Holding

The Boards may, in exercise of s.33A of the Water Act and s.31A of the Air Act, impose and collect restitutionary or compensatory damages or require bank guarantees as an ex‑ante measure, provided the procedure is governed by transparent, non‑arbitrary subordinate legislation.

Summary

The Delhi Pollution Control Committee (DPCC) appealed against a Delhi High Court decision that held it could not levy restitutionary or compensatory damages under s.33A of the Water Act and s.31A of the Air Act, on the ground that such powers amounted to penalties. The Supreme Court examined the statutory scheme, the principle of polluter pays, and the distinction between remedial damages and punitive penalties. It held that the Boards may, as an ancillary power, impose fixed monetary damages or require bank guarantees as ex‑ante measures to prevent or remediate environmental harm, provided the process is transparent and non‑arbitrary. The Court clarified that such powers are distinct from the penalty provisions in Chapters VII and VI and are analogous to the powers under s.5 of the Environment (Protection) Act. Consequently, the appeal was allowed, the High Court judgment set aside, and the DPCC was directed to refrain from reviving the earlier show‑cause notices while ensuring any collected amounts be returned. The Court also directed that detailed procedural rules incorporating natural‑justice principles be framed before exercising these powers.

Issues considered

Whether the regulatory boards, under s.33A of the Water Act and s.31A of the Air Act, can impose and collect restitutionary or compensatory damages or require bank guarantees as an ex‑ante measure.
Whether such imposition constitutes a penalty under the penal chapters of the Acts or a remedial/damages direction.
Whether the power to levy damages is consistent with the polluter pays principle and the constitutional mandate under Part IV‑A.

Legislation cited

Air (Prevention and Control of Pollution) Act, 1981s. 17, s. 21, s. 22, s. 31A
Constitution of Indias. Art.48A, s. Art.51A, s. Part IV A
Environment (Protection) Act, 1986s. 16, s. 5
Water (Prevention and Control of Pollution) Act, 1974s. 17, s. 25, s. 33A

Headnote

Issue for Consideration Whether the regulatory boards can, in exercise of powers u/s.33A of the Water Act and s.31A of the Air Act, impose and collect as restitutionary and compensatory damages fixed sums of monies or require furnishing bank guarantees as an ex-ante environmental damage. Headnotes† Water (Prevention and Control of Pollution) Act, 1974 – s.33A – Air (Prevention and Control of Pollution) Act, 1981 – s.31A – The Division Bench of the High Court held that DPCC (regulatory body/Board) is not empowered to levy

Subjects

Restitutionary and compensatory damagesBank guarantees as ex‑ante measurePotential environmental damagePolluter pays principlePower of Pollution Control BoardsNatural justice in subordinate legislationTransparency and non‑arbitrarinessEnvironmental remediationSection 33A Water ActSection 31A Air ActEnvironmental regulators

Judgment

[2025] 8 S.C.R. 362 : 2025 INSC 923

Delhi Pollution Control Committee
v.
Lodhi Property Co. Ltd. Etc.
(Civil Appeal No(s). 757-760 of 2013)
04 August 2025
[Pamidighantam Sri Narasimha and Manoj Misra, JJ.]

Issue for Consideration
Whether the regulatory boards can, in exercise of powers u/s.33A
of the Water Act and s.31A of the Air Act, impose and collect as
restitutionary and compensatory damages fixed sums of monies
or require furnishing bank guarantees as an ex-ante measure
towards potential environmental damage.

Headnotes†
Water (Prevention and Control of Pollution) Act, 1974 –
s.33A – Air (Prevention and Control of Pollution) Act, 1981 –
s.31A – The Division Bench of the High Court held that
DPCC (regulatory body/Board) is not empowered to levy
compensatory damages in exercise of powers u/s.33A of the
Water (Prevention and Control of Pollution) Act, 1974 and
s.31A of the Air (Prevention and Control of Pollution) Act, 1981
on the ground that such an action amounts to imposition of
penalty provided for in Chapters VII and VI of the respective
Acts, and as such, procedure contemplated thereunder will
be the only method for imposing and collecting compensatory
damage – Correctness:
Held: 1. Having considered the principles that governing
environmental laws and on interpretation of ss.33A and 31A
of the Water and Air Acts, this Court is of the opinion that the
Division Bench of the High Court was not correct in restrictively
reading powers of the Boards – The environmental regulators, the
Pollution Control Boards exercising powers under the Water and
Air Acts, can impose and collect restitutionary or compensatory
damages in the form of fixed sum of monies or require furnishing
of bank guarantees as an ex-ante measure to prevent potential
environmental damage – These powers are incidental and ancillary
to the empowerment u/ss.33A and 31A of the Water and Air Acts –
The powers must be exercised as per procedure laid down by
[2025] 8 S.C.R. 363

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

subordinate legislation incorporating necessary principles of natural
justice, transparency and certainty. [Paras 2, 28]
2. The Board’s powers u/s.33A of the Water Act and s.31A of the Air
Act have to be read in light of the legal position on the application
of Polluter Pays principle as formulated and explained – This means
that State Board cannot impose environmental damages in case of
every contravention or offence under the Water Act and Air Act –
It is only when the State Board has made a determination that
some form of environmental damage or harm has been caused
by the erring entity, or the same is so imminent, that the State
Board must initiate action u/s.33A of the Water Act and s.31A of
the Air Act. [Para 30]

Water (Prevention and Control of Pollution) Act, 1974 – s.33A –
Air (Prevention and Control of Pollution) Act, 1981 – s.31A –
Board’s responsibility to choose appropriate course of action:
Held: Given their broad statutory mandate and the significant duty
towards public health and environmental protection the Boards
must have the power and distinction to decide the appropriate
action against a polluting entity – It is essential that the Boards
function effectively and efficiently by adopting such measures as is
necessary in a given situation – The Boards can decide whether a
polluting entity needs to be punished by imposition of penalty or if
the situation demands immediate restoration of the environmental
damage by the polluter or both. [Para 32]

Water (Prevention and Control of Pollution) Act, 1974 –
Air (Prevention and Control of Pollution) Act, 1981 – 2024
amendments – Decriminalisation and Adjudicatory Officer:
Held: There is no conflict between the powers of the State Boards
to direct payment of environmental damages u/ss.33A and 31A
of the Water and Air Acts and the powers of the Adjudicating
Officer to impose penalties under Chapter VII of the Water Act
and Chapter VI of the Air Act – The decriminalization of offences
under these Chapters has not removed the punitive nature of
actions that can be taken under them – There remains a clear
distinction between the nature of directions that the State Boards
can issue u/ss.33A and 31A of the Water and Air Acts for payment
of environmental damage and the determination by Adjudicating
Officers – The former is compensatory in nature and will be resorted
to when remedial measures are being undertaken to restore the
364 [2025] 8 S.C.R.

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degraded environment or pollution caused – The latter is a penalty
for an offence under the law and is imposed with the objective of
punishing the offender. [Para 31]

Water (Prevention and Control of Pollution) Act, 1974 – s.33A –
Air (Prevention and Control of Pollution) Act, 1981 – s.31A –
Power of Boards to direct the payment of environmental
damages – Powers must be guided by transparency and
non-arbitrariness:
Held: The Boards have the power to direct the payment of
environmental damages, this Court makes it clear that this power
must always be guided by two overarching principles – First,
that the power cannot be exercised in an arbitrary manner; and
second, the process of exercising this power must be infused with
transparency. [Para 33]
Water (Prevention and Control of Pollution) Act, 1974 –
s.17 – Air (Prevention and Control of Pollution) Act, 1981 –
s.17 – Existing Legal Regime for Pollution Control in India –
discussed. [Paras 9 and 10]
Water (Prevention and Control of Pollution) Act, 1974 – s.33A –
Air (Prevention and Control of Pollution) Act, 1981 – s.31A –
Insertion of ss.33A & 31A in Water and Air Acts – Discussed.
[Paras 11 to 15 ]
Constitution of India – Part IV A and Arts. 48A, 51A –
Interpretation of and for Environmental Institutions –
Discussed. [Paras 16-17]
Environment – Pollution control – Duty to Restitute v. Power
to Punish and Penalise – Discussed. [Paras 18 to 26]

Water (Prevention and Control of Pollution) Act, 1974 –
Chapters VII – Air (Prevention and Control of Pollution) Act,
1981 – Chapters VI – Environmental damage – Distinction
between restitution and punitive action:
Held: There is a distinction between a direction for payment of
restitutionary and compensatory damages as a remedial measure
for environmental damage or as an ex-ante measure towards
potential environmental damage on the one hand; and a punitive
action of fine or imprisonment for violations under Chapters VII of
the Water Act and VI of the Air Act on the other hand – If directions
[2025] 8 S.C.R. 365

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

in furtherance of restitutionary and compensatory measures are
issued, these are not to be considered as punitive in nature –
Punitive action can only be taken through the procedure prescribed
in the statute for example under chapters VII and VI of the Water
and Air Acts respectively. [Paras 27(I)(II)]

Environmental Law – Indian environmental law assimilation
of Principle of Polluter Pays:
Held: Indian environmental law has assimilated the principle of
Polluter Pays and there is also a statutory incorporation of this
principle in our laws – The invocation of this principle is triggered
in the situations – i) when an established threshold or prescribed
requirement is exceeded or breached, and it does result in
environmental damage, ii) when an established threshold or
prescribed requirement is not exceeded or breached, nevertheless
the act in question results in environmental damage and also iii)
when a potential risk or a likely adverse impact to the environment
is anticipated, irrespective of whether or not prescribed thresholds
or requirements are exceeded or breached. [Para 27(III)]

Water (Prevention and Control of Pollution) Act, 1974 – s.33A –
Air (Prevention and Control of Pollution) Act, 1981 – s.31A –
Duty of Environmental regulators:
Held: Environmental regulators have a compelling duty to adopt
and apply preventive measures irrespective of actual environmental
damage – Ex-ante action shall be taken by these regulators and
for this purpose a certain measure in exercise of powers u/ss.33A
and 31A of the Water and Air Acts is necessary. [Para 27(IV)]

Water (Prevention and Control of Pollution) Act, 1974 – s.33A –
Air (Prevention and Control of Pollution) Act, 1981 – s.31A –
Environment Protection Act – s.5 – Powers of Board under
Environment Protection Act and Water and Air Acts:
Held: The powers of the Boards u/ss.33A and 31A of the Water and
Air Acts are identical to that of s.5 of the Environment Protection
Act – Under Section 5, the Central Government or its delegate
has the power to issue directions to the polluting industry to pay
certain amounts and utilise the said fund for carrying out remedial
measures – The Boards are empowered to take similar actions
u/ss.33A and 31A of the Acts. [Para 27(V)]
366 [2025] 8 S.C.R.

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Water (Prevention and Control of Pollution) Act, 1974 – s.33A –
Air (Prevention and Control of Pollution) Act, 1981 – s.31A –
Directions issued by the Supreme Court:
Held: (a) The judgement and order dated 23.01.2012, passed by
the Division Bench of the High Court of Delhi is set aside to the
extent of declaration of law but direct that the show cause notices
that have been set aside by the High Court shall not be revived;
(b) This Court directs that the Pollution Control Boards can impose
and collect as restitutionary and compensatory damages fixed
sums of monies or require furnishing bank guarantees as an ex-
ante measure towards potential environmental damage in exercise
of powers u/ss. 33A and 31A of the Water and Air Acts; (c) It is
further directed that the power to impose or collect restitutionary
or compensatory damages or the requirement to furnish bank
guarantees as an ex-ante measure u/ss. 33A and 31A of the Water
and Air Acts shall be enforced only after detailing the principle and
procedure incorporating basic principles of natural justice in the
subordinate legislation. [Para 39]

Case Law Cited
MC Mehta v. Kamal Nath [2000] Supp. 1 SCR 389 : (2000) 6
SCC 213; Vellore Citizens’ Welfare Forum v. Union of India [1996]
Supp. 5 SCR 241 : (1996) 5 SCC 647; Research Foundation for
Science (18) v. Union of India [2005] 1 SCR 115 : (2005) 13 SCC
186; Deepak Nitrite Ltd. v. State of Gujarat [2004] Supp. 2 SCR
49 : (2004) 6 SCC 402; T.N. Godavarman Thirumulpad, In Re v.
Union of India [2024] 3 SCR 187 : (2025) 2 SCC 641; Bengaluru
Development Authority v. Sudhakar Hegde [2020] 5 SCR 755 :
(2020) 15 SCC 63 – relied on.
State of MP v. Centre for Environment Protection Research &
Development [2020] 12 SCR 1139 : (2020) 9 SCC 781; Chandra
Kishore Jha v. Mahavir Prasad & Ors. [1999] Supp. 2 SCR 754 :
(1999) 8 SCC 266; Indian Council for Enviro-Legal Action v.
Union of India [1996] 2 SCR 503 : (1996) 3 SCC 212; Bengaluru
Development Authority v. Sudhakar Hegde [2020] 5 SCR 755 :
(2020) 15 SCC 63 – referred to.
Splendor Landbase Ltd. v. DPCC, 2012 (195) DLT 177; State
Pollution Control Board, Odisha v. M/s Swastik Ispat Pvt Ltd and
Others, 2014 SCC OnLine NGT 13 – referred to.
[2025] 8 S.C.R. 367

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

List of Acts
Water (Prevention and Control of Pollution) Act, 1974; Air
(Prevention and Control of Pollution) Act, 1981; Constitution of
India; Environment (Protection) Act 1986.

List of Keywords
Restitutionary and compensatory damages; Bank guarantees as
an ex-ante measure; Potential environmental damage; Violation
of the environmental norms; Power of Boards; Principle of Natural
Justice in the subordinate legislation; Polluter Pays principle;
Broad statutory mandate; Appropriate action against a polluting
entity; Payment of environmental damages; Pollution control;
Section 33A of Water (Prevention and Control of Pollution) Act,
1974; Section 31A of Air (Prevention and Control of Pollution)
Act, 1981; Environmental regulators; Punitive action; Remedial
measure; Power to issue directions to the polluting industry;
Decriminalization of offences; Powers of the Adjudicating
Officer to impose penalties; Remedial jurisprudence; Injunctory,
mandatory and compensatory remedies; Restitutionary directives;
Fundamental rights of citizens; Environmental wrongs; Institutional
foresight; Institutional memory; Institutional integrity; Institutional
transparency and accountability; Independent and objective
decisions.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 757-760
of 2013
From the Judgment and Order dated 23.01.2012 of the HIGH
COURT OF DELHI AT NEW DELHI in LPA No(s). 709, 710, 866
and 867 of 2011
With
Civil Appeal No(s). 1977-2011 of 2013

Appearances for Parties
Advs. for the Appellant:
Ninad Laud, Saurabh Kulkarni, Ms. Rashika Narain, Ms. Ishani
Shekhar, Dcosta Ivo Manuel Simon, Pradeep Misra, Daleep
Dhyani, Suraj Singh.
368 [2025] 8 S.C.R.

Supreme Court Reports

Advs. for the Respondents:
S. D. Sanjay, Satya Darshi Sanjay, A.S.Gs., Pinaki Mishra,
B.b.gupta, Ms. Swarupma Chaturvedi, Kailash Vashudev, Pravin
Bahadur, Kishan Rawat, Ms. Rubi Singh Ahuja, Ms. Kanika Gomber,
Rajan Narain, Umesh Kumar Khaitan, Ajit Warrier, Angad Kochhar,
S. S. Shroff, Gurmeet Singh Makker, Ms. Ruchi Kohli, Chinmayee
Chandra, Chitvan Singhal, Mohit D. Ram, Ms. Nayan Gupta, Mrs.
Priya Puri, Navin Prakash, Ms. Srishti Prakash, Ms. Swarupama
Chaturvedi, Ms. Ruchi Kohli, Ms. Chinmayee Chandra, Chitvan
Singhal, Amit Sharma V, Dr. N. Visakamurthy, Avijit Roy.

Judgment / Order of the Supreme Court

Judgment

Contents*

1. Introduction .................................................................................. 2

2. Facts ............................................................................................ 3

3. Single Judge’s Judgement and Orders ....................................... 4

4. Impugned Order of the Division Bench ....................................... 6

5. Submissions ................................................................................. 8

6. Issue ............................................................................................. 11

7. Existing Legal Regime for Pollution Control in India ................... 12

8. Insertion of Sections 33A & 31A in Water and Air Acts ............... 14

9. Interpretation of and for Environmental Institutions ..................... 18

10. Duty to Restitute v. Power to Punish and Penalise ..................... 20

11. Principles ...................................................................................... 26

A. Board’s Responsibility to Choose Appropriate Course of 32
Action ....................................................................................

B. Powers Must Be Guided by Transparency and 33
Non-Arbitrariness ..................................................................

* Ed. Note: Pagination as per the original Judgment.
[2025] 8 S.C.R. 369

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

1. Introduction.
1. The Delhi Pollution Control Committee (DPCC)1 is in appeal against
the judgment of the Division Bench of the High Court holding that
it is not empowered to levy compensatory damages in exercise of
powers under Section 33A of the Water (Prevention and Control
of Pollution) Act, 1974 and Section 31A of the Air (Prevention and
Control of Pollution) Act, 19812 on the ground that such an action
amounts to imposition of penalty provided for in Chapters VII and
VI of the respective Acts, and as such, procedure contemplated
thereunder will be the only method for imposing and collecting
compensatory damage.
2. Having considered the principles that govern Indian environmental
laws, we have held that the environmental regulators, the Pollution
Control Boards exercising powers under the Water and Air Acts, can
impose and collect restitutionary or compensatory damages in the
form of fixed sum of monies or require furnishing of bank guarantees
as an ex-ante measure to prevent potential environmental damage.
These powers are incidental and ancillary to the empowerment under
Sections 33A and 31A of the Water and Air Acts. At the same time,
we have directed that the powers must be exercised as per procedure
laid down by subordinate legislation incorporating necessary principles
of natural justice, transparency and certainty.

2. Facts.
3. It is the case of the Delhi Pollution Control Committee that pursuant
to the directions of the Ministry of Environment, Forest and Climate
Change (MoEFCC) to take appropriate action against certain entities
operating in violation of the environmental norms, show cause notices
were issued for violation of Section 25 of the Water Act and Sections 21
and 22 of the Air Act. These entities were either residential complexes,
commercial complexes or shopping malls. The show cause notices
were issued on the ground that they proceeded with construction and
in fact, were operating without obtaining the mandatory “consent to

1 DPCC is a regulatory body in the National Capital Territory of Delhi, established as a ‘State Board’. These
Boards are constituted under section 4 of the Water Act and under section 4 or section 5 of the Air Act,
and exercise powers granted under section 33A of the Water Act and section 31A of the Air Act. Our
interpretation of section 33A and 31A herein will apply to any such body established under said Acts.
2 Hereinafter referred to as the Water Act and Air Act respectively.
370 [2025] 8 S.C.R.

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establish” and “consent to operate” under Section 25 of the Water
Act and Section 21 of the Air Act. The show cause notices were
challenged by way of 38 writ petitions before the Delhi High Court.
The challenge culminated in the judgement of a single judge dated
30.09.2010 in the case of Splendor Landbase Ltd. v. DPCC3. The
learned single judge considered the question as to whether a State
Board can levy environmental damages in the form of fixed sums of
money or require an entity to furnish a bank guarantee as a condition
for grant of consent under Section 33A of Water Act and/or Section
31A of Air Act. Similar writ petitions were considered and decided by
another single judge bench in Bharti Realty Ltd. v. DPCC and Anush
Finlease and Construction v. DPCC on 20.07.2011 and 15.09.2011
and were disposed of in terms of the decision in Splendor Landbase
Ltd. v. DPCC. The reasoning adopted in the judgement and orders
passed by the Single Judges are as follows.

3. Single Judge’s Judgement and Orders.
4. In Splendor Landbase Ltd. v. DPCC4, the ld. single judge by his
judgement dated 30.09.2010 dealt with two major issues – firstly,
whether proprietors of properties over 20,000 square meters are
required to obtain consent to establish and consent to operate under
Water Act and Air Act independently, despite obtaining EIA Clearance
from the Ministry; and secondly, whether Boards can levy penalties,
fines, environmental damages in form of fixed sums of monies or call
for bank guaranties as a condition to grant consent under Water and
Air Acts? While the first question was answered in the affirmative,
the second was answered in the negative.
4.1 It was held that the power to levy penalty is in the nature of a
penal power and as such a penalty cannot be imposed without
there being an enabling statutory power. For this reason, the
single judge held that Board has no power to levy penalty
or damage, even on the basis of the general powers under
Sections 31A or 33A of the Acts. The learned Judge criticized
the monetary demand as a pre-condition for grant of consent
under the Acts on the ground that it has no statutory backing.

3 2012 (195) DLT 177.
4 Hereinafter referred to as Splendor.
[2025] 8 S.C.R. 371

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

4.2 In the other batch of cases i.e. in Bharti Realty Ltd. v. DPCC
and Anush Finlease and Construction Ltd. v. DPCC, decided
on 12.07.2011 and 15.09.2011, the learned Single Judge was
constrained to enquire into the matter in detail as writ appeals
against the judgement in Splendor were already pending before
a Division Bench. Therefore, the Single Judge allowed the writ
petitions following the decision in Splendor and holding that
the Board has no power to impose and collect compensatory
damages. In these cases, the learned Judge also directed refund
of the amounts collected. However, no interest was granted
to the respondents as they chose to comply with the demand
instead of challenging the same at the relevant point in time.

4. Impugned Order of the Division Bench.
5. The decisions of the single judges were challenged by the appellant
before the Division Bench of the High Court. By the judgement
impugned before us, the Division Bench upheld the findings of the
Single Judge in Splendor that the power to issue directions under
Sections 33A and 31A under the two Acts does not confer the power to
levy ‘penalty’. The High Court further observed that under Chapter VII
and Chapter VI of the Water and Air Acts penalties can be levied only
by courts and that too after taking cognizance of offences specified
under the two Acts. Provided that the procedure so prescribed under
the statute has to be followed mandatorily, the Division Bench held
that the appellant would not be entitled to impose compensation or
direct deposit of bank guarantees. The relevant portion of the Division
Bench of the High Court is as follows –
“37. We concur with the reasoning of the learned Single
Judge in paras 58 to 64 of the impugned decision and thus
do not elaborate any further, but would additionally highlight
that, the power to issue directions under Section 33A of
the Water Act and the power to issue directions under
Section 31A of the Air Act, on their plain language, does
not confer the power to levy any penalty. We would further
highlight that under Chapter VII of the Water Act and under
Chapter VI of the Air Act penalties and procedure to levy the
same have been set out. A perusal of the provisions under
the Water Act would reveal that penalties can be levied
as per procedure prescribed and only Courts can take
372 [2025] 8 S.C.R.

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cognizance of offences under the Act and levy penalties,
whether by way of imprisonment or fine. Similar is the
position under the Air Act. The legislature having enacted
specific provisions for levy of penalties and procedures to
be followed has specifically made the offences cognizable
by Courts and the power to levy penalties under both Acts
has been vested in the Courts. The role of the Pollution
Control Boards is to initiate proceedings before the Court
of Competent jurisdiction and no more.
40. The language of Sub-Section 5 of Section 25 of the
Water Act makes it plain clear that the only solution to
a situation of a building being constructed to establish
an industry, operation or process without obtaining prior
consent of the State Pollution Control Board is the power
of the Board to serve upon the person concerned a notice
imposing such conditions as might have been imposed
on an application, seeking prior consent and we find that
the learned Single Judge has correctly so opined and has
rightly issued the direction that the only way out, pertaining
to the Water Act is to permit DPCC to inspect the shopping
malls and the shopping commercial complexes and if it is
found that pertaining to discharge of sewage from these
buildings any steps are required to prevent water pollution
DPCC would be authorized to issue notices requiring the
owner of the building to take steps in terms of the notice
issued. Pertaining to the Air Act notwithstanding there being
no similar provision, but the concept of a post decisional
hearing may be made applicable with the modification that
no hearing would be required inasmuch as there is no
decision, but DPCC should be empowered to inspect the
shopping malls and the shopping, commercial complexes
and pertaining to air pollution, if the owners of the buildings
do not take corrective action, DPCC would always have
the power to file criminal complaints before the Courts of
Competent Jurisdiction, which Courts would alone have
the power to impose fine and additionally impose sentence
of imprisonment upon the offending persons.
42. In a few cases, we find that since DPCC was not
permitting the buildings to be occupied, under protest, the
[2025] 8 S.C.R. 373

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

owners paid the penalty to DPCC and have immediately
approached the Court seeking refund and the same has
been ordered for the reason neither under the Water Act
nor under the Air Act there exists any power in DPCC
to levy penalty or impose conditions of furnishing bank
guarantee. The decision of the learned Single Judge is
correct in directing the bank guarantees to be discharged
and penalties levied to be refunded for the reason the
said act of DPCC is ultra-vires its power under the two
statutes and the levy of penalty is without any authority
of law. In the decision reported as 1997 [5] SCC 535
Mafatlal Industries Ltd. & Ors. Vs UOI & Ors., under writ
jurisdiction refund can be directed where the levy is without
jurisdiction and the same would include a penalty levied
without any jurisdiction. In the instant case the penalty
levied is unconstitutional being not sanctioned by any
power vested in DPCC either under the Water Act or the
Air Act. The impugned decisions where penalty levied has
been directed to be refunded are upheld.”

5. Submissions.
6. Mr. Pradeep Mishra appearing on behalf of the appellant DPCC
submitted that the High Court erred in holding that the State Boards
are not empowered to impose environmental damages under Sections
33A and 31A of Water and Air Acts. He has argued that the application
of the principle of Polluter Pays is distinct from the requirement of
authority of law to impose tax or penalty.
7. We have requested Mr. Ninad Laud, learned counsel to assist us in
the matter. He has gracefully accepted and has eminently assisted
the Court. He has submitted# that as per broad scheme of the Acts
and also the statement of objects and reasons, State Boards are
empowered to act on their own while enforcing Sections 25 and
26 and also while issuing directions under Sections 33A and 31A.
However, when faced with non-compliances, recourse to judicial
process is contemplated under Sections 49 and 43 of Water and
Air Acts respectively. Further, neither Rule 34 of Water (Prevention

# Ed. Note: “We have requested Mr. Ninad Laud, learned counsel to assist us in the matter. He has gracefully
accepted and has eminently assisted the Court. He has submitted” instead of “On behalf of the respondents,
Mr. Ninad Laud has submitted” in terms of subsequent corrigendum.
374 [2025] 8 S.C.R.

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& Control of Pollution) Rules 1975 nor Rule 20A of Air (Prevention
& Control of Pollution) Rules 1983, while providing a mechanism
to administer Section 33A and Section 31A, contemplate monetary
penalties. Countering the submission of Mr. Pradeep Misra on the
principle of Polluter Pays to encourage reading the power to impose
and collect environmental damages under Sections 33A and 31A of the
respective Acts, he would submit such an approach is impermissible
as the said power is specifically and separately provided under
Chapters VII and VI therein. Relying on the decision of this Court in
MC Mehta v. Kamal Nath5, he would submit, after considering the
scheme of penal provisions under Water Act, Air Act and Environment
(Protection) Act 1986, the Supreme Court held that penalties under
the Acts befall a person only after finding of guilt upon trial by a court
of law. Referring to the legitimacy of State Board’s action demanding
bank guarantees to secure compliance with conditions, he would
submit that no penalty, other than that contemplated in the statute or
statutory scheme can be imposed.6 We have also heard Mr. Pinaki
Misra, Senior Advocate and other learned counsel and they have
strongly supported the decision of the Division Bench.
7.1 Counsel for M/s Laxmi Buildtech Pvt Ltd7 has submitted that
they have neither violated nor acted in breach of any provision
of environmental laws and therefore they cannot be subjected
to any penalty or criminal prosecution. Counsel for other
respondents further submitted that they have deemed consent
as well as EIA clearance from the Ministry. They have also
submitted that imposition and collection of damages by the
State Boards is outside the powers vested in them under the
Water and Air Acts.
7.2 Counsel for M/s Bharti Realty Ltd has submitted that it is a
settled principle of law that if a statute provides for a thing to
be done in a particular manner, then it has to be done in that
manner and no other.8 This principle, according to the learned
counsel, squarely applies to the present case as Chapter VII
and Chapter VI of the Water and Air Acts have a prescribed

5 (2000) 6 SCC 213, para 13-17.
6 State of MP v. Centre for Environment Protection Research & Development, (2020) 9 SCC 781.
7 Civil Appeal No. 2001 of 2013.
8 Chandra Kishore Jha v. Mahavir Prasad & Ors, (1999) 8 SCC 266.
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procedure to be followed before imposing penalties. It is further
argued that the role of any State Board is in the nature of a
complainant and not that of an adjudicatory authority. In this
vein, it is submitted that any other interpretation would render
the chapter on ‘Penalties and Procedures’ nugatory and otiose.
It is also submitted that the power to give directions under
Sections 33A and 31A of the Water and Air Acts is “subject to
provisions of this Act”. Written submissions also refer to the
recent amendments to the Water and Air Acts, empowering
an Adjudicating Officer, not below the rank of Joint Secretary
of Government of India or Secretary to State Government, for
imposing penalties for contravention of provisions of the Acts.

6. Issue.
8. The core question in these appeals is - whether the regulatory boards
can, in exercise of powers under Section 33A of the Water Act and
Section 31A of the Air Act, impose and collect as restitutionary
and compensatory damages fixed sums of monies or require
furnishing bank guarantees as an ex-ante measure towards potential
environmental damage?

7. Existing Legal Regime for Pollution Control in India.
9. Under the Water Act and the Air Act, the State Boards have a broad
statutory mandate to prevent, control and abate water pollution and
air pollution. Under Section 17 of the Water Act, the State Boards
are to shoulder enormous responsibilities and their functions are
reproduced herein for ready reference -
“Section 17. Functions of State Board – (1) Subject to
the provisions of this Act, the functions of a State Board
shall be— (a) to plan a comprehensive programme for the
prevention, control or abatement of pollution of streams
and wells in the State and to secure the execution thereof;
(b) to advise the State Government on any matter
concerning the prevention, control or abatement of water
pollution;
(c) to collect and disseminate information relating to water
pollution and the prevention, control or abatement thereof;
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(d) to encourage, conduct and participate in investigations
and research relating to problems of water pollution and
prevention, control or abatement of water pollution;
(e) to collaborate with the Central Board in organising
the training of persons engaged or to be engaged in
programmes relating to prevention, control or abatement
of water pollution and to organise mass education
programmes relating thereto;
(f) to inspect sewage or trade effluents, works and plants
for the treatment of sewage and trade effluents and to
review plans, specifications or other data relating to plants
set up for the treatment of water, works for the purification
thereof and the system for the disposal of sewage or trade
effluents or in connection with the grant of any consent
as required by this Act;
(g) to lay down, modify or annul effluent standards for the
sewage and trade effluents and for the quality of receiving
waters (not being water in an inter-State stream) resulting
from the discharge of effluents and to classify waters of
the State;
(h) to evolve economical and reliable methods of treatment
of sewage and trade effluents, having regard to the
peculiar conditions of soils, climate and water resources
of different regions and more especially the prevailing
flow characteristics of water in streams and wells which
render it impossible to attain even the minimum degree
of dilution;
(i) to evolve methods of utilisation of sewage and suitable
trade effluents in agriculture;
(j) to evolve efficient methods of disposal of sewage and
trade effluents on land, as are necessary on account of
the predominant conditions of scant stream flows that do
not provide for major part of the year the minimum degree
of dilution;
(k) to lay down standards of treatment of sewage and
trade effluents to be discharged into any particular stream
taking into account the minimum fair weather dilution
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available in that stream and the tolerance limits of pollution
permissible in the water of the stream, after the discharge
of such effluents;
(l) to make, vary or revoke any order—
(i) for the prevention, control or abatement of discharges
of waste into streams or wells;
(ii) requiring any person concerned to construct new
systems for the disposal of sewage and trade effluents
or to modify, alter or extend any such existing system
or adopt such remedial measures as are necessary to
prevent, control or abate water pollution;
(m) to lay down effluent standards to be complied with by
persons while causing discharge of sewage or sullage or
both and to lay down, modify or annul effluent standards
for the sewage and trade effluents;
(n) to advise the State Government with respect to the
location of any industry the carrying on of which is likely
to pollute a stream or well;
(o) to perform such other functions as may be prescribed
or as may, from time to time, be entrusted to it by the
Central Board or the State Government.
(2) The Board may establish or recognize a laboratory or
laboratories to enable the Board to perform its functions
under this section efficiently, including the analysis of
samples of water from any stream or well or of samples
of any sewage or trade effluents.”
10. Section 17 of the Air Act9, substantially similar to its equivalent

9 Section 17 of Air Act states –
17. Functions of State Boards.— (1) Subject to the provisions of this Act, and without prejudice to the
performance of its functions, if any, under the Water (Prevention and Control of Pollution) Act, 1974, the
functions of a State Board shall be—
(a) to plan a comprehensive programme for the prevention, control or abatement of air pollution
and to secure the execution thereof;
(b) to advise the State Government on any matter concerning the prevention, control or abatement
relating to air pollution;
(c) to collect and disseminate information relating to air pollution;
(d) to collaborate with the Central Board in organising the training of persons engaged or to be
engaged in programmes relating to prevention, control or abatement of air pollution and to organise
a mass-education programme relating thereto;
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under the Water Act, also indicates the crucial responsibilities of the
State Boards in discharge of their mandate. Chapter V of the Water
Act and Chapter IV of the Air Act include provisions that prescribe
the regulatory powers of the State Boards. These powers include
the power to issue, modify or withdraw consent10, power to obtain
information11, power of entry and inspection12 and power to take
samples13.

8. Insertion of Sections 33A & 31A in Water and Air Acts.
11. In 1988, both Acts were amended. Notably, through amendments
the State Boards were further empowered to give directions under
Section 33A of the Water Act and Section 31A14 of the Air Act. These

(e) to inspect, at all reasonable times, any control equipment, industrial plant or manufacturing
process and to give, by order, such directions to such persons as it may consider necessary to take
steps for the prevention, control or abatement of air pollution;
(f) to inspect air pollution control areas at such intervals as it may think necessary, assess the
quality of air therein and take steps for the prevention, control or abatement of air pollution in such
areas;
(g) to lay down, in consultation with the Central Board and having regard to the standards for
the quality of air laid down by the Central Board, standards for emission of air pollutants into the
atmosphere from industrial plants and automobiles or for the discharge of any air pollutant into
the atmosphere from any other source whatsoever not being a ship or an aircraft: Provided that
different standards for emission may be laid down under this clause for different industrial plants
having regard to the quantity and composition of emission of air pollutants into the atmosphere
from such industrial plants;
(h) to advise the State Government with respect to the suitability of any premises or location for
carrying on any industry which is likely to cause air pollution;
(i) to perform such other functions as may be prescribed or as may, from time to time, be entrusted
to it by the Central Board or the State Government;
(j) to do such other things and to perform such other acts as it may think necessary for the proper
discharge of its functions and generally for the purpose of carrying into effect the purposes of this
Act.
(2) A State Board may establish or recognise a laboratory or laboratories to enable the State Board to
perform its functions under this section efficiently.
10 Sections 25, 27 of Water Act and Section 21 of Air Act
11 Section 20 of Water Act and Section 25 of Air Act
12 Section 23 of Water Act and Section 24 of Air Act
13 Section 21 of Water Act and Section 26 of Air Act
14 Section 31A of the Air Act states –
31A. Power to give directions.—Notwithstanding anything contained in any other law, but subject to
the provisions of this Act, and to any directions that the Central Government may give in this behalf,
a Board may, in the exercise of its powers and performance of its functions under this Act, issue any
directions in writing to any person, officer or authority, and such person, officer or authority shall be
bound to comply with such directions.
Explanation.—For the avoidance of doubts, it is hereby declared that the power to issue directions under
this section includes the power to direct—
(a) the closure, prohibition or regulation of any industry, operation or process; or
(b) the stoppage or regulation of supply of electricity, water or any other service.
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two provisions are identically worded. Section 33A of the Water Act
is as under;
“Section 33A. Power to give directions.—Notwithstanding
anything contained in any other law, but subject to the
provisions of this Act, and to any directions that the Central
Government may give in this behalf, a Board may, in the
exercise of its powers and performance of its functions
under this Act, issue any directions in writing to any person,
officer or authority, and such person, officer or authority
shall be bound to comply with such directions.
Explanation.—For the avoidance of doubts, it is hereby
declared that the power to issue directions under this
section includes the power to direct—
(a) the closure, prohibition or regulation of any industry,
operation or process; or
(b) the stoppage or regulation of supply of electricity, water
or any other service.”
12. The directions contemplated under Sections 33A and 31A of the Water
and Air Acts must be in furtherance of the powers and functions of
the Boards and they must be in writing. These provisions, declares
that the power to issue directions will include the power to direct
closure, prohibition or regulation of any industry, operation or process.
Further, this power extends to directing the stoppage or regulation
of supply of electricity, water or any other service. The power to
give directions has been worded broadly, and it allows the Boards
significant flexibility in deciding the nature of directions. The legislative
intention of granting these powers through the 1988 amendment
can be inferred from the Statement of Objects and Reasons of the
Water Act, which reads as follows –
“2. The Water Act is implemented by the Central and
State Governments and the Central and State Pollution
Control Boards. Over the past few years, the implementing
agencies have experienced some more administrative
and practical difficulties in effectively implementing the
provisions of the Act. The ways and means to remove these
difficulties have been thoroughly examined in consultation
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with the implementing agencies. Taking into account the
views expressed, it is proposed to amend certain provisions
of the Act in order to remove such difficulties….
3. The Bill, inter alia, seeks to make the following
amendments in the Act, namely:—
….
(iv) in order to effectively prevent water pollution, the penal
provisions of the Act are proposed to be made stricter
and bring them at par with the punishments prescribed
in the Air (Prevention and Control of Pollution) Act, 1981
as amended by Act 47 of 1987;
….
(vi) it is proposed to empower the Boards to give directions
to any person, officer or authority including the power to
direct closure or regulation of offending industry, operation
or process or stoppage or regulation of supply of services
such as water and electricity;”
13. Similar objective is expressed for the amendment introduced in the
Air Act. 15
14. An appeal against directions issued under Section 33A of the
Water Act by the State Board can be filed before the National
Green Tribunal under Section 33B, introduced in 201016. Unlike the

15 Statement of Objects and Reasons for Air Act states, “2. The Air Act is implemented by the Central
and State Governments and the Central and State Boards. Over the past few years, the implementing
agencies have experienced some administrative and practical difficulties in effectively implementing the
provisions of this Act and have brought these to the notice of Government. The ways and means to
remove these difficulties have been thoroughly examined in consultation with the concerned Central
Government departments, the State Governments and the Central and State Boards. Taking into
account the views expressed, the Government have decided to make certain amendments to the Act in
order to remove such difficulties. 3. The Bill, inter alia, seeks to make the following amendments in the
Act, namely—
….
iv) In order to prevent effectively air pollution, the punishments provided in the Act are proposed to be
made stricter.
….
(vii) It is proposed to empower the Boards to give directions to any person, officer or authority including
the power to direct closure or regulation of offending establishments or stoppage or regulation of supply
of services such as, water and electricity. (viii) It is proposed to empower the Boards to approach courts
to obtain orders restraining any person from causing air pollution.”
16 Act 19 of 2010.
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Water Act there is no specific Appeal provision against directions
issued under Section 31A of the Air Act. This asymmetry must be
addressed legislatively.
15. Offences and penalties under the two Acts, and the related procedures,
are covered in Chapter VII of the Water Act and Chapter VI of the
Air Act. These chapters have undergone significant and substantial
amendments. Prior to the amendments, the two Acts stipulated
penalties in the form of imprisonment, monetary fine or both for
offences under the statute. Courts could only take cognizance of an
offence if a complaint was filed by a Board or any officer authorized
by it, or by any person who had given notice of the alleged offence
and of his intention to make a complaint. No court inferior to that of a
Metropolitan Magistrate or a Judicial magistrate of the first class can
try an offence punishable under the two Acts. Be that as it may, for
the present purpose we have to examine and interpret Sections 33A
and 31A of the Water and Air Acts.

9. Interpretation of and for Environmental Institutions.
16. Our constitutionalism bears the hallmark of an expansive interpretation
of fundamental rights. But such creative expansion is only a job half
done if the depth of the remedies, consequent upon infringement,
remain shallow. In other words, remedial jurisprudence must keep
pace with expanding rights and regulatory challenges. It is not
sufficient that courts adopt injunctory, mandatory and compensatory
remedies, but our regulators also must be empowered in that regard.
However, the legislative grammar must be elastic for us to infuse the
regulators with power to fashion different remedies. This infusion must
also be tempered ‡ with the necessary guidelines and parameters of
exercise of remedial powers, failing which such infusion would aid
arbitrary use. Our firm view is that remedial powers or restitutionary
directives are a necessary concomitant of both the fundamental rights
of citizens who suffer environmental wrongs and an equal concomitant
of the duties of a statutory regulator, which are informed by Part IV
A of the constitution. To that extent, the functions and powers of a
regulator must be inspired by the obligation in Part IV A and Article
48 A. The State’s ‘endeavour to protect and improve the environment’
will be partial, if it does not encompass a duty to restitute.

‡ Ed. Note: “tempered” instead of “tampered” in terms of subsequent corrigendum.
382 [2025] 8 S.C.R.

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17. Of all the duties imposed under Article 51A, the obligation to conserve
and protect water and air, is perhaps the most significant, amidst our
climate change crisis. The Water Act and the Air Act institutionalised
all efforts and actions that need to be taken to protect air that we
breathe and water that we consume by creating the Pollution Control
Boards. These Boards functioning as our environment regulators
are expected to act with institutional foresight by evolving necessary
policy perspectives and action plans. Working with perpetual seal and
succession, they are to develop and retain institutional memory so
that they can act on the basis of the experience, data and information
that they would have gathered and processed. Institutional expertise
is critical, and these bodies are to employ human resource which
have domain expertise and talent. These bodies are intended to
maintain institutional integrity by taking independent and objective
decisions without governmental or industrial control. These values
flow naturally if there is institutional transparency and accountability.
It is in this perspective that we need to interpret Section 33A of the
Water Act and 31A of the Air Act.

10. Duty to Restitute v. Power to Punish and Penalise.
18. There is a distinction between an action for environmental
damages for restitution or remediation and imposition of penalties
or fines levied at the culmination of a punitive action. This Court in
M.C. Mehta (supra), while referring to the provisions of the Water
Act, Air Act and the Environment Protection Act observed –
“17. All the three Acts, referred to above, also contemplate
the taking of the cognizance of the offences by the court.
Thus, a person guilty of contravention of provisions of any
of the three Acts which constitutes an offence has to be
prosecuted for such offence and in case the offence is found
proved then alone can he be punished with imprisonment
and fine or both. The sine qua non for punishment of
imprisonment and fine is a fair trial in a competent court.
The punishment of imprisonment or fine can be imposed
only after the person is found guilty.”
“24. Pollution is a civil wrong. By its very nature, it is a tort
committed against the community as a whole. A person,
therefore, who is guilty of causing pollution has to pay
damages (compensation) for restoration of the environment
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and ecology. He has also to pay damages to those who
have suffered loss on account of the act of the offender.…”
19. Therefore, Indian law distinguishes between the imposition of a
monetary penalty or fine, which constitutes punitive action following
a determination of guilt after adherence to the statutorily prescribed
procedure, and the payment of damages for restitution or remediation
as compensatory relief.
20. In this context, it is important to turn to one of the key principles of
Indian environmental law – the Polluter Pays principle. This principle
has been a part of Indian jurisprudence since 1996. In Indian Council
for Enviro-Legal Action v. Union of India17, this Court held that
according to the Polluter Pays principle the responsibility for repairing
the damage is that of the offending industry. The Court further held
that the powers of the Central Government to issue directions under
Section 5 read with Section 3 of the Environment Protection Act
include the power to impose costs for remedial measures -
“60. … Section 3 of the Environment (Protection) Act,
1986 expressly empowers the Central Government (or its
delegate, as the case may be) to “take all such measures
as it deems necessary or expedient for the purpose of
protecting and improving the quality of environment…”.
Section 5 clothes the Central Government (or its delegate)
with the power to issue directions for achieving the objects
of the Act. Read with the wide definition of ‘environment’
in Section 2(a), Sections 3 and 5 clothe the Central
Government with all such powers as are “necessary or
expedient for the purpose of protecting and improving
the quality of the environment”. The Central Government
is empowered to take all measures and issue all such
directions as are called for for the above purpose. In
the present case, the said powers will include giving
directions for the removal of sludge, for undertaking
remedial measures and also the power to impose the
cost of remedial measures on the offending industry and
utilise the amount so recovered for carrying out remedial
measures. This Court can certainly give directions to the

17 (1996) 3 SCC 212
384 [2025] 8 S.C.R.

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Central Government/its delegate to take all such measures,
if in a given case this Court finds that such directions are
warranted. …
67. The question of liability of the respondents to defray
the costs of remedial measures can also be looked into
from another angle, which has now come to be accepted
universally as a sound principle, viz., the “Polluter
Pays” principle. …Thus, according to this principle, the
responsibility for repairing the damage is that of the
offending industry. Sections 3 and 5 empower the Central
Government to give directions and take measures for
giving effect to this principle. In all the circumstances
of the case, we think it appropriate that the task of
determining the amount required for carrying out the
remedial measures, its recovery/realisation and the task
of undertaking the remedial measures is placed upon
the Central Government in the light of the provisions of
the Environment (Protection) Act, 1986. It is, of course,
open to the Central Government to take the help and
assistance of State Government, RPCB or such other
agency or authority, as they think fit.”
(emphasis added)

21. Subsequently, the Court in Vellore Citizens’ Welfare Forum v. Union of
India18, has held that the liability for environmental damage includes
both a compensatory aspect and a restorative or remedial aspect-
“12. … The “Polluter Pays Principle” as interpreted by
this Court means that the absolute liability for harm to the
environment extends not only to compensate the victims of
pollution but also the cost of restoring the environmental
degradation. Remediation of the damaged environment is
part of the process of “Sustainable Development” and as
such the polluter is liable to pay the cost to the individual
sufferers as well as the cost of reversing the damaged
ecology.”
(emphasis added)

18 (1996) 5 SCC 647
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22. Application of the Polluter Pays principle not only includes payment
for restoring the damaged environment, taking remedial action to
deal with the damage and compensating for the direct harm caused,
but also for avoiding pollution. In Research Foundation for Science
(18) v. Union of India19, this Court held -
“29. The polluter-pays principle basically means that the
producer of goods or other items should be responsible for
the cost of preventing or dealing with any pollution that the
process causes. This includes environmental cost as well
as direct cost to the people or property, it also covers cost
incurred in avoiding pollution and not just those related to
remedying any damage. It will include full environmental
cost and not just those which are immediately tangible.
The principle also does not mean that the polluter can
pollute and pay for it. The nature and extent of cost and
the circumstances in which the principle will apply may
differ from case to case.”
(emphasis added)

23. The Court further held that the observations of the Court in in Deepak
Nitrite Ltd. v. State of Gujarat20 that “mere violation of the law in not
observing the norms would result in degradation of environment
would not be correct” were confined to the facts of that case. The
Court clarified that the actual degradation of the environment is not
a necessary condition for the application of polluter pays principle,
as long as the offending activities have the potential of degrading
the environment -
“30…The decision also cannot be said to have laid down
a proposition that in the absence of actual degradation of
environment by the offending activities, the payment for
repair on application of the polluter-pays principle cannot
be ordered. The said case is not relevant for considering
cases like the present one where offending activities have the
potential of degrading the environment. In any case, in the
present case, the point simply is about the payments to be

19 (2005) 13 SCC 186.
20 (2004) 6 SCC 402
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made for the expenditure to be incurred for the destruction of
imported hazardous waste and amount spent for conducting
tests for determining whether it is such a waste or not…”
(emphasis added)

24. The distinction between a punitive action and a direction to pay
environmental damages was made by the National Green Tribunal
in State Pollution Control Board, Odisha v M/s Swastik Ispat Pvt Ltd
and Others21. The Tribunal in this case was considering the legality
of forfeiture of bank guarantees in case a defaulting industry did not
comply with the regulatory conditions within the stipulated timeframe.
The Tribunal expressly considered the opinion of the High Court in
the impugned judgment before us today and held -
“45. It is evident from the above facts and the reasoning
that there was actual levy of penalty or damages by the
DPCC and it was in consequence of such imposition
of penalty/damages that the Units were called upon to
furnish bank guarantees for granting of consent. In other
words, bank guarantee was required to be furnished in
furtherance to the imposition of a penalty or damages
in that case. It was not an act de hors the imposition of
penalty and had the element of punitive action. In the
present case, it is not a consequence of a punitive or
penal action but is in exercise of the powers vested in
the Board in relation to recalling the conditions of consent
and ensuring their implementation while also making
compensatory provision for remedying the apprehended
wrong to the environment. In the cases in hand, the
Board has not imposed any penalty upon the units but
has granted consent to them on certain conditions, none
of which is punitive. They squarely fall within the power of
the Board to prevent and control pollution in consonance
with the scheme of the Acts concerned. Thus, on facts,
the judgments of the High Court in Splendor (supra) do
not have any application to the present case. In any case,
we are of the considered view that asking for a bank

21 2014 SCC OnLine NGT 13.
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guarantee as an interim measure for due performance of
the conditions of the consent order being compensatory
in nature, is not punitive.
46. We have already noticed above that there is a clear
distinction between a penal and a compensatory provision.
In such matters, the paramount question that would
normally fall for determination before a court or tribunal
would be whether the action contemplated is penal or
compensatory. This issue shall have to be decided with
reference to the facts of the case, the provisions of the law
applicable and the intent of the authority concerned. Once
it falls in the ‘compensatory’ field, then it will necessarily
be beyond the purview of penalty….”
(emphasis added)

25. In Swastik Ispat, the Green Tribunal correctly interpreted Sections
33A and 31A of the Water and Air Acts. The judgment of the High
Court in Splendor had not yet been taken up or considered by
this Court at that time, the Tribunal had to distinguish the facts of
Splendor to arrive at its own conclusion. In view of our reasoning
and interpretation of Sections 33A and 31A of the Water and Air Acts,
we have no hesitation to hold that the Green Tribunal is correct in
its approach.
26. More recently, in T.N. Godavarman Thirumulpad, In Re v. Union of
India22, this Court while considering the issue of illegal construction
in the Corbett Tiger Reserve drew the distinction between action
against persons violating the law and measures for restoration of
the environmental damage. The Court held -
“173. … However, the principle of restoration of damaged
ecosystem would require the States to promote the
recovery of threatened species. We are of the considered
view that the States would be required to take steps for
the identification and effective implementation of active
restoration measures that are localised to the particular
ecosystem that was damaged. The focus has to be on

22 (2025) 2 SCC 641
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restoration of the ecosystem as close and similar as
possible to the specific one that was damaged.
175. We find that, bringing the culprits to face the
proceedings is a different matter and restoration of the
damage already done is a different matter. We are of the
considered view that the State cannot run away from its
responsibilities to restore the damage done to the forest.
The State, apart from preventing such acts in the future,
should take immediate steps for restoration of the damage
already done; undertake an exercise for determining the
valuation of the damage done and recover it from the
persons found responsible for causing such a damage.”
(emphasis added)

11. Principles.
27. Based on a review of precedents on this issue, the following legal
position emerges –
I. There is a distinction between a direction for payment of
restitutionary and compensatory damages as a remedial
measure for environmental damage or as an ex-ante measure
towards potential environmental damage on the one hand; and
a punitive action of fine or imprisonment for violations under
Chapters VII of the Water Act and VI of the Air Act on the other
hand.
II. If directions in furtherance of restitutionary and compensatory
measures are issued, these are not to be considered as
punitive in nature. Punitive action can only be taken through the
procedure prescribed in the statute for example under chapters
VII and VI of the Water and Air Acts respectively.
III. Indian environmental law has assimilated23 the principle of
Polluter Pays and there is also a statutory incorporation of
this principle in our laws.24 The invocation of this principle is

23 Indian Council for Enviro-Legal Action (supra n.12); Vellore (supra n 13).
24 Section 20. Tribunal to apply certain principles- The Tribunal shall, while passing any order or
decision or award, apply the principles of sustainable development, the precautionary principle and the
polluter pays principle.
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triggered in the situations25; i) when an established threshold
or prescribed requirement is exceeded or breached, and it
does result in environmental damage, ii) when an established
threshold or prescribed requirement is not exceeded or breached,
nevertheless the act in question results in environmental damage
and also iii) when a potential risk or a likely adverse impact to
the environment is anticipated, irrespective of whether or not
prescribed thresholds or requirements are exceeded or breached.
IV. Environmental regulators have a compelling duty to adopt and
apply preventive measures irrespective of actual environmental
damage. Ex-ante action shall be taken by these regulators and
for this purpose a certain measure in exercise of powers under
Sections 33A and 31A of the Water and Air Acts is necessary.
V. The powers of the Boards under Sections 33A and 31A of
the Water and Air Acts are identical to that of Section 5 of
the Environment Protection Act. Under Section 5, the Central
Government or its delegate has the power to issue directions
to the polluting industry to pay certain amounts and utilise the
said fund for carrying out remedial measures. The Boards are
empowered to take similar actions under Sections 33A and
31A of the Acts.
28. Having considered the principles that govern our environmental laws
and on interpretation of Sections 33A and 31A of the Water and Air
Acts, we are of the opinion that that the Division Bench of the High
Court was not correct in restrictively reading powers of the Boards. We
are of the opinion that these regulators in exercise of these powers
can impose and collect, as restitutionary or compensatory damages
fixed sum of monies or require furnishing bank guarantees as an
ex-ante measure towards potential or actual environmental damage.
29. There is no doubt that Section 33A of the Water Act and Section 31A of
the Air Act give the State Boards powers to issue necessary directions
for environmental restoration, remediation and compensation and for
the payment of costs for the same. The National Green Tribunal’s
judgment in Swastik Ispat correctly identified the Boards powers to
issue directions for payment of environmental damages under Section

25 Loveleen Bhullar, ‘The Polluter Pays Principle: Scope and Limits or Judicial Decisions’; in Shibani
Ghosh (ed.), Indian Environmental Law (Orient BlackSwan 2019).
390 [2025] 8 S.C.R.

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33A of the Water Act and the Section 31A of the Air Act. A restrictive
interpretation which fails to differentiate between environmental
damages and punitive action significantly encumbers the Boards
ability to discharge its duties.
30. The Board’s powers under Section 33A of the Water Act and Section
31A of the Air Act have to be read in light of the legal position on the
application of Polluter Pays principle as formulated and explained.
This means that State Board cannot impose environmental damages
in case of every contravention or offence under the Water Act and
Air Act. It is only when the State Board has made a determination
that some form of environmental damage or harm has been caused
by the erring entity, or the same is so imminent, that the State Board
must initiate action under Section 33A of the Water Act and Section
31A of the Air Act.
31. At this stage, we must also take note of the recent 2024 amendments26
to the Water and Air Acts. Two major changes relevant for our
consideration are that of decriminalisation27 and introduction of
the office of “Adjudicatory Officer”28. Even after the amendments,
in our opinion, there is no conflict between the powers of the
State Boards to direct payment of environmental damages under
Sections 33A and 31A of the Water and Air Acts and the powers of
the Adjudicating Officer to impose penalties under Chapter VII of
the Water Act and Chapter VI of the Air Act. The decriminalization
of offences under these Chapters has not removed the punitive

26 The Water (Prevention and Control of Pollution) Amendment Act, 2024, Jan Vishwas (Amendment of
Provisions) Act, 2023.
27 Section 41 in the erstwhile Water Act has been substituted by sections 41 and 41A, whereby contravention
of directions issued under section 20 (for obtaining information), 32 (for imposing emergency measures
in case of pollution), 33 (for restraining apprehended pollution) or 33A would now be punishable by
penalty alone; thereby replacing the earlier penal framework comprising of imprisonment and fine. Similar
amendments done for section 42 (penalty for certain acts), section 43 for contravention of directions
under section 24 (prohibiting use of stream or well), section 44 (prohibiting alteration of meter, etc.),
and section 45A (residuary). Correspondingly, under the Air Act criminal liability under section 37 for
contravention of directions under section 22 (restricting emission beyond standards) or section 31A has
been restricted to fine alone. Similar amendments have been brought in section 38 and 39 (residuary).
Punishment for imprisonment has been retained only for violation of section 21 and failure to pay penalty
or additional penalty under section 39D.
28 In the Water Act, section 45B puts in place a new office by the title of ‘Adjudicating Officer’, who would be
an officer not below the rank of Joint Secretary to the Centre or Secretary to the State, appointed by the
Central Government. Adjudicating Officer is empowered to inquire and impose penalties under sections
41, 41A, 42, 43, 44, 45A and 48. Appeal against such imposition lies before the National Green Tribunal
as per section 45C. The Adjudicating Officer is further empowered to file a complaint for cognizance
under section 49. Corresponding additions have been made under the Air Act as well under sections 39A
(Adjudicating Officer), 39B (Appeal to NGT) and 43 (Cognizance of offences).
[2025] 8 S.C.R. 391

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

nature of actions that can be taken under them. There remains
a clear distinction between the nature of directions that the State
Boards can issue under Sections 33A and 31A of the Water and Air
Acts for payment of environmental damage and the determination
by Adjudicating Officers. The former is compensatory in nature and
will be resorted to when remedial measures are being undertaken
to restore the degraded environment or pollution caused. The latter
is a penalty for an offence under the law and is imposed with the
objective of punishing the offender. This penalty collected here will
not be specifically directed towards the restoration of the degraded
environment (for instance, to decontaminate a pond that has been
polluted due to discharge of untreated sewage). It will be deposited
in the Environmental Protection Fund that is to be set up under
Section 16 of the Environment (Protection) Act. According to Section
16(3) of the EP Act, the Fund shall be used for, (a) the promotion of
awareness, education and research for the protection of environment;
(b) the expenses for achieving the objects and for purposes of the
Air (Prevention and Control of Pollution) Act, 1981(14 of 1981) and
under this Act; and (c) such other purposes, as may be prescribed.

A. Board’s Responsibility to Choose Appropriate Course of
Action.
32. Given their broad statutory mandate and the significant duty towards
public health and environmental protection the Boards must have
the power and distinction to decide the appropriate action against
a polluting entity. It is essential that the Boards function effectively
and efficiently by adopting such measures as is necessary in a given
situation. The Boards can decide whether a polluting entity needs
to be punished by imposition of penalty or if the situation demands
immediate restoration of the environmental damage by the polluter
or both.

B. Powers Must Be Guided by Transparency and Non-
Arbitrariness.
33. While we hold that the Boards have the power to direct the payment
of environmental damages, we make it clear that this power must
always be guided by two overarching principles. First, that the power
cannot be exercised in an arbitrary manner; and second, the process
of exercising this power must be infused with transparency.
392 [2025] 8 S.C.R.

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34. This Court has underscored the importance of strong institutional
frameworks in environmental governance that are effective,
accountable and transparent. In Bengaluru Development Authority v.
Sudhakar Hegde29, this Court held -
“95. The protection of the environment is premised
not only on the active role of courts, but also on
robust institutional frameworks within which every
stakeholder complies with its duty to ensure sustainable
development. A framework of environmental governance
committed to the rule of law requires a regime which
has effective, accountable and transparent institutions.
Equally important is responsive, inclusive, participatory
and representative decision-making. Environmental
governance is founded on the rule of law and emerges
from the values of our Constitution. Where the health
of the environment is key to preserving the right to life
as a constitutionally recognised value under Article 21
of the Constitution, proper structures for environmental
decision-making find expression in the guarantee
against arbitrary action and the affirmative duty of fair
treatment under Article 14 of the Constitution. Sustainable
development is premised not merely on the redressal
of the failure of democratic institutions in the protection
of the environment, but ensuring that such failures do
not take place.”
(emphasis added)

35. To ensure that the Boards impose restitutionary and the compensatory
environmental damages in a fair transparent, non-arbitrary manner,
with procedural certainty, necessary subordinate legislation in the
form of rules and regulations must be notified. This shall include
methods by which environmental damage is determined, and the
consequent quantum of damages are assessed. They may also
incorporate certain basic principles of natural justice for fairness
in action. At present environmental damages are being levied by
the Boards on the basis of certain guidelines issued by the Central

29 (2020) 15 SCC 63
[2025] 8 S.C.R. 393

Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. Etc.

Pollution Control Board in its document “General framework for
imposing environmental damage compensation” issue in December,
2022. These guidelines seem to have been issued pursuant to the
directions of the NGT.30 It is important that these guidelines are
reviewed thoroughly and issued in the form of Rules and Regulations.
This will enable declaration of a law that applies and ensures its
recognition and easy implementation.
36. These Rules must also create enabling framework for citizens to
file complaints about environmental damage. Public participation
in environmental protection has assumed great importance with
climate change threatening to drastically disrupt our way of living.
Boards, being the first line of defence against polluting activities,
must provide easy accessibility and encourage public participation
in their function and decision making.
37. While we have reversed the decision of the High Court on the
principle of law and hold that the environmental regulators, the
Pollution Control Boards, can impose and collect as restitutionary
and compensatory damages fixed sums of monies or require
furnishing bank guarantees as an ex-ante measure towards potential
environmental damage in exercise of powers under Sections 33A and
31A of the Water and Air Acts, we issue the following consequential
directions.
38. In view of the fact that the show cause notices in these cases relate
to the year 2006 and those show cause notices were set-aside by the
Single as well as by the Division Benches of the High Court, we are
of the opinion that no purpose will be served in reviving the said show
cause notices at this point of time. In the facts and circumstances
of the case while we allow the appeal on the principle of law there
shall not be any consequential direction for reviving the show cause
notices which have been set-aside concurrently by the Single as
well as by the Division Bench of the High Court. If certain amounts
have been collected on the basis of the said show cause notices
they shall be returned by DPCC within a period of six weeks from
the date of this order, and if amounts are not deposited or collected
the appellant, DPCC shall not take any further action.

30 Pursuant to the NGT in its order in O.A. No. 606/2018 dated 24.04.2019.
394 [2025] 8 S.C.R.

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39. For the reasons stated above:
(a) we allow these appeals and set aside the judgement and order
dated 23.01.2012, passed by the Division Bench of the High
Court of Delhi to the extent of declaration of law but direct that
the show cause notices that have been set aside by the High
Court shall not be revived.
(b) we direct that the Pollution Control Boards can impose and
collect as restitutionary and compensatory damages fixed
sums of monies or require furnishing bank guarantees as an
ex-ante measure towards potential environmental damage in
exercise of powers under Sections 33A and 31A of the Water
and Air Acts.
(c) it is further directed that the power to impose or collect
restitutionary or compensatory damages or the requirement to
furnish bank guarantees as an ex-ante measure under Sections
33A and 31A of the Water and Air Acts shall be enforced only
after detailing the principle and procedure incorporating basic
principles of natural justice in the subordinate legislation.

Result of the case: Appeals allowed.

†
Headnotes prepared by: Ankit Gyan