In a landmark judgement, India's Supreme Court Tuesday fined a subsidiary of the UK-based Vedanta mining group 1 billion rupees (18.4 million U.S. dollars) for polluting the environment in the southern state of Tamil Nadu.

Sterlite, a subsidiary of the Vedanta, runs a copper smelting plant in the state's Tuticorin town.

The apex court, however, said gave the company five years to pay the compensation, but refused to direct closure of the plant, thus setting aside the High Court in state capital Chennai's 2010 order on closing it for "letting out effluents into air and water which is having a devastating impact".

"Amount less than Rs 100 crore (1 billion rupees) would not have the desired impact," a bench headed by Justice A.K. Patnaik said, adding that "compensation must act as a deterrent".

Sterlite, which employs 3,000 people in Tamil Nadu, has always insisted that the plant used a smelt process that was internationally accepted. "It adheres to the highest standards of environment, health and safety practices, bench marked to international standards," the company says.

The plant was last week ordered by the state pollution board to shut down after a gas leak, followed by complaints of breathing problems by locals.