The Supreme Court held that Pollution Control Boards can impose restitutionary and compensatory damages, including ex-ante bank guarantees, under Sections 33A and 31A of the Water and Air Acts. This power is distinct from punitive penalties and is grounded in the ‘Polluter Pays’ principle to remediate environmental damage.
Facts Of The Case:
The Delhi Pollution Control Committee (DPCC) issued show cause notices in 2006 to multiple entities, including residential and commercial complexes, for operating without the mandatory “consent to establish” and “consent to operate” under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981. As a condition for granting consent, the DPCC demanded the payment of fixed sums as environmental damages or the furnishing of bank guarantees. These notices were challenged through writ petitions in the Delhi High Court. A Single Judge bench, in the case of Splendor Landbase Ltd. v. DPCC, ruled that the DPCC lacked the statutory power to levy such monetary demands or require bank guarantees, as this amounted to imposing a penalty—a power reserved for the courts under the Acts’ penal provisions. The Division Bench of the High Court upheld this decision, directing the refund of any collected amounts. The DPCC then appealed to the Supreme Court, arguing that its powers to issue directions under Sections 33A and 31A of the respective Acts included the authority to impose compensatory measures for environmental damage.
Procedural History:
The procedural history of this case began with the Delhi Pollution Control Committee (DPCC) issuing show cause notices to various entities in 2006 for operating without statutory environmental consents. The recipients challenged these notices through writ petitions in the Delhi High Court. A Single Judge, in the landmark Splendor Landbase Ltd. v. DPCC decision (2010), ruled that the DPCC lacked the power to levy environmental damages or demand bank guarantees, a finding later followed in related cases. The DPCC appealed these decisions to a Division Bench of the High Court, which in its impugned order dated 23.01.2012, upheld the Single Judge’s ruling, affirming that such actions were ultra vires and directing refunds. The DPCC subsequently filed civil appeals in the Supreme Court, which culminated in the present 2025 judgment reversing the High Court’s legal declaration on the extent of the Boards’ powers.
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Court Observation:
In its observations, the Supreme Court emphasized a fundamental distinction between punitive penalties and restitutionary damages. The Court held that the power to issue directions under Sections 33A and 31A of the Water and Air Acts is not confined to prohibitory orders but inherently includes the authority to impose compensatory measures, such as monetary damages or bank guarantees, as an ex-ante mechanism to remediate and prevent environmental harm. This power, rooted in the ‘Polluter Pays’ principle, is a vital tool for environmental regulators to fulfill their statutory mandate of restitution, separate from the judicial process for imposing criminal penalties outlined in the Acts. The Court further underscored that such powers must be exercised transparently and guided by subordinate legislation to ensure fairness and avoid arbitrariness.V
Final Decision & Judgement:
The Supreme Court allowed the appeals, setting aside the Delhi High Court’s declaration of law. It authoritatively held that Pollution Control Boards are empowered under Sections 33A of the Water Act and 31A of the Air Act to impose and collect restitutionary or compensatory damages, including fixed monetary sums or ex-ante bank guarantees, to address both actual and potential environmental damage. This power, derived from the ‘Polluter Pays’ principle, is distinct from the punitive penalties imposed by courts. However, the Court directed that this power must only be exercised after detailed principles and procedures are established through subordinate legislation to ensure transparency and incorporate natural justice. Consequently, the specific show cause notices from 2006 were not revived, and any collected amounts were ordered to be refunded
Case Details:
Case Title: Delhi Pollution Control Committee Vs. Lodhi Property Co. Ltd. Etc. Citation: 2025 INSC 923 Civil Appeal No(s).: 757-760 of 2013 (with Civil Appeal No(s). 1977-2011 of 2013) Date of Judgement: August 04, 2025 Judges/Justice Name: Justice Pamidighantam Sri Narasimha and Justice Manoj Misra
Download The Judgement Here