NGT Cannot Outsource Adjudication; Must Follow Natural Justice & Statutory Procedure Under Water Act: Supreme Court

Supreme Court Quashes ₹18 Crore Penalty on Sugar Mill, Slams NGT for Violating Natural Justice

New Delhi: The Supreme Court has set aside orders of the National Green Tribunal (NGT) that imposed an ₹18 crore environmental compensation on M/s. Triveni Engineering and Industries Limited, ruling that the NGT's proceedings were in "complete violation" of statutory procedures and the principles of natural justice.

A bench led by Justice Ujjal Bhuyan held that the NGT cannot outsource its adjudicatory function to ad-hoc committees and must provide an opportunity of hearing to any party that would be adversely affected by its orders.

Case Background

The case originated from a complaint filed before the NGT in March 2021, alleging that Triveni Engineering's sugar mill in Muzaffarnagar, Uttar Pradesh, was discharging untreated waste, leading to groundwater contamination.

The NGT constituted a joint committee, which submitted reports concluding that the company had violated environmental norms, including illegal disposal of untreated effluent and dilution of samples. Based on these reports, the NGT, in orders dated February 15, 2022, and September 16, 2022, imposed a compensation of ₹18 crore, calculated at 2% of the company's annual turnover. Triveni Engineering challenged these orders before the Supreme Court.

Arguments from Both Sides

Appellant's Contentions (Triveni Engineering): Senior counsel for the appellant argued that the NGT's orders were void as they were passed without making the company a party to the proceedings. The company was never given a notice or an opportunity to be heard, which is a clear violation of the principle of audi alteram partem (hear the other side). It was further contended that the joint committee’s inspection did not follow the mandatory procedure for sample collection laid down in Sections 21 and 22 of the Water (Prevention and Control of Pollution) Act, 1974.

Respondents' Stance: The respondents supported the NGT's orders, arguing that the company was aware of the proceedings as copies of the committee reports were provided. They emphasized the serious nature of the pollution, which exposed thousands of residents to health hazards, and submitted that the expert committee's findings were scientifically sound and rightly accepted by the NGT.

Court’s Legal Analysis and Precedents

The Supreme Court conducted a thorough review of the statutory framework, including the Water Act, 1974, and the National Green Tribunal Act, 2010. The bench emphasized Section 19(1) of the NGT Act, which explicitly states that the tribunal "shall be guided by the principles of natural justice."

The judgment referenced several landmark cases, including:

- *** A.K. Kraipak Vs. Union of India , to highlight that the aim of natural justice is to prevent miscarriage of justice.

- *** Municipal Corporation of Greater Mumbai Vs. Ankita Sinha , where the Court held that even in suo motu cases, the NGT must provide an opportunity of hearing to affected parties.

- *** Kantha Vibhag Yuva Koli Samaj Parivartan Trust Vs. State of Gujarat ***, clarifying that expert committees can assist but cannot substitute the NGT's adjudicatory role.

Pivotal Observations from the Judgment

The Supreme Court identified several glaring procedural flaws in the NGT's approach:

> "NGT did not deem it appropriate to get the appellant impleaded as a party respondent in O.A. No. 71/2021 though the entire proceedings were directed against it. No opportunity was granted to the appellant to contest the report of the joint committee and to have its say. Thus, there is clear violation of the provisions contained in Section 19 of the National Green Tribunal Act, 2010."

The Court further criticized the NGT for bypassing statutory safeguards:

> "NGT cannot outsource an opinion and base its decision on such opinion... This is a classic case where in the quest for doing justice, NGT has ended up doing just the reverse."

The judgment underscored that the committee's failure to follow the sample collection procedure under the Water Act rendered its findings inadmissible in legal proceedings.

Final Decision and Implications

The Supreme Court allowed the appeals and set aside the NGT's orders imposing the ₹18 crore penalty. The bench concluded that the entire exercise was vitiated by procedural illegalities and violations of natural justice, making it futile to remand the matter back to the NGT.

However, the Court clarified that its decision does not preclude the Uttar Pradesh Pollution Control Board (UPPCB) from conducting a fresh inspection and taking remedial measures against the sugar mill, provided it strictly adheres to the procedure established by law.