Utmost Good Faith



The TSR Subramanian Committee in India came up with several radical recommendations  to improve India’s environmental governance

The new concept of ‘utmost good faith’ has been proposed through a new legislation,  Environmental Laws (Management) Act (ELMA). ELMA would oblige an applicant to  disclose everything about a proposed project. The disclosure will need to include a project’s potential to pollute and its proposed solution – in short, everything that is  relevant for making a decision on granting or refusing the environmental clearance  applied for. The project proponent, and the experts who support the case, will be required by this law to certify that ‘the facts stated are true and that no information that would be relevant to the clearance has been concealed or suppressed’.

If at any time after the application is received – even after the project has been implemented and is in operation – it is discovered that the proponent had, in fact, concealed some vital information or had given wrong information or that the certificates issued by the experts suffer from similar defects, then severe consequences will follow under ELMA. They include heavy fine, penalties including imprisonment and revocation of the clearance, – and in serious cases arrest of the polluter.

‘Utmost Good Faith’ shall have the same meaning as understood in the law relating to  Insurance; and the principles underlying Section 20 of the Marine Insurance Act 1993 (Act 11of 1963) shall apply


The court room was packed. The judge called the court to order. The case involved breach of Utmost Good Faith by the Agyani Group. Newly-enacted ELMA was triggered. An environmental NGO called Facts and only Truth (FoT) had filed the petition.

I took my seat. I was keen to attend the case as my good Professor friend was leading the Technical Counsel on behalf of the giant Agyani Group. This was the first ELMA case in the

Agyani’s thermal power plant was discharging hot water into the sea. This had led to migration of the fish that the local fishermen were dependent upon. FoT found that at a distance of 12 km to the south (where the currents were heading) breeding of turtles was also affected. These turtles were a rare species.

Agyani had underplayed information on the impact of thermal discharge and indicated the impact to be minor and adverse but reversible. The EIA report was then prepared by my Professor friend.

Data from FoT (supported by direct measurements as well as satellite data) showed that Agyani’s discharge was carrying temperatures around 4 0C more than the mean sea temperature with its present 25% of operations.  The EIA report had stated that the temperature of the discharge will not cross 70C per requirement of the Ministry.

FoT argued that when 100% of the plant will be operational, the temperature of the discharge will certainly be more than the 70C threshold.  The EIA report should be have addressed such possibilities clearly and come up with a robust environmental management plan. Information on the turtle breeding ground was also suppressed with no consideration  given to the thermal discharge.

The charge was that of nondisclosure. The FoT had demanded that the environmental  clearance to the Power Plant must be revoked, corrective action be taken or the plant be shut down.

In response to the petition, my Professor friend rose from his Chair. He said ‘Non-disclosure can be classified into three types – Innocent, Negligent and Deliberate. The case of Agyani (not because the name suggests so) was that of ‘innocent non-disclosure’ and hence they should not be punished harshly under ELMA.

First of all, the baseline data collected in the EIA report showed an existing decline in the fish population over past 5 years. This trend was thus present much before Agyani’s operations. How can then Agyani be blamed for the continued decline in the population of fish, especially when the thermal discharge from Agyani was only at 40C elevation as against the threshold of 70C?”

“The EIA study was scoped, as per Ministry’s guidelines, to a 10-Km radius. Obviously, the  EIA followed this guideline and did not look into anything beyond the 10-Km radius – and thus missed looking at the turtle breeding ground that was at a distance of
12 Km– something that was not intentional!”

Professor then submitted to the Court statistical data on the fish population over past 10 years that indeed showed fall in population prior to Agyani’ s discharge. The computations were done using Mann-Kendall (M-K) test using MATLAB. He also spoke about literature demonstrating thermal resistance of the coastal fish and that the 70C elevation was of oncern only if temperature was high continuously for over 30 days.

 “When occasions of 70C happen only for a week; the fish of the kind we have are not that severely affected. This is an on-going research however and one should wait till definitive
conclusions can be drawn.” He said flashing some of the recent articles from the Journal of Marine Ecosystems.

“Regarding the turtles issue – we are sponsoring a research project being carried out by marine ecologists and marine hydrographers at the Institute of Marine Sciences. This three-year study will tell us about possible impact of our discharges. We will submit to the Honorable Court this independent assessment report in 2018 so that a view could be taken”

“What about the chemical composition of the discharge,” I asked the Professor when we were exiting the swamp Court corridor. The Professor, while joyous of his victory in stalling the ELMA case for a few more years, said “I knew you will ask me such kind of questions – in fact, a representative of FoT also asked the same question.”

Taking a deep puff from his favorite cigar, he said “I told the Judge that in the cooling water we use chemicals that have been certified by the Global Association of Green Chemicals based in Atlanta, USA. We simply trust them for their competencies and reputation. The chemicals they certify must indeed be safe. We are unable to disclose the chemical composition as it is proprietary and we have signed a Non-Disclosure Agreement to this effect – I thus pleaded for innocence and it worked! “


(Image sourced from www.littleabout.com)

I took a taxi home with Ultimate Good Faith in my Professor friend.




Making use of the concept of Ultimate Good Faith for ‘speedy Environmental Clearance’ is  a recommendation that we should actively debate. To me, it violates the precautionary  principle, simply passes the buck and questions the very sustainability of development. Its application will do more harm to our environment, resource security and the economy – than otherwise!

Facts in the environmental domain are difficult to establish and will always remain a challenge.

You may like to read

Utmost faith in corporations? You must be kidding me! http://www.greenpeace.org/international/en/news/Blogs/makingwaves/utmost-faith-in-corporations-you-must-be-kidd/blog/51569/

Panel on changing green laws puts ‘utmost good faith’ in industry. Is that good enough?http://scroll.in/article/695328/Panel-on-changing-green-laws-puts-‘utmost-good-faith’-in-industry.-Is-that-good-enough

(cover image sourced from http://zhivovlaw.ca/insurance-companies-and-the-duty-of-good-faith/)



2 thoughts on “Utmost Good Faith

  1. I think Utmost Good Faith of this nature believes in the intrinsic fairness of citizens – whether individual or corporates – and therein lies the problem. Like my good Alaskan Chartered Accountant friend said in response to my question of how do you deal with the issue of trusting anybody at all – he said the golden principle is `Trust – BUT VERIFY’. I think there that an aggrieved party (FoT, community etc.) just does not have the technical competence to respond to the level of technical aspects involved and their use and abuse by respondents (Agyan and its consultant – both as vested interest parties). And the court is an arbitrating legal wig who has not the foggiest idea of the technical dimensions involved.

    What needs to be done in my opinion is is the same process as applied to PILs – the court should appoint an Amicus Curiae. `Who, as we know is someone who is not a party to a case, who offers information that bears on the case but who has not been solicited by any of the parties to assist a court and is a way to introduce concerns ensuring that the possibly broad legal effects of a court decision will not depend solely on the parties directly involved in the case. The decision on whether to admit the information lies at the discretion of the court. The AC can be a very competent national/international environmental expert pertaining to the specific environmental aspect involved, whose advise is what counsels to court. Then the issue of utmost good faith can be used to the intent it was created. Else it will remain what you explained – a getaway car


  2. While principle of utmost good faith is best possible way for addressing environmental concerns of the society, we need to introspect whether we are ready for this approach. To just honour this principle, project proponent at planning stage itself will have to invest on competent in-house manpower, spend time on internal debates on environmental issues and measures, and be mentally ready for accepting “no”. Present situation is driving force is “EC” at any any cost. Unfortunately, project proponents are in position to hire “brains” to justify “actions”.


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