Full Judgment Text
REPORTABLE
2025 INSC 923
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 757-760 OF 2013
DELHI POLLUTION CONTROL COMMITTEE ...APPELLANT(S)
VERSUS
LODHI PROPERTY CO. LTD. ETC. …RESPONDENT(S)
WITH
CIVIL APPEAL NO(S). 1977-2011 OF 2013
J U D G M E N T
Contents
1. Introduction ............................................................................................ 2
2. Facts ....................................................................................................... 3
3. Single Judge’s Judgement and Orders ..................................................... 4
4. Impugned Order of the Division Bench .................................................... 6
5. Submissions ........................................................................................... 8
6. Issue ..................................................................................................... 11
7. Existing Legal Regime for Pollution Control in India .............................. 12
8. Insertion of Sections 33A & 31A in Water and Air Acts .......................... 14
9. Interpretation of and for Environmental Institutions .............................. 18
10. Duty to Restitute v. Power to Punish and Penalise ............................... 20
11. Principles ............................................................................................ 26
A. Board’s Responsibility to Choose Appropriate Course of Action
............. 32
Signature Not Verified
Digitally signed by
KAPIL TANDON
Date: 2025.08.13
19:08:44 IST
Reason:
B. Powers Must Be Guided by Transparency and Non-Arbitrariness ......... 33
1
1. Introduction.
1
1. The Delhi Pollution Control Committee (DPCC) is in appeal
against the judgment of the Division Bench of the High Court
holding that it is not empowered to levy compensatory damages in
exercise of powers under Section 33A of the Water (Prevention and
Control of Pollution) Act, 1974 and Section 31A of the Air
2
(Prevention and Control of Pollution) Act, 1981 on the ground that
such an action amounts to imposition of penalty provided for in
Chapters VII and VI of the respective Acts, and as such, procedure
contemplated thereunder will be the only method for imposing and
collecting compensatory damage.
2. Having considered the principles that govern Indian
environmental laws, we have held that the environmental
regulators, the Pollution Control Boards exercising powers under
the Water and Air Acts, can impose and collect restitutionary or
compensatory damages in the form of fixed sum of monies or
require furnishing of bank guarantees as an ex-ante measure to
prevent potential environmental damage. These powers are
1
DPCC is a regulatory body in the National Capital Territory of Delhi, established as a ‘State
Board’. These Boards are constituted under section 4 of the Water Act and under section 4
or section 5 of the Air Act, and exercise powers granted under section 33A of the Water Act
and section 31A of the Air Act. Our interpretation of section 33A and 31A herein will apply to
any such body established under said Acts.
2
Hereinafter referred to as the Water Act and Air Act respectively.
2
incidental and ancillary to the empowerment under Sections 33A
and 31A of the Water and Air Acts. At the same time, we have
directed that the powers must be exercised as per procedure laid
down by subordinate legislation incorporating necessary
principles of natural justice, transparency and certainty.
2. Facts.
3. It is the case of the Delhi Pollution Control Committee that
pursuant to the directions of the Ministry of Environment, Forest
and Climate Change (MoEFCC) to take appropriate action against
certain entities operating in violation of the environmental norms,
show cause notices were issued for violation of Section 25 of the
Water Act and Sections 21 and 22 of the Air Act. These entities
were either residential complexes, commercial complexes or
shopping malls. The show cause notices were issued on the ground
that they proceeded with construction and in fact, were operating
without obtaining the mandatory “consent to establish” and
“consent to operate” under Section 25 of the Water Act and Section
21 of the Air Act. The show cause notices were challenged by way
of 38 writ petitions before the Delhi High Court. The challenge
culminated in the judgement of a single judge dated 30.09.2010 in
3
3
the case of Splendor Landbase Ltd. v. DPCC . The learned single
judge considered the question as to whether a State Board can levy
environmental damages in the form of fixed sums of money or
require an entity to furnish a bank guarantee as a condition for
grant of consent under Section 33A of Water Act and/or Section
31A of Air Act. Similar writ petitions were considered and decided
by another single judge bench in Bharti Realty Ltd. v. DPCC and
Anush Finlease and Construction v. DPCC on 20.07.2011 and
15.09.2011 and were disposed of in terms of the decision in
Splendor Landbase Ltd. v. DPCC . The reasoning adopted in the
judgement and orders passed by the Single Judges are as follows.
3. Single Judge’s Judgement and Orders.
4
4. In Splendor Landbase Ltd. v. DPCC , the ld. single judge by
his judgement dated 30.09.2010 dealt with two major issues –
firstly, whether proprietors of properties over 20,000 square
meters are required to obtain consent to establish and consent to
operate under Water Act and Air Act independently, despite
obtaining EIA Clearance from the Ministry; and secondly, whether
Boards can levy penalties, fines, environmental damages in form
3
2012 (195) DLT 177.
4
Hereinafter referred to as Splendor.
4
of fixed sums of monies or call for bank guaranties as a condition
to grant consent under Water and Air Acts? While the first question
was answered in the affirmative, the second was answered in the
negative.
4.1 It was held that the power to levy penalty is in the nature of
a penal power and as such a penalty cannot be imposed without
there being an enabling statutory power. For this reason, the single
judge held that Board has no power to levy penalty or damage,
even on the basis of the general powers under Sections 31A or 33A
of the Acts. The learned Judge criticized the monetary demand as
a pre-condition for grant of consent under the Acts on the ground
that it has no statutory backing.
4.2 In the other batch of cases i.e. in Bharti Realty Ltd. v. DPCC
and Anush Finlease and Construction Ltd. v. DPCC , decided on
12.07.2011 and 15.09.2011, the learned Single Judge was
constrained to enquire into the matter in detail as writ appeals
against the judgement in Splendor were already pending before a
Division Bench. Therefore, the Single Judge allowed the writ
petitions following the decision in Splendor and holding that the
Board has no power to impose and collect compensatory damages.
In these cases, the learned Judge also directed refund of the
5
amounts collected. However, no interest was granted to the
respondents as they chose to comply with the demand instead of
challenging the same at the relevant point in time.
4. Impugned Order of the Division Bench.
5. The decisions of the single judges were challenged by the
appellant before the Division Bench of the High Court. By the
judgement impugned before us, the Division Bench upheld the
findings of the Single Judge in Splendor that the power to issue
directions under Sections 33A and 31A under the two Acts does
not confer the power to levy ‘penalty’. The High Court further
observed that under Chapter VII and Chapter VI of the Water and
Air Acts penalties can be levied only by courts and that too after
taking cognizance of offences specified under the two Acts.
Provided that the procedure so prescribed under the statute has
to be followed mandatorily, the Division Bench held that the
appellant would not be entitled to impose compensation or direct
deposit of bank guarantees. The relevant portion of the Division
Bench of the High Court is as follows –
“37. We concur with the reasoning of the learned Single Judge
in paras 58 to 64 of the impugned decision and thus do not
elaborate any further, but would additionally highlight that,
the power to issue directions under Section 33A of the Water
Act and the power to issue directions under Section 31A of the
6
Air Act, on their plain language, does not confer the power to
levy any penalty. We would further highlight that under
Chapter VII of the Water Act and under Chapter VI of the Air
Act penalties and procedure to levy the same have been set
out. A perusal of the provisions under the Water Act would
reveal that penalties can be levied as per procedure prescribed
and only Courts can take cognizance of offences under the Act
and levy penalties, whether by way of imprisonment or fine.
Similar is the position under the Air Act. The legislature having
enacted specific provisions for levy of penalties and
procedures to be followed has specifically made the offences
cognizable by Courts and the power to levy penalties under
both Acts has been vested in the Courts. The role of the
Pollution Control Boards is to initiate proceedings before the
Court of Competent jurisdiction and no more.
40. The language of Sub-Section 5 of Section 25 of the Water
Act makes it plain clear that the only solution to a situation of
a building being constructed to establish an industry,
operation or process without obtaining prior consent of the
State Pollution Control Board is the power of the Board to serve
upon the person concerned a notice imposing such conditions
as might have been imposed on an application, seeking prior
consent and we find that the learned Single Judge has
correctly so opined and has rightly issued the direction that
the only way out, pertaining to the Water Act is to permit DPCC
to inspect the shopping malls and the shopping commercial
complexes and if it is found that pertaining to discharge of
sewage from these buildings any steps are required to prevent
water pollution DPCC would be authorized to issue notices
requiring the owner of the building to take steps in terms of the
notice issued. Pertaining to the Air Act notwithstanding there
being no similar provision, but the concept of a post decisional
hearing may be made applicable with the modification that no
hearing would be required inasmuch as there is no decision,
but DPCC should be empowered to inspect the shopping malls
and the shopping, commercial complexes and pertaining to air
pollution, if the owners of the buildings do not take corrective
action, DPCC would always have the power to file criminal
complaints before the Courts of Competent Jurisdiction, which
Courts would alone have the power to impose fine and
additionally impose sentence of imprisonment upon the
offending persons.
42. In a few cases, we find that since DPCC was not permitting
the buildings to be occupied, under protest, the owners paid
the penalty to DPCC and have immediately approached the
Court seeking refund and the same has been ordered for the
reason neither under the Water Act nor under the Air Act there
exists any power in DPCC to levy penalty or impose conditions
7
of furnishing bank guarantee. The decision of the learned
Single Judge is correct in directing the bank guarantees to be
discharged and penalties levied to be refunded for the reason
the said act of DPCC is ultra-vires its power under the two
statutes and the levy of penalty is without any authority of
law. In the decision reported as 1997 [5] SCC 535 Mafatlal
Industries Ltd. & Ors. Vs UOI & Ors., under writ jurisdiction
refund can be directed where the levy is without jurisdiction
and the same would include a penalty levied without any
jurisdiction. In the instant case the penalty levied is
unconstitutional being not sanctioned by any power vested in
DPCC either under the Water Act or the Air Act. The impugned
decisions where penalty levied has been directed to be
refunded are upheld.”
5. Submissions.
6. Mr. Pradeep Mishra appearing on behalf of the appellant
DPCC submitted that the High Court erred in holding that the
State Boards are not empowered to impose environmental
damages under Sections 33A and 31A of Water and Air Acts. He
has argued that the application of the principle of Polluter Pays is
distinct from the requirement of authority of law to impose tax or
penalty.
7. We have requested Mr. Ninad Laud, learned counsel to assist
us in the matter. He has gracefully accepted and has eminently
assisted the Court. He has submitted that as per broad scheme of
the Acts and also the statement of objects and reasons, State
Boards are empowered to act on their own while enforcing Sections
25 and 26 and also while issuing directions under Sections 33A
and 31A. However, when faced with non-compliances, recourse to
8
judicial process is contemplated under Sections 49 and 43 of
Water and Air Acts respectively. Further, neither Rule 34 of Water
(Prevention & Control of Pollution) Rules 1975 nor Rule 20A of Air
(Prevention & Control of Pollution) Rules 1983, while providing a
mechanism to administer Section 33A and Section 31A,
contemplate monetary penalties. Countering the submission of Mr.
Pradeep Misra on the principle of Polluter Pays to encourage
reading the power to impose and collect environmental damages
under Sections 33A and 31A of the respective Acts, he would
submit such an approach is impermissible as the said power is
specifically and separately provided under Chapters VII and VI
therein. Relying on the decision of this Court in MC Mehta v. Kamal
5
Nath , he would submit, after considering the scheme of penal
provisions under Water Act, Air Act and Environment (Protection)
Act 1986, the Supreme Court held that penalties under the Acts
befall a person only after finding of guilt upon trial by a court of
law. Referring to the legitimacy of State Board’s action demanding
bank guarantees to secure compliance with conditions, he would
submit that no penalty, other than that contemplated in the
5
(2000) 6 SCC 213, para 13-17.
9
6
statute or statutory scheme can be imposed. We have also heard
Mr. Pinaki Misra, Senior Advocate and other learned counsel and
they have strongly supported the decision of the Division Bench.
7
7.1 Counsel for M/s Laxmi Buildtech Pvt Ltd has submitted that
they have neither violated nor acted in breach of any provision of
environmental laws and therefore they cannot be subjected to any
penalty or criminal prosecution. Counsel for other respondents
further submitted that they have deemed consent as well as EIA
clearance from the Ministry. They have also submitted that
imposition and collection of damages by the State Boards is
outside the powers vested in them under the Water and Air Acts.
7.2 Counsel for M/s Bharti Realty Ltd has submitted that it is a
settled principle of law that if a statute provides for a thing to be
done in a particular manner, then it has to be done in that manner
8
and no other. This principle, according to the learned counsel,
squarely applies to the present case as Chapter VII and Chapter VI
of the Water and Air Acts have a prescribed procedure to be
followed before imposing penalties. It is further argued that the
6
State of MP v. Centre for Environment Protection Research & Development, (2020) 9 SCC
781.
7
Civil Appeal No. 2001 of 2013.
8
Chandra Kishore Jha v. Mahavir Prasad & Ors , (1999) 8 SCC 266.
10
role of any State Board is in the nature of a complainant and not
that of an adjudicatory authority. In this vein, it is submitted that
any other interpretation would render the chapter on ‘Penalties
and Procedures’ nugatory and otiose. It is also submitted that the
power to give directions under Sections 33A and 31A of the Water
and Air Acts is “subject to provisions of this Act”. Written
submissions also refer to the recent amendments to the Water and
Air Acts, empowering an Adjudicating Officer, not below the rank
of Joint Secretary of Government of India or Secretary to State
Government, for imposing penalties for contravention of provisions
of the Acts.
6. Issue.
8. The core question in these appeals is - whether the regulatory
boards can, in exercise of powers under Section 33A of the Water
Act and Section 31A of the Air Act, impose and collect as
restitutionary and compensatory damages fixed sums of monies or
require furnishing bank guarantees as an ex-ante measure
towards potential environmental damage?
11
7. Existing Legal Regime for Pollution Control in India.
9. Under the Water Act and the Air Act, the State Boards have
a broad statutory mandate to prevent, control and abate water
pollution and air pollution. Under Section 17 of the Water Act, the
State Boards are to shoulder enormous responsibilities and their
functions are reproduced herein for ready reference -
– (1) Subject to the
“Section 17. Functions of State Board
provisions of this Act, the functions of a State Board shall be—
(a) to plan a comprehensive programme for the prevention,
control or abatement of pollution of streams and wells in the
State and to secure the execution thereof;
(b) to advise the State Government on any matter concerning
the prevention, control or abatement of water pollution;
(c) to collect and disseminate information relating to water
pollution and the prevention, control or abatement thereof;
(d) to encourage, conduct and participate in investigations and
research relating to problems of water pollution and
prevention, control or abatement of water pollution;
(e) to collaborate with the Central Board in organising the
training of persons engaged or to be engaged in programmes
relating to prevention, control or abatement of water pollution
and to organise mass education programmes relating thereto;
(f) to inspect sewage or trade effluents, works and plants for
the treatment of sewage and trade effluents and to review
plans, specifications or other data relating to plants set up for
the treatment of water, works for the purification thereof and
the system for the disposal of sewage or trade effluents or in
connection with the grant of any consent as required by this
Act;
(g) to lay down, modify or annul effluent standards for the
sewage and trade effluents and for the quality of receiving
waters (not being water in an inter-State stream) resulting
from the discharge of effluents and to classify waters of the
State;
(h) to evolve economical and reliable methods of treatment of
sewage and trade effluents, having regard to the peculiar
conditions of soils, climate and water resources of different
regions and more especially the prevailing flow characteristics
of water in streams and wells which render it impossible to
attain even the minimum degree of dilution;
12
(i) to evolve methods of utilisation of sewage and suitable trade
effluents in agriculture;
(j) to evolve efficient methods of disposal of sewage and trade
effluents on land, as are necessary on account of the
predominant conditions of scant stream flows that do not
provide for major part of the year the minimum degree of
dilution;
(k) to lay down standards of treatment of sewage and trade
effluents to be discharged into any particular stream taking
into account the minimum fair weather dilution available in
that stream and the tolerance limits of pollution permissible in
the water of the stream, after the discharge of such effluents;
(l) to make, vary or revoke any order—
(i) for the prevention, control or abatement of discharges of
waste into streams or wells;
(ii) requiring any person concerned to construct new systems
for the disposal of sewage and trade effluents or to modify,
alter or extend any such existing system or adopt such
remedial measures as are necessary to prevent, control or
abate water pollution;
(m) to lay down effluent standards to be complied with by
persons while causing discharge of sewage or sullage or both
and to lay down, modify or annul effluent standards for the
sewage and trade effluents;
(n) to advise the State Government with respect to the location
of any industry the carrying on of which is likely to pollute a
stream or well;
(o) to perform such other functions as may be prescribed or as
may, from time to time, be entrusted to it by the Central Board
or the State Government.
(2) The Board may establish or recognize a laboratory or
laboratories to enable the Board to perform its functions under
this section efficiently, including the analysis of samples of
water from any stream or well or of samples of any sewage or
trade effluents.”
9
10. Section 17 of the Air Act , substantially similar to its
equivalent under the Water Act, also indicates the crucial
9
Section 17 of Air Act states –
17. Functions of State Boards .— (1) Subject to the provisions of this Act, and without
prejudice to the performance of its functions, if any, under the Water (Prevention and Control of
Pollution) Act, 1974, the functions of a State Board shall be—
(a) to plan a comprehensive programme for the prevention, control or abatement of air
pollution and to secure the execution thereof;
(b) to advise the State Government on any matter concerning the prevention, control or
abatement relating to air pollution;
13
responsibilities of the State Boards in discharge of their mandate.
Chapter V of the Water Act and Chapter IV of the Air Act include
provisions that prescribe the regulatory powers of the State
Boards. These powers include the power to issue, modify or
10 11
withdraw consent , power to obtain information , power of entry
12 13
and inspection and power to take samples .
8. Insertion of Sections 33A & 31A in Water and Air Acts.
11. In 1988, both Acts were amended. Notably, through
amendments the State Boards were further empowered to give
(c) to collect and disseminate information relating to air pollution;
(d) to collaborate with the Central Board in organising the training of persons engaged
or to be engaged in programmes relating to prevention, control or abatement of air
pollution and to organise a mass-education programme relating thereto;
(e) to inspect, at all reasonable times, any control equipment, industrial plant or
manufacturing process and to give, by order, such directions to such persons as it may
consider necessary to take steps for the prevention, control or abatement of air pollution;
(f) to inspect air pollution control areas at such intervals as it may think necessary,
assess the quality of air therein and take steps for the prevention, control or abatement
of air pollution in such areas;
(g) to lay down, in consultation with the Central Board and having regard to the
standards for the quality of air laid down by the Central Board, standards for emission
of air pollutants into the atmosphere from industrial plants and automobiles or for the
discharge of any air pollutant into the atmosphere from any other source whatsoever
not being a ship or an aircraft: Provided that different standards for emission may be
laid down under this clause for different industrial plants having regard to the quantity
and composition of emission of air pollutants into the atmosphere from such industrial
plants;
(h) to advise the State Government with respect to the suitability of any premises or
location for carrying on any industry which is likely to cause air pollution;
(i) to perform such other functions as may be prescribed or as may, from time to time,
be entrusted to it by the Central Board or the State Government;
(j) to do such other things and to perform such other acts as it may think necessary for
the proper discharge of its functions and generally for the purpose of carrying into effect
the purposes of this Act.
(2) A State Board may establish or recognise a laboratory or laboratories to enable the State
Board to perform its functions under this section efficiently.
10
Sections 25, 27 of Water Act and Section 21 of Air Act
11
Section 20 of Water Act and Section 25 of Air Act
12
Section 23 of Water Act and Section 24 of Air Act
13
Section 21 of Water Act and Section 26 of Air Act
14
14
directions under Section 33A of the Water Act and Section 31A
of the Air Act. These two provisions are identically worded. Section
33A of the Water Act is as under;
“Section 33A. Power to give directions.— Notwithstanding
anything contained in any other law, but subject to the
provisions of this Act, and to any directions that the Central
Government may give in this behalf, a Board may, in the
exercise of its powers and performance of its functions under
this Act, issue any directions in writing to any person, officer
or authority, and such person, officer or authority shall be
bound to comply with such directions.
Explanation.—For the avoidance of doubts, it is hereby
declared that the power to issue directions under this section
includes the power to direct—
(a) the closure, prohibition or regulation of any industry,
operation or process; or
(b) the stoppage or regulation of supply of electricity, water or
any other service.”
12. The directions contemplated under Sections 33A and 31A of
the Water and Air Acts must be in furtherance of the powers and
functions of the Boards and they must be in writing. These
provisions, declares that the power to issue directions will include
the power to direct closure, prohibition or regulation of any
14
Section 31A of the Air Act states –
31A. Power to give directions .—Notwithstanding anything contained in any other law, but
subject to the provisions of this Act, and to any directions that the Central Government may
give in this behalf, a Board may, in the exercise of its powers and performance of its functions
under this Act, issue any directions in writing to any person, officer or authority, and such
person, officer or authority shall be bound to comply with such directions.
Explanation.—For the avoidance of doubts, it is hereby declared that the power to issue
directions under this section includes the power to direct—
(a) the closure, prohibition or regulation of any industry, operation or process; or
(b) the stoppage or regulation of supply of electricity, water or any other service.
15
industry, operation or process. Further, this power extends to
directing the stoppage or regulation of supply of electricity, water
or any other service. The power to give directions has been worded
broadly, and it allows the Boards significant flexibility in deciding
the nature of directions. The legislative intention of granting these
powers through the 1988 amendment can be inferred from the
Statement of Objects and Reasons of the Water Act, which reads
as follows –
“2. The Water Act is implemented by the Central and State
Governments and the Central and State Pollution Control
Boards. Over the past few years, the implementing agencies
have experienced some more administrative and practical
difficulties in effectively implementing the provisions of the Act.
The ways and means to remove these difficulties have been
thoroughly examined in consultation with the implementing
agencies. Taking into account the views expressed, it is
proposed to amend certain provisions of the Act in order to
remove such difficulties….
3. The Bill, inter alia, seeks to make the following amendments
in the Act, namely:—
….
(iv) in order to effectively prevent water pollution, the penal
provisions of the Act are proposed to be made stricter and
bring them at par with the punishments prescribed in the Air
(Prevention and Control of Pollution) Act, 1981 as amended by
Act 47 of 1987;
….
(vi) it is proposed to empower the Boards to give directions to
any person, officer or authority including the power to direct
closure or regulation of offending industry, operation or
process or stoppage or regulation of supply of services such as
water and electricity;”
16
13. Similar objective is expressed for the amendment introduced
15
in the Air Act.
14. An appeal against directions issued under Section 33A of the
Water Act by the State Board can be filed before the National Green
16
Tribunal under Section 33B, introduced in 2010 . Unlike the
Water Act there is no specific Appeal provision against directions
issued under Section 31A of the Air Act. This asymmetry must be
addressed legislatively.
15. Offences and penalties under the two Acts, and the related
procedures, are covered in Chapter VII of the Water Act and
Chapter VI of the Air Act. These chapters have undergone
significant and substantial amendments. Prior to the
amendments, the two Acts stipulated penalties in the form of
15
Statement of Objects and Reasons for Air Act states, “2. The Air Act is implemented by the
Central and State Governments and the Central and State Boards. Over the past few years,
the implementing agencies have experienced some administrative and practical difficulties in
effectively implementing the provisions of this Act and have brought these to the notice of
Government. The ways and means to remove these difficulties have been thoroughly
examined in consultation with the concerned Central Government departments, the State
Governments and the Central and State Boards. Taking into account the views expressed, the
Government have decided to make certain amendments to the Act in order to remove such
difficulties. 3. The Bill, inter alia, seeks to make the following amendments in the Act,
namely—
….
iv) In order to prevent effectively air pollution, the punishments provided in the Act are proposed
to be made stricter.
….
(vii) It is proposed to empower the Boards to give directions to any person, officer or authority
including the power to direct closure or regulation of offending establishments or stoppage or
regulation of supply of services such as, water and electricity. (viii) It is proposed to empower
the Boards to approach courts to obtain orders restraining any person from causing air
pollution.”
16
Act 19 of 2010.
17
imprisonment, monetary fine or both for offences under the
statute. Courts could only take cognizance of an offence if a
complaint was filed by a Board or any officer authorized by it, or
by any person who had given notice of the alleged offence and of
his intention to make a complaint. No court inferior to that of a
Metropolitan Magistrate or a Judicial magistrate of the first class
can try an offence punishable under the two Acts. Be that as it
may, for the present purpose we have to examine and interpret
Sections 33A and 31A of the Water and Air Acts.
9. Interpretation of and for Environmental Institutions.
16. Our constitutionalism bears the hallmark of an expansive
interpretation of fundamental rights. But such creative expansion
is only a job half done if the depth of the remedies, consequent
upon infringement, remain shallow. In other words, remedial
jurisprudence must keep pace with expanding rights and
regulatory challenges. It is not sufficient that courts adopt
injunctory, mandatory and compensatory remedies, but our
regulators also must be empowered in that regard. However, the
legislative grammar must be elastic for us to infuse the regulators
with power to fashion different remedies. This infusion must also
be tempered with the necessary guidelines and parameters of
18
exercise of remedial powers, failing which such infusion would aid
arbitrary use. Our firm view is that remedial powers or
restitutionary directives are a necessary concomitant of both the
fundamental rights of citizens who suffer environmental wrongs
and an equal concomitant of the duties of a statutory regulator,
which are informed by Part IV A of the constitution. To that extent,
the functions and powers of a regulator must be inspired by the
obligation in Part IV A and Article 48 A. The State’s ‘endeavour to
protect and improve the environment’ will be partial, if it does not
encompass a duty to restitute.
17. Of all the duties imposed under Article 51A, the obligation to
conserve and protect water and air, is perhaps the most
significant, amidst our climate change crisis. The Water Act and
the Air Act institutionalised all efforts and actions that need to be
taken to protect air that we breathe and water that we consume by
creating the Pollution Control Boards. These Boards functioning
as our environment regulators are expected to act with institutional
foresight by evolving necessary policy perspectives and action
plans. Working with perpetual seal and succession, they are to
develop and retain institutional memory so that they can act on the
basis of the experience, data and information that they would have
19
gathered and processed. Institutional expertise is critical, and these
bodies are to employ human resource which have domain expertise
and talent. These bodies are intended to maintain institutional
integrity by taking independent and objective decisions without
governmental or industrial control. These values flow naturally if
there is institutional transparency and accountability . It is in this
perspective that we need to interpret Section 33A of the Water Act
and 31A of the Air Act.
10. Duty to Restitute v. Power to Punish and Penalise.
18. There is a distinction between an action for environmental
damages for restitution or remediation and imposition of penalties
or fines levied at the culmination of a punitive action. This Court
in M.C. Mehta (supra), while referring to the provisions of the Water
Act, Air Act and the Environment Protection Act observed –
“17. All the three Acts, referred to above, also contemplate the
taking of the cognizance of the offences by the court. Thus, a
person guilty of contravention of provisions of any of the three
Acts which constitutes an offence has to be prosecuted for
such offence and in case the offence is found proved then
alone can he be punished with imprisonment and fine or both.
The sine qua non for punishment of imprisonment and fine is
a fair trial in a competent court. The punishment of
imprisonment or fine can be imposed only after the person is
found guilty.”
“24. Pollution is a civil wrong. By its very nature, it is a tort
committed against the community as a whole. A person,
therefore, who is guilty of causing pollution has to pay
20
damages (compensation) for restoration of the environment
and ecology. He has also to pay damages to those who have
suffered loss on account of the act of the offender.…”
19. Therefore, Indian law distinguishes between the imposition of
a monetary penalty or fine, which constitutes punitive action
following a determination of guilt after adherence to the statutorily
prescribed procedure, and the payment of damages for restitution
or remediation as compensatory relief.
20. In this context, it is important to turn to one of the key
principles of Indian environmental law – the Polluter Pays
principle. This principle has been a part of Indian jurisprudence
since 1996. In Indian Council for Enviro-Legal Action v. Union of
17
India , this Court held that according to the Polluter Pays
principle the responsibility for repairing the damage is that of the
offending industry. The Court further held that the powers of the
Central Government to issue directions under Section 5 read with
Section 3 of the Environment Protection Act include the power to
impose costs for remedial measures -
“60. … Section 3 of the Environment (Protection) Act, 1986
expressly empowers the Central Government (or its delegate,
as the case may be) to “take all such measures as it deems
necessary or expedient for the purpose of protecting and
improving the quality of environment…”. Section 5 clothes the
Central Government (or its delegate) with the power to issue
17
(1996) 3 SCC 212
21
directions for achieving the objects of the Act. Read with the
wide definition of ‘environment’ in Section 2(a), Sections 3 and
5 clothe the Central Government with all such powers as are
“necessary or expedient for the purpose of protecting and
improving the quality of the environment”. The Central
Government is empowered to take all measures and issue all
such directions as are called for for the above purpose. In the
present case, the said powers will include giving directions for
the removal of sludge, for undertaking remedial measures and
also the power to impose the cost of remedial measures on the
offending industry and utilise the amount so recovered for
carrying out remedial measures. This Court can certainly give
directions to the Central Government/its delegate to take all
such measures, if in a given case this Court finds that such
directions are warranted. …
67. The question of liability of the respondents to defray the
costs of remedial measures can also be looked into from
another angle, which has now come to be accepted universally
as a sound principle, viz., the “Polluter Pays” principle. …Thus,
according to this principle, the responsibility for repairing the
damage is that of the offending industry. Sections 3 and 5
empower the Central Government to give directions and take
measures for giving effect to this principle. In all the
circumstances of the case, we think it appropriate that the task
of determining the amount required for carrying out the
remedial measures, its recovery/realisation and the task of
undertaking the remedial measures is placed upon the Central
Government in the light of the provisions of the Environment
(Protection) Act, 1986. It is, of course, open to the Central
Government to take the help and assistance of State
Government, RPCB or such other agency or authority, as they
think fit.”
( emphasis added )
21. Subsequently, the Court in Vellore Citizens’ Welfare Forum v.
18
Union of India , has held that the liability for environmental
damage includes both a compensatory aspect and a restorative or
remedial aspect-
“12. … The “Polluter Pays Principle” as interpreted by this
Court means that the absolute liability for harm to the
18
(1996) 5 SCC 647
22
environment extends not only to compensate the victims of
pollution but also the cost of restoring the environmental
degradation. 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.”
(emphasis added)
22. Application of the Polluter Pays principle not only includes
payment for restoring the damaged environment, taking remedial
action to deal with the damage and compensating for the direct
harm caused, but also for avoiding pollution. In Research
19
Foundation for Science (18) v. Union of India , this Court held -
“29. The polluter-pays principle basically means that the
producer of goods or other items should be responsible for the
cost of preventing or dealing with any pollution that the
process causes. This includes environmental cost as well as
direct cost to the people or property, it also covers cost incurred
in avoiding pollution and not just those related to remedying
any damage. It will include full environmental cost and not just
those which are immediately tangible. The principle also does
not mean that the polluter can pollute and pay for it. The
nature and extent of cost and the circumstances in which the
principle will apply may differ from case to case.”
( emphasis added )
23. The Court further held that the observations of the Court in
20
in Deepak Nitrite Ltd . v. State of Gujarat that “mere violation of
the law in not observing the norms would result in degradation of
environment would not be correct” were confined to the facts of that
19
(2005) 13 SCC 186.
20
(2004) 6 SCC 402
23
case. The Court clarified that the actual degradation of the
environment is not a necessary condition for the application of
polluter pays principle, as long as the offending activities have the
potential of degrading the environment -
“30…The decision also cannot be said to have laid down a
proposition that in the absence of actual degradation of
environment by the offending activities, the payment for repair
on application of the polluter-pays principle cannot be ordered.
The said case is not relevant for considering cases like the
present one where offending activities have the potential of
degrading the environment. In any case, in the present case,
the point simply is about the payments to be made for the
expenditure to be incurred for the destruction of imported
hazardous waste and amount spent for conducting tests for
determining whether it is such a waste or not …”
( emphasis added )
24. The distinction between a punitive action and a direction to
pay environmental damages was made by the National Green
Tribunal in State Pollution Control Board, Odisha v M/s Swastik
21
Ispat Pvt Ltd and Others . The Tribunal in this case was
considering the legality of forfeiture of bank guarantees in case a
defaulting industry did not comply with the regulatory conditions
within the stipulated timeframe. The Tribunal expressly
considered the opinion of the High Court in the impugned
judgment before us today and held -
“45. It is evident from the above facts and the reasoning that
there was actual levy of penalty or damages by the DPCC and
21
2014 SCC OnLine NGT 13.
24
it was in consequence of such imposition of penalty/damages
that the Units were called upon to furnish bank guarantees for
granting of consent. In other words, bank guarantee was
required to be furnished in furtherance to the imposition of a
penalty or damages in that case. It was not an act de hors the
imposition of penalty and had the element of punitive action.
In the present case, it is not a consequence of a punitive or
penal action but is in exercise of the powers vested in the
Board in relation to recalling the conditions of consent and
ensuring their implementation while also making
compensatory provision for remedying the apprehended
wrong to the environment. In the cases in hand, the Board has
not imposed any penalty upon the units but has granted
consent to them on certain conditions, none of which is
punitive. They squarely fall within the power of the Board to
prevent and control pollution in consonance with the scheme
of the Acts concerned. Thus, on facts, the judgments of the
High Court in Splendor (supra) do not have any application to
the present case. In any case, we are of the considered view
that asking for a bank guarantee as an interim measure for
due performance of the conditions of the consent order being
compensatory in nature, is not punitive.
46. We have already noticed above that there is a clear
distinction between a penal and a compensatory provision. In
such matters, the paramount question that would normally fall
for determination before a court or tribunal would be whether
the action contemplated is penal or compensatory. This issue
shall have to be decided with reference to the facts of the case,
the provisions of the law applicable and the intent of the
authority concerned. Once it falls in the ‘compensatory’ field,
then it will necessarily be beyond the purview of penalty….”
( emphasis added)
25. In Swastik Ispat, the Green Tribunal correctly interpreted
Sections 33A and 31A of the Water and Air Acts. The judgment of
Splendor
the High Court in had not yet been taken up or
considered by this Court at that time, the Tribunal had to
distinguish the facts of Splendor to arrive at its own conclusion. In
view of our reasoning and interpretation of Sections 33A and 31A
25
of the Water and Air Acts, we have no hesitation to hold that the
Green Tribunal is correct in its approach.
26. More recently, in T.N. Godavarman Thirumulpad, In Re v.
22
Union of India , this Court while considering the issue of illegal
construction in the Corbett Tiger Reserve drew the distinction
between action against persons violating the law and measures for
restoration of the environmental damage. The Court held -
“173. … However, the principle of restoration of damaged
ecosystem would require the States to promote the recovery of
threatened species. We are of the considered view that the
States would be required to take steps for the identification
and effective implementation of active restoration measures
that are localised to the particular ecosystem that was
damaged. The focus has to be on restoration of the ecosystem
as close and similar as possible to the specific one that was
damaged.
175. We find that, bringing the culprits to face the proceedings
is a different matter and restoration of the damage already
done is a different matter. We are of the considered view that
the State cannot run away from its responsibilities to restore
the damage done to the forest. The State, apart from
preventing such acts in the future, should take immediate
steps for restoration of the damage already done; undertake
an exercise for determining the valuation of the damage done
and recover it from the persons found responsible for causing
such a damage.”
(emphasis added)
11. Principles.
27. Based on a review of precedents on this issue, the following
legal position emerges –
22
(2025) 2 SCC 641
26
I. There is a distinction between a direction for payment of
restitutionary and compensatory damages as a remedial
measure for environmental damage or as an ex-ante measure
towards potential environmental damage on the one hand;
and a punitive action of fine or imprisonment for violations
under Chapters VII of the Water Act and VI of the Air Act on
the other hand.
II. If directions in furtherance of restitutionary and
compensatory measures are issued, these are not to be
considered as punitive in nature. Punitive action can only be
taken through the procedure prescribed in the statute for
example under chapters VII and VI of the Water and Air Acts
respectively.
23
the principle of
III. Indian environmental law has assimilated
Polluter Pays and there is also a statutory incorporation of
24
this principle in our laws. The invocation of this principle
25
is triggered in the situations ; i) when an established
threshold or prescribed requirement is exceeded or
23
Indian Council for Enviro-Legal Action (supra n.12); Vellore (supra n 13).
24
Section 20. Tribunal to apply certain principles- The Tribunal shall, while passing any
order or decision or award, apply the principles of sustainable development, the precautionary
principle and the polluter pays principle.
25
Loveleen Bhullar, ‘The Polluter Pays Principle: Scope and Limits or Judicial Decisions’; in
Shibani Ghosh (ed.), Indian Environmental Law (Orient BlackSwan 2019).
27
breached, and it does result in environmental damage, ii)
when an established threshold or prescribed requirement is
not exceeded or breached, nevertheless the act in question
results in environmental damage and also iii) when a
potential risk or a likely adverse impact to the environment
is anticipated, irrespective of whether or not prescribed
thresholds or requirements are exceeded or breached.
IV. Environmental regulators have a compelling duty to adopt
and apply preventive measures irrespective of actual
environmental damage. Ex-ante action shall be taken by
these regulators and for this purpose a certain measure in
exercise of powers under Sections 33A and 31A of the Water
and Air Acts is necessary.
V. The powers of the Boards under Sections 33A and 31A of the
Water and Air Acts are identical to that of Section 5 of the
Environment Protection Act. Under Section 5, the Central
Government or its delegate has the power to issue directions
to the polluting industry to pay certain amounts and utilise
the said fund for carrying out remedial measures. The Boards
are empowered to take similar actions under Sections 33A
and 31A of the Acts.
28
28. Having considered the principles that govern our
environmental laws and on interpretation of Sections 33A and 31A
of the Water and Air Acts, we are of the opinion that that the
Division Bench of the High Court was not correct in restrictively
reading powers of the Boards. We are of the opinion that these
regulators in exercise of these powers can impose and collect, as
restitutionary or compensatory damages fixed sum of monies or
require furnishing bank guarantees as an ex-ante measure
towards potential or actual environmental damage.
29. There is no doubt that Section 33A of the Water Act and
Section 31A of the Air Act give the State Boards powers to issue
necessary directions for environmental restoration, remediation
and compensation and for the payment of costs for the same. The
National Green Tribunal’s judgment in Swastik Ispat correctly
identified the Boards powers to issue directions for payment of
environmental damages under Section 33A of the Water Act and
the Section 31A of the Air Act. A restrictive interpretation which
fails to differentiate between environmental damages and punitive
action significantly encumbers the Boards ability to discharge its
duties.
29
30. The Board’s powers under Section 33A of the Water Act and
Section 31A of the Air Act have to be read in light of the legal
position on the application of Polluter Pays principle as formulated
and explained. This means that State Board cannot impose
environmental damages in case of every contravention or offence
under the Water Act and Air Act. It is only when the State Board
has made a determination that some form of environmental
damage or harm has been caused by the erring entity, or the same
is so imminent, that the State Board must initiate action under
Section 33A of the Water Act and Section 31A of the Air Act.
31. At this stage, we must also take note of the recent 2024
26
amendments to the Water and Air Acts. Two major changes
27
relevant for our consideration are that of decriminalisation and
28
introduction of the office of “Adjudicatory Officer” . Even after the
26
The Water (Prevention and Control of Pollution) Amendment Act, 2024, Jan Vishwas
(Amendment of Provisions) Act, 2023.
27
Section 41 in the erstwhile Water Act has been substituted by sections 41 and 41A, whereby
contravention of directions issued under section 20 (for obtaining information), 32 (for
imposing emergency measures in case of pollution), 33 (for restraining apprehended
pollution) or 33A would now be punishable by penalty alone; thereby replacing the earlier
penal framework comprising of imprisonment and fine. Similar amendments done for section
42 (penalty for certain acts), section 43 for contravention of directions under section 24
(prohibiting use of stream or well), section 44 (prohibiting alteration of meter, etc.), and
section 45A (residuary). Correspondingly, under the Air Act criminal liability under section
37 for contravention of directions under section 22 (restricting emission beyond standards)
or section 31A has been restricted to fine alone. Similar amendments have been brought in
section 38 and 39 (residuary). Punishment for imprisonment has been retained only for
violation of section 21 and failure to pay penalty or additional penalty under section 39D.
28
In the Water Act, section 45B puts in place a new office by the title of ‘Adjudicating Officer’,
who would be an officer not below the rank of Joint Secretary to the Centre or Secretary to
the State, appointed by the Central Government. Adjudicating Officer is empowered to inquire
30
amendments, in our opinion, there is no conflict between the
powers of the State Boards to direct payment of environmental
damages under Sections 33A and 31A of the Water and Air Acts
and the powers of the Adjudicating Officer to impose penalties
under Chapter VII of the Water Act and Chapter VI of the Air Act.
The decriminalization of offences under these Chapters has not
removed the punitive nature of actions that can be taken under
them. There remains a clear distinction between the nature of
directions that the State Boards can issue under Sections 33A and
31A of the Water and Air Acts for payment of environmental
damage and the determination by Adjudicating Officers. The
former is compensatory in nature and will be resorted to when
remedial measures are being undertaken to restore the degraded
environment or pollution caused. The latter is a penalty for an
offence under the law and is imposed with the objective of
punishing the offender. This penalty collected here will not be
specifically directed towards the restoration of the degraded
environment (for instance, to decontaminate a pond that has been
and impose penalties under sections 41, 41A, 42, 43, 44, 45A and 48. Appeal against such
imposition lies before the National Green Tribunal as per section 45C. The Adjudicating
Officer is further empowered to file a complaint for cognizance under section 49.
Corresponding additions have been made under the Air Act as well under sections 39A
(Adjudicating Officer), 39B (Appeal to NGT) and 43 (Cognizance of offences).
31
polluted due to discharge of untreated sewage). It will be deposited
in the Environmental Protection Fund that is to be set up under
Section 16 of the Environment (Protection) Act. According to
Section 16(3) of the EP Act, the Fund shall be used for, (a) the
promotion of awareness, education and research for the protection
of environment; (b) the expenses for achieving the objects and for
purposes of the Air (Prevention and Control of Pollution) Act,
1981(14 of 1981) and under this Act; and (c) such other purposes,
as may be prescribed.
A. Board’s Responsibility to Choose Appropriate Course of
Action.
32. Given their broad statutory mandate and the significant duty
towards public health and environmental protection the Boards
must have the power and distinction to decide the appropriate
action against a polluting entity. It is essential that the Boards
function effectively and efficiently by adopting such measures as
is necessary in a given situation. The Boards can decide whether
a polluting entity needs to be punished by imposition of penalty or
if the situation demands immediate restoration of the
environmental damage by the polluter or both.
32
B. Powers Must Be Guided by Transparency and Non-
Arbitrariness.
33. While we hold that the Boards have the power to direct the
payment of environmental damages, we make it clear that this
power must always be guided by two overarching principles. First,
that the power cannot be exercised in an arbitrary manner; and
second, the process of exercising this power must be infused with
transparency.
34. This Court has underscored the importance of strong
institutional frameworks in environmental governance that are
effective, accountable and transparent. In Bengaluru Development
29
Authority v. Sudhakar Hegde , this Court held -
“95. The protection of the environment is premised not only on
the active role of courts, but also on robust institutional
frameworks within which every stakeholder complies with its
duty to ensure sustainable development. A framework of
environmental governance committed to the rule of law
requires a regime which has effective, accountable and
transparent institutions. Equally important is responsive,
inclusive, participatory and representative decision-making.
Environmental governance is founded on the rule of law and
emerges from the values of our Constitution. Where the health
of the environment is key to preserving the right to life as a
constitutionally recognised value under Article 21 of the
Constitution, proper structures for environmental decision-
making find expression in the guarantee against arbitrary
action and the affirmative duty of fair treatment under Article
14 of the Constitution. Sustainable development is premised
not merely on the redressal of the failure of democratic
institutions in the protection of the environment, but ensuring
that such failures do not take place.”
(emphasis added)
29
(2020) 15 SCC 63
33
35. To ensure that the Boards impose restitutionary and the
compensatory environmental damages in a fair transparent, non-
arbitrary manner, with procedural certainty, necessary
subordinate legislation in the form of rules and regulations must
be notified. This shall include methods by which environmental
damage is determined, and the consequent quantum of damages
are assessed. They may also incorporate certain basic principles of
natural justice for fairness in action. At present environmental
damages are being levied by the Boards on the basis of certain
guidelines issued by the Central Pollution Control Board in its
document “ General framework for imposing environmental damage
compensation ” issue in December, 2022. These guidelines seem to
30
have been issued pursuant to the directions of the NGT. It is
important that these guidelines are reviewed thoroughly and
issued in the form of Rules and Regulations. This will enable
declaration of a law that applies and ensures its recognition and
easy implementation.
36. These Rules must also create enabling framework for citizens
to file complaints about environmental damage. Public
participation in environmental protection has assumed great
30
Pursuant to the NGT in its order in O.A. No. 606/2018 dated 24.04.2019.
34
importance with climate change threatening to drastically disrupt
our way of living. Boards, being the first line of defence against
polluting activities, must provide easy accessibility and encourage
public participation in their function and decision making.
37. While we have reversed the decision of the High Court on the
principle of law and hold that the environmental regulators, the
Pollution Control Boards, can impose and collect as restitutionary
and compensatory damages fixed sums of monies or require
furnishing bank guarantees as an ex-ante measure towards
potential environmental damage in exercise of powers under
Sections 33A and 31A of the Water and Air Acts, we issue the
following consequential directions.
38. In view of the fact that the show cause notices in these cases
relate to the year 2006 and those show cause notices were set-
aside by the Single as well as by the Division Benches of the High
Court, we are of the opinion that no purpose will be served in
reviving the said show cause notices at this point of time. In the
facts and circumstances of the case while we allow the appeal on
the principle of law there shall not be any consequential direction
for reviving the show cause notices which have been set-aside
concurrently by the Single as well as by the Division Bench of the
35
High Court. If certain amounts have been collected on the basis of
the said show cause notices they shall be returned by DPCC within
a period of six weeks from the date of this order, and if amounts
are not deposited or collected the appellant, DPCC shall not take
any further action.
39. For the reasons stated above:
(a) we allow these appeals and set aside the judgement and order
dated 23.01.2012, passed by the Division Bench of the High Court
of Delhi to the extent of declaration of law but direct that the show
cause notices that have been set aside by the High Court shall not
be revived.
(b) we direct that the Pollution Control Boards can impose and
collect as restitutionary and compensatory damages fixed sums of
monies or require furnishing bank guarantees as an ex-ante
measure towards potential environmental damage in exercise of
powers under Sections 33A and 31A of the Water and Air Acts.
(c) it is further directed that the power to impose or collect
restitutionary or compensatory damages or the requirement to
furnish bank guarantees as an ex-ante measure under Sections
33A and 31A of the Water and Air Acts shall be enforced only after
36
detailing the principle and procedure incorporating basic
principles of natural justice in the subordinate legislation.
………………………………....J.
[PAMIDIGHANTAM SRI NARASIMHA]
………………………………....J.
[MANOJ MISRA]
NEW DELHI;
AUGUST 04, 2025
37
2025 INSC 923
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 757-760 OF 2013
DELHI POLLUTION CONTROL COMMITTEE ...APPELLANT(S)
VERSUS
LODHI PROPERTY CO. LTD. ETC. …RESPONDENT(S)
WITH
CIVIL APPEAL NO(S). 1977-2011 OF 2013
J U D G M E N T
Contents
1. Introduction ............................................................................................ 2
2. Facts ....................................................................................................... 3
3. Single Judge’s Judgement and Orders ..................................................... 4
4. Impugned Order of the Division Bench .................................................... 6
5. Submissions ........................................................................................... 8
6. Issue ..................................................................................................... 11
7. Existing Legal Regime for Pollution Control in India .............................. 12
8. Insertion of Sections 33A & 31A in Water and Air Acts .......................... 14
9. Interpretation of and for Environmental Institutions .............................. 18
10. Duty to Restitute v. Power to Punish and Penalise ............................... 20
11. Principles ............................................................................................ 26
A. Board’s Responsibility to Choose Appropriate Course of Action
............. 32
Signature Not Verified
Digitally signed by
KAPIL TANDON
Date: 2025.08.13
19:08:44 IST
Reason:
B. Powers Must Be Guided by Transparency and Non-Arbitrariness ......... 33
1
1. Introduction.
1
1. The Delhi Pollution Control Committee (DPCC) is in appeal
against the judgment of the Division Bench of the High Court
holding that it is not empowered to levy compensatory damages in
exercise of powers under Section 33A of the Water (Prevention and
Control of Pollution) Act, 1974 and Section 31A of the Air
2
(Prevention and Control of Pollution) Act, 1981 on the ground that
such an action amounts to imposition of penalty provided for in
Chapters VII and VI of the respective Acts, and as such, procedure
contemplated thereunder will be the only method for imposing and
collecting compensatory damage.
2. Having considered the principles that govern Indian
environmental laws, we have held that the environmental
regulators, the Pollution Control Boards exercising powers under
the Water and Air Acts, can impose and collect restitutionary or
compensatory damages in the form of fixed sum of monies or
require furnishing of bank guarantees as an ex-ante measure to
prevent potential environmental damage. These powers are
1
DPCC is a regulatory body in the National Capital Territory of Delhi, established as a ‘State
Board’. These Boards are constituted under section 4 of the Water Act and under section 4
or section 5 of the Air Act, and exercise powers granted under section 33A of the Water Act
and section 31A of the Air Act. Our interpretation of section 33A and 31A herein will apply to
any such body established under said Acts.
2
Hereinafter referred to as the Water Act and Air Act respectively.
2
incidental and ancillary to the empowerment under Sections 33A
and 31A of the Water and Air Acts. At the same time, we have
directed that the powers must be exercised as per procedure laid
down by subordinate legislation incorporating necessary
principles of natural justice, transparency and certainty.
2. Facts.
3. It is the case of the Delhi Pollution Control Committee that
pursuant to the directions of the Ministry of Environment, Forest
and Climate Change (MoEFCC) to take appropriate action against
certain entities operating in violation of the environmental norms,
show cause notices were issued for violation of Section 25 of the
Water Act and Sections 21 and 22 of the Air Act. These entities
were either residential complexes, commercial complexes or
shopping malls. The show cause notices were issued on the ground
that they proceeded with construction and in fact, were operating
without obtaining the mandatory “consent to establish” and
“consent to operate” under Section 25 of the Water Act and Section
21 of the Air Act. The show cause notices were challenged by way
of 38 writ petitions before the Delhi High Court. The challenge
culminated in the judgement of a single judge dated 30.09.2010 in
3
3
the case of Splendor Landbase Ltd. v. DPCC . The learned single
judge considered the question as to whether a State Board can levy
environmental damages in the form of fixed sums of money or
require an entity to furnish a bank guarantee as a condition for
grant of consent under Section 33A of Water Act and/or Section
31A of Air Act. Similar writ petitions were considered and decided
by another single judge bench in Bharti Realty Ltd. v. DPCC and
Anush Finlease and Construction v. DPCC on 20.07.2011 and
15.09.2011 and were disposed of in terms of the decision in
Splendor Landbase Ltd. v. DPCC . The reasoning adopted in the
judgement and orders passed by the Single Judges are as follows.
3. Single Judge’s Judgement and Orders.
4
4. In Splendor Landbase Ltd. v. DPCC , the ld. single judge by
his judgement dated 30.09.2010 dealt with two major issues –
firstly, whether proprietors of properties over 20,000 square
meters are required to obtain consent to establish and consent to
operate under Water Act and Air Act independently, despite
obtaining EIA Clearance from the Ministry; and secondly, whether
Boards can levy penalties, fines, environmental damages in form
3
2012 (195) DLT 177.
4
Hereinafter referred to as Splendor.
4
of fixed sums of monies or call for bank guaranties as a condition
to grant consent under Water and Air Acts? While the first question
was answered in the affirmative, the second was answered in the
negative.
4.1 It was held that the power to levy penalty is in the nature of
a penal power and as such a penalty cannot be imposed without
there being an enabling statutory power. For this reason, the single
judge held that Board has no power to levy penalty or damage,
even on the basis of the general powers under Sections 31A or 33A
of the Acts. The learned Judge criticized the monetary demand as
a pre-condition for grant of consent under the Acts on the ground
that it has no statutory backing.
4.2 In the other batch of cases i.e. in Bharti Realty Ltd. v. DPCC
and Anush Finlease and Construction Ltd. v. DPCC , decided on
12.07.2011 and 15.09.2011, the learned Single Judge was
constrained to enquire into the matter in detail as writ appeals
against the judgement in Splendor were already pending before a
Division Bench. Therefore, the Single Judge allowed the writ
petitions following the decision in Splendor and holding that the
Board has no power to impose and collect compensatory damages.
In these cases, the learned Judge also directed refund of the
5
amounts collected. However, no interest was granted to the
respondents as they chose to comply with the demand instead of
challenging the same at the relevant point in time.
4. Impugned Order of the Division Bench.
5. The decisions of the single judges were challenged by the
appellant before the Division Bench of the High Court. By the
judgement impugned before us, the Division Bench upheld the
findings of the Single Judge in Splendor that the power to issue
directions under Sections 33A and 31A under the two Acts does
not confer the power to levy ‘penalty’. The High Court further
observed that under Chapter VII and Chapter VI of the Water and
Air Acts penalties can be levied only by courts and that too after
taking cognizance of offences specified under the two Acts.
Provided that the procedure so prescribed under the statute has
to be followed mandatorily, the Division Bench held that the
appellant would not be entitled to impose compensation or direct
deposit of bank guarantees. The relevant portion of the Division
Bench of the High Court is as follows –
“37. We concur with the reasoning of the learned Single Judge
in paras 58 to 64 of the impugned decision and thus do not
elaborate any further, but would additionally highlight that,
the power to issue directions under Section 33A of the Water
Act and the power to issue directions under Section 31A of the
6
Air Act, on their plain language, does not confer the power to
levy any penalty. We would further highlight that under
Chapter VII of the Water Act and under Chapter VI of the Air
Act penalties and procedure to levy the same have been set
out. A perusal of the provisions under the Water Act would
reveal that penalties can be levied as per procedure prescribed
and only Courts can take cognizance of offences under the Act
and levy penalties, whether by way of imprisonment or fine.
Similar is the position under the Air Act. The legislature having
enacted specific provisions for levy of penalties and
procedures to be followed has specifically made the offences
cognizable by Courts and the power to levy penalties under
both Acts has been vested in the Courts. The role of the
Pollution Control Boards is to initiate proceedings before the
Court of Competent jurisdiction and no more.
40. The language of Sub-Section 5 of Section 25 of the Water
Act makes it plain clear that the only solution to a situation of
a building being constructed to establish an industry,
operation or process without obtaining prior consent of the
State Pollution Control Board is the power of the Board to serve
upon the person concerned a notice imposing such conditions
as might have been imposed on an application, seeking prior
consent and we find that the learned Single Judge has
correctly so opined and has rightly issued the direction that
the only way out, pertaining to the Water Act is to permit DPCC
to inspect the shopping malls and the shopping commercial
complexes and if it is found that pertaining to discharge of
sewage from these buildings any steps are required to prevent
water pollution DPCC would be authorized to issue notices
requiring the owner of the building to take steps in terms of the
notice issued. Pertaining to the Air Act notwithstanding there
being no similar provision, but the concept of a post decisional
hearing may be made applicable with the modification that no
hearing would be required inasmuch as there is no decision,
but DPCC should be empowered to inspect the shopping malls
and the shopping, commercial complexes and pertaining to air
pollution, if the owners of the buildings do not take corrective
action, DPCC would always have the power to file criminal
complaints before the Courts of Competent Jurisdiction, which
Courts would alone have the power to impose fine and
additionally impose sentence of imprisonment upon the
offending persons.
42. In a few cases, we find that since DPCC was not permitting
the buildings to be occupied, under protest, the owners paid
the penalty to DPCC and have immediately approached the
Court seeking refund and the same has been ordered for the
reason neither under the Water Act nor under the Air Act there
exists any power in DPCC to levy penalty or impose conditions
7
of furnishing bank guarantee. The decision of the learned
Single Judge is correct in directing the bank guarantees to be
discharged and penalties levied to be refunded for the reason
the said act of DPCC is ultra-vires its power under the two
statutes and the levy of penalty is without any authority of
law. In the decision reported as 1997 [5] SCC 535 Mafatlal
Industries Ltd. & Ors. Vs UOI & Ors., under writ jurisdiction
refund can be directed where the levy is without jurisdiction
and the same would include a penalty levied without any
jurisdiction. In the instant case the penalty levied is
unconstitutional being not sanctioned by any power vested in
DPCC either under the Water Act or the Air Act. The impugned
decisions where penalty levied has been directed to be
refunded are upheld.”
5. Submissions.
6. Mr. Pradeep Mishra appearing on behalf of the appellant
DPCC submitted that the High Court erred in holding that the
State Boards are not empowered to impose environmental
damages under Sections 33A and 31A of Water and Air Acts. He
has argued that the application of the principle of Polluter Pays is
distinct from the requirement of authority of law to impose tax or
penalty.
7. We have requested Mr. Ninad Laud, learned counsel to assist
us in the matter. He has gracefully accepted and has eminently
assisted the Court. He has submitted that as per broad scheme of
the Acts and also the statement of objects and reasons, State
Boards are empowered to act on their own while enforcing Sections
25 and 26 and also while issuing directions under Sections 33A
and 31A. However, when faced with non-compliances, recourse to
8
judicial process is contemplated under Sections 49 and 43 of
Water and Air Acts respectively. Further, neither Rule 34 of Water
(Prevention & Control of Pollution) Rules 1975 nor Rule 20A of Air
(Prevention & Control of Pollution) Rules 1983, while providing a
mechanism to administer Section 33A and Section 31A,
contemplate monetary penalties. Countering the submission of Mr.
Pradeep Misra on the principle of Polluter Pays to encourage
reading the power to impose and collect environmental damages
under Sections 33A and 31A of the respective Acts, he would
submit such an approach is impermissible as the said power is
specifically and separately provided under Chapters VII and VI
therein. Relying on the decision of this Court in MC Mehta v. Kamal
5
Nath , he would submit, after considering the scheme of penal
provisions under Water Act, Air Act and Environment (Protection)
Act 1986, the Supreme Court held that penalties under the Acts
befall a person only after finding of guilt upon trial by a court of
law. Referring to the legitimacy of State Board’s action demanding
bank guarantees to secure compliance with conditions, he would
submit that no penalty, other than that contemplated in the
5
(2000) 6 SCC 213, para 13-17.
9
6
statute or statutory scheme can be imposed. We have also heard
Mr. Pinaki Misra, Senior Advocate and other learned counsel and
they have strongly supported the decision of the Division Bench.
7
7.1 Counsel for M/s Laxmi Buildtech Pvt Ltd has submitted that
they have neither violated nor acted in breach of any provision of
environmental laws and therefore they cannot be subjected to any
penalty or criminal prosecution. Counsel for other respondents
further submitted that they have deemed consent as well as EIA
clearance from the Ministry. They have also submitted that
imposition and collection of damages by the State Boards is
outside the powers vested in them under the Water and Air Acts.
7.2 Counsel for M/s Bharti Realty Ltd has submitted that it is a
settled principle of law that if a statute provides for a thing to be
done in a particular manner, then it has to be done in that manner
8
and no other. This principle, according to the learned counsel,
squarely applies to the present case as Chapter VII and Chapter VI
of the Water and Air Acts have a prescribed procedure to be
followed before imposing penalties. It is further argued that the
6
State of MP v. Centre for Environment Protection Research & Development, (2020) 9 SCC
781.
7
Civil Appeal No. 2001 of 2013.
8
Chandra Kishore Jha v. Mahavir Prasad & Ors , (1999) 8 SCC 266.
10
role of any State Board is in the nature of a complainant and not
that of an adjudicatory authority. In this vein, it is submitted that
any other interpretation would render the chapter on ‘Penalties
and Procedures’ nugatory and otiose. It is also submitted that the
power to give directions under Sections 33A and 31A of the Water
and Air Acts is “subject to provisions of this Act”. Written
submissions also refer to the recent amendments to the Water and
Air Acts, empowering an Adjudicating Officer, not below the rank
of Joint Secretary of Government of India or Secretary to State
Government, for imposing penalties for contravention of provisions
of the Acts.
6. Issue.
8. The core question in these appeals is - whether the regulatory
boards can, in exercise of powers under Section 33A of the Water
Act and Section 31A of the Air Act, impose and collect as
restitutionary and compensatory damages fixed sums of monies or
require furnishing bank guarantees as an ex-ante measure
towards potential environmental damage?
11
7. Existing Legal Regime for Pollution Control in India.
9. Under the Water Act and the Air Act, the State Boards have
a broad statutory mandate to prevent, control and abate water
pollution and air pollution. Under Section 17 of the Water Act, the
State Boards are to shoulder enormous responsibilities and their
functions are reproduced herein for ready reference -
– (1) Subject to the
“Section 17. Functions of State Board
provisions of this Act, the functions of a State Board shall be—
(a) to plan a comprehensive programme for the prevention,
control or abatement of pollution of streams and wells in the
State and to secure the execution thereof;
(b) to advise the State Government on any matter concerning
the prevention, control or abatement of water pollution;
(c) to collect and disseminate information relating to water
pollution and the prevention, control or abatement thereof;
(d) to encourage, conduct and participate in investigations and
research relating to problems of water pollution and
prevention, control or abatement of water pollution;
(e) to collaborate with the Central Board in organising the
training of persons engaged or to be engaged in programmes
relating to prevention, control or abatement of water pollution
and to organise mass education programmes relating thereto;
(f) to inspect sewage or trade effluents, works and plants for
the treatment of sewage and trade effluents and to review
plans, specifications or other data relating to plants set up for
the treatment of water, works for the purification thereof and
the system for the disposal of sewage or trade effluents or in
connection with the grant of any consent as required by this
Act;
(g) to lay down, modify or annul effluent standards for the
sewage and trade effluents and for the quality of receiving
waters (not being water in an inter-State stream) resulting
from the discharge of effluents and to classify waters of the
State;
(h) to evolve economical and reliable methods of treatment of
sewage and trade effluents, having regard to the peculiar
conditions of soils, climate and water resources of different
regions and more especially the prevailing flow characteristics
of water in streams and wells which render it impossible to
attain even the minimum degree of dilution;
12
(i) to evolve methods of utilisation of sewage and suitable trade
effluents in agriculture;
(j) to evolve efficient methods of disposal of sewage and trade
effluents on land, as are necessary on account of the
predominant conditions of scant stream flows that do not
provide for major part of the year the minimum degree of
dilution;
(k) to lay down standards of treatment of sewage and trade
effluents to be discharged into any particular stream taking
into account the minimum fair weather dilution available in
that stream and the tolerance limits of pollution permissible in
the water of the stream, after the discharge of such effluents;
(l) to make, vary or revoke any order—
(i) for the prevention, control or abatement of discharges of
waste into streams or wells;
(ii) requiring any person concerned to construct new systems
for the disposal of sewage and trade effluents or to modify,
alter or extend any such existing system or adopt such
remedial measures as are necessary to prevent, control or
abate water pollution;
(m) to lay down effluent standards to be complied with by
persons while causing discharge of sewage or sullage or both
and to lay down, modify or annul effluent standards for the
sewage and trade effluents;
(n) to advise the State Government with respect to the location
of any industry the carrying on of which is likely to pollute a
stream or well;
(o) to perform such other functions as may be prescribed or as
may, from time to time, be entrusted to it by the Central Board
or the State Government.
(2) The Board may establish or recognize a laboratory or
laboratories to enable the Board to perform its functions under
this section efficiently, including the analysis of samples of
water from any stream or well or of samples of any sewage or
trade effluents.”
9
10. Section 17 of the Air Act , substantially similar to its
equivalent under the Water Act, also indicates the crucial
9
Section 17 of Air Act states –
17. Functions of State Boards .— (1) Subject to the provisions of this Act, and without
prejudice to the performance of its functions, if any, under the Water (Prevention and Control of
Pollution) Act, 1974, the functions of a State Board shall be—
(a) to plan a comprehensive programme for the prevention, control or abatement of air
pollution and to secure the execution thereof;
(b) to advise the State Government on any matter concerning the prevention, control or
abatement relating to air pollution;
13
responsibilities of the State Boards in discharge of their mandate.
Chapter V of the Water Act and Chapter IV of the Air Act include
provisions that prescribe the regulatory powers of the State
Boards. These powers include the power to issue, modify or
10 11
withdraw consent , power to obtain information , power of entry
12 13
and inspection and power to take samples .
8. Insertion of Sections 33A & 31A in Water and Air Acts.
11. In 1988, both Acts were amended. Notably, through
amendments the State Boards were further empowered to give
(c) to collect and disseminate information relating to air pollution;
(d) to collaborate with the Central Board in organising the training of persons engaged
or to be engaged in programmes relating to prevention, control or abatement of air
pollution and to organise a mass-education programme relating thereto;
(e) to inspect, at all reasonable times, any control equipment, industrial plant or
manufacturing process and to give, by order, such directions to such persons as it may
consider necessary to take steps for the prevention, control or abatement of air pollution;
(f) to inspect air pollution control areas at such intervals as it may think necessary,
assess the quality of air therein and take steps for the prevention, control or abatement
of air pollution in such areas;
(g) to lay down, in consultation with the Central Board and having regard to the
standards for the quality of air laid down by the Central Board, standards for emission
of air pollutants into the atmosphere from industrial plants and automobiles or for the
discharge of any air pollutant into the atmosphere from any other source whatsoever
not being a ship or an aircraft: Provided that different standards for emission may be
laid down under this clause for different industrial plants having regard to the quantity
and composition of emission of air pollutants into the atmosphere from such industrial
plants;
(h) to advise the State Government with respect to the suitability of any premises or
location for carrying on any industry which is likely to cause air pollution;
(i) to perform such other functions as may be prescribed or as may, from time to time,
be entrusted to it by the Central Board or the State Government;
(j) to do such other things and to perform such other acts as it may think necessary for
the proper discharge of its functions and generally for the purpose of carrying into effect
the purposes of this Act.
(2) A State Board may establish or recognise a laboratory or laboratories to enable the State
Board to perform its functions under this section efficiently.
10
Sections 25, 27 of Water Act and Section 21 of Air Act
11
Section 20 of Water Act and Section 25 of Air Act
12
Section 23 of Water Act and Section 24 of Air Act
13
Section 21 of Water Act and Section 26 of Air Act
14
14
directions under Section 33A of the Water Act and Section 31A
of the Air Act. These two provisions are identically worded. Section
33A of the Water Act is as under;
“Section 33A. Power to give directions.— Notwithstanding
anything contained in any other law, but subject to the
provisions of this Act, and to any directions that the Central
Government may give in this behalf, a Board may, in the
exercise of its powers and performance of its functions under
this Act, issue any directions in writing to any person, officer
or authority, and such person, officer or authority shall be
bound to comply with such directions.
Explanation.—For the avoidance of doubts, it is hereby
declared that the power to issue directions under this section
includes the power to direct—
(a) the closure, prohibition or regulation of any industry,
operation or process; or
(b) the stoppage or regulation of supply of electricity, water or
any other service.”
12. The directions contemplated under Sections 33A and 31A of
the Water and Air Acts must be in furtherance of the powers and
functions of the Boards and they must be in writing. These
provisions, declares that the power to issue directions will include
the power to direct closure, prohibition or regulation of any
14
Section 31A of the Air Act states –
31A. Power to give directions .—Notwithstanding anything contained in any other law, but
subject to the provisions of this Act, and to any directions that the Central Government may
give in this behalf, a Board may, in the exercise of its powers and performance of its functions
under this Act, issue any directions in writing to any person, officer or authority, and such
person, officer or authority shall be bound to comply with such directions.
Explanation.—For the avoidance of doubts, it is hereby declared that the power to issue
directions under this section includes the power to direct—
(a) the closure, prohibition or regulation of any industry, operation or process; or
(b) the stoppage or regulation of supply of electricity, water or any other service.
15
industry, operation or process. Further, this power extends to
directing the stoppage or regulation of supply of electricity, water
or any other service. The power to give directions has been worded
broadly, and it allows the Boards significant flexibility in deciding
the nature of directions. The legislative intention of granting these
powers through the 1988 amendment can be inferred from the
Statement of Objects and Reasons of the Water Act, which reads
as follows –
“2. The Water Act is implemented by the Central and State
Governments and the Central and State Pollution Control
Boards. Over the past few years, the implementing agencies
have experienced some more administrative and practical
difficulties in effectively implementing the provisions of the Act.
The ways and means to remove these difficulties have been
thoroughly examined in consultation with the implementing
agencies. Taking into account the views expressed, it is
proposed to amend certain provisions of the Act in order to
remove such difficulties….
3. The Bill, inter alia, seeks to make the following amendments
in the Act, namely:—
….
(iv) in order to effectively prevent water pollution, the penal
provisions of the Act are proposed to be made stricter and
bring them at par with the punishments prescribed in the Air
(Prevention and Control of Pollution) Act, 1981 as amended by
Act 47 of 1987;
….
(vi) it is proposed to empower the Boards to give directions to
any person, officer or authority including the power to direct
closure or regulation of offending industry, operation or
process or stoppage or regulation of supply of services such as
water and electricity;”
16
13. Similar objective is expressed for the amendment introduced
15
in the Air Act.
14. An appeal against directions issued under Section 33A of the
Water Act by the State Board can be filed before the National Green
16
Tribunal under Section 33B, introduced in 2010 . Unlike the
Water Act there is no specific Appeal provision against directions
issued under Section 31A of the Air Act. This asymmetry must be
addressed legislatively.
15. Offences and penalties under the two Acts, and the related
procedures, are covered in Chapter VII of the Water Act and
Chapter VI of the Air Act. These chapters have undergone
significant and substantial amendments. Prior to the
amendments, the two Acts stipulated penalties in the form of
15
Statement of Objects and Reasons for Air Act states, “2. The Air Act is implemented by the
Central and State Governments and the Central and State Boards. Over the past few years,
the implementing agencies have experienced some administrative and practical difficulties in
effectively implementing the provisions of this Act and have brought these to the notice of
Government. The ways and means to remove these difficulties have been thoroughly
examined in consultation with the concerned Central Government departments, the State
Governments and the Central and State Boards. Taking into account the views expressed, the
Government have decided to make certain amendments to the Act in order to remove such
difficulties. 3. The Bill, inter alia, seeks to make the following amendments in the Act,
namely—
….
iv) In order to prevent effectively air pollution, the punishments provided in the Act are proposed
to be made stricter.
….
(vii) It is proposed to empower the Boards to give directions to any person, officer or authority
including the power to direct closure or regulation of offending establishments or stoppage or
regulation of supply of services such as, water and electricity. (viii) It is proposed to empower
the Boards to approach courts to obtain orders restraining any person from causing air
pollution.”
16
Act 19 of 2010.
17
imprisonment, monetary fine or both for offences under the
statute. Courts could only take cognizance of an offence if a
complaint was filed by a Board or any officer authorized by it, or
by any person who had given notice of the alleged offence and of
his intention to make a complaint. No court inferior to that of a
Metropolitan Magistrate or a Judicial magistrate of the first class
can try an offence punishable under the two Acts. Be that as it
may, for the present purpose we have to examine and interpret
Sections 33A and 31A of the Water and Air Acts.
9. Interpretation of and for Environmental Institutions.
16. Our constitutionalism bears the hallmark of an expansive
interpretation of fundamental rights. But such creative expansion
is only a job half done if the depth of the remedies, consequent
upon infringement, remain shallow. In other words, remedial
jurisprudence must keep pace with expanding rights and
regulatory challenges. It is not sufficient that courts adopt
injunctory, mandatory and compensatory remedies, but our
regulators also must be empowered in that regard. However, the
legislative grammar must be elastic for us to infuse the regulators
with power to fashion different remedies. This infusion must also
be tempered with the necessary guidelines and parameters of
18
exercise of remedial powers, failing which such infusion would aid
arbitrary use. Our firm view is that remedial powers or
restitutionary directives are a necessary concomitant of both the
fundamental rights of citizens who suffer environmental wrongs
and an equal concomitant of the duties of a statutory regulator,
which are informed by Part IV A of the constitution. To that extent,
the functions and powers of a regulator must be inspired by the
obligation in Part IV A and Article 48 A. The State’s ‘endeavour to
protect and improve the environment’ will be partial, if it does not
encompass a duty to restitute.
17. Of all the duties imposed under Article 51A, the obligation to
conserve and protect water and air, is perhaps the most
significant, amidst our climate change crisis. The Water Act and
the Air Act institutionalised all efforts and actions that need to be
taken to protect air that we breathe and water that we consume by
creating the Pollution Control Boards. These Boards functioning
as our environment regulators are expected to act with institutional
foresight by evolving necessary policy perspectives and action
plans. Working with perpetual seal and succession, they are to
develop and retain institutional memory so that they can act on the
basis of the experience, data and information that they would have
19
gathered and processed. Institutional expertise is critical, and these
bodies are to employ human resource which have domain expertise
and talent. These bodies are intended to maintain institutional
integrity by taking independent and objective decisions without
governmental or industrial control. These values flow naturally if
there is institutional transparency and accountability . It is in this
perspective that we need to interpret Section 33A of the Water Act
and 31A of the Air Act.
10. Duty to Restitute v. Power to Punish and Penalise.
18. There is a distinction between an action for environmental
damages for restitution or remediation and imposition of penalties
or fines levied at the culmination of a punitive action. This Court
in M.C. Mehta (supra), while referring to the provisions of the Water
Act, Air Act and the Environment Protection Act observed –
“17. All the three Acts, referred to above, also contemplate the
taking of the cognizance of the offences by the court. Thus, a
person guilty of contravention of provisions of any of the three
Acts which constitutes an offence has to be prosecuted for
such offence and in case the offence is found proved then
alone can he be punished with imprisonment and fine or both.
The sine qua non for punishment of imprisonment and fine is
a fair trial in a competent court. The punishment of
imprisonment or fine can be imposed only after the person is
found guilty.”
“24. Pollution is a civil wrong. By its very nature, it is a tort
committed against the community as a whole. A person,
therefore, who is guilty of causing pollution has to pay
20
damages (compensation) for restoration of the environment
and ecology. He has also to pay damages to those who have
suffered loss on account of the act of the offender.…”
19. Therefore, Indian law distinguishes between the imposition of
a monetary penalty or fine, which constitutes punitive action
following a determination of guilt after adherence to the statutorily
prescribed procedure, and the payment of damages for restitution
or remediation as compensatory relief.
20. In this context, it is important to turn to one of the key
principles of Indian environmental law – the Polluter Pays
principle. This principle has been a part of Indian jurisprudence
since 1996. In Indian Council for Enviro-Legal Action v. Union of
17
India , this Court held that according to the Polluter Pays
principle the responsibility for repairing the damage is that of the
offending industry. The Court further held that the powers of the
Central Government to issue directions under Section 5 read with
Section 3 of the Environment Protection Act include the power to
impose costs for remedial measures -
“60. … Section 3 of the Environment (Protection) Act, 1986
expressly empowers the Central Government (or its delegate,
as the case may be) to “take all such measures as it deems
necessary or expedient for the purpose of protecting and
improving the quality of environment…”. Section 5 clothes the
Central Government (or its delegate) with the power to issue
17
(1996) 3 SCC 212
21
directions for achieving the objects of the Act. Read with the
wide definition of ‘environment’ in Section 2(a), Sections 3 and
5 clothe the Central Government with all such powers as are
“necessary or expedient for the purpose of protecting and
improving the quality of the environment”. The Central
Government is empowered to take all measures and issue all
such directions as are called for for the above purpose. In the
present case, the said powers will include giving directions for
the removal of sludge, for undertaking remedial measures and
also the power to impose the cost of remedial measures on the
offending industry and utilise the amount so recovered for
carrying out remedial measures. This Court can certainly give
directions to the Central Government/its delegate to take all
such measures, if in a given case this Court finds that such
directions are warranted. …
67. The question of liability of the respondents to defray the
costs of remedial measures can also be looked into from
another angle, which has now come to be accepted universally
as a sound principle, viz., the “Polluter Pays” principle. …Thus,
according to this principle, the responsibility for repairing the
damage is that of the offending industry. Sections 3 and 5
empower the Central Government to give directions and take
measures for giving effect to this principle. In all the
circumstances of the case, we think it appropriate that the task
of determining the amount required for carrying out the
remedial measures, its recovery/realisation and the task of
undertaking the remedial measures is placed upon the Central
Government in the light of the provisions of the Environment
(Protection) Act, 1986. It is, of course, open to the Central
Government to take the help and assistance of State
Government, RPCB or such other agency or authority, as they
think fit.”
( emphasis added )
21. Subsequently, the Court in Vellore Citizens’ Welfare Forum v.
18
Union of India , has held that the liability for environmental
damage includes both a compensatory aspect and a restorative or
remedial aspect-
“12. … The “Polluter Pays Principle” as interpreted by this
Court means that the absolute liability for harm to the
18
(1996) 5 SCC 647
22
environment extends not only to compensate the victims of
pollution but also the cost of restoring the environmental
degradation. 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.”
(emphasis added)
22. Application of the Polluter Pays principle not only includes
payment for restoring the damaged environment, taking remedial
action to deal with the damage and compensating for the direct
harm caused, but also for avoiding pollution. In Research
19
Foundation for Science (18) v. Union of India , this Court held -
“29. The polluter-pays principle basically means that the
producer of goods or other items should be responsible for the
cost of preventing or dealing with any pollution that the
process causes. This includes environmental cost as well as
direct cost to the people or property, it also covers cost incurred
in avoiding pollution and not just those related to remedying
any damage. It will include full environmental cost and not just
those which are immediately tangible. The principle also does
not mean that the polluter can pollute and pay for it. The
nature and extent of cost and the circumstances in which the
principle will apply may differ from case to case.”
( emphasis added )
23. The Court further held that the observations of the Court in
20
in Deepak Nitrite Ltd . v. State of Gujarat that “mere violation of
the law in not observing the norms would result in degradation of
environment would not be correct” were confined to the facts of that
19
(2005) 13 SCC 186.
20
(2004) 6 SCC 402
23
case. The Court clarified that the actual degradation of the
environment is not a necessary condition for the application of
polluter pays principle, as long as the offending activities have the
potential of degrading the environment -
“30…The decision also cannot be said to have laid down a
proposition that in the absence of actual degradation of
environment by the offending activities, the payment for repair
on application of the polluter-pays principle cannot be ordered.
The said case is not relevant for considering cases like the
present one where offending activities have the potential of
degrading the environment. In any case, in the present case,
the point simply is about the payments to be made for the
expenditure to be incurred for the destruction of imported
hazardous waste and amount spent for conducting tests for
determining whether it is such a waste or not …”
( emphasis added )
24. The distinction between a punitive action and a direction to
pay environmental damages was made by the National Green
Tribunal in State Pollution Control Board, Odisha v M/s Swastik
21
Ispat Pvt Ltd and Others . The Tribunal in this case was
considering the legality of forfeiture of bank guarantees in case a
defaulting industry did not comply with the regulatory conditions
within the stipulated timeframe. The Tribunal expressly
considered the opinion of the High Court in the impugned
judgment before us today and held -
“45. It is evident from the above facts and the reasoning that
there was actual levy of penalty or damages by the DPCC and
21
2014 SCC OnLine NGT 13.
24
it was in consequence of such imposition of penalty/damages
that the Units were called upon to furnish bank guarantees for
granting of consent. In other words, bank guarantee was
required to be furnished in furtherance to the imposition of a
penalty or damages in that case. It was not an act de hors the
imposition of penalty and had the element of punitive action.
In the present case, it is not a consequence of a punitive or
penal action but is in exercise of the powers vested in the
Board in relation to recalling the conditions of consent and
ensuring their implementation while also making
compensatory provision for remedying the apprehended
wrong to the environment. In the cases in hand, the Board has
not imposed any penalty upon the units but has granted
consent to them on certain conditions, none of which is
punitive. They squarely fall within the power of the Board to
prevent and control pollution in consonance with the scheme
of the Acts concerned. Thus, on facts, the judgments of the
High Court in Splendor (supra) do not have any application to
the present case. In any case, we are of the considered view
that asking for a bank guarantee as an interim measure for
due performance of the conditions of the consent order being
compensatory in nature, is not punitive.
46. We have already noticed above that there is a clear
distinction between a penal and a compensatory provision. In
such matters, the paramount question that would normally fall
for determination before a court or tribunal would be whether
the action contemplated is penal or compensatory. This issue
shall have to be decided with reference to the facts of the case,
the provisions of the law applicable and the intent of the
authority concerned. Once it falls in the ‘compensatory’ field,
then it will necessarily be beyond the purview of penalty….”
( emphasis added)
25. In Swastik Ispat, the Green Tribunal correctly interpreted
Sections 33A and 31A of the Water and Air Acts. The judgment of
Splendor
the High Court in had not yet been taken up or
considered by this Court at that time, the Tribunal had to
distinguish the facts of Splendor to arrive at its own conclusion. In
view of our reasoning and interpretation of Sections 33A and 31A
25
of the Water and Air Acts, we have no hesitation to hold that the
Green Tribunal is correct in its approach.
26. More recently, in T.N. Godavarman Thirumulpad, In Re v.
22
Union of India , this Court while considering the issue of illegal
construction in the Corbett Tiger Reserve drew the distinction
between action against persons violating the law and measures for
restoration of the environmental damage. The Court held -
“173. … However, the principle of restoration of damaged
ecosystem would require the States to promote the recovery of
threatened species. We are of the considered view that the
States would be required to take steps for the identification
and effective implementation of active restoration measures
that are localised to the particular ecosystem that was
damaged. The focus has to be on restoration of the ecosystem
as close and similar as possible to the specific one that was
damaged.
175. We find that, bringing the culprits to face the proceedings
is a different matter and restoration of the damage already
done is a different matter. We are of the considered view that
the State cannot run away from its responsibilities to restore
the damage done to the forest. The State, apart from
preventing such acts in the future, should take immediate
steps for restoration of the damage already done; undertake
an exercise for determining the valuation of the damage done
and recover it from the persons found responsible for causing
such a damage.”
(emphasis added)
11. Principles.
27. Based on a review of precedents on this issue, the following
legal position emerges –
22
(2025) 2 SCC 641
26
I. There is a distinction between a direction for payment of
restitutionary and compensatory damages as a remedial
measure for environmental damage or as an ex-ante measure
towards potential environmental damage on the one hand;
and a punitive action of fine or imprisonment for violations
under Chapters VII of the Water Act and VI of the Air Act on
the other hand.
II. If directions in furtherance of restitutionary and
compensatory measures are issued, these are not to be
considered as punitive in nature. Punitive action can only be
taken through the procedure prescribed in the statute for
example under chapters VII and VI of the Water and Air Acts
respectively.
23
the principle of
III. Indian environmental law has assimilated
Polluter Pays and there is also a statutory incorporation of
24
this principle in our laws. The invocation of this principle
25
is triggered in the situations ; i) when an established
threshold or prescribed requirement is exceeded or
23
Indian Council for Enviro-Legal Action (supra n.12); Vellore (supra n 13).
24
Section 20. Tribunal to apply certain principles- The Tribunal shall, while passing any
order or decision or award, apply the principles of sustainable development, the precautionary
principle and the polluter pays principle.
25
Loveleen Bhullar, ‘The Polluter Pays Principle: Scope and Limits or Judicial Decisions’; in
Shibani Ghosh (ed.), Indian Environmental Law (Orient BlackSwan 2019).
27
breached, and it does result in environmental damage, ii)
when an established threshold or prescribed requirement is
not exceeded or breached, nevertheless the act in question
results in environmental damage and also iii) when a
potential risk or a likely adverse impact to the environment
is anticipated, irrespective of whether or not prescribed
thresholds or requirements are exceeded or breached.
IV. Environmental regulators have a compelling duty to adopt
and apply preventive measures irrespective of actual
environmental damage. Ex-ante action shall be taken by
these regulators and for this purpose a certain measure in
exercise of powers under Sections 33A and 31A of the Water
and Air Acts is necessary.
V. The powers of the Boards under Sections 33A and 31A of the
Water and Air Acts are identical to that of Section 5 of the
Environment Protection Act. Under Section 5, the Central
Government or its delegate has the power to issue directions
to the polluting industry to pay certain amounts and utilise
the said fund for carrying out remedial measures. The Boards
are empowered to take similar actions under Sections 33A
and 31A of the Acts.
28
28. Having considered the principles that govern our
environmental laws and on interpretation of Sections 33A and 31A
of the Water and Air Acts, we are of the opinion that that the
Division Bench of the High Court was not correct in restrictively
reading powers of the Boards. We are of the opinion that these
regulators in exercise of these powers can impose and collect, as
restitutionary or compensatory damages fixed sum of monies or
require furnishing bank guarantees as an ex-ante measure
towards potential or actual environmental damage.
29. There is no doubt that Section 33A of the Water Act and
Section 31A of the Air Act give the State Boards powers to issue
necessary directions for environmental restoration, remediation
and compensation and for the payment of costs for the same. The
National Green Tribunal’s judgment in Swastik Ispat correctly
identified the Boards powers to issue directions for payment of
environmental damages under Section 33A of the Water Act and
the Section 31A of the Air Act. A restrictive interpretation which
fails to differentiate between environmental damages and punitive
action significantly encumbers the Boards ability to discharge its
duties.
29
30. The Board’s powers under Section 33A of the Water Act and
Section 31A of the Air Act have to be read in light of the legal
position on the application of Polluter Pays principle as formulated
and explained. This means that State Board cannot impose
environmental damages in case of every contravention or offence
under the Water Act and Air Act. It is only when the State Board
has made a determination that some form of environmental
damage or harm has been caused by the erring entity, or the same
is so imminent, that the State Board must initiate action under
Section 33A of the Water Act and Section 31A of the Air Act.
31. At this stage, we must also take note of the recent 2024
26
amendments to the Water and Air Acts. Two major changes
27
relevant for our consideration are that of decriminalisation and
28
introduction of the office of “Adjudicatory Officer” . Even after the
26
The Water (Prevention and Control of Pollution) Amendment Act, 2024, Jan Vishwas
(Amendment of Provisions) Act, 2023.
27
Section 41 in the erstwhile Water Act has been substituted by sections 41 and 41A, whereby
contravention of directions issued under section 20 (for obtaining information), 32 (for
imposing emergency measures in case of pollution), 33 (for restraining apprehended
pollution) or 33A would now be punishable by penalty alone; thereby replacing the earlier
penal framework comprising of imprisonment and fine. Similar amendments done for section
42 (penalty for certain acts), section 43 for contravention of directions under section 24
(prohibiting use of stream or well), section 44 (prohibiting alteration of meter, etc.), and
section 45A (residuary). Correspondingly, under the Air Act criminal liability under section
37 for contravention of directions under section 22 (restricting emission beyond standards)
or section 31A has been restricted to fine alone. Similar amendments have been brought in
section 38 and 39 (residuary). Punishment for imprisonment has been retained only for
violation of section 21 and failure to pay penalty or additional penalty under section 39D.
28
In the Water Act, section 45B puts in place a new office by the title of ‘Adjudicating Officer’,
who would be an officer not below the rank of Joint Secretary to the Centre or Secretary to
the State, appointed by the Central Government. Adjudicating Officer is empowered to inquire
30
amendments, in our opinion, there is no conflict between the
powers of the State Boards to direct payment of environmental
damages under Sections 33A and 31A of the Water and Air Acts
and the powers of the Adjudicating Officer to impose penalties
under Chapter VII of the Water Act and Chapter VI of the Air Act.
The decriminalization of offences under these Chapters has not
removed the punitive nature of actions that can be taken under
them. There remains a clear distinction between the nature of
directions that the State Boards can issue under Sections 33A and
31A of the Water and Air Acts for payment of environmental
damage and the determination by Adjudicating Officers. The
former is compensatory in nature and will be resorted to when
remedial measures are being undertaken to restore the degraded
environment or pollution caused. The latter is a penalty for an
offence under the law and is imposed with the objective of
punishing the offender. This penalty collected here will not be
specifically directed towards the restoration of the degraded
environment (for instance, to decontaminate a pond that has been
and impose penalties under sections 41, 41A, 42, 43, 44, 45A and 48. Appeal against such
imposition lies before the National Green Tribunal as per section 45C. The Adjudicating
Officer is further empowered to file a complaint for cognizance under section 49.
Corresponding additions have been made under the Air Act as well under sections 39A
(Adjudicating Officer), 39B (Appeal to NGT) and 43 (Cognizance of offences).
31
polluted due to discharge of untreated sewage). It will be deposited
in the Environmental Protection Fund that is to be set up under
Section 16 of the Environment (Protection) Act. According to
Section 16(3) of the EP Act, the Fund shall be used for, (a) the
promotion of awareness, education and research for the protection
of environment; (b) the expenses for achieving the objects and for
purposes of the Air (Prevention and Control of Pollution) Act,
1981(14 of 1981) and under this Act; and (c) such other purposes,
as may be prescribed.
A. Board’s Responsibility to Choose Appropriate Course of
Action.
32. Given their broad statutory mandate and the significant duty
towards public health and environmental protection the Boards
must have the power and distinction to decide the appropriate
action against a polluting entity. It is essential that the Boards
function effectively and efficiently by adopting such measures as
is necessary in a given situation. The Boards can decide whether
a polluting entity needs to be punished by imposition of penalty or
if the situation demands immediate restoration of the
environmental damage by the polluter or both.
32
B. Powers Must Be Guided by Transparency and Non-
Arbitrariness.
33. While we hold that the Boards have the power to direct the
payment of environmental damages, we make it clear that this
power must always be guided by two overarching principles. First,
that the power cannot be exercised in an arbitrary manner; and
second, the process of exercising this power must be infused with
transparency.
34. This Court has underscored the importance of strong
institutional frameworks in environmental governance that are
effective, accountable and transparent. In Bengaluru Development
29
Authority v. Sudhakar Hegde , this Court held -
“95. The protection of the environment is premised not only on
the active role of courts, but also on robust institutional
frameworks within which every stakeholder complies with its
duty to ensure sustainable development. A framework of
environmental governance committed to the rule of law
requires a regime which has effective, accountable and
transparent institutions. Equally important is responsive,
inclusive, participatory and representative decision-making.
Environmental governance is founded on the rule of law and
emerges from the values of our Constitution. Where the health
of the environment is key to preserving the right to life as a
constitutionally recognised value under Article 21 of the
Constitution, proper structures for environmental decision-
making find expression in the guarantee against arbitrary
action and the affirmative duty of fair treatment under Article
14 of the Constitution. Sustainable development is premised
not merely on the redressal of the failure of democratic
institutions in the protection of the environment, but ensuring
that such failures do not take place.”
(emphasis added)
29
(2020) 15 SCC 63
33
35. To ensure that the Boards impose restitutionary and the
compensatory environmental damages in a fair transparent, non-
arbitrary manner, with procedural certainty, necessary
subordinate legislation in the form of rules and regulations must
be notified. This shall include methods by which environmental
damage is determined, and the consequent quantum of damages
are assessed. They may also incorporate certain basic principles of
natural justice for fairness in action. At present environmental
damages are being levied by the Boards on the basis of certain
guidelines issued by the Central Pollution Control Board in its
document “ General framework for imposing environmental damage
compensation ” issue in December, 2022. These guidelines seem to
30
have been issued pursuant to the directions of the NGT. It is
important that these guidelines are reviewed thoroughly and
issued in the form of Rules and Regulations. This will enable
declaration of a law that applies and ensures its recognition and
easy implementation.
36. These Rules must also create enabling framework for citizens
to file complaints about environmental damage. Public
participation in environmental protection has assumed great
30
Pursuant to the NGT in its order in O.A. No. 606/2018 dated 24.04.2019.
34
importance with climate change threatening to drastically disrupt
our way of living. Boards, being the first line of defence against
polluting activities, must provide easy accessibility and encourage
public participation in their function and decision making.
37. While we have reversed the decision of the High Court on the
principle of law and hold that the environmental regulators, the
Pollution Control Boards, can impose and collect as restitutionary
and compensatory damages fixed sums of monies or require
furnishing bank guarantees as an ex-ante measure towards
potential environmental damage in exercise of powers under
Sections 33A and 31A of the Water and Air Acts, we issue the
following consequential directions.
38. In view of the fact that the show cause notices in these cases
relate to the year 2006 and those show cause notices were set-
aside by the Single as well as by the Division Benches of the High
Court, we are of the opinion that no purpose will be served in
reviving the said show cause notices at this point of time. In the
facts and circumstances of the case while we allow the appeal on
the principle of law there shall not be any consequential direction
for reviving the show cause notices which have been set-aside
concurrently by the Single as well as by the Division Bench of the
35
High Court. If certain amounts have been collected on the basis of
the said show cause notices they shall be returned by DPCC within
a period of six weeks from the date of this order, and if amounts
are not deposited or collected the appellant, DPCC shall not take
any further action.
39. For the reasons stated above:
(a) we allow these appeals and set aside the judgement and order
dated 23.01.2012, passed by the Division Bench of the High Court
of Delhi to the extent of declaration of law but direct that the show
cause notices that have been set aside by the High Court shall not
be revived.
(b) we direct that the Pollution Control Boards can impose and
collect as restitutionary and compensatory damages fixed sums of
monies or require furnishing bank guarantees as an ex-ante
measure towards potential environmental damage in exercise of
powers under Sections 33A and 31A of the Water and Air Acts.
(c) it is further directed that the power to impose or collect
restitutionary or compensatory damages or the requirement to
furnish bank guarantees as an ex-ante measure under Sections
33A and 31A of the Water and Air Acts shall be enforced only after
36
detailing the principle and procedure incorporating basic
principles of natural justice in the subordinate legislation.
………………………………....J.
[PAMIDIGHANTAM SRI NARASIMHA]
………………………………....J.
[MANOJ MISRA]
NEW DELHI;
AUGUST 04, 2025
37