Penalty and Compensation. Supreme Court Judgement 04/08/2025. Powers of Pollution Control Boards
In the matter of C.A. Nos. 757-750 of 2013 Delhi Pollution Control Board vs. Lodhi Property Co. Ltd. with C.A. Nos. 1799-2011 of 2013 the Honourable Supreme Court on 04-08-2025 held that the State Pollution Control Boards can only initiate action for compensation under the Air and Water Acts after determining that some form of environmental damage or harm has been caused. Punitive action, as different from restitution can only be imposed through the procedures prescribed in chapter VII of the Water Act and Chapter VI of the Air Acts.
Further the Honourable Supreme Court has directed that the power to impose or collect restitutionary or compensatory damages or the requirement to furnish bank guarantees as an ex-ante measure under Section 33A and 31A of the Water and Air Acts shall be enforced only after detailing the principle and procedure incorporating basic principles of natural justice in the subordinate legislation.
It has been held by the Honourable Supreme Court that punitive actions of fine or imprisonment for violations as provided in Chapter VII of the Water Act and Chapter VI of the Air Act are different from directions for payment of restitutionary and compensatory damages or as an ex-ante measure towards potential environmental damage. Punitive Action can only be taken through the procedures prescribed under Chapters VII and VI of the Water and Air Acts.
The Honourable Supreme Court (Para 30) of its judgement has only held that the State Board cannot impose environmental damages in case of every contravention or offence under the Water Act and Air Act. The Boards may only initiate action (for compensation) under section 33A of the Water Act and Section 31A of the Air Act after determining that some form of environmental damage or harm has been caused by the erring entity or is so imminent so as to warrant initiation of issue of directions. It has been held at para 19 that Indian Law distinguishes between the imposition of a monetary penalty or fine which constitutes punitive action following a determinization of guilt after adherence to the statutorily prescribed procedure and the payment of damages for restitution or remediation as compensatory relief. Boards have been held to have the power to direct the payment of environmental damages. (Para 33 of judgement). It has also been held (Para 35) that, in order to ensure transparency, necessary subordinate legislation in the form of rules and regulations must be notified. The Honourable Supreme Court has also directed that the guidelines prescribed by the CPCB may be reviewed thoroughly and issued as rules and regulations.
At para 38, the Honourable Supreme Court has directed that Show cause notices issued by Delhi Pollution Control Committee and set aside by earlier court orders will not be revived and if certain amounts have been collected on the basis of the said show cause notices they shall be returned by the Delhi Pollution Control Committee and of amounts are not deposited or collected, the Delhi Pollution Control Committee will not take any further action.
Orders of the Honourable Supreme Court passed on 04-08-2025 authorising the SPCB to impose penalty is still not in force.