India's top court on Tuesday fined British resources giant Vedanta nearly $20 million over pollution from its huge copper smelter, which has just been shut by a new row over a "toxic" gas leak.

The court told Sterlite Industries, a unit of London-listed Vedanta Resources, to pay one billion rupees ($18.4) over five years for air pollution from its copper plant -- India's biggest -- in Tamil Nadu state's port city of Tuticorin.

"Compensation must act as a deterrent and any amount less than one billion rupees would not have the desired impact," the bench headed by Justice A. K. Patnaik ruled.

But the judge set aside a 2010 Madras High Court order to close the copper plant, which produces nearly 400,000 tonnes annually, sending shares of Indian-listed Sterlite soaring nearly three percent.

The Madras court had told Sterlite to shut the plant, one of the world's leading copper smelters which lies in an ecologically fragile coastal area, to protect "mother nature" from "unabated air and water pollution".

Vedanta, controlled by billionaire Anil Agarwal, has frequently been the target of environmental criticism. The company's plans to be a major global metals player rest on developing its Indian assets, and have suffered a string of setbacks.

In 2010, the government blocked Vedanta's plans to mine bauxite in eastern India on land held sacred by tribes to feed its nearby aluminium refinery and blocked the refinery over fears of wrecking the area's fragile eco-system.

And on Tuesday, the 17-year-old Tuticorin plant, which has frequently been targeted by protesters, remained shut due to a new pollution dispute.

Sterlite on Monday announced it had closed the plant following weekend orders issued by the Tamil Nadu state pollution control board after local media alleged a "toxic" gas leak had caused breathing, throat and eye problems among residents.

The Vedanta unit denied in a statement any gas leak and said "key readings of the particular period were well within the permissible range".

Sterlite promised to "fully cooperate" with authorities to resolve the issue and analysts said they expected the shutdown to be short-lived.

Bhavesh Chauhan, an analyst with Mumbai's Angel Broking, said he expected the copper plant to resume operations shortly now that "the Supreme Court has given the order in Sterlite's favour, albeit with a fine".