Alembic Pharmaceuticals v. Rohit Prajapati (2020): ex post facto environmental clearance is illegal

Few principles of Indian environmental law are now stated as firmly as the one this judgment settled: clearance must precede the activity, not follow it. In Alembic Pharmaceuticals Ltd. v. Rohit Prajapati, decided on 1 April 2020, a Bench of Justices Dr D.Y. Chandrachud (who authored the opinion) and Ajay Rastogi held that the very idea of a retrospective environmental clearance is incompatible with the statutory scheme of environmental protection. The case is remembered both for the categorical language with which it condemned the practice and for the pragmatic relief it ultimately fashioned.

The facts in brief

The dispute arose out of three industrial units in Gujarat — Alembic Pharmaceuticals Limited, United Phosphorus Limited and Unique Chemicals Limited — that had expanded or commenced operations without first obtaining the environmental clearance (EC) mandated by the EIA Notification dated 27 January 1994. The units later sought to regularise their position by relying on a circular issued by the Ministry of Environment and Forests on 14 May 2002, which extended the deadline for defaulting units to apply for and obtain a clearance after the activity had already begun — in other words, an ex post facto EC, subject to a graded financial contribution keyed to project cost.

Rohit Prajapati and other environmental activists challenged that circular and the clearances granted under it before the National Green Tribunal. The NGT set aside the 14 May 2002 circular, held that the law did not permit ex post facto clearances, and issued consequential directions, including a restitutionary penalty. The industrial units appealed to the Supreme Court.

The question

Two questions framed the appeal. First, did the EIA Notification of 1994 require a prior clearance, given that, unlike the 2006 Notification, it did not use the word "prior"? Second, could the administrative circular of 14 May 2002 validly create a route for post-facto clearance, and did the NGT have jurisdiction to strike it down? Underlying both was the larger issue of remedy: if the clearances were bad in law, did it follow that operating units that had since installed pollution-control measures must be shut down?

What the Court held

The Court rejected the textual argument advanced by senior counsel for the appellants. The absence of the word "prior" in the 1994 Notification made no difference: the operative words "shall not be undertaken... unless it has been accorded environmental clearance" admit of only one meaning, that the clearance must be obtained before the project is commenced or expanded. A mandatory provision requires complete compliance. The Additional Solicitor General himself conceded that a prior EC was required under the 1994 Notification.

On the circular, the Court held that an administrative communication could not amend or dilute a statutory notification. Section 3 of the Environment (Protection) Act, 1986 empowers the Central Government to take measures to protect and improve the environment; it could not be the source of authority for a measure that did the opposite by permitting non-compliance to be cured retrospectively. The circular of 14 May 2002 was therefore held to be illegal and unsustainable in law, and there was no jurisdictional bar on the NGT enquiring into its vires.

On relief, however, the Court declined to follow the logic of illegality to the point of closure. The three units had operated for years, employed a substantial labour force, and had since brought their pollution-control measures into compliance. Drawing on the precautionary and polluter-pays principles, the Court treated compensation, rather than shutdown, as the appropriate facet of environmental preservation. It directed each of the three units to deposit Rs 10 crore with the Gujarat Pollution Control Board, to be utilised for restoration of the environment — a sum in addition to that already directed by the NGT.

Analysis

The judgment is significant for separating the legality question from the remedy question and answering each on its own terms. On legality, it is uncompromising: a retrospective clearance subverts the entire decision-making architecture of environmental law — screening, scoping, public hearing and appraisal — all of which are meaningful only if conducted before the activity begins. Once a plant is operating, that appraisal becomes a fiction, because the very harm the assessment is meant to anticipate has already been set in motion. This reasoning aligns the decision squarely with the precautionary principle endorsed in Vellore Citizens' Welfare Forum v. Union of India and with the Court's earlier condemnation of post-facto clearances in Common Cause v. Union of India, on which the Bench expressly relied.

On remedy, the Court drew on the polluter-pays principle to craft a proportionate outcome. The restitutionary penalty is not a fine that legalises the breach; it is compensation earmarked for environmental restoration, reflecting the idea that the cost of degradation must fall on the polluter. The refusal to order closure is best read not as a softening of the legal rule but as an equitable accommodation of operating units that had since come into compliance — a balance between the rule of law and the practical consequences of shuttering functioning industry.

Why it matters

Alembic is now the leading authority for the proposition that environmental clearance is, by its nature, prior clearance, and that the executive cannot regularise past non-compliance by administrative fiat. Its dual structure — illegality of the practice, but a calibrated restitutionary remedy in place of closure — has been invoked repeatedly in later litigation over deemed and retrospective clearances. The tension between Alembic's strict rule and subsequent attempts to revive post-facto regularisation later resurfaced before the Court, including in the line of cases culminating in Vanashakti v. Union of India, where the legitimacy of office memoranda enabling ex post facto clearance was again in issue. For project proponents and regulators alike, the message of Alembic is unambiguous: build first and clear later is not a lawful sequence.

Related on Valkya

• Vellore Citizens' Welfare Forum v. Union of India
• Common Cause v. Union of India
• Vanashakti v. Union of India and the review
• Lafarge Umiam Mining v. Union of India: environmental clearance

Sources

• Supreme Court of India, Alembic Pharmaceuticals Ltd. v. Rohit Prajapati (Judgment dated 1 April 2020)
• LiveLaw, "'Ex Post Facto' Environmental Clearance Unsustainable In Law : SC" (2 April 2020)