Case at a Glance
The National Green Tribunal had ordered closure of formaldehyde and resin manufacturing units in Rajasthan and Haryana for operating without prior Environmental Clearance (EC). The Supreme Court found these units materially identical to those in Pahwa Plastics Private Limited v. Dastak NGO: they held Consents to Establish and Operate from the State Pollution Control Boards and had applied for EC when the Boards asked them to. Setting aside the closure direction, the Court allowed the units to operate, directed a decision on their EC applications within one month, and ordered restoration of disconnected electricity, subject to payment of charges.
The appellants run formaldehyde and resin (melamine, urea and phenol formaldehyde) units in Rajasthan and Haryana. Three original applications before the NGT’s Principal Bench complained that such units were operating without prior EC. On 3 June 2021 the NGT, in the Dastak N.G.O. matter, held that such units cannot operate without prior EC, and decided the other two applications the same day by relying on that order. The Supreme Court issued notice and stayed the order on 30 July 2021.
The units had Consents to Establish (CTE) and Consents to Operate (CTO) from the State Pollution Control Boards — Dee Bee Organics, for instance, from 1994 and 1996. The Rajasthan Board (office order of 19 August 2019) and the Haryana Board (office order of 10 November 2020) then directed units to apply for EC within sixty days. The units applied in time; Terms of Reference were granted, public consultation was exempted for most units in industrial areas, some completed public hearings, and two had already received EC. Meanwhile, in Pahwa Plastics Private Limited v. Dastak NGO, the Supreme Court had on 25 March 2022 set aside the Dastak order for other units in similar circumstances.
The Key Question Before the Court
Was the NGT justified in directing closure of formaldehyde units that held State Board consents and had applied for EC when asked, without independently examining each unit’s facts, and does Pahwa Plastics govern them?
Parity With Pahwa Plastics, and Why Vanashakti Did Not Change the Result
The Court found the units’ position materially identical to the units in Pahwa Plastics: CTE and CTO had been granted, EC was sought on the Boards’ direction, and the Boards themselves had not been aware that prior EC was needed. It observed that “the case in hand is not a one where the appellants established the units of formaldehyde and started operation due to lack of bona fide ignoring any requirement of law.” The original applicants’ argument that Pahwa rested on a wrong figure of 8,000 employees was rejected: the Court explained that the figure referred to all formaldehyde units in the industrial area, so it was not an error of fact. Their argument based on the absence of a deemed-consent provision in the Air Act, contrasted with Section 25(7) of the Water Act, was repelled because the Boards did not dispute the CTOs.
Quoting Pahwa, the Court reiterated that “Ex post facto EC should not ordinarily be granted, and certainly not for the asking.” It noted that in Vanashakti v. Union of India, (2025) 05 SC CK 0223 the Court had held that “ex-post facto EC is alien to the Indian environmental jurisprudence” and struck down the 2017 and 2021 office memoranda, and that the review in Confederation of Real Estate Developers of India (CREDAI) v. Vanashakti, (2025) 11 SC CK 1763 had been allowed. But the appellants’ EC applications were pending appraisal, and Pahwa still held the field, so its ratio was applied mutatis mutandis. The Court also referred to Common Cause v. Union of India, Alembic Pharmaceuticals Ltd. v. Rohit Prajapati and Electrosteel Steels Ltd. v. Union of India.
What the Court Actually Held
- The NGT’s closure direction against the appellant units was set aside; the units, established and operated under CTE and CTO from the State Boards, are allowed to function and operate.
- The authority must decide the units’ EC applications in accordance with law within one month, if not already decided; pending that decision, operations shall not be interfered with unless otherwise required.
- Disconnected electricity shall be restored subject to payment of charges; if EC is rejected for a contravention by the units, electricity may be disconnected and parties may take fresh recourse.
- The Union of India must inform the units in writing within three working days whether anything further is required, to be completed within a week.
Why This Judgment Matters
- It protects units that acted in good faith on State Board consents from abrupt closure while keeping the EC process intact.
- It confirms that Pahwa Plastics continues to apply to similarly placed units with pending EC applications.
- It sets tight timelines so that regulatory uncertainty does not linger indefinitely.
What Should Advocates Take Away From the Judgment?
For Industries and MSMEs
- Consents from the State Pollution Control Board and a timely EC application, made when directed, were decisive here.
- Closure is not automatic where a unit is bona fide and its EC application is pending appraisal.
- Comply quickly with any further requirement the Union communicates; the Court gave only a week.
For Counsel
- Build a unit-wise chronology of CTE, CTO, EC application and ToR dates to show parity with Pahwa Plastics.
- Distinguish Vanashakti v. Union of India where EC applications are pending and the unit is bona fide.
- Challenge NGT orders that apply a lead order mechanically without examining each unit’s facts.
Key Takeaways
- NGT closure of formaldehyde units in Rajasthan and Haryana set aside.
- Pahwa Plastics applied to bona fide units holding State Board consents.
- EC applications to be decided within one month; electricity to be restored.
- Ex post facto EC is still not to be granted for the asking.
Frequently Asked Questions
Can a factory operate without prior Environmental Clearance?
Ordinarily prior EC is required. But here the Supreme Court allowed units to operate because they held State Board consents, had applied for EC when directed, and their applications were pending, applying Pahwa Plastics.
Does Vanashakti bar these units?
The Court noted Vanashakti’s view that ex post facto EC is alien to Indian environmental law and that the review had been allowed, but held that Pahwa still held the field for these units with pending EC applications.
What happens if EC is refused?
If EC is rejected because of a contravention by a unit, the authorities may disconnect electricity and the parties may take fresh recourse in law.
Conclusion
The judgment avoids both extremes: it does not endorse ex post facto clearance as a routine cure, but refuses to shut down units that relied on State Board consents and promptly sought EC. The real test is now a time-bound, unit-specific EC decision.
Practical takeaway: For units facing closure for lack of prior EC, document State Board consents and the date of the EC application made on the Board’s direction — that parity is what secured relief here.
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