INTRODUCTION

During the 1980s, through public interest litigation, the Supreme Court of India addressed
environmental degradation and governmental inability. As a result, the Court was able to
introduce a non-adversarial process and increase the scope of locus standi. As a result,
concerned persons were able to file letters-based petitions based on news reporting. This
created substantial obstacles as well as significant improvements in environmental
adjudication, such as the reading of the “right to a clean environment” in the light of the
“right to life” enshrined under Article 21 of the Constitution. Although the Court utilised the
“polluter pays concept”, “precautionary principle”, and “sustainable development” principles,
there was no pro-environment uniformity in their implementation. Judges found it
increasingly challenging to stay current on the most recent scientific and technological
breakthroughs and decide on complicated scientific issues requiring a higher level of
scientific ambiguity. This was a result of the growing requirement for scientific and technical
knowledge. As a result, the Supreme Court expressed the need for the establishment of a
Green Tribunal in three landmark judgments.
The 186th Report of the Law Commission of India added to this legal thrust by
recommending the creation of environmental courts in each state. It is suggested that judges
and experts both be present in these courts. So, although though the National Green Tribunal
Act, 2010 (NGT Act or the Act) was passed by the government to fulfil India’s responsibility
under the Stockholm and Rio Conferences, its primary purpose was to ensure effective
adjudication in light of the growing scientific uncertainty.
The NGT’s environmental adjudication process has undoubtedly been a significant advance
over the Supreme Court-led public interest litigation system. Nearly 19,066 of the 23,626
cases that were filed between 2010 and 2017 were cases resolved. There is no doubt that
cases are being resolved more quickly. Though the NGT’s ability to adjudicate more
efficiently is an issue that hasn’t been conclusively resolved. This is due to the Tribunal’s
inability to determine “environmental compensation” using a reliable approach. The
awarding of compensation is significant because it not only compensates the aggrieved
parties but also demonstrates the high accuracy of the Tribunal’s scientific investigation. It
shows how well the Tribunal manages scientific ambiguity and how accurately it assesses
environmental damage in a case.
In this paper, it has been demonstrated that the NGT lacks a clear methodology for
quantitative assessment of environmental damage by analysing its trends in awarding
compensation in environmental law cases. In the second part of this paper, the researcher has
briefly analysed Manoj Mishra v. Delhi Development Authority, popularly known as the “Art
of Living Case”– arguably one of the most controversial cases decided by the NGT and has
also discussed the preliminary and final reports submitted by the Expert Committee set up by
the NGT and significant points contained in these reports. Lastly, the researcher has also
discussed a formula recently devised by the CPCB for computing environmental
compensation.

AIMS & OBJECTIVES

The researcher had certain aims and objective during the completion of this project. The
researcher aimed to present a detailed analysis of the topic. The objectives of this project are:
 To analyse the NGT’s trends in computing and awarding compensation in environment
law cases.
 To study and briefly analyse the controversial Art of Living case of 2016.
 To study the formula devised by the CPCB for computing environmental compensation in
India.

RESEARCH QUESTIONS
1. How did the NGT’s trends have changed over the years for awarding compensation in
environment law cases?
2. What was the controversial Art of Living case?
3. How did the CPCB devised a formula for computing environmental compensation in
India?

RESEARCH METHODOLOGY
To draft this project, the researcher has used doctrinal method of research, which means using
of secondary sources of data. Researcher has used many authentic sources which are relevant
to the research questions without leaving any extent or uncertainty. With respect to this
project, the researcher has gone through previous papers on this topic, books, articles
accessible on web, etc. The primary sources for this project are Live Law and International
judicial pronouncements.

ANALYSING NGT’S TRENDS IN AWARDING COMPENSATION

During the course of its ten-year existence, the National Green Tribunal (“NGT” or
“Tribunal”) has improved environmental adjudication in India. Although the NGT lacks a
strong compensation mechanism, it may be better suited to manage complicated
environmental issues due to its technical knowledge and expertise. The NGT Act makes it
clear that the legislative intent was to provide the NGT broad authority to decide how much
compensation to award. The NGT has been able to award high amounts of environmental
compensation as a result of its broad discretion. For instance, in February 2016, the NGT
mandated that industries engaged in illegal mining along the banks of Yamuna pay INR
252.5 crores as environmental compensation. In February 2018, the NGT awarded INR 195
crores as compensation that must be paid to make up for the environmental harm caused by
illegal construction operations.
Under the NGT Act, 2010, there is no specified minimum or maximum limit for awarding
compensation. In fact, Section 20 of the Act requires that the “Tribunal adopt the principles
of sustainable development, polluter pays, and precautionary principle when delivering an
award or decision relating to calculation of compensation. However, the NGT’s current
practice in determining environmental compensation requires the project proponent to pay
between 5 and 10% of the project’s total cost. The start of this trend was in 2014 when the
NGT arbitrarily adopted the apex court’s approach to compute compensation in the case of
Goa Foundation v. Union of India (‘Goa Foundation’). In Goa Foundation, the apex court
was faced with the issue of “determining the environmental damage caused due to certain
illegal mining in Goa.” After calculating the amount of compensation, it was held that “the
project proponents would have to pay 10% of the sale proceeds as compensation.” The Court
felt that this was an appropriate compensation given that mining could not be completely
stopped due to its contribution towards employment and revenue generation for the State.
Accordingly, the Court held that “if mining had to continue, determining compensation based
on sale proceeds would be apt as it would directly affect the profitability of the project.”
However, at that time, the intention was not to make this a precedent for determining
environmental compensation in all cases.
A special purpose vehicle was created by the Court in “Goan Iron Ore Permanent Fund” for
depositing the compensation and relied on its earlier decision in Samaj Parivartana
Samudaya v. State of Karnataka, wherein it was held that “ten percent of the sale price of the
iron ore during an e-auction should be used as compensation.” Therefore, this strategy, at
best, can serve as a precedent for cases involving illegal mining in places like Goa. It is
obvious that factors like the state’s reliance on mining for tax income and employment were
taken into account while determining the compensation.
When deciding the amount of compensation, the NGT frequently showed a vested interest in
the project proponent’s profitability. This is clear from the fact that it cited the Tribunal’s
ruling in Krishan Kant Singh v. National Ganga River Basin Authority, where it stressed the
size, capability, and success of the unit. This is antithetical as in some instances, the
compensation assessed is disproportionate when compared to the project proponent’s yearly
revenue or turnover.
In several cases, the NGT has now adopted the practise of relying on the Supreme Court’s
ruling in the Goa Foundation case or merely levying an initial fine of INR 5 crores. This is
problematic because it enables a potential polluter to weigh costs and benefits before starting
a project. It is likely to encourage the potential polluter to move forward with the project if
the project can be reasonably profitable after accounting for a five percent or INR 5 crores
pollution fee, given that the initial compensation, regardless of the level of pollution, is likely
to be around INR 5 crores or pegged at a mere five percent of the project cost. This practice
needs to be stopped and the NGT should instead decide on initial compensation on a case-by-
case basis rather than adopting a general policy of granting a set proportion of the project
cost.
Furthermore, it is obvious that there is no technique or formula used by the NGT to determine
compensation. When initial compensation is given based on predetermined criteria rather
than the complexity of each case, it can either severely undervalue or greatly overvalue the
environmental damage. This was demonstrated in the case Ajay Kumar Negi v. Union of
India (‘Ajay Kumar Negi’) wherein the forest cover in the Tidong basin in Himachal Pradesh
was damaged due to the construction of a hydroelectric project. Several conditions of the EC
with respect to forests was violated by the project proponent. The Tribunal responded by
imposing an initial penalty of INR 5 crores on the project proponent, in keeping with the
general trend mentioned. Later on, in its decision given on April 4, 2016, the Tribunal
completely changed its stance with respect to the initial penalty levied and held that “the
stage is not yet matured for relief as solicited, particularly, damage to environment, if any,
arising out of the project activity is yet to be completely assessed.” The reason for this sudden
change was that “the same Expert Committee, which was instrumental in the levy of the
initial compensation, subsequently held that the livelihood of the people was least likely to be
affected by the project operation” and that “there was no apparent threat of irreversible
damage to the forest cover.” In addition to this, the Tribunal failed to hold the governmental
authorities accountable. As a result, the Tribunal shifted from finding significant
environmental damage and assessing an environmental compensation of INR 5 crores to
finding no basis for damages.
‘ART OF LIVING CASE’- AN ANALYSIS
One of the most contentious cases in the NGT’s history is undoubtedly the Art of Living
Case. The World Cultural Festival (WCF), which took place from March 11 to March 13,
2016, on the banks of the river Yamuna, was organised by the non-profit group Art of Living.
While planning for the event started months in advance, concerns about the WCF’s
environmental impact on the riverside and floodplain were raised in a February 2016
application that was submitted to the NGT. Based solely on a visual evaluation, the Expert
Committee’s initial estimate came to around INR 120 crores.
In this section of the study, we’ll analyse this instance and point out that the NGT'’s overall
practise of not holding governmental bodies accountable and its lack of scientific
investigation naturally led to the reduction in the estimated compensation. Along with the
basic strategy of the Tribunal, we’ll also talk about the preliminary and final reports
submitted by the Expert Committee formed by the NGT, important points contained in each
report, and their overall contents.
The Expert Committee members had presented a report to the NGT in 2013 titled
“Restoration and Conservation of River Yamuna,” in which they categorically stated that “the
river’s capacity to support life had already been lost and that the ecosystems of the flowing
water, the river bed, the floodplain forest, and the grasslands are now locally extinct
(emphasis supplied).” The research also noted that “the biodiversity of the floodplains has
been considerably changed and diminished, resulting in the loss of the floodplains’ original
roles.”
In the report they submitted to the NGT in the Art of Living Case, the members of the Expert
Committee stated that “Art of Living will be accountable for the restoration of the fauna, such
as fish”. Although the same members had previously come to the conclusion in 2013 that the
biodiversity of the floodplain had already been considerably decreased and that the floodplain
ecosystems were locally extinct, they came to the conclusion in 2016 that Art of Living must
restore all of the plants. Additionally, the Expert Committee stated that “the total loss cannot
be readily perceived and documented and that this is an invisible loss of biodiversity, which
cannot be properly measured” when describing the loss of vegetation and biodiversity in the
floodplain. In actuality, satellite photographs provided by the Art of Living showed that the
overall number of trees before and after the WCF was the same. The Tribunal did not address
this, nevertheless. What constitutes an invisible loss is not addressed by NGT. This shows
that the study was not performed in a scientific manner, and the NGT should not have
proposed a compensation sum unless it could support it with proof of damage in the form of a
deviation from or worsening of the environmental state that could be measured.
The Expert Committee said in both reports that the event had compacted and levelled the
floodplain at the event location. In order to remedy the soil’s compaction, it was advised that
an estimated compensation of INR 28.73 crores be paid. However, this judgement was also
not supported by any scientific research. The NGT should have established the baseline
condition of the event site prior to the WCF in order to quantify any departure from it before
doing any scientific investigation. This is the most sensible way for deciding compensation
because it is equally reasonable and accepted on a global scale. However, aside from the
visual examination to establish the baseline state before to the event, the NGT made no
scientific analyses.

FORMULA FOR COMPUTING ENVIRONMENTAL COMPENSATION IN INDIA

In December 2018, the “Central Pollution Control Board” (CPCB) curated a special formula
for computing “Environmental Compensation” (EC) for the purpose of imposing heavy
penalties on different Companies and Industries for causing emission & effluent discharge
and committing other environmental offences which includes non-compliance of its orders.
The NGT heard a matter relating to “Water Discharge Quality” in August, 2018 and in its
order, issued directions to CPCB “to ensure that the discharge quality of Environmental
Pollutants should remain within the standards as enlisted in legislature.” It was also left on
the discretion of CPCB to take penal action for assessing and recovering compensation from
polluter for damage caused to the environment.
This led to the constitution of a Committee by the Chairman and CPCB arrived at a formula
for computing Environmental Compensation (EC) and a policy was formulated by the
Committee, named as "Methodology for Assessing Penalty & Environmental Compensation
and Action Plan to Utilize the Fund". The formula for calculation of EC is as follows:
“EC=PI x N x R x S x LF
Where, EC is Environmental Compensation in (₹)
PI = Pollution Index of industrial sector
N = Number of days of violation took place
R = Factor in Rupees (₹) for deriving the EC, which may be a minimum of 100 and
maximum of 500.
S = Factor for scale of operation which could be based on small/ medium/ large industry
categorization, which may be 0.5 for micro or small, 1.0 for medium and 1.5 for large units
LF = Location factor”
This formula takes into consideration the foreseeable danger posed by the environmental
pollution in terms of “Pollution Index, duration of violation in terms of number of days, scale
of operation in terms of micro & small/medium/large industry and location in terms of
proximity to the large habitations.” Earlier, the term “Pollution Index” was used to classify
the Industrial sectors into Red, Orange, Green and White category but since 2016, the same
“Pollution Index” is being used for computing environmental compensation. When the
“Pollution Index” falls within the range of 60-100, it is categorized under the head of “red
industry”, 41-59 connotes “orange industry”, while 21-40 connotes “green industry”. To
maintain consistency in assessing liabilities, the average pollution index of 80, 50 and 30 are
used for computing the “Environmental Compensation” for red, orange and green categories
of industries, respectively.
Apart from this formula used to calculate the EC, the CPCB has also came up with other
formulas to address offences such as: “Illegal Ground Water extraction, Untreated Sewage
Discharge, Violations of provisions of the Bio Medical Waste Rules, 2016, violations under
Solid Waste Rules, Graded Response Action Plan for Air Pollution in Delhi region.” In case
of Illegal Ground Water extraction, even though the formula to compute compensation has
been formulated by CPCB, the authority to impose penalties still vests with the “Central
Ground Water Authority” (CGWA).
CPCB now regularly uses these formulas to compute and impose environmental
compensation on pollution causing companies/industries. In addition to this, CPCB has also
set maximum and minimum limits of imposing penalties.

CONCLUSION
The NGT was established to efficiently handle intricate and sophisticated scientific issues
including scientific ambiguity, revolutionising environmental adjudication in India. It has
undoubtedly sped up environmental adjudication in the nearly ten years it has been in
existence. However, as the article demonstrates, despite the technical competence, the
technique used for calculating environmental compensation and quantifying ecological harm
has fundamental faults.
The NGT has openly endorsed the Supreme Court’s strategy, but it has significantly changed
how it would be applied in two ways. First, it takes a portion of the project cost rather than
the sale proceeds as determined by the Court. Second, it has unilaterally cut the percentage
from 10% of the project cost—the figure used by the Court—to 5%. The Court had explicitly
emphasised in the Goa Foundation case that “the State’s earnings from mining was taken into
account for assessing compensation.” Nevertheless, the NGT has used this strategy in the
majority of cases, and as a result, the compensation given is frequently out of proportion to
the project proponent’s yearly turnover.
Additionally, the investigation of the Art of Living case reveals that the NGT’s initial
compensation assessment had little to do with the case’s true circumstances. The Tribunal
dramatically cut its initial compensation estimate from 120 crores to only 5 crores. Contrary
to the widespread media narrative that the reduction was the consequence of political
pressure placed on the Tribunal from the outside, it has been amply shown in this case that it
was a natural outcome of the ad hoc manner in which the proceedings were conducted. The
Tribunal unambiguously admitted to basing its estimated compensation on an invisible loss in
addition to admitting that it would have taken too much time to determine the baseline
condition of the event site before the event. The NGT simply came to the conclusion that
“there was a loss that could not be measured or documented and that no scientific
investigation had been done to ascertain whether there had been any environmental damage.”