Environment vs Development? Supreme Court Charts a Middle Path
India's rapid urbanization has placed the real estate sector at the heart of its economic growth story. However, this boom has been shadowed by a persistent and often contentious question: how do we build for the future without compromising our environmental present? For years, the environmental clearance (EC) process for building and construction projects has been a labyrinth of regulatory ambiguity and legal battles, creating uncertainty for developers, homebuyers, and environmental advocates alike.
Recent landmark judgments from the Supreme Court, coupled with key Government Notifications/Clarifications, have finally brought much needed clarity to this landscape. The new framework attempts to strike a pragmatic balance, championing sustainable development by decentralizing authority while reinforcing accountability.
The Genesis of the Conflict: The 'General Conditions' Puzzle
The foundation of the environmental appraisal process is the Environmental Impact Assessment (EIA) Notification bearing no. S.O. 1533 (E) dated 14th September 2006 (“2006 Notification”) (as amended from time to time) by Ministry of Environment, Forest and Climate Change (“MoEF”). It established a two-tier system: large-scale, high-impact projects (Category A) are appraised by an Expert Appraisal Committee (EAC) at the Central level, while smaller projects (Category B) are handled by State Expert Appraisal Committee (“SEAC”) and State Environment Impact Assessment Authoritie (“SEIAA”).
The crux of the long-standing dispute lay in a provision known as the “General Conditions" (“GC”). According to the GC, a Category B project would automatically be upgraded to the more stringent Category A if it was located within a specified distance of environmentally sensitive areas like wildlife sanctuaries, critically polluted zones, or eco-sensitive areas.
While the intent was to provide greater scrutiny for projects in fragile zones, the Schedule of the 2006 Notification never explicitly applied the GC to Item 8, which covers ‘Building and Construction Projects’ and ‘Townships’. This omission sparked years of debate, was it an oversight or a deliberate legislative choice to empower state level bodies to appraise all construction projects, regardless of their location?
A Tug-of-War Between Regulation and Litigation
This ambiguity led to a series of regulatory flip-flops and court interventions. The government attempted to clarify its stance through notification dated 22nd December 2014 bearing no. S.O. 3252 (E) (“2014 Notification”) that explicitly stated the GC did not apply to Item 8 projects. However, the Kerala High Court, by its order dated 6th March 2024 in W.P. (C) No. 3097 of 2016, One Earth Life v. MoEF, quashed the 2014 Notification on procedural grounds.
The confusion peaked in August 2024, when the National Green Tribunal (NGT), Bhopal Bench vide its order dated 9th August 2024, directed the MOEF to either comply with the provisions related to applicability of GC with respect to Item 8 of the Schedule to the EIA Notifications or to issue clarificatory in this regard. The NGT's order created a regulatory vacuum, as neither the SEIAA’s nor the Central Committee were in a position to appraise these projects, causing indefinite delays and adversely affecting thousands of homebuyers and stakeholders.
The 2025 Amendment
Through an amending notification issued on 29th January 2025 (“the 2025 Notification”), the MoEF, inter alia, vide Note 1 exempted building and construction projects with a built-up area up to 1,50,000 square metres, pertaining to industrial sheds, schools, colleges, and hostels for educational institutions, from the requirement of obtaining prior environmental clearance.
The Supreme Court's Decisive Intervention
Recognizing the widespread paralysis and the urgent need for a definitive resolution, the Supreme Court stepped in. Through two landmark judgments in Vanashakti v. Union of India (2025 SCC Online SC 1703) and Confederation of Real Estate Developers Association of India (CREDAI) v. Union of India (2025 INSC 1112), the apex court settled the debate once and for all.
The key takeaways from the Court’s rulings are:
General Conditions Do Not Apply to Construction Projects: The Supreme Court affirmed that the original legislative intent of the 2006 Notification was to keep the appraisal of all building and construction projects under the purview of state-level authorities. This decentralised approach was designed for efficiency and to leverage local expertise. The SEIAAs are now unequivocally the competent authorities for granting EC to these projects.
No Blanket Exemptions for Any Construction: While decentralizing authority, the Court reinforced environmental accountability. The Court struck down Note 1 of the 2025 Notification, which had sought to exempt industrial sheds, schools, and colleges from the requirement of prior environmental clearance, observing that any large-scale construction exceeding 20,000 square meters carries a significant environmental footprint and must therefore undergo rigorous assessment.
Streamlining the Path Forward
In a further move to enhance efficiency, the MOEF through its Office Memorandum issued a clarification on 30th October 2025, directing that project proponents need not make separate presentations before both the SEAC and the SEIAA. The SEIAA is to decide based on the expert recommendations of the SEAC, thus cutting down on duplication and delays and ensuring speedy disposal of the applications.
A New Paradigm of Balanced Growth
The recent legal and regulatory developments have ushered in a new era of clarity for India's real estate sector. The Supreme Court has charted a middle path that avoids the extremes of unchecked development and prohibitive regulation. The message is clear development is welcome, but it must be responsible.
The onus now shifts to the State authorities to conduct appraisals with the utmost diligence and technical rigour. For the developers and homebuyers, it promises a clear, faster, and more predictable path to getting projects approved. For the environment, it ensures that this streamlined process remains anchored in rigorous expert appraisal and judicial oversight. It’s a reminder that in a new India, progress and protection can, and must, move forward together.
In Maharashtra, the shift is already visible; Of the 700 stalled projects across the State, more than 100 have received clearance from the SEIAA under the State’s purview, a significant step toward accelerating long-pending development works and restoring momentum to growth.