Supreme Court Interprets “In Notified Ports” Under CRZ Notification: K.T.V. Health Food Pvt. Ltd. vs. Union of India (2023)

Introduction

Date of the Judgment: 01 February 2023
Citation: (2023) INSC 77
Judges: K.M. Joseph, J., B.V. Nagarathna, J., J.B. Pardiwala, J.

Can storage facilities for edible oil be permitted outside the physical boundaries of a notified port under the Coastal Regulation Zone (CRZ) Notification, 2011? The Supreme Court of India recently addressed this crucial question in a case involving K.T.V. Health Food Pvt. Ltd. The core issue revolved around interpreting the phrase “in notified ports” within the context of permissible activities in CRZ-II areas. This judgment clarifies the scope of environmental regulations concerning storage facilities near coastal areas. The judgment was delivered by a three-judge bench comprising Justices K.M. Joseph, B.V. Nagarathna, and J.B. Pardiwala, with the majority opinion authored by Justice K.M. Joseph.

Case Background

K.T.V. Health Food Pvt. Ltd. (the appellant) is engaged in processing and refining edible oil. They import edible oil through Chennai Port. On 05 November 2014, the appellant purchased an existing storage facility located near Ennore Expressway. The appellant sought approvals to lay a 4.5-kilometer underground pipeline from Chennai Port to this storage facility. Permissions were obtained from the Chennai Fishing Harbour Management Committee, the National Highways Authority of India (NHAI), and the Chennai Port Trust. On 10 July 2015, the appellant proposed to the District Coastal Management Authority (DCZMA) for clearance under the 2011 Notification. The proposal was recommended by the DCZMA and forwarded to the Union of India. While the recommendation was pending, the appellant started laying the pipeline with prior permissions. On 19 October 2016, a complaint was filed against the appellant’s activities, leading to an inspection of the facility. The storage facility is located approximately 160 feet from the seashore, separated by the Ennore Express Highway.

Timeline:

Course of Proceedings

The National Green Tribunal (NGT) initially noted that the storage facility was closed and no activity would be carried out until the Union of India made a decision. The Expert Appraisal Committee (EAC) recommended the proposal for CRZ clearance, drawing inspiration from the 2006 Notification, even though no such provision existed in the 2011 Notification. Subsequently, paragraph 4.3 was inserted into the 2011 Notification on 06 February 2018, allowing for ex post facto clearances. Based on this amendment, the State Authorities’ recommendations were sought, and the Union of India granted post facto clearance on 08 March 2019. The NGT, however, later set aside this clearance, ruling that while ex post facto clearances were permissible, the storage facility was illegal because it was not located “in” the Chennai Port as required under the 2011 Notification. The NGT ordered the removal of the storage facility and pipeline and imposed environmental compensation of Rs. 25 lakhs on the appellant. The appellant then appealed to the Supreme Court.

Legal Framework

The case is governed by the Environment Protection Act, 1986, and the Coastal Regulation Zone (CRZ) Notification, 2011, issued under the Act. The CRZ Notification classifies coastal areas into different zones (CRZ-I, CRZ-II, CRZ-III, CRZ-IV, and CRZ-V) based on their ecological sensitivity and development status. CRZ-II areas are defined as those developed up to or close to the shoreline. The 2011 Notification prohibits certain activities in CRZ areas, but also provides for exceptions and permissible activities. Paragraph 8 of the Notification specifies the norms for regulating permissible activities. Specifically, Paragraph 8(II)(vi) of the 2011 Notification allows for “storage of non-hazardous cargo, such as edible oil, fertilizers and food grain in notified ports” within CRZ-II areas. The core legal issue revolves around the interpretation of the term “in notified ports.” Paragraph 4.3 of the 2011 Notification, inserted in 2018, allows for post facto clearance for permissible activities that commenced construction without prior clearance, provided they are not in violation of CRZ norms.

Arguments

Appellant’s Arguments:

• The appellant argued that the term “in notified ports” should be interpreted to mean “in or around the notified ports.” They contended that the storage facility, while not within the exact boundaries of Chennai Port, was located in a Customs Notified Area of the Port and should be considered within the ambit of the notification.
• The appellant highlighted that CRZ-II areas are less sensitive than CRZ-I areas, where storage of edible oil is permitted “within” notified ports. The use of the word “in” in CRZ-II, as opposed to “within,” should allow for a broader interpretation. They relied on the judgment of the Supreme Court in M. Nizamudeen v. Chemplast Sanmar Limited and Others [(2010) 4 SCC 240], where the court interpreted “in the port areas” to mean “in or through the port areas.”
• The appellant also contended that the storage facility reduces traffic congestion at Chennai Port by using pipelines instead of tanker lorries, thus reducing pollution. They cited Electrosteel Steels Limited v. Union of India and Others [(2021) SCC OnLine 1247], Pahwa Plastics Pvt. Ltd. and Another v. Dastak NGO and Others [(2022) SCC OnLine SC 362], and Gajubha Jadeja Jesar v. Union of India and Others [(2022) SCC OnLine SC 993] to support the grant of ex post facto environmental clearance.
• The appellant argued that the principle of proportionality as highlighted in Alembic Pharmaceuticals Ltd. v. Rohit Prajapati and Others [(2020) 17 SCC 157] should be considered.
• The appellant invoked the principle of contemporanea exposito, arguing that the understanding of all authorities, including the Union of India, was that the construction of the storage facility was permissible under CRZ-II. They relied on K.P. Varghese v. Income Tax Officer, Ernakulam and Another [1981 (4) SCC 173] to support this argument.
• The appellant further argued that the matter should be viewed in the context of the principles of Sustainable Development and the Polluter Pays Principle.

Respondent’s Arguments:

• The respondent argued that the word “in” should be interpreted strictly and cannot mean “out.” They contended that the storage facility, located a significant distance from Chennai Port, cannot be considered “in” the port.
• The respondent emphasized the importance of protecting the environment and strictly construing environmental laws. They cited several cases, including Indian Council for Enviro-Legal Action v. Union of India [(1996) 5 SCC 281], S. Jagannathan v. Union of India and others [(1997) 2 SCC 87], Piedade Filomena Gonsalves v. State of Goa [(2004) 3 SCC 445], Vaamika Island (Green Lagoon Resort) v. Union of India [(2013) 8 SCC 760], Kapico Kerala Resorts (P) Ltd. v. State of Kerala [(2020) 3 SCC 18], and Kerala State Coastal Zone Management Authority v. State of Kerala [(2019) 7 SCC 248], to support their position.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues for consideration:

1. What is the correct interpretation of the term “in notified ports” as used in paragraph 8(II)(vi) of the Coastal Regulation Zone (CRZ) Notification, 2011?
2. Whether the storage facility of the appellant, located outside the physical boundaries of Chennai Port but in a Customs Notified Area, can be considered as being “in” a notified port under the CRZ Notification?
3. Whether the ex post facto clearance granted to the appellant was valid under the CRZ Notification?
4. Whether the pipeline can continue to be used if the storage tanks are demolished?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases:

• M. Nizamudeen v. Chemplast Sanmar Limited and Others [(2010) 4 SCC 240] – The appellant relied on this case for the purposive interpretation of “in notified ports.” The Supreme Court distinguished this case, stating that the context and language were different. The Court in this case had interpreted the phrase “in the port areas” to mean “in or through the port areas” to avoid an absurdity. The Supreme Court in the present case held that the rationale and principle of this case were inapposite to the present case.
• Electrosteel Steels Limited v. Union of India and Others [(2021) SCC OnLine 1247] – The appellant cited this case to support the grant of ex post facto environmental clearance. The Supreme Court noted that this case held that the Act does not prohibit the grant of ex post facto environmental clearance.
• Pahwa Plastics Pvt. Ltd. and Another v. Dastak NGO and Others [(2022) SCC OnLine SC 362] – The appellant cited this case to support the grant of ex post facto environmental clearance. The Supreme Court noted that this case followed the view taken in Electrosteel Steels Limited.
• Gajubha Jadeja Jesar v. Union of India and Others [(2022) SCC OnLine SC 993] – The appellant cited this case to support the grant of ex post facto environmental clearance. The Supreme Court noted that this case followed the view taken in Electrosteel Steels Limited.
• Alembic Pharmaceuticals Ltd. v. Rohit Prajapati and Others [(2020) 17 SCC 157] – The appellant cited this case to support the principle of proportionality. The Supreme Court did not comment specifically on this case.
• K.P. Varghese v. Income Tax Officer, Ernakulam and Another [1981 (4) SCC 173] – The appellant relied on this case to support the principle of contemporanea exposito. The Supreme Court distinguished this case, stating that the principle was inapposite in the facts of the case.
• Indian Council for Enviro-Legal Action v. Union of India [(1996) 5 SCC 281] – The respondent cited this case to emphasize the importance of protecting the environment.
• S. Jagannathan v. Union of India and others [(1997) 2 SCC 87] – The respondent cited this case to emphasize the importance of protecting the environment.
• Piedade Filomena Gonsalves v. State of Goa [(2004) 3 SCC 445] – The respondent cited this case to emphasize the importance of protecting the environment.
• Vaamika Island (Green Lagoon Resort) v. Union of India [(2013) 8 SCC 760] – The respondent cited this case to emphasize the importance of protecting the environment.
• Kapico Kerala Resorts (P) Ltd. v. State of Kerala [(2020) 3 SCC 18] – The respondent cited this case to emphasize the importance of protecting the environment.
• Kerala State Coastal Zone Management Authority v. State of Kerala [(2019) 7 SCC 248] – The respondent cited this case to emphasize the importance of protecting the environment.

Statutes and Notifications:

• Environment Protection Act, 1986
• Coastal Regulation Zone (CRZ) Notification, 2011
• Major Ports Act, 1964
• Indian Ports Act, 1908
• Customs Act, 1962

Authorities Considered by the Court

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Supreme Court analyzed the authorities cited by both parties:

• M. Nizamudeen v. Chemplast Sanmar Limited [(2010) 4 SCC 240]: The Court distinguished this case, stating that the context and language were different. The Court in this case had interpreted the phrase “in the port areas” to mean “in or through the port areas” to avoid an absurdity. The Supreme Court in the present case held that the rationale and principle of this case were inapposite to the present case.
• Electrosteel Steels Limited v. Union of India [(2021) SCC OnLine 1247], Pahwa Plastics Pvt. Ltd. and Another v. Dastak NGO and Others [(2022) SCC OnLine SC 362], and Gajubha Jadeja Jesar v. Union of India and Others [(2022) SCC OnLine SC 993]: The Court acknowledged these cases as supporting the principle of ex post facto environmental clearance, but clarified that such clearance could not be granted if the activity was in violation of CRZ norms.
• K.P. Varghese v. Income Tax Officer, Ernakulam and Another [1981 (4) SCC 173]: The Court rejected the application of the principle of contemporanea exposito, holding that the authorities’ understanding cannot override the plain language of the law.
• The Court cited Indian Council for Enviro-Legal Action v. Union of India [(1996) 5 SCC 281], S. Jagannathan v. Union of India and others [(1997) 2 SCC 87], Piedade Filomena Gonsalves v. State of Goa [(2004) 3 SCC 445], Vaamika Island (Green Lagoon Resort) v. Union of India [(2013) 8 SCC 760], Kapico Kerala Resorts (P) Ltd. v. State of Kerala [(2020) 3 SCC 18], and Kerala State Coastal Zone Management Authority v. State of Kerala [(2019) 7 SCC 248] to emphasize the importance of protecting the environment and the need to strictly construe environmental laws.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the need to uphold the environmental regulations as laid down in the CRZ Notification, 2011. The Court emphasized the importance of interpreting the term “in notified ports” strictly to mean within the physical boundaries of the port. The Court was also influenced by the objective of the notification, which is to protect coastal areas and ensure sustainable development. The Court rejected arguments based on traffic reduction and economic benefits, stating that the primary concern was environmental compliance. The Court also highlighted that the notification was not under challenge and it was its duty to give effect to the law as it is found.

Fact:Law Ratio

The Supreme Court’s decision was primarily driven by legal considerations (70%), specifically the interpretation of the CRZ Notification, 2011. Factual aspects of the case (30%) such as the location of the storage facility and the traffic reduction were considered, but were not the primary factors in the Court’s decision.

Logical Reasoning

Issue 1: Interpretation of “in notified ports”

Issue 2: Location of the storage facility

Issue 3: Validity of ex post facto clearance

Issue 4: Continued use of pipeline

Final Decision

The Supreme Court upheld the NGT’s decision, ruling that the storage facility was not located “in” a notified port as required under the Coastal Regulation Zone (CRZ) Notification, 2011. The Court directed the removal of the storage facility and the pipeline. The Court directed the District Coastal Zonal Management Authority to decide on the continued use of the pipeline, considering it is a permitted activity. The Court also upheld the imposition of environmental compensation of Rs. 25 lakhs on the appellant. The Court held that a strict interpretation of the notification was necessary to protect coastal areas and prevent unauthorized construction.

Key Takeaways

• Strict Interpretation of “In”: The term “in” when used in the context of a notified port under the CRZ Notification, 2011, means within the physical boundaries of the port and not “in or around” or in a Customs Notified Area.
• Environmental Compliance: The Supreme Court emphasized the importance of adhering to environmental regulations and strictly construing environmental laws to protect coastal areas.
• Ex Post Facto Clearance: Ex post facto clearance is not permissible if the activity is in violation of CRZ norms.
• Importance of the Notification: The Court emphasized that it was its duty to give effect to the law as it is found in the notification, and the notification is not under challenge.
• Rejection of Extraneous Factors: Arguments based on traffic reduction, economic benefits, and the understanding of the authorities cannot override the clear language of the law.

Conclusion

The Supreme Court’s judgment in K.T.V. Health Food Pvt. Ltd. vs. Union of India provides a significant clarification on the interpretation of “in notified ports” under the CRZ Notification, 2011. The ruling underscores the importance of strict adherence to environmental regulations and the need for a literal interpretation of legal terms. This judgment will serve as a guiding precedent for future cases involving similar issues under the CRZ Notification, ensuring that activities in coastal areas are carried out in accordance with the law and in a manner that protects the environment. The judgment has reiterated the importance of environmental compliance and has clarified the scope of permissible activities in CRZ-II areas, especially concerning storage facilities near coastal areas.