Summary and Analysis of Ms C L Gupta Export Ltd vs Adil Ansari & Ors
1. Heading of the Judgment
The Supreme Court of India allowed the appeal filed by M/s C.L. Gupta Export Ltd. and set aside certain directions issued by the National Green Tribunal (NGT). The Court held that the NGT exceeded its jurisdiction by imposing a heavy environmental compensation based on the appellant’s turnover and by directing the Enforcement Directorate to initiate action under the Prevention of Money Laundering Act, 2002 (PMLA). The Court emphasized that penalties must have a rational nexus with the environmental damage caused and that tribunals must act within their statutory powers.
Citation: M/s C.L. Gupta Export Ltd. vs. Adil Ansari & Ors., Civil Appeal No. 2864 of 2022, Supreme Court of India, decided on August 22, 2025.
2. Related Laws and Sections
National Green Tribunal Act, 2010 (NGT Act): Specifically, Section 15, which empowers the NGT to provide relief and compensation for environmental damage.
Water (Prevention and Control of Pollution) Act, 1974: Governs prevention and control of water pollution.
Prevention of Money Laundering Act, 2002 (PMLA): Includes environmental laws in Part-A of Schedule I as scheduled offences.
CPCB Methodology (2019): Guidelines for assessing environmental compensation.
3. Basic Judgment Details
Parties:
Appellant: M/s C.L. Gupta Export Ltd., an exporter of handicraft items with multiple manufacturing units.
Respondent No. 1: Adil Ansari, the original applicant before the NGT who filed a public interest litigation (PIL) alleging environmental violations.
Other Respondents: Pollution Control Boards (Central and State), Central Ground Water Authority, and District Collector.Background: The NGT initiated proceedings based on a PIL alleging that the appellant was causing environmental degradation, polluting water, and extracting groundwater illegally. After multiple reports and hearings, the NGT imposed a compensation of ₹50 crores based on the appellant’s turnover and directed the Enforcement Directorate to investigate under the PMLA.
Procedural History: The NGT passed the impugned order after three years of proceedings. The Supreme Court reversed the NGT’s directions on compensation and PMLA action but upheld the need for continuous monitoring and audit.
4. Explanation of the Judgment
a. Environmental Compliance and Compensation
The appellant was initially found violating environmental laws, including ineffective effluent treatment, illegal groundwater extraction, and operating without consent. The Joint Committee constituted by the NGT recommended environmental compensation (EC) based on the CPCB’s 2019 methodology. The appellant paid the levied EC and implemented mitigation measures, leading to a final report dated July 30, 2021, confirming full compliance.
Despite this, the NGT imposed an additional compensation of ₹50 crores based on the appellant’s alleged annual turnover of ₹550 crores. The Supreme Court held that there must be a rational nexus between the penalty imposed and the environmental damage caused. Relying on Benzo Chem Industrial (P) Ltd. v. Arvind Manohar Mahajan (2024), the Court reiterated that turnover cannot be the basis for determining environmental compensation. The NGT should have referred to the CPCB methodology instead of arbitrarily using turnover. Consequently, the Court set aside the ₹50 crores compensation.
b. Direction to Enforcement Directorate under PMLA
The NGT directed the Enforcement Directorate (ED) to examine the matter under the PMLA. The Supreme Court, citing Waris Chemicals (P) Ltd. v. U.P. Pollution Control Board (2025), held that the NGT lacks jurisdiction to direct action under the PMLA. For the PMLA to apply, there must be a scheduled offence (e.g., an FIR or complaint under environmental laws), which was absent here. The Court set aside this direction, emphasizing that the NGT’s powers are confined to Section 15 of the NGT Act, which relates to environmental compensation and relief, not criminal prosecution under other statutes.
c. Closure Directions and Continuous Monitoring
The NGT also ordered the closure of the appellant’s non-compliant units. The Supreme Court set aside this sweeping direction, noting that the latest reports confirmed compliance. However, the Court upheld the need for continuous monitoring, audit, and restoration measures by the Pollution Control Boards to ensure ongoing compliance. The jurisdictional PCBs retain the authority to take action, including closure, if future violations occur.
d. Judicial Approach and Observations
The Court expressed concern over the NGT’s lengthy judgment, which extensively discussed general environmental principles without sufficient focus on the specific facts of the case. It emphasized that adjudication must be based on judicious consideration of facts, not mere rhetoric. The Court warned against tribunals overstepping their jurisdiction and issuing directions without legal basis.
5. Conclusion and Directions
The Supreme Court allowed the appeal and set aside the NGT’s order regarding:
The imposition of ₹50 crores compensation based on turnover.
The direction to the Enforcement Directorate to proceed under the PMLA.
The blanket closure order for the appellant’s units.
The Court upheld the necessity of continuous monitoring and audit by the Pollution Control Boards to ensure environmental compliance. The appellant remains liable for any duly levied environmental compensation under the CPCB methodology, subject to statutory challenges.