Common Cause vs Union Of India .

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICITON I.A. No. 40 of 2015, I.A.No.42 of 2015,

IA No.61 of 2015 in IA No.40 of 2015 and IA No.111989 of 2018

IN

WRIT PETITON (C) NO. 114 OF 2014

Common Cause …Petitioner versus

Union of India & Ors. …. Respondents (IN RE: SARDA MINES PVT. LTD.)

JUDGMENT

Madan B. Lokur, J.

1. In this batch of substantive applications, we are concerned with what is

described as “Illegalities involved in the mining lease of Sarda Mines Private

Limited” by the Central Empowered Committee in its report of 16 th October,

2014.

2. It is not necessary to repeat all the facts leading up to these applications

since the background has already been detailed by us in Common Cause v. State

of Orissa.1 Signature Not Verified Digitally signed by SANJAY KUMAR Date: 2018.11.12 12:35:52 IST Reason: 1 (2017) 9 SCC 499

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 1 of 14

3. While dealing with the mining lease of Sarda Mines Private Limited, the

Central Empowered Committee or the CEC concerned itself with 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 the

environmental clearance granted to Sarda Mines Private Limited or SMPL and

the production of iron ore without/in excess of the environmental clearance. The

concern relates to a mining lease granted to SMPL over 947.046 hectares of land

for 20 years from 14th August, 2001 to 13th August, 2021. The mining lease is of

Thakurani Mines, Block B, Village Soyabali, District Keonjhar in Odisha. We

are not concerned with the validity or otherwise of the grant or renewal of the

mining lease to SMPL.

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 2 of 14 Grant of permission to mine

5. It has been pointed out to us and this is not disputed, that SMPL was

granted permission on 13th July, 1999 to extract 1,40,000 MT of iron ore per

annum. The permission granted clearly indicates that it is in the context 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 MT during 1966 as certified by the

Deputy Director (Mines). The said extraction or production was of iron ore and

the permission granted in 1999 was also for extraction or production of iron ore.

This was in accord with the provisions of the Mines and Minerals (Development

and Regulation) Act, 1957 (MMDR Act) that permits mining of the mineral iron

ore.

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

“Subject: Reopening of iron ore mines in Block-B in village Soyabali of Thakurani iron ore mines in District Keonjhar, Orissa - clarifications reg.

Sir, This has reference to letter of 10th June, 1999 jointly from you and Shri M.L. Sarda seeking clarification on applicability of the provisions of the EIA Notification of 1994. We have noted the following:

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

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

(iii) Already broken up area is 94.024 acres.

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 3 of 14 (iv) Highest production from Block-B mines was 1,39,802.00 MT during 1966 as certified by Dy. Director (Mines), Joda, Keonjhar in his letter No. 7892 dated 26.5.99.

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

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

The provisions of EIA Notification of 1994 are not applicable to the renewal of mining lease proposals that do not involve expansion or modernisation. However, you should confine excavation only to already broken up area of 94.024 acres as per mining plan approved and limit production to 1,40,000 MTPA [TPA?]. You are also advised to obtain other statutory approvals from the concerned authorities including the forestry clearance under the Forest (Conservation) Act, 1980 and ensure compliance with the general environmental conditions as indicated in Annexure-I. In case, you plan any expansion or modernisation then prior approval under the provisions of the EIA Notification of 1994 as amended subsequently should be obtained from the Ministry.”

6. Again, the admitted position is that SMPL did not act upon the permission

granted on 13th July, 1999 till 13/14 August, 2001. The apparent reason is that the

mining lease in favour of SMPL was renewed only on 13/14 August, 2001. It is

only after the mining lease was renewed that SMPL started mining or extracting

iron ore on the basis of the permission granted on 13th 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 granted environmental clearance for

the extraction of iron ore. The environmental clearance granted to SMPL was for IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 4 of 14 expansion of production of iron ore (lump) from 1.5 lakh tonnes per annum

(LTPA) to 4.0 million tonnes per annum (MTPA). There was a progressive

gradation in the production capacity inasmuch as during the first year the increase

in production was permitted from 1.5 LTPA to 0.5 MTPA; 3.0 MTPA by the third

year and 3.750 MTPA from the fifth year to achieve the rated capacity in

production of 4.0 MTPA during the 17th year.

8. However, what is strange about the environmental clearance granted to

SMPL on 22nd September, 2004 is that it referred to the “proposal for expansion

of production of iron ore (lump)” from 1.5 LTPA to 4.0 MTPA. In fact, the

permission granted on 13th July, 1999 was for production of iron ore and not for

iron ore (lump). It is not even the case of SMPL that it was granted the permission

on 13th July, 1999 for the extraction or production of iron ore (lump), Moreover,

the MMDR Act refers to the mineral iron ore and not to iron ore (lump). The

concept of extraction or production of iron ore (lump) introduced in the

environmental clearance was alien to the permission granted on 13 th July, 1999

and the MMDR Act. Therefore, the environmental clearance granted on 22nd

September, 2004 must be understood in the context of the permission granted on

13th July, 1999 and the MMDR Act. If so appreciated, then it is clear that

environmental clearance was granted to SMPL only related to 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 granted permission to extract iron ore

(lump) to the extent of 1.4 LTPA in terms of the permission granted on 13 th July,

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 5 of 14 1999. Our understanding of the environmental clearance in this context and in

this regard keeping these factors in mind is of considerable importance insofar as

the decision in the 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 an environmental

clearance does not have any retrospective effect. It is operational from the date it

is granted. In any event, this issue is no longer res integra having been settled in

the decision rendered in Common Cause in paragraph 87 of the Report. The

submission made, however, was that the benefit of retrospectivity of the

environmental clearance should be given to SMPL from the date on which the

mining lease was renewed, that is, with effect from 13/14 August, 2001. The

reason for claiming this benefit is that the expanded permissible production would

then commence from August 2001 and SMPL would be entitled to extract a larger

quantity of iron ore with the progressive gradation given in the environmental

clearance with the result that the 3rd year of production would be 2004 and the 5th

year of production would be 2006 and not 2009. Similarly, the 17 th year of

production would be 2018 and not 2021.

10. We simply cannot accept this submission since it is plainly contrary to the

decision of this Court in Common Cause. Moreover and additionally, accepting

the submission would mean that for the period from 13/14 August, 2001 till 22 nd

September, 2004 SMPL would have the benefit of the permission granted on 13 th

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 6 of 14 July, 1999 as well as the retrospective benefit of the environmental clearance

dated 22nd September, 2004 meaning thereby that SMPL would have two mining

permissions, which is obviously not possible. However, we cannot deny to SMPL

the benefit of the permission granted on 13 th July, 1999 on the basis of which

SMPL carried out mining activities from the date of renewal of the mining lease

that is 13/14 August, 2001 till 22nd September, 2004. Even learned Amicus does

not have any objection to granting the benefit of the permission to SMPL for this

period, to the extent that SMPL extracted 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 the date of the environmental clearance, that is, 22 nd

September, 2004 is legal to the extent of 1.4 LTPA and SMPL cannot be penalised

for this mining activity during this period.

11. It was submitted by learned counsel for SMPL that if the environmental

clearance is not given retrospective effect then it would mean that its validity

would not be co-extensive with the term of the mining lease. Resultantly, the

operation of the environmental clearance though granted for the life of the mining

lease would necessarily be curtailed to the detriment of SMPL. This submission

is noted only to be rejected. The submission made can hardly be a ground for

giving retrospective effect to the environmental clearance. If the life of the

environmental clearance is curtailed due to operation of the law, then so be it.

12. Learned counsel for SMPL has shown us a Summary of the Project,

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 7 of 14 Environmental Impact Assessment and Environmental Management Plan relating

to the proposed expansion of the Thakurani iron ore mine, Block-B, District

Keonjhar, Orissa. This document is of February 2002 and is to be found on page

25 of volume 168 of the paper book. He has drawn our attention to page 28 thereof

which relates to the 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 assumption that the

environmental clearance relates back to the date of renewal of the mining lease

in 2001. However, since we have held that the environmental clearance does not

and cannot have any retrospective effect, the first year of production should in

fact be 2004-2005 (pro rata) based on the environmental clearance. On the basis

of the chart pointed out by learned counsel for SMPL, it is quite clear that there

has been excess mining of iron ore from the first year of production itself. This

excess mining is clearly illegal and must be penalised in terms of our judgement

in Common Cause.

13. We leave it to the Central Empowered Committee (CEC) to quantify the

penalty to be imposed on SMPL from 22 nd September, 2004 and based on the

terms of the environmental clearance. The calculation should also take into

consideration our conclusion that the environmental clearance is not retrospective

and the first year of production, in view of the environmental clearance granted

to SMPL would be 2004-2005. Any mining in excess of the environmental

clearance by SMPL would be and is illegal.

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 8 of 14 Extraction of iron ore (lump)

14. The main rub of the controversy before us lies in the terminology employed

in the environmental clearance granted to SMPL - whether it was entitled to

extract iron ore (lump) or mineral iron ore, within the limits laid down in the

environmental clearance.

15. Before resolving this controversy, it must be clearly understood that

extraction of the mineral iron ore is the extraction of iron ore Run of Mine or

ROM. Lumps of iron ore are, in a sense, a by-product of ROM as are topsoil,

mineral rejects, sub-grade ore and fines and the distinctions made are for the

purposes of payment of royalty. The submission of learned counsel for SMPL is

to the effect that SMPL was entitled to extract iron ore (lump) in terms of the

environmental clearance. If this submission is to be taken literally, then SMPL

was entitled to extract only iron ore (lump) without extracting iron ore ROM. This

would be much like the argument put forth by Portia enabling Shylock to extract

his pound of flesh without spilling a drop of blood. However, we need not take a

decision in this regard merely on semantics.

16. That lumps are a by-product of the extraction of iron ore ROM is clear

from the decision of this Court rendered in National Mineral Development

Corporation Ltd. v. State of M.P.2 wherein this Court noted the process of

winning the mineral as described by the appellant therein in the following words: 2

(2004) 6 SCC 281

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 9 of 14 “Iron ore deposits occur mostly in the hill ranges and iron ore is found on the top of the hill i.e. on the surface. The process by which the mineral is won has been described by the appellant as under:

“The ore is extracted by opencast method of mining for which mining benches are prepared. Firstly, holes are drilled on the benches covering the entire height of the bench at regular distance depending on ore types. After charging of the holes with explosives this portion of the bench is blasted. The blasted material known as ROM (run-of-mines) consists of large boulders, fragments and fines along with other contaminants. ROM is transported to crushing plant by dumpers and crushed to below 150 mm sizes. This crushed ROM contains lump, fines and also contaminants such as alumina and silica. The crushed ore is transported to screening plant through conveyor belts and is washed with water and screened in vibrating screens. Vibrating screens 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 India3 it was observed that in

the process of mining, iron ore is extracted (that is ROM) and separated into ore

lumps, fines and waste material which is commonly known as slime.

18. Looked at in this light, the context in which permission was granted to

SMPL on 13th July, 1999 is important. Permission was granted to SMPL to extract

the mineral iron ore. This had no reference at all to the sub-category or by-product

called iron ore (lump) but must be understood as permission to extract mineral

iron ore ROM. It was this permission that was sought to be proposed for

expansion of production and if it is looked at in this contemporaneous or historical

(whichever) background, then it is quite obvious that the environmental clearance

3 (2015) 6 SCC 193

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 10 of 14 granted on 22nd September, 2004 was only with reference to iron ore ROM. This

must also be read in the context of the MMDR Act which refers to the mineral

iron ore and does not refer to iron ore (lump). A combination of these two factors

convinces us that the environmental clearance granted to SMPL was only with

reference to iron ore ROM and not iron ore (lump), notwithstanding the

terminology employed in the environmental clearance.

19. Taking the view as canvassed by learned counsel for SMPL would lead to

a rather anomalous situation wherein, for the purposes of extracting iron ore

(lump) of a permissible quantity, SMPL could extract as much iron ore ROM as

it desired. In other words, for the purposes of extracting iron ore (lump) of 4.0

MTPA could it be said that SMPL was entitled to extract iron ore ROM to the

extent of 6.0 MTPA or even 8.0 MTPA? The answer to this is certainly in the

negative otherwise the environmental clearance granted to SMPL would be

devoid of any rational meaning whatsoever. Also taking this into consideration,

it does appear to us that though the environmental clearance granted to SMPL

was unhappily worded, it must be given a realistic meaning so that it is not

rendered ineffective on the ground of vagueness and to the detriment of the

environment as also to the detriment of SMPL.

20. In this context, it is necessary to refer to the Summary of the Project,

Environmental Impact Assessment and Environmental Management Plan of

February 2002 placed on record by SMPL in volume 168 of the paper book. The

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 11 of 14 table or chart on page 28 thereof and which forms a part of the document indicates

that for the production ore extraction of iron ore (lump) the total excavation of

iron ore ROM proposed is almost double the quantity. The chart is as follows:

Years Lump Ore Total ROM Top Mineral Subgrade Fines, (+5- 180m Excavation (MT) Soil rejects Ore (MT) -5 mm and 30 + (MT) (MT) (MT) (MT) 18m) (MT) 1st year 0.500 1.151 0.770 0.000 0.349 0.032 0.270 2001-2002 2nd year 1.196 2.159 1.840 0.000 0.267 0.052 0.644 2002-2003

3rd year 1.976 3.499 3.040 0.000 0.121 0.338 1.064 2003-2004 4th year 2.990 4.829 4.600 0.000 0.183 0.046 1.610 2004-2005

5th year 3.750 6.058 5.770 0.000 0.231 0.057 2.020 2005-2006 Sub Total 10.412 17.696 16.020 0.000 1.151 0.525 5.606 2007-2011 18.750 33.571 28.850 0.024 1.342 3.355 10.100 2012-2016 18.750 33.547 28.850 0.000 1.342 3.355 10.100

2017-2021 20.00 35.779 30.770 0.000 1.431 3.578 10.770 Grand Total 67.912 120.593 104.90 0.024 5.266 10.813 36.576

21. It is quite clear to us even from the above chart that the interpretation

sought to be given by learned counsel for SMPL to the environmental clearance

was never intended and if it was, then the unfortunate consequence would be that

the environmental clearance must be held to be invalid and quashed, resulting in

greater damage to the interests of SMPL than envisaged. On a realistic

interpretation to the environmental clearance, for the purposes of calculating

excess or illegal production of iron ore, the entire extraction of iron ore ROM is

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 12 of 14 required to be taken into consideration.

22. We may note in this context that it has come on record that the entire iron

ore ROM extracted by SMPL is actually sold to Jindal Steel and Power Ltd. or

JSPL and it is not only iron ore (lump) that is sold to JSPL. In this factual

background, the issue of the relationship between SMPL and JSPL arises but we

are not concerned with this for the present. However, what is more important is

that it is the sale of iron ore 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

its extraction and production of iron ore ROM but at the same time shying away

from the legal consequences that follow.

23. It was submitted by learned counsel for SMPL that the CEC has confused

itself between extraction or production of iron ore ROM and extraction or

production of iron ore (lump) and as a consequence, it has arrived at an incorrect

figure of excess or illegal mining by SMPL. In fact, the contention is that SMPL

has neither been involved in any excess or illegal mining and the conclusions

arrived at by the CEC are totally incorrect. We cannot accept this submission in

view of the discussion above, including the conduct and activities of SMPL, the

provisions of the MMDR Act and the context in which the permission and

environmental clearance was granted to SMPL. Under the circumstances, we find

no merit in the objections raised by SMPL to the report of the CEC with regard

to the validity of the environmental clearance or the excess or illegal mining of

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 13 of 14 iron ore by SMPL.

24. However, in view of our conclusion, the CEC might have to rework the

quantum of excessive or illegal mining carried out by SMPL and the consequent

penalty. For this, we grant 6 weeks’ time to the CEC to do the needful. All records

relevant for arriving at a decision should be made available by SMPL and the

concerned authorities to the CEC.

25. The substantive applications are disposed of to the above extent and in

terms of the above directions.

...……………………J (Madan B. Lokur)

...…………………....J New Delhi; (Deepak Gupta) November 12, 2018

IA Nos.40 of 2015 etc. in W.P. (C) No.114 of 2014 Page 14 of 14