The Supreme Court (SC) has ruled that larger companies bear a greater responsibility for environmental protection and can be subjected to higher penalties for environmental damage. This decision marks a shift from a one-size-fits-all approach to environmental penalties, recognizing that the scale of a company's operations directly correlates with its environmental impact.
The ruling came as Justices Dipankar Datta and Vijay Vishnoi dismissed appeals against orders from the National Green Tribunal (NGT). The NGT had imposed penalties of ₹5 crore on Rhythm Country and ₹4.47 crore on Key Stone Properties for constructing residential and commercial projects in Pune without obtaining the necessary environmental clearances. Justice Datta refuted the realtors' arguments that the penalties were disproportionate, asserting that larger operations inherently have a larger environmental footprint.
The Supreme Court also upheld the NGT's authority to impose substantial environmental damage compensation charges, stating that the NGT Act deliberately grants the tribunal the discretion to determine relief based on the severity of environmental harm. The core argument of the appellants, that turnover or project cost should not be a metric for determining environmental compensation, was rejected. The court clarified that neither the NGT Act nor existing jurisprudence mandates a uniform formula for quantifying environmental compensation.
The court emphasized that linking a company's scale of operations, such as turnover, production volume, or revenue generation, to the environmental harm caused is a valid and powerful factor in determining compensation. This stance aligns with the principle that bigger operations signify a bigger footprint, leading to increased resource consumption, emissions, and waste, which in turn intensifies environmental stress. The Supreme Court stated that if a company profits more from its scale, it is logical that it bears more responsibility for the environmental costs.
This ruling underscores that environmental fines should not merely be seen as a cost of doing business, especially for large corporations. The judgment implies that the scale of penalties should be commensurate with the potential harm caused by a company's operations and its financial capacity. The decision aims to deter environmental damage by ensuring that penalties are significant enough to impact a company's financial performance and encourage greener practices. It also sends a message that larger companies need to adhere to stricter environmental standards.
