Exim Knits Pvt. Ltd. vs Chairman And Ors

The 1st respondent, Tamil Nadu State Pollution Control Board (Board) by order dated 13.06.2011 directed the applicant to remit an amount of Rs.76,77,480/- by way of fine for a period of 467 days from 04.07.2007 to 19.01.2009 holding that the applicant unit comes under category 'c' as per the order of the Hon'ble High Court in W.P.Nos.5494 of 1998 and 30153 of 2003 dated 04.7.2007 and 09.08.2007. That order is challenged in the application. The application was originally filed before the Hon'ble High Court of Judicature at Madras as W.P.No.20310 of 2011. Later, it was transferred to the Tribunal following the directions of the Hon'ble Supreme Court of India in Bhopal Gas Peedith Mahila Udyog Sangathan and others vs. Union of India and others reported in (2012) 8 SCC page 326.

The relevant portion of the impugned order dated 13.06.2011 reads as follows:

"I am to inform that subsequent to the Hon'ble High Court order dt. 04.07.07 and 09.08.07 in W.P.No. 5494/98 and 30153/03, your unit namely M/s. Exim Knits Private Limited located at Plot No. G-9 & F.21, SIPCOT Industrial Growth Centre, Perundurai has been categorized as 'c' category and you have remitted the deposit amount of Rs.50,000/- vide C.R.No.37385 dt. 01.10.2009.

However, as per the Hon'ble High Court Order dt. 04.07.07 and 09.08.07 issued in W.P.No.5494/98 and 30153/03, the units falling in category 'c' should remit fine amount at 6 paise per litre of the effluent. However, you have not yet remitted the fine amount of Rs. 76,77,480/-.

Hence, I request you to remit the fine amount of Rs.76,77,480/- (Rupees seventy six lakhs, seventy seven thousand four hundred and eighty only) immediately in this office. The amount should be remitted in the form of a Demand Draft drawn in favour of "The District Environmental Engineer, Tamil Nadu Pollution Control Board, Perundurai" and payable at Perundurai."

The Hon'ble High Court of Madras by common order in W.P.Nos.5494 of 1998 and 30153 of 2003, accepting the report of the Monitoring Committee appointed by the Court, categorised the units as category 'a' to 'f'. The relevant portion of the order of the Hon'ble High Court of Madras reads :

"In pursuance of the notice issued by this Court several units appeared before us and made their submissions. In the light of the submissions made on their behalf the units can be divided into following categories.

a) Units now approached this Court stating that RO and RMS have been provided for the Consented/applied capacity;

b) Units now making reduction of production capacity by removing process machines;

c) Units which are seeking time to install RO and RMS;

d) Units which are not applied for / applications not resubmitted;

e) Units willing to switch over for bleaching operation; and

f) Units which claim to have provided for a different technology like sprinkler system."

The following directions were issued in respect of category (a) to (c) which are only relevant to this case.

"As far as category (a) i.e., units who now claim to have provided with RO and RMS etc. is concerned, they will give intimation to the Board within two weeks that they have provided RO and RMS for the consented/applied capacity and deposit a sum of Rs.50,000/- each with the Board and remove the bypass, if any, for discharging their effluents. The Monitoring committee will carry out inspection of these units within four weeks from the date of the intimation and report to the Board whether RO and RMS have been provided for consented/applied capacity. If the units are found to be provided with RO and RMS and complied with the requirement and achieved "zero" discharge, then the Board will return a sum of Rs.25,000/- to the concerned unit retaining the remaining amount towards inspection charges. However, in case the Monitoring Committee reports non-compliance, the Board shall forthwith direct closure of the units and electricity supply of such units shall be discontinued and the amount of Rs.50,000/- shall stand forfeited. It if further made clear that the affidavits filed by the units claiming compliance found to be false, this Court will be constrained to take action for contempt against such units.

So far as the Category (b) is concerned i.e., units claiming reduction of production capacity by removing process machines, the concerned units shall make a representation to the Board within two weeks with a written undertaking for removing/dismantling the excess process machines to the capacity of RO and RMS and deposit a sum of Rs.25,000/- with the Board.

The Monitoring Committee shall inspect the unit and thereafter, the complied units may be permitted to operate. Needless to say that in the event of non-compliance the units shall be liable to be closed and the electricity supply to such units shall be liable to be disconnected.

The next Category is (c) where time extension is sought for to install RO and RMS. It may be remembered that this Court has granted sufficient time to the defaulting units to install RO and RMS. The Board may grant a further period of three months as a last chance for the installation of RO and RMS systems and during that period, the concerned units will pay a fine of six paise per litre of discharge to the Board. In addition, the concerned units will deposit a sum of Rs.50,000/- each with the Board within a period of two weeks. The units will be inspected after three months by the Board and the Monitoring Committee jointly. In case a failure to install RO and RMS and achieve " zero" discharge, within the said period of three months, the amount of Rs.50,000/- will be liable to be forfeited and in that event, the Board will direct the closure of such defaulting units and direct disconnection of electricity supply to the units. As far as the Tamil Nadu Co-operative Textile Processing Mills, Erode is concerned, originally they have decided to shift to a different places but as the shifting is not feasible, now they have taken a decision to install RO and RMS plant in their unit, within a period of six months. During the said period, they have to pay a fine of six paise per litre for the first three months and *ten paise per litre for the remaining three months."

We are only concerned about 'a' to 'c' in this application.

The applicant was admittedly granted Consent originally on 07.12.2006 under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974 for a period ending with 31.03.2007 for a capacity of 274 KLD. The special conditions annexed to the Consent to Establish reveal that the unit had installed the RO Plant as well as Reject Management System (RMS) at the time of establishment, even before granting Consent. The Special Condition No.1 of the order of consent reads as follows:

"The Unit shall operate and maintain the treatment components pertaining to three stage R.O. plant for wash water effluent, MEE system for the segregated dye bath effluent and rejects from R.O -III and Solar Evaporation Pan provided for the capacity of 273 KLD (for the recovery and reuse of water in the process) so as to achieve zero discharge of effluents. The unit shall operate and maintain the candidate MEE system so as to achieve zero discharge of effluent."

So also Special Condition Nos.7 to 11 establish that R.O. system was already there and the Board was satisfied with the R.O. system.

The Special Condition No.15 provides that "the Unit shall operate the Electromagnetic Flow Meter (EMFW) with computer recording arrangements to assess the quantity of effluent at the following points:

• Outlet of the equalization tanks of the wash water effluent and dye bath effluent separately.

• Outlet of the R.O permeates and condensate from mechanical evaporation system storage tank for the reuse in the process.

• Inlet to the multiple effect evaporator system.

• Inlet of the solar evaporation pan."

Hence it is clear that the applicant unit had a R.O and RMS much before the order of the Hon'ble High Court of Madras dated 04.07.2007.

The fact that the applicant unit had installed the R.O and RMS prior to the order passed by the Hon'ble High Court of Madras on 4.7.2007 is not only not disputed but also admitted by the Board. When the Monitoring Committee, pursuant to the directions of the Hon'ble High Court of Madras inspected the applicant unit it was found that the unit is having the R.O and RMS. The only defect noted in respect of the applicant unit was that the RMS was inadequate. The Monitoring Committee reported that the unit was not operating on that day and therefore it's functioning could not be verified.

Pursuant to the directions of the Hon'ble High Court, the Board issued show cause notice dated 10.07.2008 categorising the unit of the applicant under category 'b' as follows:

"The unit was categorized under I (ii) (B) category that is RO system adequate but RMS not adequate with respect to consented quantity in the report submitted to the Hon'ble High Court of Madras in W.P. No. 5494/98 and 30153/03. The unit has not categorized itself into any one of the category and intimated to the Board so as to arrange for the inspection of the Monitoring Committee as directed by the Hon'ble Court in its order dated 04.07.2007 in the said writ petitions."

Alleging that the applicant unit violated the conditions of Consent issued to the Unit, the applicant was directed to show cause within seven days from the date of receipt of the notice as to why penal action shall not be taken under Section 44 read with Section 45 of the Water (Prevention and Control of Pollution) Act, 1974 and as to why directions under Section 33A of the Act shall not be passed, for closure of the unit, stoppage of power supply, water supply etc., On 16.07.2008 applicant submitted the explanation stating that the unit does not come under category 'b', but comes only under category 'c'.

Applicant filed W.P.18026 of 2008 before the High Court to accept Rs.50,000/- and inspect the unit as the application for renewal of consent was not accepted by the Board without complying the directions of the Hon'ble High Court. The Writ Petition was disposed with a direction to accept the amount and to inspect the unit. The unit was then inspected by the Board on 10.09.2008. By order dated 15.10.2008, the Board directed the applicant unit to restrict the capacity from 274 KLD to 89 KLD. The unit was therefore operating with the restricted capacity. On 03.11.2008, the applicant sought permission to operate with the consented capacity of 274 KLD. The applicant was directed to deposit Rs.50,000/- for inspection. After inspection, the consent was renewed upto 31.03.2010. It was then renewed upto September, 2010.

Thereafter, the impugned order was passed imposing a fine based on the basis that the unit comes under category 'c'. The applicant unit was directed to pay the fine as directed by the Hon'ble High Court of Madras in respect of category 'c' , for the period from 04.07.2007 to 19.01.2009. The question is whether the applicant unit would come under category 'c' and if not, whether the impugned order is sustainable.

The applicant had furnished explanation to the show cause notice, contending that the unit does not come under category 'b' as provided in the order of the Hon'ble High Court. In the reply the applicant stated that when the Monitoring Committee inspected the unit, it was not in operation for want of work and had the unit been in operation, the status of functioning of the unit would have been shown as " in operation" in the report of the Monitoring Committee. As admittedly there was no production activities on that day, the steam boiler was not in operation and as a consequence, the Multiple Effect Evaporator System was also not in operation. It is pointed out that it is for that reason the Monitoring Committee concluded that RMS is inadequate though RO system was reported to be adequate.

It cannot be disputed that the fine imposed under the impugned order was as per the directions of the Hon'ble High Court of Madras, based on the assumption that the applicant unit would come under category 'c'. As rightly argued by the learned counsel appearing for the applicant in order to categorize the unit falling in category 'c', the unit should have been found not installed with RO and RMS on 04.07.2007, the date of the order of the Hon'ble High Court and inspite of the directions of the Hon'ble High Court, if the unit failed to install the RO and RMS. Such units are liable to pay a fine of six paise per litre of discharge, to the Board. Even according to the Board, the applicant had installed the RO and RMS before 07.12.2006, the date of the order of Consent first given to the applicant unit. Therefore, the applicant is not a unit, which did not install RO and RMS as on 04.07.2007 and sought extension of time for installation of RO and RMS and still failed to install the same as specified in category 'c". Therefore, we have no hesitation to hold that the applicant unit will not come under category 'c'. In the show cause notice originally issued by the Board, the case was that the unit would come under category 'b'. Evidently, as pointed out by the learned counsel appearing for the applicant, in the report of the Monitoring Committee the units were classified as category (I) to category (III) and category (I) was sub divided into sub category (1) to (6). Category (I) refers to units which have obtained Consent. Out of them Sub category (1) refers to units which have provided for achieving Zero Liquid Discharge (ZLD), adequate RO and adequate RMS. Sub category (2) refers to cases where the RO system is adequate to handle the consented quantity of discharge, but the RMS arrangements are inadequate. It is that sub category (2) of category (I), which was evidently taken as category B2 in the show cause notice issued by the Board. But category 'b' units classified by the order of the Hon'ble High Court, are not the units which installed adequate RO system but having only inadequate RMS. Category 'b' as classified by the Hon'ble High Court is only those units claiming reduction of production capacity by removing process machines, who shall make a representation to the Board with a written undertaking for removing / dismantling the excess process machines to the capacity of RO and RMS. The Board has no case that the applicant unit ever claimed reduction of production capacity by removing the process machines. Therefore the applicant unit will not come under category 'b' also. Even if a unit comes under category 'b', the unit is not liable to pay a fine as the order of the Hon'ble High Court specifically provides that fine is to be payable only by the units coming under category 'c'. The applicant unit, having installed the RO and RMS even before the original Consent was granted on 07.12.2006, will come under category 'a'. Therefore, the Board is not entitled to demand the fine amount from the applicant unit which is liable to be paid by a unit coming under category 'c'.

Therefore, we hold that the applicant is not liable to pay the fine amount demanded under the impugned order. The respondents are directed not to claim Rs.76,77,480/- demanded under the impugned order dated 03.06.2011. We hold that as the applicant unit does not come under category 'c' of the order of the Hon'ble High Court of Madras, the applicant is not liable to pay the fine amount.

Application is disposed accordingly, with no order as to costs.