Samaj Parivartana Samudaya vs State Of Karnataka .

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION

I.A. NO.248 OF 2015

IN

WRIT PETITION (CIVIL) NO.562 OF 2009

SAMAJ PARIVARTANA SAMUDAYA AND ORS. ...PETITIONER(S)

VERSUS

STATE OF KARNATAKA & ORS. ...RESPONDENT(S)

AND IN THE MATTER OF

FEDERATION OF INDIAN MINERAL INDUSTRIES, SOUTHERN REGION [FIMI SOUTH) ..APPLICANT(S)

JUDGMENT

RANJAN GOGOI, J.

1. This application (I.A. NO.248 of 2015)

has been filed seeking the following

direction from the Court:

Signature Not Verified “that iron-ore and manganese ore Digitally signed by NEETU KHAJURIA Date: 2017.08.28

may be sold in Karnataka without 16:03:31 IST Reason: recourse to e-auction conducted by the monitoring committee set up by this Hon'ble Court.” 2

2. The response of the Central Empowered

Committee (“CEC” for short) was sought for

by this Court. Pursuant thereto a report

dated 28th April, 2016 of the CEC has been

submitted. In the said report the CEC has

stated that it agrees with the statement

of the applicant – Federation of Indian

Industries, Southern Region (FIMI South)

that the basic objectives behind the sale

of iron ore through the Monitoring

Committee, in terms of the various orders

passed by this Court from time to time,

have been achieved and an alternative

system needs to be put in place. The main

suggestions of the CEC are as follows:

(I) The mechanism must provide for the

registration of both the buyers and

sellers of iron-ore. The sellers of

the ore, or the mining-ore lessees,

must declare their statutory 3

approvals, modalities of the

Reclamation and Rehabilitation Plan

('R & R Plan') and the estimated

annual quantity of iron-ore produced

by them. The buyers of the ore must

declare their eligibility to purchase

the ore and the industry connected

with said purchase.

(II)The sale of iron-ore by sellers to the

buyers must be through an online

platform. This e-platform must

provide for all the relevant

information concerning the iron-ore,

such as the grade and moisture-content

of the ore, minimum acceptable price

by the seller and the provision to

view the bids offered by registered

buyers on a real-time basis so that

there could be a price-match amongst

prospective buyers.

4

(III)The mechanism must provide for online

registration of the agreements and

transactions executed between the

registered buyers and sellers.

(IV)The mechanism must provide a method

for online deposit of applicable

royalty, taxes, contribution to the

Special Purpose Vehicle ('SPV') and

other statutory duties; along with the

subsequent online confirmation of such

receipt.

(V) The mechanism must consist of

checks-and-balances which can be

implemented across the e-platform, in

order to ensure that the sale or

purchase of iron-ore is not

substantially below the market price.

3. In its counter/reply, the State of

Karnataka has indicated its broad

agreement with the suggestions of the CEC 5

and has incorporated certain additional

recommendations including setting up of a

Committee consisting of officials of the

State Government to monitor the sale of

iron-ore through the e-platform on the

basis of long term agreements, a Model of

which has also been submitted to the

Court.

4. Other stake-holders like the writ

petitioners in Writ Petition (C) No.

562/2009 – Samaj Parivartana Samudaya and

ors. have objected to any change from the

existing pattern of sale of iron-ore

through the Monitoring Committee whereas

M/s Vedanta Ltd., an iron-ore lessee

operating within the State of Karnataka

has supported the stand taken by FIMI

South in the present I.A. i.e. I.A. No.248

of 2015.

6

5. The Monitoring Committee through whom

iron-ore is currently being sold by

e-auction was constituted by the order of

this Court dated 2nd September, 2011

accepting the recommendations of the CEC

dated 1st September, 2011 to sell the total

quantity of illegally extracted iron-ore

which at that point of time was 25 MMT

(approximately).

6. After the sale of the illegally mined

iron-ore was complete, this Court by order

dated 23rd September, 2011 continued to

entrust the duty and responsibility of

sale of iron-ore to the Monitoring

Committee. The above position was

continued by this Court by its Order dated

18.4.2013 disposing of Writ Petition (C)

No. 562/2009 and other connected cases.

This is how the current status/situation

with regard to sale of iron-ore by

e-auction through the Court Appointed 7

Monitoring Committee continues.

7. In the order of this Court dated 18th

April, 2013 in Writ Petition (C) No. 562

of 2009 there is a vivid and graphic

description of the enormity of the illegal

mining and consequential damage to the

ecology and environment that had led to

the intervention of this Court and had

prompted exercise of its jurisdiction in

the present matter. Innovative measures

and orders with the aid of Article 142 of

the Constitution of India were felt

necessary and consequently passed by the

Court from time to time including the

final order dated 18th April, 2013 to

comprehensively deal with the issue of

illegal mining and depredation of nature

and environment. It is in the above said

context that the constitution of the

Monitoring Committee and the continuance

of its role in the matter of sale of 8

iron-ore by e-auction had been conceived

and continued by this Court on the basis

of the various orders passed from time to

time.

8. It is in the aforesaid backdrop and

having regard to the progress achieved in

terms of what was contemplated and

visualized by this Court in its final

order dated 18th April, 2013 that the

tenability of the prayers made by the FIMI

South will have to be considered.

9. What has been suggested in the report

of the CEC dated 28th April, 2016 and the

in-principle approval thereof by the State

of Karnataka along with the suggestions

offered by the State would seem to

indicate that in place of Monitoring

Committee constituted by this Court

another Monitoring Committee consisting of

officials of the State Government (of 9

Karnataka) is proposed to over-see and

supervise the sale of iron-ore through a

hybrid system of long term contracts and

sales through an e-platform including

payment of taxes, royalty, etc.

10. While it is correct that any trading

process has to be free and fair with

liberty to the contracting parties to work

out their own terms of sale and purchase,

what cannot be ignored are the

circumstances which had prompted the Court

to conceive of and continue with a

departure from the normal rule and instead

to have a regulated, if not, highly

controlled system of sale and purchase of

iron-ore. Sale and purchase of iron-ore

through the Court Appointed Monitoring

Committee and by e-auction is not a

singular but a connected facet of what was

visualized by the Court in its bid to

check, control and regulate mining and 10

also to restore nature and environment to

its earlier pristine purity, so far as

possible.

11. A cap on production and restoration of

ecology and environment through a

Comprehensive Environment Plans for the

Mining Impact Zone ('CEPMIZ' for short)

has been visualized by this Court in its

order dated 18th April, 2013. The

connected aspects i.e. lifting of the cap

or enhancement thereof and launching of

the CEPMIZ scheme is under active

consideration of this Court in other

connected Interlocutory Applications

(I.As.). When the said connected issues

are pending it cannot be said that the

situation has become ripe for the normal

rule of sale and purchase to be restored

so far as the sale of iron-ore in the

State of Karnataka is concerned. The

experience of the past has been horrific. 11

It cannot be allowed to come back. Sale

and purchase of iron-ore had been

conducted in the most outrageous manner

and on wholly unacceptable terms

resulting, inter alia, in huge leakage of

government revenue. Such experiences and

events cannot be allowed to resurface.

Taking an overall view of the matter, we

are of the opinion that time has not come

to dispense with the existing policy of

sale and purchase of iron-ore in the State

of Karnataka through the Court Appointed

Monitoring Committee by e-auction. The

restoration of 'normalcy' in the process

of sale and purchase of iron-ore must wait

for the future and at least till such

time that significant headways are made

in the other connected aspects of the

matter dealt with by the final order of

this Court dated 18th April, 2013 passed in

Writ Petition (Civil) No.562 of 2009. 12

12. We, therefore, for the present reject

the application (I.A. No.248) filed by

FIMI South and consequently do not

entertain the support to the prayers made

therein by M/s Vedanta Ltd. For the same

reason we do not also accept the

suggestions of the CEC and the State of

Karnataka as made in their respective

reports/affidavits filed before the Court.

13. I.A. No.248 accordingly is disposed of

in the above terms.

....................,J.

(RANJAN GOGOI)

....................,J.

(PRAFULLA C. PANT)

....................,J.

(NAVIN SINHA)

NEW DELHI AUGUST 28, 2017