LEGAL ISSUE: Interpretation of “expansion” under the Environment Impact Assessment (EIA) Notification, 2006.
CASE TYPE: Environmental Law
Case Name: Keystone Realtors Pvt. Ltd. vs. Shri Anil V Tharthare & Ors.
Judgment Date: December 3, 2019
Introduction
Date of the Judgment: December 3, 2019
Citation: Civil Appeal No. 2435 of 2019
Judges: Dr. Dhananjaya Y Chandrachud, J and Ajay Rastogi, J
Can a construction project increase its built-up area after obtaining environmental clearance (EC), without further scrutiny? The Supreme Court of India addressed this question in a case involving Keystone Realtors Pvt. Ltd., clarifying the scope of “expansion” under the Environment Impact Assessment (EIA) Notification, 2006. The court examined whether an increase in construction area after the initial EC requires a fresh application and review. The judgment was delivered by a two-judge bench comprising of Dr. Dhananjaya Y Chandrachud, J and Ajay Rastogi, J.
Case Background
Keystone Realtors Pvt. Ltd. (the appellant) initiated a residential redevelopment project named ‘Oriana Residential Project’ in Mumbai. On June 8, 2010, they received a Commencement Certificate. Initially, the project’s construction area was 8,720.32 square meters. This was later expanded to 32,395.17 square meters, which necessitated an Environmental Clearance (EC) under the EIA Notification, as it exceeded 20,000 square meters.
The State Level Expert Appraisal Committee for Maharashtra (SEAC) recommended granting the EC, and on May 2, 2013, the State Level Environment Impact Assessment Authority for Maharashtra (SEIAA) granted the EC. The project’s total construction area at this point was 32,395.17 square meters. Subsequently, on September 24, 2013, the appellant informed the Environment Department of a further increase of 8,085.71 square meters, bringing the total construction area to 40,480.88 square meters. The appellant sought an ‘amendment’ to the existing EC, which was granted by the SEIAA on March 13, 2014, citing a “marginal increase.”
Shri Anil V Tharthare (the first respondent), a resident of the area, challenged the amended EC before the National Green Tribunal (NGT). The NGT initially rejected the challenge, but the Bombay High Court reversed this decision, holding that the appeal was not maintainable at the behest of the first respondent and that the challenge was barred by limitation. However, the dispute was later transferred to the Principal Bench of the NGT, which ultimately ruled against the appellant.
Timeline:
| Date | Event |
|---|---|
| June 8, 2010 | Appellant received Commencement Certificate for the project. |
| Initial Construction | Total construction area was 8,720.32 square meters. |
| Later Construction | Total construction area increased to 32,395.17 square meters. |
| May 2, 2013 | SEIAA granted Environmental Clearance (EC). |
| September 24, 2013 | Appellant informed of further increase of 8,085.71 square meters, totaling 40,480.88 square meters. |
| March 13, 2014 | SEIAA granted an ‘amendment’ to the EC. |
| May 4, 2016 | Pune Bench of the NGT rejected the applications questioning the maintainability of the proceedings. |
| August 12, 2016 | The Bombay High Court held that the appeal was not maintainable at the behest of the first respondent. |
| July 31, 2018 | The dispute was transferred from the Pune Bench of the NGT to the Principal Bench. |
| December 3, 2019 | Supreme Court dismissed the appeal. |
Legal Framework
The core of this case revolves around the interpretation of the EIA Notification, specifically Paragraph 2 and Paragraph 7. The EIA Notification aims to protect the environment by regulating new projects and expansions of existing projects.
Paragraph 2 of the EIA Notification states:
“2. Requirement for prior Environmental Clearance (EC): – The following projects or activities shall require prior environmental clearance from the concerned regulatory authority… before any construction work, or preparation of land by the project management except for securing the land, is started on the project or activity: (i) All new projects or activities listed in the Schedule to this notification; (ii) Expansion and modernisation of existing projects or activities listed in the Schedule to this notification with addition of capacity beyond the limits specified for the concerned sector, that is, projects or activities which cross the threshold limits given in the Schedule after expansion or modernisation; (iii) Any change in product – mix in an existing manufacturing unit included in Schedule beyond the specified range.”
The Schedule to the EIA Notification categorizes projects into Category A and Category B based on their potential environmental impact. Category A projects require EC from the Ministry of Environment, Forests and Climate Change, while Category B projects require EC from the SEIAA, based on the recommendations of the SEAC.
Paragraph 7(ii) of the EIA Notification outlines the procedure for obtaining EC for expansion or modernization projects:
“7(ii) Prior Environmental Clearance (EC) process for Expansion or Modernisation of Change of product mix in existing projects: All applications seeking prior environmental clearance for expansion with increase in the production capacity beyond the capacity for which prior environmental clearance has been granted under this notification or with increase in either lease area or production capacity in the case of mining projects or for the modernisation of an existing unit with increase in the total production capacity beyond the threshold limit prescribed in the Schedule to this notification through change in process and or technology or involving a change in the product mix shall be made in Form 1 and they shall be considered by the concerned Expert Appraisal Committee or State Level Expert Appraisal Committee within sixty days, who will decide on the due diligence necessary including preparation of EIA and public consultation and the application shall be appraised accordingly for grant of environmental clearance.”
Entry 8 of the Schedule to the EIA Notification deals with Building and Construction projects:
8 – Building / Construction projects / Area Development projects and Townships
8(a) Building and Construction projects ≥20,000 sq mts and <1,50,000 sq mts of built -up area Built-up area for covered construction: in the case of facilities open to the sky, it will be the activity area
8(b) Townships and Area Development projects Covering an area ≥ 50 ha and or built up area ≥1,50,000 sq mts All projects under item 8(b) shall be appraised as Category B1
Arguments
Appellant’s Submissions (Keystone Realtors Pvt. Ltd.):
- The appellant argued that when construction began, the project’s area was 8,720.32 square meters, below the 20,000 square meter threshold requiring an EC.
- When the project exceeded 20,000 square meters, the appellant obtained a valid EC on May 2, 2013.
- The subsequent increase of 8,085.71 square meters was a marginal increase, bringing the total to 40,480.88 square meters, which is within the 150,000 square meter limit of Entry 8(a). Therefore, this was not an “expansion” requiring a fresh EC.
- Clause (ii) of Paragraph 2 applies only when a project crosses the lower or upper threshold limits. Increases within these limits do not constitute an “expansion.”
- The increase was marginal and did not have an adverse environmental impact.
- The SEIAA considered the request for amendment and issued it, noting the marginal increase.
- The NGT had no basis to impose a fine of Rupees one crore.
First Respondent’s Submissions (Shri Anil V Tharthare):
- Any expansion beyond the “threshold limit” requires a fresh EC under clause (ii) of Paragraph 2 read with Paragraph 7(ii). The second increase was an expansion beyond the threshold of 20,000 square meters.
- Once the threshold is breached, any expansion, even within the upper threshold, requires a fresh Form 1 and review by the Expert Appraisal Committee or the SEAC.
- The appellant’s interpretation would defeat the purpose of the EIA Notification, allowing incremental increases without fresh ECs.
- The law must be followed as prescribed. The SEIAA was required to place the matter before the SEAC for appraisal.
- The EIA Notification operationalizes the precautionary principle, which must be given effect.
Submissions Table
| Main Submission | Appellant’s Sub-Submissions | Respondent’s Sub-Submissions |
|---|---|---|
| Requirement of EC |
✓ No EC required initially as project was below 20,000 sq m. ✓ Valid EC obtained when project crossed 20,000 sq m. ✓ Second increase was marginal and within upper limit, not an “expansion.” |
✓ Any expansion beyond the threshold requires a fresh EC. ✓ Second increase was beyond the 20,000 sq m threshold. |
| Procedure for Expansion |
✓ Clause (ii) of Paragraph 2 applies only when thresholds are crossed. ✓ No fresh Form 1 or EC required for marginal increases within limits. |
✓ Any expansion after breaching the lower threshold requires a fresh Form 1 and SEAC review. ✓ Procedure under Paragraph 7(ii) was not followed. |
| Purpose of EIA Notification | ✓ Increase was marginal, no adverse environmental impact. |
✓ Appellant’s interpretation defeats the purpose of EIA Notification. ✓ Allows incremental increases without scrutiny. |
| Compliance with Law | ✓ SEIAA applied its mind and granted amendment. | ✓ Law must be followed as prescribed; SEIAA should have placed before SEAC. |
| Precautionary Principle | – | ✓ EIA Notification operationalizes the precautionary principle. |
Issues Framed by the Supreme Court
The main issue before the Supreme Court was:
- Whether the ‘amended’ EC dated March 13, 2014, granted by the SEIAA without following the procedure stipulated in Paragraph 7(ii) of the EIA Notification, is valid.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reason |
|---|---|---|
| Validity of Amended EC | Invalid | The Court held that the amended EC was invalid as the procedure under Paragraph 7(ii) of the EIA Notification was not followed. The SEIAA should have required an updated Form 1 and a review by the SEAC. |
Authorities
The court considered the following authorities:
Authorities Table
| Authority | Court | How it was used |
|---|---|---|
| EIA Notification, 2006 | Ministry of Environment and Forests | Interpreted and applied to the facts of the case. |
| Paragraph 2, EIA Notification, 2006 | Ministry of Environment and Forests | Interpreted to determine the scope of “expansion”. |
| Paragraph 7(ii), EIA Notification, 2006 | Ministry of Environment and Forests | Interpreted to determine the procedure for expansion. |
| Entry 8 of the Schedule, EIA Notification, 2006 | Ministry of Environment and Forests | Interpreted to understand the threshold limits. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellant’s argument that no EC was required initially as the area was below 20,000 sq m. | Accepted as a matter of fact but not relevant to the issue of expansion. |
| Appellant’s argument that a valid EC was obtained when the project crossed 20,000 sq m. | Accepted as a matter of fact but not relevant to the issue of expansion. |
| Appellant’s argument that the second increase was marginal and within the upper limit, not an “expansion.” | Rejected. The Court held that any increase beyond the limits for which prior EC was obtained, even within the upper limit, requires a fresh application. |
| Appellant’s argument that Clause (ii) of Paragraph 2 applies only when thresholds are crossed. | Rejected. The Court clarified that Paragraph 7(ii) requires a fresh application for any expansion beyond the previously granted EC. |
| Appellant’s argument that the increase was marginal and had no adverse environmental impact. | Rejected. The Court stated that it cannot lay down a bright-line test for what constitutes a marginal increase and that any expansion requires scrutiny. |
| Appellant’s argument that the SEIAA applied its mind and granted an amendment. | Rejected. The Court held that the SEIAA was required to follow the procedure under Paragraph 7(ii) and place the matter before the SEAC. |
| Appellant’s argument that the NGT had no basis to impose the fine. | Rejected. The Court upheld the NGT’s direction to impose a fine. |
| Respondent’s argument that any expansion beyond the threshold requires a fresh EC. | Accepted. The Court agreed that any expansion beyond the capacity for which prior EC was granted requires a fresh application. |
| Respondent’s argument that any expansion after breaching the lower threshold requires a fresh Form 1 and SEAC review. | Accepted. The Court held that the procedure under Paragraph 7(ii) must be followed. |
| Respondent’s argument that the appellant’s interpretation defeats the purpose of the EIA Notification. | Accepted. The Court agreed that allowing incremental increases without fresh ECs would defeat the purpose of the EIA Notification. |
| Respondent’s argument that the law must be followed as prescribed and the SEIAA should have placed the matter before the SEAC. | Accepted. The Court held that the SEIAA was bound to follow the procedure under Paragraph 7(ii). |
| Respondent’s argument that the EIA Notification operationalizes the precautionary principle. | Accepted. The Court emphasized that the EIA Notification must be interpreted to give effect to the precautionary principle. |
How each authority was viewed by the Court?
The Court relied heavily on the EIA Notification, 2006, and its various provisions.
- EIA Notification, 2006: The court interpreted the notification as a whole, emphasizing the need for environmental protection and the importance of assessing the environmental impact of projects.
- Paragraph 2, EIA Notification, 2006: The court clarified that while clause (ii) of Paragraph 2 refers to crossing threshold limits, it must be read with Paragraph 7(ii).
- Paragraph 7(ii), EIA Notification, 2006: The court emphasized that this provision requires a fresh application for any expansion beyond the capacity for which prior EC was obtained, even if within the upper threshold limit.
- Entry 8 of the Schedule, EIA Notification, 2006: The court used this entry to understand the threshold limits for building and construction projects, but clarified that it does not allow for incremental increases within the limits without scrutiny.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need to uphold the environmental protection objectives of the EIA Notification. The Court emphasized that any expansion of a project, even within the threshold limits, requires scrutiny to ensure that environmental impacts are properly assessed and mitigated.
Sentiment Analysis Ranking
| Reason | Percentage |
|---|---|
| Upholding the environmental protection objectives of the EIA Notification | 40% |
| Ensuring proper assessment and mitigation of environmental impacts | 30% |
| Strict adherence to the procedure under Paragraph 7(ii) of the EIA Notification | 20% |
| Preventing incremental increases in project size without scrutiny | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The Court’s reasoning was based on a combination of legal interpretation and a focus on the factual implications of the case. The legal analysis of the EIA Notification and its provisions played a major role in the court’s decision.
Logical Reasoning
The Court considered the arguments of both sides, but ultimately rejected the appellant’s interpretation of the EIA Notification, noting that it would defeat the purpose of the notification and allow for incremental increases in project size without proper scrutiny. The Court emphasized that the EIA Notification is intended to ensure that any new or additional environmental impact is assessed and certified by the relevant regulatory authorities.
The Court also considered the potential implications of its decision, noting that it was not for the Court to lay down a bright-line test for what constitutes a “marginal” increase. The Court stated that if the government were to prescribe a one-time “marginal” increase, it could be subject to a lower standard of scrutiny, provided that it does not violate the precautionary principle. However, as the EIA Notification currently stands, any expansion within the limits prescribed by the Schedules would be subject to the procedure set out in Paragraph 7(ii).
The court quoted from the report of the committee constituted by the Ministry of Environment and Forests, Government of India which specifically recommended against the adoption of an amendment which would have exempted modernisation and expansion of projects based on a self certification by project authorities that there is no increase in pollution load. The court noted:
“The amendments propose to exempt modernisation and expansion of projects based on a self certification by project authorities that there is no increase in pollution load. It is totally unacceptable that the modernisation and expansion of projects be removed from the environmental clearance regime, with or without the requirement of self certification.”
The Court also highlighted that the construction had already been completed, which defeated the purpose of the EIA Notification. The Court upheld the NGT’s direction to deposit Rupees one crore and to set up an expert committee to evaluate the impact of the project and suggest remedial measures.
The final decision was a dismissal of the appeal, with no order as to costs.
Key Takeaways
- Any expansion of a construction project beyond the limits for which prior Environmental Clearance (EC) was obtained, requires a fresh application and review, even if the expansion is within the upper threshold limit prescribed in the Schedule to the EIA Notification.
- Project proponents cannot incrementally increase the size of a project without proper scrutiny by the Expert Appraisal Committee or the State Level Expert Appraisal Committee.
- The procedure set out under Paragraph 7(ii) of the EIA Notification must be strictly followed.
- The judgment reinforces the precautionary principle in environmental law, emphasizing the need to assess and mitigate environmental impacts before construction.
Directions
The Supreme Court upheld the directions of the NGT, which included:
- The appellant was directed to deposit Rupees one crore with the Central Pollution Control Board.
- An expert committee was to continue its evaluation of the appellant’s project.
- The committee was directed to suggest remedial measures to bring the environmental impact of the project as close as possible to that contemplated in the EC dated 2 May 2013.
- The committee was directed to suggest the compensatory exaction to be imposed on the appellant.
Specific Amendments Analysis
The judgment does not discuss any specific amendments.
Development of Law
The ratio decidendi of this case is that any expansion of a construction project beyond the limits for which prior Environmental Clearance (EC) was obtained, requires a fresh application and review, even if the expansion is within the upper threshold limit prescribed in the Schedule to the EIA Notification. This clarifies the interpretation of “expansion” under the EIA Notification and reinforces the need for strict adherence to environmental regulations. There is no change in the previous position of law, but this judgment clarifies the interpretation of the existing provisions.
Conclusion
In conclusion, the Supreme Court dismissed the appeal, holding that the amended EC granted to Keystone Realtors was invalid. The Court clarified that any expansion of a project beyond the limits for which prior EC was obtained requires a fresh application and review, even if the expansion is within the upper threshold limit. This judgment reinforces the importance of environmental protection and strict adherence to the procedures outlined in the EIA Notification.
Category
Parent Category: Environmental Law
Child Categories:
- Environment Impact Assessment
- EIA Notification, 2006
- Paragraph 2, EIA Notification, 2006
- Paragraph 7(ii), EIA Notification, 2006
- Building and Construction Projects
- Environmental Clearance
- Expansion of Projects
- Precautionary Principle
- National Green Tribunal
Parent Category: EIA Notification, 2006
Child Category: Paragraph 2, EIA Notification, 2006
Parent Category: EIA Notification, 2006
Child Category: Paragraph 7(ii), EIA Notification, 2006
FAQ
Q: What does this judgment mean for construction projects?
A: This judgment means that if you are undertaking a construction project, any increase in the built-up area beyond what was initially approved in your environmental clearance (EC) requires a fresh application and review. You cannot simply seek an amendment to your existing EC.
Q: Does this apply even if the increase is small?
A: Yes, the Supreme Court has clarified that any expansion beyond the limits for which prior EC was obtained requires a fresh application, even if the expansion is within the upper threshold limit. The court did not define a ‘marginal increase’ and stated that it is not for the court to do so.
Q: What is the EIA Notification?
A: The EIA Notification is a set of rules issued by the Ministry of Environment, Forests and Climate Change to regulate new projects and expansions of existing projects that may have an impact on the environment. It aims to ensure that environmental impacts are assessed and mitigated.
Q: What is Paragraph 7(ii) of the EIA Notification?
A: Paragraph 7(ii) outlines the procedure for obtaining EC for expansion or modernization projects. It requires a fresh application in Form 1 and review by the Expert Appraisal Committee or the State Level Expert Appraisal Committee.
Q: What is the precautionary principle?
A: The precautionary principle is a principle of environmental law that states that if there is a risk of serious or irreversible damage to the environment, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation.
Q: What is the role of the Expert Appraisal Committee (EAC) and the State Level Expert Appraisal Committee (SEAC)?
A: The EAC and SEAC are committees that review applications for environmental clearances. They assess the potential environmental impacts of a project and recommend whether or not an EC should be granted.
Q: What is the role of the State Level Environment Impact Assessment Authority (SEIAA)?
A: The SEIAA is the authority that grants environmental clearances for Category B projects, based on the recommendations of the SEAC.
Q: What is the consequence of not following the procedure?
A: Not following the procedure outlined in the EIA Notification can result in the project being deemed illegal and can lead to fines and other penalties.
Q: What should I do if I plan to expand my project?
A: If you plan to expand your project, you should consult with an environmental law expert and ensure that you follow the procedure set out in the EIA Notification, including submitting a fresh application and obtaining a new EC.