PAHWA PLASTICS PVT. LTD & ANR. V. DASTAK NGO & ORS

COURT: The Supreme Court of India

CORAM: Justice Ms. Banerjee, Justice A.S. Bopanna

DATE OF JUDGEMENT: 25 March 2022

FACTS

Appellants Pahwa Plastics Pvt. Ltd. (Appellant No. 1) and Apcolite Polymers Pvt. Ltd. (Appellant No. 2) operated in Haryana, manufacturing and selling basic organic compounds such as formaldehyde.

The Appellants had applied for and received Consent to Establish and Operate qua their Units from the Haryana State Pollution Control Board (CTE, CTO, and HSPCB, respectively), but had not received an EC from the Ministry of Environment, Forests, and Climate Change (MoEF) in accordance with the Environmental Impact Assessment Notifications dated January 27, 1994 and September 14, 2006. (1994 EIA and 2006 EIA, respectively).

On March 14, 2017, the MoEF published a notification (2017 Notification) in the same vein as the 1994 EIA and 2006 EIA, which allowed organisations to apply for an ex – post facto EC if they had started, continued, or completed a project without first getting an EC. Following that, on March 23, 2020, the MoEF issued a draught notification (2020 Draft Notification) proposing that cases of violation be assessed by an Appraisal Committee with the goal of determining whether the project was built or operated on a site that was permissible under current laws and could be run sustainably under environmental norms with adequate environmental safeguards.

If the Appraisal Committee’s conclusions were negative, closure was to be recommended. If the Appraisal Committee determines that such a unit has been operating sustainably while adhering to environmental standards and providing adequate environmental safeguards, the unit will be given appropriate Terms of Reference (TOR), after which the procedure for obtaining an EC will be followed.

Following that, on November 10, 2020, the Haryana Government’s Department of Environment and Climate Change (Haryana Govt.) issued an order (HSPCB Order), stating that the HSPCB had discovered that industries (such as the Appellants) had been operating solely on the basis of CTEs and CTOs, when in fact, they also required ECs. As a result, the HSPCB revoked the earlier consents given to these industries. After such affected industries approached the Haryana Govt. and explained their problems, the Haryana Govt., through the HSPCB Order, allowed them to continue operating for another six months on the condition that they apply for ECs immediately.

Following that, the Appellants applied for ECs under the 2020 Order.

Dastak (Respondent No. 1), an NGO, filed O.A. No. 287 of 2020 with the NGT, appealing the HSPCB Order and requesting that the Appellants’ units be closed.

The NGT held in an order and judgement dated July 3, 2021 that the Appellants’ manufacturing units that lacked prior EC could not be allowed to operate, and that the Haryana government had no authority to waive the requirement for prior EC or to allow the units to operate without EC in exchange for compensation.

It’s worth noting that the MoEF released an office memorandum (2021 OM) on July 7, 2021, outlining the standard operating procedure for identifying and managing cases involving violations of the 2006 EIA, such as failing to obtain an EC prior to starting operations.

According to the OM for 2021, any request for EC would be evaluated on its own merits, with prospective effect, using proportionality principles and the premise that the polluter pays and is liable for the expenses of corrective measures.

ISSUE RAISED

Whether an industry employing approximately 8000 people that was set up with consent to establish and consent to operate from the relevant statutory authority and that has applied for ex post facto Environmental Clearance (EC) can be closed pending issuance of EC, even though the industry may not cause pollution and/or may be found to comply with the required pollution norms.

JUDGEMENT

The Court based its decision on the findings in Electrosteel Steels Limited v. Union of

India (Electrosteel Judgment), which stated that an industry that contributed significantly to the economy and created jobs should not be closed due to technicalities relating to obtaining ECs, and that the EP Act did not prohibit the issuance of ex – post facto ECs.

The Court did agree, that ex – post facto ECs should only be given in extraordinary circumstances, taking into account all relevant environmental conditions. When the negative consequences of refusing to grant ex – post facto approval outweigh the benefits of granting it, and the industry otherwise complies with its environmental obligations, such ex – post facto approval should be granted strictly and in accordance with the applicable Rules, Regulations, and/or Notifications.

Furthermore, the Court decided that any industry seeking post-facto EC could face a penalty based on the concept that the polluter pays and is liable for remedial costs.

In light of the foregoing, the Hon’ble Supreme Court of India held that a unit that was contributing to the country’s economy and providing livelihood to hundreds of people should not be closed down due to a technical irregularity of lack of prior environmental clearance, pending the issuance of an ex – post facto EC. Some concessions, including the provision of ex – post facto EC, are authorised under the law. However, such ex – post facto EC should not be granted in most cases, and it should not be assumed that it is available for the asking.

At the same time, regardless of the repercussions of discontinuing operations, ex – post facto cannot be refused with pedantic insistence.