In a dramatic turnaround that is set to have far-reaching consequences for India's infrastructure and real estate sectors, the Supreme Court on Tuesday (November 18) recalled its own judgment from May 2025 which had imposed a blanket ban on granting ex-post facto (retrospective) Environmental Clearances (EC).

Delivering a 2:1 split verdict, the bench headed by Chief Justice of India (CJI) B.R. Gavai and Justice K. Vinod Chandran allowed the review petitions filed by the Confederation of Real Estate Developers of India (CREDAI) and others. The majority held that the earlier judgment—delivered in the case of Vanashakti v. Union of India—had failed to consider binding precedents and the practical realities of public infrastructure.

However, Justice Ujjal Bhuyan, who was part of the original bench that delivered the May verdict, penned a sharp dissent. He maintained that permitting projects to operate first and seek clearance later is "anathema" (a curse) to environmental jurisprudence.

The Core Conflict: Demolition vs. Regularization

The controversy centers on a specific question: What happens to a project that starts construction without a prior Environmental Clearance?

In the original Vanashakti judgment (May 16, 2025), the Court had struck down the government's 2017 Notification and 2021 Office Memorandum (OM) which provided a "backdoor" for violators to pay a fine and get their projects regularized. The Court had ruled that the Environment Protection Act mandates a "prior" clearance, and allowing retrospective approval would encourage lawlessness.

The review petitioners, including CREDAI and the Union government (supporting the review), argued that this rigid interpretation put thousands of crores of public money at risk.

Solicitor General Tushar Mehta and Senior Advocate Kapil Sibal pointed to critical public projects like a 962-bed AIIMS hospital in Odisha and a Greenfield Airport in Karnataka. These projects, they argued, were near completion. Demolishing them due to a procedural lapse would be a colossal waste of the public exchequer.

The Majority View: "Demolition Adds to Pollution"

CJI B.R. Gavai, writing for the majority, accepted the argument that a pragmatic balance must be struck between environmental protection and development.

The CJI observed that the earlier Vanashakti bench had treated the issue as black and white, relying heavily on judgments like Common Cause (2017) and Alembic Pharmaceuticals (2020) to say post-facto EC is illegal. However, CJI Gavai pointed out that even in Alembic, the Supreme Court did not order the demolition of the industries. Instead, it allowed them to function after paying heavy penalties.

The majority judgment highlighted two key precedents—Electrosteel Steels Ltd. (2023) and D. Swamy (2023)—which were "ignored" by the Vanashakti bench. In Electrosteel, the Court had explicitly held that while post-facto ECs should not be the norm, they are not strictly prohibited by the Environment Protection Act and can be granted in exceptional cases.

"If the project is permissible under law, but only lacks a prior EC, the course available is to demolish it and then apply for a fresh EC to reconstruct it. Such a modus operandi would be counter-productive," CJI Gavai noted.

He posed a critical question:

"Would it be in the public interest to demolish projects like AIIMS or effluent treatment plants, constructed using huge public funds, and let the money go into the dustbin? Demolition of such huge constructions, rather than reducing pollution, will add to the pollution."

Justice K. Vinod Chandran, concurring with the CJI, emphasized that the government has the power to relax regulations to meet ground realities. He termed the Vanashakti judgment as per incuriam (rendered in ignorance of law) for failing to notice the binding ratio of the Electrosteel and D. Swamy judgments.

The Dissent: "A Step in Retrogression"

Justice Ujjal Bhuyan strongly disagreed. In his dissenting opinion, he argued that the review petition was effectively an appeal in disguise, which is not permitted in law.

Justice Bhuyan stood firm on the principle that "Environmental Law cannot countenance the notion of an ex-post facto clearance." He asserted that the 2017 Notification was meant to be a "one-time window" for violators to come clean. It expired in 2018. The government cannot keep extending this window indefinitely through Office Memorandums (like the 2021 OM) to regularize illegalities.

He criticized the reliance on judgments like Electrosteel and D. Swamy, stating that these judgments themselves were per incuriam because they deviated from the foundational law laid down in Common Cause and Alembic.

Justice Bhuyan wrote:

"The review judgment is a step in retrogression. It overlooks the very fundamentals of environmental jurisprudence. Precautionary principle is the cornerstone... it cannot be given a short shrift by relying on the ‘polluter pays’ principle."

He further rejected the "public interest" argument against demolition, stating that it does not lie in the mouth of law violators to use the "pollution caused by demolition" as a shield to protect their illegal constructions.

What This Means for the Industry

The recall of the Vanashakti judgment brings immediate relief to:

Real Estate Developers: Projects that started without EC but applied under the 2021 violation SOP can now hope for regularization instead of demolition.

Public Infrastructure: Major government projects like hospitals and airports that were stuck in legal limbo can proceed towards operationalization.

However, the Court has clarified that this does not mean a free pass. The majority judgment restores the 2017/2021 framework, which implies that violators will still have to pay heavy penalties and prove that their projects are environmentally sustainable to get the final nod.

Case Title: Confederation of Real Estate Developers of India (CREDAI) v. Vanashakti & Anr.

Bench: CJI B.R. Gavai, Justice Ujjal Bhuyan, Justice K. Vinod Chandran

Date of Judgment: November 18, 2025

JUDGEMENT LINK :- https://api.sci.gov.in/supremecourt/2025/41929/41929_2025_1_1501_66095_Judgement_18-Nov-2025.pdf