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NEW DELHI : The Supreme Court (SC) on Monday stayed an order of the National Green Tribunal (NGT) imposing a fine of 500 crore on Volkswagen AG, providing major relief to the German automaker.

The NGT had imposed the fine on Volkswagen for what it called harming the environment.

A bench of the apex court headed by Justice S.A. Bopde said that ‘no coercive action’ should be taken against Volkswagen with respect to the fine. The court also sought replies from the Central Pollution Control Board and Saloni Ailawadi, a teacher at a Delhi school who, along with a few others, had moved the green tribunal seeking a ban on the sale of Volkswagen vehicles in India for alleged violation of emission norms.

The NGT on 7 March slapped the 500 crore fine on the local unit of Volkswagen for allegedly damaging the environment by using a so-called “cheat device" in its diesel cars sold in India. A bench headed by NGT chairperson Justice Adarsh Kumar Goel directed the carmaker to deposit the amount within two months.

Mint cited Volkswagen India as saying that it did not use any “cheat device"—a software that activates the engine’s emissions controls only during laboratory testing. However, in December 2015, the automaker recalled about 323,700 cars of Volkswagen, Skoda, and Audi brands in India that are equipped with EA 189 diesel engines for technical updates. The passenger vehicle models that were recalled were the Polo hatchback and Vento, and the Jetta and Passat sedans of Volkswagen. Skoda’s Fabia hatchback was also recalled, along with the Yeti sport-utility vehicle (SUV), and Rapid, Laura and Superb sedans. The company also recalled its premium brand Audi’s A4 and A6 sedans, besides Q3 and Q5 SUVs.

“It’s a very unfortunate situation for both parties as in India we didn’t have the stringent rules when it comes to vehicular emissions. Now to expect an automaker to make vehicles in compliance with global standards is not a realistic thing to do. So, I think it would be quite a stretch to penalize Volkswagen for their diesel engines in India as they never flouted the Indian emission standards," said Anil Sharma, associate director, MarketsandMarkets.

The Volkswagen emissions cheating scandal emerged in 2015 in the US when authorities there discovered that diesel vehicles manufactured by the company emitted nitrogen oxide 40 times the permissible limits.

Subsequently, the company pleaded guilty of using a device that showed emissions within permissible limit when they were tested in laboratories but violated the norms while running on the roads.

These diesel vehicles were produced between 2009 and 2015 and Volkswagen issued a recall of almost 11 million vehicles fitted with the EA 189 diesel engines across the world. The company was also asked to pay a hefty fine by a US federal court.

Subsequently, to improve its brand image, Volkswagen decided to invest significantly to develop alternative technologies such as electric powertrains for its future products.

Volkswagen’s luxury sports brand Porsche has already stopped making diesel vehicles.

Malyaban Ghosh contributed to this story.

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