Supreme Court Upholds Fine, Sets Aside Demolition Order in Coastal Zone Dispute: Kerala State Coastal Management Authority vs. DLF Universal Limited (2018)

Introduction

Date of the Judgment: 10 January 2018

Citation: (2018) INSC 12

Judges: Rohinton Fali Nariman, J., Sanjay Kishan Kaul, J.

Can a regulatory body, after years of inaction, suddenly demand the demolition of a nearly completed construction project citing environmental violations? The Supreme Court of India tackled this complex question in a case involving the Kerala State Coastal Management Authority (KSCMA) and DLF Universal Limited, a real estate developer. The court had to consider whether the construction of a residential complex by DLF, allegedly in violation of Coastal Regulation Zone (CRZ) norms, warranted demolition or could be regularized with a fine. The judgment highlights the importance of timely action by regulatory bodies and the need for clarity in environmental regulations. The bench comprised Justices Rohinton Fali Nariman and Sanjay Kishan Kaul, with the majority opinion authored by Justice Sanjay Kishan Kaul.

Case Background

In 2006, DLF Universal Limited purchased approximately 5.12 acres of land on the eastern bank of Chilavannurkayal (backwaters) in Kerala, with plans to build a multi-story residential complex consisting of about 185 units. The area, located within the Kochi Corporation limits, was already highly developed with a lot of low-lying areas, tidal marshes, and filtration ponds, which had been reclaimed for various construction activities by third parties.

DLF obtained a building permit from the Corporation of Cochin on 22nd October 2007, under the Kerala Building Rules, 1984. They also secured No Objection Certificates (NOCs) from the State Pollution Control Board, the Fire & Rescue Department, and height clearance from the Navy. On 27th November 2007, DLF applied for environmental clearance from the Ministry of Environment and Forests (MoEF).

The MoEF had issued a notification on 14th September 2006, requiring prior environmental clearance for new projects. This notification superseded an earlier one from 27th January 1994. It mandated that projects obtain clearance from the Central Government or the State Environment Impact Assessment Authority (SEIAA). The SEIAA would base its decisions on recommendations from the State or Union Territory Level Expert Appraisal Committee (SEAC). If these authorities were not set up, a project would be treated as a Category ‘A’ project.

The authorities were constituted only on 19th December 2011. DLF’s project was initially examined by the Central Expert Appraisal Committee (CEAC), which approved it as a “Silver Grading” project. The CEAC suggested that since part of the project area fell under the Coastal Regulation Zone (CRZ), DLF should obtain separate CRZ clearance. DLF then applied to the Centre for Earth Science Studies (CESS) on 23rd September 2008, for a CRZ status report. CESS issued a positive recommendation in May 2009, stating the project land was in CRZ II and there were no CRZ I or I(i) areas within or near the project site.

Despite these initial clearances, DLF commenced construction without waiting for formal environmental clearance, assuming a deemed clearance due to the lack of communication from the authorities. The Kerala Coastal Zone Management Authority (KCZMA) issued a letter on 21st January 2010, seeking an explanation for starting construction without their approval. However, on 20th March 2010, KCZMA decided to recommend the project to MoEF after discussing a site inspection report, stating that a narrow canal near the site was only a drainage canal.

Timeline

Course of Proceedings

The matter first came up before a single judge of the Kerala High Court, who ruled against DLF, categorizing the entire construction as illegal and ordering its demolition. This decision was appealed by DLF in Writ Appeal No. 1987/2014. Additionally, DLF filed Writ Petition No. 20555/2015, challenging the report of the three-member committee appointed by KCZMA. Several apartment buyers also filed writ petitions (Nos. 2810/2015 and 3375/2015), seeking occupancy certificates.

The Division Bench of the High Court, while broadly agreeing with the single judge’s findings, overturned the demolition order. Instead, it directed the regularization of the construction upon payment of a fine of Rs. 1 crore. This amount was to be deposited with the District Collector, Ernakulam, to be used for environmental restoration in the Chilavannur river area. The writ petitions filed by the apartment buyers were dismissed, but they were allowed to seek occupancy certificates upon payment of the costs. Writ Petition No. 20555/2015 was also dismissed.

Legal Framework

The case primarily revolves around the interpretation and application of the Environment Protection Act, 1986, and the notifications issued under it, particularly the notification dated 14th September 2006. This notification mandates prior environmental clearance for new projects. Specifically, the following provisions are relevant:

• Section 3 of the Environment Protection Act, 1986: This section empowers the Central Government to take measures to protect and improve the environment. Sub-section (1) and clause (v) of sub-section (2) of Section 3, read with clause (d) of sub-rule (3) of Rule 5 of the Environment Protection Rules, 1986, provide the basis for the 14th September 2006 notification.
  
  “Section 3 of the Environment Protection Act, 1986 empowers the Central Government to take measures to protect and improve the environment.”
• Clause 8 of the Notification dated 14th September 2006: This clause deals with the grant or rejection of prior environmental clearance. Sub-clause (iii) states that if the regulatory authority does not communicate its decision within the specified period, the applicant may proceed as if the clearance has been granted or denied based on the recommendations of the Expert Appraisal Committee.
  
  “In the event that the decision of the regulatory authority is not communicated to the applicant within the period specified in sub-paragraphs (i) or (ii) above, as applicable, the applicant may proceed as if the environment clearance sought for has been granted or denied by the regulatory authority in terms of the final recommendations of the Expert Appraisal Committee or State Level Expert Appraisal Committee concerned.”

The notification of 14th September 2006, was issued in furtherance of the environment protection in exercise of power conferred by sub-section (1) and clause (v) of sub-section (2) of Section 3 of the Environment Protection Act, 1986 read with clause (d) of sub-rule (3) of Rule 5 of the Environment Protection Rules, 1986.

Arguments

The arguments presented before the Supreme Court were multifaceted, with each party emphasizing different aspects of the case.

Submissions of KCZMA/Appellant:

• Violation of CRZ norms: The KCZMA argued that DLF had violated CRZ norms by reclaiming land, which was prohibited since 1991. They contended that land was reclaimed in 2005-06 and 2009-11.

• Natural stream: The KCZMA argued that the imaginary line to be drawn for CRZ regulations was cutting across a natural backwater canal and not a man-made drainage canal as claimed by DLF.

• Prior clearance: The KCZMA argued that DLF should have obtained CRZ clearance before commencing construction. The integrated environment/CRZ clearance granted by SEIAA on 11.12.2013 should have been obtained prior to construction.

• SEIAA procedure: The SEIAA ought to have based its decisions on the recommendations of the SEAC, which was not done. The SEAC had only considered the environment clearance and not the CRZ clearance for the project.

• FSI and FAR: The KCZMA contended that the FSI and FAR status of the project was also in violation of the Town and Country Plan Regulation.

• Reliance on Subsequent Reports: The KCZMA relied heavily on subsequent reports, particularly those from CESS after 2009, to allege violations from the beginning.

Submissions of DLF:

• Permissions and obligations: DLF argued that while they were obligated to obtain permissions, regulatory authorities had a corresponding obligation to facilitate informed decisions and compliances.

• No reclamation: DLF strongly rebutted the allegation of land reclamation in 2005-2006 and 2009-2011. They pointed out that the land was purchased through registered sale deeds, and if any reclamation had occurred, it was not their doing.

• Nature of the property: DLF referred to the Coastal Regulation Zone Land Use Map No.34A prepared in 1996, which showed that the area where they constructed was not marked as filtration ponds, contrary to KCZMA’s claims.

• Google Maps: DLF contested the interpretation of Google Maps images, arguing that the dark areas were not necessarily water bodies. They presented reports from the Institute of Remote Sensing to support their claim.

• CESS reports: DLF analyzed the successive CESS reports, pointing out contradictions and alleging that Mr. K.V. Thomas was a party to these contradictory reports.

• Deemed clearance: DLF argued that since there was no communication from the authorities, they perceived a deemed clearance. KCZMA itself had recommended the proposal to MoEF, and thus, there was no impediment to proceeding with the project.

• No Explanation Sought: DLF emphasized that no explanation was sought from them in respect of the observations of September, 2011 and 2012 reports.

• Integrated clearance: DLF highlighted that the project was ultimately cleared on 11.12.2013, and it was only after the construction was complete that different aspects were triggered off at the behest of Mr. Antony.

Submissions of Cochin Municipal Corporation:

• FAR Sanction: The Corporation confined its arguments to the issue of FAR sanction of 1.99, stating that the maximum FAR of the Corporation of Cochin is 2.5 as clarified by MoEF.

Submissions of State of Kerala:

• Support for KCZMA: The State of Kerala largely supported the stand of KCZMA.

• Concern over directions: The State was concerned about the directions that made the Collector responsible for managing the Rs. 1 crore fine.

Submissions of Ministry of Environment and Forests (MoEF):

• Contradictory Stands: The MoEF took contradictory stands in its affidavits, initially affirming that the project adhered to the conditions and later alleging violations of CRZ and EIA notifications.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in a dedicated section. However, the primary issues that the court addressed were:

1. Whether the construction of the residential complex by DLF violated the Coastal Regulation Zone (CRZ) norms.
2. Whether the land on which the construction was made was reclaimed illegally.
3. Whether the project was entitled to a deemed environmental clearance.
4. Whether the integrated CRZ-cum-environment clearance granted by SEIAA on 11.12.2013 was valid.
5. Whether the demolition of the structure was warranted or if a fine could be imposed for regularization.
6. Whether the authorities had acted with promptitude and clarity in their actions.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court referred to several judgments to emphasize the importance of environmental protection and the need to adhere to regulations.

Judgment

The Supreme Court’s judgment was critical of the inconsistent and delayed actions of the regulatory authorities, while also considering the practical aspects of the case.

The Court’s view on the authorities:

• Lack of Promptitude: The court observed that authorities had not performed their tasks promptly, leading to the current situation.
• Contradictory Claims: The court noted the contradictory claims by different authorities and even by the same authority.
• Sleeping Role: The court criticized the sleeping role of the authorities, especially the KCZMA, for not acting in a timely manner.

The Court’s view on the DLF:

• Legally Purchased Land: The court noted that DLF had purchased the land legally, and the sale deeds specified the nature of the area.
• Permissions Obtained: The court acknowledged that DLF had obtained various permissions for construction.
• Procedural Violation: The court found DLF at fault for not obtaining prior CRZ clearance but noted that this was a procedural violation.

The Court’s view on the CESS:

• Meanderings and Contradictions: The court noted the meanderings and contradictions in the approach of CESS, even though the same person was involved in all the reports.

The Court’s view on the MoEF:

• Strange and Contradictory Approach: The court observed that the approach of MoEF was strange and contradictory.

The Court’s view on the SEIAA:

• Clearance Upheld: The court upheld the SEIAA clearance of 11.12.2013, stating that it was never withdrawn or challenged.

The Court’s view on the Fine:

• Fine Sustained: The court sustained the fine of Rs. 1 crore as a penalty for the procedural violation.
• Transfer of Funds: The court directed that the fine be transferred to the KCZMA for better enforcement and development of the CRZ area.

The Court’s view on the Future Directions:

• Prior Clearance Mandatory: The court clarified that prior clearance is mandatory, and authorities should issue necessary clarifications in a time-bound manner.
• Single Window Clearance: The court emphasized the need for a simplified methodology for processing applications to reduce uncertainty and improve enforcement.

The court cited the following authorities and explained how they were used:

• Anil Hoble v. Kashinath Jairam Shetye [(2016) 10 SCC 701]* was cited to emphasize that illegal structures in ‘No Development Zones’ must be demolished and that permissions granted by the Coastal Zone Management Authority are of no avail.
• Union Territory of Lakshadweep v. Seashells Beach Resort [(2012) 6 SCC 136]* was cited to highlight that equitable considerations are misplaced when there is a violation of CRZ requirements.
• Esha Ekta Apartments Cooperative Housing Society v. Municipal Corporation of Mumbai [(2013) 5 SCC 257]* was cited to support the proposition that unauthorized constructions in violation of law should not be regularized.
• Piedade Filomena Gonsalves v. State of Goa [(2004) 3 SCC 445]* was cited to emphasize that constructions in violation of Coastal Regulation Zone Notifications cannot be lightly condoned.

What weighed in the mind

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors, balancing the need for environmental protection with the practical realities of the case.

• Procedural Violation vs. Substantive Harm: The Court recognized that while DLF had committed a procedural violation by not obtaining prior CRZ clearance, the substantive harm to the environment was not conclusively proven. The court noted the development in the area was not done by DLF and the area was not a pristine one.
• Inaction of Regulatory Bodies: The Court was critical of the regulatory bodies, particularly KCZMA, for their delayed and inconsistent actions. The authorities failed to act promptly, leading to the completion of the project without necessary clearances.
• Contradictory Reports: The Court noted the contradictory nature of the reports submitted by CESS and the MoEF, which created confusion and uncertainty.
• Balance of Interests: The Court had to balance the need to protect the environment with the interests of the apartment buyers who had invested in the project and the developer who had completed the construction. Demolishing the entire structure would have been a drastic and disproportionate measure.
• Practical Considerations: The Court considered the practical implications of ordering a demolition. The project was already completed, and demolishing it would have caused significant economic and social disruption.
• Regularization with Fine: The Court found that regularizing the construction with a fine was a more appropriate solution. This would penalize DLF for the procedural violation while also allowing the project to continue.
• Need for Clearer Regulations: The Court emphasized the need for clearer and more streamlined regulations, as well as a single-window clearance system to avoid such situations in the future.

Ratio Decidendi

The ratio decidendi of the judgment can be summarized as follows:

Obiter Dicta

The obiter dicta of the judgment include the following observations:

• Criticism of Authorities: The court extensively criticized the lackadaisical approach and contradictory stands of the regulatory authorities, particularly KCZMA, CESS, and MoEF.
• Need for Single Window Clearance: The court highlighted the need for a single-window clearance system to streamline the process of obtaining environmental clearances and reduce ambiguity.
• Importance of Clarity in Regulations: The court emphasized the need for clear and unambiguous environmental regulations to avoid confusion and ensure compliance.
• Role of Expert Bodies: The court noted the importance of expert bodies like CESS and SEAC in providing reliable scientific assessments, but also cautioned against their inconsistency and contradictions.
• Balancing Development and Environment: The court emphasized the need to balance development with environmental protection, ensuring that development projects are carried out in a sustainable manner.

Flowchart of the Case