Exemption conditions must be assessed on existing facts, and later lease-duration requirements cannot be applied retrospectively.

An industrial unit was treated as satisfying the section 4-A exemption condition where the term loan had been sanctioned and disbursed before machinery installation and commencement of production, even though some machinery had been purchased on credit earlier. The later introduction of a lease-duration requirement could not be used to deny exemption because that condition arose after the unit had been established and after the application was filed. On that reasoning, the exemption claim was upheld and the refusal to grant the eligibility certificate could not stand.

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Issues: (i) Whether the industrial unit was established after obtaining the term loan so as to satisfy the exemption condition under section 4-A; (ii) Whether the lease-duration condition could be applied to deny exemption when it came into existence after the unit had been established and the application had been filed.

Issue (i): Whether the industrial unit was established after obtaining the term loan so as to satisfy the exemption condition under section 4-A.

Analysis: The exemption notification required that the unit be either registered under the Factories Act or established after obtaining a term loan from the prescribed financial institution or bank. The pleadings showed that the loan was sanctioned and disbursed before the machinery was installed and production commenced, though the machinery had been purchased on credit earlier. On those facts, the unit was treated as having been established after the term loan was obtained.

Conclusion: The condition was satisfied and this issue was decided in favour of the petitioner.

Issue (ii): Whether the lease-duration condition could be applied to deny exemption when it came into existence after the unit had been established and the application had been filed.

Analysis: The requirement that the lease should be for more than seven years was introduced only after the unit had already been established and after the application had been made. A condition introduced later could not be used to defeat the claim for exemption in respect of an already existing unit.

Conclusion: The later lease-duration condition could not be applied against the petitioner and this issue was decided in favour of the petitioner.

Final Conclusion: The petitioner was entitled to exemption and the orders refusing the eligibility certificate could not stand, resulting in grant of the writ relief.

Ratio Decidendi: An exemption condition must be satisfied on a realistic reading of the facts, and a requirement introduced after the unit's establishment cannot be used retrospectively to deny the benefit.

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