On 6 May 2026, a two-judge Bench of the Supreme Court comprising Justice J.K. Maheshwari and Justice Atul S. Chandurkar set aside a batch of National Green Tribunal (NGT) orders that had directed the closure of formaldehyde and resin manufacturing units across Rajasthan and Haryana for want of prior Environmental Clearance (EC). The judgment, Neetu Solvents & Ors. v. Vineet Nagar & Ors., 2026 INSC 455, decided a bunch of connected civil appeals (C.A. Nos. 2881/2021, 4432/2021, 4431/2021, 4654/2021, 4748/2021, 4902-4903/2021 and 4908/2021) arising out of the NGT’s order in Dastak NGO.

The ruling matters well beyond the units directly involved, because it comes at the end of an unusually turbulent eighteen months for ex post facto environmental clearance law. In May 2025, a two-judge Bench struck down the very Office Memoranda that had permitted such retrospective regularisation, in Vanashakti v. Union of India, 2025 SCC OnLine SC 1139. Six months later, a three-judge Bench recalled that very judgment on review. Neetu Solvents is the first major application of the law as it stands after that recall — and gives industry and regulators a working checklist for when a closed unit can be allowed to keep running while its clearance is sorted out.

Background: units caught by a rule they didn’t know applied to them

The appellants are manufacturers of formaldehyde and its resins — melamine formaldehyde, urea formaldehyde and phenol formaldehyde — operating in Rajasthan and Haryana. Each had obtained a Consent to Establish (CTE) and a Consent to Operate (CTO) from its respective State Pollution Control Board (SPCB) in the ordinary course. It was only later, after the Ministry of Environment, Forest and Climate Change (MoEF&CC) issued Office Memoranda dated 14 March 2017 and 7 July 2021 attempting to create a window for regularising units without prior clearance, that the SPCBs turned around and asked these very units to apply for EC under the EIA Notification, 2006. The units complied — filing EC applications, and in many cases completing screening, scoping, receiving Terms of Reference (ToR), and holding public hearings.

Three original applications before the NGT (the Dastak NGO batch, decided 3 June 2021) argued that operating without prior EC was per se illegal, and the Tribunal ordered closure. That NGT ruling was itself set aside by the Supreme Court in Pahwa Plastics, decided in March 2022, which held that the Environment (Protection) Act, 1986 does not bar ex post facto clearance outright, and that where a unit conforms to pollution norms and the harm of closure would outweigh the harm of regularisation, ex post facto approval “should be given in accordance with law, in strict conformity with the applicable Rules, Regulations and/or Notifications.” The appellants in Neetu Solvents argued their facts were squarely within that exception.

From Pahwa Plastics to Vanashakti to its recall — the ground Neetu Solvents stands on

To understand why the Bench could grant relief at all, the sequence of Supreme Court authority matters:

  • 2022 — Pahwa Plastics Pvt. Ltd. v. Dastak NGO, (2023) 12 SCC 774: held that the Environment (Protection) Act, 1986 does not bar ex post facto clearance outright, and that where a unit conforms to pollution norms and the harm of closure would outweigh the harm of regularisation, ex post facto approval “should be given in accordance with law, in strict conformity with the applicable Rules, Regulations and/or Notifications.”
  • 16 May 2025 — Vanashakti v. Union of India, 2025 SCC OnLine SC 1139: a two-judge Bench struck down the 2017 Notification and the 2021 Office Memorandum that had permitted such retrospective regularisation, holding that prior environmental appraisal is central to the guarantee under Article 21 and that ex post facto EC could not be normalised.
  • 18 November 2025 — CREDAI v. Vanashakti (the review), 2025 SCC OnLine SC 2474: a three-judge Bench of Chief Justice B.R. Gavai, Justice K. Vinod Chandran and Justice Ujjal Bhuyan, by a 2:1 majority (Justice Bhuyan dissenting), allowed the Confederation of Real Estate Developers’ Associations of India’s review petition, recalled the Vanashakti judgment as conflicting with the Court’s own earlier precedents including Pahwa Plastics, and restored the underlying writ petitions for fresh hearing — while the wider constitutional question was referred to the Chief Justice on the administrative side for a possible larger-Bench reference.

By the time Neetu Solvents reached the Bench in May 2026, then, Pahwa Plastics was — in the words of the Neetu Solvents judgment itself — the precedent that “still holds the field,” the three-judge review having acknowledged its ratio. The Bench also recorded, for at least some of the appellant units, that the eighteen-month pendency of the Vanashakti/CREDAI litigation was itself the reason their EC applications had not yet been appraised — a delay attributable to the regulatory tug-of-war, not to the units. Against that backdrop, the Bench found the Neetu Solvents appellants within the Pahwa Plastics exception, observing that “PCBs were not aware that prior EC to establish and operate such units is required under [the] EIA 2006 notification.” On that footing, it held: “Ex post facto EC should not ordinarily be granted, and certainly not for the asking. At the same time, ex post facto clearances… cannot be declined with pedantic rigidity, regardless of [the] consequences” of closure.

The Water Act/Air Act distinction the Court rejected

One technical argument raised against some of the units concerned a gap between the two pollution statutes. Section 25(7) of the Water (Prevention and Control of Pollution) Act, 1974 contains a deemed-approval mechanism — if the SPCB does not respond to a CTO application within a stipulated period, consent is deemed granted. Section 21(4) of the Air (Prevention and Control of Pollution) Act, 1981 has no equivalent deeming provision. It was argued this asymmetry meant a CTO good enough under the Water Act could still be invalid under the Air Act. The Bench rejected using this technical drafting gap to invalidate consents that had, in substance, been granted and relied upon by units for years — holding that the absence of a deeming clause in the Air Act does not retroactively void a CTO the SPCB itself issued and never revoked.

What the Court actually ordered

The relief granted was carefully bounded, not an open-ended reprieve:

  1. The NGT’s closure orders were set aside; the appellant-units may continue operating.
  2. Where EC applications are pending, the competent authority must decide them within one month.
  3. Where electricity connections had been disconnected for want of EC, supply is to be restored on payment of outstanding dues.
  4. The Union of India was directed to communicate any further compliance requirements to the units within three working days, with the units given one week thereafter to comply.
  5. Crucially, the Court preserved the regulator’s hand: if an EC application is ultimately rejected on grounds attributable to the applicant unit itself, authorities remain at liberty to proceed against that unit afresh, including disconnection.

In other words, this is interim breathing room tied to a hard timeline and a working clearance process — not a licence to keep operating indefinitely or a precedent that makes ex post facto EC routine.

Practical implications for practitioners and regulators

  • Build the paper trail before you need it. The outcome turned entirely on documentary evidence — CTE/CTO certificates, SPCB correspondence, dates of EC application, ToR grants, and public hearing records. Clients facing an NGT closure application should assemble this file at the first sign of trouble, not after an adverse order.
  • Distinguish “didn’t know” from “didn’t comply.” Neetu Solvents protects units where the regulator itself was confused about the EIA Notification’s scope. It does not protect units that commenced operations clandestinely, without any CTE/CTO, hoping to regularise later — the broader constitutional question left open by the Vanashakti recall is still to be settled, likely by a larger Bench, and clandestine operators should not assume this ruling covers them.
  • Push regulators to decide, not delay. The one-month timeline for EC decisions is now a benchmark advocates can cite when authorities sit on pending applications instead of acting on them.
  • For SPCBs and MoEF&CC, the judgment is also a quiet rebuke: keep internal records that reflect the Board’s own understanding of when EC is required, and flag gaps to project proponents promptly — because ambiguity in the regulator’s own position now cuts against the regulator, not just the industry.
  • The relief is conditional, not final. Advocates for industry should not oversell this ruling to clients as a green light; the Bench expressly reserved the regulator’s power to close a unit down again if its EC application eventually fails for reasons within the unit’s own control.

Conclusion

Neetu Solvents is best read as the Supreme Court applying the boundary it drew in Pahwa Plastics, on ground that shifted twice in the eighteen months before this ruling — first tightened by Vanashakti, then loosened again by that judgment’s own recall: prior environmental clearance remains the rule, and ex post facto clearance remains the narrow, fact-sensitive exception — available only where the regulator’s own confusion, not the industry’s evasion, created the gap, and only on a tight leash, with the larger constitutional question still open for a future Bench. For practitioners on either side of an NGT closure dispute, the case supplies a concrete checklist of what “exceptional circumstances” actually looks like on the ground.

Frequently Asked Questions

What did the Supreme Court actually decide in Neetu Solvents v. Vineet Nagar?

It set aside NGT orders directing the closure of formaldehyde and resin manufacturing units in Rajasthan and Haryana that lacked prior environmental clearance, and allowed them to keep operating while their EC applications are decided within a one-month timeline, applying the exception carved out in Pahwa Plastics v. Dastak NGO.

Does this ruling mean ex post facto environmental clearance is now generally allowed?

No. The Court was explicit that ex post facto EC “should not ordinarily be granted, and certainly not for the asking.” It remains a narrow exception for units that held valid Consent to Establish/Operate from a Pollution Control Board that was itself unaware prior clearance was required, and that had already begun the EC process.

How does this square with the Supreme Court’s 2025 Vanashakti ruling against ex post facto clearances?

Vanashakti (16 May 2025) did strike down the 2017 and 2021 Office Memoranda permitting retrospective regularisation. But a three-judge Bench recalled that very judgment on review in CREDAI v. Vanashakti (18 November 2025), holding it conflicted with earlier precedent including Pahwa Plastics. Neetu Solvents applies the law as it stands after that recall — with Pahwa Plastics, not the recalled Vanashakti ruling, currently governing this narrow fact pattern.

What happens if a unit’s environmental clearance application is eventually rejected?

The Supreme Court expressly preserved the regulator’s power to act again — including disconnecting utilities or ordering closure — if the EC application is rejected for reasons attributable to the unit itself. The relief granted is interim, not a permanent shield.

What is the significance of the Water Act and Air Act provisions discussed in the judgment?

The Court rejected an argument that a valid Consent to Operate under the Water Act, 1974 could be treated as legally deficient because the Air Act, 1981 lacks an equivalent deemed-approval clause under Section 21(4), holding that this drafting asymmetry cannot be used to retroactively invalidate consents the Pollution Control Board itself granted and never withdrew.

Who were the parties and counsel in this case?

The appellants were the industrial units, represented by Senior Counsel Mr. Nidhesh Gupta; the original applicants (respondents) were represented by Senior Counsel Mr. Ankit Jain; and the Union of India appeared through Additional Solicitor General Ms. Archana Pathak Dave.

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