The government of India made contradictory submissions in the Supreme Court in the Odisha illegal mining case. The Union Ministry of Mines said companies must pay 100% of the price of iron ore and manganese that they had mined illegally in the state. But the Attorney General took the view that only 30% of the price should be recovered from the companies. On Wednesday, the Supreme Court went on to uphold 100% recovery of the price of the illegally mined ore, along with rent, royalties and taxes, starting from the year 2000-’01.
In the judgement, the bench of Justice Madan B Lokur and Justice Deepak Gupta said:
“If there has been illegal mining, the defaulting lessee must bear the consequences of the illegality and not be benefited by pocketing 70% of the illegally mined ore. It simply does not stand to reason why the State should be compelled to forego what is its due from the exploitation of a natural resource and on the contrary be a party in filling the coffers of defaulting lessees in an ill gotten manner.”
While the full amount that companies are liable to pay remains unknown, a report by the Supreme Court-appointed Central Empowered Committee valued the ore extracted without or in excess of environmental clearances at Rs 17,576 crore. This is just one form of illegality.
In letters sent to Odisha government in 2011 and 2012, the Union Ministry of Mines had said mining in the absence of environmental and forest clearances, or in excess of what the clearances prescribed, within the lease area did not constitute illegal mining. But the ministry went back on this position in the affidavit filed in January this year in the Supreme Court. Compounding the reversals, during the hearings in April, the Attorney General expressed his disagreement with the ministry’s stand in his oral submissions.
Prashant Bhushan, the lawyer representing Common Cause, the non-profit which had filed a writ petition in the matter, said the Attorney General’s disagreement with the view taken by a ministry was “unusual”.
“The Attorney General even said he would get the ministry’s affidavit changed,” he said.
Mukul Rohtagi, who was the Attorney General at the time, however, claimed he had not taken a view contrary to the ministry. “You see there were two affidavits filed by two different ministries,” he said. “One of them said that 30% of the value should be recovered. I simply took that view.”
Two affidavits were filed in the court – one by the Ministry of Mines on January 20, and the other by the Ministry of Environment, Forests and Climate Change on February 1. Scroll.in has reviewed both the affidavits.
The environment ministry’s affidavit did not say anything about the recovery of the price of illegally mined ore. It simply listed the status of environment and forest clearances for 102 mining leases that were found in violation of environmental and forest laws by Odisha.
Rohatgi did not respond to further calls by Scroll.in seeking clarifications.
What constitutes illegal mining?
In what could have larger implications for the mining sector across India, the court ruled that illegal mining was not just the extraction of minerals outside the mining lease area but also the extraction within the lease area in violation of environmental, forest or other laws.
Mining leases are contracts that allow for the extraction of minerals over a clearly defined area. In India, state governments grant mining leases for major minerals with the approval of the Centre. The lease holder must get the mining plan approved and obtain environmental and forest clearances before starting mining operations.
Just one kind of violation – mineral extracted without an environmental clearance or beyond the amount authorised by it – resulted in ore worth Rs 17,576 crore being illegally mined in the three districts of Odisha, the Central Empowered Committee told the court. The Committee is a panel of independent experts that assists the court in cases relating to forest laws. The three districts are Keonjhar, Sundargarh and Mayurbhanj.
Of the 187 leases granted for mining iron ore and manganese in the three districts, 102 lease holders did not have statutory forest and environmental clearances, the Committee found. Its report, submitted on April 25, 2014, said 2,131 lakh metric tonnes of iron ore and 24 lakh metric tonnes of manganese had been extracted by mining companies without an environmental clearance or beyond the amount authorised by the environmental clearance. The Indian Bureau of Mines had calculated the value at Rs 17,091 crore for iron ore and Rs 484 crore for manganese, in terms of the weighted average price of minerals.
In June 2013, another report prepared by a retired judge, MB Shah, had estimated the value of illegally mined iron ore and manganese in the three districts at Rs 59,203 crore. This report had become the basis of the writ petition filed by Common Cause. In its judgement, the court upheld the Shah commission’s enquiry, but it clarified that it was not relying on the facts determined by the commission.
Mines Ministry vs Attorney General
For defining illegal mining, the court relied on Section 21(5) of the Mines and Minerals (Development and Regulation) Act, 1957, which is the main law governing mining in the country.
Section 21 (5) of the Act says:
“Whenever any person raises, without any lawful authority, any mineral from any land, the State Government may recover from such person the mineral so raised, or, where such mineral has already been disposed of, the price thereof, and may also recover from such person, rent, royalty or tax, as the case may be, for the period during which the land was occupied by such person without any lawful authority.”
The Central Empowered Committee told the court that this provision is applicable only if the mineral is extracted outside the mining lease area. When the mineral is extracted within the lease area, the violation of any law other than the mining law – environmental, forest, or any other – would not constitute illegal mining, it said. The mining companies agreed with this view. But the Union Ministry of Mines expressed strong disagreement with the Committee.
The affidavit submitted on January 20 by the economic advisor in the Ministry of Mines, Sudhakar Shukla, said:
“…the Ministry would like to submit that the provisions of sub-section (5) of Section 21 would apply to all minerals raised without any lawful authority, be it forest clearances or environment clearances or any other such legal requirements.”
This contradicted what the Ministry had said in letters sent to Odisha in December 2011 and September 2012. Taking a narrow view of illegal mining as mining that takes place outside the lease area, the letters said:
“The interpretation that a land granted under a mining lease can, on the ground of violations of provisions of any other law, be held to be occupied without lawful authority is not appropriate.”
But in the affidavit, it clarified:
“...whatever has been stated in these letters cannot be read in such a manner as to go against express provisions of the Act.”
While the Central Empowered Committee took the view that recovery must be limited to 30% of the value of the illegally mined ore, the petitioners argued that the entire price of the illegally mined ore must be recovered. The Union Ministry of Mines took the same position in its affidavit.
Subsequently, in the course of hearings in the case in April, however, Mukul Rohatgi, then Attorney General of India, expressed a different opinion. The judgement records this disagreement:
“We may note that only to this extent, the learned Attorney General differed with the view expressed by the Union of India and submitted that the recommendation of the CEC to recover only 30% of the value of the illegally mined ore should be accepted.”
In its judgement, the court observed that Section 21(5) is “not limited to a violation committed by a person only outside the mining lease area – it includes a violation committed even within the mining lease area”. It reasoned that the Mines and Minerals (Development and Regulation) Act was also intended to preserve and protect the environment in mining areas. Action under the Environmental Protection Act or the Mineral Concession Rules do not preclude compensation to the state for minerals mined illegally, it said.
While mandating that companies pay 100% of the price of the illegally mined ore, the court clarified that if the mineral was extracted without both environmental clearance and forest clearance, “only one set of compensation would be payable by the mining lease holder”. This means a company that has violated more than one law needs to pay just 100% and not 200% of the price. The amount recovered would be compensation to the state, not a penalty, said the court, ruling out a probe by the Central Bureau of Investigation for the moment.
Where will the funds go?
In 2009, Rabi Das, the editor of a newspaper in Odisha, had filed an application in the Supreme Court, drawing its attention to widespread illegal mining in the state. In January 2014, responding to the application, the Supreme Court had asked the Central Empowered Committee to come up with a scheme for setting up a Special Purpose Vehicle to undertake tribal welfare and development work. The court said this was needed “to ensure inclusive growth of the mineral bearing areas”. The scheme was approved by the court in April that year.
In its judgement on Wednesday, the court said that the scheme had been implemented with the chief secretary of Odisha as the chairman of the Special Purpose Vehicle. But “no further information” was available with regard to the implementation of the scheme, it added.
The amount recovered from mining companies will be deposited in this Special Purpose Vehicle.