PAHWA PLASTICS PVT. LTD & ANR. V. DASTAK NGO & ORS.1 [MARCH 25, 2022]
QUESTION OF LAW BEFORE HON'BLE SUPREME COURT OF INDIA
Whether an industry employing about 8000 workers which has been set up pursuant to consent to establish and consent to operate, as obtained from the concerned statutory authority and which has applied for ex post facto Environmental Clearance (EC), can be closed pending issuance of EC, even though such industry may not cause pollution and/or may be found to comply with the required pollution norms.
The Hon'ble Supreme Court of India has held that the Environment (Protection) Act, 1986 does not prohibit the issuance of ex – post facto environmental clearances. Further, the Hon'ble Supreme Court of India (reiterating its observations in Electrosteel Steels Limited v. Union of India2), has held that industries making significant economic contributions, along with providing livelihood to hundreds of people, which have been set up pursuant to requisite approvals from the concerned statutory authorities, do not constitute pollution hazards and have applied for ex – post facto environmental clearance, should not be closed down for the technical irregularity of want of such prior environmental clearance, pending the issuance thereof.
- Appellants - Pahwa Plastics Pvt. Ltd. (Appellant No. 1) and Apcolite Polymers Pvt. Ltd. (Appellant No. 2), carried on the business inter alia of manufacture and sale of basic organic chemicals, namely formaldehyde, in Haryana.
- The Appellants had applied, and had been granted, Consent to Establish and Consent to Operate qua their Units by the Haryana State Pollution Control Board (CTE, CTO, and HSPCB, respectively), but had not obtained an EC from the Ministry of Environment, Forests, and Climate Change (MoEF) in terms of the Environmental Impact Assessment Notifications dated January 27, 1994 and September 14, 2006 (1994 EIA and 2006 EIA, respectively).
- On March 14, 20173, the MoEF issued a notification in the same vein as the 1994 EIA and 2006 EIA (2017 Notification), which provided for grant of an ex – post facto EC for entities that had commenced, continued, or completed a project without obtaining an EC. Thereafter, on March 23, 2020, the MoEF issued a draft notification (2020 Draft Notification), which proposed that cases of violation would be appraised by an Appraisal Committee with a view to assess whether the project had been constructed or operated at a site which was permissible under prevailing laws and could be run sustainably on compliance of environmental norms with adequate environmental safeguards. Closure was to be recommended if the findings of such Appraisal Committee were in the negative. If the Appraisal Committee found that such a unit had been running sustainably upon compliance of environmental norms with adequate environment safeguards, the unit would be prescribed appropriate Terms of Reference (TOR), after which the procedure for grant of EC would follow.
- Subsequently, the Department of Environment and Climate Change of the Government of Haryana (Haryana Govt.), issued an order on November 10, 2020 (HSPCB Order), wherein, it was stated that the HSPCB had realized that the industries (such as the Appellants), had been operating solely on the basis of CTEs and CTOs, when in fact, the same also required ECs. Therefore, the HSPCB had proceeded to revoke the earlier consents granted to such industries. Upon such affected industries approaching the Haryana Govt. and conveying their difficulties, the Haryana Govt., vide the HSPCB Order, permitted these industries to continue their operations for 6 months, on the condition that such industries would immediately apply for ECs. The Appellants proceeded to apply for ECs in terms of the 2020 Order.
- An NGO – Dastak (Respondent No. 1), preferred O.A. No. 287 of 2020 before the NGT challenging the HSPCB Order and praying for the closure of the Appellants' units.
- The NGT, vide order and judgment dated July 3, 2021 held that the manufacturing units of the Appellants, which did not have prior EC could not be allowed to operate and that the Haryana Govt. had no power to exempt the requirement of prior EC or to allow the units to function without EC on payment of compensation.
- It is pertinent to mention that on July 7, 2021, the MoEF issued an office memorandum (2021 OM), which laid down the standard operating procedure for identification and handling of cases involving the violation of the provisions of the 2006 EIA, including not obtaining an EC prior to commencing operations. In terms of the 2021 OM, any proposal for grant of EC would be considered on merits, with prospective effect, applying principles of proportionality and the principle that the polluter pays and is liable for the costs of remedial measures.
SUMMARY OF APPELLANTS' ARGUMENTS
- The Appellants challenged the NGT order before the Hon'ble Supreme Court of India under Section 22 of the Act, and contended that - the Appellants' Units had been operating in a manner that did not cause any pollution hazard;
- there had been a genuine misconception on part of both the HSPCB and the Appellants that no EC was required qua the Units, which had been duly stated on affidavit by the HSPCB before the Hon'ble Tribunal; and
- that pursuant to the issuance of the 2020 Order, the Appellants had applied for the issuance of the EC in respect of which the MoEF's appraisal committee had recommended issuance of TOR with a public hearing having been conducted in respect thereof.
- As such, the Appellants contended before the Hon'ble Supreme Court of India that the only step left was the issuance of the EC. However, they contended, that on July 20, 2021, the MoEF had rejected the TOR at the final stage, after public hearing, solely based on the NGT order.
- The Hon'ble Supreme Court of India, vide order dated July 30, 2021 granted an ad – interim stay, which was confirmed on August 23, 2021, judgment was reserved on September 30, 2021.
RATIONALE EMPLOYED BY THE HON'BLE SUPREME COURT OF INDIA
- The Environment (Protection) Act, 1986 (EP Act) does not prohibit the grant of an ex – post facto EC. Further, the 2017 Notification read with the 2020 Draft Notification and 2021 OM, clearly permitted the same, and these constituted valid statutory notifications in terms of Section 3 (1), 3 (2) (b), 3 (2) (v) of the EP Act, read with Rule 5 (3) (d) of the Environment (Protection) Rules. 1986 (EP Rules), as was the case qua the 1994 and 2006 EIAs. Further, the 2021 OM had given effect to various judicial pronouncements, including the Hon'ble Supreme Court of India's decision in Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors.4 (Alembic Judgment).
- The Court relied upon the findings in Electrosteel Steels Limited v. Union of India5 (Electrosteel Judgment), wherein it was observed that there ought not to be closure of an industry that made significant contributions to the economy and generated employment, on mere technicalities pertaining to obtaining ECs, and that the EP Act did not prohibit the issuance of ex – post facto ECs.
- However, the Court agreed that ex – post facto ECs should not be granted routinely, but in exceptional circumstances, considering all relevant environmental factors. In a situation wherein, the adverse impact in refusing to grant ex – post facto approval overshadows the consequences of regularization of operations by the grant thereof, and the industry otherwise operates in a manner commensurate with its environmental obligations, such ex – post facto approval ought to be granted strictly and in terms of the applicable Rules, Regulations and / or Notifications.
- Further, the Court held that any industry applying for such post – facto EC could have a penalty imposed on the principle that the polluter pays and is liable for the costs of remedial measures.
- Considering the aforesaid, the Hon'ble Supreme Court of India held that a unit which was contributing to the economy of the country and providing livelihood to hundreds of people, in case it had been set up pursuant to requisite approvals from the concerned statutory authorities, complying with environment norms and had applied for ex – post facto EC- should not be closed down for the technical irregularity of want of prior environmental clearance, pending the issuance of EC. Some relaxations and even grant of ex – post facto EC in accordance with law, is not impermissible. However, such ex – post facto EC should not ordinarily be granted, and it cannot be construed that the same is for the asking. At the same time, ex – post facto cannot be declined with pedantic rigidity, regardless of the consequences of stopping the operations.
The judgment in Pahwa Plastics has been rendered by the same bench which rendered the judgment in Electrosteel Steels and is on the same lines. Although in Pahwa Plastics, the Court distinguished Alembic Pharmaceuticals on facts, it has essentially followed the same principle: that ex-post facto EC should not be given for the asking but only in exceptional circumstances. In Pahwa Plastics however, the Court has somewhat mitigated the impact of Alembic Pharmaceuticals by emphasizing on the need to protect and preserve an establishment which otherwise conforms to environmental norms.
1. Civil Appeal No. 4795 of 2021
2. 2021 SCC Online SC 1247
3. S.O. 804 (E)
4 (2020) 17 SCC 157
5 2021 SCC Online SC 1247
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