The Supreme Court has quashed the Centre’s 2021 framework for granting environmental clearance to projects that began construction or operations without prior approval, ruling that statutory safeguards cannot be altered through an administrative order.A three-judge Bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul Pancholi held that the Office Memorandum issued on July 7, 2021, unlawfully created a continuing mechanism for regularising projects that had violated the mandatory prior-clearance regime.
The court said the government could introduce a limited scheme for post-facto environmental approvals only through a properly issued statutory notification under the Environment Act, 1986. Such exemptions must be narrowly designed, time-bound and justified by an overriding public interest rather than made routinely available to project developers.
The ruling preserves environmental clearances already granted under the 2021 memorandum and an earlier 2017 notification. Those approvals will remain valid unless challenged individually before an appropriate court or tribunal. The judgment will operate prospectively, limiting disruption to completed projects and investments made under the earlier regulatory framework.
No new applications can be accepted under the two schemes. Applications that were already pending, including those affected by earlier interim court orders, may be processed to their logical conclusion.
The dispute centred on the Environmental Impact Assessment Notification of 2006, which requires specified projects to secure clearance before beginning construction, expanding capacity or starting operations. The process is intended to assess ecological risks while alternatives in location, design and technology remain available.
The court found that the 2021 memorandum substantially changed that process. Once a project has been built, authorities can no longer meaningfully examine alternative sites or prevent damage before it occurs. Public consultation and environmental appraisal also take place after key commercial and physical decisions have become difficult to reverse.
Under the memorandum, projects operating without clearance could seek regularisation after undergoing environmental assessment and submitting remediation plans. Financial penalties included a percentage of project cost and turnover during the period of violation, alongside bank guarantees linked to restoration measures.
The Bench held that these provisions effectively established a parallel clearance system. Unlike the 2006 notification, which has the force of delegated legislation, the memorandum was an executive instruction that could not override or dilute a statutory framework.
The judges described the arrangement as a perpetual amnesty because it contained no meaningful cut-off date and was potentially available to a broad category of violators. The scheme also failed to distinguish projects deserving exceptional treatment from ordinary commercial developments that had ignored environmental obligations.
This open-ended structure placed law-abiding developers at a disadvantage, the court said, because projects that complied with prior-clearance requirements faced scrutiny before committing capital, while violators could proceed first and seek approval later.
The judgment found the memorandum inconsistent with the Environment Act and the constitutional guarantees of equality and protection of life under Articles 14 and 21. Environmental regulation, the Bench stressed, must balance development requirements with the precautionary principle and the right to a pollution-free environment.
The court nevertheless rejected an absolute prohibition on every form of retrospective clearance. It upheld the legal validity of the 2017 notification, which had created a limited window for dealing with projects operating without approval. That measure was issued through statutory powers, applied for a defined period and subjected projects to appraisal, compensation and remedial conditions.
The ruling clarifies a shifting legal position that has generated uncertainty for infrastructure, mining, manufacturing and real estate projects. A Supreme Court judgment in May 2025 had struck down both the 2017 notification and the 2021 memorandum, declaring post-facto clearance incompatible with environmental law.
