Supreme Court | NGT Cannot Outsource Its Adjudicatory Functions to Expert Committees | Quashes ₹18 Crore Environmental Compensation on Triveni Engineering
Kiran Raj
The Supreme Court of India Division Bench of Justices Manoj Misra and Ujjal Bhuyan set aside two orders of the National Green Tribunal (NGT) that had imposed environmental compensation on a sugar manufacturing unit. The Court allowed the civil appeals, holding that the NGT could not base its decision on the recommendations of an administrative committee in disregard of the statutory sampling procedure and the principles of natural justice. The Bench clarified that the Uttar Pradesh Pollution Control Board (UPPCB) remains free to conduct inspection and take remedial measures, provided that the process strictly complies with the Water (Prevention and Control of Pollution) Act, 1974 and due process, including adherence to natural justice.
The appeals arose from two NGT orders dated 15 February 2022 and 16 September 2022 in Original Application No. 71/2021. By the first order, the NGT recorded that the project proponent had violated environmental norms and directed a joint committee to assess compensation “in accordance with law having regard to the nature of violation, period of violation, cost of remediation and turnover of the project proponent,” while calling for a supplementary report.
Pursuant to those directions, a supplementary report dated 10 August 2022 was submitted. By the second order dated 16 September 2022, the NGT held that compensation of ₹18 crore at 2% of the annual turnover would be justified and directed deposit of the amount with the District Magistrate, Muzaffarnagar, to be utilized for environmental restoration under an action plan, with UPPCB as nodal agency.
The Supreme Court granted permission to file the appeals and condoned delay on 2 November 2022, and stayed the operation of the compensation component of the impugned orders pending appeal.
The appellant company operates a sugar manufacturing unit at Sheikhpura, Khatauli, Muzaffarnagar District, Uttar Pradesh. The unit has statutory permissions/consents under the Companies Act and environmental laws, as recorded in the judgment.
The proceedings before the NGT began with a complaint filed in March 2021 alleging discharge of untreated waste into a drain, resulting in groundwater contamination in an area of about 1.5 kilometers around the sugar mill to a depth of up to 50 meters. On 22 March 2021, the NGT constituted a joint committee consisting of the Central Pollution Control Board (CPCB), UPPCB, and the District Magistrate, Muzaffarnagar, with directions to inspect and report.
Because the 2020–21 crushing season ended on 22 May 2021 and the unit was closed, the committee initially could not inspect. The UPPCB’s regional office later inspected on 13 September 2021 and observed no contamination in groundwater samples, while noting that further investigation could be undertaken when the unit became operational in the next season.
On 21 September 2021, the NGT directed inspection while the unit was functional and sought a report by 15 December 2021, specifying parameters and requiring clarification regarding whether effluents reached any drain leading to a river/water body, and to check groundwater quality as per industry-relevant parameters. It also referred to an earlier NGT order on operating effluent treatment plants during off-season.
The joint committee inspected the unit on 8 December 2021, and submitted a report on 11 January 2022. The report’s observations included the unit’s consent status under the Air Act and Water Act; installed capacity and operations; and various compliance observations.
The report also recorded that “analysis results of samples collected from borewells within unit premises and all 04 Handpumps outside the unit premises are within permissible limit as per drinking water standard BIS IS 10500:2012,” with specified exceptions including iron and selenium levels at certain handpumps; it further set out the unit’s consents and other records that were or were not maintained.
Based on the joint committee’s observations, the NGT’s order dated 15 February 2022 recorded violations such as illegal disposal of untreated effluents, dilution at the outlet, absence of monitoring and records, and absence of an ETP logbook; it directed assessment of compensation having regard to statutory factors and sought a supplementary report.
The joint committee’s recommendations included multiple specific operational and record-keeping measures (e.g., non-discharge of partially treated effluent, installation of flow meters at specified locations, maintenance of logs and records, dismantling of two ponds containing partially treated industrial effluent, restricting use of a handpump where selenium exceeded limits, and rendering STP flow meters operational).
After the supplementary report dated 10 August 2022, the NGT, on 16 September 2022, fixed compensation at ₹18 crore (2% of annual turnover) to be deposited with the District Magistrate for restoration, to be utilized within six months in terms of an action plan, with the UPPCB as nodal agency.
In appeal, senior counsel for the appellant contended that the impugned orders were passed in complete violation of natural justice and that the appellant—though directly affected—was not made a party before the NGT; that the joint committee reports were scientifically untenable and relied on third-party laboratory data; that the statutory procedure under Sections 21 and 22 of the Water Act for sampling and analysis was not followed; and that Section 19(1) of the National Green Tribunal Act, 2010 requires the NGT to be guided by natural justice.
Senior counsel for the respondents supported the NGT orders, asserting discharge of untreated effluent, contamination affecting 10,000–15,000 residents, and health hazards; that the joint committee acted scientifically; and that natural justice is not a straitjacket formula, with the project proponent being aware of the reports yet not contesting them before the NGT.
Having adverted to the relevant statutory provisions—including Sections 21 and 22 of the Water Act governing sampling and admissibility of analysis results, Sections 7–8 and penalty provisions under the Environment (Protection) Act, and Section 19 of the NGT Act on procedure and powers—the Court proceeded to examine the NGT’s process in this matter.
“NGT exercises judicial functions. Therefore, it is all the more necessary for the NGT to adhere to a fair procedure which is statutorily laid down of which principles of natural justice are an inalienable part. Rigor of Section 19(1) of the National Green Tribunal Act, 2010 is qua the procedure to be adopted by the NGT in conducting its proceedings. It cannot be stretched to abandon the statutory procedure laid down under Sections 21 and 22 of the Water Act and by outsourcing investigation to administrative committees by overlooking the statutory provisions and basing its decisions on the recommendation of such administrative committee. This is not within the remit of NGT.”
“As we have noticed above, this is a classic case where in the quest for doing justice, NGT has ended up doing just the reverse.”
Addressing the role of expert committees, the Court recorded: “These committees are set up with specific terms of reference outlining their mandate, and their reports have to conform to the mandate. Once these committees submit their final reports to the court/tribunal, it is open to the parties to object to them, which is then adjudicated upon. The role of these Expert Committees does not substitute the adjudicatory role of the court or tribunal.”
Further, relying on precedent, the Court stated: “The role of an Expert Committee appointed by an adjudicatory forum is only to assist it in the exercise of adjudicatory functions by providing them better data and factual clarity, which is also open to challenge by all the parties concerned. Allowing for objections to be raised and considered makes the process fair and participatory for all the stakeholders.”
On the NGT’s approach, the Court quoted: “NGT had abdicated its jurisdiction by entrusting judicial function to an administrative expert committee. An expert committee may be able to assist NGT, for instance, by carrying out a fact finding exercise but the adjudication has to be by NGT.”
Referring to a comparable case, the Court reproduced: “The procedure followed by NGT was totally unknown to the settled principles of natural justice. Neither was any notice given by the joint committee to the appellant before giving an adverse report against the appellant nor the NGT permitted impleadment of the appellant as a party respondent… Approach adopted by the NGT clearly smacks of condemning a person unheard. NGT cannot outsource an opinion and base its decision on such opinion.”
The Bench examined the statutory scheme under the Water Act and noted the mandatory steps for collection and analysis of samples. The judgment extracts Section 21 in full, including the requirement to serve notice, divide samples in the presence of the occupier, seal and sign, and send portions to specified laboratories; and Section 22 on reporting and communication of analysis results. The Court set out these provisions verbatim. “The result of any analysis of a sample of any sewage or trade effluent taken under sub-section (1) shall not be admissible in evidence in any legal proceeding unless the provisions of sub-sections (3), (4) and (5) are complied with.”
The Court then summarized the practical effect of those provisions: “As is evident from the above, after a sample of any sewage or trade effluent is sent to the concerned laboratory, the competent analyst shall analyse the samples and submit a report in the prescribed form… A copy of such report shall also be forwarded to the occupier or his agent.”
Against that statutory backdrop, the Court reiterated the NGT’s duty to act judicially: “All proceedings before NGT shall be deemed to be judicial proceedings… and the NGT shall be deemed to be a civil court for the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.”
Finally, turning to the route the NGT actually adopted in this case, the Bench recorded that the committee procedure and the orders resting on its recommendations could not supplant statutory procedure and fair hearing requirements: “It cannot be stretched to abandon the statutory procedure laid down under Sections 21 and 22 of the Water Act and by outsourcing investigation to administrative committees by overlooking the statutory provisions and basing its decisions on the recommendation of such administrative committee.”
The Court expressly addressed future regulatory action: “However, we clarify that it will always be open to the UPPCB to carry out inspection and take remedial measures qua the sugar mill of the appellant by following the procedure laid down under the Water Act and after complying with the due process statutorily laid down thereunder, including by adhering to the principles of natural justice.” The clarification preserves the UPPCB’s jurisdiction, conditioned on strict compliance with statutory sampling and fair hearing requirements.
In connection with the possibility of remand, the Court further recorded: “But in this case, the entire exercise has been vitiated because of non-conforming to the laid down procedure contemplated under Sections 21 and 22 of the Water (Prevention and Control of Pollution) Act, 1974. In such circumstances, relegating the parties back to the NGT in our considered opinion would serve no useful purpose.”
“Accordingly and in the light of the above, the impugned orders dated 15.02.2022 and 16.09.2022 passed by the NGT in O.A. No. 71/2021 are hereby set aside.” The Supreme Court unequivocally annulled both NGT orders that had imposed environmental compensation and associated directions.
“Consequently, the civil appeals are allowed.” The Bench allowed the appeals filed under Section 22 of the National Green Tribunal Act, 2010.
“However, there shall be no order as to cost.” No costs were awarded by the Supreme Court.
Advocates Representing the Parties:
For Appellant(s): Mr. Kavin Gulati, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Mr. Prateek Kumar, Adv. Mr. Arshit Anand, Adv. Ms. Vidisha Swarup, Adv. Mr. Naman Gupta, Adv. Mr. E. C. Agrawala, AOR
For Respondent(s): Mr. Sudeep Kumar, AOR Mr. Pradeep Misra, AOR Mr. Daleep Dhyani, Adv. Mr. Suraj Singh, Adv.
Case Title: M/S. Triveni Engineering and Industries Ltd. v. State of Uttar Pradesh & Ors.
Neutral Citation: 2025 INSC 1060.
Case Number: Civil Appeal Nos. 8119–8120 of 2022.
Bench: Justice Manoj Misra; Justice Ujjal Bhuyan.
