The Supreme Court on Wednesday (06 May) allowed several formaldehyde manufacturing units operating in Rajasthan and Haryana to continue functioning while their applications for environmental clearance (EC) are being processed. The Court set aside orders of the National Green Tribunal (NGT) that had directed closure of the units for operating without prior EC.
A Bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar held that the case was covered by the Supreme Court’s earlier ruling in Pahwa Plastics Pvt. Ltd. v. Dastak NGO, where similar relief had been granted.
Background of the Case
The appeals were filed by multiple companies manufacturing formaldehyde and related resins after the NGT ruled in 2021 that such units could not operate without obtaining prior environmental clearance under the Environment Impact Assessment (EIA) Notification, 2006.
The industries argued that they had already received Consent to Establish (CTE) and Consent to Operate (CTO) from the respective Pollution Control Boards (PCBs) before beginning operations. According to them, the boards themselves were initially uncertain whether prior EC was mandatory for such units.
Later, the Rajasthan and Haryana Pollution Control Boards directed the units to apply for environmental clearance, which the companies said they did within the prescribed time.
The Supreme Court noted that the units were not “newly established” industries attempting to bypass environmental rules. Instead, they had been operating for years on the basis of permissions granted by statutory authorities.
“The case in hand is not one where the appellants established the units and started operation ignoring any requirement of law,” the Bench observed.
The Court also recorded that most of the units had already completed major stages of the EC process, including screening and scoping, while Terms of Reference (TOR) had been granted in many cases. Public consultation was exempted for several units because they were located in industrial areas.
Rejecting the argument that the earlier Pahwa Plastics judgment was limited to industries employing thousands of workers, the Bench clarified that the reference to “8000 employees” covered all formaldehyde units collectively, not just one company.
The Court said the NGT’s orders in the present matters were entirely based on its earlier decision in Dastak NGO, which had already been set aside by the Supreme Court in Pahwa Plastics.
Referring to that precedent, the Bench reiterated that industries operating under valid CTE and CTO permissions should not automatically be shut down merely because prior EC had not been obtained earlier, particularly when the regulatory authorities themselves were unclear about the requirement.
Allowing the appeals, the Supreme Court directed that the appellant units be permitted to continue operations while their EC applications are decided. The Court asked authorities to take a decision on the pending applications within one month.
It further ordered that electricity connections, if disconnected, be restored subject to payment of dues. However, the Bench clarified that authorities would be free to act against the units if environmental clearance is ultimately rejected for any legal violation.
Case Details
Case Title: Neetu Solvents v. Vineet Nagar & Ors. along with connected matters
Case Number: Civil Appeal No. 2881 of 2021 and connected appeals
Judges: Justice J.K. Maheshwari and Justice Atul S. Chandurkar
Decision Date: May 6, 2026
