State authorities found liable for issuing environmental approvals for real estate developments by the Supreme Court
The Supreme Court of India has upheld the constitutional validity of the Ministry of Environment, Forest and Climate Change's (MoEF&CC) notification dated January 29, 2025, which clarifies that environmental clearance (EC) for Building and Construction projects and Township and Area Development projects—including real estate projects—shall be granted by the State Level Environment Impact Assessment Authority (SEIAA) and State Expert Appraisal Committee (SEAC), regardless of their proximity to protected or eco-sensitive areas [1].
This ruling resolves a regulatory impasse that had stalled thousands of real estate projects nationwide, especially those above 20,000 square meters, which require environmental clearance under the EIA Notification 2006 [1][2]. It removes ambiguity around the authority responsible for granting EC, reaffirming that state-level bodies (SEIAA and SEAC) have the competence to appraise and grant EC for these projects, instead of the central MoEF&CC, thus allowing faster state-level environmental clearances and reducing the delays from central approval processes [1][2][3][4].
The ruling strikes down exemptions for industrial sheds, schools, and educational institutions but maintains environmental protections for projects located within 5 kilometers of protected areas, critically polluted zones, or state borders, which will still require central clearance [2]. This decision clears the path for nearly 500 stalled real estate projects in Mumbai and Pune alone, affecting approximately 70,000 housing units, mostly in affordable and mid-income segments [3][4][5]. The judgment, thus, directly benefits large urban real estate markets and homebuyers by enabling project approvals, reducing delays, and restoring buyer confidence [3][5].
The judgment is seen as essential for meeting India's housing needs (estimated 25 million new units by 2030), balancing urgent infrastructure development and environmental regulation [2]. The 2025 Notification was 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. This will not only expedite project timelines but also reduce the administrative burden on the Central government.
The effect and implementation of the 2025 Notification were stayed by an ex-parte order passed on February 24, 2025, resulting in a policy paralysis. The Supreme Court's arguments presented to demonstrate the non-applicability of the General Condition to real estate projects were based on rules of literal interpretation of statutes and judicial musings in the Supreme Court's own Judgment in Re: Construction of Park at Noida Okhla Bird Sanctuary. 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.
The 2025 Notification clarifies that the General Condition shall not apply to Building and Construction Projects and Township and Area Development Projects. Under the EIA 2006 Notification, all projects and activities enlisted in the Schedule as "Category A" are to be appraised by the Central government, while "Category B" are appraised by SEIAA.
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. The ruling's immediate and significant impact on the real estate sector is undeniable.
This ruling,Regex and certain financial institutions (finance) may now allocate funds more confidently to real estate projects due to the swift and centralized environmental clearance processes now possible (sporting a faster return on investment). Additionally, the amended regulation places environmental science at the forefront of real estate development decisions, ensuring that projects are sustainable and eco-friendly, contributing positively to the environment while meeting India's housing needs.
