Case Name - M/S Shiv Industries v.

Chandigarh Pollution Control Board, 2023

Brief facts of the case

Proceedings before the Chandigarh Pollution Control Board (“CPCC”) -

● M/s. Shiv Industries (Appellant) is engaged in manufacturing and phosphating/pickling
tractor parts i.e., Silencers, Elbow and Clamps. It is carrying out its industrial activities at
its factory situated in Chandigarh.
● The appellant was granted Consent to Operate (“CTO”) under Section 25/26 of the Water
Act, 1974 and 21 of Air (Prevention and Control of Pollution) Act, 1981 (“Air Act
1981”), which was valid till 31.03.2018. It was further renewed till 31.03.2023 passed by
CPCC.
● The appellant was also granted Authorisation under Rule 6 of Hazardous and Other
Wastes (Management and Transboundary Movement) Rules, 2016 (“‘HOWMTM Rules
2016”) to operate a facility for storage and disposal of hazardous waste.
● In furtherance of the Authorisation, the appellant was disposing of its waste through an
Authorized Re-cycler.
● The appellant received a show cause notice which stated that CTO issued to the appellant
under Water Act 1974 and Air Act 1981 as also Authorisation under HOWMTM Rules
2016 had expired on 31.03.2023. Further, the appellant’s industrial unit was inspected by
CPCC.
● The Show Cause notice further said that the appellant had violated certain conditions of
Consent and Authorisation.
● The CPCC issued the following order
a. An environment compensation amounting to Rs. 10,50,000/- (Rupees Ten Lakhs
Fifty Thousands Only) has been imposed upon the unit i.e. M/s Shiv Industries.
b. Superintending Engineer, Electricity Operation Circle, U.T., Chandigarh shall
disconnect the power supply of the above-mentioned unit with immediate effect.
c. That Superintending Engineer, Public Health Circle, Municipal Corporation, U.T.
Chandigarh shall disconnect the water supply of the aforementioned unit.
d. The concerned authorities shall seal the unit with immediate effect.

Proceedings before the National Green Tribunal (NGT)-

● An appeal was filed before the NGT.
● The appellant contended that it had not been using phosphating process since January
2023, and hence, there was no discharge of any polluting material.
● Learned Counsel appearing for CPCC, on the contrary, disputed these contentions and
submitted that during the inspection, it was found that the appellant’s unit was engaged in
manufacturing tractor parts i.e., silencer using phosphating process after January 2023.
Issues before the NGT
1. Whether appellant stopped phosphating processing in January 2023, as claimed?
2. Whether appellant was committing violations as noticed during the inspection mentioned
in the show cause notice in the impugned order?
3. Whether the impugned order is bad, having not considered the reply submitted by
appellant?
4. Whether the quantum of environmental compensation imposed by respondent CPCC is
justified and based on legal principles applicable to the computation/assessment of
environmental compensation?
5. Whether closure order passed by CPCC directed for the closure of the appellant’s unit is
justified in the facts and circumstances of the present Appeal?

Method of computing environment damage

● In Paryavaran Suraksha Samiti and Another vs Union of India directed the Central
Pollution Control Board (“CPCB”) to assess and recover compensation for damage to the
environment.
● The CPCB, accordingly, published a report on in 2019 titled “Report of the CPCB In-
house Committee on Methodology for Assessing Environmental compensation and
Action Plan to Utilize the Fund”, suggesting methodology for assessment of
environmental compensation which may be levied or imposed upon industrial
establishments who are guilty of violation of environmental laws and have caused
damage/degradation/loss to environment.
● The Report contains cases considered for levying Environmental Compensation (EC):
a. Discharges in violation of consent conditions, mainly prescribed
standards/consent limits.
b. Not complying with the directions issued, such as direction for closure due to
non-installation of OCEMS, non-adherence to the action plans submitted etc.
c. Intentional avoidance of data submission or data manipulation by tampering the
Online Continuous Emission / Effluent Monitoring systems.
d. Accidental discharges lasting for short durations resulting into damage to the
environment.
e. Intentional discharges to the environment -- land, water and air resulting into
acute injury or damage to the environment.
f. Injection of treated/partially treated/ untreated effluents to ground water.”
● The Report says that ‘Pollution Index’ (“‘PI”) would be used as a basis to levy
environmental compensation. CPCB had published Guidelines categorizing industries
into Red, Orange, Green and White, based on the concept of PI.
● The PI is arrived after considering quantity and quality of emissions/effluents generated,
types of hazardous waste generated and consumption of resources.
The following formula will be followed for determining environmental compensation in respect
of cases covered by item (a), (b) and (c)
EC = PI × N × R × S × LF
Where, EC is Environmental Compensation in Rs.
PI = Pollution Index of industrial sector
N = Number of days of violation took place
R = A factor in Rupees (₹) for EC
S= Factor for scale of operation
LF = Location factor”

In the present case, the above formula was used to calculate the environment compensation
which comes upto Rupees 10,50,000/-.
Environment Compensation has been calculated from 01.04.2023 and 23.06.2023 (84 days) EC
stands for Environment Compensation

PI (Pollution Index) = 80 (being a red category)

N (No. of Days) = 84 days (Days calculated after the expiry of the consent order)
R (A Factor in Rs.) = 250 (as it is case of violation)
S (Factor for Scale of Operation) = 0.5 (being a small industry 52 categorisation)
LF (Location Factor) = 1.25 (as Chandigarh Population is more than 10 Lakhs)

EC=PI x N x R x S x LF (for 84 days)

EC= PI x N x R x S x LF
EC = 80 x 84 x 250 x 0.5 x 1.25
EC = Rs. 10,50,000/-