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Court cannot adopt an interpretation of the EIA Notification which would permit project proponents

KEYSTONE REALTORS PVT. LTD.VS. SHRI ANIL V THARTHARE & ORS., CIVIL APPEAL NO. 2435 OF 2019. – 3 DECEMBER 2019.

The bench encompassing Justice Dr Dhananjaya Y Chandrachud and Justice Ajay Rastogi collectively pronounced judgment on the manner in which paragraphs 2 and 7 of the EIA Notification should be interpreted. The appellant, the project proponent, received a Commencement Certificate to carry out the residential redevelopment called “Oriana Residential Project‟ on 8 June 2010. The total construction area was 8,720.32 square metres but the ambit of the project was expanded, and the constructed area was increased to 32,395.17 square metres. Under the EIA Notification, an Environmental Clearance4 was necessary if the total construction area exceeded 20,000 square metres. Hence, the appellant applied for an EC under the EIA Notification. On 2 May 2013 the third respondent, the State Level Environment Impact Assessment Authority for Maharashtra, based on the recommendations of the SEAC granted an EC. The grant of the EC was conditional. The appellant then informed the Environment Department of the Government of Maharashtra that the construction area was being further increased by 8,085.71 square metres and thereby sought an amendment to the EC. On 13 March 2014, the third respondent granted the same on the ground that there was only a “marginal increase in built up and construction area”.

The respondents challenged the grant of the amended EC dated 13 March 2014 before the Pune Bench of the NGT. In response, the appellant filed two applications, challenging the standing of the first respondent and contending that the challenge was barred by limitation. The Pune Bench of the NGT rejected the applications by an order dated 4 May 2016. The appellant filed a writ petition before the Bombay High Court to challenge the decision of the Pune Bench of the NGT. The Bombay High Court allowed the writ petition by an order dated 12 August 2016 and held that the appeal was not maintainable and the challenge against the grant of the amended EC was barred by limitation. Then, the appellants approached the Hon’ble Supreme Court and it interpreted the EIA Notification.

The central issue was whether the amended EC dated 13 March 2014 granted by the SEIAA without following the procedure stipulated in paragraph 7(ii) of the EIA Notification is valid. Mr. Mukul Rohatgi, learned Senior Counsel appeared on behalf of the appellant and Mr. Aditya Pratap, learned counsel appeared on behalf of the first respondent.

The appellants argued that the EIA Notification required for projects with a total built up area of or more than 20,000 square metres to procure an EC prior to the start of construction, however, no EC was required before the construction commenced. They contended that the second increase was not an “expansion” within the meaning of clause (ii) of paragraph 2 of the EIA Notification and no fresh Form 1 or EC was required at the time of the second increase. Any increase in production capacity or construction area within the limits set out in the Schedule would not constitute an “expansion” within the meaning of Clause (ii) of paragraph 2 and it did not require compliance with the procedure under paragraph 7(ii) of the EIA Notification was their submission. The respondents, on the other hand, argued that the appellant’s project had crossed the threshold limit of 20,000 square metres and the second increase of 8,085.71 square metres constituted an “expansion” beyond the threshold limit and hence required a fresh EC. They further contended that the EIA Notification was an operationalisation of the precautionary principle, which formed a part of the environmental law of India and they submitted that If the law prescribed an act to be done in a particular manner, itmust be done only in that manner and no other.

In a case where the text of the provisions requires interpretation, this Court must adopt an interpretation which is in consonance with the object and purpose of the legislation or delegated legislation as a whole. The EIA Notification was adopted with the intention of restricting new projects and the expansion of new  projects until their environmental impact could be evaluated and understood. It  cannot be disputed that as the size of the project increases, so does the magnitude of the project‟s environmental impact. This Court cannot adopt an interpretation of the EIA Notification which would permit, incrementally or otherwise, project proponents to increase the construction area of a project without any oversight from the Expert Appraisal Committee or the SEAC, as applicable. It is true that there may exist certain situations where the expansion sought by a project proponent is truly marginal or the environmental impact of such expansion is non-existent. However, it is not for this Court to lay down a bright-line test as to what constitutes a „marginal‟ increase and what constitutes a material increase warranting a fresh Form 1 and scrutiny by the Expert Appraisal Committee.

Considering the abovementioned arguments the Court made the following observations:

  1. The central controversy between the parties to the present dispute was the manner in which paragraphs 2 and 7 of the EIA Notification should be interpreted.

  2. Any expansion beyond the lower limit stipulated in the Schedule would attract the requirement of a prior EC under paragraph 2. However, the above language in clause (ii) was further qualified by the phrase “that is, projects or activities which cross the threshold limits given in the Schedule after expansion or modernisation.”

  3. Clause (ii) of paragraph 2 of the EIA Notification therefore would not appear to cover a case where a project had already crossed the lower threshold limit set out in the Schedule and the expansion does not cross the upper limit stipulated by the Schedule. Clause (ii) of paragraph 2 must be read with paragraph 7(ii) of the EIA Notification.

  4. Paragraph 7(ii) laid down the exact procedure to be followed by a project proponent in the case of an expansion. It used the phrase, “expansion with increase in production capacity beyond the capacity for which prior environment clearance has been granted”. Second, the qualifying language referred to breaching the threshold limits “after expansion” was absent.

  5. Therefore, a close reading of paragraph 7(ii) would support the interpretation put forth by the first respondent – that even after obtaining an EC if the project was expanded beyond the limits for which the prior EC was obtained, a fresh application would need to be made even if the expansion was within upper the limit prescribed in the Schedule.

  6. If clause (ii) of paragraph 2 did not cover a case where the expansion was within the limits stipulated by the Schedule, a project proponent may incrementally keep increasing the size of the project area over time resulting in a significant increase in the project size without an assessment of the environmental impact.

  7. In the present case, the lower limit of Entry 8(a) of the Schedule was a built up area of 20,000 square metres and the upper limit was 1,50,000 square metres. It cannot be doubted that the environmental impact of a construction of 1,50,000 square metres was drastically more than construction of 20,000 square metres.

  8. Crucially, any form of expansion necessarily did put a strain on the local environment and infrastructure and needs to be carefully evaluated in a holistic manner.

  9. It cannot be disputed that as the size of the project increases, so does the magnitude of the project’s environmental impact.

  10. However, it was not for this Court to lay down a bright-line test as to what constituted a “marginal‟ increase and what constitutes a material increase warranting a fresh Form 1 and scrutiny by the Expert Appraisal Committee.

  11. As a result of the expansion, the appellant constructed sixteen additional flats which were sold at the prevailing market rate. The appellant did not comply with the procedure set out under paragraph 7(ii) of the EIA Notification but rather sought an “amendment‟ to the EC.

  12. It was not open to the third respondent to grant an „amendment‟ to the EC without following the procedure set out in paragraph 7(ii) of the EIA Notification.

The Court then pronounced the following:

“The NGT has already directed the appellant to deposit Rupees one crore and has set up an expert committee to evaluate the impact of the appellant’s project and suggest remedial measures. In view of these circumstances, we uphold the directions of the NGT and direct that the committee continue its evaluation of the appellant’s project so as to bring its environmental impact as close as possible to that contemplated in the EC dated 2 May 2013 and also suggest the compensatory exaction to be imposed on the appellant. The appeal is dismissed. There shall be no order as to costs. Pending application(s), if any, shall stands disposed of.”

Jumanah Kader

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