#OdishaMining: Scandal of enormous

proportions, caused untold misery to the

tribals,Supreme Court

 BY -Murali Krishnan 

Odisha Mining

A mining scandal of “enormous proportions involving megabucks” – these are the opening words of the Supreme Court in its judgment in the Odisha mining case.

A bench of Justices Madan B Lokur and Deepak Gupta today ordered mining companies to pay a 100 percent compensation on the price of any iron ore or manganese ore extracted contrary to Environment Impact Assessment notification, 1994 or Environment Impact Assessment notification, 2006.

The judgment came in a writ petition filed by NGO Common Cause praying for stopping of all illegal mining in Odisha and a CBI probe into illegal mining in the State.

Advocate Prashant Bhushan appeared for the petitioner NGO while Additional Solicitor General Pinky Anand appeared for the Central government. Senior Advocate Rakesh Dwivedi appeared for State of Odisha. A host of Senior Advocates represented various mining companies including Senior Advocates AM Singhvi, P Chidambaram and Gopal Subramanium

The Court began its judgment by stating that the facts revealed during the hearing of the petition suggested a mining scandal of enormous proportion. The effect of the mining on tribal population has also been allured to in the very first paragraph of the judgment which reads as follows:

The facts revealed during the hearing of these writ petitions filed under Article 32 of the Constitution suggest a mining scandal of enormous proportions and one involving megabucks. Lessees in the districts of Keonjhar, Sundergarh and Mayurbhanj in Odisha have rapaciously mined iron ore and manganese ore, apparently destroyed the environment and forests and perhaps caused untold misery to the tribals in the area. However, to be fair to the lessees, they did the detail steps taken to ameliorate the hardships of the tribals, but it appears to us that their contribution is perhaps not more than a drop in the ocean – also too little, too late.”

The Court then proceeded to consider various aspects of the case.

Central Empowered Committee Report

The Court placed reliance on the report of the Central Empowered Committee (CEC). The CEC gave its final report on April 25, 2014 which was considered by the Court and a detailed interim order was passed on May 16, 2014.

“The sum and substance of the final report dated 25th April, 2014 and the interim order is that in the districts of Odisha that we are concerned with, namely, Keonjhar, Sundergarh and Mayurbhanj, the total number of leases granted for mining iron and manganese ore are 187. Of these, 102 lease holders did not have requisite environmental clearance (under the Environment (Protection) Act, 1986) or approval under the Forest (Conservation) Act, 1980 or approved mining plan and/or Consent to Operate under the provisions of the Air (Prevention and Control of Pollution) Act, 1981 or the Water (Prevention and Control of Pollution) Act, 1981.”

According to the final report of the CEC

“…..excess mining without environmental clearance or beyond what was authorized by the environmental clearance is 2130.988 lakh MT of iron ore and 24.129 lakh MT of manganese ore making a total of 2155.117 lakh MT of iron and manganese ore. This does not include extraction of ore without forest clearance. These figures give an indication of the extent of excess or illegal or unlawful mining carried out.

In terms of rupees, according to the CEC the total notional value of minerals produced without an environmental clearance or in excess of the environmental clearance, at the weighted average price of minerals as proposed by the Indian Bureau of Mines comes to about Rs.17091.24 crores for iron ore and about Rs.484.92 crores for manganese ore making a total of Rs.17,576.16 crores.”

The Court then discussed various statutory provisions applicable in the instant case.

Illegal Mining

One of the important questions dealt with by the Court was regarding the scope and ambit of “illegal mining”. The contention of the mining companies was that only mining operations outside the mining lease area would constitute ‘illegal mining’. Thus violation of any rule within the mining lease area would not come within the definition of ‘illegal mining’.

However, the Court rejected this argument and held that illegal mining takes within its fold excess extraction of a mineral over the permissible limit even within the mining lease area which is held under lawful authority, if that excess extraction is contrary to the mining scheme, the mining plan, the mining lease or a statutory requirement.

“The simple reason for not accepting this interpretation is that Rule 2(ii a) of the MCR was inserted by a notification dated 26th July, 2012 while we are concerned with an earlier period. That apart, as mentioned above, the holder of a mining lease is required to adhere to the terms of the mining scheme, the mining plan and the mining lease as well as the statutes such as the EPA, the FCA, the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981.

If any mining operation is conducted in violation of any of these requirements, then that mining operation is illegal or unlawful. Any extraction of a mineral through an illegal or unlawful mining operation would become illegally or unlawfully extracted mineral.”

Conclusions on mining without an Environment Clearance or Forest Clearance

The Court drew a slew of conclusions regarding such mining. Some of them are:

  • A mining project that has commenced prior to 27th January, 1994 and has obtained a No Objection Certificate from the SPCB prior to that date is permitted to continue its mining operations without obtaining an EC from the Impact Assessment Agency. However, this is subject to any expansion (including an increase in the lease area) or modernization activity after 27th January, 1994 which would result in an increase in the pollution load. In that event, a prior EC is required. However, if the pollution load is not expected to  increase despite the proposed expansion (including an increase in the lease area) or modernization activity, a certificate to this effect is absolutely necessary from the SPCB, which would be reviewed by the Impact Assessment Agency.
  • The renewal of a mining lease after 27th January, 1994 will require an EC even if there is no expansion or modernization activity or any increase in the pollution load.
  • There is no doubt that a new mining project after 27th January, 1994 would require a prior EC.
  • Any iron ore or manganese ore extracted contrary to EIA 1994 or EIA 2006 would constitute illegal or unlawful mining (as understood and interpreted by us) and compensation at 100% of the price of the mineral should be recovered from 2000-2001 onwards in terms of Section 21(5) of the MMDR Act, if the extracted mineral has been disposed of. In addition, any rent, royalty or tax for the period that such mining activity was W.P. (C) Nos. 114/2014 etc. Page 96 of 114 carried out outside the mining lease area should be recovered.
  • Any mining activity carried on after 7th January, 1998 without an FC amounts to illegal or unlawful mining in terms of the provisions of Section 21(5) of MMDR Act attracting 100% recovery of the price of the extracted mineral that is disposed of.

Inter-generational Equity: Review of National Mineral Policy 2008

The petitioner, relied on the principles of inter-generational equity and urged the Court to place a limit on mining in the State of Odisha. The Court noted that though there is considerable substance in the submissions of the petitioner, such a duty is not within its domain.

“…it is really not for this Court to lay down limits on the extent of mining activities that should be permitted by the State of Odisha or by the Union of India. Nevertheless, this is an aspect that needs serious consideration by the policy and decision makers in our country in the governance structure.”

The Court, however, called upon the Union of India to revisit the National Mineral Policy, 2008 and announce a fresh and more effective policy by the end of this year.

“…it is high time that the Union of India revisits the National Mineral Policy, 2008 and announces a fresh and more effective, meaningful and implementable policy within the next few months and in any event before 31st December, 2017.”

No CBI probe, instead Expert Committee headed by retired Supreme Court judge

The Court turned down the request for CBI probe stating that there is time to learn lessons from the past and it can be achieved by identifying lapses and finding solutions.

“For the present, we do not propose to direct an investigation or inquiry by the CBI for the reason that what is of immediate concern is to learn lessons from the past so that rapacious mining operations are not repeated in any other part of the country. This can be achieved through the identification of lapses and finding solutions to the problems that are faced.”

The Court, therefore, chose to set up an Expert committee to identify the lapses that have occurred over the years enabling rampant illegal or unlawful mining in Odisha and measures to prevent this from happening in other parts of the country. The Committee would be presided by a retire Supreme Court judge. The Court stated that all parties would be heard with regard to the setting up and composition of the committee.

Read the judgment below.