M/S C.L. GUPTA EXPORT LTD.versusADIL ANSARI & ORS.

                [2025] 8 S.C.R. 1516 : 2025 INSC 1035

                       M/s C.L. Gupta Export Ltd.
                                   v.
                           Adil Ansari & Ors.
                       (Civil Appeal No. 2864 of 2022)
                                22 August 2025
           [B.R. Gavai, CJI and K. Vinod Chandran,* J.]


                            Issue for Consideration
       Issue arose as regards order of the tribunal imposing compensation
       of Rs.50 Crores and other directions on the exporter perpetrating
       environmental degradation and pollution.

                                   Headnotes†
       Environmental laws – Violations – Imposition of penalty –
       Appellant-exporter engaged in manufacturing activities
       resulting in ineffective effluent treatment, storage of hazardous
       wastes – Case of respondent no.1 before the tribunal alleging
       that the appellant actively perpetrating environmental
       degradation and pollution as also extracting ground water;
       thus polluting the surroundings and also releasing effluents
       into the nearby river – On basis of Joint Committee Report,
       imposition of compensation of Rs.50 Crores by the tribunal
       and issuance of certain directions – Challenge to:
       Held: Imposition of compensation of Rs.50 Crores by the NGT
       striked out – Direction permitting a continuous monitoring and
       restoration, and fresh water audit of the pollution control measures
       to ensure a pollution free, compliance regime, retained – These
       directions relating to audit, monitoring and restoration necessarily
       within the powers of the NGT and is a continuing process – There
       could be constant monitoring of the unit especially looking at the
       past violations – However, having accepted the report of compliance,
       no warrant for a sweeping direction to close such of the divisions of
       the appellant which are falling short of the compliance – Reserving
       the right of the jurisdictional PCBs to proceed against any violation
       of statutory or other conditions imposed, the direction issued by
       the NGT set aside – Generation of revenue, or its quantum, would
       have no nexus with the amount of penalty to be ascertained for


* Author
[2025] 8 S.C.R.                                                            1517

             M/s C.L. Gupta Export Ltd. v. Adil Ansari & Ors.


     environmental damages – Methodology adopted by the NGT for
     imposition of penalty totally unknown to any principle of law – Rule
     of law does not permit State or its agencies to extract a ‘pound
     of flesh’, even in environmental matters – Though there was
     admitted turnover of Rs.550 crores, absence of nexus between
     the turnover and the pollution alleged – If at all the NGT was of
     the opinion that the environmental compensation imposed was
     minimal or low, it could have referred to the methodology framed
     by the CPCB and not merely looked at the revenue generation
     of the polluter – Furthermore, NGT has no jurisdiction to direct
     the prosecution of individuals under the PMLA – NGT should act
     within the contours of the powers conferred on it – Direction issued
     to the Enforcement Directorate set aside – Prevention of Money
     Laundering Act, 2002. [Paras 9-13]

     Judgment/order – Lengthy judgments referring to laws,
     guidelines, reports and decisions – Relevance:
     Held: Concern expressed that application of mind is not
     proportionate to the number of pages – Impugned judgment dealt
     elaborately with the environmental law, the numerous pollution
     prevention measures, the guidelines and publications issued by
     various States as also decisions, various reports, interim orders
     of the NGT and the objections which would anyway be available
     in the records of the case – Unfortunately this was an exercise
     in futility – Judicious consideration is the sum and substance of
     adjudication and the Courts/Tribunals should restrain themselves
     from engaging in mere rhetoric by stating the law in general without
     particular reference to the facts. [Para 13]

                              Case Law Cited
     Benzo Chem Industrial (P) Ltd. v. Arvind Manohar Mahajan, 2024
     SCC OnLine SC 3543; Waris Chemicals (P) Ltd. v. U.P. Pollution
     Control Board, 2025 SCC OnLine SC 1261; Ashok Kumar
     Pandey v. State of W.B. [2003] Supp. 5 SCR 716 : (2004) 3 SCC
     349; Vijay Madanlal Choudhary v. Union of India [2022] 6 SCR
     382 : (2023) 12 SCC 1 – referred to.

                                List of Acts
     Prevention of Money Laundering Act, 2002; Water Act, 1974; NGT
     Act, 2010.
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                            List of Keywords
    Compensation of Rs.50 Crores; Environmental degradation;
    Pollution; Environmental laws; Imposition of penalty; Ineffective
    effluent treatment; Storage of hazardous wastes; Extracting ground
    water; Releasing effluents into the nearby river; Reports of a
    Joint Committee; Fresh water audit, monitoring and restoration;
    Generation of revenue; Environmental damages; Methodology; Rule
    of law; Turnover; Enforcement Directorate; Judicious consideration.

                           Case Arising From
    CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2864 of 2022
    From the Judgment and Order dated 25.02.2022 of the National
    Green Tribunal at New Delhi in OA No. 220 of 2019

                        Appearances for Parties
    Advs. for the Appellant:
    Vikas Singh, Siddharth Mridul, Rahul Kaushik, Sr. Advs.,
    Mrs. Madhurima Mridul, Ms. Bhuvneshwari Pathak, Varun Bhasin,
    Shivam Parashar, Garv Vikas, Gaurav Choudhary, Minnat Ullah,
    Deepak Chhikara, Sohil Batra, Deepika Kalia, Sudeep Chandra,
    Ms. Vasudha Singh.
    Advs. for the Respondents:
    Ms. Preeti Singh, Pradeep Misra, Daleep Dhyani, Suraj Singh,
    Saurabh Mishra, Shrimay Mishra, Nirbhay S Tewari, Rajesh Kr.
    Singh, Apoorv Kurup, Ms. Vanshaja Shukla, Amit Sharma-(ii),
    Rajeshwari Shankar, Ms. Vijay Lakshmi, Dr. N. Visakamurthy.

               Judgment / Order of the Supreme Court

                               Judgment

    K. Vinod Chandran, J.

    The respondent no.1, the applicant before the National Green
    Tribunal (for brevity, ‘NGT’) alleged that the appellant, the respondent
    no.1 before the NGT, as an industry was actively perpetrating
    environmental degradation and pollution as also extracting ground
    water; thus polluting the surroundings and also releasing effluents
    into the nearby river which is a tributary of the Ganga. It was also
[2025] 8 S.C.R.                                                          1519

                 M/s C.L. Gupta Export Ltd. v. Adil Ansari & Ors.


      alleged that the other official respondents, the Pollution Control
      Board of the State & the Centre, the Central Ground Water Authority
      and the District Collector were mute spectators to the activities of
      the appellant and often colluding, in polluting and damaging the
      environment. The proceedings before the NGT extended over a
      period of three years in which various reports were called for from
      a Joint Committee constituted by the NGT and eventually based on
      the reports, the matter was disposed of with certain directions, with
      which the appellant is aggrieved.
2.    Sh. Vikas Singh, learned Counsel appearing for the appellant would
      point out that the environmental compensation (for brevity, ‘EC’) as
      determined by the statutory bodies were paid up by the appellant.
      The appellant also had brought about all the mitigating measures,
      eventually leading to a report of complete compliance of the statutory
      conditions and the terms imposed by the Pollution Control Board (for
      brevity, ‘PCB’). Despite that last report of 30.07.2021, clearly recording
      compliance, the NGT went ahead and imposed a compensation of Rs.
      50 crores based on the allegedly admitted turnover of the appellant.
      There is no rational nexus in thus computing the penalty, which
      has also been deprecated by this Court in Benzo Chem Industrial
      (P) Ltd. v. Arvind Manohar Mahajan1. The NGT also directed the
      Enforcement Directorate (for brevity, ‘ED’) to examine the matter
      in the light of the observations made in the judgment and take
      appropriate action under the Prevention of Money Laundering Act,
      20022 wherein the environmental laws are also included in Part-A of
      Schedule I. The said measure has also been frowned upon in Waris
      Chemicals (P) Ltd. v. U.P. Pollution Control Board3. The contours
      of maintainability of a Public Interest Litigation (for brevity, ‘PIL’) is
      explicitly declared in Ashok Kumar Pandey v. State of W.B.4; within
      which contours the present litigation does not fall.
3.    None appears for respondent no.1 who was the applicant before
      the NGT. It is to be observed at the outset that we are not inclined
      to consider the question of maintainability of the PIL, at this stage
      especially when the initial reports of the Joint Committee constituted


1    2024 SCC OnLine SC 3543
2    for brevity, “PMLA”
3    2025 SCC OnLine SC 1261
4    (2004) 3 SCC 349
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     by the NGT clearly indicate violations of the environmental laws which
     led to the penalisation by imposition of EC. The proceedings were
     commenced by the applicant in the year 2019 and it was only in the
     year 2021 that a modicum of compliance was reported.
4.   Mr. Saurabh Mishra, learned Advocate-on-Record, appearing for the
     Pollution Control Board submits that as of now there is full compliance
     of the environmental laws. However, it is urged that the NGT was
     within its power in enhancing the penalty since it is a deterrent
     measure. It is also pointed out that the calibration of the quantum
     of penalty could also be with reference to multipliers under CPCB,
     2019 methodology, instead of a flat turnover percentage. It is also
     sought that structural directions in paragraph 569-571 of the NGT
     judgment may be upheld.
5.   The appellant was earlier engaged in four manufacturing activities
     when the proceedings commenced, which were Metal Art Ware,
     Glass Art Ware, Thermocol Blocks which later, were expanded with
     two additions; Marble Art Ware and Corrugated Boxes. There was
     also a residential area where 500-600 people, the employees of
     the appellant, resided. The appellant is said to be an exporter of
     handicraft items and has employed around 7,000 workers.
6.   On the allegation raised, the NGT had first constituted a Joint
     Committee comprising of the Central Pollution Control Board (for
     brevity, ‘CPCB’), the respondent no.3 and the Uttar Pradesh Pollution
     Control Board (for brevity, ‘UPPCB’), the respondent no.2. A report
     dated 07.05.2019 was filed which noticed ineffective effluent treatment,
     storage of hazardous wastes and the Thermocol manufacturing unit
     having not been granted the consent to establish/operate, among
     other defects. The report proposed a show cause notice under the
     Water Act, 1974, the closure of the unit and imposition of EC of
     Rs.10 lakhs. This was followed up with a notice dated 30.03.2019
     by the UPPCB to which objections were filed.
7.   Further reports dated 16.07.2019 and 03.12.2019 were placed before
     the NGT in which EC was computed based on the “Assessment
     of Environmental Compensation in Case of Illegal Extraction of
     Groundwater” dated 26.06.2019 brought out by the CPCB in
     compliance with the orders of the NGT. A total EC of Rs.2,49,71,157/-
     was imposed. The appellant is said to have deposited an EC of
     Rs.1,16,39,727/-; after the waiver effected on representations made.
[2025] 8 S.C.R.                                                         1521

             M/s C.L. Gupta Export Ltd. v. Adil Ansari & Ors.


8.   Subsequently, yet another report dated 30.07.2021 was submitted
     before the NGT which even according to the NGT as is seen
     from page 145 of the order confirms full compliance with all prior
     recommendations/suggestions. This report was also partly accepted
     by the NGT in paragraph 466. The reservation expressed by the
     NGT seems to be of the amount of compensation determined/
     recommended by the Committee being not consistent with the
     directions of the NGT, issued in various other matters. Finding that
     the appellant had violated environmental laws including the provisions
     relating to extraction of groundwater, the NGT went ahead to discuss
     the provisions of the PMLA, various decisions with respect to that
     statute and also those decisions of the NGT, imposing compensation
     with reference to the turnover of the polluter on the principle: “polluter
     pays”. The NGT thus imposed the compensation, issued directions
     including that with reference to PMLA as also made a sweeping
     direction for the closure of the divisions of the appellant, in which
     requisite steps are not taken to comply with the prescribed standards.
9.   As has been correctly pointed out by the CPCB, the order of the
     Tribunal relating to fresh water audit, monitoring and restoration has
     to be retained. Insofar as, the compliance is concerned we refer to
     the following in the written submissions made :
           “5. Pursuant to the above directions, a joint inspection
           was undertaken between 23-25.08.2022 and a report
           dated 24.12.2022 was filed before this Hon’ble Court.
           The said report records inter alia that soil parameters
           were normal; yellowing of stored groundwater was
           attributable to oxidation of iron and manganese; there
           was no crop damage within a 2.5 km radius as per the
           District Horticulture Officer, Amroha; OPD records from the
           Chief Medical Officer, Amroha did not show any air-borne
           disease burden requiring oxygen or ventilator support;
           and that other industries in the vicinity also contributed
           to environmental load. The report further records that
           the Appellant has installed extensive flow-meters and
           piezometers, that reconciliation between fresh water
           abstraction and consumption shows negligible variance
           (approximately 0.39% over a five-month period), and that
           a common STP/ETP with advanced treatment systems
           has been put in place.”
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     The directions in the impugned judgment relating to audit, monitoring
     and restoration are necessarily within the powers of the NGT and is
     a continuing process. We also notice the submissions of CPCB that
     restoration measures should focus on aquifer recharge, continuous
     water balance monitoring and area wide environmental load
     management. Recycling of treated water, reduced usage of ground
     water withdrawal, continuous and robust monitoring would definitely
     guide the design of a prospective compliance regime.
10. We cannot for a moment dispute that if there is non-compliance
    of any of the statutory conditions or that imposed by the PCBs in
    mitigation of the unit specific pollution, then such action sanctioned
    by the statute could be taken, including notice for closure by the
    jurisdictional PCB. We are also convinced that there could be constant
    monitoring of the unit especially looking at the past violations. But,
    we are not convinced that having accepted the report of compliance,
    there was any warrant for a sweeping direction to close such of the
    divisions of the appellant which are falling short of the compliance.
    Reserving the right of the jurisdictional PCBs to proceed against
    any violation of statutory or other conditions imposed, the direction
    issued by the NGT has to be set aside and we do so.
11. Benzo Chem Industrial (P) Ltd.1 was a case in which one of us (B.
    R. Gavai, J, as he then was) considered the question of imposition
    of penalties on a reference to the annual turnover wherein the NGT
    having noticed the revenue range of the polluter to be between 100-
    500 crores imposed a penalty of Rs.500 crores. This Court first noticed
    the huge disparity in the range noticed by the NGT, also taken from
    the public domain which would have clearly indicated the exact figure.
    It was categorically held that generation of revenue, or its quantum,
    would have no nexus with the amount of penalty to be ascertained for
    environmental damages. The methodology adopted by the NGT for
    imposition of penalty was held to be totally unknown to any principle
    of law. We fully agree with the observation and add that rule of law
    does not permit State or its agencies to extract a ‘pound of flesh’,
    even in environmental matters. Though in the present case there
    is an observation made that there was admitted turnover of Rs.550
    crores; we still notice the absence of nexus between the turnover and
    the pollution alleged. In fact the penalty imposed on the appellant,
    by the statutory body was on the basis of a methodology framed
[2025] 8 S.C.R.                                                      1523

               M/s C.L. Gupta Export Ltd. v. Adil Ansari & Ors.


     by the CPCB, on the directions of the NGT. If at all the NGT was of
     the opinion that the EC imposed was minimal or low, it could have
     referred to the methodology framed by the CPCB and not merely
     looked at the revenue generation of the alleged polluter. We hence
     strike out the imposition of compensation of Rs.50 Crores by the
     NGT. However, we make it clear that we have not considered the
     maintainability of the EC imposed by the PCBs and the statement
     regarding the penalty paid by the appellant, has not been verified.
     If the appellant has avenues to challenge the same, they would be
     left liberty, subject to the laws of limitation. The PCB would also be
     entitled to recover any shortfall or impose any further EC on non-
     compliance being detected.
12. Waris Chemicals (P) Ltd.3 dealt with a similar direction to invoke the
    provisions of the PMLA as in this case. It was held, following Vijay
    Madanlal Choudhary v. Union of India5 that Section 3 of the PMLA
    is dependent on illegal gain of property as a result of the criminal
    activity relating to a scheduled offence. As in the facts of the cited
    case, here, neither is there registration of FIR for any scheduled
    offence nor any complaint is filed alleging such offences under the
    various environmental protection statutes scheduled under the PMLA
    and coming within its ambit. This Court had also raised serious
    doubts about the jurisdiction of the NGT to direct the prosecution of
    individuals under the PMLA; which we fully subscribe to. The NGT
    should act within the contours of the powers conferred on it which
    is Section 15 of the NGT Act of 2010. Though such power would be
    available to a Court constituted under the PMLA or to constitutional
    courts, it would not be available for exercise by the NGT, constituted
    to ensure effective and expeditious consideration of cases relating
    to environmental protection and conservation of forests and other
    natural resources including enforcement of any legal right and giving
    relief and compensation for damages to persons and properties. We
    hence set aside the direction issued to the Enforcement Directorate;
    but say nothing on whether there is an offence made out or not,
    which at this stage is not within our ken.
13. We have to necessarily set aside the directions issued other than
    that which permits a continuous monitoring and audit of the pollution


5   (2023) 12 SCC 1
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     control measures to ensure a pollution free, compliance regime.
     Before we leave the matter, with some anguish, we cannot but indicate
     that application of mind is not proportionate to the number of pages.
     The impugned judgment deals elaborately with the environmental
     law, the numerous pollution prevention measures, the guidelines
     and publications issued by various States as also decisions in
     that regard. It also extracts the various reports filed by the Joint
     Committee, the interim orders of the NGT and the objections raised
     by the industry; which would anyway be available in the records
     of the case. In the context of the last of the reports having found
     complete compliance, we cannot but observe that unfortunately this
     was an exercise in futility. Judicious consideration is the sum and
     substance of adjudication and the Courts/Tribunals should restrain
     themselves from engaging in mere rhetoric by stating the law in
     general without particular reference to the facts. We say nothing
     more and allow the appeal setting aside the order of the NGT to
     the extent noticed above.
14. Pending applications, if any, shall stand disposed of.

     Result of the case: Appeal allowed.




     †
         Headnotes prepared by: Nidhi Jain