Holding

The State’s executive power to approve or decline industrial projects is valid, IPARA’s provisional approvals do not create enforceable rights, and the doctrine of promissory estoppel does not bind the State; the High Court’s judgment is set aside.

Summary

The Supreme Court examined the validity of the Himachal Pradesh government's refusal to approve several katha‑manufacturing units after the Industrial Projects Approval and Review Authority (IPARA) had given provisional approvals. The Court held that IPARA’s approvals were merely administrative recommendations and did not confer any enforceable right; the State’s executive power under Entry 24 of List‑II of the Seventh Schedule is exclusive and includes the power to approve or decline projects based on policy considerations such as raw‑material availability and environmental protection. The doctrine of promissory estoppel was not applicable to bind the State, and the High Court had exceeded its writ jurisdiction by quashing the Government’s orders. Consequently, the appeals were allowed, the High Court judgment set aside, and the matters remitted for fresh disposal with a direction that the State must obtain a proper expert estimate of khair‑wood availability before granting any further approvals.

Issues considered

The legal effect of IPARA’s provisional approvals on the applicants’ rights
Whether the State of Himachal Pradesh has the exclusive executive power to approve or refuse industrial projects under Entry 24 of List‑II
Applicability of the doctrine of promissory estoppel to a governmental approval in the context of administrative action
Whether the writ petitions filed by the MLA and the existing mechanised unit are maintainable as public‑interest litigations
Whether environmental statutes and forest policies restrict the establishment of katha‑based industries
The adequacy of the High Court’s assessment of raw‑material (khair‑wood) availability
The scope of the High Court’s jurisdiction in quashing the Government’s orders

Legislation cited

Subjects

Industrial approvalAdministrative lawPromissory estoppelPublic interest litigationEnvironmental protectionForest policySustainable developmentRaw material availabilityIPARAState executive power

Judgment

STATE OF HIMACHAL PRADESH AND OTHERS A
v.
GANESH WOOD PRODUCTS AND ORS. ETC.

SEPTEMBER 11, 1995

[B.P. JEEVAN REDDY AND M.K. MUKHERJEE, JJ.) B

Constitution of India-Seventh Schedule-Entry 24 of List //-In-
dustries-Katha /ndust1y-No enactment made by State of Himachal Pradesh
goveming establishment of industfies-Executive power of State extends to that
subject matter. c
Environment (Protection) Act, 1986-Forest based industries-Estab-
lishment of-Legal enactments govemin~Significance of forest wealth-Im-
pact on environment and ecology-No absolute or unrestricted right to
establish industries-Policy of liberalisation to be understood in the light of
National Forest Polig,-No distinction between govemment forests and D
p1ivate forests.

Administrative Law : Promiss01y Estoppel-{)octline of-Words the
promisee ...... alters his position, in the statement of doctrine-Meanin~an
doctrine be put on higher pedestal than written contract between parties. E
For encouraging the industrialisation of the State of Himachal
Pradesh by a notification dated May 13, 1974, the Governor of Himachal
.. Pradesh established the Industrial Projects Approval and Review
Authority (IPARA). The terms of reference and the activities to be under-
taken by the Authority were specified which were mainly to process the F
applications for establishment of new industries and select projects for
government approval. On November 29, 1990 IPARA was abolished by the
Government. Subsequently it was reconstituted by a Notification dated
September 3, 1993. During the period IPARA was not in existence, the
Director of Industries, Himachal Pradesh was looking after that work. G
Several units applied to !PARA/Director of Industries during the
years 1992 and 1993 proposing to establish mechanised units for manufac-
turing katha. The applications made by 8 units were considered by the
sub-committee of IPARA, which granted approval' to all the applicants.
All the proposals were put up for, further consideration before the full H
477
478 SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A committee of IPARA. The full committee decided to recommend six units
for government's approval. It rejected the proposal of two units on the
ground that they failed to take any step to set up the factories pursuant
to sub-committee's approval. Out of the six units recommended, only three
units had been approved by the Governor. Just about the time the governor
was taking his decision, one MLA filed a Writ Petition for restraining the
B government from permitting the establishment of 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. Soon afterwards, one existing
mechanised unit filed writ petition for restraining the government from
c granting permission for establishment of any new unit on the ground that
the raw material available in the State was not adequate to sustain any
new units since the entire raw material available was hardly sufficient to
meet its own requirement and the requirement of existing bhattiwalas.

D Three Writ Petitions came to be filed by the units, which were refused
approval by the Governor.

The High Court dismissed the Writ Petitions filed by the MLA and
the existing unit respectively. It allowed other two Writ Petitions and
quashed the orders of the Government refusing permission to these three
E persons to establish their units. Two writ petitions filed by two other units
were allowed with a direction to the authorities of the state to reconsider
their case. These SLPs were filed against the judgment of the High Court.
The appellant submitted that the provisional registration or 'approval' by
IPARA Cl.id not confer any right upon any of the units inasmuch as the said
F 'approval' was subject to final approval by the government; that the
Governor had taken into consideration the availability of raw material in
the State and arrived at the conclusion that it could sustain only three
units and therefore, no valid objection could be taken to the orders of the
government since they were conceived in public interest keeping in view the
availability of the raw material and that the High Court exceeded the
G constraints of writ jurisdiction in taking upon itself the determination of
the availability of the raw material and on that basis quashing the orders
of the government.

The appellant submitted that the High Court was not justified in
H holding that the appellant could not be 'accepted as a public spirited
STATE v. GANESH WOOD PRODUCTS 479

citizen approaching the court to protect the public interest', merely be- A
cause he was not able to place befqre the court reliable data in support of
his allegation of illicit felling of trees in the past and that while rightly
holding that there was no evidence of collusion between the appellant and
the existing mechanised unit, the court erred in not entertaining his writ
petition as a bonafide public interest litigation. B

The existing mechanised unit submitted that the raw material avail-
able in the State was not sufficient to feed any new units and that the
permission granted to the respondent units was in violation of the
provisions of several statutes, both Central and State..
c
One of the respondents in these appeals submitted that after the
introduction of the New Industrial 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; that Katha D
Industry was not governed by Industries Development (Regulation) Act,
1951; That no licence or permission was necessary for establishing a katha
factory; that the governments duty was merely to register the units being
set up and it had no power to cancel, revoke or disapprove such registra-
tion; that the rejection of the Governor was based on no reasons; that the
particulars of raw material available in the State was more than sufficient E
to sustain not only the three units recommended by the Governor but also
the three units recommended by the IPARA and that 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.
F
Another respondent urged that the order of the governor made
without notice to affected parties was in violation of principles of natural
justice; that the High Court was justified in going into the merits of the
case in the particular facts and circumstances of the case; that the Govern-
ment was not without power to regulate the supplies of raw material; that G
the recommendations of IPARA were considered decisions arrived at after
taking into consideration all aspects of the matter and that the Governor's
action was devoid of any reasons; that khair trees were included in the
Schedule to the Himachal Pradesh Forest Produce (Regulation of Trade)
Act, 1982 but the same was deleted by another Notification issued on
November 18, 1991 and, therefore, the Governor's action was unsus- H
480 SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.

A tainable in law.
Two other respondents submitted that they too had acted upon the
approval granted by IPARA and invested substantial amounts in setting
up the. units and if only they had been given an opportunity, they would
have established their contention.
B
Another respondent submitted that the Governor had rightly
granted permission to its unit and that there were absolutely no grounds
to interfere with the same.

Allowing the appeals, this Court
c
HELD : 1.1. Katha Industry is not in the schedule to the industries
Development and Regulation Act. The provisions regulating the estab-
lishment of industries contained in the said Act, therefore, have no ap-
plication to this industry. There is no corresponding enactment made by
the legislature of the State of Himachal Pradesh governing the estab-
D
lishment of industries similar to l.D.R. Act. 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. [493-C-D]
E
Rai Sahib Ram Jawaya Kapur And Ors. v. State of Punjab, [1955] 2
SCR 225, relied on.

1.2. The Himachal Pradesh Government had not only evolved a
forest policy but had also framed certain guidelines with a view to en-
F courage the industrialisation of the State. It constituted Industrial
Projects Approval and Review Authority, as far back as 1974, with the
same propose. 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
G entrepreneurs generally. This authority was to act as the nodal agency. It
was 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. [493-E-H]

1.3. IP ARA was not established under any statutory provision and
H its acts and proceedings did not have any statutory sanctfon. The idea was
STATE v. GANESH WOOD PRODUCTS 481

to encourage new industries and to provide necessary assistance to them. A
The more relevant function of-the authority from the point of view of the
controversy herein was the power, or function, "to process the applications
for establishment of new industries and select projects for government
approval". The function of the authority was not to grant approval for any
new industry but only to process their applications and to select projects
B
for government's consideration; it was for the government to approve
them. The Notifications constituting the IPARA did not say anywhere that
no industry could be established unless it applied to IPARA or unless its
application was processed by IPARA, nor do they state that unless ap-
proved by the Government, no industry could be established in the State.
This meant that if there were any enactments or other statutory provisions C
governing the establishment of industries, they had to be complied with by
the intending entrepreneurs. The IPARA of the Government of Himachal
Pradesh propose neither added to those provisions nor did they purport
to detract therefrom. [496-A-D]
Di
1.4 Power to approve includes the power to decline approval and the
power to disapprove. 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 E
even and balanced manner 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. [495-F] F

1.5. The impugned order of the Government of Himachal Pradesh
(made by the Governor of Himachal Pradesh) on September 3, 1993 was
not traceable to any statutory provision or statutory power. It was made
in exercise of its executive power. while acting in its executive capacity, the G
government is entitled to lay down policies and preference 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 e<1uitable treatment to all persons corning
before it. Having approached the IPARA and the government for approval, H
482 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A the respondents (persons intending to set up katha units) could not when
the approval was refused - turn round ahd say that the government had
no power to refuse approval. It is not as if the government had prohibited
the said respondents from establishing their factories in the State. The
approval and non-approval or disapproval, as it may be called, is ad-
ministrative in nature. If anyone wishes to seek approval from the govern-
B ment, he has to abide by the Government's policies and guidelines evolved
or enunciated in that behalf. [496-B-E]

2. The consideration of environment and ecology and preservation
of forest wealth are absolutely relevant considerations which the govern-
C ment must keep in mind while devising its policies and programmes.

Our Common future : World Commission on Environment and
Development, published by Oxford University press in 1987; Tom Dale and
Vernon gill Carter, Topsoil and Civilization, referred to.

D 3.1. The obligation of sustainable development requires that a
proper assessment should be made of the forest wealth and the estab-
lishment 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. Insofar as forest-
based industries are concerned, there is no absolute or unrestricted right
E to establish industries notwithstanding the policy of liberalisation an-
nounced by the Government of India. The policy of liberalisatjon 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. It is meaningless to prescribe merely that the
F government need not supply the raw material and that the units will have '., __

to get their khair trees/raw material from private land/forests. No distinc-
tion 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
G and the Himachal Pradesh Forest Policy do not make any such distinc-
tion. [512-F-H, 513-A]

3.2 The High Court was not right in observing that the appellant
could not be accepted as a public spritited citizen approaching the court to
protect public interest- more so, when it had recorded a simultaneous
H finding that there was no evidence of collusion between him and the existing
STATE v. GANESH WOOD PRODUCTS 483

mechanical unit. The credentials of the appellant appeared to be impec- A
cable. He was 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 was also the President of the Himalayan Wild Life
ancJ Environment preservation Society. Once it was found that he was not
acting at the instance of or at the behest of or for protecting the interest of B
the existing unit 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 environme:it and ecology. His inability to
produce material in support of his allegation of illict felling in the State did
not tell upon his bonafides. [513-B-E]
c
4.1. So far as the existing mechanised unit was concerned, it was 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 were going
to be affected. Its attempt to stop the new industries from coming up in the D
State, while enjoying an almost monopoly status in the matter of khair
wood supplies, was certainly a strong factor militating against its bonafides
in approaching the court. [513-F]

4.2. 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 E
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 ifthe Court is of the opinion that the interests of justice F
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 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 promis- G
sor 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. The doctrine 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 conside.ration for H
484 SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.

A 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.
Anything and everything done by the prornisee on the faith of the repre-
sentation does not necessarily amount to altering his position so as to
preclude the promissor from resiting from his representation. If the equity
B
demands that the promissor is allowed to resile and the promisee is com-
pensated 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 repre-
sentation, that the promissor should be precluded from resiting and that he
should be held fast to his representation, that should he done. It is a matter
c of holding the scales even between the parties - to do justice between them.
This is the equity implicit in the doctrine. [515-E-H, 516-A-E]

M/s. Motilal Padampat Sugar Mills Company Limited v. State of Uttar ~.

Pradesh, [1979) 2 SC<:; 409, relied on

D 4.3. In the instant case, 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 the power lay only with the government, as also pl~a ,
of the respondents that in the circumstances they believed and acted in
good faith that IPARA was but another name for, or a mouthpiece of, the
government. While deciding where the interests of justice and equity lie, the
E
Court will also take into account, and balance, public interest and the
interest of the respondents. 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
F expert committee. [517-B-D]

5. 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
G 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
H of such estimate that the capacity of the katha factories, at any given point
STATE v. GANESH WOOD PRODUCTS [B.P.JEEVAN REDDY,J.] 485

of time, may have to be restricted, if need be. Some of them may even have A
to be closed if warranted by public interest. 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. [519-C-F]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 8184-88 B
of 1995 Etc. Etc.

From the Judgment and Order dated 30.12.94 of the Himachal
Pradesh High Court in C.W.P. Nos. 1590, 1576/93, 145, 1679 and 611 of
· 1994. c
V.R. Reddy, Additional Solicitor General, K. Madhava Reddy, S.K.
Dholakia, P.P. Rao, Gopal Subramaniam and Arun Jaitely, Naresh K.
Sharma, S.K. Bhattacharya, R. Venkataramani, Satya Mitra Garg, D.A.
Dave, B.M. Nayyer, Ms. Malini Poduval, S. Ganesh, Rajiv Tyagi, Dr. Mrs.
Roxna Swamy, S.P.Mittal, R.N. Keshwani, Nalin Talwar, S. Balkrishnan, D
J .S. Attri, Prem Malhotra, and Anis Suhrawardy, for the appearing parties.

The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. Leave granted. Heard counsel for the
E
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 F
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 flock- G
ing 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 H
486 SUPREME COURT REPORTS (1995) SUPP. 3 S.C.R.

A 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 mechanized unit
consumes far larger quantities of khair wood than all the bhatties put
together.
B Himachal Pradesh is an industrially backward State. Like other
States, it too has been evolving schemes for encouraging the industrialisa-
tion 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,
c 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 En-
gineer, P.W.D. and the Director of Industries. The terms of reference and
the activities to be undertaken by the IPARA were specified as under :
D
"(i) To act as the focal point for dissemination of information
regarding programmes of Government assistance and incentives to
entrepreneurs.

(ii) To receive all applications for setting up of factories in
E medium and large scale sector.

(iii) To process. the applications for establishment of new in-
dustlies and select projects for Government approval.

(iv) To arrange all necessary assistance required for the suc-
F cessful 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 con-
cerned Govt. Departments.

G (v) To review the progress of approved projects.

(vi) To recommend necessary ch~nges in the Government
policy regarding Industrial Development in the light of experience
gained.

H (vii) Such other matters as the Government may refer or
STATE v. GANESH WOOD PRODUCTS [B.P.JEEVAN REDDY,J.] 487

delegate to the Authority from time to time." A
(Emphasis added)
- On November 29, 1990 IP ARA 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 B
President's rule) reconstituted IP ARA 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
c

..
that work. Applications received from entrepreneurs proposing estab-
lishment of industrial units in Himachal Pradesh were being processed in
the first instance by IP ARA - and during the period when IP ARA was not
in existence, by the Director of Industries.

Several units applied to IPARA/Director of Industries during the D
years 1992 and 1993 proposing to establish mechanised units for manufac-
turing 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 :

.. s.
STATEMENT SHOWING THE PROJECTS APPROVED BY !PARA

Name of the
AND THEIR PRESENT STATUS

Date of Produc- Location Khair- date of Whether
E

No. party receipt tion Capacity wood appro- IPARA
of PA Qty. & require- Vfl( by conveyed
applica- value ment IPARA
ti on per Sub-
annum Comm-
(M.T.) ittee
F
(1) (2) (3) (4) (5) (6) (7) (8)
1. Mis. Doon Katha 10.7.90 Katha-18.0M.T. Sirmur 270 10-3-92 Yes 10.3.92
Udyog, Sirmur Cutch-2.0M.T. M.T.
2. Mis. Orient 19-9-91 Katha-400M.T. Bad di 15000 7-3-92 IYes. 7-3-92
Herbs Cutch-500M.T. M.T. G
3. Mis. Sagar Katha 5-12-91 1Katha-425M.T. Sirmur 16000 11.3.92 !Yes, 11.3.92
!Factory Cutch-500M.T. M.T.
4. Mis. Indian 30-3-92 !Katha-162M.T. Nalararh 3600 25.5.92 125.5.92
!Wood Prod1,1cts, Cutch-252M.T. M.T. ~t stands
Bare illy IWithdrawnand
1ot restored.
H
488 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A 5. 17-4-93 atha-97.SM.T. Baddi/ 3000 10.5.93 es, 10-5-93
Cutch-180M.T. Solan M.T. rovisional
egistration
ithdrawn and

4500 15-6-93
M.T.
B ta nos
"thdrawn and
ot restored.
7. fs. Ganesh 11.6.93 9600 21-6-93
ood Products, M.T.
ew Delhi

c

-
ot restored.
8. /s. Chander 3600 15-7-93 -- do --
ndustries M.T.

As indicated in the Table, the applications made by these units were
D 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 SL Nos. 1 to 3 and 5 to 7 for government's
E approval. It rejected the proposals of other including the units at SL No. 4
and 8 in the Table on the ground that they failed to take only steps to set
up the factories pursuant to sub- committee's approval. The matter was
then placed before H.E. The Governor.

Out of the said six units, only the first three units have been approved
F by the Governor. In the case of units at SL No. 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.)
G
Just about the time the Governor (government) was taking his
decision, Writ Petition No. 1455of1993 came to be filed by Shri Yogendra
Chandra, M.L.A. for issuance of an appropriate writ restraining the
Government from permitting the establishment of any katha units in the
H State on the ground that such establishment would lead to indiscriminate
STATE v. GANESH WOOD PRODUCTS [B.P. JEEVAN REDDY, J.] 489

felling of khair trees which would have a deep and adverse effect upon the . A
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
on permission should be granted for new units. Soon afterwards, Shankar
Trading Company, the existing mechanised unit, filed Writ Petition No. B
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 c
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 communi-
cated to the concerned parties, three writ petitions came to be filed by the D
units at SI. 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. 145of1994 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 E
yet another writ petition (1489of1993) 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 F
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 G
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. 11086-11089of1995
by Shankar Trading Company against the judgment of the High Court. H
490 SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A The learned Additional Solicitor General, Sri V.R. Reddy, submitted
that.the provisional registration or "approval", as it is called by IP ARA, 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 raw material in the State and arrived
at the conclusion that it can sustain only three units viz., Doon Katha,
B
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
c 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
D
constraints of writ jurisdiction in taking upon itself the determination of
the availability of raw material and on that basis quashing the order of the
Government.

Sri K. Madhava Reddy, learned counsel for Sri Yogendra Chandra
E submitted that the High Court was not justified in holding that the appel-
lant 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
F 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 Com-
pany submitted that the raw material available in the State is not sufficient
G 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
H statutes, both Central and State.
STATE v. GANESH WOOD PRODUCTS [B.P.JEEVAN REDDY,J.] 491

Sri Du~hyant Dave, learned counsel appearing for Ganesh Wood A
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
B
may choose. He submitted that katha industry is not governed by Industries
Development (Regulation) Act, 1951, (1.D.R. Act) hence no licence or
permission is necessary from the authorities under the said Act for estab-
lishing 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 c
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 D
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 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 par-
ticulars of raw material available in the State is more than sufficient to E
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 F
that it is seeking to merely ensure that all the raw material in the State is
reserved for itself by excluding all others 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 Gooal Subramaniam, learned counsel for Dev Bhoomi (another G
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;. H
492 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A 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
B 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
C distinguishing 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
D 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 khatr trees were included
in the Schedule to the Himachal Pradesh Forest Produce (Regulation of
E Trade) Act, 1982 by Notification dated Apri! 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
F 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 (respon-
G dents) 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.

H Sri Dholakia and Sri M. S. Ganesh appearing for Sagar Katha (yet
STATE v. GANESH WOOD PRODUCTS [B.P. JEEVAN REDDY, J.] 493

another respondent) disputed the several contentions raised by the learned A
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 lhe same lines.
B
LAW APPLICABLE:

Katha industry is not in the schedule to the Industries Development
and Regulation Act. The provisions regulating the establishment of in-
dustries contained in the said Act, therefore, have no application to this c
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 an 52 of List-I - is a matter within the D
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 industrialisa-
tion of the State. It has constituted IPARA, as far back as 1974, with the E
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 F.
and (iii) to process the applications for establishment of new industries and
select projects for govemment 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 im-
plementation of the approved projects from various government depart-
ments and to act as the channel of correspondence and as the co-ordinating G
agency between the entrepreneurs and various concerned government
departments". In short, this authority is to acl 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. H
494 SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A 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
B
projects for government approval". This Clause makes it clear that the
function of the auth01ity was not to grant approval for any new industly but
only to process their applications and to select projects for govemment's
consideration; it was for the govemment to approve them. It is equally
relevant to note that the Notifications constitutilig or reconstituting the
c !PARA do not say anywhere that no indust1y can be established unless it
applies to !PARA or unless its application is processed by !PARA, nor do
they say that unless approved by the Govemment, no industly can be estab-
lished in the State. This means that if there are any enactments or other
statut01y provisions goveming the establishment of industlies, they have to be
D complied with by the intending entrepreneurs. The IPARA or the Government
of Himachal Pradesh propose neither add to those provisions not do they
pwp01t to detract therefrom.

Evidently because it was in their interest, the fifteen units proposing
to establish katha factories in Himachal Pradesh (including the units
E concerned in this bench 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
F 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 disap-
prove. 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
G 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 ~he IPARA.
When this is done, it is argued by learned counsel, Sri Dave, appearing for
H Ganesh Wood Products that the government has no power to decline the
STATE v. GANESHWOODPRODUCTS[B.P.JEEVANREDDY,J.] 495

approval or to disapprove the provisional approval granted by IPARA. A
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 IP ARA, whether of 1974 or of 1993, do not
speak of registering any unit. The argument of the learned counsel, there-
fore, means that any and every application for establishment of new in-
B
dustry 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 c
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 D
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 E
the government in that behalf and to its policies. While approving the
projects, it is certainly open to the gover!'ment 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 F
the State should be exploited in an even and balanced manner 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.
G
We may make it clear that we do not approve or accept the conten-
tion urged by Sri Dave that as on today there is no law preventing any
person from establishing any industry anywhere so long as 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 H
496 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A is for him to act according to his conviction and take the consequence, 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
B 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
c in such an event would be to extend a fair and equitable treatment to all
persons coming before it. Having approached the IP ARA and the govern-
ment 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
D 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.
E
Lest our observations hereinabove may be mis-understood, 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 :

F "Central Acts :

1. Wildlife Protection Act, 1972.

2. The Water (Prevention and Control of Pollution) Act, 1974
(amended in 1978, 1988 and later).
G
3. The Forest (Conservation) Act, 1980 (as amended in 1988).

4. The Air (Prevention and Control of Pollution) Act, 1981 (as
amended in 1988).

H 5. The Environment (Protection) Act, 1986.
STATE v. GANESH WOOD PRODUCTS [B.P.JEEVANREDDY,J.] 497

6. The Industries Development and Regulation Act, 1951 (as A
an'lended from time to time) - to the extent it is applicable.

HIMACHAL PRADESH ENACTMENTS:

1. The H.P. Private Forests Act, 1954.
B
2. The H.P. Land Preservation Act, 1978 and the Rules made
thereunder.

3. The Himachal Pradesh Forest Produce (Regulation of Trade)
Act, 1982.
_( c
4. Various Municipal/Panchayat and 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 D
of the Himachal Pradesh enactments. The preamble to the Environment
(Protection) Act reads :

"An Act to provide for the protection and improvement of environ-
ment and for matters connected therewith.
E
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 protec-
tion and improvement of human environment:

And whereas it is considered necessary further to implement the F
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 G
comprehensive manner to take in all factors affecting environment includ-
ing preservation of forests. It reads :

'"Environment' includes water, air and land and the inter-relation-
ship which exists among and between water, air and land, and
human being, other living creatures, plants, micro-organism and H

i
498 SUPREME COURT REPORTS (1995) SUPP. 3 S.C.R.

A property."

Section 3 empowers the Cen.tral 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
the abating environmental pollution". Sub-section (2) of Section 3
B 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 :
c (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 environ-
D ment in its various aspects ;

(v) restliction 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 ;....... "
E
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 in-
dustries and the carrying on of processes and operations in different areas".
F
Rules have been framed under the Act. Rule 5 deals with "(P)rohibi-
tion and restriction on the location of industries and the carrying on
processes and operations in different areas". Sub-rule (1) Rule 5, insofar
as it is relevant, may be quoted :
G
"(1) The Central Government may take mto consideration the
following factors while prohibiting or restricting the location of
industries and carrying on of processes and operation in different
areas ..... .

H (iv) The topographic and climatic features of an area.

ti
STATE v. GANESH WOOD PRODUCTS [B.P.JEEVAN REDDY,J.] 499

(v) The biological diversity of the area which in the opinion of the A
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 B
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 objec- C
tives underlying the Act and the alarming diminution of forest cover in the
country, the said provisions should be understood not so much as confer-
ring 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. D

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 E
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 exten- F
sive powers to regulate, restrict, prohibit cutting of trees and their removal
from notified areas. So does the Himachal Pradesh Private Forest 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 act have a crucial bearing on the establishment and G
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 H
500 SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.

A 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 considerations which the government must keep in mind while
B devising its policies and programmes. A brief examina~ion of the impm:-
tance and the fundamental significance of forests in the matter of environ-
ment and ecology would be in order at this juncture.

The report of the "World Commission on Environment and Develop-
c ment" 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:*

"There has been a growing realisation in national governments and
D 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
E global environmental problems. It is therefore futile to attempt lo
deal with environmental problems without a broader perspective
that encompasses the factors underlying world poverty and inter-
national inequality........... .

............ many present development trends leave increasing numbers
F 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 then 90 per cent of the increase (in population) will
G occur in the poorest countries ........

Meanwhile, the industries most heavily reliant on environmental
* 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
H Report was submitted in the year, 1987.
STATE v. GANESH WOOD PRODUCTS [B.P. JEEVAN REDDY, J.] 501

resources and most heavily polluting are growing most rapidly in A
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 ...... .
B
The other great institutional flaw in coping with environ-
ment/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
c
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 as-
sociated with environmental degradation-The next few decades D
are crucial for the future of humanity. Pressures on the Planet are
now unprecedented and are accelerating at rates and scales ne~
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 E
pressures or growth and changes in agricultural, energy, and in-
dustrial 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 agencies of governments, of F
international organizations, and of major private-sector institu-
tions. These must be made responsible and accountable for ensur-
ing that their policies, programmes, and budgets encourage and
support activities that are economically and ecologically sus-
tainable both in the short and longer terms". G
Similar views were e~ressed 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, H
502 SUPREME COURT REPORTS (1995) SUPP. 3 S.C.R.

A 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 :*
B
"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 environ-
ment. When he tries to circumvent the laws of nature, he usually
c 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
D 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
E did it mainly by depleting or destroying the natural 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
F 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
G 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
Quoted in "Small is beautiful - A study of economics as if people mattered • by E.F.
H Schumacher.
STATE v. GANESHWOODPRODUCTS[B.P.JEEVANREDDY,J.] 503

left for anyone to move from his place to another. A
This digression was necessary to put in proper perspective the obliga-
tion of the State and the significance of the concept of "sustainable develop-
ment" and "inter-generational equity"* vis-a-vis the legal submissions made
on the basis of principles of natural justice, estoppel and so no.
B
A FEW MORE RELEVANT FACTS:

When a person applied for approving his project for establishment
of a katha industry, the sub-committee of IPARA communicated its ap-
proval clearly envisaging that soon after receiving the said approval, the C
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 D
HIMACHAL PRADESH 'DIRECTORATE OF INDUSTRIES'

Dated : Shimla - 171002 The 21.6.1993

To
E
M/s. Ganesh Wood Products,
108-109/215, Katha Paren,
Tilak Bazar, Delhi - 110006.

Subject : APPROVAL OF PROJECT BY IPARA.
F
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 G
the State of Himachal Pradesh for the Manufacture of following
items:
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. H

1
504 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A S.NO. ITEM OF MANUFACTURE PROPOSED ANNUAL
CAPACITY
Acacia Catechu Extract 240 MT.
1.
Bye Products (Cutch) 240 MT.

This approval is subject to the following conditions :
B
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
c 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
D measures to be installed should conform to the effluent and emis-
sion 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
E
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
F 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
G what-so-ever on the pwt 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
H land, finance and other assistance as required for the project at
STATE v. GANESH WOOD PRODUCTS [B.P. JEEVAN REDDY, J.] 505

your own. A
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.
B
6. You are required to fumish qua1terly progress rep01t until the
commencement of production. This report will have to be furnished
every quarter ending 31st March, 30th June, 30 the Sept.

7. You will inform this office about the commencement of produc- C
tion.

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 D
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. In-
dustries Centre, of your district. E
9. You will have to make inbuilt parking facilities within factory
area 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 road.
F
10. This proposal has been approved without any commitment of
availability of Khair Wood by the State Govemment.

11. You will have to raise green belt around the factory premises.

We are hopeful that you will now immediately initiate effective
G
steps to implement this project. In case of any difficulty/assistance
required, kindly feel free to get in touch with us. We assure you
of our full co-operation.

(EmpJiasis added) H
506 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A Wishing you and your enterprise a success.

Yours faithfully,

sd/-
{S.C. Negi)
B Member Secretary
IPARA"

{Let it be noted that this letter is not from the Government of
Himachal Pradesh but only from IPARA)
c 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
D 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 request-
ing him to furnish basic information relevant to the State of Himachal
Pradesh in the proformas enclosed to the said letter which was necessary
E " to review the production and sale of khair wood' teak wood/resin in the
c~untry''. 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 re-producing:
F
"GOVERNMENT OF INDIA MINISTRY OF ENVIRON-
MENT AND FORESTS

Paryavaran Bhawan, C.G.O. Complex, Lodi Road,
New Delhi Pin 110 003
G
No. 3-13/93-94 Dated: 6th October, 1993

To

The Forest Secretary,
H Government .of Himachal Pradesh,
STATE v. GANESH WOOD PRODUCTS [B.P. JEEVAN REDDY, J.) 507

Shimla. A
Subject : Registration of New Katha units - availability of khair
wood.

Sir,
B
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 Govt. have issued orders
for registration of 15 new katha units for manufacturing of katha c
from khair wood and is also contemplating to issue more licences
for setting up of new units. This is being done without due con-
sideration 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 D
clearly says that no forest based enterprise, except that at the village
or cottage level be pennitted in future unless it has been first cleared
after a careful scrutiny with regard to assured availability of raw
material.

(Emphasis supplied) E

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
F
from Government and private forest area. Action taken in this
regard may kindly be sent immediately.

Your faithfully,

sd/-
G
(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 H
508 SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A 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 Chairmen of four block
B 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
C 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 peril to the
D 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 " approval" granted by the
sub-committee or 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
E entrepreneur and was a very small industry analogous to a bhatti and
further that installation of its factory was almost complete. It was, there-
fore, decided not to disturb the approval granted to it. It was also found
that five other units, viz., Orient Herbs, Sagar Katha, Dev Bhoomi In-
dustries, Naman Wood Products and Ganesh Wood Products are in the
F 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 to the
existing bhatties, existing mechanised factory (Shankar Trading Company)
and the aforesaid six new units with their restricted capacity. It decided
G that the approvals of the other units should be cancelled because they had
not taken any concrete steps to implement the projects approved. The
IP ARA 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
H material should be assessed and verified in a proper manner. The proposals
STATE v. GANESH WOOD PRODUCTS (B.P. JEEVAN REDDY,.J.] 509

and recommendations of the IPARA aforesaid were placed before H.E. A
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 deserve to be modified as under :
B
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.
c
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 entrepreneur
at Paonta Sahib (para 5 sub para 1) are approved and be irnple- D
mented.

sd/-
Governor 15.9.93"

The decision was communicated to the concerned persons - leading E
to the filing of several writ petitions in the High Court.

AVAILABILITY OF KATHA IN THE STA TE OF HIMACHAL
PRADESH:

Pursuant to the directions of the High Court on the question of F
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 :
G
"(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 :
•• An echo of sustainable development emphasised by "The Worlsd Commission on
Environment and Development". H
510 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A (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 preferab-
ly by establishment of a direct relation between the factory and the
individuals who can grow the raw materials by supporting the
individuals with inputs including credit, constant technical advice
B 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
c balances specially of broad leaved species,. available at present and
in future (projections over a period of twenty 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''.
D
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
E 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
F 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 repre-
sentation is being examined ......... .

G (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 ~ave been prepared in respect of Forest Divisions
H which prescribe ceFtain annual yield in terms of numbers of trees
STATE v. GANESH WOOD PRODUCTS (B.P.JEEVAN REDDY,J.) 511

and volume and area. The yield is exactly known after carrying out A
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 years. It is not, therefore, possible to furnish
information for 30 years.

There is no working plan or enumeration of khair trees growing B
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 ........ C
5. Approval of the State Govemment : IPARA had initially cleared
14 projects and conveyed the clearance to the respective parties
in anticipation of the Government approval. However, Govern-
ment reviewed the decision of IPARA taken in its meeting held
on 28.8.1993 and decided that 6 units out of 14 which were D
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.
E
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 F
Government Forest by H.P. St~te 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 G
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 H
512 SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.

A 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.
B
THE MYOPIC APPROACH OF THE SUB-COMMITTEE OF THE
!PARA IN APPROVING THE PROPOSALS FOR KATHA FACTORIES:

During the years 1992 and 1993, the sub-committee of IPARA seems
c 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 National Forest Policy and the
D 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 en-
vironment 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 nothi,ng for the next and future genera-
E tions. 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
F on fore st produce should not only be restlicted 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 an-
nounced by the Government of India. The policy of liberalisation has to be
G 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 wlrich have been referred to herein-
before. 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
H trees/raw material from private lands/forests.No distinction can.be made
STATE v. GANESH WOOD PRODUCTS [B.P. JEEVAN REDDY, J.) 513

between govemment fores ts and p1ivate forests in the matter offorest wealth A
of the nation and in the matter of environment and ecology. It is .iust 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 B
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 Com-
pany (Mahesh Udyog). The credentials of Sri Yogendra Chandra appear c
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 D
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 E
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 F
in the previous years pursuant to the agreement with the government were
going to be affected. It is 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. G
THE DOCTRINE OF PROMISSORY £STOPPEL 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 H
514 SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.

A 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. Nige1ia1i 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,
B beginning with Central London Property Tmst 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
c coherent exposition which have never been systematically ex-
plored."

Though the above view was expressed as far back as 1972, it is no
less valid today. The dissonance in the views expressed by this Court in
D 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 depll1ted from in wtain respects
in lit 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 Baku/ Oil In-
E dustries v. State of Gujarat, [1981] 1 S.C.C. 31 and Poumami Oil Mills v.
State of Kerala, [1986] Suppl. S.C.C. 72B is another instance. The fact the
recent decision in Kasinka Trading and Anr. v. Union of India & Ors., [1995]
1 S.C.C. 274, is being reconsidered by larger bench is yet another affirma-
tion of the need stressed by Lord Hailsham for enunciating "a coherent
F 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 Mis.
Motilal Padamapat Sugar Mills Co. Ltd. :

G "The law may, therefore, now be taken to be settled as a result of
this decision, that where the Government makes a promise know-
ing or intending that it would be acted on by the prornisee 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
H be enforceable against the Govt. at the instance of the promisee,
STATE v. GANESH WOOD PRODUCTS [B.P.JEEVANREDDY,J.] 515

notwithstanding that there is no consideration for the promise and ft,..
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 change in the
position of the promisee (as a result of acting on the faith of representation B
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 repre- c
sentation? 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 m~tter
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 D
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 E
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 compen-
sated appropriately and allow the promissor to go back on his promise, F
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 under-
standing the words "promisee altering his position". Altering his position G
should mean alteration in the position of the promisee as it make 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 H
516 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A 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 governmeBt 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
B circumstances of the case and the provisions of the Specific Relief Act,
whether the plaintiff should be granted specific performance of the contact
or only a decree for damages for breach of contract. It must be remem-
bered that the doctrine of promissory estoppel was evolved to protect a
promisee who acts on the faith of a promise/representation made by
c 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
D promisee on the faith of the representation does not necessarily amount to
altering 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
E precluded from resiling and that he should be held fast to his repre-
sentation, 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.

F The matters before us have to be approached and decided keeping
the above principles in mind. The Court should first ascertain what precise-
ly 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
G 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
H respondents - where the government should or should not be allowed to
STATE v. GANESH WOOD PRODUCTS [B.P. JEEVAN REDDY, J.) 517

go back on the said "approval" granted by the IPARA (sub-committee). It A
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 courts, it is evident that the Court shall also have to keep in
B
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 govern-
ment, as also the plea of the respondents that in the circumstances they
believed and acted in good faith that IPARA is but another name 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 c

-
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 D
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 E
been held firstly that :

"But it is necessary to point out that since the doctrine of promis-
sory estoppel is an equitable doctrine, it must yield when the equity
so requires. If it can be shown by the Government that having F
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 promisee and
enforce the promise against the government. The doctrine of
promissory estoppel would be displaced in such a case because, G
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 H
518 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A 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 :
B
"But even where there 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 promisee a reasonable opportunity of resuming his
c position' provided of course it is possible for the promisee to
restore the status quo ante. If, however, the promisee cannot
resume his position, the promise could become final and ir-
revocable. Vide Ajayi v. Briscoe (1964) 3 All ER 556."

It is this aspect which has been elaborated by us keeping in mind the facts
D 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 implementa-
E tion 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
IP ARA were earlier registered with the industries Department and have
F thereafter purchase, lands, constructed factory buildings, and/either pur-
chased 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 petit~oners
separately examined. Probably, the High Court was influenced by the
G opinion expressed by the IPARA (at the meeting held on August28, 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-
H MATERIAL!KHAIR WOOD IN THE STATE:
STATE v. GANESHWOODPRODUCTS[B.P.JEEVANREDDY,J.) 519

The facts stated above do establish the imperative necessity of a A
proper estimate of the availability of raw material, namely, khair wood in
... the St~.te. 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. 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
B
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 Govern-
ment 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 c
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 may industries it can feed - and upto what D.
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 E
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 F
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 con-
tradictions in its case from stage to stage.

The appeals are accordingly allowed, the judgment of the High Court G
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 H
520 SUPREME COURT REPORTS (1995) SUPP. 3 S.C.R.

A 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 an con-
cerned shall take steps to ensure observance of this direction.

The Government of Himachal pradesh shall make a surv~y and
B assess the approximate availability of khair wood Hi 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
C 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.

D No. order as to costs in these appeals.

R.A. Appeals allowed.