In a big relief for BSE listed Alembic Pharma and United Phosphorous, the Supreme Court of India (SC) has set aside a 2016 National Green Tribunal (NGT) order that had directed the closure of their facilities in Gujarat.

In January of 2016, the NGT had passed an order directing for revocation of the Environment Clearance and closure of the industrial units of Alembic Pharma and United Phosphorous. The NGT had passed orders for closure, after it had held that grant of ex-post-facto Environmental Clearance under the Ministry of Environment and Forests Circular of May 2002, was not sound in law.

A bench of SC headed by Justice DY Chandrachud, in its judgment noted, "Alembic Pharma, United Phosphorous operated for many years in Ankleshwar-Guj without the Environment Clearance." The Court also observed in the judgment, "Court cannot be oblivious to the environmental degradation caused by all three industries units that operated without valid ECs." The judgment also held that this was a clear case of companies having evaded the legally binding regime of obtaining ECs, cannot escape the liability.

However, interestingly, Justice DY Chandchud headed bench also reasoned, "Industrial units have made infrastructural investments and employed significant numbers of workers in their facilities." SC judgment held, "Court needs to take a balanced approach in light of economic interests, NGT directions for closure are not in keeping with principles of proportionality."

Stressing on the need for balance and proportionality, the SC held that NGT directing closure of industrial units was not warranted and consequently, set aside the NGT directions for bringing down the shutters.

However, as a rap on the knuckles, SC noted that penalties must be imposed for disobedience with a binding legal regime. SC has, therefore, directed for a levy of penalty of 10 cr on each of the errant companies. SC has directed the penalty amount to be used for the purpose of restitution and restoration of the environment. SC has also specified that the penalty amount to be deposited within 4 months of the judgment.