TMI Blog2014 (1) TMI 1913X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Section 31A of the Air Act, it is clear that the powers of the Board to issue directions are to be exercised with the primary object of prevention, control and abatement of air pollution. The most fundamental aspect of environmental law is prevention and control of pollution and to provide clean and healthy environment and wholesome water to the society at large. As already noticed, the provisions of Section 17(1)(a) casts upon the Board an obligation to do things and perform such acts as may be necessary for the proper discharge of its functions and generally for the purpose of carrying out the purposes of the Air Act. Upon analysis of the language of these provisions, it is evident that besides performing the specific acts and functions, the Board is entitled to do things or perform acts which may be in aid thereto and for carrying out effectively the purposes of the Air Act. Once it prepares a comprehensive programme for prevention, control and abatement of air pollution, and emission standards are prescribed, the Board then is required to issue the order of consent to various applicant-units to establish and operate their activities. Keeping in view the legislative schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Bank Guarantee for compliance of the conditions/directions imposed in the consent order, being an order of lesser gravity and consequences, would be permissible. It is in the interest of sustainable development and is even beneficial to the industry itself. The Bank Guarantee asked for is for compliance, compensation for environmental restoration, if required, and is not punitive in nature. There are no hesitation in holding that the invocation of the bank guarantee by the Board, in its satisfaction, is justifiable and is in accordance with law - appeal allowed in part. - APPEAL NO. 68 OF 2012, APPEAL NO. 69 OF 2012 - - - Dated:- 9-1-2014 - Hon'ble Mr. Justice Swatanter Kumar (Chairperson), Hon'ble Mr. Justice U.D. Salvi (Judicial Member), Hon'ble Dr. D.K. Agrawal (Expert Member), Hon'ble Prof. A.R. Yousuf (Expert Member) and Hon'ble Dr. R.C.Trivedi (Expert Member) For the Appellant : Mr. A.K. Panda, Sr. Advocate along with Mr. S. Panda and Mr. L. Sarangi, Advocates For the Respondent : Mr. Dhananjaya Mishra, along with Mr. Raj Bhushan Shinde, Advocates, Mr. Gaurav Gupta, Mr. Ishan Jain and Mr. U.C. Mital, Advocates, Ms. Alpana Poddar, Advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 wherein the letter has notionally endorsed the State Board to monitor the policy of Bank Guarantee towards effective pollution control. Introduction of Bank Guarantee system in respect of defaulting industries within the purview of State Pollution Control Board, Orissa was under the active consideration of the Board for some time past. This matter was placed before the Board in its 75th meeting held on 27.06.2003. After going through the concept paper prepared by the C.P.C.B., the Board unanimously resolved to introduce the Bank guarantee system for the defaulting industries in the following manner. a) Industry that fails to install necessary pollution control equipment so as to meet the prescribed standard. b) Industry whose pollution control equipment are inadequate to meet the prescribed standard. At the first instance, show cause notice will be issued to the defaulting industry indicating the intention of issuing direction for closure. Then the industry will be asked to furnish a time bound action plan for installation of pollution control equipment or up gradation of the existing pollution control system. Simultaneously the industry will be asked to furnish Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved near bottom of all the bag filters attached to cooler discharge, intermediate bin, product house and stock house, Heavy fugitive emission was observed due to improper collection and handling of dust of bag filters at rotary kilns, Internal drains are not maintained properly, No water sprinkling is made on the internal road and heavy dust accumulated on the internal road. Approach road to the factory is not black topped, Neither soil cover nor water sprinkling arrangement has been provided in solid waste dumping area, House keeping is poor and heavy dust is accumulated near bag filter area, below kiln area, product house and stock house causing fugitive emission. 4. Vide letter dated 7th May, 2008, the Board informed Respondent No.1 (for short also 'the industry'), inter alia, that as a result of non-compliance and to consider the request of Respondent No.1 for permitting the unit to function, subject to such conditions, as may be imposed, Respondent No.1 had to furnish a performance bank guarantee for a sum of five lakh rupees, valid for three years and an affidavit in the prescribed proforma. 5. Respondent No.1, in compliance with the letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called upon Respondent No.1 to extend the validity of the bank guarantee uptil 30th June, 2012. This was not done and the Board again issued a reminder on 17th October, 2011 to Respondent No.1 for extending the bank guarantee, as required. On 8th November, 2011, the industry of Respondent No.1 was again inspected and an inspection report dated 11th November, 2011 was prepared. Respondent No.1, after inspection, submitted the bank guarantee on 3rd April, 2012 for a sum of five lakh rupees, valid till 30th June, 2012. Thereafter, no action was taken by the Board. In fact, vide order dated 4th April, 2012, the Board granted consent to Respondent No.1 to operate till 31st March, 2013. The Assistant Environmental Scientist, the Environmental Engineer and the Sr. Environmental Engineer of the Board made a recommendation on 24th April, 2012 that the bank guarantee be forfeited in view of non-satisfactory performance and non-compliance with the environmental clearance conditions, and as a result thereof, the Board, vide its letter dated 26th May, 2012 requested the Indian Overseas Bank to forfeit the bank guarantee amount of five lakh rupees. The Bank, vide its letter dated 5th July, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermitted to challenge the correctness of such condition. 10. As opposed to this, the contention on behalf of the private respondent-industry is that the Board is not vested with any power to ask for a bank guarantee. Such exercise of power is not backed by any statutory provision. The imposition of such condition is punitive in nature, and is therefore, beyond the scope of Section 31A of the Air Act. However, if any penalty is to be imposed, it has to be in accordance with the provisions of Chapter VI of the Air Act. Recourse to any other provision by implication or otherwise would be impermissible. Asking for furnishing of the bank guarantee itself is a penalty and so is its invocation. The only power vested with the Board is to prosecute the industry or direct its closure in accordance with law. The invocation of the bank guarantee, in any case, is not as per terms of the bank guarantee as there was no deliberate act/default on the part of the industry and in fact it had made all efforts to take anti-pollution measures. The industry is not a polluting industry, and therefore, the encashment of the bank guarantee is bad in law. According to the respondents, the order of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued the consent order to operate the industry, valid till 31st March, 2010, under the Water Act. On 20th November, 2009, the industry wrote a letter to the Senior Environmental Engineer of the Board seeking extension of time to complete the installation of bag filters since it had already placed purchase order for supply and erection of bag filter system as well as to complete the concreting of the internal roads, etc. The Board, vide its letter dated 30th November, 2009, directed the industry to furnish a report within 10 days stating the requisite steps and rectification measures taken for compliance with the issues mentioned therein. This was replied to vide letter dated 3rd December, 2009 pointing out that it had already submitted a few photographs of the concreting and black topping of the internal roads which could not be done because of prolonged monsoons. It also stated that the installation of bag filters would be completed by January, 2010 and water sprinklers and black topping/concreting the road would be done by the end of March, 2010 positively. The Board then asked the industry to furnish a compliance report. The industry asked for extension of time to comply with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested for extension of time to complete the installation of pug-mills up to 31.12.2010 vide our letter no.PSAL/P/1029/10 dated 07.09.2010 which was allowed by the Board. Installation was also completed in scheduled time. 14. Again on 30th July, 2011, the industry wrote a letter to the Board intimating that it had already placed orders for manufacture, design and supply of two units of dense phase of pneumatic conveying system for bag filter dust conveying and sought time till December, 2011. It was also stated by the industry that their existing systems were superior to the mechanism recommended by IIT, Kharagpur. The correspondence continued to be exchanged between the Board and the industry. The industry submitted that the consent was granted after the Board was satisfied that it had complied with the directions issued from time to time and was operating in accordance with law. 15. The industry, vide its letter dated 11th April, 2012, requested the Board to return the bank guarantee since it had complied with all the conditions. The Board did not return the bank guarantee in terms of the request of the industry and instead decided to invoke the same. At this stage, it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en granted to comply with the requirements but the directions of the Board had not been fully implemented. The industry was asked to show cause by 7 th August, 2011 as to why it be not closed in terms of the provisions of Section 31A of the Air Act. Reply to the show cause notice was submitted by the industry which claimed further time to complete the remaining work and make good the non-compliances. Again, an extension of time till December, 2011 was sought by the industry vide letters dated 20th July, 2011 and 30th July, 2011. The industry was also inspected on 23rd August, 2011, particularly with respect to upgradation of bag filters, installation of pneumatic dust handling system at the bag filters and at the ESP. It was noticed that these had not been provided by the industry. It was then informed by the industry that it would be installing the said systems by 31st December, 2011. On this assurance, the consent was renewed till 31st March, 2012 vide order dated 23rd September, 2011. The relevant direction of the said order reads as under: You are directed to complete the installation of PDHS at ESP/BFs hoppers within 3 months from the date of issue of this order. In case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk guarantee and what are its consequences? (e) To what relief, if any, the appellant is entitled to? 24. The Water Act was enacted keeping in view the problem of pollution of rivers and streams, which had assumed considerable importance and urgency in the recent years as a result of growth of industries and increasing tendency of urbanisation to ensure that the domestic and industrial effluents are not allowed to be discharged into the water bodies without adequate treatment. Thus, the Water Act had provided for prevention and control of water pollution and maintenance or restoration of wholesomeness of water as well as for establishment of bodies/Boards required to achieve these purposes. Then the Air Act was enacted keeping in mind the increasing industrialisation and the tendency of the majority of industries to congregate in areas which are already heavily industrialised. The problem in relation to air pollution was felt to be more acute in those heavily industrialised areas which are densely populated. The Air Act was thus to provide for prevention, control and abatement of air pollution and also for establishment of the Boards to attain the said objective and to perfor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, codes or guides relating to prevention, control or abatement of air pollution; (h) lay down standards for the quality of air., (i) collect and disseminate information in respect of matters relating to air pollution; (j) perform such other functions as may be prescribed. (3) The CPCB may establish or recognise a laboratory or laboratories to enable the CPCB to perform its functions under this section efficiently. (4) The CPCB may- (a) delegate any of its functions under this Act generally or specially to any of the committees appointed by it; (b) do such other things and perform such other acts as it may think necessary for the proper discharge of its functions and generally for the purpose of carrying into effect the purposes of this Act. 17. Functions of State Boards. (1) subject to the provisions of this Act, and without prejudice to the performance of its functions, if any, under the Water (Prevention and Control of Pollution) Act, 1974 (Act 6 of 1974), the functions of a State Board shall be- (a) to plan a comprehensive programme for the prevention, control or abatement of air pollution and to secure the execution thereof-, (b) to advise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution in the country. This is the fundamental function of the CPCB. Without prejudice to the generality of this function, the CPCB is to perform advisory functions, plan and co-ordinate the activities of the State Boards, provide training, collect requisite data and most importantly plan and execute a nation-wide programme for prevention, control or abatement of air pollution, and with this purpose in mind, the CPCB is required to lay down standards for quality of air. Besides the specific functions, it is obligatory on the CPCB to perform such other functions as may be prescribed. The State Boards have also to perform similar functions but greater emphasis has been laid in Section 17 of the Air Act on the advisory functions of the State Boards where it is required to advise the State Government concerned with respect to suitability of any premises or location for carrying on any industry which is likely to cause air pollution. The State Board is also required to inspect air pollution control areas to ensure adherence to air quality standards. The State Board has also to perform functions, as may be prescribed by the CPCB or the State Government. 28. Most importantly, under both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Board to comply with the conditions and these conditions would primarily relate to installation of control equipments, which will control and prevent the air pollution. Similarly, fixing of chimney or such other general conditions may be imposed by the Board. To put it simply, compliance with conditions in relation to prevention and control of air pollution, as imposed by the Board, is the paramount obligation of the person wanting to establish or carry on any industrial plant in the area in question. But for such compliance, such person would not be able to establish or carry on such industrial activity. The conditions of the order would have to be complied with at all times. The conditions imposed by the Board in terms of Sub-sections (6) and (7) of Section 21 of the Air Act shall be binding even if they are varied in accordance with the prescribed procedure or even upon transfer of interest in the industrial plant. The Board has the power to inspect an industrial unit wherever it apprehends that emission of any air pollutant in excess of the prescribed standards is likely to occur by reason of any person operating an industrial plant or otherwise in any air pollution control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary object of prevention, control and abatement of air pollution. The most fundamental aspect of environmental law is prevention and control of pollution and to provide clean and healthy environment and wholesome water to the society at large. As already noticed, the provisions of Section 17(1)(a) casts upon the Board an obligation to do things and perform such acts as may be necessary for the proper discharge of its functions and generally for the purpose of carrying out the purposes of the Air Act. Upon analysis of the language of these provisions, it is evident that besides performing the specific acts and functions, the Board is entitled to do things or perform acts which may be in aid thereto and for carrying out effectively the purposes of the Air Act. Once it prepares a comprehensive programme for prevention, control and abatement of air pollution, and emission standards are prescribed, the Board then is required to issue the order of consent to various applicant-units to establish and operate their activities. The matter is not put to rest at that stage but the Board is required to ensure implementation of the terms and conditions of the consent order. It may then do such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose. Such an approach would be in consonance with the maxim Noscitur a sociis. The Wharton's Law Lexicon, 15th Edition explains 'regulation' as a word of broad import having wide meaning comprehending all facets not only specifically enumerated in the Act but also embracing within its fold the powers incidental to the regulation envisaged in good faith in the interest of the general public. 32. Keeping in view the legislative scheme and the object of the Air Act, it is evident that the Board is not incapacitated to issue a direction which may not be prohibitory or of closure in substance and application, but may be regulatory with an object to ensure that anti-pollution devices and anti-pollution measures are adopted to prevent and control pollution. For this purpose, the Board may require an industry to furnish a bank guarantee which would serve dual purposes. On the one hand, it would provide incentive to an industry to install anti-pollution devices so as to ensure non- encashment of the bank guarantee, while on the other, in the event of default, resulting in pollution, the Board would be able to spend that money for remedial purposes to control environmental deg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a definite period upon furnishing of Bank Guarantee for compliance and compensation, if required, and during integrin permitting the industry to comply with the various directions and the conditions stated in the consent order including installation of anti-pollution devices. This helps the sustainable development as industrial activity is not straightaway closed or prohibited but is permitted to carry on subject to compliance with the conditions imposed. Thus, it clearly falls in the domain of regulatory regime as opposed to prohibitory or closure regime. 34. The Board is a statutorily constituted expert body and is, therefore, competent to examine and even anticipate the likely damage to environment by such disobedience and thus to remedy the wrong in a timely manner. It has been stated, time and again, that the Board has not been constituted to perform empty formalities. In fact, it has to prevent, control and abate environmental pollution and for achieving the purposes and carrying out the purposes of the Act effectively, it frames guidelines for taking effective measures. (Refer: Bihar State Pollution Control Board Anr. v. Hiranand Stone Works Ors. (AIR 2005 Pat 62) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear contradistinction to 'remedial' and/or 'compensatory'. 'Penalty' essentially has to be for result of a default and imposed by way of punishment. On the contrary, 'compensatory' may be resulting from a default for the advantage already taken by that person and is intended to remedy or compensate the consequences of the wrong done. For instance, if a Unit has been granted conditional consent and is in default of compliance, causes pollution by polluting a river or discharging sludge, trade affluent or trade waste into the river or on open land causing pollution, which a Board has to remove essentially to control and prevent the pollution, then the amount spent by the Board, is thus, spent by encashing the bank guarantee or is adjusted thereat and this exercise would fall in the realm of compensatory restoration and not a penal consequence. In gathering the meaning of the word 'penalty' in reference to a law, the context in which it is used is significant. 39. The Air Act provides a clear exposition of both penalty and compensatory concepts. Section 37 of the Air Act deals with the penalties that can be imposed by the Court of competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e equal value for his losses. Thus, when 'compensatory' is examined with reference to the environmental law it would obviously mean an amount equal to the damage done to the environment. This amount is assessed on approximate basis by a specialized body like the Board, at the time of imposition of such condition. Thus, it is a figure rationally arrived at and is intended to provide for a given situation in the interest of environment and is not a penalty in intent and substance within the framework of the Air Act. The Supreme Court in the case of Karnataka Rare Earth (supra) was dealing with the penalty and compensation payable under the Mines and Minerals Development and Regulation Act, 1957 and the rules framed thereunder. The Court was concerned as to whether the amounts payable to the State for loss of minerals owned by it, claimed by the State, would be a penalty or compensation and held as under: We are clearly of the opinion that the marginal note 'penalties' cannot be pressed into service for giving such colour to the meaning of sub-Section (5) as it cannot have in law. The recovery of price of the mineral is intended to compensate the State for the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the provisions mentioned above, it seems to me to be clear that whatever may be the objects of levying a penalty, its imposition gives rise to a substantive liability which can be viewed either as an additional tax or as a fine for the infringement of the law. The machinery or procedure for its realization comes into operation after its imposition. In any case, it is an imposition of a pecuniary liability which is comparable to a punishment for the commission of an offence. It is a well settled cannon of construction of statutes that neither a pecuniary liability can be imposed nor an offence created by mere implication. It may be debatable whether a particular procedural provision creates a substantive right or liability. But, I do not think that the imposition of a pecuniary liability, which takes the form of a penalty or fine for a breach of a legal obligation, can be relegated to the region of mere procedure and machinery for the realization of tax. It is more than that. Such liabilities must be created by clear, unambiguous, and express enact- ment. The language used should leave no serious doubts about its effect so that the persons who are to be subjected to such a li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmittee, [(2010) 173 DLT 52] in support of their action that imposition of condition of bank guarantee is of penal consequences, and therefore, should be backed by a specific law. It is further their contention that this judgment of the Delhi High Court was upheld by a Division Bench of the Delhi High Court without dealing with the question of penalty in LPA 875 of 2010 - Delhi Pollution Control Committee v. Splendor Landbase Limited. On the other hand, the appellants have relied upon another judgment of the single Judge Bench in the case of Delhi Regent Automobiles Private Limited v. Government of NCT of Delhi (Writ Petition No.7516 of 2007) where the Court took the view that power to direct furnishing of a bank guarantee was covered under the full range of the powers vested in the authorities and rejected the challenge to the power of the authorities. They have also relied upon a judgment of the Calcutta High Court which did not discuss the legal issue and also did not interfere in the direction requiring the units to furnish a bank guarantee. 44. In the case of Splendor Land Base Limited (supra), the learned Single Judge dealt with different questions arising in the case. Suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that case. It was not an act de hors the imposition of penalty and had the element of punitive action. In the present case, it is not a consequence of a punitive or penal action but is in exercise of the powers vested in the Board in relation to recalling the conditions of consent and ensuring their implementation while also making compensatory provision for remedying the apprehended wrong to the environment. In the cases in hand, the Board has not imposed any penalty upon the units but has granted consent to them on certain conditions, none of which is punitive. They squarely fall within the power of the Board to prevent and control pollution in consonance with the scheme of the Acts concerned. Thus, on facts, the judgments of the High Court in Splendor (supra) do not have any application to the present case. In any case, we are of the considered view that asking for a bank guarantee as an interim measure for due performance of the conditions of the consent order being compensatory in nature, is not punitive. 46. We have already noticed above that there is a clear distinction between a penal and a compensatory provision. In such matters, the paramount question that would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliance with statutory obligation. Remedial and restoration measures in relation to degradation of environment resulting from default and the money spent would squarely come under the head of compensation. 48. In that case, the Supreme Court was considering the question relating to determination of quantum of fine for causing pollution and proceeded to clarify that conviction orders or fine, as contemplated under the provisions of the Air Act etc. must proceed by a trial in accordance with law and would not fall within the ambit of Article 142 of the Constitution of India. Following the principle stated in M.S. Ahlawat v. Union of India, it was observed that under Article 142 of the Constitution, the Court cannot altogether ignore the substantive provisions of a statute and pass orders concerning an issue which can be settled only through a mechanism prescribed in another statute. Having said so, the Court, while referring to the case of Vellore Citizens' Welfare Forum v. Union of India Ors. clearly stated the principle that the violator can be directed to pay compensation by way of costs for the restitution of the environment and ecology of the area. In addition to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants Act, 2000 (for short the 'DCETP Act') which had para materia provisions to the Act in question here. The challenge by the petitioner in that case was to the fixation of charges and recovery of dues towards setting up of a common effluent treatment plant. Upon inspection, deficiencies were noticed in the plant. A visit by the Inspection Team to the premises noticed the irregularities in the observance of parameters laid down for the related industries. After serving a show cause notice the petitioners in those cases were directed to furnish bank guarantees. The challenge was that the direction to furnish bank guarantees for specific amounts was without any legal authority. Rejecting this argument, the Court while referring to the provisions of Section 16 of that Act, which is para material to Section 31A of the Air Act, came to the following conclusion: 14. It is an established Rule of statutory interpretation that every provision, which confers a power should be construed in its own terms, enabling the authority the full range of options, which may naturally fall within it. Asstt. Collector of Central Excise, Calcutta v. National Tobacco Co. of India AIR 1972 SC 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch had to be inflicted by following the due process of law as contemplated under that Act. The judgment in the case of Regent Automobiles Pvt. Ltd. (supra) can be applied to the facts of the present case with greater similarity. 55. At this stage, we may also notice that there has to be a direct nexus between the directions issued within the ambit and scope of Sections 21 and 31A of the Air Act and the object sought to be achieved by issuing such directions. This nexus should be relatable to the functions and powers of the Board on the one hand and to the object of the Act on the other. Once this twin test is satisfied, then validity of such condition can hardly be questioned. We have already held that such nexus in the present case does exist. The purpose was to prevent and control pollution while permitting the industries to operate, as opposed to the closure of the industries and thus, obstructing the sustainable development. For these reasons, we hold that the plea of the respondent that the direction for furnishing of the bank guarantee was punitive or penal, is liable to be rejected. 56. In regard to the judgment of a Bench of this Tribunal in the case of Hindustan Coco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further effective measures to control the pollution within the next few months. It also stated that the situation had improved considerably. It based its defence on the fact that the plant was located in a remote area and it was difficult to get men and machinery and requested the Board that time be granted till 31st December, 2009 to complete the work detailed in the notice. As is obvious from the reply, there was no serious dispute with regard to the default in compliance as well as resultant pollution from the industry. While considering the application of the industry to operate the plant, as submitted in March, 2009, the Board, in furtherance to its Resolution, asked the industry to furnish a bank guarantee for an amount of ₹ 17.50 lakhs which was to remain in force for a period of three years from the date of its execution and, in the meanwhile, all necessary steps were required to be taken by the industry to ensure that no environmental pollution was being caused. In furtherance to this letter of the Board, the industry, vide its letter dated 18th June, 2009, without demur or protest and, in fact, in continuation to its request for extension to operate, furnished the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report was prepared and it was mentioned in the said report the steps that had been taken by the industry as well as the steps which had not been taken by it. Having received this inspection report, the industry, vide its letter dated 20th November, 2009 requested the Board for extension of time from 31st December, 2009 to 31st March, 2010 for compliance with the conditions. In this letter, it was specifically stated that due to unfavourable circumstances, the contractor did not complete the job and had left half way and after persuasion and with extra support extended by the industry, the contractor had resumed the work and the industry required further time. The request for further extension of time was allowed by the Board vide its letter dated 5th January, 2010 to rectify the defects aforestated by 31st March, 2010 positively and to furnish a compliance report. The industry was again inspected on 29th January, 2010. During this inspection, certain observations were made by the Inspecting Team and it was found that various requisite steps had still not been taken by the industry and furthermore the ambient air quality monitoring result showed existence of pollution and emissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated in the consent order and the industry was given three months' time to complete the installation of PDHS at ESP/BFs hoppers. Vide its letter dated 21st March, 2012, the industry informed the Board that the consent to operate is required for lifting of iron ore, coal and dolomite and the consent, which was valid till 31st March, 2012, should be further renewed. In furtherance to this letter, on 24th March, 2012, the unit was inspected and a detailed inspection report was prepared which was communicated to the industry on 27th March, 2012. In this report, it was noticed that the bank guarantee was valid till 12th June, 2012 and whatever direction had been issued had been complied with and the plant was operating efficiently. In this report, it was also communicated that the ambient air quality at certain points was exceeding the prescribed parameters. The observations and recommendations, as stated in this inspection report, were as follows: OBSERVATIONS RECOMMENDATIONS: 1. The unit has completed all the installation of the bag filters as per the recommendation of IIT, Kharagpur. All the bag filter houses have also been provided with the pneumatic dust handling s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to and the Bank actually encashed the bank guarantee and credited a sum of ₹ 17.50 lakhs to the account of the Board towards full and final settlement of the claim on the basis of the bank guarantee. 62. Even thereafter, a number of inspections of the industry were carried out by the Board, some of them recorded satisfactory performance while the other pointed out serious lapses and defaults on the part of the industry. Even in the inspection report dated 3 rd January, 2013, the Inspecting Team made the following observations: 1. There was visibly flue gas emission at emergency cap of DRI kiln-III. 2. The emission from the common stack connected to common ESP of kiln - I II was visually high indicating malfunctioning of ESP. 3. Fugutive dust emission was observed from CD area of kiln - III, common product house and coal crusher area indicating the bag filters at these locations were not working properly. 4. Leakage of flue gas was taking place from slip rings of DRI kiln-I. 5. PDHS system installed at the hoppers of ESP of kiln - III was found to be in defunct condition for which heavy dust nuisance in fugitive forms was observed to be taking place. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any, that could be raised by the industry, had been waived by it through its conduct and action. It is a case of acquiescence on the one hand and on the other, the respondent could even be estopped from challenging the correctness of that very order, the benefit of which it had enjoyed. Estoppel is a rule of equity and evidence. It bars or prevents one from asserting the claim or right that contradicts what one has said or done before or what has been legally established as true. Similarly, 'waiver' is actual intent to abandon or surrender his right by a person i.e. a right or an objection may be available to a person in law but the person consciously not only waives that objection or right but in fact, acts to the contrary. Like in the present case, if the respondents actually believed that they could raise an objection with regard to the condition to furnishing of the Bank Guarantee, they ought to have raised it right at the very initial stage but they not only failed to raise such objection albeit acted to the contrary by submitting a Bank Guarantee without demur and protest. At this stage, we may also refer to the judgment of the Supreme Court in the case of Chairman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of by carrying on its activities, despite being a defaulter. The data furnished in the inspection reports of the Board leaves no doubt in our minds that the bank guarantee had been invoked when on repeated inspections, it was found that the industry is a persistent defaulter and thus, was causing air pollution, particularly in relation to ambient air quality and after issuing show cause notices to the industry from time to time. The Board, thus, was fully justified in invoking the bank guarantee. Ancillary but the most significant question that now arises for consideration is whether the bank guarantee had been invoked as per its terms. Clause 2 of the bank guarantee which we have reproduced above states that the industry had three obligations - (a) to operate and instal the existing and the requisite pollution control system and/or other pollution control measures effectively within the stipulated time, and (b) this was to be to the satisfaction of the Board in terms of its letter dated 12th June, 2009, and (c) the industry was to meet the standards prescribed by the Board. 65. In case of failure to comply with the same during the stipulated period of three years, the bank g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order dated 8th November, 2012 passed by the appellate authority. Primarily, two reasons appear to have weighed with the appellate authority while allowing appeal against the order of the Board dated 26th May, 2012. Firstly, that the Board was satisfied with the pollution control measures undertaken by the industry and had indicated so in the Inspection Report dated 1st March, 2012. Secondly, there was required to be a deliberate violation on the part of the industry to invite the consequences of invocation of bank guarantee in terms of the affidavit filed by the industry before the Board. Both these reasons cannot be sustained by us. Of course, the Inspection Report dated 1st March, 2012 had indicated that the industry was working satisfactorily. But the appellate authority ignored two very important facts from its consideration. One that there were more than eight inspections that had been conducted by various technical teams of the Board and in most of them not only breach of the terms and conditions of the consent order was noticed but it was also clearly mentioned that there was serious pollution caused by the industry particularly in relation of the ambient air qualit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired devices. Even in January 2013, inspection of the industry had been conducted by a team of technical experts who found that there were visible flue gas emissions, fugitive dust emissions which were impermissible and required an appropriate action to be taken against the industry. For these reasons, we are not in a position to concur with the view taken by the appellate authority. 68. Before entering into the realm of general discussion and the directions that the Tribunal needs to pass in the facts of the present case and in the larger administration of environmental justice, we may answer the issues/questions formulated by us in paragraph 24 of this judgment. The answers are as follows: - a. Resolution of the Board for imposing a condition upon the industrial plants/units to furnish a bank guarantee as an interregnum for compliance and/or in the nature of compensation cannot be held to be without the authority of law or jurisdiction, in so far as it is not penal or punitive. b. In the facts and circumstances of the present case, invocation of the bank guarantee by the Board for non-compliance of the conditions stated in the consent order and in view of the under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urprise or need-based inspections. In the normal course, regular inspections should be carried out, preferably on annual or bi-annual (twice a year) basis. This would help maintaining proper data of inspections as well as ensuring desired implementation of the conditions, if any, imposed in the consent orders. 71. Section 21 of the Air Act places restrictions, both on establishment and operation of any industrial plant located in an air pollution control area without previous consent of the Board. The legislative intent behind this provision would lead to decipher two concepts - one, the consent for the purpose of establishing an industrial plant while the other for operation of that plant. The purpose of this Section is to ensure that when a unit or an industrial plant is given consent to operate, the unit ought to have satisfied all the conditions stated in the order of consent to establish and would have installed the requisite effluent treatment plants and other anti-pollution devices to ensure that it causes no pollution. It necessarily implies that this is the rule and permitting a unit to operate, subject to satisfaction of certain time bound conditions, is an exception, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e granted preferably for a period of two years or even more. During the period thus allowed, the Board should make inspections in terms of its 'inspection policy'. If the unit/industry is found to be defaulting, has failed to comply with the conditions of the consent order or failed to install ETPs/Anti- pollution devices and there is malfunctioning of the unit, the consent should be revoked or renewal denied in accordance with the provisions of the Air Act. Such mechanism should be a rule and its exception is to be in rare cases. 73. Wherever the Board requires a unit to furnish bank guarantee for compliance of conditions of consent order, installation of anti- pollution devices and ensuring that it is a pollution-free unit, then, in such cases, the Board should ensure that its order provides for a 'time targeted action plan'. In default of which and upon inspection, such bank guarantee would be liable to be invoked/encashed for environmental compensation and restoration purposes. Making such provision would ensure, on the one hand, that the industry does not cause avoidable pollution and on the other, the Board performs its functions timely and effectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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