I. INTRODUCTION
Although, environmental pollution is said to be as old as the emergence of homo sapiens on the earth, the scientific and technological progress of man has invested him with immense power over nature and indiscriminate use of this power has resulted in endless and senseless encroachment on nature. Unfortunately, man by his failure to live in harmony with nature has brought humanity to the brink of a global environmental catastrophe. Man’s greed attacks nature, environment and ecology and wounded nature backlashes on the human future[1]. Environment protection and its preservation is today the major concern all over the world. The environment proves that all the human activities on this earth are inter-connected. So much so that an environmental damage in the boundaries of one State has transborder ramifications. Environmental destruction and pollution has seriously threatened the human life, health and livelihood. This deleterious effect on the human beings was appreciated very soon in India and environment protection concerns can be found in the major literatures of ancient India. A great stress was laid down upon preservation and protection of the environment so that it can pass as a valuable resource from generation to generation. With the advent of industrialisation, globalisation and urbanisation and with the increase in the population, a greater pressure on the environment was asserted. It was exploited on a speed and rate higher that its regeneration. It was felt that if human beings have to survive, the environment has to be protected on a priority basis. At the international level, various Treaties and Conventions were adopted to regulate the misuse and exploitation of the environment. The Constitutions of many countries were amended to incorporate these changes. Various principles like Polluter Pays Principle, Precautionary Principle, etc were developed to give environment its due. The best shift was towards the concept of “Sustainable Development” that allows use of environment within tolerable limits and at the same time allowing the growing needs of development. The right to wholesome environment has been raised to the status of a Human Right and Fundamental Right. To give this benign drive a thrust, the benevolent concept of Public Interest Litigation has been used liberally in favour of environment protection. There is, however, a need to preserve and protect environment on a voluntary basis. This is expected more from companies operating in India as they are in a better position to protect and preserve the environment. The resources, technology and expertise they possess can protect environment in its most benign form. They can anticipate possible environmental disasters and wrongs and can take a timely action. Thus, the “preventive approach” must be preferred over “curative approach” as certain environmental damages are irreversible in nature. This is the reason why the environmental jurisprudence in India shifted from “strict liability” to “absolute liability”. The absolute liability, unlike strict liability, does not consider any exceptions that may be used to avoid liability arising out of environment damages. Thus, a sound CSR strategy must consider all these aspects on a priority basis.
II. CONCEPT OF ECSR
A company is the creation of the law. It is not a human being but is an artificial person. On incorporation, the company acquires a separate legal entity distinct from and independent of its members. Unlike a partnership firm, which has no separate legal entity, a company has a separate corporate existence. Since a company has a separate legal entity, a shareholder can be the Director, creditor of the company, office bearer of the trade union, etc all at the same time. A shareholder cannot be held personally liable for the acts of omission and commission of the company, even though he holds almost the entire share capital of the company[2]. This makes the dominant or majority shareholders relaxed businessmen and very less head is paid to the legal and the other requirements. The moment legal requirements, including environmental mandates, are violated law steps in and make the defaulting persons responsible for the wrong act or omission. At this stage these powerful companies point towards various “deficiencies” in the law that they were formerly unaware of. The sanction of criminal law opens their mind towards the law. The same is, however, not true about the “moralistic aspects” of the law. There is no requirement that a company must be a “morally abiding company” though minimum quantum of morality is incorporate by the legislature in various laws of the country. This must not be confused as granting a blanket protection to the companies from various “legal duties and responsibilities” that the law imposes upon them. It simply means that if a company is following the environmental laws of the land, a “moral duty” unspecified and unauthorised by the law of the land cannot be assumed. Some sort of positive law making is necessary for that purpose. For instance, this moral duty is expressly incorporated in the “grundnorm of all laws” popularly known as the Constitution of India. The Forty-Second Amendment to the Constitution of India added a new directive principle, Article 48-A, in the Constitution which enjoins upon the state ‘to protect and improve the environment.’[3] The directive principles contained in Part IV of the Constitution represent certain socio-economic goals which the nation is expected to achieve. While the fundamental rights in Part III have been made enforceable[4], the directive principles have specifically been made unenforceable by any court of law[5]. The Supreme Court has held that in view of Article 37 the Court may not be able to actively enforce the directive principles by compelling the state to apply them in the making of laws. But, if the state commits a breach of its duty by acting contrary to these principles, the Court can prevent it from doing so because these obligations are ‘fundamental in the governance of the country’ and therefore binding on all three wings of the government[6]. Thus, Article 48-A has also been interpreted as imposing an obligation on the govt., including the courts, to protect and improve the environment[7]. The Forty-Second Amendment also introduced Article 51-A (g) which imposes a fundamental duty on every citizen ‘to protect and improve the natural environment including forests, lakes, rivers and wild life and to have compassion for living creatures’. Fundamental duties are in the nature of social obligations and CSR originates from this provision itself. These are, however, at most a “moral appeal” and have no force of a binding law. Thus, by virtue of Articles 48-A and 51-A (g), there is a constitutional pointer to the state and a constitutional duty of the citizens not only to ‘protect’ the environment in its degraded state but also to ‘improve’ it. The neglect or failure to abide by the pointer or to perform the duty is nothing short of a betrayal of the fundamental law which the state and, indeed, every Indian, high or low, is bound to uphold and maintain [8]. Accordingly, anyone who pollutes the environment is guilty of violating the highest law of the land. This obligation is fulfilled by making various laws for protecting and preserving the environment. The same have been interpreted in a liberal and updating manner by the Judiciary. The CSR concept, however, appeals to the “moral side” and stresses more on the front of voluntary compliances rather than forcing the companies to perform their legal and compulsive duties. This nature and existence of moral appeal is also desirable since morality cannot be imposed but it is inherent in the very existence of human being. In fact, none has a right to tell what is morally good for another to do. The same holds equally true about companies and what corporate social responsibilities (CSRs) regarding environment protection are required to be fulfilled must be left for them to decide. The same must be in addition to those provided by the law on a compulsory basis. Thus, the ideal situation demands that the companies fulfill both the legal mandates and the moral appeal regarding environment protection voluntarily and in their true letter and spirit. They must not wait for the legal system to enforce the environmental mandates against them. The strategies and management decisions of the companies must consider “Environmental Corporate Social Responsibility” (ECSR) as well along with other initiatives. There cannot be any definition of what constitutes ECSR and what not. It must be left flexible and not rigid so that it can accommodate many more aspects. The defining of the same is also not the task of the academicians and lawyers but that must be left for the companies to decide. If at all the other segments wish to discuss that aspect it should be more on the side of a “moral appeal” and not “commands” and “unnecessary philosophy” which has no base and binding value. The task must be to touch the moral fabric of the companies in a friendly manner and not a hostile confrontation[9]. Thus, the best definition of ECSR can be “taking of that voluntary environmentally beneficial action on the part of companies which they are not required to take by the law”. For instance, if a company reallocates the victims of earthquake voluntarily and helps in the restoration of the environment, that is an ECSR. This is so because if they are performing the mandates of law then that is not an ECSR but a mere following of legal commands[10]. This aspect should not be misunderstood as claiming that following legal mandates is not the responsibility of companies. That has to be done by every person whether it is a company or natural person. The main idea is to clearly differentiate the spheres of legal compliance and ECSR. The moment we are able to differentiate and demarcate these two spheres we can easily identify the role played by the companies in promoting the ECSR. The non-performance of these ECSRs should not be deprecated and abhorred but their performance must be appreciated and accepted with full heart and warm regards. Thus, what we are envisaging is the “positive aspect” of ECSR and not a forceful imposition of the same upon the companies.
III. FOUNDATION OF ECSR
The foundation, if at all we can say so, for ECSR can be found not only in the Constitution of India but equally under various statutory laws. The primary source, however, can only be the Constitution of India that has to be utilised by the courts to its fullest extent. This is so because the courts in interpreting the Constitution enjoy a freedom, which is not available in interpreting a statute[11]. The Constitution is organic and living in nature. It is also well settled that the interpretation of the Constitution of India or statutes would change from time to time. Being a living organ, it is ongoing and with passage of time, law must change. New rights may have to be found out within the constitutional scheme. It is established that fundamental rights themselves have no fixed content; most of them are empty vessels into which each generation must pour its contents in the light of its experience. The attempt of the court should be to expand the reach and ambit of the fundamental rights by process of judicial interpretation. There cannot be any distinction between the fundamental rights mentioned in Chapter III of the Constitution and the declaration of such rights on the basis of the judgments rendered by the Supreme Court[12]. Thus, horizons of constitutional law are expanding and these expanding horizons can provide a sound base for ECSR. Further, we cannot allow the dead hand of the past to stifle the growth of the living present. Law cannot stand still; it must change with the changing social concepts and values. If the bark that protects the tree fails to grow and expand along with the tree, it will either choke the tree or if it is a living tree it will shed that bark and grow a living bark for itself. Similarly, if the law fails to respond to the needs of changing society, then either it will stifle the growth of the society and choke its progress or if the society is vigorous enough, it will cast away the law, which stands in the way of its growth. Law must therefore constantly be on the move adapting itself to the fast-changing society and not lag behind[13]. One of the necessities of the contemporary society is the recognition and acceptance of ECSR by the companies. This can be supplemented by declaring private persons[14] as State by the judiciary. The same assumes significance when environmental matters are under consideration and companies are involved.
IV. THE NEED OF THE HOUR
The need for the declaration of private persons as State, within the meaning of Article 12 of the Constitution of India, is immediate and compulsive in nature[15]. This has arisen due to globalisation, privatisation and decentralization. The traditional “welfare state functions” have now slipped into the hands of private individuals due to this phenomenon. The crucial “public interest” has also been transferred to these private persons as far as the transferred business is concerned. This is, however, not the end of the story. The duties and limitations by which the traditional State was bound are also, with necessary modifications, passed to the private persons. These duties and limitations, though not as stringent and rigorous as were meant for traditional State, are still in existence and are required to be followed by the “successors” of those welfare state functions. It is no doubt true that private individuals cannot be expected to play the role of “parents or guardians” of the nation, but certain minimum fair and reasonable obligations, commensurate with the basic Human Rights, Fundamental Rights and Constitutional Rights, have to be met reasonably. The welfare state requirements mandate that if the power and essential functions of a state are decentralized or delegated to private persons, they retain their mandates of welfare requirements, though in a modified form. For instance, if a public company, performing crucial public functions is pravitised, than the successors are required to act justly, fairly and reasonably. An arbitrary, unreasonable or oppressive act of a “privatized public company” should be equally vulnerable to the challenges of unconstitutionality. Thus, the changed socio-economic conditions of India require a different outlook and this makes the declaration inevitable and essential[16]. This declaration will go a long way in fulfilling the mandates of ECSR vis-à-vis the environmental matters. It will also make various Human Rights and Fundamental Rights a meaningful reality. These rights help in the protection of environment and their enforcement against the violator acts as a deterrent. The human beings cannot exist without their existence being recognised and accepted. That is why we all possess certain basic “Human Rights”, “Fundamental Rights” and “Constitutional Rights”. These rights safeguard, if not absolutely than partially, the interests that are natural with the existence of human beings. If these rights are violated, that violates and interferes with the very right to exist of the human beings. Thus, these rights have been given paramount importance and are recognised as sacrosanct and inviolable. These rights are safeguarding the interest of public at large; hence they deserve to be interpreted liberally and purposefully in favour of the right holders. The court in its exercise of its power of judicial review would zealously guard the human rights, fundamental rights and the citizens’ rights of life and liberty as also many non-statutory powers of governmental bodies as regards their control over property and assets of various kinds, which could be expended on building, hospitals, roads and the like, or overseas aid, or compensating victims of crime[17]. Thus, right to clean environment, as flowing out of Article 21 of the Constitution of India, has been liberally construed by the Supreme Court in the larger interest of India. The same falls under the “right to life” category and its ambits have been expanded to deserving horizons. Right to life is the foremost human right which is non-derogable and per-emptory. Article 21 of the Constitution of India guarantees to all persons a fundamental right to life and personal liberty[18]. By reading Article 21 along with the directive principles, the Court has broadened, and given depth to or created more fundamental rights over and above those expressly stated in the Constitution. Thus, the legal value of directive principles has constantly grown in Indian jurisprudence. They are no more mere policy prescriptions that guide state action but are complementary and supplementary to the fundamental rights. By using this approach the Court has held that the right to life connotes “quality of life” and not mere animal existence[19]. Thus, in the field of environment it entailed the recognition of a fundamental right to clean environment as being implicit in the right to life under Article 21 as read in the light of the directive principles in Articles 47, 48-A and also the fundamental duty under Article 51-A(g). It has been held that a person has the right to enjoyment of pollution free water and air to enjoy life fully. Any disturbance of the basic environment elements, namely, water, air and soil, which are necessary for life would be hazardous to life within the meaning of Art.21[20]. Through this meaningful interpretation, the courts have been able to compel the government authorities to takes affirmative steps to protect as well as improve the environment[21]. Thus, the ambit of Article 21 deserves to be expanded as far as possible because it is the most important Fundamental Right as provided under the Constitution for securing a safe environment. This requirement becomes absolute by the growing recognition of Human Rights as essential part of human’s life. Further, the procedure established by law must be just, fair and reasonable[22]. The expression “life” is of wide connotation and it is not confined to non-killing. It covers all sorts of hurts or injuries, both physical and mental, which have a “disabling effect” on the proper enjoyment of life. It is not confined to a mere animal existence with no element of human dignity attached to it. This makes it very clear that it applies to environmental matters as well that have a tendency to cause damage or injury to public at large. That is why the Supreme Court evolved the concept of “absolute liability” in cases of environmental damages arising from hazardous substances. If normal civil or criminal remedies are invoked in such cases, it will bring absurd results, as these remedies have their own limitations. Similarly, “Polluter Pays Principle” and other environmental concerns require that the polluter, who has violated the right to clean environment of people at large U/A 21 of the Constitution, should not only pay adequate compensation to the parties affected by his action but also bear costs for the restoration of the environment. Thus, companies can be held liable for violating Article 21 of the Constitution, otherwise an absurd situation may arise, i.e. the sovereign organs and its instrumentalities cannot take away life or personal liberty but private persons like companies can. It would, however, be appropriate if “precautionary measures” through ECSR technique are adopted in advance to mitigate any environmental hardship that may arise in future. For instance, the Bhopal tragedy underscored the risks associated with the growth of hazardous industries, not only to the workmen employed in such industries, but also to the innocent members of the public who may be in their vicinity. It also emphasised the need to provide immediate relief to the victims of environmental accidents through a simple compensation regime. But industrial units often lack the willingness and the financial resources to compensate the victims of such accidents, compelling them to engage in prolonged litigation. To address these issues, the parliament enacted the Public Liability Insurance Act of 1991(PLIA) which provides for mandatory public liability insurance for hazardous industries whether in the public or the private sector. Along with the premium for the insurance policy the owner has to also deposit an equivalent sum with the insurer, for being credited to the Environment Relief Fund[23]. In case the insurer fails to remit the amount to the Environment Relief Fund, it shall be recoverable from him as arrears of land revenue or of public demand[24]. These measures should be adopted on a voluntary and priority basis by the companies to effectuate their ECSR. In U.P. State Electricity Board v. District Magistrate, Dehradun, [25] the Allahabad High Court observed that the PLIA is a beneficial legislation with a social objective and it should be given a liberal interpretation. If two views are possible, the view in favour of the public should be preferred. Thus, the Court held that electricity is ‘hazardous substance’ which can injure or even kill people if not properly handled and the owner cannot escape liability on the ground that no insurance policy was taken by the owner handling hazardous substances. Thus, the companies must make provisions for these eventualities and a “disaster management strategy” must be kept in place. They must be ready for the “declaration of statehood” in the distant future as the same will be a ground reality very soon.
V. CONCLUSION
The law have conferred and assigned a special status to the companies, which is not available to other forms of associations. It expects the companies to contribute for the growth and development of the nation. The companies are expected to carry out their “environmental corporate social responsibilities” so that people can enjoy a qualitative life. The role of the companies is so important that we can see provisions touching and regulating their functioning in almost all the spheres of life. This is particularly so in a country like India which is a “Welfare State” by nature. The State formulates various laws and regulations keeping in mind its welfare state role. Thus, a balance has been maintained between social responsibilities of the company on the one hand and conferment of absolute autonomy and freedom from interference upon the company on the other. In the present scenario companies play a very important role in the growth and development of the nation. Thus, they should be encouraged and motivated to contribute more. This can be achieved by providing them additional benefits, concessions and privileges. Their functioning and operations should not be made complicated by forcing them to comply with unnecessary and technical formalities. In fact, the various technical and procedural formalities governing them should be made more liberal and simplified so that the “corporate governance” can become a real and effective governing force[26].
© Praveen Dalal. All rights reserved with the author.
Consultant and Advocate, Supreme Court of India.
Managing Partner-Perry4law (Legal firm).
Contact at:
pd37@rediffmail.com/ perry4law@yahoo.com Tele: 09899169611.
http://www.blogger.com/profile/8339811 [1] V.R. Krishna Iyer, “The Dialectics and Dynamics of Human Rights in India”, 7 (1999).
[2] Praveen Dalal, “Corporate entity in existing legal system-Its rights and liabilities under the Constitution and other enactments”, (2004) 61 CLA 96 (Mag).
[3] Article 48-A of the Constitution of India, 1950 states: “The state shall endeavour to protect and improve the environment and to safeguard the forests and wildlife of the country.”
[4] The Constitution of India, 1950, Article 13.
[5] Id., Article 37 provides that: “The provisions contained in this part (Part IV) shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the state to apply these principles in making laws.”
[6] Central Inland Water Transport Corporation v. Brojo Nath, AIR 1986 S.C. 1571 at p.1587.
[7] T. Damodhar Rao v. S. O. Municipal Corporation, Hyderabad, AIR 1987 AP 171.
[8] Kinkri Devi v. State of Himachal Pradesh, AIR 1988 H.P. 4 at pp. 8, 9.
[9] This article has been written with this understanding and the author believes that a person convinced against his will is never convinced at all.
[10] In the opinion of the author the environmental legal mandates must be first separated from the activities of the companies and if they are still performing voluntary beneficial activities then these activities must be accepted as ECSR.
[11] J.P.Bansal v State of Rajasthan, (2003) 3 SCALE 154.
[12] P.U.C.L v U.O.I, (2003) (3) SCALE 263.
[13] Justice Bhagwati in National Textiles workers union v P.R. Ramakrishanan, (1983) 1 SCC 228.
[14] The expression “persons” is used in this article to include natural as well as artificial entities, i.e. both human agency and corporate entities.
[15] Kindly see Praveen Dalal’s, “Private shades of statehood”,
http://praveen-dalal.blogspot.com/2005/04/private-shades-of-statehood.html for details. [16] This has been proved empirically by the research conducted by the author personally. For more details kindly see
http://mumbai.indymedia.org/en/2005/04/210334.shtml. [17] U.O.I v S.B.Vohra (2004) 2 SCC 150.
[18] Article 21 states: “No person shall be deprived of his life or personal liberty except according to procedure established by law.”
[19] Francis Coralie Mullion v. The Administrator, Union Territory of Delhi, AIR 1981 SC 746 at pp. 749-50.
[20] Subhash Kumar v. State of Bihar, AIR 1991 SC 420.
[21] For example, in M. C. Mehta v. Union of India (CNG litigation), (1998) 9 SCC 589, the Court observed that the duty cast on the state under Articles 47 and 48-A of the Constitution is to be read as conferring a corresponding right on the citizens and, therefore, the right under Article 21 at least must be read to include the same within its ambit. The Court pointed out that chronic exposure to the polluted air due to vehicular emissions results in the violation of right to life, which includes the right to good health.
[22] Maneka Gandhi v U.O.I, AIR 1978 SC 597.
[23] Section 4(2C), PLIA, 1991.
[24] Section 4(2D). The Fund was set up by the 1992 amendment to the PLIA.
[25] AIR 1998 All 1.
[26] Praveen Dalal, “The corporate entity and judicial panorama”,
http://praveen-dalal.blogspot.com/2005/07/corporate-entity-and-judicial-panorama.html . 
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