A writ petition was filed by Ganesh Wood Products against the decision of the Government of the State of Himachal Pradesh to refuse the establishment of katha factories in the State. The Government submitted that such establishment would lead to indiscriminate felling of the so called khair trees which would have a deep and adverse effect upon the environment and ecology of the State. The raw material available in the State, namely the khair trees, for manufacturing katha was not sufficient to sustain the proposed industries. The High Court allowed the petition. The Government appealed to the Supreme Court of India.
The Respondent, Ganesh Wood Products, submitted that according to the New Industrial Policy introduced by the Government of India, a citizen of India had an unquestioned and absolute right to establish a small-scale industry at any time, at any place and of whatever capacity he may choose. The Government was bound to register any and every application for establishing a small-scale industry and it had no power to cancel or disapprove such registration.
The Court noted that there was no enactment made by the legislature of the State of Himachal Pradesh governing the establishment of the industries in question. In the absence of an enactment, the executive power of the State extended to the said subject matter. While acting in its executive capacity, the Government was entitled to lay down policies and preferences in the interest of the State, its economy, and the Himachal Pradesh Forest Policy. The Government had the power to approve applications and this included the power to disapprove. The only obligation of the State in such event was to extend a fair and equitable treatment to all persons coming before it. It was open to the Government to say that having regard to the availability of the raw material it did not approve more than a particular number of factory units.
The Court also emphasized that during the years of 1992 and 1993 every proposed factory using khair trees was approved by the State authority in charge. This was contrary to public interest involved in preserving forest wealth, maintenance of environment and ecology and considerations of sustainable growth and inter-generational equity. After all, the present generation had no right to deplete all the existing forests and leave nothing for future generations.
The obligation of sustainable development required that a proper assessment should be made of the forest wealth and the establishment of industries based on forest produce should not only be restricted accordingly but their working should also be monitored closely to ensure that the required balance was not disturbed. In terms of forest wealth and environment, it also did not make a difference if the trees to be used came from private forests or from Government forests.
Finally, the Court analyzed the doctrine of promissory estoppel and applied it to the case. It held that the rule being an equitable doctrine, it had to be moulded to suit the particular situation. If the equity demanded that the promissory was allowed to resile and the promisee was compensated appropriately, that ought to be done. If, however, equity demanded, in the light of the things done by the promisee on the faith of the representation, that the promissory should be precluded from resiling and that he should be held fast to his representation, that should be done.
In conclusion, the Court remitted the matters to the High Court for a fresh disposal of the writ petitions and restrained the factory units from taking any further steps towards setting up the units pending the final orders by the High Court.