Whether the three industries operated without an EC Environmental Clearances for several years after the EIA notification of 1994, each of them had subsequently received ECs including amended ECs for expansion of existing capacities are liable to be closed ? 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 appeal . Apex court held 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 noncompliance. 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 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.

         2020 [4] advocatemmmohan apex court cases  5


Whether the three industries operated without an EC Environmental Clearances for several years after the EIA notification of 1994, each of them had subsequently received ECs including amended ECs for expansion of existing capacities are liable to be closed  ?

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 appeal . 

Apex court held 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 noncompliance. 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 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.

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-postfacto 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
8
(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:
11
(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
32
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
33
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
34
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
35
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
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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 wellrecognized 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)
37
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
38
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 noncompliance. 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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