11

Constitutional Conundrums Involving Corporate Insolvency

Umakanth Varottil and Rahul Sibal

Section II

Gandhi3 in 1978 and the birth of Public Interest Litigation/Social Action Litigation soon thereafter.

An NGO named Rural Litigation and Entitlement Kendra, Dehradun sent a letterdated 2 July 1983 to the Supreme Court a lleging that unauthorised and illegalmining of limestone in the Mussoorie/Dehradun belt adversely affected the ecologyof the area and led to environmental disorder On 14 July 1983, this letter wasdirected to be registered as a Writ Petitionunder Article 32 of the Constitution and a notice was ordered to the State of Uttar Pradesh and the Collector of Dehradun.

This was the first case of its kind in the country It brought into sharp focus theconflict between development and conservation The Supreme Court feltthe needto reconcile the two Itconstituted whatcame to be known as Bhargav Committee.

Some of the limestone quarries were evenordered to be closed Interim directionswere issued for stopping the blasting operationsThough the Supreme Courtacknowledged the paramount importance of the Himalayan region and noted thedanger the valley was facing on account ofirrational and uncontrolled quarrying, itmade it clear that it was for the Government and the Nation, and not for the Courtto decide whether the deposits should be exploited at the cost ofecology andenvironmental considerations, or if the industrial requirement shouldbe otherwisesatisfied.

Soon thereafter, there was a change in its approach The opening part of thejudgmentauthored by Justice OChinnappa Reddy in6 deserves to be quoted at length: “A hundred and thirtytwo years ago, in 1854, “the wise Indian Chief of Seattle” repliedto the offer of “the Great White Chief in Washington” to buy their land The reply isprofound It is beautiful It is timeless It contains the wisdom of the ages It is thefirstever and the most understanding statement on the environment It is worthquoting To abridge it or to quote extracts from it is to destroy its beauty You cannotscratch a painting and not diminish itsbeauty We will quote the whole of it: How can you buy or sell the sky, the warmthof the land? The idea is strange to us.

If we do not own the freshness of the air and the sparkle of the water, how can youbuy them? vUnion of India Sachidananda Pandey vThe State of West Bengal

Every part of the earth is sacred to mypeople Every shining pine needle, everysandy shore, every mist in the dark woods, every clearing and humming insect is holyin the memory and experience of my people The sap which courses through the treescarries the memories of the red man.....

This shining water moves in the streams and rivers is not just water but the bloodof our ancestors If we sell you land, youmust remember that it is sacred, and youmust teach your children that it is sacredand that each ghostly reflection in the clearwater of the lakes tells of events and memories in the life of my people The water”s murmur is the voice of my father”s father.

The rivers are our brothers, they quench our thirst The rivers carry our canoes andfeed our children If we sell you our land, you must remember, and teach yourchildren, that the rivers are our brothers, and yours and you must henceforth give thekindness you would give any brother.

....

He kidnaps the earth from his children Hi’s father”s grave and his children”s birthright are forgotten He treats his mother, theearth, and his brother, the sky, as thingsto be bought, plundered, sold like sheep or bright beads His appetite will devour theearth and leave behind only a desert.

....

What is man without the beasts-.? If all the beasts were gone, man would die from a great loneliness of spirit For whatever happensto the beasts soon happens to man Allthings are connected.

...Whatever befalls the earth befalls the sons of the earth If men spit upon theground, they spit upon themselves.

This we know: The earth does not belong to man; man belongs to the earth Thiswe know: All things are connected, like the blood which unites one family All thingsare connected.

...Where is the thicket? Gone Where is the eagle? Gone The end of living and thebeginning of survival”.

It was held that whenever a problem ofecology is brought before the court, thecourt is bound to bear in mind Articles 48A and 51A(g of the Constitution Thecourt should not refuse to give effect to the Directive Principle and the Fundamental Duty merelyon the ground that priorities are a matter of policyand so it is a matterfor the policymaking authority In appropriate cases, the court may go further, buthow much further must depend on the circumstances of the case.

It however made itclear that it would shy away from balancing the rival considerations The act ofbalancing mustbe done by the concerned authority.

When the issue of pollutionof the Ganges came up, the Supreme Court made itclear that the discharge of untreated effluents by tanneries will have to be stopped.

When it was argued that the petitioner was not a riparian owner, itwas laid downthat the requirement of standing cannot stand in the way and thatenvironmentallitigation is not adversarial in character In8 The vehicular pollution in Delhi was the subject matter in9 and over the years, a series of directions were issued In quite a few cases, directions for shifting and relocation of industries were issued for safeguardingancient monuments.

Specificdirections were issued for the protectionof the Taj Mahal Coke and coal industries whose emissions were having a damaging effect on Taj were ordered to be closed.

Noticing that mining laws are silent regarding theprotection of historical monuments, it wa’s held that mining activities cannot becarried on in the vicinity of protected sites.

Whenever the setting up of publicprojectswas challengedon environmental grounds, the Court would examine if thegovernment had taken into account all relevant aspects or if ithad ignored oroverlooked any material consideration or if it was influenced by any extraneousconsideration in arriving at the final decision.

When it came to the notice of the Court that Hazardous Wastes (Managementand Handling Rules, 1989 and other statutor y provisions for the protection of theenvironment were not being implemented and as a result, ecology had suffereddegradation, the Court not only directed the closure of the units but also orderedappropriate remedial measures.

The local bodies have the statutory duty to keepthe places clean, in particular, the hospital’s must have appropriate arrangements toclear medical waste.

Directions were issued for protecting water bodies, rivers, andlakes from ecological degradation This was done by banning construction activitieswithin a particular radius.

To protect the coastal regions, a notification dated Charan Lal Sahu vUnion of India, even while upholding the validityof the statute empowering the Union Government alone to represent aggrieved parties, it wa’s held that while granting licenses totransnational corporations, the conditionsmust prescribe norms and standards for running industries on Indiansoil ensuring the safety of environment and ecologyM.CMehta vUnion of India

19 February 1991 declaring coastal stretche’s as Coastal Regulations Zone (CRZ forregulating the activities therein was made operative as a result ofNoticing that intensive prawn farmingculture industries in coastal areas were causing ecological degradation, the Courtheld that sea coasts and beaches are giftsof nature and any activity polluting thesame cannot be permitted.

isanother important case at par with the MC. Mehta batch of cases The Supreme Court has been issuing countless directions from time to time for the protection offorests and to check further deforestation.

When a sugar factory did not properly complywith the directions of the Pollution Control Board and as a result, a river was found to have been polluted, theindustry was ordered to be closed till effective remedialmeasures were taken.

is a landmark decision for theprotection ofwater bodies They are communal properties, and the state authoritiesare to hold and manage them in trust for the benefit of the community Even if a water body had fallen into disuse, it must be restored and cannot be alienated Inthe Court took cognisance of theconsequences of indiscriminate sand mining, particularly, in riverbeds and directedthat even if the areas were less thanfive hectares, still, environmental clearance mustbe obtained It was observed that it is necessary to have an effective framework of a mining plan which will take care of all environmental issues, and alsoevolve a longterm rational and sustainable use of natural resource base and also the bioassessment protocol When constructionhad come upon a riverbank withoutobtaining mandatory approval, it was ordered to be demolished.

Elephant deaths on railway tracks and constructionactivities in elephant corridorshad also engaged the attention of the Su preme Court The Court stressed the needto minimise humanwildlife conflict.

Resorts thathad illegally been constructed onelephant corridors were ordered to be demolished In quite a few cases, the Courthad held that according of clearance by the environmental body was vitiated Thebody must speak in the manner of an expert Its remit is to apply itself to every Environmental Jurisprudence and Expansionaryƒ Indian Council for EnviroLegal Action vUnion of IndiaT.NGodavarman Thirumulpad vUnion of India Intellectuals Forum vState of Andhra Pradesh Deepak Kumar vThe State of Haryana,

Section III

The Court also gave equal importance to urban ecology Since it was pointed outthat the burning of firecrackers during Diwali substantially increases the pollutionlevels, crackerswith reduced emissions and green crackers alone were permitted tobe manufactured and sold Since it was also generating noise pollution, timings werealso laid down as to when they could be burst.

If in the master plan or layout, spaces had been earmarked for parks, they could not be altered and put to a differentuse.

For every locality., green spacesand green belts have to be provided to providelung space to the residents of the locality.

Duty is cast upon the authorities to act asWhen Indian Express carried a news itemheadlined “Falling Groundwater Level Threatens City”,Pollution caused toNew Delhi on account of stubbleburning by farmers in the surrounding regions was taken note of and directions wereissued.

Slaughterhouses in Delhi causing pollution were ordered to be closed.

The Court borrowed certain conceptual tools to deal with the environmental issues.

They are the doctrine of public trust, the principle of sustainable development, thedoctrine of intergenerational equity., the precautionary principle, and the polluterpays principle No doubt they were propounded either in other jurisdictions or byjurists, the Supreme Court did not innovate them-., but it certainly pushed the legaland constitutional boundaries while applying them ProfSax had propounded thepublic trust doctrine in his influential piece inHe identifiedthe following threefold restrictions ongovernmental authority: 1. the property subject to the trust must not only be used for a public purposebut it must be held available for use by the general public; 2. the property may not be sold, even for fair cash equivalent; cestui qui trust concerning public parkssuo motu notice was taken and directions were issued Michigan Law Review.

3. the propertymust be maintained for particular types of use: (i eithertraditional uses or (ii some uses particular to that form of resources.

This principle found its practical application inWhen Indian Express carrieda news item that a powerful politicianhad encroachedon the banks of river Beas for putting up a resort, the Supreme Court tooka few more concepts werearticulated Sustainable development is a balancing concept between ecology anddevelopment The “Precautionary Principle” and the “Polluter Pays Principle”areessential features of “Sustainable Development”. The “Precautionary Principle” in thecontext of the municipal law means environmental measures by the State Government and the statutory authorities must anticipate, prevent, and attackthecauses ofenvironmental degradation Where there are threats of serious andirreversible damage, a lack ofscientific certainty should no t be used as a reason forpostponing measures to prevent environmental degradation The “onus of proof” ison the actor or the developer/industrialist to show that his action isenvironmentallybenign The “Polluter Pays Principle” means that the absolute liability for harm tothe environment extends not onlyto compensate the victims of pollution but also to the cost of restoring the environmental degradation Remediation of the damagedenvironment is part of the process of “Sustainable Development” and as such thepolluter is liable to pay the costto the individualsufferers as well as the cost ofreversing the damaged ecology The “Precautionary Principle” and the “Polluter Pays Principle” were held tobe part of the environmental law of the country Intergenerational equity means the concern for the generations tocome The presentgeneration has no right to imperil the safety and wellbeing of the next generation orthe generations to come thereafter. Inthese concepts have beenelaborated with admirable clarity..

Section IV

The expansive interpretation given to Article 21 also came in handy Inthe right to the environment was declared as a fundamentalright Inthe right to live wasrecognised as a fundamental right to an environment adequate for the health andwellbeing of human beings The health of the environment iskey to preserving theright to life as a constitutionallyrecognised value under Article 21 of the Constitution of India.

In theit was observed that the Constitution also speaks of preservationand protectionof animals, all creatures, plants, rivers., hills, and the environment.

Though the theoretical framework is sound and clear, whenitcomes to application, to concrete facts, the subjective elements come into play In many a case, judgeshave chosen to defer to executive wisdom Some critics contend that the Supreme Court blinked when itcame to bigticket projects,is cited as one instance The Court batted for nuclear energy asa viable andsustainable source of energy and emphasised thatit was necessary to increase thecountry”s economic growth Though directionswere issued for installing appropriatesafetymeasures, it was obvious that the Court would not question the executivedecision When the construction and implementation of Tehri Hydro Power Projectand Tehri Dam were challenged on the ground that the site was an earthquakeprone zone, the Court chose to go by the clearance given by the official report.

When Shri ND. Jayal (described as a passionate environmentalistadministrator in Jairam Ramesh”s book intervened to point out that the safety of the dam was still indanger withregard to the seismological aspects of the area where the dam was to beconstructed, the Court brushed it aside saying thatthere was no need to discuss thematter any further asthe government has already fully considered every aspect of theproject including its safety..

Irrepressible ND. Jayal mounted an independentchallenge and sought directions to conductfurther safety tests While dealing withthe same, a prefatory remarkwas made that insuch cases, it is necessary to draw a demarcating line between the realm of policy and the permissible areas for judicialinterference Itwas concluded that there was no material to show that the projectwork was being carried out without complying with the conditions ofclearance and ND. Jayal vUnion of India, TN. Godavarman Thirumulpad vUnion of India, Ramlila Maidan Incident, GSundarrajan vUnion of India

It would be a humbling experience for judges to rereadthese two judgments every time a natural disaster strikes Uttarakhand The fate of the litigation about the Narmada Dam was no betterA lot of concerns wereexpressed for the rehabilitation of thepersons dispossessed on account of theconstruction of the dam and even directions were issued But the Court refused toeven consider the challenge to the project on the ground that it was filed belatedly.

The recent order of the Supreme Court about the Second International Airport in Goa on the Mopa plateau has evoked scathing criticism.

In March 2019, theapproval granted to the project was suspended on the ground that the projectdeveloper has given false information tosecure the environmental clearance Thejudgmentreported was celebrated all over.

The Court refers to the thirteenprinciples adopted in 2016 by the First World Environmental Law Congress,theyare Obligationto Protect Nature, Right to Nature and Rights of Nature, Right to Environment, Ecological Sustainability and Resilience, In Dubio Pro Natura, Ecological Functions of Property, Intragenerational Equity, Intergenerational Equity, Gender Equality, Participation of Minority and Vulnerable Groups., Indigenous and Tribal Peoples, and NonRegression and ProgressionEven the UN referred to it as a significant advancement of environmental law But, in less thantwelve months, the suspension was lifted and the construction activities wereallowed to resume In the secondverdict,the Supreme Court noted that after theearlier round, additional environmental safeguards and conditions have beenstipulated After noting that the Expert Appraisal Committee (EAC had followed a comprehensive process, the Court felt that its ultimate conclusions mustbescrutinised in the course of judicial review in the context of the limitations which areattached to the court conducting a meritsbased review The standard of judicialreview that must be applied in environmentrelated cases as enunciatedin(not exactly a decisionthat can be a toastof any activist was followed The evaluation of merits is a matter which primarily Environmental Jurisprudence and Expansionaryƒ Lafarge Umiam Mining (P Ltd vUnion of India

Section V

However, since climate change is a pressing national and international concern, the higher judiciary has been fairlyresponsive Whenthe Governmentof West Bengal proposed to felltrees toconstruct Road Over Bridges and widen the roads, the Supreme Court constituted a committee of experts to discuss and recommenddeveloping a set of scientific and policy guidelines that shall govern decisionmakingconcerning the cutting of trees for developmental projects.

The jurisprudence so far evolved by the Supreme Court has enabled the High Courts to effectively adjudicate environmental issues Through several progressivejudgments discussed in the previous sections, the Supreme Court introduced the Precautionary Principle, as wellas the principlesof the Polluter Pays and Intergenerational Equity into Indian environmental law The Court has repeatedlystepped in tofill lacunae in legislations, relying on internationally acceptedprinciples and case law from other jurisdictions The development of environmentallitigation was a natural corollary of the evolution of the Court”s PIL jurisprudencestarting from the 1970sPI Ls allowed the Su preme Court judges to be flexible onissues oflocus standi and procedure Theyalso were willing to tackle questions of executive action and inaction while pushing the boundaries of justiciability The right to life was interpreted as not merely staying alive but living a life of dignity in a cleanenvironment with access toclean air and water Environmental damage was rightly seen asan obstacle to leading a dignified life and enjoying the other rights guaranteedin the Constitution The Supreme Court”s judgments on environmental issues have alsoenabled High Courts to decide these matters effectively Yet, the work is far from complete In the 2000s, some decisions of the Supreme Court reflect a slightdegree of circumspection on matters of policy In these decisions, the Court has stepped back from an activist stance and stated that itcannot micromanage the decisionmaking of expert bodies or substitute its decision for theirs but still can supervise procedural compliance and ensure that all necessary inputs are necessary for the decisionmaking process to have been considered.

Further, despite the large volume of environmental law cases, the principles laiddown by the Court have not institutionalised or evolved into legislation in severalcases For future litigants on similar matters, this leads to ambiguity about the natureof the rights and entitlements available, the procedures for claiming these rights, andavenues for participating in decisionmaking on matters related to the environment.

In addition, there are gaps in the implementation of the directions of the Court intheir entirety These factors reduce the longterm consequences of such cases on thelives of ordinary Indians.

Thus, the conceptsevolved so far have served us well, but theymay not besufficient One looks invainfor references to Chandi Prasad Bhatt or Sunderlal Bahuguna or JC. Kumarappa in the judgments of the higher judiciary, but populargreen struggles like Chipko Movement do not find mention.

So, whatnext? It is time the judiciary recognises in unequivocal terms that thecurrent environmental ills are due to the relentless pursuit of economic growth andmaximisation of private profit.

The Court is often called upon to engage itself in the debate which engaged Gandhi and Nehru as to what is the appropriate model of development Thefounding fathers were on the opposing side’sNehru was a vigorous votary of rapidindustrial development He made itclear that independent India would adopt a model of economic development based on the factory and the city rather than thefarm and village He was for mass production while Gandhi was for production by the masses Gandhi realised that the world was going in the opposite direction He remarked “when the moth approaches its doom itwhirlsfaster and faster till it burnsup It is possible that India will not be able to escape this mothlike circlingI musttry, till my lastbreath, to save India and through it the world from such a fate”.

Butthe ruling elite favoured the Nehruvian model and we have been traversing the saidpath since Independence How long and how far we can travel further down theroad is a question facing all of us It is onlythe judiciary that can put roadblocks andarrest the process of ecological degradation When the government wants to giveaway an entire hill for mining and quarrying, can the villagers complain that theirright to the environment is infringed? Can they argue that while a part of the hillockcan be tapped for mineral wealth, the entire hill cannot be destroyed?

Gwendolyn JGordon, writing in Columbia Journal of Environmental Law,states that legal personhood appears to be a promising tool for protecting nature.

Given the acceptance of corporate personhood and personhood for ships andreligious deities, the idea of environmental personhood doesnot require muchof a stretch of our legal imagination In New Ze aland, a national park has been declaredto be a legal entity The country”s Whanganui River has also enjoyed the same statussince 2017. Ecuador”s Constitutionproclaims that nature has the right to exist, persist, maintain, and regenerate its vital cycles InBolivia, nature isdefined as a juridicalentity Inthe Supreme Court has propoundeda nonanthropocentricview of nature The High Court of Uttarakhandgranted personhood rights to the Ganga river basin Given the urgency of reversing climate change and widespreadenvironmental degradation, the future ofenvironmental jurisprudence inIndia may liein this direction The final step constituting a complete tryst with environmentaldestiny would be the recognitio n of nature as a person, having rights enforceable incourts of law.

— ANagaraja,

Notes & References

3. (1978 SCC 8.

4. Rural Litigation and Entitlement vThe State of UP., 1986 Supp (1 SCC 517.

5. Rural Litigation and Entitlement vThe State of UP., 1986 Supp (1 SCC 517.

6. Sachidananda Pandey vThe State of West Bengal, (1987 SCC

7. MC. Mehta vUnion of India, (1987 SCC 3.

8. Charan Lal Sahu vUnion of India, (1990 SCC 613.

9. MC. Mehta vUnion of India, (1987 SCC 3.

10. Surendra Kumar Singh vThe State of Bihar, (1991 Supp (2 SCC 628.

11. MC. Mehta vUnion of India, (1997 SCC

12. KGuruprasad Rao vThe State of Karnataka, (2013 8 SCC 418.

13. Dahanu Taluka Environment vBombay Suburban Electricity, (1991 2 SCC 539.

14. Indian Council for EnviroLegal Action vUnion of India, (1996 SCC 212.

15. BL. Wadehra (Dr vUnion of India, (1996 SCC 594.

16. MC. Mehta (Badkhal and Surajkund Lakes Matter vUnion of India, (1997 SCC 715.

17. (1996 SCC 1.

18. SJagannath vUnion of India, (1997 SCC

19. WP (Civil No. 02 of 1995 before the Supreme Court.

20. Bhavani River vSakthi Sugars Ltd., (1998 2 SCC 601.

21. Intellectuals Forum vState of Andhra Pradesh, (2006 SCC

22. Deepak Kumar vThe State of Haryana, (2012 SCC 629.

23. Assnfor Environment Protection vThe State of Kerala, (2013 7 SCC 226; Vaamika Island (Green Lagoon Resort vUnion of India. (2013 SCC 0.

24. Shakti Prasad Nayak vUnion of India, (2014 SCC 514. relevant aspectof the project bearing upon the environment and scrutinise thedocument submitted to it.

25. BDA vSudhakar Hegde, (2020 5 SCC 63; Hanuman Laxman Aroskar vUnion of India, (2019 15 SCC 401.

26. Arjun Gopal vUnion of India, (2019 SCC

27. Bangalore Medical Trust vB.SMuddappa, (1991 4 SCC 54.

28. (2004 SCC 2.

29. Municipal Corpnof Greater Mumbai vHiraman Sitaram Deorukhkar, (2019 SCC 411.

30. MC Mehta vUnion of India (Groundwater case, (1997 SCC 2.

31. MC. Mehta (Stubble Burning & Air Quality vUnion of India, (2020 SCC

32. Buffalo Traders Welfare Assnv Maneka Gandhi, (1996 SCC 5-..

33. Joseph LSax. 1970. “The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention”, Michigan Law Review, 68: 471.

34. (1997 SCC 8.

35. (1996 SCC 7.

36. LSE. 2018. “What is the polluter pays principle?”, Grantham Research Institu te on Climate Change and the Environment, 11 May, available online at https://wwwlseacuk/grantha minstitute/explainers/whatisthepolluterpaysprinciple/ (accessed on 23 November 2021.

37. State of Himachal Pradesh vGanesh Wood Products, (1995 SCC 3.

38. AP. Pollution Control Board vProf-.. MV. Nayudu, (1999 SCC 8.

39. (2004 SCC 2.

40. (2002 SCC 06.

41. (2020 SCC 3..

42. ReRamlila Maidan Incident Dt ƒvHome Secretary & Ors, (2012 5 SCC 1.

43. (2014 SCC 6.

44. Tehri Bandh Virodhi Sangarsh Samiti vState of UP., (1992 Supp (1 SCC 44. the challenge was repelled.

45. ND. Jayal vUnion of India and Ors, (2004 9 SCC 362.

46. Narmada Bachao Andolan vUnion of India and Ors, (2000 10 SCC 664.

47. Ritwick Dutta. 2020. “The Many Absurditie’s of the Supreme Court Judgement on Goa”s New Airport, Science”, The Wire, 8 April, available online at: https://sciencethewirei n/environment/supremecourtmopaairportmoefcceacenvironmentdevelopmenteia/ (accessed on 23 November 2021.

48. Hanuman Laxman Aroskar vUnion of India, (2019 SCC

49. IUCN, 2016, “1st IUCN Work Environmental Law CongressApril 2016”, iucnorg, available onlineat: https://wwwiucnorg/commissions/worldco mmissionenvironmentallaw/eventswcel/pastevents/1stiucnworldenvironmentallawcong ressapril-2016 (accessed on 23 November 20

21.

50. (2020 SCC.

51. (2011 SCC 8. rests with expert authority The Court cancertainly supervise procedural complianceand ensure that all necessary inputs which are required to be factored into thedecisionmaking process have beenduly borne in mindOnce this has been done, the Court must be circumspect inmicromanaging the decisionmaking process by EAC by substituting its own opinion for that of EAC.

52. Assnfor Protection of Democratic Rights vState of West Bengal, (2021 5 SCC 466.

53. Ramachandra Guha. 2018. “Gandhi: The Year’s That Changed the World”, Penguin Allen Lane, pp. 761-762.

54. Gwendolyn JGordon. 2018. “Environmental Personhood”, Columbia Journal of Environmental Law, 43(1, available at https://journalslibrarycolumbiaedu/indexphp/cjel/article /view/.3742 (accessed as on 17 Feb 2023.

55. Animal Welfare Board of India vA Nagaraja, (2014 7 SCC 547.

56. Mohd Salim vState of Uttarakhand, WP No. 126 of 2014 before the High Court of Uttarakhand decided on 20 March 2017.