Case Note & Summary
The State of Himachal Pradesh and its departments appealed against the High Court's judgment that directed them to provide concessional electricity rates to M/s Kundlas Loh Udyog, an existing industrial enterprise that had undertaken substantial expansion. The respondent had invested substantially in 2020 and sought the 15% discount on energy charges under Clause 16(a) of the Industrial Policy of 2019. The High Court had set aside certain rules and directed issuance of an enabling notification. The Supreme Court reversed this decision, holding that Clause 16(a) was intended only for new enterprises, while existing enterprises were covered by Clause 16(b) which provided a rebate on additional consumption. The Court also found that no enabling notification had been issued for the incentive, and the doctrine of promissory estoppel did not apply as there was no clear promise. The appeal was allowed, and the High Court's order was set aside.
Headnote
A) Industrial Policy - Interpretation of Incentive Clauses - Eligibility for Concessional Electricity - Clause 16(a) of Himachal Pradesh Industrial Policy, 2019 read with Rule 16(i)(a) of the Rules regarding grant of incentives, concessions, facilities for investment promotion in Himachal Pradesh, 2019 - The Court examined whether the 15% discount on energy charges under Clause 16(a) was available to existing enterprises undertaking substantial expansion. Held that Clause 16(a) applies only to new industrial enterprises, while Clause 16(b) applies to existing industrial consumers for additional power consumption. The amendment notification dated 29.04.2022 did not alter this position. (Paras 19-28)
B) Promissory Estoppel - Applicability Against Government Policy - Doctrine of Promissory Estoppel - The Court considered whether the State was estopped from denying the incentive to the respondent. Held that no clear promise was made to the respondent as the policy itself conditioned the incentive on issuance of an enabling notification, which was never issued. The doctrine cannot be invoked to compel the government to act contrary to law or policy. (Paras 29-37)
C) Administrative Law - Enabling Notification - Condition Precedent for Incentive - Clause 5(B) of Industrial Policy, 2019 - The Court held that incentives under the policy are admissible only from the date of commencement of commercial production or from the date of enabling notification, whichever is later. Since no enabling notification was issued for Clause 16(a) incentives for existing enterprises, the respondent was not entitled to the benefit. (Paras 10-11, 38)
Issue of Consideration
Whether the incentive of concessional electricity charges under Clause 16(a) of the Himachal Pradesh Industrial Policy, 2019, read with Rule 16(i)(a) of the 2019 Rules, was intended to be provided to existing industrial enterprises undergoing substantial expansion, and what effect the amendment notification dated 29.04.2022 has on the applicability of the said clauses; Whether the doctrine of promissory estoppel applies in favour of the respondent company.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court's judgment and order dated 07.05.2025, and dismissed the writ petition filed by the respondent.
Law Points
- Promissory estoppel
- Interpretation of industrial policy
- Eligibility for incentives
- Concessional electricity charges
- Substantial expansion
- Enabling notification
- Date of admissibility of incentives
Case Details
2026 LawText (SC) (05) 63
Civil Appeal No. of 2026 (Arising out of SLP (C) No. 26731 of 2025)
J.B. PARDIWALA J. , K.V.VISWANATHAN J.
Mr. P Chidambaram, Mr. Kapil Sibal, and Mr. Anup Rattan, the learned senior counsel, along with Mr. Vaibhav Srivastava, the learned AAG, appeared for the appellants, Mr. Navin Pahwa, the learned senior counsel, appeared for the respondent
State of Himachal Pradesh & Ors.
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Nature of Litigation
Civil appeal against High Court judgment directing State to provide concessional electricity rates to an existing industrial enterprise undergoing substantial expansion.
Remedy Sought
The State sought to set aside the High Court's order that directed issuance of enabling notification and set aside certain rules.
Filing Reason
The State challenged the High Court's interpretation of the Industrial Policy and Rules regarding eligibility for concessional electricity charges.
Previous Decisions
The High Court of Himachal Pradesh in Civil Writ Petition No. 1667 of 2021 directed the State to issue enabling notification and set aside Clause 5B of the Industrial Policy and Rules 4(B) and 4(F) as inconsistent.
Issues
Whether the incentive of concessional electricity charges under Clause 16(a) of the Industrial Policy of 2019 was intended for existing enterprises undergoing substantial expansion.
Whether the doctrine of promissory estoppel applies in favour of the respondent company.
Submissions/Arguments
Appellants argued that Clause 16(a) applies only to new enterprises, and existing enterprises are covered by Clause 16(b). The enabling notification was never issued, and the policy itself states that incentives are admissible from the date of enabling notification or commercial production, whichever is later.
Respondent argued that the policy promised incentives to all eligible enterprises including those undertaking substantial expansion, and the State is estopped from denying the benefit after the respondent invested based on the policy.
Ratio Decidendi
Clause 16(a) of the Himachal Pradesh Industrial Policy, 2019, providing a 15% discount on energy charges, is intended only for new industrial enterprises, while existing enterprises undertaking substantial expansion are covered by Clause 16(b) which provides a rebate on additional power consumption. The doctrine of promissory estoppel cannot be invoked to compel the State to provide incentives when no clear promise was made and the policy itself conditions the incentive on issuance of an enabling notification, which was never issued.
Judgment Excerpts
Clause 16(a) of the Industrial Policy of 2019 provides that eligible enterprises would be charged energy charges 15% lower than the approved energy charges for the respective category for a period of 3 years.
Clause 16(b) provides that existing industrial consumers, a rebate of 15% on energy charges shall be applicable for additional power consumption beyond the level of the preceding financial year.
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... whichever is later.
Procedural History
The respondent filed Civil Writ Petition No. 1667 of 2021 before the High Court of Himachal Pradesh, which was allowed on 07.05.2025. The State filed Special Leave Petition No. 26731 of 2025 before the Supreme Court, which was converted into Civil Appeal No. of 2026 and allowed.
Acts & Sections
- Himachal Pradesh Industrial Policy, 2019: Clause 5, Clause 5(A), Clause 5(B), Clause 16, Clause 16(a), Clause 16(b)
- Rules regarding grant of incentives, concessions, facilities for investment promotion in Himachal Pradesh, 2019: Rule 4, Rule 4(B), Rule 4(F), Rule 16(i)(a)
