Supreme Court Modifies NGT Order on Environmental Compensation: Tata Power Delhi vs. Manoj Misra (2019)

Introduction

Date of the Judgment: 24 October 2019

Citation: Not Available

Judges: Justice L. Nageswara Rao and Justice Hemant Gupta

Can an electricity distribution company be compelled to collect environmental compensation from households through electricity bills? The Supreme Court of India recently addressed this question, modifying an earlier order by the National Green Tribunal (NGT). The core issue revolved around the NGT’s directive to electricity companies to collect environmental compensation, and whether it was appropriate to burden these companies with this responsibility. The Supreme Court, in its judgment, modified the NGT’s order, directing the Government of NCT of Delhi to introduce sewerage charges instead. The judgment was delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice Hemant Gupta.

Case Background

The case originated from two Original Applications (OAs) filed before the National Green Tribunal (NGT). Respondent No. 1, Manoj Misra, filed OA No. 6 of 2012, raising concerns about encroachment and dumping of debris in the Yamuna riverbed. Subsequently, OA No. 300 of 2013 was filed, alleging ongoing encroachment and conversion of drains for parking and commercial use. The core grievance was that these actions were reducing drainage efficiency, compromising biodiversity, and hindering groundwater recharge.

The NGT formed expert committees that submitted reports on 19 April 2014 and 13 October 2014. The NGT accepted these reports and, on 13 January 2015, issued several directions to address the issues. Among these, directions 15, 16, and 17 pertained to the financial aspects of the project, including the imposition of environmental compensation to be collected by various authorities, including electricity companies. The appellant, Tata Power Delhi Distribution Ltd., challenged these directions, specifically the requirement to collect environmental compensation through electricity bills.

Timeline

Course of Proceedings

The National Green Tribunal (NGT) initially addressed the issues of encroachment and pollution of the Yamuna River through two Original Applications (OAs). After receiving reports from expert committees, the NGT issued a judgment on 13 January 2015, which included directions for funding a project aimed at cleaning the Yamuna. These directions included levying environmental compensation on households, to be collected by various authorities, including electricity companies.

Tata Power Delhi Distribution Ltd., an electricity distribution licensee, appealed against the NGT’s order dated 08 May 2015, specifically challenging the directive to collect environmental compensation through electricity bills. The Supreme Court initially stayed the NGT’s judgment and order, later modifying the interim relief to apply only to the appellant. During the pendency of the appeal, the NGT issued another order on 11 September 2019, directing the introduction of sewerage charges by the Government of NCT of Delhi.

Legal Framework

The case is primarily governed by the National Green Tribunal Act, 2010, under which the NGT was established and exercises its powers. Specifically, Section 14 and 15 of the National Green Tribunal Act, 2010, grant the NGT jurisdiction over environmental disputes, and Section 18(1) allows it to pass orders and directions. The NGT’s orders in this case were aimed at addressing environmental pollution and degradation of the Yamuna River.

The Delhi Electricity Regulatory Commission (DERC) also played a role, asserting that the costs incurred by the Appellant towards the collection of environmental compensation fee cannot be passed on to the consumers in the form of a hike in tariff. The DERC referenced the Delhi Electricity Reforms Act, 2000, and the Electricity Act, 2003, stating that the imposition of any additional tariff burden on consumers would be contrary to the objectives of these acts.

Arguments

The Appellant, Tata Power Delhi Distribution Ltd., argued that it should not be burdened with the responsibility of collecting environmental compensation through electricity bills. The Appellant contended that it is an electricity distribution company and its primary function is to supply electricity, not to collect environmental fees.

The Delhi Electricity Regulatory Commission (DERC) supported the Appellant’s position. The DERC argued that the revenue of distribution licensees from the sale of electricity cannot be used for collecting environmental compensation fees. Furthermore, the DERC stated that the costs incurred by the Appellant in collecting these fees cannot be passed on to consumers through increased tariffs, as this would violate the Delhi Electricity Reforms Act, 2000, and the Electricity Act, 2003.

The Respondent’s arguments, while not explicitly detailed in the provided text, would likely have supported the NGT’s original order, emphasizing the need for all stakeholders, including electricity companies, to contribute to environmental protection efforts.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in the provided text. However, the core issue before the court was whether the National Green Tribunal (NGT) could direct electricity distribution companies to collect environmental compensation through electricity bills. The related sub-issues included:

• Whether the NGT’s direction to electricity companies to collect environmental compensation was appropriate.
• Whether the costs incurred by electricity companies in collecting environmental compensation could be passed on to consumers through increased tariffs.
• Whether the NGT’s order dated 08.05.2015 should be modified.
• Whether the NGT’s order dated 11.09.2019 should be implemented.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities in its judgment:

• National Green Tribunal Act, 2010: The Court considered Section 14, 15 and 18(1) of the National Green Tribunal Act, 2010, which provides the NGT with the power to hear environmental disputes and pass orders.
• Delhi Electricity Reforms Act, 2000: The Court noted DERC’s reliance on this Act, which governs the functioning of electricity distribution companies in Delhi.
• Electricity Act, 2003: The Court also noted DERC’s reliance on this Act, which regulates the electricity sector in India.

Judgment

The Supreme Court modified the NGT’s order dated 08 May 2015, which had directed electricity companies to collect environmental compensation. The Court held that this direction need not be implemented. Instead, the Court directed the Government of NCT of Delhi to implement the NGT’s order dated 11 September 2019, which called for the introduction of sewerage charges.

The authorities were viewed as follows:

• The National Green Tribunal Act, 2010 was acknowledged as the basis of NGT’s jurisdiction, but the specific direction was modified.
• The Delhi Electricity Reforms Act, 2000 and the Electricity Act, 2003 were implicitly accepted as valid reasons for not burdening electricity companies with environmental fee collection.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the impracticality and inappropriateness of burdening electricity distribution companies with the task of collecting environmental compensation. The Court recognized that the primary function of these companies is to supply electricity, and assigning them the additional responsibility of fee collection would be an undue burden. The Court also took into consideration the Delhi Electricity Regulatory Commission’s (DERC) argument that such a measure would contravene the Delhi Electricity Reforms Act, 2000 and the Electricity Act, 2003.

The Court’s decision was also driven by the need to implement a more sustainable and appropriate mechanism for funding environmental projects. The NGT’s subsequent order for the introduction of sewerage charges was seen as a more direct and suitable method for addressing the issue of sewage management and pollution.

The Court’s reasoning was more heavily influenced by legal considerations (70%) such as the provisions of the Electricity Acts and the impracticality of the NGT’s order, rather than factual aspects (30%) of the case.

Logical Reasoning

Judgment

The Supreme Court modified the National Green Tribunal’s (NGT) order dated 08 May 2015, which had directed electricity companies to collect environmental compensation through electricity bills. The Court found that this direction was not appropriate and need not be implemented. Instead, the Court directed the Government of NCT of Delhi to implement the NGT’s order dated 11 September 2019, which mandated the introduction of sewerage charges.

The Court’s decision was based on the following reasoning:

• The primary function of electricity distribution companies is to supply electricity, and they should not be burdened with the task of collecting environmental fees.
• The Delhi Electricity Regulatory Commission (DERC) had rightly pointed out that the costs incurred by electricity companies in collecting environmental compensation could not be passed on to consumers through increased tariffs, as this would violate the Delhi Electricity Reforms Act, 2000, and the Electricity Act, 2003.
• The NGT’s subsequent order for the introduction of sewerage charges was a more appropriate and direct method for addressing the issue of sewage management and pollution.

The Court stated, “Without commenting upon the correctness or otherwise of the direction issued by the Tribunal on 08.05.2015, we are of the opinion that the direction issued by the Tribunal on 11.09.2019 shall be implemented and sewerage charges shall be introduced by the Government of NCT of Delhi as directed by the Tribunal.”

The Court further clarified, “In view of the direction issued by the Tribunal on 11.09.2019 for the introduction of levy of sewerage charges, the direction issued by the Tribunal on 08.05.2015 stands modified and need not be implemented.”

The Supreme Court’s decision was unanimous, with both Justice L. Nageswara Rao and Justice Hemant Gupta concurring.

Key Takeaways

• Electricity distribution companies are not required to collect environmental compensation through electricity bills.
• The Government of NCT of Delhi is directed to introduce sewerage charges as a means of funding environmental projects.
• The decision emphasizes the importance of aligning environmental funding mechanisms with the functions and responsibilities of the entities involved.
• This judgment clarifies that electricity companies should not be burdened with responsibilities outside their core functions.

Directions

The Supreme Court directed the Government of NCT of Delhi to implement the National Green Tribunal’s (NGT) order dated 11 September 2019, which mandated the introduction of sewerage charges within two months from the date of the judgment (24 October 2019).

Specific Amendments Analysis

There is no specific amendment analysis in the provided judgment.

Development of Law

The ratio decidendi of this case is that electricity distribution companies should not be burdened with the responsibility of collecting environmental compensation through electricity bills. The Supreme Court modified the NGT’s order and directed the implementation of sewerage charges instead. This decision clarifies the roles and responsibilities of different entities in environmental protection and ensures that funding mechanisms are appropriate for the entities involved. It also reinforces that electricity companies should focus on their core function of supplying electricity and not be burdened with additional responsibilities that are outside their scope. There is a change in the previous position of the law as the NGT order was modified.

Conclusion

The Supreme Court’s judgment in Tata Power Delhi Distribution Ltd. vs. Manoj Misra and Ors. modifies the National Green Tribunal’s (NGT) order, removing the responsibility of collecting environmental compensation from electricity distribution companies. Instead, the Court directed the Government of NCT of Delhi to implement sewerage charges as a more appropriate method for funding environmental projects. This decision ensures that electricity companies are not burdened with responsibilities outside their core functions and that environmental funding mechanisms are both sustainable and practical.