Alembic Pharmaceuticals Ltd. vs Rohit Prajapati . on 1 April, 2020


Supreme Court of India

Alembic Pharmaceuticals Ltd. vs Rohit Prajapati . on 1 April, 2020

Author: Hon’Ble Dr. Chandrachud

Bench: Hon’Ble Dr. Chandrachud, M.R. Shah

                                                                          REPORTABLE




                              IN THE SUPREME COURT OF INDIA
                               CIVIL APPELLATE JURISDICTION

                                   Civil Appeal No. 1526 of 2016



          Alembic Pharmaceuticals Ltd.                             ...Appellant



                                              Versus



          Rohit Prajapati & Ors.                                   ...Respondents

With

Civil Appeal No 3175 of 2016

With

Civil Appeal Nos 6604-6605 of 2016

And With

Civil Appeal No 1555 of 2017

Signature Not Verified

Digitally signed by
CHETAN KUMAR
Date: 2020.04.01
19:45:27 IST
Reason:

1
JUDGMENT

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 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 appeal 3.

2. The Environmental Impact Assessment4 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 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:

1 “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”

2
“… 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 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 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 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 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;

(iii) All the industrial activities which were being operated without a valid EC

and consent to operate shall be closed down within one month;

6 “Environment Protection Act 1986”
7 “GPCB”

3

(iv) Each of the units shall deposit a compensation of ₹ 10 lakhs for having

caused environmental degradation; and

(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:

(i) United Phosphorous Ltd – the sixth respondent;

(ii) Unique Chemicals – the seventh respondent;

(iii) Darshak Private Limited – the eight respondent; and

(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 in the lead appeal before this Court.

Darshak Private Limited merged 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 and API – II,

respectively.

EIA Notification of 1994

4

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 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 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 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 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
setting up of the project may be undertaken till the
environmental and site clearances is obtained.”

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

8 “Environment Protection Rules”
9 Which was (substituted on 4 May 1994)

5
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 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 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 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 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:

“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 prior environmental
clearance in violation of the EIA Notification of 27 January
1994.”

6

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 areas” on a graded scale linked to the

investment in the project. This was indicated in a tabulated form which read thus:



A     Projects with investment upto ₹ 100 crores            1 % of the project cost with a
                                                            minimum of ₹ 50,000
B     Projects with investment beyond ₹ 100 crores and upto 0.5% of the project cost
      ₹ 1,000 crores                                        subject to a minimum of ₹ 1
                                                            crore and a maximum of ₹
                                                            2.5 crores
C     Projects with investment exceeding ₹ 1000 crores      0.25 % of the project cost
                                                            subject to a maximum of ₹ 5
                                                            crores



Units which failed to comply with the extended deadline were to 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 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 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

7
judgment of the NGT which was dismissed. The affected industrial units and the

MoEF are in appeal before this Court.

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 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 consideration of all material factors.

The relevant details in support of the submission are thus:

Darshak Private Limited (API – I)

(a) An EC was granted on 14 May 2003 for a capacity of 15 MT per

month;

(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.

Nirayu Private Limited (API – II)

(a) An EC was granted on 14 May 2003 for a capacity of 47 MT per

month; and

8

(b) An EC was granted on 20 December 2016 for an expanded capacity

of 300 MT per month.

(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 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 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 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:

(a) On 17 July 1992, GPCB granted an NOC to establish and 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 1981 11to

API – I;

(c) On 11 October 1999, GPCB granted API – I an authorisation to operate

under the Water (Prevention & Control of Pollution) Act 1974 12;

(d) On 24 May 1985,GPCB granted API – II a consent order under the

Water Act;

10 “NOC”
11 “Air Act”
12 “Water Act”

9

(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 granted a

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, GPCB

granted a consolidated consent and authorisation to API – II.

(v) A public hearing was not mandatory under the EIA notification of 1994.

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 made an investment of over

₹ 293 crores and employed a labour force of over 1000 workers; and

(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.

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 extended to 30 June 2001 was

13 “Hazardous Waste Rules”

10
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 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);

(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 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 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

(v) The challenge by the first and second respondents was to the 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:

11

(a) On 3 October 1992, GPCB granted an NOC to the 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 consent and

authorisation to the appellant’s manufacturing unit;

(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 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 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.

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 and intermediates;

(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

(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

14 2018 (11) SCC 734

12
above EC was amended allowing an increase in the number of

products permitted to be manufactured by the appellant.

(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 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 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 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 unit;

15 (2005) 11 SCC 559
16 (2011) 7 SCC 338
17 (2016) 9 SCC 300

13

(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:

(a) On 30 September 1995, GPCB issued an ‘air consent order’ under the

Air Act;

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

(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-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

(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.

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 clearances.

Any ex post facto approval is void and the benefit of the circular cannot be

14
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 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 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 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 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 Act 1986. In Tamil

Nadu Pollution Control Board v Sterlite Industries (I) Ltd 19 (“Sterlite”) this

Court analysed the adjudicatory functions which have been entrusted to the NGT

under the National Green Tribunal Act 2010 20. Justice R F Nariman, speaking for

a two judge Bench held that while exercising its jurisdiction under Section 16, the

NGT cannot strike down rules or regulations made under the Environment

18 (2017) 9 SCC 499
19 2019 SCC Online SC 221 / Civil Appeal nos 4763-4764 of 2013
20 “NGT Act”

15
Protection Act 1986. In coming to this conclusion, the Court relied on the decision

in Bharat Sanchar Nigam Limited v Telecom Regulatory Authority of India 21,

where the appellate power contained in Section 14 of the Telecom Regulatory

Authority of India Act22 1997 was interpreted. After adverting to this decision,

Justice R F Nariman 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 Nadkarni, learned

Additional Solicitor General made an attempt to demonstrate that the power to

issue the circular dated 14 May 2002 that extended the deadline for defaulting

units to avail of an ex post facto 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 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 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

21 (2014) 3 SCC 222
22 “TRAI Act”

16
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”. 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 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:

“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 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 stringent action.”

(Emphasis supplied)

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 and preventing,

17
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 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 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. 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 ex post 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 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

18
to indicate that the requirement is 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 is sought to be

achieved by the administrative circular dated 14 May 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 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 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 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

19
“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 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 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 v Union of

India23 (“Common Cause”), Justice Madan B Lokur rejected the submission

which was urged on behalf of mining leaseholders that:

“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:

“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. 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
23 (2017) 9 SCC 499

20
renewal of a mining lease where there is no expansion or
modernisation of any 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 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 its grant.”

(Emphasis supplied)

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 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.

Requirements such as conducting 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 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

21
ex post facto clearance. This would be contrary to both the precautionary

principle as well as the need for 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 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 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)
Date Permission/Consent/Authorisation Granted
17 July 1992 GPCB issued a no objection certificate to establish an industrial unit
for the manufacture of the following items at API –I: (i) Ciprofloxacin
(1.25 MT pm); and (ii) Norfloxacin (2.5 MT pm)
11June 1997 GPCB granted no objection certificate for manufacturing additional
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 additional
12 July 1997 items at API–I
and 27 July
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

22
Between 27 GPCB issued various consents under the Air Act, Water Act and
September Hazardous Waste Rules.

2002 – 23
December
2011

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 authorising to operate API –II
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
(2 MT pm); (ii) 2 Mercapta (5 MT pm); (iii) Methoxy orthoxymethyl
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 authorising to operate API –II
1993
4 December GPCB granted no objection certificate for manufacturing additional
1995 items at API–II
4 October 1996 GPCB issued air consent order to operate API–II
and 17 April
1998
1 September GPCB granted consolidated consent and authorisation to operate
1999 API–II
12 November GPCB issued water consent order to operate API –II
1999
14 December GPCB issued authorisation to operate API –II under the Hazardous
2001 Waste Rules
Between 27 GPCB issued various consents under the Air Act, Water Act and
September Hazardous Waste Rules.

2002     –    6
January 2015




Table B: List of environmental clearances granted to Alembic Pharmaceuticals
Limited
Darshak (API–I)
Date of Date of Public EC for Expansion (Quantity) Date EC Granted
Application Hearing
21 July 30 January 2002 Manufacturing of various bulk 14 May 2003 as per
2001 drugs and intermediate the 1994 EIA

23
products with a total capacity of notification
15 MT pm
8 December 9 October 2007 Expansion of total capacity of 16 April 2008 as per
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
September active pharmaceutical per the 2006 EIA
2015 ingredients from 25 to 75 MT notification
pm

Nirayu Private Limited (API–II)
Date of Date of Public EC for Expansion (Quantity) Date EC Granted
Application Hearing
20 July 30 January 2002 Manufacturing of various bulk 14 May 2003 as per
2001 drugs and intermediate the 1994 EIA
products with a total capacity of notification
47 MT pm
28 March 12 June 2015 Expansion of total capacity of 20 December 2016
2016 active pharmaceutical as per the 2006 EIA
ingredients and intermediates notification
from 47 to 300 MT pm

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
31 January Gujarat Industrial Development Corporation granted land to the
1992 appellant to establish and run unit no 2
9 March 1992 GPCB issued no objection certificate 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 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 unit no 2 for
1995 manufacturing of two additional products – 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
25 July 2012 GPCB issued consent to establish (NOC) for expansion of unit no 2

24
11 May 2015 GPCB granted a consolidated consent and authorisation for the
and 27 April expanded operations
2017

Table B: List of environmental clearances granted to United Phosphorus Limited
Unit no 2 – Plot no 3405 and 3406

Date of Date of Public EC for Expansion (Quantity) Date EC Granted
Application Hearing
21 August 16 January 2002 Manufacturing of Phorate and 17 July 2003 as per
2002 Terbuphose (300 MT pm EIA notification of
combined) and Acephate (80 1994
MT per month)
20 October Expansion of pesticides and April 15 2008 as per
2007 – intermediate products. EIA notification of

– Production of Phorate and 2006
Terbuphose to be increased
to 500 MT pm combined

– Production of Acephate to
be increased to 1000 MT pm

– – Enhanced capacity of 9546 10 January 2020 as
MT per month (as per written per EIA notification
submissions) of 2006
Table A: List of permissions, consents and authorisations granted to 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 (site
clearance) at plot no 5
30 September GPCB issued air consent order authorising to operate unit at plot no 5
1995
25 December GPCB issued a no objection certificate to set up and manufacture the
1995 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 (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
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 to the
and 26 June unit at plot no 5 granted on 15 April 2009
2012
30 May 2011 GPCB granted no objection certificate to set up a gas-based power

25
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 to the
2013 unit at plot no 5 for manufacturing of bulk drugs and intermediates
1 July 2016 The appellant was certified as a zero liquid discharge unit
25 January GPCB granted a new consolidated consent and authorisation to the
2019 unit at plot no 5
25 October GPCB issued a revised consolidated consent and authorisation for
2019 increase in the number of products that were permitted to be
manufactured at the unit at plot no 5

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

Date of Date of Public EC for Expansion (Quantity) Date EC
Application Hearing Granted
30 June 25 January Total capacity 78.02 MT pm of bulk 23 December
2001 2002 drugs and intermediates. 2002 as per EIA
Manufacturing of (i) Diclofenac notification 1994
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
MT pm); (vi) Phentolamine HCL (10
MT pm); (vii) Diltazem HCL (1 MT
pm); and (viii) other co-products
12 January Exempt – For an increase in manufacturing of 8 August 2007
2007 proposed bulk drugs and intermediates from a as per EIA
project located total capacity from 78.02 MT pm to notification 2006
in notified 116.12 MT pm
industrial area
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 power plant
with 1.3 MW capacity
16 March Exempt – For an increase in manufacturing of 30 June 2018
2018 proposed bulk drugs and intermediates from a as per EIA
project located total capacity from 78.02 MT pm to notification 2006
in notified 290 MT pm by setting up of synthetic
industrial area organic chemicals manufacturing
plant
Amendment to the EC dated 30 10 April 2019

26
June 2018 increasing the number of as per the 2006
products permitted to be EIA notification
manufactured by the appellant at the
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 industries had been set up and

had commenced production. GPCB issued a notice to United Phosphorus Limited

on 30 April 2001 directing them 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 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 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 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

27
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 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 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 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 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.

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

28
not required to obtain ECs. Clause 8 to the explanatory note to the EIA

notification of 1994 states 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
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”

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 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 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

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

29
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.

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)

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 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:-

(A)

(B)

(C)

(D) Adequate arrangement for the management and handling
of hazardous waste shall be made:

IMPORTANT NOTE

(1)

(2)

30
(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.

(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.”

(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 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 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 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

31
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 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. 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 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 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

September 1993. Consent to operate API – II under the Water Act was issued on

32
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 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 Phosphorous Limited

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 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 later on

27 August 2009 under the Air Act, Water Act and Hazardous Waste

(Management, Handling and Trans boundary Movement) Rules 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

33
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.

32. Unique Chemicals Limited

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, 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 notification 1994.

33. From the material placed on the record by the industries, 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 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 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

34
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

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.

34. We have therefore come to the conclusion that 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.

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 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 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 pollution 25. In the Interim Assessment of CEPI for

2011, the report indicates similar critical figures 26 of pollution in the Ankleshwar

24 “CEPI”
25 CEPI score – 88.50
26 CEPI score – 85.75

35
area. The CEPI scores 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.

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 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 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 v Union of India30 (“Lafarge”) has

upheld the decision to grant ex post facto clearances with respect to limestone

27 CEPI score – 80.93
28 CEPI score – 80.21
29 (2005) 11 SCC 559
30 (2011) 7 SCC 338

36
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

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:

“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 gainsaid
that utilization of the environment and its natural
resources 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-
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 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 principles, and free from any
bias or restraint. Once this is ensured, then the doctrine of
“margin of appreciation” in favour of the decision-maker would
come into play.”

(Emphasis supplied)

37

37. After adverting to the decision in Lafarge, another Bench of three learned

judges of this Court in Electrotherm (India) Limited v 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 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 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 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. 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
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 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

31 (2016) 9 SCC 300

38
consultation/public hearing shall be organised by the
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 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 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 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 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

39
the NGT, we are of the view that it 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 the conclusion, for

the reasons indicated, that the direction for the revocation of the ECs and the

closure of the industries was not warranted, 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 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 well as the order in review dated 17 May 2016.

Pending application(s), if any, shall stand disposed of.

………………………….……………………..J.

[Dr Dhananjaya Y Chandrachud]

…..…..…….………..……………….………..J.

[Ajay Rastogi]
New Delhi;

April 01, 2020.

40



Source link