The Supreme Court on Monday held that existing industrial units undergoing "substantial expansion" are not entitled to the electricity concessions under a Himachal Pradesh policy, saying that it was for "newly established" enterprises only.

Setting aside the Himachal Pradesh High Court's verdict, a bench comprising Justices J B Pardiwala and KV Viswanathan ruled in favour of the state government in a dispute over industrial electricity concessions.

"Clause 16(a) of the Industrial Policy of 2019 and Rule 16(i)(a) of the 2019 Rules were always intended to apply to the 'new industrial enterprises' and not to the 'existing industrial enterprises undergoing substantial expansion'.

"The conglomeration of the contemporaneous tariff orders issued prior to and subsequent to the Industrial Policy of 2019, the overall scheme of the Policy, and the structure of Clause 16 itself clearly indicate that the concessional tariff benefit under Clause 16(a) was meant only for new industrial enterprises, whereas the rebate benefit under Clause 16(b) was intended for existing industrial enterprises undergoing substantial expansion," Justice Pardiwala wrote in the judgement.

The bench was dealing with the question of whether the concessional power rates Clause 16(a) of the 2019 policy was ever intended for the existing industrial enterprises undergoing substantial expansion, and the effect of an amendment notice issued in April 2022.

It also dealt with the issue whether the doctrine of "promissory estoppel" applies in favour of the respondent company M/s Kundlas Loh Udyog.

The top court set aside a May 2025 judgment of the Himachal Pradesh High Court, which had directed the state government to extend a 15 per cent discount on energy charges to the private firm, an existing unit that had undertaken expansion.

The state contended that the use of the word "eligible" in Clause 16(a) was a drafting error and was always intended to mean "newly established" industries. To fix this, the state issued an amendment in April 2022, specifically replacing "eligible" with "new".

The high court had previously ruled that this 2022 amendment could only apply prospectively.

However, the top court disagreed and said, "The substitution of the word 'eligible' with 'new'... did not alter the substance of the Policy but merely clarified the true intent and scope of the provisions as they always stood." Consequently, the top court ruled the amendment was clarificatory and retrospective in nature.

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