NEW DELHI: If a company benefits more from its scale, it should bear more responsibility for environmental costs, the Supreme Court said on Friday while upholding an NGT order imposing environmental compensation of Rs 5 crore on a builder for violating green norms.A bench of Justices Dipankar Datta and Vijay Bishnoi said that in cases involving protection of the environment, linking the scale of a company’s operations (such as turnover, production volume or revenue generation) to environmental damage can be a powerful factor in determining damages.
Given that larger operations mean a larger footprint, the court said larger scale often means greater resource use, more emissions and more waste, leading to more stress on the environment.
‘If a company benefits more from its scale, it is logical that it bears more responsibility for environmental costs. By linking scale to impact, you send the message that larger players must adopt greener rules.“If a company has a high turnover, this reflects the enormous scale of its operations. If such a company contributes generously to environmental damage, its turnover may have a direct correlation with the extent of damage caused. Thus, in our considered opinion, it is misleading to argue that turnover can never be a relevant factor in quantifying compensation to match the extent of damage,” the bank said.
The NGT in 2022 ruled that Rhythm County had violated environmental norms at Autade Handewadi in Pune and carried out construction without obtaining an environmental clearance, for which it had to pay compensation of Rs 5 crore.
In its order dated August 22, 2022, the NGT held that Rhythm County had carried out construction activities in violation of environmental norms and without obtaining mandatory permissions under the Air and Water Acts.
The NGT rejected Rhythm County’s contention that such permissions were not required, ruling that statutory compliance could not be diluted on the basis of ease of interpretation and that the company had continued construction activities even after the Maharashtra Pollution Control Board issued a stop work order.
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