Supreme Court orders re-determination of environmental compensation after finding violation of natural justice

A bench of Justice B.V. Nagarathna and Justice Prasanna B. Varale heard an appeal by a hotel operator challenging an order of the National Green Tribunal, Western Zone, which had upheld a Goa Coastal Zone Management Authority (GCZMA) determination that the appellant pay environmental compensation for alleged illegal construction. The appeal raised a narrow procedural question: whether the Authority's monetary determination could stand when the appellant had not been issued a show-cause notice or afforded an opportunity of hearing, and whether the NGT erred in declining to remand the matter to the Authority.

The Court allowed the appeal in part, found that the GCZMA's order of 9 May 2022 was made in violation of the principles of natural justice, and held that the NGT should have remanded the matter for fresh determination rather than itself sustaining the impugned order. The Court construed the Authority's order as a show-cause notice, granted the appellant three weeks to reply, directed that the appellant be heard and ordered a re-determination of the environmental compensation in accordance with the High Court's directions. The Court recorded that a sum of Rs.60,00,000 had been deposited before the NGT and directed that disbursal would be subject to the first respondent‑Authority's orders. The Court, in its reasoning, observed: "We hold that the opportunity given by the NGT to the appellant herein in an appeal is not the same quality of opportunity which the first respondent as an original Authority would have granted to the appellant herein. Therefore, we find that the NGT was not right in sustaining the impugned order dated 09.05.2022 passed by the appellant herein. Since we are setting aside the order of the NGT only on the issue of violation of principles of natural justice and not on merits, we shall construe the impugned order dated 09.05.2022 passed by the first respondent-Authority as a Show Cause Notice. Appellant herein is granted three weeks’ time from today to reply to the said order now construed as a Show Cause Notice. The appellant shall be heard and there shall be a re-determination of the environmental compensation that has to be paid by the appellant herein having regard to the direction dated 19.04.2022 issued by the High Court in PIL Writ Petition No.2530/2021 extracted above."

Background

The dispute arose after the High Court in PIL Writ Petition No.2530/2021 directed the GCZMA and other authorities to estimate demolition costs and "make an estimate of the damages that such illegal constructions cause to the environment in monetary terms, though we are conscious that such damage can never be fully compensated only in monetary terms." Pursuant to that direction, the GCZMA issued an order on 9 May 2022 directing the appellant to pay Rs.2,04,19,560 as environmental compensation for alleged unauthorized construction. The appellant contended that the Authority had neither issued a show-cause notice nor afforded any hearing before fixing the compensation and therefore the order was unilateral and contrary to settled principles of natural justice.

The appellant appealed to the NGT, which acknowledged that the appellant had not been heard but sustained the Authority's order while purporting to give the appellant an opportunity in the appellate proceedings. The appellant argued that an appellate opportunity was not equivalent to the procedural opportunity due from an original administrative authority and urged remand for re-determination. Respondents urged that the appellant could have sought relief before the High Court and that the NGT had provided an opportunity during the appeal.

The Supreme Court examined the record, noted the High Court's direction, and held that the Authority's procedure was defective. The Court found that the NGT erred in substituting the original Authority's role rather than remitting the matter for fresh administrative determination after a hearing. The appeal was allowed in part: the NGT order was set aside on the natural justice ground, the 9 May 2022 order was construed as a show-cause notice, the appellant was given three weeks to reply, and a re-determination of environmental compensation was directed to be conducted expeditiously and in accordance with law. The deposited Rs.60,00,000 remained subject to orders by the Authority. The appeal was disposed of on 19 February 2025.

Case Details: Case No.: CIVIL APPEAL NO(S). 9328/2022 (2025 INSC 297) Case Title: ZON HOTELS PVT. LTD. Vs. GOA COASTAL ZONE MANAGEMENT AUTHORITY & ORS. Appearances: For the Petitioner(s): Mr. Shiven Desai, Adv.; Mr. Avishkar Singhvi, Adv.; Mr. Vivek Jain, AOR; Ms. Suchitra Kumbhat, Adv.; Mr. Rajat Jain, Adv.; Mr. Sadiq Noor, Adv. For the Respondent(s): Mr. Surjendu Sankar Das, AOR; Ms. Annie Mittal, Adv.; Mr. Sanjay Parikh, Sr. Adv.; Ms. Srishti Agnihotri, AOR; Ms. Kritika, Adv.; Mr. D.P. Singh, Adv.; Ms. Tara Elizabeth Kurien, Adv.