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Service & Administrative LawSupreme Court of India

State of Himachal Pradesh & Ors. v. M/S Kundlas Loh Udyog

Civil Appeal · 2026 INSC 534Decided 25 May 2026
C.A. No.-008155-008155 - 2026
Justice J.B. Pardiwala · Justice K.V. Viswanathan

Background

Himachal Pradesh's Industrial Policy of 2019 offered two different incentives to industries: a concessional electricity tariff under Clause 16(a) (intended, per the State, only for brand-new industrial units) and a rebate mechanism under Clause 16(b) (for existing units undergoing substantial expansion). The respondent company, an existing metal-processing unit that had undertaken a substantial expansion, obtained a "Commencement of Production" certificate from the State recognising its expansion, and then claimed it was entitled to the more favourable concessional tariff under Clause 16(a) meant for new units. When the State declined, the company won before the Himachal Pradesh High Court, which directed the State to extend the Clause 16(a) benefit and struck down certain Policy provisions as inconsistent. The State appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that Clause 16(a)'s concessional electricity tariff was always intended exclusively for genuinely new industrial enterprises, not existing units undergoing expansion: the latter category was meant to receive the separate rebate benefit under Clause 16(b), which the company had, in fact, already received. The Court found that the mere issuance of a Commencement of Production certificate only recognised the company's expansion; it was not, by itself, a sanction of the Clause 16(a) tariff benefit, since actual sanction required a separate recommendation and approval process under the Rules that had never occurred. On the promissory estoppel argument, the Court held that the doctrine cannot be used to force the State to grant a benefit that was never intended for the company's category of industry, and since the company had already received the benefit properly due to it under Clause 16(b), no inequity remained to justify invoking estoppel, granting both would amount to an impermissible double benefit contrary to the Policy's scheme, public interest, and fiscal discipline. The appeal was allowed and the High Court's judgment was set aside.

Lesson Learnt

A government certificate that merely records a factual status (such as completion of an industrial expansion) is not automatically the same as a sanction of a specific financial incentive: actual entitlement depends on what the scheme's rules actually provide and the specific approval process they prescribe. The doctrine of promissory estoppel cannot be stretched to claim a benefit the scheme never intended for that category, especially once the appropriate benefit for that category has already been received.

State of Himachal Pradesh & Ors. v. M/S Kundlas Loh Udyog – Legal Case Shots | LegalAware