V. S. KOKJE, J. ( 1 ) THE order passed in this case shall also govern the disposal of Misc. Petition No. 1559/90. The petitioner/company carries on the business of extraction of oil by the solvent extraction process. According to the petitioner they have set up a Company in Dhar Distriction in the State of Madhya Pradesh allured by a Scheme framed by the Government of India in the year 1971 for grant of subsidy to Industrial Units set up in selected backward Districts Areas, one of which was Dhar District of Madhya Pradesh. 'the Scheme was initially published in the Gazette of India, Extraordinary dated 26-8-1971. The Scheme was called 10% Central Outright Grant of Subsidy Scheme, 1971. The Scheme was amended from time to time. The amount of subsidy was also raised by amendment from 10% to 25%. The duration of the Scheme was also extended from time to time and the last such extension' extended the operative period of the Scheme up to 30/09/1988. ( 2 ) THE petitioner purchased land for its plant on 14-10-1987, constructed a factory building thereon and set up a plant and machinery. The plant was fully set up and commercial production was commended from 13-4-1988. The petitioner-company got itself registered as a Small Scale Industrial Unit with the District Industries Centre, Dhar and a permanent registration as Small Scale Industrial Unit was issued to it on 23-5-1988. Being eligible for obtaining 25% subsidy under the said Scheme, the petitioner applied for the same on 25-6-1988. The application was forwarded by the District Industries Centre, Dhar to the State Level Committee on 27-8-1989. Meanwhile, the Government of India, Ministry of Industries issued a circular dated 21-7-1989, holding that all those Units, whose cases were not decided by the State Level Committee and to whom the subsidy was not sanctioned prior to September, 1988, were not entitled to the subsidy as the Scheme had lapsed on 30/09/1988. The petitioners are aggrieved by this decision and have filed this petition, challenging the decision depriving them of grant of subsidy. ( 3 ) IN the return filed in the case the stand taken is that the Scheme having lapsed on 30/09/1988 and by which time the petitioners' case had not been sanctioned by the State Level Committee, the petitioners were not entitled to subsidy. ( 3 ) IN the return filed in the case the stand taken is that the Scheme having lapsed on 30/09/1988 and by which time the petitioners' case had not been sanctioned by the State Level Committee, the petitioners were not entitled to subsidy. ( 4 ) WE have heard Shri G. M. Chaphekar, Senior Advocate who appeared with Shri R. Saboo for the petitioners; Shri B. G. Neema, the learned standing counsel for the Union of India and Shri T. N. Singh, the learned Additional Advocate-General. It was contended on behalf of the petitioners that they had set up the industry in the backward area only because of the representation of the Union and the State Governments that 25% subsidy would be available to the Units. But for such a representation contained in the Scheme, the petitioners would not have set up the Unit in a backward District. The petitioners have now altered their position irrevocably because of the representation as now after having set up the Unit, they cannot shift it to any other convenient place. The whole calculations of the financial liability of the Unit were based on receiving 25% Investment Subsidy. On the principle of promissory estoppel, the petitioners cannot now be told that they shall not be eligible for the grant of subsidy. According to the learned counsel, all that had to be done for obtaining the subsidy had been done by the petitioners and for no fault of theirs, they are being deprived of the subsidy. According to the learned counsel all those who are eligible for grant of subsidy whether their applications were sanctioned or not by the State Level Committee prior to 30/09/1988, were entitled to receive the Central Government Subsidy despite the lapse of the Scheme on 30/09/1988. Shri Chaphekar relied on the decisions of the Supreme Court in Pournami Oil Mills v. State of Kerala, AIR 1987 SC 590 ; Assistant Commissioner Commercial Taxes, Dharwar v. Dharmendra Trading Company, AIR 1988 SC 1247 ; Manglore Chemicals and Fertilisers Ltd. v. Deputy Commissioner of Commercial Taxes, AIR 1992 SC 152 ; M/s. Pine Chemicals Ltd. v. Assessing Authority, 1992 (2) SCC 683 : (1992 AIR SCW 702); Tapti Oil Industries v. State of Maharashtra, AIR 1984 Bom 161 and Union of India v. Tobacoo Ltd. , AIR 1986 SC 806 : 1986 Tax LR 2002. ( 5 ) ON behalf of the Union of India Shri B. G. Neema, the learned standing counsel contended that once the Scheme is announced, it cannot be expected to continue perpetually. The Government has a right to revoke the Scheme as it has a right to promulgate the Scheme. According to Shri Neema, no question of promissory estoppel arose because the promise was not unconditional but was dependent upon certain conditions. One of those was sanction of the subsidy by the State Level Committee. So long as the sanction was not granted by the State Level Committee, there was no question of any entitlement to grant of subsidy. He referred to and relied on the decision reported in AIR 1984 MP 70 . At the time of argument, when the case was closed for judgement, a plain copy of the decision in M/s. Javkar Fire Works v. Union of India (a decision of High Court of Madras) was shown to us. Shri T. N. Singh, learned Addl. Advocate-General, also contended that there is no question of promissory estoppel as no unconditional promise or representation was in fact made to the petitioners. He relied on the decision of the Supreme Court in Andhra Steel Corporation Ltd. v. Andhra Pradesh State Electricity Board, 1991 (3) SCC 263 . ( 6 ) IN Pounami Oil Mill's case (supra) the Supreme Court had an occasion to consider a case where a notification granting larger tax exemption was later on replaced by another notification granting lesser exemption. The Court held that all parties before it who in response to the earlier order set up their Industries prior to the date of the subsequent notification would be entitled to the exemption extended and/or promised under the earlier order. The Court also directed that such exemption would continue for the full period of five years from the date of the commencement of production and it is only the new Industry set up after the second notification, which would not be entitled to the benefit under the final exemption order. ( 7 ) IN Asstt. Commissioner's case (Dharwar case) (supra) the Supreme Court was dealing with a case in which an earlier order prescribing the procedure for obtaining sales-tax concession was subsequently amended to narrow down the scope of concession. ( 7 ) IN Asstt. Commissioner's case (Dharwar case) (supra) the Supreme Court was dealing with a case in which an earlier order prescribing the procedure for obtaining sales-tax concession was subsequently amended to narrow down the scope of concession. Several persons claimed that they had started Industrial Units in the State on the assurance extended because of the concession granted under the earlier order. They filed writ petitions before the High Court of Karnataka claiming that the Industrial Undertaking started between 30/06/1969 when the order dated 12-6-69 came into effect and before the order dated 12-1-1977 was issued, should not be deprived of the concession given to them by the former order as the said grant of concession constituted a bar of promissory estoppel against the Government on the basis of which they had acted by starting new Industries requiring investment of considerable funds and the Government was intending to go back on that promise as it had decided to discontinue the concessions by the order dated 12-1-1977. The Karnataka High Court upheld the contention and granted the writ. The matter thus went to the Supreme Court, which found that the view taken by the High Court was correct and the doctrine of promissory estoppel applied to the case. ( 8 ) IN Pine Chemical's case (supra) it was held that a new Industry set up after the date of grant of exemption but before the date of its withdrawal is entitled to the benefit of exemption for the entire period even though the exemption was withdrawn before the expiry of that period if the principle of promissory estoppel is invokable in the circumstances of the case. It was further held that where representations were made by the Government to the entrepreneur that tax exemption and other incentives would be given to them if they set up Industry in the State and acting on the representations such entrepreneur established Industries in the State, the principle of promissory estoppel would apply and accordingly such Industrialists would be entitled to the benefit of exemption for the entire-period, as specified in the exemption order. ( 9 ) IN Manglore Chemical's case (supra) it was held that there can be no doubt that the doctrine of promissory estoppel is applicable against the Government in exercise of its Governmental or executive functions and the doctrine of executive necessity or freedom of future executive action, cannot be invoked to deny the applicability of the doctrine of promissory estoppel. It was noted by the Supreme Court that in a decision subsequent to the decision in AIR 1979 SC 621 : (1979 All LJ 368) a solitary different view from that of Motilal Sugar Mills was taken and it was held that the doctrine of promissory estoppel was not available against the exercise of the executive functions of the State and the State cannot be prevented from exercising its function under the law. After carefully considering both the decisions, the Supreme Court found that what has been laid down in Motilal Sugar Mill's case (supra) was the correct law in regard to the doctrine of promissory estoppel. ( 10 ) A decision of the Bombay High Court in Tapti Oil Industries (supra) was also emphatically relied upon by the learned counsel for the petitioner. It has been decided in that case that when a new Industrial Unit has been established in the backward area and all steps for obtaining eligibility certificate for exemption/concessions have been taken, the State Government would be compelled to abide by the representation made by it in the Scheme announced by it to give incentives for establishing new Units in the backward area. ( 11 ) IN Andhra Steel Corporation v. A. P. Electricity Board (supra) the Supreme Court was dealing with the plea that factories had been established by the affected consumers after the grant of the concession and that but for the grant the consumers would not have established their factories and, therefore, a concessional rate of electrical tariff granted by the State Government cannot subsequently be withdrawn. In the circumstances of that case, the Supreme Court held that necessary facts so as to sustain the plea of promissory estoppel was not pleaded or established and the plea based on the doctrine of legitimate expectations was not substantially established on facts. In the circumstances of that case, the Supreme Court held that necessary facts so as to sustain the plea of promissory estoppel was not pleaded or established and the plea based on the doctrine of legitimate expectations was not substantially established on facts. ( 12 ) IN view of the aforesaid case law it can not be disputed that the Government can be bound by the principles of promissory estoppel when it tries to wrigle out of the promises made by it through the announcements of Schemes for providing incentives to the entrepreneurs to open Industries in backward areas. The question, however, in this case is as to whether the Government is precluded from depriving the benefits of the Schemes to entrepreneurs who have not fulfilled all the conditions necessary for the grant of concession or incentive before the concession/incentive was withdrawn. In this case according to the respondents dis-entitlement of the petitioners is because their application was not sanctioned by the State Level Committee and the subsidy was not sanctioned or disbursed before the date on which it was withdrawn. It was contended that the initial application for grant of subsidy was received by the District Industries Center, Dhar on 22-8-1988 was incomplete. On 2-12-1988 and 4-4-1989 the petitioner was asked to cure the defects in the application. Another letter was sent in this regard on 4-5-1989. The corrected application was forwarded by the District Industries Centre, Dhar to the Joint Director, Industries, Indore on 27-5-1989. The Joint Director, Industries Indore, returned the file on 29-6-1989 to D. I. C. Dhar because in the meanwhile on 30/09/1988 the Scheme had come to an end. ( 13 ) IN Manglore Chemical's case (supra) the Supreme Court has held that the consequence of loss of exemption from tax flowing from the non-compliance of condition prescribed for eligibility for exemption would be the result if the condition was a substantive one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. ( 14 ) APPLYING this test to the present case we find that the substantive conditions for entitlement to subsidy were contained in Cl. 2 of the Manual for Central Investment Subsidy Scheme (Annexure B to the petition) which prescribed the eligibility qualifications. The essential conditions for qualifying for grant of subsidy according to the Scheme were that the Unit must be a new industrial unit engaged in manufacturing items specified in the Scheme and must be located in area specified in the Scheme. Existing Units engaged in manufacturing of items specified in the Scheme were also eligible to claim subsidy under the Scheme provided they were located in areas specified in the Scheme if such Units wanted to undertake expansion of their existing Units. Cl. 1. 3 of the Scheme declared that the Scheme had come into operation with effect from 1-10-1970 in. respect of the areas indicated in column 3 of the Part A of Annexure 2. It was also declared that the Scheme was expected to remain in operation up to the end of 5th Five Year Plan and could be extended further if considered necessary by the Government of India. The Scheme has been amended from time to time but the essential eligibility qualifications remain the same i. e. the area in which the Unit was located and the date of commencement of production of the Unit. The procedure to be followed for grant of subsidy cannot, therefore, be said to be of substance while deciding the eligibility for subsidy of a particular Unit. Thus, when the subsidy was applied for, whether or when it was sanctioned and whether or when it was disbursed will not be relevant for the purpose of deciding eligibility to the grant of subsidy. While deciding eligibility the only consideration will be whether on following the entire procedure for claiming subsidy the Unit would have got subsidy under the Scheme or not. This view is also in consonance with the principles of reasonableness and fairness because if grant. While deciding eligibility the only consideration will be whether on following the entire procedure for claiming subsidy the Unit would have got subsidy under the Scheme or not. This view is also in consonance with the principles of reasonableness and fairness because if grant. of subsidy is made dependent on the date of its sanction by the State Level Committee, Units similarly situated may get different treatment. If the application of a Unit was processed speedily and sanction was granted by the State Level Committee before withdrawal of the Scheme such Unit would receive subsidy and a Unit which has applied earlier but whose application was delayed in process of sanction and, therefore, could not be sanctioned before the date of expiry of the Scheme, such Unit would be made to suffer for no fault on its part. Similarly, if defects not substantial in character are found in an application of the Unit and the sanction of subsidy is delayed because of this, such a Unit though eligible for grant of subsidy would not get it only because its application was defective in form though not in substance. In the case before us the subsidy is being denied only on the ground that before it could be sanctioned by the Suite Level Committee, the Scheme was withdrawn by the Government. It is not the case of the respondents that the petitioner was not eligible for subsidy because of lack of essential eligibility qualifications prescribed by the Scheme. The only reason for rejection of the claim was that the application was not processed and sanctioned by the State Level Committee before the Scheme expired. For the aforesaid reasons we are of the opinion that the respondents had to consider the case of the petitioner on merits and could not have rejected the claim of the short ground that it was not sanctioned before the expiry of the scheme. ( 15 ) FINALLY, award about the decision of the Madras High Court in M/s. Javkar Fire Works' case (supra), a copy of which has been filed by the respondents after the hearing was over and the case was closed for orders. The facts are similar to the case in hand. The facts taken by the Madras High Court is that till the subsidy is sanctioned by the State Level Committee there is neither any promise nor is there any eligibility in. The facts are similar to the case in hand. The facts taken by the Madras High Court is that till the subsidy is sanctioned by the State Level Committee there is neither any promise nor is there any eligibility in. the applicant unit to claim subsidy. According to the Madras High Court mere filing of an application does not confer any right on the applicants for subsidy any right either under the Scheme or on the principles of promissory estoppel. We regret our inability to agree with this view. In our opinion, there is a definite promise held out by the respondents by declaring the Scheme that the entrepreneurs who fulfil the eligibility qualifications under the Scheme would be given subsidy. The promise does not come into being on sanction of subsidy by the State Level Committee. Sanctions of the subsidy after due processing of the application is procedure and not substantial part of the Scheme. Once the eligibility for grant of subsidy is acquired, the right to sanction also is acquired. If the State level Committee delays or denies sanction, the applicant has a right to seek judicial review of such a decision on the ground that it is arbitrary or discriminatory. Moreover, the Madras High Court seems to have missed the consequences of the view taken by it. If the grant of subsidy is made dependant on date of sanction by the State Level Committee absurd results will follow. As already pointed out if two applicants similarly situated apply on the same day but application of one is processed fast and receives sanction before the expiry of the Scheme but the other application is not processed as fast and before it is sanctioned the Scheme expires, the latter applicant shall suffer for no fault on his part. We, therefore, find ourselves unable to follow the decision of the Madras High Court. ( 16 ) FOR the aforesaid reasons, we allow this petition and direct the respondents to decide the application for grant of subsidy filed by the petitioner on merits on the basis of acquisition of eligibility qualifications before the expiry of the Scheme i. e. 30-9-1988. The applications before the expiry of the Scheme i. e. 30-9-1988. ( 16 ) FOR the aforesaid reasons, we allow this petition and direct the respondents to decide the application for grant of subsidy filed by the petitioner on merits on the basis of acquisition of eligibility qualifications before the expiry of the Scheme i. e. 30-9-1988. The applications before the expiry of the Scheme i. e. 30-9-1988. The application shall be decided within two months from today and if the applicant is found eligible, subsidy shall be paid within two months of the decision by the State Level Committee. There shall be no orders to costs of the petition. Security be refunded. Petition allowed. .