By way of the Polluter Pays Principle a liability is imposed on a person who is guilty of polluting the environment, for the purpose of compensating for the damage which has been caused and to return the environment to its original state without taking the intent into consideration. It has been specified by the OECD recommendations that the allocation “of costs of pollution prevention and control measures to encourage rational use of scarce environmental resources and to avoid distortions in international trade and investment.” The polluter should be liable for bearing the expense to carry out the measures “decided by public authorities to ensure that the environment is in an acceptable state” (OECD 1972).

Since the time it first appeared in 1972, the Polluter Pays Principle has in the present day attained a much wider scope and ambit, and it not only covers prevention of pollution and measures of controlling but also covers liability, e.g. costs which will be employed for the cleaning up the damage that has been caused to the environment, (OECD 1989 and 1992). In addition to it, in the recent years the realm to which Polluter Pays Principle is applicable has been widened from control of pollution at the source towards control of product impacts during their whole cycle of life (extended producer responsibility).

It is assumed by the preventive function of the principle no sooner than the costs to borne become more than the anticipated benefits from the continuing pollution, than the polluter will reduce the pollution. As the potential polluter has to pay the costs for the precautionary measures, he/she now has a motivation and reason for reducing the risks and investing in suitable measures for management of risks. Lastly, the principle has a curative function as well, according to which the clean-up costs for the damage which has already occurred has to be borne by the polluter.

Evolution of the Concept

“The difference between animals and humans is that animals change themselves for the environment, but humans change the environment for themselves”[5]. For the first time the Polluter Pays Principle was promoted during the 1970s[6] by the Organization for Economic Cooperation and Development (OECD) Guiding Principles concerning International Economic Aspects of Environmental policies in which environmental damage and pollution was held to be responsibility of the polluter.

The principle, as it stands in the present day, was first amalgamated in Principles 21[7] and 22[8] of the Stockholm Declaration, 1973 [9]. After that, provisions were made in the European Charter on the Environmental and Health, 1989[10] and the Single European Act, 1986[11] in order to apply the polluter pays principle. This principle was incorporated in Principle 15 of the United Nations Conference on Environment and Development, 1992[12].

Afterwards, guidelines were laid down by the Rio Declaration for sustainable development, which meant developing of a strategy for the purpose of catering the demands and requirements of the present generation without compromising those of the future generations. For the purpose of furthering the this aim Principle 16 of the Rio Declaration enshrined in it the Polluter Pays Principle.

After being incorporated in the Rio Declaration, there began an explicit application of the Polluter Pays Principle in environmental jurisdictions.

“Polluter Pays” As Legal Principle In India

The basis on which the Polluter Pays Principle stands is the idea of cost allocation and cost internalization, i.e., the allocation of the external costs of production and/or consumption of goods and services should be done to the polluter who is responsible for causing the pollution instead of putting its burden on the government or on the members of the public.

It refers to the proposition that expenses must be borne by the polluter for carrying out the measures which are determined by the public authorities for the purpose of ensuring that the environment remains in an acceptable and appropriate state. It also covers within its ambit the cost to pay compensation to the pollution victims.

The first case in which the Polluter Pays Principle was applied in India by the Supreme Court was Indian Council for Enviro-Legal Action v. Union of India[13] (“Bichhri”). In this case the Supreme Court was dealing with the antagonistic impact of water and soil pollution on environment as well as health in Bichhri villages and in the villages adjacent to it in Rajasthan because of the dumping of untreated waste-water and sludge by the chemical industries. It was observed by the Supreme Court that once it is established that the activity which was carried on was hazardous or inherently dangerous, it is the liability of the person carrying on such activity to make good for the loss which has been caused to any person by such activity without taking into consideration as to whether reasonable care was taken by him/her at the time of carrying on the activity.

Afterwards in the case of Vellore Citizens’ Forum v. Union of India and Ors. [14], a case which dealt with the release of untreated effluent by tanneries in Tamil Nadu into a nearby river and land, the Supreme Court placed its reliance on the madate of the constitution[15] for the purpose of protecting and improving the environment in order to hold that the Polluter Pays Principle forms a part of the environmental law in India. Reliance was also placed by the Court upon the principles of customary international law and the principle of Polluter Pays was taken to be a significant feature of sustainable development. Subsequently, several courts have relied upon these two judgments which clearly shows that there has been incorporation of this principle into the environmental jurisprudence in India.

In Research Foundation For Science Technology National Resource Policy v. Union of India and Anr[16] the court came to the conclusion that environmental principles like the precautionary principle and the polluter pays principle are inherent part of the environmental laws of India.

The scope of implementation of this principle was further improved in the case of A.P. Pollution Control Board v. Prof. M.V. Nayudu (Retd.) and Ors.[17]. In this case the Apex Court gave permission to the courts, tribunals and other environmental organisations for making use of these principles while giving their decisions.

As per Article 21 of the Constitution of India every person has the basic right to life and personal liberty. Simply putting it, pollution takes away this basic right of the people. Since pollution is inevitable because of industrialisation, it is the duty of every citizen to participate to protect the environment.

 The National Green Tribunal Act was enacted in 2010 for the purpose of creating a specific forum in order to address and resolve the environmental disputes in India. This Act have statutory recognition to the concept of Polluter Pays[18]. It has been expressly stated by the NGT Act that Polluter Pays Principle would act in the form of a guiding principle while passing any order, decision or award by the NGT.

Role of National Green Tribunal in Enforcing the Polluter Pays Principle

According to Section 20 of the National Green Tribunal Act, the standards of Sustainable Development, the Precautionary Principle and the Polluter Pays Principle will be applied by the NGT at the time of rendering a choice, or request or an honour. It is clarified by Section 19 of the Act that the NGT abides by the principles of natural justice and is not bound to follow the stringent procedural rules laid down under the Code of Civil Procedure, 1908.

In the case of Jan Chetna v. Ministry of Env. And Forests[19], the principles given down under the Brundtland Report on Sustainable Development were examined  by the Tribunal and it echoed that Polluter Pays formed an essential part of the environment law in India. It is clarified by the judgement that the principle was effective and applicable in such areas which came under the governance of uniform environmental law, i.e., nation-state by way of domestic structural frameworks.

Later on, in Court on its own Motion v. the State of H.P.[20], the issue before the NGT concerned with the air and noise pollution which was prevalent at the Rohtang Pass glacier in Shimla because of a large number of vehicle entries on the motorable roads. The Polluter Pays Principle was practically implemented by the NGT by the imposition of a fee on each vehicle for the purpose of making contribution to State Government Green Tax Fund, which thereby widens the scope and ambit of the principle.

Further, the principle was developed by the NGT with regards to the water pollution in the Yamuna River in the case of Manoj Misra v. Union of India[21]. In the instant case the NGT gave orders that a minimum fees of Rs. 100 would have to be paid by every household in Delhi as environment compensation, with the charge being in direct proportion to the water bill or the property tax which is paid by that said household.

In a number of cases[22], the Tribunal has considered the violation or non- compliance with statutes to be a valid ground for the applying the Polluter Pays Principle. For example, in the case of Gurpreet Singh Bagga v. Ministry of Environment and Forests and Ors.[23] the respondent companies were directed by the NGT to pay money because of carrying out mining activities in an unauthorized way, in the absence of environmental clearance and consent by the appropriate State Pollution Control Board.

Restorative and Punitive Purpose of Polluter Pays Principle

The aim of the Polluter Pays Principle is the imposition of the financial burden on polluters for the purpose of making them liable to make compensation to the victims, damages to their property and environmental damages. Therefore, a simple and  plain understanding of the principle will put it under the scope and ambit of civil law and plausibly it would serve a restorative purpose. A majority of the cases, including those which have been discussed above, fulfill this objective of promoting such a comprehension of the Polluter Pays Principle wherein the polluter’s responsibility is discussed with regards to providing remedy to damage caused to persons and the environment. Nonetheless, a number of cases are there in which the scope of the Polluter Pays Principle has been expanded by the NGT for the purpose of including punitive purpose as well.

In the case of T.N. Godavarman Thirumulpad v. Union of India and Ors.[24], the NGT put an express emphasis on the ‘twin objectives’ of the payment of compensation by the polluters, which are making compensation to the victims for the loss that has been suffered by them and imposition of punitive penalties on the polluters.

In the case of Tanaji Balasaheb Gambhire v. Union of India[25], the a fine of Rs. 5 crore was imposed by the NGT on the defendant company as it had contravened the mandatory provisions which were contained in various laws concerning environment while conducting the construction activities, going past the limits which were prescribed in the environment clearance and for not obtaining the consent from the Board. This fine was in addition to the imposed environmental compensation. The NGT has also endorsed the idea of using Polluter Pays Principle to saddle the polluters with ‘exemplary and deterrent compensation’[26]

We can equate the sprawling comprehension of the Polluter Pays Principle made by NGT to be akin to the expansive interpretation given by the Supreme Court of liability in cases relating to hazardous industries and activities. The deterrent objective was accepted and recognized by the Supreme Court while acknowledging the absolute liability principle with regards to hazardous or inherently dangerous industries. The SC made the observation that “the measure of compensation...must be co-related to the magnitude and capacity of the enterprise because such compensation must have a deferent effect. The larger and more prosperous the enterprise, the greater must be the amount of compensation payable by it...‟[27]

Flaws in the Polluter Pays Principle

There is no doubt in the fact that the Polluter Pays Principle has an affirmative impact on the reduction of pollution. However, a few loopholes have been discovered by the legal theorists in this rule. Following are some of the flaws:

First and foremost, it is still unclear as to 'who is a polluter'. Legally speaking,Ø a 'polluter' is someone causes either a direct or indirect damage to the environment or who creates such conditions which may result in the damage to the environment. Evidently and visibly, this is a very broad definition and is not very supportive in all situations.[28]

Secondly, additional charØges cannot be paid by a large number of poor households, informal sector firms, and subsistence farmers for the purpose of energy or for waste disposal.

Thirdly, small and medium-size firms from the formal sector, which areØ mainly catering to the home market, have difficulty in passing the higher costs to the domestic end-users of their products.

Fourthly, exporters in developing countries, in usual circumstances, are unableØ to shift the burden of cost internalization to foreign customers due to elastic demand. Lastly, a number of environmental difficulties in developing nations are aØ result of an overexploitation of the common pool resources. There could be a limit to the accessibility of these common pool resources (in accordance with the Polluter Pays Principle) in certain cases by way of assigning private property rights, however, this solution could lead to severe distributional conflicts.