Pollution Control Boards lack authority to impose damages absent specific principles and procedures detailed in subordinate legislation.

The Respondent (Divine Infracon) paid ₹23 lakhs to the Appellant (DPCC) in 2008 following an order for environmental violations.

In 2010, the Appellant issued a new show-cause notice for subsequent violations, seeking to encash a bank guarantee.

On 12.04.2012, a Single Judge allowed the petition, holding that the DPCC lacked jurisdiction to levy penalties, and directed the refund of ₹18 lakhs and the return of the bank guarantee.

The Single Judge relied on a Division Bench ruling in DPCC v. Splendor Landbase Ltd., which was later overturned by the Supreme Court on 04.08.2025 during the pendency of this appeal.

1. Whether the DPCC has the statutory jurisdiction to impose restitutionary damages or demand bank guarantees for environmental damage under the Water and Air Acts.

2. Whether the Respondent was entitled to a refund of the ₹23 lakhs previously paid in 2008.

The Court applied Sections 33A of the Water (Prevention and Control of Pollution) Act and 31A of the Air (Prevention and Control of Pollution) Act, as interpreted by the Supreme Court in C.A. No. 757-760/2013.

The Supreme Court established that Pollution Control Boards can collect compensatory damages and require bank guarantees as ex-ante measures.

Such powers must be exercised via subordinate legislation that incorporates the principles of natural justice and details specific procedures.

Issues that have attained finality in previous proceedings cannot be reopened via subsequent litigation.

The Court observed that while the Supreme Court validated the DPCC’s power to impose damages, it mandated a prior regulatory framework for such enforcement.

In the present case, no such regulatory framework existed during the 2010-11 period when the show-cause notice was issued.

Regarding the ₹23 lakhs refund ordered by the Single Judge, the Court reasoned that this payment was made in 2008 and had attained finality; it was distinct from the 2010 notice and thus could not be legally disturbed or refunded.

The Court upheld the direction to return the original bank guarantee to the Respondent, as no regulatory framework existed at the time of the 2010 notice, and directed the DPCC to return the guarantee within four weeks or issue a letter of cancellation.