How India's law on retrospective environmental clearances evolved — and where it stands now

A 1994 notification, a 2006 rewrite, three circulars, precedents, and a July 2026 verdict — how the rules on post-facto environmental clearance took shape.

The Supreme Court's judgment last month ended the post-facto environmental clearance regime under a 2021 executive order and restated the requirement of prior green clearance for development projects, while leaving intact the Centre’s power to create limited exceptions through a legal route.

The Supreme Court affirmed in its July 29 ruling that the country's environmental law, which lays down prior environmental clearance as the norm, cannot be bypassed by an executive order. (Featured image: HT/Made on Canva)

A three-judge bench headed by Chief Justice of India Surya Kant affirmed that the country's environmental laws, which lay down prior environmental clearance as the norm, cannot be bypassed by an executive order.

Any such exception, the court noted, can come by way of a notification issued under Section 3 of the Environment Protection Act, 1986.

To understand what the judgment means for future projects, it is worth tracing the history of the environmental impact assessment (EIA) regime from 1986, when the parent law was enacted, through to the EIA notification of 2006.

In March 2017, the government issued a notification allowing a single-window, time-bound exception to certain categories of industries and projects to obtain a green nod after they had already commenced work on site. This was only available to projects which had applied within six months, and was framed as a “one-time exception”.

The 2021 office memorandum (OM) that followed was different. It was not a notification issued under the 1986 Act but an executive instruction. Nor was it time-bound — it left in place a perpetual regime under which all violators of the prior EC rule could seek regularisation. In practice, it laid down a way for handling violation cases, with penalties, damage assessments and remediation measures attached.

That distinction drove the outcome. The Supreme Court struck down the 2021 OM while saving the 2017 notification, asserting that the EIA regime could be modified only through the notification route, not by an administrative order.

The bench held that the OM “equates the compliant and the defiant” and yields to a principle of “pollute and then pay” rather than sustainable development.

The status of the projects already cleared under either instrument – the 2017 notification or the 2021 OM – were let be as they are now, but the top court restrained the Centre from entertaining any fresh applications for post-facto environmental clearance.

Projects still in the pipeline, the SC said, would have to be processed under the 1986 Act.

The case that produced this ruling was brought by Mumbai-based NGO Vanashakti, which challenged the 2021 OM in the Supreme Court in 2022. It argued that Section 3 of EIA could not be used to regularise projects that began without prior clearance. Vanashakti approached the top court directly because a Madras high court stay of the 2021 OM had been held to apply only within Tamil Nadu and Puducherry, leaving the memorandum operative across the rest of the country.

The 'prior' requirement

India's industrial expansion in the 1970s and 1980s — mining, gas exploration, thermal power plants, petroleum refining industries, and building and construction projects involving highways — set the context for what would become the country's environmental regulation framework.

At the United Nations Conference on the Human Environment held at Stockholm in June 1972, India resolved to take appropriate steps for the protection and improvement of the environment. The commitment translated into legislation only in 1986, with the enactment of the Environment Protection Act (EPA).

Section 3 of the Act gives the central government wide powers to take all measures it considers necessary to protect and improve the quality of the environment. Those powers extend to preventing, controlling and abating environmental pollution, and to restricting the areas in which any industry or class of industries may operate, subject to safeguards.

Using this authority, the Centre brought in a notification on January 27, 1994, mandating environmental impact assessment (EIA) before the setting up or expansion of thirty categories of industries specified in its schedule. This became the precursor to the 2006 EIA notification, which first introduced the word “prior” — laying down that no project could begin without obtaining prior environmental clearance.

The post-facto aberration

Within a few years of the 1994 notification, the Centre realised that several industrial units had not fallen in line with the EIA requirement before starting work. Circulars were issued on November 5, 1998, December 27, 2000, and May 14, 2002, allowing state pollution boards to consider post-facto environmental clearance for applications received till March 31, 2003.

The May 2002 notification was challenged before various high courts and the National Green Tribunal. The first authoritative pronouncement from the Supreme Court came on April 1, 2020, in the Alembic Pharmaceuticals case.

The court held: “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 January 27, 1994.” An administrative circular, it added, could not dilute or render “ineffective” the 1994 EIA notification, which enjoyed statutory character. The circulars were consequently held “unsustainable” in law.

Requirements such as public hearing, screening, scoping and appraisal, the court observed, were components of the decision-making process in a prior-EC regime — the very mechanisms through which the likely impacts of an industrial activity or its expansion could be assessed. Ex post-facto clearance would instead condone the operation of industrial activities without an EC in place, it said.

An earlier decision in the Common Cause v Union of India (2017) case had reached the same conclusion, holding that ex post facto environmental clearance was “detrimental to the environment” and could lead to “irreparable degradation of the environment”.

The road ahead

While the courts have underlined the requirement of prior EC, what the July 29 decision in the Vanashakti case does, in the light of the 2017 notification and the 2021 OM, is bar the Centre from departing from that requirement through administrative orders.

The 2021 OM has been set aside, with no prospective approvals to be granted under it.

But, by saving the 2017 notification, the court has signalled that the Centre's power to make concessions for post-facto environmental compliance exists, only within Section 3 of the 1986 Act.

Any exercise of that power must pass a judicial test: the amnesty scheme must apply to classes or categories of non-compliant projects whose sustainability is necessary to serve a larger public interest.

Judged by this yardstick, the court found “supervening public interest” in saving the projects already approved under the 2021 OM. These include multi-specialty hospitals, medical colleges, airports, irrigation projects, slum rehabilitation projects and highways, among other public works worth about ₹20,000 crore.

The judgment also preserved the Supreme Court’s own power under Article 142 of the Constitution to order post-facto EC in exceptional cases where complete justice requires it.

In effect, the judgment comes as a reminder to industries that the green nod is non-negotiable and must be obtained before breaking ground. And future violators, unless rescued by the court or the Centre in exceptional cases, will risk suspension.