Supreme Court Overturns Ban on Post-Facto Environmental Clearances in Contentious 2:1 Split Decision

New Delhi – In a significant and highly debated ruling, the Supreme Court of India on November 18, by a 2:1 majority, recalled its own landmark judgment in the Vanashakti case. The original May 15 decision had imposed a complete ban on the Union Government's practice of granting "post-facto" environmental clearances (ECs), a ruling hailed by environmental advocates as a crucial step towards enforcing regulatory discipline.

The review bench, comprising Chief Justice of India B.R. Gavai, Justice Ujjal Bhuyan, and Justice K. Vinod Chandran, delivered a fractured verdict that reopens the contentious debate over balancing environmental protection with economic and developmental realities. While CJI Gavai and Justice Chandran formed the majority in favour of recalling the judgment, Justice Bhuyan, who was part of the original bench that delivered the Vanashakti ruling, penned a powerful dissent.

The original Vanashakti v. Union of India judgment, delivered by a bench of Justice Abhay S. Oka and Justice Bhuyan, had invalidated government office memoranda and notifications that created a pathway for projects, particularly in the mining sector, to obtain an EC after they had already commenced operations—a direct contradiction of the "prior clearance" principle embedded in environmental law.

The recall of this judgment effectively nullifies the prospective ban and signals a potential return to a regime where operational illegalities can be regularized, a development that has profound implications for environmental jurisprudence and industrial projects nationwide.

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The Majority View: Pragmatism, Precedent, and Pollution Paradox

Chief Justice B.R. Gavai, delivering the lead opinion for the majority, grounded the decision to recall in several key arguments. The foremost was the assertion that the Vanashakti judgment was rendered without adequately considering prior judgments from coordinate benches that had adopted a more flexible stance on post-facto clearances.

"The Vanashakti judgment was rendered without taking notice of these judgments of coordinate benches," the CJI observed during the pronouncement.

The majority specifically cited Alembic Pharmaceuticals Ltd (2020), where a two-judge bench, while acknowledging that post-facto ECs were improper, nonetheless proceeded to regularize them upon payment of monetary penalties. More critically, the CJI highlighted the precedent set in D Swamy vs Karnataka State Pollution Control Board , where a coordinate bench held that "ex post facto clearances and/or approvals cannot be declined with pedantic rigidity" and could be granted in exceptional circumstances. The failure of the Vanashakti bench to engage with or distinguish D Swamy was presented as a foundational error necessitating the recall.

Furthermore, CJI Gavai introduced a "public interest" argument centered on a "pollution paradox." He noted that the only alternative to regularizing an existing structure built without prior EC is its demolition, followed by a fresh application.

"Demolition of such huge number of constructions, rather than reducing pollution, will add to the pollution and will not be in public interest," the CJI opined.

This pragmatic approach suggests that from a utilitarian perspective, penalizing and regularizing a non-compliant but otherwise permissible project is preferable to the environmental and economic waste of demolition and reconstruction.

Justice K. Vinod Chandran, concurring with the Chief Justice, provided a robust defense of the government's regulatory authority, stating the review was "not only warranted but imperative and expedient." He invoked Section 21 of the General Clauses Act, which posits that the power to create a regulation inherently includes the power to modify or rescind it. "When the prior requirement of EC was brought by the Government itself, the Government has the power to relax it as well," he reasoned.

Justice Chandran argued that the government's OMs allowing for post-facto EC were not arbitrary but were issued "taking note of the practical realities to balance the needs, noticing that a straightjacket implementation of a strict regulatory regime will also be counter-productive."

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The Dissent: A Stand for Rule of Law and Against Rewarding Illegality

In a sharply worded dissent, Justice Ujjal Bhuyan contended that no valid grounds for a review or recall had been established. He systematically dismantled the majority's reliance on precedents like D Swamy , arguing they were themselves legally flawed.

Justice Bhuyan asserted that foundational judgments like Common Cause (2018) and Alembic Pharmaceuticals Ltd had unequivocally established that post-facto EC is impermissible for projects that statutorily require prior clearance. He argued that subsequent decisions like D Swamy deviated from this established ratio and were, therefore, per incuriam —rendered in ignorance of binding law—and thus held no binding value on the Vanashakti bench.

Challenging the majority's "pollution paradox" argument, Justice Bhuyan made a powerful statement on the principle of accountability.

"The argument that demolition of properties will add to pollution cannot be accepted. It does not lie in the mouth of violators to advance such an argument to defend their illegalities," he declared.

His opinion underscores a core tenet of environmental law: that allowing violators to benefit from their non-compliance erodes the deterrent effect of the regulatory framework.

Significantly, Justice Bhuyan also pointed out that the primary respondent, the Ministry of Environment, Forest and Climate Change, had not filed a review petition, implying its acceptance of the original Vanashakti judgment. The push for review came primarily from industry bodies like the Confederation of Real Estate Developers' Associations of India (CREDAI) and public sector undertakings.

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Arguments and Implications for Legal Practice

The hearing saw a formidable lineup of senior counsel. Solicitor General Tushar Mehta, appearing for SAIL, argued the Vanashakti judgment suffered from an "error apparent on record" by overlooking the D Swamy case. Additional Solicitor General Aishwarya Bhati highlighted the practical fallout, stating that projects worth crores were stalled.

Opposing the review, Senior Advocate Gopal Sankaranarayanan, for Vanashakti, argued that the original judgment simply followed the established law from Alembic and rightfully "restrained the perpetuation of the mischief of granting post-facto ECs through circulars."

The recall of the judgment has far-reaching consequences:

1. Regulatory Uncertainty: The decision reintroduces ambiguity into environmental compliance. The clear red line drawn by the Vanashakti judgment has been erased, leaving the question of post-facto clearance to be decided on a case-by-case basis, likely leading to a surge in litigation.

2. Weakening of Deterrence: The ruling may inadvertently incentivize a "build first, seek clearance later" approach, as project proponents might weigh the risk of penalties against the costs and delays of upfront compliance.

3. Judicial Discipline: The case highlights the persistent issue of conflicting judgments between coordinate benches of the Supreme Court. The majority's view that the matter should have been referred to a larger bench underscores the need for greater judicial consistency.

4. Future of Environmental Jurisprudence: The judgment signals a potential shift from a strict, precautionary-principle-based approach to a more pragmatic, "balancing" framework that gives significant weight to economic considerations and post-facto regularization.

The case has now been directed to be placed before an appropriate bench for a fresh hearing on the merits. This next phase will be critical in shaping the definitive legal position on post-facto environmental clearances in India, with the sharply divergent views in this recall order setting the stage for a momentous legal battle.