Dividing line between state and mining lease-holders blurred, High Court of Bombay at Goa said in a recent verdict.
Goa’s iron ore mining scam may seem like an old story. It is.
The scam, which captured the national imagination at the turn of this decade with images of red-orange opencast pits in India’s favourite vacation state, was considered done and dusted once the mining was banned in 2012.
In the state elections that year, the Congress government – whose then chief minister is himself an accused in the scam – was defeated by the BJP on the promise of cleaning up mining. And when the Supreme Court in 2014 ordered mining to restart, but in limited quantities and under a fresh leasing regime, the “scam” subsequently went off the radar completely.
But two court judgments delivered this year – the Supreme Court on February 7, and the High Court of Bombay at Goa on May 4 – have brought forth uneasy facts and strong observations that the root of the scam was never properly addressed by the state government.
While the SC remarked that it appeared the state’s considerations were “not for the people of Goa but for the mining lease holders”, the HC has said: “We got a feeling that the dividing line between state and the mining lease holders was blurred.”
What’s been going on?
The judgments come in the backdrop of an important discovery that was made during the investigations. Although the environmental degradation was the most visible and permanent impact, it was soon apparent that the root of the scam lay in the mining leases – the legal root of any mining operation.
In 2014, acting on a petition filed by Goa Foundation, a Goa-based environment NGO, the Supreme Court had ruled that all mining leases in the state had expired in 2007.
In 1987, when the Portuguese-era perpetual mining permits (called Title Concessions) were abolished, those owning such concessions were told to seek fixed-duration mining leases as per the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).
As the investigations showed, almost none of the mine owners had sought fresh leases since 1987. But when the demand for ore picked up in the 2000s, driven by a huge demand from China, these leases were renewed on a number of illegal pretences, with the paper trail leading straight up to then chief minister Digambar Kamat of the Congress.
As the SC and HC decisions this year show, the state government since 2014 has favoured the same miners through decisions that were questionable at best and illegal at worst.
Supreme Court decision
The Supreme Court’s 2014 judgment should have led to a new process to allocate each lease to a miner, possibly by holding auctions. (By 2014, India knew that avoiding auctions was what turned 2G spectrum and coalgate into lakh-crore scams).
But the state simply renewed the leases of all 88 leaseholders who sought such renewals. This meant that the same miners who had been accused of the scam, and who had held leases since the Portuguese rule, were now given fresh rights, to operate the same mines they had perpetuated the alleged scam from. Consequently, Goa Foundation approached the SC again.
In its judgment of February 7, pronounced by a bench of Justices MB Lokur and Deepak Gupta, the Supreme Court said the Goa government had little intention to auction the leases, and, in the process, had circumvented a law brought by the central government.
During the Modi government’s first budget presentation in July 2014, finance minister Arun Jaitley indicated that changes would be soon brought to the MMDR Act. In November 2014, the Union government put out a draft amendment to the MMDR Act that proposed to make competitive bidding necessary to allocate mining leases to private companies.
Faced with this possibility, the state government went full throttle, renewing all leases before the law was brought in. Data perused by the court showed that, while 13 leases were renewed in early November, after the draft amendment was put out, the remaining 75 applications were granted renewals in the next two months.
Of these, 31 were granted just between January 1 and 9, 2015. Crucially, 31 more leases were granted renewals on January 12, 2015 – the same day that the MMDR Act amendment was brought in force through an Ordinance promulgated by the President.
Aghast, the Supreme Court went far enough to say the urgency showed the state had “non-statutory interests” in mind. “It appears that to circumvent this rather uncomfortable policy, the State pressed the accelerator on the renewal of mining leases from December 2014 onward… [this] is a clear indication that the State did not have ‘mineral development’ in mind but had some other non-statutory interests … The urgency […] seems to be make-believe and motivated rather than genuine.”
The state also abandoned its own proposal to ban tainted miners from getting new leases. The state’s 2014 mineral policy draft contained sections that said those leaseholders who are under investigation for the scam, and who were named in the Justice MB Shah Commission report, would be barred from receiving any new leases. These sections were deleted from the final policy notified in 2015 – Justice Shah’s report had said all leaseholders had violated the law.
The SC held that although the state was not legally bound to auction the leases, its decision to renew the leases “virtually free” was “flawed” as it did not fulfil any social good but “primarily assisted in filling the coffers of private entrepreneurs”.
Striking down the lease renewals, the SC held that all leases had again expired as on 2007, and, hence, mining must stop. In the interests of the miners, the court allowed them a few weeks’ time “to manage their affairs”. “[The leaseholders] may continue their mining operations till March 15,” the judgment said.
High court’s latest decision
Now, in a judgment pronounced on May 4, a division bench of the Bombay High Court at Goa, consisting of Justices Prithviraj K Chavan and NM Jamdar, has found that the state government misinterpreted the SC’s orders to allow miners to excavate as much ore as possible until the March 15 deadline.
According to data submitted by the government to the HC, in the 36 days between February 7 (when the SC judgment was pronounced) and March 15 (the deadline), nearly 2.3 million tonnes of ore was mined, amounting to a fifth of the total ore extracted in the 2017-18 financial year.
As the HC found, such mining was aided by the Goa government, which changed its mind on a decision that transportation of ore too would end by the SC deadline – which would have meant that extraction would have ended at least a few days before.
On March 6, Goa’s director of mines and geology had passed an order prohibiting transportation of ore after the evening of March 14, which was subsequently modified to March 15.
But on March 13 – a mere two days before the SC deadline – the state sought legal opinion on whether transportation could be allowed after the March 15 deadline.
On March 21, CM Manohar Parrikar’s principal secretary, who was holding charge of state chief secretary that day, said in a meeting attended by the Director General of Police and senior mines department officials, that the state advocate general had given an opinion that transportation could be allowed beyond the Supreme Court’s deadline.
Accordingly, an order was issued on the same day allowing transportation of the ore that was moved outside lease areas for which royalty had been paid. This effectively allowed miners who had excavated until the last day to sell their ore.
Striking down this decision, the HC bench said the state “simply omitted crucial words from the permission granted by the Supreme Court and focused only on the rights of the mining lease holders”.
“If the interpretation of the State and the [miners] is accepted that full-fledged mining excavation was permitted till 15 March 2018, then where is the time left to manage affairs thereafter,” the HC asked.
Crucially, the HC has raised eyebrows at whether miners were aware that the government would allow transportation beyond the SC deadline – especially since the only decision in force until March 15 was that transportation would also be stopped that day.
“Then where from did the mining lease holders get their confidence to carry on full-fledged mining, when there was no prospect of transportation later?” the HC asked.
“Even when two interpretations are possible, a prudent business entity, who has no State support, would not take any risk,” the HC stated, adding that the miners also did not move the SC for a clarification.
The HC bench also remarked that while the state had prepared a 66-page affidavit in this case on a short notice, it had failed to respond in other cases pending with the HC on water and air pollution due to mining.
“This sharp contrast […] is too stark for us not to notice. We write it here because it pains our conscience,” the bench said.
The HC verdict has been challenged before the Supreme Court. On May 12, the SC refused a plea by miners to transport ore and allowed only the ore lying at jetties to be exported. It also sought “full details” on mining activities in the state from February 7 to March 15.
On May 10, the state government said it will file a review petition in the Supreme Court against the February 7 judgment.
After the Supreme Court’s February 7 judgment, and now the HC decision, mining has come to a grinding halt, the legal status of the mining leases is back to being expired in 2007, red-orange deserts abound, and more questions have come up about the state government’s relationship with miners, even reigniting questions of whether the BJP government has lived up to its promise of cleaning up the sector.
Goa’s iron ore mining scam is a story that refuses to end