Demolition Of Completed Projects Results In Throwing Valuable Public Resources In Dustbin: Supreme Court Recalls ‘Vanashakti’ Judgment

The Supreme Court with 2:1 majority has recalled its Judgment dated May 16, 2025 passed in the case of Vanashakti v. Union of India (2025 INSC 718), in which it struck down the 2017 notification and the 2021 Office Memorandum (OM) issued by the Central Government, which provided for the grant of ex post facto Environmental Clearances (EC), declaring them as illegal.

The three-Judge Bench of Chief Justice of India (CJI) B.R. Gavai, Justice Ujjal Bhuyan, and Justice Vinod Chandran was deciding a Review Petition filed by the Confederation of Real Estate Developers of India (CREDAI), seeking recall of the said Judgment and final Order.

CJI Gavai observed, “I am in complete agreement with the aforesaid observations of this Court in the case of Bindu Kapurea (supra), to the effect that demolition of the projects already completed would rather than being in public interest would result in throwing the valuable public resources in dustbin.”

Justice K. Vinod Chandran while concurring with CJI’s Judgment, said that the Judgment under review did not look into the aspects of the power conferred under the Environment Protection Act, 1986 (EP Act) and the legal principles regarding an undertaking given in derogation of the statutory provisions.

However, Justice Ujjal Bhuyan while dissenting, remarked, “The review judgment is an innocent expression of opinion. It overlooks the very fundamentals of environmental jurisprudence. Precautionary principle is the cornerstone of environmental jurisprudence. Polluter pays is only a principle of reparation. Precautionary principle cannot be given a short shrift by relying on polluter pays principle. The review judgment is a step in retrogression.”

Solicitor General Tushar Mehta appeared for the Union of India, Senior Advocate Kapil Sibal appeared for the State of Karnataka, and Senior Advocate Mukul Rohatgi appeared for the Review Petitioner.

Factual Background

In pursuance of the powers conferred by sub-section (1) and clause (v) of sub-section (2) of Section 3 of the EP Act, read with clause (d) of sub rule (3) of Rule 5 of the Environment (Protection) Rules, 1986 (EP Rules), the Central Government through the erstwhile Ministry of Environment and Forest (now the Ministry of Environment, Forest and Climate Change) issued a notification dated September 14, 2006 being the Environment Impact Assessment Notification 2006.

The activities coming under the regulatory regime were divided into two categories, one requiring prior EC from the MoEF&CC on the recommendations and assessment of the Expert Appraisal Committee (EAC), while the projects falling in the other category were to be assessed by the State Environmental Impact Assessment Authority (EIAA) on the recommendation of the State Expert Appraisal Committee (SEAC). The controversy arose insofar as another notification dated March 14, 2017 which made a provision for grant of ex post facto Environmental Clearance (EC) in respect of the projects which have been initiated and continued without prior EC under the EIA Not. 2006.

CJI Gavai’s Observations

In the above context of the case, CJI B.R. Gavai noted, “It is trite law that a Bench of two-Judges is bound by an earlier view taken by the other two-Judge Benches. If, however, a subsequent Bench of two Judges considers the law laid down earlier by another two-Judges Bench requires reconsideration, the only option available to it is to refer the matter to a larger Bench. A Bench of two-Judges cannot take a view contrary to the view taken by a Bench of co-equal strength.”

He reiterated that the Judgment delivered by a subsequent Bench of two Judges in ignorance of the earlier Judgment of a Bench of co-equal strength is per incuriam in law.

“… the Court, in case of mining leaseholders who had no EC, had suspended the mining operations, and permitted them to apply for EC and only upon obtaining the EC and payment of compensation, they were permitted to restart mining operations. The contention that the EC would be valid from the date on which the application made by the leaseholders was, however, rejected. In that view of the matter, I have no hesitation in holding that the judgment of this Court in the case of Common Cause (supra) cannot be considered a precedent to hold that no ex-post facto EC can be granted”, he held.

CJI said that a bare perusal of Section 15 of the EP Act would reveal that it deals with the aspect of penalty alone and neither does it permit nor prohibit the regularization of the underlying project.

“Thus, the observations of the two-Judges Bench in JUR that perusal of the provisions contained in Section 15 of the EP Act, shows that even after the payment of penalty if the project is under construction, the same has to be stopped and demolished, and even if the operation has already commenced, the same has to be stopped and demolished, does not correctly interpret the provisions of Section 15 of the EP Act”, he added.

He was of the view that if the Vanashakti Judgment is not recalled, it will result in demolition of various buildings/projects constructed out of public exchequer to the tune of nearly Rs. 20,000 crores.

“The purpose of an effluent treatment plant is to remove the pollutants from the sewage water and throw clean water into the streams. The question is whether demolition of such effluent treatment plants, constructed using huge public exchequer, would be conducive to the protection of environment or against it? … I, therefore, ask a question to myself as to whether it would be in the public interest to demolish all such projects and permit the money spent from the pocket of public exchequer to go in the dustbin?”, he remarked.

He further clarified that he is only considering the effect of the Vanashakti Judgment on the projects being undertaken by the Central Government, State Government, Public Undertakings etc. and the effect on the projects undertaken by the private individuals/entities may be manifold.

“At the cost of repetition, I state that even in accordance with the 2017 Notification and 2021 OM, an EC can be granted only in respect of the projects which are otherwise permissible in law. … I am, therefore, of the considered view that the effect of JUR would be that though projects, such as the ones referred to hereinabove, which are otherwise permissible in law, and for which the project proponents would be entitled to apply for an EC, they would have to be demolished and only thereafter, upon obtaining the EC, the project proponents can be permitted to construct the project again”, he observed.

He also said that if the Judgment is not recalled, it will have serious consequences in terms of demolition of projects which are either completed or about to be completed in the near future and which are of vital public importance constructed out of the public exchequer.

“In fact, if the JUR is permitted to operate rather than protecting the environment, it would result in creating even more pollution. I say so because if such large number of buildings/projects which have been completed or are near completion are demolished and they could be reconstructed shortly thereafter after obtaining EC as they were otherwise permissible; it would result in nothing but creating more pollution which could not have been the intention of the JUR”, he added.

Justice Chandran’s Observations

While agreeing with the opinion of allowing the review, Justice Vinod Chandran said, “As a necessary corollary, with all the respect at my command, I have to record my disagreement with the one rejecting the review, maintaining the judgment dated 16.05.2025. … I pen this only since I owe a duty to give reasons for my concurrence and since the opinion rejecting the review denounces the one permitting it.”

He remarked that liberty to dissent is the hall mark of a robust judicial system, distancing itself from an overbearing allegiance to one’s own beliefs of right and wrong.

“The balanced approach, in the wake of admitted violations, taken in Common Cause & Alembic, have been completely lost sight of, by the judgment under review. … The judgment under review failed to notice the decision in Electrosteel in its entirety and its attention was not drawn to Pahwa and D. Swamy. It is one thing to find Electrosteel, Pahwa and D. Swamy per-incuriam in the original proceeding, which would have restrained a review on that ground; but quite another to reject the prayer for review on the ground that though not noticed or referred to, those decisions are per incuriam; which still is a valid ground for review for not having been considered”, he observed.

He, therefore, concurred with the opinion of the CJI and concluded that the review is not only warranted, but imperative and expedient.

Accordingly, the Apex Court allowed the Review Petition, recalled the Judgment, and directed the Registry to place the case before the CJI on the administrative side for obtaining the necessary Orders.

Cause Title- Confederation of Real Estate Developers of India (CREDAI) v. Vanashakti and Another (Neutral Citation: 2025 INSC 1326)

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