Establishments operating under valid state consent cannot be closed for technical lack of prior environmental clearance.

The appellants operate formaldehyde manufacturing units in Rajasthan and Haryana. These units were established and operated based on Consent to Establish (CTE) and Consent to Operate (CTO) granted by respective State Pollution Control Boards (PCBs).

Subsequently, the PCBs issued orders (Rajasthan in 2019; Haryana in 2020) directing these units to apply for Environmental Clearance (EC) under the EIA 2006 Notification, as the authorities were previously unaware that such units required prior EC.

The National Green Tribunal (NGT) ordered the closure of these units on June 3, 2021, ruling that they could not operate without prior EC.

The units appealed, contending they are "non-polluting" with "zero trade discharge" and had already commenced the EC application process.

1. Whether industrial units established with statutory consents (CTE/CTO) but lacking prior Environmental Clearance due to administrative/technical oversight must be closed pending the grant of ex-post facto EC.

2. Whether the ratio of Pahwa Plastics Private Limited v. Dastak NGO (2023) applies to units with fewer employees than the 8,000 cited in that precedent.

Environment Impact Assessment (EIA) Notification dated 14.09.2006 regarding the requirement of prior EC for "synthetic organic chemical" industries under Entry 5(f).

The precedent of Pahwa Plastics Private Limited v. Dastak NGO (2023), which established that units contributing to the economy and complying with environmental norms should not be closed for technical irregularities like the lack of prior EC if the PCB itself was unaware of the requirement.

Vanashakti v. Union of India (2025) judgment and its subsequent review (2025) regarding the validity of ex-post facto clearances and the protection of completed projects.

The Court found that the factual matrix of the appellants was identical to Pahwa Plastics, as the NGT’s impugned orders solely relied on the Dastak NGO judgment which had already been set aside by the Supreme Court.

The Court reasoned that the appellants acted in bona fide reliance on the CTE/CTO granted by the State PCBs, who were themselves under a misconception regarding the necessity of prior EC.

It rejected the respondents' argument that Pahwa Plastics only applied to large-scale employment (8,000 workers), clarifying that the figure represented the cumulative impact on the formaldehyde industry rather than a threshold for a single unit.

Since the appellants had already completed the Screening, Scoping, and TOR stages of the EC process, and some were exempt from public consultation by being in notified industrial estates, the Court determined that closing them during the final "Appraisal" stage would be pedantic and economically harmful.

The Court allowed the appeals and set aside the NGT’s closure orders, directing the Union of India to decide on the EC applications within one month and restoring electricity subject to payment of charges.