The Uttarakhand High Court has affirmed that exclusion of unregistered industrial units from incentive schemes cannot be absolute, mandating individualized review by a statutory committee. This ruling reinforces the principle that administrative policies must accommodate substantive fairness even where procedural compliance is incomplete.
Background & Facts
The Dispute
The petitioner, a company that invested substantial capital in installing a solar power plant in Pauri Garhwal, sought benefits under the Industrial Development Scheme, 2017. Despite initiating registration formalities and commencing operations, the petitioner was excluded from eligibility by communications dated 09.11.2023 and 30.07.2024 issued by the Union of India and state authorities. These communications declared that only units formally registered under the scheme would qualify for incentives, effectively denying relief to all unregistered applicants regardless of their compliance efforts or investment.
Procedural History
- 2023: Petitioner commenced operations under the Scheme of 2017 and applied for registration.
- November 2023: First communication issued excluding unregistered units from benefits.
- July 2024: Second communication reiterated blanket exclusion.
- 2026: Writ petitions filed before Uttarakhand HC challenging the exclusionary policy.
- March 2026: Court directed the Union to assess whether the matter was covered by a prior Himachal Pradesh High Court judgment.
Relief Sought
The petitioner sought quashing of the impugned communications and directed the Empowered Committee under Clause 6.1 of the Department of Industrial Policy and Promotion (D.I.P.P.) to review their application individually, consistent with the precedent set by the Himachal Pradesh High Court.
The Legal Issue
The central question was whether an administrative scheme can lawfully deny benefits to unregistered units without providing an opportunity for individualized assessment under its own policy framework, particularly when the policy contemplates discretionary review by an empowered committee.
Arguments Presented
For the Petitioner
Counsel relied on the final judgment of the Himachal Pradesh High Court in Union of India v. Atul Sharma, which had struck down identical communications and directed the Empowered Committee to examine each unregistered unit on its merits. They argued that the blanket exclusion violated Article 14 of the Constitution by treating similarly situated entities unequally and ignored the procedural safeguards embedded in Clause 6.1 of the Scheme, which explicitly contemplated case-by-case evaluation.
For the Respondent
The Union of India conceded that the impugned communications were the subject of litigation in Himachal Pradesh and acknowledged that the Uttarakhand HC’s petitioners were in identical circumstances. The learned C.G.S.C. did not contest the applicability of the Himachal Pradesh judgment and admitted that the policy required individual review, effectively abandoning the blanket exclusion stance.
The Court's Analysis
The Court observed that the Scheme of 2017, by its own terms, vested discretion in the Empowered Committee chaired by the Secretary of D.I.P.P. to examine applications on a case-specific basis under Clause 6.1. The impugned communications, by imposing a categorical bar on unregistered units, rendered this discretionary mechanism nugatory. The Court emphasized that administrative discretion cannot be fettered by rigid, non-discretionary guidelines that contradict the scheme’s own structure.
"The policy itself provides for individual examination; to deny access to that process on the basis of mere non-registration is to subvert the very purpose of the scheme."
The Court further noted that the Himachal Pradesh judgment had attained finality, with the Supreme Court declining to interfere. It held that principles of comity and consistency in administrative law required uniform application of legal principles across states, particularly where the same central policy is in question. The Court rejected the notion that procedural non-compliance alone could justify denial of substantive benefits without due consideration.
The Verdict
The petitioner succeeded. The Court held that the blanket exclusion of unregistered units violates the procedural fairness mandated by the Scheme of 2017 and directed the Empowered Committee to review each petitioner’s application individually within four months of the certified copy’s production.
What This Means For Similar Cases
Individual Review Is Mandatory Under Discretionary Schemes
- Practitioners must challenge categorical denials under incentive schemes where the policy explicitly provides for case-by-case evaluation.
- Blanket exclusions based solely on procedural status (e.g., non-registration) are void if the scheme’s own framework requires individual assessment.
Precedents from Other High Courts Bind Administrative Action
- Judgments from other High Courts on identical central schemes carry persuasive authority, especially when the policy is centrally administered.
- Government agencies cannot ignore final orders from sister courts on the same legal issue without risking judicial intervention.
Administrative Policies Must Align with Their Own Text
- When a policy creates a review mechanism (e.g., an Empowered Committee), it cannot later circumvent it through circulars or communications.
- Courts will strike down administrative actions that override the scheme’s internal procedural architecture, even if the action appears administratively convenient.
