By Vickram Kilpady
The Supreme Court has recently ruled that built-up structures, other than polluting industries, should meet environmental norms for wherever they are located. The Court was hearing an appeal by the Delhi Pollution Control Committee (DPCC) against a Delhi High Court division bench order that upheld a single-bench order striking down show cause notices issued by the DPCC.
The order impacts shopping malls, commercial complexes and residential projects, including multi-storey flats. The bench of Justices PS Narasimha and Manoj Misra said: “Pollution control boards can impose and collect 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.”
The DPCC case is that it was directed by the Ministry of Environment, Forest and Climate Change (MoEFCC) to take appropriate action against companies that were violating environmental norms. Following this, it sent show cause notices to these properties for violating Section 25 in The Water (Prevention And Control Of Pollution) Act, 1974, and Sections 21 and 22 of the Air (Prevention and Control of Pollution) Act, 1981. The two laws deal with water and air pollution, respectively.
The DPCC issued the notices because the projects in the case built and finished their projects and were operating without getting the mandatory “consent to establish” and “consent to operate” from it under the relevant provisions.
Section 25 of the Water Act says no industry or construction project can discharge sewage or trade effluent into a stream, well, sewer or land without the permission from the Pollution Control Board of the state the project is in. It also deals with building any new outlet to discharge sewage.
Sections 21 and 22 of the Air Act, 1981, deal with the regulation of industrial plants and their emissions to prevent air pollution. Section 21 focuses on the requirement for prior consent from the state Pollution Control Board before establishing or operating any industrial plant in an air pollution control area. Section 22 sets emission standards for industrial plants and prohibits discharge of pollutants exceeding standards set by the state Pollution Control Board.
Following the issuance of the notices, 38 petitions were filed in the Delhi High Court challenging them. The single judge ruled that DPCC has no power to levy environmental damages or require developers to furnish bank guarantees as conditions for grant of consent under provisions of the Water Act and the Air Act. The division bench concurred with the single judge, following which DPCC approached the Supreme Court.
In its order overturning the Delhi High Court verdict, the Supreme Court bench said Indian law leaves room for both restorative measures, such as payment of damages or guarantees, and punitive measures, such as fines and imprisonment. Remedies aimed at environmental restoration or prevention are not penal in nature and may proceed under Sections 33A/31A if the subordinate rules prescribe fair procedures.
Similarly, the apex court said under Indian law, the Polluter Pays Principle is at work. It can cover actual damage exceeding legal thresholds, damage even if thresholds are not formally breached and anticipated environmental threats. Ex-ante measures, such as bank guarantees, and ex-post remedies, such as damages, flow naturally from this principle.
The bench said Sections 33A/31A of the Water Act and Air Acts mirror Section 5 of the Environment Protection Act, which empowers authorities to direct polluters to fund—or directly undertake—remedial work.
Adding a word of caution for Pollution Control Boards, the Supreme Court said the conditions for invoking Sections 33A/31A should be foolproof. The Board must first determine that environmental harm has either occurred or is imminent, before demanding damages or guarantees. The powers vested with the Pollution Control Boards cannot be used indiscriminately for every regulatory breach, and they will need a threshold finding of damage or risk.
Laying down procedural safeguards, the Court said any subordinate rules enabling Sections 33A/31A must articulate: the legal basis for imposing damages or guarantees; a fair, transparent mechanism guaranteeing notice, an opportunity to be heard and reasoned decisions; and the prohibition of arbitrariness since public participation and accountability are vital for robust environmental governance.
“Public participation in environmental protection has assumed great 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,” the bench concluded.
The use of the word restitutionary ahead of the word compensatory is significant since restitutionary would allow the pollution control boards to levy damages on a scale that will be more than the ubiquitous compensatory penalty. Broadly, restitution would mean restoring the location of the violating structures to its pristine condition before the buildings came up, but since the violating structures cannot be mowed down, the pollution control boards will be empowered to not skimp on damages.
This is important because in the pursuit of business many property developers have raised buildings and flats without adhering to norms put in place by the MoEFCC. That too in premium, returns-minting locations along the Yamuna riverfront, amid the Aravallis, you name it, there’s an apartment complex right there! The imposition of penalties on polluting industries is a normal activity of the Pollution Control Boards, but enabling them to levy restitutionary charges on non-polluting but norms-violating residential flats and commercial complexes is a new legal paradigm. Complexes and structures may not pollute to the naked eye, but where does the sewage generated by these plush high-rises go? And at what cost to the environment?
This judgment is a necessary warning for developers who have been plundering every available space with scant regard for the environment. It is widely prevalent in the Delhi-National Capital Region, Bengaluru and the Mumbai-Pune belt. This is not to say developers follow the dictum in other regions, which also have similar violations. A flip side of this order can mean developers will need to meet environmental norms without any leeway and could end up charging for it from eventual buyers of flats and mall units, driving up cost.
Nostalgia is a privilege for the affluent who remember sylvan surroundings from the 70s or the 80s. The itch for development, mainly haphazard, has rendered everything “rurban”, there is no clear line separating the rural and the urban, a fact known to every motorist travelling out from the metropolitan cities or to those residents of so-called rural areas, surrounded by the nearby concrete jungle.
The judgment also puts Pollution Control Boards and policy makers on their toes to formulate laws and terms that anticipate the sewage or pollution stress a project whether in the very lap of nature or not can leave on its environment.