ORDER V.S. Kokje, J.--1. The order passed in this case shall also govern the disposal of' Misc. Petition No. 1559/90 2. The petitioner-company carries on that business of extraction of oil by the solvent extraction process. According to the petitioner they have set up a Company in Dhar District in that 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 the State of Madhya Pradesh. The Scheme was initially published in the Gazette of India, Extra Ordinary dated 26.8.1971. The Scheme was called 10% Central Out-right 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 30th September, 1988. 3. 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 30th September, 1988. The petitioners are aggrieved by this decision and have filed this petition, challenging the decision depriving them of grant of subsidy. 4. In the return filed in the case the stand taken is that the Scheme having lapsed on 30th Sept., 1988 and by which lime the petitioners' case had not been sanctioned by the State Level Committee, the petitioners were not entitled to subsidy. 5. 4. In the return filed in the case the stand taken is that the Scheme having lapsed on 30th Sept., 1988 and by which lime the petitioners' case had not been sanctioned by the State Level Committee, the petitioners were not entitled to subsidy. 5. 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 Government 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 irrestievably because of the representation as now after having set up the Unit, they cannot shift into 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 nut by the State Level Committee prior to 30th Sep., 1988, were entitled to receive the Central Investment Subsidy despite the lapse of the Scheme on 30th Sept., 1988. Shri Chaphekar relied on the decisions of the Supreme Court in Pournami Oil Mills v. State of Kerla & another ( 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 and others ( AIR 1992 SC 152 ). M/s. Pine Chemicals Ltd. v. Assessing Authority and Ors. (1992 (2) Supreme Court Cases 683, Tapti Oil Industries and another v. State of Maharashtra ( AIR 1984 Bom. 161 ) and Union of India & Ors. M/s. Pine Chemicals Ltd. v. Assessing Authority and Ors. (1992 (2) Supreme Court Cases 683, Tapti Oil Industries and another v. State of Maharashtra ( AIR 1984 Bom. 161 ) and Union of India & Ors. v. Tobacco Ltd., ( AIR 1986 SC 806 ). 6. 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 dependant upon certain conditions. One of these 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 or any entitlement to grant of subsidy. He referred to end relied on the decision reported in AIR 1984 MP 70 = 1984 JLJ 241 . At the time of argument, when the case was closed for judgment, a plain copy of the decision in M/s. Javkar Fire Works v. Union of India and others (a decision of High Court or 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 1991 (3) SCC 263 . 7. In Pournami Oil Mills' case (supra) the Supreme Court had an occasion to consider a case in 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 carrier order set up their industries prior to the date or 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 or rive years from the date of the commencement or production and it is only the new Industry set up after the second notification, which would not be entitled to be benefit under the final exemption order. 8. In Asstt. The Court also directed that such exemption would continue for the full period or rive years from the date of the commencement or production and it is only the new Industry set up after the second notification, which would not be entitled to be benefit under the final exemption order. 8. In Asstt. Comissioner'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 Undertakings started between 30th June, 1909 when the order dated 12.1.1977 came into effect and before the order dated 12.1.1977 was issued should not be deprived or the concession given to them by the former order as the said grant or concession constituted a bar of promissory estoppel against the Government on the basis or which they had acted by starting new Industries requiring investment or 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. 9. In Pill 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 withdrawl is entitled to the benefit of exemption for the entire period even though the exemption was withdrawn before the expiry or 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 enterprenures that tax exemptions and other incentives would be given to them if they set up Industry in the State and acting on the representations such enterprenuers established Industries in the Stale, 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. 10. 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 or future executive action, cannot be invoked to deny the applicability of the doctrine or promissory estoppel. It was noted by the Supreme Court that in a decision subsequent to the decision ( AIR 1979 SC 621 ) 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. 11. 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 exemptions/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. 12. In Andhra Steel Corporation v. A.P.P. Electricity Board and Ors. (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 concession would not haw established their factories and, therefore, a concessional rate of electrical tariff granted by the State Government cannot subsequently be withdrawn. (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 concession would not haw 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 lo sustain the plea of promissory estoppel were not pleaded or established and the plea based on the doctrine of legitimate expectations was not substantially established on facts. 13. In view of the aforesaid case law it cannot be disputed that the Government can be bound by the principles of promissory estoppel when it tries to wriggle out of the promises made by it through the announcements of Schemes for providing incentives to the enterprenuers 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 enterprenuers who have not fulfilled all the conditions necessary for till: grant of concession or incentive before the concession/incentive was withdrawn. In this case according to the respondents disentitlement of the petitioners is because their application was not sanctioned by the Suite 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 Centre, Dhar on 22.8.1988 was incomplete On 2.12.1988 and 4.4.1988 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 27.5.89. The Joint Director, Industries Indore, returned the file on 29.6.1989 to D.I.C. Dhar because in the meanwhile on 30th September, 1988 the Scheme had come to an end. 14. In Manglore Chemical's case (supra) the Supreme Court has held that the consequence of loss of exemption from tax Bowing 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. 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. 15. Applying this test to the present case we find that the substantive conditions for entitlement to subsidy were contained in clause-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 Unit wanted to undertake expansion of their existing Units. Clause 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 lo 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 un following the entire procedure for claiming subsidy the Unit would have gut subsidy under the Scheme or not. While deciding eligibility the only consideration will be whether un following the entire procedure for claiming subsidy the Unit would have gut 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 dependant on the dale of its sanction by the Stale 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 dale of expiry of the Scheme, such Unit would be made to suffer for no fault on its part. Similarly, if defects 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 un the ground that before it could be sanctioned by the State 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 eligibilily qualifications prescribed by the Scheme. The only reason for rejection of the claim was that the application was not processed and sanctioned by till: Stall: 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 on the short ground that it was nut sanctioned- before the expiry of the Scheme. 16. Finally, a word 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 respondent after the hearing was over and the case was dosed for orders. The facts arc similar to the case in hand. 16. Finally, a word 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 respondent after the hearing was over and the case was dosed for orders. The facts arc similar to the case in hand. The view 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 application unit to claim subsidy. According to the Madras High Court mere filing of an application docs 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 enterprenures 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 procedural 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 Stale 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. 17. 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. We, therefore, find ourselves unable to follow the decision of the Madras High Court. 17. 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 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 order as to costs of the petition. Security be refunded.