Rhythm County Vs Satish Sanjay Hegde & Ors. (Supreme Court of India)
Conclusion: Project cost or turnover could constitute a relevant and permissible yardstick for quantification of environmental compensation, provided the determination was reasoned, proportionate and bears a rational nexus to the scale of violations. NGT acted within its statutory mandate in imposing and enhancing environmental compensation against both project proponents.
Held: The present civil appeals arose from orders passed by the National Green Tribunal (NGT) in two original applications involving alleged environmental violations by real estate project proponents. M/s Rhythm County, a partnership firm, undertook a residential-cum-commercial project in Pune after obtaining Environmental Clearance (EC) in 2017. The Maharashtra Pollution Control Board (MPCB) later alleged that the appellant carried out construction beyond sanctioned limits and without valid statutory consents under the Air and Water Acts, including continuation of work despite a stop-work direction. NGT, relying on a Joint Committee report, held that environmental norms were violated and imposed compensation of ₹5 crore, enhanced from the amount recommended by the Committee. In the connected appeal, M/s Keystone Properties undertook a residential housing project and commenced construction prior to obtaining EC. Post-facto EC was later granted under the one-time violation regularisation window, subject to remediation and community augmentation conditions, including furnishing of a bank guarantee. NGT accepted the validity of such EC but held that Keystone had carried out construction for extended periods without Consent to Establish (CTE), continued work despite closure notices, and handed over possession without Consent to Operate (CTO). Based on the Joint Committee’s assessment using CPCB guidelines, environmental compensation of ₹4.47 crore was imposed. Appellants contended that NGT lacked authority to quantify or enhance environmental compensation in the absence of a legislatively prescribed framework or statutory formula; project cost or turnover could not be adopted as a yardstick for computing environmental compensation; CPCB compensation formula was inapplicable to residential real estate projects and lacked statutory backing. It was held that NGT Act intentionally confers broad, flexible and principle-based powers on the Tribunal to award environmental compensation, even in the absence of a codified statutory formula. Project cost or turnover could constitute a relevant and permissible yardstick for quantification of environmental compensation, provided the determination is reasoned, proportionate and bears a rational nexus to the scale of violations. The principle laid down in Goel Ganga Developers permitting compensation up to 5% of project cost remained a valid guiding benchmark and was correctly applied in the case of Rhythm County. CPCB compensation framework was facilitative and indicative, not rigid or exhaustive, and might be adopted by the NGT where appropriate, particularly in its restitutive and corrective jurisdiction. NGT did not mechanically accept the Joint Committee reports; rather, it independently assessed the nature, duration and gravity of violations and consciously determined the quantum of compensation. Distinct statutory violations such as construction without CTE, continuation despite closure orders, and occupation without CTO constitute serious infractions warranting independent compensation, even where post-facto EC has been granted.
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