CWP No.19007 of 2002 alongwith connected petitions -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 1. C.W.P. No. 19007 of 2002 M/s Balak Gases Oxygen Gas Plant and another ..Petitioners Vs. State of Punjab and others ...Respondents 2. C.W.P. No. 13452 of 2006 Channi Steels Private Limited ..Petitioner Vs. State of Punjab and another ...Respondents 3. C.W.P. No. 15756 of 2006 Mandi Gobindgarh Gases & Alloys Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents 4. C.W.P. No. 3119 of 2007 Shivam Agro (Poultry Farm) and another ..Petitioners Vs. State of Punjab and another ...Respondents 5. C.W.P. No. 11332 of 2007 M/s Soccer Tanneries ..Petitioner Vs. State of Punjab and others ...Respondents 6. C.W.P. No. 14024 of 2007 Sunita Goyal ..Petitioner Vs. State of Punjab and others ...Respondents CWP No.19007 of 2002 alongwith connected petitions -2- 7. C.W.P. No. 15822 of 2008 Patiala Strips Pvt. Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents 8. C.W.P. No. 16041 of 2009 Patiala Cold Rolling (P) Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents 9. C.W.P. No. 4917 of 2007 M/s Shree Luxmi Enterprises and others ..Petitioners Vs. State of Punjab and others ...Respondents 10. C.W.P. No. 5062 of 2007 M/s Amit Embroideries and others ..Petitioners Vs. State of Punjab and others ...Respondents 11. C.W.P. No. 20536 of 2008 M/s P.R. Textiles and another ..Petitioners Vs. State of Punjab and others ...Respondents 12. C.W.P. No. 20537 of 2008 M/s Punnu Synthetics Private Limited and another ..Petitioners Vs. State of Punjab and others ...Respondents 13. C.W.P. No. 20538 of 2008 M/s Native Drugs Private Limited ..Petitioner Vs. State of Punjab and others ...Respondents CWP No.19007 of 2002 alongwith connected petitions -3- 14. C.W.P. No. 1594 of 2010 M/s Shri Ram Udyog and another ..Petitioners Vs. State of Punjab and others ...Respondents 15. C.W.P. No. 13222 of 2007 M/s Kang Board Mills ..Petitioner Vs. State of Punjab and others ...Respondents 16. C.W.P. No. 15714 of 2007 Satpal Industries ..Petitioner Vs. State of Punjab and others ...Respondents 17. C.W.P. No. 10092 of 2008 K.K. Attachi House ..Petitioner Vs. State of Punjab and others ...Respondents 18. C.W.P. No. 11778 of 2008 Bharat Lubricants ..Petitioner Vs. State of Punjab and others ...Respondents 19. C.W.P. No. 11781 of 2008 Sahil Agro Tech Pvt. Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents 20. C.W.P. No. 15375 of 2008 Pawan Ispat Udyog ..Petitioner Vs. State of Punjab and others ...Respondents CWP No.19007 of 2002 alongwith connected petitions -4- 21. C.W.P. No. 15477 of 2008 M/s J.B. Cottex ..Petitioner Vs. State of Punjab and others ...Respondents 22. C.W.P. No. 15692 of 2007 M/s P & M Polyfabs Pvt. Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents 23. C.W.P. No. 19894 of 2008 M/s J.B. Cotton Factory ..Petitioner Vs. State of Punjab and others ...Respondents 24. C.W.P. No. 21798 of 2008 M/s Gopal Agro Products ..Petitioner Vs. State of Punjab and others ...Respondents 25. C.W.P. No. 3029 of 2009 M/s P.J. International ..Petitioner Vs. State of Punjab and others ...Respondents 26. C.W.P. No. 10664 of 2010 Oriental Gases and Chemical ..Petitioner Vs. State of Punjab and others ...Respondents 27. C.W.P. No. 8267 of 2011 M/s Royal Regency Hotels Pvt. Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents CWP No.19007 of 2002 alongwith connected petitions -5- 28. C.W.P. No. 1009 of 2007 M/s Zimidara Agro Implements Pvt. Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents 29. C.W.P. No. 1022 of 2007 M/s G.K. Cotton Mills ..Petitioner Vs. State of Punjab and others ...Respondents 30. C.W.P. No. 9653 of 2007 M/s Harnek ..Petitioner Vs. State of Punjab and others ...Respondents 31. C.W.P. No. 9732 of 2007 M/s Friends Rice and General Mills ..Petitioner Vs. State of Punjab and others ...Respondents 32. C.W.P. No. 11963 of 2007 M/s Avtar Poultry Farm ..Petitioner Vs. State of Punjab and others ...Respondents 33. C.W.P. No. 11964 of 2007 M/s Modern Foam Industries ...Petitioner Vs. The State of Punjab and others ...Respondents 34. C.W.P. No. 1551 of 2008 M/s Janta Poultries ..Petitioner Vs. State of Punjab and others ...Respondents CWP No.19007 of 2002 alongwith connected petitions -6- 35. C.W.P. No. 1839 of 2008 M/s Hans Pipes Pvt. Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents 36. C.W.P. No. 1982 of 2008 M/s Sant Ram Dass Rice Mills ..Petitioner Vs. State of Punjab and others ...Respondents 37. C.W.P. No. 1906 of 2009 M/s Vardhman Knits ..Petitioner Vs. State of Punjab and others ...Respondents 38. C.W.P. No. 8141 of 2011 M/s Amritsar Agro Food Products ..Petitioner Vs. State of Punjab and others ...Respondents 39. C.W.P. No. 5381 of 1992 Messrs Rajaram Corn Products (Punjab) Limited & another ..Petitioners Vs. State of Punjab and others ...Respondents 40. C.W.P. No. 20611 of 2006 M/s Perfect Metal Fasteners ..Petitioner Vs. State of Punjab and others ...Respondents 41. C.W.P. No. 1582 of 2007 M/s Kamboj Industries ..Petitioner Vs. State of Punjab and others ...Respondents CWP No.19007 of 2002 alongwith connected petitions -7- 42. C.W.P. No. 2966 of 2007 M/s Majestic Metaliks Limited ..Petitioner Vs. State of Punjab and others ...Respondents 43. C.W.P. No. 14574 of 2007 M/s D.K. Poultary Farm ..Petitioner Vs. State of Punjab and others ...Respondents 44. C.W.P. No. 4534 of 2009 Poddar Synthetics (P) Ltd. ..Petitioner Vs. State of Punjab and others ...Respondents Date of Decision: 20.05.2011 CORAM: HON'BLE MR.JUSTICE MEHINDER SINGH SULLAR Present:- S/Shri J.S.Toor, Vikas Bahl, N.K.Jain, Rajesh Kumar Girdhar, Sanjiv Gupta, Sudhir Mittal, P.S.Khurana, Harish Chhabra, Vibhav Jain and Ms.Manmeet Kaur, Advocates for the petitioner-Industries. Mr.Rupinder Khosla, Additional Advocate General, Mr.Palwinder Singh, Senior DAG, Punjab and Mr.Inderjeet Sharma, Advocate for the respondents. M ehinder S ingh S ullar , J. What cannot possibly be disputed that all the States, including the State of Punjab, are presumed to be the welfare States, by the people, of the people and for the people, in the regime and democratic set up, as enshrined in the Constitution of India. Article 154 postulates that the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution. Article 162 further posits that the executive power of a State shall extend to the matters CWP No.19007 of 2002 alongwith connected petitions -8- with respect to which the Legislature of the State has the power to make laws. 2. Perhaps, in exercise of these powers, conferred by the Constitution, the Governor of Punjab was pleased to formulate the new Industrial Policies from time to time, inter-alia, in order to, strengthen the economy, attract fresh investment, further boost the growth of industry, increase annual present industrial growth rate from 8% to 12% in the next two years, to increase the present share of industry in Gross Domestic Product (GDP) from 17% to 25% in the next five years and to divert 15% of the present rural population to manufacturing & related occupations through rapid industrialization in the State of Punjab. 3. Not only that, the object of the publication of Industrial Policies was also to diminish the stress of agricultural sector, which predominates the State of Punjab being predominantly an agricultural State, occupying once a pride place in India. Subsequently, the agriculture sector witnessed the heavy losses, debt and stress on the farmers. So, with an eye to meet the hopes of the people and to engage them in a variety of larger, medium and small scale industrial units, based on agricultural produce to generate the required GDP, the State notified the different Industrial Policies, promising to grant various incentives, concessions, subsidies, interest, tax exemptions and other benefits indicated therein, such as:- a) Scheme of interest subsidy @ 5% of the total interest payable on the term loan from financial institutions/banks for industrial units in small scale sector, which would be sanctioned alongwith investment incentive on the basis of certificates to be issued by the financial institutions/banks after the units have gone into production. However, units have the option to avail either the interest subsidy or the sales tax concession. b) To encourage the growth of existing industrial units, benefit of investment incentive and sales tax concession shall be allowed on expansion, provided the fixed capital investment (FCI) is increased at least by 50% or the installed capacity as recorded in the industrial licence/certificate of the Department of Industries is increased minimum by 50%. c) The investment incentive (capital subsidy) shall be available only in case of small scale units graduating to medium/large category as mentioned in (vii) CWP No.19007 of 2002 alongwith connected petitions -9- above and for new units in the small scale sector and for large and medium units in 'A' category incentive areas. d) With a view to encourage the rehabilitation of sick industrial units purchased by entrepreneurs from the Punjab Financial Corporation or other Corporations or agencies of the Central or State Government, the same shall be treated as new units for the purpose of incentives provided they are located in the areas eligible for incentives. Following incentives shall be provided to such units:- i) The investment incentive to the extent the same has not been availed or earlier by the original promoter. This incentive would also be available on new machinery purchased by the new entrepreneurs. ii) Sales Tax incentive for the remaining period which has not been availed of by the original promoter. However, the maximum prescribed limit on the FCI (including new investment) shall be adhered to. iii)These incentives shall be as admissible in 'B' category under 1992 package of incentives. Likewise, some other concessions were also announced as described therein in the Industrial Policies of 1996 and 2003. In order to implement these Policies, the State of Punjab framed the relevant rules in this respect. 4. The petitioner-Industries claimed that believing the promises of the State Government, flowing from the Industrial Policies and relevant rules, to be true, they set up their respective industrial units by spending huge amounts and started production as per the terms and conditions of the policies. The State of Punjab did not fulfill its promises and failed to make the payment, in lieu of various kinds of concessions, interest & tax exemptions, incentives, subsidies and other benefits on untenable grounds, leaving them in lurch. 5. The petitioner-Industries did not feel satisfied with the action of the respondents and preferred the present writ petitions, invoking the provisions of Articles 226 and 227 of the Constitution of India. 6. As identical questions of law and facts are involved and collectively argued by the counsel for the parties, therefore, I propose to dispose of the instant CWP No.19007 of 2002 alongwith connected petitions -10- writ petitions, by virtue of this common judgment, in order to avoid the repetition. However, the facts, which require to be noticed for the limited purpose of deciding the core controversy, involved in these matters, have been extracted from (1) CWP No. 19007 of 2002 titled as “M/s Balak Gases Oxygen Gas Plant & another vs. State of Punjab and others” in this context. Be that as it may, the facts of individual cases would also be separately noticed and discussed at the appropriate place and stage in the subsequent part of this judgment. 7. The matrix of the facts, culminating in the commencement, relevant for disposal of the present writ petitions and emanating from the record, is that in order to achieve the indicated aims & objects and to strengthen the economy, the Governor of Punjab was pleased to formulate the new Industrial Policies of 1996 and 2003, which were published by the government, by way of notifications dated 20.3.1996 and 26.3.2003 (Annexure P1 annexed with CWP No.19007 of 2002 & CWP No.4917 of 2007). In order to implement these policies, the Government of Punjab further notified the Industrial Policy and Incentives Code/Rules (for brevity “relevant Rules”) under the Industrial Policies of 1996 and 2003, published, by means of notifications dated 1.6.1996 and 2.4.2003 (Annexure P2 attached with the indicated writ petitions). It is not a matter of dispute that such notifications have the force of law as envisaged under Article 13(3) read with Articles 154 and 162 of the Constitution of India. As per the Industrial Policies and relevant Rules, the industries were classified in variety of categories and different area of operation. The relevant rules of 1996 and 2003 came into force w.e.f. 1.4.1996 & 1.4.2003 respectively and were made applicable to such units, which came into production for the first time on or after or undertake expansion/modernization after 1.4.1996 and 1.4.2003. The area of operation of industry was classified in two categories 'A' and 'B' in this respect. 8. As is clear that Rule 5 escalates the eligibility of incentives category- CWP No.19007 of 2002 alongwith connected petitions -11- wise to larger, medium and small scale industrial units, such as for rehabilitation of sick units, modernization and technology up-gradation, internet subsidy, investment incentives, incentives for projects of special significance, incentives for projects of non-conventional energy sources, incentives for Agro-based industry, incentives for electronic industry, export oriented units, village industries units. The incentives to fly ash based units were prescribed in Rules 6 to 15 respectively. Similarly, the industry was also classified in the categories of large scale, medium scale and small scale industries. The different incentives were announced for project of non-commercial agro-based unit, village industry unit, tourism industry, electronic unit, export oriented unit, project of special significance, incentives to fly ash based units and incentives for rehabilitation of sick industry units including the exemption from taxes and interest so on and so forth. 9. According to the petitioner-Industries that in the same sequence, the Indian Boilers Act, 1923 and Standards of Weights & Measures (Enforcement) Act, 1985, Indian Electricity Act, 1910 and Rules, 1956, implementation of Environmental Laws were promised to be amended to improve and to match the industrial atmosphere. Self Certification scheme under Labour Laws and mechanism of forming the Monitoring Committees were also introduced. Similarly, for the development of border area, the State Government assures to provide capital subsidy to Small Scale Industrial Units to the extent of 30% of the Fixed Capital Investment upto maximum of ` 30 lac per unit. 10. The case set up by the petitioner-Industries, in brief in so far as relevant, was that deeply believing the promises of the State to be true and sincere and in pursuance of the indicated Industrial Policies (Annexure P1), coupled with the relevant rules (Annexure P2), announced by the Government of Punjab, they set up their industrial units, strictly in consonance with the Industrial Policies, having spent huge amounts for establishing the industry of undertaking modernization and up-gradation. The State of Punjab did not fulfill and has back CWP No.19007 of 2002 alongwith connected petitions -12- tracked from the promise to give the pointed concessions/incentives on one reason or the other and did not release the amounts of benefits despite letter/representations (Annexures P5 to P8). 11. Aggrieved by the action of the respondents, the petitioner-Industry (at serial No.1) filed CWP No.16236 of 2002 titled as “M/s Balak Gases Oxygen Gas Plant Vs. State of Punjab and others”, which was dismissed by a Division Bench of this Court, by means of order dated 28.10.2002 (Annexure P9) on the ground that its name figured at Serial No.383 of the seniority list prepared by the State and amount will be paid as per seniority in this regard. 12. Levelling a variety of allegations and narrating the sequence of their respective events, in all, according to the petitioner-Industries that although they were eligible to claim the concessions and incentives in view of the Industrial Policies and relevant Rules made thereunder, but the State Govt. did not release the amounts of subsidies and concessions to them in the garb of impugned orders, without any legal ground. The plea of discrimination has also been pressed into service by the petitioner-Industries. On the basis of aforesaid allegations, the petitioners claimed the depicted concessions/incentives and benefits and sought the quashment of impugned orders in the manner described hereinabove. 13. Likewise, the remaining petitioner-Industries have also filed the writ petitions almost on the basis of the same grounds and similar pleadings and challenged the orders impugned therein in this context. 14. Faced with the situation, the respondents have contested the claim of the petitioner-Industries. The contesting respondent Nos.1 and 2 filed their joint written statement, inter-alia admitting the issuance/publication of the aforesaid policies and relevant rules and that the petitioner-Industries are duly registered as larger, medium and small scale industries with the Industry Department of Punjab State. The factum of sanction of subsidy/incentives in pursuance of the indicated policy/rules was also acknowledged. However, it was further pleaded in para 28 as CWP No.19007 of 2002 alongwith connected petitions -13- under:- “That it is the prerogative of the State government to assign priorities with the intention to have all-round development of the State and to attract investment in the State. The matter regarding disbursement is not mentioned in the policy Rules. The decision taken by the Government is an administrative decision for which Government is competent to make, priority to Export Oriented Units, was assigned with a view to earn valuable foreign exchange and similarly priority to Poultry Farms and persons belongs to Scheduled Caste Entrepreneurs was assigned with a view to uplift the weaker section of the society, moreover this was in lieu of special component scheme which was discontinued. The disbursement is made as per inter-district seniority list maintained at Head Office of unit pertaining to General category and priority categories, 80% of funds released were disbursed to units of General category and only 20% of funds released were used for making disbursement to priority categories. However, in compliance with the order dated 07.08.2001 passed by this Hon'ble High Court in another case No.14456 of 2000 -M/s Bassi Tubes V/s State of Punjab, the 80% of subsidy shall be disbursed to the Industrial units in accordance with the seniority list and 20% of the amount to the Export Oriented Units in terms of instruction dated 25/30.11.99.” 15. Sequelly, the State Government was stated to have constituted the committees to formulate the modalities and issued certain guidelines based on the recommendations dated 28.8.2006 and 20.2.2009 of these committees. The impugned orders were stated to have been legally and validly passed in exercise of administrative/executive powers of the State Government. It will not be out of place to mention here that the contesting respondents have stoutly denied all other allegations contained in the writ petitions and prayed for their dismissal. 16. Controverting the allegations contained in the written statements reiterating the pleadings of the writ petitions, some of the petitioner-units filed their replications. That is how I am seized of the matter. 17. At the very outset, the counsel for the petitioner-Industries, contended with some amount of vehemence that the State of Punjab, in exercise of CWP No.19007 of 2002 alongwith connected petitions -14- its executive powers, issued the Industrial Policies in question and framed the relevant rules in pursuance thereof to implement the same and promised various kinds of incentives, subsidies, tax and interest exemptions and other benefits mentioned therein. Having deep faith in the promise of the Government, the petitioner-Industries have set up their industrial units, by spending huge amounts, strictly in consonance with the Industrial Policies and relevant rules, but it (State Government) has miserably failed to fulfill its promise. The argument is that although the State has sanctioned the amount of subsidy, incentives and other benefits to all the industrial units and discriminately paid the same to some of its favourite units, but the payment was illegally denied to the petitioner-Industries, for the reasons best known to the respondents. They unilaterally changed the terms and conditions of the incentives already adversely affecting them, without any legal authority. The argument further proceeds that once the State has notified the Industrial Policies and the relevant rules and granted the various concessions, incentives and other benefits depicted therein and having spent huge amounts, the petitioner-Industries have set up their industrial units, then the State is estopped from denying the payment of the indicated benefits to them on the doctrine of promissory estoppel. In support of their contentions, they have placed reliance on the judgments of Hon'ble Apex Court in cases U.P.Power Corporation Ltd. and Anr. v. Sant Steel and Alloys P.Ltd. 2008(2) SCC 777 = 2008 AIR (SC) 693 and Assistant Commissioner of Commercial Taxes (Asst.), Dharwar and others v. Dharmendra Trading Co.etc.etc. AIR 1988 Supreme Court 1247. 18. On the contrary, the State counsel appearing on behalf of the respondents has acknowledged the existence of the Industrial Policies in question (Annexure P1) and the relevant rules framed thereunder (Annexure P2). He has also fairly conceded that the Government has already paid or is going to release the amount of subsidies to the different categories of Industries as per the Policy dated 8.9.2009, formulated on the basis of the recommendations of the Committees CWP No.19007 of 2002 alongwith connected petitions -15- constituted by the State. However, the State counsel further took pain to argue that the petitioner-Industries have no legitimate right, which can legally be enforced and Government has the power to amend the policies and to issue guidelines to restrict the claim of the industrial units in this behalf. He has also placed reliance on the judgments of Hon'ble Supreme Court in case M/s Motilal Padampat Sugar Mills Co.Ltd. v. State of Uttar Pradesh and others (1979) 2 S.C.C. 409 in this respect. 19. Having heard the learned counsel for the parties at quite length, having gone through the records and legal provisions with their valuable assistance and after bestowal of thoughts over the entire matter, to my mind, the instant writ petitions deserve to be accepted in this context. 20. As indicated hereinbefore, the State Government announced the Industrial Policies and published, by way of notifications dated 20.3.1996 and 26.3.2003 (Annexure P1). In order to implement the Industrial Policies, the State framed the relevant rules (Annexure P2). It is not a matter of dispute that the Government has sanctioned the amount of subsidies and incentives, but the same was not released to the petitioner-Industries on variety of grounds of closure of the units and non-availability of the funds etc., by virtue of various orders impugned therein. Similarly, the State of Punjab did not pay the amount of incentives and other benefits to M/s A.S.Forgings (Registered) on the same indicated grounds. It filed CWP No.1801 of 1998, which came to be disposed of by a Division Bench of this Court, vide judgment dated 25.11.1998 (Annexure P3 in CWP No.4917 of 2007), the operative part of which is as under:- “However, keeping in view the facts and circumstances that have been brought to our notice during the course of hearing, we hope that the State Government shall take steps to disburse the huge balance of Subsidy to the eligible Units as early as possible. A copy of this order be sent to the Chief Secretary, Punjab for information. With the above observation and directions, this Writ Petition stands CWP No.19007 of 2002 alongwith connected petitions -16- disposed of with no costs.” 21. Not only that, aggrieved by the same very impugned action of the State, The Mohali Industries Association and others filed another CWP No.1436 of 2005 to issue directions to release the amount of subsidies and for quashing the impugned sanctioned letters only to the extent that a condition has been incorporated that the disbursement would be made subject to the availability of the funds. It was decided alongwith CWP No.8719 of 2002 and bunch of other petitions, which again was disposed of by a Division Bench of this Court, by virtue of order dated 11.5.2006 (Annexure P5 attached with CWP No.4917 of 2007), which, in substance, is as under:- “Learned Senior Deputy Advocate General appearing for the State of Punjab has placed on record a decision dated February 6,2006, taken by the