1. Project proponents commenced residential and commercial construction without required environmental clearances and statutory consents, leading to environmental compensation claims by local residents before the Green Tribunal. (Para 2 , 3 , 4 )
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2026 Supreme(SC) 112
SUPREME COURT OF INDIA
Dipankar Datta, Vijay Bishnoi, JJ.
M/S. Rhythm County – Appellant
Versus
Satish Sanjay Hegde & Ors. – Respondents
Civil Appeal No. 7187 of 2022
With
M/S Key Stone Properties – Appellant
Versus
Shashikant Vithalkamble & Ors. – Respondents
Civil Appeal No. 7974 of 2022
Decided On : 30-01-2026
Advocates appeared:
For the Appellant(s) : Mr. Saurabh Mishra, Sr. Adv. Ms. Manya Hasija, Adv. Ms. Ana Upadhyay, Adv. Mr. T.illayarasu, Adv. Mr. Saurabh Guha, Adv. Mr. Shubhanshu Patel, Adv. Ms. Anupriya Poddar, Adv. Mr. Mani Aneja, Adv. Mr. Nirnimesh Dube, AOR Ms. Antima Bazaz, Adv. Mrs. Tanuj Bagga Sharma, AOR Dr. M.K. Ravi, Adv.
For the Respondent(s): Mr. Mukesh Verma, Adv. Mr. Pankaj Kumar Singh, Adv. Mr. Shashank Singh, AOR Mrs. Vatsala Tripathi, Adv. Mr. Krishna Prakash Dubey, Adv. Mr. Gaurav Gupta, Adv. Mr. Jayesh Hemrajani, Adv. Mr. Shrirang B. Varma, Adv. Mr. Aaditya Aniruddha Pande, AOR Mr. Siddharth Dharmadhikari, Adv. Mr. Sourav Singh, Adv. Mr. Gurmeet Singh Makker, AOR
For the Appellant(s) : Mr. Saurabh Mishra, Sr. Adv. Ms. Manya Hasija, Adv. Ms. Ana Upadhyay, Adv. Mr. T.illayarasu, Adv. Mr. Saurabh Guha, Adv. Mr. Shubhanshu Patel, Adv. Ms. Anupriya Poddar, Adv. Mr. Mani Aneja, Adv. Mr. Nirnimesh Dube, AOR Ms. Antima Bazaz, Adv. Mrs. Tanuj Bagga Sharma, AOR Dr. M.K. Ravi, Adv.
For the Respondent(s): Mr. Mukesh Verma, Adv. Mr. Pankaj Kumar Singh, Adv. Mr. Shashank Singh, AOR Mrs. Vatsala Tripathi, Adv. Mr. Krishna Prakash Dubey, Adv. Mr. Gaurav Gupta, Adv. Mr. Jayesh Hemrajani, Adv. Mr. Shrirang B. Varma, Adv. Mr. Aaditya Aniruddha Pande, AOR Mr. Siddharth Dharmadhikari, Adv. Mr. Sourav Singh, Adv. Mr. Gurmeet Singh Makker, AOR
The court affirmed that environmental compensation must be proportionate to project size, asserting that the 'polluter pays' principle justifies significant fines for regulatory violations, despite the absence of specific legislative guidelines.
Headnote:(A) Environmental Protection Act, 1986 - National Green Tribunal Act, 2010 - Violation of environmental norms - Appellants directed to pay substantial compensation for construction without required consents - The NGT imposed compensation of Rs. 5,00,00,000/- for M/s. Rhythm County and Rs. 4,47,42,188/- for M/s. Key Stone Properties based on project costs, finding substantial violations of environmental norms and affirming the need for effective enforcement of environmental laws. (Paras 6, 9, 40)
(B) Polluter Pays Principle - A guiding principle which mandates that environmental damages must have a rational correlation with the scale of operations and impact of violation - The NGT acted within its jurisdiction under the NGT Act while determining compensation, emphasizing the need for adequate deterrence and restorative measures. (Paras 22, 24)
(C) Expert and Judicial Oversight - NGT must exercise independent judgment while considering reports from expert committees and is not bound to accept recommendations mechanically. The tribunal must provide a reasoned analysis, ensuring proper adherence to principles of natural justice and transparency. (Paras 43, 46.1)
Legal Category Hierarchy
Table of Contents
2. Appellants contend compensation mechanisms lack statutory backing and proportionality, while objecting to the mechanical adoption of expert reports and turnover-based quantification formulas without site-specific evidence. (Para 12 , 13 )
3. Tribunal possesses remedial, restorative, and inquisitorial powers under the statutory framework to assess environmental harm and quantify compensation, including linking scale of operations to environmental impact. (Para 19 , 20 , 21 , 22 , 25 , 26 , 27 , 42 )
4. Tribunal exercises flexible, principle-oriented jurisdiction to award environmental compensation using project cost or turnover as a relevant indicium for proportionality, provided assessment remains reasoned and non-arbitrary. (Para 23 , 28 , 30 , 32 , 39 )
5. Appeals against imposition of environmental compensation are dismissed as lacking merit, with time for payment extended for compliance. (Para 47 , 48 , 49 )
6. Can the National Green Tribunal determine environmental compensation using project cost or turnover as a metric?
Yes. The Tribunal's broad remedial powers allow it to use project cost or turnover as a permissible factor to ensure compensation reflects the project's scale, environmental footprint, and the polluter pays principle, provided the decision is reasoned, proportionate, and not purely arbitrary. (Para 25 , 26 , 27 , 28 , 30 , 32 )
7. Is the Central Pollution Control Board (CPCB) formula a mandatory code for assessing environmental compensation?
No. The CPCB framework is facilitative and indicates methodology for specific industrial violations. It is not an exhaustive or rigid code, and the Tribunal maintains discretion to use site-specific expert assessments or other rational methodologies. (Para 40 , 41 , 44 )
8. Does reliance on a Joint Expert Committee report constitute an abdication of the Tribunal's judicial function?
No. Provided the Tribunal independently reviews the committee's findings, considers objections from project proponents, and exercises its own judicial mind to filter expert evidence into a reasoned outcome, it fulfills its adjudicatory duty. (Para 42 )
JUDGMENT :
DIPANKAR DATTA, J.
THE APPEALS
1. The present civil appeals arise out of disposal of two separate original applications by the National Green Tribunal, Western Zone Bench, Pune1[NGT] , involving similar facts and circumstances. The orders of disposal are of varying dates. We propose to decide these appeals by this common judgment and order.
2. The lead appeal has been filed by the project proponent, i.e., M/s. Rhythm County2[RHYTHM], challenging the order dated 22.08.2022 passed by the NGT in Original Application No. 14 of 2021 (WZ). Vide the impugned order, the NGT held that RHYTHM had violated the environmental norms and carried out construction without obtaining Environmental Clearance3[EC], for which it was liable in a sum of Rs. 5,00,00,000/- as compensation. Appellant was, accordingly, directed to pay such compensation within two months to the Maharashtra Pollution Control Board4[MPCB].
3. The connected appeal is filed by another project proponent, i.e., M/s. Key Stone Properties5[KEYSTONE]. It challenges the order dated 01.09.2022 passed by the NGT on Original Application No. 13/2021. Vide the impugned order, the NGT held that KEYSTONE had violated the environmental norms, including raising construction without obtaining requisite permissions. Like RHYTHM, KEYSTONE was directed to pay compensation in a sum of Rs. 4,47,42,188/- within two months to the MPCB.
FACTUAL MATRIX
4. The facts, which would be germane for the disposal of the present appeals, are adumbrated as follows:
LEAD APPEAL
a. Appellant RHYTHM, a partnership firm, undertook a residential and commercial construction project titled “Rhythm County” at Autade Handewadi, Pune, within the jurisdiction of the Pune Metropolitan Regional Development Authority6[PMRDA]. The project was granted EC on 27.11.2017 under the Environmental Impact Assessment7[EIA] Notification, 20068[Notification], permitting a total built-up area of 1,45,682.28 square metres. Upon issuance of requisite certificates, the construction commenced in 2018.
b. RHYTHM asserts that construction initially proceeded in conformity with the EC and the sanctioned plans. On 31.01.2020, however, Maharashtra Pollution Control Board9[MPCB] issued a show-cause notice alleging that construction had commenced without securing valid statutory consents. This was followed by an order dated 06.07.2020 whereby the MPCB refused Consent-to-Establish10[CTE] under the Water (Prevention and Control of Pollution) Act, 197411[Water Act] and the Air (Prevention and Control of Pollution) Act, 198112[Air Act], citing excess construction beyond the sanctioned area and the absence of revalidated consent. A stop-work direction was also issued on the same date.
c. Disputing these allegations, on 18.07.2020, RHYTHM applied for modification of the EC before the State Level Environment Impact Assessment Authority13[SEIAA], Maharashtra. While that application remained pending for consideration, the first respondent, a local resident of the area, approached the NGT by instituting O.A. No. 14 of 2021 (WZ), alleging that RHYTHM had undertaken substantial construction activity without valid EC and in disregard of statutory safeguards under the environmental laws.
d. In the proceedings before the NGT on 08.06.2021, a Joint Committee was constituted to ascertain the factual position. The Committee, after inspection of the site and examination of records, reported certain deviations from the sanctioned plan. These included the construction of a clubhouse of 431.91 sq. m., not expressly covered by the original EC and continuation of construction activity despite the stop-work direction issued by the MPCB. At the same time, the record indicates that RHYTHM was subsequently granted a conditional CTE by the MPCB and that later site inspections recorded compliance with prescribed environmental safeguards.
CONNECTED APPEAL
e. In the connected appeal, appellant KEYSTONE is a developer undertaking a residential housing project situated at Survey N
