Environmental compensation must track actual harm; turnover-based enhancement and ultra vires PMLA directions were struck down.

Environmental compensation must bear a rational nexus to the harm caused and be fixed under the applicable regulatory methodology; a turnover-based enhancement without such nexus was unsustainable and was set aside. A tribunal confined to environmental adjudication cannot direct the Enforcement Directorate to examine action under the Prevention of Money Laundering Act, 2002 without a proper statutory basis; that direction was beyond jurisdiction and was set aside. Where compliance had been reported, continuing audit, monitoring, restoration and regulatory supervision could be retained, but blanket closure directions were unnecessary and excessive and were set aside.

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Issues: (i) Whether the environmental compensation of Rs. 50 crores could be sustained when the compensation already determined by the statutory bodies was based on the governing environmental-compensation methodology and the turnover-based enhancement lacked nexus with the pollution alleged; (ii) Whether the direction to the Enforcement Directorate to examine the matter under the Prevention of Money Laundering Act, 2002 could be sustained; (iii) Whether the sweeping closure directions could stand after the report of compliance and in the presence of continuing monitoring powers.

Issue (i): Whether the environmental compensation of Rs. 50 crores could be sustained when the compensation already determined by the statutory bodies was based on the governing environmental-compensation methodology and the turnover-based enhancement lacked nexus with the pollution alleged.

Analysis: The compensation already assessed by the competent pollution-control bodies had to be tested on the basis of environmental harm and the applicable methodology, not by reference to the industry's revenue. A polluter's turnover has no necessary connection with the quantum of environmental damage. If the existing compensation was thought to be inadequate, the proper course was to apply the prescribed methodology, not to impose a large ad hoc amount on a turnover basis.

Conclusion: The turnover-based enhancement of compensation was unsustainable and was set aside.

Issue (ii): Whether the direction to the Enforcement Directorate to examine the matter under the Prevention of Money Laundering Act, 2002 could be sustained.

Analysis: The power of the National Green Tribunal is confined to the statutory field of environmental adjudication and relief. A direction to initiate or examine proceedings under the Prevention of Money Laundering Act, 2002 requires a distinct statutory foundation and cannot be issued in the absence of a scheduled offence or a proper complaint, especially when the Tribunal is not the forum entrusted with PMLA enforcement.

Conclusion: The direction to the Enforcement Directorate was beyond jurisdiction and was set aside.

Issue (iii): Whether the sweeping closure directions could stand after the report of compliance and in the presence of continuing monitoring powers.

Analysis: Once compliance had been reported and accepted to the extent noted, the Tribunal could retain directions for audit, monitoring, restoration, and further regulatory supervision. However, a blanket closure direction for units or divisions falling short of compliance was unnecessary and excessive when statutory regulators retained the power to act upon any future violation.

Conclusion: The sweeping closure directions were set aside, while directions for continuing monitoring and compliance oversight were retained.

Final Conclusion: The appeal succeeded in substantial part: the punitive and ultra vires directions were removed, but the regulatory monitoring framework was preserved to ensure continued environmental compliance.

Ratio Decidendi: Environmental compensation must bear a rational nexus to environmental harm and be determined under the applicable regulatory methodology; a tribunal cannot enlarge its jurisdiction by directing action under a different penal statute or by issuing blanket coercive directions where ongoing statutory compliance supervision is sufficient.

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