The environment ministry on Tuesday held that the construction at Lavasa near Pune was "unauthorised" but gave a lifeline to it, saying the project would be considered on "merits" if certain conditions are met.
The ministry said no further construction should be undertaken at the site and status quo should be maintained on the project in accordance with the ministry's November 25, 2010 order prohibiting any work at the site.
At the same time, the ministry, in an order, said it is "prepared to consider the project on merits with the imposition of various terms and conditions".
It expressed readiness to consider the project "taking into account all the facts and circumstances of the case, particularly the submissions made with regard to the investments already incurred, third party rights which are accrued, the various steps taken for establishment fo a comprehensive hill station development, the employment generated and the claimed upliftment of the area under consideration."
The terms and conditions included payment of "substantial penalty" for the violation of environmental laws, which is "incontrovertible".
Besides the penalty, Lavasa Corporation Limited will have to create Environmental Restoration Fund (ERF) with "sufficiently large corpus" to be managed by an independent body with various stakeholders under the overall supervision of the ministry of environment and forests, the order said.
The ministry also wants imposition of stringent terms and conditions to ensure that no further environmental degradation takes place and that any degradation that has already occurred would be rectified within a time-bound schedule, it said.
The Lavasa would also have to formulate a comprehensive Environmental Impact Assesment (EIA) Report and Management Plan for the project.
In its reaction, the Lavasa said a "quick review" of order indicated that the ministry's decision was "more on jurisdiction than on environment issues".
It contended that "no weightage or consideration" had been given to the "huge body of data submitted" by the Lavasa on environment protetion and enhancement initiatives.
The company suggested that a technical team of the ministry that inspected the site had misrepresented the "state of affairs" by "amplifying minor faults and ignoring the environmental work done" which was "bound to have a negative bearing on the decision of the competent authority".
The ministry's team, headed by Naresh Dayal, undertook a visit to the site from January 5 and said no large-scale destruction of forest had taken place at the controversial site.