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2005 (9) TMI 591 - SC - Indian LawsWhether before diversion of forest land for nonforest purposes and consequential loss of benefits accruing from the forests should not the user agency of such land be required to compensate for the diversion? Held that - The submission made on behalf of the Federation of Indian Mineral Industries about calculation of NPV at the rate of 10 per cent for major mineral and 5 per cent for minor mineral as already noted cannot be accepted. The question is not of the value of the mineral or it being high value and low volume and mineral of high volume and low value, the question is about use of the forest areas and need to protect the environments in the manner above stated. A larger public interest has to be the guiding principle and not the present interest of user agency only. We are of the view that the question as to which class of projects deserve to be exempted can first be examined by experts having regard to principles laid in this judgment and in receipt of the report from them, this Court would further examine the matter and issue appropriate directions. However, prima facie we feel that revenue earning projects do not deserve similar treatment as non-revenue earning public welfare projects. We are clear that if let loose, the benefits achieved as indicated in the State Forest Report of 2001 would be lost and we may be again where we were in 1990 s or 1980 s and earlier period during which there was immense depletion of forest and insignificant regeneration. The work of regeneration and also of compulsory afforestation requires special, specific and expert attention and we see no illegality in establishment of Special Purpose Vehicle (SPV) in terms of clause 6.6 above quoted except that for present till further orders it would be necessary to monitor the establishment of SPV. Thus, in respect of clause 6.6 in relation to establishment of SPV, we hold that before establishing SPV, its format shall be filed in Court and SPV shall not be established without permission of the Court. Further in our view the constitution of authority (CAMPA) is necessary to fully and effectively implement recommendation dated 9th August, 2002 made by CEC for protection of environment.
Issues Involved
1. Conservation, preservation, and protection of forests and ecology. 2. Measures required to compensate for the loss of forest land and its effect on ecology. 3. Determination and calculation of Net Present Value (NPV) for diverted forest land. 4. Guidelines for determination and uniform application of NPV. 5. Constitution and management of the Compensatory Afforestation Fund. 6. Exemption of certain projects from payment of NPV. 7. Legal and jurisdictional basis for levying NPV. 8. Validity and constitutionality of CAMPA and the related notification. Detailed Analysis 1. Conservation, Preservation, and Protection of Forests and Ecology: The judgment emphasizes that natural resources are assets of the entire nation, and it is obligatory for both the Union and State Governments to conserve and not waste these resources. Article 48A of the Constitution mandates the State to protect and improve the environment, and Article 51A imposes a duty on every citizen to protect the natural environment. The core issue is the conservation, preservation, and protection of forests and ecology, especially when forest land is diverted for non-forest purposes. 2. Measures Required to Compensate for Loss of Forest Land and Its Effect on Ecology: The judgment discusses the need for compensatory measures when forest land is diverted for non-forest purposes. It highlights the necessity of taking precautionary measures to balance economic development with environmental protection. The court questions whether user agencies should compensate for the diversion by paying the NPV of such land to mitigate the loss of benefits accruing from the forests. 3. Determination and Calculation of Net Present Value (NPV) for Diverted Forest Land: The judgment explains the concept of NPV as the present value of net cash flow from a project, discounted by the cost of capital. It emphasizes the importance of using NPV to levelize costs and benefits over time, considering the long gestation period of forestry projects. The court notes that various methods like opportunity cost, replacement cost, travel cost, and social benefit cost analysis (SBCA) can be used to estimate the value of environmental outputs from forests. 4. Guidelines for Determination and Uniform Application of NPV: The court accepts the recommendations of the Central Empowered Committee (CEC) for recovering NPV from user agencies. It directs the Ministry of Environment and Forests (MOEF) to frame comprehensive rules for the management of compensatory afforestation funds. The guidelines should ensure that the NPV is calculated uniformly, considering the economic value of forests, and should be updated periodically. 5. Constitution and Management of the Compensatory Afforestation Fund: The judgment supports the creation of a 'Compensatory Afforestation Fund' to manage the money received from user agencies. It outlines the management and disbursement procedures for the fund, emphasizing the need for transparency, accountability, and proper utilization of funds for forest regeneration and environmental protection. The court directs the inclusion of more environmentalists and experts in the Executive Body of CAMPA to ensure effective management. 6. Exemption of Certain Projects from Payment of NPV: The court considers the exemption of certain non-commercial and non-revenue earning government projects like hospitals, schools, and public welfare projects from the payment of NPV. However, it rejects the exemption for revenue-earning projects like hydroelectric projects, emphasizing the need to balance development with environmental protection. 7. Legal and Jurisdictional Basis for Levying NPV: The judgment discusses the legal principles that support the levy of NPV, including the FC Act, EP Act, and the Forest Policy of 1988. It highlights the doctrine of public trust, which mandates the government to protect natural resources for the public good. The court rejects the contention that NPV should be paid to the State Government, emphasizing that natural resources are national assets. 8. Validity and Constitutionality of CAMPA and the Related Notification: The court upholds the constitutionality of the notification constituting CAMPA, rejecting the argument that the fund should be disbursed to the State Government. It emphasizes that the fund is meant for national environmental protection and not for state-specific proprietary rights. The court directs modifications to the CAMPA notification to ensure financial discipline, transparency, and accountability. Conclusion 1. All projects, except certain government public welfare projects, are required to pay NPV. 2. The payment to CAMPA is constitutional and valid. 3. The funds are to be used for ecological plans, environmental protection, and forest regeneration. 4. The NPV is based on economic principles and must be periodically updated. 5. An expert committee is to be appointed to examine the parameters and methodology for NPV calculation. 6. User agencies must give undertakings for further payment pending the expert committee's report. 7. Establishment of Special Purpose Vehicles (SPVs) requires court permission. 8. CAMPA's clauses must be modified in line with the judgment within one month.
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