Benefits Once Promised By State, Can't Be Denied Due To Procedural Delays: Himachal Pradesh High Court

The Himachal Pradesh High Court directed the State to grant the benefits laid down in Himachal Pradesh Industrial Investment Policy, 2019. The Court held that once the State has notified a policy, the benefits related to it cannot be denied merely because the concerned department failed to issue a formal notification to implement it.Justice Tarlok Singh Chauhan and Justice Sushil Kukreja “ Lastly and more importantly, the State Government cannot speak in two voices. Once the Government has taken a policy decision to extend certain benefits to the petitioner, the same cannot be withheld simply for want of notification”Facts:In 2019, the State of Himachal Pradesh notified the Himachal Pradesh Industrial Investment Policy, 2019, which assured enterprises a 15% reduction in energy charges if they undertook substantial expansion as per the "Rules regarding Grant of Incentives, Concessions and Facilities for Investment Promotion in Himachal Pradesh-2019" (“Incentive Rules”).Pursuant to the policy, the petitioner, M/s. Kundlas Loh Udyog, a manufacturer of steel gates & steel doors in baddi applied for expansion of its company in 2020, which was subsequently approved. The petitioner expanded its plant and machinery by 88.69%, far surpassing the 25% threshold required under Clause 5 of the Industrial Policy to avail the incentives. However, the tariff order for the year 2020-2021, passed by the Himachal Pradesh Electricity Regulatory Commission , did not mention the provisions of the 2019 Industrial Policy, hence petitioner was not granted the promised incentives for its expansion. Aggrieved by the order, the petitioner wrote a letter to the Chief Minister of the State, highlighting the non-implementation of the promised incentives and stated that it felt cheated by the state.In response to the letter, the state informed the petitioner that the enabling notification regarding the tariff incentive was yet to be issued by the Department of Multi-Purpose Projects & Power. It stated that the incentives cannot be given till the notification is issued. Subsequently, even the tariff order for the years 2021-2022 and 2022-2023 did not include the incentives. Therefore, the petitioner filed the writ petition before the High Court. Contentions:The State submitted that the primary objective of the Industrial policy was to attract investment and generate employment. Incentives such as concessional electricity duty, SGST reimbursement, and stamp duty rebates were subject to eligibility criteria. They further submitted that Clause 5-B of the Incentive Rules, states that incentives are admissible either from the commencement date of commercial operations or from the date of issuance of the enabling notification, whichever is later. Since, there was no enabling notification from the department, the incentives cannot be provided to the petitioner. The petitioner contended that there cannot be self-contradictory statements in the Industrial Policy or the Incentive Rules, and the State is not only expected but bound to speak in one voice. It further argued that once certain incentives are promised, they can't be denied due to procedural delays. Findings:The Court noted that Clause 5 of the Industrial Policy clearly defines eligible enterprises, including new and existing enterprises undertaking substantial expansion, provided they employ at least 80% Bonafide Himachali workers. The petitioner, having undertaken a substantial expansion of 88.69% and providing employment to 21 persons, 17 of whom were Himachalis, clearly fell under Clause 5 of the policy and was eligible for the incentives. Further with respect to respondent's contention that Clause 5(B) of the Policy states that incentives are admissible from the date of commercial production or from the enabling notification, whichever is later. The court held that the term whichever is later can't be used as an excuse by the State, as not issuing the enabling notification within reasonable time is unfair. Also, the contention of the respondent that there was no enabling notification was denied by the court stating that enabling notification is merely a ministerial act and what is enforceable and otherwise entitlement of the petitioner is the promise set out in the Industrial Policy. The Court noted that petitioner did the substantial expansion required for being eligible for the incentives under the policy. However, the State did not comply with its promise and is delaying the process of enabling notification without any reason, only shows bureaucratic lethargy. The Court remarked that since the respondents had notified the H.P. Industrial Investment Policy long back in 2019, regarding Grant of Incentives, Concessions and Facilities for Investment Promotion in Himachal Pradesh. They are bound by the promise as per the doctrine of “promissory estoppel”. Finally, the Court remarked that the Government cannot speak in two voices. Once the Government has taken a policy decision to...

Benefits Once Promised By State, Can't Be Denied Due To Procedural Delays: Himachal Pradesh High Court

Mehak Aggarwal

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