# ALEMBIC PHARMACEUTICALS LTD v. ROHIT PRAJAPATI & ORS

- **Citation:** [2020] 10 S.C.R. 677
- **Court:** Supreme Court of India
- **Decided:** 2020-04-01
- **Case number:** Civil Appeal No. 1526 of 2016
- **Bench:** Dr. Dhananjaya Y Chandrachud, Ajay Rastogi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/alembic-pharmaceuticals-ltd-v-rohit-prajapati-ors-34488
- **Pages:** 41

## Headnote

Environment (Protection) Act 1986 - s.3 - 1994 Environmental
Impact Assessment (EIA) notification mandated prior Environmental
Clearance (EC) for setting up and expansion of industrial units
falling within thirty categories - Deadline extended by various
circulars - 2002 Circular while further extending the deadline
allowed for ex post facto ECs - Quashed by National Green Tribunal
(NGT) - On appeal, held: Concept of an ex post facto EC is in
derogation of the fundamental principles of environmental
jurisprudence - It is an anathema to the 1994 EIA notification -
Allowing for an ex post facto clearance would essentially condone
the operation of industrial activities without the grant of an EC - It
would be contrary to both the precautionary principle as well as
the need for sustainable development - 2002 circular alters the
application of the 1994 EIA notification which has a statutory
character - Being an administrative decision, it is beyond the scope
of s.3 - It cannot be said to be a measure for protecting and
improving the quality of environment and is not protected by s.3 -
No jurisdictional bar on NGT to enquire into its vires - In case of
the three industries in question, no ECs were sought before the
commencement or expansion of operations, as mandated by the 1994
EIA notification - They continued to operate in the teeth of the said
notification - Further, none of these industries are entitled to the
benefit of the exemption contained in Clause 8 to the explanatory
note of the 1994 notification - However, NGT's directions for
revocation of the ECs and closure of the units do not accord with
the principle of proportionality - Industries to deposit compensation
of ` 10 crores each, in addition to the amount directed by NGT -
Environment (Protection) Rules 1986 - Constitution of India -
Art.142.
Environment (Protection) Act 1986 - Rules/Regulations under
- Jurisdiction of NGT to strike down - Discussed.
[2020] 10 S.C.R. 677
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[2020] 10 S.C.R.
Allowing the appeals, the Court
HELD: 1. Section 3(1), Environment (Protection) Act 1986
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
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".
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". 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,
controlling and abating environment pollution". The circular dated
14 May 2002 in fact does quite the contrary. 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 prohibit

## Text

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 ALEMBIC PHARMACEUTICALS LTD.
v.
ROHIT PRAJAPATI & ORS.
(Civil Appeal No. 1526 of 2016)
APRIL 01, 2020
[DR. DHANANJAYA Y CHANDRACHUD AND
AJAY RASTOGI, JJ.]
Environment (Protection) Act 1986 - s.3 - 1994 Environmental
Impact Assessment (EIA) notification mandated prior Environmental
Clearance (EC) for setting up and expansion of industrial units
falling within thirty categories - Deadline extended by various
circulars - 2002 Circular while further extending the deadline
allowed for ex post facto ECs - Quashed by National Green Tribunal
(NGT) - On appeal, held: Concept of an ex post facto EC is in
derogation of the fundamental principles of environmental
jurisprudence - It is an anathema to the 1994 EIA notification -
Allowing for an ex post facto clearance would essentially condone
the operation of industrial activities without the grant of an EC - It
would be contrary to both the precautionary principle as well as
the need for sustainable development - 2002 circular alters the
application of the 1994 EIA notification which has a statutory
character - Being an administrative decision, it is beyond the scope
of s.3 - It cannot be said to be a measure for protecting and
improving the quality of environment and is not protected by s.3 -
No jurisdictional bar on NGT to enquire into its vires - In case of
the three industries in question, no ECs were sought before the
commencement or expansion of operations, as mandated by the 1994
EIA notification - They continued to operate in the teeth of the said
notification - Further, none of these industries are entitled to the
benefit of the exemption contained in Clause 8 to the explanatory
note of the 1994 notification - However, NGT's directions for
revocation of the ECs and closure of the units do not accord with
the principle of proportionality - Industries to deposit compensation
of ` 10 crores each, in addition to the amount directed by NGT -
Environment (Protection) Rules 1986 - Constitution of India -
Art.142.
Environment (Protection) Act 1986 - Rules/Regulations under
- Jurisdiction of NGT to strike down - Discussed.
[2020] 10 S.C.R. 677
677
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SUPREME COURT REPORTS
[2020] 10 S.C.R.
Allowing the appeals, the Court
HELD: 1. Section 3(1), Environment (Protection) Act 1986
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
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".
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". 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,
controlling and abating environment pollution". The circular dated
14 May 2002 in fact does quite the contrary. 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
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purpose of protecting and improving the quality of the
environment. 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
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. [Paras 20, 21][697C-F; 698-A-E; 699-C]
Tamil Nadu Pollution Control Board v. Sterlite Industries
(I) Ltd. [2019] 3 SCR 777 - referred to.
2.1 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 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 ex post facto clearance. This
would be contrary to both the precautionary principle as well as
the need for sustainable development. 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. The
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& ORS.
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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. [Paras 23, 25][700-F-H; 701-A-C; 706G-H; 707-E-F]
Common Cause v. Union of India (2017) 9 SCC 499 :
[2017] 13 SCR 361- relied on.
2.2 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 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. 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 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. With
this background, it will now be assessed individually whether the
industries in question qualified for the exemption provided by
Clause 8 to the explanatory note.
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Alembic Pharmaceuticals Limited
(i) Darshak Private Limited (API - I)
The material produced on the record indicates that on 17
July 1992, Gujarat Pollution Control Board (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 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. The evidence
produced on the record by Darshak Private Limited indicates
that it did not have the requisite consents and 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. 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. 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.
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United Phosphorous Limited
No material has been produced to indicate that all relevant
clearances from the State government 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.
Unique Chemicals Limited
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. [Paras 28-32][708-E-F, G-H; 709-A-B, CD; 710-D, F-H; 711-A-C, D-F; 712-A-D]
2.3 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 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
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development but as a measure towards achieving sustainable
development and inter-generational equity. 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. [Paras 33, 34][712-D-H; 713-A]
2.4 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. 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.
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 breach by the
industries cannot be left unattended by legal consequences. The
three industries are directed to deposit compensation quantified
at ` 10 crores each. The amount shall be deposited with GPCB
and duly utilised for restoration and remedial measures to improve
the quality of the environment in the industrial area in which the
industries operate. This deposit shall be in addition to the amount
directed by the NGT. The impugned judgment of the NGT is set
aside in so far as it directed the revocation of the ECs and closure
of the industries as well as the order in review. [Paras 36, 38 and
39][713-G; 714-A; 716-C-D, E-F, G-H; 717-B-C]
Lafarge Umiam Mining Pvt Ltd v. Union of India (2011)
7 SCC 338 : [2011] 7 SCR 954; Electrotherm Ltd v.
Patel Vipulkumar Ramjibhai (2016) 9 SCC 300 - relied
on.
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Goa Foundation v. Union of India (2005) 11 SCC 559;
Techi Tagi Tara v. Rajendra Singh Bhandari & Ors.
(2018) (11) SCC 734 : [2017] 12 SCR 956; Bharat
Sanchar Nigam Limited v. Telecom Regulatory Authority
of India (2014) 3 SCC 222 : [2013] 12 SCR 999 -
referred to.
Case Law Reference
[2017] 12 SCR 956
referred to
Para 15
(2005) 11 SCC 559
referred to
Para 15
[2011] 7 SCR 954
relied on
Para 15
(2016) 9 SCC 300
relied on
Para 15
[2017] 13 SCR 361
relied on
Para 16
[2019] 3 SCR 777
referred to
Para 18
[2013] 12 SCR 999
referred to
Para 18
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1526
of 2016.
From the Judgment and Order dated 08.01.2016 of the National
Green Tribunal (Western Zone) Bench, Pune in Application No. 66 (THC)
of 2015 (WZ) Special Civil Application No. 17417 of 2003.
With
C.A. No. 3175 of 2016, C.A. No. 6604-6605 of 2016, C.A. No.
1555 of 2017.
A.N.S. Nadkarni, ASG, Kapil Sibal, Huzefa Ahmadi, Devang
Nanavati, C.U. Singh, Dr. Abhishek M. Singhvi, Parag P. Tripathi,
Sr. Advs., Ms. Ruby Singh Ahuja, Ms. Deepti Sarin, Ms. Kritika
Sachdeva, Ashutosh P. Shukla (for M/s. Karanjawala & Co.), Sandeep
Narain, Ankit Virmani, M. Chandra Sekhar, Joyti Prakash Sahu (for
M/s. S. Narain & Co.), Mahesh Agarwal, Rishi Agrawala, Ankur Saigal,
Anirudha Bhatia, Rohan Talwar, E. C. Agrawala, D.L. Chidanand, S.S.
Rebello, Arzu Paul, Neeleshwar Pavani, Ms. Riya Soni, Gurmeet Singh
Makker, Siddharth Seem, Satya Mitra, Ms. Hetvi Patel, A.P. Mayee, A.
Rajarajan, Sanjeev Kr. Choudhary, Mrs. Hemantika Wahi, Ms. Jesal
Wahi, Ms. Puja Singh, Ms. Ruchi Kohli, Ms. Nidhi Jaswal, Ms. Manyaa
Chandok, Ajay Marwah, Advs. for the appearing parties.
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The Judgment of the Court was delivered by
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 appeal3.
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:
"... to extend the deadline upto 31 March 2003 so that defaulting
units could avail of this last and final opportunity to obtain expost-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
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"
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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;
(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
6 "Environment Protection Rules"
7 "GPCB"
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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
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 "Environment Protection Rules"
9 Which was (substituted on 4 May 1994)
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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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 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."
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
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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
` 1,000 crores
0.5% of the project cost 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 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
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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consideration of all material factors. The relevant details in
support of the submission arethus:
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
(b)
An EC was granted on 20 December 2016 for an
expanded capacity of 300 MT permonth.
(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 certificate10 from GPCB has been
obtained before 27 January 1994, an EC is not required. In
this context it has been submitted that:
10 "NOC"
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(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 198111 to API - I;
(c) On 11 October 1999, GPCB granted API - I an authorisation
to operate under the Water (Prevention & Control of Pollution)
Act 197412;
(d) On 24 May 1985,GPCB granted API - II a consent order
under the Water Act;
(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
granteda 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
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]
11 "Air Act"
12 "Water Act"
13 "Hazardous Waste Rules"
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(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 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
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(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:
(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
manufacturingunit;
(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
andintermediates;
(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
14 2018 (11) SCC 734
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI
& ORS. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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(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 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;
(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;
15 (2005) 11 SCC 559
16 (2011) 7 SCC 338
17 (2016) 9 SCC 300
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(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 gasbased 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 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
18 (2017) 9 SCC 499
ALEMBIC PHARMACEUTICALS LTD. v. ROHIT PRAJAPATI
& ORS. [DR.