Keystone Realtors Pvt Ltd. vs Shri Anil V Tharthare & Ors.

In the Supreme Court of India
Civil Appeal No. 2435 OF 2019
Petitioner
Keystone Realtors Pvt Ltd.
Respondents
Shri Anil V Tharthare & Ors.
Date of Judgement
3rd December, 2019
Bench
Hon’ble Justice Dr. Justice Dhananjay Y Chandrachud, Hon’ble Justice Ajay Rastogi

Facts of the Case

•  The appellant is the project proponent of a residential redevelopment, called “Oriana Residential Project”. On 8 June 2010 the appellant received a Commencement Certificate to carry out the development and the construction began. When the construction commenced, the total construction area was 8,720.32 square metres. The ambit of the project was expanded, and the area was increased to 32,395.17 square metres. The appellant applied for EC which is necessary if the total construction area exceeded 20,000 square metres.     
• The fourth respondent, the State Level Expert Appraisal Committee for Maharashtra recommended the grant of an EC for the project. On 2 May 2013 the third respondent, the State Level Environment Impact Assessment Authority for Maharashtra, based on the recommendations of the SEAC granted an EC. It is not in dispute that at the time when the EC dated 2 May 2013 was granted, the total construction area of the project was 32,395.17 square metres. The grant of the EC was conditional on the appellant obtaining consent for establishment from the Maharashtra Pollution Control Board under the Air (Prevention and Control of Pollution) Act 1981 and the Water (Prevention and Control of Pollution) Act 1974.                        
•  By a letter dated 24 September 2013, the appellant informed the Environment Department, the second respondent, that the construction area was being further increased by 8,085.71 square metres, as a result of which the total construction area of the project would stand enhanced to 40,480.88 square metres. In letter, the appellant sought an amendment to the EC dated 2 May 2013 by the third respondent to reflect the increase in the total construction area. On 13 March 2014, the third respondent granted an amendment to the EC dated 2 May 2013 on the ground that there was only a “marginal increase in built up and construction area”.   
• The first respondent, claiming to be a resident of MIG Colony, Mumbai, challenged the grant of the amended EC dated 13 March 2014 before the Pune Bench of the NGT. In response, the appellant filed two applications, challenging the standing of the first respondent and contending that the challenge was barred by limitation. The Pune Bench of the NGT rejected the applications questioning the maintainability of the proceedings and setting up the bar of limitation. The appellant filed a writ petition before the High Court of Judicature at Bombay. The Bombay High Court, allowing the writ petition held by an order dated 12 August 2016, that the appeal was not maintainable at the behest of the first respondent, and the challenge against the grant of the amended EC dated 13 March 2014 was barred by limitation. By an administrative order dated 31 July 2018, the dispute was transferred from the Pune Bench of the NGT to the Principal Bench which heard the parties and delivered the impugned order.     
• The Civil Appeal was raised from an order dated 11 February 2019 of the Principal Bench of the National Green Tribunal. In its order, the NGT held that the increase in the total construction area of the appellants project was an “expansion” under a notification dated 14 September 20062 of the Ministry of Environment and Forests. The NGT found that the appellant had undertaken an “expansion” as set out in Paragraph 2 of the EIA Notification without complying with the regulatory procedure prescribed. The appellant was directed to deposit Rupees one crore with the Central Pollution Control Board3. Noting that the construction at the project site had been completed, the NGT appointed a five-member expert committee to study the impact of the appellants expanded project and to suggest remedial measures.

Issues Raised

• What is exact interpretation of the NIA Notification?
• Is there need for Fresh Environmental clearance for expansion beyond limits approved by prior EC?

Ratio Decidendi

• Paragraph 2 of the EIA Notification reads thus:

“2. Requirement for prior EC: – The following projects or activities shall require prior environmental clearance from the concerned regulatory authority, which shall hereinafter be referred to as the Central Government in the Ministry of Environment and Forests for matters falling under Category „A‟ in the Schedule and at State level the State Environment Impact Assessment Authority (SEIAA) for matters falling under Category „B‟ in the said Schedule, before any construction work, or preparation of land by the project management except for securing the land, is started on the project or activity:

(i) All new projects or activities listed in the Schedule to this notification;

(ii) Expansion and modernisation of existing projects or activities listed in the Schedule to this notification with addition of capacity beyond the limits specified for the concerned sector, that is, projects or activities which cross the threshold limits given in the Schedule after expansion or modernisation;

(iii) Any change in product – mix in an existing manufacturing unit included in Schedule beyond the specified range.” (Emphasis supplied) The Schedule to the EIA Notification classifies potential projects into Category „A‟ and Category „B‟ based on their size and potential environmental impact. Category „A‟ projects require project proponents to secure an EC from the Ministry of Environment, Forests and Climate Change. Category „B‟ projects require project proponents to secure an EC from the SEIAA, based on the recommendations of the SEAC. Where a project falls within the parameters stipulated in the Schedule, paragraph 2 of the EIA Notification provides that no construction work shall begin unless an EC is granted in regard to three types of activity: (i) new projects or activities provided in the Schedule, (ii) expansion or modernisation of existing projects or activities provided in the Schedule, and (iii) changes in the product mix in existing manufacturing units provided in the Schedule beyond the specified range. The present dispute raises questions as to how the second type of activity, the “expansion” of existing projects, should be construed under the EIA Notification.

• In order to secure an EC, the project proponent must submit an application in the manner set out in Form 1 and Supplementary Form 1A (if applicable) of the EIA Notification. Under paragraph 7(i) of the EIA Notification, the project proponent must also submit a pre-feasibility report. However, in the case of projects under item 8 of the Schedule, only a conceptual plan is required to be submitted.

Paragraph 7(ii) of the EIA Notification states that:

7(ii) Prior Environmental Clearance (EC) process for Expansion or Modernisation of Change of product mix in existing projects.

Submissions from counsels

Appellant’s Side

1. When construction began, the total construction area of the appellants’ project was 8,720.32 square metres. As the EIA Notification requires projects with a total built up area of or more than 20,000 square metres to procure an EC prior to the start of construction, no EC was required before construction of the appellants project commenced;
2. Pursuant to the first increase, when the appellants project crossed the 20,000 square metre provided for in the EIA Notification, the appellant submitted a Form 1 and was granted a valid EC dated 2 May 2013 by the third respondent;
3.  Pursuant to the second increase, the built-up area of the appellants project only marginally increased by 8,085.71 square metres to a total construction area of 40,480.88 square metres, which is within the upper limit of 1,50,000 square metres prescribed by entry 8(a) of the Schedule to the EIA Notification. Therefore, the second increase was not an “expansion” within the meaning of clause (ii) of paragraph 2 of the EIA Notification and no fresh Form 1 or EC was required at the time of the second increase;
4.  Clause (ii) of paragraph 2 only applies to situations where the project crosses the lower or upper threshold limits stipulated in the Schedule. Any increase in production capacity or construction area within the limits set out in the Schedule would not constitute an “expansion” within the meaning of Clause (ii) of paragraph 2 and does not require compliance with the procedure under paragraph 7(ii) of the EIA Notification;
5. The increase in the appellants project is only marginal and does not have an adverse impact on the environment;
6. The SEIAA applied its mind to the appellants request for an amendment; noted that the increase in construction area was only marginal and issued an amendment to the original EC dated 2 May 2013; and
7. The NGT had no basis to impose the fine of Rupees one crore on the appellant.

 Respondent’s Side

• Under clause (ii) of paragraph 2 read with paragraph 7(ii) of the EIA Notification, any expansion beyond the “threshold limit” requires a fresh EC. The appellants project had crossed the threshold limit of 20,000 square metres and the second increase of 8,085.71 square metres constituted an „expansion beyond the threshold limit‟ and hence required a fresh EC;
•  Once a project breaches the lower threshold limit set out in the Schedule to the EIA Notification, any expansion or modernisation, even within the upper threshold set out in the Schedule, will require the submission of a fresh Form 1 and the matter to be placed before the Expert Appraisal Committee or the SEAC, as applicable in accordance with paragraph 7(ii) of the EIA Notification;
• Adopting the appellants interpretation of clause (ii) of paragraph 2 would defeat the object and purpose of the EIA Notification as a whole. It would allow project proponents to incrementally increase the construction area and over time significantly impinge on the environmental impact of the project without seeking a fresh EC;
• If the law prescribes an act to be done in a particular manner, it must be done only in that manner and no other. Under paragraph 7(ii) of the EIA Notification, it was incumbent on the SEIAA to place the matter before the SEAC for appraisal and recommendations; and
•  The EIA Notification is an operationalisation of the precautionary principle, which forms a part of the environmental law of India. The EIA Notification must be read in a manner which gives effect to the precautionary principle.

Held

1. It is only with industrial, thermal power and other such related operations that one can decide on parameters of pollution. Development projects like highways, airports and other infrastructure projects which seek to expand might have a detrimental impact due to factors such as change in land use despite this, the project proponent can certify that there is no change in pollution load and hence expansion is to be allowed. The current process seeks a detailed EIA report to determine whether impacts can be mitigated. If the amendment is brought into force, it will simply do away with this critical and necessary step in the environmental clearance process. Therefore, this amendment should not be allowed.
2. It was further noted that as on the date of the impugned order construction at the project site had already been completed. A core tenet underlying the entire scheme of the EIA Notification is that construction should not be executed until ample scientific evidence has been compiled so as to understand the true environmental impact of a project. By completing the construction of the project, the appellant had denied the third and fourth respondents’ ability to evaluate the environmental impact and suggest methods to mitigate any environmental damage. At that stage, only remedial measures could have been taken. The NGT which had already directed the appellant to deposit Rupees one crore and has set up an expert committee to evaluate the impact of the appellants project and suggest remedial measures. In view of these circumstances, the court uphold the directions of the NGT and directed that the committee continue its evaluation of the appellants project so as to bring its environmental impact as close as possible to that contemplated in the EC dated 2 May 2013 and also suggest the compensatory exaction to be imposed on the appellant.
3. The appeal was dismissed along with any dismissed orders.

“The views of the authors are personal“