T.N. GODAVARMAN THIRUMULPAD versus UNION OF INDIA AND ORS.

Citation: [2005] SUPP. 3 S.C.R. 552 · Decided: 26-09-2005 · Supreme Court of India · Bench: Y.K. SABHARWAL · Disposal: Disposed off
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

A 
B 
c 
T.N. GODAV ARMAN THIRUMULPAD 
v. 
UNION OF !NOIA AND ORS. 
SEPTEMBER 26, 2005 
[Y.K. SABHARWAL,ARIJITPASAYAT ANDS.H. KAPADIA,JJ.] 
Environment & Ecology: 
Fores/ (Conservation) Act, 1980: Section 2. 
Forest and ecology-Conservation, preservation and protection of-
Use of forest land for non-forest purposes-Measures to compensate for loss 
of forest land and to compensate effect on ecology-Benefits lost by diversion 
of forest land-Payment of Net Present Value (NPV) of such diverted land/or 
getting back in the long run the benefits lost by such diversion--Guidelines 
D for determination of NPV-Uniform application of guidelines to all-Method 
~ 
of calculation of NP V-Constitution, management and funding of 
Compensatory Afforestation Fund Management and Planning Authority 
(CAMPA)-Value of environment-Estimation of-Contingency Value Method, 
Opportunity Cost Method, Travel Cost Method and Social Benefits Cost 
E Analysis-Held: Conclusions given and direction issued-Environment 
Protection Act, 1986, Ss. 3 and 5-Constitution of India, 1950-Arts. 110, 
199, 266, 283 & 284, 7th Sch., Entry 47 rlw 20 of list Ill-Notification dated 
23.4.2004 issued by Ministry of Environment and Forests. 
The following questions arose before the Court:-
F 
Whether before diversion of forest land for non-forest 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? 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 received for getting back in 
G the long r~n the benefits which are lost by such diversion? What guidelines 
should be issued for determination of NPV? Should guidelines apply 
uniformly to all? How to calculate NPV? Should some projects be exempted 
from payment of NPV? 
H 
Disposing of the petition, the Court 
552 
T.N. GOO AV ARMAN THIRUMULPAD v. U.0.1. 
553 
HELD: 1. The Executive Body of the Compensatory Afforestation Fund A 
Management and Planning Authority (CAMPA) shall include two more 
environmentalists, one of whom may be an expert in the field of forest and the 
other in the field of forest economy development. These members shall be 
included in the Executive Body in consultation with the Chairperson of the 
Central Empowered Committee. 1569-G; 570-B] 
2. Regarding Clause 6.3 (iv) of the Notification dated 23.4.2004 issued 
by the Ministry of Environment and Forests, it is directed that corporate 
accounting based on double entry system and auditing should be conducted 
by the Comptroller and Auditor-General (CAG). (570-C] 
3. Clause 6.4 (Y) of the Notification provides that the monies received in 
B 
c 
CAMPA shall be used only in that particular State or Union Territory. The 
clause seems to be too rigid. Many a time, 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 D 
limited to the place of origin. Therefore, it is directed that a suitable 
modification of the clause shall be made so as to provide that ordinarily 
expenditure shall be incurred in the particular State or Union Territory but 
leaving it to the discretion of the CAMPA to also incur expenditure in the 
State or Union Territory other than the one mentioned in clause 6.4 (v), if it 
is necessary. (570-D-E] 
E 
4. Clause 6.6 of the Notification which by use of the word 'may' leaves 
it to the discretion of the CAMPA to establish Special Performance Vehicle 
(SPV) for undertaking compensatory afforestation deserves to be amended 
so as to substitute the word 'may' by the word 'shall' so that the regeneration F 
is done by some SPV in specified areas. (570-F] 
5.1. The NPV is the present value (PV) of net cash flow from a project, 
discounted by the cost of capital. 1571-El 
5.2. Forestry is a public project. It is important to bear in mind that a G 
benefit received today is worth more than that received later. The benefit 
received today is in fact 'cost incurred' today. Time value of the cash inflow/ 
outflow is important in investment appraisal. NPV is a method by which future 
expenditure (cost) benefit is levelised in order to account for the time value of 
money. The object behind NPV is to Ievelise costs. What is the value of Rupee 
tod
Excerpt shown. Read the full judgment & AI analysis in Lexace.