Haripur Paper Company Vs the UOI and Others

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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CWP No. 10600 of 2024 with

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CWP Nos.13353, 13354, 13357, 13406 and 13412 of 2024 Date of Decision: 06.01.2025

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________________________ 1.CWP No. 10600 of 2024 Atul Sharma Union of India and others	____________ Versus	___________________ …….Petitioner … Respondents
2.CWP No. 13353 of 2024 Higgs Life Sciences Pvt. Ltd.	Versus	…….Petitioner
Union of India and others		… Respondents
3.CWP No. 13354 of 2024 Haripur Paper Company	Versus	…….Petitioner
Union of India and others		… Respondents
________________________ 4.CWP No. 13357 of 2024 Unix Biotech	_____________ Versus	__________________ …….Petitioner
Union of India and others		… Respondents
5.CWP No. 13406 of 2024 Higgs Healthcare	Versus	…….Petitioner
Union of India and others		… Respondents
6.CWP No. 13412 of 2024 Higgs Healthcare Unit-III	Versus	…….Petitioner
Union of India and others		… Respondents

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______________________________________________________

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Coram:

Hon’ble Mr. Justice Sandeep Sharma, Judge. Whether approved for reporting?¹

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For the Petitioner(s): Mr. Sunil Mohan Goel, Advocate, for the petitioner in CWP No.10600 of 2024.

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Mr. Ajay Thakur, Ajay Thakur, Advocate ,for petitioner(s) in CWP Nos.13353, 13354, 13357, 13406 and 13412 of 2024.

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For the Respondent(s) : Mr. Balram Sharma, Deputy Solicitor General of India, for the respondent-Union of India.

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Mr. Rajan Kahol, Mr. Vishal Panwar and Mr. B.C.Verma, Additional Advocate Generals, with Mr. Ravi Chauhan, Deputy Advocate General, for the respondentState.

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_______________________________________________________ Sandeep Sharma, Judge (oral):

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Since common questions of facts as well as law are involved in the above captioned petitions and similar reliefs have been claimed, same were heard together and are being disposed of vide this common judgment.

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By way of instant petitions, petitioners have prayed for the reliefs, which are similar, as such, relief prayed for in CWP No.10600 of 2024 is reproduced herein below:-

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“ i) That the impugned letter dated 30.07.2024 (Annexure P-11) and impugned order letter dated 9.11.2023 (Annexure P-12) may kindly be struck or read down/quashed to the extent it has been applied to the petitioner, thereby rejecting registration of its hotel

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1 Whether the reporters of the local papers may be allowed to see the judgment?

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under Industrial Development Scheme 2017 by issuance of an appropriate writ of certiorari;

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(ii) That this Hon’ble Court may be pleased to issue writ of mandamus directing respondent Nos. 1 and 2 to formally register the petitioner’s online application dated 22.03.2021, as being eligible under the Industrial Development Scheme 2017 and grant registration to the petitioner as per Industrial Development Scheme, 2017 and further order to allow the claim of the petitioner for grant of incentive under claim the consequential Central Capital Investment Incentive for Access to Credit (CCIIAC) @ 30% of the investment expenditure incurred on the petitioner project;

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For having bird’s eye view, facts, relevant for adjudication of the case at hand as emerge from the pleadings adduced on record by the respective parties are that vide Notification dated 23.04.2018, Ministry of Commerce & Industry (Department of Industrial Policy & Promotion), Government of India, notified a scheme called as “Industrial Development Scheme, 201 7 (for short ‘IDS) for Himachal Pradesh and Uttarakhand, to promote/boost industrial development in hilly States like Himachal Pradesh and Uttrakhand by providing financial incentives to the new and existing units in manufacturing and service sector (Annexure P-1). To give effect to aforesaid Scheme, General Operational Guidelines for the State of Himachal Pradesh and Uttarakhand, also came to be circulated by the Government of India vide Annexure P-2. Careful perusal of aforesaid

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Scheme suggests that same was to remain effective from 1.04.2017 till 31.03.2022. Clause 4 of the Scheme, provided for the eligibility of the unit to be covered under the Scheme and as per eligibility criteria, it was provided that all new and existing industrial units undertaking on their substantial expansion in manufacturing sector and service sector including Bio-technology and Hydel Power Generation Units upto 10MW located in the State of Himachal Pradesh and Uttarakhand would be eligible for incentive under the Scheme. Clause 6 of the Scheme provided that incentive shall be provided to eligible industrial units on reimbursement basis i.e. Central Capital Investment Incentive for access to credit (CCIIAC) and Central Comprehensive Insurance Incentive (CCII). Clause 6.2 of the Scheme provided that Central Capital Investment Incentive for access to credit would be provided to all eligible existing new industrial units and existing industrial units on their substantial expansion in the manufacturing and service sector located anywhere in the State of Himachal Pradesh and Uttrakhand at the rate of 30% of the investment in plant and machinery with an upper limit of Rs. 5.00 crore. As per afore Clause, project cost was required to be apprised by a Scheduled Commercial Bank or Financial Institution before the proposal of assistance is approved by Empowered Committee of DIPP. Clause 6.1 of the Scheme provided for an Empowered Committee chaired by Secretary, Department of Industrial Policy and Promotion with

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Secretaries of Department of Expenditure, representatives of NITI Aayog and Secretary of the concerned Ministries/ Departments of Government of India dealing with the subject matter of that industry and its members, as also the concerned Chief Secretary/ Secretary(Industry) of the State, where the beneficiary unit claiming incentive is located for selection of beneficiaries under the Scheme. As per aforesaid clause Empowered Committee, while examining the proposals for incentive, was required to be given to give due consideration for factors like cost disadvantage, project viability, bankability, employment generation and promoters’ risk capital.

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In nutshell, the grouse of the petitioner as has been highlighted in the petition and further canvassed by Mr. Sunil Mohan Goel, learned Senior counsel duly assisted by Mr. Ajay Thakur and Mr. Raman Jamalta, Advocates, representing the petitioner, is that though petitioner herein being fully eligible in terms of Clause 4 of the Scheme, applied on the portal of ‘IDS’ and was allotted IDS/HP/1945 number by the DIPP (Annexure P-3), but yet his case was not considered under the Scheme, as result thereof, he has been put to huge financial loss. It is averred in the petition that petitioner after having purchased land measuring 0-79-80 hectares comprised in Khasra Nos. 1376, 1378, 1379, 1380, 1554/1381, 1510, 1551/1511, 1512 & 1513, Kita 9, Khata/Khatauni No.147/2020, situate in Muhal and Phatti Palchan, Tehsil Manali, District Kullu, Himachal Pradesh in

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the year, 2011 constructed hotel in the name and style of Whispering Rock Hotel and registration of the said hotel was valid till 7.11.2015 by the Tourism Department. Since construction of afore hotel was old and petitioner wanted to expand the hotel as such, petitioner applied to the Town & Country Planning Department, Kullu in the year, 2014 with fresh expansion plans, which were further approved by the Department vide letter dated 26.06.2014. Immediately prior to demolition of old hotel complex, Scheme came to be announced by the Government of India vide notification dated 23.04.2018. Petitioner being eligible to apply under the Scheme, applied with fresh plans to the Town & Country Planning Department, Kullu to undertake construction of the hotel consisting of 56 rooms with Bar, Restaurant, Coffee Shop, Conference Hall, Health Club and Swimming pool. Though, necessary permission as well as NOCs were granted by the concerned authorities of the Himachal Pradesh and petitioner also raised construction work, legitimately expecting that he would be provided incentive under the Scheme notified by the Government of India vide notification dated 23.04.2018, but his case was not considered by the Empowered Committee chaired by Secretary, Department of Industrial Policy and Promotion, Government of India, on the pretext that at the time of convening of meeting by the Committee, as detailed hereinabove, for the State of Himachal Pradesh, petitioner was not registered under the Scheme.

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Mr. Sunil Mohan Goel, learned Senior counsel

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representing the petitioner, while making this Court peruse pleadings as well as other documents adduced on record, vehemently argued that three meetings of the Empowered Committee to consider the application for additional unit under the Scheme took place between the year 2021 to 2023, but yet case of the petitioner, who had well within time registered himself, was not considered. While referring to reply filed by respondent Nos. 3 and 4, learned Senior counsel representing the petitioner, submitted that State Government had repeatedly recommended the case of the petitioner, but for no cogent and convincing reason, Empowered Committee failed to consider the same. While referring to reply filed by respondent Nos. 1 and 2, learned Senior Counsel representing the petitioner argued that there is no specific denial on the part of Government of India that petitioner herein had applied on 22.03.2021 on the portal of IDS and as such, he was required to be considered under the Scheme.

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Mr. Balram Sharma, learned Deputy Solicitor General of India representing respondent Nos. 1 and 2, while justifying the action of respondent-Union of India inasmuch as afore respondents refused to consider the case of the petitioner on the ground that petitioner was never registered under the scheme, submitted that though petitioner had applied under IDS, 2017 for grant of CCIIAC and CCII, but since he was not granted registration, there was no occasion, if any, for the

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Empowered Committee to consider his case. He submitted that merely uploading of application on the web portal of the Department does not give any right to the petitioner to claim that his unit was registered well within time, rather after his having uploaded the application online on 22.03.2021, he was merely issued application number, which was wrongly interpreted as registration number. He further submitted that process of application is wrongly construed by the petitioner because once the unit applies on the portal, same, at first instance, is received at the District Industries Centre (DIC) of the concerned States. He states that once DIC recommends the application, same is forwarded to the State Nodal Officer and it is only after recommendation of the State Nodal Officer, case is forwarded to the Department for promotion of Industry and Internal Trade (DPIIT), Government of India, for grant of registration in accordance with Clause 7.3 of the Scheme. While referring to aforesaid Clause, learned Deputy Solicitor General of India, attempted to argue that final grant of registration in principle could only have been decided by the Committee and no industrial unit shall have right to register, under the Scheme for the State of Himachal Pradesh and Uttarakhand or claim the benefits, unless it is specifically approved by the Central Government. He submitted that since petitioner’s unit never came to be recommended by the Empowered Committee for registration,

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coupled with the fact that the Scheme already stands expired, prayer made in the instant petition deserves outright rejection.

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Learned Additional Advocate General representing the respondent-State, submitted that owing to Corona pandemic during the pendency of the Scheme, the industrial units(State of Himachal Pradesh) were put to severe financial disadvantage and as such, case of the petitioner and other similarly situate persons, is required to be considered sympathetically. He submitted that though respondent-State has very limited role for providing incentive in terms of Scheme, but in the case at hand application received on 08.03.2022 for pre-registration vide No. IDS/HP/1945 was updated on portal on 19.03.2022. He submitted that application was forwarded to the Ministry of Commerce & Industry Department for Promotion of Industry & Internal Trade, Government of India, through online portal well within time.

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8. Since after having perused the pleadings adduced on record, this Court find that same were conspicuously silent about the status of the application filed by the petitioner, this Court vide order 12.11.2024 called upon respondent Nos. 1 and 2 to file supplementary affidavit within a period of three weeks, specifically stating therein “ Whether application having been uploaded by the petitioner on portal well within time was actually considered or not? If not, why?”

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Pursuant to afore direction issued by this Court, Under Secretary, (DPIIT), Government of India, has filed supplementary affidavit, which, if read in its entirety, nowhere suggests that queries raised by this Court vide order 12.11.2024 has been answered, rather attempt has been made to reiterate the stand taken by afore respondents in their reply to the main petition. It has been stated in the afore affidavit that according to the data available with the Department, the District Industries Centre (DIC) sought clarification from the applicant unit on 3.6.2021 and thereafter, same was forwarded to State Nodal Officer. There is nothing in the afore affidavit as well as reply to the petition that proposal submitted by the petitioner approved by DIC and further verified by State Nodal Officer, was ever placed before the Empowered Committee or not? In addition to afore stand taken by the respondents, attempt has been made to defeat the claim of the petitioner on the ground that in coherence with the decision of the Cabinet of Union Government, no claim and registration will be entertained from the unregistered units(Annexure R-6).

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Having heard learned counsel representing the parties and perused pleadings adduced on record by the respective parties, this Court finds that there is no dispute with regard to eligibility of the petitioner to apply for incentive under the Scheme. It is also not in dispute that petitioner herein being fully eligible had applied online on

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the portal of the IDS on 22.3.2021and in lieu thereof, he was allotted No. IDS/HP/1945 (Annexure P-3). Though, factum with regard to petitioner having applied well within time has been not denied by respondent Nos. 1 and 2, but attempt has been made to defeat the claim of the petitioner on the ground that at the time of meeting of Empowered Committee constituted in terms of Clause 6.1 of the Scheme, unit of the petitioner was not registered. Though, learned Deputy Solicitor General of India repeatedly attempted to argue that mere application, if any, filled by the petitioner-unit on the web portal on 22.3.2021 would not make him entitled ipso facto for benefit of the Scheme, but he was unable to pinpoint any document suggestive of the fact that pursuant to application made by the petitioner online, case of the petitioner was ever considered by Empowered Committee. Though, careful perusal of the reply filed by respondent Nos. 1 and 2 as well as supplementary affidavit filed in terms of order dated 12.11.2024, if read in conjunction, clearly suggest that DIC repeatedly sought for clarification from the petitioner’s unit and in the year 2022 i.e. on 8.3.2022 same was forwarded to the State Nodal Officer, but it has nowhere clarified “whether State Nodal Officer recommended the case of the petitioner to the Ministry of Commerce & Industry Department for Promotion & Industry & Internal Trade for placing it before the Empowered Committee or not?”

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If the reply filed by respondent Nos. 3 and 4 is read in its entirety, it clearly reveals that application was received on 8.3.2022 for pre-registration vide No. IDS/HP/1945 and same was updated on the portal on 19.03.2022. As per aforesaid respondents, application was forwarded to Ministry of Commerce & Industry Department for Promotion & Industry & Internal Trade, Government of India through online portal and thereafter further action, if any, was to be taken by the government. As per aforesaid respondents, State has very limited role in grant of incentive as it could only process the application, subject to fulfillment of eligibility criteria, through online portal on DPIIT for pre-registration and thereafter, final decision to grant of registration/approval could only be taken by the Committee of Government of India.

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Repeatedly, this Court called upon the respondents to make available record, if any, with regard to consideration of the application made by the petitioner through online mode for registration, but in vain. As has been noticed hereinabove, there is nothing in the reply filed by respondent Nos.1 and 2 suggestive of the fact that pursuant to petitioner having applied online, application of the petitioner was ever placed before the Committee. Though, as per the reply of afore respondent Nos. 1 and 2, case for registration of the petitioner’s unit or other similarly situate persons could only be

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considered after same was recommended by the DIC and further approved by State Nodal Officer.

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Though, it is quite apparent from the reply filed by respondent Nos. 3 and 4 that application of the petitioner was received on 8.3.2022 through Field Office and same was forwarded to the Government of India through online portal during currency of the said Scheme, but yet this Court with a view to have correct information from the respondents with regard to processing of the case specifically called upon respondent Nos. 1 and 2 to file supplementary affidavit, specifically stating that “whether application having been uploaded by the petitioner on portal well within time was actually consider or not?”, but yet no specific answer to afore query ever came to be put forth. Hence, this Court is persuaded to agree with the submission of learned counsel representing the petitioner that though, petitioner herein had applied well within time during the currency of the Scheme, but for the reason known best to the respondent Nos. 1 and 2, his case was not considered for registration under the Scheme.

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Though, at this stage, Mr. Balram Sharma, learned Deputy Solicitor General of India, attempted to argue that since now Scheme is over and it has been specifically decided by the Cabinet of Union Government that no claim of registration will be entertained from the unregistered units, prayer made in the instant petition cannot

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be allowed at this stage, but this Court having taken note of the fact that petitioner herein had applied well within time and there was no hand, if any, of him in processing the case further, prayer made on behalf of the petitioner for issuance of direction to respondent Nos. 1 and 2 to consider his case under the Scheme, deserves to be considered. While placing reliance upon the judgment rendered by Hon’ble High Court of Delhi in case titled Shirdi Industries Limited vs. Union of India and others, in WP(c) No.17701/2024, decided on 23.12.2024, learned Deputy Solicitor General of India argued that case of the present petitioner is similar to the facts and circumstances of the afore case, but such petition has been dismissed by the Hon’ble High Court of Delhi.

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Having perused aforesaid judgment in its entirety, this Court is convinced and satisfied that facts of the aforesaid case are totally different from the case at hand as such, judgment passed by the Hon’ble High Court of Delhi is not applicable in the present case. True, it is that an individual cannot claim subsidy as matter of right in terms of the policy formulated by the Government of India, but at least he has right of consideration in the instant case. Though, petitioner being fully eligible as per the scheme/policy formulated by the Government of India for grant of incentive applied well within time but his case never came to be placed before the Empowered Committee for registration under scheme, as a result thereof, he has

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been deprived of the benefit, which otherwise could not have been allowed in his favour on the basis of his entitlement in terms of the scheme.

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No doubt, the Scheme has come to an end, but careful perusal of letters date d 30.07.2024 (Annexure P-11) and dated 9.11.2023 (Annexure P-12), clearly reveals that additional outlay of Rs. 1164.53 crore under IDS, 2017 has been provided by the Government of India to the State of Himachal Pradesh and Uttarakhand for the 774 already registered units in respect of various incentives provided under the Scheme. No doubt, as per the Scheme, amount provided was to be disbursed among registered units only, but since in the case at hand there was no fault of the petitioner, rather failure, if any, to place the case of the petitioner before the Empowered Committee for registration lies on the official of respondent Nos. 1 and 2, who despite having received application duly recommended to the State of Himachal Pradesh, failed to place the same before the Empowered Committee, this Court sees no impediment in directing the respondents to place the case of the petitioner before the Empowered Committee constituted in terms of Clause 6.1 of the Scheme for considering the prayer of the petitioner for registration under the Schem e .

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Once Government of India by way of the Scheme agreed to provide some financial incentive to industrial units and in

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furtherance thereof, petitioner herein made huge investment, coupled with the fact that application filed by him, complete in all respect, was forwarded to the Government of India by State of Himachal Pradesh, rightful claim of the petitioner cannot be permitted to defeated on the ground raised by the respondents with regard to expiry of the Scheme, which otherwise is in operation as necessary funds are yet to be provided to the State of Himachal Pradesh for further distributing the same to the registered units.

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Reliance in this regard is placed upon the judgment passed by Hon'ble Apex Court in State of Jharkhand and others vs. Brahmputra Metallics Limited, Ranchi and another, (2023) 10 Supreme Court Cases, 634, wherein it has been held as under:-

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“36. Another difference between the doctrines of promissory estoppel and legitimate expectation under English law is that the latter can constitute a cause of action. [ Rebecca Williams, “The Multiple Doctrines of Legitimate Expectations”, (2016) 132 (Oct) Law Quarterly Review 639, 645.] The scope of the doctrine of legitimate expectation is wider than promissory estoppel because it not only takes into consideration a promise made by a public body but also official practice, as well. Further, under the doctrine of promissory estoppel, there may be a requirement to show a detriment suffered by a party due to the reliance placed on the promise. Although typically it is sufficient to show that the promisee has altered its position by placing reliance on the promise, the fact that no prejudice has been caused to the promisee may be relevant to hold that it would not be “inequitable” for the promisor to go back on their promise. [ American Law Institute, Restatement of the Law (2d), Contracts (1981), para 4-095.] However, no such requirement is present under the doctrine of legitimate expectation. In R. v. Newham London Borough Council [ R. v. Newham London Borough Council , (2002) 1 WLR 237 (CA)] , the Court of Appeal held : ( Newham London Borough Council

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case [ R. v. Newham London Borough Council , (2002) 1 WLR 237 (CA)] , WLR p. 250, para 55)

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“ 55 . The present case is one of reliance without concrete detriment. We use this phrase because there is moral detriment, which should not be dismissed lightly, in the prolonged disappointment which has ensued; and potential detriment in the deflection of the possibility, for a refugee family, of seeking at the start to settle somewhere in the United Kingdom where secure housing was less hard to come by. In our view these things matter in public law, even though they might not found an estoppel or actionable misrepresentation in private law, because they go to fairness and through fairness to possible abuse of power. To disregard the legitimate expectation because no concrete detriment can be shown would be to place the weakest in society at a particular disadvantage. It would mean that those who have a choice and the means to exercise it in reliance on some official practice or promise would gain a legal toehold inaccessible to those who, lacking any means of escape, are compelled simply to place their trust in what has been represented to them .”

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48. Applying the abovementioned principles in the present case, we are unable to perceive any substance in the submission of the State which was urged in defence before the High Court. Not only did the State in the present case hold out a solemn representation, this representation was founded on its stated desire to encourage industrialization in the State. The policy document spelt out:

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( i ) The nature of the incentives;

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( ii ) The period during which the incentives would be available; and

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( iii ) The time-limit within which follow-up action would be taken by the State Government through its departments for implementing the Industrial Policy, 2012.

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49. The State having held out a solemn representation in the above terms, it would be manifestly unfair and arbitrary to deprive industrial units within the State of their legitimate entitlement. The State Government did as a matter of fact, issue a statutory notification under Section 9 but by doing so

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prospectively with effect from 8-1-2015 it negated the nature of the representation which was held out in the Industrial Policy, 2012. Absolutely no justification bearing on reasons of policy or public interest has been offered before the High Court or before this Court for the delay in issuing a notification. The pleadings are completely silent on the reasons for the delay on the part of the Government and offer no justification for making the exemption prospective, contrary to the terms of the representation held out in the Industrial Policy, 2012.

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50. It is one thing for the State to assert that the writ petitioner had no vested right but quite another for the State to assert that it is not duty-bound to disclose its reasons for not giving effect to the exemption notification within the period that was envisaged in the Industrial Policy, 2012. Both the accountability of the State and the solemn obligation which it undertook in terms of the policy document militate against accepting such a notion of State power. The State must discard the colonial notion that it is a sovereign handing out doles at its will. Its policies give rise to legitimate expectations that the State will act according to what it puts forth in the public realm. In all its actions, the State is bound to act fairly, in a transparent manner. This is an elementary requirement of the guarantee against arbitrary State action which Article 14 of the Constitution adopts. A deprivation of the entitlement of private citizens and private business must be proportional to a requirement grounded in public interest. This conception of State power has been recognised by this Court in a consistent line of decisions. As an illustration, we would like to extract this Court's observations in National Buildings Construction Corpn. [ National Buildings Construction Corpn. v. S. Raghunathan , (1998) 7 SCC 66 : 1998 SCC (L&S) 1770] : (SCC p. 75, para 18)

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18 . … The Government and its departments, in administering the affairs of the country, are expected to honour their statements of policy or intention and treat the citizens with full personal consideration without any iota of abuse of discretion. The policy statements cannot be disregarded unfairly or applied selectively. Unfairness in the form of unreasonableness is akin to violation of natural justice.”

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51. Therefore, it is clear that the State had made a representation to the respondent and similarly situated industrial units under the Industrial Policy, 2012. This representation gave rise to a legitimate expectation on their behalf, that they would be offered a 50% rebate/deduction in electricity duty for the next five years. However, due to the failure to issue a notification within the stipulated time and by the grant of the exemption only prospectively, the expectation and trust in the State stood violated. Since the State has offered no justification for the delay in issuance of the notification, or provided reasons for it being in public interest, we hold that such a course of action by the State is arbitrary and is violative of Article 14.”

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It is quite apparent from the aforesaid exposition of law

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that State , having held out a solemn representation would be manifestly unfair and arbitrary to deprive industrial units within the State of their legitimate entitlement. When Government has issued a notification granting some incentive to the industrial units, there can be absolutely no justification for rejecting the claim of beneficiaries. Similarly, in the case at hand, once Government had approved an additional outlay of Rs. 1164.53 crore under the Scheme for the State of Himachal Pradesh and Uttarakhand for already registered units, there cannot be any reason to deprive the petitioners from the benefit.

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Since petitioners, in above captioned petitions, had filed application well within time and there is no dispute with regard to their eligibility of consideration of Scheme, coupled with the fact that their cases were favourably recommended by the State of Himachal Pradesh, prayer made on their behalf to at least consider them under the Scheme deserves to be allowed.

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Consequently, in view of the detailed discussion made herein as well as law taken into consideration, this Court finds merit in the present petitions and accordingly same are allowed with a direction to respondent Nos. 1 and 2 to place the matter before the Empowered Committee chaired by Secretary, DIPP, constituted in terms of Clause 6.1 of the Scheme, for registration expeditiously, preferably within a period of four weeks, without being influenced by letters dated 9.11.2023 and 30.07.2024. Needless to say, petitioners shall be granted incentives, as prayed for, in terms of the Scheme, if they are found eligible. Pending applications, if any, also stand disposed of. Interim order, if any, is vacated.

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(Sandeep Sharma), Judge

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January 06, 2025 (shankar)

Haripur Paper Company v. the UOI and Others

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Haripur Paper Company v. the UOI and Others

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