Serious Doubt About NGT's Jurisdiction To Direct Prosecution Under PMLA: Supreme Court

The Supreme Court recently expressed doubt over the National Green Tribunal's (NGT) jurisdiction to direct prosecution under the Prevention of Money Laundering Act, 2002 (PMLA).“There is a serious doubt about the jurisdiction of the NGT to direct prosecution of an individual under the PMLA. However, we are not going into this question, as the direction contained in paragraph 230 will have to be even otherwise set aside”, the Court observed.A bench of Justice Abhay Oka and Justice Ujjal Bhuyan and set aside NGT's direction to initiate proceedings under PMLA against a company in a case concerning environmental pollution in Kanpur Dehat, Uttar Pradesh emphasizing that proceedings under the PMLA cannot be initiated in the absence of a registered scheduled offence.“In the facts of the case, there is neither a registration of First Information Report for any scheduled offence under the Prevention of Money Laundering Act, 2002 (for short "the PMLA") nor any complaint is filed alleging the offences under the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Environment (Protection) Act, 1986. In the absence of existence of the scheduled offence, the proceedings under the PMLA cannot be initiated”, the Court held. The Court partially allowed the appeal of Waris Chemicals Pvt. Ltd., setting aside aspects of an environmental compensation order issued by the National Green Tribunal (NGT) for pollution due to hazardous chromium waste disposal in Kanpur Dehat, Uttar Pradesh.FactsNGT on September 27, 2019, directed the Uttar Pradesh Pollution Control Board (UPPCB) to determine environmental compensation for Waris Chemicals Pvt. Ltd. and other units accused of polluting the groundwater through the improper storage of hazardous chromium waste in the village of Khan Chandpur, Rania, Kanpur Dehat. The PCB, after receiving the NGT's directive, conducted an assessment and found that a total of 62,225 metric tons (MT) of waste had been dumped at the site. The PCB applied a formula to calculate the compensation, which included dividing the total waste amount among various units, including Waris Chemicals, based on their production capacities. The Regional Officer of the PCB, after receiving approval from the board, issued an order on November 19, 2019, fixing the environmental compensation.Waris Chemicals contested the PCB's order in an appeal before the NGT. In its judgment, the NGT expressed disapproval of the PCB's methodology. The Tribunal highlighted that Waris Chemicals started its operations in 1995, yet the PCB had considered waste dumped since 1976 to determine the company's liability. The NGT found the proportional allocation of the entire waste quantity to be erroneous and not reflective of the actual contribution of Waris Chemicals to the pollution.Subsequently, the NGT recalculated the environmental compensation specifically for the waste generated by Waris Chemicals, which was quantified at 5,643.75 MT, resulting in a compensation amount of Rs. 25.39 crores. The NGT also held the company liable under the Prevention of Money Laundering Act, 2002 (PMLA), asserting that the company violated provisions of the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981, and the Environment (Protection) Act, 1986.Waris Chemicals then approached the Supreme Court, challenging the NGT's findings and the environmental compensation imposed.Supreme Court's ObservationsThe Supreme Court agreed with the appellant's contention that the PCB's methodology in calculating the compensation was flawed. The apex court noted that the NGT should have remanded the matter back to the PCB for a fresh determination of the compensation instead of recalculating it itself.The Supreme Court observed that no complaints under the Water Act, Air Act, or Environment Protection Act were filed at the time when the NGT issued its judgment.The Supreme Court referred to Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., highlighting that the offense under Section 3 of the PMLA is contingent on the illegal gain of property from criminal activity related to a scheduled offense. Since no scheduled offense was registered or pending, the court ruled that the PMLA could not be invoked against Waris Chemicals.Consequently, the Supreme Court set aside the NGT's findings in paragraphs 230 and 232 of its judgment, which pertained to the action under PMLA and the earlier computed compensation. The court directed the UPPCB to undertake a fresh exercise to determine the environmental compensation in a lawful manner. Case no. – Civil Appeal No. 6398 of 2024Case Title – Waris Chemicals Pvt. Ltd. v. Uttar Pradesh Pollution Control BoardCitation : 2025 LiveLaw (SC) 87Click Here To Read/Download Order

Serious Doubt About NGT's Jurisdiction To Direct Prosecution Under PMLA: Supreme Court

Amisha Shrivastava

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