ELECTROSTEEL STEELS LIMITED versus UNION OF INDIA AND ORS. ETC on 9 December 2021

ELECTROSTEEL STEELS LIMITED

v.

UNION OF INDIA AND ORS. ETC.

(Civil Appeal Nos. 7576-7577 of 2021)

DECEMBER 09, 2021

[INDIRA BANERJEE AND J. K MAHESHWARI, JJ.]

Environment Protection Act, 1986 – Ex post factoenvironmental clearance – In the instant case, Appellant applied toMinistry of Environment, Forest and Climate Change, Governmentof India for grant of Environmental Clearance (EC) to establishsteel plant at Bokara District – Appellant stated in its applicationthat no forest land was involved in the project – After obtainingEC, the Appellant applied to the JSPCB, for grant of ‘Consent toEstablish’ (CTE) under the Air (Prevention and Control of Pollution)Act, 1981 - The JSPCB granted CTE to the Appellant to establishsteel plant – Even though CTE was granted to the Appellant toestablish a steel plant at Bokaro District, the Appellant establishedit 5.3 Kms away from the permitted site - CTE was extended fromtime to time – However, JSPCB issued an order revoking EC of theappellant on the ground that appellant had encroached upon forestland and shifted its location there by violating the conditions of EC– Appellant filed writ petition before High Court in which HighCourt passed an interim order staying the operation, implementationand execution of the order of JSPCB which was extended time totime – In the meanwhile, Appellant applied for ex post facto ForestClearance (FC) which was also claimed before the High Court -However, after final hearing, High Court passed the order ofdiscontinuing the earlier interim orders – On Appeal, Held: The1986 Act does not prohibit ex post facto Environmental Clearance– Ex post facto environmental clearance should not however begranted routinely, but in exceptional circumstances taking intoaccount all relevant environmental factors – Ex post facto approvalshould not be withheld only as a penal measure – In present facts,steel plant was not started without EC or consent of JSPCB –Appellant had asserted that no part of steel plant is in any forestwhich MoEF had also confirmed - Appellant had duly applied forex post fact forest clearance approval without prejudice to its rights

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Aand contentions that its steel plant is not on forest land – Anestablishment contributing to the economy and providing livelihoodto hundreds of people should not be closed down for technicalirregularity of shifting its site without prior EC – JSPCB was directedto take action on the application of the appellant for revised EC inaccordance with law - High Court erred in vacating interim ordersBwhich had been in force for two years.

Allowing the appeals, the Court

HELD: 1. The question is whether an establishmentcontributing to the economy of the country and providingClivelihood to hundreds of people should be closed down for thetechnical irregularity of shifting its site without priorenvironmental clearance, without opportunity to theestablishment to regularize its operation by obtaining the requisiteclearances and permissions, even though the establishment maynot otherwise be violating pollution laws, or the pollution, if any,Dcan conveniently and effectively be checked. The answer has tobe in the negative. [Para 82][885-D-E]

2. The 1986 Act does not prohibit ex post factoEnvironmental Clearance. Some relaxations and even grant ofex post facto EC in accordance with law, in strict compliance withERules, Regulations Notifications and/or applicable orders, inappropriate cases, where the projects are in compliance with, orcan be made to comply with environment norms, is in over viewnot impermissible. The Court cannot be oblivious to the economyor the need to protect the livelihood of hundreds of employeesFand others employed in the project and others dependent on theproject, if such projects comply with environmental norms.[Para 84][885-G-H; 886-A-B]

3. Ex post facto environmental clearance should nothowever be granted routinely, but in exceptional circumstancesGtaking into account all relevant environmental factors. Wherethe adverse consequences of ex post facto approval outweighthe consequences of regularization of operation of an industry bygrant of ex post facto approval and the industry or establishmentconcerned otherwise conforms to the requisite pollution norms, H

ex post facto approval should be given in accordance with law, instrict conformity with the applicable Rules, Regulations and/orNotifications. Ex post facto approval should not be withheld onlyas a penal measure. The deviant industry may be penalised by animposition of heavy penalty on the principle of ‘polluter pays’and the cost of restoration of environment may be recoveredfrom it. [Para 87][891-G-H; 892-A-B]

4. This Court held that the High Court erred in passing theimpugned order, vacating interim orders which had been in forcefor two years. The impugned order is not in conformity with theprinciple of proportionality. This is not a case where the steelplant was started without environmental clearance or consent ofJSPCB. The Appellant had applied for and obtained environmentalclearance to set up an integrated steel plant (3MTPA) on 1350acres of land at Mauza South Parbatpur, as observed above.Environmental Clearance had been granted on 21[st ]February 2008and Consent to Operate had been granted by JSPCB on 5[th] May2008. In passing the impugned order the High Court overlookedthe consequences of closure of an integrated steel plant with awork force of 300 regular and 700 contractual workers. The HighCourt also failed to appreciate that the judgment of this Court inAlembic Pharmaceuticals was distinguishable on facts.Furthermore, continuance of the interim orders allowingoperation of an industrial establishment or even the grant ofrevised EC to the industrial establishment cannot stand in theway of action against that establishment for contraventions,including the imposition of penalty, on the principle ‘polluter pays’.JSPCB is directed to take a decision on the application of theappellant for revised EC in accordance with law within threemonths. [Paras 88, 94, 95][892-B-D; 893-E-F; 894-A]

Indian Council for Enviro-Legal Action and Ors. v.Union of India and Ors. (1996) 3 SCC 212 : [1996] 2SCR 503 Alembic Pharmaceuticals Ltd. v. RohitPrajapati and Others 2020 SCC OnLine SC 347;Lafarge Umiam Mining Private Limited v. Union of India(2011) 7 SCC 338 : [2011] 7 SCR 954 – referred to.

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[2011] 7 SCR 954

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 7576-B7577 of 2021.

From the Judgment and Order dated 16.09.2020 of the High Courtof Jharkhand at Ranchi in W.P. (C) Nos.4850 and 1873 of 2018.

Harish N. Salve, Krishnan Venugopal, Sr. Advs., Ms. AnuradhaDutt, Ms. Suman Yadav, Ms. Nikhita Suri, Dhruv Nayar, Kunal Dutt,CNinad Laud, Anish Kapur, Ms. B. Vijayalakshmi Menon, Ivo D’Costa,Aditya Pratap Singh, Advs. for the Appellant.

Vikramjit Banerjee, ASG, Gurmeet Singh Makker, ShaileshMadiyal, Ketan Paul, Ms. Divyanshi H. Rathi, Raghavendra S. Srivatsa,Ravi Shankar Dvivedi, Kumar Anurag Singh, Saurabh Jain, Ms. TulikaDMukherjee, Zain A. Khan, Shwetank Singh, Ms. Aastha Shrestha, RajeshR. Dubey, Santosh Mishra, Advs. for the Respondents.

The Judgment of the Court was delivered by INDIRA BANERJEE, J.

E1. Leave granted.

2. These Appeals are against an order dated 16[th] September 2020passed by a Single Bench of the High Court of Jharkhand in W.P. (C)No.1873 of 2018 and W.P. (C) No. 4850 of 2018, discontinuing the interimorders earlier passed by the High Court, allowing the Appellant to operateFits unit under the supervisory regulatory control of the Respondent –Jharkhand State Pollution Control Board, hereinafter referred to as“JSPCB”, which had been in force for over two years.

3. The Appellant owns and runs a 1.5 MTPA integrated steelplant in Bokaro District in Jharkhand. The said steel plant in Bokaro,Gwhich employs 3,000 regular employees and 7000 contractual employees,produced steel worth Rs.4,200 crores in the financial year 2019-20.

4. The Appellant claims that about 30,000 persons other than thoseactually employed by the steel plant as regular or contractual employeesdepend on the steel plant for their livelihood.

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5. Corporate Insolvency Resolution Process (CIRP) hadcommenced against the Appellant under the Insolvency and BankruptcyCode 2016. As successful Resolution Applicant, Vedanta Ltd. took overthe Appellant on or about 4[th] June 2018 upon payment of Rs.5,320 croresfor discharge of its debts.

6. Pollution and consequential deterioration of environment hasbeen assuming alarming proportions, and has become a cause of universalconcern. Fumes, smoke, emission of green house gases by use of motorsand machines and operation of mills, factories and plants causeenvironmental degradation.

7. Under the aegis of the United Nations discussions anddeliberations have been held to protect and improve environment andprevent pollution.

8. In 1972, the United Nations Conference on the HumanEnvironment was convened in Stockholm to work out ways and meansto protect and improve the environment. In course of deliberations, itwas felt that there was need to enact law to tackle environmental pollution.India participated in the conference and strongly voiced environmentalconcerns.

9. The Environment (Protection) Act, 1986, hereinafter referredto as “the 1986 Act”, has been enacted as a consequence of decisionstaken at the United Nations Conference on the Human Environmentheld in Stockholm in June, 1972.

10. The statement of objects and reasons for enactment of the1986 Act declares that the Act has been prompted by concern overenvironment, that has grown the world over, since the sixties.

11. Sub-Section (1) of Section 3 of the 1986 Act empowers theCentral Government to take all such measures as it might deem necessaryor expedient for the purpose of protecting and improving the quality ofthe environment and preventing, controlling and abating environmentalpollution.

12. Sub-section (2) of Section 3 of the 1986 Act enables the CentralGovernment to take, inter alia, the following measures:

“(i) co-ordination of actions by the State Governments, officersand other authorities—

(a) under this Act, or the rules made thereunder; or A

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(b) under any other law for the time being in force whichis relatable to the objects of this Act; A

(ii) planning and execution of a nation-wide programme forthe prevention, control and abatement of environmentalpollution; B

(iii) laying down standards for the quality of environment inits various aspects;

(iv) laying down standards for emission or discharge ofenvironmental pollutants from various sources whatsoever:

Provided that different standards for emission or dischargemay be laid down under this clause from different sourceshaving regard to the quality or composition of the emissionor discharge of environmental pollutants from such sources; C

(v) restriction of areas in which any industries, operations orDprocesses or class of industries, operations or processes shallnot be carried out or shall be carried out subject to certainsafeguards;

(vi) laying down procedures and safeguards for the preventionof accidents which may cause environmental pollution andremedial measures for such accidents;E(vii) laying down procedures and safeguards for the handlingof hazardous substances;

(viii) examination of such manufacturing processes, materialsand substances as are likely to cause environmental pollution; F(ix) carrying out and sponsoring investigations and researchrelating to problems of environmental pollution;

(x) inspection of any premises, plant, equipment, machinery,manufacturing or other processes, materials or substancesand giving, by order, of such directions to such authorities,Gofficers or persons as it may consider necessary to take stepsfor the prevention, control and abatement of environmentalpollution;

(xi) establishment or recognition of environmental laboratoriesand institutes to carry out the functions entrusted to suchHenvironmental laboratories and insitutes under this Act;

(xii) collection and dissemination of information in respect ofmatters relating to environmental pollution;

(xiii) preparation of manuals, codes or guides relating to theprevention, control and abatement of environmental pollution;

(xiv) such other matters as the Central Government deemsnecessary or expedient for the purpose of securing theeffective implementation of the provisions of this Act.”

13. Sub-section (3) of Section 3 of the 1986 Act provides as follows:

“The Central Government may, if it considers it necessary orexpedient so to do for the purposes of this Act, by order,published in the Official Gazette, constitute an authority orauthorities by such name or names as may be specified in theorder for the purpose of exercising and performing such ofthe powers and functions (including the power to issuedirections under Section 5) of the Central Government underthis Act and for taking measures with respect to such of thematters referred to in sub-section (2) as may be mentioned inthe order and subject to the supervision and control of theCentral Government and the provisions of such order, suchauthority or authorities may exercise the powers or performthe functions or take the measures so mentioned in the orderas if such authority or authorities had been empowered bythis Act to exercise those powers or perform those functionsor take such measures.”

14. Subject to the provisions of the 1986 Act, the CentralGovernment has power under sub-section (1) of section 3 to take allsuch measures as it deems necessary or expedient for the purpose ofprotecting and improving the quality of the environment and preventing,controlling and abating environmental pollution.

15. Section 5 of the 1986 Act provides that notwithstanding anythingcontained in any other law, but subject to the provisions of the 1986 Act,the Central Government may, in exercise of its powers and performanceof its functions under the 1986 Act, issue directions in writing to anyperson, officer or any authority and such person, officer or authorityshall be bound to comply with such directions.

16. In exercise of powers conferred by Sub-Section (1) and clause(v) of sub-section (2) of Section 3 of the 1986 Act read with Rule 5(3)(d)

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Aof the Environment (Protection) Rules, 1986 the Central Governmentissued the Environmental Impact Assessment Notification dated 27[th]January 1994 directing that on and from the date of publication of thesaid notification in the Official Gazette, expansion or modernisation ofany activity or a new project listed in Schedule I of the Notification shallnot be undertaken in any part of India, unless it has been accordedBEnvironmental Clearance (EC) by the Central Government in accordancewith the procedure specified in the Notification.

17. Under Clause (2)(I) of the said Notification, any person whodesires to undertake any new project listed in Schedule I is required tosubmit an application to the Secretary, Ministry of Environment andCForests (MoEF), New Delhi in the pro forma specified in Schedule II,accompanied by a project report which is to include the EIA(Environmental Impact Assessment) Report /Environment ManagementPlan (EMP) prepared in accordance with the guidelines issued by MoEF.Another Environmental Impact Notification was issued in 2006, for grant Dof Terms and Environmental Clearance inter alia for projects whichhad started work on site.

18. The EIA Report submitted with the application of the projectproponent is to be evaluated and assessed by the Impact AssessmentAgency (IAA), that is MoEF, and if deemed necessary, it may consult aCommittee of Experts constituted in the manner prescribed in ScheduleEIII. The Committee of Experts shall have full right of entry and inspectionof the site. The Impact Assessment Agency is to prepare a set ofrecommendations based on technical assessment of documents and data,furnished by the project proponent, supplemented by data collected duringvisits to sites, interaction with the affected population and environmental Fgroups, if necessary. The summary of the reports, the recommendationsand the conditions, subject to which EC is given shall, subject to publicinterest, be made available to the parties concerned or environmentalgroups on request. The IAA may solicit comments of the public withinthe specified period by arranging public hearings for that purpose. Thepublic shall, subject to public interest, be provided access, to the summaryGof the EIA Report/Environment Management Plan (EMP). Theclearance granted for commencement of the construction or operationof the plant, is to be valid for five years. Clause IV of the EnvironmentalImpact Assessment Notification provides for the monitoring of theimplementation of the conditions of EC and/or the recommendationsHand conditions laid down by IAA.

19. A minor amendment was made to the said EnvironmentalImpact Assessment Notification dated 27[th] January 1994, by aNotification dated 10[th] April 1997, which prescribes a detailed procedurefor public hearing.

20. By a notification being S.O. 327(E), dated 10[th] April 2001,published in the Gazette of India, Extra., Pt.II, Sec.3(ii), dated 12[th] April2001, the Central Government has delegated the powers vested in itunder Section 5 of the 1986 Act, to the Chairpersons of the respectiveState Pollution Control Boards/Committees to issue directions to anyindustry or any local or other authority for the violations of the standardsand rules relating to biomedical waste, hazardous chemicals, industrialsolid waste and municipal solid waste including plastic waste notifiedunder the Environment (Protection) Act, 1986 subject to the conditionthat the Central Government may revoke such delegation of powers ormay itself invoke the provisions of Section 5 of the said Act, if in theopinion of the Central Government such a course of action is necessaryin the public interest.

21. On or about 8[th] January 2007, the Appellant applied to theMinistry of Environment, Forest and Climate Change, Government ofIndia, hereinafter referred to as “MoEF&CC” for grant of EC to establish3 MTPA integrated steel plant at Mauza South Parbatpur ofChandankiyari Block of Bokaro District.

22. In its application, the Appellant stated that 1350 acres of landwere required for establishing the said plant at the Mauza South Parbatpurof Chandankiyari Block of Bokaro District and that no forest land wasinvolved in the project.

23. By a letter No. F.No.J-11011/137/2006-1A-II (i) dated 21[st]February 2008, the Appellant was granted EC. After obtaining EC, theAppellant applied to the JSPCB, for grant of ‘Consent to Establish’ (CTE)under the Air (Prevention and Control of Pollution) Act, 1981, hereinafterreferred to as the Air Pollution Act, and Water (Prevention and Controlof Pollution) Act 1974, hereinafter referred to as the Water PollutionAct.

24. On 5[th] May 2008, the JSPCB granted CTE to the Appellant toestablish the 3 MTPA integrated steel plant at Mauza South Parbatpurof Chandankiyari Block of Bokaro District. The CTE was granted onthe basis of the EC granted by the MoEF&CC.

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A25. The CTE was extended from time to time till 4[th] May 2011.Even though CTE was granted to the Appellant to establish a steel plantat Mauza South Parbatpur of Chandankiyari Block of Bokaro District,the Appellant established steel plant in Mauza Bhagabandh in the ChasBlock in Bokaro District, 5.3 Kms away from the site for which EC andCTE had been granted.B

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26. A Circular No.J-11013/41/2006-1A.2(i) dated 22[nd] January,2010 was issued by the Ministry of Environment and Forest (MoEF) ofthe Government of India which provided as follows:

“Instances have come to the notice of this Ministry whereinCthe project proponents have changed the project site afterthe said project has been granted environmental clearanceor after the public hearing has been held. The projectproponents have approached this Ministry to revalidate theenvironmental clearance so granted without undergoing afreshthe procedure prescribed for obtaining environmentalDclearance. The matter has been considered in the ministry.The change in project site would lead to change in projectaffected people as well as the change in study area and theimpact zone. As such the Environment Impact AssessmentReport and Public Hearing conducted for a particularElocation cannot be taken valid for the changed location.

Accordingly, it has been decided that any shift in project sitelocation after holding of public hearing will be deemed to bea new proposal and will be appraised afresh as per theprocedure prescribed under EIA Notification 2006 providedFthe respective Expert Appraisal Committee is satisfied thatthe shift is so minor as to have no change in EIA/EMP, dulyrecorded in the minutes and prior approval of advisor (In-charge)/SEIAA for Category ‘A’/Category ‘B’ projectsrespectively is obtained for not holding the public hearingfor the changed location afresh.G

This issues with the approval of the Competent Authority.”

27. By a communication being Reference No.1142 dated 4[th] May2010, the District DFO (District Forest Officer) Bokaro requested JSPCBto take action against the Appellant for setting up its integrated steelplant on forest land in Mauza Bhagabandh of Chas Block of BokaroH

District, in violation of the Forest Conservation Act 1980 and IndianForest Act 1927. The DFO, Bokaro reported encroachment of 220.88acres of notified forest land by the Appellant to JSPCB.

28. It appears that cases had been initiated against the officials ofthe Appellant under the Indian Forest Act, 1927, Forest ConservationAct, 1980 and the Bihar Public Land Encroachment Act, 1955 whichhave been quashed by the Jharkhand High Court, by an order dated 25[th]January 2011.

29. On or about 23[rd] September 2010 the Appellant applied forConsent to Operate (CTO) under the Air Pollution Act and the WaterPollution Act for its 350 m[3] blast furnace. Later on 9[th] September 2011,the Appellant applied for CTO in respect of its entire plant.

30. By a letter dated 2[nd] December 2011, addressed to theAppellant, the MoEF confirmed that the lay out of the Appellant’s 3MTPA Integrated Steel Plant was well within the Environment ImpactArea and that the affected people had the opportunity to participate in apublic hearing.

31. By letter dated 18[th] May 2012, the JSPCB reportedencroachment by the Appellant upon forest land and alleged violation bythe Appellant of the Forest Conservation Act, 1980 to the MoEF&CC,New Delhi. The MoEF&CC was also informed of the unauthorizedshifting of the integrated steel plant from Mauza South Parbatpur ofChandankiyari Block of Bokaro District to Mauza Bhagabandh of ChasBlock of Bokaro District in violation of the conditions of EnvironmentClearance granted by the MoEC&CC.

32. Pursuant to the report of JSPCB, MoEF&CC issued a ShowCause Notice dated 6[th] June 2012 to the Appellant under Section 5 ofthe 1986 Act. The Appellant submitted its reply to the Show Cause Noticeon 20[th] June 2012.

33. On 10[th] September 2012, the Appellant once again applied toJSPCB for CTO for one year under the Water Pollution Act and AirPollution Act. According to the Appellant, several reminders were sentto MoEF&CC requesting MoEF&CC to intimate JSPCB of the outcomeof the Show Cause Notice issued to the Appellant. However, JSPCBhas not been informed of the decision of MoEF&CC.

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A34. The Appellant filed a Writ Petition being W.P. No.2247/2012in the Jharkhand High Court for orders on JSPCB to grant the AppellantCTO. The said writ petition was disposed of by an order dated 5[th]November 2012, the operative part whereof is set out hereinbelow:- “Respondent 1& 2 to consider the petitioner’s applicationBand as assured by them, if so required, give an opportunity ofhearing to the petitioners and after taking into considerationthe facts and provisions of law and the related decisions, shalldispose of the petitioner’s application within five weeks fromthe date of receipt/production of a copy of this order.”

35. On or about 27[th] November 2013, the application of theCAppellant for CTO was rejected on the ground that the Appellant hadshifted the site of its steel Plant and had encroached upon forest land inviolation of the Forest Conservation Act, 1980. The operative part of theorder dated 27[th] November 2013 reads:- “at this stage subject to final outcome of the decision ofDMoEF&CC, New Delhi with respect to show cause notice dated6.6.2012, we dispose the application for CTO in exercise ofpower conferred u/s 21(4) of Air (Prevention and Control ofPollution) Act, 1981 & u/s 25(4) of Water (Prevention andControl of Pollution) Act, 1974 by “refusing” the CTO to theunit for the reason aforesaid.”E36. The Appellant filed an application for contempt being ContemptCase (C) No.939 of 2013 in W.P.(C) No.2247 of 2012 in the JharkhandHigh Court. Pursuant to an order dated 29[th] November 2013 in theContempt Petition, the JSPCB disposed of the applications for grant ofCTO to the Appellant.F37. By a letter dated 17[th] April 2013, the MoEF&CC had calledfor a status report from the State of Jharkhand in respect of forest landencroached by the Appellant. The Forest Department submitted a reportto the MoEF&CC on 13[th] May, 2014.

38. Thereafter, by a letter dated 20[th] October 2014, the MoEF&CC,GNew Delhi directed the Department of Forest, Environment and ClimateChange, Government of Jharkhand to take action against the Appellantfor violating the provisions of Indian Forest Act, 1927 and ForestConservation Act, 1980. In compliance with the aforesaid order, JSPCBdirected the Appellant to close down its plant under Section 31(A) of theHAir Pollution Act and Section 33(A) of Water Pollution Act.

39. By a Memo No.521 dated 6[th] February 2015, the Departmentof Forest, Environment and Climate Change, Government of Jharkhanddirected the DGP, Jharkhand, Ranchi and the Deputy Commissioner,Bokaro to take action against the Appellant in the light of the letter dated20[th] October, 2014 of the MoEF&CC, Government of India and to submitan action taken report.

40. The aforesaid order of JSPCB was challenged by the Appellantby filing a Writ Petition being WP(C) No.2033 of 2015 in the JharkhandHigh Court. By an order dated 5[th] February 2016 the High Court setaside the order of the JSPCB holding that the same had been passed inviolation of principles of natural justice. The High Court however, heldthat JSPCB would be at liberty to pass an order in accordance with lawafter giving the Appellant an opportunity of hearing.

41. Thereafter, a show cause notice dated 25[th] April 2016, wasissued to the Appellant. The Appellant replied to the show cause noticeon 28[th] September 2016, contending that the Appellant had not set up itsplant on any forest land and that all pollution control measures had beentaken. However, the Principal Chief Conservator of Forests (PCCF),Jharkhand had by a communication No.2966 dated 8[th] August 2016informed JSPCB that the Appellant had encroached forest land.Thereafter JSPCB once again called upon the Appellant to show causein the light of information provided by the PCCF, Jharkhand. TheAppellant by a letter dated 28[th] September 2016 reiterated that therewas no forest land in the plant premises.

42. JSPCB passed an order No.B-319 dated 13[th] February 2017disposing of the show cause notice in the light of the direction dated 5[th]February 2016 of the Jharkhand High Court and the applications forCTO. JSPCB granted CTO to the Appellant which was valid till 31[st]December, 2017.

43. The MoEF&CC and the State Environment Impact AssessmentAuthorities had, in the meanwhile been receiving proposals under theEnvironment Impact Assessment Notification, 2006 for grant of Termsof Reference and Environmental Clearance for projects which had startedthe work on site, expanded the production beyond the limit ofenvironmental clearance or changed the product mix without obtainingprior environmental clearance.

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A44. The MoEF&CC deemed it necessary that all entities notcomplying with the environmental regulation under Environment ImpactAssessment Notification, 2006, be brought to comply with theenvironmental laws in expedient manner, for the purpose of protectingand improving the quality of the environment and reducing environmentalpollution.B

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45. The MoEF&CC deemed it necessary to bring such projectsand activities in compliance with the environmental laws at the earliestpoint of time, rather than leaving them unregulated and unchecked, whichwould be more damaging to the environment.

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C46. In furtherance of this objective, the Government of Indiadeemed it essential to establish a process for appraisal of cases of violationof norms, and prescribing such adequate environmental safeguards thatwould deter violation of the provisions of Environment Impact AssessmentNotification, 2006 and ensure that damage to environment was adequatelycompensated for.D

47. In Indian Council for Enviro-Legal Action and Ors. v.Union of India and Ors.[1], the Supreme Court analyzed relevantprovisions of environmental laws and concluded that damages might berecovered under the provisions of the 1986 Act, inter alia, to implementmeasures that were necessary or expedient for protecting and promotingEthe environment. This Court affirmed that the power of the CentralGovernment under Section 3 of the 1986 Act was wide and included thepower to prohibit an activity, close an industry, direct to carry out remedialmeasures, and wherever necessary impose the cost of remedial measuresupon the offending industry. The question of liability of the respondentsFto defray the costs of remedial measures could also be looked into fromthe principle “polluter pays.”

48. In exercise of power under Section 3(1) and Section 3(2)(v)of the 1986 Act read with Rule 5(3)(d) of the Environment (Protection)Rules, 1986, the Central Government has issued a Notification beingGS.O. 804(E) dated 14[th] March 2017 which provides for grant of ex postfacto EC for project proponents who have commenced, continued orcompleted a project without obtaining EC under the 1986 Act or the EIAnotification issued under it.

H1 (1996) 3 SCC 212

49. Paragraphs 3, 4 and 5 of the said notification, read as follows:“(3) In cases of violation, action will be taken against theproject proponent by the respective State or State PollutionControl Board under the provisions of section 19 of theEnvironment (Protection) Act, 1986 and further, no consentto operate or occupancy certificate will be issued till theproject is granted the environmental clearance.

(4) The cases of violation will be appraised by respective sectorExpert Appraisal Committees constituted under sub- section(3) of Section 3 of the Environment (Protection) Act, 1986with a view to assess that the project has been constructed ata site which under prevailing laws is permissible andexpansion has been done which can be run sustainably undercompliance of environmental norms with adequateenvironmental safeguards; and in case, where the finding ofthe Expert Appraisal Committee is negative, closure of theproject will be recommended along with other actions underthe law.

(5) In case, where the findings of the Expert AppraisalCommittee on point at sub-para(4) above are affirmative, theprojects under this category will be prescribed the appropriateTerms of Reference for undertaking Environment ImpactAssessment and preparation of Environment ManagementPlan. Further, the Expert Appraisal Committee will prescribea specific Terms of Reference for the project on assessmentof ecological damage, remediation plan and natural andcommunity resource augmentation plan and it shall beprepared as an independent chapter in the environment impactassessment report by the accredited consultants. The collectionand analysis of data for assessment of ecological damage,preparation of remediation plan and natural and communityresource augmentation plan shall be done by an environmentallaboratory duly notified under Environment (Protection) Act,1986, or a environmental laboratory accredited by NationalAccreditation Board for Testing and Calibration Laboratoriesor a laboratory of a Council of Scientific and IndustrialResearch institution working in the field of environment.”

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A50. On or about 24[th] August 2017, the Appellant applied for CTOfor five years. On 13[th] November 2017, JSPCB issued a Show CauseNotice to the Appellant pointing out alleged contraventions of theconditions of Consent to Operate (CTO) earlier granted to the Appellant.The Appellant was called upon to show cause whether conditions of theCTO had been contravened while the application of the Appellant forBCTO for five year was pending.

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51. On 23[rd] November 2017, the Appellant submitted its onlinereply to the Show Cause Notice showing compliance of the conditionsof the CTO.C52. By a communication No.2105 dated 18[th] December 2017JSPCB requested MoEF&CC to inform JSPCB of the decision on theshow cause notice issued to the Appellant under Section 5 of the 1986Act for revocation of the EC for non compliance of the conditions forgrant of EC for the integrated plant at Parbatpur, Jharkhand.

D53. Aggrieved by the failure of JSPCB to issue/renew the CTOto the Appellant, pursuant to its application made on 24[th] August 2017,the Appellant filed a writ petition being W.P.(C) No. 1873 of 2018 in theJharkhand High Court on or about 12[th] April 2018 seeking directions onthe JSPCB to issue CTO to the Appellant.

E54. By an order dated 16[th] July 2018, the High Court directed theJSPCB to take a final decision on the application of renewal/grant ofCTO filed by the Appellant on 24[th] August 2017 within the time stipulatedin the said order.

55. The High Court further passed an interim order directing thatFthe Appellant be allowed to operate its unit under the supervisory andregulatory control of the JSPCB, who might carry out periodical checkas to adherence by the Appellant of pollution control laws.

56. JSPCB passed an order dated 21[st] August, 2018, rejecting atthat stage the request of the Appellant for CTO, subject to the decisionof MoEF&CC on the show cause notice issued to the appellant. TheGoperative part of the said order is set out hereinbelow:

“at this stage subject to final outcome of the decision ofMoEF&CC, New Delhi with respect to show cause notice dated6.6.2012, we dispose the application for CTO in exercise of powerconferred u/s 21(4) of Air (Prevention and Control of Pollution)H

Act, 1981 & u/s 25(40 of Water (Prevention and Control of pollution)Act, 1974 by “refusing” the CTO to the unit for the reasonaforesaid.”

57. The Appellant, thereafter approached the High Court with aprayer for amendment of Writ Petition No.1873 of 2018. By an orderdated 25[th] August 2018, the High Court allowed the application foramendment of the Writ Petition and directed the respondent to file theirresponse to the amended writ petition. The High Court further directed:- “10. So far as interim relief is concerned, this court findsthat the order passed by the respondent-Jharkhand StatePollution Control Board dated 23.08.2018 appears to bedirectly dependent on the final decision which is yet to betaken by the Ministry of Environment, Forest & ClimateChange on the show cause issued to the petitioner as back asin the year 2012. As per the submission made by the counselappearing on behalf of Union of India, they are shortly goingto take a final decision in the matter after hearing thepetitioner. Accordingly the operation, implementation andexecution of the order dated 23.08.2018 passed by JharkhandState Pollution Control Board is hereby stayed till 27.09.2018and the interim order dated 16.07.2018 is hereby extendedtill 27.09.2018.

11. So far as decision of the Ministry of Environment, Forest& Climate Change are concerned, considering the fact thatthe unit of the petitioner is running unit and large number ofemployees are working in this unit of the petitioner, this courtconsider it appropriate that the issue regarding theenvironmental clearance of the petitioner should be decidedat the earliest.

12. It is further observed that it is open to the petitioner toapproach the Union of India with their proposal/ applicationfor regularization of the alleged violation, without prejudiceto their rights (including right, title, interest, possession andnature of property of the petitioner) and advance submissionsbefore the respondent authority of Union of India pursuantto the show cause notice issued to them dated 6.6.2012 andthe appropriate authority may, if possible, simultaneously A

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Aconsider the aforesaid application of the petitioner forregularization along with the show cause reply of the petitionersuch that entire dispute is decided and the petitioner may alsohave a clarity about the fate of its unit . The decision which isto be taken by the Union of India be brought on record byeither of the parties by filing supplementary affidavit latestBby 25.09.2018.

13. I.A. No. 7610 of 2018 and I.A No. 7613 OF 2018 arehereby disposed of.

14. It is made clear that this court has not gone into the meritsCof the claim of the petitioner and it will be open to therespondent no 3 to take decision as per law.”

58. By the aforesaid order dated 25[th] August 2018, the High Courtdirected MoEF to take a decision on the application of the Appellant forEC as also a decision regarding violation by the Appellant of the provisionsDof EC by encroachment upon forest land by shifting the location of theplant.

59. On 31[st] August 2018, MoEF&CC issued a show cause noticeNo. F.No.J-11011/137/2006-1A Pt.II (i) dated 31[st] August 2018 to theAppellant for violating the provisions of the EC by shifting the locationEof its plant and encroaching upon forest land.

60. The Respondent No.1 was also accorded personal hearing on10[th] September 2018. On 12[th] September 2018 Mr. Gyanesh Bharti whopresided over the personal hearing was transferred from MoEF&CC.

61. On 20[th] September 2018 the Respondent No.1 issued an orderFbearing No.F.No.J-11011/137/2006-IA.II(I) revoking the EC of theAppellant on the ground that the Appellant had encroached upon 220acres of forest land and had shifted the location of its plant from Parbatpurto Bhagabandh, violating the conditions stipulated in the EC.

62. The Appellant filed Writ petition being W.P. (C) No.4850 ofG2018 in the Jharkhand High Court challenging the revocation of the ECgranted to the Appellant.

63. On 27[th] September 2018 the High Court passed an interimorder staying the operation, implementation and execution of the impugnedorder dated 20[th] September 2018. The Court prima facie found that theH

impugned order, passed in violation of principles of natural justice, hadserious repercussions on the unit of the Appellant which was a runningunit, and had caused prejudice to the Appellant.

64. On 4[th] October 2018, the Appellant applied for ex post factoForest Clearance (FC) without prejudice to its rights and contentions.On 27[th] November 2019 the Appellant applied for a “revised” EC withoutprejudice to its rights and contentions. In the meanwhile, the Interimorder passed by the High Court on 27[th] September 2018 was extendedfrom time to time. Such extensions were granted on 10.10.2018,5.11.2018, 11.12.2018, 8.1.2019, 23.1.2019, 16.5.2019, 25.7.2019 and17.10.2019.

65. On 17[th] December 2019, MoEF&CC passed an order accordingex post facto in principle approval for the forest diversion/clearanceproposal of the Appellant. The operative part of the said order reads:-

“After careful examination of the proposal of the StateGovernment and on the basis of the recommendations of theForest Advisory Committee and approval of the same by thecompetent authority of the MoEF&CC, New Delhi, the CentralGovernment hereby accords ex-post facto ‘in-principle’approval under Section -2 of the Forest (Conservation) Act,1980 for diversion of 184.23 ha of forest land (174.39 haencroached (ex- post facto) and 9.84 ha virgin land) in favourof M/s Electrosteel Steels Limited in the State of Jharkhandsubject to fulfilment of following conditions:-

(i) Legal status of the diverted forest land shall remainunchanged;...”

66. By an order dated 26[th] February 2020, the Jharkhand HighCourt directed that the pendency of W.P. (C) No. 4850 of 2018 andW.P. (C) No.1873 of 2018 would not come in the way of considerationby the MoEF&CC of grant or refusal of restoration of EC and it wouldbe open to the Ministry to take appropriate decision in accordance withlaw. The interim orders in force were extended.

67. Thereafter by a letter dated 2[nd] March 2020, the Appellantrequested MoEF&CC to consider the application of the Appellant forrevised EC. In the meanwhile, the interim orders passed by the HighCourt were further extended. The interim orders were extended by orderspassed on 26.2.2020, 7.4.2020 and 29.5.2020.

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A68. The Writ Petition was called for hearing on 19[th] June 2020whereupon it was submitted on behalf of the Respondent No.1 that therevised EC application of the Appellant would be placed before the ExpertAppraisal Committee (EAC) for consideration on merit and ViolationCommittee would decide on the action to be taken against the Appellantfor violation of Environment (Protection) Act, 1986.B

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69. On 6[th] August 2020 and 7[th] August 2020, the case of theAppellant was placed before the EAC at its 35[th] meeting. The Appellantwas invited to present its proposal online before the Committee.

70. After detailed deliberation, the EAC appraised the proposalon merits and recommended issuance of Standard Terms of ReferenceCalong with Specific Terms of Reference for undertaking EnvironmentalImpact Assessment (EIA) and preparation of Environment ManagementPlan (EMP). The EAC noted that the plant was a running unit and theEC was subject to the conditions imposed in the Terms of Reference.

71. On 4[th] September 2020, the Jharkhand High Court extendedDthe interim orders till 8[th] September 2020 while awaiting response fromthe Respondents. On 8[th] September 2020, the High Court reserved orderson the extension of interim orders dated 16[th] July 2018 and 27[th] September2018 while listing the writ petitions for final hearing on 16[th] September2020.E[[th]]

72. On 15[[th]] September 2020, the Respondent No.1 filed an affidavitstating that it had no objection to extension of the interim ordersconsidering that the steel plant employed a large workforce. At the hearingon 16[th] September 2020 JSPCB also consented to extension of the interimorder. However, the High Court passed the impugned order dated 16[th]FSeptember 2021 dis-continuing the earlier interim orders on, inter alia,the following grounds:

(i) The Expert Appraisal Committee of the MoEF&CC had,after detailed deliberations, found that the Appellant hadbeen in violation of the EIA Notification 2006 and generalcondition no.G

(ii) of the EC dated 21.02.2008.

(ii) The MoEF&CC had while issuing ToR for grant of ECrecommended action against the Appellant under Section19 of the 1986 Act for past violations. Extension of theHinterim orders would amount to staying action.

(iii) In Alembic Pharmaceuticals Ltd. v. Rohit Prajapati andOthers[2], this Court had deprecated ex post facto Ecs butpassed certain directions in exercise of powers under Article142 of the Constitution.

73. By an Office Memorandum, being F.No. 22-21/2020-1A III,dated 7[th] July 2021, the MoEF&CC issued Standard Operating Procedure(SOP) for Identification and Handing of violation cases under EIANotification 2006.

74. The said Office Memorandum, inter alia, reads:

“The Ministry had issued a notification number S.O.804(E),dated the 14[th] March, 2017 detailing the process for grant ofTerms of Reference and Environmental Clearance in respectof projects or activities which have started the work on siteand/ or expanded the production beyond the limit of PriorEC or changed the product mix without obtaining Prior ECunder the EIA Notification, 2006.

2. This Notification was applicable for six months from thedate of publication i.e. 14.03.2017 to 13.09.2017 and furtherbased on court direction from 14.03.2018 to 13.04.2018.

3. Hon’ble NGT in Original Application No. 287 of 2020 inthe matter of Dastak N.G.O. Vs Synochem Organics Pvt. Ltd.&Ors. and in applications pertaining to same subject matterin Original Application No. 298 of 2020 in Vineet Nagar Vs.Central Ground Water Authority &Ors., vide order dated03.06.2021 held that “( ... ) for past violations, the concernedauthorities are free to take appropriate action in accordancewith polluter pays principle, following due process”.

4. Further, the Hon’ble National Green Tribunal in O.A No.34/2020 WZ in the matter of Tanaji B. Gambhire vs. ChiefSecretary, Government of Maharashtra and ors., vide orderdated 24.05.2021 has directed that “ ... a proper SoP be laiddown for grant of EC in such cases so as to address the gapsin binding law and practice being currently followed. TheMoEF may also consider circulating such SoP to all SEIAAsin the country”.

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A5. Therefore, in compliance to the directions of the Hon’bleNGT a Standard Operating Procedure (SoP) for dealing withviolation cases is required to be drawn. The Ministry is alsoseized of different categories of ‘violation’ cases which havebeen pending for want of an approved structural/proceduralframework based on ‘Polluter Pays Principle’ and ‘PrincipleBof Proportionality’. It is undoubtedly important that actionunder statutory provisions is taken against the defaulters/violators and a decision on the closure of the project oractivity or otherwise is taken expeditiously.

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6. In the list of the above directions of the Hon’ble TribunalCand the issues involved, the matter has accordingly beenexamined in detail in the Ministry. A detailed SoP hasaccordingly been framed and is outlined herein. The SoP isalso guided by the observations/decisions of the Hon’bleCourts wherein principles of proportionality and pollutersDpay have been outlined.”

75. The Standard Operating Procedure formulated by the saidOffice Memorandum dated 7[th] July 2021 refers to and gives effect tovarious judicial pronouncements including the judgment of this Court inAlembic Pharmaceuticals (supra).

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76. In terms of the Standard Operating Procedure, the proposalfor grant of EC in cases of violation are to be considered on merits, withprospective effect, applying principles of proportionality and the principlethat the polluter pays and is liable for costs of remedial measures.

77. By an interim order passed on 15[th] July 2021 in WP(MD)F11757 of 2021 in Fatima vs. Union of India, the Madurai Bench ofMadras High Court has stayed the operation of the Standard OperatingProcedure.

78. By an order dated 25[th] August 2021, MoEF&CC rejected theapplication of the Appellant for the time being. The application has, inGeffect, been kept in abeyance.

79. The MoEF apparently did not take any decision on theapplication of the Appellant for EC, since the Standard OperatingProcedure issued by it has been stayed by the Madurai Bench of MadrasHigh Court, by the said order dated 15[th] July 2021, citing the judgment ofHthis Court in Alembic Pharmaceuticals (supra).

80. The Appellant has filed an application being I.A No.125221 of2021 in this appeal seeking directions on the Respondent No.1 to processthe Appellant’s application dated 5[th] August 2020 for revised EC.

81. There can be no doubt that the need to comply with therequirement to obtain Environment Clearance is non-negotiable. A projectcan be set up or allowed to expand subject to compliance of the requisitenorms. Environmental clearance is granted on condition of the suitabilityof the site to set up the project from the environmental angle, and existenceof necessary infrastructural facilities and equipment for compliance ofenvironmental norms. To protect future generations, it is imperative thatpollution laws be strictly enforced. Under no circumstances, can industrieswhich pollute be allowed to operate unchecked and degrade theenvironment.

82. The question is whether an establishment contributing to theeconomy of the country and providing livelihood to hundreds of peopleshould be closed down for the technical irregularity of shifting its sitewithout prior environmental clearance, without opportunity to theestablishment to regularize its operation by obtaining the requisiteclearances and permissions, even though the establishment may nototherwise be violating pollution laws, or the pollution, if any, canconveniently and effectively be checked. The answer has to be in thenegative.

83. The Central Government is well within the scope of its powersunder Section 3 of the 1986 Act to issue directions to control and/orprevent pollution including directions for prior Environmental Clearancebefore a project is commenced. Such prior Environmental Clearance isnecessarily granted upon examining the impact of the project on theenvironment. Ex-Post facto Environmental Clearance should notordinarily be granted, and certainly not for the asking. At the same timeex post facto clearances and/or approvals and/or removal of technicalirregularities in terms of Notifications under the 1986 Act cannot bedeclined with pedantic rigidity, oblivious of the consequences of stoppingthe operation of a running steel plant.

84. The 1986 Act does not prohibit ex post facto EnvironmentalClearance. Some relaxations and even grant of ex post facto EC inaccordance with law, in strict compliance with Rules, RegulationsNotifications and/or applicable orders, in appropriate cases, where theprojects are in compliance with, or can be made to comply with AB

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Aenvironment norms, is in over view not impermissible. The Court cannotbe oblivious to the economy or the need to protect the livelihood ofhundreds of employees and others employed in the project and othersdependent on the project, if such projects comply with environmentalnorms.

B85. As held by a three Judge Bench of this Court in LafargeUmiam Mining Private Limited v. Union of India[3](“Lafarge”) reportedin (2011) 7 SCC 338:

“119. The time has come for us to apply the constitutional“doctrine of proportionality” to the matters concerningCenvironment as a part of the process of judicial review incontradistinction to merit review. It cannot be gainsaid thatutilization of the environment and its natural resources has tobe in a way that is consistent with principles of sustainabledevelopment and intergenerational equity, but balancing ofthese equities may entail policy choices. In the circumstances,Dbarring exceptions, decisions relating to utilization of naturalresources have to be tested on the anvil of the well- recognizedprinciples of judicial review. Have all the relevant factorsbeen taken into account? Have any extraneous factorsinfluenced the decision? Is the decision strictly in accordanceEwith the legislative policy underlying the law (if any) thatgoverns the field? Is the decision consistent with the principlesof sustainable development in the sense that has the decision-maker taken into account the said principle and, on the basisof relevant considerations, arrived at a balanced decision?Thus, the Court should review the decision- making processFto ensure that the decision of MoEF is fair and fully informed,based on the correct principles, and free from any bias orrestraint. Once this is ensured, then the doctrine of “marginof appreciation” in favour of the decision-maker would comeinto play.”G86. In Alembic Pharmaceuticals (supra) this Court observed:- “27. The concept of an ex post facto EC is in derogation ofthe fundamental principles of environmental jurisprudence and isan anathema to the EIA notification dated 27 January 1994. It is, H3 (2011) 7 SCC 338

as the judgment in Common Cause holds, detrimental to theenvironment and could lead to irreparable degradation. The reasonwhy a retrospective EC or an ex post facto clearance is alien toenvironmental jurisprudence is that before the issuance of an EC,the statutory notification warrants a careful application of mind,besides a study into the likely consequences of a proposed activityon the environment. An EC can be issued only after various stagesof the decision-making process have been completed. Requirementssuch as conducting a public hearing, screening, scoping andappraisal are components of the decision- making process whichensure that the likely impacts of the industrial activity or theexpansion of an existing industrial activity are considered in thedecision-making calculus. Allowing for an ex post facto clearancewould essentially condone the operation of industrial activitieswithout the grant of an EC. In the absence of an EC, there would beno conditions that would safeguard the environment. Moreover, ifthe EC was to be ultimately refused, irreparable harm would havebeen caused to the environment. In either view of the matter,environment law cannot countenance the notion of an ex post factoclearance. This would be contrary to both the precautionaryprinciple as well as the need for sustainable development.

87. In Alembic Pharmaceuticals (supra), this Court deprecatedex- post facto clearances, but this Court did not pass orders for closureof the three industries concerned, on consideration of the consequencesof their closure. This court proceeded to observe and held:-

44. The issue which must now concern the Court is theconsequence which will emanate from the failure of the threeindustries to obtain their ECs until 14 May 2003 in the caseof Alembic Pharmaceuticals Limited, 17 July 2003 in the caseof United Phosphorous Limited, and 23 December 2002 inthe case of Unique Chemicals Limited. The functioning of thefactories of all three industries without a valid EC would havehad an adverse impact on the environment, ecology andbiodiversity in the area where they are located. TheComprehensive Environmental Pollution Index[4] report issuedby the Central Pollution Control Board for 2009-2010describes the environmental quality at 88 locations across AB

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the country. Ankleshwar in the State of Gujarat, where thethree industries are located showed critical levels of pollution[5].In the Interim Assessment of CEPI for 2011, the reportindicates similar critical figures[6] of pollution in the Ankleshwararea. The CEPI scores for 2013[7] and 2018[8] were alsosignificantly high. This is an indication that industrial unitshave been operating in an unregulated manner and indefiance of the law. Some of the environmental damage causedby the operation of the industrial units would be irreversible.However, to the extent possible some of the damage can becorrected by undertaking measures to protect and conservethe environment.

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45. Even though it is not possible to individually determinethe exact extent of the damage caused to the environment bythe three industries, several circumstances must weigh withthe Court in determining the appropriate measure of restitution.First, it is not in dispute that all the three industries did obtainECs, though this was several years after the EIA notificationof 1994 and the commencement of production. Second,subsequent to the grant of the ECs, the manufacturing unitsof all the three industries have also obtained ECs for anexpansion of capacity from time to time. Third, the MoEF hadissued a circular on 5 November 1998 permitting applicationsfor ECs to be filed by 31 March 1999, which was extendedsubsequently to 30 June 2001. On 14 May 2002, the deadlinewas extended until 31 March 2003 subject to a depositcommensurate to the investment made. The circulars issuedby the MoEF extending time for obtaining ECs came to thenotice of this Court in Goa Foundation (I) v. Union of India[9].Fourth, though in the context of the facts of the case, thisCourt in Lafarge Umiam Mining Private Limited v. Union ofIndia[10] (“Lafarge”) has upheld the decision to grant ex postfacto clearances with respect to limestone mining projects in D

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5 CEPI score – 88.50

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9 (2005) 11 SCC 559H10 (2011) 7 SCC 338

the State of Meghalaya. In Lafarge, the Court dealt with thequestion of whether ex post facto clearances stood vitiatedby alleged suppression of the nature of the land by the projectproponent and whether there was non-application of mindby the MoEF while granting the clearances. While upholdingthe ex post facto clearances, the Court held that the nativetribals were involved in the decision-making process and thatthe MoEF had adopted a due diligence approach in reassuringitself through reports regarding the environmental impact ofthe project. ”

(Emphasis supplied)

46. After adverting to the decision in Lafarge, another Benchof three learned judges of this Court in Electrotherm (India)Limited v. Patel Vipulkumar Ramjibhai[11], dealt with the issueof whether an EC granted for expansion to the appellantwithout holding a public hearing was valid in law. JusticeUday Umesh Lalit speaking for the Bench held thus:

“19…the decision-making process in doing away with orin granting exemption from public consultation/publichearing, was not based on correct principles and as suchthe decision was invalid and improper.”

47. The Court while deciding the consequence of granting anEC without public hearing did not direct closure of theappellant’s unit and instead held thus:

“20. At the same time, we cannot lose sight of the fact thatin pursuance of environmental clearance dated 27-1-2010, the expansion of the project has been undertakenand as reported by CPCB in its affidavit filed on 7-7-2014,most of the recommendations made by CPCB are compliedwith. In our considered view, the interest of justice wouldbe subserved if that part of the decision exempting publicconsultation/public hearing is set aside and the matter isrelegated back to the authorities concerned to effectuatepublic consultation/public hearing. However, since theexpansion has been undertaken and the industry has beenfunctioning, we do not deem it appropriate to order closure A

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of the entire plant as directed by the High Court. If thepublic consultation/public hearing results in a negativemandate against the expansion of the project, theauthorities would do well to direct and ensure scaling downof the activities to the level that was permitted byenvironmental clearance dated 20-2-2008. If publicconsultation/public hearing reflects in favour of theexpansion of the project, environmental clearance dated27-1-2010 would hold good and be fully operative. In otherwords, at this length of time when the expansion has alreadybeen undertaken, in the peculiar facts of this case and inorder to meet ends of justice, we deem it appropriate tochange the nature of requirement of public consultation/public hearing from pre-decisional to post-decisional. Thepublic consultation/public hearing shall be organised bythe authorities concerned in three months from today.”

(Emphasis supplied)

48. Guided by the precepts that emerge from the abovedecisions, this Court has taken note of the fact that thoughthe three industries operated without an EC for several yearsafter the EIA notification of 1994, each of them hadsubsequently received ECs including amended ECs forexpansion of existing capacities. These ECs have beenoperational since 14 May 2003 (in the case of AlembicPharmaceuticals Limited), 17 July 2003 (in the case of UnitedPhosphorous Limited), and 23 December 2002 (in the caseof Unique Chemicals Limited). In addition, all the three unitshave made infrastructural investments and employedsignificant numbers of workers in their industrial units.

49. In this backdrop, this Court must take a balancedapproach which holds the industries to account for havingoperated without environmental clearances in the past withoutordering a closure of operations. The directions of the NGTfor the revocation of the ECs and for closure of the units donot accord with the principle of proportionality. At the sametime, the Court cannot be oblivious to the environmentaldegradation caused by all three industries units that operatedwithout valid ECs. The three industries have evaded the legally

binding regime of obtaining ECs. They cannot escape theliability incurred on account of such noncompliance.Penalties must be imposed for the disobedience with a bindinglegal regime. The breach by the industries cannot be leftunattended by legal consequences. The amount should be usedfor the purpose of restitution and restoration of theenvironment. Instead and in place of the directions issued bythe NGT, we are of the view that it would be in the interests ofjustice to direct the three industries to deposit compensationquantified at Rs. 10 crores each. The amount shall be depositedwith GPCB and it shall be duly utilised for restoration andremedial measures to improve the quality of the environmentin the industrial area in which the industries operate. Thoughwe have come to the conclusion, for the reasons indicated,that the direction for the revocation of the ECs and the closureof the industries was not warranted, we have issued the orderfor payment of compensation as a facet of preserving theenvironment in accordance with the precautionary principle.These directions are issued under Article 142 of theConstitution. Alembic Pharmaceuticals Limited, UnitedPhosphorous Limited and Unique Chemicals Limited shalldeposit the amount of compensation with GPCB within aperiod of four months from the date of receipt of the certifiedcopy of this judgment. This deposit shall be in addition to theamount directed by the NGT. Subject to the deposit of theaforesaid amount and for the reasons indicated, we allow theappeals and set aside the impugned judgment of the NGTdated 8 January 2016 in so far as it directed the revocationof the ECs and closure of the industries as well as the orderin review dated 17 May 2016.”

87. The Notification being SO 804(E) dated 14[th] March, 2017was not an issue in Alembic Pharmaceuticals (supra). This Court wasexamining the propriety and/or legality of a 2002 circular which wasinconsistent with the EIA Notification dated 27[th] January, 1994, whichwas statutory. Ex post facto environmental clearance should not howeverbe granted routinely, but in exceptional circumstances taking into accountall relevant environmental factors. Where the adverse consequences ofex post facto approval outweigh the consequences of regularization ofoperation of an industry by grant of ex post facto approval and the industry ABC

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Aor establishment concerned otherwise conforms to the requisite pollutionnorms, ex post facto approval should be given in accordance with law, instrict conformity with the applicable Rules, Regulations and/orNotifications. Ex post facto approval should not be withheld only as apenal measure. The deviant industry may be penalised by an impositionof heavy penalty on the principle of ‘polluter pays’ and the cost ofBrestoration of environment may be recovered from it.

88. We are of the view that the High Court erred in passing theimpugned order, vacating interim orders which had been in force for twoyears. The impugned order is not in conformity with the principle ofproportionality. This is not a case where the steel plant was started withoutCenvironmental clearance or consent of JSPCB. The Appellant had appliedfor and obtained environmental clearance to set up an integrated steelplant (3MTPA) on 1350 acres of land at Mauza South Parbatpur, asobserved above. Environmental Clearance had been granted on 21[st]February 2008 and Consent to Operate had been granted by JSPCB onD5[th] May 2008.

89. The Appellant established its steel plant in Mauza Bhagaband,5.3 kms away from the site for which EC and CTE had been granted. Itis the contention of the Appellant that the shift is minor and makes nochange in the EIA/EMP on the basis of which EC has been granted.EThe shift did not require fresh public hearing in terms of the Circulardated 22[nd] January 2010 of the MoEF.

90. As aforesaid, by a letter dated 2.12.2011 addressed to theAppellant, the MoEF confirmed that the steel plant of the Appellant waswithin the Environment Impact Area and the affected people had theFopportunity to air their views in a public hearing. The question is whetherthe Petitioner was required to obtain fresh prior clearance for shifting orwas covered by the exemption under the said Notification dated 22[nd]January 2010.

91. The Appellant has all along asserted that no part of theGpremises of the integrated steel plant is in any forest. As such therewas no violation of the Indian Forest Act, 1927 or the ForestConservation Act, 1980. The MoEF had also confirmed that the steelplant in question was well within the Environment Impact Area andthe affected people had the opportunity in a public hearing. Be that asit may, whether the shifting of the site has really made any differenceH

from the environmental impact angle requires consideration by theappropriate authority/forum.

92. In any case, the Appellant has duly applied for ex post factoforest clearance approval without prejudice to its rights and contentionsthat its steel plant is not on forest land and also applied for revised EC.On 17[th] December 2019, MoEF&CC accorded ex post facto in principleapproval to the forest clearance proposal on the recommendations ofthe Forest Advisory Committee. The application for revised clearance ispending consideration. No final decision has however been taken,ostensibly in view of the interim order passed by the Madras High Courtstaying the operation of the Standard Operation Procedures issued videMemorandum dated 7[th] July 2021.

93. The interim order passed by the Madras High Court appearsto be misconceived. However, this Court is not hearing an appeal fromthat interim order. The interim stay passed by the Madras High Courtcan have no application to operation of the Standard Operating Procedureto projects in territories beyond the territorial jurisdiction of Madras HighCourt. Moreover, final decision may have been taken in accordancewith the Orders/Rules prevailing prior to 7[th] July, 2021.

94. In passing the impugned order the High Court overlookedthe consequences of closure of an integrated steel plant with a workforce of 300 regular and 700 contractual workers. The High Courtalso failed to appreciate that the judgment of this Court in AlembicPharmaceuticals (supra) was distinguishable on facts. Furthermore,continuance of the interim orders allowing operation of an industrialestablishment or even the grant of revised EC to the industrialestablishment cannot stand in the way of action against thatestablishment for contraventions, including the imposition of penalty,on the principle ‘polluter pays’. The scope and effect of Section 32Aof the IBC is a different issue. This Court need not examine into thequestion of whether penal action can be initiated against the Appellantor, whether compensation can be recovered from the Appellant, at thisstage. The issue may be decided by the appropriate authority at theappropriate stage when it adjudicates an action for penalization of theAppellant or recovery of compensation from the Appellant. Theapplication of the Appellant for revised EC, CTO etc. shall be consideredstrictly in accordance with environmental norms.

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A95. The appeals are allowed. The impugned order is set aside.The Respondent No.1 shall take a decision on the application of theAppellant for revised EC in accordance with law, within three monthsfrom date. Pending such decision, the operation of the steel plantshall not be interfered with on the ground of want of EC, FC, CTE orCTO.B

Devika Gujral

Appeals allowed.

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