CAM Comment: The Supreme Court’s landmark decision in Vanashakti v. Union of India categorically bars ex-post facto environmental clearances, signalling a decisive shift toward stricter, rule-based environmental governance in India. By striking down the 2017 Notification and 2021 Office Memorandum that enabled retrospective approvals, the Court has restored the primacy of ex-ante environmental scrutiny and constitutional accountability. This judgment has immediate and far-reaching compliance implications for businesses, regulators, and investors, making proactive environmental due diligence an operational and legal imperative.
Background
Environmental Clearances (“ECs”) under the EIA Notification, 2006, are mandatory ex-ante approvals granted by regulatory authorities to ensure that a project’s environmental impacts are assessed before it begins. In March 2017, the MoEF&CC issued a Notification[1] introducing a one-time amnesty mechanism for projects that had commenced without prior ECs, allowing them to regularise violations through a structured process. This was institutionalised by a July 2021 Office Memorandum[2] (later reiterated in 2022), which laid out the procedural framework for granting ex-post facto clearances.
In 2023, Vanashakti, an environmental NGO based in Mumbai, challenged these instruments as encouraging illegality (Vanashakti v. Union of India and Anr.[3]). The Supreme Court agreed, striking them down on May 16, 2025.
Supreme Court’s Reasoning
In a sweeping and emphatically reasoned judgment, the Supreme Court held that prior EC under the EIA Notification, 2006, is not merely a technical prerequisite, but a substantive legal safeguard. Reiterating principles it had previously laid down in Common Cause v. Union of India[4] and Alembic Pharmaceuticals v. Rohit Prajapati[5], the Court underscored that the Environmental Impact Assessment process is not designed to retrospectively analyse damage, it is a forward-looking instrument meant to prevent irreversible harm. Accordingly, granting environmental clearance after a project has already commenced violates the very rationale of the EIA framework and is fundamentally incompatible with the precautionary principle, which forms a part of the environmental rule of law in India.
The Court viewed the 2021 OM as more than administrative guidance. It was, in effect, a regulatory instrument that allowed widespread violation of the EC regime without adequate statutory backing. The ruling categorically stated that subordinate legislation cannot be used to nullify the mandatory requirement of prior environmental clearance. In strong terms, the Court criticised the regularisation mechanism as a legal shield for violators who were fully aware of the requirements under the EIA Notification, but chose to proceed with construction or operations. By allowing such projects to be retrospectively ‘legalised’, the MoEF&CC created a precedent for undermining the rule of law. It also diluted the constitutional and statutory protections intended to safeguard the environment.
Importantly, the Court observed that the regularisation process introduced by the 2017 Notification and the 2021 OM had evolved from an exceptional amnesty to a systematised workaround, thereby eroding the integrity of the EIA framework. It acknowledged that although ex-post facto ECs had been entertained in earlier decisions, such as Electrosteel Steels Ltd. v. Union of India[6], the judiciary could no longer permit such dispensations without fundamentally compromising the legal structure underpinning environmental regulation in India. With this verdict, the Court has drawn a decisive line, rejecting any further administrative or policy instruments aimed at enabling post-facto regularisation of projects, in violation of environmental norms.
Impact on Past and Ongoing Projects
The Court’s ruling, though stringent, is not devoid of pragmatism. Recognising that some projects had already secured ex-post facto ECs under the 2017 Notification, it clarified that clearances granted before the date of the judgment would not be invalidated retrospectively. This move ensures legal and economic stability for past approvals, thereby protecting vested rights and settled expectations. However, the decision firmly restrains regulatory authorities from issuing any further clearances under similar mechanisms. The path forward is unambiguous. No new project will be allowed to circumvent prior EC requirement through post-facto rationalisation.
This judgment has immediate consequences for projects across infrastructure, mining, manufacturing, ports, and energy sectors, where physical work has commenced without prior environmental clearance. Projects currently requiring approvals, for which applications were made under the 2021 OM, are likely to face rejection. Regulatory authorities such as the Expert Appraisal Committees (“EACs”) and the State Environmental Impact Assessment Authorities (“SEIAAs”) will now be constrained from processing such applications, even if procedural steps were undertaken.
Non-compliant projects, which had not initiated any regularisation process before the judgment, are now at risk of enforcement action. The implications range from show-cause notices and financial penalties to closure or demolition orders in extreme cases. Civil society and environmental interest groups are likely to rely on this judgment to file PILs targeting non-compliant projects. For previously approved ex-post ECs, while the judgment provides interim security, companies may still need to disclose such compliance pathways in their ESG reports, sustainability disclosures, and risk statements, especially where institutional investors or international lenders are involved.
Impact on future projects
For project developers and businesses, the Vanashakti ruling marks a turning point in how environmental risks are perceived and managed. With the removal of any possibility of ex-post clearance, the compliance bar is significantly raised. The EC process can no longer be viewed as a parallel administrative formality, it must be frontloaded into the earliest stages of project conceptualisation. This includes assessing EC applicability prior to land acquisition, building in clearance timelines, and accounting for site inspections and public consultation.
The judgment reinforces the need to integrate environmental compliance into core operations. Legal, ESG, and technical teams must work jointly, from the pre-feasibility stage, to ensure projects are environmentally sound, legally compliant, and socially viable. Contracts with vendors may also need to reflect EC timelines and obligations.
For investors, particularly those with ESG mandates, the ruling increases scrutiny during risk assessments. There is also a reputational angle. With growing judicial and media focus on violations, and investor reliance on ESG metrics, compliance lapses can affect confidence, valuation, and funding.
Conclusion
The Vanashakti judgment is a turning point in India’s environmental governance. By barring ex-post facto clearances, it restores the primacy of ex-ante environmental scrutiny and constitutional accountability. It cautions the executive against diluting statutory safeguards and signals stricter judicial review of such attempts. Regulators must now adopt stronger enforcement, inter-agency coordination, and real-time monitoring. For businesses and investors, environmental non-compliance is no longer a technical risk, but a legal liability. The judgment is both a warning and a guidepost, compliance must be anticipatory, deliberate, and embedded into core governance frameworks.
[1] https://environmentclearance.nic.in/ViewB_order.aspx?rid=83&pid=andhra%20pradesh.
[2] https://environmentclearance.nic.in/writereaddata/OMs-2004-2021/256_OM_07_07_2021.pdf.
[3] W.P. (C) No. 1394 of 2023.
[4] (2017) 9 SCC 499.
[5] (2020) 17 SCC 157.
[6] (2023) 6 SCC 615.