Points of learning and discussion

To understand the meaning, nature and scope of

Polluter Pays Principle

To study the judicial approach towards Polluter

Pays Principle

To understand the methods and techniques to

implement this principle
 Broader questions to be addressed
• Understand the development of the ‘polluter pays principle’, as a
principle of environmental economics and as a legal principle.
• Examine and analyze the legal basis for the incorporation of the
polluter pays principle into domestic environmental law by the
Supreme Court of India and its relationship with the absolute
liability principle.
• Develop the understanding on the different issues that arise in the
context of operationalizing the principle while implementing the
decisions of the Supreme Court, High Courts, and the National
Green Tribunal (NGT).
 Polluter Pays Principle …
The polluter pays principle forms an integral component of
environmental law jurisprudence at the international,
regional, and domestic levels.
• The ‘polluter pays’ principle is the commonly accepted
practice that those who produce pollution should bear
the costs of managing it to prevent damage to human
health or the environment.
• The polluter pays principle is part of a set of broader
principles to guide sustainable development worldwide.
 Polluter Pays Principle …
• The origin of the polluter pays principle can be traced
to the economic theory of externalities.
• The polluter pays principle is based on the idea of
cost allocation and cost internalization, that is, the
external costs of production and/or consumption of
goods or services should be allocated to the
polluter who is responsible for the pollution rather
than to the government or to members of the
public.
 Polluter Pays Principle …
• The credit of development of the PPP goes to OECD
(Organization of Economic Cooperation and
Development)
• The PPP as popularized by OECD means that the
producer of goods or other items should be
responsible for the cost of preventing or dealing
with pollution which the process causes.
• This includes environmental cost as well the direct
cost to people or property.
 Polluter Pays Principle …
• The credit of development of the PPP goes to OECD
(Organization of Economic Cooperation and
Development)
• The PPP as popularized by OECD means that the
producer of goods or other items should be
responsible for the cost of preventing or dealing
with pollution which the process causes.
• This includes environmental cost as well the direct
cost to people or property.
 Polluter Pays Principle …
• The polluter pays principle ‘secured international support as an environmental
policy’ for the first time during the United Nations Conference on Environment
and Development (UNCED) held in 1992. Principle 16 of the Rio Declaration,
which has been described as the most important and far-reaching international
statement of the fundamental principles of environmental law, reads as follows:
• ‘National authorities should endeavor to promote the
internalization of environmental costs and the use of economic
instruments, taking into account the approach that the polluter
should, in principle, bear the cost of pollution, with due regard
to the public interest and without distorting international trade
and investment’.
 Polluter Pays Principle …
• Thus, the polluter pays principle has been interpreted
to include :-
• An obligation to pay for the prevention and control
of pollution, and liability in respect of damages.
• It incorporates measures for the prevention of
further pollution and the reduction and control of
past and existing pollution, as well as imposition of
liability for damages resulting from past pollution.
 Functions of Polluter Pays Principle
There are a number of different functions which the principle can serve:

1. remediation of damage (restorative);

2. compensation for damage (redistributive);

3. prevention of pollution/damage, (preventative);

4. as a deterrent (punitive).
Development of the Polluter Pays Principle in India
The Supreme Court of India has expressly invoked the
polluter pays principle by relying on the understanding of
the principle in other jurisdictions and/or in international
environmental law.
The polluter pays principle was explicitly relied on for the
first time in domestic environmental law by the Supreme
Court in
Indian Council for Enviro-legal Action v. Union of India
and Ors.
[Interesting is the modality through which court adopted the principle]
Development of the Polluter Pays Principle in India
Relying on an Article published in an academic journal,
which discussed the development of the polluter pays
principle in the OECD and the European Community,
the Court observed that the principle ‘has now come to
be accepted universally as a sound principle’, and it has
gained almost universal recognition.
In other words, the Court appears to have incorporated
the polluter pays principle into domestic law as a general
principle of law prevalent in other systems, rather than
as a principle of international environmental law.
Development of the Polluter Pays Principle in India
The Supreme Court explicitly invoked the polluter pays principle
for the second time in
Vellore Citizens’ Welfare Forum v. Union of India and Ors.
1. First, the Court relied on the constitutional mandate to protect
and improve the environment to hold that the polluter pays
principle is part of domestic environmental law
2. Second, the Court considered the international law dimension of
the polluter pays principle. It held that sustainable development
‘has been accepted as a part of the customary international law.
The Court then identified the polluter pays principle as one of
the ‘salient principles’ and ‘essential features’ of sustainable
 Some pertinent questions
• How the term ‘pollution’ and consequently the term
‘polluter’ have been understood while applying PPP?
• What methods have been applied to determine the
quantum of compensation?
• What mechanisms have been adopted to ensure the
receipt of compensation by deserving individuals or
victims of environmental pollution?
• How has the payment by polluters been used for the
purpose of restoration of the environment?
Development of the Polluter Pays Principle in India
In order to operationalize the PPP,
• It is essential to identify the polluter,
• The situations in which the principle will be triggered,
• The authority that will be responsible for undertaking the
assessment of environmental harm.
• Determination of damages payable by the polluter and
the extent of, or the manner in which, damages will be
paid by the polluter, etc.
 Some interesting precedents
• The polluter is normally understood as the person or entity
responsible for the polluting activity. Even in India, the
Court has defined the polluter as the producer of goods.
• However, in a significant departure from the practice in
other jurisdictions as well as international environmental
law, the courts in India, especially the NGT, have played
an important role in expanding the traditional definition
of the polluter to include other persons/entities within
its scope.
Development of the Polluter Pays Principle in India
• In a case concerning disposal of debris and construction
waste on the banks of the river Yamuna, the polluter
included the contractor and the truck owner who were
responsible for dumping, as well as the person whose
property created the waste

• Manoj Misra v. Union of India and Ors, OA No. 6/2012,

order dated 22 July 2013, NGT (Principal Bench).
Development of the Polluter Pays Principle in India
• In some cases, the NGT has held government departments
and officials directly responsible for pollution.
• This includes municipal authorities whose inaction led to
environmental degradation and/ or pollution within the
definition of polluter.
__________________________________________________
• In Invertis University and Ors v. Union of India and Ors, for
example, the municipal body was directed to pay compensation for
restitution of the solid waste site to its original condition, and to prevent
further damage to environment
Development of the Polluter Pays Principle in India
• In Dr Karan Singh v. State of Himachal Pradesh and Ors, a case concerning open burning
of municipal wastes, a compensatory cost was imposed on the Municipal Council, which
was subsequently recoverable from all the concerned officers and the contractor.
• In Rohit Choudhary v. Union of India and Ors, the Ministry of Environment and Forests
(MoEF), Government of India and the Government of Assam were considered as
polluters for permitting unregulated quarrying and mining activities in and around the
area of Kaziranga National Park.
• In M/s Cox India Ltd v. M. P. Pollution Control Board and Anr, the regional officer of the
State Pollution Control Board (SPCB) was treated as a polluter because of his failure to
furnish correct information about the condition of the distillery unit for rectified spirit,
which prevented the NGT from taking appropriate action to prevent pollution.
• In the Art of Living case, the NGT imposed fines on the regulatory authorities for
dereliction of their statutory duty in allowing an event on the Yamuna floodplains that
resulted in environmental damage.
Development of the Polluter Pays Principle in India
• In Wazirpur Bartan Nirmata Sangh v. Union of India and Ors,
for example, the pollution and ecological problems resulting from
the unhygienic conditions created by the ‘encroachers’ or
squatters on public land was the reason for directing their
displacement.
• Similarly, the order of the NGT in Saloni Singh and Anr v. Union
of India and Ors, which requires any person found defecating on
the railway track or on the railway properties to pay Rs 5,000 per
offence in accordance with the polluter pays principle, identifies
the poor people, who engage in the practice of open defecation
on the railway tracks, as polluters.
 How to work on quantum of compensation..
• What should be the criteria/criterion for
calculating the quantum of damages and
compensation ?
• How damages are measured ?
• What are the factors that influences or informs
the decision of the court in calculating the
compensation ?
 How to work on quantum of compensation..
In Gurpreet Singh Bagga v. Ministry of Environment and Forests and Ors.
• The NGT was forced to apply the principle of guesswork while resolving the
issue, as despite the directions of the Court, both governments of State of
Haryana and State of Uttar Pradesh failed to place on record any report which
defined the damage caused due to the wrongful acts (illegal sand mining in
district Saharanpur more particularly on the river banks and bed of river
Yamuna).
• While applying the principle of guesswork on approximate basis using the
available documentary evidence and reports a sum of Rs. 50 crores were
imposed on each of the respondents who were carrying on the extraction of
minerals and Rs. 2.5 crores on each of the stone crushers/screening plants
which had been running illegally.
 How to work on quantum of compensation..
• In Samir Mehta v. Union of India, the NGT held respondent companies
responsible for oil spill and pollution caused by sinking of the ship.
• The NGT observed that, The damage caused by pollution, cannot be
computed in terms of money with exactitude and precision. This has to be on
the basis of some hypothesizing or guess work as in necessary to be applied in
such cases. For instance, damage caused to the aquatic life, mangroves, sea shore
and tourism are incapable of being computed exactly in terms of money.
• The NGT has admitted that the environmental damages are incapable of being
measured in terms of money with ‘exactitude and precision’, therefore it
supported the method of ‘hypothesizing or guess work’. By following this
method, the NGT arrived at an amount of Rs.100 crores.
 How to work on quantum of compensation..
The method of guesswork or approximation is not NGT’s invention.
In fact, the NGT validates the application of this method by relying
on the SC’s decision in
A.P. Pollution Control Board v. Prof. M.V. Nayudu (Retd.)
and notes that the principle of ‘limited’ guesswork is an ‘accepted
principle’. The SC observed that uncertainty is a problem when
scientific knowledge is institutionalized in policy making or is used
as a basis for decision making by agencies or courts. Where the
scientists have a liberty to modify variables or models when more
information is available, the agencies and courts have to make
decisions based on existing data.
 How to work on quantum of compensation..
There are two other methods as well for working out the quantum
of compensation.
First, in certain cases, the size of the respondent company was
taken into consideration.
In The Proprietor M/s. Varuna Bio Products v. The Chairman Tamil
Nadu Pollution Control Board
[2015 SCC OnLine NGT 138] &
C. Murugan v. Member Secretary Karnataka [2015 SCC OnLine
NGT 8]
the NGT apparently determined the amount of compensation by
taking into consideration the size of the company.
 How to work on quantum of compensation..
In Tanaji Balasaheb Gambhire v. Union of India,
2016 SCC OnLine NGT 4213.
the NGT has calculated the compensation on the basis of the cost of
the project in question.
The NGT directed the respondent, M/s. Goel Ganga Developers India Private
Limited to pay environmental compensation cost of Rs. 100 crores or 5 per
cent of the total cost of the project to be assessed by the State Level
Express Appraisal Committee (“SEAC”) whichever is less for restoration and
restitution of environment damages and degradation caused by the project by
carrying out the construction activities without the necessary prior environmental
clearance within a period of one month.
 How to work on quantum of compensation..
• Another method is to decide the quantum of compensation on
the basis of the size of the industry or project.
• The Supreme Court in the case of Goa Foundation v. Union of
India [(2014) 6 SCC 590] directed the respondents to deposit 10 per
cent of the value of the mineral extracted at the first instance.

• In Sterlite Industries India Ltd. v. Union of India

2013 4 SCC 575, notional damages based on 5 per cent of the
capital cost were imposed as there did not exist enough material to
enable the Court to compute damages based on exactitude.
 Important issue for discussion ..
• Nonetheless, the Courts and NGT have invoked the
polluter pays principle to hold the polluter liable for
payment of damages and/or compensation in a number
of cases, it involves an onerous task of assessment of
loss, and determination, imposition, and recovery of the
amount from the polluter.
• The first question relates to the competence of the
judiciary to undertake such an assessment.
 Important issue for discussion ..
• In Janardan Kundalikrao Pharande v. Ministry of
Environment and Forests and Ors, after admitting that it
lacked any mechanism to quantify the loss caused to the
fertility of the agricultural lands of the villagers in the
area, the NGT directed the collector to constitute a
committee for this purpose.
• Here too the question of the competence of the
authority to implement the polluter pays principle can
be raised.
 Important issue for discussion ..
• The process of assessment of loss and determination of
compensation is subject to a number of additional difficulties.
• The methodology applied for valuation, exclusion of certain types
of damages and the adequacy of compensation are also
contentious issues.
_____________________________________________
Do the case study of Art of Living Case and discuss the approach of
the court
Read about the modality of exemplary fines imposed by the court in
certain cases