The Role of Pollution Control Boards in the Real Estate Sector

-by Gayathri Gireesh* & Divyansh Bhansali**

Introduction

The real estate sector is one of the largest contributors to the Indian Economy and has been expanding rapidly which is estimated to reach USD 1 Trillion by 2030.^[1] It attracts large investments and caters to the housing needs of a huge segment of the Indian population in urban centers. The government introduced the Real Estate (Regulation and Development) Act (RERA) in 2016.^[2] Under this, Real Estate Development Authorities (the RERA Authority) are set up in each state to regulate and develop the sector. However, given the nature of the real estate sector involving a great amount of construction activity, it is also a cause of environmental pollution in the country. The RERA is a regulatory authority that mainly focuses on the administrative aspects of the regulations and does not have its primary focus on environmental protection. The real estate projects, nonetheless, are required to fulfill certain norms and compliances laid by other laws in the country made for environmental protection. These include the clearances under Environment Impact Assessment,^[3] Coastal Regulation Zone Notification, 2011,^[4] consent and NOC of the State Pollution Control Board (SPCB) under the Water (Prevention and Control of Pollution) Act, 1974^[5]  and Air (Prevention and Control of Pollution) Act, 1981^[6] among other requirements.

SPCBs and the RERA Authorities are state-level bodies and therefore exploring the interplay between these two regulatory bodies and their interacting jurisdiction is important. These two bodies do not work in silos but rather work in tandem to strengthen the framework for environmental protection. Though the powers of the SPCBs are defined both under the Water Act and the Air Act (together as pollution control legislations), this article takes the Water Act as its central point of analysis to discuss the powers of the SPCB, which are almost similar to powers enumerated in the Air Act.^[7]

The Real Estate Projects having the threshold of more than of 20,000 square meters requires Environment Clearance and as such these projects require SPCB consent.S.3 of RERA ^[8] states the pre requisite for registration is where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases.The SPCB regulates the Real Estate sectors having more than 20,000 square meters and for the RERA projects (u/s 3 of the RERA) within 20,000 square meters, the SPCB provides consent in the areas of setting up of Sewage Treatment Plants (STPs) consonance with the state government rules (For eg: BWSSB in Bangalore). It also regulates the installation and monitoring emission control devices for diesel generator sets (DG) in apartments

How do the SPCBs regulate real estate projects?

The SPCBs are constituted under the Water Act^[9] and derive their power from various enactments including the Air Act,^[10] Environmental Protection Act, 1986, etc.^[11] Their primary function is to control and prevent water and air pollution. More generally, for this purpose, they have the power to inspect, take samples, obtain information, direct any person or authority, and prohibit any industry or activity that pollutes the environment.^[12] From the time of enactment of the Air Act and Water Act, the ambit of SPCBs’ jurisdiction has increased multifariously.  Earlier, it was only envisaged to regulate pollution-causing industries, however, it now also regulates the construction and real estate sector as well. This was also reiterated in the S.P.E.B v. UOI,^[13] where the National Green Tribunal held that the construction projects including the residential projects and townships fall under the ambit of the Water and the Air Act and are therefore required to obtain ‘consent to establish’ and ‘consent to operate’ from the SPCBs.^[14]

A real estate project, hence by the requirement of law, needs to obtain ‘consent to establish’ and ‘consent to operate’ from the concerned SPCB under section 25 of the Water Act before starting the construction of the project.^[15] It is however important to note, as held in VET Bangalore v. KSPCB,^[16] that if after four months of filing the application, it is neither accepted nor rejected, the consent of the Board shall be deemed under section 25(7). However, three conditions need to be fulfilled for having a deemed consent that are:

• the consent referred to in Sub-section 25(1) shall not have been given or refused earlier,
• a period of four months ought to have expired after making of the application, and
• his application should be complete in all respects. On an applicant establishing that these three factors do exist in his favor, it would have to be deemed, without much ado, that the permission would be given unconditionally immediately on the expiry of the four-month period.^[17]

With these consents, the Board may also impose certain conditions as it deems fit that need to be complied with by the person establishing the project.^[18] Further, under section 33A of the Water Act, the Board has the power to issue directions to any person or authority, including directions to stop any work or process.^[19] The Board may also exercise the power “to enter and inspect” in order to perform its duties.^[20] The persons/authority in charge of the project shall face penal consequences for non-compliance with any of the requirements laid under the Water Act.

Illustration I: The Elegant Apartments in Kengeri had obtained the consent to establish from Karnataka State Pollution Control Board. It had 200 apartment units with more than 20,000 Sq meters However, a petition was filed in the NGT by a prospective buyer of the apartment stating that The Elegant apartments have violated consent conditions of the KSPCB by constructing several illegal structures including the swimming pool on the buffer zone. The storm water drain has been used to let the sewage water. Under these circumstances the KSCPB can exercise the power to entry and inspect to assess the situation. It can impose fine and such conditions to do away with the illegal structures.

However, to launch a real estate project, it is also mandatory to register it with the RERA Authority. Under S.3 of RERA ^[21]  the pre requisite is where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases. For getting project registration, it needs to have approvals from the competent authorities.^[22]

• This includes Consent orders from the SPCBs which need to be submitted along with the application for registration and if the project is above the threshold limit of 20,000 square meters which requires Environment clearance under the Schedule of the Environmental Impact Assessment Notification, 2006.^[23]
• The registration can be refused, if necessary, compliances are not in place.^[24]
• It can also be subsequently revoked if it comes to the notice of the RERA Authority that the necessary compliances are not complied.^[25]
• Further S.14 of the RERA imposes a duty on the promoter to adhere to the sanctioned plan which includes the environmental compliances as approved by the competent authority and disclosed to the purchasers.^[26]
• Any non-compliance with the provisions of the RERA shall lead to penal consequences for the promoter of the project

From the above description, it is clear that real estate projects are not exempted from the compliance requirements of the SPCBs. It is also clear that the RERA, though primarily concerned with the administrative and regulation of the sector, mandatorily requires the project to comply with the environmental norms including the consent of the SPCBs.

What are the remedies present when any real estate project is found violating the environmental norms set by the SPCBs?

From the previous section, it is clear that real estate projects are required to adhere to the Pollution Control Boards’ environmental norms among other compliances. However, in case of breach of these norms when the construction work starts without the requisite permissions from the SPCBs or when after obtaining the permission, the work is carried out in breach of the conditions imposed by the Board, there are several remedies which an aggrieved customer or an affected person may avail.

• Under section 49 of the Water Act, information regarding violation of norms can be given to the SPCBs by any person.^[27]
• On such a complaint or otherwise, under section 25(5) if the work is undertaken without the consent of the SPCB, the Board may impose such conditions on the project by serving the person in charge as it may have imposed if an application for consent would have been filed.^[28]
• The consent once given may be withdrawn if there is any violation of conditions imposed by the Board under section 27. ^[29]
• Also, where the Board apprehends any danger of pollution from any project being undertaken, it may move to court and get an order restraining the person in charge of such project to stop the work or any other direction that the court may deem fit.^[30]
• Further, as mentioned earlier, the Board may itself direct a person in charge of a project to stop the work if such a project is causing or is likely to cause pollution under section 33A. Such direction may also be issued to any officer or authority and such person, officer, or authority is bound to follow the directions.^[31]
• The SPCB can grant ex post facto consent with a condition to prosecute if the terms of consent are violated.^[32]

Illustration II: – Considering a scenario where a real estate developer is registered under RERA Karnataka is having 150 apartments.  If the developer has not obtained the consent of the SPCB under S.25 of the Water Act for establishing the Sewage Treatment Plant (STP) for the apartments, it is a punishable offence under S.44 of the Water Act, with imprisonment for a term which shall not be less than one year and six months but which may extend to six years and with fine. S.25 is a crucial clause in the pollution control aspects and has been emphasized in the case of V.T Wilson v. KSPCB. ^[33] A private compliant can be filed by any consumer or any private person against the promoters engaging in the violation of the Act.

Empowering RERA Authority for Environmental Compliances under the RERA Act

However, not only under the pollution control legislations but remedies against breaches of environmental norms are also present under the RERA. The real estate projects within 20,000 square meters are huge source of water pollution and therefore RERA must be empowered to regulate the real estate companies in terms of mandatory environmental compliances form SPCB and State Water supply Authority. An aggrieved person can file a complaint with the RERA Authority against violation of the Act, or any of the rules and regulations under it.^[34] This means that complaints can be filed with the RERA Authority against projects not following SPCB compliances as they are required to be followed under the RERA under S(4)(2)(c). The following actions are also taken by RERA

• The RERA Authority may revoke the registration, if necessary, compliances are not in place, or conditions imposed by the competent authorities are not followed^[35], which means that if the conditions imposed by the SPCB are violated, the registration of the project may be canceled under RERA as well.
• The RERA Authority instead of revoking the registration may impose certain conditions on the project which the promoter shall be bound to follow.^[36] The RERA Authority has the power to issue interim orders under S.36 and can also issue directions under section 37 of the RERA Act, hence, a project may be halted by its directions if it finds that the work is being carried out in contravention of any of the requirements, which include the SPCB compliances.^[37]
• If the promoter contravenes any of the duties imposed on him, the RERA Authority has the power to impose penalty and interest on him under section 38.^[38]
• A promoter can be punished for contravening S.3 and S.4 of the RERA Act, that is for not registering a real estate project for not obtaining proper approvals from the competent authorities.^[39]
• Also, the promoter is liable to be punished for not following section 14 of the Act that is if the layout or plan of the project is changed after the approval from the competent authority without notice to it.^[40] This includes any change in plan as sanctioned by the SPCB as well.
• However, a person/promoter can only be prosecuted under the provisions of the RERA Act if such an application is filed by the RERA Authority to the court.^[41]

It is also important to note here that the promoters cannot hide behind the corporate veil under both the RERA and the Water Act. The apex court in KSPCB v. B. Heera Naik^[42] has held that section 47 of the Water Act has to be given a broad definition and hence, any person in charge of a company or responsible for its conduct shall be deemed to be liable for the offences under the Act. According to the Court, this would include any body-corporate as defined under the explanation to the section and shall include the City Municipal Council as well.^[43] This was also affirmed in the Noorulla Khan v. KSPCB.^[44] A similar provision exists in the RERA, which makes the deeming liability of persons in charge of the company committing the offences under the RERA.^[45]

Illustration III: Considering a scenario where a real estate project being constructed by the government departments like BDA (Bangalore Development Authority) or Karnataka Housing Board Societies (KHB) who have now agreed to be registered as promoters under KRERA. They had previously sought an exemption to be registered under KRERA. In this situation they would also come under the purview of KSPCB under “Residential Townships including Commercial Building”. As held by the Supreme Court in the V.C. Chinnappa Goudar and Ors. vs. KSPCB^[46], section 48 of the Water Act shall acquire the provision of deemed guilt against the heads of government departments who are considered guilty of the offences committed by the department. This section overrides section 197 of the CrPC (prior sanction for prosecuting public servants) and hence, no prior sanction is required from the government to prosecute these officials.

 Conclusion

From the above description it is clear that remedies are available both under the pollution control legislation and the RERA for non-compliance with the environmental norms The SPCB has the power to issue directions to any person as well as any officer or authority^[47], which means that the Board is equipped to direct the RERA Authority as well as to take actions to prevent environmental pollution caused by any real estate project. Similarly, under section 7 of the RERA, registration of the project may be revoked on the recommendation of any competent authority, which includes the SPCBs.^[48]The SPCB and the State RERA Authority do not operate in silos, but complement each other. For a consumer or any aggrieved person, affected by the violation of pollution norms by a real estate project, remedies both under RERA SPCBs are present hereby giving extra layers of protection against the pollution-causing projects. The SC and NGT has emphasized that invariably the SPCBs have increased the ambit of their jurisdiction to cover the construction sector.

********

*Gayathri Gireesh, Consultant Advocate, CEERA NLSIU

**Divyansh Bhansali, Second Year, B.A.LL. B, NLSIU

^[1] Indian Real Estate Industry Analysis, India Brand Equity Foundation (Feb., 2024), https://www.ibef.org/industry/real-estate-india (last visited May 08, 2024).

^[2] The Real Estate (Regulation and Development) Act, 2016.

^[3] Environment Impact Assessment Notification, 2006.

^[4] Coastal Regulation Zone Notification, 2011.

^[5] The Water (Prevention and Control of Pollution) Act, 1974.

^[6] Air (Prevention and Control of Pollution) Act, 1981.

^[7] Brief Note on Strengthening of State Pollution Control Boards (SPCBs) / Pollution Control Committees (PCCs), CENTRAL POLLUTION CONTROL BOARD, https://cpcb.nic.in/pcp/brief-note-strengthning-spcb-pcc.pdf (May 08, 2024)

^[8] The Real Estate (Regulation and Development) Act, 2016, §3. “Prior registration of real estate project with Real Estate Regulatory Authority.”

^[9] The Water (Prevention and Control of Pollution) Act, 1974, §4. “Constitution of State Board.”

^[10] Air (Prevention and Control of Pollution) Act, 1981, §5, §16-31A. “Chapter III: Powers and Functions of Boards & Chapter IV: Prevention and Control of Air Pollution.”

^[11] Environmental Protection Act, 1986.

^[12]The Water (Prevention and Control of Pollution) Act, 1974, §16-33A. “Chapter IV: Powers and Functions of Boards & Chapter V: Prevention and Control of Water Pollution.”

^[13] Society for Protection of Environment & Biodiversity v. Union of India, 2017 SCC OnLine NGT 981.

^[14] Id., para 51.

^[15] The Water (Prevention and Control of Pollution) Act, 1974, §25(1)(a). “Restrictions on new outlets and new discharges.”

^[16] Vijayanagar Educational Trust, Bangalore v. The Karnataka State Pollution Control Board, Bangalore, AIR 2002 Kar 123.

^[17] Id., para 12.

^[18] The Water (Prevention and Control of Pollution) Act, 1974, §25(4). “Restrictions on new outlets and new discharges.”

^[19] The Water (Prevention and Control of Pollution) Act, 1974, §33A. “Power to give directions.”

^[20] The Water (Prevention and Control of Pollution) Act, 1974, §23. “Power of entry and inspection.”

^[21] The Real Estate (Regulation and Development) Act, 2016, §3. “Prior registration of real estate project with Real Estate Regulatory Authority.”

^[22] The Real Estate (Regulation and Development) Act, 2016, §4(2)(c). “Application for registration of real estate projects.”

^[23] Environment Impact Assessment Notification, 2006, Schedule.

^[24] The Real Estate (Regulation and Development) Act, 2016, §5(1)(b). “Grant of registration.”

^[25] The Real Estate (Regulation and Development) Act, 2016, §7(1). “Revocation of registration.”

^[26] The Real Estate (Regulation and Development) Act, 2016, §14(1). “Adherence to sanctioned plans and project specifications by the promoter.”

^[27] The Water (Prevention and Control of Pollution) Act, 1974, §49(1)(b). “Cognizance of offences.”

^[28] The Water (Prevention and Control of Pollution) Act, 1974, §25(5). “Restrictions on new outlets and new discharges.”

^[29] The Water (Prevention and Control of Pollution) Act, 1974, §27(2)(a). “Refusal or withdrawal of consent by State Board.”

^[30] The Water (Prevention and Control of Pollution) Act, 1974, §33. “Power of Board to make application to courts for restraining apprehended pollution of water in streams or wells.”

^[31] The Water (Prevention and Control of Pollution) Act, 1974, §33A. “Power to give directions.”

^[32] M/S Sweta Estate Pvt. Ltd. Gurgaon v. Haryana State Pollution Control Board, MANU/SC/1235/2023.

^[33] V.T. Wilson v. Karnataka State Pollution Control Board, Criminal Petition No.5314 Of 2016 (Karnataka High Court).

^[34] The Real Estate (Regulation and Development) Act, 2016, §31. “Filing of complaints with the Authority or the adjudicating officer.”

^[35] The Real Estate (Regulation and Development) Act, 2016, §7(1). “Revocation of registration.”

^[36] The Real Estate (Regulation and Development) Act, 2016, §7(3). “Revocation of registration.”

^[37] The Real Estate (Regulation and Development) Act, 2016, §36-37. “Power to issue interim orders. & Powers of Authority to issue directions.”

^[38] The Real Estate (Regulation and Development) Act, 2016, §38. “Powers of Authority.”

^[39] The Real Estate (Regulation and Development) Act, 2016, §59-60. “Punishment for nonregistration under section 3. & Penalty for contravention of section 4.”

^[40] The Real Estate (Regulation and Development) Act, 2016, §61. “Penalty for contravention of other provisions of this Act.”

^[41] The Real Estate (Regulation and Development) Act, 2016, §80. “Cognizance of offences.”

^[42] Karnataka State Pollution Control Board vs. B. Heera Naik and Ors, (2020) 16 SCC 298.

^[43] Id., para 33.

^[44] Noorulla Khan v. Karnataka State Pollution Control Board, (2021) 17 SCC 524.

^[45] The Real Estate (Regulation and Development) Act, 2016, §69. “Offences by companies.”

^[46] V.C. Chinnappa Goudar v. Karnataka State Pollution Control Board, (2015) 14 SCC 535.

^[47] The Water (Prevention and Control of Pollution) Act, 1974, §33A. “Power to give directions.”

^[48] The Real Estate (Regulation and Development) Act, 2016, §7(1). “Revocation of registration.”

Featured Image taken from: https://images.hindustantimes.com/rf/image_size_630x354/HT/p2/2017/02/08/Pictures/_36e24774-ed64-11e6-90af-e8d3e91f500c.jpg