Serious Doubt Over NGT’s Jurisdiction To Prosecute Under PMLA: SC While Setting Aside NGT’s Directive For PMLA Action Against Kanpur Firm

The Supreme Court has set aside the National Green Tribunal's (NGT) directive to initiate proceedings under the Prevention of Money Laundering Act, 2002 (PMLA), against Waris Chemicals Pvt. Ltd., a Kanpur-based company accused of polluting groundwater through hazardous chromium waste disposal.

The Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan emphasized that PMLA proceedings cannot be initiated without the registration of a scheduled offence.

The Court observed, “There is a serious doubt about the jurisdiction of the NGT to direct prosecution of an individual under the PMLA. In this case, there is neither a registration of an FIR for any scheduled offense under the PMLA nor any complaint alleging violations of environmental laws.”

Referring to the case of Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., the Bench reiterated that PMLA actions require evidence of illegal property gains linked to a registered scheduled offense.

Background

The case concerned environmental pollution in Kanpur Dehat, Uttar Pradesh, where the Uttar Pradesh Pollution Control Board (UPPCB) had attributed groundwater contamination to the improper disposal of chromium waste. Following NGT’s 2019 judgment, the UPPCB determined that Waris Chemicals and other units had contributed to the pollution and imposed environmental compensation based on the waste quantity.

Initially, the NGT found flaws in UPPCB’s methodology, which calculated compensation using waste quantities from 1976, even though Waris Chemicals began operations in 1995. The tribunal recalculated the company’s liability at Rs. 25.39 crore for 5,643.75 metric tons of waste and also held the company liable under the PMLA.

Court’s Ruling

The Court ruled that the NGT had erred in recalculating the compensation itself instead of remanding the matter to the UPPCB. It directed the board to reassess the compensation through a lawful process.

The Court also invalidated the NGT’s findings regarding the applicability of the PMLA, highlighting the absence of registered complaints under the Water (Prevention and Control of Pollution) Act, the Air (Prevention and Control of Pollution) Act, or the Environment (Protection) Act. "In the facts of the case, there is neither a registration of First Information Report for any scheduled offence under the Prevention of Money Laundering Act, 2002 (for short "the PMLA") nor any complaint is filed alleging the offences under the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Environment (Protection) Act, 1986. In the absence of existence of the scheduled offence, the proceedings under the PMLA cannot be initiated," the Bench said.

Conclusion

The Court ordered, "The appeal is partly allowed by setting the direction contained in clause (I) of paragraph 232 of the impugned judgment as well as by setting aside that part of paragraph 230 which holds the appellant liable for action under the PMLA."

Additionally, the Court directed, "The order dated 28th May, 2020 of the Regional Officer, PCB, Kanpur Dehat, which was impugned before the NGT shall stand set aside and a fresh exercise shall be undertaken by the PCB for determination of the Environmental Compensation payable by the appellant in accordance with law."

Cause Title: Waris Chemical Pvt Ltd. v. Uttar Pradesh Pollution Control Board [Civil Appeal No. 6398 OF 2024]

Appearance:-

Appellant: Advocates Ninad Laud, Ashok Kumar Tripathi, Swarnendu Das, Umesh Kumar Shukla, Sarthak Pathak, Ishani Shekhar, Gajendra Singh Negi, Subhro Prokas Mukherjee (AOR)

Respondent: Advocates Arvind Kumar, Anuradha Mishra, Abhay Kumar Mishra, Ankit Kumar Vats, James Bedi, Anuradha Mishra

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