Substantial pre-amendment investment does not confer vested subsidy rights absent prior mandatory registration.

Lupin Limited operated an industrial unit in Sikkim and claimed the benefit of the Central Capital Investment Subsidy Scheme (CCISS) under the North-East Industrial and Investment Promotion Policy, 2007 (NEIIP, 2007), which initially provided a 30% subsidy on plant and machinery, subject to prescribed eligibility conditions.

The Union Government suspended the NEIIP, 2007 on 1 December 2014 and, by Notification dated 22 November 2016, limited the subsidy for new manufacturing units to ₹5 crores.

The Petitioner executed a 99-year lease on 27 May 2008, commenced establishment of its factory, and began commercial production on 10 February 2017.

However, it applied for registration with the District Industries Centre only on 23 February 2017, and registration was granted on 8 March 2017, after the revised Notification had come into force.

The Petitioner applied for CCISS on 5 February 2018 and ultimately received ₹5 crores on 22 May 2024.

It claimed a total subsidy of ₹13,65,75,271, contending that its substantial investment had been made before the 22 November 2016 amendment and that it was therefore entitled to the benefit of the unamended policy.

Whether the Petitioner had acquired an accrued or vested right to claim CCISS under the unamended NEIIP, 2007 before the Notification dated 22 November 2016 came into force, despite obtaining registration only thereafter?

Whether the Petitioner’s prior investment and commencement of commercial production under the NEIIP, 2007 entitled it to the original subsidy quantum of ₹13,65,75,271, notwithstanding the revised cap of ₹5 crores?

Whether the revised Notification was unenforceable against the Petitioner on the grounds of legitimate expectation, promissory estoppel, or violation of Article 14 of the Constitution?

The Court applied the terms of the NEIIP, 2007 and the subsequent Notification dated 22 November 2016, under which the subsidy for new manufacturing units was capped at ₹5 crores.

It held that a vested right is a fixed, accrued and complete right, not dependent upon fulfilment of a future contingency; a mere expectation based on the anticipated continuation of an existing policy does not constitute a vested right, following MGB Gramin Bank v. Chakrawarti Singh, relying on Mst. Bibi Sayeeda v. State of Bihar.

The Court also applied Mahabir Vegetable Oils (P) Ltd. v. State of Haryana, distinguishing accrued rights already conferred by law from uncrystallised expectations.

It recognised that promissory estoppel and legitimate expectation cannot create an entitlement that had not accrued under the governing scheme, relying on Manjushree Extrusions Ltd. v. State of Assam, while also acknowledging that governmental incentive policies may be modified or withdrawn in public interest, subject to applicable constitutional and equitable principles, as stated in State of Rajasthan v. J.K. Udaipur Udyog Ltd.

The Court further considered the principles in Union of India v. M/s V.V.F. Ltd., M/s Sidhbali Steels Ltd. v. State of U.P., and Hero MotoCorp Ltd. v. Union of India, that promissory estoppel does not prevent the Government from changing a policy or withdrawing a concession where legally justified or required in public interest.

The Court held that the Petitioner’s substantial investment and commencement of commercial production before or around the amendment did not, by themselves, establish an accrued or vested right to the original subsidy quantum.

The relevant consideration was whether the Petitioner had fulfilled the mandatory eligibility conditions under the NEIIP, 2007 before the revised Notification came into force.

Since the Petitioner applied for registration only on 23 February 2017 and obtained registration on 8 March 2017, both events occurred after the 22 November 2016 Notification imposing the ₹5-crore cap.

The Court therefore found that the Petitioner had not demonstrated that its subsidy entitlement had crystallised before the amendment or that registration was not a condition precedent to such entitlement.

Consequently, prior expenditure and timely commencement of commercial production could not transform a mere expectation into a vested right, and the doctrines of legitimate expectation and promissory estoppel could not be invoked to create a benefit not otherwise available under the scheme.

It held that Lupin Limited had failed to establish any vested or accrued right to receive ₹13,65,75,271 under the unamended NEIIP, 2007.

Because registration was obtained after the Notification dated 22 November 2016, the Petitioner was governed by the revised subsidy regime and could not claim the balance amount beyond the ₹5-crore subsidy already paid.

The writ petition was accordingly dismissed.