IN THE SUPREME COURT OF INDIA

(CIVIL APPEALLATE JURISDICTION)

Civil Appeal No. 328 of 2017

ABCL COMPANY

….Appellant/Petitioner

VERSUS

STATE POLLUTION CONTROL BOARD

…Respondent

JUDGMENT

PRESENT:

Hon’ble Justice Anmol Rattan Singh

Hon’ble Justice G.K Pandey

JUDGMENT BY THE BENCH

1. That, the appellant ABCL Company is a big profit earning - private company

incorporated under The Companies Act, 1956 and is engaged in the business of

manufacturing, processing and sale of natural fruit juices under the brand name ‘Real
 Fruit Juice’ and has a plant based in Plot No-10 Industrial Area Phase I, Panchkula,

Haryana.

2. The present appeal is filed by the appellant company ABCL aggrieved from the order

passed by the National Green Tribunal, Delhi on 30.03.2017 confirming the directions of

State Pollution Control Board directing the appellant company to furnish the bank

guarantee of Rupees Five Lakh within fifteen days from the issue of directions vide letter

dated 16.03.2017.

3. The direction issued by the respondent State Pollution Control Board (SPCB), Haryana to

the appellant company vide its letter dated 16.03.2017 is to sought be assailed here and as

per the contents of the letter the respondent directed the appellant to-

(a) Ensure pollution abatement system in all its unit operations and comply with

the standards, and

(b) Submit a bank guarantee of Rupees Five Lakh within fifteen days (15 days)

from the date of the issuance of the direction, valid for twelve (12) months for

the assuring the compliance of the above directions.

The directions are impugned mainly on the following grounds:

(a) That, the grave injustice has occurred to the appellant company by denying

them the opportunity of being heard as per the principles of natural justice.

(b) That, the samples collected by the State Pollution Control Board on

05.12.2016 and 20.02.2017 are in contravention of the procedure laid down

under Section 21 of the Water (Prevention and Control of Pollution) Act, 1974
 (c) That, the directions dated 16.03.2017 has no nexus with the last analysis

report of the discharged effluent drawn upon the samples collected on

09.03.2017.

(d) That, the respondent State Pollution Control Board had no power or

jurisdiction to impose penalty upon the appellant company and direct for the

bank guarantee amounting to Rupees Five Lakh to be submitted within fifteen

(15) days of the issuance of the direction dated 16.03.2017.

BRIEF FACTS:

4. To address the controversy, it is essential to adhere to the facts-

The appellant company was granted consent on dated 04.03.2012 under Section 21 of Air

(Prevention and Control of Pollution) Act, 1981 and under Section 25 and Section 26 of

the Water (Prevention and Control of Pollution) Act, 1974 by the State Pollution Control

Board, Haryana for bottling a plant in Phase I, Industrial Area, Panchkula, Haryana and

was granted and extended time to time under the provisions of Air (Prevention and

Control of Pollution) act, 1981 and Water (Prevention and Control of Pollution) Act,

1974.

5. On 05.12.2016, State Pollution Control Board issued the notice to the appellant ABCL

Company for the collection of samples from their plant. In consonance with the said

notice the samples were collected on the same day from the premises of appellant’s plant

by the officials of State Pollution Control Board, Haryana. According to the appellant

company, the samples were not collected as per the standard norms and procedure laid
 under Section 21 of the Water (Prevention and Control of Pollution) Act, 1974. Appellant

pleaded that samples collected by the officials of State Pollution Control Board, Haryana

were not divided into two (2) separate containers in the presence of any agent or occupier

of the company nor the signatures of agent were taken upon the sealed container/samples

so collected.

6. According to appellants, another set of samples was also collected from the premises of

appellant’s plant on 20.02.2017 and it is alleged that the said samples were again

collected in contravention of the said procedure mentioned under Section 21 of the Water

(Prevention and Control of Pollution) Act, 1974. The State Pollution Control Board on

the basis of the impugned samples collected dated 05.12.2016 and 20.02.2017 made an

analysis report and issued a show cause notice to the appellant company alleging

violation of regulatory standards and asked the appellant company to show cause and

take necessary steps to comply with the required standards.

7. The appellant was asked to inform the office about action taken in regard to the analysis

report. It is averred that necessary cause was shown by the appellant company within the

time prescribed indicating the measures taken for eradicating the deficiencies. State

Pollution Control Board again took the samples on 09.03.2017 from the premises of the

plant of appellant company and this time samples were within the prescribed parameters.

Further, State Pollution Control Board vide its above mentioned letter dated 16.03.2017

directed the appellant company for ensuring pollution abatement in all its unit operations
 and directed to furnish the bank guarantee of Rupees Five Lakh within fifteen days (15)

from the issuance of direction, valid for twelve months.

8. The appellant company challenged the directions of the State Pollution Control Board,

Haryana dated 16.03.2017 before the National Green Tribunal, whereby the Principal

Bench of NGT upholding the sanctity/ validity of the said directions. The order passed by

NGT is reproduced as follows:

20. The argument of the plaintiff company that samples dated 05.12.2016 and

20.02.2017 are in violation of mandatory procedure laid down under Water (Prevention

and Control of Pollution) Act, 1974 is baseless as plaintiff’s failed to produce the

supporting evidence reflecting the act of SPCB in contravention of said procedure under

Water Act.

23. There is no abuse of power on the part of respondent SPCB as the plaintiff’s

were given adequate opportunity to appear in its office and inform the office about the

necessary action taken within the time specified for eradicating the deficiencies.

26. The State Pollution Control Board is the competent authority to issue

direction as per wide powers allotted to SPCB under Section 33 A of Water (Prevention

and Control of Pollution) Act, 1974. Section 33 A empowers the SPCB to issue “any

direction” and for further clarity Explanation (i) to section 33A specifically mentions any

direction includes power to prohibit, close or regulate any industry, operation or

process. Thus, the said direction issued by SPCB to furnish the said bank guarantee of

Rupees Five Lakh within fifteen days of issue of directions valid for twelve months is
 valid in terms of Explanation (i) to Section 33A, Water (Prevention and Control of

Pollution) Act, 1974.

9. Aggrieved by the decision of Principal Bench, NGT, confirming the direction to furnish

the bank guarantee of Rupees Five Lakh the appellants filed the present civil appeal. Mr.

Anupam Gupta, Ld. Counsel for the appellant, took the stand that SPCB lacked the power

to impose the penalty in form of substantial amount or direct the appellant company to

furnish a bank security of Rupees Five lakh as an assurance to comply with the direction

issued under Section 33 A or any other provision of the Water Act, 1974. According to

Mr. Anupam Gupta such a pecuniary liability could only be levied when there is clear

and unambiguous provision in the enactment. And, there being no clear and unambiguous

provision in the Water act, State pollution Control Board, Haryana is not competent to

impose any sort of penalty. Thus, direction to furnish bank security issued by the State

Pollution Control Board is ulta vires, vague and arbitrary and is entitled to be set aside.

10. Mr. Anupam Gupta in support of his contentions relied upon the decision of the Supreme

Court in M/S Khemka Company (Agencies) Pvt. Ltd. v. State of Maharastra, 1975 SCC

22 and of High Court in the case of Splendor Landbase v. Delhi Pollution Control

Committee, DPCC reported in 173 (2010) DLT 52.

Interpreting Section 25 of Water Act, 1974 Ld. Counsel appearing on behalf of appellant

argued that if a consent is not obtained as per provisions of law so , penalty would be

levied of imprisonment not less than one year and six months but, which may extend to

six years and fine. Similarly, Section 41 empowers the power to levy a penalty is there is

any failure to comply with the provisions of Section 20 (2) , Section 20 (3), section 32(1),
 section 33(2) or Section 33A which would be imprisonment of not less than one year and

six months which may extend to six years and fine. But, section 49, Water Act explicitly

mentions that no court inferior to the court of metropolitan magistrate or Judicial

Magistrate First Class shall try the offence punishable under this section.

Thus, it is clear that such a punishment along with fine could be levied only by the Court

and State Board lacks the power to levy any sort of penalty. Further, counsel for the

appellant argued that State Pollution Control Board lacks the power to issue the direction

to furnish a bank guarantee under Section 33 A of the Water Act since, Section 33 A

merely empowers the State Board to Issue any direction in dispersing its functions as

provided under water act and such “any directions” is to include power to direct, closure,

prohibition and to regulate any industry, process or operation or secondly, stoppage or

regulation of supply of water and electricity. It is argued by the counsel for the appellant

that State Board merely has administrative powers under Section 33 A whereby, State

Pollution Control Board can issue any direction in order to regulate any industry, process

or operation, but, State Board lacks power to order a pecuniary liability upon the

appellant company by issuing a direction to furnish a bank guarantee amounting to

Rupees Five Lakh as an assurance for adhering to prescribed standards.

11. Mr. Anupam Gupta also relied on the decisions of Supreme Court in the cases of Indian

Institute of Chartered Accountants v. Price Waterhouse, (1997) 6 SCC 312 and Union

of India v. Azadi Bachao Andolan, (2004) 10 SCC 1, and argued that the phrase “any

directions” cannot be stretched so far than the explicit provision stated in the enactment

in order to cover the action of the respondent State Pollution Control Board. Counsel for
 appellant argued that National Green Tribunal was wrong in interpreting the phrase “any

directions” so as to include the power to levy any pecuniary liability and argued that

decision of NGT is arbitrary, vague and hence is liable to be set aside.

12. Mr. Amit Kataria, Counsel appearing on behalf of the respondents countenancing the

arguments of the appellant counsel argued that counsel for appellant is wrong in

interpreting Section 33 A and is misleading the court. According to Respondent Counsel,

State Pollution Control Board has very wide powers under Section 33 A whereby, SPCB

is empowered to issue “any directions” in exercising its powers and performance of its

functions. Directions to be issued under Section 33 A are compensatory in nature.

Causing harm to the environment and causing pollution in violations of the norms and

rules prescribed under the act it a tortuous act and unliquidated damages could be

directed to be paid by the polluter. Counsel for respondent argued that measures under

Section 33 A are for causing a deterrent effect such that, whoever is guilty of or tries to

harm or pollute the environment, has to pay the damages so to restore the ecology and

remove the pollution caused by such person or association of persons. Thus, according to

Mr. Kataria, SPCB acted in consonance of the provisions laid down in the enactment and

submissions to the contrary were unfounded.

13. Mr. Kataria in support of his submissions relied upon various decisions of the Supreme

Court and applied the principles of Polluter Pays, Precautionary Principle and

Principle of Sustainable Development. Also, Mr. Kataria pointed out to the provision of

Section 20 of The National Green Tribunal Act, 2010.

The Tribunal shall, while passing any order or decision or award, apply the principles of

sustainable development, the precautionary principle and the polluter pays principle.

The polluter pays principle in the ethos of the International Environment Jurisprudence in

matter of correcting a civil norm by award of cost or damages on a polluting industry.

The Principle is derived from the fundamental propositions that: “whoever

causes/generates pollution is to bear the cost of abatement.”

Counsel for the respondent relied upon the decisions of Supreme Court in the case of

Indian Council for Enviro Legal Action & Ors. V. Union of India, (1996) 3 SCC 212;

Vellore Citizens welfare Forum v. Union of India, (1996) 5 SCC 647; M.C Mehta v.

Kamal Nath and Ors. (2000) 6 SCC 213; Research Foundation for Science v. Union of

India, (2005) 13 SCC 213; Tirupur Dying Factory Owners Association. Noyyal River

Ayacutdars Protection Associations & Ors.(2009) 9 SCC 373 and on the decision of

National Green Tribunal In suo moto taken from the news item of ‘The Hindu’ dated

21.11.2013 v. The Secretary MOEFF and Ors., 30th January.

14. The Hon’ble Supreme Court in all the above previous decisions upheld the “principle of

sustainable development” which means the needs of the present generation people

without compromising the needs of the future generation and the development of the

economy in all social, economic and cultural level without adversely affecting the

environment. In such a case, reasonable persons test is applied and harm caused to

ecology, environment and human life is tested against the development. In such an

eventuality, balance is to be struck between the development process and damage if any,
 caused to environment. Damage should not be irreparable damage at the heck of

development. Yet, whoever by any act adversely affects the environment and causes

pollution so applying the “polluter pays principal” necessary action shall be taken by the

appropriate authorities and court have to uphold the sanctity of environment which

cannot be compromised at the heck of development processes carried out in an area.

Thus, in all the above cases appropriate action included the action demanding closure of

any particular factory or tannery that caused pollution by discharge of harmful effluents

in the rivers or factories were asked to set up effluent treatment plant and adhere to

prescribed norms laid down in the enactments and also, huge compensations were

ordered by the courts to be paid in respect of pollution caused to the environment

applying the polluter pays principle and principle of sustainable development.

15. Without going into the factual error and mainly deciding if the direction issued by

respondent SPCB under Section 33 A lacks the bona fide authorization we rely on the

Splendor Landbase Ltd. v. Delhi Pollution Control Committee and Khemka (Agencies)

Pvt. Ltd. v. State of Mahrastra where Supreme Court obsereved that:

Power to levy a penalty in nature of penal power and there should be specific

provision empowering to levy such penalty. Unless there is any specific provision

enabling the authority to do, it cannot levy such penalty as per the general

provisions of Section 31A of the Air Act or Section 33 A of the Water Act.

Thus, under para 66 of the said judgment court came held that it has no hesitation to

conclude that orders issued by the CPC and DPCC directing the furnishing of bank
 guarantee and making grant of consent to establish under Air and Water Act conditional

upon bank guarantees are entirely without authority of law and are liable to be set aside.

Having similar circumstances in the present case, we come to the conclusion that SPCB

lack the Bonafide authority to issue any direction requiring the appellant to furnish the

bank gurantee worth Ruppees Five Lakh as an assurance foradhereing to the prescribed

standards is in clear violation of the rules and provisions of the Water Act and that NGT

committed an error in confirming the decision of the SPCB by merely relying on the

principle of polluter pays and sustainable development and failed to recognize and

measure the pollution caused by the appellants. It is clear from the facts that notice was

first issued on 05.12.2016 for the collection of the sample which was collected on the

same day, again on 20.02.2017 samples are alleged to have been taken without following

the desired procedure as laid down in section 21 of the Water Act. 1974 according to

which analysis report was drawn and it was found to be exceeding the prescribed norms.

Whereby, respondent SPCB called for a show cause notice to appellant calling upon the

appellant to show in the office of respondent and inform about further action taken by the

appellant in eradicating the deficiencies. It is made out that respondents stayed silent till

date. And, again on collection of samples on 09.03.2017 as per the prescribed procedure

under Section 21 of Water Act, the analysis report was drawn which was found adequate

within the pr4scribed norms and then respondents asked to furnish the bank guarantee.

16. We hereby conclude that SPCB issued the directions in contravention of the Principle of

Polluter Pays as appellants were carrying out their unit operations within the prescribed
norms under Water Act and as per report of sample drawn on 09.03.2017 there was no

pollution caused by the appellant. Hence, appeal is allowed and order of National Green

Tribunal confirming the order of SPCB is set aside..

A copy of this direction may be communicated to SPCB, Haryana at the cost of appellant.

Parties to bear their own cost.

Hon’ble Justice Anmol Rattan Singh Hon’ble Justice G.K Pandey

DELIBERATION

PROJECT REPORT
OF
ENVIRONMENT LAW

SUBMITTED TO: SUBMITTED BY:

to extend a heartfelt gratitude towards my teacher Dr. Sabina Salim who kept faith in me and

through her continued guidance and support helped me in the compilation of my research

project.

She deepened my interest into this subject by teaching the broadening prospect of the

Environment Law, the problems relating to environment and remedied available to seek redressal

against environmental pollution.

It is due to her deliberations that I could challenge my own limits and used my skills for writing

the judgment. It is an appeal to Supreme Court from the Orders of National Green Tribunal

under Section 22 of The National green Tribunal Act, 2010.