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Luthra, P&A, Gopal Jain & Subramanium win SC compromise for Toyota, Mercedes, diesel car makers

The Supreme Court today lifted a ban on registering diesel cars, SUVs and other vehicles with an engine capacity of 2,000 cc and more in the National Capital Region after depositing one per cent of the ex-showroom price as environment compensation charge (ECC) with the Central Pollution Control Board (CPCB).

Revoking its 16 December, 2015, order, a bench of Chief Justice TS Thakur, Justice AK Sikri and Justice R Banumathi said that the vehicles would be registered only after furishing proof that the one per cent ECC had been paid.

The court said the Central Pollution Control Board will open a separate account for car manufacturers or their dealers to deposit the ECC

The court order came on the plea by the Mercedes Benz, Toyota and other car manufacturers.


Toyota Kirloskar Motor was represented by senior counsel Gopal Jain, who was briefed by Luthra & Luthra senior partner Vijay Sondhi, managing associate Cauveri Birbal , senior associate Aranyak Pathak , senior associate Arjun Sawhney , senior associate Nayamat Sistani , Ms. Divya Sharma (Associate), and associate Avantika.

Mercedes was represented by senior counsel Gopal Subramanium, who was briefed by P&A Associates.

The Society of Indian Automobile Manufacturers was represented by senior counsel Abhishek Manu Singhvi, who was briefed by Sandeep Narain.

The order

The court kept open the question whether an ECC should be levied on all diesel cars regardless of their engine capacity.

The bench said this question would be decided during appropriate proceedings at a later stage.

While recording the central government’s submission that the court could not impose the ECC as it had no such power, the bench also left open the question whether the one per cent charge could be enhanced further.

Resisting the move to impose the ECC, Solicitor General Ranjit Kumar urged the bench to hear the central government’s plea against the charge.

The possibility of ECC getting enhanced in future was sounded by senior counsel Harish Salve, who is also amicus curiae assisting the court in the pollution matters, urged the bench to make “it clear that that it should not be believed that that the court has accepted one per cent ECC”.

As the CJI indicated that it may go up, Salve said “now we have reached a stage of how much” the ECC should be.

Sensing the import of what Salve was saying, senior counsel Abhishek Manu Singhvi, appearing for one of the car manufacturers, told the court that any future enhancement should not be retrospective.

As court signalled that it was going to lift the registration ban, Salve told the court that one per cent ECC should be applicable to all the vehicles, petrol or diesel.

As various counsel appearing for different manufacturers raised their eyebrows, Salve sought 10 minutes time to argue that one per cent ECC should be levied on all the vehicles, be it fuelled by petrol or diesel.

Chief Justice Thakur said, “You can (at a future date) argue that petrol cars too contribute to pollution as diesel-run vehicles, then we will extend this order to them also.”

The apex court by its 16 December, 2015, order while permitting the registration of new light commercial diesel vehicles, had banned the registration of SUVs and private cars of the capacity of 2000 cc and above using diesel as fuel.

Noting that diesel vehicles with higher engine capacity were more prone to cause higher levels of pollution, the apex court by its 16 December order had justified the ban saying that these vehicles were used by more affluent sections of the society and ban on their registration would not affect the common man.

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