The Supreme Court of India, in a closely divided 2:1 judgment dated 18 November 2025, held that retrospective environmental clearances may be granted for activities classified as "permissible" under the Environmental Impact Assessment (EIA) Notification, subject to penalty requirements. The majority comprising Chief Justice BR Gavai and Justice K Vinod Chandran overruled an earlier precedent in which such ex post facto clearances had been prohibited, declaring that decision to be per incuriam. Justice Ujjal Bhuyan dissented.
Background
The question of whether environmental clearances can be granted retrospectively — that is, after a project has commenced operations without obtaining the required prior clearance — has been among the most contested issues in Indian environmental law. Environmental activists have consistently argued that permitting ex post facto clearances incentivises non-compliance, as developers can proceed with projects and seek regularisation later.
The earlier Vanashakti precedent had taken a strict position, holding that retrospective environmental clearances were impermissible as they defeated the very purpose of the environmental assessment process. The CREDAI challenge, brought by the Confederation of Real Estate Developers' Associations of India, argued that this blanket prohibition failed to distinguish between genuinely permissible activities and those that could never qualify for clearance, resulting in disproportionate consequences for projects that were otherwise compliant.
Key Holdings
The three-judge Bench rendered a split decision with the following majority holdings:
Retrospective clearances permitted conditionally: The majority held that ex post facto environmental clearances may be granted where the activity in question falls within the category of "permissible activities" under the EIA Notification. The clearance is not automatic but contingent on the project meeting all substantive environmental standards.
Penalty requirement: Projects seeking retrospective clearance must pay prescribed penalties for the period of operation without clearance. The penalty framework serves as a deterrent while avoiding the disproportionate consequence of shutting down otherwise compliant projects.
Earlier precedent overruled: The majority declared the earlier Vanashakti decision per incuriam — holding that it was rendered without considering relevant statutory provisions that contemplate a compliance-based regularisation mechanism.
Dissenting view: Justice Ujjal Bhuyan, in a strong dissent, held that permitting retrospective clearances undermines the precautionary principle embedded in environmental law. The dissent reasoned that the EIA process is designed to assess environmental impact before a project commences, and retroactive approvals cannot replicate this preventive function.
Implications for Practitioners
This judgment significantly alters the landscape of environmental compliance litigation. Developers and project proponents operating without environmental clearances now have a judicially endorsed pathway to regularisation, provided their activities qualify as permissible under the EIA framework. Real estate, infrastructure, and industrial projects that had faced closure orders may seek retrospective clearances under this dispensation.
Environmental law practitioners should note the narrow scope of the majority holding — only "permissible activities" qualify. Projects in prohibited zones, ecologically sensitive areas, or those involving activities that could never have obtained prior clearance remain outside the scope of retrospective regularisation.
The 2:1 split and the robust dissent by Justice Bhuyan suggest that this issue may be revisited by a larger Bench in future. Practitioners advising environmental organisations should consider whether a reference to a larger Bench may be sought. The doctrinal question of whether the earlier decision was truly per incuriam may itself become the subject of further judicial examination.