Can an establishment employing about 8000 workers be shut down for not obtaining Environmental Clearance, even when it acts in compliance with required pollution norms? SC answers

Supreme Court: The Division Bench comprising of Indira Banerjee*and J.K. Maheshwari, JJ., held that although to protect future generations and to ensure sustainable development, it is imperative that pollution laws be strictly enforced, were the adverse consequences of denial of ex post facto approval of Environment Clearance outweigh the consequences of regularization of operations by grant of ex post facto approval, and the establishment concerned otherwise conforms to the requisite pollution norms, ex post facto approval should be given in accordance with law, in strict conformity with the applicable Rules, Regulations and/or Notifications.

Question of Law

The question of law to be answered was that whether an establishment employing about 8000 workers, which has been set up pursuant to Consent to Establish (CTE) and Consent to Operate (CTO) from the concerned statutory authority and has applied for ex post facto EC can be closed down pending issuance of Environmental Clearance (EC), even though it may not cause pollution and/or may be found to comply with the required pollution norms.

Grievance of the Appellants

The Appellants carry on business, inter alia, of manufacture and sale of basic organic chemicals, namely, Formaldehyde. The manufacturing units fell in the category of Micro, Small and Medium Enterprise (MSME) as defined under the Micro, Small and Medium Enterprises Development Act, 2006.

It was the case of the Appellants that they were under bona fide impression that EC was not required for setting up units which manufactured Formaldehyde. Even the Haryana State Pollution Control Board (HSPCB) itself was not sure of whether EC was required for such units. The appellants contended that on the basis of CTE granted by HSPCB, they had set up their units taking huge loans from banks for which repayments had to be paid in installments.

Impugned Order of NGT

Considering that the HSPCB itself was under the misconception that prior EC was not necessary for units of the Appellants, Department of Environment and Climate Change of the Government of Haryana had took a policy decision dated 10-11-2020 to allow the units which did not have prior EC to operate for six months, on condition that they would apply for EC within sixty days. Pursuant to which a Non-Governmental Organisation,  “Dastak” filed an application before the National Green Tribunal (NGT) challenging the order dated 10-11-2020 passed by the State of Haryana. The NGT held that establishments which did not have prior Environmental Clearance (EC) could not be allowed to operate.

Related Notifications

Noticeably, the Central Government issued a notification being S.O. 804(E) dated 14-03-2017 providing for grant of ex post facto EC for project proponents who had commenced, continued or completed a project without obtaining EC. Further, the Ministry of Environment, Forest and Climate Change issued a draft notification for dealing with cases of violation of the notification with regard to EC. It was proposed that cases of violation would be appraised by the Appraisal Committee with a view to assess whether the project had been constructed or operated at a site which was permissible under prevailing laws and could be run sustainably on compliance of environmental norms with adequate environmental safeguards. Closure was to be recommended if the findings of the Appraisal Committee were in the negative. If the Appraisal Committee found that such unit had been running sustainably upon compliance of environmental norms with adequate environment safeguards, the unit would be prescribed appropriate Terms of Reference (TOR) after which the procedure for grant of EC would follow.

Factual Analysis

The Appellants duly applied for EC in respect of their manufacturing units and the Expert

Appraisal Committee, after scrutinizing their applications and finding the units suitable for grant of EC in terms of the prevailing guidelines, conducted a public hearing to finalize the cases of the Appellants for issuance of Terms of Reference. Hence, the Bench noted that ToR was already granted, a public hearing had been conducted and only the last procedural step of issuance of EC was left. The Bench observed:

  • The units of the Appellants were totally non-polluting units having “Zero Trade discharge”.
  • They had been in operation for many years in good faith with valid CTOs granted by the HSPCB.
  • The units were not causing pollution hazards. The only thing against the units was the procedural lapse of not obtaining EC.
  • The manufacturing units of the Appellants appoint about 8,000 employees and have a huge annual turnover.

The Bench held that the requirement to obtain EC is non-negotiable and EC is granted on condition of the suitability of the site to set up the unit, from the environmental angle, and also existence of necessary infrastructural facilities and equipment for compliance of environmental norms. However, the Bench stated,

“An establishment contributing to the economy of the country and providing livelihood ought not to be closed down only on the ground of the technical irregularity of not obtaining prior Environmental Clearance irrespective of whether or not the unit actually causes pollution.

Validity of Ex-post Facto Environmental Clearance

The Bench clarified that although it had been held in Electrosteel Steels Ltd. v. Union of India, 2021 SCC online SC 1247, that ex post facto Environmental Clearance should not ordinarily be granted, and certainly not for the asking, however the same cannot be declined with pedantic rigidity, oblivious of the consequences of stopping the operation of mines, running factories and plants; particularly when the Environment (Protection) Act, 1986 does not prohibit ex post facto Environmental Clearance.

Holding that the grant of ex post facto EC in accordance with law, in strict compliance with Rules, Regulations, Notifications and/or applicable orders, in appropriate cases, where the projects are in compliance with, or can be made to comply with environment norms is not impermissible, the Bench remarked,

“The Court cannot be oblivious to the economy or the need to protect the livelihood of hundreds of employees and others employed in the project and others dependent on the project, if such projects comply with environmental norms.”

However, the Bench added that under no circumstances can industries, which pollute, be allowed to operate unchecked and degrade the environment, therefore, ex post facto environmental clearance should not be granted routinely, but in exceptional circumstances taking into account all relevant environmental factors.

Verdict

In the light of the above, the Bench directed the government to decide applications of the Appellants for EC in accordance with law within one month and that pending decision, the operation of the manufacturing units, in respect of which consents had been granted and even public hearing held, should not be interfered with. The appeal was allowed and the impugned decision was set aside.

[Pahwa Plastics Pvt. Ltd. v. Dastak NGO, 2022 SCC OnLine SC 362, decided on 25-03-2022]


*Judgment by: Justice Indira Banerjee

Appearance by:

For the Appellants: Advocate Tarun Gupta

For the Respondents: Surender Singh Hooda[R-1], Sanjay Kumar Visen[R-9] and Gurmeet Singh Makker[R-11]


Kamini Sharma, Editorial Assistant has put this report together

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