Principal Liable for Environmental Violations by Sub-Contractors: National Green Tribunal - 2025-03-24

NGT Holds NHAI Liable for Environmental Damage by Sub-Contractor in Highway Project

New Delhi, March 19, 2025 – The National Green Tribunal (NGT), Principal Bench, has delivered a significant judgment holding the National Highway Authority of India (NHAI) jointly and severally liable for environmental violations committed by its sub-contractor, M/s. Ceigall India Limited, during the construction of the Ludhiana-Rupnagar National Highway (NH-205K). The bench, comprising Hon’ble Mr. Justice Sudhir Agarwal (Judicial Member) and Hon’ble Dr. Afroz Ahmad (Expert Member), pronounced the order in Original Application No. 40/2024, initiated suo-moto based on a letter petition by Balwinder Kaur , raising concerns about illegal mining and potential environmental damage.

Background of the Case

The case stemmed from a complaint alleging illegal mining of earth up to 15-20 feet deep in agricultural land adjacent to forest areas in Rupnagar, Punjab. The complainant, Balwinder Kaur , argued that this illegal mining, carried out by M/s. Ceigall India Limited, posed a risk of land sliding and threatened thousands of trees. The NGT took cognizance of the complaint and formed a Joint Committee comprising representatives from the Punjab State Pollution Control Board (PSPCB) and the District Magistrate, Ropar, to investigate the matter.

Joint Committee Report and Findings

The Joint Committee's report revealed significant violations. It found that M/s. Ceigall India Limited, engaged by NHAI for the Jammu-Katra Expressway project, had extracted far more material than permitted. Demand notices for over ₹62.75 lakhs were issued and deposited by the company for the excess extraction of 1,063,562 cubic feet of earth. Further, it was discovered that while M/s. Ceigall had obtained Consent to Operate (CTO) for a Ready Mix Cement Concrete Plant, they lacked the necessary Consent to Establish (CTE) and CTO for the highway construction project itself, which falls under the ‘Orange Category’ as per environmental regulations. The CTOs obtained were subsequently revoked by PSPCB due to these violations.

Arguments and Tribunal’s Observations

NHAI argued that as the principal authority, responsibility lay with the concessionaire, IRCON International Limited, and subsequently with their sub-contractor, M/s. Ceigall. NHAI cited clauses in their concession agreement stating the concessionaire's obligation to procure all necessary permits and comply with environmental laws. They claimed no direct role in the illegal mining activities and asserted that the violations were by the sub-contractor outside the Right of Way (ROW) acquired by NHAI.

However, the NGT rejected NHAI’s defense. The Tribunal emphasized that under the National Highways Authority of India Act, 1988, NHAI has the primary function to develop, maintain, and manage National Highways. It noted that NHAI, as the principal body for the NH-205K project, cannot absolve itself of responsibility for environmental violations by outsourcing the work. Referencing Section 182 of the Indian Contract Act, 1872, the NGT underscored the principal-agent relationship, holding NHAI accountable for the actions of its contractors, especially when the work was ultimately for NHAI's project and benefit.

The Tribunal stated: “ Therefore, for all purposes, NHAI is the Principal body for carrying out the work of the said National Highway and if any Sub-Concessionaire or executing agency i.e., outsourced agency has committed violation of law, the liability is joint and several and the Principal cannot claim that it is only the outsourced agency which should be saddled with responsibility of violation of laws particularly the environmental laws. ”

Legal Precedents and Compensation

The NGT highlighted the precedent set by the Supreme Court in Goel Ganga Developers vs. Union of India and Others , (2018) 18 SCC 257, which established guidelines for environmental compensation in cases of project violations. Following this, the Tribunal imposed a substantial environmental compensation.

PSPCB had already computed an environmental compensation of ₹85,87,500/- for illegal mining activities up to July 18, 2024. In addition to this, considering the project cost exceeding ₹1100 Crores, the NGT levied a further environmental compensation of ₹11 Crores (rounded off), representing approximately 1% of the project cost, for carrying out illegal construction activities without requisite environmental clearances.

Final Order and Directives

The NGT directed NHAI to pay the total environmental compensation of ₹11,85,87,500/- (₹11 Crores + ₹85,87,500/-) within three months. PSPCB was instructed to assess further environmental compensation for ongoing violations post July 19, 2024, after providing NHAI an opportunity to be heard. The Tribunal clarified that while NHAI is primarily liable for the compensation, it is entitled to recover these amounts from the concessionaire or sub-contractors as per their agreements and applicable laws.

Furthermore, the NGT mandated NHAI and M/s. Ceigall India Limited to obtain all necessary environmental consents and clearances within two months, failing which, further construction work must cease until compliance is ensured. The recovered environmental compensation will be utilized for environmental remediation, with a joint committee comprising CPCB, PSPCB, and MoEF&CC representative (with CPCB as the nodal authority) tasked with preparing and executing a remediation plan within six months.

This judgment reinforces the principle of ‘Polluter Pays’ and underscores the responsibility of principal authorities like NHAI to ensure environmental compliance throughout project execution, even when work is outsourced to contractors and sub-contractors. It serves as a strong reminder for stringent adherence to environmental regulations in infrastructure development projects.