A bench headed by Justice A K Patnaik said that the environment has been polluted for a long time due to the discharge from the plant of the multinational company and it has to pay compensation.
The court said that the compensation "must act as deterrent" and the amount of compensation should be decided on the basis of financial strength of the company.
It, however, refused to direct closure of the plant and set aside the Madras High Court's 2010 order on closing it down.
Imposing the compensation on the company, the bench said, "Amount less than Rs 100 crore would not have the desired impact."
The apex court directed Sterlite to pay the Rs 100 crore compensation amount over a period of five years to the District Collector of Tuticorin.
The court's judgement would, however, have no bearing on Tamil Nadu Pollution Control Board's (TNPCB) direction of March 30, this year to shut down the copper plant in the wake of alleged noxious gas leak from it, as the apex court's verdict is confined to the high court's 2010 order, according to lawyers.
Sterlite had moved the apex court against the order of the high court which had on September 28, 2010, ordered shutting down of the smelting plant for allegedly failing to comply with environmental norms.
The company, in its special leave petition against the order, had claimed that the high court did not give it a proper hearing and had ignored its submissions.
The apex court had on October 1, 2010, in an interim direction, stayed the operation of the Madras High Court order directing closure of the industry.
TNPCB's March 30 order came a week after an unspecified gas had allegedly leaked from the plant on March 23.
The gas leak had caused mild suffocation, sore throat and eye irritation to several people in the area.
Thereafter, on instructions of the District Collector of Tuticorin, TNPCB had issued a direction to the Vedanta group company to close down the plant.
Sterlite had yesterday moved the National Green Tribunal challenging the TNPCB directive.