The Supreme Court has held that existing industrial enterprises undertaking substantial expansion under the Himachal Pradesh Industrial Policy, 2019 cannot claim the concessional electricity tariff benefit meant for new industries. The Court clarified that such industries are only entitled to the specific rebate benefit designed for expansion-related additional power consumption and cannot seek overlapping incentives under the policy.
The bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan allowed the State’s appeal and set aside the Himachal Pradesh High Court judgment that had directed the State to extend concessional electricity charges to the respondent company.
The dispute arose from the Himachal Pradesh Industrial Policy, 2019, which introduced incentives to encourage industrial investment and expansion within the State. The respondent company, a manufacturer engaged in industrial metal processing and stamping, had undertaken substantial expansion of its manufacturing unit in 2020 and claimed entitlement to concessional electricity rates under Clause 16(a) of the Industrial Policy.
Under Clause 16(a), “eligible enterprises” were to receive electricity charges at rates 15% lower than approved energy charges for three years, while Clause 16(b) granted existing industrial consumers a rebate of 15% on additional power consumption beyond the preceding financial year’s consumption levels.
The respondent argued that since it had substantially expanded its unit and obtained a Commencement of Production certificate (COP Certificate), it qualified as an “eligible enterprise” and therefore was entitled to the concession under Clause 16(a). The company further argued that it had altered its position based on the State’s representations and had made substantial investments relying upon the incentives promised under the Industrial Policy. It therefore sought protection under the doctrine of promissory estoppel.
The State, however, argued that the policy had inadvertently used the expression “eligible enterprises” in Clause 16(a) and that the provision was always intended to apply only to new industries. According to the State, the later amendment replacing “eligible enterprises” with “new enterprises” merely corrected a drafting mistake and was clarificatory in nature.
Examining the policy framework and tariff orders issued over the years, the Supreme Court concluded that the incentives under Clause 16 had always been intended for two different categories of industries. The Court noted that Clause 16(a) was designed to attract fresh investments by offering lower energy charges to new industrial enterprises, whereas Clause 16(b) was meant to encourage capacity enhancement by existing industries through rebates on incremental electricity consumption.
The Court observed that accepting the respondent’s interpretation would effectively grant existing industries undergoing expansion two separate benefits — concessional tariff rates under Clause 16(a) and additional consumption rebates under Clause 16(b). According to the Bench, such an interpretation would create an unintended double benefit and distort the policy’s structure.
The judgment emphasised that the distinction between newly established industrial units and already existing units undergoing expansion was a conscious policy decision. New industries were incentivised to encourage fresh investment inflow into the State, while existing industries were incentivised separately to improve productive capacity and expand operations.
On the issue of the 2022 amendment to the Industrial Policy, the Supreme Court held that the amendment replacing the word “eligible” with “new” was merely clarificatory and therefore retrospective in operation. The Court observed that the amendment did not create any new rights or alter the substance of the policy but simply clarified the original legislative intent.
The Court also examined the doctrine of promissory estoppel in detail and reiterated settled principles governing governmental incentives and fiscal benefits. It observed that while the doctrine may operate against the State where a clear promise induces action and changes a party’s position, it cannot be used to create a right that never existed under the policy framework itself.
Applying these principles to the facts, the Court found that the COP Certificate issued to the respondent merely recognised its status as an existing industrial enterprise undergoing substantial expansion. The certificate itself did not grant or sanction the electricity concession claimed under Clause 16(a).
The Supreme Court further noted that the respondent had already been granted the benefit available under Clause 16(b) for additional power consumption and therefore no surviving equity existed in its favour. Extending another concession would amount to granting overlapping benefits contrary to fiscal discipline and public interest.
The Court allowed the appeal filed by the State of Himachal Pradesh and set aside the High Court judgment.
Case Details
Case Title: State Of Himachal Pradesh & Ors. Versus M/S Kundlas Loh Udyog
Citation: JURISHOUR-1388-SC-2026
Case No.: Special Leave Petition No. 26731 of 2025
Date: 25/05/2026
