CENTRAL UNIVERSITY OF SOUTH BIHAR, GAYA

SCHOOL OF LAW AND GOVERNANCE

PROJECT WORK
ENVIRONMENTAL LAW
Polluter Pays Principle and its applicability in India

Submitted to Mrs. Poonam Kumari

By- Kundan Kumar

Ba.Llb(h)

7th semester

cub14131250__

CUSB, Gaya

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 CONTENTS

SR.NO. TITLE PAGE NO.

2. LITERATURE REVIEW 04
3. INTRODUCTION 05
4.
5.

6.

7.

8.

9.

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 ACKNOWLEDGMENT

During the course of writing this project, I have received the help, encouragement and assistance from my
teacher, colleagues, friends, library staff and other. I am thankful to all of them.

I am very thankful to my Environmental Law teacher, Ms. Poonam Kumari for encouragement and
support that she provided during the preparation of the project.

I am deeply indebted to the works of eminent legal experts and law scholars and other scholars of repute,
whose valuable work has been highly useful in writing this project.

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 LITERATURE REVIEW

BOOKS REFFERED
1. SC Shastri, Environmental Law, (5th edition Eastern Book Company)
2. Class Notes
3. Dr. Sukanta K. Nanda, Environmental Law, (Central Law Publications, 2007)

CASES REFFERED

LAW JOURNALS & WEBSITES REFFERED

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Ch.1 Introduction

Polluter Pays Principle has become a popular catchphrase in recent times. 'If you make a mess,
it's your duty to clean it up'- this is the main basis of this slogan. It should be mentioned that in
environmental law, the 'polluter pays principle' does not refer to "fault." Instead, it favors a
curative approach which is concerned with repairing ecological damage. It's a principle in
international environmental law where the polluting party pays for the damage done to the
natural environment. It is regarded as a regional custom because of the strong support it has
received in most Organization for Economic Co-operation and Development (OECD) and
European Community (EC) countries. International environmental law itself mentions little
about the principle.

In recent days, the polluter pays principle is seen as a way of internalizing pollution-related costs
within the context of the economic rationality of the enterprise. There is a close relationship
between a country's environmental policy and its overall socioeconomic policy. Furthermore,
under this principle it is not the responsibility of government to meet the costs involved in either
prevention of environmental damage, or in carrying out remedial action, because the effect of
this would be to shift the financial burden of the pollution incident to the taxpayer. But State
practice does not support the view that all depollution costs should be borne by the polluter,
particularly where transnational dispute is involved.

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Ch.2 Historical Evolution of the PPP

The first major reference to the PPP appeared 1972 in the OECD Guiding Principles Concerning
International Economic Aspects of Environmental Policies (henceforth called OECD Guiding
Principles). The PPP as a guiding principle across countries became necessary because some
countries faced complaints by national firms about rising costs and a loss of international
competitiveness following a national implementation of the PPP within their borders. The OECD
Guiding Principles define the PPP as an instrument for "... allocating costs of pollution
prevention and control measures".

The polluter should bear these costs in order to achieve and maintain an "... acceptable state of
environment" which is determined by the public authorities. The OECD Guiding Principles also
state that the PPP should "... not be accompanied by subsidies that would create significant
distortions in international trade and investment" This weak or standard definition of the PPP
neither requires polluters to bear the costs of accidental damages, nor do they have to pay for
residual pollution.

The range of costs to be borne by the polluter has expanded over time. In 1989, the OECD
suggested extending the PPP in order to cover the costs of accident prevention and to internalise
the environmental costs caused by accidents. In 2001, the OECD Joint Working Party on
Agriculture and Environment stated that according to the PPP

"... the polluter should be held responsible for environmental damage caused and bear the
expenses of carrying out pollution prevention measures or paying for damaging the state of the
environment where the consumptive or productive activities causing the environmental damage
are not covered by property rights." This version of the PPP is referred to as the extended or
strong PPP in the literature.

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Only one year later, the European Community followed the example of the OECD Principles
from 1972 by adopting the first Environment Action Programme (EAP). Since 1987, the PPP has
been part of European Law. It is included in Article 174 of the EU Treaty (1997). Since 1990,
when the International Convention on Oil Pollution Preparedness, Response and Co-operation
was agreed upon by the International Maritime Organization (IMO), the PPP has been
acknowledged as a " ...general principle of international environmental law." In 1992, the Rio
Declaration (UNCED) included the PPP in Principle 16: "National authorities should endeavour
to promote the internalisation of environmental costs and the use of economic instruments,
taking into account the approach that the polluter should, in principle, bear the cost of pollution
with due regard to public interest and without distorting international trade and investment."

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Ch.3 Flaws in the PPP

It is true that polluter pays principle has a positive effect to reduce pollution. The principle seems
quite relevant for pollution that occurs during industrial activity, although it remains inefficient
in the case of historical pollution. Most developing countries, however, have not yet subscribed
to the PPP as a main environmental policy guideline. As Rege (1994) points out, this is due to
adverse economic conditions. Legal theorists discovered few loopholes of this rule.

The flaws are as follows:

Firstly, ambiguity still exists in determining 'who is a polluter'. In legal terminology, a

Second, a large number of poor households, informal sector firms, and subsistence farmers
cannot bear any additional charges for energy or for waste disposal.

Third, small and medium-size firms from the formal sector, which mainly serve the home
market, find it difficult to pass on higher costs to the domestic end-users of their products.

Fourth, exporters in developing countries usually cannot shift the burden of cost internalisation
to foreign customers due to elastic demand.

Lastly, many environmental problems in developing countries are caused by an

All of these problems make it difficult to implement the PPP as a guideline for environmental
policy in developing countries. Despite the fact that Polluter Pay Principle was publicized by
early conservationists as a means to reduce ecological pollution, still many consider it as a 'vague

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idea'. Some put forward their argument that under this principle a polluter fulfils his obligations
when he pays at least some of administrative expenses of the agencies who regulate pollution
activities. 'Exxon Valdez' case is the best example of this criterion of Polluter Pays Principle.
Others argue that it can only be satisfied by polluters when they will pay the total depollution
cost. And the rest support the view that tax (like 'Carbon Taxes') should be legitimised on the
users of the natural resources that cause atmospheric hazards.

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Ch.4 Indian Judiciary and PPP

"We are interested not only in the development but also in the enforcement of law" - Justice
Christopher G. Weeramantry [Vice President of the ICJ]

The judiciary in India recognizes the Polluter Pays Principle as is seen from the judgment
delivered by the Supreme Court of India in writ petition no 657 of 1995. In its order dated Feb.4,
2005, The Supreme Court held that " The Polluter Pays Principle means that absolute liability of
harm to the environment extends not only to compensate the victims of pollution, but also to the
cost of restoring environmental degradation. Remediation of damaged environment is part of the
process of sustainable development."

In order to link law and sustainable development we split sustainable development into two
components:-

Environmental Justice
Social Justice

The two principles of justice are

1. Polluter Pays Principle (PPP)

During the two decades from Stockholm to Rio "Sustainable Development" has come to be
accepted as a viable concept to eradicate poverty and improve the quality of human life while
living within the carrying capacity of the supporting eco-systems. "Sustainable Development" as
defined by the Brundtland Report means "development that meets the needs of the present
without compromising the ability of the future generations to meet their pwn needs". We have no
hesitation in holding that "Sustainable Development' as a balancing concept between ecology
and development has been accepted as a part of the Customary International Law though its
salient features have yet to be finalised by the International Law jurists.

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Some of the salient principles of "Sustainable Development", as culled-out from Brundtland
Report and other international documents, are Inter-Generational Equity, Use and Conservation
of Natural Resources, Environmental Protection, the Precautionary Principle, Polluter Pays
principle, Obligation to assist and cooperate, Eradication of Poverty and Financial Assistance to
the developing countries. We are, however, of the view that "The Precautionary Principle" and
"The Polluter Pays" principle are essential features of "Sustainable Development".

"The Polluter Pays" principle has been held to be a sound principle by this Court in Indian
Council for Enviro - Legal Action v. Union of India. The Court observed, "We are of the opinion
that any principle evolved in this behalf should be simple, practical and suited to the conditions
obtaining in this country". In this case the number of private companies operated as chemical
companies were creating hazardous wastes in the soil, henceforth, polluting the village area
situated nearby, and they were also running without licenses, so an environmental NGO, filed
writ petition under article 32 of the COI, which sought from the court to compel SPCB and
CPCB to recover costs of the remedial measures from the companies.

The Court ruled that "Once the activity carried on is hazardous or inherently dangerous, the
person carrying on such activity is liable to make good the loss caused to any other person by his
activity irrespective of the fact whether he took reasonable care while carrying on his activity.
The rule is premised upon the very nature of the activity carried on".

Consequently the polluting industries are "absolutely liable to compensate for the harm caused
by them to villagers in the affected area, to the soil and to the underground water and hence, they
are bound to take all necessary measures to remove sludge and other pollutants lying in the
affected areas".

The "Polluter Pays" principle as interpreted by the Court means that the absolute liability for
harm to the environment extends not only to compensate the victims of pollution but also the
cost of restoring the environmental degradation. Remediation of the damaged environment is
part of the process of "Sustainable Development" and as such polluter is liable to pay the cost to
the individual sufferers as well as the cost of reversing the damaged ecology.

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The court further stated that:

"According to this principle, the responsibility for repairing the damage is that of the offending
industry. Sections 3 and 5 empower the Central Government to give directions and take
measures for giving effect to this principle. In all the circumstances of the case, we think it
appropriate that the task of determining the amount required for carrying out the remedial
measures, its recovery/realisation and the task of undertaking the remedial measures is placed
upon the Central Government in the light of the provisions of the Environment [Protection] Act,
1986. It is of course, open to the Central Government to take the help and assistance of State
Government, R.P.C.B. or such other agency or authority, as they think fit."

In M.C.Mehta V. UOI, SC reffered the case of Enviro-Legal Action and Vellore Citizens case
and ordered the Calcutta tanneries to relocate and pay compensation for the loss of
ecology/environment of the affected areas and the suffering of the residents.

In Vellore Citizen's case, court held that:

The precautionary principle and the polluter pays principle have been accepted as part of the law
of the land. Article 21 of the Constitution of India guarantees protection of life and personal
liberty. Article 47, 48A and 51A(g) of the Constitutional are as under:

# Article 47. Duty of the State to raise the level of nutrition and the standard of living and to
improve public health. - The State shall regard the raising of the level of nutrition and the
standard of living of its people and the improvement of public health as among its primary duties
and in particular, the State shall endeavour to bring about prohibition of the consumption except
from medicinal purposes of intoxicating drinks and of drugs which are injurious to health.

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# Article 48A. Protection and improvement of environment and safeguarding of forests and wild
life. - The State shall endeavour to protect and improve the environment and to safeguard the
forests and wild life of the country.

# Article 51A(g). To protect and improve the natural environment including forests, lakes, rivers
and wild life, and to have compassion for living creatures.

Apart from the constitutional mandate to protect and improve the environment there are plenty of
post independence legislations on the subject but more relevant enactments for our purpose are:

The Water (Prevention and Control of Pollution) Act, 1974 (the Water Act), The Air (Prevention
and Control of Pollution) Act, 1981 (the Air Act) and the Environment Protection Act 1986 (the
Environment Act). The Water Act provides for the Constitution of the Central Pollution Control
Board by the Central Government and the Constitution of the State Pollution Control Boards by
various State Governments in the country. The Boards function under the control of the
Governments concerned. The Water Act prohibits the use of streams and wells for disposal of
polluting matters. Also provides for restrictions on outlets and discharge of effluents without
obtaining consent from the Board. Prosecution and penalties have been provided which include
sentence of imprisonment. The Air Act provides that the Central Pollution Control Board and the
State Pollution Control Boards constituted under the Water Act shall also perform the powers
and functions under the Air Act. The main function of the Boards, under the Air Act, is to
improve the quality of the air and to prevent, control and abate air pollution in the country. We
shall deal with the Environment Act in the later part of this judgment.

In view of the above mentioned constitutional and statutory provisions we have no hesitation in
holding that the precautionary principle and the polluter pays principle are part of the
environmental law of the country.

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Even otherwise once these principles are accepted as part of the Customary International Law
there would be no difficulty in accepting them as part of the domestic law. It is almost accepted
proposition of law that the rule of Customary International Law 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. To support we may refer to Justice H.R. Khanna's opinion in
Addl. Distt. Magistrate Jabalpur v. Shivakant Shukla, Jolly George Varghese's case and
Gramophone Company's case.

In the Kamalnath's case, court by considering the PPP as the law of the land, ordered that:

"It is thus settled by this Court that one who pollutes the environment must pay to reverse the
damage caused by his acts." Court disposed this matter by giving a show cause notice to the span
motels, that, why Pollution-fine and damages be not imposed as directed by us.

This case subsequently came up in front of the court in the year 2000 and court directed to the
span motels that: "The powers of this Court under Article 32 are not restricted and it can award
damages in a PIL or a Writ Petition as has been held in a series of decisions".

Henceforth, court directed a fresh notice to be issued to M/s. Span Motel to show cause why in
addition to damages, exemplary damage be not awarded for having committed the acts set out
and detailed in the main judgment. Finally in 2002, while granting exemplary damages court
held that:

"Liability to pay damages on the principle of 'polluter pays' in addition to damages, exemplary
damages for having committed the acts set out and detailed in the main judgment. Considering
the object underlying the award of exemplary damages to be to serve a deterrent for others not to
cause pollution in any manner. So the quantum at Rs. 10 lakhs is fixed for the span motels.

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Ch.5 Conclusion

It is good that India that imbibed the Polluter Pays Principle (PPP) in their Law of land. And, it
also had actually helped in imposing damages on the polluter but still the problem with this
principle is that it hasn't been implemented peoperly. If we look at the exemplary damages
granted to span motels doesn't serve the purpose of the exemplary damages. Ten lakhs rupees is
nothing for the big corporations like span motels. For them at least 10 crores Rs. exemplary
damges should be given. And again if we look at the penalty imposed in the Vellore Citizens
case, then it just shocks me that how 10,000 rupees can justify the pollution spreaded by the
tanneries in the nearby areas.

We should reconsider the criteria's laid to decide the compensation amount. Atleast it should
deter the polluters from spreading pollution. This principle needs a strict interpretation from our
judiciary with immediate effect and we just can't afford any sort of delay in its proper
implementation in developing country, like India.

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