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PETITIONER: STATE OF HIMACHAL PRADESH & ORS.ETC.

       Vs.

RESPONDENT: GANESH WOOD PRODUCTS & ORS.ETC.

DATE OF JUDGMENT11/09/1995

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) MUKHERJEE M.K. (J)

CITATION:  1996 AIR  149            1995 SCC  (6) 363  JT 1995 (6)   485        1995 SCALE  (5)303

ACT:

HEADNOTE:

JUDGMENT:                       JUDGMENT B.P.JEEVAN REDDY.J.      Leave granted. Heard counsel for the parties.      These appeals  arise from  a judgment  of the  Himachal Pradesh  High   Court  disposing  of  eight  writ  petitions together.      Katha is a necessary ingredient in pan and pan masalas. Katha is derived from the khair tree. The central portion of the tree  is used for this purpose. These trees are found in considerable number  in the  State of Himachal Pradesh. They are also found in other States but it appears that one after the other,  various States  have banned the cutting of khair trees, with  the result  that those intending to manufacture katha have  been flocking  to Himachal Pradesh over the last few years.      Till the year 1975, katha was being manufactured in the State of  Himachal Pradesh  only by ’bhattiwalas’. Since the manufacture of  katha requires extremely cold conditions, it is stated,  the manufacture of katha was being undertaken in bhatties only  during the  winter season.  In the year 1975, however, a  mechanised unit  was established in the State by Shankar Trading  Company for  the manufacture  of katha. The manufacture  of  katha  can  go  on  round  the  year  in  a mechanised unit.  The mechanised  unit consumes  far  larger quantities of khair wood than all the bhatties put together.      Himachal Pradesh  is an  industrially  backward  State. Like other  States, it  too has  been evolving  schemes  for encouraging  the   industrialisation  of  the  State.  By  a Notification dated  May 13,  1974, the  Governor of Himachal Pradesh established  the Industrial  Projects  Approval  and Review Authority  (IPARA) comprising  Chief Secretary to the Government, Secretaries  to the  Departments of Multipurpose Projects and  Power, Public  Works, Industries  and  Finance besides Chairman  of the  Himachal Pradesh State Electricity Board, Chief  Conservator of Forests, Chief Engineer, P.W.D.

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and the  Director of  Industries. The terms of reference and the activities  to be undertaken by the IPARA were specified as under :      "(i) To  act  as  the  focal  point  for      dissemination of  information  regarding      programmes of  Government assistance and      incentives to entrepreneurs.      (ii) To  receive   all  application  for      setting up  of factories  in medium  and      large scale sector.      (iii)     To  process  the  applications      for establishment  of new industries and      select projects for Government approval.      (iv) To arrange all necessary assistance      required     for      the     successful      implementation of approved projects from      various Govt.  Departments and to act as      the channel  of correspondence  and  the      coordinating    agency    between    the      entrepreneurs  and   various   concerned      Govt. Departments.      (v)  To review  the progress of approved      projects.      (vi) To recommend  necessary changes  in      the    Government    policy    regarding      Industrial Development  in the  light of      experience gained.      (vii)  Such   other   matters   as   the      Government may  refer of delegate to the      Authority from time to time."                              (Emphasis added)      On  November  29,  1990  IPARA  was  abolished  by  the Government. It  appears  to  have  been  revived  later.  By Notification dated September 3, 1993, the President of India (Himachal Pradesh  was  then  under  the  President’s  rule) reconstituted IPARA  with a  more expansive  membership. The terms of  reference and  the activities  to be undertaken by the IPARA,  however, remained  the same as were contained in the Notification  dated May  13, 1977.  It  is  stated  that during the  period IPARA  was not in existence, the Director of Industries, Himachal Pradesh was looking after that work. Applications   received    from   entrepreneurs    proposing establishment of  industrial units  in Himachal Pradesh were being processed  in the first instance by IPARA - and during the period  when IPARA was not in existence, by the Director of Industries.      Several units  applied to  IPARA/Director of Industries during the  years  1992  and  1993  proposing  to  establish mechanised units  for manufacturing  katha. In  all, fifteen units applied  but we  are concerned  only with  eight  such units in  these appeals.  We  shall,  therefore,  state  the particulars with respect to these eight units only:      As indicated  in the  Table, the  applications made  by these units  were considered  by the sub-committee of IPARA, which granted  "approval" to  all the  applicants. Since the said "approval"  was supposed  to be  provisional in nature, all the  proposals were  put  up  for  fuller  consideration before the  full committee  of IPARA. The full committee met on August  28,  1993  and  decided  to  recommend  units  at S1.Nos.1 to  3 and  5 to  7 for  government’s  approval.  It rejected the  proposals of  others including  the  units  at S1.Nos.4 and  8 in  the Table on the ground that they failed to take  any steps  to set up the factories pursuant to sub- committee’s approval. The matter was then placed before H.E. The Governor.

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    Out of  the said  six units, only the first three units have been  approved by the Governor. In the case of units at S1.Nos.5 to  7, the  Governor has  declined to approve. This decision was  taken by  the Governor  of Himachal Pradesh on September 15,  1993. The proceedings of the meeting of IPARA held on  August 28,  1993 and the order of H.E. The Governor have been  placed before us. (Himachal Pradesh was under the President’s rule then.)      Just about  the  time  the  Governor  (government)  was taking his  decision, Writ  Petition No.1455 of 1993 came to be filed  by Sri Yogendra Chandra, M.L.A. for issuance of an appropriate writ  restraining the government from permitting the establishment  of any  katha units  in the  State on the ground that  such establishment would lead to indiscriminate felling of  khair trees  which would have a deep and adverse effect upon  the environment  and ecology  of the  State. He submitted that  the raw  material  available  in  the  State (khair trees)  for manufacturing  katha is not sufficient to sustain the  proposed industries,  as  many  as  fifteen  in number, and  hence no  permission should  be granted for new units.  Soon   afterwards,  Shankar   Trading  Company,  the existing mechanised  unit, filed  Writ Petition  No.1475  of 1973 for  an appropriate  writ restraining the Government of Himachal Pradesh  from granting permission for establishment of any  new  unit  on  the  ground  that  the  raw  material available in  the State  is not  adequate to sustain any new units. According to this petitioner, the entire raw material available is  hardly sufficient  to meet its own requirement and the  requirement  of  bhattiwalas.  It  relied  upon  an agreement entered  into  with  the  Government  of  Himachal Pradesh  whereunder   fifty  percent  of  the  raw  material extracted in a year has to be sold to it.      Soon after  the Governor’s  decision aforementioned was communicated to  the concerned parties, three writ petitions came to  be filed  by the  units at  S1.Nos.5 to  7  in  the aforementioned Table, viz., Writ Petition No.1576 of 1993 by Dev Bhoomi  Industries, Writ  Petition No.  1590 of  1993 by Ganesh Wood  Products and  Writ Petition  No.145 of  1994 by Naman Wood  Products. Two  other Writ  Petitions, No.1479 of 1994 and  611 of 1994 were filed by Indian Wood Products and Chander Katha  Products. There was yet another writ petition (1489 of  1993) filed by one Ved Prakash espousing the cause of Bhattiwalas.      After hearing  the parties  and perusing  the  relevant records, the  High Court dismissed Writ Petition Nos.1455 of 1993 and  1475 of  1993 filed  by Sri  Yogendra Chandra  and Shankar  Trading   Company  respectively.  It  allowed  Writ Petition Nos.1576  of 1993, 1590 of 1993 and 145 of 1994 and quashed the  orders of the Government refusing permission to these three  persons to establish their units. So far as the writ petitions  filed by  Indian Wood  Products and  Chander Katha Industries (Writ Petition Nos. 1479 of 1993 and 611 of 1994) are  concerned, they  were allowed with a direction to the authorities of the State to reconsider their case in the light of  the observations  made in  the judgment. S.L.P.(C) Nos.12754-58 of  1995 are preferred by the State of Himachal Pradesh, S.L.P.(C) No.11082 of 1995 is preferred by Yogendra Chandra and  S.L.P.(C) Nos.11086-11089  of 1995  by  Shankar Trading Company against the judgment of the High Court.      The learned  Additional  Solicitor  General,  Sri  V.R. Reddy,  submitted   that  the  provisional  registration  or "approval", as  it is  called by  IPARA, did  not confer any right upon  any of the units inasmuch as the said "approval" was  subject  to  final  approval  by  the  government.  The Governor has  taken into  consideration the  availability of

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raw material in the State and arrived at the conclusion that it can  sustain only  three units  viz., Doon  Katha, Orient Herbs and  Sagar Katha  besides the  existing one.  Of these three  units,   Doon  Katha   is  a  very  small  unit;  its consumption is  almost as much as that of a bhatti. Thus, in truth, only  two units  have been permitted. It is true that the IPARA recommended the case of six units, viz., the three units  aforesaid   and  Ganesh  Wood  Products,  Naman  Wood Products and  Dev Bhoomi Industries but the Governor did not agree with  the said  recommendation and  selected the first three  units  applying  the  principle  ’first  come,  first served’. No  valid objection  can be  taken to the orders of the government  since they  are conceived in public interest keeping in  view the  availability of  the raw material. The learned Additional Solicitor General submitted that the High Court exceeded  the  well  recognised  constraints  of  writ jurisdiction in  taking upon itself the determination of the availability of  raw material and on that basis quashing the orders of the government.      Sri K.  Madhava Reddy, learned counsel for Sri Yogendra Chandra submitted  that the  High Court was not justified in holding  that  the  appellant  Yogendra  Chandra  cannot  be "accepted as  a public  spirited  citizen  approaching  this Court to protect the public interest", merely because he was not able  to place before the Court reliable data in support of his  allegation of  illicit felling of trees in the past. Learned counsel  contended that  while rightly  holding that there was  no evidence of collusion between Yogendra Chandra and  Shankar   Trading  Company,  the  Court  erred  in  not entertaining his writ petition as a bonafide public interest litigation.      Sri P.P.  Rao, learned  counsel appearing  for  Shankar Trading Company submitted that the raw material available in the State  is not  sufficient to feed any new units and that this fact  has been  repeatedly brought to the notice of the government by  the Chief Conservator of Forests, who must be deemed to  be the  person fully  aware of the true situation regarding the  availability of raw material. Learned counsel submitted that  the permission  granted to  the  respondent- units is in violation of the provisions of several statutes, both Central and State.      Sri Dushyant Dave, learned counsel appearing for Ganesh Wood Products  (one of  the respondents  in  these  appeals) submitted that  after the introduction of the New Industrial Policy (Liberalisation  Policy) and the notifications issued in that behalf by the Government of India, a citizen of this country  has  an  unquestioned  and  an  absolute  right  to establish a  small-scale industry  at any time, at any place and of  whatever capacity  he may  choose. He submitted that Katha industry  is not  governed by  Industries  Development (Regulation) Act,  1951, (I.D.R.Act)  hence  no  licence  or permission is  necessary from the authorities under the said Act for  establishing a  katha factory, more so in the small scale sector.  The government’s  duty is  merely to register the units  being set  up. It  is bound  to register  any and every application  for establishing  a small-scale  industry and it  has no  power to  cancel, revoke  or disapprove such registration. Learned  counsel submitted further that on the basis of  approval granted  by IPARA, the government granted registration to  Ganesh Wood  Products on  June 21, 1993 and has communicated  the same  to it.  Indeed, by  a subsequent communication  dated   18th  August,  1993,  the  government restricted its  capacity  to  3600  metric  tons  (2400  cu. meters). Even the full IPARA meeting held on August 28, 1993 recommended the  case of Ganesh Wood Products. The rejection

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by the  Governor is  based on  no reasons and is, therefore, liable to  be set  aside as  an arbitrary  decision. Learned counsel relied  upon certain  material  in  support  of  his proposition that  the particulars  of raw material available in the State is more than sufficient to sustain not only the three units  permitted by  the Governor  but also  the three units recommended by the IPARA in its meeting held on August 28, 1993.  He  submitted  that  bonafides  of  Sri  Yogendra Chandra are  suspect and  that he  has been put up really by Shankar Trading  Company. So  far as Shankar Trading Company is concerned,  the learned  counsel  submitted  that  it  is seeking to  merely ensure  that all  the raw material in the State is  reserved for  itself by excluding all other units. It is  submitted that  in the  interest of  growers of khair trees and  in the  interest  of  public  and  the  State  of Himachal Pradesh, new units must be allowed to come up.      Sri Gopal  Subramaniam, learned  counsel for Dev Bhoomi (another   respondent   in   these   appeals)   urged   four contentions: 1.   that the  order of  the Governor made without notice to affected parties  is in  violation of  principles of natural justice since  no notice  was given  to them before refusing approval;. 2.   that the  High Court  was justified  in going  into the merits of  the case  and quashing the orders of the Governor on merits  in the  particular facts and circumstances of the case; 3.   that the  State Government  is  not  without  power  to regulate the  supplies of  raw material  in case it think it necessary  or   expedient.  There   are  enough   enactments empowering it to do so; 4.   The recommendations  of IPARA  made in its meeting held on August  28, 1993  were considered  decisions  arrived  at after taking  into consideration  all aspects of the matter. It applied  a legitimate  criteria in  diseinguishing Ganesh Wood Products, Naman Wood Products and Dev Bhoomi Industries from others.  IPARA was  of the  opinion that  no new  units should be  permitted but those units that have already acted upon the approval granted by IPARA should be allowed to come up and  function. The  Governor’s action  is devoid  of  any reasons.  The  alleged  protests  of  Chief  Conservator  of Forests contained  in his  letters are of no significance in view of  the fact  that though  he was a member of IPARA, he never recorded  his protest  to any of the approvals granted to several units.      Learned counsel  further pointed  out that  khair trees were included in the Schedule to the Himachal Pradesh Forest Produce (Regulation  of Trade)  Act,  1982  by  Notification dated April  30, 1991  but that  the  same  was  deleted  by another Notification  issued on  November 18,  1991. In this view of  the matter,  the  learned  counsel  contended,  the Governor’s action is unsustainable in law.      Mrs.Roxana Swamy,  learned counsel  appearing  for  the Naman  Wood  Products  (another  respondent)  supported  the contentions of Sri Dave and Sri Gopal Subramaniam.      Sri Arun  Jaitley, learned counsel appearing for Indian Wood Products  and the  learned counsel  for  Chandra  Katha respectively (respondents) submitted that they too had acted upon  the  approval  granted  by  IPARA  and  have  invested substantial amounts in acquiring the land and setting up the units and  if only  they had been given an opportunity, they would have  established their contention. They supported the submissions of Sri Gopal Subramaniam and Sri Dave.      Sri Dholakia  and Sri  M.S.Ganesh appearing  for  Sagar Katha  (yet   another  respondent)   disputed  the   several

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contentions raised by the learned counsel for the appellants and  submitted   that  the   Governor  has  rightly  granted permission to  Sagar Katha  and that there are absolutely no grounds to  interfere with  the  same  at  the  instance  of Yogendra   Chandra   or   Shankar   Trading   Company.   Sri Balakrishnan, learned  counsel  for  Orient  Herbs  advanced submissions on the same lines.      LAW APPLICABLE:      Katha industry is not in the schedule to the Industries Development and  Regulation Act.  The provisions  regulating the establishment  of industries  contained in the said Act, therefore, have no application to this industry. There is no corresponding enactment made by the legislature of the State of  Himachal   Pradesh  governing   the   establishment   of industries similar  to I.D.R.  Act. At  the  same  time,  by virtue of Entry 24 of List-II of the Seventh Schedule to the Constitution,  "industries"-  subject,  of  course,  to  the provisions of  Entries 7  and 52  of List-I  - is  a  matter within the  exclusive province of the States. In the absence of an enactment, the executive power of the State extends to the said subject matter [Rai Sahib Ram Jawaya Kapur And Ors. v. State  of Punjab  (1955  (2)  S.C.R.225)].  The  Himachal Pradesh Government  has not only evolved a forest policy but has also  framed certain guidelines with a view to encourage the industrialisation  of  the  State.  It  has  constituted IPARA, as  far back  as 1974,  with the  same  purpose.  The functions  of   the  said   authority  have  been  the  same throughout,  viz.,   to  act   as  the   focal   point   for dissemination  of   information  regarding   programmes   of government  assistance   and  incentives   to  entrepreneurs generally. In  particular, it  is empowered "(ii) to receive all applications  for setting  up of factories in medium and large scale sector and (iii) to process the applications for establishment of  new industries  and  select  projects  for government approval".  Indubitably, clause  (iii)  takes  in industries in  small scale  sector as well. The authority is further required  "(iv) to  arrange all necessary assistance required for  the successful  implementation of the approved projects from  various government  departments and to act as the channel of correspondence and as the coordinating agency between the  entrepreneurs and  various concerned government departments". In  short, this  authority is  to act  as  the nodal agency.  It is also expected to review the progress of approved projects  and to  recommend  necessary  changes  in government policy  regarding industrial  development in  the light of experience gained.      We may  reiterate that  IPARA is  not established under any statutory  provision and its acts and proceedings do not have any  statutory sanction.  The idea  is to encourage new industries and  to provide necessary assistance to them. The more relevant  function of  the authority  from the point of view of the controversy herein is the power, or function, as it  may   be  called,   "to  process  the  applications  for establishment of  new industries  and  select  projects  for government approval".  This clause  makes it  clear that the function of  the authority was not to grant approval for any new industry  but only  to process their applications and to select projects  for government’s  consideration; it was for the government  to approve  them. It  is equally relevant to note that  the Notifications  constituting or reconstituting the IPARA  do not  say anywhere  that  no  industry  can  be established  unless  it  applies  to  IPARA  or  unless  its application is  processed by  IPARA, nor  do they  say  that unless approved  by  the  Government,  no  industry  can  be established in  the State.  This means that if there are any

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enactments  or  other  statutory  provisions  governing  the establishment of  industries, they  have to be complied with by the  intending entrepreneurs. The IPARA or the Government of Himachal  Pradesh propose neither add to those provisions nor do they purport to detract therefrom.      Evidently because it was in their interest, the fifteen units proposing  to establish  katha factories  in  Himachal Pradesh (including  the units  concerned in  this  batch  of appeals) applied  to IPARA - and during the period the IPARA was not  in existence,  to the  Director of Industries - for approval of  their projects.  They knew  full well  that  if their applications are approved by the government, they will have several  advantages in  the matter  of acquiring  land, obtaining power  connection, obtaining water supplies and in various other  matters relevant  to successful establishment and running  of the  industry. Now, it cannot be denied that the power  to approve includes the power to decline approval and the  power to  disapprove. And  that  is  all  that  has happened now.  The Government of Himachal Pradesh has chosen to approve  only three  units, viz., Doon Katha, Sagar Katha and Orient  Herbs and  it has  refused to  approve the  rest including Ganesh  Wood Products, Naman Wood Products and Dev Bhoomi Industries  (Hari Krishan).  So far  as  Indian  Wood Products and  Chander Katha  Products are  concerned,  their cases were  not even  put up to the government because their cases were rejected even by the IPARA. When this is done, it is argued by learned counsel, Sri Dave, appearing for Ganesh Wood Products  that the  government has  no power to decline the approval  or  to  disapprove  the  provisional  approval granted  by   IPARA.  Learned  counsel  contended  that  the government can  only register  an unit  but  it  cannot  de- register it  nor can  it refuse  to register  it. We  cannot agree. The notifications constituting IPARA, whether of 1974 or of  1993, do  not speak  of  registering  any  unit.  The argument of  the learned  counsel, therefore, means that any and every application for establishment of new industry must necessarily be  approved by  the  government  and  that  the government has  no power  to refuse  to approve  nor can  it disapprove any  provisional approval granted earlier. We are unable to  understand or  appreciate the  logic behind  this argument,  more   particularly,  in   view  of  the  further contention of  the learned counsel that since the I.D.R. Act does not  govern the establishment of this industry and also because of  the  liberalisation  policy  introduced  by  the Central Government  in 1991,  no permission of any authority whatsoever is  required for  establishing the katha industry in small  scale sector.  If the  contention of  the  learned counsel is that by virtue of the liberalisation policy or by virtue of  the position  of law  obtaining as  on today - as understood by  him -  a  citizen  of  this  country  has  an absolute and  unbridled freedom to establish any small scale industry anywhere  in the  country, he is free to do so. The impugned order  of the  government  does  not  say  that  he cannot. It  does not  prohibit  him  from  establishing  the industry. All  that the  government says, and means, is that if any  one  wants  to  come  to  it  or  to  the  authority established by  it, viz.,  IPARA, for  approval then he must submit to  the regimen established by the government in that behalf and to its policies. While approving the projects, it is certainly  open to  the government  to  say  that  having regard to  the availability of the raw material it shall not approve  more  than  a  particular  number  of  units  in  a particular industry  or of  more than a particular capacity. It is entitled to say that the available raw material in the State should  be exploited  in an  even and  balanced manner

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keeping in  mind the availability of the raw material in the years to come. It is entitled to make an estimate of the raw material available  from the government sources as also from the private  sources  and  say  that  the  raw  material  so available can feed only so many industries and no more.      We may  make it  clear that we do not approve or accept the contention  urged by  Sri Dave that as on today there is no law  preventing any person from establishing any industry anywhere so  long as  it is  not governed by the I.D.R. Act. That question  does not  arise in  these writ  petitions and appeals. All that we have stated is that if that is what any person thinks,  it is  for  him  to  act  according  to  his conviction and take the consequences, if any, of his action.      In short,  the position  is this: the impugned order of the Government  of Himachal Pradesh (made by the Governor of Himachal Pradesh)  on September  3, 1993 is not traceable to any statutory  provision or  statutory power.  It is made in exercise  of  its  executive  power.  While  acting  in  its executive capacity,  the government  is entitled to lay down policies and  preferences in  the  interest  of  State,  its economy and  keeping in  view the  National  Forest  Policy, Himachal Pradesh  Forest Policy  and the  Central and  State enactments relevant  in that  behalf. The only obligation of the State  in such  an event  would be  to extend a fair and equitable treatment  to all persons coming before it. Having approached the  IPARA and  the government  for approval, the respondents (persons intending to set up katha units) cannot - when the approval is refused - turn round and say that the government has  no power  to refuse approval. They cannot be heard to  say so.  It is  not as if - be it reiterated - the government  has   prohibited  the   said  respondents   from establishing their  factories in the State. The approval and non-approval  or  disapproval,  as  it  may  be  called,  is administrative in  nature. If anyone wishes to seek approval from the  government, he  has to  abide by  the government’s policies  and  guidelines  evolved  or  enunciated  in  that behalf.      Lest our observations hereinabove may be misunderstood, we may  mention a  few of the enactments - without trying to be exhaustive  - governing the establishment of forest-based industries, whether  small  scale,  medium  scale  or  large scale. They are:      "Central Acts:      1.   Wildlife Protection Act, 1972.      2.   The Water  (Prevention and  Control      of Pollution) Act, 1974 (amended in 1978      1988 and later).      3.   The Forest (Conservation) Act, 1980      (as amended in 1988).      4.   The Air  (Prevention and Control of      Pollution)  Act,  1981  (as  amended  in      1988).      5.   The Environment  (Protection)  Act,      1986.      6.   The  Industries   Development   and      Regulation Act,  1951 (as  amended  from      time to  time) -  to the  extent  it  is      applicable.      HIMACHAL PRADESH ENACTMENTS:      1.   The H.P. Private Forests Act, 1954.      2.   The H.P. Land Preservation Act,      1978 and the Rules made thereunder.      3.   The Himachal Pradesh Forest Produce      (Regulation of Trade) Act, 1982.      4.   Various Municipal/Panchayat and

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    Development Acts, wherever applicable."      While we  do not  think it necessary to refer to all of them, it  would be sufficient to refer to certain provisions of the Environment (Protection) Act, 1986 and the rules made thereunder and  to  refer  briefly  to  the  scheme  of  the Himachal Pradesh enactments. The preamble to the Environment (Protection) Act reads:      "An Act to provide for the protection      and improvement of environment and for      matters connacted therewith.      Whereas decisions were taken at the      United Nations Conference on the Human      Environment held at Stockholm in June,      1972, in which India participated, to      take appropriate steps for the      protection and improvement of human      environment;      And whereas it is considered necessary      further to implement the decisions      aforesaid in so far as they relate to      the protection and improvement of      environment and the prevention of      hazards to human beings, other living      creatures, plants and property."      Clause  (a)   of  Section   2  defines  the  expression "environment" in  a comprehensive  manner  to  take  in  all factors  affecting  environment  including  preservation  of forests. It reads:      "’Environment’ includes water, air and      land and the inter-relationship which      exists among and between water, air and      land, and human beings, other living      creatures, plants, micro-organism and      property."      Section 3  empowers the Central Government "to take all such measures  as it  deems necessary  or expedient  for the purpose of  protecting and  improving  the  quality  of  the environment  and   preventing,   controlling   and   abating environmental  pollution".  Sub-section  (2)  of  Section  3 elaborates the powers of the Central Government. It says:      "(2) In    particular,    and    without      prejudice  to   the  generality  of  the      provisions  of   sub-section  (1),  such      measures  may   include  measures   with      respect to  all or  any of the following      matters, namely:-      (ii) Planning and execution of a nation-      wide  programme   for  the   prevention,      control and  abatement of  environmental      pollution;      (iii)     laying down  standards for the      quality of  environment in  its  various      aspects;      (v)  restriction of  areas in  which any      industries, operations  or processes  or      class  of   industries,  operations   or      processes shall  not be  carried out  or      shall be  carried out subject to certain      safeguards;....."      Section 6 confers upon the Central Government the power to make  rules in  respect of  all or  any  of  the  matters referred to  in Section  3. Section 6(2) (e), in particular, empowers the  Central Government to make rules providing for "(e) the  prohibition and  restrictions on  the location  of industries and  the carrying  on of processes and operations

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in different areas".      Rules have been framed under the Act. Rule 5 deals with "(P)rohibition and restriction on the location of industries and the  carrying on  processes and  operations in different areas". Sub-rule  (1) of  Rule 5, insofar as it is relevant, may be quoted:      "(1) The  Central  Government  may  take      into consideration the following factors      while  prohibiting  or  restricting  the      location of  industries are  carrying on      of processes and operations in different      areas.......      (iv) The   topographic    and   climatic      features of an area.      (v)  The  biological  diversity  of  the      area  which,   in  the  opinion  of  the      Central   Government    needs   to    be      preserved.      (vi) Environmentally   compatible   land      use.      (vii)     Net   adverse    environmental      impact  likely   to  be   caused  by  an      industry, process  or operation proposed      to be prohibited or restricted."      These provisions  establish and  emphasise the power of the  Central   Government  to   regulate  the   location  of industries which  also includes  the power to prohibit their establishment as  well.  Having  regard  to  the  objectives underlying the  Act and  the alarming  diminution of  forest cover  in   the  country,  the  said  provisions  should  be understood not  so much  as conferring powers on the Central Government but as creating an obligation upon it to exercise those powers  for achieving  the objectives  underlying  the Act. It  is absolutely essential that the Central Government issues orders  under and  as contemplated  by Rule 5, if not already issued.      The Himachal  Pradesh  Forest  Produce  (Regulation  of Trade) Act,  1982 contains  elaborate provisions  regulating sale,  purchase,   transfer  and  trade  of  forest  produce including the  forest produce  from private lands. It is, of course, true  that khair  trees were  first included  in the Schedule to  the Act  in April  1991 and deleted in November 1991, but  it can  always be included in the schedule again, if the  government thinks  it necessary,  as contemplated by Section 18  of the  Act. The Act permits government monopoly in the matter of sale of forest produce covered by the Act.      The  Himachal   Pradesh  Land  Preservation  Act,  1978 confers extensive  powers to  regulate,  restrict,  prohibit cutting of  trees and  their removal from notified areas. So does the  Himachal Pradesh Private Forests Act, 1955 contain elaborate provisions  empowering  the  State  Government  to prohibit the  cutting and felling the trees in the specified private forests. The provisions of these Acts have a crucial bearing on  the establishment  and running  of forest  based industries.           THE SIGNIFICANCE OF FOREST WEALTH AND           ITS IMPACT ON ENVIRONMENT AND ECOLOGY:      It is  well  to  remember  that  manufacture  of  katha requires cutting of khair trees. Only the central portion of the trunk  of the  tree is used for the manufacture of katha and the  rest is  of no  use except perhaps as firewood. The more the  number of industries, the more pressure there will be for  cutting these  trees. Himachal  Pradesh  is  a  hill State. The  considerations of  environment and  ecology  and preservation  of   forest  wealth  are  absolutely  relevant

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considerations which  the government must keep in mind while devising its policies and programmes. A brief examination of the importance  and the  fundamental significance of forests in the  matter of  environment and ecology would be in order at this juncture.      The report  of the "World Commission on Environment and Development" constituted  by the  United Nations and chaired by the  then Prime Minister of Norway, Gro Harlem Brundtland contains certain  facts and  warnings which  are relevant to the present context. We may refer to a few of them: *----------------------------------------------------------- The excerpts  are drawn  from the  book "Our  Common Future: World Commission  on Environment  and Development" published by Oxford University Press in 1987. India was represented on this Commission  by its  representative Sri  Nagendra Singh. The Report was sutmitted in the year, 1987.      "There has  been  a  growing  realisation  in  national governments  and   multilateral  institutions   that  it  is impossible to  separate  economic  development  issues  from environment issues;  many forms  of  development  erode  the environmental resources  upon which  they must be based, and environmental    degradation    can    undermine    economic development. Poverty  is a  major cause and effect of global environmental problems. It is therefore futile to attempt to deal  with   environmental  problems   without   a   broader perspective that  encompasses the  factors underlying  world poverty and international inequality.......... ....many present development trends leave increasing numbers of people  poor and  vulnerable,  while  at  the  same  time degrading the  environment. How  can such  development serve next century’s  world of twice as many people relying on the same environment? ....More than  90 per  cent of  the increase (in population) will occur in the poorest countries.....      Meanwhile,  the  industries  most  heavily  reliant  on environmental  resources  and  most  heavily  polluting  are growing most repidly in the developing world, where there is both more  urgency for  growth and less capacity to minimize damaging side effects.......Ecology and economy are becoming ever more  interwoven - locally, regionally, nationally, and globally - into a seamless net of causes and effects.......      The other  great  institutional  flaw  in  coping  with environment/development challenges  is governments’  failure to  make   the  bodies  whose  policy  actions  degrade  the environment responsible  for ensuring  that  their  policies prevent that degradation."      In  Chapter   -12  entitled   "Towards  Common  Action: Proposals  for   Institutional  and   Legal   Change",   the Commission states, inter alia, that: "developing    countries     face    the    challenges    of desertification, deforestation,  and pollution,  and  endure most  of   the   poverty   associated   with   environmental degradation......The next  few decades  are crucial  for the future  of   humanity.  Pressures  on  the  planet  are  now unprecedented and  are accelerating  at rates and scales new to human  experience: a  doubling of  global population in a few decades,  with most  of the  growth in cities; a five to ten fold  increase in  economic activity in less than half a century; and  the resulting pressures for growth and changes in   agricultural,    energy,   and    industrial   systems. Opportunities for  more  sustainable  forms  of  growth  and development  are   also  growing.   New   technologies   and potentially unlimited  access  to  information  offer  great promise.......Environmental   protection   and   sustainable development must  be an integral part of the mandates of all

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agencies of governments, of international organizations, and of major  private-sector institutions.  These must  be  made responsible  and   accountable  for   ensuring  that   their policies, programmes,  and  budgets  encourage  and  support activities   that    are   economically   and   ecologically sustainable both in the short and longer terms."      Similar views  were expressed  at  the  United  Nations Conference on  the Human  Environment held at Stockholm from June 5th  to 16th,  1972. We do not, however, wish to burden this judgment with them. Suffice to refer to Article 51-A of our Constitution  which makes  it a duty of every citizen to protect  and   improve  the  natural  environment  including forests, lakes,  rivers and  wildlife and to have compassion for living creatures.      While the  effects  of  unthinking  and  indiscriminate felling  of   forests  needs  no  emphasis  at  the  present juncture, we  cannot but  quote the  following passages from the book  "Topsoil and  Civilization" by Tom Dale and Vernon Gill Carter, both highly experienced ecologists:*      "Man, whether civilised or savage, is a child of nature      - he  is not  the master of nature. He must conform his      actions to  certain natural  laws if  he is to maintain      his dominance  over his  environment. When  he tries to      circumvent the  laws of nature, he usually destroys the      natural environment  that sustains  him. And  when  his      environment  deteriorates   rapidly,  his  civilisation      declines.......      The writers of history have seldom noted the importance      of land  use. They seem not to have recognised that the      destinies of  most of  man’s empires  and civilisations      were determined  largely by  the way the land was used.      While  recognising  the  influence  of  environment  on      history, they  fail to note that man usually changed or      despoiled his environment.      How  did   civilised  man   despoil   this   favourable      environment?  He   did  it   mainly  by   depleting  or      destroying the natural ----------------------------------------------------------      *Quoted in  "Small is  beautiful - A study of economics      as if people mattered" by E.F.Schumacher.      resources. He cut down or burned most of      the   usable    timber   from   forested      hillsides and  valleys.  He  over-grazed      and denuded  the grasslands that fed his      livestock.  He   killed  most   of   the      wildlife and  much of the fish and other      water life.  He permitted erosion to rob      his farm land of its productive topsoil.      He  allowed  eroded  soil  to  clog  the      streams   and   fill   his   reservoirs,      irrigation  canals,  and  harbours  with      silt. In  many cases, he used and wasted      most of the easily mined metals or other      needed minerals.  Then his  civilisation      declined amidst  the despoilation of his      own creation  or he  moved to  new land.      There  have  been  from  ten  to  thirty      different   civilisations    that   have      followed this  road to  ruin (the number      depending   on    who   classifies   the      civilisations)."      We may  add that  in the  present-day world,  there  is hardly any  space left  for anyone to move from his place to another.      This  digression   was  necessary   to  put  in  proper

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perspective the ooligation of the State and the significance of the  concept of  "sustainable  development"  and  "inter- generational equity"*  vis-a-vis the  legal submissions made on the  basis of principles of natural justice, estoppel and so on.      A FEW MORE RELEVANT FACTS:      When  a  person  applied  for approving his project for ------------------------------------------------------------ *  Inter-generational  equity  means  the  concern  for  the generations to  come. The present generation has no right to imperil the  safety and well-being of the next generation or the generations to come thereafter. establishment of  a katha  industry,  the  sub-committee  of IPARA communicated its approval clearly envisaging that soon after receiving  the said  approval,  the  person  concerned should take immediate and effective steps for setting up the industry. We are told that all these approvals were accorded in a  prescribed proforma, one of which (addressed to Ganesh Wood Products) may be set out hereinbelow:           "NO.IND DEV.F.(34) IPARA-463/93           GOVERNMENT OF HIMACHAL PRADESH           ’DIRECTORATE OF INDUSTRIES’      Dated: Shimla - 171002 The 21.6.1993      To            M/s Ganesh Wood Products,            108-109/215, Katha Paren,            Tilak Bazar, Delhi - 110006.      Subject: APPROVAL OF PROJECT BY IPARA.      Dear Sir,           We have the pleasure to inform you      that your application dated 11/6/93 for      the approval of your project has been      cleared by IPARA Sub-Committee meeting      held on 16/6/1993 for the setting up of      new Industrial Undertaking at Sansarpur      Terrace District Kangra in the State of      Himachal Pradesh for the manufacture of      following items:-      ----------------------------------------      S.NO.  ITEM OF MANUFACTURE   PROPOSED                                   ANNUAL                                   CAPACITY      ----------------------------------------      Acacia Catechu Extract       240 MT.      Bye Products (Cutch)         240 MT.      ----------------------------------------      This  approval   is   subject   to   the      following conditions:-      1.   The letter of approval is valid for      a period  of 12  months from the date of      issue. You  shall take  effective  steps      within  this  validity  period  for  the      implementation of  the  project,  if  an      extension to  the period  of validity is      found   necessary   you   should   apply      preferably 3 months in advance with full      justification for  any extension of time      sought alongwith  a detailed  statements      of   the    steps    taken    for    the      implementation of the project.      2.   Adequate steps  shall be  taken  to      the satisfaction of the Govt. to Prevent      Air,  Water  and  Soil  Pollution.  Such      anti-pollution measures  to be installed      should  conform   to  the  effluent  and

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    emission standard prescribed by the H.P.      State  Pollution   Control  Board.   The      equipment  for  anti-pollution  measures      will form a part of your project report.      The design of the equipment will have to      be got  approved  from  the  H.P.  State      Pollution   Control    Board.   Further,      adequate industrial  safety measures  as      provided in  the relevant  Act should be      made to  the satisfaction  of the  State      Government.       3.  This letter  of approval  does  not      constitute   an    authorisation   under      Industrial Development & Regulation Act,      1951 or  any other  relevant acts of the      Govt. of India. Wherever applicable such      permission  or   clearances  as  may  be      required under  the provisions  of  such      Acts should  be separately  obtained  by      you before  taking any  effective  steps      for the implementation of the project.      4.   Further this  approval  of  project      does not  imply any  commitment what-so-      ever on  the part  of the  Government to      provide  finance,  raw  materials,  Land      etc. or  any other  assistance.  Request      for such  assistance would be considered      separately on merits after you have made      the   necessary   application   to   the      concerned    authorities.    You    are,      therefore,  advised   to  initiate   the      steps, for  procurement of land, finance      and other assistance as required for the      project at your own.      5.   You   will   have   to   make   own      arrangement for the procurement of water      from the  source to  the factory site at      your own  cost. In  case you sink a tube      well for your unit, you will ensure that      it does  not upset  the water  table  in      that area significantly.      6.   You   are   required   to   furnish      quarterly  progress  report  untill  the      commencement of  production. This report      will have  to be furnished every quarter      ending 31st March, 30th June, 30th Sept.      7.   You will  inform this  office about      the commencement of production.      8.   You will  notify the  vacancies  to      all the employment exchanges in Himachal      Pradesh. These vacancies shall be filled      in as  per notifications  issued by  the      Department from  time to time. You shall      have to  employ only  bonafide residents      of H.P.  and also  trained and technical      persons from ITI’s, RITI’s, polytechnics      and Engineering Colleges in the State in      your industrial  unit. You  are  further      required  to   give   quarterly   return      regarding  employment  of  Himachal  and      non-Himachali to  the  General  Manager,      Distt.  Industries   Centre,   of   your      district.      9.   You  will   have  to  make  inbuilt      parking facilities  within factory  area

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    or separately  for parking of trucks and      other vehicles  and these  will  not  be      allowed  to   be  parked   on   National      Highway/State    Highway/other    public      utility read.      10.  This  proposal  has  been  approved      without any  commitment of  availability      of Khair Wood by the State Government.      11.  You will  have to  raise green belt      around the factory premises.           We are  hopeful that  you will  now      immediately initiate  effective steps to      implement this  project. In  case of any      difficulty/assistance  required,  kindly      fee free  to get  in touch  with us.  We      assure you of our full co-operation.                          (Emphasis added)           Wishing you  and your  enterprise a      success.                          Yours faithfully,                             sd/-                          (   S.C. Negi   )                          Member Secretary                          ______ _________                               IPARA"      (Let it  be noted  that this  letter is  not  from  the Government of Himachal Pradesh but only from IPARA.)      The terms  of approval  are clear  enough and we do not think it  necessary to  set out  their substance  in our own words.      It appears  that when IPARA approved as many as fifteen proposals for establishing katha factories in the State, the Forest  Department   of  the   State  and  the  Ministry  of Environment and  Forest of  the Government  of India  became alarmed. On  September 23,  1992, the  Government of  India, Ministry of Environment and Forest addressed a letter to the Principal  Chief   Conservator  of  Forests,  Government  of Himachal Pradesh requesting him to furnish basic information relevant to  the State  of Himachal Pradesh in the proformas enclosed to  the said  letter which was necessary "to review the production and sale of khair wood/teak wood/resin in the country". A reminder was sent on April 29, 1993. The concern of the  Government of India is evident from the letter dated October  6,   1993  addressed   to  the   Forest  Secretary, Government of Himachal Pradesh, which is worth reproducing:                "GOVERNMENT OF INDIA           MINISTRY OF ENVIRONMENT AND FORESTS           Paryavaran Bhawan, C.G.O. Complex,            Lodi Road, New Delhi Pin 110 003.      No.3-13/93-94 Dated: 6th October, 1993      To           The Forest Secretary,           Government of Himachal Pradesh,           Shimla.      Subject: Registration of New Katha units                - availability of khair wood.      Sir,           I am  directed  to  refer  to  this      Ministry’s letter  No.  7-4/92-SU  dated      18.9.92 (copy enclosed) regarding review      of production and disposal of Khair Wood      and to  say that  the information sought      has  not   yet  been  received  by  this      Ministry. However,  it has  come to  the      notice of  this Ministry  that the State

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    Govt.    have    issued    orders    for      registration of  15 new  katha units for      manufacturing of  Katha from  Khair Wood      and is  also contemplating to issue more      licences for  setting up  of new  units.      This   is   being   done   without   due      consideration  to   the   principle   of      sustainable management of the forest and      is not  commensurate to the annual yield      for Govt.  and private  forests. This is      against our  National Forest  Policy  of      1988, which  clearly says that no forest      based enterprise,  except  that  at  the      village or cottage level be permitted in      future unless  it has been first cleared      after a  careful scrutiny with regard to      assured availability of raw material.                           (Emphasis supplied)      2.   It is,  therefore,  requested  that      review of  the earlier decision taken by      the  State   Govt.  in   regard  to  the      registration of  15 new  units of  Katha      may  be   taken  keeping   in  view  the      availability of  Khair Wood in the State      as   per    sustainable   annual   yield      available from  Government  and  private      forest area. Action taken in this regard      may kindly be sent immediately.                              Yours faithfully                                 sd/-                              ( Anoop Badhwa )      Asstt. Inspector General of Forests."      Evidently, this  letter was  written by  Government  of India before  it was  apprised of  the action  taken by  the Government  of  Himachal  Pradesh  impugned  herein.  It  is legitimate to presume that similar views must also have been expressed earlier.      Apart from  the concern  expressed by the Government of India, Ministry of Environment and Forest, there was a spate of criticism  in the  media and other public fora (including protest by  Chairman of four block samities) with respect to grant of approval to establish as many as fifteen mechanised units for manufacture of katha in Himachal Pradesh. All this made the  Government of Himachal Pradesh and IPARA to sit up and take  notice of  the consequences  of the  action of the sub-committee of  IPARA in  approving fifteen  units. A full meeting  of   IPARA  was   convened  for  August  28,  1993. Meanwhile,  the   capacity  of   each  of  these  units  was restricted to  3600 metric  tonnes or  2400 cubic metres per annum and  the "approvals"  granted to some other units, who had  not   taken  any   steps  pursuant  to  sub-committee’s "approval" were cancelled. The full committee meeting of the IPARA held  on August  28, 1993  took note  of  the  concern expressed in  the media  and other public fora regarding the paril to  the forest  wealth of  the  State  on  account  of indiscriminate approval  of katha  factories  and  tried  to restrict the  number as  much as  possible. But  then it was faced with  the problem  that pursuant  to  the  "approvals" granted by  the sub-committee  of IPARA,  certain units  had already taken  steps for setting up of the factories. It was noted that  of the  fifteen units  to which  approval was so accorded, Doon  Katha industries  was promoted  by  a  woman entrepreneur and  was a  very small  industry analogous to a bhatti and  further that  installation of  its  factory  was almost complete.  It was,  therefore, decided not to disturb

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the approval  granted to  it. It  was also  found that  five other units,  viz., Orient  Herbs, Sagar  Katha, Dev  Bhoomi Industries, Naman Wood Products and Ganesh Wood Products are in the  process of  establishing their  units. It noted that the capacity of these industries has already been restricted to 3600 metric tonnes. The IPARA was of the opinion that the approximate availability  of khair  wood  in  the  State  is 30,000 cubic  metres and that it would be sufficient to feed the existing  bhatties, existing mechanised factory (Shankar Trading Company)  and the aforesaid six new units with their restricted capacity.  It decided  that the  approvals of the other units  should be  cancelled because they had not taken any concrete  steps to  implement the projects approved. The IPARA also  took note  of the requirement of Shankar Trading Company (Mahesh  Udyog) and  the agreement  it had  with the Government of  Himachal Pradesh  and felt  that its capacity and its  requirement of  raw material should be assessed and verified   in   a   proper   manner.   The   proposals   and recommendations of  the IPARA  aforesaid were  placed before H.E. the  Governor for approval. On September 15, 1993, H.E. the Governor made the following order:      "In my  opinion, the  proposal at Para 5      and its sub para 1 on page 3 of the note      descorve to be modified as under:-      Para 5  -  sub  para  2  (3)  Shri  Hari      Krishan  Bajaj,  Prop.  M/s.  Dev  Bhumi      Industries, Baddi  District, Solan,  (4)      M/s.  Naman  Wood  Products,  Tahliwala,      District Una  and (5)  M/s. Ganesh  Wood      Products,  Sansarpur   Terrace,   Distt.      Kangra, H.P.,  as approved by IPARA Sub-      Committee should not be implemented.           Only units  at para 5 sub-para 2(1)      Shri Anil Kumar Arya, Prop., M/s. Orient      Herbs,  Baddi,  Distt.  Solan  (2)  M/s.      Sagar Katha  Factory, Kala  Amb,  distt.      Sirmour and one small proposal of Bhatti      type  being   set  up   by  Mrs.  Sushma      Chauhan, a  woman entrepeneur  at Paonta      Sahib (para  5 sub  para 1) are approved      and be implemented.                                    sd/-                             Governor 15.9.93"      The decision  was communicated to the concerned persons - leading  to the  filing of  several writ  petitions in the High Court.      AVAILABILITY OF KATHA IN THE STATE OF HIMACHAL PRADESH:      Pursuant to  the directions  of the  High Court  on the question of  availability of  raw material for manufacturing katha, Sri  R.K.Anand, Secretary (Forests) to the Government of Himachal  Pradesh, filed,  what he  designated as  "short affidavit in compliance to the order dated 31.12.1993 passed by the  Hon’ble Court". It is instructive to extract certain portions  of   this  affidavit  in  view  of  their  crucial relevance:      "(1) It  is  submitted  that  policy  in      regard to  cutting of  Khair trees is to      obtain yield  on sustained  basis.** The      National and State policies in regard to      establishment of industries is as under:      (i)  National Forest Policy: Para 4.9 of      the National  Forest Policy  states that      ‘as far  as possible’,  a  forest  based      industry should  raise the  raw material      needed for  meeting its  own requirement

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    preferably by  establishment of a direct      relation between  the  factory  and  the      individuals  who   can  grow   the   raw      material by  supporting the  individuals      with inputs  including credit,  constant      technical advice  and finally harvesting      and transport services."      (ii) State Forest Policy: Para No. 25 of      the H.P. State Forest Policy states that      "until detailed  forest resources,  wood      production and  consumption studies have      been  carried   out  to  determine  wood      balances  specially   of  broad   leaved      species, available  at  present  and  in      future (projections  over  a  period  of      twenty ----------------------------------------------------------- ** An  echo of  sustainble development  emphasised  by  "The World Commission on Environment and Development.      years)  for   various   industries,   no      commitment for  supply of  raw  material      should be  held out  to the  wood  based      industries. The consequences of proposed      moratorium of  commercial fellings shall      also have to be fully kept in view".           Regarding establishment  of  forest      based  industries   particularly   those      based on khairwood, it is stated that so      far there  is only  one mechanized katha      unit apart  from about  100 Bhatties. As      per the decision of the Government while      the mechanized  unit is  allotted 50% of      the total  khairwood available  annually      from  Government  forests  and  all  the      Bhatti units  get 12  1/2%.  Though  the      installed   capacity    of   the    said      mechanized unit  is 5000  M3 per year as      assessed by  the representatives  of the      Forest,  Industry   Deptts   and   Small      Industries  Service   Institution  -  an      organisation of  Govt. of India situated      at Solan, as per the suggestion of IPARA      -  yet   the  management   of  the  said      mechanized unit  i.e. Mahesh  Udyog  has      represented to  the Government  that the      installed capacity  of the  unit has not      been  properly   assessed.  Accordingly,      their    representation     is     being      examined.......      (2)  Working Plan  of Khair trees: Khair      trees are  not found all over the State.      These are  confined to the lower belt of      H.P. from  Sirmaur district  in the East      to Chamba  in the  West. All  the  khair      trees in  Government  Forests  have  not      been enumerated.  However, Working Plans      have been  prepared in respect of Forest      Divisions which prescribe certain annual      yield in  terms of  numbers of trees and      volume and  area. The  yield is  exactly      known after  carrying out  markings  and      fellings. However,  the  average  annual      yield  is   2838  cubic  metres.  It  is      average   of    1990-91   to    1992-93.      Periodicity  of   Working  Plans  is  15

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    years. It is not, therefore, possible to      furnish information for 30 years.           There  is   no  working   plan   or      enumeration of  khair trees  growing  on      private land.  However, the annual yield      of 21034 cubic metres of khair wood from      private ownership is based on extraction      of khair  wood during  the year  1990-91      and 1991-92.  This makes  a total annual      availability  of   23872  cubic   metres      (2838+21034) of  khair  wood  both  from      Government and private ownership........      5.   Approval of  the State  Government:      IPARA had  initially cleared 14 projects      and  conveyed   the  clearance   to  the      respective parties  in  anticipation  of      the   Government    approval.   However,      Government  reviewed   the  decision  of      IPARA taken in its meeting held on 28-8-      1993 and  decided that 6 units out of 14      which were  recommended by IPARA, only 3      units in  order of precedence or receipt      of applications  be allowed to continue.      Accordingly, IPARA withdrew the approval      of all  units except  3  as  allowed  by      Government.      6.   Policy regarding  import/export  of      khair wood  from outside  the  State  of      Himachal Pradesh:  There is  no  ban  on      export of  khair wood  from the State in      respect  of  khair  wood  obtained  from      private land.  However, the  export from      the State  of khair  wood obtained  from      private land  is regulated  in terms  of      the  Government’s   order  contained  in      Annexure R-19.  The khair wood extracted      from Government  Forest  by  H.P.  State      Forest  Corporation  Ltd.  and  disposed      through open  auction is  required to be      utilised within  the State  of  Himachal      Pradesh only.           There  is  no  restriction  on  the      import of  khair wood  from outside  the      State."      It is  clear from  the above  affidavit that  there has been no systematic or a proper survey of the availability of khair wood  in the  State. The availability of khair wood is determined on  the basis  of quantity  extracted during  the years 1990-91  to 1992-93  in the case of government forests and 1990-91  and 1991-92  in the case of private forests. It is obvious, and an indisputable proposition, that extraction in a  given year  or in  certain given  years is no index of availability. The  estimate of  availability on the basis of extraction in a given two or three years’ period is bound to be faulty.  Extraction in  a given year or years may be more or less than the average annual availability.      THE MYOPIC APPROACH OF THE SUB-COMMITTEE OF THE IPARA      IN APPROVING THE PROPOSALS FOR KATHA FACTORIES:      During the  years 1992  and 1993,  the sub-committee of IPARA seems  to have  been proceeding on the assumption that so long  as there  is no  commitment  on  the  part  of  the Government to  supply khair  wood to the proposed factories, there is  no harm  in approving  any and every proposal that comes before  it. This  cannot but  be termed  as a  totally faulty and  a myopic  approach. It  is also violative of the

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National Forest  Policy and  the State Forest Policy evolved by  the   Government  of  India  and  the  Himachal  Pradesh Government respectively  -  besides  the  fact  that  it  is contrary to  public interest  involved in  preserving forest wealth,  maintenance   of  environment   and   ecology   and considerations of  sustainable growth and inter-generational equity. Afterall,  the present  generation has  no right  to deplete all  the existing  forests and leave nothing for the next  and   future  generations.   Not  keeping   the  above considerations in  mind, it  is obvious,  has  vitiated  the approvals granted by the sub-committee of IPARA - apart from the fact  that it  was  not  empowered  to  grant  any  such approval. The obligation of sustainable development requires that a proper assessment should be made of the forest wealth and the  establishment of industries based on forest produce should not  only be restricted accordingly but their working should also be monitored closely to ensure that the required balance is  not disturbed.  In this  view of  the matter, we must  say   that  insofar  as  forest-based  industries  are concerned, there  is no  absolute or  unrestricted right  to establish   industries   notwithstanding   the   policy   of liberalisation announced  by the  Government of  India.  The policy of  liberalisation has  to be understood in the light of the  National Forest  Policy devised by the Government of India itself  and in  the light  of the  several  enactments applicable in  that behalf, some of which have been referred to hereinbefore.  It is meaningless to prescribe merely that the government need not supply the raw material and that the units will  have to  get their khair trees/raw material from private lands/forests.  No distinction  can be  made between government forests  and private  forests in  the  matter  of forest wealth of the nation and in the matter of environment and ecology.  It is  just not  possible or  permissible. The National Forest  Policy  and  the  Himachal  Pradesh  Forest Policy do  not make  any such  distinction.  The  perils  of ignoring the  above policies  and considerations  cannot  be over-emphasised.      We  must   say  that   in  the   light  of   the  above considerations, the  High Court  was not  right in observing that Sri  Yogendra Chandra  cannot be  accepted as  a public spirited citizen  approaching the  court to  protect  public interest -  more so,  when it  has recorded  a  simultaneous finding that  there is  no evidence of collusion between him and Shankar  Trading Company (Mahesh Udyog). The credentials of Sri  Yogendra Chandra  appear to be impeccable. He is not only a  member of  the Himachal Pradesh Legislative Assembly but also  the Convenor  of the Indian National Trust for Art and Cultural  Heritage. He  is also  the  President  of  the Himalayan Wild  Life and  Environment Preservation  Society. The said  organisations may  be big  or small,  may be well- established  ones   or  recently  started  ones  -  that  is immaterial. Once  it is  found that he was not acting at the instance of  or at  the behest  of  or  for  protecting  the interests of Shankar Trading Company, there was no reason to hold that  he was  not acting  bonafide in  approaching  the court to  preserve the  forest wealth  of the  State in  the interest  of  environment  and  ecology.  His  inability  to produce material  in support  of his  allegation of  illicit felling in the State does not tell upon his bonafides.      We may also mention, even at this stage, that so far as Shankar Trading Company is concerned, there is absolutely no doubt in  our mind  that it  is not entitled to question the approvals granted to new units since there was no indication at any stage that the supplies which it was receiving in the previous years pursuant to the agreement with the government

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were going  to be  affected. Its  attempt to  stop  the  new industries from  coming up  in the  State, while enjoying an almost monopoly status in the matter of khair wood supplies, is  certainly   a  strong   factor  militating  against  its bonafides in approaching the court. THE DOCTRINE OF PROMISSORY ESTOPPEL AND THE PUBLIC INTEREST:      The doctrine  of promissory  estoppel is  by  now  well recognised in  this country.  Even so  it should  be noticed that it  is an  evolving doctrine, the contours of which are not  yet   fully  and   finally  demarcated.   It  would  be instructive to  bear in  mind what Viscount Hailsham said in Woodhouse Ltd. v. Nigerian Produce Ltd. (1972 A.C. 741):      "I desire  to add that the time may soon      come when  the whole  sequence of  cases      based upon promissory estoppel since the      war,  beginning   with  Central   London      Property Trust  Ltd. v. High Trees House      Ltd. (1947  (1) K.B. 130) may need to be      reviewed and  reduced to a coherent body      of doctrine by the courts. I do not mean      to say that they are to be regarded with      suspicion. But  as  is  common  with  an      expanding  doctrine,   they   do   raise      problems of  coherent  exposition  which      have    never     been    systematically      explored."      Though the  above view  was expressed  as far  back  as 1972, it  is no less valid tody. The dissonance in the views expressed by  this Court  in some  of its  decisions on  the subject emphasises  such a need. The views expounded in M/s. Motilal Padampat  Sugar Mills  Company Limited  v. State  of Uttar Pradesh  (1979 (2)  S.C.C.409) was  departed  from  in certain respects  in Jit  Ram Shiv Kumar v. State of Haryana (1981 (1)  S.C.C.11), which  was in turn criticised in Union of  India   v.  Godfrey  Philips  India  Limited  (1985  (4) S.C.C.369). The  divergence in approach adopted in Sri Bakul Oil Industries  v. State  of Gujarat (1981 (1) S.C.C.31) and Pournami Oil Mills v. State of Kerala (1986 Suppl.S.C.C.728) is another  instance. The  fact that  the recent decision in Kasinka Trading  and Ann. v. Union of India & Ors. (1995 (1) S.C.C.274) is  being reconsidered  by larger  Bench  is  yet another affirmation  of the  need stressed  by Lord Hailsham for enunciating "a coherent body of doctrine by the Courts". An aspect  needing a  clear exposition  - and  which  is  of immediate relevance  herein - is what is the precise meaning of the  words "the promisee.....alters his position", in the statement of  the doctrine. The doctrine has been formulated in the  following words in M/s. Motilal Padampat Sugar Mills Co. Ltd.:      "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      Govt. would be held bound by the promise      and the  promise  would  be  enforceable      against the Govt. 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 Art.299      of the Constitution." What does  altering the  position mean?  Does it mean such a

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change in  the position  of the  promisee (as  a  result  of acting on the faith of representation of the promissor) that compensating him in money would not be just and equitable to him, i.e.,  a  situation  where  the  ends  of  justice  and requirements of  equity demand that the promissor should not be allowed to go back on his representation and must be held to it  or does altering his position mean doing of some act, big or small, which the promisee does acting on the faith of the representation  which he would not have done but for the representation? In  other  words,  is  it  enough  that  the promisee has  spent some money or has taken some step acting on the  basis of representation, which can be recompensed in money or  otherwise? Is  it not ultimately a matter of doing equity and  justice between  the parties - a case of holding the scales  even between the parties and deciding whether in the interests  of justice  and equity  the promissor  can be allowed to  resile  from  his  promise  and  compensate  the promisee appropriately  or the promissor ought to be held to his promise  and not  allowed to go back since such a course is necessary  in view of the change in position of promisee? Our view  of the  matter is probably evident from the way we have  posed  the  above  questions.  To  wit,  the  rule  of promissory estoppel  being an  equitable doctrine, has to be moulded to  suit the  particular situation. It is not a hard and fast  rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. If it is more just from the point of view of  both   promissor  and   promisee  that   the  latter  is compensated appropriately and allow the promissor to go back on his  promise, that should be done; but if the Court is of the opinion  that the interests of justice and equity demand that the  promissor should not be allowed to resile from his representation in  the facts and circumstances of that case, it will  do so.  This, in  our respectful  opinion,  is  the proper way of understanding the words "promisee altering his position". Altering his position should mean such alteration in the position of the promisee as it makes it appear to the Court that  holding the  promissor to  his representation is necessary to  do justice  between the  parties. The doctrine should not be reduced to a rule of thumb. Being an equitable doctrine it  should be  kept elastic  enough in the hands of the Court  to do  complete justice between the parties. Now, can the  doctrine of  promissory estoppel be put on a higher pedestal than the written contract between the parties? Take a case  where  there  is  a  contract  between  the  parties containing  the   very  same  terms  as  are  found  in  the "approval" granted  by IPARA  (sub-committee) and  then  the government resiles  from the  contract  and  terminates  the contract. The  promisee will  then have  to file  a suit for specific performance of the contract in which case the court will decide, having regard to the facts and circumstances of the case  and the  provisions of  the Specific  Relief  Act, whether the plaintiff should be granted specific performance of the  contract or  only a decree for damages for breach of contract.  It  must  be  remembered  that  the  doctrine  of promissory estoppel  was evolved  to protect  a promisee who acts on  the  faith  of  a  promise/representation  made  by promissor and  alters his  position even  though there is no consideration for the promise and even though the promise is not recorded  in the  form of  a formal  contract. Surely, a representation  made   or  undertaking  given  in  a  formal contract  is  as  good  as,  if  not  better  than,  a  mere representation. All  that  we  wish  to  emphasise  is  that anything and everything done by the promisee on the faith of the representation  does not  necessarily amount to altering

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his position  so as  to preclude the promissor from resiling from his  representation. If  the equity  demands  that  the promissor  is   allowed  to   resile  and  the  promisee  is compensated  appropriately,  that  ought  to  be  done.  If, however, equity  demands, in the light of the things done by the promisee  on the  faith of  the representation, that the promissor should  be precluded  from resiling  and  that  he should be  held fast  to his  representation, that should be done. To  repeat, it  is a matter of holding the scales even between the  parties -  to do  justice between them. This is the equity implicit in the doctrine.      The matters before us have to be approached and decided keeping the above principles in mind. The Court should first ascertain what  precisely has each the said five respondents (Ganesh Wood  Products,  Naman  Wood  Products,  Dev  Bhoomi Industries,  Indian   Wood  Products   and   Chander   Katha Industries) have  done on  the basis  of and on the faith of the "approval" granted by the IPARA (sub-committee of IPARA) by the  date of  the communication  of the  decision of  the government -  and IPARA  in the  case of  two last mentioned units. [The expression "communication" in this behalf should be understood  as explained  in State of Punjab v. Khemi Ram (A.I.R. 1970  S.C.214). After  ascertaining  the  same,  the Court shall have to decide whether it is a case - separately in case  of  each  of  the  said  respondents  -  where  the government should or should not be allowed to go back on the said "approval"  granted by the IPARA (sub-committee). It is obvious that  this decision  has to be taken after giving an opportunity to  both  the  parties  to  adduce  material  in support of  their respective  stands. Inasmuch  as the  High Court has  not approached  and examined  the case  from  the above standpoint,  the matter has to go back. While deciding the appropriate  course, it  is evident that the Court shall also have  to keep in mind the plea of government that IPARA or its  sub-committee was  not competent  to accord approval and that the power lay only with the government, as also the plea of  the respondents  that  in  the  circumstances  they believed and  acted in  good faith that IPARA is but another name for,  or a mouthpiece of, the government. It is equally evident that  while deciding  where the interests of justice and equity  lie, the  Court will also take into account, and balance, public interest and the interest of the respondents aforesaid. The  Court shall also take into consideration the estimate of  raw material  (khair trees)  and  its  expected availability -  at present  and in the years to come - to be made by  the Himachal  Pradesh government  pursuant  to  the directions contained  herein  with  the  aid  of  an  expert committee. The  High Court  may give six months’ time to the government to  arrive at  such an  estimate and  to place it before the Court.      It may perhaps be appropriate to point out that what we have said above is consistent with the doctrine as stated in Motilal Padampat  Sugar Mills  and the subsequent decisions. In Motilal  Padampat Sugar  Mills, it  has been held firstly that:      "But it  is necessary  to point out that      since   the   doctrine   of   promissory      estoppel is  an equitable  doctrine,  it      must yield  when the equity so requires.      If it  can be  shown by  the  Government      that having  regard to the facts as they      have subsequently  transpired, it  would      be inequitable to hold the Government to      the promise  made by it, the Court would      not raise  an equity  in favour  of  the

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    promisee and enforce the promise against      the   Government.    The   doctrine   of      promissory estoppel  would be  displaced      in such  a case  because, on  the facts,      equity  would   not  require   that  the      Government should  be held  bound by the      promise made  by it. When the Government      is able  to show  that in  view  of  the      facts which  have transpired  since  the      making of  the promise,  public interest      would be  prejudiced if  the  government      were required  to carry out the promise,      the Court  would  have  to  balance  the      public  interest   in   the   Government      carrying out a promise made to a citizen      which has  induced the  citizen  to  act      upon it  and alter  his position and the      public interest  likely to suffer it the      promise were  required to be carried out      by the  Government and  determine  which      way the equity lies."      and then it is observed:         "But  even  where  ther  is  no  such      overriding public interest, it may still      be competent to the Government to resile      from the  promise ’on  giving reasonable      notice,  which  need  not  be  a  formal      notice, giving the promises a reasonable      opportunity of  resuming  his  position’      provided of  course it  is possible  for      the promisee  to restore the statuts quo      ante. If,  however, the  promises  could      become final and irrevocable. Vide Ajayi      v. Briscoe (1964) 3 All ER 556." It is this aspect which has been elaborated by us keeping in mind the facts and circumstances of this case.      It is true that in case of the three units (Ganesh Wood Products, Naman  Wood Products  and Dev  Bhoomi Industries), the full  meeting of  IPARA (held on August 28, 1993) opined that "it  would not  be appropriate  to rescind the approval keeping in view the progress made in implementation of their projects.....", yet  it is  not clear  what exactly had they done by  the date  of rejection  of their  proposal  by  the Government (23rd  September, 1993).  Even the High Court has not recorded  any clear  finding on this aspect. All that it said is  : "It  is apparent  that the  Units recommended  by IPARA were earlier registered with the industries Department and have  thereafter purchased  lands,  constructed  factory buildings,  and/either   purchased  or   placed  orders  for machinery. In  some cases  even the  raw-material  has  been purchased." There is no reference to any material in support of the  said  opinion  nor  is  the  case  of  each  of  the petitioners separately  examined. Probably,  the High  Court was influenced by the opinion expressed by the IPARA (at the meeting held  on August  28, 1993) referred to above. But it would be seen that it too is quite general and vague. Hence, the necessity for the remand to High Court.      OBLIGATION OF THE STATE OF HIMACHAL PRADESH TO MAKE A      PROPER ESTIMATE OF THE AVAILABILITY OF THE RAW-      MATERIAL/KHAIR WOOD IN THE STATE:      The facts  stated above  do  establish  the  imperative necessity of  a proper  estimate of  the availability of raw material, namely,  khair wood in the State. We are told that any and  every  khair  tree  is  not  fit  for  cutting  for obtaining katha. Only a tree with a particular girth (20 cm.

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at breast  height) yields  the optimum quantity of requisite material and  is allowed  to be cut. Trees with lesser girth are not  allowed to be cut as per the Technical Order No.670 dated 13th  August, 1993  issued under  the Himachal Pradesh Land Preservation  Act, 1978  and the Rules made thereunder. This Order,  it may  be  noted,  is  applicable  to  private lands/forests. The  State Government  should obtain a proper estimate of  the khair wood in the State and also to make an estimate of  its availability  in each  of the  coming years with the  assistance of  an expert  body to  be appointed in consultation with the Ministry of Environment, Government of India. Such an estimate should cover both the Government and private lands/forests and must be arrived at keeping in view the National  and State  forest policies  and  the  relevant statutory provisions.  It is  only then one can say, what is the quantity of khair wood available and how many industries it can  feed - and upto what capacity. Further, it is on the basis of  such estimate  that  the  capacity  of  the  katha factories, at  any given  point of  time,  may  have  to  be restricted, if  need be.  Some of  them may  even have to be closed if warranted by public interest.      We must  say that  the estimate  of availability of raw material arrived  at by  the High  Court is  based upon  the quantity extracted  over a  period of two or three years. As pointed out  hereinabove, the  quantity extracted in a given year or  given years  can  never  be  treated  as  a  proper estimate of the availability of the raw material. Hence, the need for  a proper and credible survey by an expert body. In this view  of the  matter, it  is not necessary to deal with the criticism mounted by the learned counsel for respondents to the  varying estimates of raw material put forward by the government at various stages of this litigation and to other alleged contradictions in its case from stage to stage. ************      The appeals  are accordingly  allowed, the  judgment of the High Court is set aside and the matters remitted to High Court  for  a  fresh  disposal  of  the  writ  petitions  in accordance with law and in the light of this judgment.      Pending the  passing of  final  orders  by  High  Court pursuant to  these directions, none of the said five units - Ganesh  Wood  Products,  Naman  Wood  Products,  Dev  Bhoomi Industries, Indian  Wood Products  and Chander Katha - shall take any  further steps  towards setting up the factory. The status quo  as on  today shall  continue. The government and all concerned  shall take steps to ensure observance of this direction.      The Government  of Himachal Pradesh shall make a survey and assess the approximate availability of khair wood in the year 1996  and the ensuing years. This shall be done through an expert  body to  be  appointed  by  the  government.  The government  shall  be  entitled  to  rely  upon  the  expert committee’s report  and its  own assessment  arrived on  the basis  of   such  report  before  the  High  Court  for  its consideration as provided in this judgment.      No new  industry/unit for manufacture of katha shall be approved by  the government  pending a final decision by the government on  the question  of availability of raw material in the years to come.      No order as to costs in these appeals.