Alembic Pharmaceuticals Ltd. vs Rohit Prajapati & Ors.

HELD: 1. Section 3(1), Environment (Protection) Act 1986 is an enabling provision for the Central Government to undertake all such measures as it deems necessary or expedient for the purpose of protecting and improving the quality of the environment and preventing, controlling and abating environmental pollution. This limb of the submission of the Additional Solicitor General is crucial to the issue as to whether the NGT has exceeded its jurisdiction since the decision in Sterlite holds that the NGT, while exercising its appellate jurisdiction, “cannot strike down rules or regulations made under this Act”. To demonstrate that the NGT did not have the jurisdiction to strike down the circular dated 14 May 2002, it was urged that the circular was issued by the MoEF pursuant to its powers under Section 3 of the Environment Protection Act 1986. There is an inherent difficulty in accepting the submission. Before this Court, the Union of India has not pleaded the case that the circular dated

14 May 2002 is a measure which is traceable to the provisions of Section 3. On the contrary, in its pleadings the Union of India construed it as a “purely administrative decision”. The omission in the appeal to make any attempt to sustain the circular dated

14 May 2002 with reference to the provisions of Section 3 of the Environment Protection Act 1986 is significant. For an action of the Central government to be treated as a measure referable to Section 3 it must satisfy the statutory requirement of being necessary or expedient “for the purpose of protecting and improving the quality of the environment and preventing, controlling and abating environment pollution”. The circular dated

14 May 2002 in fact does quite the contrary. The EIA notification of 1994 has been issued under the provisions of the Environment Protection Act 1986 and the Environment Protection Rules 1986, with the object of imposing restrictions and prohibitions on setting up of new projects or expansion or modernisation of existing project. The measures are based on the precautionary principle and aim to protect the interests of the environment. The circular dated 14 May 2002 allowed defaulting industrial units who had commenced activities without an EC to cure the default by an ex post facto clearance. Being an administrative decision, it is beyond the scope of Section 3 and cannot be said to be a measure for the & ORS.

purpose of protecting and improving the quality of the environment. The EIA notification of 1994 mandates a prior environmental clearance. The circular substantially amends or alters the application of the EIA notification of 1994. The administrative circular is not a measure protected by Section 3. Hence there was no jurisdictional bar on the NGT to enquire into its legitimacy or vires. Moreover, the administrative circular is contrary to the EIA Notification 1994 which has a statutory character. The circular is unsustainable in law. [Paras 20, 21][697C-F; 698-A-E; 699-C] Tamil Nadu Pollution Control Board v. Sterlite Industries (I) Ltd. [2019] 3 SCR 777 – referred to.

2.1 The concept of an ex post facto EC is in derogation of the fundamental principles of environmental jurisprudence and is an anathema to the EIA notification dated 27 January 1994. It is detrimental to the environment and could lead to irreparable degradation. The reason why a retrospective EC or an ex post facto clearance is alien to environmental jurisprudence is that before the issuance of an EC, the statutory notification warrants a careful application of mind, besides a study into the likely consequences of a proposed activity on the environment. An EC can be issued only after various stages of the decision-making process have been completed. Requirements such as conducting a public hearing, screening, scoping and appraisal are components of the decision-making process which ensure that the likely impacts of the industrial activity or the expansion of an existing industrial activity are considered in the decision-making calculus. Allowing for an ex post facto clearance would essentially condone the operation of industrial activities without the grant of an EC. In the absence of an EC, there would be no conditions that would safeguard the environment. Moreover, if the EC was to be ultimately refused, irreparable harm would have been caused to the environment. In either view of the matter, environment law cannot countenance the notion of an ex post facto clearance. This would be contrary to both the precautionary principle as well as the need for sustainable development. In the case of all the three industries, ECs were applied for nearly a decade after the introduction of the EIA notification 1994. In the meantime, the industries had been set up and had commenced production. The documents disclosed by the three industries demonstrate that no ECs as mandated by the EIA notification of 1994 were sought before the commencement or expansion of operations. The terms of the EIA notification of 1994 envisage that expansion or modernisation of any activity (if the pollution load is to exceed the existing one) or a new project listed in Schedule – I shall not be undertaken unless it has been granted an EC. In the present case, all the three industries continued to operate in the teeth of the EIA notification 1994. [Paras 23, 25][700-F-H; 701-A-C; 706G-H; 707-E-F] Common Cause v. Union of India (2017) 9 SCC 499 : [2017] 13 SCR 361– relied on.

2.2 Before the exemption contained in Clause 8 applies, it was necessary for projects listed in Schedule - I to obtain all relevant clearances from the State government including an NOC from the State Pollution Control Board. It was not sufficient to merely obtain an NOC from the State Pollution Control Board. The exemption which was carved out in the explanatory note was to ensure that activities which had received all required clearances at the state level, following the acquisition of land should be protected. In fact, many of them would also involve the commencement of production prior to 27 January 1994. The explanatory note stated that where production had not yet commenced, the IAA would have to be intimated. The EIA notification 1994 is a significant instrument in effectuating the implementation of the precautionary principle. The burden lies on the project proponent who seeks to alter the state of the environment or to impact on the environment to demonstrate that the terms on which an exemption has been granted have been fulfilled. An exemption must be construed in its strict sense according to its plain terms. None of the three industries before the Court have furnished an exhaustive catalogue of what were the “relevant clearances from the State government” that had to be obtained under the provisions of the law as it then stood. With this background, it will now be assessed individually whether the industries in question qualified for the exemption provided by Clause 8 to the explanatory note.

& ORS.

Alembic Pharmaceuticals Limited

(i) Darshak Private Limited (API - I)

The material produced on the record indicates that on 17 July 1992, Gujarat Pollution Control Board (GPCB) had issued an NOC to establish an industrial unit and manufacture two pharmaceuticals products. However, the NOC for manufacturing additional items was issued only on 11 June 1997 subsequent to the EIA notification dated 27 January 1994. The language used in the NOC makes it clear that obtaining consents and authorisations under various environment related legislations was a mandatory pre-condition and not merely directory. The evidence produced on the record by Darshak Private Limited indicates that it did not have the requisite consents and authorisations under the Air Act, Water Act and Hazardous Waste Rules prior to the EIA notification 1994. Many of the consents and permissions were obtained subsequently and not prior to the EIA notification of 1994. Accordingly, the manufacturing unit of Darshak Private Limited (API – I) is not covered under the exemption under Clause 8 to the explanatory note of the EIA notification of 1994.

(ii) Nirayu Private Limited (API – II)

A factory license was issued on 12 July 1984 to API – II. On 24 May 1985, GPCB issued a water consent order under the Water Act. This was valid only for the manufacture of anaesthetic Ether. GPCB issued a site clearance certificate on 9 October 1991 for the manufacture of CIMC Chloride and Cloxacillin Sodium. An NOC to establish an industrial unit and to manufacture products was issued on 12 May 1993 and one for expansion on 4 December 1995. The NOC dated 12 May 1993 issued to Nirayu Private Limited (API – II) also mandates that the project proponent “shall be required to obtain” from the board “prior to commencement of production” requisite consents and authorisations under the Air Act, Water Act and Hazardous Waste Rules from GPCB. All consents and permissions had not been obtained prior to the EIA notification of 1994. Accordingly, the manufacturing unit of Nirayu Private Limited (API – II) is not covered under the exemption under Clause 8 to the explanatory note of the EIA notification of 1994.

United Phosphorous Limited

No material has been produced to indicate that all relevant clearances from the State government including the NOC from GPCB had been obtained prior to the EIA notification 1994. Accordingly, they cannot be granted the benefit of the exemption under Clause 8 to the explanatory note of the EIA notification of 1994.

Unique Chemicals Limited

It is evident from the table enlisting the list of relevant permissions, consents and authorisations that all permissions were received after the EIA notification 1994 was issued. Clearly, Unique Chemicals Limited is not entitled to the benefit of the exemption contained in Clause 8 of the explanatory note to the EIA notification 1994. [Paras 28-32][708-E-F, G-H; 709-A-B, CD; 710-D, F-H; 711-A-C, D-F; 712-A-D]

2.3 From the material placed on the record by the industries, it becomes evident that there has been a gross abdication of responsibility by all the three industries in terms of obtaining timely consents and authorisations from the GPCB. There exists a distinction between obtaining relevant clearances and consents from the State Pollution Control Board and obtaining an environmental clearance in accordance with the procedure laid down under the EIA notification of 1994. A consent order issued by the State Pollution Control Board allows an industry to operate within the prescribed emission norms. However, the consent orders do not account for the social cost and impact of undertaking an industrial activity on the environment and its surroundings. A holistic analysis of the environmental impact of an industrial activity is only accounted for once all the steps listed out in EIA notification of 1994 are followed. The purpose of setting in place specific requirements such as public hearing, screening, scoping and appraisal is to foster deliberative decisions and protect environmental concerns. The detailed process listed out in the EIA notification of 1994 for obtaining an EC allows for minimising the adverse environmental impact of any industrial activity and improving the quality of the environment. One must adopt an ecologically rational outlook towards development. Given the social and environmental impacts of an industrial activity, environment compliance must not be seen as an obstacle to & ORS.

development but as a measure towards achieving sustainable development and inter-generational equity. None of the three industries were entitled to the benefit of the exemption contained in Clause 8 of the explanatory note to the EIA notification of 1994. [Paras 33, 34][712-D-H; 713-A]

2.4 The MoEF had issued a circular on 5 November 1998 permitting applications for ECs to be filed by 31 March 1999, which was extended subsequently to 30 June 2001. On 14 May 2002, the deadline was extended until 31 March 2003 subject to a deposit commensurate to the investment made. Though the three industries operated without an EC for several years after the EIA notification of 1994, each of them had subsequently received ECs including amended ECs for expansion of existing capacities. These ECs have been operational since 14 May 2003 (in the case of Alembic Pharmaceuticals Limited), 17 July 2003 (in the case of United Phosphorous Limited), and 23 December 2002 (in the case of Unique Chemicals Limited). In addition, all the three units have made infrastructural investments and employed significant numbers of workers in their industrial units. The directions of the NGT for the revocation of the ECs and for closure of the units do not accord with the principle of proportionality. At the same time, the Court cannot be oblivious to the environmental degradation caused by all three industries units that operated without valid ECs. The breach by the industries cannot be left unattended by legal consequences. The three industries are directed to deposit compensation quantified at ` 10 crores each. The amount shall be deposited with GPCB and duly utilised for restoration and remedial measures to improve the quality of the environment in the industrial area in which the industries operate. This deposit shall be in addition to the amount directed by the NGT. The impugned judgment of the NGT is set aside in so far as it directed the revocation of the ECs and closure of the industries as well as the order in review. [Paras 36, 38 and 39][713-G; 714-A; 716-C-D, E-F, G-H; 717-B-C] Lafarge Umiam Mining Pvt Ltd v. Union of India (2011)

7 SCC 338 : [2011] 7 SCR 954; Electrotherm Ltd v. Patel Vipulkumar Ramjibhai (2016) 9 SCC 300 – relied on.

Goa Foundation v. Union of India (2005) 11 SCC 559; Techi Tagi Tara v. Rajendra Singh Bhandari & Ors. (2018) (11) SCC 734 : [2017] 12 SCR 956; Bharat Sanchar Nigam Limited v. Telecom Regulatory Authority of India (2014) 3 SCC 222 : [2013] 12 SCR 999 – referred to.