The Supreme Court has allowed several formaldehyde manufacturing units operating in Rajasthan and Haryana to continue functioning pending consideration of their applications for Environmental Clearance (EC), while setting aside the National Green Tribunal’s (NGT) directions ordering closure of the units for operating without prior EC.
The bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar has held that the industries had established and commenced operations after obtaining Consent to Establish (CTE) and Consent to Operate (CTO) from the respective Pollution Control Boards (PCBs), and therefore could not be shut down merely because prior EC had not been obtained at the initial stage.
The dispute arose from three original applications filed before the NGT alleging that formaldehyde manufacturing units had been established and operated without obtaining prior Environmental Clearance under the Environmental Impact Assessment (EIA) Notification, 2006. Acting on those pleas, the NGT on June 3, 2021 directed that such units could not continue operations without prior EC.
The Supreme Court noted that the NGT’s orders substantially relied upon its earlier decision in Dastak NGO, which had subsequently been set aside by the Supreme Court itself in Pahwa Plastics Pvt. Ltd. v. Dastak NGO.
Referring extensively to the Pahwa Plastics ruling, the Court observed that the Pollution Control Boards themselves were initially unaware that formaldehyde manufacturing units required prior Environmental Clearance under the EIA Notification. The Court recorded that the units had received valid CTE and CTO permissions from the concerned State PCBs and had commenced operations lawfully on that basis.
The bench emphasized that this was not a case where industries had deliberately bypassed environmental laws. Instead, it found that the respective Pollution Control Boards later realized that such units fell within the category of “synthetic organic chemicals” under Item 5(f) of Schedule I of the EIA Notification, 2006, following which notices were issued directing the industries to apply for EC.
The Court noted that the industries complied with those directions and filed applications for EC within the stipulated period. It further recorded that substantial progress had already been made in the EC process, including screening, scoping, grant of Terms of Reference (TOR), and in certain cases public consultation. For many units situated in notified industrial areas, public consultation had also been exempted.
The bench also examined the impact of the Supreme Court’s earlier rulings in Vanashakti v. Union of India and the subsequent review proceedings. The Court referred to the controversy surrounding the Ministry of Environment, Forest and Climate Change (MoEF&CC) Office Memorandums of 2017 and 2021 that permitted grant of ex-post facto environmental clearances.
While the earlier Vanashakti judgment had declared ex-post facto ECs impermissible in environmental jurisprudence, the review judgment later observed that important precedents including Pahwa Plastics had not been considered.
Relying on Pahwa Plastics, the Court reiterated that although ex-post facto EC should not ordinarily be granted, industries which had been established pursuant to approvals from statutory authorities and were already in operation should not automatically be closed merely because prior EC had not been obtained.
The Court further rejected the argument that Pahwa Plastics was confined only to cases involving large-scale employment. Clarifying the earlier judgment, Justice J.K. Maheshwari observed that the reference to approximately 8,000 employees in Pahwa Plastics covered all formaldehyde manufacturing units collectively, including the present appellants, and was not restricted to a single industrial unit.
The Supreme Court ultimately concluded that the facts of the present batch of appeals were substantially similar to those in Pahwa Plastics and therefore deserved identical relief.
Accordingly, the Court set aside the NGT’s closure directions and permitted the industries to continue operations subject to final decision on their EC applications. It directed the authorities to decide the pending EC applications within one month.
The Court also directed restoration of electricity supply to units where connections had been disconnected, subject to payment of dues. However, it clarified that if any EC application is ultimately rejected on grounds of contravention by the industries, authorities would be free to disconnect electricity and take fresh action in accordance with law.
Case Details
Case Title: Neetu Solvents Versus Vineet Nagar & Ors.
Citation: JURISHOUR-1124-SC-2026
Case No.: Civil Appeal No. 2881 Of 2021
Date: 06/06/2026
