ENVIS Centre, Ministry of Environment & Forest, Govt. of India

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SC orders Sterlite to pay Rs 100 crore for polluting environment

The Times of India, New Delhi, 2rd April, 2013

NEW DELHI: In an important ruling, the Supreme Court on Tuesday ordered Sterlite Industries, a subsidiary of mining giant Vedanta, to pay Rs 100 crore as compensation for environmental damage around its Tuticorin-based copper smelting unit in Tamil Nadu.

Although the SC set aside the Madras high court order shutting down the factory for violation of green norms and environmental damage, the fine imposed on the firm can act as a deterrent in future as it upholds the polluter pays principle.

The court did not uphold closure of the Tuticorin plant on the ground that public interest would be hurt as the unit makes a substantial contribution to India's copper production and employs 1,300 persons who will be affected by a harsh order.

Sterlite could be relieved that the shutdown order was negated but the apex court did not prevent state authorities from taking action against the company's environmental lapses with closure not ruled out as a punitive measure.

The clarification is pertinent because the state pollution control board had only three days ago ordered the smelter to be closed in a separate case of a gas leak on March 27. But given the plant's 2 million tonne a year capacity and a large number of employees, the state government may hesitate from enforcing closure of the complex.

While the SC order is a stern message to firms who violate green norms, business groups argue that clearances are often time consuming and lack transparency, leading to graft and circumvention of rules.

Directing the company to deposit Rs 100 crore in three months, the court said the interest would be used to improve the water and soil in the vicinity of the plant that has been affected adversely over the years.

The money will be deposited with the collector of Thoothukudi district and kept in a fixed deposit in a nationalized bank for a minimum of five years. "The interest will be spent on suitable measures for improvement of the environment... (it will be spent) after consultation with Tamil Nadu State Pollution Control Board and approval of the environment secretary of Tamil Nadu," the court said.

The Rs 100 crore fine will not shield Sterlite against other damage claims. "We also make it clear that the award of damages of Rs 100 crore by this judgment against the appellant company for the period from 1997 to 2012 will not stand in the way of any claim for damages for the aforesaid period or any other period," the court said.

The order comes just after the company approached the National Green Tribunal seeking relief against the closure order passed recently by the state authorities in the gas leak case.

The apex court ruling came in a case filed by MDMK leader Gopalasamy Vaiko before the Madras HC in 1996 against the company for running the country's fourth largest copper smelting unit without proper mandatory clearances and in violation of green norms and conditions causing damage to the environment and public health in its vicinity.

The court held Sterlite guilty of polluting the environment in breach of environmental standards and later running the unit without consent orders after the state authorities withdrew its clearances for causing harm to the plant's surroundings.

While the court noted the company suppressed facts by claiming it has run the plant with statutory consents, it refused to direct closure saying the plant contributed substantially to copper production and generated large revenue for the government.

"The plant of the appellants contributes substantially to copper production in India and copper is used in defence, electricity, automobile, construction and infrastructure etc. The plant of the appellants has about 1,300 employees and it also provides employment to large number of people through contractors. A number of ancillary industries are also dependent on the plant."

Adding that the factory provided substantial revenue to the government, the court said, "It (the plant) also contributes to 10% of the total cargo volume of Tuticorin port. For these considerations of public interest, we do not think it will be a proper exercise of our discretion under Article 136 of the Constitution to refuse relief on the grounds of misrepresentation and suppression of material facts in the special leave petition."

In reaction to the apex court order, MDMK leader Vaiko said in New Delhi that he would challenge the order and plead for complete closure of the plant. He said he was not agreeable to putting lives of people at risk just to bring revenue to the government.