Karnataka High Court Stays ₹12.69 Crore Demand Notice Issued By KPSCB Against Private Company Seeking Environmental Compensation
The Karnataka High Court recently granted interim protection to a private limited company engaged in real estate development by restraining the Karnataka State Pollution Control Board from taking any coercive steps to recover environmental compensation amounting to ₹12.69 crore, which had been levied by the Board.A Division Bench comprising Chief Justice Vibhu Bakhru and Justice C.M....
The Karnataka High Court recently granted interim protection to a private limited company engaged in real estate development by restraining the Karnataka State Pollution Control Board from taking any coercive steps to recover environmental compensation amounting to ₹12.69 crore, which had been levied by the Board.
A Division Bench comprising Chief Justice Vibhu Bakhru and Justice C.M. Poonacha passed the interim order while issuing notice to the respondents on the petition filed by M/s Ramky Estates and Farms Pvt. Ltd.
The counsel for the petitioner had relied on the decision of the Supreme Court in Delhi Pollution Control Committee v. Lodhi Property Co. Ltd., [2025 SCC OnLine SC 1601], wherein it had been held that Pollution Control Boards could impose and collect, as restitutionary and compensatory damages, fixed sums of money or require furnishing of bank guarantees as an ex-ante measure towards potential environmental damage in exercise of powers under Sections 33A and 31A of the Water and Air Acts.
It had also been held that the power to impose or collect such damages or to require bank guarantees as an ex-ante measure under Sections 33A and 31A of the Water and Air Acts would be enforceable only after detailing the principle and procedure incorporating basic principles of natural justice in the subordinate legislation.
The Bench observed that no subordinate legislation had been framed as yet. In that background, it held that the petitioner's contention that no compensation could be levied or collected at that stage warranted consideration. The Court therefore directed that no coercive steps be taken for recovery of the environmental compensation until the next date of hearing, February 2, 2026.
The petition had challenged the jurisdiction of the Karnataka State Pollution Control Board (“KSPCB”) to impose and recover a sum of ₹12.69 crore as “environmental compensation” by its demand notice dated 16.10.2025.
It had been claimed in the plea that the impugned demand was wholly without jurisdiction. According to the petitioner, none of the statutes or subordinate legislations enacted under the parent statutes administered by the Board—the Water (Prevention and Control of Pollution) Act 1974, the Air (Prevention and Control of Pollution) Act 1981, or the Environment (Protection) Act 1986—conferred any power upon a State Pollution Control Board to adjudicate, quantify, or recover monetary compensation.
It had further been submitted that the Board's functions were regulatory and preventive, and that any claim for “environmental compensation” lay exclusively before the National Green Tribunal under Section 15 of the NGT Act 2010.
It had been contended that the impugned notice satisfied none of the constitutional or statutory requirements, and that it was non-speaking, retrospective, disproportionate, and contrary to Article 265 and Article 300-A of the Constitution. It had also been argued that coercive recovery pursuant to the notice would cause irreparable prejudice and constitute unlawful deprivation of property.
The petition therefore, prayed for quashing or setting aside the impugned demand notice dated 16.10.2025 issued by the Regional Officer, KSPCB, Bengaluru, demanding payment of ₹12,69,60,000 as “environmental compensation.”
Case Title: M/s Ramky Estates and Farms Pvt Ltd AND State of Karnataka & ANR Case No: WP 34181/2025
Appearance: Advocate Angad Kamath for Petitioner
Advocate Mahesh Choudary for KSPCB