- FACTS
The company Electrosteel Steels Limited (ESL) operates a huge steel production facility in Bokaro, Jharkhand, which leaves behind a substantial economic footprint. The company has stated that it has approximately 3,000 regular and 7,000 contractual employees, and its steel production stands valued at Rs.4,200 crores. On top of this, the plant also indirectly has around 30,000 individuals who rely in it for their livelihood. ESL, subject to previous proceeding, was acquired by Vedanta Ltd. in June 2018 under a Corporate Insolvency Resolution Process (CIRP), where they paid Rs.5,320 crores to clear ESL’s debts.
Originally, ESL had obtained Environmental Clearance (EC) in February 2008 from the Ministry of Environment, Forest and Climate Change (MoEF&CC) for establishing a 3 MTPA integrated steel plant in Bokaro District. Subsequently, the company shifted the plant location to Mauza Bhagabandh in Chas Block, approximately 5.3 kilometers from the approved site by the Ministry. This relocation also allegedly involved encroaching on 220.88 acres of forest land, which led to legal disputes. The Jharkhand State Pollution Control Board (JSPCB) denied ESL’s Consent to Operate (CTO) in November 2013, citing the site shift and forest land encroachment as issues.
Despite a Jharkhand High Court order in January 2011 quashing cases against ESL, the company still faced continued regulatory challenges. JSPCB issued a show cause notice in November 2017 regarding these allegations on CTO contraventions, and ESL followed with a writ petition. The High Court allowed ESL to operate under JSPCB supervision while seeking revised clearances. However, on 20th September 2018, MoEF&CC revoked the EC due to encroachment and unauthorized relocation.
- ISSUES RAISED
- Whether ESL’s shifting of the steel plant site and encroachment on forest land justified the revocation of its EC.
- Whether there was fairness in the MoEF&CC’s decision to revoke the EC, especially regarding the process followed and the impact on ESL’s operations and its employees
- Whether a business that supports hundreds of people and contributes to the nation’s economy should be shut down for the technical irregularity regarding Environmental clearance?
- CONTENTIONS
- Electrosteel Steels Limited:
They argued that the relocation of its steel plant was just a minor change that did not alter the environmental impact zone that was made for the purpose of the initial clearance according to the Notification. The original Environmental Clearance (EC) granted in 2008 was based on a site that was approximately 5.3 kilometers away from the new location. It was also contended that this relocation did not warrant any new public hearings or additional clearances as it was only a small shift in geographical terms and the public affected remained the same. They maintained that the revocation of the EC was unjust and arbitrary, given that the decision was made without properly adhering to principles of natural justice. At no point was ESL given a proper chance to speak their part. The significant economic impact such a revocation would have on their operations, including the livelihoods of their 3,000 regular and 7,000 contractual employees were highlighted by ESL. The company also emphasized on its continuous efforts to comply with environmental regulations and pointed out that there were no other active pollution violations other than the accusations/allegations made.
- Ministry of Environment, Forest and Climate Change and the Jharkhand State Pollution Control Board:
They contended that ESL’s actions, including relocating the plant and encroaching on forest land, were significant enough to require a new set of environmental clearances and public hearings. Since the act was of such huge offense, there is a requirement to start from scratch so as to ensure there is no further violations made. They argued that such relocations and land encroachments fundamentally altered the environmental impact scenario initially assessed and the impact zone and population would alter even if the geographical extension was only a mere 5.3 Kilometers. The MoEF&CC and JSPCB emphasized that compliance with environmental laws was crucial to prevent and mitigate potential harm to the environment. They asserted that ESL’s failure to adhere to these regulations justified the revocation of the initial EC and its renewal. They kept emphasising on the necessity of maintaining stringent environmental standards and ensuring that all significant deviations from approved plans undergo proper scrutiny to safeguard ecological balance and community health.
- RATIONALE
The Supreme Court put emphasise on the importance of balancing environmental protection with economic and social impacts. While it acknowledged the necessity of strict compliance with environmental regulations, it also considered the significant investments made by ESL and the employment provided by the steel plant. The Court recognized that ex post facto clearances are generally not favoured but can be considered in specific cases where compliance can be achieved and practical consequences, such as workforce impact, are significant.
The Court found that the Jharkhand High Court erred in vacating the interim orders, given that ESL had obtained the necessary clearances and operated within the environmental impact area. The Court deemed the relocation as a minor issue that did not necessitate fresh public hearings, reflecting an understanding of the practical aspects of regulatory compliance.
- DEFECTS OF LAW
The revocation of the EC by MoEF&CC lacked adequate adherence to the principles of natural justice. This included potential issues with how ESL was notified and given an opportunity to respond to the allegations before a final decision was made.
The handling of ex post facto clearances lacked consistency with previous judicial pronouncements, which emphasized the necessity of balancing environmental protection with practical and economic considerations. The case revealed a need for clearer guidance on managing regulatory compliance in complex situations involving significant economic and social impacts.
- INFERENCE
The Supreme Court’s decision in 2021 shows a new approach to environmental regulation, where balancing the need for compliance with broader economic and social considerations is highlighted. In cases involving industrial operations that began without adequate environmental clearances, such as the Electrosteel Steels Limited case, the Court has shown reluctance to order closures despite technical irregularities. This reluctance is often driven by concerns about the economic impact, including the livelihoods of workers and the contributions to the national economy. The Court has highlighted that while adherence to environmental laws is critical, there should be a proportional response that considers significant investments and the impact on employment.
This trend was further evidenced in the Pahwa Plastics Pvt. Ltd. case, where the National Green Tribunal (NGT) addressed industrial units operating without prior environmental clearances. Although these units were found in violation of the law, the NGT’s decision showed the importance of considering the large workforce and economic contributions of the industries before resorting to shut down these economic boosters. The Court recognized that while the law mandates environmental clearance and impact assessments, post-facto approvals are legally permissible, reflecting a shift towards accommodating economic realities alongside environmental protection.
This evolving perspective suggests a broader, more multi-dimensional approach to environmental jurisprudence, where the Court not only addresses violations but also considers the overall impact on affected communities and the economy. However, this shift raises questions about whether economic concerns can adequately justify overlooking environmental non-compliance. The principle of sustainable development, integral to the right to a clean and healthy environment, requires careful evaluation of potential environmental impacts and
measures to minimize them. As the judiciary continues to navigate this balance, the long-term implications for environmental jurisprudence remain to be seen.