A Bench of Justices Dipankar Datta and Vijay Bishnoi said that in environmental cases, linking the scale of a company’s operations to environmental damage can be a strong factor in determining compensation. File | Photo credit: The Hindu
If a company profits more from its scale, it must bear more responsibility for environmental costs, the Supreme Court said on Friday (Jan 30, 2026) as it upheld a National Green Tribunal (NGT) order that imposed an environmental compensation of ₹ 5 crore on a builder for violating environmental norms.
A Bench of Justices Dipankar Datta and Vijay Bishnoi said that in environmental cases, linking the scale of a company’s operations (such as turnover, volume of production or revenue generation) to environmental damage can be a strong factor in determining compensation.
The Court found that larger operations mean a larger footprint, and said that larger scale often means greater use of resources, more emissions and more waste, leading to a greater burden on the environment.
“If a company benefits more from its scale, it stands to reason that it bears more responsibility for environmental costs. Linking scale to impact sends a message that larger players must play by greener rules,” Bench noted.
“If a company has a high turnover, it reflects the sheer scale of its operations. If such a company is found to be contributing generously to environmental damage, its turnover may have a direct relationship with the extent of damage caused. Therefore, in our considered opinion, it is wrong to say that turnover can never form a relevant factor in calculating compensation commensurate with the extent of damage,” the Bench said.
In 2022, the NGT found that Rhythm County had violated environmental norms at Autade Handewadi in Pune and carried out construction without obtaining environmental clearance, for which it was ordered to pay ₹5 crore compensation.
In its order dated August 22, 2022, the NGT ruled that Rhythm County had carried out construction activities in violation of environmental norms and without obtaining mandatory approvals under the Air and Water Act.
The NGT rejected Rhythm County’s contention that such approvals were not required, saying that statutory compliance could not be relaxed on the basis of interpretive convenience and that the firm continued construction activities even after the Maharashtra Pollution Control Board issued a stop-work order.
Published – 1 Feb 2026 06:52 IST
