Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-007187 – 2022 |
| Diary Number | 30735/2022 |
| Judge Name | HON’BLE MR. JUSTICE DIPANKAR DATTA |
| Bench | Hon’ble Mr. Justice Dipankar Datta and Hon’ble Mr. Justice Vijay Bishnoi |
| Precedent Value | Binding authority |
| Overrules / Affirms | Affirms |
| Type of Law | Environmental law; administrative law (NGT Act; EIA Notification; Water Act; Air Act) |
| Questions of Law |
|
| Ratio Decidendi | The NGT Act’s Sections 15(1)(a)–(c) and 20 vest wide, principle-oriented discretion in the NGT to order compensation “as the Tribunal may think fit” guided by sustainable development, precautionary and polluter-pays principles. Project cost or turnover may legitimately inform quantum where a rational nexus with the scale of the offending activity exists. CPCB guidelines are facilitative and illustrative, not binding, and expert committee reports require independent judicial scrutiny by the NGT before adoption or modification. |
| Judgments Relied Upon | M/s Goel Ganga Developers India Pvt. Ltd. v. Union of India (2018) 18 SCC 257; Deepak Nitrite Ltd. v. State of Gujarat (2004) 6 SCC 402; Vellore District Environment Monitoring Committee v. District Collector, Vellore (2025) SCC OnLine SC 207; Research Foundation for Science v. Union of India (2005) 13 SCC 186; Municipal Corporation of Greater Mumbai v. Ankita Sinha (2022) 13 SCC 401 |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Interpretation of Sections 15 and 20 NGT Act emphasizing remedial and deterrent flexibility; polluter-pays principle; Goel Ganga Developers as general benchmark of up to 5% of project cost; Deepak Nitrite on rational nexus; CPCB guidelines as non-exhaustive, sector-specific, illustrative tools; independent application of mind by NGT when adopting expert reports. |
| Facts as Summarised by the Court |
|
Practical Impact
| Category | Impact |
|---|---|
| Binding On | NGT and all subordinate environmental tribunals and courts |
| Persuasive For | High Courts; State Pollution Control Boards; regulatory authorities |
| Distinguishes | Benzo Chem Industrial Pvt. Ltd. v. Arvind Manohar Mahajan (2022) |
| Follows | M/s Goel Ganga Developers India Pvt. Ltd. v. Union of India (2018) |
What’s New / What Lawyers Should Note
- Confirms that, in absence of a delegated legislative formula, the NGT may quantify compensation using project cost or turnover under its wide discretion in Sections 15 and 20 of the NGT Act.
- Clarifies that CPCB guidelines on environmental compensation are illustrative and facilitative; not binding, and must be applied with judicial scrutiny.
- Reaffirms Goel Ganga Developers benchmark (up to 5% of project cost as outer guideline) for large-scale real-estate violations.
- Emphasises that compensation orders must demonstrate rational nexus, proportionality, and reasoned application of the polluter-pays principle.
Summary of Legal Reasoning
- Statutory Framework: Sections 15(1)(a)–(c) and 20 of the NGT Act empower the Tribunal to grant compensation and restitution guided by sustainable development, precautionary and polluter-pays principles, with wide discretionary scope.
- Permissible Yardsticks: Project cost and turnover can serve as relevant indicia for compensation, subject to a rational nexus test. There is no absolute legislative prohibition.
- Precedential Guidance: Goel Ganga Developers (2018) permits up to 5% of project cost; Deepak Nitrite (2004) requires correlation between enterprise capacity, harm and quantum; subsequent decisions (Vellore, Research Foundation) confirm discretion.
- CPCB Guidelines: Clauses 1.5.1–1.5.4 show the formula is limited to CPCB-issued directions and specific categories; other cases require detailed expert investigation. Thus, CPCB methodology is non-binding and sector-specific.
- Independent Judicial Mind: NGT independently assessed violations, considered objections to expert committee reports, and either adopted or enhanced compensation based on scale, duration and gravity of non-compliance, upholding reasoned exercise of discretion.
Arguments by the Parties
Petitioner – Rhythm County
- Relied on MoEF&CC 2016 notification exempting residential projects below 1.5 lakh sqm from CTE requirement.
- Obtained EC and only commenced construction thereafter; subsequent CTE/CTO and fresh ECs demonstrate compliance.
- CPCB formula inapplicable to residential projects; NGT wrongly outsourced adjudication to the Joint Committee and imposed excessive compensation.
Petitioner – Key Stone Properties
- Expert/Joint Committee reports are non-binding; NGT must independently scrutinise and reason objections under natural-justice principles.
- CPCB methodology lacks statutory sanction under the Air and Water Acts and applies only to industrial units under CPCB directions.
- No demonstration of actual environmental damage; mechanical application of formula is arbitrary and disproportionate.
Respondent – Union of India (as amicus)
- NGT findings based on careful appraisal of statutory framework and fact findings; violations substantive and warrant full application of polluter-pays principle.
- Appeals lack merit and should be dismissed.
Factual Background
Rhythm County, a partnership firm, undertook a mixed residential-commercial development in Pune after EC (Nov 2017) but proceeded with unauthorized structures (clubhouse, commercial blocks) and without CTE, defying MPCB stop-work directions.
Key Stone Properties began a residential housing project pre-EC and later obtained post-facto EC (Jan 2020) under the violation window with bank guarantee, yet carried out construction without CTE/CTO and handed over possession prematurely.
NGT proceedings, aided by Joint Committees, concluded both had violated environmental norms and imposed compensation of Rs. 5 crore (Rhythm) and Rs. 4.47 crore (Key Stone).
Statutory Analysis
- EIA Notification, 2006 & MoEF&CC 2016 Notification: Conditions for EC, and temporary exemptions (<1.5 lakh sqm) later stayed.
- Water (Prevention & Control of Pollution) Act, 1974 & Air (Prevention & Control of Pollution) Act, 1981: Mandatory CTE and CTO for construction projects unless exempted.
- National Green Tribunal Act, 2010:
- Section 15(1)(a)–(c): Power to award relief, compensation, and restitution “as the Tribunal may think fit.”
- Section 20: Mandates application of sustainable development, precautionary and polluter-pays principles.
- CPCB In-house Report (31.05.2019): Illustrative formula (EC = PI×N×R×S×LF) limited to cases under EPA directions; inapplicable elsewhere without detailed expert study.
Alert Indicators
- ✔ Precedent Followed – Reaffirms Goel Ganga Developers and Deepak Nitrite principles on compensation quantification.