SC slaps Rs 100-cr fine on Sterlite's TN plant

In a relief to Sterlite Industries (India) Ltd, the Supreme Court on Tuesday overruled a Madras High Court order to shut down its copper smelting plant at Tuticorin, Tamil Nadu, while imposing a fine of Rs 100 crore (Rs 1 billion) on the Anil Agarwal-promoted Vedanta Group company for causing ecological damage to the area surrounding the unit.

The apex court had in October 2010 granted a stay to the company against the high court order after the plant was shut down for five days.

The 400,000-tonne plant, the country's largest copper smelting unit, has seen an investment of around Rs 8,300 crore (Rs 83 billion).

Sterlite contributes about 50 per cent of India's copper production.

It also produces 232,000 tonnes fertiliser grade phosphoric acid and around 1.3 million tonnes of sulphuric acid.

Sterlite’s stock rose 3.79 per cent on Tuesday on BSE to Rs 93.10, while the benchmark Sensex gained 0.93 per cent to 19,040.95.

In Tuesday’s detailed judgment, the bench headed by Justice A K Patnaik allowed the plant to operate, but asked the company to pay up for the pollution caused due to operation of the plant.

Sterlite welcomed the judgment, stating it would continue to work in close association with the Tamil Nadu government and "other regulatory bodies, towards maintaining highest standards of health, safety and environment".

The SC order, however, may not have a bearing on the Tamil Nadu Pollution Control Board ’s order last week to close the plant following a suspected sulphur dioxide leak.

The closure would lead to a daily loss of around Rs 5 crore, said

a company spokesperson. The company has filed a petition in the National Green Tribunal against the TNPCB order.

The apex court asked Sterlite to deposit the amount with the collector of Tuticorin, who will use it to restore the ecological balance, especially the water quality of the region.

The penalty is not the final figure. If the company causes further damage to the environment, more penalty can be imposed, the court ruled.

Moreover, those affected by the environment damage can move civil courts seeking more compensation.

SC also stated the high court should not have exercised its power of judicial review in this case as there were several preconditions before using that exceptional jurisdiction.

Closure of the plant will affect some 1,300 workers, ancillary industries, income for the Tuticorin port and taxes. Moreover, the industrial unit supplies its products to defence and other vital sectors, the judgment said.

The apex court recalled its earlier environment judgments and stated judicial review should be exercised only when there are “patent illegality, irrationality or procedural violations”.

Meanwhile, in its petition at the Green Tribunal against TNPCB, Sterlite said it was not given an opportunity of hearing and the order was passed in haste.

The Tribunal has admitted the petition and asked the board to file a response.

The matter is expected to be heard next week.

Last week, the board said it had identified that there was sulphur dioxide emission from the plant and several people in the neighbourhood had experienced eye irritation, among other disturbances.

Based on this, the board asked the company to close down the plant.