No Nexus Between Company's Revenue & Amount Of Penalty For Environmental Damages : Supreme Court Disapproves NGT's Approach

The Supreme Court expressed disapproval of an order passed by the National Green Tribunal(NGT) which imposed penalty for environmental damages on a company based on its revenue.

The Court observed that there was no nexus between the revenue generation of the company and the ascertainment of penalty for violation of environmental laws.

The Court was hearing an appeal filed by a company against the NGT order which imposed a penalty of Rs.25 crores on it. The NGT passed this order on the reasoning that the revenue of the company ranged from 100 Crores to 500 Crores.

While setting aside this order, the bench comprising Justice BR Gavai and Justice KV Viswanathan flagged three main shortcomings in the NGT's approach. Firstly, there is a vast difference between Rs. 100 crores and Rs. 500 crores. Secondly, the NGT said that it took this information from the public domain and even then, there was no exact figure found out. Thirdly, the Court said that the revenue of the company was not a relevant consideration to fix penalty. Furthermore, the penalty was imposed without notice to the company.

"In any case, the generation of revenue would have no nexus with the amount of penalty to be ascertained for environmental damages...With deep anguish we have to say that the methodology adopted by the learned NGT for imposing penalty is totally unknown to the principles of law," the Court observed.

The Court also observed that it was the third order of the NGT that it came across on that day which was passed without following the principles of natural justice and due consideration.

On facts as well, the Court found that there were no violations on the part of the appellant.

Senior Advocate A.N.S. Nadkarni appeared for the appellant, Advocate Feroze Ahmad for Respondents No.1 to 13 and Adv Mukesh Verma for the Maharashtra Pollution Control Board

Case : BENZO CHEM INDUSTRIAL PRIVATE LIMITED v. ARVIND MANOHAR MAHAJAN & ORS.

Citation : 2024 LiveLaw (SC) 938

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