BALAKRISHNA, J. ( 1 ) THE following are the material facts of the case in which the petitioner is seeking the quashing of the decision of the central government contained in a letter dated 5-4-1982 (Annexure-F) and the decision of the state government embodied in letter dated 12-8-1982 (Annexure-H) and for a declaration that the grasilene unit belonging to the petitioner is entitled to the subsidy under Annexure-A to the extent of Rs. 15 lakhs along with a direction to the respondents to pay the same to the petitioner with interest at 18% per annum from 27-1-1979 which is the date of the petitioner's application till payment thereof. ( 2 ) THE petitioner, which is a public company, set up a unit called grasilene division in the year 1976 in an industrially backward area of Karnataka at kumarapatnam in dharwar district. The said unit went into commercial production in July 1977. The petitioner company had complied with all the prescribed formalities for the purpose of setting up a new industry as contemplated by the Provisions of the industries (development and regulation) Act, 1951 and a letter of intent dated 5-12-1974 was granted to the petitioner by the government of india. The state government provided the required land through its agencies to the petitioner for setting up the industry. A sum of Rs. 4. 44 crores by way of fixed capital investment on land, building, plant and machinery was made employing a workforce of about 1000. The grasilene unit was registered as a factory under the factories act and in particular as an independent unit in conformity with various labour and industrial laws. Though this industry is owned by gwalior rayon silk manufacturing (weaving) company limited, it is being managed and run as an independent entity with a separate indentifiablc investment. ( 3 ) THE government of India had introduceda scheme in order to provide central subsidy to industrial units set up in selected backward areas for the manufacture of specified items and the scheme was published in the gazzette of India (extraordinary) dated 26-8-1971 subsequently amended by 2 notifications dated 30-9-1972 and 19-6-1973. The scheme took effect on 1-10-1970, in respect of certain areas and on 26-8-1971 in regard to other areas. The scheme took effect on 1-10-1970, in respect of certain areas and on 26-8-1971 in regard to other areas. The implementation or administration of the scheme is done by the central government through the state agency and the state directorate of industries apart from others is the disbursing agency which is assisted by a state level committee presided over by the secretary to the government of state industries department. The secretary of the committee is the director of industries. ( 4 ) ACCORDING to the said scheme, new industrial units which are engaged in the manufacture of items specified in part-b of the scheme are eligible to 15% subsidy if such units are located in areas specified in part-a. Man-made fibres industry fell within part-b and dharwar district is in part-a of the aforesaid scheme. The central investment subsidy which is admissible to an eligible industrial unit is 15% of the fixed capital investment made on or after 1-3-1973 or Rs. 15 lakhs which ever is less. ( 5 ) GRASILENE division of petitioner's industry being engaged in the manufacture of specified items and located in a notified backward area of the state is stated to be entitled to the central investment subsidy of Rs. 15 lakhs based on its fixed capital investment on the unit. It is stated that it is this subsidy which attracted the petitioner company and prompted it to setup grasilene industry in a backward area even though facilities available are sparse and labour is untrained. On 27-1-1979, the petitioner company made an application for grant of 15% subsidy for their grasilene unit and the application as contemplated was submitted through the assistant director of industries and commerce, haveri, in whose jurisdiction the unit is located. Processing was done by the directorate of industries of the state government which gathered several particulars and information from the petitioner in the course of processing. Processing was done by the directorate of industries of the state government which gathered several particulars and information from the petitioner in the course of processing. The district industries centre of the department of industries and commerce, government of karnataka, scrutinised and verified the particulars including the details of investment stated to have been made by the petitioner on the unit and certified that the petitioner's grasilene unit was eligible for the subsidy as could be seen from a copy of their letter dated 23-2-1980 vide Annexure-C. ( 6 ) IN the letter dated 1-5-1980 issued by the central government to the secretaries of the state industrial department, eligibility Provisions in respect of industries or companies owning more than one unit were clarified. According to the clarification so issued, subsidy is payable "on unitwise basis of each distinct and separate identifiable investment. " it is to be noticed that the petitioner company owns another industrial unit called harihar polyfibres which is engaged in the manufacture of wood pulp. This industry was commissioned in March 1971 and it was given a letter of intent by the government of India in may 1968 and in 1969 steps were taken to establish the unit and work was commenced. The investment of fixed capital assets on that unit is Rs. 22. 8 crorcs, whereas the industrial unit of grasilene division was set up in 1976 and went into production in July 1977. It is to be seen that both in terms of investment and in terms of the product of manufacture, there is no similarity and they are distinctly different from one another. Also apparent is the feature that both the industrial units though seperate have a common owner. It is emphasised that functionally the two industries are independent of each other and further under the labour and industrial laws they are registered as seperate units and, therefore, they are to be regarded as two separate and distinct legal entities. Harihar polyfibres which is an industry anterior to the grasilene division, became eligible for investment subsidy and was in fact granted such subsidy to the extent of Rs. 15 lakhs. However, when it came to the question of grant of similar subsidy in terms of the scheme, the authorities in the state were rather hesitant. Harihar polyfibres which is an industry anterior to the grasilene division, became eligible for investment subsidy and was in fact granted such subsidy to the extent of Rs. 15 lakhs. However, when it came to the question of grant of similar subsidy in terms of the scheme, the authorities in the state were rather hesitant. The state government was not sure whether the grasilene division would be eligible for grant of subsidy in view of the fact that harihar polyfibres earlier had applied for and taken subsidy under the scheme. In order to banish the doubt, the petitioner addressed a letter dated 31-3-1982 explaining the factual position to the state government whereupon the state government, in turn, sought clarification from the central government who in turn replied by letter dated 5-4-1982 stating that subsidy is not admissible to the grasilene unit since the company had already secured a subsidy to the other unit owned by the company called harihar polyfibres. The petitioner promptly addressed a letter dated 28-4-1982 to the central government pointing out the fallacy in the reasoning of the central government and contended that the grasilene unit being a new industrial unit could not be denied subsidy merely because another industrial unit of the petitioner company viz. , harihar polyfibres had been conferred with a subsidy. A letter dated 12-8-1982 (Annexure-H) was received by the petitioner from the 3rd respondent stating that the petitioner's grasilene unit is not at all a separate legal entity and, therefore, no subsidy could be granted. The petitioner is, therefore, aggrieved and has approached this court invoking its jurisdiction under article 226 of the constitution. ( 7 ) THE learned counsel appearing for the petitioner contended that the grasilene division is a new unit which satisfies the conditions of eligibility under the scheme and is, therefore, entitled to the subsidy payable to an industry set up in a backward area notified by the state government including dharwar district. According to the learned counsel for the petitioner denial of subsidy amounts to deprivation of the petitioner's property rights without the authority of law and is violative of article 300aof the constitution. According to the learned counsel for the petitioner denial of subsidy amounts to deprivation of the petitioner's property rights without the authority of law and is violative of article 300aof the constitution. It is contended that the scheme as originally conceived and framed does not disqualify an industrial unit for subsidy merely because another industrial unit under common ownership has received the subsidy earlier so long as the two industries are distinct and separate legal entities. It is contended that the concerned authorities have not applied their mind to the facts and legal considerations which regulate the grant of subsidy and have unreasonably and arbitrarily declined the subsidy in gross violation of article 14 of the constitution. ( 8 ) ON behalf of the petitioner it is also contended that there is a violation of rules of natural Justice inasmuch as no opportunity was afforded to the petitioner to substantiate their claim before Annexure-H was issued to the petitioner. ( 9 ) ANOTHER important contention is that the petitioner set up grasilene unit in a backward area such as dharwar district where no trained labour is available and where other facilities and amenities are scarce, it had not been for the inducement and assurance held out by the central government that subsidy would be granted under the scheme and particularly when no indication was made that such a subsidy will be available only to one unit even though the company owned several units in a backward area and thus the petitioner being led to believe that subsidy would be granted acted upon the assurance but to its detriment and that it is too late in the day for the authorities to deny the subsidy. In short, the learned counsel appearing for the petitioner relied upon the principle of proraissory estoppel apart from the principle of legitimate expectation. ( 10 ) IT was further contended that even if the petitioner has not suffered any detriment while acting upon the assurance held out by the concerned authorities, the concept of promissory estoppel is attracted to the facts and circumstances of the case. ( 10 ) IT was further contended that even if the petitioner has not suffered any detriment while acting upon the assurance held out by the concerned authorities, the concept of promissory estoppel is attracted to the facts and circumstances of the case. ( 11 ) ANOTHER contention, advanced is that the purported clarification issued by the central government in its letter dated 1-5-1980 vide anncxure-d on the basis on which the authorities have relied to repudiate the claim of the petitioner for a subsidy, seems to have been construed in such a manner that it would amount to an amendment of the scheme with retrospective effect which is not warranted by law. The requirement that the industrial unit should be a separate legal entity is a condition which is conspicuous by its absence in the original scheme which was the basis for the petitioner to act upon in establishing the grasilene division. Finally it is contended that there are numerous factors which are made out in paras 12. 6 and 12. 7 of the writ petition which substantiate the fact that even assuming that an industrial unit should be a separate legal entity for the purpose of grant of subsidy, the grasilene division of the petitioner company is both defacto and dcjury a separate juristic entity or person and, therefore, the denial of subsidy is unjustified. ( 12 ) LASTLY it is contended that on account of unjustified denial of subsidy, an amount of Rs. 15 lakhs was not made available to the petitioner and on account of non-availability of this sub-stantial amount, the Provisions of the interest Act, 1978 are applicable and that this is a fit case for grant of interest at the rate of 18% per annum from the date of application for grant of subsidy till the date of payment. In support of this proposition, the petitioner relied not only on the interest act of 1978 but also on a decision rendered by the Supreme Court reported in AIR 1989 SC 973 . In support of this proposition, the petitioner relied not only on the interest act of 1978 but also on a decision rendered by the Supreme Court reported in AIR 1989 SC 973 . ( 13 ) ON behalf of respondenis-2 and 3, astatement of objections is filed wherein it is contended that the petitioner is not eligible for the subsidy for the reason stated in the endorsement dated 12-8-1982 under Annexure-H. It is also maintained that respondent-1 is vested with the power of clarifying, interpreting any point regarding eligibility or otherwise of an industrial unit under the central subsidy scheme and that the decision of respondent-1 is final. It is argued that according to the letters/circulars issued by respondent-1, the bifurcation of two units namely M/s. Harihar polyfibrcs and grasilene division owned by the same petitioner viz. , gwalior rayon silk manufacturing (weaving) company limited has been found to be an artificial bifurcation of investment and that they arc eligible under law only for a maximum subsidy of Rs. 15 lakhs for both the units put together. The foundation for this argument is that though a separate licence is obtained for grasilene division, the unit belongs to the same petitioner and is located in the same premises and that both the units are interdependent with the finished product of harihar polyfibrcs being raw-material for the grasilene division and in reality the two arc not separate units. Reliance is also placed on letter dated 5-4-1982 issued by rcspondcnt-1 that the claim of the petitioner cannot be entertained as they are ineligible for subsidy. On other words, the contention is that there is an artificial splitting of investment and therefore the authorities were justified in holding that the petitioner is not eligible for a subsidy. It is therefore submitted that there is no flaw in the impugned orders/decisions and that the petitioner is not entitled to the reliefs sought in this writ petition. ( 14 ) THE learned central government standing counsel appearing on behalf of respondent-1 made submissions which are not different from the stand taken by the learned government pleader appearing for rcspondents-2 to 4. The points made out on behalf of respondent-1 and respondents-2 to 4 are consistently similar. ( 14 ) THE learned central government standing counsel appearing on behalf of respondent-1 made submissions which are not different from the stand taken by the learned government pleader appearing for rcspondents-2 to 4. The points made out on behalf of respondent-1 and respondents-2 to 4 are consistently similar. However, it was submitted on behalf of respondent-1 that the principle of promissory estoppel as well as the principle of legitimate expectation are not at all attracted to the facts of the case since the terms and conditions of the scheme which are conditions precedent for grant of sub-sidy do not admit any ambiguity in regard to the fact that no subsidy is permissible in respect of grasilene division not only because of common ownership and mutual dependency in the manufacture of the end product, but also because the grasilene division cannot be regarded as a separate legal entity distinguishable from harihar polyfibres, it was submitted that the principle of legitimate expectation would not over the facts of this case since the expectation is not even reasonable in view of the clarity with which various definitions are given in the scheme itself and these definitions do not qualify the petitioner for grant of subsidy, ( 15 ) THE point to be considered is whether the respondents were justified in their decisions under annexures 'f and 'h' denying the grant of subsidy to the petitioner company in respect of the grasilene division to the extent of Rs. 15 lakhs and whether the petitioner is entitled to payment of interest at 18% per annum from the date of the petitioner's application for grant of subsidy till the date of payment. ( 16 ) THE central investment subsidy scheme on which the petitioner relies is of material relevance in order to decide whether the decision conveyed to the petitioner under Annexure-H stands the test of reasonableness. Annexure-H reads as follows:"we are inability to inform you that as per the central subsidy rules vide goi letter dated 4. 9. 80, that the above unit is not a seperate legel entity and the unit is not entitled for central subsidy. Hence the case is hereby treated as closed. " ( 17 ) THIS letter of repudiation issued by the 3rd respondent assigns only one reason for rejection of the application of the petitioner for grant of central subsidy. 9. 80, that the above unit is not a seperate legel entity and the unit is not entitled for central subsidy. Hence the case is hereby treated as closed. " ( 17 ) THIS letter of repudiation issued by the 3rd respondent assigns only one reason for rejection of the application of the petitioner for grant of central subsidy. The reason is that the grasilene division of the petitioner company is not a separate legal entity. The point whether grasilene division is a separate legal entity and whether only a separate legal entity will be entitled to central subsidy is of consequence if the central investment subsidy scheme under Annexure-A specifically lays down such a condition to qualify for the subsidy. ( 18 ) 1 have examined the manual for 10-15% central investment subsidy scheme vide Annexure-A and my effort to discover such a condition has proved futile. The said manual prefaces the scheme with the following words:"eligibility and procedure for claiming disbursement and reimbursement etc. , of the central investment subsidy are dealt with in the succeeding sections. "according to clause 1. 2 of the scheme, the area of operation of central investment subsidy is confined to a list of industrially backward districts/areas which qualify for the central investment subsidy as described in Annexure-I i (part-a ). According to clause 13, the scheme comes into operation with effect from 1-10-1970 in respect of areas indicated in column 3 of part-a of Annexure-I i and with effect from 26-8-1971 in respect of areas indicated in column 4 of the same annexure. It is provided that the scheme is expected to remain in operation upto the end of fifth five year plan and may be extended further if considered necessary by government of india. Clause 1. 4 deals with the difinitions of industrial unit, new industrial unit, existing industrial unit, expansion and fixed capital investment. Upto clause 2, a description of what is fixed capital investment in terms of land and buildings, plant and machinery is set out followed by audit authority. Under clause 1. 4 (g), central investment subsidy represents 10%-15% by value of the fixed capital investment of an industrial unit located in an area specified in part-a of Annexure-I i and under clause 1. Under clause 1. 4 (g), central investment subsidy represents 10%-15% by value of the fixed capital investment of an industrial unit located in an area specified in part-a of Annexure-I i and under clause 1. 4 (h) the disbursing agency is stated to be the agency which disburses the central investment subsidy to the eligible industrial units on the basis of prior sanction of the state level committee in the first instance and later prefer claims for reimbursement with the state level committee. The relevant clause is 1. 4 (e)ii (iii ). According to it, an industrial unit undertaking modernisation of its plant and machinery will be considered for grant of central investment-subsidy on the value of plant and machinery purchased by the industrial unit as a part of its modernisation programme reduced by the sale value, written down value or market value of the old machinery, whichever is the highest. Value of machinery so arrived at may be certified by a chartered accountant. The procedure for claiming subsidy is to be found in clause 2. 3. The applicant is expected to furnish information and documents along with the application (form prescribed in Annexure-I ii) for claiming central investment subsidy under the scheme as detailed below: (a) project report wherever it is prepared; (b) details of the scheme including the details of the fixed assets to be acquired; (c) sanction letter from the financial institution^) sanctioning the loan or loans for the purpose of implementing the project; (d) if the project is under implementation a certificate from the chartered accountants regarding capital expenditure incurred on the project and a certificate from an engineer as prescribed in Section 5 (6) (b) certifying the civil work done. These certificates should be in the prescribed from (vide annexures-vi and viii); in cases where the total claims for subsidy do not exceed Rs. 15,000/- the state government/agency concerned at their discretion can dispense with submission of certificates from the chartered accountant and the engineer as specified above. According to clause 2. 4, the disbursing agency with whom the application for central investment subsidy is filed will examine the application and determine the eligibility of the industrial unit. All the cases after due scrutiny will be referred to the state level committee constituted under the scheme with suitable recommendations for final decision. According to clause 2. 4, the disbursing agency with whom the application for central investment subsidy is filed will examine the application and determine the eligibility of the industrial unit. All the cases after due scrutiny will be referred to the state level committee constituted under the scheme with suitable recommendations for final decision. The agenda notes will be submitted to the state level committee in the form prescribed in Annexure-I V. At this stage, it has to be pointed out that there is no dispute about the fact that the petitioner has duly complied with the procedure prescribed for claiming subsidy. According to clause 3. 1, the extent of central investment subsidy admissible as the maximum to an eligible industrial unit will be 15% of the fixed capital investment made on or after 1st march, 1973 or Rs. 15 lakhs whichever is less, and, according to clause 3. 2, in case of eligible industrial units which have made fixed capital investments before 1st march, 1973 and where further investments were made beyond 1st march, 1973, the disbursement of central investment subsidy will be regulated as follows: 'the maximum central investment subsidy admissible to an eligible industrial unit which has made fixed capital investment or Rs. 5 lakhs whichever is less irrespective of the total size of the project. The maximum central investment subsidy admissible to an eligible industrial unit from 1st march, 1973 to the date of expiry of the scheme will be 10% of the fixed capital investment made upto 28th february, 1973 plus 15% of the fixed capital investment made on or after 1st march, 1973 or Rs. 15 lakhs whichever is less. According to clause 3. 5, any number of expansions can be allowed to an industrial unit but the total quantum of central investment subsidy granted should not exceed Rs. 15 lakhs to an industrial unit at the same backward area/district. According to clause 4. 2, the state level committee will go into merits of each case to decide whether the industrial unit qualifies for grant of central investment subsidy and will also determine the quantum of central investment subsidy admissible to the industrial unit. The state level committee is authorised to sanction 15% subsidy upto Rs. 15 lakhs even in cases where projects cost more than Rs. One crore. According to clause 4. The state level committee is authorised to sanction 15% subsidy upto Rs. 15 lakhs even in cases where projects cost more than Rs. One crore. According to clause 4. 6, the state level committee shall have overall authority over the various disbursing agencies. It shall be the responsibility of the state level committee to ensure that the sanction and disbursement of central investment subsidy to industrial units are in conformity with the requirements laid down therein. According to clause 4. 9, the state level committee shall submit to government of India quarterly progress report in the form as per annexure-xii detailing the progress about sanctions and disbursements of central investment subsidy, bottlenecks of handicaps working of the scheme or any other matter of importance concerning central investment subsidy. Clause 5. 1 describes the procedure for disbursement of centra] investment subsidy. On receipt of the sanction from the state level committee the concerned disbursing agency will issue a sanction letter (vide annexure-v) to the eligible industrial unit intimating the cost of the fixed capital investment and project approved by the state level committee as also the amount of central investment subsidy sanctioned in respect of the project. Along with the sanction letter, there shall be enclosed a legally enforceable agreement to be executed by the eligible industrial unit for the purpose of drawing the central investment subsidy sanctioned by the state level committee. According to clause 5. 2, where the eligible industrial unit is set up by a co-operative society or a limited company, a certified copy of the board resolution accepting the central investment subsidy should be filed with the disbursing agency along with the agreement duly executed as per the requirements. Clause 5. 4 provides that the documents so furnished by the eligible industrial unit shall be examined by the disbursing agency. The central investment subsidy shall be disbursed to the extent admissible on the basis of actual fixed capital investment made by the industrial unit. According to clause 6. 1, the various disbursing agencies after making disbursement of subsidy to eligible industrial units in accordance with the Provisions made herein shall prefer claims for reimbursement of central investment subsidy as disbursed with the state level committee. According to clause 6. 1, the various disbursing agencies after making disbursement of subsidy to eligible industrial units in accordance with the Provisions made herein shall prefer claims for reimbursement of central investment subsidy as disbursed with the state level committee. The claims shall be preferred in the form shown in annexure-x. Clause 10 envisages that where any matter arises for the purpose of interpretation or in cases where any suggestions are made in regard to implementation of the scheme, such matters shall be referred to government of india, ministry of industry, department of industrial development and the decision of government of india, ministry of industry, department of industrial development shall be final. According to clause 1. 4 (h), the following are the disbursing agencies: (i) directorate of industries; (ii) state regional development corporations/state financial corporations authorised in this behalf by state governments; (iii) central financial agencies viz. , idbi, ifc1, icici and nationalised banks authorised in this behalf by the state government; (iv) any other agency, duly authorised in this behalf by the state government. Clause 2 deals with eligibility for grant of central investment subsidy. According to it, new industrial units engaged in manufacture of items specified in part (8) of annexurc-ii are eligible to claim 10%-15% central investment subsidy under the scheme provided such industrial units are located in areas specified in part (a) of Annexure-I i and are also covered by Section 13 above. Existing industrial units engaged in manufacture of items specified in part (b) of Annexure-I i are eligible to claim 10%- 15% central investment subsidy under the scheme provided such industrial units are located in areas specified in part (a) of Annexure-I i and are also covered by Section 1. 3 above for purposes of expansion only. ( 19 ) ON 27-1-1979, the petitioner company made an application for grant of 15% central investment subsidy for the grasilene division of the petitioner company engaged in the manufacture of specified items, the industry being located in a notified backward area of the state. It is submitted by the petitioner that it was because of this subsidy announced under Annexure-A by the government of India that the petitioner was induced to set up the unit even though in the backward area where it was established, facilities are sparse and the labour is untrained. It is submitted by the petitioner that it was because of this subsidy announced under Annexure-A by the government of India that the petitioner was induced to set up the unit even though in the backward area where it was established, facilities are sparse and the labour is untrained. ( 20 ) THE application was submitted through the assistant director of industries and commerce, haveri,who is the jurisdictional authority and after it was processed by the directorate of industries of the state government who obtained numerous particulars and information from the petitioner, the district industries centre of the department of industries and commerce, government of karnataka, having verified the particulars and information furnished , having satisfied itself regarding the eligibility of the petitioner, certified that the grasilene division of the petitioner's company was eligible for subsidy vide letter dated 23-2-1980 addressed to the commissioner for industrial development and director of industries and commerce, Bangalore. ( 21 ) THUS, so far it is seen that the petitioner had complied with the procedural requirements and the state authorities after due examination and scrutiny of all the particulars and information furnished by the petitioner, formed the opinion that the petitioner was eligible for grant of subsidy and therefore issued a certificate to that effect. At this stage a letter dated 1-5-1980 was received from the central government by the secretaries of the state industries department purporting to clarify the eligibility Provisions in respect of applications made by industries or companies owning more than one unit, a copy of which is anncxure-d. It is necessary to refer to this letter dated 1-5-1980. It appears from the letter that representations were received from the state governments, private and public sector organisations seeking a review of the orders contained in the "ministry of industry of government of India letter No. 1/35/76-nd dated 17-6-1978 restricting the quantum of investment subsidy payable to Rs. 15 lakhs even if two or more units are set up by an individual/company/group/legal entity in selected backward districts/areas within a state. 15 lakhs even if two or more units are set up by an individual/company/group/legal entity in selected backward districts/areas within a state. After re-examining the question in consultation with the finance division of the ministry, the government of India decided to amplify the conditions set out in para 1 of the ministry's letter No. V33/76-hd dated 17-6-1978 as follows: (i) concept of 'group' will not be relevant to such of the units as are set up/assisted by the state industrial development corporations in selected backward area; (ii) an individual/company/group, though interconnected but having separate legal entity would be eligible for central subsidy on unitwise basis on each discrete, separate and in identifiable investment to the extent of prescribed ceiling whether the investment has taken place in the same backward area or in two different backward areas within a state. In other words, on individual/company/group legal entity will be entitled to central subsidy equivalent to 15% of the investment on fixed assets subject to a maximum of Rs. 15 lakhs on unitwise basis for each unit engaged in different lines of end product irrespective of the number of units set up whether in the same backward areas or in different backward areas within a state. It is,'however, clarified that in cases where more than one unit set up by an individual/company/group/legal entity are engaged in the manufacture of identical products or those involving the same processes of manufacture, the capital subsidy to such units will be permissible on unitwise basis, but subject to an overall limit of Rs. 15 lakhs for all such units which do not form separate identifiable investment. The identifiable investment will be judged by the criteria, such as (a) separate licenced items (b) linkages between the product of one investment and the activity of another investment i. e. an entrepreneur should not be permitted to derive additional benefit by having one licence for manufacturing a product upto an intermediate stage and another licence for manufacturing the finished products; (iii) it has to be ensured that any artificial splitting of investment is not made so as to be eligible for subsidy over and above the maximum limit of Rs. 15 lakhs. 15 lakhs. In such cases, government will have to take up a case by case approach to prevent abuse of this facility, (iv) if any kind of doubtful interconnected investment takes place in the same backward area or different backward areas within the state, the cases have to be carefully examined and where slcs are clear about the distinct identity of an investment whether the units are located in the same or different backward areas, they should admit the eligibility for separate subsidy. In doubtful cases, the slcs should refer the matter to the central government before making any commitment; (v) to safeguard against misuse of the facility, the state governments were requested to introduce a new clause in the qucstionaire meant for the entrepreneur applicant to the effect "have you made an application or received subsidy from any other state government?. " these orders will take effect from the date of issue of this letter. All pending cases will also be decided in accordance with these instructions. ( 22 ) IT is thus seen that the matter became complicated on account of the clarification issued by the government of India under annexurc-d. It is to be noticed that whereas the petitioner made an application for grant of subsidy on 27-1-1979 after the grasilene division went into commercial production in July 1977 after it was set up in the year 1976 for the manufacture of man-made fibre called grasilene fibre, the clarification came from the government of India about 3 years later from the date of commissioning of the industry and 1 year 4 months subsequent to the date of application of the petitioner company for grant of central investment subsidy. For the first time on 1-5-1980, the government of India laid down the condition that the applicant should be a separate legal entity in order to qualify for grant of central investment subsidy on unitwise basis on each distinct, separate and identifiable investment to the extent of prescribed ceiling whether the investment has taken place in the same backward area or in two different backward areas within a state. In other words, it was clarified that a legal entity will be entitled to central subsidy equivalent to 15% of the investment on fixed assets subject to a maximum of Rs. In other words, it was clarified that a legal entity will be entitled to central subsidy equivalent to 15% of the investment on fixed assets subject to a maximum of Rs. 15 lakhs on unitwise basis for each unit engaged in different lines of product irrespective of the number of units set up whether in the same backward area or in different backward areas within a state. But this subsidy would not be available in cases where more than one unit is set up by a legal entity engaged in the manufacture of identical products or those involving the same processes of manufacture, the capital subsidy to such units being admissible on unitwise basis, but subject to an overall limit of Rs. 15 lakhs for all such units which do not form separate identifiable investment. It was amplified that the identifiable investment will be adjudged by criteria such as separate licenced items, linkages between the product of one investment and the activity of another investment preferring an entrepreneur from deriving additional benefit by having one licence for manufacturing a product upon an intermediate stage and another licence for manufacturing the finished products. ( 23 ) THE clarification, in my opinion, issued under Annexure-D makes a departure from the conditions and terms originally contained in the subsidy scheme announced by the government of India under annexure-a. The conditions and terms contained in Annexure-A are distinctly different from the conditions brought out in the guise of clarification under Annexure-D , virtually bringing about a change of front. By the clarification, what was announced, what was bargained for, what was legitimately expected by the announcement of the subsidy scheme have frustrated the expectations of the petitioner company which acted on the assurance held out under the said scheme of 1971 as amended from time to time by notifications issued on 30-9-1972 and 19-6-1973. It has to be remembered that the scheme came into operation with effect from 1-10-1970 in respect of areas indicated in column 3 of part 'a' of Annexure-I i and with effect from 26-8-1971 in respect of areas indicated in column 4 of the same Annexure and expected to remain in force till the end of fifth five year flan and subject to further extention if considered necessary by the government of india. There is much force in the contention that based on the assur ances held out under annexure-a, the petitioner company set up the grasilene division for the manufacture of grasilene fibre which is polynosic type high performance fibre of cellulose origin. The unit was set up in 1976 and commissioned in July 1977 commencing its production. There is no condition or term in the entire scheme which prohibits grant of central investment subsidy to an industrial unit on the ground of it being not a seperate legal entity. That the subsidy would not be available to a unit which is not a separate legal entity was never made known to the petitioner in the scheme announced by the government of India under Annexure-A as amended from time to time, the last amendment being 19-6-1973. The very fact that a separate purported amplification had to be issued by the government of India under Annexure-D dated 1-5-1980 which is 7 year subsequent to 1973 which is the last date of amendment of the scheme prbvides sufficient basis to infer that the conditions articulated in Annexure-D do not find their palces in the original scheme at all. The so called amplification of 1-5-1980 amounts to an alteration of the original scheme itself and such an alteration was made without inviting any representation from the applicants whose applications were pending consideration. The case of the petitioner falls within the category of pending applications and the elucidation issued under Annexure-D though taking effect on 1-5-1980 is made applicable to pending applications also including that of the petitioner. If we look into clause 2 of the scheme, new industrial units engaged in manufacture of items specified in part (8) of Annexure-I i are eligible for the subsidy provided the units are located in areas specified in part (a) of Annexure-I i and are also covered by clause 13 of the scheme. A new industrial unit is defined in clause 1. 4 (b) as a unit which has made investments in land, building and plant and machinery as defined hi sub-clause (e) during the operative period of the scheme and industrial unit is defined in clause 1. 4 (a) as any industrial undertaking and servicing unit other than that run departinentally by government of india/state government/union territory administrations. 4 (b) as a unit which has made investments in land, building and plant and machinery as defined hi sub-clause (e) during the operative period of the scheme and industrial unit is defined in clause 1. 4 (a) as any industrial undertaking and servicing unit other than that run departinentally by government of india/state government/union territory administrations. Thus, none of the clauses in the scheme contemplate that the unit should be a separate legal entity in order to qualify for the subsidy. Existing industrial unit is defined in clause 1. 4 (c) as an industrial unit which has made investments in land, building and plant and machinery as defined in sub-clause (e) prior to the operative period of the scheme. ( 24 ) IT is beyond dispute that the petitioner which is gwalior rayon silk manufacturing (weaving) company limited is a company within the meaning of the Companies Act, 1956 which has an existing industrial unit under a separate licence for the manufacture of pulp by an industry carrying on business of manufacture in the name of harihar polyfibres limited. It is the very same company which established another industrial unit which meets the definition of a new industrial unit established in the name of grasilene division under a separate licence for the manufacture of a different product called grasilene fibre. This is an instance of a single company which has established two distinctly different and separate industries at different points of time under different licences for the manufacture of different products. Nowhere in the scheme is there a bar for grant of subsidy under the scheme because of common ownership. Even assuming that grasilene division should be a separate legal entity to meet the requirements of eligibility as clarified under Annexure-D , it is not possible to subscribe to the inference of the authority which issued Annexure-H that the grasilene division is not a separate legal entity. But the real point is whether such a qualification is contemplated under the scheme as it existed prior to the issue of Annexure-D. I am of the opinion that there is absolutely no indication of any such qualification being imposed by the scheme as it stood prior to 1- 5-1980. The reason given in Annexure-H rejecting the application of the petitioner for grant of subsidy is unsustainable. The reason given in Annexure-H rejecting the application of the petitioner for grant of subsidy is unsustainable. Even assuming that grant of subsidy is not a matter of right but only a benefit conferred by the government of India by its policy decision, i hold the view that once the policy is announced, the petitioner having acted upon the assurance believing it to be true cannot be denied the benefit by an alteration or reversal of policy without an opportunity of representation to the petitioner, unilaterally to the detriment of the petitioner, thereby frustrating the legitimate expectation of the petitioner. The legitimate expectation is that the state is not justified in refusing to honour undertakings or assurances which it haand given. ( 25 ) IN Regina v Inland Revenue commissioners, 1985 ac 835, it was held that in principle it would be in certain situations be, an improper exercise of power for a public body to refuse to honour undertakings or assurances it has given. Lord templeman observed that resiling from an undertaking would normally constitute an abuse of power if the conduct would, if committed by a private body have given raise to a claim for breach of contract or estoppel by representation. Circumstances are identified which give raise to legitimate expectation as either on express terms given on behalf of the state or the public authority or the existence of a regular practise which the claimant can reasonably expect to continue. ( 26 ) IN the relationship between the state and its citizen, fairness of treatment is implied and it can be reasonably expected that the citizen will be treated as fairly as fairness permits. The focus is on the conduct of the decision maker. It is the expectation created by state's conduct which engenders legitimate expectation which is higher than reasonable expectation, which in turn provides the justification for judicial intervention. The focus is on the conduct of the decision maker. It is the expectation created by state's conduct which engenders legitimate expectation which is higher than reasonable expectation, which in turn provides the justification for judicial intervention. ( 27 ) APART from the fact that the grasilene division is indeed a distinct and separate entity belonging to the petitioner company, I am of the clear opinion that annexures 'f and 'h' deserve to be quashed since there is no bar for grant of subsidy under the original scheme to a company which is not a separate legal entity and also for the reason that such a new condition cannot be read into the scheme which was in vogue over a considerable period of time until a clarification came to be issued by the government of India on 1-5-1980 making it impermissible to grant central investment subsidy to any company which is not a separate legal entity. I also hold that the petitioner's grasilene division is entitled to grant of subsidy under Annexure-A to the extent of Rs. 15 lakhs. ( 28 ) IN support of his contention that the respondents are estopped from going behind their promise, the learned counsel for the petitioner relied on the principle laid down in M. P. Sugar Mais v State of U. P. , AIR 1979 SC 621 . On page 631 in para-8, the court observed:"this observation of lord denning clearly suggests that the parties need not be in any land of legal relationship before the transaction from which the promissory estoppel takes its origin. The doctrine would seem to apply even where there is no pre-existing legal relationship between the parties, but the promise is intended to create legal ralalions or affect a legal relationship which will arise in future. . . . . . . . . . . . . . . . . . . . . . The doctrine would seem to apply even where there is no pre-existing legal relationship between the parties, but the promise is intended to create legal ralalions or affect a legal relationship which will arise in future. . . . . . . . . . . . . . . . . . . . . . The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any pre-existing relationship between the parlies or not. "in para-19, the court said:-" when we turn to the Indian law on the subject it is heartening to find that in India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action lo the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the government and the defence based on executive necessity has been categorically negatived. "in para-24 again it was observed: "the law may, therefore, now be taken to be settled as a result of this decision, that where the government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the government would be held bound by the promise and the promise would be enforceable against the government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by article 299 of the constitution. It is elementary that in a republic governed by the Rule of law, no one, how so ever high or low, is above the law. Every one is subject to the law as fully and completely as any other and the government is no exception. It is indeed the pride of constitutional democracy and Rule of law that the government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a government, committed to the Rule of law, claim immunity from the doctrine of promissory estoppel?. . . . . . . . . . . . . :. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The most significant observation is to be found in para-33 of the ruling:-". . . THIS contention of the state is clearly unsustainable and must be rejected. We do not think it is, necessary, in order to attract the applicability of the doctrine of promissory estoppel, that the promisee, acting in reliance on the promise, should suffer any detriment. What is necessary is only that the promisee should have altered his position in reliance on the promise. This position was implicdly accepted by denning, j. , in the high trees case when the learned judge pointed out that the promise must be one 'which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made and which was in fact acted on. . . . . . . . . we do not think that in order to invoke the doctrine of promissory estoppel it is necessary for the promisee to show that he suffered detriment as a result of acting in reliance on the promise. But we may make it clear that if by detriment we mean injustice to the promisee which would result of the promisor were to recede from his promise, then detriment would certainly come in as a necessary ingredient. But we may make it clear that if by detriment we mean injustice to the promisee which would result of the promisor were to recede from his promise, then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee, if the promisor were allowed to go back on the promise. . . . . . "in the instant case, not only the petitioner relied on the promise that it would be granted central investment subsidy under the scheme announced by the central government, but also it acted upon the same and whether as a consequence of it the petitioner sustained any injury or loss is inconsequential. The principle of promissory estoppel is clearly attracted to the facts of the case and the benefit to which the petitioner is entitled cannot be with held by the respondents. ( 29 ) AS regards the claim for grant of interestat 18% per annum on the subsidy claimed by the petitioner company, I am not inclined to award interest because what is in question is grant of subsidy and not grant of liquidated or unliquidated damages. In the facts and circumstances of the case, i do not think that it is permissible to apply the Provisions of the interest act for grant of interest to the petitioner. ( 30 ) IN the result, for the fore going reasons,the writ petition is allowed and anncxures 'p and 'h' arc quashed. The respondents are directed to pay to the petitioner the subsidy under anncxurc-a to the extent of Rs. 15 lakhs only within a time limit of ninety days from the dale of receipt of a copy of this order. Writ petition allowed. --- *** --- .