Are actions against Corporate Breach of Environmental Law sufficient deterrents?

The Author, Adhip Ray, is a 3rd-year, BA.LLB student at Amity University, Kolkata. He is currently interning with LatestLaws.com.

Introduction

Starting a business is so much easier nowadays. You no longer need to wait for bank clearances or search drearily for funds and capital to push your business off the canvas.

Governments all around the world and especially the Indian Government has made it extremely easy to start a business. No longer do you have to wait for hours in front of a line or in a Government office.

All you need to do is decide a legal entity for your business and you’re set.

With the frequent amendments to the Limited Liability Amendment Act, 2008 or the Companies Act, 2013 along with their rules, starting a business is at its all-time easiest.

However, while the ease of starting a company has changed incredibly, what did not change was pollution caused by corporations in India. While there is great debate among legal luminaries, with some highlighting the legal lacunas and some blaming the enforcement agencies, in this article, we shall ponder on the fact as to whether environmental laws are enough to actually prevent these corporate entities from polluting the environment.

Effects of Corporations Breaching Environmental Laws

A corporation or a company that uses hazardous materials in course of their businesses are likely to cause potential environmental issues by contamination of the same. The liabilities that these corporations may incur include both civil and criminal penalties. The other charges for which the companies can be held liable are for failing to obtain the required permits to carry out the business and other approvals relating to the storage, transportation, use and discharge of such hazardous materials. They can also be sued and held responsible if the employees or customers are exposed to hazardous and harmful substances, or if the neighbours and the public in the locality; along with the environment are contaminated causing damage, degradations and other serious health hazards.

The Indian Scenario

In India, the statutory law that strive to protect the environment and curb the environmental hazards by penalising the corporate bodies on rash and gross are Water (Prevention and Control of Pollution) Act, 1974; Environment (Protection) Act, 1986 and Air (Prevention and Control of Pollution) Act, 1981.

There are constitutional mandates under Article 48-A and 51-A(g), tortious liabilities and safeguards along with penal provisions in the Indian Penal Code, 1860, that act as a safeguard and makes accountable the individuals responsible for environmental damage.

Safeguards under tort law

Tort law is basically the development of common law in a country and is a subset of civil laws. Where there is tort, there is remedy. If there is no remedy, there is no tort. ''ubi ius, ibi remedium'' (Roman legal maxim) says ''where there is a right, there is a remedy''.

In case of gross negligence, a direct nexus between the action of negligence and the damage caused by the plaintiff is to be established. It is also important to establish that the respondent lacked to take sufficient and due care to avoid the public nuisance that the person was required to. In the case of Naresh Dutt Tyagi v. State of Uttar Pradesh^[1], fumes that had been released from the pesticides company leaked to a nearby property through the ventilators and caused death of three children and a foetus in a pregnant woman. The Court held that it was a case of negligence and made the respondents accountable.

The concept of Strict Liability has originated from the leading case of Rylands v. Fletcher[2], and it says that “the person who, for his own purposes, brings on his land and collects and keeps there anything likely to do mischief, if it escapes, must keep it in at his own peril and if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape”; provided liability can be escaped if the action that caused the damage falls under any of the exceptions enlisted.

In the case of M C Mehta v. Union of India^[3], the landmark case also popularly called the Oleum Gas Leak Case; where in the Supreme Court pronounced that if a hazardous or inherently dangerous activity is carried out by an organization and it causes to the release of such toxic substance for which any damage is incurred, then the organization or such company is strictly and absolutely liable for all such damages caused and any of the exceptions enlisted the aforementioned case of strict liability will not act as a defence to escape liability in India.

In the case of Union Carbide Corporation v. Union of India[4] the court held that the compensation imposed to be paid has to be directly proportional to magnitude and capacity of the corporation or company to have a deterrent effect and hold the company rightly accountable.

This case is important in regard to deterring companies from polluting the environment. In India, unlike countries like USA, the compensation granted to litigants is usually much lower. This enables the larger corporations to disregard the law with impunity.

With even more lax enforcement and judicial delay, companies are further strengthened in regard to their lax and negligent behaviour.

However, in this case, the ratio of deciding the compensation in proportion to the magnitude and capacity of corporation serves as an effective deterrent to even large Multi-National Corporations.

Safeguards under penal law

The Chapter XIV of the IPC, Section 268 to 294-A, enlists the offences concerning public health, safety and so on. It renders the acts or omissions that causes environmental pollution and are dangerous to life to be punishable in the court of law.

Section 268 defines public nuisance and section 290 makes public nuisance punishable. If any act or omission that causes injury to any person by polluting the environment occurs, it can be sued in the court of law. Noise pollution is made punishable under Section 268.

The Air (Prevention and Control of Pollution) Act, 1981 (hereinafter called as the Air Act), Water (Prevention and Control of Pollution) Act, 1974 (hereinafter called as the Water Act) and the Environment (Protection) Act, 1986 actually provide for provisions to stop the menace of pollution by corporations.

Section 47 of the Water Act provides that every person who had been in charge of conducting business of the company shall be punishable under the statute when a company does any offence provided under the statute. Section 40 of the Air Act and Section 17 of the Environment (Protection) Act prescribe for a similar manner of criminal liability on the persons in-charge of the conduct of business of a company. Usually these individuals are the directors and key managerial personnel of the corporation. Now, although a company is a legal entity, the fact of the matter is that it is created via a legal faction and the appointed directors are basically the brains of the company.

Therefore, if the management is not liable and only the company has to bear the brunt, then it shall be the shareholders who will have to bear the brunt of offences which are actually committed by the Board of Directors and the Key Managerial Personnel of the company.

However, if they can prove that the offence was committed without their knowledge or that they tried to prevent it, they shall not be held liable for the offence concerned.

Now, this form of criminal liability is actually a very welcome decision. Although large corporations have their liabilities limited, these provisions help keep the administration of the company who are actually responsible for the workings of the corporation on their toes. However, too much of criminal liability can be a hindrance for the effective growth in business of a country and it is for this reason that the sections effectively takes off liability from the shoulders of those individuals who can prove that they had no knowledge of the offence being committed behind their backs, or against their advice.

This criminal liability towards the management of corporations has even been extended to partnership firms, as has been held in the case of Haryana State Board v. Jai Bharat Woollen Finishing Works[5] by the Punjab and Haryana High Court.

In the case of Uttar Pradesh Pollution Control Board v. Mohan Meakins Ltd[6], the Supreme Courts indicted the directors of the company for water pollution by the company and dismissed their plea for lapse of the case on account of long-pending delay.

Further Legislations and Rules to Prevent Corporate Abuse over the Environment

The Environment Protection Act, 1986 provides for several rules in order to protect the environment against corporations, such as the Environment (Siting for Industrial Projects) Rules, 1999.

The Wild Life (Protection) Act, 1972, The Forest (Conservation) Act, 1980, The Biological Diversity Act, 2002, Bio-Medical Waste (Management and Handling) Rules, 1998, Manufacture, Storage, and Import of Hazardous Chemical Rules, 1989, Hazardous Wastes (Management and Handling) Rules, 1989 and the Chemical Accidents (Emergency Planning, Preparedness, and Response) Rules, 1996 are crucial legislations which help prevent and protect the environment from pollution caused by industries including corporations.

Related: List of Environment Protection Laws including Rules and Regulations

So, Where Lies the Problem?

With reference to the Indian law, to curb the menace of environmental degradations by the large enterprises, the need of the hour is strong integrated legislation rather than a plethora of individual legislations. As we have seen there are a ton of legislations and regulations so as to stop pollution by corporations.

Further, with writ petitions being liberalised by way of Public Interest Litigations (PIL), anybody can approach the Court seeking the Court’s attention towards protection of environment.

Even after this, with plethora of guidelines as well as imposition of criminal liability on the management of both corporations and partnerships, what remains to be asked, is why are all these ineffective?

Well, on a careful analysis of the cases filed before the Supreme Court as well as High Courts and Criminal Courts of a country, we find the same problem that is plaguing thousands of litigators in our country, which is judicial delay. M.C Mehta’s Tanneries case[7] is a perfect example of how tanneries exploit the delay in the judicial system and keep on committing the offences by simply filing an appeal and getting the case procedure stayed.

To top it off, the Boards which are responsible for execution of these laws and prosecution of corporations are frequently understaffed and given very little funds to operate.

This results in poor prosecution in Courts of law which are easily defended by large corporations.

The pollution boards in India have been given the powers to launch prosecution to make accountable the violators of law to curb environmental degradation. There have been tribunals set up and given quasi-judicial powers to allow and empower them to impose penalty upon the guilty violators and also to reduce the burden and backlog of cases on the already overburdened courts of law. However due to having unrestricted appeal jurisdiction, the accused persons often abuse these provisions and keep on filing appeals so as to prevent the operation of law.

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