SC in Delhi Pollution Control Committee VS Lodhi Property co. ltd. case overturned Delhi High court ruling which held that only courts could impose environmental compensations (EC).

• Environmental compensation is a policy instrument for the protection of the environment which works on the Polluter Pay Principal.

Key highlights of the rulings:

• Statutory mandate: PCBs can impose penalties for environmental compensation in exercise of powers under Section 33A of Water Act, 1974 and Section 31A of the Air Act, 1981.
• Polluter Pays principle: PCBs can’t impose penalties in every contravention under the Acts but only when environmental harm has been caused by the erring entity.
  • In Indian Council for Enviro-Legal Action v. UoI, SC held that according to Polluter Pays principle, responsibility for repairing the damage is that of offending industry.
• Appropriate Course of Action: Boards can decide whether a polluting entity needs to be punished by imposition of penalty or if situation demands immediate restoration of environmental damage by the polluter or both.
  • SC in Vellore Citizens’ Welfare Forum v. Union of India (1996) also held that liability for environmental damage includes both a compensatory and remedial aspect.
• Preventive or ex ante measures can be taken by regulators.