Industries Operating on Valid Pollution Board Consents Cannot Be Closed for Later-Discovered Environmental Clearance Requirement

Case Name: Neetu Solvents v. Vineet Nagar & Ors. with connected matters

Citation: 2026 INSC 455

Date of Judgment/Order: 6 May 2026

Bench: Justice J.K. Maheshwari and Justice Atul S. Chandurkar

Held: The Supreme Court held that formaldehyde manufacturing units which were established and operated on the basis of valid Consent to Establish and Consent to Operate granted by the respective State Pollution Control Boards cannot be directed to shut down merely because the requirement of prior Environmental Clearance was later realised by the Boards. The Court held that where the Pollution Control Boards themselves were earlier unaware that formaldehyde units fell within the EIA 2006 Notification, and the units applied for Environmental Clearance within the time granted after being asked to do so, the case was governed by the ratio of Pahwa Plastics. The Court clarified that such units may continue to operate while their Environmental Clearance applications are decided in accordance with law, unless clearance is rejected for contravention attributable to the units.

Summary: The appeals were filed by formaldehyde and resin manufacturing units situated in Rajasthan and Haryana against orders of the National Green Tribunal directing closure for want of prior Environmental Clearance. The NGT had relied on its earlier decision in Dastak N.G.O., which held that formaldehyde manufacturing units could not operate without prior Environmental Clearance. However, that very decision had later been set aside by the Supreme Court in Pahwa Plastics, where the Court permitted similar units to continue operations because they had been established pursuant to CTE and CTO and had applied for Environmental Clearance after the authorities realised the requirement. In the present case also, the appellants had obtained CTE and CTO from the respective Pollution Control Boards, had started operations on that basis, and later applied for Environmental Clearance within the stipulated period after office orders were issued by the Rajasthan and Haryana Pollution Control Boards. The Court noted that Screening and Scoping had been completed, Terms of Reference had been granted, public consultation was either exempted or completed, and only appraisal remained pending largely due to intervening litigation concerning ex-post facto Environmental Clearance.

Decision: The Supreme Court allowed the appeals and set aside the NGT’s closure directions against the appellant-units. The Court directed that the appellant-units, having been established and operated pursuant to CTE and CTO granted by the concerned Pollution Control Boards, shall be allowed to function and operate. The authorities were directed to decide the pending Environmental Clearance applications within one month, if not already decided, and pending such decision, the operations of the units shall not be interfered with unless otherwise required by law. Electricity, if disconnected, was directed to be restored subject to payment of charges. The Court further directed the Union of India to inform the appellant-units within three working days whether any further steps were required from them, whereafter the units were to comply within one week. Pending applications were disposed of.