Supreme Court holds State authorities responsible for grant of environmental clearances for real estate projects

Bringing a quietus to the regulatory impasse that spanned over a year, the  Supreme Court by its judgment dated August 5, 2025 upheld the constitutional validity of the notification dated January 29, 2025 (“2025 Notification”) issued by the Ministry of Environment, Forest and Climate Change (“MoEF&CC”) that clarified that Building and Construction projects and Township and Area Development projects, regardless of their proximity to protected areas and eco-sensitive areas, shall be appraised by the State Level SEAC and SEIAA for grant of Environmental Clearance (EC).

Real Estate projects are regulated under the Environment Impact Assessment Notification dated September 14, 2006 (“EIA 2006 Notification”) which mandates EC for these projects if they cross the threshold of 20,000 square metres of built-up area. The 2025 Notification, in essence, provided two key changes in relation to real estate projects which are covered under Item 8(a) (Building and Construction Projects) and Item 8(b) (Township and Area Development Projects) of the Schedule to the EIA 2006 Notification:

(a) It exempted industrial sheds, schools, and educational institutions from the requirement of obtaining EC under the EIA 2006 Notification; and

(b) It clarified that the General Condition (“GC”) shall not apply to Building and Construction Projects and Township and Area Development Projects.

This Notification came to be challenged in a Public Interest Litigation (PIL) filed by an environmental NGO, Vanashakti, and by an ex-parte order passed on February 24, 2025, the effect and implementation of 2025 Notification was stayed. Resultantly, the Note which clarified that “General Conditions shall not apply” to Item 8(a) and 8(b) of the Schedule was also stayed and, therefore, SEAC and SEIAAs across the country had stopped appraisal of thousands of such projects which were under consideration before them. As a matter of fact, since the passing of the stay order, neither the State nor the Centre has been appraising these projects, resulting in a policy paralysis.

Under the regulatory framework of the EIA 2006 Notification, all projects and activities enlisted in the Schedule as “Category A” are to be appraised by the Central government and “Category B” are appraised by SEIAA. However, under the “General Condition”, an additional onerous condition is imposed on those projects which fall within a 5 km radius of a protected area notified under the Wildlife (Protection) Act, 1972, critically polluted area as notified by the CPCB, eco-sensitive zone or projects lying at inter-state and international boundaries. Such projects, regardless of whether they are “Category B” projects under the Schedule would be deemed as “Category A” projects to be appraised by the Central government.

The Confederation of Real Estate Developers’ Association of India (“CREDAI”) and Godrej Properties Limited intervened before the Supreme Court and argued that the General Condition has historically never applied to real estate projects which fall under Item 8(a) and 8(b) of the Schedule to the EIA 2006 Notification. The effect of such non-applicability of the General Condition would mean that the State Level SEAC and SEIAA are to appraise these projects for clearance instead of the Central government (MoEF). This stand was also taken by the Union of India and the State of Maharashtra.

The arguments canvassed to demonstrate the non-applicability of the General Condition to real estate projects were based on rules of literal interpretation of statutes as well as the judicial musings in the Supreme Court’s own Judgment in Re: Construction of Park at Noida Okhla Bird Sanctuary which are briefly summarized:

(i) Firstly, the Schedule to the EIA 2006 Notification is divided into 5 columns. Column 5 of the Schedule provides for “Conditions if any.” Wherever the legislature intended to make General Condition applicable to a certain project or activity, it specifically provided for it in Column 5. For instance, against Item 1(a) [Mining of minerals], 1(c), 1(d), 2(a) [Coal washeries], 2(b), 3(a), 3(b) amongst others, there is an express mention in Column 5 that “General Condition shall apply”

(ii) Hence, wherever the legislature deemed it fit to make the General Condition applicable to a particular item/project, it expressly said so. In contradistinction, against Item 8(a) and 8(b), there is no mention of General Condition. Thus, as a matter of literal interpretation, the General Condition does not apply to real estate projects.

(iii) Secondly, in Re: Construction of Park at Noida Okhla Bird Sanctuary, the apex court considered the applicability of General Conditions to Item 8(a) and Item 8(b) of the Schedule and held that “if general conditions were to apply to Item 8(a) and 8(b)…then it would not make any sense to expressly mention it in column 5 in respect of some other project and activities…”. The Hon’ble Court also observed that the issue of applicability of General Condition to Item 8(a) and 8(b) must be put beyond any debate.

(iv) Thirdly, in light of the observations made in Re: Construction of Park at Noida Okhla Bird Sanctuary, the MoEF&CC clarified the position by issuing a Notification on December 22, 2014, specifically providing that “general condition shall not apply” to Item 8(a) and 8(b). However, due to a procedural irregularity i.e., variance in the draft and final notification, the Kerala High Court vide its Judgment dated March 6, 2024 quashed this notification only due to the procedural irregularity. However, liberty was granted to issue a fresh notification.

(v) Fourthly, the setting aside of the 2014 Notification did not mean that General Conditions would be made applicable to real estate projects because the 2014 Notification was merely clarificatory in nature and did not contemplate a change in the regulatory regime.

(vi) Finally, the 2025 Notification came to be issued in light of the liberty granted to MoEF&CC to issue a clarificatory notification by the Kerala High Court and the National Green Tribunal, Bhopal’s Order dated August 9. 2024.

On a consideration of the arguments summarized above, the Supreme Court upheld the 2025 Notification to the extent that “General Condition” does not apply to real estate projects covered under Item 8(a) and 8(b) of the Schedule to the EIA 2006 Notification. Consequently, the appraisal process for such projects is to be undertaken by SEACs and SEIAAs across the country.

This judgment brings much-needed clarity and regulatory certainty, enabling the resumption and timely processing of thousands of stalled or delayed development projects across the country by the State authorities. This will not only expedite project timelines but also reduce the administrative burden on the Central government.

The Judgment will have an immediate and significant impact on the real estate sector. By resolving the impasse, the Supreme Court has paved way for quicker decentralised environmental clearance which is in tune with the legislative philosophy based on which real estate projects have always been appraised.

Trilegal team comprising of Samit Shukla, Saakshi Saboo and Vaibhavi Bhalerao successfully represented the Confederation of Real Estate Developers in India (CREDAI-National) and Godrej Properties Ltd. (Godrej) before the Supreme Court in the challenge to the 2025 Notification.

About the authors: Samit Shukla is a Partner, Saakshi Saboo is a Senior Associate and Vaibhavi Bhalerao is an Associate at Trilegal.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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