In India the massive exodus of population from the rural to the urban areas as also from the smaller towns to the larger metropolis has been driven by a combination of the push and pull factors, but the central element has been the opportunity cost of employment in urban informal sector, which has grown rapidly in a two way process – on the one hand, the relative impoverishment of urban economy has offered a large space for the informal sector, on the other cheap labour market has encouraged the growth of processing and service industry in the household and tiny sector. The result has been two fold – on the one hand imperfections in land and housing markets have left the poor with virtually no alternative except to seek informal solutions to their housing needs in mushrooming slums without access to basic minimum facilities of drinking water and sanitation, on the other industrial and service centers, sometimes employing hazardous means, have come up in residential neighborhoods in violation of the rules and regulations. Thus a complex pattern of urban form has emerged, in which the ‘informal’ and the ‘illegal’ have developed an intricate and organic relationship with the ‘formal’ and the ‘legal’ system. Many parameters of the development plan and zoning regulations have largely become irrelevant by these parallel developments. The contradiction between the legal and the illegal has often been compromised by the logic of growth itself which has become irreversible and compounded by the pressures of electoral politics, but nowhere has it been so open and critical than in the ongoing debate on the shifting of polluting industries from the national capital of Delhi, in which the question of implementation of Supreme Court decision regarding shifting of polluting industries has exposed the fragility of the formal legal and planning system as also of the political system. This paper traces the growth of informal settlements and work centers of Delhi as organic components of the urban system and examines the issues of environmental jurisprudence that marginalises the poor who keep the city going.