Legal Action for Wildlife and Environment (LAW-E)

Legal Action for Wildlife and Environment (LAW-E) is an active forum of lawyers dedicated to wildlife and environment, established in 1998 as a Non - Profit Public Charitable Trust committed to the cause of protection of environment in general and forests and wildlife in particular. LAW-E provides Policy and Legislative inputs to the Ministry of Environment and Forests(MoEF) and the States, conducts Law Enforcement Awareness and Training programmes, provides legal advice and support to individuals, NGO's and the Governments.

The papers in this section are contributed by Mahendra Vyas (Trustee)

Background Note

1. In 1996, when the forest matter ( T. N. Godavarman Thirumalpad Vs. Union of India Writ Petition (Civil) No. 202 of 1995) was being heard by the Supreme Court, India was losing its forests at an alarming rate. The State of Forest Report Published by the Forest Survey of India every two years had revealed rapid decline of the forest cover in almost all the states and particularly in Northeastern States. The following were the main reasons identified:
  • Felling of trees continued at unsustainable levels and even where there were Working Plans as the felling exceeded the regeneration;
  • The Forest (Conservation) Act, 1980 (“F.C. Act”) which restricted diversion of forest land for non forest use was applicable only to notified forest areas whereas vast tracts of excellent forests were not notified and therefore not protected under the said Act. The implementation of the F. C. Act by the State was extremely lax.
  • The amount of funds received by the States from the user agencies for undertaking Compensatory Afforestation (“CA”) in lieu of forest land diverted for non forest use were diverted by the State Government for other purposes and their utilization was also poor and improper.
  • Even the plantations raised by the forest departments under CA takes at least 30 years to mature. They are a poor substitute to a forest
  • A number of wood based industries i.e. saw mills, veneer and plywood factories many of them unlicensed freely operated in side or close to forest areas which were using of illegally felled timber. Besides their capacity and numbers exceeded the amount of timber available from all source was having devastating impact on the forests particularly in the North eastern states.
  • Large scale illegal mining and other destructive non forest activities continued in forest areas with impunity leading to degradation of forests on a massive scale
  • Large scale encroachments continued unabated and were encouraged and patronized before each election
  • Even the protected areas i.e. the national parks and sanctuaries declared under the Wild Life (Protection) Act, 1972 were not spared from being used for destructive activities such as mining and other forms of commercial exploitation; etc.

2. The Supreme Court with the landmark order of 12.12.1996 expanded the definition of the forest for the purposes of the Forest (Conservation) Act, 1980 giving specific directions, which had far reaching impact in saving our forests:
  • besides notified forests included all areas recorded as forest in government record and any areas which has characteristics of a forest were brought under the purview of the F.C. Act;
  • no felling of trees without the approved Working Plan as provided in the F.C. Act;
  • each state was directed to constitute an Expert Committee to identify ‘forest' with a view to bring all types forests under the purview of the F.C. Act, irrespective of ownership. This Committee was also assigned the task of identifying areas which were earlier forest but stand degraded, denuded or cleared;
  • each State was directed to constitute an Expert Committee to file a report regarding the number of wood based units including saw mills, veneer and plywood factories operating in the State, their actual capacity, their proximity to forests, source of their timber;
  • each State was to constitute an Expert Committee to assess sustainable capacity of forest of the State qua the timber based units, their number which could safely sustained in the State and their optimum distance from the forest;
  • detailed directions were issued for the North Eastern States , the States of Jammu & Kashmir, Tamil Nadu, Himachal Pradesh and hill region of Uttar Pradesh and West Bengal ;
  • the Railways Ministry was asked to file details of wooden sleepers used by them and steps being taken to find alternatives of wood;
  • the saw mills in the States of J & K to be relocated 10 km. from the boundary of the nearest forest.

3. Subsequently, several orders were passed including a judgment closing down mining in Kudremukh National Park and the recent one on charging Net Present Value on diversion of forest land for non forest use. Some of the orders which have far reaching consequences are briefly explained as under:
  • by order dated 4.3.1997 the High Powered Committee for the North Eastern States was constituted. Thousands of unlicensed saw mills in U. P. and Maharashtra was closed down;
  • by order dated 15.1.1998 directions were issued for managing forests and regulating the wood based industry in North Eastern states;
  • by order dated 14.2.2000 removal of dead, dying, diseased trees, drift wood grasses etc. was prohibited from national parks and sanctuaries;
  • by order dated 22.9.2000 prohibited felling of trees as per approved Working Plans without ensuring regeneration;
  • by order dated 12.5.2001 the Empowered Committees for the States of Chattisgarh and Madhya Pradesh were constituted for adjudicating dispute pending before the Supreme Court;
  • by order dated 10.5.2001 and 18.2.2002 permitted collection of minor forest produce from areas other than national parks and sanctuaries;
  • by order dated 18.2.2002 banned use of indigenous wood for railway sleepers;
  • by order dated 18.2.2002 seeking reasons for delay in notifying Matheran and the adjoining areas as Ecologically Sensitive Zone under the Environment (Protection) Act, 1986. Similar protection is being given to Mt. Abu ;
  • by order dated 7.5.2002 detailed directions given regulating felling of trees in Andaman Islands, ban on operation of wood based units, removal of encroachments etc.;
  • by order dated 9.5.2002 directions were issued to constitute the Central Empowered Committee to monitor the implementation of the orders of the Hon'ble Court in the forest matter;
  • by order dated 9.9.2002 directions were passed to stop commercial vandalism indulged by various companies and other entities by painting advertisements on rocks around Manali and Rohtang Pass and subsequently series of orders passed imposing costs to clean the rocks;
  • by order dated 29.10.2002 rich and influential encroachers of forests in Western Ghats (Chickmagalur) were evicted and in the event the order was not complied by 31.12.2002, the encroachers were to pay Rs. 5 lakhs per ha. per month for illegal occupation till encroached land is vacated / surrendered;
  • by order dated 29.10.2002 / 16.12.2002 mining activities were banned / regulated in the Aravalli Hills;
  • by order dated 29.10.2002 CEC‘s recommendations were accepted to establish Compensatory Afforestation Fund (CAMPA) and charging Net Present Value of forest land diverted for non forest use @ Rs. 5.80 to 9.20 lakhs per ha. depending upon the density of forest involved;
  • by order dated 29.10.2002 the Power Grid Corporation was directed to pay Rs. 50 Crores before allowing felling of 14,739 trees (subsequently reduced to about 7,000 only) for laying transmission lines through Rajaji National Park. The original clearance was given for felling about 67,000 trees in the said Park. Subsequently, all projects which involved the use of land within any national park or sanctuary were asked to pay a minimum of Rs. 1 Crore or 5% of the project cost towards environmental costs and the money to be used for strengthening protection measures in the park / sanctuary;
  • by order dated 19.4.2004 the NHPC was ordered to deposit Rs. 300 Crores as Net Present Value of forest over 4,000 ha. of forest land and about 42 ha. land of Tale sanctuary was diverted / submerged in the Lower Subansri Hydel Power Project, now confirmed by the recent judgment dated 26.9.2005.
Summary of the judgment of the Supreme Court on Net Present Value

1. On September 26, 2005 , a three-judge bench of the Supreme Court of India through Justice Y.K. Sabharwal delivered its judgment after hearing Interlocutory Application ( I. A.) No. 826 [in I.A. No. 566] and several other I.A.'s filed in the T.N. Godavarman Case. While not doubting the importance of the various orders given by the Court during the pendency of this case and the applications filed under it, the September 26, 2005 order is probably one of the most significant decisions given by the Court having a far-reaching impact on the conservation of forests in India.

2. The main issue that was raised before the Court in the said I.A.'s was “ whether before diversion of forest land for non-forest purposes and consequential loss of benefits accruing from the forests should be required to compensate for the diversion. If so, should not the user Agency be required to make payment of Net Present Value (NPV) of such diverted land so as to utilize the amounts so received for getting back in the long run the benefits which are lost by such diversion? What guidelines should be issued for determination of NPV? Should guidelines apply uniformly to all? Ho w to calculate NPV? Should some projects be exempted from payment of NPV? “

3. At the very outset the Court held that there is an absolute need to take all precautionary measures when forest lands are sought to be diverted for non forest use as economic development at the cost of environmental degradation and forest depletion was counter productive and not long lasting.

4. After discussing at length the inception, constitution and powers of the Compensatory Afforestation Fund Management and Planning Authority (“CAMPA”), the Court, while accepting the suggestion given by the Amicus Curiae , held that the Executive Body of the CAMPA has to be expanded and the involvement of NGOs needs to be increased. It directed that the Executive Body must be expanded to include two more environmentalists, one of whom may be an expert in forestry and the other in the field of forest economy development.

5. While considering the clause in the Notification issued by the MoEF constituting the CAMPA with regard to the utilization of the funds received from a particular State or Union Territory in the same State or Union Territory as very rigid, the Court held that-

"… the effect of degradation of environment or depletion of forest can be felt more in the adjoining area which may be in a different State or Union Territory . The effect of environmental degradation cannot be restricted to a particular area. The impact cannot be limited to the place of origin. "

6. It was directed that the clause be modified to the extent that the funds would be ordinarily used for the State or Union Territory from which they were received. However, the CAMPA must now be given the discretion to utilize these funds while incurring expenditure in other States and Union Territories .

7. The Court further observed that “ the notification dated 23 rd April, 2004 does not deprive any state of any land timber or mineral and, therefore, there is no question of disbursement of any amount to the State. The damage to the environment is a damage to the country's asset as a whole. Ecology knows no boundaries. It can have impact on the climate . The principles and parameters for valuation of the damage have to be evolved also keeping in view the likely impact of activities on future generation.”

8. The issue of legality and jurisdictional basis of levying Net Present Value (NPV) was addressed in detail by the Court. The States, while not opposing the collection of NPV from the user-agency, had urged the Court that the amount deposited by the agency as NPV must be given to them. It was further contended by the States that NPV need not be paid for degraded forests. Contention placed by the Amicus Curiae was that as forests were a part of the eco-system, their value is not only the value of the trees and leaves but also the value of preservation of bio-diversity. NPV must be paid for the effect on the ecology due to the use of forestland for non-forest purposes. It was further stated to calculate NPV, the economic value spread over fifty years , which takes into account the value of regeneration must be considered, instead of the restorative value.

9. The Court defined NPV as the present value (PV) of net cash flow from a project, discounted by the cost of capital . It is the method by which future expenditures (costs) and benefits are levelised in order to account for the time value of money. The object behind NPV is to levelise costs . The NPV method which discounts future costs and future benefits by use of appropriate discount rate and brings down such costs and benefits to a particular reference date. The Court enumerated various environmental outputs from forests that have no market; such as Flood Control Benefits; Water Production; Soil Conservation; Outdoor Recreation; Biodiversity & Conservation; Habitat; and Air Purification. The problem in valuing these outputs is that of allocation of fixed costs according to the contribution of each product in total revenue. For each of them, different methods of valuation have to be applied. Further, the Court stated that the amount of NPV to be deposited shall be updated after every three years.

10. The legislative instruments relating to forest protection have been analysed in detail in the judgment. However a crucial point that maybe highlighted is that the Court considered the principal aim of the National Forest Policy 1988 as to ensure environmental stability and maintenance of ecological balance including atmospheric equilibrium which are vital for sustenance of all life forms, human, animal and plant. The derivation of direct economic benefit must be subordinated to this principal aim . The non-fulfillment of this principle would amount to the violation of Article 14 and 21 of the Constitution of India. According to the Court, preservation and enhancement of forest cover, as a natural gene pool reserve is clearly a constitutional imperative. Further, it stated that-

" It has been recognized that one of the essentials for forest management is the conservation of total biological diversity, the network of national parks, sanctuaries, biosphere reserves and other protected areas to be strengthened and extended adequately. "

11. With regard to grant of exemption to certain projects such as Government hospitals, dispensaries, non-commercial government ventures like schools, rain water harvesting tanks, sewer lines, village roads etc. that are meant for public welfare and dams/hydro electric power projects and similar projects which are undertaken in public interest, the Court said that a distinction needs to be drawn between public utilities which are revenue earning and those which are non-revenue earning projects. Further, a larger public interest has to be the guiding principle and not the present value of user agency only . The Court, however stated, that prima facie revenue earning projects do not deserve similar treatment as non-revenue earning public welfare projects .

12. The Court overruled the objections raised by some of the States and held that the CAMPA was constitutionally and legally valid.

13. After examining the above issues at length the Court arrived at the following conclusions:
  • except for government project like hospitals, dispensaries and schools referred to in the body of the judgment, all other projects shall be required to pay NPV though final decision on this matter will be taken after receipt of Expert Committee report;
  • the payment to CAMPA under notification dated 23 rd April, 2004 is constitutional and valid.
  • the amounts are required to be used for achieving ecological plans and for protecting the environment and for the regeneration of forest and maintenance of ecological balance and eco-systems. The payment of NPV is for protection for environment and not in relation to any propriety rights;
  • the fund has been created having regard to the principles of intergenerational justice and to under take short term and long-term measures; and
  • the NPV has to be worked out on economic principles.

14. Keeping in view the above conclusions the Court issued the following directions:
  • an expert committee comprising of three experts including Ms. Kanchan to be appointed within a period of one month be the Institution of Economic Growth (North Campus).
  • the committee of experts would examine the following issues:
  • to identify and define parameters (scientific, bio-metric and social) on the basis of which each of the categories of values of forest land should be estimated;
  • to formulate a practical methodology applicable to different bio-geographical zones of India for estimation of the values in monetary terms in respect of each of the above categories of forest values;
  • to illustratively apply this methodology to obtain actual numerical values for different forest types for each bio-geographical zone in the country;
  • to determine on the basis of established principles of public finance, who should pay the costs of restoration and/or compensation with respect to each category of values of forests;
  • which project deserves to be exempted from payment of NPV;
  • the user agencies shall give undertakings for the further payment, if any as may be determined on receipt of report from the expert body;
  • the Special Purpose Vehicle shall be established with the permission of the Court;
  • the Institute shall send report of Committee of Experts within a period of four months; and
  • the various clauses of CAMPA shall be suitably modified in terms of this judgment within a period of one month.
Full text of the Judgment is available at (last visited on October 17, 2005 ).

Writ Petition (C) No.202 of 1995.

Notification dated April 23, 2004 , available at (last visited on October 17, 2005 ).

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