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CASE NO.: Writ Petition (civil)  202 of 1995

PETITIONER: T.N. Godavarman Thirumulpad

RESPONDENT: Union of India & Ors

DATE OF JUDGMENT: 28/03/2008

BENCH: CJI K.G. BALAKRISHNAN & DR. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: JUDGMENT O  R   D  E  R REPORTABLE

I.A. Nos. 826 IN 566 WITH 955 IN 566, 958, 985, 1001-1001A,           1013-14, 1016-1018, 1019, 1046, 1047, 1135-1136, 1164,            1180-1181, 1182-1183, 1196, 1208-1209, 1222-1223, 1224-1225,  1229, 1233 IN 1135-1136, 1248-1249, 1253, 1301-1302, 1303-1304,  1312, 1313, 1314, 1318, 1319 IN 1137, 1325, 1364, 1365-1366,  1370-1370A,1371, 1384, 1385-1386, 1387, 1434, 1435-1437, 1438,  1441 WITH 1634, 1475-1476, 1513, 1573, 1639 IN 1135-1136 IN IA  566, 1664, 1665, 1671, 1676, 1707, 1721, 1779 IN 1164 IN 566,  1785-1786 IN I.A. NO. 1441, 1980-1981, 1993, 2013, 2074-2076,  2077-2078 IN 1441 & 2098 IN 1233 IN 1135-1136, 2145-2146, 2147- 2148, 2149-2150 & 2153-2154 IN I.A. 566 IN W.P.(C) NO. 202/1995

       It is an undisputed fact that the forest in this country is an  important and vital component to sustain the life support system on  this planet.  For various reasons, our forest is being slowly depleted.   At the same time, as part of our developmental activities, some areas  of the forest have to be used for non-forest purposes.  The economic  development shall not be at the cost of complete degradation of the  forest or the environment and eco-system provided by the green area  of the forest.  Therefore, it was considered whether the user agency  of such land which is required for developmental activities to  compensate for the diversion of the forest and on the  recommendations of the Central Empowered Committee (hereinafter  being referred to as "CEC"), it was decided by this Court that the user  agency shall be required to make payment of net present value(NPV)  of such diverted land so as to  utilize this for getting back in the long  run which are lost by such diversion.  A scheme was submitted by  Ministry of Environment and Forests(MOEF) alongwith an affidavit  dated 22.3.2002.  The CEC considered all relevant aspects including  the scheme submitted by MOEF and filed a report on 9.8.2002.   These reports were accepted by this Court.  This Court in T.N.  Godavarman Thirumulpad Vs. Union of India  2006(1) SCC 1  finally directed that the question as to what amount of NPV is  required to be paid and to achieve these objectives, it was directed  that the question is to be examined by experts.  A Committee  comprising of three experts including Mrs. Kanchan Chopra was  appointed and this Court gave the following directions:-

(i)     to identify and define parameters (scientific, biometric and  social) on the basis of which each of the categories of values  of forest land should be estimated. (ii)    To formulate a practical methodology applicable to different

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biogeographical zones of India for estimation of the values in  monetary terms in respect of each of the above categories of  forest values. (iii)   To illustratively apply this methodology to obtain actual  numerical values for different forest types for each  biogeographical zone in the country. (iv)    To determine on the basis of established principles of public  finance, who should pay the costs of restoration and/or  compensation with respect to each category of values of  forests. (v)     Which projects deserve to be exempted from payment of  NPV.

On the basis of the directions issued by this Court, a Committee  consisting of Mrs. Kanchan Chopra gave a report and the same was  examined by the CEC.   

The report contains detailed study of the relevant factors.  The  Forest Survey of India, has since last two decades, been undertaking  forest cover mapping of the country using satellite data obtained by  the NRSA, Hyderabad.  The methodology of mapping involves the  geo-rectification of the satellite imagery using the Survey of India  toposheets followed by the digital interpretation of the same and  extensive ground truthing.  It was found that the forest cover maps  depicts mainly three tree canopy density classes, viz., very dense,  moderately dense and open.  There were other classifications in the  Forest of India and "Champion and Seth" have classified the forests  of India into 16 major groups.  The major basis of classification  included the climate, the soil and the past treatment as these factors  determine the vegetation type of a given locality.  CEC has classified  the forest taking in view the ecological role and value of the forests  and for the purpose of the report, 16 major forest types have been  further grouped into 6 ecological classes depending upon their  ecological functions.

Eco-Class I  - Consisting of Tropical Wet Evergreen   Forests,  Tropical Semi Evergreen Forests and Tropical Moist  Deciduous Forests Eco- Class II   -Consisting of Littoral and Swamp Forests Eco-Class III   -Consisting of Tropical Dry Deciduous Forests Eco-Class IV    -Consisting of Tropical Thorn Forests and Tropical  Dry Evergreen Forests Eco-Class V     -Consisting of Sub-tropical Broad Leaved Hill  Forests, Sub-Tropical Pine Forests and Sub  Tropical Dry Evergreen Forests Eco-Class VI    -Consisting of Montane Wet Temperate Forests,  Himalayan Moist Temperate Forests, Himalayan  Dry Temperate Forests, Sub Alpine Forest, Moist  Alpine Scrub and Dry Alpine Scrub

       Based on the ecological importance of forest falling in different  eco-value and canopy density classes, relative weightage factors  have also been taken into consideration.  By using these relative  weightage factors, the equalized forest area in eco-value Class I and  very dense forest corresponding to forest falling in different eco-value  and density classes have been compiled.  For example, 17,997 sq.  km. of open forest of Eco-Class IV has been calculated to be  equivalent to 7,558 sq. km. of very dense forest of Eco-Value Class I.   Accordingly, the entire forest area of the country has been calculated  and found to be equivalent to 5.2 lakh sq. km. forest area having  highest ecological significance as that of forest falling in eco-value  Class I with density above 70%.  

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       The net present value per hectare of forest has been fixed  based on this data.  For calculating the average net percent value per  hectare of forest in India, the following monetary value of goods and  services provided by the forest have been considered:- (i)     Value of timber and fuel wood (ii)    Value of Non Timber Forest Products (NTFP) (iii)   Value of fodder (iv)    Value of Eco-tourism (v)     Value of bio-prospecting (vi)    Value of Ecological services of forest (vii)   Value of Flagship Species (viii)  Carbon Sequestration Value

Based on this, the NPV was fixed and the following  recommendations have been made:-

(i)     for non-forestry use/diversion of forest land, the NPV may be  directed to be deposited in the Compensatory Afforestation  Fund as per the rates given below:-    (in Rs.) Eco-Value  class Very Dense  Forest Dense  Forest Open  Forest Class I 10,43,000 9,39,000 7,30,000 Class II 10,43,000 9,39,000 7,30,000 Class III 8,87,000 8,03,000 6,26,000 Class IV 6,26,000 5,63,000 4,38,000 Class V 9,39,000 8,45,000 6,57,000 Class VI 9,91,000 8,97,000 6,99,000

(ii)    the use of forest land falling in National Parks / Wildlife  Sanctuaries will be permissible only in totally unavoidable  circumstances for public interest projects and after obtaining  permission from the Hon’ble Court.  Such permissions may  be considered on payment of an amount equal to ten times  in the case of National Parks and five times in the case of  Sanctuaries respectively of the NPV payable for such areas.   The use of non-forest land falling within the National Parks  and Wildlife Sanctuaries may be permitted on payment of an  amount equal to the NPV payable for the adjoining forest  area.  In respect of non-forest land falling within marine

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National Parks / Wildlife Sanctuaries, the amount may be  fixed at five times the NPV payable for the adjoining forest  area; (iii)   these NPV rates may be made applicable with prospective  effect except in specific cases such as Lower Subhanshri  Project, mining leases of SECL, Field Firing Ranges,  wherein pursuant to the orders passed by this Hon’ble Court,  the approvals have been accorded on lump-sum payment /  no payment towards the NPV; and  (iv)    for preparation and supply of district level maps and GPS  equipments to the concerned State / UT Forest Departments  and the regional offices of the MoEF, the Ad-hoc CAMPA  may be asked to provide an amount of Rs.1.0 crore to the  Forest Survey of India out of the interest received by it.

Ministry of Environment and Forests also has filed its response  and has accepted the recommendations made by CEC.  Various user  agencies have filed its objections.  We heard the learned senior  Counsel Mr. Nariman and other learned senior Counsel who  appeared before us.  The main contention raised is that the NPV  value was fixed on the basis of the net flow accruing over 20 years at  a 5% social discount rate.  This, according to the applicants, is too  low.  It has been contended that the Economic and Research  Department of the Asian Development Bank is of the view that a  survey of the social discount rate policies of individual countries show  significant variations and the developing countries apply higher social  discount rate.  The paper published by Asian Development Bank  shows that India should have a social discount rate of 12%.  It may  be noted that the Expert Committee under the leadership of                Mrs. Kanchan Chopra recommended 5% social discount rate but the  CEC has reduced further and accepted 4% social discount rate.  It  may be noted that the CEC had made consultation with eminent  economists and it was of the view that the social discount rate should  be around 2% in India.  We do not find much force in the contention  advanced by the learned Counsel who appeared for the user agents.   The 10% suggested by them cannot be applied to the present case  because 10% is the rate linked to assumptions about the opportunity  cost of capital.  One cannot apply that rate for social time preference  in evaluating the benefits from an environmental resource such as  forests.  In project evaluation, the horizon is compatible with the life of  the project whereas in forest matters, the horizon spans over several  generations.  Therefore, the rate of 10%, as suggested by the user  agency cannot be accepted.

Another contention raised by the applicant(FIMI) is that the  NPV is not fixed on site specific and, therefore, the fixation of the rate  is based on surmises and conjectures and the same rate cannot be  applied to the large extent of area covered by the forests.  This  question was elaborately considered by the CEC.  Considering the  large extent of this country and the forest being spread over in  various parts of the State, it is difficult to fix the NPV based on the  specific area.  It is not feasible to fix NPV in each and every individual  case.  The entire forest area in each of the State/UT is calculated by  considering the monetary value of the services provided by it.  The  average NPV per hectare of the forest area in the State has also  been calculated.  If NPV is to be calculated on the specific area, the  process would be time consuming and in most of the cases, it may be  beyond the capability of the Range Forest Officers or other officials  posted at the grassroot level.  Moreover, the NPV is linked with the  type of the forest and no useful purpose would be served by carrying  out NPV calculations in each case involving the diversion of forest  areas.

       We are of the view that the NPV now fixed is more scientific  and is based on all available data.  We accept the recommendations

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and we make it clear that the NPV rate now fixed would hold good for  a period of three years and subject to variation after three years.  The  following exemptions have been recommended:-

(i)     public works such as schools, hospitals, children play  grounds of non-commercial nature and the public welfare  projects such as community centres in rural areas which  require forest land upto 2 ha; (ii)    rural infrastructure and basic services such as the  construction of the overhead tanks, village roads, etc. (iii)   the minor irrigation projects upto 10 ha. of storage area,  municipal water supply projects, drinking water supply  pipelines; (iv)    activities necessary for the ecological management,  relocation of the villages from the sactruaries and the  national parks, regularization of pre-1980 eligible  encroachers; (v)     housing for the rehabilitation of tribals; laying of the  underground optical fibre cables; (vi)    laying of the pipelines for the underground gas  transportation; (vii)   the district and rural roads; (viii)  shifting cultivation; (ix)    roads constructed by Defence in border areas; (x)     construction of the transmission lines. The above recommendations for exemptions are  accepted.  If, in any case, exemption is required by nature of  the peculiar circumstances of the case, the same would be  decided as and when necessary on a case to case basis.