Are Environment Protection Efforts Based on Guesswork Justified?

When the Central Pollution Control Board (“CPCB”) was established under the Ministry of Environment, Forest and Climate Change, Government of India to give effect to the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981; Indians rejoiced at the possibility of an environmental crusader that’ll hold polluting industries responsible for the harm caused in furtherance of commercial gain. In the wake of numerous decisions by the National Green Tribunal (NGT), Hon’ble Supreme Court, and High Courts, the CPCB has started imposing stringent penal actions against the polluting units/potential polluting units such as the issuance of closure notice and/or direction to pay the Environmental Compensation under Section 5 of the Environmental Protection Act (EPA).

The CPCB in the recent crackdown on the sugarcane industry in Uttar Pradesh has imposed compensations to the tune of Rs 25,00,00,000/- on sugarcane units that only operate for 6 months in a year, which makes up for one crushing season, adding to the woes of the financially struggling sugarcane industry.

Upon closer scrutiny of several directions issued under Section 5 of the EPA, it could be noted that many of these directions suffer from lacunae amounting to sheer departure from the well-settled principle of “Polluter Pays”. Below are a few of the observations in this direction:

The imposition of Environmental Compensation contrary to the guidelines of CPCB

The CPCB has imposed heavy penalties on various sugarcane crushing units for alleged violation of emission and effluent standards, non-installation of equipment like e-monitoring systems, flow meters, etc. and other environmental non-compliances.

In August 2018, the National Green Tribunal (NGT) during the hearing of a matter related to water discharge quality, gave directions to the CPCB to ensure that discharge quality of environmental pollutants remains within notified standards. The NGT left the decision to take penal actions and to assess and recover compensation for damage caused to the environment at the disposal of CPCB. As a result, the CPCB constituted a committee which included the Chairman, to provide the formula for calculation of environmental compensation. This Committee prepared a policy on “Methodology for Assessing Penalty & Environmental Compensation and Action Plan to Utilize the Fund”.

On 19 February 2019, the NGT had also considered the recommended formula for calculation of environment compensation, as devised by the Monitoring Committee, in the matter of ParyavaranSurakshaSamiti vs. Union of India.

The formula for calculation of the Environmental Compensation (EC) is as follows:

EC=PI x N x R x S x LF

Where EC is Environmental Compensation in (₹)

PI = Pollution Index of the industrial sector

N = Number of days of the violation

R = Factor in Rupees (₹) for deriving the EC, which may be a minimum of 100 and a maximum of 500.

S = Factor for the scale of operation which could be based on small/medium/large industry categorization, which may be 0.5 for micro or small, 1.0 for medium, and 1.5 for large units

LF = Location factor

This formula incorporates the anticipated severity of environmental pollution in terms of Pollution Index, duration of violation in terms of the number of days, the scale of operation in terms of micro & small/medium/large industry, and location in terms of proximity to the large habitations. The Pollution Index was first used by the CPCB to categorize the Industrial sectors into Red, Orange, Green, and White categories and the same Pollution Index is now being used for the purpose of calculating the EC. A sample list of Location Factors was also provided therein, which can be used for calculating the EC.

In several cases, the CPCB, in its closure notice, did not include a breakdown of the compensation, the formula used for calculating said compensation, or a breakdown of the variables taken into consideration for said calculation. The closure notices were issued for a variety of reasons that were laid out in the notices, however, neither were the samples,  which would form the basis of the effluent emission tests, gathered in the prescribed manner as laid out by the EPA and rules nor was the rationale for the compensation stated in the notice/direction.

What caused a further blow to the units was that the compensation was decided without taking into account the measures taken by the units, wherein the units had already spent 10s of lakhs on the equipment and installation thereof, as directed by the CPCB. Other factors that may have been complex to estimate were assumed to be at the highest side and hence were calculated keeping a worst-case scenario in mind. Water samples collected by the personnel weren’t supplied to the management at the sugarcane units and there was no record of the time period which might have passed between the collection and the testing of the collected samples. A lot of incompetencies of the aforesaid nature were reviewed by professionals who came to the aid of these sugarcane units which were already undergoing crippling losses due to the sugar cane industry and were on the brink of closing down, irrespective of the verdict of the closure notice.

Grave miscalculations on part of the CPCB run compensation into crores

The CPCB has been miscalculating compensations in violation of the committee report[1] as also expressed in ParyavaranSurakshaSamiti vs. Union of India.

According to the committee report, the Pollution Index (“PI”) variable to be considered during calculation is adopted according to the zone that the industry falls in. The sugar industry; accordingly, falls under the Red Zone[2]. The report suggests that an average index of 80 must be considered for purposes of the calculation for the Red Zone. ‘N’ which depicts the number of days for which the specific violation occurred must, according to the report, be the number of days counted from the day the violation was observed till the day the recommended changes were made and the error was cured. ‘R’ is the variable for Rupees, wherein a minimum of 100 and a maximum of 500 may be considered for the calculation. The report suggests that R must be considered at 250, as the Environmental Compensation in cases of violation.S, according to the report, must be based on the small/medium/large industry categorization, which may be 0.5 for micro or small, 1.0 for medium and 1.5 for large units. ‘LF’ or the location factor, could be based on the population of the city/town and location of the industrial unit. Wherein less than 1 million is calculated at 1.0 and 10 million and above at 2.0.

It has been observed in numerous cases, that sugarcane crushing units have been fined with compensation to the tune of Rs. 1,30,00,000 to Rs1,51,00,000. These figures, for a medium scale industry which only works 6 months a year, aren’t possible unless the variables assumed are at their maximum value during the calculation. Also noteworthy is that the CPCB has assumed the value of the number of days ‘N’ to be between 160 to 183 days; even though the unit works only for 6 months in a year. The CPCB itself conducts audits at the units only once every season and hence it is technically impossible for the CPCB to be aware of the violations being cured unless there are at least 2-3 inspections at the unit.


This isn’t the first time that such trends on account of the CPCB have been noticed. On various occasions, the NGT has explicitly stated that compensations cannot be arrived at with certainty, and has hence proceeded to rely on guesswork to determine the penalty. In two cases, Krishan Kant Singh vs. Triveni Engineering Industries Ltd., and DSM Sugar Distillery Division vs. Shailesh Singh, the Tribunal categorically mentioned dependence on ‘guesswork’ for arriving at the compensation amounts.


2019 has been a great year for climate change and environmental awareness. With an increasing number of people speaking up and against environmental hazards caused by commercial industries, it has become imperative for the apex body that deals with pollution control for two of the most basic sources of life i.e. water and air, to pull up its socks and make explore ways to understand the state of industries and workmen rather than making elaborate arrangements for waste/effluent monitoring that turn out to be excessively expensive for industries, especially loss-making industries like the sugar industry and that leave the management with no option but to resort to ways for cost-cutting. It is also important for the body to make efforts towards substantial and innovative ways to set up machinery which is cost-effective, easy to understand, and accepted by agricultural industries.

The trend of imposing heavy penalties marred with logical and calculative flaws only causes citizens, especially the ones that are directly affected by the government body’s regulations and impositions, to lose trust in the one institution which factually has the duty to lead the citizens to wholeheartedly care and works towards the betterment of the environment.

Author: Niharika Sanadhya, Associate at IP & Legal Filings. In case of any queries please contact/write back to us at

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