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Supreme Court upholds NGT’s ruling, orders the illegal construction to be razed: Everything that went wrong with a PPP project

Legacy > Legal Advice  > Supreme Court upholds NGT’s ruling, orders the illegal construction to be razed: Everything that went wrong with a PPP project

Supreme Court upholds NGT’s ruling, orders the illegal construction to be razed: Everything that went wrong with a PPP project

“If human society is to stay within the bounds of critical ecological thresholds, it is imperative that environmental laws are widely understood, respected and enforced and the benefits of environmental protection are enjoyed by people and the planet.”[i]


The Supreme Court vide its judgment dated January 12, 2021 has upheld the ruling of the National Green Tribunal (“NGT”) passed in 2016 regarding demolition of an illegal hotel-cum-restaurant structure built on forest land for the Himachal Pradesh Bus Stand Management and Development Authority (“HPBSM & DA”), the appellant in the instant case. The Court held that the construction constitutes a brazen violation of law, particularly Section 2 of the Forest (Conservation) Act, 1980[ii] (“FCA, 1980”). This section mandates strict and punctilious compliance, mere substantial compliance shall not suffice. Authorities have been directed to commence the process of demolishing the complex within two weeks from the date of the judgment and the same must be executed by the Concessionaire i.e. M/s Prashanti Surya Construction Co. (“second respondent”) within one month thereafter.

The appeal was brought before the Supreme Court under section 22[iii] of the NGT Act, 2010 to ascertain the correctness of a judgment and order dated May 4, 2016 by the NGT (“Impugned order”). The NGT gave its order while dealing with an application filed by the second respondent to challenge a report dated September 18, 2008 of the Central Empowered Committee (“CEC”), the first respondent. Relying on the findings of the CEC, the NGT concluded that the disputed complex seriously disturbs the ecology of the area in which it has been constructed, thereby ordering the structure to be demolished and the matter to be enquired into by the State of Himachal Pradesh (“State of HP”). Further, the NGT ordered that the second respondent, the appellant, the State of HP and its Tourism Department to compensate with a penalty of Rs.15 lacs, Rs.10 lacs and Rs.5 lacs each respectively.

Genesis of the dispute

To understand the crux of the issues that were brought before the Apex Court, it would be beneficial to dig out the history of the disputed forest land and the project that fell flat on its face.

The issues can be tracked back to November 12 1997, when the Union Ministry of Environment and Forests (“MOEF”) permitted the diversion of 0.093 hectares of forest land for the construction of a parking space in McLeod Ganj within the ambit of Section 2 of the FCA, 1980. The order specifically mentions that the land shall be used only for the purpose mentioned in the proposal by the State of HP. MOEF further issued an order dated March 01, 2001, approving the diversion of another 0.48 hectares of forest land for the construction of a bus stand at McLeod Ganj, adjoining the land proposed for making a parking space. The land measuring 0.093 hectare is above the main road and the land measuring 0.48 hectares is below the road, while the two pieces of land face each other and are a part of Banoi Reserve Forest.

In April 2001, HPBSM& DA was constituted for the construction of bus stands in the State of HP following the enactment of the Himachal Pradesh Bus Stands Management and Development Authority Act, 1999 (“HP Bus Stand”). The land that was diverted for non-forest use under orders dated November 12, 1997 and March 01, 2001 was leased out to HPBSM&DA for a 99 year lease period.

For creating a modern complex, the Board of Directors of the appellant in their meeting dated November 07, 2003 decided to construct a bus stand-cum parking complex on a Build-Operate-Transfer (“BOT”) basis. Upon inviting offers on November 19, 2003, a single financially unviable offer was received and the HPBSM&DA decided to alter the nature of the Bus Stand Complex by issuing a new Request for Proposal (“RFP”) on July 13, 2004. Apart from the bus stand on the lower level, the appellant envisaged further construction of a multi-level commercial complex with shops, a dormitory & budget hotel, a restaurant and a parking provision for about 50 cars at road level. Through a notice of award dated November 18, 2004, the appellants approved the lowest bid by the second respondent and entered into a concession agreement on December 23, 2004 for a period of 16 years, 7 months and 15 days.

The Impugned Construction

The issue started when the second respondent started the construction of the Bus Stand Complex in December 2005 without awaiting the permission of the Town and Country Planning Department (“TCP Department”) that approves drawings and plans. On March 04, 2006, the TCP Department received an application from the second respondent for approval of drawings, to which the TCP Department issued letters directing them to rectify the shortcomings in the proposed construction. It is an undisputed fact that during this entire period between July 2006 to February 2007, the second respondent continued with the construction without seeking proper approval. Ultimately, the TCP through its notices dated March 8, 2007 and June 5, 2008 ordered the second respondent to halt the construction of the Bus Stand Complex, to which the second respondent paid no heed and continued with the construction.

The Change in Land Use and User Agency

The State of HP also sent a proposal to the MOEF requesting the use of land permitted for non-forest use under orders dating back to 1997 and 2001 to be changed to the construction of the Bus Stand Complex. Further, to replace the user agency with the second respondent, this proposal was rejected by the MOEF in June 2007.

Before the CEC constituted by the Supreme Court, one Atul Bhardwaj & Bombay Environmental Action Group filed an application praying that the construction was violative of the FCA, 1980 and is liable to be demolished. Under the pretext that the CEC shall inspect the site, the Supreme Court allowed only the construction of the bus stand until the report is duly submitted. The construction of the bus stand complex was then completed by the second respondent on 7 July 2008.

The Discourse that followed

The dispute now arose between the authorities working for the modern complex and the authorities that were clearly against the illegal construction. Below is a chronological list of disputes between the parties prior to the matter being brought before the Supreme Court:

  1. On September 18, 2008, the CEC submitted its report declaring the construction to be in violation of the FCA, 1980, observing the rejection of the change in land use, the unviability of the proposed plan, the tactical approval of the Board of the appellants, congestion in the area and the lack of approval from the TCP Department with respect to the plans. The CEC recommended the demolition of the illegal construction.
  2. The second respondent filed an application before the Apex Court to set aside the report issued by the CEC and pleaded that they had not been given a fair opportunity to explain themselves. The Apex Court transferred the proceedings to the NGT in 2015.
  3. The NGT noted that the approval procured in 1997 from the MOEF was only for the ‘parking space’ at McLeod Ganj and the State of HP had no power to authorize the construction of the hotel-cum-restaurant structure and, therefore, the construction was entirely illegal. The NGT characterized the construction as “violation of law coupled with serious adverse impacts on environment and ecology of the eco sensitive area”[iv].
  4. The District and Sessions Judge, Kangra submitted his enquiry in October 2018 against the impugned construction. He concluded that the second respondent could not have engaged in this illegal construction without the connivance of Government Agencies and officials from the appellant, the Tourism Department, TCP Department, Forest Department and other related authorities to let the work continue from mid-2005 to mid-2008.

Analysis of the Apex Court & Environmental rule of Law

The Hon’ble judges of the Supreme Court observed that the permission granted by the MOEF was only for construction of a ‘parking place’ at McLeod Ganj and the same has been unlawfully utilized to construct a different structure which was not authorized. Section 2[v] mandates strict compliance and clearly provides that no State Government or authority can approve the use of forest areas without the Central Government’s go ahead. The report of the CEC is a serious indictment of the actions of the appellant. The findings arrived at in NGT’s judgment are supported by the report submitted by the District and Sessions Judge. The report presents a striking analysis of the manner in which the hotel-cum-restaurant structure was constructed in breach of statutory requirements and how this was made possible by the connivance of multiple state actors.

In a constitutional framework which is intended to create, foster and protect a democracy committed to liberal values, the rule of law provides the cornerstone. The modern rule of law recognizes that liberty and equality are the focal points of a just governance system, without which human dignity can be subverted by administrative discretion and absolute power. The environmental rule of law, at a certain level, is a facet of the concept of the rule of law, including features unique to the environment. The environmental rule of law seeks to create essential tools – conceptual, procedural and institutional to bring structure to the discourse on environmental protection and enhance our understanding of environmental challenges. Together, the elements which it embodies aspire to safeguard the bounties of nature against existential threats. For it is founded on the universal recognition that the future of human existence depends on how we conserve, protect and regenerate the environment today.[vi]

Based on the Court’s analysis, it upheld the directions issued by the NGT, directing the process of demolishing the hotel-cum-restaurant structure to commence within two weeks. Further, as directed by the NGT, the State of HP and the second respondent can utilize the parking space and the bus stand in the bus stand complex after the demolition of the hotel-cum-restaurant structure. However, this has to be in accordance with orders dated November 12, 1997 and March 01, 2001 issued by the MOEF, i.e., it shall not be used for any purpose other than parking of cars and buses, as the case may be.

In Goel Ganga Developers India Pvt. Ltd. vs Union of India[vii], the Supreme Court dealt with a situation in which the project proponent had engaged in construction that was contrary to the environmental clearance granted to it. The two-judge bench felt that damages should be higher keeping in view the totally intransigent and unapologetic behavior of the project proponent. He has maneuvered and manipulated officials and authorities. Instead of 12 buildings, he has constructed 18; from 552 flats the number of flats has gone up to 807 and now two more buildings having 454 flats are proposed. The project proponent was directed to pay damages of INR 100 crores or 10% of the project cost, whichever was more.

Similarly, in the present case, the MOEF made a conscious decision not to modify the terms of its permission. Hence, any construction undertaken by the second respondent, even with the tacit approval of the appellant being a statutory authority under the HP Bus Stands Act, is said to be illegal.


In the present case, it is not possible to determine in quantifiable terms the exact effect of the construction of the hotel-cum-restaurant structure by the appellant and the second respondent on the ecology of the area. Both of them feel that the number of trees felled by them would have been the same even if they had pursued the earlier plan of a parking space. However, the way in which they have gone about achieving their object is concerning. The construction proceeded even when the TCP Department tried to halt it, refusing to approve its plans. Even the post facto refusal by the MOEF for changing the nature of the diverted forest land was not enough to stop the parties. Ultimately, when they were forced to halt the construction by the CEC, they proceeded with it under the guise of an order of the Supreme Court which permitted only legal construction. A combination of these circumstances highlights not only conduct oblivious of the environmental consequences of their actions, but an active disdain for them in favour of commercial benefits. Whatever the environmental rule of law may mean, it surely means that construction of this sort cannot receive endorsement, no matter what its economic benefits may be. A lack of scientific certainty is no ground to imperil the environment. This case can be an eye opener for PPP projects that may face similar issues. The law of the land will always favour conservation and protection of the ailing environment and it is vital that constructions, especially in difficult terrains should be ecologically viable. Seeking approvals from concerned authorities should be a pre-requisite to the commencement of any construction as the vice versa can hinder the project and incur great financial repercussions.

[i] UNEP, ‘Environmental Rule of Law First Global Report’ (January 2019), pgs viii and 233.

[ii] Forest (Conservation) Act, 1980,  (Central Act No. 69 of 1980)

[iii] National Green Tribunal, Act, 1980 (Act No. 19 of 2019)

[iv] M/s Prashanti Surya Construction Co. & Others Vs Central Empowered Committee & Others, NGT order dated May 4, 2016.

[v] Section 2, Forest (Conservation) Act, 1980,  (Central Act No. 69 of 1980)

[vi] Himachal Pradesh Bus Stand Management and Development Authority (HPBSM&DA) vs. The Central Empowered Committee (CEC), LL 2021 SC 14

[vii] (2018) 18 SCC 257[/vc_column_text][/vc_column][/vc_row]

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