A later departmental clarification cannot by itself retrospectively create subsidy ineligibility.

The petitioners, manufacturers of fuel briquettes substantially made from agro-waste, had their units and subsidy claims considered by the competent authorities under the Industrial Promotion Policy, 2010.

Investment and interest subsidies were sanctioned and disbursed.

The State later treated Agro Waste Briquettes as falling within the Policy’s ineligible category, “Smokeless Fuel Manufacture and Coal Making,” relying on subsequent departmental communications, and initiated recovery.

The petitioners’ challenges before the departmental authorities were unsuccessful.

They then sought judicial review under Articles 226 and 227, contending, among other things, that the later communications could not retrospectively enlarge the exclusion and that the recovery orders did not adequately address their objections.

1. Whether subsequent departmental communications could, by themselves, make Agro Waste Briquettes ineligible for subsidies already sanctioned under the Industrial Promotion Policy, 2010

2. Whether the recovery orders could stand when they did not adequately determine, by reference to the Policy and the relevant record, whether each petitioner’s product fell within the applicable ineligible category

The Court applied the Industrial Promotion Policy, 2010, particularly Serial No. 22 of its ineligible-industries list, which referred to “Smokeless Fuel Manufacture and Coal Making”.

It distinguished a clarification of an existing provision from a subsequent interpretation that, in effect, enlarges an exclusion and unsettles rights or benefits previously determined; the label given to a communication does not control, and its actual effect must be assessed against the policy applicable at the relevant time.

A liability to recover subsidy must rest on a specific finding, supported by the applicable policy provision and material on record, and the affected party must have an opportunity to present its case.

The Policy, as it stood on the relevant dates, did not expressly identify Agro Waste Briquettes as ineligible, while the State’s classification arose from later departmental communications.

The impugned orders did not adequately examine the original Policy, the product and raw materials, the contemporaneous record, or the circumstances in which the subsidies had been sanctioned.

The Court therefore held that the subsequent communications could not, standing alone, justify recovery.

It did not determine that the petitioners were ultimately eligible; that question required a reasoned assessment under the applicable Policy and the individual record.

The petitioners must be given an opportunity to present their case, and any decision imposing liability must contain reasons and a specific finding of ineligibility.

The exercise was directed to be completed preferably within four months; any amounts already recovered would remain subject to the resulting decision.

The connected petitions were disposed of on the same terms, with no order as to costs.