The Supreme Court docket on Friday (January 30) noticed that the corporate’s scale of operation (like turnover, manufacturing quantity, or income era) could be a decisive consider figuring out the environmental harm compensation.
“If an organization has a excessive turnover, it displays the sheer scale of its operations. Such an organization, if discovered to contribute generously to environmental harm, its turnover can have a direct co-relation with the extent of injury that’s brought on. Thus, in our thought of opinion, to contend that turnover can by no means kind a related consider quantifying compensation to match the magnitude of hurt is fallacious.”, noticed a bench of Justices Dipankar Datta and Vijay Bishnoi, whereas upholding the Nationwide Inexperienced Tribunal’s (NGT) determination to impose heavy penalties on the actual property builders for the atmosphere harm brought on on account of their unlawful and unauthorized development.
The appeals arose from separate orders of the NGT imposing compensation of ₹5 crore on Rhythm County and roughly ₹4.47 crore on Key Stone Properties for violations of environmental legal guidelines in the course of the execution of enormous residential initiatives in Pune. The NGT took into consideration the developer’s scale of operation to find out the compensation.
Earlier than the Supreme Court docket, the builders contended that the NGT lacked a statutory formulation to quantify environmental compensation and couldn’t arbitrarily depend on challenge price or turnover. They argued that the Central Air pollution Management Board’s compensation formulation, designed primarily for industrial polluters, was inapplicable to residential actual property initiatives. It was additional alleged that the NGT had mechanically adopted Joint Committee stories, amounting to an abdication of its judicial operate.
Agreeing with the NGT’s determination to find out compensation based mostly on the developer’s challenge price, the judgment authored by Justice Datta noticed:
“In circumstances regarding safety of atmosphere, linking an organization’s scale of operations (like turnover, manufacturing quantity, or income era) to the environmental hurt could be a highly effective issue for figuring out compensation. Larger operations signify an even bigger footprint. Bigger scale typically means extra useful resource use, extra emissions, extra waste resulting in extra environmental stress. If an organization income extra from its scale, it’s logical that it bears extra duty for the environmental prices. Linking scale to influence sends a message that greater gamers have to play by greener guidelines.”
“the NGT consciously adopted the challenge price because the related yardstick for quantification of environmental compensation.”, the courtroom mentioned, including that “…the adoption of the CPCB framework by the NGT, within the information of the current case, doesn’t stand ousted merely as a result of challenge price may even have been taken into consideration.”
The Court docket relied on its earlier determination in Goel Ganga Builders India Pvt. Ltd. v. Union of India (2018), the place compensation within the vary of 5–10% of challenge price was permitted for flagrant violations. The penalties imposed on Rhythm County and Key Stone Properties had been discovered to fall properly inside this benchmark and had been held to be neither extreme nor disproportionate, the courtroom mentioned.
“With respect to RHYTHM, the NGT recorded clear findings of development with out requisite statutory permissions, continuation of labor regardless of a stop-work route and deviations from the sanctioned plan, and, discovering the compensation really helpful by the Joint Committee to be grossly insufficient, consciously adopted the challenge price because the related yardstick according to Goel Ganga Builders (supra) to boost the environmental compensation to Rs. 5,00,00,000/-, thereby making certain a rational nexus between the size of the challenge and the targets of deterrence and environmental restitution. The NGT can’t be held to be divested of its statutory authority to make use of challenge turnover as a related yardstick for the dedication of environmental compensation.”, the courtroom noticed.
Different conclusions drawn by the Court docket are:
“1. This Court docket has persistently underscored that environmental compensation should relaxation on a basis of rationality, proportionality and reasoned evaluation. Whereas challenge turnover or price can’t be utilized mechanically as a blunt instrument, it nonetheless stays a related and permissible issue the place the factual matrix so warrants. The dedication of compensation, when undertaken inside this calibrated framework and guided by the parameters delineated in Deepak Nitrite Ltd. (supra), Goel Ganga Builders (supra) and Vellore District Setting Monitoring Committee (supra) doesn’t appeal to the infirmities seen in Benzo Chem Industrial (P) Ltd. (supra) and C.L. Gupta Export Ltd. (supra), and should, due to this fact, be sustained as falling throughout the permissible zone of judicially recognised discretion.
2. Insofar as KEYSTONE is worried, the NGT drew a transparent distinction between violations already subsumed below the one-time violation window and separate statutory infractions regarding extended development with out CTE, continuation of actions regardless of closure 36 instructions and occupation with out CTO, and, upon impartial consideration of the character, length and gravity of such violations, accepted the Joint Committee’s computation based mostly on the CPCB methodology as an acceptable measure of environmental compensation.
3. The CPCB framework, on a conjoint studying of Clauses 1.5.1, 1.5.2 and 1.5.4, makes it abundantly clear that the formula-based methodology is confined to restricted classes of violations arising from instructions issued below the Setting (Safety) Act, 1986, and that in different courses of circumstances, the dedication of environmental compensation have to be preceded by an in depth, site-specific and expert-driven evaluation with emphasis on remediation and restitution. The rules, on the identical time, expressly recognise that such compensation will not be an alternative to impartial statutory motion below the Air Act, Water Act or the Setting Act. The CPCB framework, due to this fact, operates as a facilitative and indicative device, and never as a inflexible or exhaustive code.
4. In respect of each the appellants, the NGT proceeded on the premise of contemporaneous materials and skilled inputs, afforded due alternative of listening to, utilized its impartial thoughts to the problems of legal responsibility and quantum, and exercised its powers below Sections 15 and 20 of the NGT Act in a way that’s reasoned, proportionate and in line with the polluter pays precept.”
Accordingly, the attraction was dismissed, and the penalty imposed was justified.
Trigger Title: M/S. RHYTHM COUNTY VERSUS SATISH SANJAY HEGDE & ORS. (with linked matter)
Quotation : 2026 LiveLaw (SC) 98
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