Supreme Court Upholds Coastal Regulation Zone Norms: K.T.V. Health Food Pvt. Ltd. vs. Union of India (2023)

Introduction

Date of the Judgment: 1 February 2023

Citation: 2023 INSC 912

Judges: K.M. Joseph, J., B.V. Nagarathna, J., J.B. Pardiwala, J.

Can a storage facility for edible oil be considered “in” a notified port if it’s located outside the port’s geographical limits but within a customs-notified area? The Supreme Court of India addressed this question in a recent judgment, clarifying the scope of permissible activities within Coastal Regulation Zones (CRZ). The court was tasked with interpreting the terms “in” and “within” in the context of the 2011 Coastal Regulation Zone Notification issued under the Environment Protection Act, 1986. The bench, composed of Justices K.M. Joseph, B.V. Nagarathna, and J.B. Pardiwala, delivered a unanimous verdict.

Case Background

K.T.V. Health Food Pvt. Ltd. is involved in processing and refining edible oil, importing it through Chennai Port. In 2014, the company purchased an existing storage facility located on Ennore Expressway. Subsequently, they sought approvals for laying a 4.5 km underground pipeline from Chennai Port to this facility. Permissions were obtained from various authorities, including the Chennai Fishing Harbour Management Committee, the National Highways Authority of India (NHAI), and the Chennai Port Trust.

In 2015, the company proposed the project to the District Coastal Zone Management Authority (DCZMA). The proposal was forwarded through the Tamil Nadu State Coastal Zonal Management Authority to the Union of India. While the proposal was pending, K.T.V. Health Foods began laying the pipeline. This led to a challenge by Respondent No. 5, who filed an Original Application (O.A.) before the National Green Tribunal (NGT) in 2016. The NGT initially ordered a halt to the operations.

Following an amendment to the 2011 Notification in 2018, which introduced a provision for ex post facto clearances, K.T.V. Health Foods obtained a clearance in 2019. However, this was challenged again by Respondent No. 5 before the NGT, which ultimately set aside the clearance, leading to the present appeal before the Supreme Court.

Timeline:

Course of Proceedings

The National Green Tribunal (NGT) initially disposed of the Original Application (O.A.) noting that the storage facility was closed and directed that no activity be carried out until the Union of India made a decision. Subsequently, the Expert Appraisal Committee, CRZ, recommended the proposal for CRZ clearance, drawing inspiration from the 2006 Notification, despite the absence of a similar provision in the 2011 Notification.

Following the 2018 amendment to the 2011 Notification, which introduced paragraph 4.3 allowing for ex post facto clearances, the State Authorities recommended the proposal. Based on this, the Union of India granted post facto clearance in 2019. This clearance was challenged by Respondent No. 5 before the NGT. The NGT allowed the appeal, setting aside the ex post facto clearance. The NGT held that while ex post facto clearance could be granted, the activity of setting up a storage tank transit terminal outside the Chennai Port was illegal under the 2011 Notification.

Legal Framework

The case revolves around the interpretation of the 2011 Notification issued under the Environment Protection Act, 1986. This notification classifies coastal areas into different Coastal Regulation Zones (CRZ) with varying restrictions and permissions.

The relevant provisions include:

• Paragraph 3: Prohibits certain activities within CRZ, including setting up new industries (with exceptions for waterfront-related activities) and handling hazardous substances. Specifically, it states:
  
  “3. Prohibited activities within CRZ,- The following are declared as prohibited activities within the CRZ, – (i) Setting up of new industries and expansion of existing industries except, – (a) those directly related to waterfront or directly needing foreshore facilities…”

• Paragraph 4: Regulates permissible activities, requiring clearance for activities needing waterfront facilities. It also states:
  
  “4. Regulation of permissible activities in CRZ area.- The following activities shall be regulated except those prohibited in para 3 above,- (i)(a) clearance shall be given for any activity within the CRZ only if it requires waterfront and foreshore facilities…”

• Paragraph 4.3: Introduced in 2018, allows for post facto clearance for permissible activities that commenced without prior clearance, provided they do not violate CRZ norms. It states:
  
  “4.3 Post facto clearance for permissible activities. – (i) all activities, which are otherwise permissible under the provisions of this notification, but have commenced construction without prior clearance, would be considered for regularisation only in such cases wherein the project applied for regularization in the specified time and the projects which are in violation of CRZ norms would not be regularised;”

• Paragraph 8(I)(ii)(f): Specifies norms for CRZ-I, permitting storage of non-hazardous cargo such as edible oil “within” notified ports. It states:
  
  “(f) storage of non- hazardous cargo such as edible oil, fertilizers and food grain within notified plants;”

• Paragraph 8(II)(vi): Specifies norms for CRZ-II, permitting storage of non-hazardous cargo such as edible oil “in” notified ports. It states:
  
  “(vi) storage of non- hazardous cargo, s uch as edible oil, fe rtilizers and food grain in notified po rts;”

The core issue is the interpretation of “within” in CRZ-I and “in” in CRZ-II, specifically concerning storage of non-hazardous cargo. The appellant argued that “in” should be interpreted more broadly than “within,” allowing storage facilities outside the geographical limits of the port but within a customs-notified area.

Arguments

Arguments of the Appellants:

• The appellants argued that the term “in notified ports” should be interpreted to mean “in or around the notified ports.” They contended that since CRZ-II is less sensitive than CRZ-I, the storage of edible oil should be permitted even outside the strict limits of the port.

• The storage container is located in the Customs Notified Area of the Chennai Port, and therefore, should be considered “in” the Chennai Port, even if not within its notified limits.

• Given that CRZ-II permits facilities for the storage of petroleum products and liquified natural gas, it would be absurd to disallow the storage of non-hazardous cargo like edible oil in CRZ-II.

• The appellants relied on judgments like Electrosteel Steels Limited v. Union of India and Others, Pahwa Plastics Pvt. Ltd. and Another v. Dastak NGO and Others, and Gajubha Jadeja Jesar v. Union of India and Others to argue that ex post facto environmental clearances are permissible.

• The appellants contended that the impugned order does not adhere to the Principle of Proportionality, referring to Alembic Pharmaceuticals Ltd. v. Rohit Prajapati and Others, where the industry was allowed to continue on payment of environmental compensation.

• The appellants argued that the principle of contemporaneous exposito should apply, as all authorities, including the Union of India, initially understood the construction of the storage facility as permissible under CRZ-II. They cited K.P. Varghese v. Income Tax Officer, Ernakulam and Another to support this argument.

• The appellants argued that the matter should be viewed in the context of the Principles of Sustainable Development and the Polluter Pays Principle.

Arguments of the Respondents:

• Respondent No. 5 argued that the word “in” cannot mean “out” and that the storage facility, being outside the limits of the notified port, is a violation of environmental law. They contended that environmental laws should be strictly construed.

• Respondent No. 5 relied on a body of case law, including Indian Council for Enviro-Legal Action v. Union of India, S. Jagannathan v. Union of India and others, Piedade Filomena Gonsalves v. State of Goa, Vaamika Island (Green Lagoon Resort) v. Union of India, Kapico Kerala Resorts (P) Ltd. v. State of Kerala, and Kerala State Coastal Zone Management Authority v. State of Kerala, to support their argument that environmental laws must be strictly enforced.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues:

1. What is the correct interpretation of the word “in” as used in Paragraph 8(II)(vi) of the 2011 Notification, specifically concerning the storage of non-hazardous cargo in notified ports?

2. Whether the storage facility of the appellant, located outside the geographical limits of the Chennai Port but within a customs-notified area, can be considered “in” a notified port for the purposes of the 2011 Notification?

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:

Judgment

The Supreme Court analyzed the submissions made by both parties and the authorities cited. Here’s how each submission and authority was treated:

Final Decision

The Supreme Court held that the storage facility of the appellant was not “in” a notified port as required by the 2011 Notification. Consequently, the Court dismissed the appeal and upheld the order of the National Green Tribunal (NGT).

Key Takeaways

The Supreme Court’s judgment in K.T.V. Health Food Pvt. Ltd. vs. Union of India has several important implications:

• Strict Interpretation of Environmental Laws: The judgment emphasizes that environmental laws, particularly those related to Coastal Regulation Zones, must be interpreted strictly. The Court rejected the appellant’s attempt to interpret “in” as “in or around,” highlighting the need for precision in environmental regulations.

• Importance of Adhering to CRZ Norms: The case underscores the importance of adhering to Coastal Regulation Zone norms. The Court’s decision to dismiss the appeal demonstrates that activities not explicitly permitted within the CRZ will not be allowed.

• Location of Storage Facilities: The Court clarified that storage facilities for non-hazardous cargo must be located within the geographical limits of notified ports, not merely within customs-notified areas. This interpretation provides clarity for future projects in CRZ areas.

• Limited Scope of Ex Post Facto Clearances: While the Court acknowledged that ex post facto clearances are permissible, it emphasized that such clearances are subject to compliance with environmental norms. Projects that violate CRZ norms will not be regularized.

• Rejection of Contemporaneous Exposito: The Court rejected the appellant’s argument based on contemporaneous exposito, noting that the initial understanding of the authorities was erroneous and cannot dictate legal interpretation.

Flowchart