R6-Bhullar - Polluter Pays Principle 1

8/9/2019 R6-Bhullar - Polluter Pays Principle 1

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2 Making the Polluter Pay in India:

Scope and Limitations of Environmental Law

LOVLEEN BHULLAR


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I. INTRODUCTION

The polluter pays principle forms an integral component of environmental law jurisprudence,

at the international, regional and domestic levels. The widely accepted formulation of the

principle requires that the polluter, rather than the government or members of the public,

should bear the cost of pollution.1 While the principle is widely recognized, its content and

scope forms the subject matter of considerable debate and discussion. The application of the

polluter pays principle depends upon the identification of the polluter, the circumstances in

which the polluter’s responsibility to pay is triggered, the determination of what is to be paid

pollution prevention and control measures determined by public authorities and!or costs of

environmental restoration including cleanup costs as well, and the identification of the

recipients of the payment individuals or the government, etc. "s a result, different meanings

have been attributed to the principle in different conte#ts. $ The intended function of the

principle in a given conte#t, whether redistributive, preventive or curative, also influences its

meaning.%

The polluter pays principle has formed part of the domestic environmental jurisprudence in

&ndia e#plicitly or implicitly ' for several years but neither its conceptual basis nor its

interpretation by the legislature and the judiciary has been e#amined in sufficient detail. This

paper attempts to fill this gap while focusing particularly on the role of the judiciary. (ection

&& will briefly describe the development of the polluter pays principle, as a principle of

environmental economics and as a legal principle. (ection &&& will e#amine and analyze the

forms in which the polluter pays principle has been incorporated into domestic environmental

jurisprudence in &ndia ' e#plicitly as well as by implication ' and implemented ' through the

principle of strict liability and absolute liability in legislation as well as judicial decisions.

This section will highlight the legal basis for the incorporation of the principle into domestic

environmental law by the (upreme )ourt of &ndia and the implementation of the principle

through the application of the absolute liability principle in particular. (ection &* will focus

on the different issues that arise in the conte#t of operationalizing the principle as a part of

judicial decisions. This will be followed by the conclusion highlighting the contribution of

the domestic environmental jurisprudence in &ndia to the understanding of the polluter pays

principle and its limits.

II. POLLUTER PAYS PRINCIPLE: FROM ECONOMICS TO LAW

The origin of the polluter pays principle can be traced to the economic theory of

1 +atricia irnie, "lan oyle - )atherine edgewell, & /T0/"T&/"2 2"W - T30 0 /*&/40/T %$$ 5%rd edn,

)larendon +ress!#ford 6niversity +ress $7789 :hereafter ;irnie, oyle - edgewell’ T30 0 /*&/40/T ?% 5@uridisA >orlag 188B9.

3 /icolas de (adeleer, 0 /*&/40/T"2 +&/)&+20(C >4 +2&T&)"2 (2D"/( T 20D"2

620( %?%E 5#ford 6niversity +ress $77$9 :hereafter ;de (adeleer’


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e#ternalities.H &t is based on the idea that the production and!or consumption of goods or

services may result in pollution or environmental harm or damage 5;e#ternalities’9 but often

these costs are not reflected in the marAet price of the goods or services in question. This

distorts price signals and results in inefficient economic choices. >urther, instead of the

polluter, public authorities or members of the public have to bear the 5social9 costs of pollution. The polluter pays principle is based on the idea of cost allocation and cost

internalization, that is, the e#ternal 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.? This is e#pected to reduce the consumption of

pollutionintensive products.B

The shift of the polluter pays principle from economic theory to practice initially tooA place

in the conte#t of the introduction of strict environmental measures on chronic pollution in

member countries of the rganization for 0conomic )ooperation and =evelopment 5hereafter

;0)=’9.E The 0)= first identified the features of the ;socalled +olluter+ays +rinciple’ in18E$.I

The principle to be used for allocating costs of pollution prevention and control

measures to encourage rational use of scarce natural resources and to avoid distortions

in international trade and investment is the socalled ;+olluter+ays +rinciple’. This

principle means that the polluter should bear the e#penses of carrying out the above

mentioned measures decided by public authorities to ensure that the environment is in

an acceptable state. &n other words, the cost of these measures should be reflected in

the cost of goods and services which cause pollution in production and!or

consumption. (uch measures should not be accompanied by subsidies that would

create significant distortions in international trade and investment.

Two years later, the 0)= )ouncil reaffirmed the principle as a ;fundamental principle’. 8

4 ") +igou, T30 0)/4&)( > W02>"0 5$nd edn, 4acmillan 18$H9.

5 +hilippe (ands - @acqueline +eel, +&/)&+20( > & /T0/"T&/"2 0 /*&/40/T"2 2"W

$$I 5)ambridge 6niversity +ress $71$9 :hereafter ;(ands - +eel’


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"ccording to de (adeleer, the principle ;was not intended to eliminate all forms of pollution’

or ;to oblige polluters to assume the full consequences of their acts’.17 The reduction of

pollution beyond a certain level was considered neither practical nor necessary in view of the

costs involved.11 >urther, the polluter was not required to ;pay’ anything to anyone. 1$ This

formulation is described as partial internalization of environmental costs by the polluter.

1%

(ubsequently, the scope of the principle was e#tended so that the potential polluter 5operator9

bears the cost of ;reasonable measures’, which are introduced by the public authority, to

prevent and control accidental pollution from hazardous installations.1H The 0)= also

recommended the internalization of cost of damage arising from pollution, thus marAing a

shift towards full cost internalization.1? This trend is also reflected in the initial development

of the polluter pays principle in the 0uropean )ommunity 50)9 5later 0uropean 6nion

50699.1B

"t the international level, one of the earliest references to the polluter pays principle, albeitimplicit, can be traced to the rundtland eport of 18IE, which suggested that the

;environmental costs of economic activity’ can be ;internalized’paid by the enterprises’.1E

This reflects the formulation of the polluter pays principle in the 0)= recommendations.

3owever, the polluter pays principle ;secured international support as an environmental

policy’1I for the first time during the 6nited /ations )onference on 0nvironment and

=evelopment 56/)0=9 5or io )onference9 held in 188$.18 +rinciple 1B of the io

=eclaration, which has been described as the most important and farreaching international

ecommendation of the 0)= )ouncil on the 6se of 0conomic &nstruments in 0nvironmental +olicy, 0)=

=oc. )58791EE!>inal 5@an. %1, 18819 :hereafter ;1881 0)= ecommendation’inal 5@uly E, 18I89, $I &24 1%$7 518I89.

15 1881 0)= ecommendation 5n 89.

16 >or soft law instruments, see, for e#ample, )ouncil and Dovernments of the 4ember (tates =eclaration, of

$$ /ovember 18E%, on the programme of action of the 0uropean )ommunities on the environment 5@ ) 11$,$7. 1$. 18E%9 1. >or binding legal instruments, see (ingle 0uropean "ct 5@ 2 1B8, 1E. 7$. 18IB9 1, art $?F

)onsolidated version of the Treaty 0stablishing the 0uropean )ommunity 5@ ) %$?, $H. 11. $77$9%%, 17E7I,art 1EH5$9F )onsolidated version of the Treaty on the >unctioning of the 0uropean 6nion, 1% =ecember$77E, $77I!) 11?!71, art 1815$9. >or e#ante measures, see, for e#ample, =irective of the 0uropean +arliamentand of the )ouncil $77I!8I!0) of 18 /ovember $77I on waste and repealing certain =irectives 5@ 2 %1$, $$.11. $77I9 %. >or e#post measures to address unavoidable pollution in case of accidents and other environmentaldisasters, see =irective of the 0uropean +arliament and of the )ouncil $77H!%?!0) of $1 "pril $77H onenvironmental liability with regard to the prevention and remedying of environmental damage 5@ 2 1H%, %7. H.

$77H9 %?E.

17 eport of the World )ommission on 0nvironment and =evelopment, ,ur $ommon

-uture para ?% 518IE9.

18 irnie, oyle - edgewell 5n 19 %$$.

19 io =eclaration on 0nvironment and =evelopment, 6nited /ations )onference on 0nvironment and

=evelopment, 6./. =oc. "!)/>.1?1!? 5188$9, reprinted in %1 &24 IEH 5188$9. >or a commentary on thenegotiating history of the io =eclaration, see )hee JoAe 2ing, The .io /eclaration on En#ironment and

/e#elopment: An Assessment ?7 5Third World /etworA $71$9.


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statement of the fundamental principles of environmental law,$7 reads as followsC

/ational authorities should endeavor to promote the internalization of environmental

costs and the use of economic instruments, taAing 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.

This formulation of the polluter pays principle is neither absolute nor does it impose legally

binding obligations on national authorities.$1 The principle is e#pressed in qualified and

aspirational termsF it lacAs the normative character of a rule of law. $$ 3owever, it does state

that the polluter should bear the ;cost of pollution’, which is wider in scope than pollution

prevention and control measures introduced by public authorities. This reflects a shift towards

full internationalization of environmental costs.$% &n addition to the io =eclaration, the

polluter pays principle is also mentioned in the preamble or operative provisions of several

international 5and regional9 agreements.$H

3owever, the foundation of the above ;legal’formulations of the polluter pays principle is still based on economic theory. >urther, the

overwhelming focus on the polluter in the dominant discourse concerning the polluter pays

principle often overlooAs its justice dimensions.

III.DEVELOPMENT OF THE POLLUTER PAYS PRINCIPLE IN INDIA

The idea of holding a polluter liable to pay damages for causing pollution!environmental

harm is not new in &ndia. )ourts have invoAed the polluter pays principle to grant relief in anumber of cases of pollution. &n some cases, strict and absolute liability has been imposed on

the polluter while applying the principle and in other cases, ordinary and!or e#emplary

damages!compensation have been awarded against the polluter. &t has also been mentioned,

e#plicitly or implicitly, in legislation. 3owever, the first point of entry of the principle into

domestic environmental jurisprudence has not received much attention. This section first

e#amines two important judicial decisions of the (upreme )ourt of &ndia that serve as the

starting point to understand the source of the polluter pays principle. This is followed by a

brief overview of legislation that refer to the principle. While some laws apply the polluter

pays principle implicitly by requiring the polluter to pay for the damage resulting from

pollution or environmental harm, the principle is e#plicitly referred to in some other laws.

20 /ash 5n I9 HE1.

21 de (adeleer 5n %9 H%. !ee also "lan oyle - =avid >reestone 5eds9, & /T0/"T&/"2 2"W

"/= (6(T"&/"20 =0*02+40/T H 5#ford 6niversity +ress 18889 :hereafter ;oyle -

>reestone’reestone 5n $19 18. !ee also 1orth !ea $ontinental !helf $ase, &)@ eports 518B89 %, para

E$. )f .hines $hlorides $on#ention Ar)itral Award 5>rance!/etherlands9 +)" 5$77H9 para

17%.

23 de (adeleer 5n %9 H%.

24 &bid $%$H.


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1. Explicit !"!!#c!$

The (upreme )ourt of &ndia has e#pressly invoAed the polluter pays principle by relying on

the understanding of the principle in other jurisdictions and!or in international environmentallaw. The activism of the )ourt has been attributed, among other factors, to &ndia’s role in the

international environmental law policymaAing processes,$? to the )ourt’s ;desire to do

justice’,$B or to fill ;gaps’ in the domestic environmental law regime.$E &n addition, although

the polluter pays principle was e#pressly referred to in the domestic environmental policy

frameworA for sometime, it is only recently that it is being mentioned in legislation as well.

1.1 Locating the source of the principle in udicial decisions

The polluter pays principle was e#plicitly relied on for the first time in domestic

environmental law by the (upreme )ourt of &ndia in "ndian $ouncil for En#iro2Legal Action

# 0nion of "ndia and ,thers 5hereafter the ; (icchri case’9.$I The case concerned the adverse

environmental and health impacts of water and soil pollution in ichhri village and

surrounding villages in 6daipur =istrict, ajasthan as a result of dumping of untreated

wastewater and highly to#ic sludge, particularly ironbased and gypsumbased, resulting from

the past production of 3 acid by chemical industries. "lthough the application of the polluter

pays principle by the )ourt in the (icchri case has been referred to in a number of subsequent

decisions,

$8

its legal basis has not been e#amined.

elying solely on an article published in an academic journal, which discussed the

development of the polluter pays principle in the 0)= and the 0),%7, the )ourt observed

25 4ichael "nderson, "nternational En#ironmental Law in "ndian $ourts, E519 0*&0W >

06+0"/ )446/&TJ "/= & /T0/"T&/"2 0 /*&/40/T"2 2"W $1, $B 5188I9

:hereafter ;"nderson’ & /T0/"T&/"2 2"W 1, E 5$7179 :hereafter

;andopadhyay’ +2"//&/D "/=

0 /*&/40/T"2 2"W E7%. The )ourt quotes certain passages of the article. &bid $HE$HI 5para BE9. (ome portions of this e#cerpt from an article in an academic journal have been subsequently attributed to the )ourtitself. !ee, for e#ample, 8arnata'a "ndustrial Areas /e#elopment (oard # $ 8enchappa, 5$77B9 B ()) %E1,%IE 5para I19 :hereafter ; 8enchappa’ 0 /*&/40/T"2 2"W %I%, %IE 5$77?9 :hereafter;=am - Tewary’


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that the principle ;has now come to be accepted universally as a sound principle’, %1 and it has

gained almost universal recognition%$. &n other words, in this case, the )ourt 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. &t

has also been observed that the polluter pays principle, as stated in the (icchri case, ;is muchcloser to the ordinary, commonsense meaning of the term ;polluter pays’’.%H

The (upreme )ourt e#plicitly invoAed the polluter pays principle for the second time in

;ellore $iti6ens3 elfare -orum # 0nion of "ndia and ,thers 5hereafter ;;ellore’9.%? The case

concerned pollution caused by the discharge of untreated effluent by tanneries and other

industries in the (tate of Tamil /adu into river +alar and on land, which contaminated surface

water and groundwater, the main sources of water supply to the residents of the area. The

)ourt considered two sources of the polluter pays principleC domestic law 5the )onstitution

and environmental statutes9 and international law 5custom9.

>irst, unliAe the (icchri case,%B the )ourt relied on the constitutional mandate to protect and

improve the environment to hold that the polluter pays principle is part of domestic

environmental law.%E This is in line with the )ourt’s history of broad interpretation of

constitutional provisions. (ubsequently, in &$ &ehta # 8amal 1ath and ,thers, the )ourt

observed that "rticles HI" and ?1"5g9 of the )onstitution ;have to be considered in the

light of "rticle $1 of the )onstitution’.%I

There is no direct reference to the polluter pays principle in the Water 5+revention and

)ontrol of +ollution9 "ct, 18EH and the 0nvironment 5+rotection9 "ct of 18IB, which were

enacted by the Dovernment of &ndia in order to implement the decisions of the 6nited

31 (icchri case 5n $I9 $HE 5para BE9.

32 &bid $?7 5para B85*99.

33 "nderson 5n $?9 $B. !ee also =aniel odansAy and @utta runnLe, The .ole of 1ational

$ourts in the -ield of "nternational En#ironmental Law, E519 0*&0W > 06+0"/

)446/&TJ "/= & /T0/"T&/"2 0 /*&/40/T"2 2"W 11, 1B 5188I9 :hereafter ;odansAy

- runnLe’


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/ations )onference on the 3uman 0nvironment of 18E$ 5where the polluter pays principle

was not mentioned9 and in response to the hopal Das tragedy of 18IH respectively.

3owever, in ;ellore, the )ourt added that ;in fact’ the polluter pays principle!concept is

already implied in domestic environmental laws.%8 This approach of the )ourt has raised

some concerns.

H7

>or e#ample, the penalty provisions in the 0nvironment 5+rotection9 "ct donot support the implementation of the polluter pays principle in its broad sense because they

prescribe payment of fines and imprisonment rather than compensation for restitution of the

damaged environment.H1

n the other hand, the )ourt’s reading of the polluter pays principle into the provisions of the

Water 5+revention and )ontrol of +ollution9 "ct and the 0nvironment 5+rotection9 "ct may

be justified on the ground that these laws lay down pollution prevention and control measures

and the polluter is required to bear the cost of compliance. &n this respect, the domestic

environmental laws in &ndia partly mirror the polluter pays principle in its narrow sense, as

envisaged in the early 0)= recommendations. 3owever, the objective of these laws in&ndia is limited to environmental protectionF they are not concerned with the prevention of

distortions in international trade and investment 5the other objective of the 0)=

recommendations9.

(econd, while there was no reference to customary international law in the (icchri case, the

)ourt in ;ellore considered the international law dimension of the polluter pays principle. &t

held that sustainable development ;has been accepted as a part of the customary international

law though its salient features have yet to be finalized by the international law jurists’.H$ The

)ourt then identified the polluter pays principle as one of the ;salient principles’ and

;essential features’ of sustainable development. (ome commentators have taAen these

observations of the )ourt to mean that it considered the polluter pays principle to be part of

customary international law.H% ut the ne#t observation of the )ourt is significant.

39 ;ellore 5n %?9 B?8BB7 5paras 1% - 1H9.

40 (hanmuganathan - Warren 5n %H9 %88 :;not entirely convincing’


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0ven otherwise once these principles are accepted as part of )ustomary &nternational

2aw there would be no difficulty in accepting them as part of the domestic law. &t is

almost an accepted proposition of law that the rules of )ustomary &nternational 2aw

which are not contrary to the municipal law shall be deemed to have been

incorporated in the domestic law and shall be followed by the courts of law...

HH

&t is argued that the use of the phrases ;once these principles are accepted’ and ;there would

be no difficulty’ suggest that the )ourt did not hold that the polluter pays principle is a part of

customary international law and therefore it is incorporated in domestic lawF instead, it

envisaged its incorporation in domestic law in the future once the principle is accepted as

customary international law. &n this conte#t, it is pertinent to mention that the polluter pays

principle has still not achieved the status of a generally applicable rule of customary

international law.H?

&n ;ellore, the )ourt also observed that the polluter pays principle has been held to be a;sound principle’ in the (icchri case,HB whereas in the latter case, the )ourt had actually stated

that the polluter pays principle has ;now come to be accepted universally as a sound

principle’ based on a journal article, which refers to the adoption of the principle by the

0)= and its incorporation by the 0uropean )ommunity 5two regional systems9.HE &n any

case, the )ourt’s observation does not ;necessarily mean that it is fully accepted in law’. HI

/evertheless, this decision has been relied upon in a number of subsequent decisions.H8

&n the (icchri case, there was no reference to the polluter pays principle in the conte#t of

international environmental law. &n ;ellore, although the )ourt referred to the conventions

and nonbinding documents signed during the 6nited /ations )onference on 0nvironment

and =evelopment held in io de @aneiro in 188$, it did not refer to any of its outputs,

including +rinciple 1B of the io =eclaration 5which e#plicitly relates to the polluter pays

principle9 or the relevant provisions of "genda $1. n the other hand, in .esearch

-oundation for !cience # 0nion of "ndia and Another , the )ourt specifically relied on

44 ;ellore 5n %?9 BB7 5para 1?9. &n support of the ;accepted proposition of law’, the )ourt

referred to some of its previous decisions.

45 (ands - +eel 5n ?9 $$IF irnie, oyle - edgewell 5n 19 %IF "lan oyle, &a'ing the

Polluter Pay Alternati#es to !tate .esponsi)ility in the Allocation of Trans)oundary

En#ironmental $ost , in >r. >ranzioni and T. (covazzi 5eds.9, & /T0/"T&/"2 0(+/(&&2&TJ

> 0 /*&/40/T"2 3"4 %B% 5Draham - Trotman 18819.

46 ;ellore 5n %?9 B?I 5para 1$9. ut 8enchappa 5n %79 observed that the )ourt held the

polluter pays principle to be a sound principle in ;ellore. &bid %IE 5para I$9.

47 (icchri case 5n $I9 $HE 5para BE9.

48 (hanmuganathan - Warren 5n %H9 %88.

49 !ee &$ &ehta # 0nion of "ndia


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+rinciple 1B of the io =eclaration for support ;:a


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environmentally sound’ handling of hazardous waste 5rule H5199, while the operator of the

treatment, storage and disposal facility is responsible for its safe and environmentally sound

operation, closure and post closure phase 5rule 1I5H99. The ules hold the occupier, importer,

transporter and operator of a facility liable for all damages caused to the environment or third

party due to improper handling or disposal of the hazardous wastes 5rule $?5199. (imilarly,under the 0Waste 54anagement and 3andling9 ules, $711, collection centres and

dismantlers are responsible for ensuring that no damage is caused to the environment during

storage and transportation of ewaste 5rules ?5%9 and E5%99.

oth of these legislation, which implicitly apply the polluter pays principle, are either silent

about the recipient of the amount of damage or compensation that may be awarded against

the polluter or the actual victim does not directly receive the amount of damage or

compensation awarded. 6nder the 3azardous Waste ules, the polluter 5occupier and!or

operator of the facility9 does not pay directly to the victim of pollution or environmental

harmF instead, the (tate +ollution )ontrol oard 5hereafter ;(+)’9 is authorized to levyfinancial penalties, with prior approval of the )entral +ollution )ontrol oard, in case of

violation of the provisions of these ules 5rule $?5$9. "lthough the 0Waste ules do not

specify the nature of action that can be initiated against the polluter in case of resulting

damage, s 1? of the 0nvironment 5+rotection9 "ct, which provides the penalty for

contravention of the provisions of the "ct, the rules made or orders and directions issued

thereunder, is relevant. &n such a case, however, the (+) rather than the actual victim of

pollution receives the financial penalty imposed on the polluter.

,. I%pl!%!#t'ti(# (" t-! P(llt! P'/$ Pi#cipl!

There are different instruments to implement the polluter pays principle including ex ante

measures such as regulation and economic instruments, and ex post measures such as liability

rules.

".1 #egulation

The domestic environmental law frameworA in &ndia is based on the commandandcontrol

approach. The Water 5+revention and )ontrol of +ollution9 "ct, 18EH, the "ir 5+revention and

)ontrol of +ollution9 "ct, 18I1 and the 0nvironment 5+rotection9 "ct, 18IB, the rules framed

under these laws, as well as other environmental laws, appear to reflect the partial cost

internalization approach. +ublic authorities determine discharge or quality standards,

emission limit values, best available technology, licensing procedures, etc. to ensure that the

environment is in an acceptable state. The polluting industries!local authorities are required to

internalize the costs of pollution prevention and control, failing which they will penalized in

accordance with the provisions of these laws.


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,.2 Economic$market%&ased or incentive%&ased instruments

0conomic instruments, such as tradable permits, charges, ecota#es, feedin tariffs and

certificates, have formed an integral element of the toolAit to implement the polluter pays

principle.?? They provide an incentive for potential polluters to adopt pollution prevention and

control measures to reduce the adverse environmental impact of their activities. They also

generate revenue for the adoption of environmental measures by the government.

(uch instruments can be found in a number of legislation. 6nder the Water 5+revention and

)ontrol of +ollution9 )ess "ct, 18EE, for e#ample, every person carrying on any specified

industry and every local authority is liable to pay cess on their water consumption 5including

supply of water9 with a view to augment the water pollution prevention and control resources

of the )+) and the (+)s. &n order to induce behavioral change and to generate additional

revenue to address the results of environmental pollution, some states have introduced

legislation providing for the levy and collection of cess on certain polluting substances andactivities.?B &n addition, incentives such as rebate in, or e#emption from, ta#es, e#cise and

customs duty or depreciation allowance are also offered for installation of pollution control

equipment and for shifting polluting industries from congested areas.?E

The appeal for the polluters lies in the fle#ibility of these instruments. 3owever, their ability

to implement the polluter pays principle is contingent upon the rate of the levy ' if the rate is

not high enough, it is unliAely to influence behavioral changes. (uch instruments also

undermine developments in domestic environmental law, which impose strict or absolute

liability on the polluter to compensate the victims of pollution as well as to restore the

environment. &nstead of performing the redistributive function for the affected individuals,

they procure financial resources for environmental protection for the (tate, which may or

may not be used for the specified purposes.

"." Lia&ility rules

55 !ee, for e#ample, Theodore +anayotou, 0conomic &nstruments for 0nvironmental

4anagement and (ustainable =evelopment, 0nvironment 0conomic (eries +aper /o. 1B,0nvironment and 0conomics 6nit, 6nited /ations 0nvironment +rogramme 56/0+ 188H9F

"parna (awhney, " eview of 4arAet ased &nstruments for +ollution )ontrolC &mplications

for &ndia, acAground +aper for TasAforce eport of the 4inistry of 0nvironment and >orests

5/ational &nstitute of +ublic >inance and +olicy 188E9.

56 !ee )lean 0nergy )ess ules, $717 :gross quantity of raw coal, lignite or peat raised and dispatched from a

coal mine


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The introduction of, and compliance with, ex ante measures does not rule out the possibility

of occurrence of environmental damage. &n such situations, as well as where ex ante measures

are either absent or are not being implemented, the polluter pays principle may be

implemented through curative measures, such as liability rules, which hold the polluter

responsible for environmental damage and for payment of compensation to victims.

?I

2iability rules can also perform a preventive function. The anticipation of liability for

damages that might occur as a result of an activity may provide the incentive to increase the

amount of care taAen in conducting the activity.?8

The polluter pays principle can be traced bacA to some of the earliest instruments establishing

minimum rules on civil liability for damage resulting from hazardous activities.B7 The

principle has also been referred to in a number of international and regional agreements

dealing with environmental liability.B1 The relationship between the polluter pays principle

and liability has also been e#plored in domestic legislation and judicial decisions.

The nature of liability may be faultbased or nofault liability. &n the former case, harm results

from noncompliance with regulatory requirements or the breach of a general duty of care

5also Anown as negligence9. 3owever, the affected party is required to prove the fault of the

polluter, which is a heavy burden to discharge. >urther, the polluter is not liable to pay

damages for environmental harm, which is neither reasonably foreseeable nor avoidable. B$ "s

a result, faultbased liability is of limited use in implementing the polluter pays principle.

&nstead, nofault liability or strict liability is preferred in such situations. &t is based on the

rule laid down in .ylands # -letcher .B% There is no requirement to prove the polluter’s fault.

3owever, the application of the rule is subject to a number of e#ceptions. BH >urther, the

liability may be limited in amount and the definition of damage tends to be narrow.B?

58 de (adeleer 5n %9 %E.

59 Pathleen (egerson, Lia)ility for en#ironmental damages, in 3enA >olmer - Dabel 3

2andis 5eds9, +&/)&+20( > 0 /*&/40/T"2 "/= 0(6)0 0)/4&)(C " D6&=0 >

(T6=0/T( "/= =0)&(&/4"P0( H$7, H$1 50dward 0lgar +ublishing $7779.

60 +hilippe (ands, +&/)&+20( > & /T0/"T&/"2 0 /*&/40/T"2 2"W $I$ 5$nd edn,

)ambridge 6niversity +ress $77%9.

61 de (adeleer 5n %9 $H - %7.

62 &bid ?7. !ee also, 2ucas ergAamp, 2&"&2&TJ "/= 0 /*&/40/T 5Pluwer 2aw

&nternational $7719.63 51IBI9 2 % 32 %%7. lacAburn, @. enunciated the principle thusC;We thinA that the true rule of the

law is that the person who for his own purposes brings on his lands and collects and Aeeps thereanything liAely to do mischief if it escapes, must Aeep it at his peril, and if he does not do so, is primafacie answerable for all the damages which is the natural consequence of its escape.’

64 The e#ceptions are an act of Dod, an act of a third party, plaintiff’s own fault, plaintiff’s

consent, natural use of land and e#clusion of rule by statute or statutory authority.

65 !ee, for e#ample, 18B8 )onvention on )ivil 2iability for il +ollution =amage and 18E1

)onvention on the 0stablishment of an &nternational >und for )ompensation for il +ollution

=amage.


14/27


15/27


...where an enterprise is engaged in a hazardous or inherently dangerous activity and

harm results to anyone on account of an accident in the operation of such hazardous

or inherently dangerous activity resulting, for e#ample, in the escape of to#ic gas the

enterprise is strictly and absolutely liable to compensate all those who are affected by

the accident.

The liability is absolute because it is not subject to any e#ceptions as is the case with the strict

liability principle> The )ourt further observedC

...the measure of compensation...must be correlated to the magnitude and capacity of

the enterprise because such compensation must have a deterrent effect. The larger and

more prosperous the enterprise, the greater must be the amount of compensation

payable by it for the harm caused on account of an accident in the carrying on of the

hazardous or inherently dangerous activity by the enterprise.BI

&n the (icchri case, the (upreme )ourt opined that ;any principle evolved in this behalf

should be simple, practical and suited to the conditions obtaining in this country’.B8 The )ourt

then relied on the absolute liability principle as laid down in the ,leum gas lea' case to

determine the liability of the polluters.E7 The )ourt held that the polluting industries areC

absolutely liable to compensate for the harm caused by them to the villagers in the

affected area, to the soil and to the underground water and...they are bound to taAe all

necessary measures to remove the sludge and other pollutants lying in the affected

area...and also to defray the cost of the remedial measures required to restore the

damaged environment, that is, the soil and the underground water sources.E1

The )ourt concluded that the polluter pays principle is stated in absolute terms in the ,leum

gas lea' case.E$ This suggests that the )ourt recognized the distinction between the absolute

liability principle or ;nofault’ liability, which applies to inherently dangerous or hazardous

activities, and the polluter pays principle, which applies more broadly to different cases of

68 &bid H$7H$1 5paras %1%$9.

69 (icchri case 5n $I9 $HB 5para B?9.

70 &bid. The )ourt disagreed with the concurring opinion of anganath 4isra, ).@. in 0nion$ar)ide $orpn # 0nion of "ndia, 518819 H ()) ?IH, B7EB7I 5paras 1H1?9, that held the law

declared in the ,leum gas lea' case to be obiter. &bid $H$ 5paras ?8B79.

71 &bid $H7$H1 5para ?E9 - $HB$HI 5paras BBBE9. 3owever, the implementation of the decision left

a lot to be desired. &n "ndian $ouncil for En#iro2Legal Action # 0nion of "ndia and ,thers , 5$7119 I()) 1B1,1EE 5para H9, the )ourt observedC...This case is a classic illustration where even after adecadeandahalf of the pronouncement of the judgment by this )ourt based on the principle of Npolluter paysO, till date the polluters 5industries concerned in this case9 have taAen no steps to

ecologically restore the entire village and its surrounding areas or complied with the directions of this)ourt at all. The orders of this )ourt were not implemented by Aeeping the litigation alive by filinginterlocutory and interim applications even after dismissal of the writ petition, the review petition andthe curative petition by this )ourt.

72 &bid $?7 5para B85*99. !ee also "nderson 5n $?9 $E.


16/27


pollution.E% 3owever, in ;ellore, after referring to its previous opinion e#pressed in the

(icchri case that ;any principle evolved in this behalf should be simple, practical and suited

to the conditions obtaining in this country’,EH the )ourt went on to holdC

...The N+olluter +aysO principle as interpreted by this )ourt means that the absolute

liability for harm to the environment e#tends not only to compensate the victims of

pollution but also the cost of restoring the environmental degradation. emediation of

the damaged environment is part of the process of N(ustainable =evelopmentO and as

such polluter is liable to pay the cost to the individual sufferers as well as the cost of

reversing the damaged ecology.E?

;ellore appears to have blurred the distinction between different types of polluting activities

and endorsed the absolute liability principle laid down in the (icchri case as an integral

component of the polluter pays principle so long as the polluting activity results in harm or

damage.EB

The understanding of the polluter pays principle in ;ellore also goes beyond theformulation in international environmental law, which generally limits the polluter’s

liability.EE /evertheless, a number of subsequent decisions have applied the principle of

absolute liability to maAe the polluter pay for pollution without determining whether or not

the polluting substance or industry is hazardous in nature. n the other hand, in .esearch

-oundation "" , although the )ourt observed that ;in &ndia the liability to pay compensation to

affected persons is strict and absolute’,EI it was a case concerning the import of hazardous

waste oil. Therefore, it is possible that the )ourt did not intend the rule of absolute liability to

apply to all cases of pollution or environmental harm.

IV.OPERATIONALI0IN THE POLLUTER PAYS PRINCIPLE

&n order to operationalize the polluter pays principle, it is essential to identify the polluter, the

situations in which the principle will be triggered, the authority that will be responsible for

undertaAing the assessment of environmental harm and determination of damages payable by

the polluter and the e#tent of, or the manner in which, damages will be paid by the polluter.

This section addresses each of these issues.

73 (hyam =ivan - "rmin osencranz, 0 /*&/40/T"2 2"W "/= +2&)J &/ & /=&" ?87

5$nd edn, #ford 6niversity +ress $77$9 :hereafter ;=ivan - osencranz’


17/27


1. W-( i$ t-! P(llt!

The polluter is normally understood as the person or entity that is responsible for the

polluting activity. 0ven in &ndia, the courts have defined the polluter as the producer of goodsin a number of cases.E8 3owever, in a significant departure from the practice in other

jurisdictions as well as international environmental law, the courts in &ndia, especially the

/ational Dreen Tribunal, have played an important role in e#panding the traditional

definition of the polluter to include other persons!entities within its scope. >or e#ample, in a

case concerning disposal of debris and construction waste on the banAs of the river Jamuna,

the polluter included the contractor and the trucA owner who were responsible for dumping,

as well as the person whose property created the waste.I7

&n some cases, the /DT has held government departments and officials directly responsible

for pollution. &n "n#ertis 0ni#ersity and ,thers # 0nion of "ndia and ,thers , for e#ample, the

municipal body was directed to pay compensation for restitution of its solid waste site to its

original condition and to prevent further damage to the environment.I1 &n /r 8aran !ingh #

!tate of 5imachal Pradesh and ,thers,I$ a case concerning open burning of municipal

wastes, a compensatory cost was imposed on the 4unicipal )ouncil, which was subsequently

recoverable from all the concerned officers and the contractor. The /DT has also included

municipal authorities whose inaction led to environmental degradation and!or pollution

within the definition of polluter. &n .ohit $houdhary # 0nion of "ndia and ,thers, the 4o0>

and the Dovernment of "ssam were considered as polluters for permitting unregulated

quarrying and mining activities in and around the area of Paziranga /ational +arA. I% &n $ox

"ndia, the egional fficer of the (+) 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 Tribunal from taAing appropriate action to prevent pollution. The (+) was

also held equally responsible.IH

The public has also been considered as the polluter in some cases. &n Gaura# 4ain # !tate of

79 !ee, for e#ample, .esearch -oundation "" 5n $89 $77 5para $89.

80 &anoj &ishra # 0nion of "ndia and ,thers, " /o B of $71$, rder dated $$.7E.$71%,

/ational Dreen Tribunal 5+rincipal ench9. !ee also &?s 4aipra'ash Power Ltd # !tate of

5imachal Pradesh and ,thers, )W+ /o IH% of $711, rder dated $8.7E.$71%, /ational

Dreen Tribunal 5+rincipal ench9F A)hishe' .ai # !tate of 5imachal Pradesh and ,thers,

"pplication /o $?B of $71% in )W+&2 /o $I of $711, rder dated 1E.78.$71%, /ational

Dreen Tribunal 5)ircuit ench at (himla9 :hereafter ; A)hishe' .ai’


18/27


Punja) and ,thers,I? for e#ample, the /DT ;indicated’ that the authorities will be at liberty to

asA for payment of money from the entire population generating municipal solid waste in

order to generate funds for effective e#ecution of municipal solid waste disposal worAs. &n

!u)has /atta # 0nion of "ndia and ,thers,IB a committee was set up inter alia to determine

whether it would be appropriate for the authorities to collect fee for environmental pollutioncaused by the residents of, and visitors to, +uri. The polluter pays principle has also been

applied to identify the poor as the ;polluter’ and to justify maAing them ;pay’. &n a6irpur

(artan 1irman !angh # 0nion of "ndia and ,thers,IE for e#ample, 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.

&n some cases, the government pays instead of the polluter where the polluter fails to pay or is

unable to pay and it is necessary to compensate the victims immediately. II The government

can subsequently recover the amount from the polluter. &n "ndian $ouncil "" , for e#ample, the

(upreme )ourt directed the (tate Dovernment to pay the portion of the total amount of compensatory damages that the polluting industries were directed to pay to the villagers for

loss suffered as a result of damage to crops.I8 &n another case, the (upreme )ourt had

imposed a liability on the polluters 5importers of hazardous waste oil in the garb of

lubricating oil9 towards the cost of incineration. 87 3owever, on account of nonpayment of

this cost by the polluters, the )ourt ordered the )ustoms =epartment to pay the cost and

recover it from the importers later.81 (uch substitution may be necessary in some cases to

ensure timely payment of compensation to victims and!or environmental restoration.

0nvironmental harm or damage is not confined to polluting activitiesC the unbridled

consumption of natural resources is also a problem.8$ This includes mining activities, use of

biological resources, etc. &n such situations, the polluter pays principle may be renamed as the

user pays principle. )ourts in &ndia have accommodated this variation of the polluter pays

principle. &n 1ature Lo#ers &o#ement # !tate of 8erala and ,thers,8% for e#ample, the 3igh

)ourt applied the polluter pays principle and directed the (tate Dovernment to determine the

quantum of injury and compensation payable by occupants!encroachers in respect of forest

lands sought to be regularized.

85 " /o 17B of $71%, rder dated 7%.78.$71%, /ational Dreen Tribunal 5+rincipal ench9.86 " /o 117 of $71%, rder dated $$.17.$71%, /ational Dreen Tribunal 5+rincipal ench9.

87 17% 5$77%9 =2T B?H.

88 arbara 2uppi, >rancesco +arisi - (hruti ajagopalan, The .ise and -all of the Polluter2

Pays Principle in /e#eloping $ountries, %$ & /T0/"T&/"2 0*&0W > 2"W "/=

0)/4&)( 1%?, 1%B 5$71$9.

89 &n "ndian $ouncil for En#iro2Legal Action and ,thers # 0nion of "ndia and ,thers,

5188?9 % ()) EE :hereafter ; "ndian $ouncil "" ’


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2. Ti&&!i#& t-! P(llt! P'/$ Pi#cipl!

Denerally, the application of the polluter pays principle is contingent upon a polluting activity

5or emission9. The principle may be invoAed in different situationsC 5i9 when an established

threshold in the form of prescribed standards for the receiving environment is e#ceeded but

does not result in damageF 5ii9 when an emission e#ceeds the prescribed standards and results

in damageF 5iii9 when an emission does not e#ceed the prescribed standards but nevertheless

results in damageF or 5iv9 when there is a risA of potential negative environmental impact

irrespective of compliance with prescribed standards, etc.

The occurrence of harm or the e#istence of damage has been identified as a precondition for

the application of the polluter pays principle in some cases. &n /eepa' 1itrite # !tate of

Gujarat ,8H for e#ample, the (upreme )ourt clarified that ;compensation to be awarded must

have some broad correlation not only with the magnitude and capacity of the enterprise but

also with the harm caused by it’. "fter restating the ;legal position’ that ;if there is a findingthat there has been degradation of environment or any damage caused to any of the victims

by the activities of the industrial units certainly damages have to be paid’, the )ourt held that

it would not be correct ;to say that mere violation of the law in not observing the norms

would result in degradation of environment’.8? (imilarly % in 5industan $oca2$ola (e#erages,

the /DT observed that the assessment of damage and the amount required to rectify the

damage were preconditions before imposing a liability on the polluter .8B

3owever, the requirement of e#istence of damage as a precondition to trigger the polluter

pays principle fails to taAe into account situations where the risA of environmental

degradation necessitates the application of the precautionary principle,8E and!or the principle

of prevention. This represents a significant step bacAward as it does not encourage the

5potential9 polluter to adopt preventive or precautionary measures before the pollution occurs.

3owever, in some cases, the polluter pays principle and the precautionary principle has been

applied in tandem. &n .esearch -oundation "" , for e#ample, the (upreme )ourt observedC

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...covers cost incurred in

avoiding pollution and not just those related to remedying any damage.8I

The )ourt then limited and distinguished its observation in /eepa' 1itrite, that ;to say that

mere violation of the law in not observing the norms would result in degradation of

environment would not be correct’. &t observed that /eepa' 1itrite did not lay down a

proposition that the application of the polluter pays principle requires actual environmental

degradation. The )ourt distinguished the case before it on the ground that the offending

activities 5that is, import of hazardous waste oil in the garb of lubricating oil9 had the

94 5$77H9 B ()) H7$ :hereafter ; /eepa' 1itrite’


20/27


potential to degrade the environment.88

)ourts have also issued directions to the potential polluter to pay the amount of damages in

advance, that is, before environmental degradation taAes place. &n &$ &ehta and Another #

0nion of "ndia and ,thers,177 for instance, the )ourt allowed the petitioner’s caustic chlorine

plant to be restarted subject to fulfillment of certain directions. (imilarly, in .udresh 1ai' #

Goa $oastal @one &anagement Authority,171 a case concerning permission to construct a

marine slipway for a dry docA, the /DT directed the appellant to deposit an amount in

advance in order to remedy any future damage to the ecology or the environment around the

site.

0ven among the cases under review where the occurrence of harm or the e#istence of damage

is a precondition, the court does not discuss the threshold of harm that will result in the

application of the polluter pays principle. 3owever, it is clear that the principle has not been

invoAed in the case of ;any’ or ;every’ instance of environmental harm or damage resultingfrom the pollution. &n most cases, the application of the principle by the courts has been

pursuant to a finding of ;some’ environmental harm or damage. This suggests that the courts

are applying an implicit threshold of harm. The nature of the activity and the ;public interest’

involved in its continuation also influences the determination of acceptable risA and therefore

the threshold of harm, which becomes unacceptable.

,. A$$!$$%!#t (" l($$ '#+ +!t!%i#'ti(# (" c(%p!#$'ti(#

The courts invoAe the polluter pays principle to hold a polluter responsible for environmental

damage. This has to be followed by the onerous tasA of assessing, determining, imposing and

recovering the compensation amount from the polluter. &n a number of cases, the (upreme

)ourt has not itself undertaAen the tasA of assessment of the loss resulting from the situation

created by the polluting activity and determination of the amount payable by the polluter for

reversing the environmental!ecological damage and the compensation payable by the polluter

to the victims 5individuals and families9. &n the (icchri case, in a footnote, the )ourt briefly

raised the question of its own competence to impose and recover cost of all measures

including remedial measures 5or award damages against private parties9 in order to ensure

observance of law and its orders as a part of enforcement of fundamental rights but it did not

e#press any final opinion.17$ The )ourt does not appear to have ruled out the possibility that it

99 &bid $71 5para %79 :;The observations...is evidently confined to the facts of that case’


21/27


can award damages.17%

/evertheless, it directed the )entral Dovernment 5through the 4inistry of 0nvironment and

>orests9 to undertaAe this function in e#ercise of its powers under s %5%9 of the 0nvironment

5+rotection9 "ct.17H &nsofar as the tasA of awarding damages for loss suffered by the villagers

in the affected area is concerned, the )ourt left it open to the villagers or any organization on

their behalf to institute civil suits for this purpose. 17? (ubsequently, however, courts have

awarded damages in writ petitions.17B The same approach has been followed in other

decisions where the )ourt has directed the )entral Dovernment to establish an authority,

which is required to implement the polluter pays principle. 17E &n some cases, courts have

directed the (tate Dovernment to appoint an authority or )ommissioner for this purpose.17I

&n most cases, the authority prepares the statement showing the total amount to be recovered,

the names of the polluters from whom the amount is to be recovered, the amount to be

recovered from each polluter, the persons to whom the compensation is to be paid and theamount payable to each of them. Then the )ollector!=istrict 4agistrate of the concerned area

is responsible for recovering the amount from the polluters, if necessary as arrears of land

revenue, and its disbursement to the affected individuals and families.178

The process of assessment of loss and determination of compensation is subject to a number

of difficulties.117 ne is the difficulty associated with identification of the polluters and the

victims where their number is large. The methodology applied for valuation, e#clusion of

certain types of damages and the adequacy of compensation are also thorny issues. The equity

dimension is also often overlooAed where the determination of compensation is linAed with

land ownership.

(ome cases have relied on alternative mechanisms for determination of loss and

compensation. >or e#ample, in a recent decision, a (+) directed the polluting industry to

103 The )ourt observedC ;e that as it may we are of the considered opinion that even if it is

assumed 5for the saAe of argument9 that this )ourt cannot award damages against the

respondents...’ &bid $H% 5para B79.

104 &bid $?7 5para E79. The )ourt derived its authority to issue the necessary directions to the )entral

Dovernment from its earlier decision in "ndian $ouncil "" 5n II9. &bid $H% 5para B79.

105 &bid $?1 5para E75%99.

106 !ee, for e#ample, 8amal 1ath "" 5n %I9 $18$$7 5para 89 - $$H 5para $H9F ;ijay !ingh

Puniya # !tate of .ajasthan, "& $77H aj 1, 111$ 5para %19 :hereafter ; Puniya’or e#ample, the )ourt’s directions led to the constitution of the 2oss of 0cology 5+revention and

+ayment of )ompensation9 "uthority for the (tate of Tamil /adu #ide /otification /o. (..BE1 509, dated

%7.8.188B 5;ellore 5n %?9 18?18B 5para 1?, 1E - 1I99F the "quaculture "uthority #ide /otification /o. (..II509 dated B.7$.188E 5 4agannath 5n H89 1HE 5para ?$99F and the =ahanu TaluAa 0nvironment +rotection"uthority #ide /otification /o. (.. IIH509 dated 18.1$.188B to control pollution 5 (ittu !ehgal 5n H89 18? 5para1E99.

108 !ee, for e#ample, 4ehta2$alcutta Tanneries 5n H89 H%$ 5para $751H99F "shwar !ingh # !tate of 5aryana

and ,thers, "& 188B +-3 %7, H8 5para HB5?99.

109 !ee cases referred to in n 17E above.

110 "sha PrishnaAumar, An award and despair , 1851B9 >/T2&/0 5"ugust %1B, $77$9F 2 *enAatachalam, /amage Assessment and $ompensation to -armers: Lessons from ;erdict of Loss of Ecology Authority in Tamil 1adu, H751?9 0)/4&) "/= +2&T&)"2 W00P2J 1??B 5$77?9.


22/27


23/27


-oundation "" , the (upreme )ourt held that this includes direct cost to the people or property

as well as full environmental cost 5tangible and intangible9. 11E 3owever, the determination of

the full environmental cost of pollution involves calculation of the marAet value of natural

resources and valuation of environmental damages, which is a very difficult tasA. "s a result,

in practice, the scope of liability of the polluter is often limited to some tangibleenvironmental costs. >urther, although decisions refer to reversing the damage and restoration

of the environment, this is not possible in the case of irreversible damages. &n the latter case,

a preventive and anticipatory approach or a precautionary approach may be more appropriate.

&n some cases, courts have applied the ;percentage of gross turnover’ formula to determine

the quantum of compensation payable by the polluter.11I The (upreme )ourt has

acAnowledged that this formula ;may be a proper measure’ in a given case because ;the

method to be adopted in awarding damages on the basis of NpollutertopayO principle has got

to be practical, simple and easy in application’. 118 3owever, the application of this formula

may result in polluters with different annual turnovers paying the same amount where theyare all included within the same band for the purpose of determination of liability. 1$7 The

formula may also fail to have the requisite deterrent effect on polluters if the ;percentage of

gross turnover’ awarded as is not high enough. &n some cases, it may be difficult to access

information about the annual turnover of the polluting industry.1$1

&t appears, however, that in a number of cases, the curative dimension of the polluter pays

principle is completely sidelined and it is applied in a manner to avoid addressing the

question of liability altogether. >or e#ample, in some cases, courts have directed the polluter

to pay lump sum compensation 5normally s one lac or s five lac9 while in other cases, a

daily penalty amount is imposed. This is a regressive approach because leave alone absolute

liability for environmental harm, it fails to even hold the polluter strictly liable for causing

environmental damage.

117 .esearch -oundation "" 5n $89 $77$71 5para $89.

118 Pra#in)hai 4ash)hai Patel and Another # !tate of Gujarat and ,thers, 5188?9 $ D2

1$17 :hereafter ; Pra#in)hai’


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'.! Punitive or e)emplary damages

+unitive or e#emplary damages are different from compensation to victims of pollution

and!or damages for restoration of the damaged ecology. The primary objective of punitive or

e#emplary damages is to punish the polluter as well as to deter the polluter as well as others

from causing pollution in the future. ut a polluter can be held liable to pay both types of

damages.1$$ &n &$ &ehta # 8amal 1ath and ,thers, the )ourt considered the aim and

purpose of e#emplary damages to be ;almost similar’ to the purpose of punishment 5in the

nature of fine or imprisonment or both9 under domestic environmental laws. 1$% >inally, the

)ourt imposed e#emplary damages on the polluter, which were to be used by the (tate

Dovernment for flood protection worAs in the area affected by pollution.1$H

The (upreme )ourt has identified the nature and e#tent of the offending activity, the nature of

the offending party, and the intention behind such activity as the basis of the levy of

e#emplary and!or penal damages.1$?

4ore recently, in !terlite "ndustries


25/27


in accordance with the polluter pays principle. "lthough the (upreme )ourt directed the

polluter to show cause why pollution fine should not be imposed in 8amal 1ath " ,1$8 it was

subsequently held that a pollution fine cannot be imposed under writ jurisdictionF it can be

imposed only if it is prescribed in a statute, the polluter is guilty of contravention of its

provisions and he!she is found guilty after fair trial in a competent court.

1%7

&n $alcuttaTanneries, the )ourt imposed a pollution fine on the polluters in addition to compensation.1%1

3owever, in some cases, courts have applied the polluter pays principle and directed the

polluter to pay a ;pollution fine’ to compensate affected persons and to cover the cost of

restoring the damaged ecology for its period of operation. 1%$&n 1oyyal .i#er Ayacutdars

Protection Association # Go#ernment of Tamil 1adu,1%% the 4adras 3igh )ourt directed the

polluting industries to pay a fine on pro rata basis until they stopped pollution 5by achieving

zero liquid discharge by a specified date9 without reference to any victims of the pollution. &n

these cases, courts may not be applying the term ;pollution fine’ stricto sensu as understood

in statutory enactments.

4. Li%it$ (" t-! p(llt! p'/$ pi#cipl!

The polluter pays principle imposes, on the polluter, the cost of pollution prevention and

control as well as the cost of remedying the damage resulting from pollution. 3owever, the

application of the polluter pays principle in &ndia is heavily influenced by the manner in

which the judiciary manages the tradeoff between environmental protection and

;development’. &n the 1887s, during the period immediately following the io conference,while the (upreme )ourt acAnowledged the importance of the polluting industries to the

generation of foreign e#change and employment 5directly and in ancillary industries9, it

finally gave precedence to environmental considerations.1%H The (upreme )ourt has also

clarified that the principle does not mean that the polluter can ;pollute and pay’. 1%? &n

Pra#in)hai 4ash)hai Patel and Another # !tate of Gujarat and ,thers, the 3igh )ourt of

Dujarat observed that this would ;legalise the violation, which is impermissible’. 1%B

129 8amal 1ath " 5n H89 H1? 5para %85H99.

130 8amal 1ath "" 5n %I9 $$$$$% 5paras 1E189 - $$H 5para $$9. !ee also &?s /;$ Emta$oal &ines Limited # Pollution $ontrol Appellate Authority


26/27


3owever, in a large number of cases, courts have invoAed the polluter pays principle to

impose a fine on the polluter or to asA him!her to pay damage or compensation for

environmental degradation but then allowed the polluting industry to continue its operations.

>or instance, in !terlite, even after accepting that the appellant!polluter had misrepresented

and suppressed material facts in its petition, the )ourt observed that the closure of its plantwould be against public interest.1%E (imilarly, in 5im Pari#esh, the court noted that the

damages should not bring the polluter to a halt. 1%I The manner in which the polluter pays

principle is interpreted in such decisions is liAely to set a precedent, which may lead to

further pollution or environmental harm in the future.

4oreover, compensation to victims does not always taAe the form of disbursement of monies

directly to them. &nstead the amount collected from the polluter may be utilized for worAs of

socioeconomic upliftment of the villages and for the betterment of their educational, medical

and veterinary facilities and agriculture and livestocA, 1%8 or the creation of common facilities

such as schools, hospitals, community halls, tube wells etc. and improvement of the ecologyand the environment1H7. &nstead of payment of monetary compensation, courts may also

impose other pollution prevention and control measures. >or e#ample, the /DT has ordered

the polluter to plant trees in some cases.1H1

V.CONCLUSION

The polluter pays principle is recognized as a principle of international environmental law as

well as regional and domestic environmental laws. The (upreme )ourt of &ndia has read the principle into the e#isting domestic legal frameworA 5including constitutional provisions and

environmental laws9. &n this conte#t, the judiciary has been influenced by the developments

within the 0)=!0) as well as the urgent need to achieve sustainable development, one of

the guiding principles of international environmental law, in the aftermath of the io

)onference of 188$. 0#plicit references to the principle are included in some legislation,

while others apply the principle by implication.

3owever, the manner in which the polluter pays principle has evolved and been adapted to

the &ndian conte#t represents a departure from the practice in other jurisdictions. )ourts,

137 !terlite 5n 1$B9 S 5para H79. The ;considerations of public interest’ identified by the

)ourt includedC substantial contribution to copper production in &ndia, which is used in

defence, electricity, automobile, construction and infrastructure etc.F employment to large

number of people, directly as well as through contractorsF support to ancillary industriesF

generation of revenue for )entral and (tate DovernmentsF and contribution to 17 percent of

the total cargo volume of Tuticorin port.

138 5im Pari#esh 5n 1$I9 Q 17B.

139 Pra#in)hai 5n 11I9 Q 1%?5#ii9.

140 5im Pari#esh 5n 1$I9 QQ 17H17B.

141 !ee, for e#ample, /e#endra 8umar # 0nion of "ndia and ,thers, "pplication /o 81 of

$71$, rder dated 1H.7%.$71%, /ational Dreen Tribunal 5+rincipal ench9 Q 1$5H9F $ox "ndia

5n IH9 Q %H5H9.


27/27


particularly the /ational Dreen Tribunal, have e#panded the definition of the polluter. &n

many cases, courts have adopted the full internalization of costs approach and held the

polluter liable to pay compensation to victims of pollution and damages for restoration of the

environment. They have also not hesitated to impose absolute liability on the polluters

5instead of strict liability9. )ourts have also imposed liability for past pollution on the polluter, where the polluting activity has ceased, or directed a potential polluter to pay for

preventative measures to be undertaAen by the government. &n case of evasion or refusal to

pay damages or compensation, the polluting industry has been closed. &n some other cases,

courts have directed the closure!relocation of polluting industries without imposing any

financial liability on the polluter. This may be described as another way to maAe the polluter

pay. &t is important to note, however, that the decision in most of the cases under review was

not based solely on the polluter pays principle.

The polluter pays principle can serve as an important mechanism to address the problems of

environmental pollution and resultant public health issues in &ndia. 3owever, liAe +rinciple1B of the io =eclaration, the polluter pays principle, as incorporated into domestic law by

the )ourt, is e#tremely general in its formulation, and uncertain in the precise scope of the

legal obligations involved. This does not lend the principle to direct application or

enforcement in domestic lawsF its relevance and impact on domestic environmental law

requires interpretation and implementation by the judiciary. The effectiveness of the principle

also depends on the severity of the penalty, strict regulatory measures and its ability to ensure

longterm deterrence and not just to compensate for the immediate damage caused, in other

words, the cost of compliance should be higher than the cost of noncompliance.

3owever, the principle, as applied by the courts in &ndia, does not often result in the

imposition of severe penalty and its deterrent effect is limited. This limits the ability of the

principle to provide justice to the victims of pollution, including the environment. &n some

situations, the application of the principle may actually cause injustice to certain sections of

the population, for e#ample, where the slum dwellers or the poor ;polluters’ are removed

from their homes or where the closure of polluting industries results in loss of livelihood

without redress. Therefore, the justice!5in9justice dimensions of the principle in the &ndian

conte#t require further scrutiny.

Documents

R6-Bhullar - Polluter Pays Principle 1