Industrial policy exemption for prestigious unit upheld; negative list inapplicable and promised incentives enforceable after agreed investment was completed.

An industrial policy exemption for a separately classified prestigious unit was upheld where the policy fixed capital investment of Rs. 25 crores or more but did not require completion before commercial production. The State had accepted a time-bound arrangement allowing completion of the minimum investment within six months, and the unit met that condition. The negative list attached to S.R.O. No. 249 applied only to medium and large scale units and was not extended to prestigious units by express language or necessary implication. The unit was therefore entitled to the promised exemption, incentives, and subsidies under the policy and notifications.

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Issues: (i) whether the industrial unit satisfied the conditions for being treated as a prestigious unit entitled to exemption; (ii) whether the negative list attached to S.R.O. No. 249 applied to prestigious units; (iii) whether the appellant was entitled to the incentives and subsidies promised under the Industrial Policy and notifications.

Issue (i): whether the industrial unit satisfied the conditions for being treated as a prestigious unit entitled to exemption

Analysis: The Industrial Policy and S.R.O. No. 247 contemplated a prestigious unit as one having capital investment of Rs. 25 crores or more, but did not fix any date by which the investment had to be completed. The memorandum of understanding approved by the State permitted commercial production to begin first and the minimum investment to be completed within six months, and the record showed that the appellant invested more than Rs. 25 crores within that period. The Government had itself accepted this arrangement and acted upon it through departmental certificates and the declaration of prestigious status.

Conclusion: The appellant satisfied the eligibility condition for being treated as a prestigious unit and was not disqualified for want of initial investment on the date of commercial production.

Issue (ii): whether the negative list attached to S.R.O. No. 249 applied to prestigious units

Analysis: Paragraph 10 of the Industrial Policy package and S.R.O. No. 247 granted a special exemption to prestigious units by a non obstante clause and did not refer to any negative list. By contrast, S.R.O. No. 249 expressly applied to medium and large scale units and made the exemption subject to a schedule of excluded goods. Prestigious units were treated as a separate class, and the negative list was not extended to them by express language or necessary implication.

Conclusion: The negative list did not apply to prestigious units.

Issue (iii): whether the appellant was entitled to the incentives and subsidies promised under the Industrial Policy and notifications

Analysis: Once the appellant fulfilled the conditions accepted by the State and the negative list was held inapplicable, the State could not resile from the package of incentives promised under the Industrial Policy and the notifications issued pursuant to it. The appellant had acted on the State's representation and completed the required investment within the period agreed.

Conclusion: The appellant was entitled to all incentives and subsidies applicable to prestigious units under the Industrial Policy and the notifications issued pursuant thereto.

Final Conclusion: The High Court's decision was set aside and the appellant's claim to exemption and allied incentives under the prestigious-unit package was upheld.

Ratio Decidendi: Where an industrial policy grants a special exemption to a separately classified unit without incorporating a negative list, and the State accepts a time-bound arrangement for completion of investment, the State cannot deny the promised benefit once the agreed conditions are fulfilled within the stipulated period.

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