The Division Bench comprising Justice Attau Rahman Masoodi and Justice Subhash Vidyarthi of the Allahabad High Court (“HC”), in its judgment dated 17.07.2025, in Suez India Private Limited v. U.P. Pollution Control Board, (WRIT - C No. - 4816 of 2024 and 152 connected writ petitions, Neutral Citation No. 2025 AHC-LKO:40756-DB) (“Suez India Case”) allowed a batch of writ petitions and held that the State Pollution Control Board (“PCBs”) has no authority to impose environmental compensation on any person or industry. The HC ruled that the exclusive adjudicatory jurisdiction to determine and award environmental compensation vests in the National Green Tribunal ("NGT").

Factual Background

A group of over 152 (One hundred and fifty two) writ petitions were instituted by various industries, including Suez India Private Limited, numerous brick works and kiln operators, cement industries, frozen food companies, dyeing units, and other industrial establishments in Uttar Pradesh, challenging the validity of orders passed by the U.P. Pollution Control Board ("UPPCB"), which had directly imposed environmental compensation upon several industrial units. The compensation was purportedly levied under the Water (Prevention and Control of Pollution) Act, 1974 ("Water Act") and the Air (Prevention and Control of Pollution) Act, 1981 ("Air Act").

The central question before the HC was whether UPPCB had the authority to impose and recover environmental compensation directly from such industries without approaching the NGT. The petitions thus sought judicial scrutiny of what was described as an act of "administrative overreach" by the UPPCB and requested for a clarification on the scope and validity of such environmental compensation orders.

Contentions of Petitioners

The counsel for the petitioners contended that neither the Water Act nor the Air Act, nor any other statutory framework, confers upon the UPPCB the authority to adjudicate, impose, or recover environmental compensation. They submitted that the National Green Tribunal Act, 2020 (“NGT Act”) and the National Green Tribunal Rules, 2011 (“NGT Rules”) make it manifest that the legislature has conferred the jurisdiction to adjudicate the claims regarding payment of compensation for causing environmental damage upon the NGT, which has been constituted as an expert body. The NGT Act is a complete code in itself which has been enacted for adjudication of claims relating to compensation for any damage caused to the environment. It was further submitted that the functions of the PCBs under Section 17 of the Water Act were limited to preventive, regulatory, and advisory roles, and did not extend to adjudicating liability or quantifying compensation. Relying on numerous precedents, they argued that such a jurisdiction can be conferred by a statute alone and it cannot be conferred by any Court or Tribunal, not even by the Supreme Court of India.

The petitioners also relied upon Delhi Pollution Control Committee v. Splendor Landbase Limited, (2012 SCC OnLine Del 400), ("Splendor Landbase Case") wherein it was held that the PCBs cannot themselves impose penalties and must approach the competent authority or tribunal. They further argued that while Sections 33-A of the Water Act and 31-A of the Air Act empower PCBs to issue directions, such powers are strictly administrative or preventive in nature and do not encompass adjudicatory functions such as levying compensation.

Contentions of the U.P. Pollution Control Board

On behalf of the UPPCB, it was argued that it was empowered under Section 33-A of the Water Act and Section 31-A of the Air Act to issue directions to any person, and such power include the authority to direct payment of environmental compensation. It was further submitted that as appeals against such directions lie to the NGT under Section 33-B of the Water Act, Section 31-B of the Air Act, and Section 16 of the NGT Act, the NGT's role is appellate and not original in this respect.

The counsels for the UPPCB urged the HC to adopt a purposive interpretation of the Water Act, describing it as social welfare legislation intended to protect the environment. The UPPCB relied on the wide and unfettered powers under Section 33-A of the Water Act and also placed reliance on Article 21 of the Constitution of India, 1950 (“Constitution”), submitting that the right to life encompasses the right to a clean environment, thereby obligating the UPPCB to secure compensation for environmental harm. Additionally, it was submitted that  Section 17 of the Water Act enumerates the functions of the PCB and sub-Section (1)(l)(ii) provides that the functions of a PCB include requiring any person concerned to construct new systems for the disposal of sewage and trade effluents or to modify, alter or extend any such existing system or to adopt such remedial measures as are necessary to prevent, control or abate water pollution. The counsel also argued that water pollution is included in the term 'water' occurring in item - 17 of List - II contained in Schedule 7 appended to the Constitution, and therefore, it is a State subject.

Contentions of the Central Pollution Control Board

The counsel appearing for the Central Pollution Control Board (“CPCB”) contended that the Environment (Protection) Act, 1986 vests wide powers in the Central Government, which have been delegated to CPCB to take necessary measures for environmental protection, including the recovery of compensation. [The counsel for the CPCB relied on the Supreme Court's decision in Paryavaran Suraksha Samiti v. Union of India, (2017) 5 SCC 326 (“Paryavaran Case”), wherein the PCBs were directed to act against defaulting industries and initiate civil or criminal action, including the recovery of compensation.

The counsel for the CPCB further cited the principles of strict and absolute liability, asserting that industries engaged in polluting or hazardous activities must bear the cost of restoring environmental damage. He also referred to the Public Liability Insurance Act, 1991, to highlight that the legislative policy consistently ensures that compensation forms an integral component of India's environmental framework.

Reasoning and Order by the HC

Interpretation by the HC:

The HC analyzed the statutory framework in detail, including the Water Act, Air Act, NGT Act, and the NGT Rules. The Court noted that the NGT has been constituted as an expert body under Section 4 of the NGT Act, comprising judicial members (who are or have been judges of the Supreme Court or High Courts) and expert members with specialized environmental qualifications. The HC further analyzed Sections 14, 15, and 18 of the NGT Act in detail, noting that Section 15 specifically provides for relief, compensation and restitution, and that Schedule II of the Act lists detailed heads under which compensation or relief for damage may be claimed.

Additionally, the HC examined the nature of powers under Sections 33-A of the Water Act and 31-A of the Air Act, noting that these sections empower the PCB to issue directions, but the explanation to these sections clarifies that such directions would include closure, prohibition or regulation of any industry, operation or process or the stoppage or regulation of supply of electricity, water or any other service - all of which are preventive or restrictive in nature.

Upon consideration of the rival submissions, the HC concluded that the UPPCB can only issue administrative/preventive directions under Section 33-A of Water Act and Section 31-A of Air Act, and the said sections do not confer any adjudicatory power on the UPPCB, which power vests in the NGT only. The HC further clarified that these sections allow the UPPCB to issue directions for closure, prohibition or regulation of any industry, operation or process, or the stoppage or regulation of supply of electricity, water or any other service, and these directions are only preventive or restrictive in nature.

The HC declined to examine whether “water pollution” falls within the scope of “water” under Entry 17 of List II of the Constitution and is a State subject. It held that, in any case, the entries merely indicate that the State is competent to make laws on the subject, and in the present case, no such law has been enacted by the State empowering the PCBs to impose and recover environmental compensation. It acknowledged the importance of environmental protection under Articles 48-A and 51-A(g) of the Constitution, and the State’s duty to ensure that polluters pay compensation. However, it clarified that these constitutional principles do not authorize the PCBs to exercise adjudicatory powers, as such powers have been expressly conferred upon the NGT under the NGT Act, and not on the PCBs by any statute.

Finally, the HC clarified that the UPPCB has no statutory power to impose or recover environmental compensation. The power to adjudicate and quantify environmental compensation is vested exclusively in the NGT under Sections 14 and 15 of the NGT Act. Such adjudicatory functions cannot be assumed, delegated or exercised by administrative agencies like the UPPCB. Where the UPPCB is of the view that an industry is liable to pay environmental compensation, it may file an application before the NGT. It is for the NGT to adjudicate both the existence of liability and the quantum of compensation. The UPPCB cannot unilaterally impose such liability by its own order.

Reliance on Previous Judgments:

While rejecting the contrary submissions advanced by the UPPCB, the HC agreed with the Delhi High Court's ruling in the Splendor Landbase Case and relied on the principle that "jurisdiction must flow strictly from statute". It also cited the case of Jagmittar Sain Bhagat v. Health Services, Haryana, (2013) 10 SCC 136, wherein it was emphasized that "conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court" and "the court cannot derive jurisdiction apart from the statute".

The HC also relied on Kantha Vibhag Yuva Koli Samaj Parivartan Trust v. State of Gujarat, (2023) 13 SCC 525, wherein the Supreme Court held that "Section 14 and Section 15 entrust adjudicatory functions to NGT" and that "NGT cannot abdicate its jurisdiction by entrusting these core adjudicatory functions to administrative Expert Committees”. Further, while discussing numerous ither cases, the Court emphasized that jurisdiction can be exercised only when provided for either in the Constitution of India or in the laws made by the legislature. As a result, where the statute does not confer this adjudicatory power on the PCBs, it cannot be assumed by the PCBs nor conferred or delegated upon it by the NGT.

The HC rejected the argument based on the Paryavaran Case, holding that the Supreme Court's directions in that case only empowered the PCB to take such action as is "permissible in law" which includes issuing preventive directions and filing applications for compensation before the NGT, but does not include passing orders imposing liability for payment of compensation. The HC further clarified that reliance on any previous NGT decisions, could not override the statutory framework, particularly where they were inconsistent with the jurisdictional scheme of the NGT Act. Similarly, while affirming that principles like "Polluter Pays", the Precautionary Principle, and the right to a clean and healthy environment under Article 21 of the Constitution are binding and form part of Indian environmental jurisprudence, the HC held that such constitutional and environmental principles cannot be employed to enlarge the statutory powers of the PCB beyond what is expressly provided.

The HC made important observations about the binding effect of NGT judgments, noting in Dan Bahadur Yadav v. Bank of Baroda, 2025 SCC OnLine All 600, that "The Tribunals have to follow the law laid down by the Supreme Court and the High Court within whose superintendence they function, but they do not have the power to lay down law."

Accordingly, the impugned compensation orders passed by the UPPCB were quashed. The HC, however, granted liberty to the UPPCB to initiate appropriate proceedings before the NGT, in accordance with law, for the recovery of environmental compensation, if any.

Conclusion and Implication

The Suez India Case serves as a clear reaffirmation of the statutory limits on the powers of PCBs. It effectively establishes that while the Board has important regulatory and preventive powers, it cannot act as an adjudicatory body for environmental compensation, and that power lies exclusively with the NGT under the current legal framework. This judgment reinforces the decision in the 2012 Delhi High Court Splendor Landbase Case, and provides additional clarity on the procedural requirements for seeking environmental compensation, requiring PCBs to approach the NGT through an application under the NGT Act rather than attempting to levy such compensation directly. It also serves as a cautionary reminder to regulatory authorities to operate strictly within the confines of their statutory mandate and to adhere to the due process of law.

Notably, the HC also addressed jurisdictional complexities in the National Capital Region, highlighting how the Commission for Air Quality Management (CAQM) Act of 2021 (“CAQM Act”) has created regulatory challenges. The CAQM Act has established a parallel authority for air quality management in the NCR that appears to oust or dilute the NGT's jurisdiction in the areas governed by the CAQM Act, creating a complex regulatory landscape with potential jurisdictional overlaps between the NGT and CAQM. The Court recognized these challenges and emphasized the need for legislative clarification to streamline environmental regulations, particularly where multiple regulatory frameworks intersect. The Suez India Case thus addresses not only the specific question of UPPCB’s authority but also identifies broader regulatory gaps requiring legislative attention, especially in regions like the NCR.

Please find attached a copy of the judgment here.

This update has been contributed by Jitendra Soni (Partner) and Samia Haider (Associate).

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