In a landmark judgment that redefines environmental accountability for corporations, the Supreme Court of India has established that larger companies must bear higher penalties for environmental damage, moving away from a uniform penalty approach. This significant ruling was delivered by a bench comprising Justices Dipankar Datta and Vijay Vishnoi, who emphasized that the scale of a company's operations directly correlates with its environmental impact.
Dismissal of Appeals Against NGT Orders
The court dismissed appeals filed by two real estate developers, Rhythm Country and Key Stone Properties, challenging penalties imposed by the National Green Tribunal (NGT). The NGT had levied a fine of Rs 5 crore on Rhythm Country and Rs 4.47 crore on Key Stone Properties for constructing residential and commercial projects in Pune without obtaining mandatory environmental clearances.
Rejection of Proportionality Arguments
Justice Datta firmly rejected the arguments put forth by the real estate firms, which claimed that the penalties were disproportionate. The bench clarified that the NGT Act empowers the tribunal to exercise discretion in determining compensation based on the severity of environmental harm, and such discretion is not arbitrary.
Linking Scale of Operations to Environmental Impact
The Supreme Court articulated a clear principle: "Bigger operations signify a bigger footprint." The judgment elaborated that larger-scale operations typically involve greater resource consumption, higher emissions, and increased waste generation, all of which contribute to heightened environmental stress.
Justice Datta stated, "In cases relating to protection of environment, linking a company's scale of operations—such as turnover, production volume, or revenue generation—to the environmental harm can be a powerful factor for determining compensation."
Corporate Responsibility and Profitability
The court underscored that companies that derive greater profits from their expansive operations should logically shoulder more responsibility for the environmental costs associated with their activities. This approach, according to the bench, sends a strong message that larger players must adhere to stricter environmental standards.
"If a company profits more from its scale, it is logical that it bears more responsibility for the environmental costs. Linking scale to impact sends a message that bigger players need to play by greener rules," the judgment emphasized.
Jurisdiction and Discretion of NGT
The Supreme Court also addressed concerns regarding the NGT's jurisdiction, affirming that the tribunal possesses the authority to impose substantial environmental damage compensation. The bench highlighted that the legislature, through the NGT Act, intentionally granted the tribunal the discretion to assess and grant relief based on the seriousness of environmental violations.
Rejection of Uniform Formula Argument
The appellants had argued that factors like turnover or project cost should not be used as metrics for determining environmental compensation. The court dismissed this contention, stating, "We are unable to accede to such a submission. Neither NGT Act nor the jurisprudence of this court calls for the adoption of a uniform formula for the quantification of environmental compensation."
This ruling sets a precedent for future environmental cases, ensuring that penalties are tailored to reflect the actual environmental footprint of corporate entities, thereby promoting greater ecological stewardship among India's largest businesses.
