Holding

The Court held that the 2002 circular is not a Section 3 measure, the NGT has jurisdiction to review it, ex‑post‑facto clearances are impermissible, the industries are not covered by the Clause 8 exemption, and the NGT’s closure order is disproportionate, directing only a compensation deposit.

Summary

Three pharmaceutical units in Ankleshwar began operations without obtaining the prior environmental clearance (EC) mandated by the 1994 Environmental Impact Assessment (EIA) notification. The Ministry of Environment and Forests issued a 2002 circular allowing defaulting units to obtain an ex‑post‑facto EC, which the National Green Tribunal (NGT) struck down as illegal. The Supreme Court examined whether the circular could be treated as a "measure" under Section 3 of the Environment (Protection) Act, 1986 and whether the concept of ex‑post‑facto EC violated the precautionary principle and the statutory requirement of prior clearance. The Court held that the circular was a purely administrative decision, not a Section 3 measure, and therefore the NGT was within its jurisdiction to review its vires. While confirming that the industries had operated without valid ECs, the Court found the NGT’s order to revoke the ECs and close the units disproportionate and instead directed each unit to deposit Rs 10 crore as compensation for environmental damage. The judgment was delivered under Article 142 of the Constitution, allowing the Court to modify the NGT’s orders.

Issues considered

The 2002 circular granting ex‑post‑facto environmental clearances is a "measure" within the meaning of Section 3 of the Environment (Protection) Act, 1986.
Whether the National Green Tribunal has jurisdiction to strike down the circular.
Whether ex‑post‑facto environmental clearance is permissible under the 1994 EIA notification and environmental jurisprudence.
Whether the exemption under Clause 8 of the explanatory note to the 1994 EIA notification applies to the three industries.
Whether the NGT’s directions to revoke the ECs and order closure of the units are proportionate.

Legislation cited

Subjects

environmental clearanceex post facto clearanceprecautionary principleproportionalityNational Green TribunalEIA notification 1994environmental jurisprudencesustainable developmentcompensationindustrial pollution

Judgment

[2020] 10 S.C.R. 677 677

ALEMBIC PHARMACEUTICALS LTD. A
v.
ROHIT PRAJAPATI & ORS.
(Civil Appeal No. 1526 of 2016)
APRIL 01, 2020
B
[DR. DHANANJAYA Y CHANDRACHUD AND
AJAY RASTOGI, JJ.]
Environment (Protection) Act 1986 – s.3 – 1994 Environmental
Impact Assessment (EIA) notification mandated prior Environmental
Clearance (EC) for setting up and expansion of industrial units
falling within thirty categories – Deadline extended by various C
circulars – 2002 Circular while further extending the deadline
allowed for ex post facto ECs – Quashed by National Green Tribunal
(NGT) – On appeal, held: Concept of an ex post facto EC is in
derogation of the fundamental principles of environmental
jurisprudence – It is an anathema to the 1994 EIA notification – D
Allowing for an ex post facto clearance would essentially condone
the operation of industrial activities without the grant of an EC – It
would be contrary to both the precautionary principle as well as
the need for sustainable development – 2002 circular alters the
application of the 1994 EIA notification which has a statutory
character – Being an administrative decision, it is beyond the scope E
of s.3 – It cannot be said to be a measure for protecting and
improving the quality of environment and is not protected by s.3 –
No jurisdictional bar on NGT to enquire into its vires – In case of
the three industries in question, no ECs were sought before the
commencement or expansion of operations, as mandated by the 1994 F
EIA notification – They continued to operate in the teeth of the said
notification – Further, none of these industries are entitled to the
benefit of the exemption contained in Clause 8 to the explanatory
note of the 1994 notification – However, NGT’s directions for
revocation of the ECs and closure of the units do not accord with
the principle of proportionality – Industries to deposit compensation G
of ` 10 crores each, in addition to the amount directed by NGT –
Environment (Protection) Rules 1986 – Constitution of India –
Art.142.
Environment (Protection) Act 1986 – Rules/Regulations under
– Jurisdiction of NGT to strike down – Discussed. H
677
678 SUPREME COURT REPORTS [2020] 10 S.C.R.

A Allowing the appeals, the Court
HELD: 1. Section 3(1), Environment (Protection) Act 1986
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
B environment and preventing, controlling and abating
environmental pollution. This limb of the submission of the
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”.
C 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,
D 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”. 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
E 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,
F controlling and abating environment pollution”. The circular dated
14 May 2002 in fact does quite the contrary. 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
G 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
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 679
& ORS.

purpose of protecting and improving the quality of the A
environment. 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
administrative circular is not a measure protected by Section 3.
Hence there was no jurisdictional bar on the NGT to enquire into
B
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. [Paras 20, 21][697-
C-F; 698-A-E; 699-C]
Tamil Nadu Pollution Control Board v. Sterlite Industries
(I) Ltd. [2019] 3 SCR 777 – referred to. C
2.1 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 detrimental to the environment and could lead to irreparable
degradation. The reason why a retrospective EC or an ex post D
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 E
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 F
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 ex post facto clearance. This G
would be contrary to both the precautionary principle as well as
the need for sustainable development. 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. The H
680 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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
B
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. [Paras 23, 25][700-F-H; 701-A-C; 706-
G-H; 707-E-F]
Common Cause v. Union of India (2017) 9 SCC 499 :
C [2017] 13 SCR 361– relied on.
2.2 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 not sufficient to
D 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
E explanatory note stated that where production had not yet
commenced, the IAA would have to be intimated. 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
F 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 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
G be obtained under the provisions of the law as it then stood. With
this background, it will now be assessed individually whether the
industries in question qualified for the exemption provided by
Clause 8 to the explanatory note.

H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 681
& ORS.

Alembic Pharmaceuticals Limited A
(i) Darshak Private Limited (API - I)
The material produced on the record indicates that on 17
July 1992, Gujarat Pollution Control Board (GPCB) had issued
an NOC to establish an industrial unit and manufacture two
pharmaceuticals products. However, the NOC for manufacturing B
additional items was issued only on 11 June 1997 subsequent to
the EIA notification dated 27 January 1994. 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. The evidence
produced on the record by Darshak Private Limited indicates C
that it did not have the requisite consents and 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 D
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. E
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 F
December 1995. 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 G
Rules from GPCB. 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.
H
682 SUPREME COURT REPORTS [2020] 10 S.C.R.

A United Phosphorous Limited
No material has been produced to indicate that all relevant
clearances from the State government including the NOC from
GPCB had been obtained prior to the EIA notification 1994.
Accordingly, they cannot be granted the benefit of the exemption
B under Clause 8 to the explanatory note of the EIA notification of
1994.
Unique Chemicals Limited
It is evident from the table enlisting the list of relevant
permissions, consents and authorisations that all permissions
C 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. [Paras 28-32][708-E-F, G-H; 709-A-B, C-
D; 710-D, F-H; 711-A-C, D-F; 712-A-D]
2.3 From the material placed on the record by the industries,
D 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
E 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
F 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 appraisal is to foster deliberative decisions and protect
G 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,
H environment compliance must not be seen as an obstacle to
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 683
& ORS.

development but as a measure towards achieving sustainable A
development and inter-generational equity. 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. [Paras 33, 34][712-D-H; 713-A]
2.4 The MoEF had issued a circular on 5 November 1998 B
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. Though the
three industries operated without an EC for several years after
the EIA notification of 1994, each of them had subsequently C
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 D
the three units have made infrastructural investments and
employed significant numbers of workers in their industrial units.
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 E
units that operated without valid ECs. The breach by the
industries cannot be left unattended by legal consequences. The
three industries are directed to deposit compensation quantified
at ` 10 crores each. The amount shall be deposited with GPCB
and duly utilised for restoration and remedial measures to improve F
the quality of the environment in the industrial area in which the
industries operate. This deposit shall be in addition to the amount
directed by the NGT. The impugned judgment of the NGT is set
aside in so far as it directed the revocation of the ECs and closure
of the industries as well as the order in review. [Paras 36, 38 and
39][713-G; 714-A; 716-C-D, E-F, G-H; 717-B-C] G
Lafarge Umiam Mining Pvt Ltd v. Union of India (2011)
7 SCC 338 : [2011] 7 SCR 954; Electrotherm Ltd v.
Patel Vipulkumar Ramjibhai (2016) 9 SCC 300 – relied
on.
H
684 SUPREME COURT REPORTS [2020] 10 S.C.R.

A Goa Foundation v. Union of India (2005) 11 SCC 559;
Techi Tagi Tara v. Rajendra Singh Bhandari & Ors.
(2018) (11) SCC 734 : [2017] 12 SCR 956; Bharat
Sanchar Nigam Limited v. Telecom Regulatory Authority
of India (2014) 3 SCC 222 : [2013] 12 SCR 999 –
referred to.
B
Case Law Reference
[2017] 12 SCR 956 referred to Para 15
(2005) 11 SCC 559 referred to Para 15
[2011] 7 SCR 954 relied on Para 15
C (2016) 9 SCC 300 relied on Para 15
[2017] 13 SCR 361 relied on Para 16
[2019] 3 SCR 777 referred to Para 18
[2013] 12 SCR 999 referred to Para 18
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1526
D of 2016.
From the Judgment and Order dated 08.01.2016 of the National
Green Tribunal (Western Zone) Bench, Pune in Application No. 66 (THC)
of 2015 (WZ) Special Civil Application No. 17417 of 2003.
With
E
C.A. No. 3175 of 2016, C.A. No. 6604-6605 of 2016, C.A. No.
1555 of 2017.
A.N.S. Nadkarni, ASG, Kapil Sibal, Huzefa Ahmadi, Devang
Nanavati, C.U. Singh, Dr. Abhishek M. Singhvi, Parag P. Tripathi,
Sr. Advs., Ms. Ruby Singh Ahuja, Ms. Deepti Sarin, Ms. Kritika
F Sachdeva, Ashutosh P. Shukla (for M/s. Karanjawala & Co.), Sandeep
Narain, Ankit Virmani, M. Chandra Sekhar, Joyti Prakash Sahu (for
M/s. S. Narain & Co.), Mahesh Agarwal, Rishi Agrawala, Ankur Saigal,
Anirudha Bhatia, Rohan Talwar, E. C. Agrawala, D.L. Chidanand, S.S.
Rebello, Arzu Paul, Neeleshwar Pavani, Ms. Riya Soni, Gurmeet Singh
G Makker, Siddharth Seem, Satya Mitra, Ms. Hetvi Patel, A.P. Mayee, A.
Rajarajan, Sanjeev Kr. Choudhary, Mrs. Hemantika Wahi, Ms. Jesal
Wahi, Ms. Puja Singh, Ms. Ruchi Kohli, Ms. Nidhi Jaswal, Ms. Manyaa
Chandok, Ajay Marwah, Advs. for the appearing parties.

H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 685
& ORS.

The Judgment of the Court was delivered by A
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 B
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. C
4
2. The Environmental Impact Assessment 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 D
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:
E
“... 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 F
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
1
G
“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” H
686 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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
B 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
C 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;
D (iii) All the industrial activities which were being operated without
a valid EC and consent to operate shall be closed down within
one month;
(iv) Each of the units shall deposit a compensation of ` 10 lakhs
for having caused environmental degradation;and
E
(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:
F
(i) United Phosphorous Ltd - the sixth respondent;
(ii) Unique Chemicals - the seventh respondent;
(iii) Darshak Private Limited - the eight respondent; and

G (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
6
“Environment Protection Rules”
7
H “GPCB”
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 687
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

in the lead appeal before this Court. Darshak Private Limited merged A
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
B
and API – II, respectively.
EIA Notification of 1994
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 C
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 D
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 E
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 F
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 G
setting up of the project may be undertaken till the environmental
and site clearances is obtained.”

8
“Environment Protection Rules”
9
Which was (substituted on 4 May 1994) H
688 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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 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
B
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
C 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
D 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
E 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:
F
“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
G prior environmental clearance in violation of the EIA Notification
of 27 January 1994.”
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
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 689
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

areas” on a graded scale linked to the investment in the project. This A
was indicated in a tabulated form which read thus:
A Projects with investment upto 1 % of the project cost with a
` 100 crores minimum of ` 50,000
B Projects with investment 0.5% of the project cost subject
beyond ` 100 crores and upto to a minimum of ` 1 crore and a
` 1,000 crores maximum of ` 2.5 crores B

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

Units which failed to comply with the extended deadline were to C
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 D
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 E
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 judgment of the NGT which was dismissed. The affected industrial
units and the MoEF are in appeal before this Court.
F
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 G
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 H
690 SUPREME COURT REPORTS [2020] 10 S.C.R.

A consideration of all material factors. The relevant details in
support of the submission arethus:
Darshak Private Limited (API - I)
(a) An EC was granted on 14 May 2003 for a capacity of 15 MT
per month;
B
(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.
C Nirayu Private Limited (API – II)
(a) An EC was granted on 14 May 2003 for a capacity of
47 MT per month; and
(b) An EC was granted on 20 December 2016 for an
expanded capacity of 300 MT permonth.
D
(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
E 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
F 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
G where a no objection certificate 10 from GPCB has been
obtained before 27 January 1994, an EC is not required. In
this context it has been submitted that:

10
H “NOC”
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 691
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

(a) On 17 July 1992, GPCB granted an NOC to establish and A
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 198111 to API - I;
(c) On 11 October 1999, GPCB granted API – I an authorisation B
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;
C
(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 D
granteda 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, E
GPCB granted a consolidated consent and authorisation to
API -II.
(v) A public hearing was not mandatory under the EIA notification
of 1994.
F
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 G
made an investment of over ` 293 crores and employed a
labour force of over 1000 workers; and

11
“Air Act”
12
“Water Act”
13
“Hazardous Waste Rules” H
692 SUPREME COURT REPORTS [2020] 10 S.C.R.

A (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.
B 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
C extended to 30 June 2001 was 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
D 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);
E (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
F 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
G 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
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 693
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

(v) The challenge by the first and second respondents was to the A
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:
(a) On 3 October 1992, GPCB granted an NOC to the B
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 C
consent and authorisation to the appellant s
manufacturingunit;
(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 D
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 E
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. F
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
andintermediates; G

(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
14
2018 (11) SCC 734 H
694 SUPREME COURT REPORTS [2020] 10 S.C.R.

A (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 above EC was amended allowing an increase in the
number of products permitted to be manufactured by the
appellant.
B (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
C 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
D 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
E 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
F unit;
(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:
G
(a) On 30 September 1995, GPCB issued an ‘air consent order’
under the Air Act;

15
(2005) 11 SCC 559
16
(2011) 7 SCC 338
17
H (2016) 9 SCC 300
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 695
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

(b) On 9 January 1996 GPCB issued an authorisation under the A
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; B

(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- C
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 D
(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.
E
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 F
clearances. Any ex post facto approval is void and the benefit
of the circular cannot be 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 G
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
18
(2017) 9 SCC 499 H
696 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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
B 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
C 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
D 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,
E the NGT cannot strike down rules or regulations made under the
Environment 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 Act 22 1997
was interpreted. After adverting to this decision, Justice R F Nariman
F 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
G
Nadkarni, learned Additional Solicitor General made an attempt to
demonstrate that the power to issue the circular dated 14 May 2002 that
19
2019 SCC Online SC 221 / Civil Appeal nos 4763-4764 of 2013
20
“NGT Act”
21
(2014) 3 SCC 222
22
“TRAI Act”
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 697
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

extended the deadline for defaulting units to avail of an ex post facto A
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 B
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 C
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 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 D
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 E
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: F

“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 G
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 string entaction.” H
(Emphasis supplied)
698 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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
B
and preventing, 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
C 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
D
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.
E 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 expost 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
F
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 to indicate that the requirement is
G 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
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 699
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

is sought to be achieved by the administrative circular dated 14 May A
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
B
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 C
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 D
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 “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 E
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 F
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 G
v Union of India 23 (“Common Cause”), Justice Madan B Lokur
rejected the submission which was urged on behalf of mining lease holders
that:

23
(2017) 9 SCC 499 H
700 SUPREME COURT REPORTS [2020] 10 S.C.R.

A “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:
B “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.
C 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 renewal of a mining
lease where there is no expansion or modernisation of any
D 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
E 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
itsgrant.”
(Emphasis supplied)
F 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
G 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.

H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 701
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

Requirements such as conducting a public hearing, screening, A
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
B
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 ex post facto clearance. This would be
contrary to both the precautionary principle as well as the need for C
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 D
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 E
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) F
Date Permission/Consent/Authorisation Granted
17 July 1992 GPCB issued a no objection certificate to establish an industrial
unit
for the manufacture of the followi ng items at API–I: (i)
Ciprofloxacin (1.25 MT pm); and (ii) Norfloxacin (2.5 MT pm)
11June 1997 GPCB granted noobjectioncertificate for
manufacturingaddi tional
items at API–I
29 May 1997 GPCB issued air consent order authorising to operate API–I G
11 July 1997, GPCB granted no objection certificate for manufacturing of
12 July 1997 and 27 July additional items at API–I
1998
31 March 1999 GPCB issued air consent order authorising to operate API–I
11 October GPCB issued water consent order authorising to operate AP–I
1999
Between 27 September GPCB issued various consents under the Air Act, Water Act
2002 – 23 and Hazardous Waste Rules.
December 2011
H
702 SUPREME COURT REPORTS [2020] 10 S.C.R.

A Table A: List of permi ssions, consents and authorisations granted to Alembic
Pharmaceuticals Limited
Darshak (API–I)
Date Permission/Consent/Authorisation Granted
17 July 1992 GPCB issued a no obj ection certificate to establish an industrial
unit
for the manufacture of the followi ng items at API–I: (i)
B Ciprofloxacin (1.25 MT pm); and (ii) Norfloxacin (2.5 MT pm)
11June 1997 GPCB granted noobjectioncertificate for
manufact uringadditional
items at API–I
29 May 1997 GPCB issued air consent order authorising to operate API–I
11 July 1997, GPCB granted no objection certificate for manufacturing of
12 Jul y 1997 and 27 July additional items at API–I
C 1998
31 March 1999 GPCB issued air consent order authorising to operate API–I
11 October GPCB issued water consent order authorising to operate AP–I
1999
Between 27 September GPCB issued various consents under t he Air Act, Water Act
2002 – 23 and Hazardous Waste Rules.
December 2011
D
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 authorisi ng to operate API–II

E 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
(2MTpm);(ii)2Mercapta(5MTpm);(iii)Methoxyorthoxymethyl
F chloride (0.3 MT pm); and (iv) Solvent ether (7 MT pm)
1 September GPCB issued authorisation to operate API–II under the Hazardous
1993 Waste Rules
23 September GPCB issued water consent order authorisi ng to operate API–II
1993
4 December GPCB granted no objection certificate for manufacturing
G 1995 additional
items at API–II
4 October 1996 GPCB issued air consent order to operate API–II
and 17 April
1998

H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 703
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

1 September 1999 GPCB granted consolidated consent and authorisation to A
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 GPCB issued various consents under the Air Act, Water
2002 – 6 January 2015 Act and Hazardous Waste Rules. B

Table B: List of environmental clearances granted to Alembic Pharmaceuticals
Limited
Darshak(API–I)
Date of Date of EC for Expansion Date EC Granted
Public (Quantity)
C
Application
Hearing
21 July 30 January 2002 Manufacturing of various 14 May 2003 as per
2001 bulk drugs and intermediate the 1994 EIA
products with a total capacity notification
of
15 MT pm
8 December 9 October 2007 Expansion of total capacity of 16 April 2008 as per
D
2006 bulk drugs from 15 to 25 MT the 2006 EIA
pm notification
16 12 June 2015 Expansion of total capacity of 31 January 2017 as per
September active pharmaceutical the 2006 EIA
2015 ingredients from 25 to 75 MT notification
pm E
Nirayu Private Limited(API–II)
Date of Date of Public EC for Expansion Date EC Granted
Application Hearing (Quantity)
20 July 30 January 2002 Manufacturing of various 14 May 2003 as per
2001 bulk drugs and the 1994 EIA
intermediate products with notification F
a total capacity of
47 MT pm
28 March 12 June 2015 Expansion of total 20 December 2016 as
2016 capacity of active per the 2006 EIA
pharma notification
ceutical ingredients
andintermediates G
from 47 to 300 MT pm

H
704 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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
B 31 January Gujarat Industrial Development Corporation granted
1992 land to the
appellant to establish and run unit no 2
9 March 1992 GPCB issued no objection certifi cate 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
C manufacture the following items at unit no 2: (i)
Carbendazim; (ii) Quinalphos; and
(iii) Paraquat
1993 Unit no 2 commenced manufacturing activities
17 November GPCB granted no objection certificate for expansion of
1995 unit no 2 for manufacturing of two additi onal products –
D 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
E
25 July 2012 GPCB issued consent to establish (NOC) for expansion
of unit no 2
11 May 2015 GPCB granted a consolidated consent and authorisation
and 27 April for the expanded operations
2017

Tab le B : Lis t of enviro nmental clearances g ranted to Un ited P hos phorus L imited
F U nit no 2 - P lot no 3 40 5 and 3 40 6

D a te o f D a te of EC fo r E xpansio n (Q uantity) Da te EC Gra nted
Applica tio n P ubli c
H ea ring
21 Au gu st 1 6 Jan uary 20 02 Man ufacturing of Phorate and 1 7 Jul y 2003 as per
2 00 2 Terbu phos e (3 00 M T p m E IA no tification of
co mb ined ) and A cephate (80 1 994
MT per month)
G 2 0 Octo ber Ex pansion o f p esticides an d April 15 20 08 as per
2 00 7 - intermed iat e p ro ducts. E IA no tification of
- Prod uctio n o f Phorate an d 2 006
Terbu phos e to be in creased to
50 0 MT pm comb in ed
- Produ ctio n o f A ceph at et o
be increased to 1 00 0 MT pm
- - En han ced cap aci ty of 9546 M T 1 0 Jan uary 20 20 as
H per m on th (as per written p er E IA no tification
sub mis sions) o f 2 00 6
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 705
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

Table A: List of permissions, consents and authorisations granted to A
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 B
(site clearance) at plot no 5
30 September GPCB issued air consent order authorising to operate unit at
1995 plot no 5
25 December GPCB issued a no objection certificate to set up and
1995 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
C
(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 D
15 April 2009 GPCB granted a consolidated consent and authorisation to the
unit at
plot no 5
11 June 2010 GPCB amended the consolidated consent and authorisation
and 26 June to the unit at plot no 5 granted on 15 April 2009
2012
E
30 May 2011 GPCB granted no objection certificate to set up a gas-based
power
generation plant of a capacity of 400 KW at the unit at plot no
5
2 November GPCB granted a fresh consolidated consent and authorisation
2013 to the
unit at plot no 5 for manufacturing of bulk drugs and F
intermediates
1 July 2016 The appellant was cert ified as a zero liquid discharge unit
25 January GPCB granted a new consolidated consent and authorisation
2019 to the
unit at plot no 5
25 October GPCB issued a revised consolidated consent and
authorisation for
G
2019
increase in t he number of products that were permitted to be
manufactured at the unit at plot no 5

H
706 SUPREME COURT REPORTS [2020] 10 S.C.R.

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

Date of Date of Public EC for Expansion Date EC
Application Hearing (Quantity) Granted
30 June 2001 25 January 2002 Total capacity 78.02 MT 23 December 2002 as
pm of bulk drugs and per EIA not ification
intermediates. 1994
Manufacturing of (i)
B 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
C MT pm); (vi) Phentolamine
HCL (10 MT pm); (vii)
Diltazem HCL (1MT
pm); and (viii) other co-
products
12 January 2007 Exempt – For an i ncrease in 8 August 2007 as per
proposed project manufacturing of bulk drugs EIA notification 2006
located in notified and intermediates from a
industrial area total capacity from 78.02
D 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
E power plant with 1.3 MW
capacity
16 March 2018 Exempt – For an i ncrease in 30 June 2018 as per EIA
proposed project manufacturing of bulk drugs notification2006
located in notified and intermediates from a
industrial area total capacity from 78.02
MT pm to
290 MT pm by
setti ng up of
F synthetic organic chemicals
manufacturing plant
Amendment to the EC dated 10 April 2019
30
June 2018 increasing the as per the 2006
number of
products permitted EIA notification
manufactured by the
appellant at the
G unit at plot no 5

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
H industries had been set up and had commenced production. GPCB issued
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 707
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

a notice to United Phosphorus Limited on 30 April 2001 directing them A
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
B
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 C
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
D
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 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 E
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
F
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 G
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 H
708 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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.
B 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 not required to obtain ECs.
Clause 8 to the explanatory note to the EIA notification of 1994 states
C 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
D 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”

E 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
F 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
G 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
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 709
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

demonstrate that the terms on which an exemption has been granted A
have been fulfilled. An exemption must be construed in its strict sense
according to its plain 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.
B
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) C

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 D
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:- E
(A)
(B)
(C)
(D) Adequate arrangement for the management and handling of F
hazardous waste shall be made:
IMPORTANT NOTE
(1)
(2) G
(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. H
710 SUPREME COURT REPORTS [2020] 10 S.C.R.

A (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.”
B (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
C 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
D 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
E 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 authorisations
under the Air Act, Water Act and Hazardous Waste Rules prior to the
F 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.

G (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
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 711
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

of CIMC Chloride and Cloxacillin Sodium. An NOC to establish an A
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
B
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 C
September 1993. Consent to operate API – II under the Water Act was
issued on 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
D
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 PhosphorousLimited
E
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 F
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 G
later on 27 August 2009 under the Air Act, Water Act and Hazardous
Waste (Management, Handling and Trans boundary Movement) Rules

H
712 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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 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.
B
32. Unique ChemicalsLimited
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,
C 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 notification1994.
33. From the material placed on the record by the industries, it
D 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
E 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
F 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 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
G 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.
H
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 713
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

34. We have therefore come to the conclusion that none of the A
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 B
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 C
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 area. The CEPI scores D
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. E

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 F
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 G

24
“CEPI”
25
CEPI score - 88.50
26
CEPI score - 85.75
27
CEPI score - 80.93
28
CEPI score - 80.21 H
714 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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
B
v Union of India30 (“Lafarge”) has upheld the decision to grant ex
post facto clearances with respect to limestone 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
C 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:
D
“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 gain said
that utilization of the environment and its natural resources
E 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-
F 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
G 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
29
(2005) 11 SCC 559
H 30
(2011) 7 SCC 338
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 715
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

principles, and free from any bias or restraint. Once this is ensured, A
then the doctrine of “margin of appreciation” in favour of the
decision-maker would come intoplay.”
(Emphasis supplied)
37. After adverting to the decision in Lafarge, another Bench of
three learned judges of this Court in Electrotherm (India) Limited v B
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 C
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 D
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 E
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. F
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 G
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
31
(2016) 9 SCC 300
H
716 SUPREME COURT REPORTS [2020] 10 S.C.R.

A 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 consultation/public hearing shall be organised by the
B
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
C 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
D 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
E 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
F 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 the NGT, we are of the view that it
G 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
H the conclusion, for the reasons indicated, that the direction for the
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI 717
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]

revocation of the ECs and the closure of the industries was not warranted, A
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
B
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 C
well as the order in review dated 17 May 2016.
Pending application(s), if any, shall stand disposed of.

Divya Pandey Appeals allowed.
D

E

F

G

H