Deepak
Nitrite Ltd. Vs. State of Gujarat & Ors [2004] Insc 360 (5 May 2004)
Cji
& G.P. Mathur.
(WITH
C.A.No.1522/2001, 1523/2001, 1524/2001, 1525-1526/2001, 1527/2001 1528/2001)
RAJENDRA BABU, CJI. :
These
appeals arise out of a series of orders made by the High Court of Gujarat. A
petition was filed before the High Court in public interest alleging large
scale pollution caused by industries located in the Gujarat Industrial
Development Corporation (GIDC) Industrial Estate at Nandesari. It is alleged
that effluents discharged by the said industries into the effluent treatment
project had exceeded certain parameters fixed by the Gujarat Pollution Control
Board (GPCB) thereby causing damage to the environment. Some of the industries
have set up their own effluent treatment plants in their factory premises,
while some of them have not. The High Court, by an order made on 17.4.1995,
directed that the chemical industries in Nandesari should be made parties to
the proceedings thereby 252 industrial units located in the Nandesari
Industrial Estate, Baroda were made parties to the proceedings, apart from the
State of Gujarat, Central Pollution Control Board, Gujarat Industrial
Development Corporation and Nandesari Industries Association. The High Court
also issued notices to the financial institutions or banks in respect of these
proceedings.
On May 5, 1995 the High Court appointed a Committee under the
Chairmanship of Dr. V.V. Modi to ascertain the position with regard to the
extent of pollution in Nandesari Industrial Estate. A Common Effluent Treatment
Plant (CETP) was erected by the GIDC in Nandesari Industrial Estate on the
contribution made by the industrial units in the Nandesari Industrial Estate to
the extent of about Rs. 300 lakhs.
In as much
as CETP was not achieving the required parameters laid down by the GPCB, the
High Court, by an order made on 7.8.1996, appointed NEERI as a consultant to
assess the treatment facilities and to provide suitable rectification measures
for upgrading the CETP and effluent treatment plant facilities. Dr.Committee
made a report on 7.9.1996. The High Court restrained several industries from
removing their products from their plant without prior permission of the High
Court and thereafter, by an order made on 13.9.1996, the High Court permitted
them to dispatch materials by depositing a certain sum of money which was the
value of the materials. NEERI submitted its report on 31.10.1996. The High
Court, while granting permission to some of the industries to carry on their
activities, called for turnover figures and profitability data. On 9.5.1997 the
High Court passed an order directing the industries to pay 1% of the maximum
annual turnover of any of the preceding three years towards compensation and
betterment of environment within a stipulated time. It is against this order
that the appellants are before us.
The
High Court in its impugned order followed a decision of the High Court of
Gujarat in Pravinbhai Jashbhai Patel & wherein it was noticed that the
industrial units though aware of the requirements of law had not complied with
the same nor did they meet the GPCB parameters and they were irresponsible in
not wanting or caring to set up effluent treatment plants but continued to
manufacture and pollute the environment and the concern shown now in meeting
with the pollution control norms is only because of the threatened court order;
that pollution caused by these industrial units was adversely affecting large
number of citizens residing in the adjacent cities or villages; that in
particular water and air pollution is not only continued to the immediate area
in which the pollution is generated, but the same affects other areas as well
wherever water or air went;
that
this Court in M.C. Mehta vs. Union of India, AIR 1988 Ors., 1995 (2) SCC 577
and CERC vs. Union of India, AIR 1995 SC 922, invoked the provisions of Article
21 of the Constitution of India to declare that the citizens have a fundamental
right to live decently unaffected by pollution. After noticing various contentions,
the High Court took the view that 1% of the turnover would be a good measure of
assessing damages for the pollution caused by the industrial units and that
amount should be kept apart by the Ministry of Environment and should be
utilized for the works of socio- economic uplift of the population of the
aforesaid affected areas and for the betterment of educational, medical and
veterinary facilities and the betterment of the agriculture and livestock in
the said villages with certain additional directions in this regard.
It is
now submitted before us by the appellants that a court has no power to either
impose penalty or fine or make any levy for general betterment unless the
statute authorized the same; that, however, in awarding damages it is
permissible to make the same exemplary or penal; that award of damages is way
of restitution for the damage caused to victims and for restoration or
restitution and for restoration of ecology by way of punishment; that, unless a
finding is given by the High Court that there had been degradation of
environment, question of restitution or awarding damages could not arise; that
there is no finding of degradation of environment and, therefore, it is not
open to the High Court to impose 1% of the turnover by way of damages. The
appellants relied upon a decision of this Court in Vellore Citizens' Welfare
Forum vs. Union of India & Ors., 1996 (5) SCC 647, in support of this
contention. Their argument is that principle of 'polluter to pay' cannot be
applied unless a finding has been given that the industrial unit concerned is
the polluter. In what manner pollution has been caused should have been
ascertained, particularly when a separate common effluent treatment plant had
been erected and a channel was provided through which water would flow into
river which would reach the sea thereby not causing any damage anywhere. They
seek to bring about difference between Pravinbhai Jashbhai Patel's case (supra)
and the present proceedings to contend that in those cases there was direct evidence
of damage having taken place and by way of rule of thumb the High Court adopted
the standard of 1% of turnover to be paid by way of damages and that this
principle cannot always uniformally be applied. They commend us to apply the
principle set out by this Court in Vellore Citizens' Welfare Forum's case
(supra) wherein principle of 'polluter to pay' has been applied and wherein it
is noticed that any principle evolved in this behalf should be simple,
practical and suited to the conditions obtaining in this country; once the
activity carried on is hazardous or inherently dangerous, the person carrying
on such activity is liable to make good the loss caused to any other person by
his activity irrespective of the fact whether he took reasonable care while
carrying on his activity; consequently, the polluting industries are absolutely
liable to compensate for the harm caused by them to villagers in the affected
areas, to the soil and to the underground water and hence, they are bound to
take all necessary measures to remove sludge and other pollutants lying in the
affected areas;
that
the 'polluter pays principle' as interpreted by this Court means that the
absolute liability for harm to the environment extends not only to compensate
the victims of pollution but also the cost of restoring the environmental
degradation; that 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.
Shri
T.R. Andhyarujina, learned Senior Advocate, who assisted this Court as Amicus
Curiae with great ability, explained to us the background in which the High
Court had passed the impugned order. He submitted that the High Court had
followed the earlier decision in Pravinbhai Jashbhai Patel's case (supra)
wherein standard of 1% of turnover was adopted for closure of polluting units
and payment of compensation by such units for polluting river and land; that
the basis of this decision in that case was that the polluting industrial units
were not meeting GPCB norms and the continued violation of the law by
industrial units had become a habit; that after elaborate discussion, the High
Court had concluded that these industries had caused pollution and, therefore,
gave certain directions, including for closure of the industrial units until
they observe GPCB norms; that the directions given by the High Court regarding
closure and payment of compensation were complied with by the industrial units
and this Court did not interfere with the order made by the High Court,
therefore, the methodology adopted by the High Court in Pravinbhai Jashbhai
Patel's case (supra) can be applied to other industrial units which are causing
pollution;
that,
after investigation made by the Committee or by an expert body there were
reports that the industrial units were causing pollution by not complying with
the norms prescribed by GPCB and High Court, in fact, noticed that a number of
units have voluntarily agreed to pay 1% of the turnover of a year out of the
last three years and there was consensus between all the industries and for
betterment of environment, they voluntarily stated before the Court that 1%
shall be paid; that one may say that even some of the units having no treatment
plant or having inadequate facilities appeared before the High Court stating
that they would voluntarily stop manufacturing till installation of proper
treatment plant and were in a position to discharge trade effluent meeting with
GPCB norms. Thus, in these cases, the High Court restrained firstly several
industries from removing their products from their plant without prior
permission of the High Court and thereafter, such units themselves suspended
operation of the polluting activities. The High Court, after having considered
further reports of the Committee; NEERI and GPCB permitted to restart
activities on a trial basis and at the same time, directed that "with
regard to 1% payment an order will be passed after the details furnished by the
learned counsel." The High Court thereafter adopted payment of 1% of the
turnover method as indicated in Pravinbhai Jashbhai Patel's case (supra). He
submitted that in these cases the High Court has through its investigation
either by Committee appointed by itself or expert agency like NEERI found that
the industrial units in question were polluting units and had not conformed
with the norms prescribed by GPCB and each of the units were discharging
effluents into the effluent channel project constructed by GIDC which in turn
discharged the effluents into the Mahi river which ultimately reached sea. Thus
the High Court had found that there was extensive environmental degradation as
a result of the pollution because of the violatioin of the pollution laws and
on account of such damage, the High Court ordered the payment of 1%
compensation as a one time payment for pollution and damage for a number of
years from 1993 to 1996. He further submitted that in no case the High Court
ordered compensation without giving a finding that there was environmental
degradation and damage as a result of violation of prescribed norms. He also
adverted to various decisions of this Court in M.C. Mehta vs. Union of India,
1987 (1) SCC 395, to support the proposition that the measure of compensation
must be co-related to the magnitude and capacity of the enterprise because such
compensation must have a deterrent effect and such damage not only extends to
restitution for the harm to the environment to compensate the victims of the
pollution but also cost of restoring the environment by degradation. This Court
reiterated the principle of "polluter to pay" to the effect that one
of the principles is to levy damages of a certain percentage of total turnover
and the right to a clean and hazardless environment has been recognised as a
fundamental right under Article 21 of the Constitution. The Court has innovated
new methods and strategies for the purpose of securing enforcement of
fundamental rights.
The
fact that the industrial units in question have not conformed with the
standards prescribed by GPCB cannot be seriously disputed in these cases. But
the question is whether that circumstance by itself can lead to the conclusion
that such lapse has caused damage to environment. No finding is given on that
aspect which is necessary to be ascertained because compensation to be awarded
must have some broad co-relation not only with the magnitude and capacity of
the enterprise but also with the harm caused by it. May be, in a given case the
percentage of the turnover itself may be a proper measure because the method to
be adopted in awarding damages on the basis of 'polluter to pay' principle has
got to be practical, simple and easy in application. The appellants also do not
contest legal position that if there is a finding that there has been
degradation of environment or any damage caused to any of the victims by the
activities of the industrial units certainly damages have to be paid. However,
to say that mere violation of the law in not observing the norms would result
in degradation of environment would not be correct.
Therefore,
we direct the High Court to further investigate in each of these cases and find
out broadly whether there has been any damage caused by any of the industrial
units by their activities in not observing the norms prescribed by the GPCB as
reported by the Modi Committee appointed by the High Court or by an expert body
like NEERI and that exercise need not be undertaken by the High Court as if the
present proceeding is an action in tort but an action in public law. A broad
conclusion in this regard by the High Court would be sufficient. We, therefore,
direct the High Court to re-examine this aspect of the matter as to whether
there is degradation of environment and as a result thereof any damage is
caused to any victim, and what norms should be adopted in the matter of
awarding compensation in that regard. In this process it is open to the High
Court to consider whether 1% of the turnover itself would be an appropriate
formula or not as applicable to the present cases.
We
record our appreciation and gratitude to Shri T.R. Andhyarujina in assisting
this Court as Amicus Curiae.
With
these observations, these appeals stand disposed of.
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