Environmental Offences and Corporate Liability: Jan Vishwas Decriminalisation, Liability of Companies and Directors, Due Diligence, Environmental Audit and Compliance

For almost four decades, Indian environmental statutes treated pollution as a crime: exceeding standards, operating without consent or disobeying a Board's direction could lead to imprisonment of up to six or seven years. In practice, prosecutions were rare, trials took decades and convictions were few. Since 2024, the Jan Vishwas (Amendment of Provisions) Act, 2023 and the Water (Prevention and Control of Pollution) Amendment Act, 2024 have replaced most of these offences with monetary penalties imposed by adjudicating officers, while retaining imprisonment for the gravest breaches and for failure to pay. This note explains the resulting law of environmental offences, the liability of companies, directors and government departments, and the compliance systems that companies must now maintain.

1. Environmental Offences: The Landscape

Environmental offences in India arise under three groups of laws:

• Pollution statutes: the Water Act, 1974, Air Act, 1981, Environment (Protection) Act, 1986 and the rules under the EPA (waste, hazardous substances, CRZ, noise), now largely converted into civil penalty regimes; the Public Liability Insurance Act, 1991 and the Biological Diversity Act, 2002 have also been decriminalised to a large extent (the latter by its 2023 amendment);
• Conservation statutes: the Wild Life (Protection) Act, 1972 (poaching, trade in wildlife, damage to protected areas), the Indian Forest Act, 1927 and State forest Acts (illicit felling, transit of forest produce), and the Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980, which remain criminal; and
• General criminal law: the Bharatiya Nyaya Sanhita, 2023, including public nuisance (Section 270), negligent act likely to spread infection (Section 271), fouling the water of a public spring or reservoir (Section 279), making the atmosphere noxious to health (Section 280), and negligent conduct with respect to poisonous substances or fire (Sections 286 and 287), together with offences of causing death by negligence where accidents kill.

2. Criminalisation versus Administrative Penalties

The choice between criminal prosecution and administrative (civil) penalties is a classic debate in environmental enforcement.

Arguments for criminalisation: pollution can cause death and disease, and serious harm deserves moral condemnation; the threat of imprisonment of managers is a powerful deterrent that fines alone may not provide, since companies may treat fines as a cost of business; and criminal law expresses society's values.

Arguments for administrative penalties: criminal trials under environmental statutes were slow (often a decade or more), required proof beyond reasonable doubt, and rarely ended in conviction; magistrates lacked technical expertise; the threat of prosecution encouraged rent-seeking by inspectors; and minor procedural lapses by small units were criminalised. Graded monetary penalties imposed quickly by an expert officer, backed by the Boards' powers of closure and by environmental compensation, may deter more effectively. Most modern systems use a mixed model: civil penalties for most violations and criminal sanctions for wilful, serious or repeated violations.

3. Jan Vishwas Decriminalisation of Environmental Offences

The Jan Vishwas (Amendment of Provisions) Act, 2023 (Act 18 of 2023) amended 42 Central laws to decriminalise minor offences and promote 'trust-based governance'. Its amendments to the EPA, Air Act and PLI Act came into force on 1 April 2024. The Water Act was amended separately by the Water (Prevention and Control of Pollution) Amendment Act, 2024, in force from 15 February 2024 in the States and Union territories to which it applies. The common architecture is:

1. most contraventions become civil contraventions attracting monetary penalties in graded bands, generally Rs 10,000 to Rs 15 lakh, with additional daily penalties for continuing contraventions;
2. penalties are imposed by an adjudicating officer not below the rank of Joint Secretary to the Government of India or Secretary to the State Government, after an inquiry and hearing, considering factors such as the population and area affected, duration, vulnerability of persons affected, damage caused and undue gain;
3. an appeal lies to the National Green Tribunal within sixty days, on deposit of ten per cent of the penalty;
4. penalties are credited to the Environment Protection Fund under Section 16 of the EPA;
5. imprisonment is retained for operating without consent under the Water and Air Acts, and for failure to pay a penalty within ninety days (up to three years, or fine up to twice the penalty, or both); and
6. Government departments are dealt with by a penalty on the Head of Department equal to one month's basic salary.

4. Liability of Companies, Directors and Persons in Charge

4.1 The traditional model of vicarious liability

The same model appeared in Section 47 of the Water Act and Section 40 of the Air Act. It creates two routes to personal liability: (i) persons in charge of and responsible for the conduct of business are deemed guilty, subject to a reverse burden to prove lack of knowledge or due diligence; and (ii) any director, manager, secretary or officer is guilty if the offence occurred with his consent, connivance or neglect, which the prosecution must prove.

4.2 The position after the 2024 amendments

After the Jan Vishwas amendments, the EPA's Section 16 on offences by companies was replaced by the Environment Protection Fund provisions, and Section 15A imposes a monetary penalty on the company itself. Under the Water Act, Section 47 was omitted and the liability of directors, managers and officers for the offences that remain (operating without consent and non-payment) is carried into Section 45E, on the basis of consent, connivance or neglect. The Air Act follows a similar pattern for its surviving offences. The practical effect is that personal criminal exposure of directors now arises mainly for operating without consent and non-payment of penalties, while most contraventions result in monetary liability of the company.

4.3 Due diligence defence

The due diligence defence allows a person in charge to escape liability by proving that the offence was committed without his knowledge or that he exercised all due diligence to prevent it. Due diligence means taking all reasonable steps a prudent person in his position would take: establishing compliance systems, allocating responsibility, providing resources for pollution control, monitoring performance, acting on alerts and training staff. A paper policy is not enough; the defence requires evidence of an effective system. The same defence applies to Heads of Government departments under the new penalty provisions.

4.4 Consent, connivance and neglect

Consent means that the officer knew of and agreed to the conduct. Connivance means tacit acceptance, such as knowingly turning a blind eye. Neglect means failure to perform a duty that the officer knew or ought to have known he had. Liability under this limb depends on the officer's role and proof of his personal fault; a non-executive director with no role in operations will not ordinarily be liable.

4.5 Judicial guidance

In U.P. Pollution Control Board v. Modi Distillery, (1987) 3 SCC 684, the complaint under the Water Act named the company's industrial unit but not the company itself, and the High Court quashed proceedings against the directors. The Supreme Court held that this was a technical flaw that could be cured by amending the complaint to implead the company, and that directors could not escape liability on such a ground. In U.P. Pollution Control Board v. Mohan Meakins Ltd., (2000) 3 SCC 745, it set aside the discharge of a company and its directors in a long-delayed Water Act prosecution, observing that environmental offences must be taken seriously and that delay should not defeat them. Under general criminal law, Aneeta Hada v. Godfather Travels and Tours, (2012) 5 SCC 661, holds that where liability of directors is vicarious, the company must be arraigned as an accused, and Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609, holds that a director cannot be made vicariously liable without a statutory provision to that effect; the complaint must contain specific averments of the director's role.

5. Government Department Liability

Government departments, municipal bodies and public works agencies are among the largest polluters (through sewage, solid waste and construction). Under the former Section 17 of the EPA, Section 48 of the Water Act and Section 41 of the Air Act, the Head of the Department was deemed guilty unless he proved lack of knowledge or due diligence. After the amendments, Section 15B of the EPA, Section 48 of the Water Act and Section 38A of the Air Act make the Head of Department liable to a penalty equal to one month's basic salary, and any other officer whose neglect caused the contravention to a similar penalty, subject to the due diligence defence. The NGT, meanwhile, imposes large environmental compensation on States and municipal bodies for systemic failures.

6. Corporate Environmental Compliance

A company's environmental compliance system typically covers:

• Permits: environmental clearance, forest and wildlife clearances, consent to establish and operate, hazardous waste authorisation, EPR registrations, groundwater NOC and CRZ clearance;
• Conditions: implementing the conditions of each permit and submitting six-monthly compliance reports on EC conditions;
• Returns: the annual environmental statement (Rule 14 of the Environment (Protection) Rules, in Form V, for the financial year, by 30 September), EPR returns, hazardous waste annual returns, and water cess or other levies where applicable;
• Monitoring: online continuous emission and effluent monitoring systems (OCEMS) linked to CPCB and State Board servers for seventeen categories of highly polluting industries, stack and effluent testing by recognised laboratories, and ambient monitoring;
• Disclosure: for listed companies, the Business Responsibility and Sustainability Report (BRSR) mandated by SEBI, including environmental indicators, with third-party assurance of core indicators for the largest companies; and
• Governance: a board-level committee or officer responsible for environment, health and safety, internal audits and training.

6.1 Environmental due diligence

Environmental due diligence is the investigation of environmental risks and liabilities before a transaction (merger, acquisition, lending, lease). It involves a Phase I review (documents, permits, site history, interviews) and, where red flags appear, a Phase II investigation (soil and groundwater sampling). It is now critical because liability can follow the land and the business: under the Contaminated Sites Rules, 2025, a subsequent owner may be a 'responsible person' for remediation, and NGT compensation orders and EPR obligations survive changes of ownership. Findings shape price, indemnities, warranties and escrow.

6.2 Environmental audit

An environmental audit is a systematic, documented and periodic evaluation of an organisation's environmental performance and compliance. India introduced the 'environmental audit' statement in 1992 (renamed 'environmental statement' in 1993) under Rule 14 of the EP Rules. The Environment Audit Rules, 2025, notified on 29 August 2025, create a system of Registered Environment Auditors certified through recognition of prior learning or a national certification examination, and an Environment Audit Designate Agency that registers auditors, monitors their performance, takes disciplinary action and maintains an online register. Auditors verify compliance with environmental laws, carry out sampling and analysis, verify self-compliance reports, audit waste management and EPR compliance, and verify activities under the Green Credit Rules. Auditors are randomly assigned to units to avoid conflicts of interest, and a steering committee of the Ministry oversees the system. The audits supplement, not replace, inspection by the Boards.

6.3 Self-monitoring and reporting

Modern regulation increasingly relies on self-monitoring by industry, with verification by regulators and auditors. OCEMS data, self-certified compliance reports, EPR returns and environmental statements are the main tools. Self-monitoring reduces inspection burden but depends on the integrity of data, which is why tampering and false reporting are treated seriously.

7. Specific Contraventions

7.1 Environmental false reporting

Making a false statement in any application, return or report under the Water or Air Act is a contravention attracting a monetary penalty (Section 42 of the Water Act, Section 38 of the Air Act), and under the EPA falls within the residuary Section 15. Tampering with monitoring devices (for example, diluting samples or bypassing OCEMS) is specifically penalised under Section 44 of the Water Act. In EPR regimes, fake certificates and false returns attract environmental compensation, suspension or cancellation of registration, and the Environment Audit Rules provide for action against auditors who certify falsely. Deliberate fabrication may also constitute forgery and false evidence under the BNS.

7.2 Obstruction of environmental authorities

Officers of the Boards and authorised persons have powers of entry, inspection and sampling (Section 10 of the EPA, Section 23 of the Water Act, Section 24 of the Air Act). Obstructing them, failing to render assistance, or damaging Board property is a contravention (EPA Section 14B; Water Act Section 42; Air Act Section 38), attracting monetary penalties. Physical obstruction or assault may also be an offence under the BNS.

7.3 Failure to furnish information

Occupiers must inform authorities of accidents and excess discharges (EPA Section 9; Water Act Section 31; Air Act Section 23) and must furnish information when required (Water Act Section 20). Failure attracts a penalty (EPA Section 14B; Water Act Section 41; Air Act Section 38). Timely information is crucial because it allows authorities to prevent or mitigate harm.

7.4 Non-payment of environmental penalty

Failure to pay a penalty imposed by the adjudicating officer within ninety days is punishable with imprisonment up to three years, or fine up to twice the penalty, or both (EPA Section 15F; Water Act Section 45E; Air Act Section 39D; see also PLI Act Section 17B). This is the 'teeth' of the civil penalty regime. Cognizance is taken on a complaint by the adjudicating officer or authorised officer, by the Board, or by a citizen after sixty days' notice (EPA Section 19; Water Act Section 49; Air Act Section 43).

8. Environmental Prosecution versus Monetary Penalty

The two tracks operate alongside the Boards' closure powers (Section 33A Water Act, Section 31A Air Act, Section 5 EPA), environmental compensation (now expressly upheld for the Boards in DPCC v. Lodhi Property, 2025), and the NGT's powers. Critics of decriminalisation fear that penalties capped at Rs 15 lakh may be trivial for large corporations; supporters point to daily penalties, compensation and closure as adequate deterrents. Whether the reform improves compliance will depend on the speed and severity of adjudication in practice.

9. Critical Appraisal

Decriminalisation responds to real failures of the old system: slow trials, few convictions and harassment of small units. It builds a faster, expert-led penalty system and keeps criminal sanctions for the core wrongs. But it also weakens the personal deterrent on senior management for serious pollution, sets penalty ceilings that may be low for large firms, and depends on adjudicating officers who are senior bureaucrats with many other duties. Effective corporate liability now rests on a combination of monetary penalties, environmental compensation, closure, third-party audit, disclosure and investor pressure through ESG reporting. For companies, robust compliance systems and documented due diligence are both a legal defence and a business necessity.

10. Related Topics and Provisions