The Supreme Court confirms the authority of central and state pollution control boards to impose fixed compensatory damages on large establishments exceeding 20,000 sq meters under the provisions of the Water and Air Acts. The Court clarified that these powers can be exercised independently of environmental clearances granted to such entities

The judgment states that pollution control boards can collect restitutionary or compensatory sums or demand bank guarantees as a preventive measure to avoid environmental harm. These powers are incidental to those granted under Sections 33A and 31A of the Water and Air Acts. The ruling emphasized that the ‘polluter pays’ principle should guide the interpretation of Sections 33A and 31A. However, the bench noted that appropriate rules and procedures must be notified for their effective implementation.

The bench further directed that these powers must be used in accordance with procedures laid out in subordinate legislation, ensuring adherence to principles of natural justice, transparency, and legal certainty. The Court also underlined the importance of public involvement, stating that rules must enable citizens to report environmental violations. It was observed that public participation is crucial in the face of growing climate threats.

According to the bench, environmental penalties cannot be imposed for every violation. Action under the specified sections should only follow a clear determination that environmental damage has occurred or is imminent. The Court concluded that while the boards have the power to demand environmental compensation, such authority must be exercised without arbitrariness and with full transparency.