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Synopsis

The Supreme Court has said the generation of revenue would have no nexus with the amount of penalty to be ascertained for environmental damages, while expressing anguish over the National Green Tribunal's order to impose a Rs 25 Cr penalty on a company without issuing any notice to it.

A bench of Justices B R Gavai and K V Vishwanathan quashed and set aside the NGT's order of August 29, 2022, acting on a plea by Benzo Chem Industrial Private Limited.

The appellant company contended that the NGT's order depicted total non-application of mind. Though the reports of the Maharashtra Pollution Control Board (MPCB) as well as National Environmental Engineering Research Institute (NEERI) found that there were no non-compliances, the tribunal recorded to the contrary, it claimed.

The methodology of imposing a penalty of Rs 25 Cr on the ground that the operative revenue of the appellant ranges from 100 Cr to 500 Cr is totally unknown to the canons of law, it said.

The bench said, "We are considering the orders passed by the NGT, which depicts total violation of principles of natural justice and lack of due consideration."

It noted that the appellant had placed on record reports of the inspections conducted by the Maharashtra Pollution Control Board for the period between 2011 to 2020.

"Not only that but under the orders of the NEERI, which is a premier institution insofar as environment sciences is concerned, has also found that the unit of the appellant was compliant with environment requirements and there was not a single non-compliance," the bench added.

The court said in the light of these findings in the report, the observations of the NGT that the unit had been non compliant right from the year 2010 was totally untenable.

The further observations of the NGT that the report of the NEERI of June 2019 also showed that the violations continued, was is also contrary to the records. The report of the MPCB, which was placed would reveal otherwise, the court pointed out.

A counsel for the MPCB, also submitted that in view of the inspection reports of the MPCB, he was not in a position to counter the claim of the appellant that there were no violation.

"We could have allowed the appeal on this short ground, however, the further part of the order i.e. paragraph 15 makes an interesting reading," the bench said.

The court noted the NGT held that the appellant was liable to pay environmental damages. However, while computing the said damages, the only methodology that has been adopted by the learned NGT is that as per the information which is available in the public domain the revenue range of the appellant is between 100 Cr to 500 Cr. It is therefore found that the penalty of Rs 25 Cr would be commensurated with the revenue, court highlighted.

Firstly, there is a vast difference between 100 Cr and 500 Cr. Secondly, if the NGT had relied on the information available in the public domain, then it would not be difficult for it to come out with the exact figure, the court said.

"In any case, the generation of revenue would have no nexus with the amount of penalty to be ascertained for environmental damages. It is further to be noted that the NGT found the appellant to be guilty of violations, the least that was expected from the NGT is to give a notice to the appellant before imposing such a heavy penalty," the bench said.

"With deep anguish we have to say that the methodology adopted by the NGT for imposing penalty is totally unknown to the principles of law," the bench added.

The court, however, clarified in the event any person feels that the appellant is engaged in any of the environmental non-compliances, such a person would always be at liberty to approach the appropriate forum and if such an issue comes before it, the forum would consider and decide the same after following the principles of natural justice.

Case Title: Benzo Chem Industrial Private Limited Vs Arvind Manohar Mahajan & Ors