M/S Nufab Technical Textiles Private Limited vs. State Of Haryana And Others

Facts

The petitioner, M/s Nufab Technical Textiles Pvt. Ltd., a small-scale unit manufacturing non-woven fabrics, sought a writ of certiorari to set aside an order dated 28.05.2019 by Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) denying subsidy. The petitioner also challenged Notifications dated 21.12.2018 and 09.01.2019, which amended the subsidy policy. The petitioner established its unit in Block-C, Ambala district, in response to the Haryana Government's Enterprises Promotion Policy, 2015, which offered incentives including power tariff subsidy. The unit commenced commercial production on 03.05.2017. A subsequent policy dated 12.06.2018 provided a power tariff subsidy of Rs. 2/- per unit for Micro and Small Enterprises in 'C' and 'D' category blocks for three years from the power connection date. The petitioner applied for subsidy in June 2017. However, the impugned notifications restricted the subsidy to units with a connected load of 20KVA or less, which was not the original criterion when the petitioner set up its unit.

Held

The Court held that the amendments to the power tariff subsidy policy, specifically the restriction to units with a connected load of 20KVA or less introduced by Notifications dated 21.12.2018 and 09.01.2019, could not be applied retrospectively to the petitioner's unit. The Court found the ratio of the cited judgments in M/s Jaiprakash Associates Ltd., M/s Pawan Alloys and Casting Pvt. Ltd., and Pournami Oil Mills directly applicable. These judgments established that once an incentive policy is announced and an enterprise acts upon it by setting up its unit, the incentive cannot be withdrawn retrospectively. The Court reasoned that the petitioner had set up its unit in reliance on the Enterprises Promotion Policy, 2015, and the subsequent policy dated 12.06.2018, which did not contain the 20KVA restriction. Therefore, the principle of estoppel applied, preventing the respondents from denying the subsidy. The Court set aside the order dated 28.05.2019 and directed the respondents to pay the power subsidy as claimed by the petitioner based on submitted bills, without insisting on the retrospective application of the notification dated 21.12.2018. The amending notifications were held to be applicable prospectively only.

Key Issues

1. Whether the amendment to the power tariff subsidy policy, restricting eligibility to units with a connected load of 20KVA or less via Notifications dated 21.12.2018 and 09.01.2019, can be applied retrospectively to the petitioner's unit established prior to these notifications, in light of the Enterprises Promotion Policy, 2015 and subsequent policy dated 12.06.2018? The petitioner argued that the subsequent notifications imposing the 20KVA limit cannot be applied retrospectively as the unit was established and commenced production based on the earlier policies which did not have this restriction. They relied on the principle of promissory estoppel and legitimate expectation, citing Supreme Court judgments in M/s Pawan Alloys and Casting Pvt. Ltd. vs. U.P. State Electricity Board and others and Pournami Oil Mills vs. State of Kerala and another, and a Himachal Pradesh High Court judgment in M/s Jaiprakash Associates Ltd. vs. State of H.P. and others. These precedents establish that incentives granted and acted upon cannot be withdrawn retrospectively. The respondents, represented by the State of Haryana and UHBVNL, argued that the amendment was valid and applicable, leading to the denial of subsidy. Their contentions are not explicitly detailed in the provided text, but their action of denying the subsidy based on the new notifications implies a defense of the validity and applicability of the amended policy.