"We in public interest direct the suspension of existing licences for possessing, stocking and selling of firecrackers in Delhi-NCR region till further orders," a bench of Chief Justice T S Thakur and Justices A K Sikri and S A Bobde said.
The apex court also directed the Centre not to renew any such licences till further orders.
It directed the Central Pollution Control Board to examine and submit its report in six months on the harmful effects caused by the materials used in the firecrackers.
The suspension of licences with immediate effects means that sale, purchase and stocking of firecrackers are completely banned in Delhi and NCR region.
The apex court had on November 11 reserved its verdict on the issue and said it would go step-by-step as fireworks have become a part of life and a reasonable order needed to be passed which could be enforced.
It had said it was considering passing an order that no new licence will be granted and the existing ones not renewed or could even direct the Centre to pass an order suspending the existing licences in Delhi-NCR.
The court had said it will not pass any final order without going into research and reports on its impact on air quality, health and life-style.
Equating firecrackers with "burning of money", the apex court had said one should think that when humans are affected so much with these fire crackers, what effect would it have it on animals like dogs which have more sensitive ears than humans. It had also observed that as per reports, 30 per cent children in Delhi were asthmatic and steps needed to be taken all fronts.
The petitioners had requested the bench to give a time limit to the government to suspend and not renew licences for possessing, stocking and selling firecrackers.
They had moved the Supreme Court seeking ban on use of firecrackers in Delhi-NCR on the ground that it has contributed immensely to the worsening air pollution.
The court was hearing a PIL initiated by it on the issue of alarming levels of air pollution in the national capital.
The bench said that the air quality levels appeared to be better than what they were was a couple of weeks ago.
It, however, noted that the levels of suspended particulate matter was still beyond the prescribed norms.
DPCC said it was due to the sunshine, wind and the temporary cessation in construction activities.
Last week, the court had observed that if a person can run a marathon in Delhi, he can run anywhere and suggested measures like immediate extinguishing of landfill fires and ensuring only CNG taxis enter the national capital to improve air quality in the city.
The municipal authorities, which are responsible for landfill sites, were told to immediately extinguish the fires burning in such areas as smoke rising from there would subject people to "serious health hazards" as they contain particulate matter like PM 2.5 and 10 apart from carcinogens.
The corporations today showed photographs to support their claim that they had stopped the fires, but the court said it was "not satisfied" by it.
The amicus curiae also rejected the corporations' claims and said that the affidavit filed by them was vague.
On November 10, the court had said the alarming pollution level was literally 'capital punishment' for Delhiites who were being robbed of three years of their lives due to it.
It had held the government's inaction and stubble burning in Punjab for the situation in Delhi.
The court had said that the "grave" situation was leading to "decimation" of more than 60 million life years or one million deaths, which it termed as "genocide".
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