when it becomes due in an
interest bearing account in a nationalized bank. This amount
and the amount accrued during the pendency of the appeal,
shall not be withdrawn by either side.
The amount so kept in deposit shall become payable to the
party which ultimately succeeds in this appeal.
The appellants are directed to issue the exemption orders and
on receipt of such order, the above said amount shall be
deposited. The issuance of the exemption orders is without
prejudice to the case of the parties in this appeal.
The IA is thus disposed of.”
40(viii) Thereafter IA No.3 of 2006 was filed by the appellant
seeking stay of the judgment of the High Court wherein it was
averred that the application was necessitated because of the
intervening circumstances and the conduct of the Company. It was
38
( 2025:HHC:13047 )
further stated that pursuant to the direction issued by the Court on
18.11.2002, the appellant issued Notification No.SO-174 dated
18.10.2004 granting exemption to the Company. The Notification
was to have effect for five years from the date of publication in the
Official Gazette or till the disposal of the Special Leave Petition. The
aforesaid Notification was issued on the following terms:-
“2. Terms and conditions-
(a) Tax payable by M/s Kalyanpur Cement Ltd.
shall be deposited per month in an interest-
bearing account in a nationalized bank.
(b) M/s Kalyanpur Cement Ltd. shall provide information of
such bank account to the circle where he is registered.
(c) M/s Kalyanpur Cement Ltd. shall submit the details
regarding amount of payment in the bank account as
mentioned in para (a) above along with brief abstract each
month.
40(ix) Thereafter the appellant requested the company to
comply with the directions of the court. The Company, however,
informed the appellant that it was unable to comply with the
directions because of its `sickness’.
40(x) Since the Company failed to comply with the aforesaid
order, a prayer was made for recalling the same. The Company in
its reply elaborately explained the efforts being made by the
financial institutions to ensure the survival of the Company. It was
reiterated that the Company had acted honestly and in good faith
on assurances/approval given by the appellant at various stages.
The Company continued with its operation in anticipation of
receiving the appellant’s approval at some point of time. Had the
appellant not given the assurances, the Company could have
39
( 2025:HHC:13047 )
suspended its operation. The Government gave assurances and
granted approval on 07.01.1998, 23.01.1998, 12.03.1998,
21.01.1999, 12.07.1999, 29.10.1999, 02.12.1999, 17.12.1999,
25.01.2000, 31.03.2000, 29.05.2000 and 30.06.2000. It was also
pointed out that even the officers of the Commercial Taxes
Department including Commissioner, Commercial Taxes to the
effect that the Notification was in the process of being issued. It
was also pointed out that even after the VAT regime being
introduced, Sales Tax related incentives to industries are being
given to industries by various States. In fact under the Industrial
Policy 2003 as well as the Industrial Policy, 2006, Sales Tax
incentives in some form or the other had been retained/provided.
40(xi) It was further pointed out that the Notification dated
18.10.2004 was issued after expiry of two years from the date of
the order passed by the Court. The delayed action of the appellant
practically crippled the Company financially and jeopardized efforts
for revival as the Sales Tax benefit was crucial for the Company’s
revival and continued operations. It was further reiterated that the
Company was entitled to get the benefit under the Industrial Policy,
1995. With regard to the non-deposit of the “amount equivalent to
the Sales Tax payable by it as and when it becomes due”, it was
stated that the Company had bona fide opened the Bank account
with a Nationalized Bank but could not deposit the amount
40
( 2025:HHC:13047 )
equivalent to the Sales Tax due because of circumstances beyond
its control.
40(xii) During the pendency of the Interim Application,
proposal for the approval of the reconstruction package of the
Company was under the active consideration of the State.
Therefore, the proceedings were adjourned from time to time.
During this period an application was also filed by the Assets
Reconstruction Company (I) Ltd. for being impleaded as a party.
The aforesaid application was allowed by the Court on 04.09.2006
and the applicant was impleaded as respondent No.2.
40(xiii) The Hon’ble Supreme Court after invoking doctrine of
promissory estoppel held the action of the State of Bihar in not
issuing enabling notification granting an exemption to be arbitrary
as would be evident from para 85 of the judgment, which reads as
under:-
85. Even if we are to accept the submissions of Dr. Dhawan
and Mr. Dwivedi that the provisions contained in Clause 24
was mandatory the time of one month for issuing the
notification could only have been extended for a reasonable
period. It is inconceivable that it could have taken the
Government 3 years to issue the follow up notification. We are
of the considered opinion that failure of the appellants to issue
the necessary notification within a reasonable period of the
enforcement of the Industrial Policy, 1995 has rendered the
decisions dated 06.01.2001 and 05.03.2001 wholly arbitrary.
The appellant cannot be permitted to rely on its own lapses in
41
( 2025:HHC:13047 )
implementing its policy to defeat the just and valid claim of the
Company.
72. For the same reason we are unable to accept the
submissions of the learned senior counsel for the appellant
that no relief can be granted to the Company as the Policy has
lapsed on 31.08.2000. Accepting such a submission would be
to put a premium and accord a justification to the wholly
arbitrary action of the appellant, in not issuing the notification
in accordance with the provisions contained in Clause 24 of
the Industrial Policy, 1995.
41 Lastly and more importantly, the State Government
cannot speak in two voices. Once the Government has taken a
policy decision to extend certain benefits to the petitioner, the
same cannot be withheld simply for want of notification.
42 In coming to such conclusion, we are duly supported by
the judgment of the Hon’ble Supreme Court in Lloyd Electric &
Engineering Ltd. vs. State of H.P. (2016) 1 SCC 560, wherein it
has been held as under:-
14. The State Government cannot speak in two voice. Once the
Cabinet takes a policy decision to extend its 2004 Industrial
Policy in the matter of CST concession to the eligible units
beyond 31.03.2009, upto 31.03.2013, and the Notification
dated 29.05.2009, accordingly, having been issued by the
Department concerned, viz., Department of Industries,
thereafter, the Excise and Taxation Department cannot take a
different stand. What is given by the right hand cannot be
taken by the left hand. The Government shall speak only in
one voice. It has only one policy. The departments are to
implement the Government policy and not their own policy.
Once the Council of Ministers has taken a decision to extend
42
( 2025:HHC:13047 )
the 2004 Industrial Policy and extend tax concession beyond
31.03.2009, merely because the Excise and Taxation
Department took some time to issue the notification, it cannot
be held that the eligible units are not entitled to the concession
till the Department issued the notification.
43 In view of the aforesaid discussions and for the reasons
stated above, we find merit in this petition. Accordingly, respondent
No.2 is directed to issue the enabling notification in terms of the
incentive under clause 16 (A) of the Industrial Policy 2019 w.e.f.
the date of commercial production qua the petitioner within a
period of four weeks from today.
44 As regards the prayer made in the writ petition for
quashing clause 5 B of the Industrial Policy, 2019 along with
Rule 4B(b) and 4 F of the Rules regarding grant of incentives,
concessions and facilities for investment promotion in Himachal
Pradesh 2019, to the extent they are inconsistent with the
Industrial Policy 2019, it needs to be noticed that it was the
respondents themselves who had categorically held out in their
letter dated 03.07.2020 that the enabling notification relating to
tariff and incentive would be notified by respondent No.2 and the
petitioner in terms of the policy, rules and the promise held out to
it had done substantial expansion. Therefore, in such
circumstances, clause 5B of the Industrial Policy, 2019 along with
Rule 4B(b) and 4F of the Rules regarding grant of incentives,
43
( 2025:HHC:13047 )
concessions and facilities for investment promotion to the extent
they are inconsistent with the Industrial Policy, 2019, is set-aside.
45 The petition is allowed in the aforesaid terms. Pending
application(s), if any, also stands disposed of.
(Tarlok Singh Chauhan)
Judge
(Sushil Kukreja)
Judge
7.05. 2025
(mamta/pankaj)
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