Summary
The National Green Tribunal, after a Joint Committee report confirmed the appellant industry's full compliance, nonetheless imposed Rs.50 crore compensation computed on the appellant's turnover, directed the Enforcement Directorate to act under the Prevention of Money Laundering Act and ordered closure of non-compliant divisions. The Supreme Court set aside those directions, holding that turnover has no nexus with environmental penalty, that the NGT has no jurisdiction to direct PMLA action, and that a sweeping closure direction was unwarranted after compliance was accepted, while retaining the directions for continuous audit, monitoring and restoration.
Issues
- Whether the NGT could impose environmental compensation of Rs.50 crore computed with reference to the appellant's annual turnover.
- Whether the NGT could direct the Enforcement Directorate to examine the matter and take action under the Prevention of Money Laundering Act, 2002.
- Whether, having accepted the report of full compliance, the NGT could direct closure of such divisions of the appellant as fall short of compliance.
- Which of the NGT's directions (fresh water audit, monitoring and restoration) should be retained.
Provisions considered
- Section 15, National Green Tribunal Act, 2010The NGT must act within the contours of the powers conferred by Section 15 (relief, compensation and restitution for environmental damage); a power to direct prosecution under the PMLA, which may be available to a PMLA court or constitutional courts, is not available to the NGT. (¶ 12)
- Section 3, Prevention of Money Laundering Act, 2002Following Waris Chemicals and Vijay Madanlal Choudhary, Section 3 depends on illegal gain of property from criminal activity relating to a scheduled offence; here there was neither an FIR for any scheduled offence nor a complaint alleging offences under the environmental statutes scheduled under the PMLA, so the direction to the Enforcement Directorate was set aside without any finding on whether an offence is made out. (¶¶ 2, 12)
Held
- Generation of revenue, or its quantum, has no nexus with the penalty to be ascertained for environmental damage (Benzo Chem Industrial followed); the rule of law does not permit the State or its agencies to extract a 'pound of flesh' even in environmental matters. Although the NGT noted an admitted turnover of Rs.550 crores, there was no nexus between turnover and the pollution alleged; if the NGT thought the compensation imposed by the statutory bodies was low, it should have referred to the CPCB methodology rather than the polluter's revenue. The Rs.50 crore compensation was struck out. (¶ 11)
- The Court did not examine the maintainability of the environmental compensation imposed by the Pollution Control Boards, and the appellant's statement that it had paid the penalty was not verified; the appellant is left free to challenge that compensation subject to limitation, and the Board remains entitled to recover any shortfall or impose further compensation on non-compliance. (¶ 11)
- The NGT, constituted for effective and expeditious disposal of environmental cases, must act within Section 15 of the NGT Act and has no jurisdiction to direct prosecution under the PMLA; since Section 3 PMLA depends on illegal gain from a scheduled offence and no FIR or complaint for any scheduled environmental offence existed, the direction to the Enforcement Directorate was set aside, without deciding whether any offence is made out. (¶ 12)
- Having accepted the Joint Committee report of complete compliance, there was no warrant for a sweeping direction to close such divisions of the appellant as fall short of compliance; the jurisdictional Pollution Control Boards retain the right to proceed against any violation of statutory or other conditions, including by notice for closure, and constant monitoring is permissible in view of past violations. (¶ 10)
- The NGT's directions on fresh water audit, monitoring and restoration are within its powers and form a continuing process; they are retained, with the CPCB's suggestions on aquifer recharge, water balance monitoring, recycling of treated water and reduced groundwater withdrawal to guide the prospective compliance regime. (¶¶ 9, 13)
- The question of maintainability of the application as a public interest litigation was not considered, since the Joint Committee's initial reports clearly indicated violations of environmental law which led to compensation being imposed. (¶ 3)
- Application of mind is not proportionate to the number of pages; a judgment that elaborately states the law in general, extracts reports and orders already on record, yet ignores the last report finding complete compliance, is an exercise in futility. Courts and Tribunals should refrain from rhetoric and state the law with particular reference to the facts. (¶ 13)
Result
Appeal allowed; NGT order dated 25.02.2022 set aside except the directions permitting continuous monitoring and audit of pollution control measures; the Rs.50 crore compensation, the direction to the Enforcement Directorate and the closure direction are set aside, reserving the Pollution Control Boards' right to proceed against any violation; pending applications disposed of.