1. Determination of environmental compensation for groundwater pollution and subsequent liability under the Prevention of Money Laundering Act for violations of environmental laws. (Para 2 , 3 )
2025 Supreme(SC) 129
SUPREME COURT OF INDIA
ABHAY S.OKA, UJJAL BHUYAN, JJ.
Waris Chemicals Pvt. Ltd. – Appellant
Vs.
Uttar Pradesh Pollution Control Board – Respondents
Civil Appeal No. 6398 of 2024
Decided On : 09-01-2025
For the Appellant(s) : Mr. Ninad Laud, Adv. Mr. Ashok Kumar Tripathi, Adv. Mr. Swarnendu Das, Adv. Mr. Umesh Kumar Shukla, Adv. Mr. Sarthak Pathak, Adv. Ms. Ishani Shekhar, Adv. Mr. Gajendra Singh Negi, Adv. Mr. Subhro Prokas Mukherjee, AOR
For the Respondent(s): Mr. Arvind Kumar, Adv. Ms. Anuradha Mishra, Adv. Mr. Abhay Kumar Mishra, Adv. Mr. Ankit Kumar Vats, Adv. Mr. James Bedi, Adv. Ms. Anuradha Mishra, AOR
Environmental compensation determination must accurately reflect individual contributions, and proceedings under PMLA require registered complaints for scheduled offences.
Headnote:(A) Water (Prevention and Control of Pollution) Act, 1974 - Air (Prevention and Control of Pollution) Act, 1981 - Environment (Protection) Act, 1986 - Prevention of Money Laundering Act, 2002 - Environmental compensation determined by PCB was disapproved by NGT for not accurately reflecting appellant's contribution to waste. The appellant's liability for waste prior to 1995 was rejected. (Paras 146, 147, 230)
(B) Jurisdiction of NGT - NGT lacks jurisdiction to direct prosecution under PMLA without a scheduled offence being registered. (Paras 7, 8)
Facts of the case:
The appellant was held liable for environmental compensation due to hazardous waste storage, but the NGT's calculation was found flawed as it did not consider the appellant's actual production timeline.
Findings of Court:
The NGT's findings regarding the appellant's waste generation were upheld, but the liability under PMLA was set aside due to lack of scheduled offence registration.
Issues: The main issues were the accuracy of the environmental compensation calculation and the jurisdiction of NGT regarding PMLA.
Ratio Decidendi: The court ruled that without a registered scheduled offence, proceedings under PMLA cannot be initiated, and the NGT's direction regarding PMLA liability was set aside.
Result: Appeal partly allowed.
Legal Category Hierarchy
Table of Contents
2. Challenge to the method of calculating environmental compensation and the legality of initiating PMLA proceedings without a registered scheduled offence. (Para 2 , 3 )
3. PMLA proceedings require a registered scheduled offence; prosecution cannot be based on notional assumptions of criminal activity without a formal complaint or FIR. (Para 5 , 6 , 7 )
4. Proceedings under the Prevention of Money Laundering Act cannot be initiated in the absence of a registered scheduled offence or a filed criminal complaint. (Para 6 , 7 )
5. Direction for PMLA action set aside and order for environmental compensation quashed with a direction for fresh determination. (Para 9 , 10 )
6. Can PMLA proceedings be initiated based on the assumption that a scheduled offence has been committed?
No. Prosecution under the PMLA cannot be conducted on a notional basis. A scheduled offence must be registered with the jurisdictional police or be pending enquiry or trial via a criminal complaint before a competent forum. (Para 6 , 7 )
7. What is the essential prerequisite for an offence under Section 3 of the PMLA?
The offence is dependent on the illegal gain of property resulting from criminal activity relating to a scheduled offence. (Para 6 )
8. Can a party be held liable under PMLA for environmental law violations if no formal complaint has been filed under those laws?
No. In the absence of a registered FIR or a filed complaint for scheduled offences under the Water Act, Air Act, or Environment (Protection) Act, proceedings under the PMLA cannot be initiated. (Para 5 , 7 )
ORDER
Heard the learned counsel appearing for the appellant and the learned counsel for the respondent.
2. Pursuant to the order dated 27th September, 2019 passed by the National Green Tribunal (for short, "the NGT"), New Delhi, the respondent-Uttar Pradesh Pollution Control Board (for short, "the PCB") undertook the exercise of making determination of the Environmental Compensation payable by the appellant and others. The compensation was to be computed for causing pollution of the ground water due to the storage of hazardous chromium waste in village Khan Chandpur, Rania, Kanpur Dehat. It was found that the waste was of the quantity of 62225 MT. An order was made on 19th November, 2019 signed by the Regional Officer after obtaining approval of the PCB of fixing the compensation. A statutory appeal was preferred by the appellant against the said order before the NGT. In the impugned judgment, the NGT recorded disapproval to the manner in which Environmental compensation was determined by the PCB. Paragraphs 146 and 147 of the impugned judgment read thus:
"146. We also express our disapproval to the manner in which environmental compensation has been determined by RO UPPCB, Kanpur Dehat. On the one hand, it has applied the formula of EX+Q x ERF x R but for determining value of Q., it has not considered the contribution of appellant as such but taking total quantity of dumped waste at questioned site as 62225 MT, it has divided the same by taking appellant's production capacity of 4 MT/day in proportionate to other unit's production capacity and on that basis, has arrived at the quantity of waste differently on all the three occasions.
147. Learned Counsel for UPPCB did not dispute that the total quantity of waste collected at the questioned site reflected the period of 1976 and onwards but admittedly, appellant commenced its production only in 1995, therefore, for the waste dumped at the questioned site prior to 1995, no liability could have been fastened upon the appellant. In a mechanical manner, entire quantity of 62225 MT has been divided proportionately between six units initially and thereafter, eleven units and then eight units respectively. We express our strongest disapproval to the manner in which RO UPPCB has acted in this case."
3. After recording the said findings, the NGT recorded a finding of fact that the appellant generated waste of quantity of 5643.75 MT and by adopting certain formula, fixed the Environmental Compensation at Rs.25,39,68,750/-. Another finding with which the appellant has a grievance is in paragraph 230 of the impugned judgment which reads thus:
"230. We, accordingly, answer issue VII holding that appellant having violated the provisions of Water Act, 1974, Air Act, 1981 and EP Act, 1986, therefore is also liable for action under PMLA 2002."
5. Now, we come to paragraph 230 of the impugned judgment. Firstly, we find that complaints alleging the commission of 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 were not even filed on the date on which the impugned judgment was passed by the NGT. There is no material placed on record to show that the complaints were filed even thereafter.
6. Our attention is invited to paragraph 382.8 of a decision of a Bench of the three Hon'ble Judges of this Court in the case of Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., 2022 7 Supreme 193 which reads thus:
"382.8.The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money laundering. The authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional p