Legal Contractual and Environmental

Issues in IndianInfrastructure
Dr.Pravin Jadhav
Importance…
• A project agreement, no matter how well drafted, may be
unenforceable and/ or irrelevant if it is inconsistent with the country's
laws and regulations.
• The existing laws/ regulations may prohibit or impede the proposed
project and so the project may need to be adapted to fit within them.
• It may be appropriate to embark on more fundamental reforms of the
institutions in the country such as reform of the judiciary/
establishment of a regulatory regime.
• A large proportion of infrastructure projects become the subject of
regulatory and legal battles. Developer versus concessioning
authority. Government versus contractor. Operator versus regulator.
Regulator versus government. Lender versus developer. Losing
bidder versus awarding agency
Diverse legislation applicable to a particular sector/activity-

• Laws governing various sectors like the Electricity Act, 2003; the
Telecom Regulatory Authority of India Act, 1997; the National
Highways Authority of India Act, 1988; Municipal laws of various
States;

• Laws governing normal commercial transactions like the Contract

Act, 1872; the Sale of Goods Act, 1930; the negotiable Instruments
Act, 1881; the Companies Act, 1956; the Foreign Exchange
Management Act, 1999; the Competition Act, 2002; • Laws for
recognition and enforcement of rights and obligations like the
Specific Relief Act, 1963, the Code of Civil Procedure, 1908, the
Arbitration and Conciliation Act, 1996.
• Binding rulings and instruments issued by
a regulatory authorities include –
• regulations,
• practice directions,
• licenses,
• quality of supply standards,
• tariff orders,
• performance standards,
• safety standards,
• environmental issues,
• and case-specific orders.
 Real Estate (Regulation and
Development) Act, 2016
Compulsory registration: According to the central act, every real estate project (where the
total area to be developed exceeds 500 sq mtrs or more than 8 apartments is proposed to be
developed in any phase), must be registered with its respective state’s RERA.

Once the registration is granted by the Regulatory Authority, the builder or developer has
to publish entire details of their projects on the website of the Regulatory Authority

Reserve account: Builders will be required to deposit 70 per cent of the money they collect
from prospective home buyers into an escrow account that will only be used for construction
purposes.

They will also need to disclose details of exactly when the property will be completed, and how
much money they have already collected.

In addition, any new advertising of unsold property for ongoing projects or any major structural
changes will need approval from two-thirds of existing occupants or home owners.
No more early bird deals
Home builders can now only advertise property and homes once they have received all the regulatory
approvals.
In addition, builders will also have to enter a registered sale agreement if they collect more than 10 per
cent of the home value at the time of booking the project.
Penalties for delayed projects
If a builder has delayed a housing project they will now have to either refund the entire amount they
have charged, or pay interest on it until the home is delivered to the buyer.
Defaulters will be subject to an interest rate of two percentage points higher than that being offered by
the State Bank of India, on the amount already paid.
Home builders that violate the new laws could be imprisoned for up to three years.
Real estate disputes
In case of disputes, instead of going to civil courts, home buyers can now take their complaints in
connection to their property projects to special real estate courts that will be set up in each state. This
is aimed at speeding up the current redressal process.
RERA definition of carpet area
Gautam Chatterjee, Maharashtra RERA chairman, explains that “It is now mandatory for the
developers of all ongoing projects, to disclose the size of their apartments, on the basis on carpet
area (i.e., the area within four walls). This includes usable spaces, like kitchen and toilets. This imparts
clarity, which was not the case earlier.”
A)Carpet Area
B) Built-up area
C)Super built-up area
Carpet Area
Carpet area is the area that can actually be covered by a carpet, or the area of the apartment
excluding the thickness of inner walls. Carpet area does not include the space covered by common
areas such as lobby, lift, stairs, play area, etc. Carpet area is the actual area you get for use in a
housing unit.
Built-up area
Built-up area is the area that comes after adding carpet area and wall area. Now, the wall area does not mean
the surface area, but the thickness of the inner walls of a unit. The built-up area also consists of other areas
mandated by the authorities, such as a dry balcony, flower beds, etc., that add up to 10% of the built-up area.
So when you think about it, the usable area is only 70% of the built-up area. So, if the built-up area says 1200
square feet, it means around 30% (360 square feet) is not really usable, and the actual area you will get to
use is only the remaining 840 square feet.
Super Built-Up Area
It is the area calculated by adding the built-up area and common area that includes the corridor, lift lobby, lift,
etc. In some cases, builders even include amenities such as a pool, garden and clubhouse in the common
area. A Developer/Builder charges you on the basis of the super built-up area which is why it is also known as
‘saleable’ area.
Case of Environmental Clearance
 1. Statutory authorities and their respective responsibilities
Statutory Agency Responsibilities
Ministry of Environment & 1. Formulation of Policies and Strategies
Forests (MoEF) 2. Formulation of Rules and acts and put them before parliament for approval.
[Government Of India] 3. Interaction with international agencies
4. Issuance of Environmental Clearance & permits
5. Implementation of National Schemes/programs
6. Monitoring through Regional Offices

Central Pollution Control 1. Preparation of technical guidelines

Board (CPCB) 2. Providing technical back‐up to MoEF
[Government Of India] 3. Laboratory facility and Monitoring, R & D
4. Legal Proceedings (Section 5 of wateract)
5. Implementation of Registration & other schemes
6. Monitoring through Zonal Offices

Dept. of Environment 1. Formulation of Policies and Strategies

(DoEn) 2. Formulation of Rules and acts and put them before StateLegislative
Assembly & Council for approval.
[State Government] 3. Co‐ordination with MoEF and CPCB
4. Issuance of Environmental Clearance & permits

State Pollution Control 1. Consent Management of industries

Board (SPCB) 2. Legal proceedings (Sec. 33A of WaterAct)
[State Government] 3. Projects and Planning
4.Monitoring aspects
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 2. Environmental Impact Assessment : Concept and Components…

• Concept: EIA is a tool to assess positive and negative impacts of a

project on surrounding area, population, vegetation, flora, fauna,
property and overall environment

• Components
Air Pollution (From Process and Fuelburning)
Water Pollution (Industrial process, Effluents and sewage, Treatment and reuse)
Land Pollution (Chemical pollution, Waste substances, solid waste, treatment & disposal)
Noise Pollution
Ecology, Flora, Fauna, Fisheries, endangered species
Natural Resources (Air, Water, Land, Rivers, Streams, Ponds & Lakes, Hills,Forest,)
Eco‐sensitive zone, Sanctuaries, Migration routes,
Archeological sites, Roads, Military Establishments, Schools, Hospitals, Other social centers
Socio‐Economy, Rehabilitation, Resettlement, Compensations
Disaster Management, Risk Assessment
Environmental Management Plan 3
 3. EIA Notification 1994 (Amendments 1997 and 2004)

• In India, for the first time, Environmental Impact Assessment got a sanctity when
EIA Notification was published on 27th January 1994 through Extra Ordinary
Gazette of India

• The notification mandated 29 types of Industries to seek Environmental Clearance from

Ministry of Environment and Forests, New Delhi before commencement of the project

• While most of the industries required clearance from Central Government, State
Government clearance considered sufficient for less polluting industries.

• Provision of “Public Hearing” was introduced in 1997 in order to encourage public

participation in decision making.

• Through Notification dated 7th July 2004, construction projects were brought under
EIA process for the firsttime

4
 4. Environmental Clearance to Construction Projects …

• Directives by Supreme Court of

India…

• Central Govt. notification (7 July

2004)…

• Criteria :
• Capital Investment 50 Cr or more

• 1,000 or more population

• 50,000 liters or more sewage generation

• Public Hearing mandatory…

• EIA mandatory…
 5. EIA Notification 2006

• Initiative by Hon’ble Prime Minister, In effect from 14th September

2006…

• Fair & Improvised in comparison with earlier notification (1994)

• Transparency in Public Hearing ensured

• Systematic classification of Industries/ activities …

• Total 39 types of activities under 8 major classes Scheduled under

notification
• Prior Environmental Clearance from Central Government/ State

Level Environmental Impact Assessment Authority (SEIAA)

mandatory

• Powers of State Government defunct …

• However, EIA not mandatory for all Projects

• No EIA and public hearing required for construction projects in 8a

 6. List of Projects requiring Environmental Clearance

• Mining • Pulp and Paper

• Oil and Natural Gas Exploration • Sugar Industries
• River Valley Projects • Foundry Projects
• Thermal Power Projects • Oil and Gas Pipelines
• Nuclear Power Projects • Hazardous waste storage & Handling
• Coal Refineries • Air Ports
• Ports and Harbors
• Metal Industry
• National Highways & Express ways
• Cement
• Rope ways
• Petroleum Refineries
• Ship Breaking
• Asbestos based projects
• Industrial Estates
• Tanneries • SEZ Projects
• Chemical Fertilizerso • Export processing projects
• Pesticides • CHWTSDF
• Chemicals • CETP
• Bulk drugs abdPharmaceuticals • CSWTSDF
• Distillery • ConstructionProjects
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• Dyes and Dye Intermediates
 7. Process of Environmental Clearance

Step 1 : Screening
Step 2 : Scoping
Step 3 : Public Consultation
Step 4 :Appraisal

Project Proponent applies with Form-1, 1A & Conceptual Plans

to State Environmental Impact Assessment Authority
(SEIAA)

Screening :Scrutiny by State Level Expert Appraisal Committee (SEAC)

No EIArequired EIA Required

Appraisal by Expert Committee Scoping: Award ToR for EIA preparation

Public Consultation (If applicable)

Appraisal by Expert Committee

Environmental Clearance issued by MoEF or SEIAAA

 8. Why take Environmental Clearance ?

EIA Notification 2006 mandates as follows:

Central Government hereby directs that on and from the date of its
publication the required construction of new projects or activities or the
expansion or modernization of existing projects or activities listed in the
Schedule to this notification entailing capacity addition with change in
process and or technology shall be undertaken in any part of India only after

the prior environmental clearance from the Central Government or as the

case may be, by the State Level Environment Impact Assessment Authority,
duly constituted by the Central Government under sub‐section
(3) of section 3 of the said Act, in accordance with the procedure specified
hereinafter in this notification.
 9. When take Environmental Clearance ?

EIA Notification 2006 mandates as follows:

An application seeking prior environmental clearance in all

cases shall be made in the prescribed Form‐1 annexed herewith

and Supplementary Form‐1A, if applicable, as given in Appendix

II, after the identification of prospective site(s) for the project

and/or activities to which the application relates, before

commencing any construction activity, or preparation of land,

at the site by the applicant.

10. Which Construction Projects need Environmental Clearance?(Applicability
Criteria)

Projects Listed in Schedule appended to EIA Notification

2006:
8 Building /Construction projects/Area Development projects and Townships

8(a) Building ≥20000 sq.mtrsand (built up area for covered

an <1,50,000 sq.mtrs. of built‐ construction; in the case of
d up area facilities open to the sky, it
Constructio will be the activity area)
n projects
8(b) Townships Covering an area ≥ 50 ha All projects under Item 8(b)
an and or built up shall be appraised
d area as Category B1
Area ≥1,50,000 sq .mtrs
Developmen
t projects.
11. Townships VS Local People, Affected people, Ecology and Environment

• Pressure on Local Resources e. g. Drinking

Water

• Sewage Disposal Problems – Whose baby is this ?

• Solid Waste Disposal ?

• Environmental Infrastructure ?

• Emergency Infrastructure like Fire Stations?

• Changes in Local Drainage Pattern

• Locals Vs migrants – social divide

• Hutments Vs Towers – class divide

• Rural vs Urban – cultural divide

Part - 2

A case studyof LAVASA

 A. Project Lavasa at a glance

• Lavasa Corporation Limited is developing a hill station township project in the Mose
River valley located in Mulshi near Pune

• Total 20 villages are going to be affected due to this project

• A total of 10,000 hectares (= 25,000 acres) land will be used for the project
which includes mostly the farm land and private forests or forest like land
• Initially, for getting government approvals smoothly, this project was declared to be an
Eco-Tourism Project however later it revealed that this is a major Housing Project for
Rich Class meaning just another project for the builders to mint money

• Construction of the project has begun since 2004 however the project has to date not
received an appropriate environmental clearance as mandated by the Central/ State
Government for any such construction project

• A large part of construction work has already been finished in the villages of Dasve
and some parts of village Mugav
 B. Major Socio-Environmental Issues involved

1. Ecology: Large Scale Ecological Damages : Cutting of hills, flora-fauna,

water body

2. Environment: Violation of Laws- E P Act 1986, Govt filed criminal case

against Lavasa

3. Forest : Breach of Forest laws, Offence booked by Govt, Supreme Court’s

Contempt

4. Land: Social Crimes of Land Grab, Bad Land Use, Land Pollution

5. Town Planning: Bad Planning, Violation of TP Rules

6. Water Resources: Effects on downstream users- Pune and further users,

Pollution
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7. Constitutional Issues: Breach of article 243 of Constitution of India by govt,
Tribal Rights
 1. Ecology

• Lavasa is in the province of WESTERN GHATS of INDIA which is among World’s 20 Most
ecologically sensitive HOT SPOTS. Also, the UNESCO is considering to declare Western
Ghats region as the World Heritage Site according to media reports.

• The Government of India has specially constituted Western Ghats Expert Ecology Panel
(WGEEP) to control such ecologically hazardous development in the region, the Panel
has already submitted its report to former which is under consideration.

• Western Ghat is a crucial factor for Monsoon of India and other meteorologically
important parameters .

• The Government of India has expressed that In case many such projects like Lavasa are
approved, it will badly affect the climate of India. The GOI has also directed all State
Governments to take cognizance of this while proposing new hill-stations

• National Alliance of People’s Movements (NAPM) and other NGOs have filed a Public
Interest Litigation in Bombay High Court against Lavasa.

• In this pending case, following to the orders dated 22-Oct-2010 issued by Hon’ble Bombay
High Court one Naresh Dayal Committee comprising of 6 members was constituted by Govt of
India to examine environmental issues in Lavasa.
• Findings of Dayal Committee: In itsreport;

• Vide point 10 [Page-9] the committee noted that large scale hill cutting and destruction of
vegetation has been done by Lavasa. The committee also noted that back water of the dams
were filled with stone crushing material and also that the villagers expressed that the project has
adversely impacted their life and they are not willing to part with their land for any of the project
activities.

• Vide point 17 (ii) (b) [Page-13] the committee observed that “The area proposed for the hill
station project was originally planned as an afforestation zone in the Regional Plan for Pune
district. Even though the project boundaries have been drawn by delineating the forest areas,
the area surrounding the Lavasa site continues to be in the afforestation zone. The project area
is within eco–sensitive region having green tree cover and practically all of it is on the hill slopes
of the mountains skirting the Warasgaon backwaters”.

• Vide point 17 (ii) (c) [Page-13]the committee noted that “Large scale hill cutting was observed
for obtaining building material for construction as well as for widening the road. Due to hill
cutting, the topography has changed from good vegetative cover to barren exposed slopes
and enhancement in siltation etc would occur.”

• Vide point 17 (ii) (c) [Page-14] the committee observed that “The excavated material was
observed to occupyareas in the valley in some places near Mugaon within the flood zone, which
is unscientific way of storing the raw material.”
whether the hill cutting is at locations approved by the District Collector as well as the quantum
quarry material to be excavated.
 2. Environment and Environmental Laws

• It was mandatory for Lavasa to seek PRIOR Environmental Clearance from the appropriate
authorities under EIA Notifications 1994, 2004 and 2006. However none of them has been as yet
obtained from the appropriate authorities.

• NAPM pointed out this to Ministry of Environment and Forests (MOEF) Govt of India which in turn
issued a STOP WORK notice to Lavasa on 25th November 2010.

• Lavasa moved to High Court against MOEF order, however; the High Court rejected Lavasa’s
request to allow continuation of construction work. The works at project site have come to a
halt since then. The matter is pending at Bombay High Court.

• MoEF constituted Dayal Committee and further Ravindran Committee which recommended that
Lavasa should be asked to pay 5% of the projectcost as the Environment Protection Fund in lieu
of the environmental damages caused by it.

• The clearance issued recently on 9th Nov 2011 by MoEF is totally illegal as it is issued by
incompetent authority and violating MoEF’s own norms, this also has been challenged in the
High Court

• Recently, Govt of Maharashtra has filed a criminal case against 15 high level officials and
Directors of Lavasa for breach of above referred notifications. The court has already
issued summons to all those against whom this criminal case is filed

• If convicted, this offence is punishable with imprisonment upto 5 years and fine upto 100 thousand
INR
 3. Forest

• Dayal Committee in its report vide point 6 (xii) (c), [Page-5] noted that “Conservator of
Forests has reported that Lavasa Corporation(LCL) hasviolatedForestact1980 in case
of F.S. No. 35 in Mugaon Reserved Forest and that enquiry in this regard was in
progress”.

• The ForestsDepartment, Govt of Maharashtra has already bookedoffenceunder

ForestAct and the case is with Forest Department’s Sinhgad Road Office.

• Lavasa project itself is violation of ForestsRightsAct(FRA) which was adopted by

Parliament of India to ensure livelihood of tribes.

• The website www.corruptionininmaharashtra revealed a shocking fact that in

Godavarman case (1996) the Supreme Court of India has ordered a detailed survey by
all state governments to record forest lands in each taluka of the respective state.

• However, most shockingly , Govt of Maharashtra submitted a report to Supreme Court in

the year 2006, but has deliberately not mentioned anything about forests in 3 talukas, i.e.
Mulshi (whereLavasa wastakingshape), Indapur and Baramati !
 4. Land

• Ceiling Land which is meant for distribution to landless poor people only as per the Ceiling Act,
has been diverted illegally to Lavasa by State Government itself

• Adivasi (Tribal) Land which cannot be sold in any case to a Non Tribal entity as per law; has been
transferred to Lavasa. A case filed at police by one tribe Bandya Bhau Valhekar is pending at
Mulshi Police.

• Government Land of 141 ha, which is a public property belonging to Water Resources
Department, Govt of Maharashtra, has been leased to Lavasa where Lavasa has
erected unauthorized structures against the clauses of the agreement with government.

• Land Grab: In addition, there are incidences where Lavasa has aquired land from poor farmers
either by cheating them or by using muscle power. A poor farmer Dnyaneshwar Shedge has
filed a complaint against Lavasa in one such matter

• Dayal Committee Vide point 17 (ii) (e) [Page-14-15] noted that “The project is spread over 18
villages consisting of various Gaothans (villages). There are some adivasi communities in the
affected area and that there has been a large scale diversion of “ceiling surplus” land which
was allotted to these Adivasis and Nomadic Tribes.
30
 5. Town Planning

• No carrying capacity study has been done by Lavasa before planning to impose a population of
200 thousand people as against present population of 12 thousand people in the area.

• As a result, the development plan of Lavasa has been termed as the worst development plan
by many experts in the field.

• Dayal Committee; Vide point 17 (vi) [Page-19] in its report noted that “The committee could not
see any documents about the public consultation before taking up such a large project, since the
figures of population will vary and since requirements for water supply, sewerage, amenities,
solid waste disposal etc cannot be ascertained due to the piece meal approach adopted in the
project, it was very essential that a detailed Master Plan was prepared following due procedures,
before undertaking the work”.

• It shows the major lacuna in development plan of Lavasa which cannot be overlooked

• Lavasa utilised political highhandedness in getting approved itself as a Special Planning

Authority (SPA) from The Govt. of Maharashtra.
• Dayal Committee, vide point 17 (i) (a) [Page-11] in its report observed that there was no
approvedlandscape plan, parking and circulation plan, baseline environmental information
within and around the site.

• It also observed that “even in no development zone, the widening and strengthening of road
was seen to have been completed.

• Dayal Committee, vide point 17 (i) (c) [Page-11] in its report noted that “As per the Hill Station
Development Policy, the maximumwidth of the roads is 9 meters. For a township with a
projected population of 2 lakhs, it appears that the proposed width of 9 mts is insufficient to take
peak traffic load, meet emergency services for the entire development.

• Dayal Committee also commented that ‘A “world Class” huge convention centre does not go with the
concept of a hill station with only 9 meters access road, without adequate parking provisions.’

• Dayal Committee, vide point 17 (vi) [Page-19] in its report noted that “The creation of SPA (Special
Planning Authority) and powers vested with the Lavasa Corporation Ltd leads to a perception of
conflict of interest because the promoter is also a regulator and whether any changes / revisions
are carried out without following due procedures is not known to the stake holders.”

• It is also noteworthy to mention here that a public interest litigation is already pending before Hon’ble
Bombay High Court with regard to Govt of Maharashtra’s decision to appoint Lavasa as a Special
Planning Authority (SPA) and Hon’ble court is yet to pass an order in this regard.
 6. Water Resources

• The Water Resources Department of Govt of Maharashtra has, within a day,

sanctioned a quota of 1.03 TMC water to Lavasa which has been challenged in the
Bombay High Court.

• This is equivalent to 1 month’s water utilised by the entire City of Pune. Naturally,
Pune people have challenged this decision of government as it would make them
deficient of water that they gettoday.

• Dayal Committee vide point 17 (ii) (d) [Page-14] in its report noted that “The drawl of
water for the project is apprehended to reduce water availability for irrigation purposes
as well as the downstream requirements of drinking water etc.

• This clearly indicates that water availability to this project is at risk. At the same time,
water supply to City of Pune is also endangered due to this project.
 7. Constitutional Issue

• Article 243 of Constitution of India ensures local self governance

powers to village administration and it is not clear what will happen
to Local Governments in these 20 villages affected by Lavasa

• There are many issues in Lavasa case wherein constitutional issues

may arise in future like Inequality in distribution of water, for example
Pune Citizen get water at the rate 135 LPCD against this Lavasa
citizen get 900 LPCD also highlights the issue of equality
guaranteed by the Constitution of India.

• Constitution of India provides a special protection to weaker sections

of society such as Schedule Tribes and Schedule Castes. Lavasa
model of develoment has no place within its ambit for such socially
and economically backward social classes.
 8. Social Unrest

• There has been a wide agitation against Lavasa since last 5 years by local people and
environment conservationist groups as local people have been suffering from atrocities
by Lavasa.

• The Mose Khore Bachao Sanghatan, a local social activists group and National Alliance of
People’s Movements are leading these social, non-violent agitations alongwith many Non
Governmental Organisations in and around Pune.

• The agitations is mainly against atrocities on Local farmers, Schedule Tribes and
their constitutional rights, their right to livelihood.

• The agitation is also against environmental damages and degradation of ecology of the
area.
• Also the issues such as land grab, water conflicts are on the agenda of
agitations
• Dayal Committee also has pointed out that “No scheme for rehabilitation of affected villagers
as also for the protection of of existing gaothans (villages) was available to the committee.
Many villagers from Mugaon were complained that their lands have been taken forcibly and
their source of water supply etc are being affected by the project.

• Social Activists Mrs Medha Patkar, ShriAnna Hazare, Shri Prakash Ambedkar are leading
these agitations.