Power To Direct Prosecution Under PMLA Not Available To NGT: Supreme Court

The appeal before the Apex Court challenged the order of the Tribunal.

The Division Bench of Chief Justice Of India B. R. Gavai and Justice K. Vinod Chandran observed, “This Court had also raised serious doubts about the jurisdiction of the NGT to direct the prosecution of individuals under the PMLA; which we fully subscribe to. The NGT should act within the contours of the powers conferred on it which is Section 15 of the NGT Act of 2010. Though such power would be available to a Court constituted under the PMLA or to constitutional courts, it would not be available for exercise by the NGT, constituted to ensure effective and expeditious consideration of cases relating to environmental protection and conservation of forests and other natural resources including enforcement of any legal right and giving relief and compensation for damages to persons and properties.”

AOR Bhuvneshwari Pathak represented the Appellant while AOR Preeti Singh represented the Respondent.

Factual Background

The respondent, who was the applicant before the National Green Tribunal (NGT), alleged that the appellant, as an industry, was actively perpetrating environmental degradation and pollution as well as extracting groundwater; thus polluting the surroundings and also releasing effluents into the nearby river, which is a tributary of the Ganga. It was also alleged that the other official respondents, the Pollution Control Board of the State & the Centre, the Central Ground Water Authority and the District Collector were mute spectators to the activities of the appellant and often colluding in polluting and damaging the environment.

The proceedings before the NGT extended over a period of three years, in which various reports were called for and the matter was disposed of with certain directions, with which the appellant was aggrieved.

Arguments

It was the appellant’s case that the environmental compensation (EC) as determined by the statutory bodies was paid up by the appellant. It was further submitted that despite the last report recording compliance, the NGT went ahead and imposed a compensation of Rs 50 crore based on the allegedly admitted turnover of the appellant, and there was no rational nexus in computing the penalty.

The Counsel appearing for the Pollution Control Board submitted that there was full compliance with the environmental laws.

Reasoning

The Bench noted that the directions in the impugned judgment relating to audit, monitoring and restoration are necessarily within the powers of the NGT and are a continuing process. The Bench also noticed the submissions of CPCB that restoration measures should focus on aquifer recharge, continuous water balance monitoring and area-wide environmental load management.

The Bench also stated, “We are also convinced that there could be constant monitoring of the unit especially looking at the past violations. But, we are not convinced that having accepted the report of compliance, there was any warrant for a sweeping direction to close such of the divisions of the appellant which are falling short of the compliance. Reserving the right of the jurisdictional PCBs to proceed against any violation of statutory or other conditions imposed, the direction issued by the NGT has to be set aside and we do so.”

Concurring with the views expressed in the judgment in Benzo Chem Industrial (P) Ltd. v. Arvind Manohar Mahajan (2024), the Bench said, “We fully agree with the observation and add that rule of law does not permit State or its agencies to extract a ‘pound of flesh’, even in environmental matters. Though in the present case there is an observation made that there was admitted turnover of Rs.550 crores; we still notice the absence of nexus between the turnover and the pollution alleged. In fact the penalty imposed on the appellant, by the statutory body was on the basis of a methodology framed by the CPCB, on the directions of the NGT. If at all the NGT was of the opinion that the EC imposed was minimal or low, it could have referred to the methodology framed by the CPCB and not merely looked at the revenue generation of the alleged polluter. We hence strike out the imposition of compensation of Rs.50 Crores by the NGT.”

The Bench also noted that the NGT imposed the compensation, issued directions including that with reference to PMLA and also made a sweeping direction for the closure of the divisions of the appellant, in which requisite steps were not taken to comply with the prescribed standards. The Bench referred to the judgment in Waris Chemicals (P) Ltd. v. U.P. Pollution Control Board (2025),where the Court had raised serious doubts about the jurisdiction of the NGT to direct the prosecution of individuals under the PMLA.

Considering the fact that the NGT’s judgment dealt elaborately with environmental law, the numerous pollution prevention measures and various reports filed by the Joint Committee which were available in the records of the case, the Bench held, “In the context of the last of the reports having found complete compliance, we cannot but observe that unfortunately this was an exercise in futility. Judicious consideration is the sum and substance of adjudication and the Courts/Tribunals should restrain themselves from engaging in mere rhetoric by stating the law in general without particular reference to the facts. We say nothing more and allow the appeal, setting aside the order of the NGT to the extent noticed above.”

Cause Title: M/s C.L. Gupta Export Ltd. v. Adil Ansari (Neutral Citation:2025 INSC 1035)

Appearance

Appellant: AOR Bhuvneshwari Pathak, Advocates Shivam Parashar, Garv Vikas

Respondent: AOR Preeti Singh, AOR Pradeep Misra, AOR Saurabh Mishra, ASG Aishwarya Bhati, Senior Advocate R.Bala, Advocates Rajesh Kr.singh, Apoorv Kurup, Vanshaja Shukla, Amit Sharma-(II), Rajeshwari Shankar, Vijay Lakshmi, AOR N. Visakamurthy

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