Environmental Clearance Violation: SC Made Polluters Pay

In the judgment of a bunch of 4 civil appeals in the case –Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Others - delivered on April 1, 2020, Justice Dr D.Y. Chandrachud and Justice Ajay Rastogi, at the Supreme Court, have adopted balanced approach, which holds the industries to account for having operated without environmental clearances in the past without ordering closure of operations. The Court has issued the order for payment of compensation as a facet of preserving the environment in accordance with the precautionary principle.

These directions have been issued under Article 142 of the Constitution. Aggrieved appellant companies – Alembic Pharmaceuticals Ltd., United Phosphorus Ltd. and Unique Chemicals Ltd. have been directed to deposit the amount of compensation –Rs ten crores – each with the Gujarat Pollution Control Board (GPCB) within a period of four months from the date of receipt of the certified copy of this judgment.

The material produced on the record indicates that the GPCB issued an No Objection Certificate –NOC- to establish and run the manufacturing unit on August 14, 1995.It is evident from the table enlisting the list of relevant permissions, consents and authorizations that all permissions were received post facto, that is after the EIA (Environmental Impact Assessment) notification, 1994 was issued. Clearly, Unique Chemicals Ltd. is not entitled to the benefit of the exemption contained in Clause 8 of the explanatory note to the EIA notification 1994.

From the material placed on the record by the industries, it becomes evident that there has been a gross abdication of responsibility by all the three industries in terms of obtaining timely consents and authorizations from GPCB. There exists a distinction between obtaining relevant clearances and consents from the State Pollution Control Board and obtaining an environmental clearance in accordance with the procedure laid down under the EIA notification of 1994. 

A consent order issued by the State Pollution Control Board allows industry to operate within the prescribed emission norms. However, the consent orders do not account for the social cost and impact of undertaking an industrial activity on the environment and its surroundings. A holistic analysis of environmental impact of an industrial activity is only accounted once all the steps listed out in EIA notification of 1994 are followed.

The purpose of setting in place specific requirements such as public hearing, screening, scoping and appraisal is to foster deliberative decisions and protect environmental concerns. The detailed process listed out in the EIA notification of 1994 for obtaining an Environmental Clearance (EC) allows for minimizing the adverse environmental impact of any industrial activity and improving the quality of the environment. One must adopt an ecological/ rational outlook towards development. Given the social and environmental impacts of an industrial activity, environmental compliance must not be seen as an obstacle to development but a measure towards achieving sustainable development and inter-generational equity.

In light of this discussion, the Apex-Court has reached the conclusion that none of the three industries were entitled to the benefit of the exemption contained in Clause 8 of the explanatory note to the EIA notification of 1994.

The issue which concerned the Court next has been the consequences which will emnate from the failure of the three industries to obtain their ECs until the stipulated dates. The functioning of all these three industries without a valid EC would have had an adverse impact on the environment ecology and biodiversity in the area where these are located.

The Comprehensive Environmental Pollution Index –CEPI- report issued by the Central Pollution Control Board for 2009-10 describes the environmental quality at 88 locations across the country. Ankleshwar in the State of Gujarat, where these 3 industries are located showed critical levels of pollution. In the interim assessment of CEPI for 2011, the report indicates similar critical figures of pollution in the Akleshwar area.

By a judgment on January 8, 2016, the Western zone Bench of the National Green Tribunal held that a circular issued by the Union Environment and Forests Ministry on May 14, 2002 is contrary to law. The circular envisaged the grant of ex post facto environmental clearances. The NGT issued several directions including the revocation of ECs and for closing down industrial units operating without valid consents. On May 17, 2016, the NGT dismissed an application for review filed by one of the affected industrial units. This took these units and the Union Environment Ministry before the Supreme Court, in appeal.

A 3- judge Bench of the Supreme Court had occasion to deal with the aspect of whether an EC granted for expansion to the appellant without holding a public hearing was valid in law in the case – Electrotherm (India) Ltd. v. Patel Vipulkumar Ramjibhai- (2016) 9 SCC 300 and therein Justice Uday Umesh Lalit speaking for the Bench, held :

“19. ....the decision-making process in doing away with or in granting exemption from public consultation/public hearing was not based on correct principles and as such the decision was invalid and improper.”

The Court while deciding the consequence of granting an EC without public hearing did not direct closure of the appellant’s unit and instead held thus:

“20. At the same time we cannot lose sight of the fact that in pursuance of EC of January 27 2010, the expansion of the project has been undertaken and as reported by the CPCB in its affidavit on July 7, 2014, most of the recommendations made by CPCB are complied with. In our considered view, the interest of justice would be sub served if that part of the decision exempting public consideration/public hearing is set aside and the matter is relegated back to the authorities concerned to effectuate public consideration/public hearing. 

“However, since the expansion has been undertaken and the industry has been functioning, we do not deem it appropriate to order closure of the entire plant as directed by the High Court. If the public consultation/ public hearing results in a negative mandate against the expansion of the project, the authorities would do well to direct and ensure scaling down of the activities to the level that was permitted by EC of February 20, 2008.If public consultation/public hearing reflects in favour of the expansion of the project EC of January 27, 2010 will hold good and be fully operative.

Subject to the deposit of the ordered amount and for the reasons indicated, The Supreme Court allowed the appeals and set aside the Impugned judgment of the NGT of January 8, 2016 in so far as it directed the revocation of the ECs and closure of the industries as well as the order in review of May 17, 2016.