In this judgment, the Supreme Court curtailed the National Green Tribunal’s (NGT) powers, ruling that environmental compensation cannot be arbitrarily linked to a polluter’s turnover, lacking a direct nexus to the actual damage. It also held that the NGT lacks jurisdiction to direct investigations by the Enforcement Directorate under the PMLA, affirming that such actions require a scheduled offence to be registered. The Court emphasized that penalties must be determined based on established methodologies and legal principles, not rhetoric.
Facts Of The Case:
The case originated from a Public Interest Litigation (PIL) filed by Adil Ansari before the National Green Tribunal (NGT) in 2019 against M/s C.L. Gupta Export Ltd. The allegations were that the company, an exporter of handicraft items with multiple manufacturing units, was causing environmental degradation by polluting the surroundings, releasing effluents into a tributary of the Ganga, and illegally extracting groundwater. The NGT constituted a Joint Committee, which in its initial reports found violations, including ineffective effluent treatment and improper handling of hazardous waste. Based on these reports, the Uttar Pradesh Pollution Control Board (UPPCB) imposed an environmental compensation of over ₹2.4 crore, which the company partially paid. Subsequently, a final report in July 2021 confirmed the company’s full compliance with all environmental norms. However, the NGT, in its final order, disregarded this compliance report and imposed a significantly enhanced penalty of ₹50 crores, explicitly linking it to the company’s admitted annual turnover. The NGT also directed the closure of non-compliant divisions and ordered the Enforcement Directorate (ED) to investigate the company under the Prevention of Money Laundering Act (PMLA). The company appealed these directions to the Supreme Court, challenging the proportionality of the penalty and the NGT’s jurisdiction to order a PMLA probe.
Procedural History:
The proceedings commenced in 2019 with an application filed by Adil Ansari before the National Green Tribunal (NGT) alleging environmental violations by M/s C.L. Gupta Export Ltd. The NGT constituted a Joint Committee, which filed multiple reports over three years documenting violations and recommending actions, leading to the initial imposition of environmental compensation by the pollution control boards. After a final committee report in July 2021 confirmed the company’s full compliance, the NGT surprisingly issued a final order imposing a hefty compensation of ₹50 crores based on the company’s turnover, directed the closure of certain divisions, and referred the matter to the Enforcement Directorate under the PMLA. Aggrieved by these specific directions, the company filed the present civil appeal before the Supreme Court, which culminated in this judgment.
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Court Observation:
The Supreme Court made several critical observations, holding that the National Green Tribunal (NGT) committed a legal error by imposing a compensation of ₹50 crores based solely on the company’s turnover, as there was no rational nexus between revenue and the actual environmental damage, a method deprecated in its earlier judgments. The Court firmly stated that the NGT overstepped its jurisdiction by directing an investigation by the Enforcement Directorate under the PMLA, emphasizing that such a power is not available to the NGT under its governing statute, as it first requires the registration of a scheduled offence. Furthermore, while upholding the necessity of continuous monitoring and audit, the Court set aside the NGT’s sweeping closure directions, noting they were unwarranted after a report of full compliance had been accepted. The judgment also cautioned tribunals against lengthy, rhetorical judgments that state general laws without a judicious application to the specific facts of the case.
Final Decision & Judgement:
The Supreme Court allowed the appeal and set aside the specific directions of the NGT that were under challenge. It struck down the imposition of the ₹50 crores compensation, declaring the linkage to turnover as legally untenable. The direction to the Enforcement Directorate to investigate under the PMLA was also quashed, being beyond the NGT’s jurisdiction. However, the Court upheld the directions for continuous monitoring, audit, and restoration, reserving the right for the Pollution Control Boards to take action against any future non-compliance. The Court concluded that the NGT’s extensive order was an exercise in futility, given the prior report of full compliance.
Case Details:
Case Title: M/s C.L. Gupta Export Ltd. vs. Adil Ansari & Ors. CITATION: 2025 INSC 1035 Civil Appeal No.: Civil Appeal No. 2864 of 2022 Date of Judgement: August 22, 2025 Judges/Justice Name: Justice B. R. Gavai, and Justice K. Vinod Chandran
Download The Judgement Here