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

- **Citation:** [1995] Supp. 3 S.C.R. 477
- **Court:** Supreme Court of India
- **Decided:** 1995-09-11
- **Case number:** Civil Appeal Nos. 8184-88 of 1995
- **Bench:** B.P. Jeev An Reddy, M.K. Mukherjee
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-himachal-pradesh-and-others-v-ganesh-wood-products-and-ors-etc-13319
- **Pages:** 44

## Headnote

Constitution of India-Seventh Schedule-Entry 24 of List //-Industries-Katha /ndust1y-No enactment made by State of Himachal Pradesh
goveming establishment of industfies-Executive power of State extends to that
subject matter.
A
B
c
Environment (Protection) Act, 1986-Forest based industries-Establishment of-Legal enactments govemin~Significance of forest wealth-Impact 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 undertaken 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 manufacturing 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
B
c
was taking his decision, one MLA filed a Writ Petition for restraining the
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
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
IP ARA 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
governme

## Text

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..
STATE OF HIMACHAL PRADESH AND OTHERS
v.
GANESH WOOD PRODUCTS AND ORS. ETC.
SEPTEMBER 11, 1995
[B.P. JEEV AN REDDY AND M.K. MUKHERJEE, JJ.)
Constitution of India-Seventh Schedule-Entry 24 of List //-Industries-Katha /ndust1y-No enactment made by State of Himachal Pradesh
goveming establishment of industfies-Executive power of State extends to that
subject matter.
A
B
c
Environment (Protection) Act, 1986-Forest based industries-Establishment of-Legal enactments govemin~Significance of forest wealth-Impact 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 undertaken 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 manufacturing 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
B
c
was taking his decision, one MLA filed a Writ Petition for restraining the
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
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
IP ARA 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 beA
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 available 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 ..
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
c
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 registration; 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.
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
F
case in the particular facts and circumstances of the case; that the Government 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 unsusH
480
SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.
A
tainable in law.
B
c
D
E
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.
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
HELD : 1.1. Katha Industry is not in the schedule to the industries
Development and Regulation Act. The provisions regulating the establishment of industries contained in the said Act, therefore, have no application to this industry. There is no corresponding enactment made by
the legislature of the State of Himachal Pradesh governing the establishment of industries similar to 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]
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 enF
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
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 approved by the Government, no industry could be established in the State.
B
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]
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
Di
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 adB ministrative 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. [496-B-E]
2. The consideration of environment and ecology and preservation
of forest wealth are absolutely relevant considerations which the governC
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
E
F
proper assessment should be made of the forest wealth and the establishment of industries based on forest produce should not only be
restricted accordingly but their working should also be monitored closely
to ensure that the required balance is not disturbed. Insofar as forestbased industries are concerned, there is no absolute or unrestricted right
to establish industries notwithstanding the policy of liberalisation announced by the Government of India. The policy of 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
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 distinction can be made between government forests and private forests in the
matter of forest wealth of the nation and in the matter of environment and
ecology. It is just not possible or permissible. The National Forest Policy
G and the Himachal Pradesh Forest Policy do not make any such distinction. [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 impecA
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]
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
c
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
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
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
E
F
of the promisee as it makes it appear to the Court that holding the promisG
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 representation does not necessarily amount to altering his position so as to
B
c
D
E
F
preclude the promissor from resiting from his representation. If the equity
demands that the promissor is allowed to resile and the promisee is compensated appropriately, that ought to be done. If, however, equity demands,
in the light of the things done by the promisee on the faith of the representation, that the promissor should be precluded from resiting and that he
should be held fast to his representation, that should he done. 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. [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
4.3. In the instant case, the Court shall also have to keep in mind the
plea of government that IP ARA 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
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
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
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.
V.R. Reddy, Additional Solicitor General, K. Madhava Reddy, S.K.
B
c
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
parties.
These appeals arise from a judgment of the Himachal Pradesh High
Court disposing of eight writ petitions together.
E
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 flockG
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
c
D
E
F
G
H
Himachal Pradesh is an industrially backward State. Like other
States, it too has been evolving schemes for encouraging the industrialisation of the State. By a Notification dated May 13, 1974, the Governor of
Himachal Pradesh established the Industrial Projects Approval and Review
Authority (IPARA) comprising Chief Secretary to the Government,
Secretaries to the Departments of Multipurpose Projects and Power,
Public works, Industries and Finance besides Chairman of the Himachal
Pradesh State Electricity Board, Chief Conservator of Forests. Chief Engineer, P.W.D. and the Director of Industries. The terms of reference and
the activities to be undertaken by the IP ARA were specified as under :
"(i) To act as the focal point for dissemination of information
regarding programmes of Government assistance and incentives to
entrepreneurs.
(ii) To receive all applications for setting up of factories in
medium and large scale sector.
(iii) To process. the applications for establishment of new industlies and select projects for Government approval.
(iv) To arrange all necessary assistance required for the successful implementation of approved projects from various govt.
Departments and to act as the channel of correspondence and the
coordinating agency between the entrepreneurs and various concerned Govt. Departments.
(v) To review the progress of approved projects.
(vi) To recommend necessary ch~nges in the Government
policy regarding Industrial Development in the light of experience
gained.
(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 IP ARA,
however, remained the same as were contained in the Notification dated
May 13, 1977. It is stated that during the period IPARA was not in
existence, the Director of Industries, Himachal Pradesh was looking after
that work. Applications received from entrepreneurs proposing establishment of industrial units in Himachal Pradesh were being processed in
the first instance by IP ARA - and during the period when IP ARA was not
in existence, by the Director of Industries.
c
Several units applied to IP ARA/Director of Industries during the D
years 1992 and 1993 proposing to establish mechanised units for manufacturing katha. In all, fifteen units applied but we are concerned only with
eight such units in these appeals. We shall, therefore, state the particulars
with respect to these eight units only :
STATEMENT SHOWING THE PROJECTS APPROVED BY !PARA
AND THEIR PRESENT STATUS
E
s.
Name of the
Date of
ProducLocation Khairdate of
Whether
No.
party
receipt
tion Capacity
wood
approIPARA
of
PA Qty. &
requireVfl( by
conveyed
applicavalue
ment
IP ARA
ti on
per
Subannum 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 IY es. 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
B
7.
c
8.
fs. Ganesh
11.6.93
ood Products,
ew Delhi
/s. Chander
ndustries
Cutch-180M.T.
Solan
M.T.
rovisional
4500
15-6-93
M.T.
9600
21-6-93
M.T.
3600
15-7-93
M.T.
egistration
ithdrawn and
ta nos
"thdrawn and
ot restored.
ot restored.
-- do --
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 IP ARA 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
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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.
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Out of the said six units, only the first three units have been approved
by the Governor. In the case of units at 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 IP ARA
held on August 28, 1993 and the order of H.E. The Governor have been
placed before us. (Himachal Pradesh was under the President's rule then.)
Just about the time the Governor (government) was taking his
decision, Writ Petition No. 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
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STATE v. GANESH WOOD PRODUCTS [B.P. JEEV AN 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 communicated 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 Y ogendra 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.
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490
SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.
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,
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 IP ARA recommended the case of six units, viz. the three
units aforesaid and ganesh Wood Products, Naman Wood Products and
Dev Bhoomi Industries but the Governor did not agree with the said
recommendation and selected the first three units applying the principle
first come, first served'. No valid objection can be taken to the orders of
the Government since they are conceived in public interest keeping in view
the availability of the raw material. The learned Additional Solicitor
General submitted that the High Court exceeded the well recognised
constraints of writ jurisdiction in taking upon itself the determination of
the availability of raw material and on that basis quashing the order of the
Government.
Sri K. Madhava Reddy, learned counsel for Sri Y ogendra Chandra
submitted that the High Court was not justified in holding that the appellant yogendra Chandra cannot be "accepted as a public spirited citizen
approaching this Court to protect the public interest", merely because he
was not able to place before the Court reliable data in support of his
allegation of illicit felling of trees in the past. Learned counsel contended
that while rightly holding that there was no evidence of collusion between
Y ogendra Chandra and Shankar Trading Company, the Court erred in not
entertaining his writ petition as a bonafide public interest litigation.
Sri P.P. Rao, learned counsel appearing for Shankar Trading Company submitted that the raw material available in the State is not sufficient
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
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 establishing a katha factory, more so in the small scale sector. The government's
duty is merely to register the units being set up. It is bound to register any
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and every application for establishing a small-scale industry and it has no
power to cancel, revoke or disapprove such registration. Learned counsel
submitted further that on the basis of approval granted by IP ARA, 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 particulars of raw material available in the State is more than sufficient to
sustain not only the three units permitted by the Governor but also the
three units recommended by the IP ARA in its meeting held on August 28,
1993. He submitted that bonafides of Sri Y ogendra Chandra are suspect
c
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, 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;.
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SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.
2 .. that the High Court was justified in going into the merits of the
case and quashing the orders of the Governor on merits in the particular
facts and circumstances of the case;
.
3. that the State Government is not without power to regulate the
supplies of raw material in case it think it necessary or expedient. There
are enough enactments empowering it to do so;
4. The recommendations of IPARA made in its meeting held on
August 28, 1993 were considered decisions arrived at after taking into
consideration all aspects of the matter. It applied a legitimate criteria in
C distinguishing Ganesh Wood Products, Naman Wood Products and Dev
Bhoomi Industries from others. IP ARA was of the opinion that no new
units should be permitted but those units that have already acted upon the
approval granted by IP ARA 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 IP ARA, 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
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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
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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 (responG dents) submitted that they too had acted upon the approval granted by
IP ARA 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. JEEV AN 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 Y ogendra Chandra
or Shankar Trading Company. Sri Balakrishnan, learned counsel for Orient
Herbs advanced submissions on lhe same lines.
LAW APPLICABLE:
Katha industry is not in the schedule to the Industries Development
and Regulation Act. The provisions regulating the establishment of industries contained in the said Act, therefore, have no application to this
industry. There is no corresponding enactment made by the legislature of
the State of Himachal Pradesh governing the establishment of industries
similar to I.D.R. Act. At the same time, by virtue of Entry 24 of List-II of
the Seventh Schedule to the Constitution, "industries" - subject, of course,
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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 industrialisation of the State. It has constituted IP ARA, as far back as 1974, with the
same purpose. The functions of the said authority have been the same
throughout, viz., to act as the focal point for dissemination of information
regarding programmes of government assistance and incentives to
entrepreneurs generally.