Supreme Court Holds That a Separate Manufacturing Unit Set Up After Policy Cut-Off Qualifies as a New Industrial Unit Eligible for Subsidy

Case Name: IFGL Refractories Ltd. v. Orissa State Financial Corporation & Ors.
Citation: 2026 INSC 18
Date of Judgment/Order: 06 January 2026
Bench: Justice J.B. Pardiwala and Justice K.V. Viswanathan

Held: The Supreme Court held that a manufacturing unit set up with fresh fixed capital investment after the effective date of the Orissa Industrial Policy, 1989 qualifies as a “new industrial unit” under the policy, and once such status is recognized and subsidies are sanctioned, the State authorities are not justified in denying disbursement on the basis of prior subsidy limits applicable to earlier or different units.

Summary: The dispute arose from the refusal of Odisha authorities to disburse capital investment subsidy and DG set subsidy sanctioned in 2003 for the Magneco Metrel Plant of Indo Flogates, which had subsequently amalgamated with IFGL Refractories Ltd. The authorities contended that both companies had already exhausted the maximum subsidy limits under earlier industrial policies and that incentives could be granted only once. The Supreme Court examined the definitions of “industrial unit” and “new industrial unit” under the Industrial Policy of 1989, analyzed the factual matrix showing separate registration, fresh capital investment, and independent commercial production of the MM Plant after the policy’s effective date, and relied on settled principles that expansion of business does not negate the existence of a new and distinct industrial undertaking. The Court also considered the conduct of the authorities in classifying the unit as new and sanctioning subsidies, giving rise to legitimate expectation and estoppel against subsequent denial.

Decision: The appeal was allowed, the judgment of the Orissa High Court dated 07.12.2018 was set aside, and the rejection of disbursement of the sanctioned capital investment subsidy and DG set subsidy was quashed, with directions to release the sanctioned amounts in favour of the appellant as the lawful successor to the eligible new industrial unit.