Kiran Raj

The Supreme Court of India Division Bench of Justice Pamidighantam Sri Narasimha and Justice Manoj Misra held that the Pollution Control Boards constituted under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981 are empowered to impose and collect restitutionary or compensatory damages as fixed sums of money or through bank guarantees in response to potential or actual environmental damage.

The Court allowed the appeals filed by the Delhi Pollution Control Committee (DPCC) challenging the High Court’s interpretation that denied such power under Sections 33A and 31A of the respective Acts. While the Supreme Court validated the Boards' authority to levy such compensation, it directed that enforcement of these powers must align with established procedures incorporating principles of natural justice through subordinate legislation. The Court further stated that show cause notices issued in the present case, having been concurrently quashed by the lower courts, shall not be revived.

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The matter arose out of a series of actions initiated by the Delhi Pollution Control Committee (DPCC) following directions from the Ministry of Environment, Forest and Climate Change (MoEFCC). The Ministry had called for appropriate action against entities alleged to be operating in violation of environmental norms. The DPCC issued show cause notices under Section 25 of the Water Act and Sections 21 and 22 of the Air Act to various residential, commercial, and shopping complexes, citing their failure to obtain mandatory "consent to establish" and "consent to operate".

These show cause notices became the subject of 38 writ petitions before the Delhi High Court. The central legal contention was whether the DPCC had authority to demand fixed monetary damages or bank guarantees as preconditions for granting statutory consent. These petitions were addressed in three significant judgments by single judge benches, namely in Splendor Landbase Ltd. v. DPCC, Bharti Realty Ltd. v. DPCC, and Anush Finlease and Construction Ltd. v. DPCC, dated 30.09.2010, 20.07.2011, and 15.09.2011, respectively.

In Splendor Landbase Ltd., the single judge framed two primary issues: whether entities with developments exceeding 20,000 square meters required environmental consents independently of an Environmental Impact Assessment (EIA) clearance, and whether the DPCC could levy environmental damages or require bank guarantees under Sections 33A or 31A. While the former was answered affirmatively, the court rejected the latter, holding that penalties require explicit statutory backing.

The subsequent judgments followed the same legal reasoning. The court declared that the DPCC’s actions lacked legal foundation and ordered the refund of amounts collected, albeit without interest, as the respondents had voluntarily complied under protest rather than challenge the directives initially.

DPCC appealed these findings to the Division Bench of the High Court, which upheld the single judge’s conclusion. The Division Bench held that Sections 33A and 31A do not authorize the imposition of penalties, citing that penalties under both Acts are strictly governed by Chapter VII of the Water Act and Chapter VI of the Air Act, respectively. The court stated that only a court of law could impose such penalties, upon following due legal procedure.

The Division Bench acknowledged that DPCC could inspect premises and issue directions to ensure pollution control. However, it observed that in absence of statutory authority to demand monetary deposits or guarantees, such directives were ultra vires. The High Court relied on the Supreme Court’s decision in Mafatlal Industries Ltd. v. Union of India to justify the refund of penalties collected without jurisdiction.

In appeal to the Supreme Court, counsel for the DPCC, Mr. Pradeep Mishra, contended that the power to impose restitutionary damages flows from the principle of "Polluter Pays" and is distinct from the power to levy penal fines. He argued that Sections 33A and 31A should be read broadly to include environmental compensation.

In response, Mr. Ninad Laud and other counsel for the respondents argued that the statutory framework provides a clear procedure under the respective penalty chapters, and any departure from such procedure would render these chapters ineffective. They also referred to amendments in 2024 that introduced Adjudicating Officers with express authority to impose penalties, reinforcing that such powers were not originally vested in Pollution Control Boards. It was also contended that any attempt to read compensatory power into Sections 33A and 31A would bypass the principles of natural justice and statutory limitations.

The Supreme Court recorded that "the environmental regulators, the Pollution Control Boards exercising powers under the Water and Air Acts, can impose and collect restitutionary or compensatory damages in the form of fixed sum of monies or require furnishing of bank guarantees as an ex-ante measure to prevent potential environmental damage." It held that these powers are "incidental and ancillary to the empowerment under Sections 33A and 31A of the Water and Air Acts."

It was further stated, "Our firm view is that remedial powers or restitutionary directives are a necessary concomitant of both the fundamental rights of citizens who suffer environmental wrongs and an equal concomitant of the duties of a statutory regulator."

The Court recorded, "There is a distinction between a direction for payment of restitutionary and compensatory damages as a remedial measure... and a punitive action of fine or imprisonment..."

Referring to precedents including Indian Council for Enviro-Legal Action v. Union of India and Vellore Citizens' Welfare Forum v. Union of India, the Court held that the principle of Polluter Pays includes payment for restoration, prevention, and remediation. "The invocation of this principle is triggered in situations when an established threshold is breached and results in environmental damage, or when potential risk is anticipated."

In rejecting the High Court's narrow reading, the Court observed that "a restrictive interpretation which fails to differentiate between environmental damages and punitive action significantly encumbers the Boards' ability to discharge its duties."

The Court recognized the 2024 amendments that decriminalized certain provisions and introduced Adjudicating Officers. However, it observed, "Even after the amendments, there is no conflict between the powers of the State Boards... and the powers of the Adjudicating Officer." The former are compensatory, while the latter are punitive.

It stated, "The Board's powers under Section 33A and Section 31A have to be read in light of the legal position on the application of Polluter Pays principle... It is only when the State Board has made a determination that some form of environmental damage or harm has been caused... that the State Board must initiate action."

The Court allowed the appeals and set aside the judgment dated 23.01.2012 of the Division Bench of the High Court of Delhi, "to the extent of declaration of law but directed that the show cause notices that have been set aside... shall not be revived."

It directed, "that the Pollution Control Boards can impose and collect as restitutionary and compensatory damages fixed sums of monies or require furnishing bank guarantees as an ex-ante measure towards potential environmental damage in exercise of powers under Sections 33A and 31A of the Water and Air Acts."

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However, it added that " the power to impose or collect restitutionary or compensatory damages or the requirement to furnish bank guarantees as an ex-ante measure under Sections 33A and 31A of the Water and Air Acts shall be enforced only after detailing the principle and procedure incorporating basic principles of natural justice in the subordinate legislation."

On case-specific relief, the Court held that, "If certain amounts have been collected on the basis of the said show cause notices they shall be returned by DPCC within a period of six weeks from the date of this order, and if amounts are not deposited or collected the appellant, DPCC shall not take any further action."

Advocates Representing the Parties:

For the Petitioners: Mr. Ninad Laud, Adv. Mr. Saurabh Kulkarni, Adv. Ms. Rashika Narain, Adv. Ms. Ishani Shekhar, Adv. Mr. Dcosta Ivo Manuel Simon, AOR Mr. Pradeep Misra, AOR Mr. Daleep Dhyani, Adv. Mr. Suraj Singh, Adv.

For the Respondents: Mr. Pinaki Mishra, Sr. Adv. Mr. B.b.gupta, Sr. Adv. Mr. Pravin Bahadur, Adv. Mr. Kishan Rawat, Adv. Ms. Rubi Singh Ahuja, Adv. Ms. Kanika Gomber, Adv. Mr. Rajan Narain, AOR Mr. Umesh Kumar Khaitan, AOR Mr. Ajit Warrier, Adv. Mr. Angad Kochhar, Adv. Mr. S. S. Shroff, AOR Mr. S. D. Sanjay, A.S.G. Mr. Gurmeet Singh Makker, AOR Ms. Swarupma Chaturvedi, Sr. Adv. Ms. Ruchi Kohli, Adv. Mr. Chinmayee Chandra, Adv. Mr. Chitvan Singhal, Adv. Mr. Mohit D. Ram, AOR Ms. Nayan Gupta, Adv. Mrs. Priya Puri, AOR Mr. Kailash Vashudev, Sr. Adv. Mr. Navin Prakash, AOR Ms. Srishti Prakash, Adv. Mr. Satya Darshi Sanjay, A.S.G. Ms. Swarupama Chaturvedi, Adv. Ms. Ruchi Kohli, Adv. Ms. Chinmayee Chandra, Adv. Mr. Chitvan Singhal, Adv. Mr. Amit Sharma V, Adv. Dr. N. Visakamurthy, AOR Mr. Avijit Roy, AOR

Case Title: Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. etc.

Neutral Citation: 2025 INSC 923

Case Number: Civil Appeal Nos. 757-760 of 2013

Bench: Justice Pamidighantam Sri Narasimha, Justice Manoj Misra