Kerala High Court: No Separate EC Needed for NHAI Concessionaires with Pre-March 21 Work Orders

Kochi, India – In a significant ruling providing clarity to the infrastructure sector, the Kerala High Court has held that concessionaires of the National Highway Authority of India (NHAI) holding valid work orders issued before March 21, 2024, are not required to obtain a separate Environmental Clearance (EC) for the extraction of ordinary earth for linear projects. The decision resolves critical ambiguities that arose following a landmark Supreme Court judgment, ensuring that ongoing infrastructure projects can proceed without fresh regulatory hurdles, provided they adhere to stringent environmental safeguards.

The division bench, comprising Justice Devan Ramachandran and Justice M B Snehalatha, delivered the judgment while addressing an intra-court reference in the case of Anirudh Karthikeyan v State of Kerala and Others . The Court's detailed analysis focused on the interpretation and scope of a clarificatory order issued by the Supreme Court, ultimately extending its relief not just to the NHAI but also to its contracting partners.

Background: A Regulatory Rollercoaster

The legal contention stems from notifications issued by the Ministry of Environment, Forest and Climate Change (MoEF&CC) on March 28, 2020, and subsequently on August 30, 2023. These notifications had exempted the sourcing or borrowing of ordinary earth for linear projects, such as roads and pipelines, from the otherwise mandatory requirement of obtaining an Environmental Clearance under the Environmental Impact Assessment (EIA) framework. This exemption was intended to fast-track crucial infrastructure development.

However, the blanket exemption was challenged before the National Green Tribunal (NGT), which struck it down on environmental grounds. The matter escalated to the Supreme Court. In its pivotal judgment in Noble M. Paikada v. Union of India , delivered on March 21, 2024, the apex court upheld the NGT's decision. The Supreme Court quashed Item 6 of Appendix IX of both MoEF&CC notifications, effectively reinstating the requirement for an EC for all such extraction activities.

This ruling created immediate uncertainty for numerous ongoing projects across the country, where work orders had been issued and contracts awarded based on the previous exemption. Recognizing the potential for widespread project disruption, the Supreme Court issued a subsequent clarificatory order on May 15, 2024. This order stipulated that projects for which the NHAI had issued work orders before the date of its judgment (March 21, 2024) could continue without obtaining a fresh EC.

The Core Legal Question: Scope of the Supreme Court's Clarification

The matter landed before the Kerala High Court to resolve a specific, yet crucial, question: Did the Supreme Court's clarification apply only to the NHAI itself, or did it also cover the numerous private concessionaires and contractors executing the projects on behalf of the NHAI? A further point of contention was whether this relief was conditional on the work orders explicitly mentioning the extraction of earth.

The High Court meticulously dissected the intent behind the Supreme Court's order. The bench reasoned that a narrow interpretation, limiting the exemption solely to the NHAI, would be illogical and would defeat the purpose of the clarification, which was to prevent the stalling of ongoing projects.

The Court observed that the Supreme Court's language was precise and intentionally broad. The bench noted:

“Clarification by the Hon'ble Supreme Court cover not merely the 'NHAI', but the concessionaires also, because otherwise, it would not have stated with precision that all projects for which Work Orders by the 'NHAI' was issued before 21.03.2024 can continue and will remain unaffected by its declarations.”

This purposive interpretation establishes that the legal status and protections afforded by the work order flow from the issuing authority (NHAI) to the executing entity (the concessionaire). To hold otherwise would create an artificial and unworkable distinction, effectively nullifying the apex court's intent to provide transitional relief.

Environmental Safeguards and Future Compliance

While granting relief to existing projects, the Court heavily emphasized that this exemption is not a carte blanche to bypass environmental responsibilities. The bench underscored that all extraction activities must be conducted in strict compliance with prescribed environmental safeguards.

The judgment referenced a prior decision of the Kerala High Court in Pradeep Kumar P. v. State of Kerala , which had already directed the NHAI to ensure robust transparency and environmental protection measures are in place for such activities.

Furthermore, the counsel for the NHAI informed the Court of proactive steps taken to align with the Supreme Court's primary judgment. A new notification, dated March 17, 2025, has been issued by the government. This notification introduces comprehensive Standard Operating Procedures (SOPs) and safeguards for earth extraction in linear projects, aiming to create a regulated and environmentally conscious framework moving forward. The High Court recorded this submission, noting that these new safeguards would apply to both the ongoing works covered by the clarification and all future projects.

In its concluding remarks, the bench synthesized these points, affirming the exemption while tying it inextricably to regulatory compliance:

"In rundown, it is luculent that the express intent of the Hon'ble Supreme Court is to allow even concessionaires, who are enjoying a Work Order issued by the 'NHAI' prior to 21.03.2024, to engage in extraction, sourcing, and borrowing of ordinary earth for linear projects, without having to apply for or obtain an 'EC'. However, this inextricably ought to be as per the safeguards stipulated, or to be stipulated by the 'NHAI', and those which have been given approval by the learned Division Bench of this Court in Pradeep Kumar P. (supra)."

Implications for the Legal and Infrastructure Sectors

This judgment from the Kerala High Court serves as a vital precedent for similar disputes that may arise in other jurisdictions.

• Legal Certainty for Concessionaires: It provides immediate legal certainty and operational continuity for infrastructure companies with pre-March 21, 2024 contracts, protecting them from unforeseen delays and the significant costs associated with obtaining retrospective ECs.
• Balancing Development and Environment: The ruling exemplifies a balanced judicial approach. It respects the Supreme Court's primary environmental ruling by ensuring future projects comply with a stricter regime (via the new SOPs) while using the apex court's clarification to avoid chaotic disruption to established projects.
• Emphasis on Contractual Flow-Down: The decision reinforces the principle that rights and exemptions granted to a principal entity (NHAI) in the context of a specific project can extend to its agents and contractors, provided the work is performed for the principal's purpose.
• Guidance for Future Contracts: The legal journey from exemption to its quashing and subsequent clarification will undoubtedly influence how the NHAI and other government bodies structure future contracts, likely incorporating more explicit clauses regarding environmental compliance and risk allocation.

The Court has left other potential issues open for future adjudication, but its clear and reasoned order on the primary question of EC exemption provides a stable foundation for a critical sector of the nation's economy.

Case Details: - Case Title: Anirudh Karthikeyan v State of Kerala and Others - Case Number: ICR(WP(C)) 25/ 2025- Bench: Justice Devan Ramachandran and Justice M B Snehalatha