NEW DELHI, Aug 4: In a significant judgment strengthening the regulatory authority of environmental bodies, the Supreme Court today upheld the powers of State Pollution Control Boards to impose environmental compensation and demand bank guarantees from polluters as part of their preventive and remedial functions.
A Bench comprising Justice P.S. Narasimha and Justice Manoj Misra ruled that such actions taken under Section 33A of the Water (Prevention and Control of Pollution) Act, 1974 and Section 31A of the Air (Prevention and Control of Pollution) Act, 1981 are lawful and fall squarely within the statutory powers of the Boards.
The Court, however, underscored that such powers must be exercised with fairness, transparency, and adherence to the principles of natural justice.
“We hold that Pollution Control Boards can impose and collect, as restitutionary and compensatory damages, fixed sums or require the furnishing of bank guarantees as an ex-ante measure to prevent potential environmental harm,” the Court said.
However, it cautioned that such actions must not be arbitrary and should follow a legally sound and transparent procedure.
The judgment came in response to a batch of appeals filed by the Delhi Pollution Control Committee (DPCC), which had challenged a Delhi High Court ruling restraining it from imposing compensatory damages on real estate developers for commencing construction without prior environmental clearance under the Air and Water Acts.
The High Court had held that such compensations amounted to penalties and could not be imposed without following formal procedures under Chapters VI and VII of the Acts.
Overruling the High Court, the Supreme Court distinguished compensatory measures from punitive sanctions, noting that the former serve a restorative and preventive function rather than a penal one.
“There is a clear distinction between restitutionary directions aimed at preventing or repairing
environmental damage and punitive actions like fines or imprisonment meant to punish violations,” the Bench noted.
Importantly, the Court affirmed that actual environmental damage is not a prerequisite for invoking the polluter pays principle. “The potential for environmental harm is sufficient to trigger remedial action. Actual degradation is not essential,” the Court stated.
The ruling reaffirmed the scope of Sections 33A and 31A introduced in 1988, which empower Pollution Control Boards to issue binding directives, including orders to regulate operations, close polluting industries, or enforce environmental safeguards.
The Court also endorsed the view taken by the National Green Tribunal in the Swastik Ispat Pvt. Ltd. case, which upheld the use of bank guarantees as a legitimate tool for ensuring compliance.
“We have no hesitation in holding that the NGT’s interpretation was correct,” the judgment said.
In addressing the impact of the 2024 amendments to environmental statutes, which introduced adjudicating officers and decriminalised certain offences, the Court clarified that these reforms do not dilute the Pollution Control Boards’ authority to issue compensatory or preventive directions.
“There is no overlap between the role of the Adjudicating Officer, who imposes penalties, and the Boards, which act to prevent or remedy environmental harm,” the Court observed.
Calling for clarity and consistency in enforcement, the Bench urged the government to frame subordinate legislation detailing the method of calculating environmental damage and assessing appropriate compensation.
“Rules and regulations must be notified to codify procedures, ensure transparency, and uphold natural justice,” the Court said.
However, the Bench declined to revive 2006 show cause notices that had been quashed by the Delhi High Court, citing the significant passage of time and concurrent findings of both the single and division benches.
It ordered that any environmental compensation already recovered under those notices be refunded by the DPCC within six weeks.
This landmark ruling reaffirms the regulatory authority of Pollution Control Boards and strengthens environmental governance by validating proactive enforcement measures grounded in the polluter pays principle.
(UNI)
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