Barratt Homes and Wainhomes Developments launched a judicial review against the decision by Cheshire West and Chester Borough Council to allow the Tattenhall Neighbourhood Plan to be put to a local referendum.
The council approved the referendum last September after the document passed examination in August.
Prepared by Tattenhall Parish Council, the plan was approved in a public vote last October but, following the legal challenge, it has yet to be adopted by the authority.
The plan’s "policy 1" proposes allowing housing developments of "up to 30 homes … within or immediately adjacent to the built up part of" the village.
Barratt Homes and Wainhomes are each waiting appeal decisions by communities secretary Eric Pickles for applications for proposed developments at Tattenhall on greenfield sites not allocated in the neighbourhood plan.
Barratt wants to build 68 homes on land opposite Brook Hall Cottages, Chester Road. Wainhomes has agreed to buy land to the rear of Greenhalls if its owner secures outline consent for up to 137 houses.
The housebuilders challenged Cheshire West Council’s decision on four grounds, firstly claiming that it failed to undertake a proper "strategic environmental assessment" (SEA) in breach of a European Union directive.
Secondly, they said the plan did not meet the "basic conditions" of schedule 3 of the Neighbourhood Planning Regulations 2012, which state that plans must comply with national planning policies and conform to the strategic policies of the council’s local plan.
Cheshire West Council has no up-to-date local plan, but submitted its draft local plan for examination last December.
According to the judge’s decision notice, the housebuilders’ lawyer, Paul Tucker QC, argued that "as the [neighbourhood plan] sought to control the delivery of housing it could not be progressed in that form in advance of the [local plan]".
Thirdly, the claimants questioned the impartiality of the plan’s examiner, Nigel McGurk and said the plan was tainted by "apparent bias".
They said that McGurk is a director of a "commercial rival", the Himor Group, which has published its own plans for a "substantial urban extension" to Chester, called Hoole Gate.
Finally, the neighbourhood plan’s policy 1 was "introduced without meaningful evidence", the housebuilders argued, while the examiner "failed to provide proper reasons for its retention".
But Mr Justice Supperstone, said at London’s High Court on Friday that the plan had been the subject of SEA appraisal "throughout the process of its preparation".
He said: "In my judgment the council did properly comply with the SEA Directive."
Supperstone added that he was "satisfied that there was a proper evidential basis for policy 1" and that it had been introduced "after due consideration".
The judge went on to say: "I do not consider that the fair-minded and informed observer, having considered the relevant facts, would conclude that there was a real possibility that Mr McGurk was biased."
A third housebuilder, Taylor Wimpey was an interested party in the case and is seeking outline planning permission for up to 110 homes on land next to Adari on Chester Road.
Cheshire West Council leader Mike Jones said: "We welcome the judge’s findings which are undoubted endorsement of the processes employed in the creation of the Tattenhall Neighbourhood Plan.
"This decision will be greeted with delight in the village of Tattenhall by a community which worked so hard and showed such unbelievable commitment in creating the plan."
In a statement, the authority said its executive would now be asked to formally adopt or ‘make’ the plan.
The authority said it would also be "pressing" the examiner of another neighbourhood plan in the district, Winsford, to reopen his hearing into the document having adjourned it in January. At the time, Dr Charles Mynors said the examination should be put on hold until the outcome of the Tattenhall legal challenge was known.
The full judgement can be found here.