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Polluter Pays' Principle: Case Analysis of NTPC Ltd. vs. Uttarakhand Pollution Control Board

Polluter Pays Principle:

The Polluter Pays' principle states that the one who causes damage to the environment should be the one who pays for its restoration, to its original state, regardless of the intent. This principle imposes liability on the polluter, for not only the cost of the restoration of the environment but for compensation to the victims as well, if any.
  1. International level
    The principle was first introduced in 1972 by the Organisation of Economic Cooperation and Development (OECD). The majority of the countries of OECD as well as the European Community (EC) have supported it.

    Principle 16 of the 1992 Rio Declaration on Environment and Development, as well as the Kyoto Protocol of United Nations Framework Convention on Climate Change, mention this principle.
     
  2. Indian context
    The Indian Judiciary has also recognized the concept of Polluter Pays'. The principle was first recognized and applied in 1996 in the case of Indian Council for Enviro-Legal Action vs. Union of India[2] and in the landmark case of Vellore Citizens' Welfare Forum vs. Union of India[3] where the Hon'ble Supreme Court held that precautionary principle and polluter pays' principle form an intrinsic part of environmental law. The polluter pays' principle not only includes compensation to the victims of pollution but extends to paying for the cost of restoration of the environment as well, which is a part of the process of 'Sustainable Development'.
     
The Supreme Court in M. C. Mehta vs Kamal Nath & Ors[4] held that pollution is a tort that is committed against the whole community. Therefore, the person guilty of causing damage to the environment should pay compensation for its restoration and not the government as the financial burden would ultimately shift to the taxpayers.

In the case of A.P. Pollution Control Board vs Prof. M.V. Nayudu (Retd.) & Others[5], the Justices empowered the Courts, Tribunals, and other environmental organizations to apply this principle, whenever a case arises before them.

Subsequently, the National Green Tribunal Act, 2010[6] was passed which provides for the establishment of the National Green Tribunal for the effective disposal of cases relating to the environment. Section 20[7] of the Act states that the tribunal can apply this principle whenever while passing any order or decision or award.

NTPC Limited vs. Uttarakhand Pollution Control Board
Court: National Green Tribunal Principal Bench, New Delhi
Citation: Appeal No. 05/2021 (I.A. No. 43/2021)
Date of Judgement: 18th February 2021
Judges: Hon'ble Mr. Justice Adarsh Kumar Goel (Chairperson), Hon'ble Mr. Justice Sheo Kumar Singh (Judicial Member) & Hon'ble Dr. Nagin Nanda (Expert Member)
Parties: M/s NTPC Limited (Plaintiff / Appellant Corporation)
Uttarakhand Pollution Control Board (Respondent)
  1. Brief highlight of the case
    The case was decided by National Green Tribunal Principal Bench, New Delhi on 18th February 2021. The Appellant Corporation i.e. NTPC Ltd., which is an Indian government-owned electric utility company, was found violating the muck disposal sites maintenance norms in the state of Uttarakhand. This resulted in damage to the environment. The Uttarakhand Pollution Control Board, according to Section 33A of Water (Prevention and Control of Pollution) Act, 1974, directed the Appellant to pay compensation worth Rs 57,96,000/- for restoration of the environment under Polluter Pays' principle. NTPC challenged this order dated 07.12.2020 which was later upheld by the 3-member bench of NGT.
     
  2. Facts of the case:
    1. The appellant corporation is operating Vishnugad Hydroelectric Project, District Chamoli, Uttarakhand. It has set up 5 muck disposal dumping sites in Tapovan Vishnugad Hydroelectric Project, out of which 3 were completed 3-5 years back while 2 are still active and operational.

      The State Pollution Control Board found deficiencies in the same and directed the appellant vide notice dated 29.06.2021 to take the following measures:
      1. To repair and strengthen damaged toe protection and contour stone walls.
      2. Provide suitable fencing to control excess human and animal interference.
      3. Complete unattended works of levelling, surface smoothing, and remove unwanted material, and spread available soil at the Tapovan site.
      4. Apply manure and fertilizer to improve soil fertility.
      5. Plant suitable species of grasses, shrubs, and trees in degraded areas.
         
    2. Thereafter, an inspection was conducted by the State Pollution Control Board on 23.10.2020 and 24.10.2020. Upon inspection, it was found that the slope of the muck dump was hazardously double the standards. Moreover, the upstream side of the muck dump has triggered severe mass erosion. Therefore, based on the non-compliance of the notice dated 29.06.2020, the impugned order was passed. This impugned order also refers to proceedings in O.A. No. 61/2019, Gram Pradhan & Residents of Tapovan v. State of Uttarakhand, in which NTPC was directed to take adequate protective measures in respect of muck reaching the river system.
       
    3. Based on the report filed by the State Pollution Control Board, it was held by the State PCB that the appellant did not comply with its directions, which resulted in damage to the environment. Therefore, the compensation on the 'Polluter Pays' principle was assessed as Rs 57,96,000/-.
       
  3. Issue
    The appellant corporation challenged the impugned order of State Pollution Control Board dated 07.12.2020, which assessed the compensation on 'Polluter Pays' principle of Rs 57,96,000/-. Therefore, issues can be classified under the following heads:
    1. Whether the 'Polluter Pays' principle has been rightly invoked for damage to the environment?
    2. Whether the compensation of Rs 57,96,000/- is a just amount towards the restoration of the environment for the damage caused?
       
  4. Judgement:
    1. The appellant corporation mentioned its action plan for compliance with environmental norms in the memo of appeal. The action plan included repair of damaged wall, protection work with gabions in respect of the completed muck dumping sites as well as repair the damaged toe protection wall. These works were projected to be complete by 31.05.2021.

      However, the Principal Bench held that even according to the appellant, the remedial measures are yet to be completed, even though the State Pollution Control Board sent a notice dated 29.06.2020.
       
    2. The Bench held that the report by the State Pollution Control Board clearly highlights that the slope of the muck dumped was hazardously double the standards with potential for erosion. Moreover, erosion was already seen in terms of gully formation. Therefore, it is clear that the operative muck disposal sites were not being maintained as per the Ministry of Environment and Forests laid down norms.
       
    3. Therefore, the 3-member Bench of NGT upheld the order of the State Pollution Control Board dated 07.12.2020 which directed NTPC to pay compensation of Rs 57,96,000/-.
       
    4. Thus, the Bench found no merit in the appeal and held that the 'Polluter Pays' principle has been rightly invoked for the damage caused to the environment and dismissed the appeal.
       
    5. The NGT further directed that the amount of compensation may be utilized for the restoration of the environment in the district as per the action plan.
       
End-Notes:
  1. NTPC Limited v. Uttarakhand Pollution Control Board, Appeal No. 05/2021 (India).
  2. Indian Council for Enviro-Legal Action vs. Union of India, 1996(3) SCC 212 (India).
  3. Vellore Citizens' Welfare Forum vs. Union of India, 1996(5) SCC 647 (India).
  4. M. C. Mehta vs Kamal Nath & Ors., 1997(1) SCC 388 (India).
  5. A.P. Pollution Control Board vs Prof. M.V. Nayudu (Retd.) & Others, 1999(2) SCC 718 (India).
  6. National Green Tribunal Act, 2010, No. 10 Acts of Parliament, 2010 (India).
  7. National Green Tribunal Act, 2010, 20 No. 10 Acts of Parliament, 2010 (India) - Tribunal to apply certain principle - 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.

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