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TaxTMI 
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2026 (1) TMI 349
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.... F. ANALYSIS (I). Whether the MM Plant unit set up by Indo Flogates could be termed as a new industrial unit in accordance with the terms of industrial policy of 1989? (II). If the answer to the issue no. (I) is in the affirmative then, whether the respondents were justified in rejecting the capital investment subsidy and DG Set subsidy respectively for MM Plant unit on the ground that both Indo Flogates and the appellant company had already exhausted the overall subsidy limit under the previous industrial policies? (III). Whether the respondents are estopped from refusing to disburse the capital investment subsidy and DG Set subsidy respectively for the MM Plant unit to the appellant company? G. CONCLUSION 1. Leave Granted. 2. This appeal arises from the judgment and order dated 07.12.2018 passed by the High Court of Orissa in the W.P. (C) No. 17398 of 2008 by which the High Court rejected the writ petition filed by the appellant company and thereby, denied the sanctioned incentives of capital investment subsidy and DG Set subsidy under industrial policy of 1989 in favour of industrial setup namely, Magneco Metrel Plant ("MM Plant Unit"....
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.... and Investment Corporation of Orissa Limited (IPICOL). Respondent no. 3 authority is established as a nodal agency of the State of Orissa for investment promotion and single-window facilitation to promote medium and large-scale industries in the state by providing necessary support services. 7. Lastly, the respondent no. 4 is the Sub-Committee of the State Level Committee (SLC). The state level committee is the body that sanctions the investment subsidy on application forwarded to them by the forwarding agencies like the respondent nos. 1 to 3 respectively. As per Clause 6 of the Orissa Capital Investment Subsidy Rules, 1989 ("1989 Rules"), the state level committee is vested with the authority to assess the merits of each case relating to state investment subsidy, determine eligibility, and sanction the quantum of subsidy admissible to industrial units. Further, the state level committee is also empowered to delegate any of its powers and functions to the respondent no. 4 subcommittee. B. FACTUAL MATRIX 8. In the year 1989, the Government of Orissa came out with the industrial policy of 1989, which came into force with effect from 01.12.1989, with the twin objectives of ....
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....e upsurge in the industrial climate of the State. There has been very encouraging response from entrepreneurs both outside and inside the State. In the light of experience gained from implementation of the 1986 Policy and keeping in view the need to maintain and enhance the tempo of industrialization in the State, State Government have decided to further liberalize the package of incentives announced in the 1986 Policy with the twin objective of encouraging new industries and providing support to industries which have come up in the State during the last few years. Accordingly, it has been decided to operate, in public interest, a new Industrial Policy as outlined hereunder:- 2. DEFINITION 2.1 "Effective Date" means the date of issue of the policy on and from which, the provisions thereof shall operative. 2.2 "Expansion / modernisation / diversification" of an existing industrial unit means additional investment of more than 25% of the underpreciated [sic] book value of fixed capital investment of an existing unit in acquisition of fixed capital investment of expanding / modernising / diversifying the production of the said unit and resulting in increased....
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....xpansion / modernisation and diversification will be eligible for specific incentives as mentioned against the concerned incentive. Any number of expansion / modernisation / diversification can be taken up by an industrial unit but the concerned specific incentive shall be allowed only once. 4.5 Industrial Units of Public Sector Undertakings will not be eligible for any incentive unless the State Government on special consideration, make all or any to these incentives, applicable to any such undertaking. 5. CAPITAL INVESTMENT SUBSIDY 5.1 New Industrial Units as well as expansion / modernisation / diversification projects as defined earlier, shall be allowed Capital Investment Subsidy including Central Investment Subsidy, if any made available by Government of India in the following manner :- Zone 'A' 25 percent of the fixed capital investment subject to the limit of Rs. 25,00,000/-. Zone 'B' 15 percent of the fixed capital investment subject to the limit of Rs. 15,00,000/-. Zone 'C' 10 percent of the fixed capital investment subject to the limit of Rs. 10,00,000/-. Provided that if Central Investment Subsidy for any district / area....
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.....1992, Indo Flogates made its first capital investment towards the purchase of the land and shed for the establishment of the MM Plant unit. On 21.11.1992, the said MM Plant commenced its commercial production. 14. Thereafter, considering various incentives available to a new industrial unit under the industrial policy of 1989, Indo Flogates on 23.08.1993 submitted an application to the respondent no. 3 for availing assistance towards the subsidies for the Diesel Generator Set ("DG Set") set up by them in MM Plant unit under Clause 11.4.4 of the industrial policy of 1989 inter alia stating the following: (a) That, Indo Flogates in technical collaboration with Magneco / Metrel of USA had completed the establishment of the MM Plant unit for manufacturing stool inserts, stool coatings, and basic gunning mix; (b) That, the commercial production in the said MM Plant unit had also begun; and (c) That, in view of the frequent power cuts and power supply being erratic in the area, Indo Flogates had procured DG Sets in the project cost for which they want to avail the assistance of subsidy for DG Set. 15. Similarly, on 29.09.1993, Indo Flogates submitted ano....
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.... letter dated 15.12.2000 to the respondent no. 3 inter alia requesting for the expeditious disposal of the grant and disbursement of technical know-how subsidy of Rs. 5,00,000/-; capital investment subsidy of Rs. 10,00,000/-; and DG Set subsidy of Rs. 1,16,000/- in respect of the alleged new industrial unit i.e., MM Plant unit, set up by the erstwhile Indo Flogates. In the said letter dated 15.12.2000, the appellant company also informed the respondent no.3 that applications for the abovementioned subsidy were pending for more than 8 (eight) years due to the lackadaisical approach of the office of respondent no.2 and requested the respondent no. 3 for its intervention in the matter so as to expedite the sanction and disbursement process. 21. As there was no response at the end of respondent no.3 to the letter dated 25.12.2000, the appellant company sent a follow-up letter dated 17.01.2001 to the respondent no.3, inter alia, seeking an update on the progress in the matter. Thereafter, the appellant company again addressed a letter dated 22.05.2001 to the respondent no.3, inter alia, drawing attention to the fact that the aforesaid subsidies relating to Indo Flogates had been pend....
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....so conveyed the decision of the respondent no. 4 to the appellant company of sanctioning of the amount of Rs. 10,00,000/- towards capital investment subsidy inter alia stating as follows: "Sub: 10% Capital Investment Subsidy Ref: Your application for Capital Investment Subsidy Dear Sir, We are pleased to inform you that the Sub-committee of the State Level Committee in its 3rd meeting held on 20.02.03 has sanctioned a subsidy of Rs. 10,00,000/- (Rupees Ten Lac Only) to your unit at I.E. Kalunga [...]" (Emphasis Supplied) 26. Following the sanction of subsidies, the appellant company sent a letter dated 15.05.2003 to the respondent no. 1 enclosing the necessary documents as requested in the letters dated 10.04.2003 and 19.04.2003 respectively and enclosing the certified copy of order of High court dated 03.08.2000 inter alia reinforming the respondents that Indo Flogates had amalgamated with the appellant company with effect from 01.04.1999 in terms of the order passed by the High Court on 03.08.2000 by virtue of which all assets, liabilities, rights, benefits, etc including entitlement to abovementioned subsidies of Indo Flogates got transf....
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....ted to the appellant company that the sanctioned amount may be processed for disbursement on the receipt of the same from the respondent no. 2 authority. 29. Thereafter, on 23.08.2007, the respondent no. 2 sent a letter to the joint director of industries, Cuttack and informed that the fact of amalgamation of the appellant company and Indo Flogates was already conveyed to the director and the Joint Director of Industries, Cuttack vide internal office letters dated 27.09.2003 and 11.08.2006 respectively, thereafter which, the personnel from the respondent no. 1 authority had visited the site of the appellant company wherein it was found that the appellant company was managing the continuity of production of MM Plant unit. In such circumstances, the respondent no. 2 recommended the respondent no. 1 to consider releasing the 10% (ten percent) capital investment subsidy amounting to Rs. 10,00,000/- and 15% (fifteen percent) DG Set subsidy amounting to Rs. 1,14,750/- sanctioned in favour of Indo Flogates for the MM Plant unit in favour of the appellant company. The relevant correspondence is as under: "To, Shri T.K. Chatopadhyaya, Joint Director of Industri....
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.... Flogates under industrial policy of 1989; 2. That, the unit had amalgamated with the appellant company with effect from 01.04.1999 by the order of High court dated 03.08.2000; 3. That, the decision of amalgamation was neither recorded in the proceedings nor any documents were produced before the state level committee by either the unit or the authorities below i.e., the respondent no. 3; 4. That, as per an executive instruction dated 28.10.1994, the capital investment subsidy claims including claims for additional subsidy on account of expansion / modernisation / diversification were limited to the overall financial limits prescribed under previous industrial policies; 5. That, earlier Indo Flogates had been sanctioned a collective subsidy of Rs. 15,00,000/- which was disbursed to them under industrial policies of 1980 and 1986; 6. That, earlier the appellant company had also been sanctioned a collective subsidy of Rs. 20,00,000/- which was disbursed to them under the industrial policy of 1989. 7. That, since both Indo Flogates and the appellant company had availed the maximum limit of their respective subsidies, thus further s....
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....ier Clause 4.4 as abovementioned and inserted new wordings to Clause 4.4 stating that the capital investment subsidy, including any additional subsidy on account of expansion / modernisation / diversification, shall in all cases remain subject to the overall financial limit prescribed inter alia under the industrial policy of 1989. Accordingly, where an eligible unit had already availed capital investment subsidy under a previous industrial policy during its operational period, its entitlement to any further or additional subsidy under the industrial policy of 1989 shall be limited to the differential amount between the subsidy actually availed under the earlier industrial policies and the maximum capital investment subsidy permissible under the industrial policy of 1989. The said amended Clause 4.4 reads as under: "4.4 "Capital Investment Subsidy claim including claims for additional subsidy on account of E/M/D shall be limited to the overall financial limit prescribed under this IPR. In other words, if the eligible unit has availed of capital investment subsidy under the previous IPR during its operational period, its claim for additional subsidy would be limited to the ....
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.....02.2003 for a total sum of Rs.11,14,750/- (Rs.10,00,000/- normal CIS + Rs.1,14,750/- D.G. set subsidy). Hence the same has been rejected by the Sub-Committee." 5. In our considered opinion, it is true that a newly set up Industrial Unit is entitled to get the benefit but nonetheless the interpretation put forward by the Committee that only once benefit will be granted to the company is correct. Hence, the prayer made in this writ petition cannot be granted. 6. In that view of the matter, no interference is called for this writ petition. Even otherwise, we do not find any good ground to entertain the writ petition at this stage. According, the writ petition stands dismissed." (Emphasis Supplied) 36. In such circumstances referred to as above, the appellant company is here before us with the present appeal. C. SUBMISSIONS ON BEHALF OF THE APPELLANT 37. Mr. Nakul Dewan, the learned senior counsel appearing for the appellant company, submitted that the industrial policy of 1989 came into force with effect from 01.12.1989 with twin objectives of encouraging new industries and providing support to the then existing units. On this note, he argued that Clause....
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....unsel also submitted that the MM Plant unit is a new industrial unit under the industrial policy of 1989 as the same had also been classified by the respondents in 1998, and there is no prescribed limit on the benefits available to it. This is because Clause 4.1 of the industrial policy of 1989 states that all new industrial units would be eligible for all incentives provided in the industrial policy of 1989, which is different from the treatment of existing industrial units, whereunder Clause 4.4 of the industrial policy of 1989, incentives were allowed only once in case of expansion / modernisation / diversification. He argued that since the respondents had classified the MM Plant unit as a new industrial unit, the High Court was incorrect in holding that the benefits under the industrial policy of 1989 could have been granted only once. 42. Lastly, the learned counsel argued that the respondents in their counter affidavit before the High Court and further in the course of hearing before this Court had alleged the non-disclosure of the amalgamation between Indo Flogates and the appellant company as the basis for the rejection of the disbursal of subsidies. Refuting this, the l....
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....e state level committee had noticed that at the time of sanction of the subsidy for the MM Plant unit of Indo Flogates Ltd in 2003, the very existence of Indo Flogates was not there as it was already amalgamated with the appellant company, and since both Info Flogates and the appellant company had already availed the individual overall maximum limit of subsidies i.e. Rs.15,00,000/- and Rs. 20,00,000/- respectively, the sub-committee of the state level committee decided not to release any subsidy in favour of the appellant company. 45. Mr. Gaurav Khanna, the learned counsel appearing for the respondent nos. 2 and 4 respectively, submitted that as per Clause 5.1 of the industrial policy of 1989 the incentive of capital investment subsidy was available in cases of both new industrial unit as well as expansion / modernisation / diversification project in Zone C at 10% (ten percent) of the fixed capital investment subject to the limit of Rs. 10,00,000/. He further submitted that Clause 11.4.4 of the industrial policy of 1989 provided for subsidy for DG Set, 15% (fifteen percent) of the investment in DG Set subject to a maximum of Rs. 5,00,000/-. Thus, the maximum limit of subsidy tha....
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....s, therefore, the same should also apply in case of claim of a new industrial unit for capital investment subsidy as also in case of claim for additional subsidy in case of expansion / modernisation / diversification. 47. The learned counsel laying much stress on the instruction letter dated 28.10.1994, referred to as above, submitted that both Indo Flogates and the appellant company were already being granted to the extent of overall maximum limit of subsidy of Rs. 15,00,000/- and Rs. 20,00,000/- collectively under the previous industrial policies i.e., industrial policy of 1980 and 1986 respectively and, therefore, the subsidies sanctioned for MM Plant unit in favour of Indo Flogates could not have been disbursed in favour of later transferee i.e. the appellant company for being excessive of overall maximum limit of subsidy that can be granted as per the instruction letter dated 28.10.1994. 48. The learned counsel in the last submitted that Indo Flogates had preferred the applications for sanction of capital investment subsidy and DG Set subsidy on 29.09.1993 and 23.08.1993 respectively under the industrial policy of 1989 for manufacturing of stool insert, stool coatings an....
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...., stood accepted by the respondents when they had earlier accorded sanction in favour of the MM Plant as though it were a new industrial unit. The respondents, per contra, contend that the MM Plant unit is not a new industrial unit but merely an expansion of the already existing unit, namely Indo Flogates unit, and that, consequently, no further subsidy can be extended to the appellant company in respect of the MM Plant unit, since such subsidy can be availed only once as per Clause 4.4 of industrial policy of 1989. It is further the case of the respondents that, even while accepting the MM Plant qualifies as a new industrial unit, no additional subsidy can be granted in view of the overall maximum limit imposed by the instruction letter dated 28.10.1994. 51. Before delving into what "new industrial unit" means, we are of the view that it is necessary to first understand the definition of "industrial unit" as defined under the industrial policy of 1989. In this respect, Clause 2.5 of the industrial policy of 1989 states that an industrial unit means any "industrial undertaking" detailed in Annexure-1 of the policy. Annexure-1 of the policy inter alia states that an industrial un....
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....aid to be a new industrial unit. 54. At this juncture, it is relevant to state that this Court had an occasion to deliberate upon the phrase "newly established industrial undertaking" as provided in Section 15C of the Income Tax Act, 1922 ("IT Act, 1922") in the case of Textile Machinery Corpn. Ltd. v. CIT, West Bengal, reported in (1977) 2 SCC 368. In this case, the assessee company was a heavy engineering concern engaged in the manufacture of boilers, machinery parts, wagons, and allied products. For the assessment years 1958-59 and 1959-60, the assessee company claimed exemption under Section 15C in respect of the profits and gains derived from its steel foundry division and, for the latter year, from its jute mill division as well. The Income tax Officer rejected the claim, holding that the steel foundry division merely began producing castings which were earlier purchased from the market and that such castings were used exclusively within the assessee company's existing divisions. He further held that the expansion was a normal incident of the assessee company's established business and did not amount to the setting up of a new industrial undertaking within the meaning of S....
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....blish such new undertakings. 57. When the matter came up before this Court, it was noted that Section 15C provided for exemption from tax in respect of a newly established industrial undertaking and that, under sub-section (2)(i) of Section 15C, such exemption was not available where the undertaking is formed by the reconstruction of a business already in existence, or by the transfer to a new business of building, machinery, or plant previously used in any other business. While construing the expression new industrial undertaking in this context, this Court held that the undertaking must not, in substance, be the same old existing undertaking; that there must be a fresh and substantial investment of new capital; and the mere fact that a person, by setting up a new industrial undertaking, expands his existing business does not, by itself, disentitle him from the benefit of exemption, for every new creation in business necessarily involves some measure of expansion or advancement of the pre-existing enterprise. 58. This Court further held that the real test is not whether the new undertaking represents an expansion of the existing business, but whether it is, in truth, a new a....
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....articles yielding additional profit attributable to the new outlay of capital in a separate and distinct unit is the heart of the matter, to earn benefit from the exemption of tax liability under Section 15-C [...] The fact that an assessee by establishment of a new industrial undertaking expands his existing business, which he certainly does, would not, on that score, deprive him of the benefit under Section 15- C. Every new creation in business is some kind of expansion and advancement. The true test is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business. No particular decision in one case can lay down an inexorable test to determine whether a given case comes under Section 15-C or not. In order that the new undertaking can be said to be not formed out of the already existing business, there must be a new emergence of a physically separate industrial unit which may exist on its own as a viable unit. An undertaking is formed out of the existing business if the physical identity with the old unit is preserved. This has....
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....tion 15-C the industrial units set up must be new in the sense that new plants and machinery are erected for producing either the same commodities or some distinct commodities. In order to deny the benefit of Section 15-C the new undertaking must be formed by reconstruction of the old business. Now in the instant case there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking. There is no such transfer of assets in the two cases with which we are concerned." xxx xxx xxx 26. If any undertaking is not formed by reconstruction of the old business that undertaking will not be denied the benefit of Section 15- C simply because it goes to expand the general business of the assessee on some directions. As in the instant case, once the new industrial undertakings are separate and independent production units in the sense that the commodities produced or the results achieved are commercially tangible products and the undertakings can be carried on separately without complete absorption and losing their identity in the old business, they ar....
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....business, on the other. It was observed that the separate business need not be a different kind of business. The commodity which the original produced, manufactured or sold might be a relevant factor in finding out whether the subsequent business was an extended business or an independent new business. The relevant observations are as under: "11. Section 15C provides that the assessee should not be taxed in respect of the profits or gains derived from its subsequent industrial undertaking as do not exceed 6% per annum on the capital employed by it in such undertaking. But it is obvious from this section that the "industrial undertaking" in clause 15C must refer to some new undertaking or undertaking which amounts to additions, alterations, extensions, expansions or new units. It pre-supposes that the assessee has got an existing business of its own. But, apart from its original business, the assessee, for commercial expediency, might decide to cause expansion of its business. This expansion may take place in various ways. The original business might be carried on in the assessee's plot of land or over the assessee's building or buildings. Several floors may be rais....
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....here the assessee invests large sums of money and establishes new production units of similar or different nature as a result of which the original business of the assessee does not intrinsically alter its original character or continues to produce, manufacture or carry on the original activity in the same way even after the establishment of subsequent undertakings, the latter may be called extensions of such a nature which may be called a kind of new industrial undertaking which is entitled to get tax relief. relief. Thus whether the term "reconstruction" would include the case of substantial extensions or expansions of the assessee's original business so as to invoke the benefit or mischief under section 15C would depend upon the facts of each case. Exemption under section 15C would only be available to those industrial undertakings which are not established by division or reorientation of the assessee's original business or which has not been formed by the transfer to it of building, machinery or plant used in the assessee's original business. The emphasis should be laid on the words "is formed by" and not the form of subsequent undertaking. To obtain relief under se....
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....y, the restriction on it, too, has to be construed so as to advance the objective of the section and not to frustrate it. Noting above, this Court held that even if the alleged new industrial undertaking was established by transfer of building, plant or machinery of any existing unit still if it is not formed as a result of such transfer the assessee could not have been denied the benefit. In short, this Court took the view that such new undertaking should not be a continuation of the old but emergence of a new unit in itself. The relevant observation is as under: "5. The section, read as a whole, was a provision, directed towards encouraging industrialisation by permitting an assessee setting up a new undertaking to claim benefit of not paying tax to the extent of six per cent in a year on the capital employed. But the legislature took care to restrict such benefit only to those undertakings which were new in form and substance, by providing that the undertaking should not be, 'formed' in any manner provided in clause (i) of sub-section (2) of Section 15-C. Each of these requirements, namely, formation of the undertaking by splitting up or reconstruction of an exi....
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.... transfer of building or material to the new company but that it should not be formed by such transfer. This is the key to the interpretation. The formation should not be by such transfer. The emphasis is on formation not on use. Therefore it is not transfer of building or material but the one which can be held to have resulted in formation of the undertaking [...]" (Emphasis Supplied) 65. Further, the Calcutta High Court in the case of Commissioner of Income-Tax v. Orient Paper Mills Ltd., reported in (1974) 94 ITR 73, was confronted with the question whether the electrolysis plant set up by the assessee company was a new industrial undertaking within the meaning of Section 15C of the IT Act, 1922. In this case, the assessee company owned a paper mill. It manufactured and sold paper in the market. In the preceding year to the relevant assessment year it had set up an electrolysis plant unit for the purpose of manufacturing caustic soda which is an essential chemical for use in the process of manufacture of paper. The assessee company obtained a separate licence for the manufacture of caustic soda and the plant unit was housed in a separate building. In assessing the company ....
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....g up of new industries in various areas of the country. On this note, the High court observed that it was the case of the assessee company from the beginning that intended to produce raw materials of a type which was capable of being available in the market independently and which was also capable of being sold in the market and the assessee company had set up a new and separate unit for the same in a separate building and had obtained a separate licence for it. The High court observed that the setting up of a factory or a plant for the manufacture of caustic soda was not an essential or an integral part for the setting up of the plant and machinery for paper manufacture. Furthermore, it was observed that the plant had been set up for production of raw material. This raw material has an independent market both to be purchased and to be sold apart from the production of paper. The court had pointed out that if the undertaking of assessee company were not to held as a new industrial undertaking simply because the assessee company was using this in the manufacturing process then it would lead to strange results that should otherwise be avoided. The relevant observation is as under: ....
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....s using the same for its own products. Such an anomalous result, if possible, should be avoided. Furthermore, it appears to us that the expressions "splitting up or reconstruction of business already in existence" should be given their ordinary commercial meaning. Judged from that point of view it appears to us that, as a new plant was set up in a new building not by re-fitting any existing plant or machinery for production of a raw material which can be continued irrespective of paper manufacturing business, the assessee in this case was entitled to the benefit of section 15C of the Act." (Emphasis Supplied) 68. The above view taken in Orient Paper (supra) also came to be affirmed by this Court in CIT v. Orient Paper Mills Ltd., reported in (2015) 17 SCC 305, wherein this Court found the appeal to be covered by the view taken by this Court in Textile Machinery (supra) and Indian Aluminium (supra) respectively, and thus, dismissed the same. The relevant observation is as under: "Admittedly, the appeal is concluded by the view taken by this Court in Textile Machinery Corpn. Ltd. v. CIT and CIT v. Indian Aluminium Co. Ltd. In accordance with that view, the appeal fails....
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....mmodities. In order to deny the benefit of the exemption under Section 80-I, the new undertaking must be formed by reconstruction of the old business. Considering the fact that substantial capital was employed to establish the new industrial unit and that such expansion had resulted in increase in the production by two fold, the High court held that there was no formation of any industrial undertaking out of the existing business since that could take place only when the assets of the old business are transferred substantially to the new undertaking. The court observed that just because the new undertaking was dependent to a certain extent on the existing undertaking the same by itself should not deprive the new undertaking of the status of integrated unit by itself. Thus, the High court held the alleged unit to be a new industrial undertaking in this case and granted incentive of exemption under Section 80-I. The relevant observation is as under: "20. It appears that the only ground which weighed with the Commissioner of Income-tax (Appeals) and the Tribunal is that the assessee has not been able to lead any evidence to show that the new unit is capable of independently p....
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....lant and machinery are erected for producing either the same commodities or some distinct commodities. In order to deny the benefit of section 80-I, the new undertaking must be formed by reconstruction of the old business. In the present case, there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking. Just because the new undertaking is dependent to a certain extent on the existing undertaking should not deprive the new undertaking of the status of integrated unit by itself [...] 26. We are of the view that so far as the fifth test is concerned, i .e., a separate and distinct identity, only because to a certain extent the new undertaking is dependent on the existing unit, will not deprive the new undertaking the status of a separate and distinct identity. It all depends on the nature of the technology and the mechanism of production. We cannot ignore the fact that new machinery and new plant have been installed at an investment of Rs. 7 crores sometime in the year 1982-83, i.e., almost three decades back and also the fact that the p....
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....omparison to the old existing unit. While affirming the said decision, this Court highlighted the following tests laid in Textile Merchants (supra): "(i)Manufacture or production of articles yielding additional profit attributable to the new outlay of capital in a separate and distinct unit is the heart of the matter; (ii) The fact that an assessee by establishment of a new industrial undertaking expands his existing business which he certainly does would not on that score, deprive him of the benefit. Every new creation in business is some kind of expansion and advancement; (iii) The true test is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business; (iv) In order that the new undertaking can be said to be not formed out of the already existing business, there must be a new emergence of a physically separate industrial unit which may exist on its own as a viable unit; (v) The new unit may produce the same commodities of the old business or it may produce some other distinct ma....
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.... unit so invested in is genuinely a new industrial unit or merely an expansion of the existing unit masquerading as a new one. For such determination, reliance can be placed on various tests prescribed by the courts as mentioned above particularly in Textile Machinery (supra) and Indian Aluminium (supra) and later affirmed in Bajaj Tempo (supra), Orient Papers (supra), and Gujarat Alkalies (supra). 74. The higher threshold laid down in the various decisions above to determine the newness of industrial unit, assume even greater relevance for consideration and application to the facts of the present case as those tests were evolved in the context of Section 15C of the IT Act, 1922 (later Section 80-I of the IT Act, 1961), the underlying objective of which was to foster industrial development by encouraging the deployment of fresh capital through the establishment of new industrial undertakings. In a similar vein, the promotion of industrialization in the State of Orissa by facilitating the setting up of new industrial units through incentives such as capital investment subsidy, tax exemptions, and related fiscal benefits, constitutes the ultimate object of the industrial policy of....
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....ctory products such as stool inserts, stool coatings, and basic gunning mix. In fact, the project cost for establishing the MM Plant unit had been separately appraised and financed by the IDBI Bank. In our view, therefore, the MM Plant unit constituted an identifiable undertaking, separate and distinct from the existing business of Indo Flogates. 77. Even assuming that the products manufactured by the MM Plant unit could have been utilised in the operations of the Indo Flogates unit, it nonetheless remains a well-settled principle that a new industrial unit does not lose its character merely because it produces the same or similar commodities as the old unit, or even products which may serve as inputs for the existing unit. The rationale underlying this principle is rooted in the expertise of an industrialist or a company. An industrialist or company already experienced and well-versed in the manufacture and trade of a particular commodity would ordinarily seek to develop the industry in which it possesses skill and familiarity. In doing so, such an entity may understandably choose to set up a new industrial unit for the further development of its existing industry, without bein....
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.... the increased production over and above the capacity of existing unit. This means in order to fall within the phrase "expansion of an existing unit" under Clause 2.2 of the industrial policy of 1989, four essentials at the least are required: (i) There must be an additional investment; (ii) such additional investment must exceed 25% (twenty - five percent) of undepreciated value of existing unit's fixed capital investment; (iii) such additional investment must be made in acquiring new fixed capital; and (iv) such additional investment must result in increase in the production over and above the existing capacity. 80. Having explained the meaning of expansion of existing unit under industrial policy of 1989, it is now pertinent to highlight the fact that the respondent nos. 2 and 4 respectively in their counter affidavit before this Court have stated that the sanctioned subsidies were rejected due to the reason that MM Plant unit was nothing but an expansion of the Indo Flogates unit and that under Clause 4.4 of the industrial policy of 1989 though an industrial unit may carry any number of expansions but the subsidy incentive for such industr....
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.... out expansions therein, and that the applications of Indo Flogates simply stated that this unit has been set up separately in the state with a separate registration with the Government of India and with new and separate electrical connection obtained from the Orissa State Electricity Board (OSEB). On the basis of the above, it was stated that it fulfilled the criteria of a new unit for subsidy under industrial policy of 1989. Therefore, on the basis of the applications, the respondent no. 2 vide letter dated 05.11.1998, communicated to Indo Flogates that on further examination of matter, it had decided to treat MM Plant unit of Indo Flogates for manufacture of stool insert, stool coatings and gunning mix as a separate new industrial unit. It is relevant to note here that there was already a pre-formatted application form issued by the state wherein the applicant while applying for subsidy for new industrial unit had no choice but to accept to the pre-formatted clause in the draft application which stated that the applicant certifies that they had not either applied for or have received any amount by way of state investment subsidy before. 83. We do not agree with the argument o....
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....wards capital investment subsidy and Rs. 1,14,750/- towards DG Set subsidy) was based on the documents submitted by Indo Flogates. It was also argued that the fact of amalgamation of Indo Flogates and the appellant company was not disclosed to or brought to the knowledge of the respondents before sanctioning the subsidies, therefore, MM Plant unit was earlier recognised as a new industrial unit and on that basis capital investment subsidy was sanctioned for MM Plant in favour of Indo Flogates. The respondents further argued that in the 35th meeting of subcommittee of state level committee, the very existence of Indo Flogates was not there as it was already amalgamated with the appellant company. However, we do not find any merit in this argument as the fact of amalgamation was also referred to by the appellant company (which till this time had amalgamated with Indo Flogates) in its letter dated 22.05.2001 wherein the respondents were asked to "kindly be informed that following subsidy matters relating to erstwhile lndo Flogates Ltd (since amalgamated with the Company) are lying pending with the Industries Department". Whereas, the subsidies were sanctioned by the respondent nos. 2 ....
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....er to the issue no. (I) is in the affirmative then, whether the respondents were justified in rejecting the capital investment subsidy and DG Set subsidy respectively for MM Plant unit on the ground that both Indo Flogates and the appellant company had already exhausted the overall subsidy limit under the previous industrial policies? 86. The respondents contended that the Industries Department, Government of Orissa while exercising its power under Clause 20.1 of the industrial policy of 1989 had issued to the respondent no. 3 the instructions letter vide dated 28.10.1994, clarifying that the capital investment subsidy claims including the claims for additional subsidy on account of expansion / modernisation / diversification shall be limited to the overall financial limits prescribed under different IPRs and that this procedure was followed earlier also and that the same may continue to be followed in future. In this background, the respondents had argued that it is clear from the instruction letter dated 28.10.1994 that capital investment subsidy claim, including claim for additional subsidy in case of expansion, was subject to overall financial limits prescribed under differe....
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.... had issued the notification dated 30.10.2008 and amended industrial policy of 1989 retrospectively to insert a new sub-clause being Clause 4.4, containing a verbatim requirement as had been provided under the instruction letter dated 28.10.1994. 88. Having set the important dates above, a close reading of Clause 20.1 of the industrial policy of 1989 is also required. Clause 20.1 of industrial policy of 1989 inter alia provides that the State Government may issue operational guidelines / instructions for administration of incentives and that an industrial unit, which considers itself eligible for any incentive under the policy, shall apply for the same in accordance with the operation guidelines / instructions and the same shall be considered and disposed of on merits. This means if an industrial unit, while submitting the application for subsidies to the respondent authorities, considers itself to be eligible for any incentive then it shall apply "in accordance" with the operational guidelines / instructions. At this juncture, it is pertinent to note that at the time when Indo Flogates had applied for DG Set subsidy and capital investment subsidy i.e., on 23.08.1993 and 29.09.1....
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.... means such eligible unit would necessarily would have to be an existing unit first. This is because a new industrial unit (in which fixed capital investment is required to take place only after the effective date of industrial policy of 1989) on the other hand would be receiving a fresh subsidy as per the scheme and objective of entire industrial policy of 1989 and not the additional subsidy which is otherwise meant for an industrial unit which was set up during the operation of previous policies. In such circumstances, the word "eligible unit" used in the instruction letter dated 28.10.1994 and in the amendment notification dated 30.10.2008 would require to be read as the existing industrial unit which is undergoing either expansion / modernisation / diversification. This view would fall squarely into place when one would refer to the heading of the amendment notification dated 30.10.2008 that clarified the intent behind the requirement of the instruction letter dated 28.10.1994. The heading of the amendment notification dated 30.10.2008 states that an amendment to industrial policy of 1989 is being carried out for the provisions of sanction of capital investment subsidy under ex....
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....proceed", that it will prevent a person from insisting on his legal rights - whether arising under a contract or on his title deed, or by statute - when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties." 94. The essential elements of the doctrine of promissory estoppel have also been discussed in Chitty on Contracts : Hugh Beale, Chitty on Contracts (32nd edn., Sweet & Maxwell 2017): "4.086. For the equitable doctrine to operate there must be a legal relationship giving rise to rights and duties between the parties; a promise or a representation by one party that he will not enforce against the other his strict legal rights arising out of that relationship; an intention on the part of the former party that the latter will rely on the representation; and such reliance by the latter party. Even if these requirements are satisfied, the operation of the doctrine may be excluded if it is, nevertheless, not "inequitable" for the first party to go back on his promise. The doctrine most commonly applies to promises not to enforce contractual rights, but it also extends to certain other relationships. xxx xxx xx....
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....Appeal held that consideration is an essential element of the cause of action: "It [promissory estoppel] may be part of a cause of action, but not a cause of action itself [...] The principle [promissory estoppel] never stands alone as giving a cause of action in itself, it can never do away with the necessity of consideration when that is an essential part of the cause of action. The doctrine of consideration is too firmly fixed to be overthrown by a side-wind" 97. Even within English law, the application of the rule laid down in Combe (supra) has not been consistent, and the width of the principle itself has been a matter of doubt. In the absence of any authoritative pronouncement by the House of Lords recognising promissory estoppel as an independent cause of action, it has been considered difficult to state with certainty that English law has moved away from the traditional position of treating the doctrine as a 'shield' rather than a 'sword'. In contrast, the position in the United States and Australia is comparatively less restrictive. 98. Whereas India adopted a more broader formulation of the doctrine. Comparative law enables countries which apply a doctrine ....
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....tablishes that here too the court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will amount to an abuse of power. Here, once the legitimacy of the expectation is established, the court will have the task of weighing the requirements of fairness against any overriding interest relied upon for the change of policy." (Emphasis Supplied) 101. Under English law, the doctrine of legitimate expectation initially emerged within the domain of public law as an analogue to the doctrine of promissory estoppel in private law. Over time, however, English law has drawn a clear distinction between the two, treating legitimate expectation and promissory estoppel as discrete remedies operating in the spheres of public law and private law respectively. In this context, De Smith's Judicial Review, authored by Harry Woolf and others (8th edn., Thomson Reuters, 2018), highlights the contrast between the public law orientation of the doctrine of legitimate expectation and the private law foundations of promissory estoppel: "despite dicta to the contrary [Rootkin v Kent CC, (1981) 1 WLR 1186 (CA); R v Jockey Club Ex p ....
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....misrepresentation in private law, because they go to fairness and through fairness to possible abuse of power. To disregard the legitimate expectation because no concrete detriment can be shown would be to place the weakest in society at a particular disadvantage. It would mean that those who have a choice and the means to exercise it in reliance on some official practice or promise would gain a legal toehold inaccessible to those who, lacking any means of escape, are compelled simply to place their trust in what has been represented to them." (Emphasis Supplied) 103. Consequently, while the basis of the doctrine of promissory estoppel in private law is a promise made between two parties, the basis of the doctrine of legitimate expectation in public law is premised on the principles of fairness and non-arbitrariness surrounding the conduct of public authorities. This is not to suggest that the doctrine of promissory estoppel has no application in circumstances when a State entity has entered into a private contract with another private party. Rather, in English law, it is inapplicable in circumstances when the State has made representation to a private party, in furtherance o....
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....y repose in the State. The same considerations apply with equal force in the commercial sphere, where predictability and consistency are indispensable to rational business planning. A failure on the part of public authorities to honour their representations, absent adequate and cogent justification, undermines the confidence of citizens in the State and erodes the credibility of governmental action. The creation of a business-friendly environment conducive to investment and trade is intrinsically linked to the degree of faith that may be placed in government to fulfil the expectations it engenders. Professors Jain and Deshpande have characterised the consequences of this doctrinal confusion in the following terms: "Thus, in India, the characterization of legitimate expectations is on a weaker footing, than in jurisdictions like UK where the courts are now willing to recognize the capacity of public law to absorb the moral values underlying the notion of estoppel in the light of the evolution of doctrines like LE [Legitimate Expectations] and abuse of power. If the Supreme Court of India has shown its creativity in transforming the notion of promissory estoppel from the lim....
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....gitimate expectation" have been held to require reliance on representations and resulting detriment to the claimant in the same way as claims based on promissory estoppel." (Emphasis Supplied) 108. However, it is necessary to bear in mind that the aforesaid observation was made by this Court in the context of examining the contours of the doctrine of legitimate expectation under English law as it then stood. As noticed earlier, at that stage of its development, English law exhibited a significant degree of overlap between the doctrines of legitimate expectation and promissory estoppel, the former often being invoked by analogy with the latter. Subsequent developments in English law, particularly following the decision of this Court in National Buildings Construction Corporation (supra), reflect a conscious effort to disentangle the two doctrines and to locate the doctrine of legitimate expectation on a distinct and more expansive doctrinal footing. In Regina (Reprotech (Pebsham) Ltd) vs East Sussex County Council, reported in [2003] 1 WLR 348, the House of Lords has held thus: "33. In any case, I think that it is unhelpful to introduce private law concepts of estoppe....
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....red its position to its detriment. In contrast, the application of the doctrine of legitimate expectation is primarily informed by considerations of fairness and reasonableness in State action. The relevant observation is as under: "Promissory Estoppel and Legitimate Expectations 289. As we have seen earlier, for invoking the principle of promissory estoppel there has to be a promise, and on that basis the party concerned must have acted to its prejudice. In the instant case it was only a proposal, and it was very much made clear that it was to be approved by the Central Government, prior whereto it could not be construed as containing a promise. Besides, equity cannot be used against a statutory provision or notification. 290. [...] In any case, in the absence of any promise, the Appellants including Aadhunik cannot claim promissory estoppel in the teeth of the notifications issued under the relevant statutory powers. Alternatively, the Appellants are trying to make a case under the doctrine of legitimate expectations. The basis of this doctrine is in reasonableness and fairness. However, it can also not be invoked where the decision of the public author....
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....r excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review. 8. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate....
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....y estoppel against government instrumentalities finds its reference in a pivotal decision of this Court in the case of Motilal Padampat (supra). In this case, the State Government of UP in 1968 had taken a policy decision to grant the incentive of exemption from sales tax for a period of three years to all new industrial units being established within the State. Pursuant to this policy, the appellant addressed a communication to the Director of Industries, stating that, in view of the sales-tax exemption announced by the Government, it intended to set up a plant unit for the manufacture of vanaspati and sought confirmation regarding the availability of the exemption. The Director of Industries affirmed the position, and the assurance was further endorsed and confirmed by the Chief Secretary to the State Government. Acting on the strength of these assurances, the appellant proceeded to establish the plant unit. In and around 1969, the State Government expressed reservations regarding the grant of exemption and requested the appellant to attend a meeting, during which the appellant reiterated that the government had already granted sales-tax exemption and that it had proceeded with t....
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..... 117. Applying the said doctrine to facts of that case, this Court had observed that the in the letter of the chief secretary to the government, a categorical representation was made by him on behalf of the government that the proposed vanaspati unit of the appellant would be entitled to exemption sales tax for a period of three years from the date of commencement of production. This representation was made by way of clarification and as a definite commitment on the part of the government to grant exemption. Therefore, the representation was made by the government knowing and intending that it would be acted on by the appellant, because, the appellant had decided to set up a unit for manufacture of vanaspati only on account of the exemption from sales tax promised by the government. The relevant observations are as under: "7. That takes us to the question whether the assurance given by respondent 4 on behalf of the State Government that the appellant would be exempt from Sales Tax for a period of three years from the date of commencement of production could be enforced against the State Government by invoking the doctrine of promissory estoppel. Though the origins of t....
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....the letter dated January 23, 1969 clearly shows that respondent 4 made this representation in his capacity as the Chief Secretary of the Government, and it was therefore, a representation on behalf of the Government [...] We must, therefore, proceed on the basis that this representation made by respondent 4 was a representation within the scope of his authority and was binding on the Government. Now, there can be no doubt that this representation was made by the Government knowing or intending that it would be acted on by the appellant, because the appellant had made it clear that it was only on account of the exemption from sales tax promised by the Government that the appellant had decided to set up the factory for manufacture of vanaspati at Kanpur. The appellant, in fact, relying on this representation of the Government, borrowed moneys from various financial institutions, purchased plant and machinery from M/s. De Smet (India) Pvt. Ltd., Bombay and set up a vanaspati factory at Kanpur. The facts necessary for invoking the doctrine of promissory estoppel were, therefore, clearly present and the Government was bound to carry out the representation and exempt the appellant from s....
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..... 119. This Court, for the purpose of applying the doctrine of promissory estoppel to the above set of facts, held that the Board had issued the notifications in question, acting in its wisdom and pursuant to the directions of the State, in furtherance of the package of incentives offered by the State of U.P. to new industrial units. By the plain terms of these notifications, the Board, functioning as an arm of the State Government had extended concessions in the form of rebates in electricity duty to the new industrial units, with the objective of attracting such units to invest in the state and bringing them within its fold as prospective consumers of electricity. Through these notifications, the Board had clearly held out a promise to new industries, and since such industries had admittedly established themselves in the region where the Board operated, acting upon that promise, equity required that the Board be held bound by it. It was further observed that the new industrial units, having been induced to establish themselves in the region on the strength of the promise, had altered their position irretrievably. They had invested substantial amounts in setting up infrastructu....
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....d to take them in its fold as prospective consumers of electricity to be sold by it to them. xxx xxx xxx 24. Consequently it cannot be held on the clear recitals found in the aforesaid three notifications issued by the Board that no representation whatsoever guaranteeing 10% rebate on electricity consumption bills could be culled out from these notifications. We, therefore, agree with the finding of the High Court on Issue No. 1 that by these notifications the Board had clearly held out a promise to these new industries and as these new industries had admittedly got established in the region where the Board was operating, acting on such promise, the same in equity would bind the Board. Such a promise was not contrary to any statutory provision but on the contrary was in compliance with the directions issued under Section 78-A of the Act. These new industries which got attracted to this region relying upon the promise had altered their position irretrievably. They had spent large amounts of money for establishing the infrastructure, had entered into agreements with the Board for supply of electricity and, therefore, had necessarily altered their position relying on these....
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....party suffering by the breach of contract may sue for damages but cannot compel specific performance of the contract. It was not disputed and in fairness to Mr Bhatt, it must be said that he did not dispute that the Corporation which is set up under Section 3 of the State Financial Corporation Act, 1955 is an instrumentality of the State and would be "other authority" under Article 12 of the Constitution. By its letter of offer dated July 24, 1978 and the subsequent agreement dated February 1, 1979 the appellant entered into a solemn agreement in performance of its statutory duty to advance the loan of Rs 30 lakhs to the respondent. Acting on the solemn undertaking, the respondent proceeded to undertake and execute the project of setting up a 4-star hotel at Baroda. The agreement to advance the loan was entered into in performance of the statutory duty cast on the Corporation by the statute under which it was created and set up. On its solemn promise evidenced by the aforementioned two documents, the respondent incurred expenses, suffered liabilities to set up a hotel. Presumably, if the loan was not forthcoming, the respondent may not have undertaken such a huge project. Acting on....
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....ndustries in rural and backward areas. This was intended to ensure balanced industrial growth and reduce congestion in developed centres such as Ahmedabad, Baroda, and Surat respectively. For the said purpose, the State Government had introduced two distinct schemes by way of two separate resolutions. By the first resolution, it framed the "State Cash Subsidy Scheme for Industries". By the second, it introduced a scheme providing for sales tax exemption and the grant of loans equivalent to the amount of sales tax paid on the sale of finished products. Under this scheme, sales tax exemption was to be granted to all small-scale new industrial units commissioned on or after 01.11.1977, and interest-free sales-tax loan benefits were made available to medium and large-scale industrial units commissioned during the currency of the scheme, including for expansion and diversification of existing units. All three schemes came into effect from 01.11.1977. However, on 27.08.1980, the State Government reviewed the package of incentives introduced under the said resolutions and decided to introduce a new scheme of sales tax benefits in place of the then prevailing sales tax exemption and loan s....
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....t a new industrial unit would continue to receive benefits only so long as its industry was not included in the list of excluded industries. The assurance was not a limited or qualified one. It was not intended to mean that the benefit would be available only until the industry came to be excluded from the scheme. Where a new industrial unit had set up an industry not excluded from the purview of the scheme and had commenced commercial production before that industry was subsequently included in the exclusion list, it would be unreasonable and unjust to deprive such an industrial unit of the benefit of the scheme, especially when it had already become eligible and had started receiving the incentives. In other words, the Government may withdraw an exemption previously granted, but only if such withdrawal does not offend the doctrine of promissory estoppel or deprive an industrial unit of an exemption which it is otherwise entitled to claim by virtue of that doctrine. Where the Government has offered an incentive of exemption to a new industry, and where an industry has been established in reliance on such representation in order to avail the benefit, that new industry may legitimat....
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....he entrepreneurs that if a new unit or project was set up on the basis of the assurance held out under the scheme, and that the new industrial project was commissioned on or after 1st June, 1980, then it was entitled to the benefits available under that scheme, if by the time it was commissioned, i.e., by the time it commenced commercial production, the said industry was not included in the list of excluded industries. As the scheme was operative for a period of five years only from 1st June, 1980, it will have to be further held that the assurance of benefits was available to those new industrial units or projects which had started commercial production on or after 1st June, 1980, but before 31st May, 1985, and which were not excluded earlier from the benefits of the scheme. So far as the petitioner is concerned, the petitioner had started commercial production on 31st March, 1982. The industry in which it was engaged came to be included in the list of excluded industries on 15th September, 1982, that is after it started commercial production, and as we are not called upon to decide in this case whether it stood excluded by the resolution dated 7th January, 1982, it will have to b....
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....t no. 3 in the present appeal) to whom the petitioner had applied for financial assistance had intimated the petitioner vide letter dated 10.03.1989, about the financial assistance sanctioned by the corporation and indicated therein that the central subsidy of Rs. 25,00,000/- has been taken into account while deciding the term loan to be granted by the IPICOL. The OSFC (which is the respondent no. 1 in the present appeal) also intimated vide letter dated 26.07.1989 that the state level committee (sub-committee of state level committee is the respondent no. 4 in the present appeal) in its 53rd meeting had sanctioned a subsidy of Rs. 25,00,000/- to the petitioner's unit. 126. Upon the aforesaid unequivocal assurances from the OSFC and the IPICOL as well as the decision of the State Government taken by its state level committee, the petitioner had started making investments for setting-up the industrial unit in the district of Balasore and had invested a substantial amount by 30.11.1989. Thereafter on 03.08.1992, the OSFC intimated the petitioner that the subsidy which had been sanctioned earlier in their favour to the tune of Rs. 25,00,000/- stood cancelled and instead only a ....
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...., acting upon them, had altered its position by making significant financial investment in setting up the industrial unit. Consequently, the opposite parties were obliged to honour the representation made to the petitioner by sanctioning and disbursing the amount of Rs. 25,00,000/-. In this manner, the High Court, relying upon this Court's decision in Motilal Padampat (supra), held that the principle of promissory estoppel squarely applied to the facts of the case and that the opposite parties must be held bound by it. The relevant observations are as under: "8. The principle of promissory estoppel is a principle evolved by equity to avoid injustice and, as has been said by the apex Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh, (1979) 2 SCC 409 : A.I.R. 1979 S.C. 621, it is neither in the realm of contract nor in the realm of estoppel. According to the law laid down by the Supreme Court in the aforesaid case, the true principle of promissory estoppel is that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relationship or effect a legal relationship to....
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....he facts pleaded and proved, the conclusion is irresistible that the petitioner has relied upon the assurance given to it under Annexures 2 and 3 and acting on the said assurances has altered its position by way of making huge financial investment in setting up the industry and, therefore, the opposite parties must adhere to the representation made by them to the petitioner by way of sanctioning Rs. 25 lakhs as subsidy and intimating the same to the petitioner through the financial institutions of the State Government, namely the OSFC and the IPICOL. In our considered opinion, the principle of promissory estoppel squarely applies and the opposite parties must be bound by the same. We accordingly hold that the opposite parties were not entitled to cancel the sanctioned amount of subsidy of Rs. 25 lakhs to the petitioner communicated to it under letter dated 26-7- 1989 and the said order is grossly (sic) detrimental to the petitioner's interest. In the aforesaid premises we allow this writ application and issue a writ of mandamus calling upon the opposite parties to disburse the balance amount of Rs. 10 lakhs to the petitioner which they are bound by their earlier sanction and pr....
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....d down under the clauses. In case of denial of these benefits, action may lie in Courts of law in appropriate cases. In that view of the matter, there is every justification for the Government to extend the benefit under a particular policy, if the industrial unit has come into existence on set up or goes for commercial production any time during the period when that particular policy is in force. In the present case, the I.P.R. being of 1989, the period of five years would be from 1-12-1989 to 30-11-1993. Since the object of the policy is to grant various incentives enumerated under the policy to an eligible unit the same should not be denied merely by interpreting the clause of the policy in such a way that such interpretation instead of furthering the objects for which the policy is framed would create bottle-neck and deprive the particular industrial unit from availing the incentives to which it is otherwise entitled, but for the mere fact that capital investment either in small or big scale has been made prior to the effective date. In other words, if any time after the date of coming into force of any particular policy (in the present case 1-12-1989) an industrial unit is set....
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.... favour of the appellant company. It is pertinent to note here that the fact of amalgamation was informed to the respondents vide letter dated 22.05.2001 i.e. even before the sanction letters dated 10.04.2003 and 19.04.2003 respectively. Pursuant to sanctioning of subsidies, the appellant company between 2003 and 2007, made as many as nine written requests to the respondent authorities for disbursement of the sanctioned subsidies in their favour. 132. During the period referred to above, the respondents had also acknowledged the sanction of the subsidies on two occasions. Firstly, on 24.03.2007 wherein the respondent no. 1 had communicated to the appellant company that sanctioned amount may be processed for disbursal on the receipt of the respondent no. 3. Secondly, on 23.08.2007 wherein the respondent no. 3 after conducting a site inspection of the MM Plant unit recommended the disbursal of amounts towards subsidies. Therefore, in view of the unequivocal promises and assurances made to the appellant company under various communications particularly the letters dated 05.11.1998, 10.04.2003, 19.04.2003, 24.03.2007, and 23.08.2007 respectively as mentioned above, and the appellant....
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....Metallics Ltd, Ranchi and anr., reported in (2023) 10 SCC 634) G. CONCLUSION 135. In view of the foregoing and considering the totality of the circumstances, our conclusion on each issue is as follows: (i) The MM Plant unit fulfils the definition of a "new industrial unit" under Clause 2.7 of the industrial policy of 1989. This is because the fixed capital investment for the MM Plant unit was made after the effective date of the industrial policy of 1989, i.e., 01.12.1989, and the unit was separately registered, separately located, independently powered, and commenced independent commercial production in 1992. (ii) The MM Plant is not an expansion/modernisation/ diversification of an existing unit as defined under Clause 2.2 of the industrial policy of 1989. The MM Plant unit constitutes a physically and functionally distinct industrial undertaking, meeting the judicial tests as more particularly discussed above, distinguishing a new unit from an expanded unit. (iii) The concept of overall financial limit under the amended Clause 4.4 as introduced retrospectively vide the instruction letter dated 28.10.1994 and later the amended notification dated 3....