Supreme Court Quashes NGT’s PMLA Directive, Orders Fresh Environmental Compensation Review
Kiran Raj
The Supreme Court of India directed the Uttar Pradesh Pollution Control Board (UPPCB) to re-evaluate the environmental compensation levied on Waris Chemicals Pvt. Ltd. for groundwater pollution in Kanpur Dehat. The Court partially set aside the National Green Tribunal's (NGT) judgment for improper computation of environmental damages and struck down directives imposing liability under the Prevention of Money Laundering Act (PMLA), 2002, citing procedural deficiencies.
The case arose from alleged groundwater contamination due to hazardous chromium waste stored in Khan Chandpur village, Rania, Kanpur Dehat. Following an NGT order dated September 27, 2019, the UPPCB calculated environmental compensation for six industrial units, including Waris Chemicals Pvt. Ltd. The appellant challenged the methodology used for computation, which divided the total waste (62,225 metric tons) among the units based on their production capacity.
The appellant, represented by Advocate Ninad Laud, contended that its operations began only in 1995, and it could not be held responsible for waste dumped before that year. The UPPCB had attributed 5,643.75 metric tons of waste to Waris Chemicals, resulting in compensation of ₹25,39,68,750. The appellant argued that the UPPCB acted arbitrarily by failing to isolate its contributions and sought a fresh determination of its liability.
The respondents, represented by Advocate Anuradha Mishra, maintained that the compensation was proportionate and consistent with NGT directives. The NGT, in its judgment, acknowledged errors in the UPPCB's methodology but affirmed liability under the PMLA, citing violations of the Water (Prevention and Control of Pollution) Act, 1974; Air (Prevention and Control of Pollution) Act, 1981; and Environment (Protection) Act, 1986.
The Supreme Court found flaws in the UPPCB's method of apportioning liability. It stated: “The manner in which the environmental compensation was computed by the PCB was not correct.”
The bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan noted that the compensation should reflect the specific contributions of each unit to the pollution, rather than relying on generalized or arbitrary formulas. The court observed: “For waste dumped at the site prior to 1995, no liability could have been fastened upon the appellant.”
The court also addressed the NGT’s finding of liability under the PMLA. It emphasized that prosecution under the PMLA required evidence of illegal gains connected to a scheduled offense. The court referred to Vijay Madanlal Choudhary v. Union of India, stating: “The authorities under the 2002 Act cannot prosecute any person on a notional basis or on the assumption that a scheduled offense has been committed.”
The bench observed that no complaints or FIRs under the Water Act, Air Act, or Environment Protection Act were filed, making the imposition of PMLA liability procedurally unsustainable.
The Supreme Court issued the following directions:
- The UPPCB was ordered to reassess the environmental compensation imposed on Waris Chemicals Pvt. Ltd. using a legally sound methodology.
- The portion of the NGT judgment directing action under the PMLA was set aside.
- The order of the UPPCB dated May 28, 2020, which determined compensation, was quashed.
Case Title: Waris Chemicals Pvt. Ltd. v. Uttar Pradesh Pollution Control Board
Case Number: Civil Appeal No. 6398 of 2024
Bench: Justice Abhay S. Oka and Justice Ujjal Bhuyan
[Read/Download order]
