India — Chalakudy Puzha Samrakshna Samithy “Chithanya” v. State of Kerala, OP 3581/2001 (2001.10.17)

IN THE HIGH COURT OF KERALA, AT ERNAKULAM.

PRESENT:

THE HONOURABLE MR.JUSTICE.P.K.BALASUBRAMANYAN
&
THE HONOURABLE MR.JUSTICE.M.RAMACHANDRAN

WEDNESDAY, THE 17th OCTOBER, 2001. /

O.P.No. 3 5 8 1…OF 2001

PETITIONERS:

1. Ravi.S.P., Secretary, Chalakudy Puzha Samrakshna Samithy, "Chithanya", Moozhikkekadavu, Panyaram.P.O., Chalakudy.

2. S.Unnikrishnan, "Karthika", Ollur, Thrissur District.

By Advocates: Shri.P.B.SAHASRANAMAN, K.JAGADEESH & T.S.HARIKUMAR

VS

RESPONDENTS

1. State of Kerala, represented by its Secretary, Energy and Power Department, Secretariet, Thiruvananthpuram.

2. Kerala State Electricity Board, represented by its Secretary, Vydyuthi Bhavanam, Pattom, Thiruvananthpuram.

3. Tropical Botanic Garden and Research Institute, Palode, Thiruvananthapuram-695 562, represented by its Director.

4. Union of India, represented by its Secretary, Ministry of Environment and Forests, New Delhi. Kochi-682011.

Respondents, RETNA SINGH , Advocate General of Kerala, Adv. P.Santhalingam, K.Anand, Sr.Advocates: Anil Dhawan, & S.Venkitasubramonia Ayyar, & Additional Central Government Standing Counsel.

This original petition having been finally heard _______ along with O.P.1774/2001, & 7713/2001, THE COURT DELIVERED THE FOLLOWING:-

JUDGEMENT

BALASUBRAMANYAN, Ag.C.J.

1. The Kerala State Electricity Board took a decision to construct a Dam at Athirampilly across the Chalakudy River and establish a Hydro Power Generating Project. The Board formally sought the permission of the State Government. While seeking the permission of the State Government, the Board contemplated that if the project were to be approved, the construction and commissioning had to be on turn-key basis and the tenderer was to provide a financial package for the construction and completion of the project. The Government granted the permission specifically referring to the financial package and the completion of the project on a turn-key basis. The Board, thereupon, invited pre-qualification bids. It was intended to be a global tender. It was specifically mentioned that the project was to be commissioned on a turn-key basis with a financial package. The board distributed the invitation to tender to 117 Companies. Only 8 of them submitted the pre-qualification bids. The Board found that only four of the tenderers were pre-qualified. Out of the four, respondent No.4 in the main Original Petition, hereinafter called the "Consortium" was selected. It is at that stage that these Original Petitions came to be filed in this Court.

2. O.P.No.1774 of 2001 was filed as a Public Interest Litigation complaining that the Board has dispensed with an essential criterion of the tender and the decision to do so taken by the Board was in violation of the Government`s decision and the permission for the Hydro Electric Project. The other ground was that there was no proper environmental clearance obtained for the project and hence the proposed coming into existence of the project was illegal and was liable to be interferred with by the Court. O.P.3581 of 2001 was thereafter filed as a Public Interest Litigation essentially on the ground that the environmental clearance had not been duly obtained and the alleged environmental clearance relied on by the Board was illegal and was not in accordance with law, the Environmental Protection Act and the relevant amendment relating to establishment of such Hydro Electric Projects. The prayer, therefore, was that the entire decision should be set aside and in any event, there should be a further and proper environmental clearance sought for and obtained before the work could be proceeded with. O.P.7713 of 2001 came to be filed as yet another Public Interest Litigation putting forward the objection based on the illegality and irregularity in the matter of the grant of environmental clearance, the impropriety in the award of the contract and also the alleged non-feasibility of the intended Hydro Electric Project. Since all the three Original Petitions related to the same Hydro Electric Project conceived of an sought to be executed by the Kerala State Electricity Board, the Original Petitions were heard together.

3. All these Original Petitions are filed in public interest. The petitioners have expressed concern about the feasibility and viability of the project, about the financial ability of the Board to put through the project especially in the context of the scheme originally envisaged and the departure made therefrom while awarding the contract, the impairment to the environment, the inadequacy of the investigation in that behalf and the failure to fulfil the mandate of the concerned regulation as amended in the year 197. There is also apprehension that the commissioning of the project would entail the valley being deprived of even drinking water in addition to the displacement of the Tribals and the disastrous consequences to flora and fauna. One of the main aspects urged is that there will be no adequate water available for the scheme as projected by the Board. There is also a ground that in stead of going in for such a project which, according to the petitioners, would not be viable, the Board would be better advised to take up rectification, repair and improvement of the existing Hydro Electric Projects and to eliminate huge losses in transmission now suffered, to meet the requirement of additional power at lower cost.

4. Counsel for the Electricity Board and counsel for the Consortium, which is being awarded the contract, submit that these Original Petitions are not really in public interest and the petitioners in the three Original Petitions have no locus-standi either to question the award of the contract or to question the environmental clearance given by the concerned authority or to question the technical feasibility and the financial viability of the project as a whole. These are times when the Courts are invited or compelled to play a constructive and positive role even in matters relating to public expenditure. The doctrine of "public trust" has not only taken roots, but has also grown rapidly and substantially. The lack of concern or lukewarm attitude of the authorities towards environment and its protection and in the matter of adhering to the norms prescribed in that behalf have also to be borne in mind while dealing with such approaches to this Court by citizens who may or may not be personally affected. In that context, subject to specific consideration of those matters at the appropriate stage, we must proceed on the basis that the petitioners prima-facie have locus-standi to invite this court to look into these aspects, of course, not as a Court of appeal, but as a Court conferred with the power of judicial review in appropriate cases. We are, therefore, not satisfied that these Original Petition ought to be thrown out at the threshold as urged on behalf of the respondents.

5. Learned Senior Counsel for the Consortium which has been selected for the award of the contract, also emphasised that none of the other tendering parties has approached this Court with a challenge to the choosing of respondent No.4 for the award of the contract and in that situation, the jurisdiction of this Court to consider the alleged illegality, impropriety or irregularity in the award of the contract is not as wide as it would have been in the normal course. Counsel submitted that there could be only a broad scrutiny by this Court of the legality of the award of the contract and at the instance of these petitioners, even the question whether somebody else could have been awarded the contract, could not be considered. We have certainly to bear in mind this aspect while dealing with the challenge to the award of the contract in this case. We may at once notice that the challenge is based more on the failure of the Board to adhere to the original proposal while deciding to tender for the work in the light of the sanction obtained from the Government for the implementation of the project.

6. Considering the nature of the contentions raised, we think that the aspects to be considered are (i) whether the Board was justified in deciding to award the contract to the Consortium after dispensing with what the petitioners call "an essential condition of the contract or sanction for the project", (ii) whether the environmental clearance obtained is bad for ignoring the mandatory requirements of the Environment Impact Assessment Notification as amended in the year 1997, (iii) whether even otherwise, the requirements set down by the 1994 notification had been satisfied before the grant of clearance, (iv) whether the project as envisaged is feasible and (v) whether it has not been conceived without proper study and without consideration of the alternatives available to the Board to meet the ever increasing demand for power in the State. A further question urged is that the commission of the project will result in environmental degradation and also deprive the valley of water now available for drinking and irrigation purposes. We shall deal with these aspects one by one.

7. By an invitation to a global tender dated 6-6-1998, the Kerala State Electricity Board intimated the prospective tenderers that it will receive applications from interested contractors for implementation of Athiramppilly Hydro Electric Project in the State of Kerala, on "turn key basis with Financial package". Dealing with finances, the notification stated:-

"Financing the project by way of Loan for a Long Term preferably at concessional rate of interest. The financing proposal should cover the entire Capital cost for completion of the Project including customs duty, sales tax, etc. payable for the purchase and supply of equipment".

Forms were supplied to 117 companies. Only eight of those companies submitted pre-qualification bids. On an assessment, the Board found that only four of the tenderers were pre-qualified. Out of the four, M/s. HCC-BHEL Consortium was selected. It may be noted that the Board had issued the notice inviting tenders after obtaining sanction from the Government. By the order of the Government dated 14-11-2000, the Government had issued the following order:-

"In the circumstances reported by the Secretary, Kerala State Electricity Board in the letter read above (dated 14-9-2000), Government are pleased to accord administrative sanction for the implementation of Athirappilly Hydro Electric Project (163 MW), on turnkey basis with financial package, at an estimated cost of Rs.315.90 crores at 1999 price level".

It maybe noted in this connection that the Govenrment sanction was accorded after considerable discussion. In the minutes of the meeting held in the Chamber of the Minister for Electricity and Co-operation on 15-4-1998 to discuss the funding of Athirappilly Hydro Electric Project, it was recorded:-

"The main hindrance in the way is raising the required funds. The project as per the present estimates would cost Rs.650 crores. The K.S.e.B. cannot finance this much amount. Hence, investment from the private sector has to be thought of. Even if private sectros comes forward to collaborate on the project, the costs on civil construction, customs duty etc. have to be borne by the KSEB, which would be around Rs.350 crores. As the KSEB cannot raise this much amount from its internal resources, State Govt. have to provide Rs.350 crores over a period of 4 years. The project has to be advertised for private participation".

The minutes also recorded that the Principal Secretary (Finance) had expressed doubts as to whether it would be possible to provide planned funds to the extent of 400 crores of rupees. It is also recorded that the Minister (Electricity and Co-operation) remarked that the project should be taken up and completed quickly. If the entire project was given on turn key basis, it would be completed early. Funds would not be a constraint as the investors remarked that they should examine the possibility of someone taking up the project with finance. The Board should also examine whether the required funds could be raised by the Board and if it were possible, there would be no need to engage outside agencies. The subsequent minutes of the metting of the Kerala State Electricity Board dated 10-6-1998 considered the proposal made by the concerned Chief Engineer for implementation of the project on turn key basis with financial package. After discussion, the meeting decided to make certain changes in the pre-qualification bid notice. Regarding finances, the expression "soft" which preceded the word "loan" was deleted and in its place was substituted "Financing the project by way of loan for a Long Term preferably at concessional rate of interest". It was also decided that the bidder would be responsible for arranging loan at reasonable period of repayment. The Board intended to provide Bank Guarantee for such loan raised by the bidder. However, the bidders were free to indicate the secuirty package required by them for arranging the finance for the project. A further decision was taken to add the words "with financial package" in Section 3 of Part-II-A after the words "Pre-qualification information for implementation of Athiramppilly HEP on Turnkey basis". This was followed by a Board`s order dated 24-6-1998, in which it was clarified that the pre-qualification bid from contractors was aimed at selection of contractors having sufficient financial resources, relevant experience of work to be executed, backed by competent technical personnel, equipment and other expertise necessary for ensurin gthat the work if awarded to him/them would be executed in time. the order also noticed that the Chief Engineer (Civil), North had forwarded the draft bid document for the implementation of the project on "turn key basis with financial package" to the Board for approval. the approval at the Full Board on 18-6-1998 is referred to and the Chief Enhgineer (Civil), North was directed to take further necessary action in the matter. As indicated, it is thereafter that the Government passed the order above referred to. The tender was for implementation of the Athiramppilly Hydro Electric project on turn key basis with financial package. The minutes of the meeting of the Board held on 17-6-1998 indicates that the criteria that had been clearly set forth for being following by the bidders were:

a) The bidder`s ability to secure finance for the project,
b) the bidder`s relevant experience of the work,
c) the bidder`s financial soundness,
d) availability of sufficient technical personnel, machinery/
equipment, and
e) the overall performance on the earlier jobs.

8. On 30-11-1998, an order was issued by the Board. By that order, the Chief Engineer (Civil Construction) was authorised to issue bids on turn key execution of Athiramppilly Hydro Electric Scheme to the bidders pre-qualified by the Pre-qualification Committee. He was authorised to accept the bid to be submitted by the pre-qualified bidder even if the financial packages are not satisfactory. In the invitation to bid addressed to the four tenderers who were pre-qualified, the Board invited the pre-qualified bidders to submit their comprehensive bids fulfilling specific criteria including a financial package to cover the entire scope of works as per the bid documents. It was also clarfied that incomplete offers and conditional bids would be rejected as non-responsive. In the instruction to bidders, in the preamble, it was clearly stated that it was for the Desirn-build and Turnkey execution with Financial package of Athiramppilly Hydro Electic Project (163 MW). The financing proposals were set out as follows:

1. Bidders are required to offer financing proposal under separate sealed cover in the form of Financing Packages to cover the cost of entire scope of work described in the Bid documents. The proposals may comprise Indian Financing or foreign credits (Grant, soft credit, export credit or a mix of soft and export credits, loans, etc.)

2. The KSEB however, prefers low interests financing, with minimum currency risk, repayable over an extended number of years and ideally, with a maximum proportion to be repaid in Indian Rupees. The K.S.E.B. can provide a Bank Guarantee/Government of Kerala Guarantee to secure repayment. However, the Bidder is free to indicate the security package required.

The bidder was called upon to provide data showing confirmation of financing during construction including any administrative arrangements that would affect K.S.e.B. and documentary evidence to prove the potential/commitment and nature of the financing arrangements. It was also indicated that the Board was interested in obtaining long term loans which are offered on reasonable soft terms and conditions. It was also provided in the instruction to bidders in paragraph 14(3) that the bidder`s financial package would be evaluated by completed a discounted cash flow analysis and the evaluated bid price of each bid would be produced at that stage and the order of ranking. It was further provided:

"KSEB reserves the right to consider the Price Bid ignoring the financial package in all cases".

9. The Evaluation Committee met on 27-7-2000 for the finalisation of the price bids. Clarifications were decided to be obtained from the Consortium whether the Consortium would raise tha loan under the financial package at its risk and cost. At its meeting on 17-10-2000, the Evaluation committee directed that the various conditions given in the tender by the tenderers as noted by the Scrutiny Committee had to be withdrawn. Regarding financial package submitted by the Consortium, it was noticed that the financial package was not being considered as the same is not intended to provide financial assistance to the project at the risk of the bidder. the details provided by the bider was only market information and the Board was well aware of the sources from which the Board could borrow for meeting the capital expenditure. Hence, the financial package provided the consortium had to be rejected. It was found that none of the tenderers satisfied the condition regarding financial package. After some persuasions, the Consortium withdraw the conditions it had put forward, the the satisfaction of the Board. By its proceedings dated 3-1-2001, the Board decided that the work be awarded to M/s. HCC-BHEL Consortium on turn key basis without financial package at their quoted rate of Rs.4,14,22,94,500/- only, less a discount of Rs.50 lakhs in the quoted price offered by the Consortium.

10. It was argued on behalf of the petitioners that the need for financial package is emphasised in the various meetings of the board and the Board and the Government and in that situation, the dropping of the requirement for a financial package was not justified and was not in public interest. Learned counsel went to the extent of arguing that neither the Kerala State Electricity Board nor the State of Kerala were in a position to find resources for the commissioning of the project and in that situation, the financial package was an essential criterion for the acceptance of a final bid and the withdrawing of the insistence on providing a financial package was clearly illegal and in any event, unjustified. It was emphasised on behalf of the petitioners that all the four pre-qualified bidders had obtained zero marks out of 15 for the financial package they were expected to provide and in that situation, one of them could be taken to be qualified for the award of the contract. Referring to the decision of the Supreme Court in Poddar Steel Corporation v. Ganesh Engineering Works (AIR 1991 SC 1579), it was submitted that the providing of a financial package was an essential condition and the same could not be dropped after the process had been initiated. Learned Senior counsel appearing for the Consortium, on the other hand, submitted that the Board had reserved its right to consider the price bid ignoring the financial package in all cases in the notice inviting tenders and in that situation, the decision of the Board to award the contract to the Consortium without financial package could not be interfered with in this proceeding which was essentially in the nature of a public interest litigation. Except arguing that the Board and/or the Government can raise loans from the concerned agencies, there was no concrete suggestion either from the Advocate General on behalf of the State or from Standing Counsel for the Board regarding the source from which the amounts could be raised for the purpose of the commissioning of the project. It could not be disputed either by the board or by the State that the Board and the State were passing through a difficult period financially and neither the Board nor the State could on its own, raise finances immediately for the purpose of the project. Even then, what was contended was that the finance could be easily found by the Board and the State and since the Board could dispense with the provision for financial package to be provided by the bidder and the Government had not objected to that stand adopted by the Board, notwithstanding the earlier decision to have a financial package, there was no justification in this Court interfering with the decision of the Board to award the contract to the Consortium. We find some merit in the submission made on behalf of the petitioners that the petitioners, as citizens of the State, are entitled to be reassured that finances are available for the construction of a project like the one in question and that the project will not take years to complete because of non-availablity of the requisite finances and this court must satisfy itself that the Board and the Government were in a position to find the necessary finances for the project. We find that it may not be possible for this Court to go into these aspects or to come to a decision whether the finances for the project could be found as envisaged by the board and the Government. In the circumstances, all that can be done is to direct the Government to consider that aspect pointedly and afresh before permitting the Board to go ahead with the construction of the project or before taking up a construction of the project by finally accepting the bid made by the Consortium. It is true that this Court cannot sit in appeal over the aspect of financial viability or the availability of finances for the project. But, we feel that in the circumstances of the case, a direction to the Government to link into that aspect once more before finally deciding to go ahead with the contract with the consortium is justified. As we have already noted, the Board had initially envisaged the providing of a financial package by the bidder and had obtained sanction from the Govenrment on that basis and thereafter the Board had gone back on that requirement. It is not shown that the Government had subsequently considered the question of dispensing with the need for financial package by the bidder or had taken a decision in that behalf based on a consideration of all the relevant aspects before permitting the Board to go ahead on that basis. Except baldly stating in paragraph 10 of the counter affidavit that the financial package on Turn Key basis is not the basic requirement of the scheme, it is not disclosed that any actual study of that aspect was undertaken by the Government or whether all the relevant facts in that regard were considered before granting sanction. It is in that situation that we feel that a consideration of that aspect by the Government is warranted.

11. In the view we have taken as above, we do not think that it is necessary to consider the question whether the decision of the Board amounts to a change midstream that is not permissible in the light of the decision in Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation (AIR 2000 SC 2272).

12. Though a faint attempt was made to argue that the Consortium had not submitted a tender, we are not satisfied that we will be justified in interfering with the decision to accept the tender submitted by the Consortium on that ground on the facts and in the circumstances of the case.

13. As we have noticed, none of the rival bidders have come up challenging the decision to award the contract to the Consortium. What is involved in these writ petitions is only public interest. That public interest only involves the question whether it is prudent on the part of the Board to enter into a contract like the one envisaged especially in view of the decision earlier taken, the financial package insisted upon and the order to go ahead obtained from the Government. We are of the view that public interest would be sub served by directing the Govenrment to consider the question whether the Board was justified in dropping the financial package while accepting the bid of the Consortium, whether it would be advisable in the circumstances and whether the project should go on the basis of the decision now taken by the Board, and by directing the Board not to finalise the contract with the Consortium until clearance is obtained from the Government for entering into the contract as now envisaged by the Board. We have no doubt that the Government will insist on the Board coming forward with more precise details regarding the mode of raising finances for the intended project.

14. The next aspect to be considered is whether the environmental clearance obtained for the project is valid and is even otherwise proper. The environemntal clearance was sought for and the first report submitted by the Board was rejected. There was yet another report submitted, which was also rejected on 18-10-1989. Thereafter the Board sought to get the decision reviewed and sought the issuance of environmental clearance. Lot of correspondence ensued. Meanwhile, The Environment Impact Assessment Notification, 1994 was amended as per amendment notification dated 10-4-1997. Schedule IV was added to the notification, Schedule IV contemplated a public hearing and laid down the procedure there for. Thus, by the 1997 amended notification, a public hearing before clearance for the project became mandatory. Clause 2 of the Environment Impact Assessment Notification, 1994 providing for the requirements and procedure for seeking environmental clearance of projects provided that an application should be submitted to the Secretary, Ministry of environment and Forests, New Delhi and that the application should be made in the proforma specified in Schedule II of the notification and should be accompanied by a project report which should, inter-alia, include an Environmental Impact Assessment Report/Environment Management Plan and details of public hearing as specified in Schedule IV of the amended notification in accordance with the guidelines issued by the Government of India in the Ministry of environment and Forests from time to time. It also provided that cases rejected due to submission of insufficient of inadequate date and plans may be reviewed as and when submitted with complete data and plans. What happened in the case on hand was that even though the original application for clearance was rejected and the Board had carried on correspondence seeking a review of the earlier decision, before such a decision was taken by the authority, the amendment notification dated 10-4-1997 had come tinto force. It maybe noted that the clearance was granted only by order dated 20-1-1998. The order in that behalf did not take note of the impact of the amendment to the notification in 1997. Admittedly, no public hearing as envisaged by Schedule IV of the amended notification was held. Whereas under the 1994 notification, public hearing was not mandatory, after the 1997 amendment, public hearing became mandatory. the amendment notification clearly provides that a new project listed in Schedule I to that notification should not be undertaken in any part of India unless it had been accorded environmental clearance by the Central Government in accordance with the procedure specified in the amended notification. Admittedly a Hydro Electric Project comes within the scope of the amended notification. It is provided in Schedule IV, that whoever apply for environmental clearance of projects shall submit to the concerned State Pollution Control Board, the documents referred to in the schedule. The schedule also provides for notice of public hearing and the manner of its circulation. It also enables persons including bonafide residents, environmental groups and others located at the project site/sites likely to be affected, to participate in the hearing. The composition of the public hearing panel is also specified. Admitedly, in this case, there was no public hearing before the environmental clearance was granted. Senior counsel for the consortium submitted that if the Court were to take the view that the 1997 notification govern the situation and a public hearing as contemplated was a must, if has necessarily to be held that the order granting clearance requires reconsideration. But, counsel submitted that what the Court looks for in a public interest litigation of this nature with reference to challenges regarding environmental impact, is substantial compliance with the requirements and the Court could not go into minute details of the various aspects as if it were sitting in appeal over the decision of the authority concerned. Counsel placed strong reliance on the decision of the Supreme Court in Narmada Bachao Andolan v. Union of India (2000) 10 SCC 664). Counsel submitted that in this case, an environmental study had been undertaken by a qualified body, all the relevant aspects have been considered, before the grant of environmental clearance and in such a situation, it was not necessary or proper for this court to interfere with the commissioning of the project on the ground that there has been no proper environmental clearance. Learned counsel for the petitioners, on the other hand, contended that the request for environmental clearance had earlier been rejected and the clearance was granted only after the 1994 notification was amended in the year 1997 and the Central Government could not have granted the environmental clearance without the requirements of the amended notification being satisfied. counsel pointed out that the authority concerned was not even conscious of the 1997 amendment of the notification when it granted the sanction. It was also pointed out that even if one were to go by the unamended 1994 notification, one could see that there was no proper investigation in this case, since against the specific terms of that notification, all the relevant data were gathered during monsoon. It was pointed out that the date gathered during monsoon could not be ralied on for the purpose of deciding whether the environmental clearance should be granted for such a project or not.

15. It is pointed out on behalf of the petitioners that in the case on hand, there was not even a proper application as envisaged by the notification in that, the application was not accompanied by the necessary enclosures. It is submitted that what was sent by the Board was only a letter requesting the authority to grant the clearance which had earlier been rejected and there has been no compliance with the requirements of the notification at all. There was no assessment report submitted along with the application as envisaged. Even the time limit of 90 days laid down for making the enquiry and 30 days laid down for taking a decision was adhered to. In the counter affidavit filed on behalf of the Union of India on 9-7-2001, it is stated that though the original application was rejected in the year 1989, additional information sought for in 1990, was received in 1994 and was approved taking into consideration all relevant information including environmental impact, it is not stated when exactly was the additional information furnished.

16. Learned counsel for the Board argued that since this was only a case of reviewing an earlier rejection of environmental clearance, it was not necessary to comply with the requirements of the amended notification of the year 1997 though, as a matter of fact, the clearance was granted only after the coming into force of the amendment. It was not disputed by counsel that no formal application as contemplated by the amended notification was made for environemntal clearance accompanied by the report of a public hearing as envisaged. But, counsel submitted that all environmental aspects had been taken note of after detailed studies and the relevant facts reported to the concerned authority during the pendency of the request for environmental clearance. Counsel submitted that the protection of the environment should go hand in hand with development and since the State needed more power and power at as cheap a rate as possible, the Court must objectively consider whether the studies undertaken are not sufficient rather than placing emphasis on the procedural formalities insisted upon by the amended notification. Counsel for the petitioners submitted that the public hearing, which was earlier optional, was made obligatory by the amended notification with a specific object and that object cannot be defeated by resort to the arguments raised on behalf of the Board.

17. Earlier, the application made for environmental clearance was admittedly rejected. Thereafter the Board was trying to get the earlier decision reversed r modified by the concerned authority. In the course of that attempt, various further details were sought for by the concerned authority and were supplied by the Board at different stages. But ultimately, when the concerned authority finally took up the question of clearance, the amended notification had come into effect. It maybe noted that the original application filed before the coming into force of the amendment had been rejected. It was not pending in the sense that it was not a pending application when the amendment of the notification came into force. But, of course, continued attempts were being made by the Board to have the earlier decision reviewed. In that sense, it could be said that a request for review of the earlier decision was pending. When in such a situation, the notification is amended and the notification insists on certain other formalities being complied with, before the grant of environmental clearance, we think that it would be proper to hold that the grant of sanction after the amendment of the notification must be only on compliance with the requirements of the amended notification. We may notice here that even regarding the studies undertaken, there is a serious complaint, which appears to be true, that the relevant statistics was gathered during monsoon against the clear prescription in that behalf. At this stage, we may notice that in the case of the Narmada project covered by the decision of the Supreme Court in Narmada Bachao Andolan v. Union of India (2000) 10 SCC 664) the environmental clearance had been granted before the amended notification came into force and the question of the application of the amended notification did not as such arise for decision. Here, we have a different situation altogether. Repeated attempts made by the Board for getting environmental clearance had not met with success until at last, the clearance was given on 20-1-1998 on certain conditions imposed in that behalf. But that environmental clearance was ultimately given only after the amended notification had come into force on 4-10-1997. We think that in the circumstances, the authority concerned should be directed to reconsider the question of the grant of environmental clearance after directing the Board to comply with the requirements of the notification as amended to the extent of compliance with the requirement of public hearing as envisaged by the amended notification, before deciding to grant or refusing to grant the environmental clearance sought for by the Board. To that extent, we feel that interference is warranted in these Original Petitions.

18. It is no doubt true, as contended by learned Senior Counsel for the Consortium, that in such a litigation, this court is not sitting in appeal over the decision of the authority concerned and this court is only concerned with public interest and in that view, need only look for substantial compliance with the requirements of law. Obviously, the amendment brought to the Environment Impact Assessment Notification, 1994 on 4-10-1997 was with a definite purpose. That was to ensure that the Environment Protection Act and the policy behind it was fully implemented before the grant of clearance for projects like the Hydro Electric Project involved in this case. Since public hearing was made mandatory by the amended notification as against the same being optional under the earlier notification, we are inclined to the view that the requirement of a public hearing is a must in the face of the amended notification and the environmental sanction or clearance can only follow, after all the relevant data, including the report of a public hearing is scrutinised by the concerned authority. Though normally, a substantial compliance as suggested by learned Senior Counsel for the Consortium would have satisfied this Court while entertaining writ petitions termed as "Public Interest Litigations", we think that this Court has a duty to ensure that the requirements of the Environment Protection Act, the Rules and the Notifications are strictly complied with, in the interest of environment and in that process, a public hearing cannot be dispensed with in respect of the grant of any clearance after the coming into force of the amended notification. As we have indicated, there is also some doubt about the nature of the study carried on in the case on hand especially with reference to the gathering of the relevant information which reference to the gathering of the relevant information which was done during monsoon and not even strictly in terms of the unamended notification. We, thus, overrule the argument raised on behalf of the Consortium on this aspect. We think that it is necessary to direct the Board to have a public hearing as contemplated by the amended notification and to send up the report of that public hearing also, so that the authority concerned can consider that also while considering the grant of permission afresh.

19. The other serious objection raised is regarding the technical and practical feasibility of the project and the cost benefit ratio and absence of a proper study in that regard. It is submitted by learned counsel appearing for the petitioner in O.P.7713 of 2001 that the Kerala State Electricity Board is known for designing projects which fall far short of expectations and which are ultimately found to be white elephants. Counsel referred to what, according to her, were such projects. The essential contention raised was that there were already sufficient number of other projects in the river concerned and the creation of yet another Hydro Electric Project and the building of a dam as envisaged could not be of sufficient benefit to the Board or to the public at large. Counsel submitted that the expenditure to be incurred would be ultimately found to be much more than expected and it would also be found that the production of electricity as targeted, could not be achieved. Counsel also referred to the fact that, now water was being diverted to augment the generation of power in Edamalayar and the investment made in that behalf will go waste and the increased production at Edamalyar would come to an end, thus, even affecting the viability of the Edamalayar Project which, according to counsel, had not achieved the rate of production as envisaged or planned when that project was commissioned. Counsel on behalf of the Board submitted that the Board had made a proper study of the feasibility of the project, the availability of water and the cost benefit ratio and the Board has come to the conclusion that the investment proposed in the Hydro Electic Project would fetch adequate and economical return in addition to increasing the availability of cheaper power in the State. Counsel submitted that the Engineers of the Kerala State Electricity Board are second to none in the matter of conceiving and designing Hydro Electric Projects and the assertions made on behalf of the petitioners was not acceptable and the allegations were not true or sustainable.

20. Various aspects are highlighted in support of the argument of the counsel for the petitioner in O.P.No.7313 of 2001. Lot of materials have also been produced to support the argument that there has been no proper investigation or assessment at the stage of planning or at the stage of taking a final decision to go ahead with the Hydro Electric Project at Athiramppilly. Normally, when the Board with the help of its experts conceives of a project and submits that it is feasible and it is in the interests of the State to have that project and it would be viable and economical, and the State government has sanctioned, it that would be sufficient to enable the Court to reject any challenge like the one attempted in O.P.No.7713 of 2001. As we have stated earlier and as repeatedly reminded by counsel, we are not sitting in appeal over the decision of the Board. After all, apparently competent experts of the Board have finalised the project. We do not think that on judicial review, there is any reason to interfere with the decision of the Board on the question of feasibility of the project and so on. We reject the challenge on that score.

21. We, therefore, allow these Original Petitions in part. We direct the Government to specifically consider the question whether the Board was justified in dropping the financial package while accepting the bid of the Consortium and whether it would be advisable in the circumstances and practicable to take up the project as now proposed by the Board and take a decision thereon and communicate it to the Board. We direct the Board to comply with the requirements of Environment Impact Assessment Notification, 1994 as amended by the notification of 1997 in so far as it relates to public hearing and direct the Board to send up to the Authority concerned the report of public hearing also as mandated by the amended notification. We direct the Central government to reconsider the question of grant of environmental clearance in terms of the Environment Impact Assessment Notification, 1994 as amended by notification dated 10-4-1997 on the basis of all the materials including the report of public hearing. Till fresh decisions are taken on these two aspects, the finalisation of the contract and the starting of the work will stand suspended or stayed and the finalisation, construction and commissioning will abide by the result of the reconsideration ordered.

22. During the course of the hearing, it was revealed that the Hydro Electric Projects already commissioned by the Board and managed by it are not producing energy as planned and the generation of electricity has fallen far short of the anticipated or expected production. It is also brought out that there is considerable loss in transmission and also by way of theft. Taking note of the submissions made by counsel for the petitioners, Standing Counsel for the Board and the learned Advocate General that the State is badly in need of additional power, it appears to us that the first step to be taken by the Board is to take up the rectification or repair works in the Hydro Electric Projects so as to restore the optimum generation of energy in those projects and also to take steps to minimise the transmission loss and eliminate theft of energy. Since we are concerned with public interest in these proceedings, we think it is just and proper to issue a direction to the Board to take all the necessary steps to repair and restore to full capacity, all the existing Hydro Electric Project to ensure that the generation of power as envisaged is obtained and also to take steps to ensure that transmission losses are minimised and that theft of energy is prevented and to the extent possible eliminated altogether. There will be such a direction to the Board.

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P.K.BALASUBRAMANYAN, JUDGE

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M. RAMACHANDRAN, JUDGE.