The sale and registration of vehicles which are not compliant with BS-IV emission norms will not be allowed from April 1 across the country.
The apex court observed that the "health of the people is far far more important than the commercial interest of automobile manufactures".
The BS-IV emission norms will come into force from April 1, 2017.
Earlier on Tuesday, the apex court had reserved its verdict for Wednesday on pleas seeking ban on sale and registration of BS-III compliant vehicles after April 1 when BS-IV emission norms will come into force.
Senior advocate A M Singhvi, appearing for Society of Indian Automobile Manufacturers (SIAM), had told the bench that it needs around a year's time to dispose of the inventory of BS-III vehicles and bulk of the stock can be sold in seven-eight months.
He had said that phasing out of the vehicles should be done gradually as since 2010 till March 2017, 41 automobile firms have manufactured 13 crore BS-III vehicles and their stock at present is 8.24 lakh.
"The process should be a gradual one," Singhvi had said.
He said that the plea to stop registration of vehicles after April 1, 2017 is like an ambush on the industry which is the second biggest job generator in the country and has the highest industry tax rate.
The bench then observed that the automobile companies knew about the BS-IV notification in 2014 and when people were aware in 2010 that it was coming up, then the firms should have scaled down the production of BS-III vehicles.
Senior advocate K K Venugopal, appearing for auto major Hero MotoCorp, said that the company has unsold inventory of 3.28 lakh BS-III compliant two-wheelers and could loose over Rs 1500 crore due to the impending ban.
Senior lawyer Shyam Diwan, representing Bajaj Auto which supported the plea to ban registration of BS-III vehicles after April 1, said that the
ban on manufacture also meant ban on sale/registration of such vehicles and no extension should be given.
The Environment Pollution Control Authority (EPCA), which had sought ban on registration of such vehicles after April 1, said that the automobile firms were having the latest technology for a long time and these should have scaled down the production of BS-III vehicles.
The automobile firms had told the Supreme Court yesterday that it was not possible for them to convert the existing stock of BS-III compliant two and four-wheelers to Bharat Stage-IV emission norms.
Solicitor General Ranjit Kumar, appearing for the Centre, had told the court that fuel for BS-IV vehicle is "much cleaner" and the oil refineries had spent around Rs 30,000 crore since 2010 to produce it.
He had said that a BS-III vehicle can run on BS-IV fuel and it is not that BS-III vehicles will become redundant because these will run on BS-IV fuel.
The Supreme Court had earlier asked the automobile companies not to frustrate the Centre's initiative to check increasing levels of pollution by selling BS-III vehicles which are being hold in stock.
It had indicated that it will either ban registration of such vehicles or impose costs to compensate for the health hazards created by pollution.
It had said that three options were available before it.
These were either to ban registration of BS-III vehicles or allow their registration but ban plying of such vehicles in major cities or ask the companies to pay costs for creating health hazards and reimburse the Centre which spent enormous money in upgrading the fuel standard.