The Supreme Court has held that the concessional electricity tariff benefit under Clause 16(a) of the Himachal Pradesh Industrial Policy, 2019 applies only to new industrial enterprises.
The Court ruled that existing industries undertaking substantial expansion cannot claim the benefit.
A Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan delivered the judgment on May 25, 2026, in State of Himachal Pradesh & Ors. v. M/s Kundlas Loh Udyog.
The Court allowed the State’s appeal and set aside a Himachal Pradesh High Court judgment that had extended the benefit to the respondent company.
Background of the Dispute
The Himachal Pradesh Government introduced the Industrial Policy, 2019 to attract investment through incentives, subsidies, and infrastructure support.
Under Clause 5(A), both new industrial units and existing units undertaking substantial expansion could avail incentives, subject to prescribed conditions.
Clause 16(a) provided concessional electricity charges at 15% below approved rates for three years. Clause 16(b) granted a 15% rebate on additional power consumption to existing industries undertaking expansion.
M/s Kundlas Loh Udyog expanded its manufacturing unit in 2020 and obtained approval from the State Single Window Clearance & Monitoring Authority.
On February 12, 2021, authorities issued a certificate confirming substantial expansion and reclassified the unit from a small-scale industry to a large and medium-scale industry.
The company later approached the High Court seeking concessional tariff benefits under Clause 16(a).
High Court Ruled in Favour of the Company
The High Court allowed the writ petition.
It directed the State to issue the necessary notification granting concessional electricity charges under Clause 16(a).
The Court also struck down portions of Clause 5B of the Industrial Policy and certain provisions of the 2019 Rules to the extent they conflicted with the policy.
State Challenged the Decision
The State argued that Clause 16(a) always targeted new industrial enterprises.
According to the State, the phrase “eligible enterprises” in the original provision resulted from a drafting error.
The State further contended that existing industries undergoing expansion could claim benefits only under Clause 16(b). It pointed out that the respondent had already received that rebate.
The State also argued that the amendment notification issued on April 29, 2022 merely clarified the original intent of the policy.
Supreme Court Examines Industrial Policy Scheme
The Supreme Court closely examined Clauses 16(a) and 16(b), along with the relevant tariff orders.
The Bench found that the policy created two separate categories of beneficiaries.
The first category consisted of new industrial enterprises. The second category included existing enterprises undertaking substantial expansion.
According to the Court, policymakers designed different incentives for each category.
The Bench held that Clause 16(a) aimed to attract fresh industrial investment by offering concessional electricity tariffs to newly established industries.
In contrast, Clause 16(b) specifically rewarded existing industries that increased production through expansion.
Court Rejects Dual Benefit Argument
The respondent argued that it qualified for benefits under both provisions.
The Supreme Court rejected this interpretation.
The Bench observed that granting benefits under both Clauses 16(a) and 16(b) would create an overlapping advantage for the same category of industries.
The Court held that such an interpretation would disrupt the policy framework and impose an unintended financial burden on the State.
Amendment Held Clarificatory and Retrospective
The Court examined the amendment notification dated April 29, 2022.
Through that amendment, the State replaced the words “eligible enterprises” with “new enterprises” in Clause 16(a) and Rule 16(i)(a).
The Bench held that the amendment did not create a new class of beneficiaries. Nor did it remove any vested right.
Instead, it merely clarified what the policy had always intended.
Therefore, the Court ruled that the amendment operated retrospectively.
Promissory Estoppel Argument Rejected
The respondent relied on the doctrine of promissory estoppel.
It argued that it had invested substantial amounts based on promises contained in the Industrial Policy.
The Supreme Court rejected the argument.
The Bench held that promissory estoppel cannot create a right that contradicts the true meaning and scope of a policy.
Since Clause 16(a) never applied to existing industries undertaking substantial expansion, the respondent could not claim any enforceable right under that provision.
No Vested Right from COP Certificate
The Court also rejected the respondent’s reliance on the Commercial Production (COP) Certificate issued in February 2021.
The Bench clarified that the certificate did not automatically create a vested right to claim concessional tariff benefits.
The Court noted that the respondent had not obtained any sanction or approval from the Director of Industries under Rule 27 of the 2019 Rules.
Appeal Allowed
The Supreme Court concluded that M/s Kundlas Loh Udyog could claim only the rebate available under Clause 16(b), which the State had already granted.
Accordingly, the Court allowed the appeal, set aside the High Court’s judgment dated May 7, 2025, and disposed of all pending applications.
Case Details
Case: State of Himachal Pradesh & Ors. v. M/s Kundlas Loh Udyog
Bench: Justice J.B. Pardiwala and Justice K.V. Viswanathan
Case No.: Civil Appeal arising out of SLP (Civil) No. 26731 of 2025
Decision Date: May 25, 2026
