M/s. Gotawat Industries vs Karnataka State Pollution Control Board And Ors

1) This appeal challenges the Order of the 1st Respondent, Karnataka State Pollution Control Board dated 29.07.2013 issued for closure of the Appellant's unit based on the Government of Karnataka's Thippagondanahalli Reservoir (TGR) Notification dated 18.11.2003.

2) Brief facts necessary for the disposal of the Appeal can be stated thus: The Appellant, a partnership firm engaged in the business of manufacture of plastic and other allied products has been running its Unit in the industrial area in Plot No.232, Sompura Industrial Unit, 1st Stage, Sy. No.41 and 42 at Makanakuppe, Nelamangala Taluk, Bengaluru Rural (North). It is being run as a small scale industry employing around 30 workers whose livelihood depends on the unit.

3) The Appellant approached Karnataka Industrial Area Development Board (KIADB), the 2nd Respondent herein, for the allotment of land to put up a manufacturing unit and the land was allotted measuring an extent of 4018 square meters in the Sompura Industrial Unit, 1st Stage, vide letter dated 21.01.2010 under a lease- cum- sale agreement and the same was also registered by the Sub- Registrar, Nelamangala, Bengaluru Rural (N) on 16.07.2010. A planning permission was also accorded on 27.07.2010 on compliance of the requirements. As per the planning permission, construction was completed by the Appellant and he also imported sophisticated machinery for the operation of the Unit. Financial assistance was also availed amounting to Rs.5 Crores through the Central Bank of India, Bengaluru City Branch, Bengaluru by way of equitable mortgage by depositing title deeds of the property and created a charge in favour of the Bank; also a deed of hypothecation was executed wherein the machinery imported from abroad was hypothecated in favour of the Bank. The Appellant approached the competent authorities and obtained all the necessary licenses for the commencement and operation of the Unit.

4) The Government of Karnataka issued a Notification on 18.11.2003, vide no. FEE 215 ENV 2000, wherein directions were issued in respect of TGR declaring the Schedule of Zones in the TGR. The land allotted to the Appellant does not fall under Sl.No.148 of Makanakuppe Village in the annexure of the Notification dated 18.11.2003 wherein, details of Village and Survey Number wise areas falling in various Zones of the TGR Catchment Area are referred to. Various authorities viz., Industries and Commerce Department, Electricity Board, Sales Tax and Central Excise Department and Labour Department also inspected the Appellant unit and after being satisfied that the unit doesn't fall under the TGR Notification, accorded licenses for running the business. Thereupon, the Unit of the Appellant became operational since January, 2012 and made a turnover amounting to Rs. 6 crores.

5) While it stood so, the 1st Respondent in his proceedings No. PCB/BNB/IND/CFE/2010-11/R 4832 sent a communication dated 15.12.2010 informing the Appellant that consent is accorded for establishment under Water (Prevention and Control of Pollution) Act, 1974 (Water Act,1974) and Air (Prevention and Control of Pollution) Act, 1981 (Air Act,1981)for the proposed unit to be engaged in the manufacture of plastic threads of capacity 500 T/month in Plot No.232, Sy.No.Part 41 and 42 of Makanakuppe, 1st Stage, Sompura Industrial area, Nelamangala Taluk, Bengaluru (North) with certain conditions. In the said letter, the Clause VIII of general condition envisages that the Appellant shall abide by the Government of Karnataka Notification dated 18.11.2003 as the proposed unit is situated in Zone - 4 of TGR Catchment area. Even without serving any Show Cause notice of the proposed direction under Section 33A of the Water Act, 1974 and Rule 34 of Water (Prevention and Control of Pollution) Rules, 1975 and Section 31 A of the Air Act, 1981 and Rule 20A of Air (Prevention and Control of Pollution) Rules, 1983 calling upon the Appellant to submit an explanation, the Appellant was directed to come for a hearing on 03.11.2011. It was further alleged that an inspection was done in the Appellant's unit by a Senior Environmental Officer on 24.10.2011 and that it was noticed that the Appellant Unit is falling under Zone-3 of the TGR Notification dated 18.11.2003. During the personal hearing, the Appellant explained that the land allotted to him was outside the purview of the Notification and it was further alleged that the Government of Karnataka has approved the interim Master Plan of Nelamangala Local Planning area vide Government Order No. NaAaEe/173/BMR/2006 dated 28.05.2009 and in the same approved Master Plan, the guidelines issued in accordance with the Notification dated 18.11.2003. While the Appellant was awaiting for a favourable reply, the 1st Respondent issued a letter dated 06.02.2013 informing the Appellant that the application for issue of consent for operation is returned, the reason being the unit is falling under Zone-3 of TGR notification. The Appellant subsequently represented orally to the 1st Respondent and impressed upon them to recall the order as otherwise it would put serious hardship to the Appellant Unit. Instead of accepting the explanation, the 1st Respondent has passed the impugned order of closure under Section 33A of Water Act, 1974 and Rule 34 of Karnataka State Board for the Prevention and Control of Pollution (Procedure for transaction of Business) and the Water (Prevention and Control of Pollution) Rules, 1976 in the proceedings No.KSPCB/CEO-2/TGRCA/2013-14 dated 29.07.2013 which was received by the Appellant on 08.08.2013 and it is the subject matter of challenge. The Appellant has filed a memo on 10.11.2014 stating that the TGR Notification dated 18.11.2003 was withdrawn by the Karnataka Government by a Notification issued in GO No. Aa/Pa/Jee/01/ENG/2011 dated 24.07.2014.

6) On notice, the Respondents have entered appearance. The 1st Respondent had produced an Order of Stay granted by the First Bench, Hon'ble Karnataka High Court in W.P. 38218/2013 on 28.11.2014. It is also pointed out that the High Court of Karnataka in its Order dated 02.02.2015 had appointed an amicus curiae and the Environmental Management & Policy Research Institute (EMPRI) to make a comprehensive study in accordance with the Terms of Reference as may be approved by the High Court of Karnataka and to submit an interim report latest by 27.04.2015. The 2nd Respondent in its reply stated that the Appellant's project proposal was approved by the 2nd Respondent and the request for land allotment measuring 4018 square meters in Plot No.232 in Sompura Industrial area, 1st Phase vide letters dated 30.11.2009 and 22.01.2010, for the manufacture of "HDPE/PP Sewing Thread, Multifilament yarn and Woven Sacks/Fabrics" was agreed, subject to terms and conditions set forth therein and subsequently executed a lease- cum-sale agreement on 16.07.2010. The 2nd Respondent also states that the Appellant had utilized only 1671.95 sq.mts of land which works out to 41.61 % of the land allotted. An interim order of status quo for a period of 4 weeks in favour of the Appellant was ordered by the Tribunal on 12.08.2013 which was extended until further orders on 21.09.2013.

DISCUSSION & CONCLUSION:

7) The points that arise for consideration in the Appeal are:

a) Whether the impugned order of closure of the Appellant Unit dated 29.07.2013 is liable to be set aside on all or any of the grounds put forth by the Respondents.

b) To what reliefs the Appellant is entitled for.

8) Advancing the arguments on behalf of the Appellant, the Learned Counsel would submit that the impugned order is untenable in law and contradictory to facts. The 1st Respondent failed to note that the Appellant Unit is situated in the land allotted by the 2nd Respondent in Sy.No. 41 and 42 which did not fall under the TGR Notification dated 18.11.2003. The Government of Karnataka has approved the interim Master Plan of Nelamangala Planning Area vide G.O. dated 28.05.2009 in which it has been categorically pointed out at Sl.No.148 wherein several Sy.Nos. covered under Zone-3 of Makanakuppe Village are referred to. It is pertinent to point out that the part of Sy.No.41 and 42 wherein the unit of the Appellant is situated is not referred to. A planning permission was also accorded to the 3rd Respondent, after a thorough verification of the authorities and the Appellant was permitted to proceed with the construction of the unit in Sy.No 41 and 42 of Makanakuppe Village. The Respondents have erred in mentioning that the Appellant Unit is situated within 1 km of the Arkavathy River Bank. The said River Bank is situated around 25 km away from the Unit and hence the said allegation is thoroughly unfounded. The Respondents have also failed to note that the Director of Industries and Commerce issued a license for the Unit to be run by the Appellant which is a small scale industry and the same also comes under the green category. Even otherwise, the 1st Respondent ought to have seen that the Appellant has complied with all the requirements including rain water harvesting system in the Unit though it was not mandatory to do so. Without giving an opportunity to the Appellant to tender its explanation by serving a Show Cause notice, the 1st Respondent has passed the impugned closure order thereby violating all canons of the principles of natural justice and also as the order under challenge is without the application of mind the impugned order has got to be set aside.

9) In reply, both the Counsel for the 1st and 2nd Respondents put forth their respective submissions. The contentions put forth by either side were considered and all the materials made available were looked into. Admittedly, the Appellant approached the KIADB, the 2nd Respondent herein, for allotment of land. Upon the request made by the Appellant, the 2nd Respondent allotted the land measuring an extent of 4018 square meters in Sompura Industrial Unit, 1st Stage on 22.01.2010 and on the execution of the agreement; the same was also registered on 16.07.2010. A planning permission was also accorded to the Appellant on 27.07.2010 and as per the planning permission, the construction was also completed. The Appellant unit after importing the machinery became operational. While the matter stood so, the Appellant made an application for Consent for Establishment of the unit. According to the Appellant, at the time of personal hearing, to consider the grant by the 1st Respondent all related documents were placed before the PCB and a discussion had also taken place. In view of the same, on the ground urged by the Appellant an opportunity of being heard was not given and the impugned order came to be passed offending the principles of natural justice which cannot be countenanced and without considering the same, Order of closure came to be passed.

10) On scrutiny of the entire materials, the Tribunal is of the considered view that the impugned order of closure cannot be sustained. As could be seen from the documentary evidence relied on by the Appellant, Appellant has taken possession over the allotted land as per the Possession Certificate dated 03.08.2010 issued by the 2nd Respondent to the Appellant (Page 14 of the Appellant's index to typed set) and the lease- cum- sale agreement dated 15.07.2010 was entered between the 2nd Respondent and the Appellant (Page 16 of the Appellant's index to typed set). The Appellant obtained the requisite license such as Certificate of Importer-Exporter dated 06.12.2010 issued by the Ministry of Commerce and Industry, Bangalore (Page 34 of the Appellant's index to typed set), Small scale industry licence dated 20.12.2010 issued by the Directorate of Industries and Commerce, Government of Karnataka (Page 39 of the Appellant's index to typed set), Certificate of Value Added Tax Registration dated 08.09.2011 issued by the Assistant Commissioner of Commercial Taxes, Bangalore (Page 40 of the Appellant's index to typed set). The impugned order reads as follows:

You are operating an industry in the name and style of M/s. Gotawat Industries, engaged in manufacture of Plastic Thread &Yarn at Plot No.232, Sompura Industrial Area, 1st stage, Sy. No.41 & 42 of Makanakuppe, Nelamangala Taluk, Bangalore Rural District. Your industry is situated within 1 Km from Arkavathy River bank. As per the notification No.FEE 215 ENV 2000 dated 18.11.2003 issued by the Government of Karnataka, the location of your industry falls within the Zone-3 of the said notification. In Zone-3, no industrial activity is permitted.

11) From the above, it is quite clear that adducing the reason by the 1st Respondent Board for the closure of the Appellant Unit is on the premise that the location of the industry falls within Zone-3 of the Notification dated 18.11.2003 and in Zone-3, no industrial activities are permitted. On scrutiny of the documentary evidence, it is factually incorrect. Admittedly, the allotted land for the industrial unit for the Appellant is situated in Plot No.232, Sompura Industrial Unit, 1st Stage, Sy. No.41 & 42 at Makanakuppe, Nelamangala Taluk, Bengaluru Rural District (North). The TGR Notification dated 18.11.2003 relied on by the 1st Respondent has categorized four Zones comprising of areas specified therein. A perusal of Sl.No.148 of the TGR Notification dated 18.10.2003 would make it abundantly clear that the Plot No.232, Sompura Industrial Unit, 1st Stage, Sy. No. 41 & 42 does not find place in anyone of those 4 Zones and thus, it would fall outside the Notification. When the Appellant approached the 2nd Respondent for the planning permission, the same was granted since the Sy.No 41 & 42 in which the Unit is situated did not find place within anyone of the Zones. The Learned Counsel for the Respondent relied on an Order of Stay granted by the First Bench, Hon'ble High Court of Karnataka in W.P. 38218/2013 which reads as follows:

It may be noted and clarified here that, by virtue of the order dated 28.11.2014, pending hearing of the present group of petitions, the operation of the notification dated 24.07.2014 issued by the Government of Karnataka in exercise of powers under Section 5 of the Environment (Protection) Act,1986 was stayed till further orders, with the effect that the original notification dated 18.11.2003 operates and the authorities designated therein continue to be responsible for strict compliance with the said notification. It is, therefore, unnecessary to further clarify that any new development, construction, utilization, or conversion of lands, in violation of the original notification dated 18.11.2003, shall be viewed seriously and may result into prosecution for the offences under the Environment (Protection) Act,1986, of the officers and authorities concerned.

12) The Order of the Hon'ble High Court as seen above, is to the effect that the operation of the Notification dated 24.07.2014 issued by the Government of Karnataka was stayed till further orders and also with the effect that the original Notification dated 18.11.2003 operates and the authorities designated therein continue to be responsible for strict compliance of the Notification dated 18.11.2003 It remains to be stated that the above Order of the Hon'ble Karnataka High Court in the Writ proceedings is a direction to the authorities designated under the TGR Notification dated 18.11.2003 to strictly comply with the said Notification. In the instant case, it is to be reported that the land in question falls outside the TGR Notification dated 18.11.2003.

13) All the above would clearly indicate that the Closure Order based on the ground that the land allotted to the Appellant for his industrial unit in Sy.No.41 & 42 falls under the aforesaid Notification dated 18.11.2003 is factually incorrect and the impugned order of closure was made without the application of mind and thus liable to be set aside. Hence, the impugned order dated 29.07.2013 is set aside. The Appeal stands as allowed. However, there is no order as to costs.