Lupin Limited vs Union of India and Ors.
- Court
- High Court of Sikkim
CNR No. SKHC01-000068-2025
THE HIGH COURT OF SIKKIM: GANGTOK
(Civil Extra Ordinary Jurisdiction)
---------------------------------------------------------------------------------------
SINGLE BENCH : THE HON’BLE MR. JUSTICE A. MUHAMED MUSTAQUE,
CHIEF JUSTICE
---------------------------------------------------------------------------------------
WP(C) No.23 of 2025
Lupin Limited,
A Company having its factory at
th
4 Mile, Bhasmey,
Kamarey-Bhasmey Block, Duga - Ilaka,
P.O & P.S. Rangpo, Sikkim,
Through its signature authorized representative
Shri Sandeep Agarwal. ... Petitioner
versus
1. Union of India,
Through the Secretary,
Ministry of Commerce & Industry,
Department of Industrial Policy and Promotion
Udyog Bhawan, Rajpath Area,
New Delhi.
2. The Director,
Commerce and Industries Department,
Government of Sikkim,
Gangtok, Sikkim.
3. State of Sikkim,
Through the Chief Secretary,
Government of Sikkim,
Gangtok, Sikkim. ... Respondents
Petition under Articles 226 and 227 of the Constitution of India
---------------------------------------------------------------------------------
Appearance:
Mr. Prakash Shah, Senior Advocate (through VC) with Ms. Menuka
Gurung, Advocate for the Petitioner.
Ms. Sangita Pradhan, Deputy Solicitor General of India with Mr. Amit
Kumar Sharma, Advocate for the Respondent No.1.
Mr. S. K. Chettri, Government Advocate for the Respondent Nos.2 and 3.
---------------------------------------------------------------------------------
Judgment Reserved on : 03.09.2026
Judgment Pronounced on : 10.09.2026
Judgment Uploaded on : 10.09.2026
---------------------------------------------------------------------------------
Page 1 of 8
WP(C) No.23 of 2025
Lupin Limited vs. Union of India and Others
JUDGMENT
(A. Muhamed Mustaque, C.J.)
1. The Writ Petition is filed by the Petitioner, Lupin Limited, having
an industrial unit in the State of Sikkim. The Petitioner is aggrieved by
the denial of the full benefit of the Central Capital Investment Subsidy
Scheme (CCISS) under the North-East Industrial and Investment
Promotion Policy, 2007 (hereinafter referred to as the “NEIIP, 2007”),
introduced by the Government of India.
2. Under the NEIIP, 2007, a Central Capital Investment Subsidy
(CCISS) of 30% on plant and machinery was provided to new industrial
units and existing industrial units undertaking substantial expansion,
subject to the fulfillment of the conditions prescribed under the Policy,
including commencement of commercial production within the stipulated
period. The NEIIP, 2007 was introduced with effect from 01.04.2007
and was to remain in force until 31.03.2017.
3. The Union Government suspended the NEIIP vide Notification
dated 01.12.2014. Subsequently, the scheme was modified and, vide
Notification dated 22.11.2016, the subsidy available to new industrial
units was restricted to a maximum of ₹5 crores per industrial unit
operating in the manufacturing sector and ₹3 crores per industrial unit
operating in the service sector.
4. The Petitioner executed a 99-year lease deed on 27.05.2008 and
commenced the process of establishing its factory in Sikkim. The
Petitioner commenced commercial production on 10.02.2017. However,
it applied for registration with the District Industries Centre (DIC) only
on 23.02.2017, and registration was granted on 08.03.2017.
5. The Petitioner thereafter applied for the CCISS benefit on
05.02.2018. After certain proceedings and hearings concerning the
delay in registration, an amount of ₹5 crores was ultimately credited to
the Petitioner’s account on 22.05.2024.
6. The Petitioner claims that it is entitled to a subsidy of
₹13,65,75,271/- (Rupees thirteen crores sixty-five lakhs seventy-five
thousand two hundred and seventy one only) under the terms of the
NEIIP, 2007. According to the Petitioner, substantial investment had
Page 2 of 8
WP(C) No.23 of 2025
Lupin Limited vs. Union of India and Others
already been made prior to the Notification dated 22.11.2016 and the
establishment of the industrial unit had commenced much earlier,
pursuant to the incentives promised under the NEIIP, 2007. The
Petitioner therefore contends that the subsequent reduction of the
subsidy to ₹5 crores cannot be applied to its case.
7. The principal question for consideration is whether the Petitioner is
entitled to claim the CCISS benefit in accordance with the NEIIP, 2007,
notwithstanding the subsequent amendment dated 22.11.2016, or
whether the Petitioner is governed by the revised policy on account of
its registration having taken place in the year 2017.
8. The Petitioner relies upon the doctrine of legitimate expectation
and promissory estoppel, contending that it had undertaken substantial
expenditure on the basis of the incentives contemplated under the
NEIIP, 2007. It is stated that substantial expenditure had been incurred
towards land, plant and machinery and other expenses prior to the
Notification dated 22.11.2016. The Petitioner therefore contends that it
had a legitimate expectation of receiving the subsidy under the original
policy.
9. The Petitioner further contends that the Notification dated
22.11.2016 creates an arbitrary classification between industrial units
based upon the date of registration, despite the fact that certain units
had already made substantial investments or had commenced the
process of establishing their industrial units under the NEIIP, 2007.
According to the Petitioner, such classification does not bear a
reasonable nexus with the object sought to be achieved and is therefore
violative of Article 14 of the Constitution of India.
10. The Petitioner also challenges the manner in which the subsidy
was determined. It is contended that although the Petitioner’s claim was
for ₹13,65,75,271/-, the Respondents merely credited ₹5 crores to its
account on 22.05.2024 without passing a reasoned or speaking order
explaining why the balance amount was denied. The Petitioner submits
that this action is contrary to the principles of natural justice and
procedural fairness, particularly as no specific hearing was afforded on
the applicability of the Notification dated 22.11.2016 to the quantum of
subsidy.
Page 3 of 8
WP(C) No.23 of 2025
Lupin Limited vs. Union of India and Others
11. Learned Deputy Solicitor General of India, appearing for the
Respondents, submits that the Petitioner cannot claim the benefit of the
NEIIP, 2007 since the Petitioner had not obtained registration prior to
the revision of the scheme. It is submitted that the Petitioner applied for
registration only on 23.02.2017, after the Notification dated 22.11.2016
had already come into force, and was therefore rightly treated as a “new
industrial unit” governed by the revised norms.
12. The Respondents further contend that the Government possesses
the power to modify its policies in public interest and that the Petitioner
cannot claim an absolute right to the continuation of the earlier policy
merely because it had commenced investment prior to the amendment.
According to the Respondents, the Petitioner was required to satisfy the
conditions applicable on the date on which it sought registration and
claimed the benefit. The Respondents rely upon the Union of India &
1
Anr. v. M/s V.V.F. Ltd. & Anr. wherein the Hon’ble Supreme Court
held that the doctrine of promissory estoppel is not absolute and cannot
operate to restrain the Government from modifying or withdrawing a
policy where such change is necessitated by public interest or protection
of public revenue. Similarly, in M/s Sidhbali Steels Ltd. & Ors. v.
2
State of U.P. & Ors. it was held that the doctrine of promissory
estoppel cannot be invoked to challenge statutory action, and that the
Government retains the power to alter its policies whenever public
interest so demands. Further, in Hero MotoCorp Ltd. v. Union of
3
India the Hon’ble Supreme Court reiterated that a promise or
representation by the Government granting a tax exemption does not
confer an indefeasible or perpetual right upon the beneficiary to
continue enjoying such exemption where it is subsequently withdrawn
by a valid statutory provision or policy decision.
13. The Petitioner, however, submits that the investment had already
been substantially made before the revised Notification and that the
subsequent modification cannot retrospectively defeat the rights and
legitimate expectations arising from the earlier policy. The Petitioner
relies upon MRF Ltd. v. Assistant Commissioner (Assessment)
1
(2020) 20 SCC 57.
2
(2011) 3 SCC 193.
3
2022 SCC OnLine SC 1436.
Page 4 of 8
WP(C) No.23 of 2025
Lupin Limited vs. Union of India and Others
4
Sales Tax that legitimate expectation may arise from a government
promise, representation or consistent past practice. It is based on Article
14 and fairness. However, it does not automatically create a substantive
legal right; departure from a legitimate expectation must be justified by
an overriding public interest; Bannari Amman Sugars Ltd. v.
5
Commercial Tax Officer that a person may have a legitimate
expectation of being treated in a particular manner even without a
private-law right. If the expectation is defeated, the authority must act
fairly and justify the departure by sufficient public interest, Union of
6
India v. Hindustan Development Corporation that legitimate
expectation is an aspect of fairness under Article 14. It does not itself
confer an enforceable right, but where the expectation is disappointed,
the authority must show an overriding public interest for the departure.
Further, the Petitioner relies upon Motilal Padmapat Sugar Mills Co.
7
Ltd. v. State of Uttar Pradesh which deals with the principle of
estoppel and public interest.
14. The contention of the Petitioner that it acquired a vested right
merely by reason of the existence of the NEIIP, 2007 cannot, however,
be accepted unless the Petitioner establishes that it had fulfilled the
conditions necessary for claiming the subsidy under the said Policy.
15. The fact that the NEIIP, 2007 contemplated a period of ten years
within which commercial production was required to commence does
not, by itself, confer an indefeasible or vested right upon every
industrial unit to claim the subsidy in accordance with the terms of the
original policy irrespective of subsequent amendments. The existence of
a time period for commencement of production cannot be treated as
dispensing with the other eligibility conditions prescribed under the
Policy.
16. A vested right is a right which is fixed and is not dependent upon
the fulfillment of a future contingency. In MGB Gramin Bank v.
8
Chakrawarti Singh , while referring to the principle laid down in Mst.
4
(2006) 8 SCC 702.
5
(2005) 1 SCC 625.
6
AIR 1994 SC 988.
7
(1979) 2 SCC 409.
8
(2014) 13 SCC 583.
Page 5 of 8
WP(C) No.23 of 2025
Lupin Limited vs. Union of India and Others
9
Bibi Sayeeda and Others v. State of Bihar and Others , the Hon’ble
Supreme Court observed as follows:
“...........................
11. The word "vested" is defined in Black's Law Dictionary (6th
Edn.) at p. 1563, as:
"Vested.—fixed; accrued; settled; absolute; complete. Having the
character or given in the rights of absolute ownership; not
contingent; not subject to be defeated by a condition precedent.
Rights are 'vested' when right to enjoyment, present or
prospective, has become property of some particular person or
persons as present interest; mere expectancy of future benefits,
or contingent interest in property founded on anticipated
continuance of existing laws, does not constitute 'vested rights'."
12. In Webster's Comprehensive Dictionary (International
Edition) at p. 1397, "vested" is defined as law held by a tenure
subject to no contingency; complete; established by law as a
permanent right; vested interest. (Vide Bibi Sayeeda v. State of
Bihar- and J.S. Yadav v. State of U.P.°)
13. Thus, vested right is a right independent of any contingency
and it cannot be taken away without consent of the person
concerned. Vested right can arise from contract, statute or by
operation of law. Unless an accrued or vested right has been
derived by a party, the policy decision/scheme could be changed.
........................... “
17. The distinction between an existing accrued right and a mere
expectation assumes particular significance in matters concerning
industrial incentives. In Mahabir Vegetable Oils (P) Ltd. and
10
Another v. State of Haryana and Others , the Hon’ble Supreme
Court held that where a statutory provision had already conferred rights
upon the industrial units, subsequent amendments could not
retrospectively take away such accrued rights. The Court specifically
recognised the distinction between vested rights and accrued rights and
held that the rights already conferred could not be taken away with
retrospective effect.
18. Similarly, in Manjushree Extrusions Ltd. and Anr. v. State of
11
Assam & Ors. the Gauhati High Court considered an industrial
incentive policy under which existing industrial units had undertaken
expansion, modernisation and diversification on the basis of the
incentives promised by the Government. The Court held that the
principle of promissory estoppel, being an equitable doctrine, cannot be
invoked to confer a benefit where the claimant had no underlying
entitlement to such benefit under the governing scheme. Thus,
9
(1996) 9 SCC 516.
10
(2006) 3 SCC 620.
11
1998 SCC OnLine Gau 219.
Page 6 of 8
WP(C) No.23 of 2025
Lupin Limited vs. Union of India and Others
promissory estoppel cannot be used to create a right which had not
otherwise accrued in favour of the claimant. At the same time, the
Supreme Court has made it clear that the mere existence of an incentive
policy does not invariably create an indefeasible vested right. In State
of Rajasthan and Another v. J.K. Udaipur Udyog Ltd. and
12
Another the Court held that Government may modify or revoke an
exemption granted under a scheme, subject to the doctrine of
promissory estoppel and considerations of equity and public interest.
The mere continuation of a concession does not, by itself, create an
indefeasible right to its continued enjoyment. Exemptions are defeasible
concessions and not indefeasible rights.
19. Thus, the decisive question in the present case is not merely
whether the Petitioner had made substantial investments under the
NEIIP, 2007, but whether, before the Notification dated 22.11.2016
came into force, the Petitioner had acquired an accrued or vested right
to the specific quantum of subsidy claimed by it. The Petitioner had
admittedly commenced establishment of its industrial unit and incurred
substantial expenditure, but its application for registration was made
only on 23.02.2017 and registration was granted on 08.03.2017, after
the impugned Notification had come into force. Therefore, unless the
Petitioner establishes that registration was not a condition precedent to
the accrual of the subsidy entitlement under the NEIIP, 2007, or that its
right had otherwise accrued before 22.11.2016, the mere fact of prior
investment may not, by itself, be sufficient to constitute a vested right
immune from the subsequent policy amendment.
20. The material placed before the Court shows that the Petitioner
applied for registration only on 23.02.2017, and registration was
granted on 08.03.2017. By that time, the Notification dated 22.11.2016,
restricting the subsidy for new industrial units in the manufacturing
sector to ₹5 crores, was already in force.
21. Therefore, notwithstanding the fact that the Petitioner had
commenced the establishment of its industrial unit and had made
substantial investments prior to the amendment. The Petitioner must
demonstrate compliance with the mandatory conditions prescribed for
12
(2004) 7 SCC 673.
Page 7 of 8
WP(C) No.23 of 2025
Lupin Limited vs. Union of India and Others
eligibility under the NEIIP, 2007 before claiming that a vested right had
accrued in its favour.
22. In the absence of fulfillment of the mandatory eligibility condition
relating to registration, the Petitioner cannot claim an absolute vested
right to the subsidy under the unamended NEIIP, 2007 merely on the
basis that the investment had commenced earlier or that commercial
production was commenced within the period contemplated under the
original Policy.
23. Consequently, the Petitioner has failed to establish that a vested
right to receive the subsidy of ₹13,65,75,271/- had accrued in its favour
under the NEIIP, 2007 and that such right was subsequently taken away
by the Notification dated 22.11.2016.
24. Accordingly, the challenge to the denial of the subsidy claimed
under the NEIIP, 2007, cannot be sustained on the ground of violation
of any vested right. The Petitioner is therefore not entitled to claim the
balance subsidy solely on the basis of the unamended Policy.
25. Accordingly, this Writ Petition fails and is dismissed.
Chief Justice
Approved for Reporting: Yes
ami/arc
Page 8 of 8