NGT Has No Power To Direct ED Probe Under PMLA : Supreme Court

The Supreme Court held that the National Green Tribunal has no jurisdiction to direct the Enforcement Directorate to launch investigation under the Prevention of Money Laundering Act against an entity.The bench of Chief Justice of India BR Gavai and Justice K Vinod Chandran set aside the direction of the NGT to the Enforcement Directorate to examine and take appropriate action under the Prevention of Money Laundering Act, 2002. In this regard, it cited Waris Chemicals (P) Ltd (2025) and stated that Section 3 of the PMLA is dependent on illegal gains of property as a result of criminal activity relating to a scheduled offence. Here, there is neither a FIR for any scheduled offence nor any complaint filed alleging such offences under various environmental protection statutes scheduled under PMLA.The judgment authored by Justice Vinod Chandran stated :"The NGT should act within the contours of the powers conferred on it which is Section 15 of the NGT Act of 2010. Though such power would be available to a Court constituted under the PMLA or to constitutional courts, it would not be available for exercise by the NGT, constituted to ensure effective and expeditious consideration of cases relating to environmental protection and conservation of forests and other natural resources including enforcement of any legal right and giving relief and compensation for damages to persons and properties. We hence set aside the direction issued to the Enforcement Directorate; but say nothing on whether there is an offence made out or not, which at this stage is not within our ken."Environmental compensation has no nexus with turnoverThe Court also reiterated its judgment in Benzo Chem Industrial (P) ltd, which held that the penalty to be imposed on a company for environmental pollution has no nexus with its turnover. It warned that the rule of law does not permit the State or its agencies to "extract a pound of flesh", even in environmental matters. Disapproving of the reliance upon turnover of the alleged polluter to compute environmental compensation, while citing Benzo Chem judgment, it struck down the imposition of compensation: "It was categorically held that generation of revenue, or its quantum, would have no nexus with the amount of penalty to be ascertained for environmental damages. The methodology adopted by the NGT for imposition of penalty was held to be totally unknown to any principle of law. We fully agree with the observation and add that rule of law does not permit State or its agencies to extract a 'pound of flesh', even in environmental matters. Though in the present case there is an observation made that there was admitted turnover of Rs.550 crores; we still notice the absence of nexus between the turnover and the pollution alleged."In this case, the National Green Tribunal ("NGT") imposed a fine of Rs.50 crore on the appellant based on his turnover, for actively perpetrating environmental degradation and pollution as also extracting groundwater and releasing effluents into nearby tributaries of Ganga by engaging in metal art ware, glass art ware, thermocol blocks etc. It monitored the matter for three years and eventually disposed of it with certain directions. Another direction passed by the NGT was the closure of the divisions of the appellant, in which requisite steps were not taken to comply with prescribed standards. The Court also set this aside this direction, while agreeing that the NGT is within its limit to impose sanctions as mandated by the statute for failing to comply with statutory directions or those set by the Pollution Control Board. "We cannot for a moment dispute that if there is non-compliance of any of the statutory conditions or that imposed by the PCBs in mitigation of the unit specific pollution, then such action sanctioned by the statute could be taken, including notice for closure by the jurisdictional PCB. We are also convinced that there could be constant monitoring of the unit especially looking at the past violations. But, we are not convinced that having accepted the report of compliance, there was any warrant for a sweeping direction to close such of the divisions of the appellant which are falling short of the compliance. Reserving the right of the jurisdictional PCBs to proceed against any violation of statutory or other conditions imposed, the direction issued by the NGT has to be set aside and we do so."Before concluding, the Court had to express dismay at the lengthy judgment of the NGT referring to unnecessary laws without any relevance."Before we leave the matter, with some anguish, we cannot but indicate that application of mind is not proportionate to the number of pages. The impugned judgment deals elaborately with the environmental law, the numerous pollution prevention measures, the guidelines and publications issued by various States as also decisions in that regard. It also extracts the various reports filed by the Joint Committee, the interim orders of the...

NGT Has No Power To Direct ED Probe Under PMLA : Supreme Court

Gursimran Kaur Bakshi

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