Supreme Court of India
M/S C.L. Gupta Export Ltd vs Adil Ansari on 22 August, 2025
Author: B. R. Gavai
Bench: B. R. Gavai
2025 INSC 1035
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2864 OF 2022
M/s C.L. Gupta Export Ltd.
…Appellant
Versus
Adil Ansari & Ors.
…Respondents
JUDGMENT
K. VINOD CHANDRAN, J.
The respondent no.1, the applicant before the
National Green Tribunal (for brevity, ‘NGT’) alleged that
the appellant, the respondent no.1 before the NGT, as an
industry was actively perpetrating environmental
degradation and pollution as also extracting ground
water; thus polluting the surroundings and also releasing
effluents into the nearby river which is a tributary of the
Ganga. It was also alleged that the other official
Signature Not Verified
respondents, the Pollution Control Board of the State &
Digitally signed by
POOJA SHARMA
Date: 2025.08.25
17:07:48 IST
Reason:
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the Centre, the Central Ground Water Authority and the
District Collector were mute spectators to the activities of
the appellant and often colluding, in polluting and
damaging the environment. The proceedings before the
NGT extended over a period of three years in which
various reports were called for from a Joint Committee
constituted by the NGT and eventually based on the
reports, the matter was disposed of with certain
directions, with which the appellant is aggrieved.
2. Sh. Vikas Singh, learned Counsel appearing for
the appellant would point out that the environmental
compensation (for brevity, ‘EC’) as determined by the
statutory bodies were paid up by the appellant. The
appellant also had brought about all the mitigating
measures, eventually leading to a report of complete
compliance of the statutory conditions and the terms
imposed by the Pollution Control Board (for brevity,
‘PCB’). Despite that last report of 30.07.2021, clearly
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Civil Appeal No. 2864 of 2022
recording compliance, the NGT went ahead and
imposed a compensation of Rs. 50 crores based on the
allegedly admitted turnover of the appellant. There is no
rational nexus in thus computing the penalty, which has
also been deprecated by this Court in Benzo Chem
Industrial (P) Ltd. v. Arvind Manohar Mahajan1. The
NGT also directed the Enforcement Directorate (for
brevity, ‘ED’) to examine the matter in the light of the
observations made in the judgment and take appropriate
action under the Prevention of Money Laundering Act,
20022 wherein the environmental laws are also included
in Part-A of Schedule I. The said measure has also been
frowned upon in Waris Chemicals (P) Ltd. v. U.P.
Pollution Control Board3. The contours of
maintainability of a Public Interest Litigation (for brevity,
‘PIL’) is explicitly declared in Ashok Kumar Pandey v.
1
2024 SCC OnLine SC 3543
2
for brevity, “PMLA”
3
2025 SCC OnLine SC 1261
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Civil Appeal No. 2864 of 2022
State of W.B.4; within which contours the present
litigation does not fall.
3. None appears for respondent no.1 who was the
applicant before the NGT. It is to be observed at the
outset that we are not inclined to consider the question of
maintainability of the PIL, at this stage especially when
the initial reports of the Joint Committee constituted by
the NGT clearly indicate violations of the environmental
laws which led to the penalisation by imposition of EC.
The proceedings were commenced by the applicant in
the year 2019 and it was only in the year 2021 that a
modicum of compliance was reported.
4. Mr. Saurabh Mishra, learned Advocate-on-
Record, appearing for the Pollution Control Board
submits that as of now there is full compliance of the
environmental laws. However, it is urged that the NGT
was within its power in enhancing the penalty since it is
4
(2004) 3 SCC 349
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Civil Appeal No. 2864 of 2022
a deterrent measure. It is also pointed out that the
calibration of the quantum of penalty could also be with
reference to multipliers under CPCB, 2019 methodology,
instead of a flat turnover percentage. It is also sought that
structural directions in paragraph 569-571 of the NGT
judgment may be upheld.
5. The appellant was earlier engaged in four
manufacturing activities when the proceedings
commenced, which were Metal Art Ware, Glass Art
Ware, Thermocol Blocks which later, were expanded
with two additions; Marble Art Ware and Corrugated
Boxes. There was also a residential area where 500-600
people, the employees of the appellant, resided. The
appellant is said to be an exporter of handicraft items and
has employed around 7,000 workers.
6. On the allegation raised, the NGT had first
constituted a Joint Committee comprising of the Central
Pollution Control Board (for brevity, ‘CPCB’), the
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Civil Appeal No. 2864 of 2022
respondent no.3 and the Uttar Pradesh Pollution Control
Board (for brevity, ‘UPPCB’), the respondent no.2. A
report dated 07.05.2019 was filed which noticed
ineffective effluent treatment, storage of hazardous
wastes and the Thermocol manufacturing unit having not
been granted the consent to establish/operate, among
other defects. The report proposed a show cause notice
under the Water Act, 1974, the closure of the unit and
imposition of EC of Rs.10 lakhs. This was followed up with
a notice dated 30.03.2019 by the UPPCB to which
objections were filed.
7. Further reports dated 16.07.2019 and 03.12.2019
were placed before the NGT in which EC was computed
based on the “Assessment of Environmental
Compensation in Case of Illegal Extraction of
Groundwater” dated 26.06.2019 brought out by the
CPCB in compliance with the orders of the NGT. A total
EC of Rs.2,49,71,157/- was imposed. The appellant is said
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Civil Appeal No. 2864 of 2022
to have deposited an EC of Rs.1,16,39,727/-; after the
waiver effected on representations made.
8. Subsequently, yet another report dated
30.07.2021 was submitted before the NGT which even
according to the NGT as is seen from page 145 of the
order confirms full compliance with all prior
recommendations/suggestions. This report was also
partly accepted by the NGT in paragraph 466. The
reservation expressed by the NGT seems to be of the
amount of compensation determined/recommended by
the Committee being not consistent with the directions of
the NGT, issued in various other matters. Finding that the
appellant had violated environmental laws including the
provisions relating to extraction of groundwater, the NGT
went ahead to discuss the provisions of the PMLA, various
decisions with respect to that statute and also those
decisions of the NGT, imposing compensation with
reference to the turnover of the polluter on the principle:
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Civil Appeal No. 2864 of 2022
“polluter pays”. The NGT thus imposed the
compensation, issued directions including that with
reference to PMLA as also made a sweeping direction for
the closure of the divisions of the appellant, in which
requisite steps are not taken to comply with the
prescribed standards.
9. As has been correctly pointed out by the CPCB,
the order of the Tribunal relating to fresh water audit,
monitoring and restoration has to be retained. Insofar as,
the compliance is concerned we refer to the following in
the written submissions made :
“5. Pursuant to the above directions, a joint
inspection was undertaken between 23-
25.08.2022 and a report dated 24.12.2022 was
filed before this Hon’ble Court. The said report
records inter alia that soil parameters were
normal; yellowing of stored groundwater was
attributable to oxidation of iron and manganese;
there was no crop damage within a 2.5 km radius
as per the District Horticulture Officer, Amroha;
OPD records from the Chief Medical Officer,
Amroha did not show any air-borne disease
burden requiring oxygen or ventilator support;
and that other industries in the vicinity also
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Civil Appeal No. 2864 of 2022
contributed to environmental load. The report
further records that the Appellant has installed
extensive flow-meters and piezometers, that
reconciliation between fresh water abstraction
and consumption shows negligible variance
(approximately 0.39% over a five-month period),
and that a common STP/ETP with advanced
treatment systems has been put in place.”
The directions in the impugned judgment relating to
audit, monitoring and restoration are necessarily within
the powers of the NGT and is a continuing process. We
also notice the submissions of CPCB that restoration
measures should focus on aquifer recharge, continuous
water balance monitoring and area wide environmental
load management. Recycling of treated water, reduced
usage of ground water withdrawal, continuous and
robust monitoring would definitely guide the design of a
prospective compliance regime.
10. 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
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Civil Appeal No. 2864 of 2022
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.
11. Benzo Chem Industrial (P) Ltd.1 was a case in
which one of us (B. R. Gavai, J, as he then was) considered
the question of imposition of penalties on a reference to
the annual turnover wherein the NGT having noticed the
revenue range of the polluter to be between 100-500
crores imposed a penalty of Rs.500 crores. This Court
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first noticed the huge disparity in the range noticed by
the NGT, also taken from the public domain which would
have clearly indicated the exact figure. 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 fact the penalty imposed on the
appellant, by the statutory body was on the basis of a
methodology framed by the CPCB, on the directions of
the NGT. If at all the NGT was of the opinion that the EC
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imposed was minimal or low, it could have referred to the
methodology framed by the CPCB and not merely
looked at the revenue generation of the alleged polluter.
We hence strike out the imposition of compensation of
Rs.50 Crores by the NGT. However, we make it clear that
we have not considered the maintainability of the EC
imposed by the PCBs and the statement regarding the
penalty paid by the appellant, has not been verified. If
the appellant has avenues to challenge the same, they
would be left liberty, subject to the laws of limitation. The
PCB would also be entitled to recover any shortfall or
impose any further EC on non-compliance being
detected.
12. Waris Chemicals (P) Ltd.3 dealt with a similar
direction to invoke the provisions of the PMLA as in this
case. It was held, following Vijay Madanlal Choudhary
v. Union of India5 that Section 3 of the PMLA is dependent
5
(2023) 12 SCC 1
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on illegal gain of property as a result of the criminal
activity relating to a scheduled offence. As in the facts of
the cited case, here, neither is there registration of FIR
for any scheduled offence nor any complaint is filed
alleging such offences under the various environmental
protection statutes scheduled under the PMLA and
coming within its ambit. This Court had also raised
serious doubts about the jurisdiction of the NGT to direct
the prosecution of individuals under the PMLA; which we
fully subscribe to. 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
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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.
13. We have to necessarily set aside the directions
issued other than that which permits a continuous
monitoring and audit of the pollution control measures to
ensure a pollution free, compliance regime. 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 and
the objections raised by the industry; which would
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anyway be available in the records of the case. In the
context of the last of the reports having found complete
compliance, we cannot but observe that unfortunately
this was an exercise in futility. Judicious consideration is
the sum and substance of adjudication and the
Courts/Tribunals should restrain themselves from
engaging in mere rhetoric by stating the law in general
without particular reference to the facts. We say nothing
more and allow the appeal setting aside the order of the
NGT to the extent noticed above.
14. Pending applications, if any, shall stand disposed
of.
…….…………………….….. CJI.
(B. R. GAVAI)
.……….…………………….….. J.
(K. VINOD CHANDRAN)
NEW DELHI;
AUGUST 22, 2025.
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