Featured

A Look at the Legal Issues Plachimada’s Struggle for Water Against Coca-Cola Has Brought Up

The Plachimada case is an example of how large companies have shown utter disregard for the damage they cause to the environment and local communities in carrying out their business activities.

Coca-Cola's unit at Plachimada, which after being operational for some years is shut since 2004, had "willfully polluted" the water sources of Eravalas. Credit: EJ Atlas

Coca-Cola’s unit at Plachimada, which after being operational for some years is shut since 2004, had “willfully polluted” the water sources of Eravalas. Credit: EJ Atlas

Almost a month ago, when Coca-Cola’s Indian subsidiary, Hindustan Coca-Cola Beverages Limited, informed the Supreme Court that it had no plans whatsoever to restart operations in its bottling plant in Plachimada, Kerala, the curtain came down on more than a decade-long tireless agitation by the residents of Perumatty gram panchayat against the beverage giant.

The bottling plant, which occupied a total area of 34 acres, was lying unused for over a decade. At the peak of its operation, in 2000, it was producing nearly 5.61 lakh litres of beverages a day, drawing around 20 lakh litres of groundwater per day from six borewells and two ponds. The depletion of water levels and polluting effects is what put the Perumatty panchayat, which had given a licence to the company for its operations in the first place, on a collision course with the multinational corporation (MNC).

In 2005, the Supreme Court issued a notice based on an application by the Perumatty panchayat which sought a stay on the decision of the Kerala high court division bench allowing the plant the use of five lakh litres of groundwater daily.

The case epitomised a classic tug of war –  on one hand, the Perumatty panchayat was asserting its right to clean water for potable as well as agricultural purposes; and, on the other hand, the MNC, in this case, a private owner, was speaking about its right to extract groundwater for the purpose of manufacturing aerated soft drinks.

In an attempt to wrest its ‘inalienable’ right to this ground water, owing to its licence over 35 acres of land, the company smothered the soil with cadmium and lead as a result of its bottle-washing process, depleted groundwater levels and turned it brackish. Villagers were taken ill and the crop output each year was lower than it was the previous season.

Several important issues were at stake in this tug of war – the idea of public access to common resources like air or water, the limits of the decision-making powers of local self-governing bodies like panchayats, and the acceptance of the polluter pays principle (PPP). However, these issues could not be tested in law in the Supreme Court. Since the MNC categorically declared that it had no plans to restart the bottling plant operation, despite a favourable verdict in the high court, the appeals filed by the gram panchayat, the government of Kerala and the Kerala State Pollution Control Board were rendered unnecessary.

It is all the more important to look closely at the important issues that this case has thrown up, namely the importance of the public trust doctrine, the role of local self governing bodies in decision making, and the relevance of the PPP.

Doctrine of public trust

The public trust doctrine originally gained prominence in the Roman law and was founded on the idea that certain common properties such as rivers, seas, forests and the air were held by the state in trusteeship for the free and unimpeded use of the general public. These resources were either owned by no one i.e. res nullious, or by everyone in common i.e. res communious.

In this regard, the decision of the Supreme Court in the Span Motel case ( (1997) 1 SCC 388) – where it was decided that the course of a river cannot be manipulated in order to accommodate the construction of a hotel – is relevant. The Supreme Court noted that the public trust doctrine primarily rests on the principle that “certain resources like air, sea, waters and the forests have such a great importance to the people as whole that it would be wholly unjustified to make them a subject of private ownership”

This principle of public trust was rightly invoked by a single judge of the Kerala high court in the Plachimada dispute as far back as 2003. The judge held that there was no doubt that groundwater was a precious and invaluable resource. For this reason, it could not be treated as private property, but it was in the nature of a public good and therefore held by the state in public trust.

This judgment, despite being rendered by a single judge, has been cited with approval in various other decisions reiterating the state’s duty to protect groundwater against excessive exploitation and that any inaction on its part is tantamount to infringement of the fundamental rights guaranteed under Article 21 of the constitution.

However, the division bench of the same high court reversed this decision and directed the gram panchayat to resume the company’s license to use the area’s groundwater. This decision of the division bench was challenged in multiple civil appeals before the Supreme Court which, in its final order in July 2017, chose not to go into these issues, thus leaving the questions of law open.

As far as the decision of the division bench is concerned, it overlooked the role of local self governing bodies in protecting natural resources. By doing so, it did not uphold the public trust doctrine. At the same time, it diluted the liability of large corporations to be penalised for environmental pollution caused by them in the course of business.

Duties of the panchayat 

Further, when the division bench directed the Perumatty panchayat to resume the licence, the implication was that the panchayat did not have the right to unilaterally modify the terms of the licence. It is important to see whether this squares with the constitutional status accorded to local self-governing bodies.

The 73rd amendment to the constitution gave constitutional status to bodies such as gram panchayats and village councils. These bodies have since collectively been called the ‘third rung’ of constitutional democracy in India. In this spirit, Article 243 read with the eleventh schedule of the constitution, casts a constitutional duty on the panchayats to manage and regulate resources (water management included) to ensure that they are used  judiciously and held in trust  for future generations.

Hindustan Coca-Cola Beverages Limited informed the Supreme Court last month that it had no plans whatsoever to restart operations in its bottling plant in Plachimada, Kerala. Credit: Reuters

Hindustan Coca-Cola Beverages Limited informed the Supreme Court last month that it had no plans whatsoever to restart operations in its bottling plant in Plachimada, Kerala. Credit: Reuters

The Kerala Panchayat Act of 1994 also vests the gram panchayats with community property which by custom belongs to the village collectively. The question that arises is whether the high court should have denuded the panchayat of these powers, especially in an area which is increasingly drought-prone and receives the least amount of rainfall in all of Kerala. With the enactment of the Kerala Ground Water Act in 2002, Palakkad was declared ‘over-exploited’, thus requiring special protection of its groundwater resources.

As an instrumentality of the state, the Panchayat’s actions such as the cancellation of the company’s license and subsequently granting renewal conditional upon various environmental pollution clearances were well within its duties under the constitution. In other words, the Perumatty panchayat was doing nothing more than upholding the principles of public trust and submitting to its constitutional obligation to protect natural resources, including groundwater, which it holds in public trust.

Polluter pays principle

The Perumatty panchayat’s stance has to be seen in the context of the PPP as well. It was Principle 16 of the Rio Declaration, 1992, which first introduced the PPP as an essential feature of sustainable development by stating that National authorities should endeavour to promote the internalisation of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to public interest and without distorting international trade and investment”.

In India, it was the Oleum Gas Leak case (1987, 1 SCR  819) which ruled that the larger and more prosperous the enterprise, the greater must be the amount of compensation payable by it for the harm caused on account of an accident in carrying on of the hazardous or inherently dangerous activity by the enterprise. The rule is premised upon the very nature of the activity undertaken. This observation was reiterated in the ruling of the Tanneries case (AIR 1996 SC 2715) where the Supreme Court ordered polluting tanneries in five districts of Tamil Nadu to set up pollution control devices apart from paying compensation to those affected as well as the cost of restoring the damaged ecology.

Yet, this principle is rarely followed when a public resource is polluted in the exercise of private ownership over it. In the Plachimada case, the division bench of the high court chose to accept the findings of the investigation team constituted at its behest, thus disregarding the clearly visible effects of severe groundwater pollution experienced by the community. This issue too has been left open by the Supreme Court for future examination.

The Plachimada case is an example of how large companies have shown utter disregard for the damage they cause to the environment and local communities in carrying out their business activities. The role of local governance bodies such as gram panchayats in upholding the public trust doctrine are clearly central to the perpetuation of such disregard for environmental and natural resources.

Compensation for the people of Plachimada

In 2011, the Plachimada Coca-Cola Victims’ Relief and Compensation Claims Special Tribunal Bill was passed by the Kerala state legislature to adjudicate disputes relating to compensation to be paid by Hindustan Coca-Cola Beverages Limited for the damaged caused by it. However, it was returned without presidential assent and even termed unconstitutional by the central government on grounds of legislative competence.

Earlier this year, the speaker of the 14th Kerala assembly announced that the Bill may be reintroduced with certain necessary changes. This could be a step towards reintroducing the process of assessment of compensation due to those affected by groundwater pollution and depletion in the area. Although the Hindustan Coca-Cola Beverages Limited may have shut down its plant in the face of dogged resistance from the community, what remains to be seen is the nature of compensation that the Bill seeks to provide. The reintroduction of the Bill could look to expiate the wrongs done to the community and uphold the spirit of the Indian constitution.

As for concerns such as the public trust doctrine and the role of local self-governing bodies in decision-making, they too will be tested in the highest echelons of law – sooner than later.

Gayatri Raghunandan is a lawyer at the Chambers of Shomona Khanna, Advocate, Supreme Court of India.