COMMON CAUSE versus UNION OF INDIA & ORS. on 12 November 2018

1. In this batch of substantive applications, we are concernedwith what is described as “Illegalities involved in the mining lease ofSarda Mines Private Limited”by the Central Empowered Committee inGits report of 16[th] October, 2014.

2. It is not necessary to repeat all the facts leading up to theseapplications since the background has already been detailed by us inCommon Cause v. State of Orissa.[1]

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COMMON CAUSE v. UNION OF INDIA & ORS.[MADAN B. LOKUR, J.]

3. While dealing with the mining lease of Sarda Mines PrivateLimited, the Central Empowered Committee or the CEC concerned itselfwith seven issues. They are:

1. Regarding renewal of the mining lease.

2. Regarding validity of the Environmental Clearance.

3. Regarding sale of iron ore in the form of ROM by Sarda Mines Private Limited.

4. Regarding diversion of additional land for mining and allied activities

5. Regarding production of iron ore without/in excess of the Environmental clearance.

6. Regarding enquiry done by the State Government for alleged violation of Rule 37, MCR, 1960 [Mineral Concession Rules of 1960].

7. Regarding alleged ownership of the mining lease actually being with Jindal Steel and Power Ltd.

4. For the present, we are concerned only with the validity of theenvironmental clearance granted to Sarda Mines Private Limited or SMPLand the production of iron ore without/in excess of the environmentalclearance. The concern relates to a mining lease granted to SMPL over947.046 hectares of land for 20 years from 14[th] August, 2001 to 13[th]August, 2021.The mining lease is of Thakurani Mines, Block B, VillageSoyabali, District Keonjhar in Odisha. We are not concerned with thevalidity or otherwise of the grant or renewal of the mining lease to SMPL.

Grant of permission to mine

5. It has been pointed out to us and this is not disputed, that SMPLwas granted permission on 13[th] July, 1999 to extract 1,40,000 MT of ironore per annum.The permission granted clearly indicates that it is in thecontext of reopening (to the extent of broken up area of 94.024 acres)the existing mine where the highest production was 1,39,802.00 MTduring 1966 as certified by the Deputy Director (Mines). The saidextraction or production was of iron ore and the permissiongranted in1999 was also for extraction or production of iron ore. This was in accord A

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Awith the provisions of the Mines and Minerals (Development andRegulation) Act, 1957 (MMDR Act) that permits mining of the mineraliron ore.

The permission granted on 13[th] July, 1999reads as follows:

“Subject : Reopening of iron ore mines in Block-B in villageSoyabali of Thakurani iron ore mines in DistrictKeonjhar, Orissa - clarifications reg.

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This has reference to letter of 10[th] June, 1999 jointly from youand Shri M.L. Sarda seeking clarification on applicability ofthe provisions of the EIA Notification of 1994. We have notedthe following:

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(i) The Department of Steel and Mines, Government of Orissahas agreed to renew mining lease in respect of Block-Bcovering an area of 2340.20 acres in village Soyabali ofthe Thakurani iron ore mines in favour of Shri S.L. Sardaand Shri M.L. Sarda.

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(ii) The entire lease area is in reserve forest for whichde-reservation proposal has been forwarded by the DFO,Keonjhar to the PCCF, Bhubaneswar.

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(iii) Already broken up area is 94.024 acres.

(iv) Highest production from Block-B mines was 1,39,802.00MT during 1966 as certified by Dy. Director (Mines),Joda, Keonjhar in his letter No. 7892 dated 26.5.99.

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(v) Applications have been submitted to Orissa State PollutionControl Board for obtaining “consent to operate” and IBMfor approval of mining plan.

Further, it has been noted that you are planning to reopen themine sometimes by the end of 1999 without change in brokenup area and production level. Also there is no plan to modernisethe mine. It has also been noted that wet drilling will be adoptedon working phases. Besides management of surface run off,mine water discharge and plantation of OB dumps, waterspraying on haul roads, transfer points and crushing plant willbe done regularly.

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The provisions of EIA Notification of 1994 are not applicableto the renewal of mining lease proposals that do not involveexpansion or modernisation. However, you should confineexcavation only to already broken up area of 94.024 acres asper mining plan approved and limit production to 1,40,000 MTPA[TPA?]. You are also advised to obtain other statutoryapprovals from the concerned authorities including the forestryclearance under the Forest (Conservation) Act, 1980 and ensurecompliance with the general environmental conditions asindicated in Annexure-I. In case, you plan any expansion ormodernisation then prior approval under the provisions of theEIA Notification of 1994 as amended subsequently should beobtained from the Ministry.”

6. Again, the admitted position is that SMPL did not act upon thepermission granted on 13[th] July, 1999 till 13/14 August, 2001. The apparentreason is that the mining lease in favour of SMPL was renewed only on13/14 August, 2001. It is only after the mining lease was renewed thatSMPL started mining or extracting iron ore on the basis of the permissiongranted on 13[th] July, 1999.

Grant of environmental clearance

7. The next important date that we are concerned with is 22[nd]September, 2004 that is the date on which SMPL was grantedenvironmental clearance for the extraction of iron ore. The environmentalclearance granted to SMPL was for expansion of production of iron ore(lump) from 1.5 lakh tonnes per annum (LTPA) to 4.0 million tonnes perannum (MTPA). There was a progressive gradation in the productioncapacity inasmuch as during the first year the increase in productionwas permitted from 1.5 LTPA to 0.5 MTPA; 3.0 MTPA by the thirdyear and 3.750 MTPA from the fifth year to achieve the rated capacityin production of 4.0 MTPA during the 17[th] year.

8. However, what is strange about the environmental clearancegranted to SMPL on 22[nd] September, 2004 is that it referred to the“proposalfor expansion of production of iron ore (lump)” from 1.5 LTPAto 4.0 MTPA. In fact, the permission granted on 13[th] July, 1999 was forproduction of iron ore and not for iron ore (lump). It is not even the caseof SMPL that it was granted the permission on 13[th] July, 1999 for theextraction or production of iron ore (lump), Moreover, the MMDR Actrefers to the mineral iron ore and not to iron ore (lump).The concept of A

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Aextraction or production of iron ore (lump) introduced in the environmentalclearance was alien to the permission granted on 13[th] July, 1999 and theMMDR Act. Therefore, the environmental clearance granted on 22[nd]September, 2004 must be understood in the context of the permissiongranted on 13[th] July, 1999 and the MMDR Act. If so appreciated, then itis clear that environmental clearance was granted to SMPL only relatedBto the expansion of production of iron ore from 1.5 LTPA to 4.0 MTPA.As mentioned above, it is not even the case of SMPL that it was grantedpermission to extract iron ore (lump) to the extent of 1.4 LTPA in termsof the permission granted on 13[th] July, 1999. Our understanding of theenvironmental clearance in this context and in this regard keeping theseCfactors in mind is of considerable importance insofar as the decision inthe applications is concerned, as will be apparent a little later.

Retrospective effect of the environmental clearance

9. Learned counsel for SMPL did not contest or dispute that anenvironmental clearance does not have any retrospective effect. It isDoperational from the date it is granted. In any event, this issue is nolonger res integra having been settled in the decision renderedinCommonCause in paragraph 87 of the Report. The submission made,however, was that the benefit of retrospectivity of the environmentalclearance should be given to SMPL from the date on which the miningElease was renewed, that is, with effect from 13/14 August, 2001. Thereason for claiming this benefit is that the expanded permissible productionwould then commence from August 2001 and SMPL would be entitledto extract a larger quantity of iron ore with the progressive gradationgiven in the environmental clearance with the result that the 3[rd] year ofproduction would be 2004 and the 5[th]year of production would be 2006Fand not 2009. Similarly, the 17[th] year of production would be 2018 andnot 2021.

10. We simply cannot accept this submission since it is plainlycontrary to the decision of this Court in Common Cause. Moreover andadditionally, accepting the submission would mean that for the periodGfrom 13/14 August, 2001 till 22[nd] September, 2004 SMPL would havethe benefit of the permission granted on 13[th]July, 1999 as well as theretrospective benefit of the environmental clearance dated 22[nd]September, 2004 meaning thereby that SMPL would have two miningpermissions, which is obviously not possible. However, we cannot deny H

to SMPL the benefit of the permission granted on 13[th] July, 1999 on thebasis of which SMPL carried out mining activities from the date of renewalof the mining lease that is 13/14 August, 2001 till 22[nd] September, 2004.Even learned Amicus does not have any objection to granting the benefitof the permission to SMPL for this period, to the extent that SMPLextracted or produced 1.4 LTPA of iron ore during this period. Therefore,the mining activity carried out by SMPL from 13/14 August, 2001 till thedate of the environmental clearance, that is, 22[nd] September, 2004 islegal to the extent of 1.4 LTPA and SMPL cannot be penalised for thismining activity during this period.

11. It was submitted by learned counsel for SMPL that if theenvironmental clearance is not given retrospective effect then it wouldmean that its validity would not be co-extensive with the term of themining lease. Resultantly, theoperation of the environmental clearancethough granted for the life of the mining lease would necessarily becurtailed to the detriment of SMPL. This submission is noted only to berejected. The submission made can hardly be a ground for givingretrospective effect to the environmental clearance. If the life of theenvironmental clearance is curtailed due to operation of the law, then sobe it.

12. Learned counsel for SMPL has shown us a Summary oftheProject, Environmental Impact Assessment and EnvironmentalManagement Plan relating to the proposed expansion of the Thakuraniiron ore mine, Block-B, District Keonjhar, Orissa. This document is ofFebruary 2002 and is to be found on page 25 of volume 168 of the paperbook. He has drawn our attention to page 28 thereof which relates tothe mining proposed by open-cast method using drilling and blasting.The production build-up is given in the form of a chart but it takes 2001-2002 as the first year of production. This is obviously on the assumptionthat the environmental clearance relates back to the date of renewal ofthe mining lease in 2001. However, since we have held that theenvironmental clearance does not and cannot have any retrospectiveeffect, the first year of production should in fact be 2004-2005 (pro rata)based on the environmental clearance. On the basis of the chart pointedout by learned counsel for SMPL, it is quite clear that there has beenexcess mining of iron ore from the first year of production itself. Thisexcess mining is clearly illegal and must be penalised in terms of ourjudgement inCommon Cause.

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A13. We leave it to the Central Empowered Committee (CEC) toquantify the penalty to be imposed on SMPL from 22[nd] September, 2004and based on the terms of the environmental clearance. The calculationshould also take into consideration our conclusion that the environmentalclearance is not retrospective and the first year of production, in view ofthe environmental clearance granted to SMPL would be 2004-2005. AnyBmining in excess of the environmental clearance by SMPL would be andis illegal.

Extraction of iron ore (lump)

14. The main rub of the controversy before us lies in theterminology employed in the environmental clearance granted to SMPLC- whether it was entitled to extract iron ore (lump) or mineral ironore,within the limits laid down in the environmental clearance.

15. Before resolving this controversy, it must be clearly understoodthat extraction of the mineral iron ore is the extraction of iron ore Run ofMine or ROM. Lumps of iron ore are, in a sense, a by-product of ROMDas are topsoil, mineral rejects, sub-grade ore and fines and the distinctionsmade are for the purposes of payment of royalty. The submission oflearned counsel for SMPL is to the effect that SMPL was entitled toextract iron ore (lump) in terms of the environmental clearance. If thissubmission is to be taken literally, then SMPL was entitled to extract only iron ore (lump) without extracting iron ore ROM. This would beEmuch like the argument put forth by Portia enabling Shylock to extracthis pound of flesh without spilling a drop of blood. However, we neednot take a decision in this regard merely on semantics.

16. That lumps are a by-product of the extraction of iron oreROM is clear from the decision of this Court rendered in NationalFMineral Development Corporation Ltd. v. State of M.P.[2] wherein thisCourt noted the process of winning the mineral as described by theappellant therein in the following words:

“Iron ore deposits occur mostly in the hill ranges and iron ore isfound on the top of the hill i.e. on the surface. The process byGwhich the mineral is won has been described by the appellant asunder:

“The ore is extracted by opencast method of mining for whichmining benches are prepared. Firstly, holes are drilled on thebenches covering the entire height of the bench at regular H2 (2004) 6 SCC 281

distance depending on ore types. After charging of the holeswith explosives this portion of the bench is blasted. The blastedmaterial known as ROM (run-of-mines) consists of largeboulders, fragments and fines along with othercontaminants. ROM is transported to crushing plant bydumpers and crushed to below 150 mm sizes. Thiscrushed ROM contains lump, fines and alsocontaminants such as alumina and silica. The crushed oreis transported to screening plant through conveyor belts and iswashed with water and screened in vibrating screens. Vibratingscreens segregate ore into different sizes such as lump,calibrated ore and fines……” (Emphasis supplied by us).

17. Similarly, in Tata Steel Limited v. Union of India[3] it wasobserved that in the process of mining, iron ore is extracted (that isROM) and separated into ore lumps, fines and waste material which iscommonly known as slime.

18. Looked at in this light, the context in which permission wasgranted to SMPL on 13[th] July, 1999 is important. Permission was grantedto SMPL to extract the mineral iron ore. This had no reference at all tothe sub-category or by-product called iron ore (lump) but must beunderstood as permission to extract mineral iron ore ROM. It was thispermission that was sought to be proposed for expansion of productionand if it is looked at in this contemporaneous or historical (whichever)background, then it is quite obvious that the environmental clearancegranted on 22[nd] September, 2004 was only with reference toiron oreROM. This must also be read in the context of the MMDR Act whichrefers to the mineral iron ore and does not refer toiron ore (lump). Acombination of these two factors convinces us that the environmentalclearance granted to SMPL was only with reference toiron ore ROMand notiron ore (lump), notwithstanding the terminology employed in theenvironmental clearance.

19. Taking the view as canvassed by learned counsel for SMPLwould lead to a rather anomalous situation wherein, for the purposes ofextracting iron ore (lump) of a permissible quantity, SMPL could extractas much iron ore ROM as it desired. In other words, for the purposes ofextracting iron ore (lump) of 4.0 MTPA could it be said that SMPL wasentitled to extract iron ore ROM to the extent of 6.0 MTPA or even 8.0

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AMTPA? The answer to this is certainly in the negative otherwise theenvironmental clearance granted to SMPL would be devoid of any rationalmeaning whatsoever. Also taking this into consideration, it does appearto us that though the environmental clearance granted to SMPL wasunhappily worded, it must be given a realistic meaning so that it is notrendered ineffective on the ground of vagueness and to the detriment ofBthe environment as also to the detriment of SMPL.

20. In this context, it is necessary to refer to the Summary of theProject, Environmental Impact Assessment and EnvironmentalManagement Plan of February 2002 placed on record by SMPL involume 168 of the paper book. The table or chart on page 28 thereof andCwhich forms a part of the document indicates that for the production oreextraction of iron ore (lump) the total excavation of iron ore ROMproposed is almost double the quantity. The chart is as follows:

Y earsLu mp Ore To tal ROMTo p M ineral S ub grade Fin es,(+5­ 180m Excav ation So il rejects O re (MT)­5 mm and 30 + (MT)(MT)(M T)(MT)(MT)1 8m) (MT)1[st] year 0.5001 .1510.7700.000 0.3 490.032 0. 2702001­2002 2[nd]year1.1962 .1591.8400.0000.2 670.0520.6442002­2003 3[rd] y ear 1.9763 .4993.0400.000 0.1 210.338 1. 0642003­2004 4thyear2.9904 .8294.6000.0000.1 830.0461.6102004­2005 5[th]year3.7506 .0585.7700.0000.2 310.0572.0202005­2006 Sub Tot al10.41217 .6961 6.0200.0001.1 510.5255.6062007­201118.75033 .5712 8.8500.0241.3 423.35510.1002012­2016 18.75033 .5472 8.8500.000 1.3 423.355 10. 1002017­202120.0035 .7793 0.7700.0001.4 313.57810.770Gran d To tal67.912120 .5931 04.900.0245.2 6610.81336.576

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21. It is quite clear to us even from the above chart that theinterpretation sought to be given by learned counsel for SMPL to theHenvironmental clearance was never intended and if it was, then the unfortunate consequence would be that the environmental clearancemust be held to be invalid and quashed, resulting in greater damage tothe interests of SMPL than envisaged. On a realistic interpretation tothe environmental clearance, for the purposes of calculating excess orillegal production of iron ore, the entire extraction of iron ore ROM isrequired to be taken into consideration.

22. We may note in this context that it has come on record thatthe entire iron ore ROM extracted by SMPL is actually sold to JindalSteel and Power Ltd. or JSPL and it is not only iron ore (lump) that issold to JSPL. In this factual background, the issue of the relationshipbetween SMPL and JSPL arises but we are not concerned with this forthe present. However, what is more important is that it is the sale of ironore ROM that is made by SMPL to JSPL and not the sale of iron ore(lump). In other words, SMPL is desirous of taking full advantage of itsextraction and production of iron ore ROM but at the same time shyingaway from the legal consequences that follow.

23. It was submitted by learned counsel for SMPL that the CEChas confused itself between extraction or production of iron ore ROMand extraction or production of iron ore (lump) and as a consequence, ithas arrived at an incorrect figure of excess or illegal mining by SMPL.In fact, the contention is that SMPL has neither been involved in anyexcess or illegal mining and the conclusions arrived at by the CEC aretotally incorrect. We cannot accept this submission in view of thediscussion above, including the conduct and activities of SMPL, theprovisions of the MMDR Act and the context in which the permissionand environmental clearance was granted to SMPL. Under thecircumstances, we find no merit in the objections raised by SMPL to thereport of the CEC with regard to the validity of the environmentalclearance or the excess or illegal mining of iron ore by SMPL.

24. However, in view of our conclusion, the CEC might have torework the quantum of excessive or illegal mining carried out by SMPLand the consequent penalty. For this, we grant 6 weeks’ time to the CECto do the needful. All records relevant for arriving at a decision shouldbe made available by SMPL and the concerned authorities to the CEC.

25. The substantive applications are disposed of to the above extentand in terms of the above directions.

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Devika Gujral

H IAs disposed of.