2008 Supreme(SC) 557

SUPREME COURT OF INDIA
K.G. BALAKRISHNAN, CJI., DR. ARIJIT PASAYAT & S.H. KAPADIA, JJ.
T.N. Godavarman Thirumulpad - PETITIONER:
Versus
Union of India & Ors - RESPONDENT:
Writ Petition (civil) 202 of 1995
Decided On : 28/03/2008

Headnote:

It is an undisputed fact that forest in this country is an important and vital component to sustain life support system on this planet - For various reasons, our forest is being slowly depleted - At same time, as part of our developmental activities, some areas of forest have to be used for non-forest purposes - economic development shall not be at cost of complete degradation of forest or environment and eco-system provided by green area of forest - Therefore, it was considered whether user agency of such land which is required for developmental activities to compensate for diversion of forest and on recommendations of Central Empowered Committee hereinafter being referred to as CEC, it was decided by this Court that user agency shall be required to make payment of net present value of such diverted land so as to utilize this for getting back in long run which are lost by such diversion - A scheme was submitted by Ministry of Environment and Forests alongwith an affidavit - CEC considered all relevant aspects including scheme submitted by MOEF and filed a report - These reports were accepted by this Court - This Court in T -N - Godavarman Thirumulpad Vs - Union of India finally directed that question as to what amount of NPV is required to be paid and to achieve these objectives, it was directed that question is to be examined by experts – Held , For preparation and supply of district level maps and GPS equipments to concerned State / UT Forest Departments and regional offices of MoEF, Ad-hoc CAMPA may be asked to provide an amount of Rs -1 -0 crore to Forest Survey of India out of interest received by it - Ministry of Environment and Forests also has filed its response and has accepted recommendations made by CEC - Various user agencies have filed its objections - Court heard learned senior Counsel Mr - Nariman and other learned senior Counsel who appeared before us - main contention raised is that NPV value was fixed on basis of net flow accruing over 20 years at a 5% social discount rate - This, according to applicants, is too low - It has been contended that Economic and Research Department of Asian Development Bank is of view that a survey of social discount rate policies of individual countries show significant variations and developing countries apply higher social discount rate - paper published by Asian Development Bank shows that India should have a social discount rate of 12% - It may be noted that Expert Committee under leadership recommended 5% social discount rate but CEC has reduced further and accepted 4% social discount rate - It may be noted that CEC had made consultation with eminent economists and it was of view that social discount rate should be around 2% in India - Court do not find much force in contention advanced by learned Counsel who appeared for user agents - 10% suggested by them cannot be applied to present case because 10% is rate linked to assumptions about opportunity cost of capital - One cannot apply that rate for social time preference in evaluating benefits from an environmental resource such as forests - In project evaluation, horizon is compatible with life of project whereas in forest matters, horizon spans over several generations - Therefore, rate of 10%, as suggested by user agency cannot be accepted - Another contention raised by applicant is that NPV is not fixed on site specific and, therefore, fixation of rate is based on surmises and conjectures and same rate cannot be applied to large extent of area covered by forests - This question was elaborately considered by CEC - Considering large extent of this country and forest being spread over in various parts of State, it is difficult to fix NPV based on specific area - It is not feasible to fix NPV in each and every individual case - entire forest area in each of State/UT is calculated by considering monetary value of services provided by it - average NPV per hectare of forest area in State has also been calculated - If NPV is to be calculated on specific area, process would be time consuming and in most of cases, it may be beyond capability of Range Forest Officers or other officials posted at grassroot level - Moreover, NPV is linked with type of forest and no useful purpose would be served by carrying out NPV calculations in each case involving diversion of forest areas - Court are of view that NPV now fixed is more scientific and is based on all available data - Court accept recommendations and Court make it clear that NPV rate now fixed would hold good for a period of three years and subject to variation after three years