The National Green Tribunal on Thursday slapped a penalty of Rs 500 crore on German automaker Volkswagen for installing ‘cheat devices’ in its diesel cars in India to deceive emission tests. While directing the company to pay the fine within two months, the tribunal said the apex pollution monitoring body can utilise the money towards improving air quality in the NCR of Delhi and other highly polluted areas.

The green panel had earlier on November 16 directed the foreign car manufacturer to deposit an interim amount of Rs 100 crore with the Central Pollution Control Board.

Also read | Will small, midcap stocks rally continue? What experts say; check top bets

The NGT bench led by its chairperson justice Adarsh Kumar Goel said, “Sustainable development is the main guiding factor… We are unable to accept the manufacturer’s objections to the report.”

An NGT-appointed committee had earlier in January recommended a penalty of Rs 171.34 crore on Volkswagen as a means of “creating deterrence” for causing “health damages” and air pollution in Delhi due to excess nitrogen oxide (NOx) emissions. This fine was enhanced to Rs 500 crore by the NGT on Thursday. The expert panel had estimated that Volkswagen cars released approximately 48.678 tonne of NOx in 2016 in the national capital.

Read | Angel tax: Discussions underway over criteria for accredited investors, says DPIIT secretary

On January 17, the NGT had slammed Volkswagen for not depositing Rs 100 crore, imposed on it for damaging the environment and directed it to submit the amount within 24 hours failing which its directors would be sent to jail.

However, the Volkswagen Group in India reiterated that all its cars are “compliant with the emission norms defined in India”.

“The Group awaits the copy of the order of Honourable NGT. The Volkswagen Group will challenge the order of the NGT before the Supreme Court,” the Volkswagen Group India spokesperson said.

The Supreme Court had on January 21 had said the NGT can examine other automobile manufacturers also for flouting emission norms if it deemed fit to widen the judicial scrutiny. Volkswagen through senior advocate Abhishek Manu Singhvi had argued that the German carmaker strictly adhered to Bharat Stage IV norms and was been singled out for violation of norms which are “non-existent”.

The automobile giant had admitted to the use of “defeat device” in 11 million diesel engine cars sold in the US, Europe and other global markets to manipulate emission test results. Volkswagen India had in December 2015 announced the recall of 3.23 lakh vehicles in India to fix the emission software after ARAI conducted tests on some models and found that their on-road emissions were 1.1 times to 2.6 times higher than the applicable BS-IV norms. The company, however, had said that the recall in India was purely voluntary in nature as it did not face any charges regarding violating emission norms in India, unlike in the US. In 2017, the company had pleaded guilty in the US.

A “cheat” or “defeat device” is a software in diesel engines to manipulate emission tests by changing the performance of the cars globally.

The tribunal was hearing pleas filed by Delhi-based teacher Saloni Ailawadi and a few others seeking ban on the sale of Volkswagen vehicles for alleged violation of emission norms.