8/9/2019 R6-Bhullar - Polluter Pays Principle 1
1/27
Only for class room learning. Please contact the author before citing
2 Making the Polluter Pay in India:
Scope and Limitations of Environmental Law
LOVLEEN BHULLAR
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
2/27
Only for class room learning. Please contact the author before citing
I. INTRODUCTION
The polluter pays principle forms an integral component of environmental law jurisprudence,
at the international, regional and domestic levels. The widely accepted formulation of the
principle requires that the polluter, rather than the government or members of the public,
should bear the cost of pollution.1 While the principle is widely recognized, its content and
scope forms the subject matter of considerable debate and discussion. The application of the
polluter pays principle depends upon the identification of the polluter, the circumstances in
which the polluter’s responsibility to pay is triggered, the determination of what is to be paid
pollution prevention and control measures determined by public authorities and!or costs of
environmental restoration including cleanup costs as well, and the identification of the
recipients of the payment individuals or the government, etc. "s a result, different meanings
have been attributed to the principle in different conte#ts. $ The intended function of the
principle in a given conte#t, whether redistributive, preventive or curative, also influences its
meaning.%
The polluter pays principle has formed part of the domestic environmental jurisprudence in
&ndia e#plicitly or implicitly ' for several years but neither its conceptual basis nor its
interpretation by the legislature and the judiciary has been e#amined in sufficient detail. This
paper attempts to fill this gap while focusing particularly on the role of the judiciary. (ection
&& will briefly describe the development of the polluter pays principle, as a principle of
environmental economics and as a legal principle. (ection &&& will e#amine and analyze the
forms in which the polluter pays principle has been incorporated into domestic environmental
jurisprudence in &ndia ' e#plicitly as well as by implication ' and implemented ' through the
principle of strict liability and absolute liability in legislation as well as judicial decisions.
This section will highlight the legal basis for the incorporation of the principle into domestic
environmental law by the (upreme )ourt of &ndia and the implementation of the principle
through the application of the absolute liability principle in particular. (ection &* will focus
on the different issues that arise in the conte#t of operationalizing the principle as a part of
judicial decisions. This will be followed by the conclusion highlighting the contribution of
the domestic environmental jurisprudence in &ndia to the understanding of the polluter pays
principle and its limits.
II. POLLUTER PAYS PRINCIPLE: FROM ECONOMICS TO LAW
The origin of the polluter pays principle can be traced to the economic theory of
1 +atricia irnie, "lan oyle - )atherine edgewell, & /T0/"T&/"2 2"W - T30 0 /*&/40/T %$$ 5%rd edn,
)larendon +ress!#ford 6niversity +ress $7789 :hereafter ;irnie, oyle - edgewell’ T30 0 /*&/40/T ?% 5@uridisA >orlag 188B9.
3 /icolas de (adeleer, 0 /*&/40/T"2 +&/)&+20(C >4 +2&T&)"2 (2D"/( T 20D"2
620( %?%E 5#ford 6niversity +ress $77$9 :hereafter ;de (adeleer’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
3/27
Only for class room learning. Please contact the author before citing
e#ternalities.H &t is based on the idea that the production and!or consumption of goods or
services may result in pollution or environmental harm or damage 5;e#ternalities’9 but often
these costs are not reflected in the marAet price of the goods or services in question. This
distorts price signals and results in inefficient economic choices. >urther, instead of the
polluter, public authorities or members of the public have to bear the 5social9 costs of pollution. The polluter pays principle is based on the idea of cost allocation and cost
internalization, that is, the e#ternal costs of production and!or consumption of goods or
services should be allocated to the polluter who is responsible for the pollution rather than to
the government or to members of the public.? This is e#pected to reduce the consumption of
pollutionintensive products.B
The shift of the polluter pays principle from economic theory to practice initially tooA place
in the conte#t of the introduction of strict environmental measures on chronic pollution in
member countries of the rganization for 0conomic )ooperation and =evelopment 5hereafter
;0)=’9.E The 0)= first identified the features of the ;socalled +olluter+ays +rinciple’ in18E$.I
The principle to be used for allocating costs of pollution prevention and control
measures to encourage rational use of scarce natural resources and to avoid distortions
in international trade and investment is the socalled ;+olluter+ays +rinciple’. This
principle means that the polluter should bear the e#penses of carrying out the above
mentioned measures decided by public authorities to ensure that the environment is in
an acceptable state. &n other words, the cost of these measures should be reflected in
the cost of goods and services which cause pollution in production and!or
consumption. (uch measures should not be accompanied by subsidies that would
create significant distortions in international trade and investment.
Two years later, the 0)= )ouncil reaffirmed the principle as a ;fundamental principle’. 8
4 ") +igou, T30 0)/4&)( > W02>"0 5$nd edn, 4acmillan 18$H9.
5 +hilippe (ands - @acqueline +eel, +&/)&+20( > & /T0/"T&/"2 0 /*&/40/T"2 2"W
$$I 5)ambridge 6niversity +ress $71$9 :hereafter ;(ands - +eel’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
4/27
Only for class room learning. Please contact the author before citing
"ccording to de (adeleer, the principle ;was not intended to eliminate all forms of pollution’
or ;to oblige polluters to assume the full consequences of their acts’.17 The reduction of
pollution beyond a certain level was considered neither practical nor necessary in view of the
costs involved.11 >urther, the polluter was not required to ;pay’ anything to anyone. 1$ This
formulation is described as partial internalization of environmental costs by the polluter.
1%
(ubsequently, the scope of the principle was e#tended so that the potential polluter 5operator9
bears the cost of ;reasonable measures’, which are introduced by the public authority, to
prevent and control accidental pollution from hazardous installations.1H The 0)= also
recommended the internalization of cost of damage arising from pollution, thus marAing a
shift towards full cost internalization.1? This trend is also reflected in the initial development
of the polluter pays principle in the 0uropean )ommunity 50)9 5later 0uropean 6nion
50699.1B
"t the international level, one of the earliest references to the polluter pays principle, albeitimplicit, can be traced to the rundtland eport of 18IE, which suggested that the
;environmental costs of economic activity’ can be ;internalized’paid by the enterprises’.1E
This reflects the formulation of the polluter pays principle in the 0)= recommendations.
3owever, the polluter pays principle ;secured international support as an environmental
policy’1I for the first time during the 6nited /ations )onference on 0nvironment and
=evelopment 56/)0=9 5or io )onference9 held in 188$.18 +rinciple 1B of the io
=eclaration, which has been described as the most important and farreaching international
ecommendation of the 0)= )ouncil on the 6se of 0conomic &nstruments in 0nvironmental +olicy, 0)=
=oc. )58791EE!>inal 5@an. %1, 18819 :hereafter ;1881 0)= ecommendation’inal 5@uly E, 18I89, $I &24 1%$7 518I89.
15 1881 0)= ecommendation 5n 89.
16 >or soft law instruments, see, for e#ample, )ouncil and Dovernments of the 4ember (tates =eclaration, of
$$ /ovember 18E%, on the programme of action of the 0uropean )ommunities on the environment 5@ ) 11$,$7. 1$. 18E%9 1. >or binding legal instruments, see (ingle 0uropean "ct 5@ 2 1B8, 1E. 7$. 18IB9 1, art $?F
)onsolidated version of the Treaty 0stablishing the 0uropean )ommunity 5@ ) %$?, $H. 11. $77$9%%, 17E7I,art 1EH5$9F )onsolidated version of the Treaty on the >unctioning of the 0uropean 6nion, 1% =ecember$77E, $77I!) 11?!71, art 1815$9. >or e#ante measures, see, for e#ample, =irective of the 0uropean +arliamentand of the )ouncil $77I!8I!0) of 18 /ovember $77I on waste and repealing certain =irectives 5@ 2 %1$, $$.11. $77I9 %. >or e#post measures to address unavoidable pollution in case of accidents and other environmentaldisasters, see =irective of the 0uropean +arliament and of the )ouncil $77H!%?!0) of $1 "pril $77H onenvironmental liability with regard to the prevention and remedying of environmental damage 5@ 2 1H%, %7. H.
$77H9 %?E.
17 eport of the World )ommission on 0nvironment and =evelopment, ,ur $ommon
-uture para ?% 518IE9.
18 irnie, oyle - edgewell 5n 19 %$$.
19 io =eclaration on 0nvironment and =evelopment, 6nited /ations )onference on 0nvironment and
=evelopment, 6./. =oc. "!)/>.1?1!? 5188$9, reprinted in %1 &24 IEH 5188$9. >or a commentary on thenegotiating history of the io =eclaration, see )hee JoAe 2ing, The .io /eclaration on En#ironment and
/e#elopment: An Assessment ?7 5Third World /etworA $71$9.
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
5/27
Only for class room learning. Please contact the author before citing
statement of the fundamental principles of environmental law,$7 reads as followsC
/ational authorities should endeavor to promote the internalization of environmental
costs and the use of economic instruments, taAing into account the approach that the
polluter should, in principle, bear the cost of pollution, with due regard to the public
interest and without distorting international trade and investment.
This formulation of the polluter pays principle is neither absolute nor does it impose legally
binding obligations on national authorities.$1 The principle is e#pressed in qualified and
aspirational termsF it lacAs the normative character of a rule of law. $$ 3owever, it does state
that the polluter should bear the ;cost of pollution’, which is wider in scope than pollution
prevention and control measures introduced by public authorities. This reflects a shift towards
full internationalization of environmental costs.$% &n addition to the io =eclaration, the
polluter pays principle is also mentioned in the preamble or operative provisions of several
international 5and regional9 agreements.$H
3owever, the foundation of the above ;legal’formulations of the polluter pays principle is still based on economic theory. >urther, the
overwhelming focus on the polluter in the dominant discourse concerning the polluter pays
principle often overlooAs its justice dimensions.
III.DEVELOPMENT OF THE POLLUTER PAYS PRINCIPLE IN INDIA
The idea of holding a polluter liable to pay damages for causing pollution!environmental
harm is not new in &ndia. )ourts have invoAed the polluter pays principle to grant relief in anumber of cases of pollution. &n some cases, strict and absolute liability has been imposed on
the polluter while applying the principle and in other cases, ordinary and!or e#emplary
damages!compensation have been awarded against the polluter. &t has also been mentioned,
e#plicitly or implicitly, in legislation. 3owever, the first point of entry of the principle into
domestic environmental jurisprudence has not received much attention. This section first
e#amines two important judicial decisions of the (upreme )ourt of &ndia that serve as the
starting point to understand the source of the polluter pays principle. This is followed by a
brief overview of legislation that refer to the principle. While some laws apply the polluter
pays principle implicitly by requiring the polluter to pay for the damage resulting from
pollution or environmental harm, the principle is e#plicitly referred to in some other laws.
20 /ash 5n I9 HE1.
21 de (adeleer 5n %9 H%. !ee also "lan oyle - =avid >reestone 5eds9, & /T0/"T&/"2 2"W
"/= (6(T"&/"20 =0*02+40/T H 5#ford 6niversity +ress 18889 :hereafter ;oyle -
>reestone’reestone 5n $19 18. !ee also 1orth !ea $ontinental !helf $ase, &)@ eports 518B89 %, para
E$. )f .hines $hlorides $on#ention Ar)itral Award 5>rance!/etherlands9 +)" 5$77H9 para
17%.
23 de (adeleer 5n %9 H%.
24 &bid $%$H.
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
6/27
Only for class room learning. Please contact the author before citing
1. Explicit !"!!#c!$
The (upreme )ourt of &ndia has e#pressly invoAed the polluter pays principle by relying on
the understanding of the principle in other jurisdictions and!or in international environmentallaw. The activism of the )ourt has been attributed, among other factors, to &ndia’s role in the
international environmental law policymaAing processes,$? to the )ourt’s ;desire to do
justice’,$B or to fill ;gaps’ in the domestic environmental law regime.$E &n addition, although
the polluter pays principle was e#pressly referred to in the domestic environmental policy
frameworA for sometime, it is only recently that it is being mentioned in legislation as well.
1.1 Locating the source of the principle in udicial decisions
The polluter pays principle was e#plicitly relied on for the first time in domestic
environmental law by the (upreme )ourt of &ndia in "ndian $ouncil for En#iro2Legal Action
# 0nion of "ndia and ,thers 5hereafter the ; (icchri case’9.$I The case concerned the adverse
environmental and health impacts of water and soil pollution in ichhri village and
surrounding villages in 6daipur =istrict, ajasthan as a result of dumping of untreated
wastewater and highly to#ic sludge, particularly ironbased and gypsumbased, resulting from
the past production of 3 acid by chemical industries. "lthough the application of the polluter
pays principle by the )ourt in the (icchri case has been referred to in a number of subsequent
decisions,
$8
its legal basis has not been e#amined.
elying solely on an article published in an academic journal, which discussed the
development of the polluter pays principle in the 0)= and the 0),%7, the )ourt observed
25 4ichael "nderson, "nternational En#ironmental Law in "ndian $ourts, E519 0*&0W >
06+0"/ )446/&TJ "/= & /T0/"T&/"2 0 /*&/40/T"2 2"W $1, $B 5188I9
:hereafter ;"nderson’ & /T0/"T&/"2 2"W 1, E 5$7179 :hereafter
;andopadhyay’ +2"//&/D "/=
0 /*&/40/T"2 2"W E7%. The )ourt quotes certain passages of the article. &bid $HE$HI 5para BE9. (ome portions of this e#cerpt from an article in an academic journal have been subsequently attributed to the )ourtitself. !ee, for e#ample, 8arnata'a "ndustrial Areas /e#elopment (oard # $ 8enchappa, 5$77B9 B ()) %E1,%IE 5para I19 :hereafter ; 8enchappa’ 0 /*&/40/T"2 2"W %I%, %IE 5$77?9 :hereafter;=am - Tewary’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
7/27
Only for class room learning. Please contact the author before citing
that the principle ;has now come to be accepted universally as a sound principle’, %1 and it has
gained almost universal recognition%$. &n other words, in this case, the )ourt appears to have
incorporated the polluter pays principle into domestic law as a general principle of law
prevalent in other systems,%% rather than as a principle of international environmental law. &t
has also been observed that the polluter pays principle, as stated in the (icchri case, ;is muchcloser to the ordinary, commonsense meaning of the term ;polluter pays’’.%H
The (upreme )ourt e#plicitly invoAed the polluter pays principle for the second time in
;ellore $iti6ens3 elfare -orum # 0nion of "ndia and ,thers 5hereafter ;;ellore’9.%? The case
concerned pollution caused by the discharge of untreated effluent by tanneries and other
industries in the (tate of Tamil /adu into river +alar and on land, which contaminated surface
water and groundwater, the main sources of water supply to the residents of the area. The
)ourt considered two sources of the polluter pays principleC domestic law 5the )onstitution
and environmental statutes9 and international law 5custom9.
>irst, unliAe the (icchri case,%B the )ourt relied on the constitutional mandate to protect and
improve the environment to hold that the polluter pays principle is part of domestic
environmental law.%E This is in line with the )ourt’s history of broad interpretation of
constitutional provisions. (ubsequently, in &$ &ehta # 8amal 1ath and ,thers, the )ourt
observed that "rticles HI" and ?1"5g9 of the )onstitution ;have to be considered in the
light of "rticle $1 of the )onstitution’.%I
There is no direct reference to the polluter pays principle in the Water 5+revention and
)ontrol of +ollution9 "ct, 18EH and the 0nvironment 5+rotection9 "ct of 18IB, which were
enacted by the Dovernment of &ndia in order to implement the decisions of the 6nited
31 (icchri case 5n $I9 $HE 5para BE9.
32 &bid $?7 5para B85*99.
33 "nderson 5n $?9 $B. !ee also =aniel odansAy and @utta runnLe, The .ole of 1ational
$ourts in the -ield of "nternational En#ironmental Law, E519 0*&0W > 06+0"/
)446/&TJ "/= & /T0/"T&/"2 0 /*&/40/T"2 2"W 11, 1B 5188I9 :hereafter ;odansAy
- runnLe’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
8/27
Only for class room learning. Please contact the author before citing
/ations )onference on the 3uman 0nvironment of 18E$ 5where the polluter pays principle
was not mentioned9 and in response to the hopal Das tragedy of 18IH respectively.
3owever, in ;ellore, the )ourt added that ;in fact’ the polluter pays principle!concept is
already implied in domestic environmental laws.%8 This approach of the )ourt has raised
some concerns.
H7
>or e#ample, the penalty provisions in the 0nvironment 5+rotection9 "ct donot support the implementation of the polluter pays principle in its broad sense because they
prescribe payment of fines and imprisonment rather than compensation for restitution of the
damaged environment.H1
n the other hand, the )ourt’s reading of the polluter pays principle into the provisions of the
Water 5+revention and )ontrol of +ollution9 "ct and the 0nvironment 5+rotection9 "ct may
be justified on the ground that these laws lay down pollution prevention and control measures
and the polluter is required to bear the cost of compliance. &n this respect, the domestic
environmental laws in &ndia partly mirror the polluter pays principle in its narrow sense, as
envisaged in the early 0)= recommendations. 3owever, the objective of these laws in&ndia is limited to environmental protectionF they are not concerned with the prevention of
distortions in international trade and investment 5the other objective of the 0)=
recommendations9.
(econd, while there was no reference to customary international law in the (icchri case, the
)ourt in ;ellore considered the international law dimension of the polluter pays principle. &t
held that sustainable development ;has been accepted as a part of the customary international
law though its salient features have yet to be finalized by the international law jurists’.H$ The
)ourt then identified the polluter pays principle as one of the ;salient principles’ and
;essential features’ of sustainable development. (ome commentators have taAen these
observations of the )ourt to mean that it considered the polluter pays principle to be part of
customary international law.H% ut the ne#t observation of the )ourt is significant.
39 ;ellore 5n %?9 B?8BB7 5paras 1% - 1H9.
40 (hanmuganathan - Warren 5n %H9 %88 :;not entirely convincing’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
9/27
Only for class room learning. Please contact the author before citing
0ven otherwise once these principles are accepted as part of )ustomary &nternational
2aw there would be no difficulty in accepting them as part of the domestic law. &t is
almost an accepted proposition of law that the rules of )ustomary &nternational 2aw
which are not contrary to the municipal law shall be deemed to have been
incorporated in the domestic law and shall be followed by the courts of law...
HH
&t is argued that the use of the phrases ;once these principles are accepted’ and ;there would
be no difficulty’ suggest that the )ourt did not hold that the polluter pays principle is a part of
customary international law and therefore it is incorporated in domestic lawF instead, it
envisaged its incorporation in domestic law in the future once the principle is accepted as
customary international law. &n this conte#t, it is pertinent to mention that the polluter pays
principle has still not achieved the status of a generally applicable rule of customary
international law.H?
&n ;ellore, the )ourt also observed that the polluter pays principle has been held to be a;sound principle’ in the (icchri case,HB whereas in the latter case, the )ourt had actually stated
that the polluter pays principle has ;now come to be accepted universally as a sound
principle’ based on a journal article, which refers to the adoption of the principle by the
0)= and its incorporation by the 0uropean )ommunity 5two regional systems9.HE &n any
case, the )ourt’s observation does not ;necessarily mean that it is fully accepted in law’. HI
/evertheless, this decision has been relied upon in a number of subsequent decisions.H8
&n the (icchri case, there was no reference to the polluter pays principle in the conte#t of
international environmental law. &n ;ellore, although the )ourt referred to the conventions
and nonbinding documents signed during the 6nited /ations )onference on 0nvironment
and =evelopment held in io de @aneiro in 188$, it did not refer to any of its outputs,
including +rinciple 1B of the io =eclaration 5which e#plicitly relates to the polluter pays
principle9 or the relevant provisions of "genda $1. n the other hand, in .esearch
-oundation for !cience # 0nion of "ndia and Another , the )ourt specifically relied on
44 ;ellore 5n %?9 BB7 5para 1?9. &n support of the ;accepted proposition of law’, the )ourt
referred to some of its previous decisions.
45 (ands - +eel 5n ?9 $$IF irnie, oyle - edgewell 5n 19 %IF "lan oyle, &a'ing the
Polluter Pay Alternati#es to !tate .esponsi)ility in the Allocation of Trans)oundary
En#ironmental $ost , in >r. >ranzioni and T. (covazzi 5eds.9, & /T0/"T&/"2 0(+/(&&2&TJ
> 0 /*&/40/T"2 3"4 %B% 5Draham - Trotman 18819.
46 ;ellore 5n %?9 B?I 5para 1$9. ut 8enchappa 5n %79 observed that the )ourt held the
polluter pays principle to be a sound principle in ;ellore. &bid %IE 5para I$9.
47 (icchri case 5n $I9 $HE 5para BE9.
48 (hanmuganathan - Warren 5n %H9 %88.
49 !ee &$ &ehta # 0nion of "ndia
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
10/27
Only for class room learning. Please contact the author before citing
+rinciple 1B of the io =eclaration for support ;:a
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
11/27
Only for class room learning. Please contact the author before citing
environmentally sound’ handling of hazardous waste 5rule H5199, while the operator of the
treatment, storage and disposal facility is responsible for its safe and environmentally sound
operation, closure and post closure phase 5rule 1I5H99. The ules hold the occupier, importer,
transporter and operator of a facility liable for all damages caused to the environment or third
party due to improper handling or disposal of the hazardous wastes 5rule $?5199. (imilarly,under the 0Waste 54anagement and 3andling9 ules, $711, collection centres and
dismantlers are responsible for ensuring that no damage is caused to the environment during
storage and transportation of ewaste 5rules ?5%9 and E5%99.
oth of these legislation, which implicitly apply the polluter pays principle, are either silent
about the recipient of the amount of damage or compensation that may be awarded against
the polluter or the actual victim does not directly receive the amount of damage or
compensation awarded. 6nder the 3azardous Waste ules, the polluter 5occupier and!or
operator of the facility9 does not pay directly to the victim of pollution or environmental
harmF instead, the (tate +ollution )ontrol oard 5hereafter ;(+)’9 is authorized to levyfinancial penalties, with prior approval of the )entral +ollution )ontrol oard, in case of
violation of the provisions of these ules 5rule $?5$9. "lthough the 0Waste ules do not
specify the nature of action that can be initiated against the polluter in case of resulting
damage, s 1? of the 0nvironment 5+rotection9 "ct, which provides the penalty for
contravention of the provisions of the "ct, the rules made or orders and directions issued
thereunder, is relevant. &n such a case, however, the (+) rather than the actual victim of
pollution receives the financial penalty imposed on the polluter.
,. I%pl!%!#t'ti(# (" t-! P(llt! P'/$ Pi#cipl!
There are different instruments to implement the polluter pays principle including ex ante
measures such as regulation and economic instruments, and ex post measures such as liability
rules.
".1 #egulation
The domestic environmental law frameworA in &ndia is based on the commandandcontrol
approach. The Water 5+revention and )ontrol of +ollution9 "ct, 18EH, the "ir 5+revention and
)ontrol of +ollution9 "ct, 18I1 and the 0nvironment 5+rotection9 "ct, 18IB, the rules framed
under these laws, as well as other environmental laws, appear to reflect the partial cost
internalization approach. +ublic authorities determine discharge or quality standards,
emission limit values, best available technology, licensing procedures, etc. to ensure that the
environment is in an acceptable state. The polluting industries!local authorities are required to
internalize the costs of pollution prevention and control, failing which they will penalized in
accordance with the provisions of these laws.
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
12/27
Only for class room learning. Please contact the author before citing
,.2 Economic$market%&ased or incentive%&ased instruments
0conomic instruments, such as tradable permits, charges, ecota#es, feedin tariffs and
certificates, have formed an integral element of the toolAit to implement the polluter pays
principle.?? They provide an incentive for potential polluters to adopt pollution prevention and
control measures to reduce the adverse environmental impact of their activities. They also
generate revenue for the adoption of environmental measures by the government.
(uch instruments can be found in a number of legislation. 6nder the Water 5+revention and
)ontrol of +ollution9 )ess "ct, 18EE, for e#ample, every person carrying on any specified
industry and every local authority is liable to pay cess on their water consumption 5including
supply of water9 with a view to augment the water pollution prevention and control resources
of the )+) and the (+)s. &n order to induce behavioral change and to generate additional
revenue to address the results of environmental pollution, some states have introduced
legislation providing for the levy and collection of cess on certain polluting substances andactivities.?B &n addition, incentives such as rebate in, or e#emption from, ta#es, e#cise and
customs duty or depreciation allowance are also offered for installation of pollution control
equipment and for shifting polluting industries from congested areas.?E
The appeal for the polluters lies in the fle#ibility of these instruments. 3owever, their ability
to implement the polluter pays principle is contingent upon the rate of the levy ' if the rate is
not high enough, it is unliAely to influence behavioral changes. (uch instruments also
undermine developments in domestic environmental law, which impose strict or absolute
liability on the polluter to compensate the victims of pollution as well as to restore the
environment. &nstead of performing the redistributive function for the affected individuals,
they procure financial resources for environmental protection for the (tate, which may or
may not be used for the specified purposes.
"." Lia&ility rules
55 !ee, for e#ample, Theodore +anayotou, 0conomic &nstruments for 0nvironmental
4anagement and (ustainable =evelopment, 0nvironment 0conomic (eries +aper /o. 1B,0nvironment and 0conomics 6nit, 6nited /ations 0nvironment +rogramme 56/0+ 188H9F
"parna (awhney, " eview of 4arAet ased &nstruments for +ollution )ontrolC &mplications
for &ndia, acAground +aper for TasAforce eport of the 4inistry of 0nvironment and >orests
5/ational &nstitute of +ublic >inance and +olicy 188E9.
56 !ee )lean 0nergy )ess ules, $717 :gross quantity of raw coal, lignite or peat raised and dispatched from a
coal mine
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
13/27
Only for class room learning. Please contact the author before citing
The introduction of, and compliance with, ex ante measures does not rule out the possibility
of occurrence of environmental damage. &n such situations, as well as where ex ante measures
are either absent or are not being implemented, the polluter pays principle may be
implemented through curative measures, such as liability rules, which hold the polluter
responsible for environmental damage and for payment of compensation to victims.
?I
2iability rules can also perform a preventive function. The anticipation of liability for
damages that might occur as a result of an activity may provide the incentive to increase the
amount of care taAen in conducting the activity.?8
The polluter pays principle can be traced bacA to some of the earliest instruments establishing
minimum rules on civil liability for damage resulting from hazardous activities.B7 The
principle has also been referred to in a number of international and regional agreements
dealing with environmental liability.B1 The relationship between the polluter pays principle
and liability has also been e#plored in domestic legislation and judicial decisions.
The nature of liability may be faultbased or nofault liability. &n the former case, harm results
from noncompliance with regulatory requirements or the breach of a general duty of care
5also Anown as negligence9. 3owever, the affected party is required to prove the fault of the
polluter, which is a heavy burden to discharge. >urther, the polluter is not liable to pay
damages for environmental harm, which is neither reasonably foreseeable nor avoidable. B$ "s
a result, faultbased liability is of limited use in implementing the polluter pays principle.
&nstead, nofault liability or strict liability is preferred in such situations. &t is based on the
rule laid down in .ylands # -letcher .B% There is no requirement to prove the polluter’s fault.
3owever, the application of the rule is subject to a number of e#ceptions. BH >urther, the
liability may be limited in amount and the definition of damage tends to be narrow.B?
58 de (adeleer 5n %9 %E.
59 Pathleen (egerson, Lia)ility for en#ironmental damages, in 3enA >olmer - Dabel 3
2andis 5eds9, +&/)&+20( > 0 /*&/40/T"2 "/= 0(6)0 0)/4&)(C " D6&=0 >
(T6=0/T( "/= =0)&(&/4"P0( H$7, H$1 50dward 0lgar +ublishing $7779.
60 +hilippe (ands, +&/)&+20( > & /T0/"T&/"2 0 /*&/40/T"2 2"W $I$ 5$nd edn,
)ambridge 6niversity +ress $77%9.
61 de (adeleer 5n %9 $H - %7.
62 &bid ?7. !ee also, 2ucas ergAamp, 2&"&2&TJ "/= 0 /*&/40/T 5Pluwer 2aw
&nternational $7719.63 51IBI9 2 % 32 %%7. lacAburn, @. enunciated the principle thusC;We thinA that the true rule of the
law is that the person who for his own purposes brings on his lands and collects and Aeeps thereanything liAely to do mischief if it escapes, must Aeep it at his peril, and if he does not do so, is primafacie answerable for all the damages which is the natural consequence of its escape.’
64 The e#ceptions are an act of Dod, an act of a third party, plaintiff’s own fault, plaintiff’s
consent, natural use of land and e#clusion of rule by statute or statutory authority.
65 !ee, for e#ample, 18B8 )onvention on )ivil 2iability for il +ollution =amage and 18E1
)onvention on the 0stablishment of an &nternational >und for )ompensation for il +ollution
=amage.
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
14/27
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
15/27
Only for class room learning. Please contact the author before citing
...where an enterprise is engaged in a hazardous or inherently dangerous activity and
harm results to anyone on account of an accident in the operation of such hazardous
or inherently dangerous activity resulting, for e#ample, in the escape of to#ic gas the
enterprise is strictly and absolutely liable to compensate all those who are affected by
the accident.
The liability is absolute because it is not subject to any e#ceptions as is the case with the strict
liability principle> The )ourt further observedC
...the measure of compensation...must be correlated to the magnitude and capacity of
the enterprise because such compensation must have a deterrent effect. The larger and
more prosperous the enterprise, the greater must be the amount of compensation
payable by it for the harm caused on account of an accident in the carrying on of the
hazardous or inherently dangerous activity by the enterprise.BI
&n the (icchri case, the (upreme )ourt opined that ;any principle evolved in this behalf
should be simple, practical and suited to the conditions obtaining in this country’.B8 The )ourt
then relied on the absolute liability principle as laid down in the ,leum gas lea' case to
determine the liability of the polluters.E7 The )ourt held that the polluting industries areC
absolutely liable to compensate for the harm caused by them to the villagers in the
affected area, to the soil and to the underground water and...they are bound to taAe all
necessary measures to remove the sludge and other pollutants lying in the affected
area...and also to defray the cost of the remedial measures required to restore the
damaged environment, that is, the soil and the underground water sources.E1
The )ourt concluded that the polluter pays principle is stated in absolute terms in the ,leum
gas lea' case.E$ This suggests that the )ourt recognized the distinction between the absolute
liability principle or ;nofault’ liability, which applies to inherently dangerous or hazardous
activities, and the polluter pays principle, which applies more broadly to different cases of
68 &bid H$7H$1 5paras %1%$9.
69 (icchri case 5n $I9 $HB 5para B?9.
70 &bid. The )ourt disagreed with the concurring opinion of anganath 4isra, ).@. in 0nion$ar)ide $orpn # 0nion of "ndia, 518819 H ()) ?IH, B7EB7I 5paras 1H1?9, that held the law
declared in the ,leum gas lea' case to be obiter. &bid $H$ 5paras ?8B79.
71 &bid $H7$H1 5para ?E9 - $HB$HI 5paras BBBE9. 3owever, the implementation of the decision left
a lot to be desired. &n "ndian $ouncil for En#iro2Legal Action # 0nion of "ndia and ,thers , 5$7119 I()) 1B1,1EE 5para H9, the )ourt observedC...This case is a classic illustration where even after adecadeandahalf of the pronouncement of the judgment by this )ourt based on the principle of Npolluter paysO, till date the polluters 5industries concerned in this case9 have taAen no steps to
ecologically restore the entire village and its surrounding areas or complied with the directions of this)ourt at all. The orders of this )ourt were not implemented by Aeeping the litigation alive by filinginterlocutory and interim applications even after dismissal of the writ petition, the review petition andthe curative petition by this )ourt.
72 &bid $?7 5para B85*99. !ee also "nderson 5n $?9 $E.
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
16/27
Only for class room learning. Please contact the author before citing
pollution.E% 3owever, in ;ellore, after referring to its previous opinion e#pressed in the
(icchri case that ;any principle evolved in this behalf should be simple, practical and suited
to the conditions obtaining in this country’,EH the )ourt went on to holdC
...The N+olluter +aysO principle as interpreted by this )ourt means that the absolute
liability for harm to the environment e#tends not only to compensate the victims of
pollution but also the cost of restoring the environmental degradation. emediation of
the damaged environment is part of the process of N(ustainable =evelopmentO and as
such polluter is liable to pay the cost to the individual sufferers as well as the cost of
reversing the damaged ecology.E?
;ellore appears to have blurred the distinction between different types of polluting activities
and endorsed the absolute liability principle laid down in the (icchri case as an integral
component of the polluter pays principle so long as the polluting activity results in harm or
damage.EB
The understanding of the polluter pays principle in ;ellore also goes beyond theformulation in international environmental law, which generally limits the polluter’s
liability.EE /evertheless, a number of subsequent decisions have applied the principle of
absolute liability to maAe the polluter pay for pollution without determining whether or not
the polluting substance or industry is hazardous in nature. n the other hand, in .esearch
-oundation "" , although the )ourt observed that ;in &ndia the liability to pay compensation to
affected persons is strict and absolute’,EI it was a case concerning the import of hazardous
waste oil. Therefore, it is possible that the )ourt did not intend the rule of absolute liability to
apply to all cases of pollution or environmental harm.
IV.OPERATIONALI0IN THE POLLUTER PAYS PRINCIPLE
&n order to operationalize the polluter pays principle, it is essential to identify the polluter, the
situations in which the principle will be triggered, the authority that will be responsible for
undertaAing the assessment of environmental harm and determination of damages payable by
the polluter and the e#tent of, or the manner in which, damages will be paid by the polluter.
This section addresses each of these issues.
73 (hyam =ivan - "rmin osencranz, 0 /*&/40/T"2 2"W "/= +2&)J &/ & /=&" ?87
5$nd edn, #ford 6niversity +ress $77$9 :hereafter ;=ivan - osencranz’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
17/27
Only for class room learning. Please contact the author before citing
1. W-( i$ t-! P(llt!
The polluter is normally understood as the person or entity that is responsible for the
polluting activity. 0ven in &ndia, the courts have defined the polluter as the producer of goodsin a number of cases.E8 3owever, in a significant departure from the practice in other
jurisdictions as well as international environmental law, the courts in &ndia, especially the
/ational Dreen Tribunal, have played an important role in e#panding the traditional
definition of the polluter to include other persons!entities within its scope. >or e#ample, in a
case concerning disposal of debris and construction waste on the banAs of the river Jamuna,
the polluter included the contractor and the trucA owner who were responsible for dumping,
as well as the person whose property created the waste.I7
&n some cases, the /DT has held government departments and officials directly responsible
for pollution. &n "n#ertis 0ni#ersity and ,thers # 0nion of "ndia and ,thers , for e#ample, the
municipal body was directed to pay compensation for restitution of its solid waste site to its
original condition and to prevent further damage to the environment.I1 &n /r 8aran !ingh #
!tate of 5imachal Pradesh and ,thers,I$ a case concerning open burning of municipal
wastes, a compensatory cost was imposed on the 4unicipal )ouncil, which was subsequently
recoverable from all the concerned officers and the contractor. The /DT has also included
municipal authorities whose inaction led to environmental degradation and!or pollution
within the definition of polluter. &n .ohit $houdhary # 0nion of "ndia and ,thers, the 4o0>
and the Dovernment of "ssam were considered as polluters for permitting unregulated
quarrying and mining activities in and around the area of Paziranga /ational +arA. I% &n $ox
"ndia, the egional fficer of the (+) was treated as a polluter because of his failure to
furnish correct information about the condition of the distillery unit for rectified spirit, which
prevented the Tribunal from taAing appropriate action to prevent pollution. The (+) was
also held equally responsible.IH
The public has also been considered as the polluter in some cases. &n Gaura# 4ain # !tate of
79 !ee, for e#ample, .esearch -oundation "" 5n $89 $77 5para $89.
80 &anoj &ishra # 0nion of "ndia and ,thers, " /o B of $71$, rder dated $$.7E.$71%,
/ational Dreen Tribunal 5+rincipal ench9. !ee also &?s 4aipra'ash Power Ltd # !tate of
5imachal Pradesh and ,thers, )W+ /o IH% of $711, rder dated $8.7E.$71%, /ational
Dreen Tribunal 5+rincipal ench9F A)hishe' .ai # !tate of 5imachal Pradesh and ,thers,
"pplication /o $?B of $71% in )W+&2 /o $I of $711, rder dated 1E.78.$71%, /ational
Dreen Tribunal 5)ircuit ench at (himla9 :hereafter ; A)hishe' .ai’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
18/27
Only for class room learning. Please contact the author before citing
Punja) and ,thers,I? for e#ample, the /DT ;indicated’ that the authorities will be at liberty to
asA for payment of money from the entire population generating municipal solid waste in
order to generate funds for effective e#ecution of municipal solid waste disposal worAs. &n
!u)has /atta # 0nion of "ndia and ,thers,IB a committee was set up inter alia to determine
whether it would be appropriate for the authorities to collect fee for environmental pollutioncaused by the residents of, and visitors to, +uri. The polluter pays principle has also been
applied to identify the poor as the ;polluter’ and to justify maAing them ;pay’. &n a6irpur
(artan 1irman !angh # 0nion of "ndia and ,thers,IE for e#ample, the pollution and
ecological problems resulting from the unhygienic conditions created by the ;encroachers’ or
squatters on public land was the reason for directing their displacement.
&n some cases, the government pays instead of the polluter where the polluter fails to pay or is
unable to pay and it is necessary to compensate the victims immediately. II The government
can subsequently recover the amount from the polluter. &n "ndian $ouncil "" , for e#ample, the
(upreme )ourt directed the (tate Dovernment to pay the portion of the total amount of compensatory damages that the polluting industries were directed to pay to the villagers for
loss suffered as a result of damage to crops.I8 &n another case, the (upreme )ourt had
imposed a liability on the polluters 5importers of hazardous waste oil in the garb of
lubricating oil9 towards the cost of incineration. 87 3owever, on account of nonpayment of
this cost by the polluters, the )ourt ordered the )ustoms =epartment to pay the cost and
recover it from the importers later.81 (uch substitution may be necessary in some cases to
ensure timely payment of compensation to victims and!or environmental restoration.
0nvironmental harm or damage is not confined to polluting activitiesC the unbridled
consumption of natural resources is also a problem.8$ This includes mining activities, use of
biological resources, etc. &n such situations, the polluter pays principle may be renamed as the
user pays principle. )ourts in &ndia have accommodated this variation of the polluter pays
principle. &n 1ature Lo#ers &o#ement # !tate of 8erala and ,thers,8% for e#ample, the 3igh
)ourt applied the polluter pays principle and directed the (tate Dovernment to determine the
quantum of injury and compensation payable by occupants!encroachers in respect of forest
lands sought to be regularized.
85 " /o 17B of $71%, rder dated 7%.78.$71%, /ational Dreen Tribunal 5+rincipal ench9.86 " /o 117 of $71%, rder dated $$.17.$71%, /ational Dreen Tribunal 5+rincipal ench9.
87 17% 5$77%9 =2T B?H.
88 arbara 2uppi, >rancesco +arisi - (hruti ajagopalan, The .ise and -all of the Polluter2
Pays Principle in /e#eloping $ountries, %$ & /T0/"T&/"2 0*&0W > 2"W "/=
0)/4&)( 1%?, 1%B 5$71$9.
89 &n "ndian $ouncil for En#iro2Legal Action and ,thers # 0nion of "ndia and ,thers,
5188?9 % ()) EE :hereafter ; "ndian $ouncil "" ’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
19/27
Only for class room learning. Please contact the author before citing
2. Ti&&!i#& t-! P(llt! P'/$ Pi#cipl!
Denerally, the application of the polluter pays principle is contingent upon a polluting activity
5or emission9. The principle may be invoAed in different situationsC 5i9 when an established
threshold in the form of prescribed standards for the receiving environment is e#ceeded but
does not result in damageF 5ii9 when an emission e#ceeds the prescribed standards and results
in damageF 5iii9 when an emission does not e#ceed the prescribed standards but nevertheless
results in damageF or 5iv9 when there is a risA of potential negative environmental impact
irrespective of compliance with prescribed standards, etc.
The occurrence of harm or the e#istence of damage has been identified as a precondition for
the application of the polluter pays principle in some cases. &n /eepa' 1itrite # !tate of
Gujarat ,8H for e#ample, the (upreme )ourt clarified that ;compensation to be awarded must
have some broad correlation not only with the magnitude and capacity of the enterprise but
also with the harm caused by it’. "fter restating the ;legal position’ that ;if there is a findingthat there has been degradation of environment or any damage caused to any of the victims
by the activities of the industrial units certainly damages have to be paid’, the )ourt held that
it would not be correct ;to say that mere violation of the law in not observing the norms
would result in degradation of environment’.8? (imilarly % in 5industan $oca2$ola (e#erages,
the /DT observed that the assessment of damage and the amount required to rectify the
damage were preconditions before imposing a liability on the polluter .8B
3owever, the requirement of e#istence of damage as a precondition to trigger the polluter
pays principle fails to taAe into account situations where the risA of environmental
degradation necessitates the application of the precautionary principle,8E and!or the principle
of prevention. This represents a significant step bacAward as it does not encourage the
5potential9 polluter to adopt preventive or precautionary measures before the pollution occurs.
3owever, in some cases, the polluter pays principle and the precautionary principle has been
applied in tandem. &n .esearch -oundation "" , for e#ample, the (upreme )ourt observedC
the producer of goods or other items should be responsible for the cost of preventing
or dealing with any pollution that the process causes. This...covers cost incurred in
avoiding pollution and not just those related to remedying any damage.8I
The )ourt then limited and distinguished its observation in /eepa' 1itrite, that ;to say that
mere violation of the law in not observing the norms would result in degradation of
environment would not be correct’. &t observed that /eepa' 1itrite did not lay down a
proposition that the application of the polluter pays principle requires actual environmental
degradation. The )ourt distinguished the case before it on the ground that the offending
activities 5that is, import of hazardous waste oil in the garb of lubricating oil9 had the
94 5$77H9 B ()) H7$ :hereafter ; /eepa' 1itrite’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
20/27
Only for class room learning. Please contact the author before citing
potential to degrade the environment.88
)ourts have also issued directions to the potential polluter to pay the amount of damages in
advance, that is, before environmental degradation taAes place. &n &$ &ehta and Another #
0nion of "ndia and ,thers,177 for instance, the )ourt allowed the petitioner’s caustic chlorine
plant to be restarted subject to fulfillment of certain directions. (imilarly, in .udresh 1ai' #
Goa $oastal @one &anagement Authority,171 a case concerning permission to construct a
marine slipway for a dry docA, the /DT directed the appellant to deposit an amount in
advance in order to remedy any future damage to the ecology or the environment around the
site.
0ven among the cases under review where the occurrence of harm or the e#istence of damage
is a precondition, the court does not discuss the threshold of harm that will result in the
application of the polluter pays principle. 3owever, it is clear that the principle has not been
invoAed in the case of ;any’ or ;every’ instance of environmental harm or damage resultingfrom the pollution. &n most cases, the application of the principle by the courts has been
pursuant to a finding of ;some’ environmental harm or damage. This suggests that the courts
are applying an implicit threshold of harm. The nature of the activity and the ;public interest’
involved in its continuation also influences the determination of acceptable risA and therefore
the threshold of harm, which becomes unacceptable.
,. A$$!$$%!#t (" l($$ '#+ +!t!%i#'ti(# (" c(%p!#$'ti(#
The courts invoAe the polluter pays principle to hold a polluter responsible for environmental
damage. This has to be followed by the onerous tasA of assessing, determining, imposing and
recovering the compensation amount from the polluter. &n a number of cases, the (upreme
)ourt has not itself undertaAen the tasA of assessment of the loss resulting from the situation
created by the polluting activity and determination of the amount payable by the polluter for
reversing the environmental!ecological damage and the compensation payable by the polluter
to the victims 5individuals and families9. &n the (icchri case, in a footnote, the )ourt briefly
raised the question of its own competence to impose and recover cost of all measures
including remedial measures 5or award damages against private parties9 in order to ensure
observance of law and its orders as a part of enforcement of fundamental rights but it did not
e#press any final opinion.17$ The )ourt does not appear to have ruled out the possibility that it
99 &bid $71 5para %79 :;The observations...is evidently confined to the facts of that case’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
21/27
Only for class room learning. Please contact the author before citing
can award damages.17%
/evertheless, it directed the )entral Dovernment 5through the 4inistry of 0nvironment and
>orests9 to undertaAe this function in e#ercise of its powers under s %5%9 of the 0nvironment
5+rotection9 "ct.17H &nsofar as the tasA of awarding damages for loss suffered by the villagers
in the affected area is concerned, the )ourt left it open to the villagers or any organization on
their behalf to institute civil suits for this purpose. 17? (ubsequently, however, courts have
awarded damages in writ petitions.17B The same approach has been followed in other
decisions where the )ourt has directed the )entral Dovernment to establish an authority,
which is required to implement the polluter pays principle. 17E &n some cases, courts have
directed the (tate Dovernment to appoint an authority or )ommissioner for this purpose.17I
&n most cases, the authority prepares the statement showing the total amount to be recovered,
the names of the polluters from whom the amount is to be recovered, the amount to be
recovered from each polluter, the persons to whom the compensation is to be paid and theamount payable to each of them. Then the )ollector!=istrict 4agistrate of the concerned area
is responsible for recovering the amount from the polluters, if necessary as arrears of land
revenue, and its disbursement to the affected individuals and families.178
The process of assessment of loss and determination of compensation is subject to a number
of difficulties.117 ne is the difficulty associated with identification of the polluters and the
victims where their number is large. The methodology applied for valuation, e#clusion of
certain types of damages and the adequacy of compensation are also thorny issues. The equity
dimension is also often overlooAed where the determination of compensation is linAed with
land ownership.
(ome cases have relied on alternative mechanisms for determination of loss and
compensation. >or e#ample, in a recent decision, a (+) directed the polluting industry to
103 The )ourt observedC ;e that as it may we are of the considered opinion that even if it is
assumed 5for the saAe of argument9 that this )ourt cannot award damages against the
respondents...’ &bid $H% 5para B79.
104 &bid $?7 5para E79. The )ourt derived its authority to issue the necessary directions to the )entral
Dovernment from its earlier decision in "ndian $ouncil "" 5n II9. &bid $H% 5para B79.
105 &bid $?1 5para E75%99.
106 !ee, for e#ample, 8amal 1ath "" 5n %I9 $18$$7 5para 89 - $$H 5para $H9F ;ijay !ingh
Puniya # !tate of .ajasthan, "& $77H aj 1, 111$ 5para %19 :hereafter ; Puniya’or e#ample, the )ourt’s directions led to the constitution of the 2oss of 0cology 5+revention and
+ayment of )ompensation9 "uthority for the (tate of Tamil /adu #ide /otification /o. (..BE1 509, dated
%7.8.188B 5;ellore 5n %?9 18?18B 5para 1?, 1E - 1I99F the "quaculture "uthority #ide /otification /o. (..II509 dated B.7$.188E 5 4agannath 5n H89 1HE 5para ?$99F and the =ahanu TaluAa 0nvironment +rotection"uthority #ide /otification /o. (.. IIH509 dated 18.1$.188B to control pollution 5 (ittu !ehgal 5n H89 18? 5para1E99.
108 !ee, for e#ample, 4ehta2$alcutta Tanneries 5n H89 H%$ 5para $751H99F "shwar !ingh # !tate of 5aryana
and ,thers, "& 188B +-3 %7, H8 5para HB5?99.
109 !ee cases referred to in n 17E above.
110 "sha PrishnaAumar, An award and despair , 1851B9 >/T2&/0 5"ugust %1B, $77$9F 2 *enAatachalam, /amage Assessment and $ompensation to -armers: Lessons from ;erdict of Loss of Ecology Authority in Tamil 1adu, H751?9 0)/4&) "/= +2&T&)"2 W00P2J 1??B 5$77?9.
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
22/27
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
23/27
Only for class room learning. Please contact the author before citing
-oundation "" , the (upreme )ourt held that this includes direct cost to the people or property
as well as full environmental cost 5tangible and intangible9. 11E 3owever, the determination of
the full environmental cost of pollution involves calculation of the marAet value of natural
resources and valuation of environmental damages, which is a very difficult tasA. "s a result,
in practice, the scope of liability of the polluter is often limited to some tangibleenvironmental costs. >urther, although decisions refer to reversing the damage and restoration
of the environment, this is not possible in the case of irreversible damages. &n the latter case,
a preventive and anticipatory approach or a precautionary approach may be more appropriate.
&n some cases, courts have applied the ;percentage of gross turnover’ formula to determine
the quantum of compensation payable by the polluter.11I The (upreme )ourt has
acAnowledged that this formula ;may be a proper measure’ in a given case because ;the
method to be adopted in awarding damages on the basis of NpollutertopayO principle has got
to be practical, simple and easy in application’. 118 3owever, the application of this formula
may result in polluters with different annual turnovers paying the same amount where theyare all included within the same band for the purpose of determination of liability. 1$7 The
formula may also fail to have the requisite deterrent effect on polluters if the ;percentage of
gross turnover’ awarded as is not high enough. &n some cases, it may be difficult to access
information about the annual turnover of the polluting industry.1$1
&t appears, however, that in a number of cases, the curative dimension of the polluter pays
principle is completely sidelined and it is applied in a manner to avoid addressing the
question of liability altogether. >or e#ample, in some cases, courts have directed the polluter
to pay lump sum compensation 5normally s one lac or s five lac9 while in other cases, a
daily penalty amount is imposed. This is a regressive approach because leave alone absolute
liability for environmental harm, it fails to even hold the polluter strictly liable for causing
environmental damage.
117 .esearch -oundation "" 5n $89 $77$71 5para $89.
118 Pra#in)hai 4ash)hai Patel and Another # !tate of Gujarat and ,thers, 5188?9 $ D2
1$17 :hereafter ; Pra#in)hai’
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
24/27
Only for class room learning. Please contact the author before citing
'.! Punitive or e)emplary damages
+unitive or e#emplary damages are different from compensation to victims of pollution
and!or damages for restoration of the damaged ecology. The primary objective of punitive or
e#emplary damages is to punish the polluter as well as to deter the polluter as well as others
from causing pollution in the future. ut a polluter can be held liable to pay both types of
damages.1$$ &n &$ &ehta # 8amal 1ath and ,thers, the )ourt considered the aim and
purpose of e#emplary damages to be ;almost similar’ to the purpose of punishment 5in the
nature of fine or imprisonment or both9 under domestic environmental laws. 1$% >inally, the
)ourt imposed e#emplary damages on the polluter, which were to be used by the (tate
Dovernment for flood protection worAs in the area affected by pollution.1$H
The (upreme )ourt has identified the nature and e#tent of the offending activity, the nature of
the offending party, and the intention behind such activity as the basis of the levy of
e#emplary and!or penal damages.1$?
4ore recently, in !terlite "ndustries
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
25/27
Only for class room learning. Please contact the author before citing
in accordance with the polluter pays principle. "lthough the (upreme )ourt directed the
polluter to show cause why pollution fine should not be imposed in 8amal 1ath " ,1$8 it was
subsequently held that a pollution fine cannot be imposed under writ jurisdictionF it can be
imposed only if it is prescribed in a statute, the polluter is guilty of contravention of its
provisions and he!she is found guilty after fair trial in a competent court.
1%7
&n $alcuttaTanneries, the )ourt imposed a pollution fine on the polluters in addition to compensation.1%1
3owever, in some cases, courts have applied the polluter pays principle and directed the
polluter to pay a ;pollution fine’ to compensate affected persons and to cover the cost of
restoring the damaged ecology for its period of operation. 1%$&n 1oyyal .i#er Ayacutdars
Protection Association # Go#ernment of Tamil 1adu,1%% the 4adras 3igh )ourt directed the
polluting industries to pay a fine on pro rata basis until they stopped pollution 5by achieving
zero liquid discharge by a specified date9 without reference to any victims of the pollution. &n
these cases, courts may not be applying the term ;pollution fine’ stricto sensu as understood
in statutory enactments.
4. Li%it$ (" t-! p(llt! p'/$ pi#cipl!
The polluter pays principle imposes, on the polluter, the cost of pollution prevention and
control as well as the cost of remedying the damage resulting from pollution. 3owever, the
application of the polluter pays principle in &ndia is heavily influenced by the manner in
which the judiciary manages the tradeoff between environmental protection and
;development’. &n the 1887s, during the period immediately following the io conference,while the (upreme )ourt acAnowledged the importance of the polluting industries to the
generation of foreign e#change and employment 5directly and in ancillary industries9, it
finally gave precedence to environmental considerations.1%H The (upreme )ourt has also
clarified that the principle does not mean that the polluter can ;pollute and pay’. 1%? &n
Pra#in)hai 4ash)hai Patel and Another # !tate of Gujarat and ,thers, the 3igh )ourt of
Dujarat observed that this would ;legalise the violation, which is impermissible’. 1%B
129 8amal 1ath " 5n H89 H1? 5para %85H99.
130 8amal 1ath "" 5n %I9 $$$$$% 5paras 1E189 - $$H 5para $$9. !ee also &?s /;$ Emta$oal &ines Limited # Pollution $ontrol Appellate Authority
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
26/27
Only for class room learning. Please contact the author before citing
3owever, in a large number of cases, courts have invoAed the polluter pays principle to
impose a fine on the polluter or to asA him!her to pay damage or compensation for
environmental degradation but then allowed the polluting industry to continue its operations.
>or instance, in !terlite, even after accepting that the appellant!polluter had misrepresented
and suppressed material facts in its petition, the )ourt observed that the closure of its plantwould be against public interest.1%E (imilarly, in 5im Pari#esh, the court noted that the
damages should not bring the polluter to a halt. 1%I The manner in which the polluter pays
principle is interpreted in such decisions is liAely to set a precedent, which may lead to
further pollution or environmental harm in the future.
4oreover, compensation to victims does not always taAe the form of disbursement of monies
directly to them. &nstead the amount collected from the polluter may be utilized for worAs of
socioeconomic upliftment of the villages and for the betterment of their educational, medical
and veterinary facilities and agriculture and livestocA, 1%8 or the creation of common facilities
such as schools, hospitals, community halls, tube wells etc. and improvement of the ecologyand the environment1H7. &nstead of payment of monetary compensation, courts may also
impose other pollution prevention and control measures. >or e#ample, the /DT has ordered
the polluter to plant trees in some cases.1H1
V.CONCLUSION
The polluter pays principle is recognized as a principle of international environmental law as
well as regional and domestic environmental laws. The (upreme )ourt of &ndia has read the principle into the e#isting domestic legal frameworA 5including constitutional provisions and
environmental laws9. &n this conte#t, the judiciary has been influenced by the developments
within the 0)=!0) as well as the urgent need to achieve sustainable development, one of
the guiding principles of international environmental law, in the aftermath of the io
)onference of 188$. 0#plicit references to the principle are included in some legislation,
while others apply the principle by implication.
3owever, the manner in which the polluter pays principle has evolved and been adapted to
the &ndian conte#t represents a departure from the practice in other jurisdictions. )ourts,
137 !terlite 5n 1$B9 S 5para H79. The ;considerations of public interest’ identified by the
)ourt includedC substantial contribution to copper production in &ndia, which is used in
defence, electricity, automobile, construction and infrastructure etc.F employment to large
number of people, directly as well as through contractorsF support to ancillary industriesF
generation of revenue for )entral and (tate DovernmentsF and contribution to 17 percent of
the total cargo volume of Tuticorin port.
138 5im Pari#esh 5n 1$I9 Q 17B.
139 Pra#in)hai 5n 11I9 Q 1%?5#ii9.
140 5im Pari#esh 5n 1$I9 QQ 17H17B.
141 !ee, for e#ample, /e#endra 8umar # 0nion of "ndia and ,thers, "pplication /o 81 of
$71$, rder dated 1H.7%.$71%, /ational Dreen Tribunal 5+rincipal ench9 Q 1$5H9F $ox "ndia
5n IH9 Q %H5H9.
8/9/2019 R6-Bhullar - Polluter Pays Principle 1
27/27
Only for class room learning. Please contact the author before citing
particularly the /ational Dreen Tribunal, have e#panded the definition of the polluter. &n
many cases, courts have adopted the full internalization of costs approach and held the
polluter liable to pay compensation to victims of pollution and damages for restoration of the
environment. They have also not hesitated to impose absolute liability on the polluters
5instead of strict liability9. )ourts have also imposed liability for past pollution on the polluter, where the polluting activity has ceased, or directed a potential polluter to pay for
preventative measures to be undertaAen by the government. &n case of evasion or refusal to
pay damages or compensation, the polluting industry has been closed. &n some other cases,
courts have directed the closure!relocation of polluting industries without imposing any
financial liability on the polluter. This may be described as another way to maAe the polluter
pay. &t is important to note, however, that the decision in most of the cases under review was
not based solely on the polluter pays principle.
The polluter pays principle can serve as an important mechanism to address the problems of
environmental pollution and resultant public health issues in &ndia. 3owever, liAe +rinciple1B of the io =eclaration, the polluter pays principle, as incorporated into domestic law by
the )ourt, is e#tremely general in its formulation, and uncertain in the precise scope of the
legal obligations involved. This does not lend the principle to direct application or
enforcement in domestic lawsF its relevance and impact on domestic environmental law
requires interpretation and implementation by the judiciary. The effectiveness of the principle
also depends on the severity of the penalty, strict regulatory measures and its ability to ensure
longterm deterrence and not just to compensate for the immediate damage caused, in other
words, the cost of compliance should be higher than the cost of noncompliance.
3owever, the principle, as applied by the courts in &ndia, does not often result in the
imposition of severe penalty and its deterrent effect is limited. This limits the ability of the
principle to provide justice to the victims of pollution, including the environment. &n some
situations, the application of the principle may actually cause injustice to certain sections of
the population, for e#ample, where the slum dwellers or the poor ;polluters’ are removed
from their homes or where the closure of polluting industries results in loss of livelihood
without redress. Therefore, the justice!5in9justice dimensions of the principle in the &ndian
conte#t require further scrutiny.
Top Related