Himachal Pradesh government in its new industrial policy invited investors to extract lime stone from the areas designated by the State and to set up cement industry within the State. One of the areas so earmarked was the Baga Bhalag lime stone deposits in Tehsil Arki of District Solan. The Jaypee Group was the successful bidder for this project and entered into a memorandum of understanding (MOU) with the State on 9th July, 2004 wherein it agreed to set up a large capacity cement project based on the Baga limestone deposits with a minimum capacity of 2 million tones per annum (MTPA) of clinker manufacturing out of which at least 50% of the installed capacity of clinker was to be converted to cement through a grinding and blending unit. A 62 MW thermal power plant was also envisaged to exploit the cement plant, with a budget of Rs 90.45 crores.

On realizing that environment clearance under an Environment Impact Assessment (EIA) 2006 notification was mandatory, the Pollution Control Board on February 15, 2007 asked the company to hold a public hearing and obtain environment clearance for the thermal plant under construction. A public hearing was so conducted on July 2, 2007 and minutes of the meeting revealed that the entire public present opposed setting up of the thermal plant, so the government took a decision to withdraw all no objection certificates for setting up thermal plants in the state. But the company did not scrap the projects.

Later on, in 2008, with a change of government, the policy was changed by the cabinet to permit captive consumption thermal plants and on the same day JAL sent a letter seeking permission to set up a 60 MW captive thermal plant at Bagheri.

However, the court suspected active connivance of officials with the company and ordered setting up of a three member special investigation team.

The organization Him Privesh Environment Protection Society and panchayat representatives of the area had alleged that the cement plant had been set up in total violation of environment laws and requested due investigation. The society of senior and concerned citizens works on environment issues in the Baddi-Barotiwala-Nalagarh Industrial area; they did raise the issue of pollution from the cement plant, praying for cancellation of the unit's consent to operate. "We carried out an independent monitoring of the ambient air quality in November 2010 and the results showed that the pollution was way beyond the norms. The sample, tested and analysed at a US-based laboratory, with support from Community Environment Monitoring (CEM), a Chennai-based toxics watchdog group, revealed that the Jaypee Cement facility is a source of unsafe levels of particulate matter like manganese, mercury, nickel and cadmium. Studies have shown a significant association between exposure to fine particles and aggravation of respiratory and cardiovascular disease, lung disease, decreased lung function, asthma attacks, and certain cardiovascular problems such as arrhythmia, with older people and children being particularly vulnerable.

Green bench of HP High Court in fact found blatant violations of environment laws and imposed Rs 100 crore damages on the company for setting up a cement plant by adopting fraudulent means. The court has also cancelled permissions for the thermal plant and directed that it be dismantled within 3 months. According to Justice Deepak Gupta observes “this company has behaved like a law unto itself. At every stage JAL has either given wrong information or has tried to mislead the authorities.” The company had in fact obtained environment clearance by fraudulently claiming costs of the plant to be less than Rs 100 crore (in which case it did not need environmental clearance) where it had invested between Rs 400 to Rs 500 crore for setting up the cement plant. It also transferred 325 bighas of villagers’ common lands worth crores of rupees without any authority; the court bench further questions: "Can the state act like a land mafia, take over possession of the village common land and hand it over to a private company without even following the semblance of the rule of law" [1].

The court issued its order in May 4th, 2012. However, the 94-page judgment does not mention pollution from the cement unit, as most of the observations revolve around the irregularities indulged in while obtaining and granting clearances. In the concluding paragraphs the bench clarifies its position by stating that, "If this was going to affect JAL alone we would not have hesitated to pass such an order (to demolish the cement plant). We are sadly aware that if we pass such an order the livelihood of thousands who are totally innocent and not guilty like JAL will be adversely affected". There is a special mention of the truck owners and drivers in this context in the judgment. In fact, almost all truckwallah (truck drivers) have taken loans for buying the truck and were apprehensive about the fate of the plant. However, the impact of the dust on the health of the residents was a shared concern even in the truck union members, "because any sane person would place the health of their family before money" [4].

The case is still quite blurred today, as Jaypee has put both plants (a grinding and blending unit and a cement plant) on sale in 2013 as the company is ridded by a huge debt; Birla Group expressed interest in buying the plant [2].

At the beginning of 2015, the Congress government, after opposing the illegal plant for years, approved expansion of the very same Jaypee Himachal Cement Plant, for the enhancement of clinkerization capacity, as stated a cabinet spokesman [3]

In Baga, it was envisaged lime stone deposits with a minimum capacity of 2 million tones per annum (MTPA) of clinker manufacturing out of which at least 50% of the installed capacity of clinker was to be converted to cement.