REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No. 1526 of 2016

Alembic Pharmaceuticals Ltd.                     ...Appellant

Versus

Rohit Prajapati & Ors.                            ...Respondents

With

Civil Appeal No 3175 of 2016

With  

Civil Appeal Nos 6604-6605 of 2016

And With  

Civil Appeal No 1555 of 2017

1

J U D G M E N T  

Dr Dhananjaya Y Chandrachud, J

1. By a judgment dated 8 January 2016, the Bench of the National Green

Tribunal1 for the Western Zone held that a circular issued by the Union Ministry of

Environment  and  Forests2 on  14  May  2002  is  contrary  to  law.  The  circular

envisaged the grant of ex post facto environmental clearances. The NGT issued

a slew of directions including the revocation of environmental clearances and for

closing down industrial units operating without valid consents. On 17 May 2016,

the NGT dismissed an application for review filed by one of the affected industrial

units. The industrial units and MoEF are in appeal3.  

2. The Environmental  Impact  Assessment4 notification of  27 January 1994

mandated  prior  Environmental  Clearances5 for  setting  up  and  expansion  of

industrial projects falling within thirty categories. The deadline for obtaining an EC

under the EIA notification of 1994 was extended by various circulars to 31 March

1999 and thereafter to 30 June 2001. By the circular of 14 May 2002, which was

quashed by the NGT, MoEF extended the period till  31 March 2003 for those

industrial units which had gone into production without obtaining an EC under the

EIA notification of 1994 to apply for and obtain an ex post facto EC. The circular

indicated that it had been decided:

1 “NGT” 2 “MoEF” 3   Civil  Appeal no 1526 of  2016 (Alembic Pharmaceuticals Limited);  Civil  Appeal no 3175 of 2016 (United

Phosphorus Limited); Civil Appeal nos 6604-6605 of 2016 (Unique Chemicals); and Civil Appeal no 42756 of 2016 (Union of India)

4 “EIA” 5 “EC”

2

“...  to  extend  the  deadline  upto  31  March  2003  so  that defaulting units could avail of this last and final opportunity to obtain ex-post-facto environmental clearance...”  

3. The circular of 14 May 2002, allowed for  ex post facto ECs, subject to a

graded contribution into an earmarked fund based on the investment cost of the

project. The first and the second respondents challenged the circular of 14 May

2002  before  the  High  Court  of  Gujarat.  The  proceedings  were  subsequently

transferred to the NGT. The NGT by its decision dated 8 January 2016 held that

the law did not  permit  the grant  of  an  ex post  facto clearances and that  the

circular of 14 May 2002 was an internal communication and did not override the

provisions of the EIA notification dated 27 January 1994 which had been issued

in  exercise  of  statutory  powers  conferred  by  Section  3  of  the  Environment

(Protection) Act 19866.  

4. Having held that the concept of an “ex post facto environmental clearance”

was not sustainable with reference to any provision of law, the NGT issued the

following directions: (i) The authorities of  the Union of  India,  including the MoEF,   State of

Gujarat, Gujarat Pollution Control Board7 and District Collectors shall

not  grant  consent  for  an  industrial  activity  covered  by  the  EIA

notification of 1994 without the steps mandated by the notification such

as screening, scoping, public hearing and decision being fulfilled; (ii) The ECs granted to the industrial units of the sixth to ninth respondents

shall be revoked; (iii) All the industrial activities which were being operated without a valid EC

and consent to operate shall be closed down within one month;

6 “Environment Protection Act 1986” 7 “GPCB”

3

(iv) Each of the units shall deposit a compensation of  ₹ 10 lakhs for having

caused environmental degradation; and  (v) The  amount  deposited  shall  be  used  for  the  restoration  of  the

environment  in  and around the  industrial  area  of  Ankleshwar  in  the

State of Gujarat.

5. The private respondents before the NGT who were affected by the above

directions are:

(i) United Phosphorous Ltd - the sixth respondent;

(ii) Unique Chemicals - the seventh respondent;

(iii) Darshak Private Limited - the eight respondent; and

(iv) Nirayu Private Limited - the ninth respondent.

The private respondents are engaged in the manufacture of pharmaceuticals and

bulk drugs at the industrial area of Ankleshwar in the State of Gujarat. Alembic

Pharmaceuticals Limited is the appellant in the lead appeal before this Court.

Darshak Private Limited merged with the appellant in 2002 pursuant to a scheme

of amalgamation sanctioned by the High Court of Gujarat. Nirayu Private Limited

was acquired by the appellant under a slump sale on 1 January 2008. Following

this exercise, the manufacturing units of erstwhile Darshak Private Limited and

Nirayu  Private  Limited  have  come  to  be  known  as  API  –  I  and  API  –  II,

respectively.

EIA Notification of 1994

4

6. The EIA notification  was  issued  by  the  MoEF on  27  January  1994,  in

exercise of its powers under Section 3(1) and clause (v) of Section 3(2) of the

Environment  Protection  Act  1986  read  with  Rule  5(3)(d)  of  the  Environment

(Protection) Rules 19868. The EIA notification stipulated that:  

“…on and form the date of publication of this notification in the  Official  Gazette,  expansion  or  modernization  of  any activity (if pollution load is to exceed the existing one) or new project  listed in Schedule I  to this notification,  shall  not  be undertaken in any part of India unless it has been accorded environmental  clearance  by  the  Central  Government  in accordance with  the procedure hereinafter  specified in  this notification.”    

7. The EIA notification stipulated that any person who desired to undertake a

new project, or the expansion or modernisation of an existing industry, listed in

Schedule-I  shall  submit  an  application  to  the  Secretary,  MoEF.  Entry  8  of

Schedule  -  I  includes  industries  engaged  in  manufacturing   bulk  drugs  and

pharmaceuticals.  The  application  had  to  be  accompanied  by  a  project  report

including,  inter  alia, an  EIA report  and  an  environmental  management  plan

prepared in  accordance with  the guidelines issued by the Union Government

through the MoEF from time to time. The notification spelt out the procedure to be

followed  upon  the  submission  of  the  application  including  an  evaluation  and

assessment by a stipulated agency. Clause 3(a)9 provided that:  “...no construction work primarily or otherwise relating to the setting  up  of  the  project  may  be  undertaken  till  the environmental and site clearances is obtained.”

8. On 10 April 1997, the EIA notification of 1994 was amended by making a

public hearing mandatory for thirty categories of activities which required an EC.

On 5 November 1998, the MoEF issued a circular recording that though the EIA

8 “Environment Protection Rules” 9 Which was (substituted on 4 May 1994)

5

notification of 1994 was in effect since 27 January 1994, units covered by the

notification had been set up without obtaining prior ECs. The GPCB had despite

the  advice  of  the  MoEF  allowed  units  to  operate  without  valid  ECs.  In  this

backdrop, the circular of 5 November 1998 provided that:

“Since number of  such proposals  are large in number  and many  of  the  units  have  not  applied  for  environmental clearance genuinely out of ignorance it  has been decided to consider  their  case  for  environmental  clearance on merits. This will apply only to those proposals which are received in the  Ministry  till  31st March  1999.  Simultaneously  State Pollution  Control  Boards  have  also  been  advised  to  issue requisite  notices  to  the  units  to  apply  for  environmental clearance. In case of those units which have already started production, we may consider the proposals on merits and if necessary suggest additional  mitigative measures. A formal environmental clearance will  be issued in these cases after approval by the competent authority.”  

9. By  a  circular  dated  27  December  2000,  the  MoEF  directed  all  state

pollution control boards to issue fresh notices to all defaulting units and extended

the deadline to obtain ECs from 31 March 1999 to 30 June 2001. Inspite of this,

there were delinquent units which had either failed to apply for an EC or had

failed to complete the requirement of a public hearing before the extended date.

By the circular of 14 May 2002, the deadline was extended to 31 March 2003.

The circular stated that:

“Keeping the foregoing in view, it has been decided to extend the  deadline  upto  31  March  2003  so  that  defaulting  units could avail of this last and final opportunity to obtain ex-post- facto environmental clearance. This would apply to all such units,  which  had  commenced  construction activities/operations  without  obtaining  prior  environmental clearance in  violation of  the EIA Notification of  27 January 1994.”    

6

10. In terms of the circular, those defaulting units seeking an expansion were

to earmark a separate fund for “eco-development measures including community

development measures in Indian projects areas” on a graded scale linked to the

investment in the project. This was indicated in a tabulated form which read thus:

A Projects with investment upto ₹ 100 crores  1 % of the project cost with a minimum of ₹ 50,000

B Projects with investment beyond ₹ 100 crores and upto ₹ 1,000 crores

0.5%  of  the  project  cost subject to a minimum of  ₹ 1 crore  and  a  maximum  of  ₹ 2.5 crores

C Projects with investment exceeding ₹ 1000 crores 0.25  %  of  the  project  cost subject to a maximum of ₹ 5 crores  

Units which failed to comply with the extended deadline were to be proceeded

against.  

The challenge to the ex post facto circular dated 14 May 2002  

11. A petition was instituted under Article 226 of the Constitution by the first

and second respondents in  the present  lead appeal before the High Court  of

Gujarat challenging the circular dated 14 May 2002 and seeking the revocation of

the clearances which were granted to the industrial units in question. The case

was transferred to the Western Zonal Bench of the NGT by the High Court of

Gujarat on 21 April 2015. The NGT by its judgment dated 8 January 2016 set

aside the circular dated 14 May 2002 and issued consequential directions which

have been noted in the earlier part of this judgment. Unique Chemicals Limited,

the seventh respondent before the NGT, preferred a review petition against the

7

judgment of the NGT  which was dismissed. The affected industrial units and the

MoEF are in appeal before this Court.

12. The issue to be adjudicated is whether in view of the requirement of a prior

EC under the EIA notification of 1994, a provision for an  ex post facto EC to

industrial  units could be validly made by means of the circular dated 14 May

2002.  

13. During  the  course  of  the  submissions,  Mr  Kapil  Sibal,  learned  Senior

Counsel appearing on behalf of Alembic Pharmaceuticals Limited has urged the

following submissions: (i) The issue   is  academic  as  both  the units  of  the  appellant  have been

granted an EC for subsequent expansion to a much higher capacity after

conducting a public hearing and upon consideration of all material factors.

The relevant details in support of the submission are thus:

Darshak Private Limited (API - I)  

(a) An EC was granted on 14 May 2003 for a capacity  of  15 MT per

month;

(b) An EC was granted on 16 April 2008 for expansion of capacity from

15 MT per month to 25 MT per month; and

(c) An EC was granted on 31 January 2017 for a further expansion of

capacity from 25 to 75 MT per month.                                       

Nirayu Private Limited (API – II)

(a) An EC was granted on 14 May 2003 for a capacity  of  47 MT per

month; and

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(b) An EC was granted on 20 December 2016 for an expanded capacity

of 300 MT per month.  (ii) The  EIA  notification  of  1994  omits  the  expression  “prior”.  This  is

contrasted  with  the  EIA notification  dated  14  September  2006  which

stipulates the requirement of a “prior” EC. While a prior EC is mandatory

under the notification dated 14 September 2006,  it  was not  under the

earlier notification dated 27 January 1994; (iii) Once  an  EC  has  been  granted  for  a  much  larger  capacity  after

conducting a prior public hearing, the question as to whether the first EC

for a lesser capacity was valid, is of no significance. Since both the units

have an EC for a larger capacity, the satisfaction for granting an EC for a

lesser capacity would be subsumed; (iv) The EIA notification of 1994 did not apply to the two units of the appellant

(API  –  I  and  API  –  II).  Clause  8  of  the  explanatory  note  to  the  EIA

notification of 1994 provides that where a no objection certificate10 from

GPCB has been obtained before 27 January 1994, an EC is not required.

In this context it has been submitted that: (a) On 17 July 1992, GPCB granted an NOC to establish and manufacture

to the manufacturing unit of API - I; (b) On 29 May 1997 and 27 July 1998, GPCB granted an authorisation to

operate under the Air (Prevention and Control of Pollution) Act 198111to

API - I; (c) On 11 October 1999, GPCB granted API – I an authorisation to operate

under the Water (Prevention & Control of Pollution) Act 197412; (d) On 24 May 1985,GPCB granted API  -  II  a  consent  order  under the

Water Act;

10 “NOC” 11 “Air Act” 12 “Water Act”

9

(e) On 9 October 1991, GPCB granted a site clearance certificate to API –

II; (f) On 12 May 1993,GPCB granted an NOC to API - II to establish and for

the manufacture drugs; (g) On  23  September  1993  and  13  November  1999,  GPCB granted  a

consent under the Water Act to API - II; (h) On 14 December 2001, GPCB granted an authorisation to API - II to

operate  under  the  Hazardous  Waste  (Management  and  Handling)

Rules 198913; and (i) On 1 September 1999, 14 December 2001 and 7 March 2008,  GPCB

granted a consolidated consent and authorisation to API - II.

(v) A public hearing was not mandatory under the EIA notification of 1994.

Clause 4 of the explanatory note  confers a discretion to call for a hearing

in  case  of  projects  that  may  cause  large  scale  displacement  or  with

severe environmental ramifications;       (vi) If  the order of the NGT prevails, the appellant would be prejudiced and

suffer an irreparable loss. The appellant has made an investment of over

₹ 293 crores and employed a labour force of over 1000 workers; and  (vii) The first  respondent  who was the petitioner  before  the NGT chose to

target only the appellant and two others out of over ninety different entities

which  were  granted  similar  clearances.  This  cherry  picking  of  certain

select units demonstrates the mala fide nature of the proceedings.

14. During  the  course  of  his  submissions,  Mr  C  U  Singh,  learned  Senior

Counsel  appearing  on  behalf  of  United  Phosphorus  Limited  has  urged  the

following submissions: (i) The circular dated 5 November 1998,  by which the deadline for obtaining

ECs under the EIA notification of 1994 was extended to 30 June 2001 was

13 “Hazardous Waste Rules”

10

not challenged. The circular dated 5 November 1998 specifically noted that

the  State  Pollution  Control  Board  had  despite  the  advice  of  the  MoEF

allowed units to operate without valid ECs; (ii) United  Phosphorus  Limited  had  all  requisite  ECs that  were  granted  by

GPCB for the existing and expanded capacity. In this context it has been

submitted:  (a)  An EC was granted on 17 July 2003 for manufacturing Phorate and

Terbuphose (300 MT per month combined) and Acephate (80 MT per

month); (b) An EC was granted on 15 April 2008 for the expansion of capacity for

manufacturing  pesticides  and  intermediate  products.  Production  of

Phorate and Terbuphose was increased from 300 MT per month to 500

MT per month, and production of Acephate was increased to 1000 MT

per month;  (c) An EC was granted on 10 January 2020 for an enhanced capacity of

9546 MT per month;   

(iii) The  complainant,  the  first  respondent  in  the  lead appeal,  attended the

public hearing held on 16 January 2002 prior to the grant of an EC on 17

July 2003 and raised no objections; (iv) If  the order of the NGT prevails, the appellant would be prejudiced and

suffer an irreparable loss. The appellant has employed approximately 400

permanent and contract workers at its manufacturing unit; and     (v) The  challenge  by  the  first  and  second  respondents  was  to  the  EIA

notification  1994  which  did  not  apply  to  the  manufacturing  unit  of  the

appellant. At the relevant time, the appellant was exempted from obtaining

an EC since it  had all  requisite permissions. In this context it  has been

submitted:

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(a) On 3 October 1992, GPCB granted an NOC to the appellant for setting

up a manufacturing unit; (b) On 17  November  1995 and  2  April  1996,  GPCB granted  NOCs for

expansion and manufacturing additional products; (c) On  27  August  2009,  GPCB  granted  a  consolidated  consent  and

authorisation to the appellant’s manufacturing unit; (d) On  25  July  2012,  GPCB  issued  an  NOC  for  the  expansion  of  the

appellant’s manufacturing unit; and (e) On  11  May  2015  and  27  May  2017,GPCB  granted  a  consolidated

consent and authorisation for expanded operations.

15. Appearing  for  Unique  Chemicals  Limited,  Dr  Abhishek  Singhvi,  learned

Senior Counsel urged the following submissions:

(i) The NGT did not have the jurisdiction to entertain the petition filed by the

first and second respondents in view of the decision of this Court in Techi

Tagi Tara v Rajendra Singh Bhandari & Ors14;

(ii) The  EC  granted  in  2007  superseded  the  earlier  EC  granted  in  2002.

Therefore, the question of validity of the earlier EC does not arise. In this

context it has been submitted:  

(a) An EC was granted on 23 December 2002 for a capacity of 78.02 MT

per month for manufacturing  bulk drugs and intermediates;

(b) An EC was granted on 8 August 2007 for an increase in manufacturing

capacity from 78.02 MT per month to 116.12 MT per month; and

(c) An  EC  was  granted  on  30  June  2018  for  an  increase  in  the

manufacturing capacity  to 290 MT per month. On 10 April 2019, the

14 2018 (11) SCC 734

12

above  EC  was  amended  allowing  an  increase  in  the  number  of

products permitted to be manufactured by the appellant.  

(iii) The ex post facto clearance granted to the appellant cannot be set aside

by the order  of  the NGT in terms of  the decision of  this  Court  in  Goa

Foundation v  Union  of  India15,  where  95  industrial  projects  were

accorded  ex post facto clearances in terms of the circular dated 14 May

2002. Accordingly, no question of closing down the manufacturing units of

the appellants can arise;

(iv) The requirement of an ex post facto public hearing was introduced by an

amendment in 1997 to the EIA notification of 1994. The legality of an ex

post facto public hearing has been upheld by this Court in Lafarge Umiam

Mining Pvt Ltd v Union of India16;  

(v) In various cases where there has been a violation of law, this court has not

ordered the closure considering the significant investment and expansion

undertaken by the industry. In  Electrotherm Ltd v  Patel17, this Court did

not order closure of the plant since a  significant  expansion had already

taken place and the industry was functioning;

(vi) If  the order of the NGT prevails, the appellant would be prejudiced and

suffer an irreparable loss. The appellant has employed approximately 400

employees at its manufacturing unit;     

15 (2005) 11 SCC 559 16 (2011) 7 SCC 338 17 (2016) 9 SCC 300

13

(vii) The EIA notification 1994 did not apply to the manufacturing unit  of the

appellant.  The  manufacturing  unit  of  the  appellant  was  exempt  from

obtaining an EC as it had all the requisite permissions. In this context it has

been submitted:

(a) On 30 September 1995, GPCB issued an ‘air consent order’ under the

Air Act; (b) On 9 January 1996 GPCB issued an authorisation under the Hazardous

Waste Rules; (c) On 16 April 1996 GPCB issued a ‘water consent order’ under the Water

Act; (d) On  15  April  2009  GPCB  granted  a  consolidated  consent  and

authorisation to the manufacturing unit of the appellant; (e) On 11 June 2010 and 26 June 2012,  GPCB amended the consolidated

consent and authorisation granted to the appellant on 13 April 2009; (f) On 30 May 2011, GPCB granted consent to set up a gas-based power

generation plant having a capacity of 400 KW at the manufacturing unit

of the appellant; (g) On 2 November 2013, GPCB granted a fresh consolidated consent and

authorisation to the manufacturing unit of the appellant; and (h) On 25 January 2019 and 25 October 2019, GPCB granted a fresh and

revised  consolidated  consent  and  authorisation,  respectively  for  an

increase in the number of products  permitted to be manufactured at the

manufacturing unit of the appellant.

16. Appearing  for  the  first  and  second  respondents,  Mr  Siddharth  Seem,

learned counsel has urged the following submissions before this Court: (i) The  circular  dated  14  May  2002  is  illegal  because  environmental

jurisprudence does not recognise any concept of ex post facto clearances.

Any ex post facto approval  is void and the benefit of the circular cannot be

14

given to such an industry.  In this regard, reliance was placed upon the

decision of this Court in Common Cause v Union of India18; (ii) The circular dated 14 May 2002 does not mention its source or authority of

law.  The  source  of  the  circular  is  not  traceable  to  Section  3  of  the

Environment Protection Act 1986 because the circular does not protect or

improve the quality of the environment. The circular allows defaulters to get

ex post facto clearances and does not encourage compliance with the law;  (iii) The Comprehensive Environmental Pollution Index report by the Central

Pollution Control Board indicates that the air, water and soil parameters in

and around the industrial area of Ankleshwar in the State of Gujarat, where

the three industrial units are located, are among the most critical in India:

and (iv) Even if this court were to hold that the closure of the industries should not

be  ordered,  compensation  should  be  directed  to  be  paid  by  them  for

restoration of the environment. These industries have brazenly operated

for years without environmental clearances.  

17. The rival submissions fall for our consideration.

18. We first address the challenge to the jurisdiction of the NGT to strike down

rules or regulations made under the Environment Protection Act 1986. In  Tamil

Nadu Pollution Control Board v Sterlite Industries (I)  Ltd19 (“Sterlite”) this

Court analysed the adjudicatory functions which have been entrusted to the NGT

under the National Green Tribunal Act 201020. Justice R F Nariman, speaking for

a two judge Bench held that while exercising its jurisdiction under Section 16, the

NGT  cannot  strike  down  rules  or  regulations  made  under  the  Environment

18 (2017) 9 SCC 499 19 2019 SCC Online SC 221 / Civil Appeal nos 4763-4764 of 2013 20 “NGT Act”

15

Protection Act 1986. In coming to this conclusion, the Court relied on the decision

in Bharat Sanchar Nigam Limited v Telecom Regulatory Authority of India21,

where the appellate power contained in Section 14 of the Telecom Regulatory

Authority  of  India  Act22 1997 was interpreted.  After  adverting  to  this  decision,

Justice R F Nariman concluded that:

“53…the NGT has no general power of judicial review akin to that  vested  under  Article  226  of  the  Constitution  of  India possessed by the High Courts of this country.”

19. While placing reliance on the above decision, Mr ANS Nadkarni, learned

Additional Solicitor General made an attempt to demonstrate that the power to

issue the circular dated 14 May 2002 that extended the deadline for defaulting

units to avail of an  ex post facto clearance until 30 March 2003 could well be

traceable to Section 3 of the Environment Protection Act 1986. Section 3, to the

extent relevant, provides thus:

“Section 3. Power of central government to take measures to protect  and  improve  environment.-  (1)  Subject  to  the provisions of this Act, the Central Government, shall have the power to take all such measures as it deems necessary or expedient  for  the  purpose  of  protecting  and  improving  the quality  of  the  environment  and  preventing  controlling  and abating environmental pollution.”  

20. Section  3(1)  is  an  enabling  provision  for  the  Central  Government  to

undertake all such measures as it deems necessary or expedient for the purpose

of  protecting  and  improving  the  quality  of  the  environment  and  preventing,

controlling and abating environmental pollution. This limb of the submission of the

21 (2014) 3 SCC 222 22 “TRAI Act”

16

Additional Solicitor General is crucial to the issue as to whether the NGT has

exceeded its jurisdiction since the decision in Sterlite holds that the NGT, while

exercising its appellate jurisdiction, “cannot strike down rules or regulations made

under this Act”. In the present case, to demonstrate that the NGT did not have

the jurisdiction to strike down the circular dated 14 May 2002, it was urged that

the circular was issued by the MoEF pursuant to its powers under Section 3 of

the Environment Protection Act 1986. There is an inherent difficulty in accepting

the submission. Before this Court, the Union of India has not pleaded the case

that  the  circular  dated  14 May  2002 is  a  measure  which  is  traceable  to  the

provisions  of  Section  3.  On  the  contrary,  in  its  pleadings  the  Union  of  India

construed it as a “purely administrative decision”. Ground (iii) in paragraph 3 of

the memo of appeal states the position of the Union government:

“Because the Hon’ble Tribunal failed to appreciate that after the  EIA,  Notification  1994  the  opportunity  to  seek  ex-post facto  environmental  clearance  was  given  to  industries  in background of far reaching impact in terms of direct loss of livelihood in the employees working in the units which also supply inputs to other units and their indirect employment.  It was submitted to the Hon’ble High Court of Gujarat that issuance  of  circular  dated 14/05/2002,  based  on which environmental  clearance  was  given,  was  purely  an administrative decision before taking stringent action.”

   (Emphasis supplied)

21. The omission in the appeal to make any attempt to sustain the circular

dated  14  May  2002  with  reference  to  the  provisions  of  Section  3  of  the

Environment  Protection  Act  1986  is  significant.  For  an  action  of  the  Central

government to be treated as a measure referable to Section 3 it must satisfy the

statutory  requirement  of  being  necessary  or  expedient  “for  the  purpose  of

protecting  and  improving  the  quality  of  the  environment  and  preventing,

17

controlling and abating environment pollution”. The circular dated 14 May 2002 in

fact  does  quite  the  contrary.  It  purported  to  allow  an  extension  of  time  for

industrial  units  to  comply with the requirement  of  an EC. The EIA notification

dated  27  January  1994  mandated  that  an  EC  has  to  be  obtained  before

embarking on a new project or expanding or modernising an existing one. The

EIA notification of 1994 has been issued under the provisions of the Environment

Protection Act 1986 and the Environment Protection Rules 1986, with the object

of  imposing  restrictions  and  prohibitions  on  setting  up  of  new  projects  or

expansion or modernisation of existing project. The measures are based on the

precautionary principle and aim to protect the interests of the environment. The

circular  dated  14  May  2002  allowed  defaulting  industrial  units  who  had

commenced activities  without  an EC to  cure  the default  by  an  ex post  facto

clearance. Being an administrative decision, it is beyond the scope of Section 3

and cannot be said to be a measure for the purpose of protecting and improving

the quality of the environment. The circular notes that there were defaulting units

which had failed to comply with the requirement of obtaining an EC as mandated.

The circular provided for an extension of time and inexplicably introduced the

notion of an  ex post facto  clearance. In effect, it impacted the obligation of the

industrial units to be in compliance with the law. The concept of  ex post facto

clearance is fundamentally at odds with the EIA notification dated 27 January

1994. The EIA notification of 1994 contained a stipulation that any expansion or

modernisation of an activity or setting up of a new project listed in Schedule – I

“shall  not  be  undertaken  in  any  part  of  India  unless  it  has  been  accorded

environmental clearance”. The language of the notification is as clear as it can be

18

to indicate that the requirement is of a prior EC. A mandatory provision requires

complete compliance. The words “shall not be undertaken” read in conjunction

with the expression “unless” can only have one meaning : before undertaking a

new  project  or  expanding  or  modernising  an  existing  one,  an  EC  must  be

obtained. When the EIA notification of 1994 mandates a prior EC, it proscribes a

post  activity  approval  or  an  ex  post  facto permission.  What  is  sought  to  be

achieved by the administrative  circular  dated 14 May 2002 is  contrary  to the

statutory notification dated 27 January 1994. The circular dated 14 May 2002

does not stipulate how the detrimental effects on the environment would be taken

care  of  if  the  project  proponent  is  granted  an  ex  post  facto EC.  The  EIA

notification  of  1994  mandates  a  prior  environmental  clearance.  The  circular

substantially amends or alters the application of the EIA notification of 1994. The

mandate  of  not  commencing  a  new project  or  expanding  or  modernising  an

existing  one  unless   an  environmental  clearance  has  been  obtained  stands

diluted and is rendered ineffective by the issuance of the administrative circular

dated  14  May  2002.  This  discussion  leads  us  to  the  conclusion  that  the

administrative circular is not a measure protected by Section 3. Hence there was

no jurisdictional bar on the NGT to enquire into its legitimacy or vires. Moreover,

the administrative circular is contrary to the EIA Notification 1994 which has a

statutory character. The circular is unsustainable in law.  

22. Mr Kapil  Sibal,  learned Senior Counsel  appearing on behalf  of  Alembic

Pharmaceuticals Limited sought to urge that the EIA notification dated 27 January

1994 contains an omission of the expression “prior” and contrasted this with the

EIA notification dated 14 September 2006 which stipulates the requirement of a

19

“prior” EC. This, in his submission is an indicator that a prior EC is mandatory

under the notification dated 14 September 2006 but was not so under the earlier

notification dated 27 January 1994. This interpretation was not supported by Mr

ANS Nadkarni, learned Additional Solicitor General who categorically submitted

that the requirement under the notification dated 27 January 1994 was of a prior

EC. We are unable to accept the submission of Mr Kapil Sibal. The terms of the

EIA notification dated 27 January 1994 leave no manner of doubt that a prior EC

was mandated before a new project was commenced or before undertaking any

expansion or modernisation of an existing project. The absence of the expression

“prior” in the EIA notification dated 27 January 1994 makes no difference since

the words “shall not be undertaken…unless”  postulate the requirement of a prior

EC. Speaking for a two judge Bench of this Court in Common Cause v Union of

India23 (“Common Cause”),  Justice  Madan  B  Lokur  rejected  the  submission

which was urged on behalf of  mining leaseholders that:  

“108… the possibility of getting an ex post facto EC was a signal to the mining leaseholders that obtaining an EC was not mandatory or that it if was not obtained, the default was retrospectively condonable.”  

Disagreeing with the submission, the Court held:

“125. We are not in agreement with the learned counsel for the mining leaseholders. There is no doubt that the grant of an EC cannot be taken as a mechanical exercise. It can only be granted after due diligence and reasonable care since damage to the environment can have a long-term impact. EIA 1994 is therefore very clear that if expansion or  modernisation  of  any  mining  activity  exceeds  the existing pollution load, a prior EC is necessary and as already  held  by  this  Court  in M.C.  Mehta [M.C. Mehta v. Union of India, (2004) 12 SCC 118] even for the

23 (2017) 9 SCC 499

20

renewal of a mining lease where there is no expansion or modernisation of  any activity,  a  prior  EC is  necessary. Such importance having been given to an EC, the grant of  an  ex post  facto  environmental  clearance would  be detrimental  to  the  environment  and  could  lead  to irreparable degradation of the environment. The concept of an ex post facto or a retrospective EC is completely alien to environmental jurisprudence including EIA 1994 and EIA 2006. We make it clear that an EC will  come into force not earlier than the date of its grant.”

   (Emphasis supplied)

23. The concept of an  ex post facto  EC is in derogation of the fundamental

principles  of  environmental  jurisprudence  and  is  an  anathema  to  the  EIA

notification dated 27 January 1994. It is, as the judgment in  Common Cause

holds, detrimental to the environment and could lead to irreparable degradation.

The reason why a retrospective EC or an  ex post facto  clearance is  alien to

environmental jurisprudence is that before the issuance of an EC, the statutory

notification warrants a careful application of mind, besides a study into the likely

consequences of a proposed activity on the environment. An EC can be issued

only after various stages of the decision-making process have been completed.

Requirements  such  as  conducting  a  public  hearing,  screening,  scoping  and

appraisal are components of the decision-making process which ensure that the

likely impacts of the industrial activity or the expansion of an existing industrial

activity are considered in the decision-making calculus. Allowing for an  ex post

facto  clearance would essentially condone the operation of industrial  activities

without  the  grant  of  an  EC.  In  the  absence  of  an  EC,  there  would  be  no

conditions that would safeguard the environment. Moreover, if the EC was to be

ultimately refused, irreparable harm would have been caused to the environment.

In either view of the matter, environment law cannot countenance the notion of an

21

ex  post  facto  clearance.  This  would  be  contrary  to  both  the  precautionary

principle as well as the need for sustainable development.  

24. In  order  to  enable  the  Court  to  assess  the  status  of  compliance,  the

material which has been produced on the record by (i) Alembic Pharmaceuticals

Limited; (ii) United Phosphorous Limited; and (iii) Unique Chemicals Limited has

been compiled in a tabulated form for each of the three industries. For Alembic

Pharmaceuticals Limited, the data for its two industrial units - Darshak Private

Limited  (API  –  I)  and  Nirayu  Private  Limited  (API  –  II)  -  has  been analysed

separately. For each of the three industries, Table A below consists of the list of

permissions, consents and authorisations obtained by the industry from various

authorities. Table B contains a list of ECs which were granted from time to time to

each industrial unit.  The position as tabulated below is based on the material

which has been disclosed on the record of these proceedings :

Table A: List of permissions, consents and authorisations granted to Alembic Pharmaceuticals Limited

Darshak  (API–I)

Date Permission/Consent/Authorisation Granted

17 July 1992 GPCB issued a no objection certificate to establish an industrial unit

for the manufacture of the following items at API–I: (i) Ciprofloxacin (1.25 MT pm); and (ii) Norfloxacin (2.5 MT pm)

11June 1997 GPCB granted no objection certificate  for manufacturing additional

items at API–I 29 May 1997 GPCB issued air consent order authorising to operate API–I 11  July  1997, 12  July  1997 and  27  July 1998

GPCB granted no objection certificate for manufacturing of additional

items at API–I

31 March 1999 GPCB issued air consent order authorising to operate API–I  11  October 1999

GPCB issued water consent order authorising to operate AP–I  

22

Between  27 September 2002  –  23 December 2011

GPCB  issued  various  consents  under  the  Air  Act,  Water  Act  and Hazardous Waste Rules.  

                    Nirayu Private Limited  (API–II) Date Permission/Consent/Authorisation Granted

12 July 1984 Factory license was issued in favour of Nirayu Private Limited 24 May 1985 GPCB issued water consent order authorising  to operate API–II 9 October 1991 GPCB issued a site clearance certificate to establish an industrial unit

and manufacture the following items at API–II: (i) CIMC chloride (2000 kgs pm); and (ii) Cloxacillin sodium (500 kgs pm)

12 May 1993 GPCB granted a no objection certificate to establish an industrial unit and manufacture the following items: (i) Acetone thiosemicarbazone (2 MT pm);  (ii)  2 Mercapta (5 MT pm);  (iii)  Methoxy orthoxymethyl chloride (0.3 MT pm); and (iv) Solvent ether (7 MT pm)

1  September 1993

GPCB issued authorisation to operate API–II  under  the Hazardous Waste Rules  

23  September 1993  

GPCB issued water consent order authorising to operate API–II

4  December 1995

GPCB granted  no  objection  certificate  for  manufacturing  additional

items at API–II 4 October 1996 and  17  April 1998

GPCB issued air consent order to operate API–II

1  September 1999  

GPCB  granted  consolidated  consent  and  authorisation  to  operate

API–II 12  November 1999

GPCB issued water consent order to operate API–II  

14  December 2001

GPCB issued authorisation to operate API–II  under  the Hazardous Waste Rules

Between  27 September 2002  –  6 January 2015

GPCB  issued  various  consents  under  the  Air  Act,  Water  Act  and Hazardous Waste Rules.  

Table B: List of environmental clearances granted to Alembic Pharmaceuticals Limited

Darshak  (API–I)

Date of Application

Date of Public Hearing

EC for Expansion (Quantity) Date EC Granted

21  July 2001

30 January 2002 Manufacturing  of  various  bulk drugs  and  intermediate

14 May 2003 as per the  1994  EIA

23

products with a total capacity of 15 MT pm

notification

8 December 2006

9 October 2007 Expansion  of  total  capacity  of bulk  drugs  from 15 to  25  MT pm

16 April 2008 as per the  2006  EIA notification

16 September 2015

12 June 2015 Expansion  of  total  capacity  of active  pharmaceutical ingredients  from 25 to  75  MT pm

31 January 2017 as per  the  2006  EIA notification

Nirayu Private Limited  (API–II) Date of

Application Date of Public

Hearing EC for Expansion (Quantity) Date EC Granted

20  July 2001

30 January 2002 Manufacturing  of  various  bulk drugs  and  intermediate products with a total capacity of 47 MT pm

14 May 2003 as per the  1994  EIA notification

28  March 2016

12 June 2015 Expansion  of  total  capacity  of active  pharmaceutical ingredients  and  intermediates from 47 to 300 MT pm

20  December  2016 as per the 2006 EIA notification

Table A: List of permissions, consents and authorisations granted to United Phosphorus Limited

Unit no 2 - Plot no 3405 and 3406

Date Permission/Consent/Authorisation Granted

31  January 1992

Gujarat  Industrial  Development  Corporation  granted  land  to  the appellant to establish and run unit no 2

9 March 1992 GPCB issued no objection certificate  for  operation of  unit  no 2  in relation to manufacturing of various products

3 October 1992 GPCB issued no objection certificate to set up a unit to manufacture the following items at unit no 2: (i) Carbendazim; (ii) Quinalphos; and (iii) Paraquat

1993 Unit no 2 commenced manufacturing activities 17  November 1995

GPCB granted no objection certificate for expansion of unit no 2 for manufacturing of two additional products – Phorate and Terbuphose (300 MT pm combined)

2 April 1996 GPCB granted no objection certificate for expansion of unit no 2 for the manufacture of Acephate (80 MT per month)

27 August 2009 GPCB granted a consolidated consent and authorisation to unit no 2 25 July 2012 GPCB issued consent to establish (NOC) for expansion of unit no 2

24

11  May  2015 and  27  April 2017  

GPCB  granted  a  consolidated  consent  and  authorisation  for  the expanded operations

Table B: List of environmental clearances granted to United Phosphorus Limited Unit no 2 - Plot no 3405 and 3406

Date of Application

Date of Public Hearing

EC for Expansion (Quantity) Date EC Granted

21  August 2002

16 January 2002 Manufacturing of Phorate and Terbuphose  (300  MT  pm combined) and Acephate (80 MT per month)

17 July 2003 as per EIA  notification  of 1994

20  October 2007 -

Expansion  of  pesticides  and intermediate products.  -  Production  of  Phorate  and Terbuphose  to  be  increased to 500 MT pm combined   -  Production  of  Acephate  to be increased to 1000 MT pm

April 15 2008 as per EIA  notification  of 2006

- - Enhanced  capacity  of  9546 MT per month (as per written submissions)

10 January 2020 as per  EIA notification of 2006

Table A: List of permissions, consents and authorisations granted to Unique Chemicals Limited

Unit at plot no 5

Date Permission/Consent/Authorisation Granted

14 August 1995 GPCB issued a no objection certificate to establish and run a unit (site clearance) at plot no 5

30  September 1995  

GPCB issued air consent order authorising to operate unit at plot no 5

25  December 1995

GPCB issued a no objection certificate to set up and manufacture the following items at the unit at plot no 5: (i) Dichlotofenance sodium (6 MT pm); (ii) Nifedipine (2 MT pm); (iii) Indolinone (6.9 MT pm); and (iv) Pefloxacin (3 MT pm)

9 January 1996 GPCB issued authorisation under the Hazardous Waste Rules 16 April 1996 GPCB issued water consent order authorising  to operate unit at plot

no 5 24 April 1996 Unit at plot no 5 commenced manufacturing activities 15 April 2009 GPCB granted a consolidated consent and authorisation to the unit at

plot no 5 11  June  2010 and  26  June 2012

GPCB amended the consolidated consent  and authorisation to  the unit at plot no 5 granted on 15 April 2009

30 May 2011 GPCB granted no objection certificate to set up a gas-based power

25

generation plant of a capacity of 400 KW at the unit at plot no 5  2  November 2013

GPCB granted a fresh consolidated consent and authorisation to the unit at plot no 5 for manufacturing of bulk drugs and intermediates

1 July 2016 The appellant was certified as a zero liquid discharge unit 25  January 2019  

GPCB granted a new consolidated consent and authorisation to the unit at plot no 5

25  October 2019  

GPCB issued a revised consolidated consent  and authorisation for increase  in  the  number  of  products  that  were  permitted  to  be manufactured at the unit at plot no 5

Table B: List of environmental clearances granted to Unique Chemicals Limited Unit at plot no 5

Date of Application

Date of Public Hearing

EC for Expansion (Quantity) Date EC Granted

30  June 2001

25  January 2002  

Total capacity 78.02 MT pm of bulk drugs  and  intermediates. Manufacturing  of  (i)  Diclofenac sodium intermediates and derivates (40  MT pm);  (ii)  Nifedipine  and  its intermediates  (2  MT  pm);  (iii) Indelinone  (7   MT  pm);  (iv) Pefloxacin  and  its  intermediates  (3 MT pm); (v) 2 methyl imldazole (15 MT pm); (vi) Phentolamine HCL (10 MT pm);  (vii)  Diltazem HCL (1  MT pm); and (viii) other co-products

23  December 2002 as per EIA notification 1994

12  January 2007  

Exempt  – proposed project  located in  notified industrial area

For an increase in manufacturing of bulk drugs and intermediates from a total capacity from 78.02 MT pm to 116.12 MT pm

For an increase in manufacturing of co-products from a total capacity of 103 MT pm to 297 MT pm

For setting up a captive power plant with 1.3 MW capacity

8  August  2007 as  per  EIA notification 2006

16  March 2018

Exempt  – proposed project  located in  notified industrial area

For an increase in manufacturing of bulk drugs and intermediates from a total capacity from 78.02 MT pm to 290 MT pm by setting up of synthetic organic  chemicals  manufacturing plant

30  June  2018 as  per  EIA notification 2006

Amendment  to  the  EC  dated  30 10  April  2019

26

June 2018 increasing the number of products  permitted  to  be manufactured by the appellant at the unit at plot no 5

as per the 2006 EIA notification

25. The position that emerges from the record is that in the case of all  the

three industries, ECs were applied for nearly a decade after the introduction of

the EIA notification 1994. In the meantime, the industries had been set up and

had commenced production. GPCB issued a notice to United Phosphorus Limited

on 30 April 2001 directing them to apply for an EC. On 9 December 2000, GPCB

issued a notice to Darshak Private Limited (API – I) and Nirayu Private Limited

(API – II) directing them to apply for and obtain an EC in accordance with the EIA

notification of 1994. Darshak Private Limited (API – I) of Alembic Pharmaceuticals

Limited, applied for an EC on 21 July 2001 which it was granted on 14 May 2003.

Subsequent  applications  for  expansion  of  capacity  were  submitted  on  8

December 2006 and 16 September 2015 for which ECs were granted on 16 April

2008 and 31 January 2017, respectively. Nirayu Private Limited (API – II), initially

applied for an EC on 20 July 2001 and the EC was granted on 14 May 2003. The

application for the grant of an EC for an extended capacity was submitted on 28

March 2016 and the EC was granted on 20 December  2016.  In  the case of

United Phosphorous Limited, the initial EC was sought on 21 August 2002 and it

was  granted  on  17  July  2003.  An  application  for  expansion  of  capacity  was

submitted on 20 October 2007 and it was granted on 15 April 2008. An EC for the

further expansion of capacity was granted on 10 January 2020. In the case of

Unique Chemicals Limited, the initial application for an EC was submitted on 30

June 2001 and it was granted on 23 December 2002. Subsequent applications

for expansion in capacity were submitted on 12 January 2007 and 16 March 2018

27

for which ECs were granted on 8 August 2017 and 30 June 2018, respectively.

An amendment to the EC dated 30 June 2018 was granted on 10 April 2019. The

documents   disclosed  by  the  three  industries  demonstrate  that  no  ECs  as

mandated by the EIA notification of 1994 were sought before the commencement

or expansion of operations. The terms of the EIA notification of 1994 envisage

that expansion or modernisation of any activity (if the pollution load is to exceed

the existing one) or a new project listed in Schedule – I shall not be undertaken

unless it has been granted an EC. In the present case, all the three industries

continued to operate  in the teeth of the EIA notification 1994.  26. Learned counsel appearing for the three industries have relied on a range

of  additional  measures  adopted,  such  as  the  installation  of  latest  pollution

capturing  technologies,  recent  consents  from GPCB and certification  of  “zero

discharge” units. These measures adopted subsequently will not cure the failure

to obtain ECs before the projects commenced operation. These measures are

simply to ensure compliance with the pollution standards and requirements of law

that exist as of date. These submissions have no bearing on determining whether

the industrial units were in the past operating in compliance with the requisite

environmental standards. These measures cannot act as correctives for historical

wrongs  and  cannot  compensate  for  the  damage  already  caused  to  the

environment as a result of manufacturing activities which were carried on without

ECs.  

27. Learned counsel for the three industries urged that the EIA notification of

1994 did not  apply to their  manufacturing units  as they were covered by the

exemption in terms of Clause 8 of the explanatory note. The issue which needs to

be considered is whether the industries were covered by the exemption and were

28

not  required  to  obtain  ECs.  Clause  8  to  the  explanatory  note  to  the  EIA

notification of 1994 states thus:

“8. Exemption for projects already initiated

For projects listed in Schedule – I to the notification in respect of which the required land has been acquired and all relevant clearances of the State Government including NOC from the respective State Pollution Control Board have been obtained before 27th January  1994,  a  project  proponent  will  not  be required  to  seek  environmental  clearance  from  the  IAA. However,  those  units  who  have  not  as  yet  commenced production will inform the IAA”

28. Before the exemption contained in Clause 8 applies, it was necessary for

projects listed in Schedule - I  to obtain all  relevant clearances from the State

government including an NOC from the State Pollution Control Board. It was in

other  words  not  sufficient  to  merely  obtain  an  NOC from the  State  Pollution

Control Board. The exemption which was carved out in the explanatory note was

to ensure that activities which had received all required clearances at the state

level, following the acquisition of land should be protected. In fact, many of them

would also involve the commencement of production prior to 27 January 1994.

The explanatory note stated that where production had not yet commenced, the

IAA would have to be intimated. In order to be covered within the scope of the

exemption, the burden is on the industry to demonstrate before this Court that

they fulfilled conditions spelt out in Clause 8 of the explanatory note. The EIA

notification 1994 is a significant instrument in effectuating the implementation of

the precautionary principle. The burden lies on the project proponent who seeks

to  alter  the  state  of  the  environment  or  to  impact  on  the  environment  to

demonstrate that the terms on which an exemption has been granted have been

fulfilled. An exemption must be construed in its strict sense according to its plain

29

terms.  None  of  the  three  industries  before  the  Court  have  furnished  an

exhaustive  catalogue  of  what  were  the  “relevant  clearances  from  the  State

government” that had to be obtained under the provisions of the law as it then

stood.  

29. With  this  background,  we  will  now  assess  individually  whether  the

industries in question qualified for the exemption provided by Clause 8 to the

explanatory note. 30. Alembic Pharmaceuticals Limited  

(i) Darshak Private Limited (API - I)

The material produced on the record indicates that on 17 July 1992, GPCB had

issued  an  NOC  to  establish  an  industrial  unit  and  manufacture  two

pharmaceuticals products. However, the NOC for manufacturing additional items

was issued only on 11 June 1997 subsequent to the EIA notification dated 27

January 1994. The NOC dated 17 July 1992 issued by GPCB clearly states:

“We would like to inform you that the proposed location for this industrial plant is acceptable to us provided that you will implement the following measure for the prevention and control of environmental pollution:-

(A)

(B)

(C)

(D) Adequate arrangement for the management and handling of hazardous waste shall be made:

IMPORTANT NOTE  

(1)

(2)

30

(3) The applicant/entrepreneur  shall be required to obtain the following from the Board prior to commencement of production:  

(a)  Consent  under  the  Water  (Prevention  and  Control  of Pollution) Act 1974.

(b)  Consent  under  the  Air  (Prevention  and  Control  of Pollution) Act 1981.

(c) Authorisation under the Hazardous Waste (Management and Handling) Rules 1989 under the Environment (Protection) Act 1986.”

   (Emphasis supplied)

GPCB while granting the NOC to establish an industrial unit required the project

proponent  to  undertake  certain  measures  for  the  prevention  and  control  of

environmental  pollution  including  installation  of  treatment  plants,  discharge  of

effluents  within  prescribed  limits  and the creation of  a  green belt  around the

industrial unit. One of the points under the “Important Note” states that the project

proponent “shall be required to obtain” from the board “prior to commencement of

production” requisite consents and authorisations under the Air  Act, Water Act

and Hazardous Waste Rules. The language used in the NOC makes it clear that

obtaining  consents  and  authorisations  under  various  environment  related

legislations  was  a  mandatory  pre-condition  and  not  merely  directory.  In  the

present case, the authorisation under the Air Act was issued only on 29 May 1997

and 31 March 1999. The authorisation under the Water Act was issued on 11

October 1999. Clause 8 of the explanatory note states that for the exemption to

apply, it was necessary for projects listed in Schedule - I to have obtained all

relevant clearances from the State government including an NOC from the State

Pollution  Control  Board.  The  evidence   produced  on  the  record  by Darshak

Private  Limited  indicates  that  it  did  not  have  the  requisite  consents  and

31

authorisations under the Air Act, Water Act and Hazardous Waste Rules prior to

the EIA notification 1994. Many of the consents and permissions were obtained

subsequently  and  not  prior  to  the  EIA notification  of  1994.  Accordingly,  the

manufacturing unit of Darshak Private Limited (API – I) is not covered under the

exemption under Clause 8 to the explanatory note of the EIA notification of 1994.

(ii) Nirayu Private Limited (API – II)

A factory license was issued on 12 July 1984 to API – II. On 24 May 1985, GPCB

issued a water consent order under the Water Act. This was valid only for the

manufacture of anaesthetic Ether. GPCB issued a site clearance certificate on 9

October 1991 for the manufacture of CIMC Chloride and Cloxacillin Sodium. An

NOC to establish an industrial unit and to manufacture products was issued on

12 May 1993 and one for expansion on 4 December 1995. It is relevant to note

that the NOC dated 12 May 1993 issued by GPCB to Nirayu Private Limited (API

– II)  is  worded in exactly the same manner as the NOC dated 17 July 1992

issued to Darshak Private Limited (API – I). The NOC dated 12 May 1993 issued

to Nirayu Private Limited (API – II)  also mandates that  the project  proponent

“shall  be  required  to  obtain”  from  the  board  “prior  to  commencement  of

production” requisite consents and authorisations under the Air  Act, Water Act

and Hazardous Waste Rules from GPCB. In the case of Nirayu Private Limited

(API  –  II),  authorisation  under  the  Hazardous  Waste  Rules  was  issued on 1

September 1993. Consent to operate API – II under the Water Act was issued on

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12  November  1999.  GPCB  issued  consolidate  consent  and  authorisation  to

operate API – II on 14 December 2010. From the above narration which is based

on the disclosures made by Nirayu Private Limited, it is evident that all consents

and permissions had not  been obtained prior  to  the EIA notification of  1994.

Accordingly,  the manufacturing unit  of  Nirayu Private Limited (API – II)  is  not

covered under the exemption under Clause 8 to the explanatory note of the EIA

notification of 1994.

31. United Phosphorous Limited  

On 31 January 1992, Gujarat Industrial Development Corporation granted land to

the appellant to establish and run its unit. On 9 March 1992 and 3 October 1992,

GPCB  issued  an  NOC  for  the  operation  of  the  unit.  The  unit  commenced

manufacturing in 1993. It is relevant to note that the NOC dated 3 October 1993

also mandates that the project proponent “shall be required to obtain” from the

GPCB  “prior  to  commencement  of  production”  requisite  consents  and

authorisations under the Air Act, Water Act and Hazardous Waste Rules. United

Phosphorous  Limited  has  not  disclosed  the  dates  on  which  it  received

authorisations  under  the  relevant  environmental  legislation.  It  has  placed  on

record a consolidated consent and authorisation that was issued much later on

27  August  2009  under  the  Air  Act,  Water  Act  and  Hazardous  Waste

(Management,  Handling  and  Trans  boundary  Movement)  Rules  2008.  The

disclosures  which  have been made are  patently  incomplete.  No material  has

been produced to indicate that all relevant clearances from the State government

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including the NOC from GPCB had been obtained prior to the EIA notification

1994. Accordingly,  they cannot be granted the benefit  of  the exemption under

Clause 8 to the explanatory note of the EIA notification of 1994.

32. Unique Chemicals Limited

The material  produced on the record indicates that GPCB issued an NOC to

establish and run the manufacturing unit on 14 August 1995. It is evident from the

table enlisting the list of relevant permissions, consents and authorisations that all

permissions were received after the EIA notification 1994 was issued. Clearly,

Unique  Chemicals  Limited  is  not  entitled  to  the  benefit  of  the  exemption

contained in Clause 8 of the explanatory note to the EIA notification 1994.

33. From the  material  placed  on  the  record  by  the  industries,  it  becomes

evident that there has been a gross  abdication of responsibility by all the three

industries  in  terms  of  obtaining  timely  consents  and  authorisations  from  the

GPCB.  There  exists  a  distinction  between  obtaining  relevant  clearances  and

consents from the State Pollution Control Board and obtaining an environmental

clearance in accordance with the procedure laid down under the EIA notification

of 1994. A consent order issued by the State Pollution Control Board allows an

industry to operate within the prescribed emission norms. However, the consent

orders do not account for the social cost and impact of undertaking an industrial

activity  on  the  environment  and  its  surroundings.  A  holistic  analysis  of  the

environmental impact of an industrial activity is only accounted for once all the

steps listed out in EIA notification of 1994 are followed. The purpose of setting in

place  specific  requirements  such  as  public  hearing,  screening,  scoping  and

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appraisal is to foster deliberative decisions and protect environmental concerns.

The detailed process listed out in the EIA notification of 1994 for obtaining an EC

allows for minimising the adverse environmental impact of any industrial activity

and improving the quality of the environment. One must adopt an ecologically

rational  outlook  towards  development. Given  the  social  and  environmental

impacts of an industrial activity, environment compliance must not be seen as an

obstacle  to  development  but  as  a  measure  towards  achieving  sustainable

development and inter-generational equity.    34. We have therefore come to the conclusion that none of the three industries

were  entitled  to  the  benefit  of  the  exemption  contained  in  Clause  8  of  the

explanatory note to the EIA notification of 1994.  

35. The issue which must now concern the Court is the consequence which

will emanate from the failure of the three industries to obtain their ECs until 14

May 2003 in the case of Alembic Pharmaceuticals Limited, 17 July 2003 in the

case of  United  Phosphorous Limited,  and 23 December  2002 in  the case of

Unique Chemicals Limited. The functioning of the factories of all three industries

without  a  valid  EC would  have  had  an  adverse  impact  on  the  environment,

ecology and biodiversity in the area where they are located. The Comprehensive

Environmental  Pollution  Index24 report  issued by the Central  Pollution  Control

Board for 2009-2010 describes the environmental quality at 88 locations across

the country. Ankleshwar in the State of Gujarat, where the three industries are

located showed critical levels of pollution25. In the Interim Assessment of CEPI for

2011, the report indicates similar critical figures26 of pollution in the Ankleshwar

24 “CEPI” 25 CEPI score - 88.50 26 CEPI score - 85.75

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area. The CEPI scores for 201327 and 201828 were also significantly high. This is

an indication that industrial units have been operating in an unregulated manner

and in defiance of the law. Some of the environmental damage caused by the

operation of  the industrial  units  would  be irreversible.  However,  to  the extent

possible  some of  the  damage can  be corrected  by  undertaking  measures  to

protect and conserve the environment.  

36. Even though it is not possible to individually determine the exact extent of

the  damage  caused  to  the  environment  by  the  three  industries,  several

circumstances must weigh with the Court in determining the appropriate measure

of restitution. First, it is not in dispute that all the three industries did obtain ECs,

though  this  was  several  years  after  the  EIA  notification  of  1994  and  the

commencement of production. Second, subsequent to the grant of the ECs, the

manufacturing units  of  all  the three industries have also obtained ECs for  an

expansion of capacity from time to time. Third, the MoEF had issued a circular on

5 November 1998 permitting applications for ECs to be filed by 31 March 1999,

which  was  extended  subsequently  to  30  June  2001.  On  14  May  2002,  the

deadline was extended until 31 March 2003 subject to a deposit commensurate

to the investment made. The circulars issued by the MoEF extending time for

obtaining ECs came to the notice of this Court in Goa Foundation (I) v Union of

India29.  Fourth,  though  in  the  context  of  the  facts  of  the  case,  this  Court  in

Lafarge  Umiam Mining Private  Limited  v Union of  India30 (“Lafarge”) has

upheld the decision to grant  ex post facto  clearances with respect to limestone

27 CEPI score - 80.93 28 CEPI score - 80.21 29 (2005) 11 SCC 559 30 (2011) 7 SCC 338

36

mining projects in the State of Meghalaya. In  Lafarge, the Court dealt with the

question  of  whether  ex  post  facto clearances  stood  vitiated  by  alleged

suppression of the nature of the land by the project proponent and whether there

was non-application of mind by the MoEF while granting the clearances. While

upholding the ex post facto clearances, the Court held that the native tribals were

involved in the decision-making process and that the MoEF had adopted a due

diligence  approach  in  reassuring  itself  through  reports  regarding  the

environmental impact of the project. Chief Justice SH Kapadia speaking for the

three judge Bench observed:  

“119. The time has come for us to apply the constitutional “doctrine of proportionality”  to the matters concerning environment as a part of the process of judicial review in contradistinction to merit  review. It  cannot be gainsaid that  utilization  of  the  environment  and  its  natural resources  has  to  be  in  a  way  that  is  consistent  with principles  of  sustainable  development  and intergenerational equity, but balancing of these equities may  entail  policy  choices. In  the  circumstances,  barring exceptions,  decisions  relating  to  utilization  of  natural resources  have  to  be  tested  on  the  anvil  of  the  well- recognized principles of judicial review. Have all the relevant factors  been  taken  into  account?  Have  any  extraneous factors  influenced  the  decision?  Is  the  decision  strictly  in accordance with the legislative policy underlying the law (if any) that governs the field? Is the decision consistent with the principles of sustainable development in the sense that has the decision-maker taken into account the said principle and, on the basis of relevant considerations, arrived at a balanced decision? Thus, the Court should review the decision-making process to ensure that the decision of MoEF is fair and fully informed, based on the correct principles, and free from any bias or restraint. Once this is ensured, then the doctrine of “margin of appreciation” in favour of the decision-maker would come into play.”  

               (Emphasis supplied)

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37. After adverting to the decision in Lafarge, another Bench of three learned

judges  of  this  Court  in  Electrotherm  (India)  Limited  v Patel  Vipulkumar

Ramjibhai31, dealt with the issue of whether an EC granted for expansion to the

appellant without holding a public hearing was valid in law. Justice Uday Umesh

Lalit speaking for the Bench held thus:  

“19…the decision-making process in doing away with or  in granting  exemption  from public  consultation/public  hearing, was not based on correct principles and as such the decision was invalid and improper.”          

The Court  while  deciding  the  consequence  of  granting  an  EC without  public

hearing did not direct closure of the appellant’s unit and instead held thus:

“20. At the same time, we cannot lose sight of the fact that in pursuance of environmental clearance dated 27-1-2010, the expansion  of  the  project  has  been  undertaken  and  as reported by CPCB in its affidavit filed on 7-7-2014, most of the recommendations made by CPCB are complied with. In our  considered  view,  the  interest  of  justice  would  be subserved  if  that  part  of  the  decision  exempting  public consultation/public  hearing  is  set  aside  and  the  matter  is relegated  back  to  the  authorities  concerned  to  effectuate public  consultation/public  hearing.  However,  since  the expansion  has  been  undertaken  and  the  industry  has been functioning, we do not deem it appropriate to order closure of the entire plant as directed by the High Court. If the public consultation/public hearing results in a negative mandate against the expansion of the project, the authorities would  do  well  to  direct  and  ensure  scaling  down  of  the activities  to  the  level  that  was  permitted  by  environmental clearance  dated  20-2-2008.  If  public  consultation/public hearing  reflects  in  favour  of  the  expansion  of  the  project, environmental  clearance dated 27-1-2010 would hold good and be fully operative. In other words, at this length of time when the expansion has already been undertaken, in the peculiar facts of this case and in order to meet ends of justice, we deem it appropriate to change the nature of requirement  of  public  consultation/public  hearing  from pre-decisional  to  post-decisional.  The  public

31 (2016) 9 SCC 300

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consultation/public  hearing  shall  be  organised  by  the authorities concerned in three months from today.”

   (Emphasis supplied)

38. Guided by the precepts that emerge from the above decisions, this Court

has taken note of the fact that though the three industries operated without an EC

for  several  years  after  the  EIA  notification  of  1994,  each  of  them  had

subsequently  received ECs including amended ECs for  expansion of  existing

capacities. These ECs have been operational since 14 May 2003 (in the case of

Alembic  Pharmaceuticals  Limited),  17  July  2003  (in  the  case  of  United

Phosphorous Limited), and 23 December 2002 (in the case of Unique Chemicals

Limited). In addition, all the three units have made infrastructural investments and

employed significant numbers of workers in their industrial units.  

39. In this backdrop, this Court must take a balanced approach which holds

the industries to account for having operated without environmental clearances in

the past without ordering a closure of operations. The directions of the NGT for

the revocation of the ECs and for closure of the units do not accord with the

principle of proportionality. At the same time, the Court cannot be oblivious to the

environmental  degradation  caused  by  all  three  industries  units  that  operated

without valid ECs. The three industries have evaded the legally binding regime of

obtaining ECs. They cannot escape the liability incurred on account of such non-

compliance. Penalties must be imposed for the disobedience with a binding legal

regime.  The  breach  by  the  industries  cannot  be  left  unattended  by  legal

consequences. The amount should be used for the purpose of restitution and

restoration of the environment. Instead and in place of the directions issued by

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the NGT, we are of the view that it would be in the interests of justice to direct the

three industries to deposit  compensation quantified at  ₹ 10 crores each.  The

amount shall be deposited with GPCB and it shall be duly utilised for restoration

and remedial measures to improve the quality of the environment in the industrial

area in which the industries operate. Though we have come to the conclusion, for

the reasons indicated, that the direction for the revocation of the ECs and the

closure  of  the  industries  was  not  warranted,  we  have  issued  the  order  for

payment of compensation as a facet of preserving the environment in accordance

with the precautionary principle. These directions are issued under Article 142 of

the Constitution. Alembic Pharmaceuticals Limited, United Phosphorous Limited

and Unique Chemicals Limited shall  deposit the amount of compensation with

GPCB within a period of four months from the date of receipt of the certified copy

of this judgment. This deposit shall be in addition to the amount  directed by the

NGT.  Subject  to  the  deposit  of  the  aforesaid  amount  and  for  the  reasons

indicated, we allow the appeals and set aside the impugned judgment of the NGT

dated 8 January 2016 in so far  as it  directed the revocation of  the ECs and

closure of the industries as well as the order in review dated 17 May 2016.

Pending application(s), if any, shall stand disposed of.  

                         …………...…...….......………………........J.                                                                 [Dr Dhananjaya Y Chandrachud]

…..…..…....…........……………….…........J.                        [Ajay Rastogi]

New Delhi;  April 01, 2020.

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