Full Judgment Text
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CASE NO.:
Appeal (civil) 1521 of 2001
PETITIONER:
Deepak Nitrite Ltd.
RESPONDENT:
State of Gujarat & Ors.
DATE OF JUDGMENT: 05/05/2004
BENCH:
CJI & G.P. MATHUR.
JUDGMENT:
JUDGMENT
(WITH C.A. No. 1522/2001, 1523/2001, 1524/2001, 1525-
1526/2001, 1527/2001 1528/2001)
RAJENDRA BABU, CJI. :
These appeals arise out of a series of orders made by the
High Court of Gujarat. A petition was filed before the High
Court in public interest alleging large scale pollution caused by
industries located in the Gujarat Industrial Development
Corporation (GIDC) Industrial Estate at Nandesari. It is alleged
that effluents discharged by the said industries into the effluent
treatment project had exceeded certain parameters fixed by the
Gujarat Pollution Control Board (GPCB) thereby causing
damage to the environment. Some of the industries have set
up their own effluent treatment plants in their factory premises,
while some of them have not. The High Court, by an order
made on 17.4.1995, directed that the chemical industries in
Nandesari should be made parties to the proceedings thereby
252 industrial units located in the Nandesari Industrial Estate,
Baroda were made parties to the proceedings, apart from the
State of Gujarat, Central Pollution Control Board, Gujarat
Industrial Development Corporation and Nandesari Industries
Association. The High Court also issued notices to the financial
institutions or banks in respect of these proceedings.
On May 5, 1995 the High Court appointed a Committee
under the Chairmanship of Dr. V.V. Modi to ascertain the
position with regard to the extent of pollution in Nandesari
Industrial Estate. A Common Effluent Treatment Plant (CETP)
was erected by the GIDC in Nandesari Industrial Estate on the
contribution made by the industrial units in the Nandesari
Industrial Estate to the extent of about Rs. 300 lakhs.
Inasmuch as CETP was not achieving the required parameters
laid down by the GPCB, the High Court, by an order made on
7.8.1996, appointed NEERI as a consultant to assess the
treatment facilities and to provide suitable rectification
measures for upgrading the CETP and effluent treatment plant
facilities. Dr.Committee made a report on 7.9.1996. The High
Court restrained several industries from removing their products
from their plant without prior permission of the High Court and
thereafter, by an order made on 13.9.1996, the High Court
permitted them to dispatch materials by depositing a certain
sum of money which was the value of the materials. NEERI
submitted its report on 31.10.1996. The High Court, while
granting permission to some of the industries to carry on their
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activities, called for turnover figures and profitability data. On
9.5.1997 the High Court passed an order directing the
industries to pay 1% of the maximum annual turnover of any of
the preceding three years towards compensation and
betterment of environment within a stipulated time. It is against
this order that the appellants are before us.
The High Court in its impugned order followed a decision
of the High Court of Gujarat in Pravinbhai Jashbhai Patel &
Anr. Vs. State of Gujarat & Ors., 36 Guj. Law Reports1210,
wherein it was noticed that the industrial units though aware of
the requirements of law had not complied with the same nor did
they meet the GPCB parameters and they were irresponsible in
not wanting or caring to set up effluent treatment plants but
continued to manufacture and pollute the environment and the
concern shown now in meeting with the pollution control norms
is only because of the threatened court order; that pollution
caused by these industrial units was adversely affecting large
number of citizens residing in the adjacent cities or villages; that
in particular water and air pollution is not only continued to the
immediate area in which the pollution is generated, but the
same affects other areas as well wherever water or air went;
that this Court in M.C. Mehta vs. Union of India, AIR 1988
SC 1037, Virender Gaur & Ors. Vs. State of Haryana &
Ors., 1995 (2) SCC 577 and CERC vs. Union of India, AIR
1995 SC 922, invoked the provisions of Article 21 of the
Constitution of India to declare that the citizens have a
fundamental right to live decently unaffected by pollution. After
noticing various contentions, the High Court took the view that
1% of the turnover would be a good measure of assessing
damages for the pollution caused by the industrial units and
that amount should be kept apart by the Ministry of
Environment and should be utilized for the works of socio-
economic uplift of the population of the aforesaid affected areas
and for the betterment of educational, medical and veterinary
facilities and the betterment of the agriculture and livestock in
the said villages with certain additional directions in this regard.
It is now submitted before us by the appellants that a
court has no power to either impose penalty or fine or make any
levy for general betterment unless the statute authorized the
same; that, however, in awarding damages it is permissible to
make the same exemplary or penal; that award of damages is
way of restitution for the damage caused to victims and for
restoration or restitution and for restoration of ecology by way of
punishment; that, unless a finding is given by the High Court
that there had been degradation of environment, question of
restitution or awarding damages could not arise; that there is
no finding of degradation of environment and, therefore, it is
not open to the High Court to impose 1% of the turnover by way
of damages. The appellants relied upon a decision of this
Court in Vellore Citizens’ Welfare Forum vs. Union of India
& Ors., 1996 (5) SCC 647, in support of this contention. Their
argument is that principle of ’polluter to pay’ cannot be applied
unless a finding has been given that the industrial unit
concerned is the polluter. In what manner pollution has been
caused should have been ascertained, particularly when a
separate common effluent treatment plant had been erected
and a channel was provided through which water would flow
into river which would reach the sea thereby not causing any
damage anywhere. They seek to bring about difference
between Pravinbhai Jashbhai Patel’s case (supra) and the
present proceedings to contend that in those cases there was
direct evidence of damage having taken place and by way of
rule of thumb the High Court adopted the standard of 1% of
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turnover to be paid by way of damages and that this principle
cannot always uniformally be applied. They commend us to
apply the principle set out by this Court in Vellore Citizens’
Welfare Forum’s case (supra) wherein principle of ’polluter to
pay’ has been applied and wherein it is noticed that any
principle evolved in this behalf should be simple, practical and
suited to the conditions obtaining in this country; once the
activity carried on is hazardous or inherently dangerous, the
person carrying on such activity is liable to make good the loss
caused to any other person by his activity irrespective of the
fact whether he took reasonable care while carrying on his
activity; consequently, the polluting industries are absolutely
liable to compensate for the harm caused by them to villagers
in the affected areas, to the soil and to the underground water
and hence, they are bound to take all necessary measures to
remove sludge and other pollutants lying in the affected areas;
that the ’polluter pays principle’ as interpreted by this Court
means that the absolute liability for harm to the environment
extends not only to compensate the victims of pollution but also
the cost of restoring the environmental degradation; that
remediation of the damaged environment is part of the process
of sustainable development and as such the polluter is liable to
pay the cost to the individual sufferers as well as the cost of
reversing the damaged ecology.
Shri T.R. Andhyarujina, learned Senior Advocate, who
assisted this Court as Amicus Curiae with great ability,
explained to us the background in which the High Court had
passed the impugned order. He submitted that the High Court
had followed the earlier decision in Pravinbhai Jashbhai
Patel’s case (supra) wherein standard of 1% of turnover was
adopted for closure of polluting units and payment of
compensation by such units for polluting river and land; that the
basis of this decision in that case was that the polluting
industrial units were not meeting GPCB norms and the
continued violation of the law by industrial units had become a
habit; that after elaborate discussion, the High Court had
concluded that these industries had caused pollution and,
therefore, gave certain directions, including for closure of the
industrial units until they observe GPCB norms; that the
directions given by the High Court regarding closure and
payment of compensation were complied with by the industrial
units and this Court did not interfere with the order made by the
High Court, therefore, the methodology adopted by the High
Court in Pravinbhai Jashbhai Patel’s case (supra) can be
applied to other industrial units which are causing pollution;
that, after investigation made by the Committee or by an expert
body there were reports that the industrial units were causing
pollution by not complying with the norms prescribed by GPCB
and High Court, in fact, noticed that a number of units have
voluntarily agreed to pay 1% of the turnover of a year out of the
last three years and there was consensus between all the
industries and for betterment of environment, they voluntarily
stated before the Court that 1% shall be paid; that one may say
that even some of the units having no treatment plant or having
inadequate facilities appeared before the High Court stating
that they would voluntarily stop manufacturing till installation of
proper treatment plant and were in a position to discharge trade
effluent meeting with GPCB norms. Thus, in these cases, the
High Court restrained firstly several industries from removing
their products from their plant without prior permission of the
High Court and thereafter, such units themselves suspended
operation of the polluting activities. The High Court, after
having considered further reports of the Committee; NEERI and
GPCB permitted to restart activities on a trial basis and at the
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same time, directed that "with regard to 1% payment an order
will be passed after the details furnished by the learned
counsel." The High Court thereafter adopted payment of 1% of
the turnover method as indicated in Pravinbhai Jashbhai
Patel’s case (supra). He submitted that in these cases the
High Court has through its investigation either by Committee
appointed by itself or expert agency like NEERI found that the
industrial units in question were polluting units and had not
conformed with the norms prescribed by GPCB and each of the
units were discharging effluents into the effluent channel project
constructed by GIDC which in turn discharged the effluents into
the Mahi river which ultimately reached sea. Thus the High
Court had found that there was extensive environmental
degradation as a result of the pollution because of the violatioin
of the pollution laws and on account of such damage, the High
Court ordered the payment of 1% compensation as a one time
payment for pollution and damage for a number of years from
1993 to 1996. He further submitted that in no case the High
Court ordered compensation without giving a finding that there
was environmental degradation and damage as a result of
violation of prescribed norms. He also adverted to various
decisions of this Court in M.C. Mehta vs. Union of India,
1987 (1) SCC 395, to support the proposition that the measure
of compensation must be co-related to the magnitude and
capacity of the enterprise because such compensation must
have a deterrent effect and such damage not only extends to
restitution for the harm to the environment to compensate the
victims of the pollution but also cost of restoring the
environment by degradation. This Court reiterated the principle
of "polluter to pay" to the effect that one of the principles is to
levy damages of a certain percentage of total turnover and the
right to a clean and hazardless environment has been
recognised as a fundamental right under Article 21 of the
Constitution. The Court has innovated new methods and
strategies for the purpose of securing enforcement of
fundamental rights.
The fact that the industrial units in question have not
conformed with the standards prescribed by GPCB cannot be
seriously disputed in these cases. But the question is whether
that circumstance by itself can lead to the conclusion that such
lapse has caused damage to environment. No finding is given
on that aspect which is necessary to be ascertained because
compensation to be awarded must have some broad co-relation
not only with the magnitude and capacity of the enterprise but
also with the harm caused by it. May be, in a given case the
percentage of the turnover itself may be a proper measure
because the method to be adopted in awarding damages on
the basis of ’polluter to pay’ principle has got to be practical,
simple and easy in application. The appellants also do not
contest legal position that if there is a finding that there has
been degradation of environment or any damage caused to any
of the victims by the activities of the industrial units certainly
damages have to be paid. However, to say that mere violation
of the law in not observing the norms would result in
degradation of environment would not be correct.
Therefore, we direct the High Court to further investigate
in each of these cases and find out broadly whether there has
been any damage caused by any of the industrial units by their
activities in not observing the norms prescribed by the GPCB
as reported by the Modi Committee appointed by the High
Court or by an expert body like NEERI and that exercise need
not be undertaken by the High Court as if the present
proceeding is an action in tort but an action in public law. A
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broad conclusion in this regard by the High Court would be
sufficient. We, therefore, direct the High Court to re-examine
this aspect of the matter as to whether there is degradation of
environment and as a result thereof any damage is caused to
any victim, and what norms should be adopted in the matter of
awarding compensation in that regard. In this process it is
open to the High Court to consider whether 1% of the turnover
itself would be an appropriate formula or not as applicable to
the present cases.
We record our appreciation and gratitude to Shri T.R.
Andhyarujina in assisting this Court as Amicus Curiae.
With these observations, these appeals stand disposed
of.