A) ABSTRACT / HEADNOTE

The Supreme Court of India examined the legality of the earlier judgment delivered in Vanashakti v. Union of India, 2025 SCC OnLine SC 1139 through a review petition filed by the Confederation of Real Estate Developers of India (CREDAI). The controversy revolved around the validity of the 2017 Notification and the 2021 Office Memorandum (OM) issued by the Ministry of Environment, Forest and Climate Change (MoEF&CC) permitting grant of ex-post facto Environmental Clearance (EC) to projects which commenced operations without obtaining prior environmental clearance under the Environment Impact Assessment Notification, 2006.

The earlier judgment had struck down the 2017 Notification and the 2021 OM as illegal, holding that ex-post facto environmental clearance is alien to environmental jurisprudence. The Court had relied primarily on precedents including Common Cause v. Union of India (2017) 9 SCC 499 and Alembic Pharmaceuticals Ltd. v. Rohit Prajapati (2020) 17 SCC 157.

In the present review petition, the petitioner argued that relevant precedents such as Electrosteel Steels Ltd. v. Union of India (2023) 6 SCC 615, D. Swamy v. Karnataka State Pollution Control Board (2023) 20 SCC 469 and Pahwa Plastics Pvt. Ltd. v. Dastak NGO (2023) 12 SCC 774 were not considered. According to the petitioner, these decisions recognised that although prior environmental clearance is the norm, ex-post facto approval may be granted in exceptional cases, subject to environmental safeguards and penalties.

The Supreme Court therefore re-examined the doctrine of precautionary principle, polluter pays principle, and principle of proportionality within environmental governance. The Court analysed the statutory framework under the Environment (Protection) Act, 1986 and the Environment (Protection) Rules, 1986.

The judgment clarified the legal position that ex-post facto EC cannot be granted routinely, yet it is not absolutely prohibited under the environmental regulatory regime. Where projects comply with environmental norms and denial of approval would cause disproportionate economic and social consequences, regulatory authorities may adopt a balanced approach.

This case therefore significantly contributes to Indian environmental jurisprudence by reconciling strict environmental protection with pragmatic regulatory governance, reaffirming that environmental law must balance ecological protection with sustainable development and economic realities.

Keywords

Environmental Clearance, Ex-Post Facto Approval, Environment Protection Act 1986, Environmental Jurisprudence, Sustainable Development, Precautionary Principle.

B) CASE DETAILS

i) Judgement Cause Title

Confederation of Real Estate Developers of India (CREDAI) v. Vanashakti & Another

ii) Case Number

Review Petition (Civil) Diary No. 41929 of 2025
in Writ Petition (Civil) No. 1394 of 2023

iii) Judgement Date

18 November 2025

iv) Court

Supreme Court of India

v) Quorum

Chief Justice B.R. Gavai and companion judges

vi) Author of Judgment

Chief Justice B.R. Gavai

vii) Citation

2025 INSC 1326

viii) Legal Provisions Involved

• Section 3 of the Environment (Protection) Act, 1986
• Section 19 of the Environment (Protection) Act, 1986
• Rule 5 of the Environment (Protection) Rules, 1986
• Environment Impact Assessment Notification, 2006
• MoEF&CC Notification dated 14 March 2017
• Office Memorandum dated 7 July 2021

ix) Judgments Overruled by the Case

None expressly overruled.

x) Law Subjects Involved

Environmental Law
Constitutional Law
Administrative Law
Environmental Governance

xi) Counsels Appearing

• Kapil Sibal – for State of Karnataka
• Mukul Rohatgi – for Review Petitioner (CREDAI)
• Tushar Mehta – Solicitor General for Union of India
• Anand Grover, Raju Ramachandran, Gopal Sankaranarayanan, Sanjay Parikh – for respondents.

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises from the regulatory regime governing environmental clearances for industrial and infrastructure projects in India. Under the Environment Impact Assessment Notification, 2006, every project falling under specified categories must obtain prior environmental clearance before commencing operations. The notification was issued under Section 3 of the Environment (Protection) Act, 1986, empowering the Central Government to regulate industrial activities in order to protect environmental quality.

However, many projects across India commenced operations without obtaining prior environmental clearance. In response, the government issued the 2017 Notification to establish a mechanism enabling such projects to apply for environmental clearance after commencement of operations. The objective was to bring defaulting projects within the environmental regulatory framework rather than allowing them to operate illegally without oversight.

Subsequently, the National Green Tribunal directed the government to develop a proper standard operating procedure for handling violation cases. Consequently, the 2021 Office Memorandum introduced a procedural framework for assessing environmental damage, imposing penalties and granting clearance in appropriate cases.

Environmental groups challenged these mechanisms before the Supreme Court, arguing that they legitimised illegal industrial activity and violated environmental principles. The Supreme Court initially struck down the notification and memorandum, stating that ex-post facto environmental clearance undermines environmental jurisprudence.

The present review petition emerged because several stakeholders argued that the earlier decision ignored binding precedents recognising the possibility of ex-post facto environmental clearance in exceptional situations.

D) FACTS OF THE CASE

The petitioner, Confederation of Real Estate Developers of India (CREDAI), filed a review petition seeking recall of the Supreme Court judgment dated 16 May 2025 delivered in Vanashakti v. Union of India. In the earlier judgment the Court invalidated the 2017 Notification and the 2021 Office Memorandum which permitted grant of ex-post facto environmental clearance to projects that had commenced without prior approval.

The earlier decision held that these regulatory mechanisms were inconsistent with environmental law because the concept of ex-post facto clearance contradicts the precautionary principle embedded within environmental jurisprudence. The Court had relied primarily on decisions such as Common Cause v. Union of India and Alembic Pharmaceuticals Ltd. v. Rohit Prajapati.

However, several stakeholders including the Union Government, state governments and infrastructure developers argued that the decision produced severe economic consequences. Numerous large-scale projects such as steel plants, airports and hospital infrastructure had already completed construction and were awaiting environmental clearance under the 2021 procedure. The earlier judgment would effectively require demolition of these projects.

The review petition therefore argued that the Court had not considered important precedents including Electrosteel Steels Ltd. v. Union of India and D. Swamy v. Karnataka State Pollution Control Board which recognised that ex-post facto environmental clearance may be granted in exceptional circumstances subject to penalties and environmental safeguards.

E) LEGAL ISSUES RAISED

i. Whether the 2017 Notification permitting grant of ex-post facto environmental clearance is legally valid under the Environment (Protection) Act, 1986.

ii. Whether the 2021 Office Memorandum establishing a procedure for handling violation cases is consistent with environmental jurisprudence.

iii. Whether the Supreme Court’s earlier judgment striking down these instruments overlooked binding precedents of coordinate benches.

iv. Whether ex-post facto environmental clearance is absolutely prohibited in Indian environmental law.

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the petitioner submitted that the earlier judgment suffered from error apparent on the face of the record because it relied selectively on precedents without considering the full ratio of those decisions. The petitioner argued that while the judgment cited Common Cause v. Union of India and Alembic Pharmaceuticals Ltd. v. Rohit Prajapati, it ignored the later portions of those judgments which adopted a balanced approach between environmental protection and economic consequences.

The petitioner further contended that several subsequent Supreme Court decisions explicitly recognised the possibility of granting ex-post facto environmental clearance. In Electrosteel Steels Ltd. v. Union of India (2023) 6 SCC 615 the Court held that ex-post facto clearance should not ordinarily be granted but may be allowed in exceptional cases where the project complies with environmental norms and denial would cause disproportionate harm. Similarly in D. Swamy v. Karnataka State Pollution Control Board (2023) 20 SCC 469 the Court held that the Environment Protection Act does not prohibit ex-post facto environmental clearance.

The petitioner argued that the earlier judgment ignored these binding precedents, thereby violating the doctrine of judicial discipline. According to established constitutional practice, a coordinate bench cannot disregard binding precedent without referring the matter to a larger bench.

The petitioner also emphasised the severe consequences of the earlier decision. Infrastructure projects worth thousands of crores had been developed after following the procedures prescribed by the 2021 SOP. If these projects were demolished merely due to procedural irregularities, it would cause immense financial loss and undermine the doctrine of sustainable development, which requires balancing environmental protection with economic progress.

G) RESPONDENT’S ARGUMENTS

The counsels for the respondents argued that the review petition was essentially an attempt to re-argue the entire case. According to established law, review jurisdiction is extremely limited and can only be exercised in cases of error apparent on the face of the record.

The respondents further contended that the 2017 Notification fundamentally undermined environmental governance. By allowing project proponents to seek environmental clearance after commencing operations, the notification incentivised violation of environmental law. The environmental impact assessment process is intended to evaluate ecological consequences before a project begins, not afterwards.

The respondents relied heavily on Alembic Pharmaceuticals Ltd. v. Rohit Prajapati where the Supreme Court held that ex-post facto environmental clearance is inconsistent with environmental jurisprudence and contrary to the precautionary principle. According to the respondents, environmental law prioritises prevention rather than post-facto regularisation.

They further argued that project proponents who knowingly commence projects without obtaining environmental clearance must bear the consequences of their unlawful conduct. Allowing ex-post facto approval would encourage regulatory non-compliance and weaken environmental protection.

H) RELATED LEGAL PROVISIONS

The case primarily involved interpretation of Section 3 of the Environment (Protection) Act, 1986 which empowers the Central Government to take measures for protecting and improving environmental quality. This provision authorises the government to issue notifications regulating industrial activities and imposing environmental safeguards.

The regulatory framework also operates through the Environment Impact Assessment Notification, 2006 which requires prior environmental clearance for specified categories of projects. The objective of the EIA process is to ensure that environmental impacts are assessed through screening, scoping, public consultation and appraisal before project implementation.

The 2017 Notification introduced a mechanism for addressing violation cases by allowing projects which had commenced operations without clearance to apply for environmental approval subject to environmental assessment and penalties. The 2021 Office Memorandum subsequently created a detailed standard operating procedure for evaluating such cases, incorporating the polluter pays principle and the principle of proportionality.

I) PRECEDENTS ANALYSED BY COURT

i. Common Cause v. Union of India (2017) 9 SCC 499

The Court held that environmental clearance must ordinarily be obtained before commencing mining operations. It emphasised that retrospective environmental clearance may cause irreversible environmental damage.

ii. Alembic Pharmaceuticals Ltd. v. Rohit Prajapati (2020) 17 SCC 157

The Supreme Court ruled that administrative circulars permitting ex-post facto clearance were inconsistent with the statutory environmental framework. However, the Court adopted a balanced approach by imposing environmental compensation rather than ordering closure of the industries.

iii. Electrosteel Steels Ltd. v. Union of India (2023) 6 SCC 615

The Court recognised that while prior environmental clearance is mandatory, ex-post facto approval may be granted in exceptional circumstances where the project complies with environmental norms and closure would cause disproportionate harm.

iv. D. Swamy v. Karnataka State Pollution Control Board (2023) 20 SCC 469

The Court upheld the validity of the 2017 Notification and observed that the Environment Protection Act does not absolutely prohibit ex-post facto environmental clearance.

v. Pahwa Plastics Pvt. Ltd. v. Dastak NGO (2023) 12 SCC 774

The Supreme Court reiterated that ex-post facto environmental clearance may be granted in appropriate cases after environmental assessment and imposition of penalties.

J) JUDGEMENT

a) Ratio Decidendi

The Supreme Court held that the earlier judgment required reconsideration because relevant precedents were not adequately examined. The Court clarified that while prior environmental clearance remains the rule, the statutory framework under the Environment Protection Act does not absolutely prohibit ex-post facto clearance.

The Court emphasised that environmental law must adopt a balanced approach. Projects that violate environmental regulations should be penalised, but demolition or closure should not be ordered mechanically if the project can be made environmentally compliant.

b) Obiter Dicta

The Court observed that environmental regulation must reconcile environmental protection with economic development. A rigid approach may cause disproportionate economic and social consequences without necessarily benefiting environmental protection.

K) CONCLUSION & COMMENTS

The judgment represents an important clarification of Indian environmental jurisprudence. The Court recognised that strict adherence to prior environmental clearance is essential for environmental protection, yet acknowledged that practical realities sometimes require regulatory flexibility. By emphasising the principle of proportionality and polluter pays principle, the Court sought to ensure that environmental violations are penalised while avoiding unnecessary economic disruption. The judgment also reinforces the importance of judicial discipline, highlighting that coordinate benches must respect earlier precedents unless the matter is referred to a larger bench.