Supreme Court Clarifies Industrial Policy Benefits, Rules in Favor of Himachal Pradesh Government, Supreme Court overturns High Court judgment, holds concessional tariff benefits under Himachal Pradesh Industrial Policy, 2019, are exclusive to new enterprises.
In a significant judgment delivered on May 25, 2026, the Supreme Court of India ruled in favor of the State of Himachal Pradesh, clarifying the scope of concessional tariff benefits under the Himachal Pradesh Industrial Policy, 2019. The judgment, delivered by a bench comprising Justices J.B. Pardiwala and K.V. Viswanathan, overturned a previous order by the Himachal Pradesh High Court that had directed the State to extend concessional electricity tariffs to an existing industrial enterprise undergoing substantial expansion.
The case, titled "State of Himachal Pradesh v. M/s Kundlas Loh Udyog," revolved around whether existing industrial enterprises undertaking substantial expansions were entitled to concessional electricity tariffs initially intended for new enterprises. The respondent, M/s Kundlas Loh Udyog, claimed the benefit under Clause 16(a) of the Industrial Policy, arguing that they were misled by the policy's language, which initially referred to "eligible enterprises."
The Supreme Court analyzed the policy and related tariff orders, concluding that the concessional rates under Clause 16(a) were meant exclusively for new enterprises, while existing enterprises undergoing substantial expansion were eligible only for rebates on additional consumption under Clause 16(b). The Court noted that the amendment on April 29, 2022, replacing "eligible enterprises" with "new enterprises" was merely clarificatory and retrospective, reinforcing the original intent of the policy.
Furthermore, the Court dismissed the respondent's reliance on the doctrine of promissory estoppel, stating that no vested right was conferred upon them by the issuance of the Certificate of Substantial Expansion. The Court emphasized that granting dual benefits under both Clause 16(a) and Clause 16(b) would lead to fiscal imbalance and was never the intention of the policy.
This judgment is pivotal as it clarifies the application of industrial incentives, ensuring that fiscal benefits are distributed in line with the policy's objectives. It underscores the principle that industrial policies must be interpreted in a manner that aligns with their original intent and objectives, preventing unintended fiscal implications for the state.
Bottom Line:
Industrial Policy - Concessional tariff benefits under Clause 16(a) of the Himachal Pradesh Industrial Policy, 2019 are applicable only to new industrial enterprises and not to existing industrial enterprises undergoing substantial expansion.
Statutory provision(s): Industrial Policy of Himachal Pradesh, 2019 Clause 16(a) and Rule 16(i)(a), Clause 16(b) and Rule 16(i)(b), Doctrine of Promissory Estoppel
State of Himachal Pradesh v. M/s Kundlas Loh Udyog, (SC) : Law Finder Doc id # 2906360
