IFGL Refractories Ltd. v. Orissa State Financial Corporation .; 2026 INSC 18 - Art.14 Constitution - Arbitrariness -Promissory Estoppel -Bureaucratic Lethargy-
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Constitution of India - Article 14 - Arbitrariness- The State must abandon the colonial conception of itself as a sovereign dispensing benefits at its absolute discretion. Policies formulated and representations made by the State generate legitimate expectations that it will act in accordance with what it proclaims in the public domain. In the exercise of all its functions, the State is bound to act fairly and transparently, consistent with the constitutional guarantee against arbitrariness enshrined in Article 14 of the Constitution of India. Any curtailment or deprivation of the entitlements of private citizens or private business must be proportional to a requirement grounded in public interest. (Para 134)
Legal Doctrines -Promissory estoppel- The true principle of promissory estoppel seemed 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 effect 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. Where 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. This would be so irrespective of whether there is any pre-existing relationship between the parties or not. (Para 115)
Bureaucratic lethargy- If the object of formulating the industrial policy is to encourage investment, employment and growth, the bureaucratic lethargy of the State apparatus is clearly a factor which will discourage entrepreneurship. (Para 133)
Case Info
Case Details
- Case name: IFGL Refractories Ltd. v. Orissa State Financial Corporation & Ors.
- Neutral citation: 2026 INSC 18
- Coram: J.B. Pardiwala, J.; R. Mahadevan, J.
- Judgment date: 6 January 2026
Caselaws and citations
- Textile Machinery Corpn. Ltd. v. CIT, (1977) 2 SCC 368.
- CIT v. Indian Aluminium Co. Ltd., (1977) 4 SCC 598; Calcutta HC precursor (1973) 88 ITR 257.
- Bajaj Tempo Ltd. v. CIT, (1992) 3 SCC 78.
- CIT v. Orient Paper Mills Ltd., (2015) 17 SCC 305; Calcutta HC earlier (1974) 94 ITR 73.
- Gujarat Alkalies and Chemical Ltd. v. CIT, 2012 SCC OnLine Guj 1628.
- CIT v. Sociedade de Fomento Industrial (P) Ltd., 2022 SCC OnLine SC 623.
- Motilal Padampat Sugar Mills v. State of U.P., (1979) 2 SCC 409.
- Pawan Alloys & Casting (P) Ltd. v. U.P. SEB, (1997) 7 SCC 251.
- Gujarat State Financial Corpn. v. Lotus Hotels (P) Ltd., (1983) 3 SCC 379.
- National Buildings Construction Corporation v. S. Raghunathan, [2003] 1 WLR 348 (SC discussion; Indian citation).
- Monnet Ispat and Energy Ltd. v. Union of India, (2012) 11 SCC 1.
- Union of India v. Lt. Col. P.K. Choudhary, (2016) 4 SCC 236.
- Food Corporation of India v. Kamdhenu Cattle Feed Industries, (1993) 1 SCC 71.
- NOIDA Entrepreneurs Assn. v. NOIDA, (2011) 6 SCC 508.
- The State of Jharkhand v. Brahmputra Metallics Ltd., (2023) 10 SCC 634.
- English authorities discussed: Crabb v. Arun DC, [1976] 1 Ch 179; Combe v. Combe, [1951] 2 KB 215; R v. North and East Devon HA, ex p Coughlan, [2001] QB 213; Regina (Bibi) v. Newham LBC, [2002] 1 WLR 237; Regina (Reprotech) v. East Sussex CC, [2003] 1 WLR 348.
- Orissa HC: Camma Textile Industries v. State of Orissa, 1994 SCC OnLine Ori 207; Prachi Engineering Pvt. Ltd. v. State of Orissa, 1998 SCC OnLine Ori 27.
- Gujarat HC: Tata Metals and Strips Ltd. v. State of Gujarat, 1991 SCC OnLine Guj 220.
Statutes, policies, and rules referred
- Industries (Development & Regulation) Act, 1951 (First Schedule – Metallurgical Industries).
- Income Tax Act, 1922, Section 15C.
- Income Tax Act, 1961, Section 80-I.
- State Financial Corporations Act, 1951.
- Orissa Industrial Policy Resolution (IPR) 1980, 1986, 1989 (effective 01.12.1989), 1992, 1996, 2001, 2007, 2015, 2022.
- Orissa Capital Investment Subsidy Rules, 1989.
- Orissa Industrial Policy, 1989: Clauses 2.1 (Effective Date), 2.3 (Fixed Capital Investment), 2.5 (Industrial Unit), 2.7 (New Industrial Unit), 3 (Zones), 4.1 (Eligibility and “all incentives”), 4.4 (once-only for E/M/D; later amended on 30.10.2008 to impose overall limit for E/M/D), 5.1 (Capital Investment Subsidy rates and caps), 11.4.4 (DG set subsidy 15% up to Rs 5 lakh; in addition to CIS), 20.1 (operational guidelines).
- Instruction letter dated 28.10.1994 issued under Clause 20.1 (overall financial limit for CIS claims in E/M/D).
- Amendment notification dated 30.10.2008 (retrospective insertion clarifying overall limits for E/M/D claims).
- Constitutional reference: Article 14 (non-arbitrariness) and Article 12 (State instrumentality).
