SAMAJ PARIVARTANA SAMUDAYA & ORS. versus STATE OF KARNATAKA & ORS on 26 August 2022

ORDER

1. The present hearing is in continuation of our earlier hearing andorder dated 20.05.2022, whereby this Court had considered and grantedEcertain reliefs relating to the sale and export of iron ore in the Districtsof Bellary, Tumkur and Chitradurga in the State of Karnataka. In thesaid order, we had specifically left open the question of the lifting/relaxation of the ceiling limit for production of iron ore in theabovementioned Districts and had sought an opinion from the OversightAuthority appointed by this Court vide order dated 21.04.2022. TheFobservations made by this Court were as follows:

“22….For the present, we propose to confine the scope of thisorder to examining the twin prayers made by learned counsel forthe applicants namely, permission to sell the unsold stock of ironore already excavated without resorting to the process of eauctionGconducted through the Monitoring Committee and for lifting theban on export of iron ore/pellets from the districts of Bellary,Chitradurga and Tumkur situated in the State of Karnataka.Although certain submissions were made by the parties regardinglifting of the ceiling limit for total production of iron ore, at thisHjuncture we are not inclined to decide the said issue.

32. With respect to the submissions of the parties in relation to thelifting of the ceiling limit for production of iron ore for miningleases in the Districts of Bellary, Chitradurga and Tumkur, we areof the considered opinion that it would be expedient to obtain anopinion from the Oversight Authority appointed by this Court videorder dated 21st April, 2022 about the same before deciding thesaid issue. We request the Oversight Authority to take inputs fromthe stakeholders, including the CEC and the Monitoring Committee,and to send his opinion to this Court preferably within a period of4 weeks.”

2. On the last date of hearing, this Court took on record the Reportfiled by the learned Oversight Authority and had directed that copies ofthe same be made available to the parties whereafter, the matter wasposted for considering the issue of lifting of ceiling limit.

3. Heard Mr. Prashant Bhushan, learned counsel appearing onbehalf of the original petitioner and Mr. Dushyant Dave, learned seniorcounsel appearing on behalf of Federation of Indian Mineral Industries,South.

4. Mr. Prashant Bhushan submitted that the ceiling limits wereimposed in view of the earlier CEC recommendation and the report ofthe learned Lokayukta, which suggested that the rate of mining of ironore in the State of Karnataka was unsustainable and would result inexhaustion of the iron ore deposits in the State of Karnataka within 30years. This as per the learned counsel would seriously impact the goalof inter-generational equity. Lastly, he submitted that as the learnedOversight Authority has sought additional information regarding theinfrastructural capacity before giving an opinion as to the viability oflifting of the ceiling limit, this Court should presently refrain from passingany orders at this juncture.

5. On the other hand, Mr. Dushyant Dave, Senior Advocatesubmitted that the present regime relating to iron ore mining in the Stateof Karnataka, with Court imposed ceiling limits, has been in existencefor over a decade. When the ceiling limit was first imposed, the Courtwas confronted with a vastly different situation, where there was rampantillegal mining activity taking place in the State of Karnataka. The saidsituation has now been remedied through series of orders passed by thisCourt. As a result, all illegal mining in the area has been halted and A

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Aseveral ameliorative measures have been taken for the improvement ofthe environment and ecology of the region. In such circumstances, thelearned Senior Advocate submitted that the present mining lease holders,who are complying with all the laws, are being unfairly penalized for theillegalities that were committed a decade ago. Such ceiling limits hasresulted in a discriminatory situation where mining lease holders in theBState of Karnataka are governed by one legal regime, while those inother States of the country are governed by a completely different regime.

6. At this juncture, it might be relevant, to highlight the history ofthe ceiling limits on production of iron ore through various Court orders.On 29.07.2011 and 26.08.2011, this Court had imposed a ban on miningCin the districts of Bellary, and Chitradurga and Tumkur, respectively basedon the report of the Centrally Empowered Committee (‘CEC’).

7. On 13.04.2012, this Court had accepted some of therecommendations contained in the Report dated 13.03.2012 of the CEC,including the following recommendation:D

“B) a ceiling of 25 Million Metric Tonnes (MMT) for totalproduction of iron ore from all the mining leases in DistrictBellarymay be prescribed. Aceiling of 5 MMT for productionof iron ore from all the mining leases in DistrictsChitradurga and Tumkur togethermay be prescribed”E

(emphasis supplied)

8. The above position was reiterated by this Court vide judgmentdated 18.04.2013, wherein the underlying set of petitions were disposed.

9. Vide judgment dated 14.12.2017, while dealing with certainFapplications seeking enhancement/lifting of ceiling cap. This court hadpermitted to increase the same from 25 MMT to 28 MMT with respectto Bellary District, and from 5 MMT to 7 MMT for Chitradurga andTumkur Districts collectively, based on a fresh report of the CEC dated14.07.2017. Certain observations made by this Court for granting therelaxation merit reiteration:G

“16. The cap fixed by this Court by Orders dated 5.08.2011and 1.09.2014 was in a situation where there was virtuallyno control or effective regulatory measures as to themaximum output that could be generated by a particularmine. There was no scientific study of the iron ore reserves H

allocated to a particular mine in the lease granted. As aresult, it was virtually a free for all exercise designed toachieve the maximum profit within the shortest possibletime frame. There was rampant and illegal mining withencroachments into forest land, particularly for use asoverburdened dumps resulting from excessive mining. Thishad led to environmental and ecological depredation to anextent that necessitated judicial interventionto resolve asituation which is the normal course may have fallen within theexecutive domain. It is on the basis of the intervention by theCourt that R&R Plans have been prepared for each mine by anexpert body, ICFRE, based on a scientific study of variousparameters including mining reserves. R&R Plans have beendrawn up specifying a particular/permissible limit for each mineon the basis of limitations of reserves, dumping areas, availableinfrastructure etc. Accordingly, recommendations have been madefor increase of MPAP for 13 different category ‘A’ mines andalso for increase of MPAP in respect of 2 leases held by thepublic sector lessee, i.e., NMDC. Similarly, 10 mines are anticipatedto undertake operations within a short time….The solution offeredby the Court has to be realistic. Therefore, it is the various featuresof the current scenario on the ground as highlighted in the reportof the CEC that would deserve a close look/consideration. In thisregard, we may also take note of the fact that the assessment ofreserves has also changed over the years and today theiron-ore reserves across the State of Karnataka, comprisingof haematite and magnetite reserves, is to the tune of10.071 BMT (Billion Metric Tonnes). All these reasons impelus to accept the recommendations of the CEC for enhancementof the cap for category A and B Mines in the 3 district of Bellary,Tumkur and Chitradurga as well as the recommendations withregard to MPAP of NMDC and MML, as mentioned in paragraph12 hereinabove, with the further direction that all pending proposalsfor enhancement of MPAP shall be decided without delay, naturally,subject to the cap as above.”

10. It is in light of the above set of facts that the submissionsmade by learned counsel ought to be considered. In 2017, this court was A

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Aof the view that the situation had vastly changed in the State of Karnatakaand had therefore allowed an increase in the ceiling limit. We are now inthe year 2022. It can be no one’s case that the situation subsisting in theState of Karnataka currently, is the same as had existed when theunderlying petition was first taken up, or when the Court had passed theorder in 2017, relaxing the ceiling limit to some extent.B

11. This is also clear from the changed stance of the State ofKarnataka and the CEC before this Court. In 2017, the CEC hadrecommended a cumulative increase in the ceiling limit up to 5 MMT,whereas now, the CEC supports the view that the ceiling limit need notto continue. The State of Karnataka, in 2017, had submitted before thisCCourt that the ceiling limit may be raised to 40 MMT, and graduallyincreased later to 50 MMT. However, the State of Karnataka is now infavor of a complete removal of the ceiling limit.

12. In fact, it appears that the CEC, the State of Karnataka, theMinistry of Steel, Union of India, Karnataka Iron and Steel ManufacturersDAssociation (‘KISMA’) and the mining lease holders are all ad idemthat the changed situation on ground warrants a complete removal ofthe ceiling limits that were imposed by this Court to ensure protection ofthe environment and keeping in mind the principles governingintergenerational equity. The response dated 10.04.2022 of the CECE(viz. CEC Report No. 3 of 2022) on the issue of lifting of ceiling limitsmerits reproduction and is extracted herein below:

“17. This Hon’ble Court by orders dated 05.08.2011 and01.09.2014 had fixed a production cap of 25 MMT in respectof District Bellary and 5 MMT in respect of DistrictsFChitradurga and Tumkur. This Hon’ble Court by Judgementdated 14.12.2017 enhanced the production cap to 28 MMTin respect of District Bellary and 7 MMT for DistrictsChitradurga and Tumkur. The availability of iron ore asapproved in the R&R plans currently exceeds the limit of 35 MMTper annum fixed by this Hon’ble Court. As per the latest dataGfurnished by the Monitoring Committee, currently 34 category‘A’ and ‘B’ mining leases are in operation with an approved MPAPof 36.31 MMT. An Additional 9 Category “C” mining leases and4 Category “A” and “B” expired leases, which were e-auctioned,are operational with MPAP of 5.54 MMT and 2.41 MMTrespectively. Another 4 mining leases located in Districts Bagalkote H

and Davanagere have production capacity of 6.29 lakh MT perannum and 60000 MT per annum respectively. The production ofiron ore in these two Districts is not affected by the orders of thisHon’ble Court. The sum of approved annual production capacityof iron ore in Karnataka as on 31 .03.2022 adds upto 44.949 MMT.In addition, there are 5 Category “C” and 2 expired Category“A” & “B” mines which have been e-auctioned by the state butthe execution of lease agreements are pending in respect of these7 mines as on 31.3.2022.

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23. Keeping in view the facts highlighted in the precedingparagraphs, it is for consideration of this Hon’ble Court whetherthe restrictions on production and sale of the iron ore in the threeDistricts Bellary, Chitradurga and Tumkur imposed following thetotal ban on mining are required to be reviewed and if agreedupon by this Hon’ble Court the following may please be considered

(i) Vacation of the orders of this Hon’ble Court directing saleof iron ore through e-auction conducted by the MonitoringCommittee, and which ore has been produced by the lesseesafter resumption of mining operation. However, the sale ofbalance old stock of iron ore, including sub-grade iron oreavailable on the date of imposition of ban on mining be continuedthrough e-auction. The Monitoring Committee be directed todispose all the balance old stock through e-auction before 31[st]July 2022. If any stock over which the lessee has the ownershipright is left unsold the lessee may be allowed to dispose of it.

(ii) The collection of 10 per cent of the sale value from all thelessee except NMDC and 20% of sale value from NMDCtowards their contribution to the SPV may be discontinued.

(iii) Vacation of the orders on total ban on export of iron oreand pellets from the districts of Bellary, Chitradurga and Tumkur.

(iv) Vacation of the orders on fixing district level capson production of iron ore in respect of Category ‘A’ andCategory ‘B’ mines from the financial year 2022-2023.

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A24. However the system of determination of the MaximumPermissible Annual Production (MPAP) being fixed through theR&R Plans and Supplementary Environment Plans, after ensuringthe scientific and sustainable mining and after taking into accountthe mining reserves available within the lease area and afterfollowing the standards stipulated under various environmentalBand mining statutes, as approved in order dated 13.4.2012 andjudgement dated 18.4.2013 of this Hon’ble Court, may continue.All mining leases to operate strictly adhering to such MPAP, asmay be fixed /refixed.”

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13. The Monitoring Committee, without directly alluding to theCissues raised by the others with respect to why the ceiling limit should bemaintained or lifted, has highlighted a separate concern, viz., theinfrastructural incapacity to transport the iron ore excavated if the ceilinglimits were to be raised. It is in this context that the learned OversightAuthority appointed by this Court expressed his inability to conclude onDthe said issue. The learned Oversight Authority, in his report dated29.07.2022, observed as follows:

The Oversight Authority as at present in unable to express itsfirm opinion in the matter in view of the conflicting reportssubmitted by Central Empowered Committee and the MonitoringECommittee. It is not for the Oversight Authority to express anyopinion as to whether the Monitoring Committee has exceeded itsbrief in joining an issue with Central Empowered Committee bypleading for continuation of the ceiling limit. Be it as it may, it isjust and necessary to gather some further evidence in the matterof ‘current available road infrastructure’, ‘existing as well asFimprovements made to transport infrastructure’. There is noevidence as such made available for the perusal of the OversightAuthority as to what are the developments that have taken placebetween today and 20.05.2022 i.e. when the Hon’ble SupremeCourt of India passed the Orders referred to hereinabove.

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14. Mr. Prashant Bhushan, learned counsel appearing on behalfof the original petitioner, is therefore the sole objector to the request oflifting of the ceiling limit, on principles. The motivating concern behindthe objection appears to be the anxiety that lifting of the ceiling limit mayspiral into the same situation that had resulted in this Court’s judicialHintervention in the first place. Learned counsel submitted that such an

order of lifting the ceiling limit might lead to unmitigated mining activityin the State of Karnataka, setting the clock back entirely and resulting inregression of the entire state of affairs.

15. The concerns of the original petitioner and the MonitoringCommittee merit due consideration of this Court. Much good work hasbeen done in the State of Karnataka, because of the action initiated bythe original petitioner and the subsequent judicial interventions by thisCourt. In fact, it is this progress made steadily over the past decade thatweighed with this Court to even consider the relief regarding raising ofthe ceiling limit sought by the present applicants. The concerns raised bythe original petitioner, of possible over excavation and its adverse impacton intergenerational equity, must be balanced against the concerns ofthe other parties, as the principles of sustainable development also comesinto play.

16. This Court has generally accepted the recommendations ofthe CEC when it comes to the ceiling limit. In the present case, the CEChas recommended a complete relaxation of the ceiling limit. But we arenot inclined to allow the same in toto. Rather, the situation merits a cautiousapproach, keeping in view the concerns raised and to ensure that anychanges in the situation with respect to the mining activity in the State ofKarnataka is brought about gradually, we are of the opinion that theceiling limit of iron ore mining may be raised from 28 MMT to 35 MMTfor District Bellary, and from 7 MMT to 15 MMT for Chitradurga andTumkur Districts collectively.

17. Conservation of the ecology and the environment must gohand in hand with the spirit of economic development and the fine balancebetween the two goals is what is sought to be achieved even now.

18. IA Nos. 83141/2017, 72931/2017 and 218/2014 are disposedof on the above terms. As far as IA No. 10973/2018 is concerned, thesame relates to directions to the CEC and Monitoring Committeeregarding deciding applications for enhancement of MPAP in terms ofthe earlier orders of this Court. The same may be considered by theCourt on the next date of hearing.

Nidhi Jain

All IAs except one disposed of.

(Assisted by : Shashwat Jain, LCRA)

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