Tuesday, August 25, 2015

NGT cracks whip on projects without Prior Environmental Clearance, real estate projects also in trouble

In a landmark judgment recently National Green Tribunal (NGT) has imposed a penalty of Rs 76.192 crore on seven private builders from Tamilnadu for raising structures without “ prior environment clearance”. NGT has also quashed two Office Memoranda (O.M.) dated December 12, 2012 and June 27, 2013, of Union Ministry of Environment terming them as 'ultra vires' the provisions of the Act of 1986 and the EIA notification of 2006.

This judgement is big blow to builders all over India  and specially for Pune being hub of illegal constructions where many residential and commercial projects are on without obtaining necessary “Prior Environment clearance” (PEC). As the big politicians and babus are indirectly involved in this racket earlier no project proponent of such activities was  scared of any law in India. However latest NGT judgment may  be a nightmare for builders who have cheated innocent property buyers for crores of rupees. The NGT is the institution that  has  dedicated jurisdiction in environmental matters to provide speedy environmental justice and help reduce the burden of litigation in the higher courts.

Actually builder can start the construction only after he obtains the environmental clearance. However many builders had started construction without even applying for it. When property buyers asked about EC Builders use to mislead them by telling that - the builder can construct up to 2 lakh sq.ft. Without obtaining EC.  We have applied for EC Or We will launch next phase only after obtaining EC. The NGT judgement may put some check on such builder’s gammon.

Earlier if project proponent was found to have started construction without “ prior Environmental clearance”, under the garb of above memorandum on recommendation of SEAC’s  SEIIA used to send  notices for such violation then Project Proponent used to file an undertaking to ensure that violations will not be  repeated. Then proposal would be considered for environmental clearance. However NGT has described this process as violation of law condoning illegal act.

The EIA  Notification 2006  mandates the requirement of ‘prior Environmental Clearance’ without exception. However as per NGT the entire mandate of prior Environmental Clearance has not only been diluted but completely rendered infructuous or ineffective by issuance of these  Office Memoranda dated

AS per NGT,  if construction is found to be started without prior environmental clearance. Authorities have to send stop work notice. Take penal action against project proponent. Demolish or regularize the construction as per NGT act. And then only proposal for fresh “Prior environmental clearance “should be heard.

Photo Courtsey www.zameen.com
The NGT  held Office Memoranda (O.M.) dated December 12, 2012 and June 27, 2013 under which violations of PEC were being condoned , to be ineffective and prohibited the MoEF and the SEIAA in the entire country from giving effect to these Office Memoranda in any manner, whatsoever.

NGT also levelled a fine of five per cent of the total cost incurred  i.e
Mr. Y. Pondurai: Rs. 7.4125 crores.
M/s Ruby Manoharan Property Developers Pvt. Ltd.: Rs. 1.8495 crores.
M/s Jones Foundations Pvt. Ltd.: Rs. 7 crores.
M/s SSM Builders and Promoters: Rs. 36 crores.
M/s SPR and RG Construction Pvt. Ltd.: Rs. 12.5505 crores.
M/s Dugar Housing Ltd.: Rs. 6.8795 crores.
M/s SAS Realtors Pvt. Ltd.: Rs. 4.5 crores.
All from Tamilnadu.

NGT also made it clear that The above environmental compensation was  being imposed on account of the intentional defaults and the conduct attributable only to the Project Proponents. NGT directed that the Project Proponents shall not pass on this compensation to the purchasers / prospective purchasers, as an element of sale.

The other key points of the judgment are

1) The impugned Office Memoranda (dated December 12, 2012 and June 27, 2013) were not only in conflict with the Notification of 2006, but in fact run contra thereto. What was not only intended but in fact was prohibited to be done, was being permitted by the impugned Office Memoranda. They had been issued without reference to any power or source of law and were neither pronounced nor authenticated in the name of the prescribed executive authority.

Photo courtsey www.indianrealestatefordummies.in
2)The requirements of the Notification of 2006 are mandatory in character (PEC). Their default or non-compliance is liable to be punished. The intention of the Legislature is to protect the environment for which words of specific nature like ‘prior’ and ‘shall’ have been used. The impact of non-compliance of these provisions would be of serious consequence, not only on environment but upon the society at large. All these enactments are unambiguous and framed in no uncertain terms and this conveys that projects commenced without obtaining Environmental Clearance would invite the penalty postulated under the Act of 1986 the provisions of Notification 2006 are mandatory and not procedural simplicitor.

Photo Courtsey www.polyp.org.uk
3)The contention  that the Project Proponents were under a bonafide belief that they could start the construction without obtaining the Environmental Clearance which they were expected to obtain prior to grant of completion certificate only. NGT held This submission  fallacious at the face of it. Every person is expected to know the law. Ignorance of law cannot be a plea. The Project Proponents were not persons who can be presumed to be in ignorant of law, they were into this business for years and the Notification of 2006 came into the existence in the year 2006. All the projects in question commenced in the year 2010 and subsequent thereto

4)The illegal and indiscriminate development activity that has been carried out by the Project Proponents is bound to have serious impacts on environment, ecology and biodiversity and a very comprehensive and stringent study would be required to dilute or mitigate adverse environmental impacts of the projects in question
5)To obtain Environmental Clearance prior to commencement of any activity or project is the mandate of law. This language has to be given its proper and purposive meaning. It is undoubtedly mandatory. When the law mandates prior approval, it ought not to be averred as post activity approval or ex-post facto permission.

This judgement will have long term impact on real estate business in India. However that doesn’t mean builders will stop cheating property buyers. As public authorities in India are stooges in the hands of such notorious builders . they will find new ways to cheat. However if property buyers don’t want their hard earned money to go waste, they should take following precautions.

Photo Courtsey snagesh.wordpress.com

1) If you are booking or have booked a flat in new scheme and if that project requires prior environment clearance, ask for it..

2) If such project proponent (PP)  has started construction without PEC , then immediately lodge a complaint with concerned authority

3) If environmental clearance granted is conditional one. Then it is not clear recommendation. It becomes full clearance only after PP fulfills the conditions

4) In case of conditional recommendations adequate precaution should be taken. Because some times to comply with condition like water supply or sewage treatment PP provide fake or certificates from any tom dick and harry who do not have authority to issue such certificates. Especially in case of water supply PP produces certificates from village heads and authorities blindly believe in those certificates however in such cases nobody takes responsibility of actual water supply. In this case you have to obtain information on what grounds such certificate has been issued. It is fact that verifying such documents is responsibility of public authorities. But when they are hand in gloves with real state mafia’s property buyers have to take adequate precaution.

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