In a significant ruling, the Supreme Court in Delhi Pollution Control Committee v. Lodhi Property Co. Ltd. clarified that Pollution Control Boards have the authority to impose and recover environmental compensation under Sections 33A and 31A of the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981.
Background of the Case
The Delhi Pollution Control Committee (DPCC), acting under directives from the Ministry of Environment, issued show cause notices to multiple entities—including commercial and residential complexes—for operating without mandatory "consent to establish" and "consent to operate" under the Water and Air Acts.
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These entities challenged the notices before the Delhi High Court. A single judge ruled that DPCC lacked the statutory power to levy environmental damages or demand bank guarantees, holding that such actions were penal in nature and could only be pursued through judicial mechanisms laid out in Chapters VI and VII of the respective Acts.
The Division Bench upheld the single judge’s view, stating:
“The power to issue directions under Section 33A of the Water Act and Section 31A of the Air Act does not confer the power to levy penalties.”
The High Court declared that penalties could only be imposed through a proper judicial process, and directed refund of the amounts collected by the DPCC.
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The Supreme Court reversed this interpretation. It clarified that:
“Regulators like DPCC can impose and collect restitutionary or compensatory damages in the form of fixed monetary amounts or bank guarantees as ex-ante measures to prevent environmental harm.”
The Court made a clear distinction between punitive penalties (which must follow legal trial procedures) and compensatory measures aimed at preventing or remedying environmental damage. These compensatory powers, it said, are incidental to the broad regulatory mandate of the Boards under Sections 33A and 31A.
The bench highlighted that the "Polluter Pays" principle has been a part of Indian environmental law since Indian Council for Enviro-Legal Action v. Union of India and must be enforced by regulators effectively.
“The power to impose environmental compensation is not a penalty—it’s a restitutionary tool to protect and restore the environment.” — Supreme Court
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“Such powers must be guided by fairness, transparency, and non-arbitrariness and should be codified through proper rules and procedures.”
While allowing the appeals, the Court refused to revive old show cause notices from 2006 that were already set aside by the High Court. It directed DPCC to refund the amounts collected under those notices within six weeks.
- Pollution Control Boards can impose environmental compensation or seek bank guarantees under Sections 33A and 31A.
- These powers are compensatory—not punitive—and can be used without judicial trial.
- Boards must develop transparent procedures, backed by rules and natural justice, before enforcing these powers.
- Old notices quashed by High Court will not be revived; collected amounts must be refunded.
Supreme Court allows Pollution Control Boards to recover environmental compensation under Water and Air Acts, clarifies non-punitive nature of such powers.
Case Title: Delhi Pollution Control Committee vs. Lodhi Property Co. Ltd. & Others
Case Type: Civil Appeals No(s). 757-760 of 2013
(with Civil Appeal No(s). 1977-2011 of 2013)
Jurisdiction: Civil Appellate Jurisdiction
Date of Judgment: 4 August 2025