Legal Review and Analysis of Confederation of Real Estate Developers Association of India CREDAI vs Vanashakti & Anr 2025 INSC 1326

In-Short

Case: Confederation of Real Estate Developers’ Association of India (CREDAI) v. Vanashakti & Anr., Review Petition (C) No. of 2025 in W.P. (C) No. 1394 of 2023.
Related To: The Supreme Court, by a 2:1 majority, recalls its judgment that had banned the grant of ex post facto environmental clearances, holding that the previous decision ignored binding precedents and would lead to devastating economic and environmental consequences from the demolition of large-scale projects.

1. Heading of the Judgment

Confederation of Real Estate Developers’ Association of India (CREDAI) v. Vanashakti & Anr.
Citation: Review Petition (C) No. of 2025 (Diary No. 41929 of 2025) in Writ Petition (C) No. 1394 of 2023
Court: Supreme Court of India
Date: November 18, 2025
Coram: B.R. Gavai, C.J.I., Ujjal Bhuyan, J., and K. Vinod Chandran, J. (Split Verdict: 2:1)

2. Related Laws and Sections

The judgment primarily interprets and deals with the following legal frameworks:

• The Environment (Protection) Act, 1986:
  Section 3: Powers of the Central Government to take measures for protecting and improving environmental quality.
  Section 15: Penalties for contravention of the Act's provisions.

• The Environment (Protection) Rules, 1986:
  Rule 5: Prohibition and restriction on the location of industries and carrying on processes.

• Notifications and Office Memoranda:
  Environment Impact Assessment (EIA) Notification, 2006: Mandates prior Environmental Clearance (EC) for specified projects.
  Office Memorandum (OM) dated 07.07.2021: Provided a Standard Operating Procedure (SOP) for granting ex post facto EC.

• Constitutional Provision:
  Article 142: Empowers the Supreme Court to pass any decree or order necessary for doing complete justice.

3. Basic Judgment Details

This is a Review Petition filed by CREDAI seeking a recall of the Supreme Court's earlier judgment dated May 16, 2025 (the "JUR" or Vanashakti judgment). The JUR had declared the 2017 Notification and the 2021 OM—which provided a framework for granting ex post facto environmental clearances—as illegal and struck them down. The review was heard by a three-judge bench which delivered a split verdict.

4. Core Principle and Analysis of the Judgment

The core issue revolves around the legality and judicial propriety of the previous judgment that banned the grant of ex post facto Environmental Clearance (EC), and the consequential impact of that ban.

A. The Issue: The Legality of Ex Post Facto Environmental Clearance

The central legal conflict is whether the government can create a process to regularize projects that began operations or were completed without obtaining the mandatory prior Environmental Clearance (EC), a process known as granting ex post facto clearance.

• The Impugned Framework: The Ministry of Environment, Forest & Climate Change (MoEF&CC) issued a Notification in 2017 and an Office Memorandum in 2021 that established a procedure for projects in violation to apply for an EC. This process involved damage assessment, remedial plans, and heavy penalties under the "Polluter Pays" principle.

• The Original Judgment (JUR): The two-judge bench in the Vanashakti case (May 16, 2025) struck down this framework. It relied heavily on precedents like Common Cause and Alembic Pharmaceuticals to hold that the concept of ex post facto EC is "completely alien to environmental jurisprudence" and violates the precautionary principle. It directed that violating projects, even if near completion, must be stopped and demolished.

B. The Review Petition's Core Arguments

The petitioners argued that the JUR was flawed and required review on several grounds:

• Incomplete Precedent Analysis: It was contended that the JUR failed to consider crucial paragraphs from the very judgments it relied upon (Common Cause, Alembic Pharmaceuticals, Electrosteel Steels), which showed that in those cases, the Court had, in fact, allowed projects to regularize their operations upon payment of penalties, adopting a "balanced approach."

• Ignoring Binding Co-ordinate Bench Decisions: The JUR did not consider later co-ordinate bench judgments in D. Swamy v. Karnataka State PCB and Pahwa Plastics v. Dastak NGO, which had explicitly upheld the validity of the 2017 Notification and the 2021 OM. As per judicial discipline, a bench of equal strength is bound by such decisions.

• Devastating Practical Consequences: It was argued that the JUR's directive for demolition would lead to massive economic waste and environmental damage from the demolition itself. Examples included a fully constructed 962-bed AIIMS hospital in Odisha, a greenfield airport in Karnataka, and numerous public infrastructure projects, involving public funds exceeding ₹20,000 crore.

C. The Split Verdict and In-Depth Analysis

i. Majority View (Gavai, C.J.I. & Chandran, J.) - Allowing the Review

The majority, through the opinion of Chief Justice B.R. Gavai, held that the JUR suffered from an error apparent on the face of the record and was per incuriam (decided in ignorance of a binding statute or precedent).

• Judicial Discipline and Per Incuriam: The majority emphasized that the JUR, delivered by a two-judge bench, was bound by the earlier two-judge bench decisions in D. Swamy and Pahwa Plastics, which had validated the very instruments the JUR quashed. By taking a contrary view without referring the matter to a larger bench, the JUR violated judicial propriety. Therefore, it was not a binding precedent.

• Re-interpreting Precedents: The majority conducted a detailed re-analysis of Common Cause and Alembic Pharmaceuticals. It pointed out that while these judgments rhetorically condemned ex post facto EC, they ultimately permitted the violating projects to continue operations after imposing heavy penalties and environmental compensation. This "balanced approach" was the true ratio of those cases, which the JUR overlooked.

• Proportionality and Public Interest: The majority argued that the 2017 Notification and 2021 OM did not provide a free pass. They mandated a rigorous appraisal, and only projects that were "otherwise permissible in law" and could be made environmentally compliant were regularized. Demolishing such projects, only to rebuild them after a fresh EC, was deemed "counter-productive," causing more pollution and economic harm than the regularization process itself.

ii. Dissenting View (Bhuyan, J.) - Dismissing the Review

Justice Ujjal Bhuyan, in a strong dissent, argued that no grounds for review were made out.

• Upholding Foundational Environmental Principles: The dissent held that the JUR correctly followed the ratio decidendi (the core legal principle) of Common Cause and Alembic Pharmaceuticals, which unequivocally declared ex post facto EC as an "anathema" and in "derogation" of environmental law. The fact that those cases imposed penalties under Article 142 was an exception in peculiar facts, not the creation of a new legal principle.

• Per Incuriam is Misapplied: Justice Bhuyan turned the per incuriam argument on its head. He reasoned that it was the later trilogy of Electrosteel, Pahwa, and D. Swamy that were per incuriam for failing to follow the binding ratio of the earlier co-ordinate benches in Common Cause and Alembic. Therefore, the JUR was right to ignore them.

• Principle of Non-Regression: The dissent warned that allowing ex post facto clearance represents a "backtracking" on environmental standards, violating the principle of non-regression in international and domestic environmental jurisprudence. It rejected the "false narrative" of environment versus development, asserting that the precautionary principle is paramount.

5. Final Outcome and Supreme Court's Direction

As a result of the 2:1 majority:

• The Review Petition was ALLOWED.

• The judgment and order dated May 16, 2025 (the JUR) was RECALLED.

• The original Writ Petitions and the Civil Appeal were RESTORED to the court's file.

• The Registry was directed to place the matters before the Chief Justice of India for obtaining necessary orders, implying that the cases will be heard afresh by an appropriate bench.

In essence, the Supreme Court, by a majority, set aside its own prior judgment that had banned ex post facto environmental clearances, restoring the legal status quo that existed before May 16, 2025, and paving the way for a fresh hearing on the validity of the 2017 Notification and 2021 OM.

6. MCQs Based on the Judgment

1. The Supreme Court, in the case of CREDAI v. Vanashakti, recalled its earlier judgment primarily on the ground that it was:
A) Against the economic interests of the nation.
B) Delivered without considering the views of the Ministry of Environment.
C) Per incuriam for ignoring binding co-ordinate bench decisions.
D) Based on an incorrect interpretation of Section 15 of the Environment (Protection) Act, 1986.

2. According to the majority opinion in the review petition, what was the "balanced approach" adopted in the Common Cause and Alembic Pharmaceuticals judgments?
A) Striking down all projects operating without prior Environmental Clearance.
B) Allowing violating projects to continue upon payment of heavy penalties and environmental compensation.
C) Granting automatic exemption to all public infrastructure projects.
D) Referring all cases of violation to the National Green Tribunal for fresh appraisal.