Coming to the rescue of industries in Punjab, which are fast falling prey to other states having better policies and facilities, the Punjab and Haryana high court has directed the state government to release the amount of incentive, subsidies and other benefits as promised in its industrial policies within six months period.
The bench headed by justice MS Sullar while disposing of a bunch of 44 petitions filed by various affected industries issued the directions. The bench also made it clear that if the state fails to release the amount within the stipulated period, the industries would also be entitled to interest at the rate of 6% per annum on the accrued benefits till the realization of the amount.
The petitioner industries had brought to the notice of the court that the Punjab government had announced industrial policies in 1996 and 2003 promising to grant various incentives, concessions, subsidies, tax exemptions and other benefits. Believing the promises made in the state government policies to be true, the petitioner industries set up their respective industrial units by spending crores of rupees and started production as per the terms and conditions of the policies. But the state government did not fulfill its promises and failed to disburse various exemptions on untenable grounds leaving the industries in lurch, submitted the petitioners.
The two industrial policies were notified on March 20, 1996 and March 26, 2003. The object of publication of industrial policies was also to diminish the stress of agricultural sector, which predominates Punjab. Since the agriculture sector witnessed heavy losses, debt and stress on the farmers, hence to meet 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 gross domestic product(GDP), industrial policies were notified.
As per the policies, for the development of border areas, the state government had assured to provide capital subsidy to small-scale industial units to the extent of 30% of the fixed capital investment upto maximum of Rs 30 lakh per unit and various such benefits to medium and large scale industries.
The petitioner industries also submitted that the state had sanctioned the amount of subsidy, incentives and other benefites to all the industrial units but discriminately paid the same to some of its favourite units only.
However, the counsel appearing for Punjab government asserted that petitioner industries had no legitimate right, which can legally be enforced and government had the power to amend the policies and to issue guidelines to restrict the claim of the industrial units. Repelling the arguments of the state council, the bench held, “the state could not legally be permitted to completely defeat the rights of the industries by constant re-appraisal of the scheme retrospectively, that too by issuing administrative insutructions of any kind by its officers….”
Justice Sullar also set aside various subsequent impugned guidelines and orders issued by the government denying the incentives/subsidies, emanating from the industrial policies, to the industries.