KEYSTONE REALTORS PVT. LTD. versus SHRI ANIL V THARTHARE & ORS. on 3 December 2019

[2019] 17 S.C.R. 539

KEYSTONE REALTORS PVT. LTD.

v

SHRI ANIL V THARTHARE & ORS.

(Civil Appeal No. 2435 of 2019)

DECEMBER 03, 2019

[DR. DHANANJAYA Y CHANDRACHUD AND

AJAY RASTOGI, JJ.]

Environmental Law: EIA Notification – S.O.1533 dated14.09.2006 – Paragraph 2 – Expansion – Appellant projectproponent of a residential redevelopment project, commencedconstruction of building at the project property – At the time ofcommencement of construction, total construction area was8720.320 sq. mtrs – Appellant expanded the ambit of project andincreased construction area to 32,395.17 sq. mtrs. – Under EIANotification, an Environment Clearance (EC) was necessary if thetotal construction area exceeded 20,000 sq.mtrs and so appellantapplied for the EC – On recommendations of SEAC, SEIAA grantedEC on 02.05.2013 – By letter dated 24.09.2013, the appellantinformed the Environment Department that construction was furtherincreased by 8085.71 sq.mtrs as a result of which the totalconstruction area of the project was enhanced to 40,482.88 sq.mtrs – On 13.03.2014, an amendment to EC dated 02.05.2013 wasgranted on the ground that there was only a marginal increase inbuilt up and construction area – Challenge to the grant of amendedEC dated 13.03.2014 by first respondent – NGT held that theincrease in the total construction area of the appellant’s projectwas an expansion under Notification dated 14.09.2006 – NGTfound that the appellant had undertaken an expansion as set outin Paragraph 2 of the Notification without complying with theregulatory procedure prescribed and directed the appellant todeposit Rs. One crore with the CPCB – Further, noting that theconstruction at the project site had been completed, the NGTappointed a five-member expert committee to study the impact ofthe appellant’s expanded project and to suggest remedial measures– In the instant appeal challenge was made to this order of theNGT – Held: The entire scheme of the EIA Notification is to ensure

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Athat any new or additional environmental impact is assessed andcertified by the relevant regulatory authorities – The lower limitof Entry 8(a) of the Schedule is a built up area of 20,000 sq. mtrsand the upper limit is 1,50,000 sq. mtrs – No doubt, theenvironmental impact of a construction of 1,50,000 sq. mtrs wouldBbe drastically more than construction of 20,000 sq. mtrs – It cannotbe disputed that as the size of the project increases, so does themagnitude of the project’s environmental impact – There may existcertain situations where the expansion sought by a projectproponent is truly marginal or the environmental impact of suchexpansion is non-existent – However, it is not for this Court to layCdown a bright-line test as to what constitutes a ‘marginal’ increaseand what constitutes a material increase warranting a fresh Form1 and scrutiny by the Expert Appraisal Committee – Thus, anexpansion within the limits prescribed by the Schedules would besubject to the procedure set out in paragraph 7(ii) – At the time ofDthe second increase, the total construction area of the appellant’sproject was enlarged to 40,480.88 sq.mtrs – As a result ofexpansion, appellant constructed sixteen additional flats –Appellant did not comply with the procedure set out underparagraph 7(ii) of the EIA Notification but rather sought anE‘amendment’ to the EC – SEIAA did not require the appellant tosubmit an updated Form 1 nor was the proposal processed andevaluated by SEAC – The ‘amendment’ to EC dated 13.03.2014did not discuss the potential environmental impact of the increasein construction area – The procedure set out under paragraph 7(ii)Fof the EIA Notification exists to ensure that where a project isexpanded in size, the environmental impact on the surrounding areais evaluated holistically considering all the relevant factorsincluding air and water availability and pollution, management ofsolid and wet waste and the urban carrying capacity of the area

Conclusion

– This was not done in the case of the appellant’s project – It wasGnot open to SEIAA to grant an ‘amendment’ to the EC withoutfollowing the procedure set out in paragraph 7(ii) of the EIANotification – Further, as on the date of the impugned orderconstruction at the project site had already been completed – Bycompleting the construction of the project, the appellant deniedHSEIAA and SEAC, the ability to evaluate the environmental impact and suggest methods to mitigate any environmental damage – Atthis stage, only remedial measures may be taken – The NGT alreadydirected the appellant to deposit one crore and has set up an expertcommittee to evaluate the impact of the appellant’s project andsuggest remedial measures – In view of these circumstances, thedirections of the NGT are upheld and the Committee is directed tocontinue its evaluation of the appellant’s project so as to bring itsenvironmental impact as close as possible to that contemplated inEC dated 02.05.2013 and also suggest the compensatory exactionto be imposed on the appellant.

Interpretation of Statutes: Interpretation of Notification – Ina case where the text of the provisions requires interpretation,Courts must adopt an interpretation which is in consonance withthe object and purpose of the legislation or delegated legislationas a whole – EIA Notification was adopted with the intention ofrestricting new projects and the expansion of new projects untiltheir environmental impact could be evaluated and understood –Environmental law.

Dismissing the appeal, the Court

HELD: 1. The EIA Notification seeks to ensure theprotection and preservation of the environment during theexecution of new projects and the expansion or modernisationof existing projects. It imposes restrictions on the execution ofnew projects and on the expansion of existing projects, until theirpotential environmental impact has been assessed and approvedby the grant of an EC. Where a project falls within theparameters stipulated in the Schedule, paragraph 2 of the EIANotification provides that no construction work shall beginunless an EC is granted in regard to three types of activity: (i)new projects or activities provided in the Schedule, (ii)expansion or modernisation of existing projects or activitiesprovided in the Schedule, and (iii) changes in the product mixin existing manufacturing units provided in the Schedule beyondthe specified range. [Para 6] [547-G-H; 548-G-H]

2. In order to secure an EC, the project proponent mustsubmit an application in the manner set out in Form 1 andSupplementary Form 1A (if applicable) of the EIA Notification.

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AClause (ii) of paragraph 2 of the EIA Notification requires theproject proponent to secure an EC from the relevant regulatoryauthority prior to undertaking any “expansion” of an existingproject. Paragraph 7(ii) further stipulates that all applications foran EC in cases of “expansion” resulting in the increase ofBproduction capacity or lease area beyond the capacity/areastipulated in the previous EC shall be made in the manner setout in Form 1 or 1A (as applicable). The appellant’s applicationin Form 1 acknowledges that the project fell under entry 8(a) ofSchedule 1 of the EIA Notification. Entry 8 deals with ‘Building and Construction projects having a built-up area of or greaterCthan 20,000 square metres but less than 1,50,000 square metres.’In applying for the original EC, the appellant submitted anapplication in Form 1 as required under the provisions of theEIA Notification. The total construction area identified in theappellant’s Form 1 was 32,395.17 square metres. However, inDSeptember 2013, the appellant informed the second respondentof an increase by 8,085.71 square metres as a result of whichthe total construction area of the project would be 40,480.88square metres. [Paras 7, 8] [549-B-G-H; 550-A-D-E]

3.1 Clause (ii) of paragraph 2 of the EIA NotificationEstipulates that a project proponent shall require an EC prior tothe start of construction in the case of an “expansion”. Clause(ii) uses the phrase “expansion…beyond the limits specified forthe concerned sector”. A plain reading of the second half ofclause (ii) indicate that it applies to cases where a project wasFinitially below the threshold limits stipulated in the Schedule butafter the proposed expansion, would breach the threshold limits.However, clause (ii) of paragraph 2 must be read with paragraph7(ii) of the EIA Notification. Paragraph 7(ii) says that even afterobtaining an EC if the project is expanded beyond the limits forwhich the prior EC was obtained, a fresh application would needGto be made even if the expansion is within upper the limitprescribed in the Schedule. [Paras 12, 13] [552-H; 553-A-F]

3.2 If clause (ii) of paragraph 2 does not cover a casewhere the expansion is within the limits stipulated by theSchedule, a project proponent may incrementally keepH

increasing the size of the project area over time resulting in asignificant increase in the project size without an assessment ofthe environmental impact resulting from the expansion. Suchan outcome would defeat the entire scheme of the EIANotification which is to ensure that any new or additionalenvironmental impact is assessed and certified by the relevantregulatory authorities. In the instant case, the lower limit of Entry8(a) of the Schedule is a built up area of 20,000 square metresand the upper limit is 1,50,000 square metres. It cannot bedoubted that the environmental impact of a construction of1,50,000 square metres is drastically more than construction of20,000 square metres. If the appellant’s argument is acceptedin totality, a project proponent could potentially secure an ECfor constructing 20,000 square metres and by ‘amendment’steadily increase the area of construction up to 1,50,000 squaremetres without submitting an updated Form 1 or any substantivereview by the SEAC. [Para 14] [553-G-H; 554-A-B]

4. In a case where the text of the provisions requiresinterpretation, this Court must adopt an interpretation which isin consonance with the object and purpose of the legislation ordelegated legislation as a whole. The EIA Notification wasadopted with the intention of restricting new projects and theexpansion of new projects until their environmental impact couldbe evaluated and understood. It cannot be disputed that as thesize of the project increases, so does the magnitude of theproject’s environmental impact. This Court cannot adopt aninterpretation of the EIA Notification which would permit,incrementally or otherwise, project proponents to increase theconstruction area of a project without any oversight from theExpert Appraisal Committee or the SEAC, as applicable. It istrue that there may exist certain situations where the expansionsought by a project proponent is truly marginal or theenvironmental impact of such expansion is non-existent.However, it is not for this Court to lay down a bright-line testas to what constitutes a ‘marginal’ increase and what constitutesa material increase warranting a fresh Form 1 and scrutiny bythe Expert Appraisal Committee. If the government in itswisdom were to prescribe that a one-time ‘marginal’ increase A

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A(e.g. 5% or 10%) in project size, within the threshold limitstipulated in the Schedule, could be subject to a lower standardof scrutiny without diluting the urgent need for environmentalprotection, conceivably this Court may give effect to such aprovision. This would be subject to any challenge on the groundBof their being a violation of the precautionary principle. However,as the EIA Notification currently stands, an expansion within thelimits prescribed by the Schedules would be subject to theprocedure set out in paragraph 7(ii). [Para 16] [556-D-H; 557-A]

5. At the time of the second increase, the total constructionCarea of the appellant’s project was enlarged from 32,395.17square metres to 40,480.88 square metres. As a result of theexpansion, the appellant constructed sixteen additional flats. Theappellant did not comply with the procedure set out underparagraph 7(ii) of the EIA Notification but rather sought anD‘amendment’ to the EC. The third respondent did not requirethe appellant to submit an updated Form 1 nor was the proposalprocessed and evaluated by the fourth respondent. The‘amendment’ to the EC dated 13 March 2014 did not discussthe potential environmental impact of the increase inEconstruction area, but merely recorded that the construction areastood at 40,480.88 square metres. The procedure set out underparagraph 7(ii) of the EIA Notification exists to ensure thatwhere a project is expanded in size, the environmental impacton the surrounding area is evaluated holistically considering allthe relevant factors including air and water availability andFpollution, management of solid and wet waste and the urbancarrying capacity of the area. This was not done here. It was notopen to the third respondent to grant an ‘amendment’ to the ECwithout following the procedure set out in paragraph 7(ii).Further, as on the date of the impugned order, construction at the project site had already been completed. By completing theGconstruction of the project, the appellant denied the third andfourth respondents the ability to evaluate the environmentalimpact and suggest methods to mitigate any environmentaldamage. The NGT has already directed the appellant to depositRs. One crore and has set up an expert committee to evaluateHthe impact of the appellant’s project and suggest remedial measures. In view of these circumstances, the directions of theNGT are upheld and the committee is directed to continue itsevaluation of the appellant’s project so as to bring itsenvironmental impact as close as possible to that contemplatedin the EC dated 2 May 2013 and also suggest the compensatoryexaction to be imposed on the appellant. [Paras 17, 18] [557-B-H; 558-A]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2435of 2019.

From the Judgment and Order dated 11.02.2019 of the NationalGreen Tribunal, Principal Bench, New Delhi in Appeal No. 122 of 2018(Earlier Appeal No. 09 of 2014.

Mukul Rohatgi, Sr. Adv., Kunal Tandan, Pranaya Goyal, AmanRaj Gandhi, Nikhil Rohatgi, Abhishek Sharma, Ms. Sanjana Arora,Ms. Richa Saudilya, Ms. Narayani Bhattacharyya, Advs. for theAppellant.

Aditya Pratap, Munawwar Naseem, Chirag M. Shroff,Ms. Mahima C. Shroff, Ms. Yashika Verma, Riya Thomas, Advs. forthe Respondents.

The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, J.

1. The present Civil Appeal arises from an order dated 11February 2019 of the Principal Bench of the National Green Tribunal[1].In its order, the NGT held that the increase in the total constructionarea of the appellant’s project was an “expansion” under a notification(bearing number S.O. 1533) dated 14 September 2006[2] of the Ministryof Environment and Forests. The NGT found that the appellant hadundertaken an “expansion” as set out in Paragraph 2 of the EIANotification without complying with the regulatory procedure prescribed.The appellant was directed to deposit an amount of Rupees one crorewith the Central Pollution Control Board[3]. Noting that the constructionat the project site had been completed, the NGT appointed a five-member expert committee to study the impact of the appellant’sexpanded project and to suggest remedial measures.

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AThe facts

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AThe facts

2. The appellant is the project proponent of a residentialredevelopment, called ‘Oriana Residential Project’ situated at CTS no646, 646 (Pt) Gandhinagar, Bandra (East), Mumbai 400050. On 8 June2010 the appellant received a Commencement Certificate to carry outBthe development and erect a building situated at the project property.The appellant began construction. When the construction commenced,the total construction area was 8,720.32 square metres. The ambit ofthe project was expanded, and the constructed area was increased to32,395.17 square metres. Under the EIA Notification, an EnvironmentalCClearance[4] was necessary if the total construction area exceeded20,000 square metres. Hence, the appellant applied for an EC underthe EIA Notification.

3. The fourth respondent, the State Level Expert AppraisalCommittee for Maharashtra[5] recommended the grant of an EC for theDproject. On 2 May 2013 the third respondent, the State LevelEnvironment Impact Assessment Authority for Maharashtra[6], based onthe recommendations of the SEAC granted an EC. It is not in disputethat at the time when the EC dated 2 May 2013 was granted, the totalconstruction area of the project was 32,395.17 square metres. The grantof the EC was conditional on the appellant obtaining a ‘consent forEestablishment’ from the Maharashtra Pollution Control Board under theAir (Prevention and Control of Pollution) Act 1981 and the Water(Prevention and Control of Pollution) Act 1974.

4. By a letter dated 24 September 2013, the appellant informedthe Environment Department of the Government of Maharashtra, theFsecond respondent, that the construction area was being furtherincreased by 8,085.71 square metres, as a result of which the totalconstruction area of the project would stand enhanced to 40,480.88square metres. In its letter, the appellant sought an ‘amendment’ to theEC dated 2 May 2013 by the third respondent to reflect the increaseGin the total construction area. On 13 March 2014, the third respondentgranted an ‘amendment’ to the EC dated 2 May 2013 on the groundthat there was only a “marginal increase in built up and construction 4 EC

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KEYSTONE REALTORS PVT. LTD. v SHRI ANILV THARTHARE [DR. DHANANJAYA Y CHANDRACHUD, J.]

area”. The third respondent noted the changes in the specification ofthe project as follows:

5. The first respondent, claiming to be a resident of MIG Colony,Gandhinagar, Bandra East, Mumbai, challenged the grant of theamended EC dated 13 March 2014 before the Pune Bench of the NGT.In response, the appellant filed two applications, challenging the standingof the first respondent and contending that the challenge was barredby limitation. By an order dated 4 May 2016, the Pune Bench of theNGT rejected the applications questioning the maintainability of theproceedings and setting up the bar of limitation. The appellant filed awrit petition before the High Court of Judicature at Bombay to challengethe decision of the Pune Bench of the NGT. The Bombay High Court,allowing the writ petition held by an order dated 12 August 2016, thatthe appeal was not maintainable at the behest of the first respondent,and the challenge against the grant of the amended EC dated 13 March2014 was barred by limitation. By an administrative order dated 31 July2018, the dispute was transferred from the Pune Bench of the NGT tothe Principal Bench which heard the parties and delivered the impugnedorder.

Relevant clauses of the EIA Notification

Relevant clauses of the EIA Notification

6. The present dispute raises important questions regarding theinterpretation the EIA Notification. The EIA Notification seeks to ensurethe protection and preservation of the environment during the executionof new projects and the expansion or modernisation of existing projects.It imposes restrictions on the execution of new projects and on theexpansion of existing projects, until their potential environmental impacthas been assessed and approved by the grant of an EC. Paragraph 2of the EIA Notification reads thus:

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A“2. Requirement for prior Environmental Clearance (EC):- The following projects or activities shall require priorenvironmental clearance from the concerned regulatory authority,which shall hereinafter be referred to as the Central Governmentin the Ministry of Environment and Forests for matters fallingunder Category ‘A’ in the Schedule and at State level the StateBEnvironment Impact Assessment Authority (SEIAA) for mattersfalling under Category ‘B’ in the said Schedule, before anyconstruction work, or preparation of land by the projectmanagement except for securing the land, is started on the projector activity:

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(i) All new projects or activities listed in the Schedule tothis notification;

(ii) Expansion and modernisation of existing projectsor activities listed in the Schedule to thisnotification with addition of capacity beyond theDlimits specified for the concerned sector, that is,projects or activities which cross the thresholdlimits given in the Schedule after expansion ormodernisation;

(iii) Any change in product – mix in an existingEmanufacturing unit included in Schedule beyond thespecified range.”

The Schedule to the EIA Notification classifies potential projectsFinto Category ‘A’ and Category ‘B’ based on their size and potentialenvironmental impact. Category ‘A’ projects require project proponentsto secure an EC from the Ministry of Environment, Forests and ClimateChange. Category ‘B’ projects require project proponents to secure anEC from the SEIAA, based on the recommendations of the SEAC.GWhere a project falls within the parameters stipulated in the Schedule,paragraph 2 of the EIA Notification provides that no construction workshall begin unless an EC is granted in regard to three types of activity:(i) new projects or activities provided in the Schedule, (ii) expansion ormodernisation of existing projects or activities provided in the Schedule,and (iii) changes in the product mix in existing manufacturing unitsHprovided in the Schedule beyond the specified range. The present dispute raises questions as to how the second type of activity, the“expansion” of existing projects, should be construed under the EIANotification.

7. In order to secure an EC, the project proponent must submitan application in the manner set out in Form 1 and Supplementary Form1A (if applicable) of the EIA Notification. Under paragraph 7(i) of theEIA Notification, the project proponent must also submit a pre-feasibilityreport. However, in the case of projects under item 8 of the Schedule,only a conceptual plan is required to be submitted. Paragraph 7(ii) ofthe EIA Notification states that:

“7(ii) Prior Environmental Clearance (EC) process forExpansion or Modernisation of Change of product mix inexisting projects:

All applications seeking prior environmental clearance forexpansion with increase in the production capacity beyondthe capacity for which prior environmental clearance hasbeen granted under this notification or with increase ineither lease area or production capacity in the case of miningprojects or for the modernisation of an existing unit with increasein the total production capacity beyond the threshold limitprescribed in the Schedule to this notification through change inprocess and or technology or involving a change in the productmix shall be made in Form 1 and they shall be consideredby the concerned Expert Appraisal Committee or StateLevel Expert Appraisal Committee within sixty days, whowill decide on the due diligence necessary includingpreparation of EIA and public consultation and the applicationshall be appraised accordingly for grant of environmentalclearance.”

Clause (ii) of paragraph 2 of the EIA Notification requires theproject proponent to secure an EC from the relevant regulatoryauthority prior to undertaking any “expansion” of an existing project.Paragraph 7(ii) further stipulates that all applications for an EC in casesof “expansion” resulting in the increase of production capacity or leasearea beyond the capacity/area stipulated in the previous EC shall bemade in the manner set out in Form 1 or 1A (as applicable).

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8. The appellant’s application in Form 1 acknowledges that theproject fell under entry 8(a) of Schedule 1 of the EIA Notification. Entry8 deals with ‘Building and Construction projects having a built-up areaof or greater than 20,000 square metres but less than 1,50,000 squaremetres.’ Entry 8 of the Schedule to the EIA Notification is as follows:

IssueD

9. In applying for the original EC, the appellant submitted anapplication in Form 1 as required under the provisions of the EIANotification. The total construction area identified in the appellant’s Form1 was 32,395.17 square metres. However, in September 2013 theappellant informed the second respondent of an increase by 8,085.71square metres as a result of which the total construction area of theEproject would be 40,480.88 square metres. In seeking an ‘amendment’to the EC dated 2 May 2013 the appellant did not submit an updatedForm 1. Further, the ‘amendment’ to the EC was granted by the SEIAAwithout the recommendations of the SEAC. The issue before this Courtis whether the ‘amended’ EC dated 13 March 2014 granted by theSEIAA without following the procedure stipulated in paragraph 7(ii) ofFthe EIA Notification is valid.

Submissions

10. Mr Mukul Rohatgi, learned Senior Counsel appearing onbehalf of the appellant submitted that:

(i) When construction began, the total construction area ofthe appellant’s project was 8,720.32 square metres. Asthe EIA Notification requires projects with a total builtup area of or more than 20,000 square metres to procurean EC prior to the start of construction, no EC wasrequired before construction of the appellant’s projectcommenced; G

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(ii) Pursuant to the first increase, when the appellant’sproject crossed the 20,000 square metre thresholdprovided for in the EIA Notification, the appellantsubmitted a Form 1 and was granted a valid EC dated2 May 2013 by the third respondent; A

(iii) Pursuant to the second increase, the built up area of theBappellant’s project only marginally increased by 8,085.71square metres to a total construction area of 40,480.88square metres, which is within the upper limit of 1,50,000square metres prescribed by entry 8(a) of the Scheduleto the EIA Notification. Therefore, the second increasewas not an “expansion” within the meaning of clauseC(ii) of paragraph 2 of the EIA Notification and no freshForm 1 or EC was required at the time of the secondincrease;

(iv) Clause (ii) of paragraph 2 only applies to situationswhere the project crosses the lower or upper thresholdDlimits stipulated in the Schedule. Any increase inproduction capacity or construction area within the limitsset out in the Schedule would not constitute an“expansion” within the meaning of Clause (ii) ofparagraph 2 and does not require compliance with theEprocedure under paragraph 7(ii) of the EIA Notification;

(v) The increase in the appellant’s project is only marginaland does not have an adverse impact on theenvironment;

(vi) The SEIAA applied its mind to the appellant’s requestfor an ‘amendment’; noted that the increase inconstruction area was only marginal and issued anamendment to the original EC dated 2 May 2013; and F

(vii) The NGT had no basis to impose the fine of Rupeesone crore on the appellant.

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11. Joining issue with the above submissions, Mr Aditya Pratap,learned counsel appearing on behalf of the first respondent submittedthat:

(i) Under clause (ii) of paragraph 2 read with paragraph 7(ii) of the EIA Notification, any expansion beyond the H

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“threshold limit” requires a fresh EC. The appellant’sproject had crossed the threshold limit of 20,000 squaremetres and the second increase of 8,085.71 squaremetres constituted an ‘expansion beyond the thresholdlimit’ and hence required a fresh EC;

(ii) Once a project breaches the lower threshold limit setout in the Schedule to the EIA Notification, anyexpansion or modernisation, even within the upperthreshold set out in the Schedule, will require thesubmission of a fresh Form 1 and the matter to be placedbefore the Expert Appraisal Committee or the SEAC,as applicable in accordance with paragraph 7(ii) of theEIA Notification; B

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(iii) Adopting the appellant’s interpretation of clause (ii) ofparagraph 2 would defeat the object and purpose of theEIA Notification as a whole. It would allow projectproponents to incrementally increase the constructionarea and over time significantly impinge on theenvironmental impact of the project without seeking afresh EC; D

(iv) If the law prescribes an act to be done in a particularmanner, it must be done only in that manner and no other.Under paragraph 7(ii) of the EIA Notification, it wasincumbent on the SEIAA to place the matter before theSEAC for appraisal and recommendations; and E

(v) The EIA Notification is an operationalisation of theprecautionary principle, which forms a part of theenvironmental law of India. The EIA Notification mustbe read in a manner which gives effect to theprecautionary principle.

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Interpreting paragraphs 2 and 7G

12. The central controversy between the parties to the presentdispute is the manner in which paragraphs 2 and 7 of the EIANotification should be interpreted. Clause (ii) of paragraph 2 of the EIANotification stipulates that a project proponent shall require an EC priorto the start of construction in the case of an “expansion”. Clause (ii)Huses the phrase “expansion…beyond the limits specified for the concerned sector”. The first respondent sought to lay emphasis on thisconstruction to argue that any expansion beyond the lower limitstipulated in the Schedule would attract the requirement of a prior ECunder paragraph 2. However, the above language in clause (ii) is furtherqualified by the phrase “that is, projects or activities which cross thethreshold limits given in the Schedule afterexpansion or modernisation.”A plain reading of the second half of clause (ii) would indicate that itapplies to cases where a project was initially below the threshold limitsstipulated in the Schedule but after the proposed expansion, wouldbreach the threshold limits. Clause (ii) of paragraph 2 of the EIANotification therefore would not appear to cover a case where a projecthad already crossed the lower threshold limit set out in the Scheduleand the expansion does not cross the upper limit stipulated by theSchedule.

13. However, clause (ii) of paragraph 2 must be read withparagraph 7(ii) of the EIA Notification. Paragraph 7(ii) lays down theexact procedure to be followed by a project proponent in the case ofan expansion. Two crucial points must be noted with respect toparagraph 7(ii). First, it uses the phrase, “expansion with increase inproduction capacity beyond the capacity for which prior environmentclearance has been granted”. Second, the qualifying language referringto breaching the threshold limits “after expansion” is absent. An “expansion” can occur even after the grant of an EC when the projectfirst crossed the lower limit stipulated in the threshold and it is notnecessary for the project to breach the upper limit after the expansion.Therefore, a close reading of paragraph 7(ii) would support theinterpretation put forth by the first respondent – that even after obtainingan EC if the project is expanded beyond the limits for which the priorEC was obtained, a fresh application would need to be made even ifthe expansion is within upper the limit prescribed in the Schedule.

14. The dangers effectively articulated by the learned counselfor the first respondent are real. If clause (ii) of paragraph 2 does notcover a case where the expansion is within the limits stipulated by theSchedule, a project proponent may incrementally keep increasing thesize of the project area over time resulting in a significant increase inthe project size without an assessment of the environmental impactresulting from the expansion. Such an outcome would defeat the entirescheme of the EIA Notification which is to ensure that any new oradditional environmental impact is assessed and certified by the relevant AB

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Aregulatory authorities. In the present case, the lower limit of Entry 8(a)of the Schedule is a built up area of 20,000 square metres and the upperlimit is 1,50,000 square metres. It cannot be doubted that theenvironmental impact of a construction of 1,50,000 square metres isdrastically more than construction of 20,000 square metres. If theappellant’s argument is accepted in totality, a project proponent couldBpotentially secure an EC for constructing 20,000 square metres and by‘amendment’ steadily increase the area of construction up to 1,50,000square metres without submitting an updated Form 1 or any substantivereview by the SEAC.

15. We note that subsequent to the EIA Notification beingCpublished in 2006, a draft notification was issued on 19 January 2009.[7]The draft notification proposed the following amendment:

“in para 2 [of the EIA Notification], after sub-para (iii), thefollowing shall be inserted; namely:- DHowever modernisation or expansion proposals without anyincrease in pollution load, and, or without any additional waterand or land requirement are exempted from the provisions of thisNotification:

Provided that, a self certification, stating that the proposals shallEnot involve any additional pollution load, waste generation or waterrequirement, be submitted to the regulatory authority by theproject proponent.”

Prior to adopting the draft notification, hearings were conductedand written comments were solicited from various stakeholders including:F(i) Central Ministries and Departments, (ii) State Governments and theirAgencies, (ii) Industries and their Associations and (iv) Civil Societyincluding NGOs. A committee was constituted by the Ministry ofEnvironment and Forests, Government of India which published a reportin October 2009. The committee specifically recommended against theadoption of the above amendment, noting:G“The amendments propose to exempt modernisation andexpansion of projects based on a self certification by projectauthorities that there is no increase in pollution load. It is totallyunacceptable that the modernisation and expansion of H7 Notification S.O. 195 (E) dated 19 January 2009.

H7 Notification S.O. 195 (E) dated 19 January 2009.

projects be removed from the environmental clearanceregime, with or without the requirement of selfcertification. There are several industries operating in criticallypolluted areas or are in violation of their environmental clearanceconditions, which need to be considered before the expansion ofa project is considered. What is to be considered is not justwhether there is an increase in pollution load but also the currentimpact of the project and its compliance with environmentalclearance conditions. We can provide clear examples whereinthe non-compliance of the clearance conditions has not beenconsidered while granting clearance for expansion which includesadding new components to the existing industrial operations etc.This has allowed several projects to continue their activities andexpand despite blatant non compliance. Finally, it is only withindustrial, thermal power and other such related operations thatone can decide on parameters of pollution. Developmentprojects like highways, airports and other infrastructureprojects which seek to expand might have a detrimentalimpact due to factors such as change in land use (i.e.construction over a wetland, grassland or agricultural landetc). Despite this, the project proponent can certify that there isno change in pollution load and hence expansion is to be allowed.The current process seeks a detailed EIA report todetermine whether impacts can be mitigated. If theamendment is brought into force, it will simply do awaywith this critical and necessary step in the environmentalclearance process. Therefore, this amendment should not beallowed.

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The draft notification takes a myopic view of environmental andsocial impact of modernisation and expansion. Anymodernisation/expansion projects will necessarily entailincrease in production, increase in transportation, increasein pressure on the local infrastructure and local naturalresources and increase in the pollution load during theconstruction phase. So, even if a modernisation/expansion doesnot lead to an increase in the pollution load or water or landrequirement within the factory premises during the operation A

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Aphase, it will lead to an increase in environmental and socialimpact outside the premise.”

The draft amendment was not adopted in subsequent amendmentsto the EIA Notification. We find considerable merit in the observationsBof the committee that the requirement of an EC at the time of expansionforms a critical step in the environmental clearance regime. Accordingto the committee, it assists officials not just in evaluating and mitigatingany adverse impact caused by the expansion but also in assessingwhether the project proponent is in compliance with their existingCobligations. Crucially, any form of expansion necessarily puts a strainon the local environment and infrastructure and needs to be carefullyevaluated in a holistic manner.

16. In a case where the text of the provisions requiresinterpretation, this Court must adopt an interpretation which is inDconsonance with the object and purpose of the legislation or delegatedlegislation as a whole. The EIA Notification was adopted with theintention of restricting new projects and the expansion of new projectsuntil their environmental impact could be evaluated and understood. Itcannot be disputed that as the size of the project increases, so doesthe magnitude of the project’s environmental impact. This Court cannotEadopt an interpretation of the EIA Notification which would permit,incrementally or otherwise, project proponents to increase theconstruction area of a project without any oversight from the ExpertAppraisal Committee or the SEAC, as applicable. It is true that theremay exist certain situations where the expansion sought by a projectFproponent is truly marginal or the environmental impact of suchexpansion is non-existent. However, it is not for this Court to lay downa bright-line test as to what constitutes a ‘marginal’ increase and whatconstitutes a material increase warranting a fresh Form 1 and scrutinyby the Expert Appraisal Committee. If the government in its wisdomwere to prescribe that a one-time ‘marginal’ increase (e.g. 5% or 10%)Gin project size, within the threshold limit stipulated in the Schedule, couldbe subject to a lower standard of scrutiny without diluting the urgentneed for environmental protection, conceivably this Court may giveeffect to such a provision. This would be subject to any challenge onthe ground of their being a violation of the precautionary principle.HHowever, as the EIA Notification currently stands, an expansion within the limits prescribed by the Schedules would be subject to the procedureset out in paragraph 7(ii).

17. At the time of the second increase, the total construction areaof the appellant’s project was enlarged from 32,395.17 square metresto 40,480.88 square metres. As a result of the expansion, the appellantconstructed sixteen additional flats which were sold at the prevailingmarket rate. The appellant did not comply with the procedure set outunder paragraph 7(ii) of the EIA Notification but rather sought an‘amendment’ to the EC. The third respondent did not require theappellant to submit an updated Form 1 nor was the proposal processedand evaluated by the fourth respondent. The ‘amendment’ to the ECdated 13 March 2014 does not discuss the potential environmental impactof the increase in construction area, but merely records that theconstruction area now stands at 40,480.88 square metres. Theprocedure set out under paragraph 7(ii) of the EIA Notification existsto ensure that where a project is expanded in size, the environmentalimpact on the surrounding area is evaluated holistically considering allthe relevant factors including air and water availability and pollution,management of solid and wet waste and the urban carrying capacityof the area. This was not done in the case of the appellant’s project. Itwas not open to the third respondent to grant an ‘amendment’ to theEC without following the procedure set out in paragraph 7(ii) of theEIA Notification.

18. We further note that as on the date of the impugned orderconstruction at the project site had already been completed. A coretenet underlying the entire scheme of the EIA Notification is thatconstruction should not be executed until ample scientific evidence hasbeen compiled so as to understand the true environmental impact of aproject. By completing the construction of the project, the appellantdenied the third and fourth respondents the ability to evaluate theenvironmental impact and suggest methods to mitigate anyenvironmental damage. At this stage, only remedial measures may betaken. The NGT has already directed the appellant to deposit Rupeesone crore and has set up an expert committee to evaluate the impactof the appellant’s project and suggest remedial measures. In view ofthese circumstances, we uphold the directions of the NGT and directthat the committee continue its evaluation of the appellant’s project soas to bring its environmental impact as close as possible to that AB

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Acontemplated in the EC dated 2 May 2013 and also suggest thecompensatory exaction to be imposed on the appellant.

19. The appeal is dismissed. There shall be no order as to costs.

20. Pending application(s), if any, shall stands disposed of.

B

Devika Gujral

Appeal dismissed.

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