Madan B. Lokur and Deepak Gupta, Jj.
Madan B. Lokur and Deepak Gupta, Jj.
361 361
COMMON CAUSE A
v.
UNION OF INDIA AND ORS.
(Writ Petition (Civil) No. 114 of 2014)
AUGUST 2, 2017 B
[MADAN B. LOKUR AND DEEPAK GUPTA, JJ.]
Mines and Minerals – Illegal mining of enormous proportions
in districts of Odisha – Writ petition partly based on reports given
by Justice M.B. Shah Commissions of Inquiry sought directions,
C
inter alia, to Union of India and Government of Odisha to immediately
stop forthwith all illegal mining in the State of Odisha and for CBI
investigation into such illegal mining – Plea of mining lease holders
that reports given by Commission were vitiated as they were not
given notice u/ss.8B, 8C of the 1952 Act, and thus, the very
foundation of the writ petition goes away – Held: First report given D
by Commission was a general, overall perspective on the subject –
No irregularity or illegality has been committed so as to vitiate the
first report – Second report went into specific details of several
mining lease holders, but herein one is not concerned with those
specifics – Therefore, whether notices were issued or not to the
E
lease holders who were the subject matter of discussion in the second
report is of no consequence –However, the reports of the
Commission are not being relied upon for the purpose of present
judgment and order – Further, for now, no direction is being given
with regard to any investigation by CBI – Expert Committee be set
up under the guidance of a retired judge of Supreme Court to identify F
the lapses occurred over the years enabling rampant illegal or
unlawful mining in Odisha and measures to prevent this from
happening in other parts of the country – Further, directions issued –
Commissions of Inquiry Act, 1952 – ss.8B, 8C.
Committees: G
Central Empowered Committee (CEC) – Constitution of – Held:
CEC was first constituted by Supreme Court in T. N. Godavarman
case as an interim body – Thereafter, it was constituted by
notification issued u/s.3(3) of the 1986 Act – It has continued
H
361
362 SUPREME COURT REPORTS [2017] 13 S.C.R.
Illegal Mining A
8. The holder of a mining lease is required to adhere to the
terms of the mining scheme, the mining plan and the mining lease
as well as the statutes such as the EPA, the FCA, the Water
(Prevention and Control of Pollution) Act, 1974 and the Air
(Prevention and Control of Pollution) Act, 1981. If any mining B
operation is conducted in violation of any of these requirements,
then that mining operation is illegal or unlawful. Any extraction
of a mineral through an illegal or unlawful mining operation would
become illegally or unlawfully extracted mineral. Illegal mining
is not confined only to mining operations outside a leased area.
Such an activity is obviously illegal or unlawful mining. Illegal C
mining takes within its fold excess extraction of a mineral over
the permissible limit even within the mining lease area which is
held under lawful authority, if that excess extraction is contrary
to the mining scheme, the mining plan, the mining lease or a
statutory requirement. [Paras 128, 129] [425-B-D] D
Encroachments
9.1 Section 4(1) of the MMDR Act makes it clear that no
person can carry out any mining operations except under and in
accordance with the terms and conditions of a mining lease granted
under the MMDR Act and the rules made thereunder. Obviously E
therefore, any person carrying on mining operations without a
mining lease, is indulging in illegal or unlawful mining. This would
also necessarily imply that if a mining lease is granted to a person
who carries out mining operations outside the boundaries of the
mining lease, the mineral extracted would be the result of illegal F
or unlawful mining. In its report, the CEC has dealt with illegal
mining outside the sanctioned mining areas. It is stated that 82
mining leases for iron ore and manganese ore were identified by
the Commission where there were encroachments in the form of
illegal mining pits, illegal over-burden dumps etc. [Paras 130,
131] [425-E-H] G
9.2 A fresh Joint Survey to be conducted by concerned
officers of the Government of Odisha from the Revenue
Department, the Forest Department, the Mining Department and
any other department that may be deemed necessary. The Forest
H
374 SUPREME COURT REPORTS [2017] 13 S.C.R.
A Survey of India, the MoEF, the Indian Bureau of Mines and the
Geological Survey of India should also be associated in the Joint
Survey. It would also be appropriate if the CEC is also associated
in the Joint Survey and the best and latest technology should be
made use of including satellite imagery and thereafter a report
be submitted in this Court after hearing the 82 lessees identified
B
by the Commission. [Para 134] [426-E-F]
Adherence to the mining plan
10. A mining plan is valid for a period of five years but there
could be a 20% variation in extraction over and above the mining
C plan. This is the maximum that is stated to be reasonably
permissible according to the Ministry of Mines. In terms of Rule
22(5) of the MCR a mining plan shall incorporate a tentative
scheme of mining and annual program and plan for excavation
from year to year for five years. At best, there could be a variation
in extraction of 20% in each given year but this would be subject
D to the overall mining plan limit of a variation of 20% over five
years. What this means is that a mining lease holder cannot
extract the five year quantity (with a variation of 20%) in one or
two years only. The extraction has to be staggered and continued
over a period of five years. While mining in excess of permissible
E limits under the mining plan or the EC or FC on leased area may
not amount to mining on land occupied without lawful authority, it
would certainly amount to illegal or unlawful mining or mining
without authority of law. [Paras 135, 139] [427-B; 428-E-F]
Section 21 of the MMDR Act
F 11.1 Section 21(1) of the MMDR Act is clearly relatable to
a penal offence and applies if any one contravenes the provisions
of Section 4(1) of the MMDR Act. Section 4(1) of the MMDR
Act prohibits the undertaking of any mining operation in any area
except under and in accordance with the terms and conditions of
G a mining lease and the rules made thereunder. Therefore, when
a person carries out a mining operation in any area other than a
leased area or violates the terms of a mining lease, which
incorporates the mining plan and which requires adherence to
the law of the land, that person becomes liable for prosecution
under Section 21(1) of the MMDR Act. In the event of a
H conviction, he or she shall be punishable with imprisonment for a
COMMON CAUSE v. UNION OF INDIA AND ORS. 375
term which may extend to five years and with fine which may A
extend to Rs.5 lakh per hectare of the area. [Para 141] [428-G-
H; 429-A-B]
11.2 There is no ambiguity in Section 21(5) of the MMDR
Act or in its application. Though Section 21(1) of the MMDR Act
might be in the realm of criminal liability, Section 21(5) of the B
MMDR Act is certainly not within that realm. Section 21(5) of
the MMDR Act is applicable when any person raises, without
any lawful authority, any mineral from any land. In that event, the
State Government is entitled to recover from such person the
mineral so raised or where the mineral has already been disposed
of, the price thereof as compensation. The words ‘any land’ are C
not confined to the mining lease area. As far as the mining lease
area is concerned, extraction of a mineral over and above what is
permissible under the mining plan or under the EC undoubtedly
attracts the provisions of Section 21(5) of the MMDR Act being
extraction without lawful authority. It would also attract Section D
21(1) of the MMDR Act. In any event, Section 21(5) of the Act is
certainly attracted and 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. This is also because
the MMDR Act is intended, among other things, to penalize illegal
or unlawful mining on any land including mining lease land and E
also preserve and protect the environment. Action under the
EPA or the MCR could be the primary action required to be taken
with reference to the MCR and Rule 2(ii a) thereof read with the
Explanation but that cannot preclude compensation to the State
under Section 21(5) of the MMDR Act. The MCR cannot be F
read to govern the MMDR Act. [Paras 149, 150] [432-C-G]
11.3 There can be no compromise on the quantum of
compensation that should be recovered from any defaulting
lessee – it should be 100%. If there has been illegal mining, the
defaulting lessee must bear the consequences of the illegality G
and not be benefited by pocketing 70% of the illegally mined
ore. [Para 153] [433-D-E]
Calculations on merits
12. The base year of 1993-94 is most appropriate. Some
lessees might lose in the process while some of them might benefit H
376 SUPREME COURT REPORTS [2017] 13 S.C.R.
A but that cannot be avoided. In any event, each mining lease holder
is being given the benefit of calculations only from 2000-01 and
is not being ‘penalized’ for the period prior thereto. The
compensation should be payable from 2000-2001 onwards at
100% of the price of the mineral, as rationalized by the CEC.
[Paras 155, 156] [434-G-H; 435-B]
B
Violation of Forest (Conservation) Act, 1980
13. Given the fact that the defaulting mining lease holders
have been asked to pay and have paid additional NPV as well as
an amount towards penal compensatory afforestation, it must be
C assumed the violation of the FCA has been condoned to a limited
extent. A violation of the FCA is condonable on payment of penal
compensatory afforestation charges. This obviously would not
apply to illegal or unlawful mining under Section 21(5) of the
MMDR Act, but it is made clear that the mining lease holders
would be entitled to the benefit of any Temporary Working
D Permission granted. [Paras 178, 185] [440-C-D; 443-D]
Conclusions on the issues of mining without an EC or FC or both
14. To avoid any misunderstanding, confusion or ambiguity,
the following is made very clear: (1) A mining project that has
E commenced prior to 27th January, 1994 and has obtained a No
Objection Certificate from the SPCB prior to that date is
permitted to continue its mining operations without obtaining an
EC from the Impact Assessment Agency. However, this is subject
to any expansion (including an increase in the lease area) or
modernization activity after 27th January, 1994 which would result
F in an increase in the pollution load. In that event, a prior EC is
required. However, if the pollution load is not expected to
increase despite the proposed expansion (including an increase
in the lease area) or modernization activity, a certificate to this
effect is absolutely necessary from the SPCB, which would be
G reviewed by the Impact Assessment Agency; (2) The renewal of
a mining lease after 27th January, 1994 will require an EC even if
there is no expansion or modernization activity or any increase
in the pollution load; (3)For considering the pollution load the
base year would be 1993-94, which is to say that if the annual
production after 27th January, 1994 exceeds the annual production
H
COMMON CAUSE v. UNION OF INDIA AND ORS. 377
H
382 SUPREME COURT REPORTS [2017] 13 S.C.R.
Ajay Bhargava, Kudrat Dev, Ms. Shreya Agrawal, (for M/s Khaitan & A
Co.), Indrani Patnaik, Anand Verma, Mahesh Agarwal, Dhananjay
Mishra, Gaurav Khanna, Ms. Nishit Agarwal, Ms. Devika Mohan,
E.C. Agrawala, Amar Dave, R.N. Karanjawala, Ms. Nandini Gore,
Abhinay Sharma, Ms. Neha Khandelwal, Ms. Sonia Nigam, Amit
Bhandari., Mrs. Manik Karanjawala (For M/s. Karanjawala & Co.),
B
Raj Kumar Mehta, Elangbam Premjit Singh, Ms. Himanshi Andley, Sunil
Kumar Jain, Akarsh Garg, K.P.S. Chani, Ms. Kirti Renu Mishra, Ms.
Apurva Upmanyu, Gopal Prasad, Sunil Dogra, Vivek Vishnoi, Abhishek
Sharma, Suchit Mohanty, Anupam Lal Das, Balaji Srinivasan, Gaurav
Kejriwal, Keshav Mohan, Sujit Keshri, Saraswata Mohapatra,
P.R. Mishra, Ms. Rajani Ohri Lal, Himinder Lal, Ashok Panigrahi, C
Dhananjaya Mishra, Arnav Dash, Bishwaranjan Sahoo, Avnish Kr.
Sharma, R.M. Patnaik, Gaurav Khanna, Tayenjam Momo Singh, Tejaswi
Kumar Pradhan, Manoranjan Paikaray, Aniruddha Purushotham, Shiv
Mangal Sharma, Lalit Mohapatra (for M/s Aura & Co.), Lalitendu
Mohapatra, Nishit Agarwal, T.R. Rehman, (for M/s Aura & Co.), M/s Fox
D
Mandal & Co., Ms. Ruchi Kohli, Ms. Movita, R.L. Mitra, Ms. Daisy
Hannah, Ms. Akhila J., Haris Beeran, Kedar Nath Tripathy, Nishikant
Singh, Sudeep Dey, Ms. Ameyavikrama Thanvi, Ms. Alankrita Sinha,
B.V. Gadnis, Vishwanath Gadnis, V.S. Lakshmi, Abhishek Kumar, Ambhoj
Kumar Sinha, S.K. Biswal, Sachin Das, Azim H. Laskar, Chandra
Bhushan Prasad, Biswajit Das, S. Udaya Kumar Sagar, Mrityunjai Singh, E
Bhavani Shankar, Mrs. V.S. Lakshmi, Aakash Bajaj (for M/s Khaitan &
Co.), Ms. Nandini Sen, Chanchal Kr. Ganguli, Manoj Kumar Goyal,
Mohd. Ainul Ansari, Yagesh Kumar Dahiya, Sunil Khatwani, Taiba Khan,
Dr. Monika Gusain, Advs., for the appearing parties.
The Judgment of the Court was delivered by F
MADAN B. LOKUR, J. 1. The facts revealed during the hearing
of these writ petitions filed under Article 32 of the Constitution suggest a
mining scandal of enormous proportions and one involving megabucks.
Lessees in the districts of Keonjhar, Sundergarh and Mayurbhanj in
Odisha have rapaciously mined iron ore and manganese ore, apparently G
destroyed the environment and forests and perhaps caused untold misery
to the tribals in the area. However, to be fair to the lessees, they did the
detail steps taken to ameliorate the hardships of the tribals, but it appears
to us that their contribution is perhaps not more than a drop in the ocean –
also too little, too late.
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384 SUPREME COURT REPORTS [2017] 13 S.C.R.
forest area of the mining lease only if (i) it has the requisite A
environmental clearance; (ii) it has the consent to operate
from the State Pollution Control Board under the Air and
Water Acts; (iii) Mining Plan is duly approved by the
competent authority; and (iv) the NPV for the entire forest
falling within the mining lease is deposited in the
B
Compensatory Afforestation Fund.
The mining in the forest land included in the mining lease
should be permissible only if, in addition to the above, the
approval under the FC Act/TWP has been obtained;
(c) No forest land can be leased/assigned without first obtaining C
the approval under the FC Act. Therefore, the forest area
approved under the FC Act should not be lesser than the
total forest area included in the mining leases approved
under the MMDR Act, 1957. Both necessarily have to be
the same. In view of the above, this Hon’ble Court while
permitting grant of Temporary Working Permission to the D
mines in Orissa and Goa has made it one of the pre-
conditions that the NPV will be paid for the entire forest
area included in the mining leases. Similarly, all the mining
lease holders in Orissa should be directed to pay the NPV
for the entire forest area, included in the mining lease; E
(d) In Orissa, substantial areas included in the mining leases as
non forest land have subsequently been identified as DLC
forest (deemed forest/forest like areas) by the Expert
Committee constituted by the State Government pursuant
to this Hon’ble Court’s order dated 12.12.1996. While F
processing and/or approving the proposals under the FC
Act in many cases such areas have been treated as non-
forest land. It is recommended that (i) the NPV for the
entire DLC area included in the mining lease, after deducting
the NPV already paid, should be deposited by the concerned
lease holder and (ii) the mining operations in the unbroken G
DLC land (virgin land) should be permissible only if the
permission under the FC Act has been obtained/is obtained
for such area. Keeping in view the peculiar circumstances
as was existing in Orissa and subject to the above, the mining
operations in the broken DLC land may be allowed to be H
386 SUPREME COURT REPORTS [2017] 13 S.C.R.
H
390 SUPREME COURT REPORTS [2017] 13 S.C.R.
-------------
(E) Misuse of Rules: 10 & 12 of MCDR, 1988 [Mineral
Conservation and Development Rules, 1988] which provides for
modification and review of mining plan only for a specific purpose, C
namely,
(i) Safe and scientific mining;
(ii) conservation of minerals;
(iii) the protection of environment; and
D
(iv) in case of modification, explanation for the same.
-------------
(F) Encroachment:-
On the basis of Google Image, the survey report prepared by the E
State Government by DGPS method, it was found that in 82
mining leases, there was encroachment. Out of the said leases,
re-survey was ordered for 37 leases.”
30. Soon thereafter, the Commission gave its Second Report on
Illegal Mining of Iron and Manganese Ores in the State of Odisha, F
sometime in October, 2013. This report dealt with specific lease holders
and violations committed by them. It is not necessary for us to delve into
those specific details.
31. It was submitted before us by learned counsel for the mining
lease holders that the reports given by the Commission were not
G
acceptable on the ground that a notice had not been given to the lease
holders under Section 8B or Section 8C of the Commissions of Inquiry
Act, 1952. It was submitted that under these circumstances the reports
given by the Commission were vitiated and therefore the foundation of
the writ petition filed by Common Cause was taken away. We are not in
agreement with learned counsel for the mining lease holders. H
398 SUPREME COURT REPORTS [2017] 13 S.C.R.
A 32. The first report given by the Commission was a general, overall
perspective on the subject while the second report went into specific
details of several mining lease holders - but we are not concerned with
those specifics. Therefore, whether notices were or were not issued to
the lease holders who were the subject matter of discussion in the second
report is of no consequence.
B
33. What we are really perturbed about is the facts stated by the
Commission in the first report. So far as this is concerned, we are of the
view that no irregularity or illegality has been committed so as to vitiate
the first report. Notwithstanding this, we are not relying upon any of the
facts determined by the Commission for the purposes of our judgment
C and order.
34. The procedure followed by the Commission has been mentioned
in Volume I Part II of the first report, but it is not necessary for us to
recount each and every detail. Suffice it to say that a resume of the
procedure followed will indicate that full opportunity was given to the
D lease holders to have their say.
Resume of the procedure followed by the Commission
35. In March 2011 the Commission sent the first questionnaire to
the concerned Secretary of the Government of Odisha seeking the
E following information regarding each lease holder:-
“(i) the name of the lessee;
(ii) area of the lease;
(iii) date of the execution of the lease deed;
F (iv) present status (renewal, mining plan, mining scheme)
approval date;
(v) production and export particulars from the year 2008-09 up
to January, 2011; etc.”
36. On 20 th April, 2011 the Commission sent the second
G questionnaire to the said concerned Secretary seeking further information
in a Form consisting of 14 questions and 4 tables.
37. Thereafter, between 24th and 26th August, 2011 the Commission
issued the first notice to various mining lessees in Odisha seeking
information on affidavit as per Proforma A and B enclosed with the
H
COMMON CAUSE v. UNION OF INDIA AND ORS. 399
[MADAN B. LOKUR, J.]
from 31st October, 2010 to 8th November, 2012. The purpose of the
visits was to collect information and seek explanations and gather facts
from the concerned Departments of the Government of India and the
Government of Odisha. During the visits, the Commission received as C
many as 140 complaints alleging illegal mining. Accordingly, a public
hearing was held in Keonjhar and Bhubaneshwar on 11th and 12th
December, 2011.
39. On 21st December, 2012 and 12th January, 2013 several senior
counsel were given a personal hearing by the Commission including a D
personal hearing to the Federation of Indian Mining Industries (for short
‘FIMI’). Following the submissions made, a fresh notice was issued to
the lease holders from 28th January, 2013 seeking information in
Proformas A to H. In terms of the fresh notice, the lease holder was
required to verify the facts stated therein (which were collected by the E
Commission) and if found incorrect then to state the correct facts. The
fresh notice specifically mentioned that:
“(i) The lessee shall come fully prepared to answer, related to
this matter and submit all related records.
(ii) Explain the production from the leased area without having F
approval under F(C) Act, 1980.
(iii) Explain the production during the deemed extension period
without having approval under EIA Notification dated
27.01.1994 and amendments thereon.
G
(iv) Explain the excess production in violation of EIA
Notification dated 27.01.1994 and amendments thereon
under the EP Act, 1986.”
40. The report mentions the various dates of hearing given to
learned counsel for the lease holders, the State of Odisha, FIMI,
H
400 SUPREME COURT REPORTS [2017] 13 S.C.R.
A findings on these issues consider granting the reliefs prayed for in the
writ petition filed by Goa Foundation and the reliefs prayed for in the
writ petitions filed by the mining lessees, which have been transferred to
this Court.”
45. In the present petitions before us, there is no challenge to the
B reports of the Justice Shah Commission. However, we propose (as in
Goa Foundation) to confine ourselves to some limited facts adverted
to by the CEC in its final report. We do not propose to base any of our
conclusions on the reports of the Commission.
46. Learned counsel for the petitioners insisted that the illegal or
C unlawful mining activity carried on in the State of Odisha as noted by the
Commission deserves to be investigated by the Central Bureau of
Investigation. Reference in this regard was made to the passage in Part
III of Volume I of the first report of the Commission to the following
effect:-
D “Since this is one of the biggest illegal mining ever observed by
the Commission, it is strongly felt that this is a fit case to handover
to Central Bureau of Investigation, for further investigation and
follow up action.”
47. Similarly, on page 125 of Chapter II of Volume I of the report,
E it is stated as follows:-
“Terms of Reference No. 8 provides that “The Commission may
take the services of any investigating agency of the Central
Government in order to effectively address its terms of reference.
The Commission, therefore, suggests that Central Bureau of
F Investigation (C.B.I.) may be directed to investigate into
allegations of corruption made against politicians, bureaucrats
and others.”
We will consider this at the appropriate stage. Suffice it to say for the
time being that the Commission made certain significant observations in
G Chapter II of the report to the effect that:
a. That the tribals in the area have been displaced or stay in
pathetic and miserable conditions in same area. There is rampant
air pollution with the trees having the colour of minerals making
it clear that tribals are forced to breathe polluted air and drink
H polluted water.
COMMON CAUSE v. UNION OF INDIA AND ORS. 403
[MADAN B. LOKUR, J.]
55. The details of the functioning of the CEC have been discussed A
by this Court in Samaj Parivartana Samudaya v. State of Karnataka.7
In that decision, questions were raised about the credibility of the CEC
and while rejecting the submissions, it was made clear that the
recommendations made by the CEC are subject to the satisfaction of
this Court. We need say nothing more except that during the course of
B
hearing of the present petitions, some of the conclusions arrived at by
the CEC were disputed by the petitioners and even by the learned Amicus
and some were supported by learned counsel for the mining lease holders,
the learned Attorney General and the learned counsel for the State of
Odisha. It is therefore quite clear that in the present cases, the CEC as
a fact finding body has functioned impartially and it is only on the C
conclusions arrived at by the CEC on the basis of the facts gathered that
there can be some debate and discussion. Anyone may disagree with
the views of the CEC and there is no need to make heavy weather
about this at all.
56. In so far as the report given by the CEC on 16th October, 2014 D
(the final report) is concerned, before going into the details thereof, we
may mention that the CEC has stated that it held meetings with the
Chief Secretary and other senior officials of the State of Odisha and
others on six dates. It also heard the lease holders and others on seven
dates and it held meetings with three of the lease holders that is Jindal
Steel and Power Ltd. (JSPL), Sarda Mines Pvt. Limited (SMPL) and E
Essel Mining and Industries Ltd. (Essel) on 10th September, 2014. The
CEC visited the site of the mining lease of SMPL from 4th March, 2014
to 7th March, 2014 and had site visits of a number of other lessees from
12th July, 2014 to 16th July, 2014.
57. As far as the facts collected by the CEC are concerned, there F
is no dispute with regard to their correctness. The CEC has recorded
that there are 187 iron ore and manganese ore mining leases in the State
of Odisha. On the basis of the material and information collected, a
statement was prepared showing lease-wise and year-wise details of
production of iron ore and manganese ore, permissible production and G
production without environmental clearance/beyond environmental
clearance. The details in this regard have been given as Annexure R-14
to the final report.
7
(2013) 8 SCC 154
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406 SUPREME COURT REPORTS [2017] 13 S.C.R.
the MMDR Act), the Mineral Concession Rules, 1960 (or the MCR) A
and the Mineral Conservation and Development Rules, 1988 (or the
MCDR).
61. Section 4(1) of the MMDR Act provides that no person shall
undertake any mining operation in any area except under and in
accordance with the terms and conditions of a mining lease granted B
under the MMDR Act and the rules made thereunder. A mining operation
is defined in Section 3(d) of the MMDR Act as meaning any operation
undertaken for the purpose of winning any mineral. Section 4(2) of the
MMDR Act provides that no mining lease shall be granted otherwise
than in accordance with the provisions of the said Act and the rules
made thereunder. C
62. Section 5(2) of the MMDR Act provides for certain restrictions
on the grant of a mining lease. It provides that the State Government
shall not grant a mining lease unless it is satisfied that the applicant has
a mining plan duly approved by the Central Government or the State
Government in respect of the concerned mine and for the development D
of mineral deposits in the area concerned.
63. Section 10 of the MMDR act provides for the procedure for
obtaining a mining lease and sub-section (1) thereof provides that an
application is required to be made for a mining lease in respect of any
land in which the mineral vests in the government and the application E
shall be made to the State Government in the prescribed form and along
with the prescribed fee.
64. Section 12 of the MMDR Act requires the State Government
to maintain a set of registers. Among the registers that the State
Government is required to maintain are a register of applications for F
mining leases and a register of mining leases. Every such register shall
be open to inspection by any person on payment of such fee as the State
Government may fix.
65. Section 13 of the MMDR Act provides for the rule making
power of the Central Government in respect of minerals. The MCR are G
framed in exercise of power conferred by Section 13 of the MMDR
Act.
66. Section 18 of the MMDR Act makes it the duty of the Central
Government to take all such steps as may be necessary for the
H
408 SUPREME COURT REPORTS [2017] 13 S.C.R.
71. Rule 27 of the MCR deals with the conditions that every mining A
lease is subject to. One of the conditions is that the lessee shall comply
with the MCDR.
72. The format of a mining lease is given in Form K to the MCR
and this is relatable to Rule 31 of the MCR which provides that on an
application for the grant of a mining lease, if an order has been made for B
the grant of such lease, a lease deed in Form K or in a form as near
thereto as circumstances of each case may require, shall be executed
within six weeks of the order, or within such extended period as the
State Government may allow.
73. Part VII of Form K deals with the covenants of the lessee/
lessees. Clause 10 thereof requires the lessee to keep records and C
accounts regarding production and employees etc. The lessee is required,
inter alia, to maintain a record of the quantity and quality of the mineral
released from the leased land, the prices and all other particulars of all
sales of the mineral and such other facts, particulars and circumstances,
as the Central Government or the State Government may require. D
74. Clause 11C is of some importance and it requires that the
lessee shall take measures for the protection of the environment like
planting of trees, reclamation of land, use of pollution control devices
and such other measures as may be prescribed by the Central Government
or the State Government from time to time at the expense of the lessee. E
75. Rule 37 of the MCR deals with the transfer of a lease and
provides, inter alia, that a mining lessee shall not without the previous
consent in writing of the State Government or the Central Government,
as the case may be, assign, sublet, mortgage, or in any other manner,
transfer the mining lease, or any right, title or interest therein. The lessee
shall not enter into or make any bona fide arrangement, contract or F
understanding whereby the lessee will or may directly or indirectly be
financed to a substantial extent in respect of its operations or undertakings
or be substantially controlled by any person or body of persons. Sub-
rule (3) of Rule 37 of the MCR enables a State Government to determine
any lease if the mining lessee has committed a breach of Rule 37 of the G
MCR or has transferred any lease or any right, title or interest therein
otherwise than in accordance with sub-rule (2) of Rule 37 of the MCR.
Mineral Conservation and Development Rules, 1988
76. The MCDR promulgated under Section 18 of the MMDR
Act and referred to in Rule 27 of the MCR are also of some significance. H
410 SUPREME COURT REPORTS [2017] 13 S.C.R.
and to look after them during the subsistence of the lease after which A
these trees shall be handed over to the State Forest Department or any
other appropriate authority. The holder of a mining lease is also required
to restore, to the extent possible, other flora destroyed by the mining
operations.
83. Briefly therefore, the overall purpose and objective of the B
MMDR Act as well as the rules framed there under is to ensure that
mining operations are carried out in a scientific manner with a high degree
of responsibility including responsibility in protecting and preserving the
environment and the flora of the area. Through this process, the holder
of a mining lease is obliged to adhere to the standards laid down under
the Environment (Protection) Act, 1986 or the EPA as well as the laws C
pertaining to air and water pollution and also by necessary implication,
the provisions of the Forest (Conservation) Act, 1980 (for short ‘the FC
Act’). Exploitation of the natural resources is ruled out. If the holder of
a mining lease does not adhere to the provisions of the statutes or the
rules or the terms and conditions of the mining lease, that person is liable D
to incur penalties under Section 21 of the MMDR Act. In addition thereto,
Section 4A of the MMDR Act which provides for the termination of a
mining lease is applicable. This provides that where the Central
Government, after consultation with the State Government is of opinion
that it is expedient in the interest of regulation of mines and mineral
development, preservation of natural environment, prevention of pollution, E
etc. then the Central Government may request the State Government to
prematurely terminate a mining lease.
Environment Impact Assessment Notification of 27th January,
1994
F
84. As can be seen from the statutory scheme adverted to above,
protection and preservation of the environment is a significant and integral
component of a mining plan, a mining lease and mining operations - and
rightly so.
85. Keeping this in mind, an Environment Impact Assessment G
Notification dated 27th January, 1994 was issued by the Central
Government in exercise of powers conferred by Section 3(1) and Section
3(2)(v) of the EPA read with Rule 5(3)(d) of the Environment (Protection)
Rules, 1986. The Environment Impact Assessment Notification dated
27th January, 1994 (for short ‘EIA 1994’) is a prohibitory notification and
directs that on and from the date of its publication in the official gazette: H
412 SUPREME COURT REPORTS [2017] 13 S.C.R.
A the pollution load while proposing any expansion activity? The second
question is: What is the duration for which an EC is not necessary for an
ongoing project which does not propose any expansion, or to put it
differently, what is the validity period for a no objection certificate from
the SPCB?
B 92. In our opinion, as far as the first question is concerned, a
reading of EIA 1994 read with the 1st Note implies that the base year
would need to be the immediately preceding year that is 1993-94. This
is obvious from the opening sentence of the 1st Note, that is, “A project
proponent is required to seek environmental clearance for a proposed
expansion/modernization activity if the resultant pollution load is to exceed
C the existing levels.” (Emphasis supplied). In its report, the CEC has
taken 1993-94 as the base year and we see no error in this. Even the
MoEF in its circular dated 28th October, 2004 stated with regard to the
expansion in production: “If the annual production of any year from
1994-95 onwards exceeds the annual production of 1993-94 or its
D preceding years (even if approved by IBM), it would constitute
expansion.” If that expansion results in an increase in the pollution load
over the existing levels, then an EC is mandated.
93. It was contended on behalf of the mining lease holders that in
terms of the circular of 28th October, 2004 the annual production even
E prior to 1993-94 could be considered for ascertaining if there was an
expansion or not. We cannot accept this submission for a variety of
reasons. For one, the existing levels mentioned in the 1st Note clearly
have reference to the immediately preceding year and not to a preceding
year in a comparatively remote past. Secondly, a very high annual
production in any one year is not reflective of a consistent pattern of
F production – it could very well be a freak year and that freak year
certainly cannot be a basic standard or the norm to measure expansion.
Then if the interpretation sought to be given is accepted, there would be
an absence of consistency and a lack of uniformity with different mining
lease holders having different base years. This is hardly conducive to
G good governance. Finally, EIA 1994 was intended to prevent the existing
environmental load from increasing based on the existing data of the
immediate past and not data of a few years gone by. We may add that
the only exception that could be made in this regard would be if there is
no production during 1993-94. In that event, the immediately preceding
year would be relevant and that is the only reasonable interpretation that
H we see for the use of the words “or its preceding years”.
COMMON CAUSE v. UNION OF INDIA AND ORS. 415
[MADAN B. LOKUR, J.]
A 97. Learned counsel for the mining lease holders sought to buttress
their submission that EIA 1994 was vague and ambiguous by mentioning
two circulars issued by the MoEF on 5th November, 1998 and 27th
December, 2000 extending the period for obtaining an EC for new units.
However, these circulars are apparently not on our record (which goes
into 148 volumes) and therefore we cannot make any comment about
B
them. These circulars were mentioned to also contend that even for
new units the absence of an EC would not have an adverse impact on
them, since the period for obtaining an EC was extended from time to
time. A reference was also made to a circular dated 14th May, 2002
which later on became the subject of consideration by this Court in M.C.
C Mehta v. Union of India.8 A reading of the circular of 14th May, 2002
indicates that several units had come up in violation of EIA 1994. The
MoEF had taken the view that such units may be permitted to apply for
an EC by 31st March, 1999 which was then extended to 30th June, 2001
by circulars dated 5th November, 1998 and 27 th December, 2000
respectively.
D
98. By the circular dated 14th May, 2002 the deadline for applying
for an EC was extended up to 31 st March, 2003 as a last and final
opportunity to obtain an ex post facto EC in respect of units which had
commenced mining operations without obtaining a prior EC in violation
of EIA 1994. The circular also stated that: “Suitable directions shall be
E issued by all States/UTs under the Environment (Protection) Act to units
to stop construction activities/operations of all such units that fail to apply
for environmental clearance by 31st March, 2003. Units which fail to
comply with these directions shall be proceeded against forthwith under
the relevant provisions of the Environment (P) Act, 1986 without making
F reference to this Ministry.”
99. It was submitted that in view of these ambiguous and unclear
signals emanating from the MoEF which resulted in confusion being
worse confounded, the mining lease holders were not clear whether or
not they were required to obtain an EC particularly in respect of pre-
G EIA 1994 mining leases and operations.
100. As mentioned above, these dates and the text of the circulars
were emphasized by learned counsel for the lease holders to contend
that it was not obligatory for the mining lease holders, who did not expand
their mining operations, to obtain an EC and in any event the period for
H 8
(2004) 12 SCC 118
COMMON CAUSE v. UNION OF INDIA AND ORS. 417
[MADAN B. LOKUR, J.]
obtaining an EC was extended till 31st March, 2003 with ex post facto A
approval. In this context, reliance was placed on M.C. Mehta referred
to above.
101. We are not in agreement with the contention of learned counsel
for the mining lease holders on the interpretation given to the various
circulars for the reasons given above and must also correctly appreciate B
the decision of this Court in M.C. Mehta.
102. In M.C. Mehta the issue that arose for consideration was
whether mining activity in the Aravalli hills causes environmental
degradation and what directions are required to be issued. While
considering this issue, this Court also considered EIA 1994 and the circular C
dated 14th May, 2002. In doing so, this Court categorically held in
paragraph 37 of the Report that the intention of the MoEF was not to
legalize the continuance of mining activity without complying with the
requisite stipulations. If that were unfortunately so, then it would
demonstrate a lack of sensitivity of the MoEF to the principles of
sustainable development and the object behind issuing EIA 1994. This D
Court said:
“It does not appear that MOEF intended to legalise the
commencement or continuance of mining activity without
compliance of stipulations of the notification. In any case, a
statutory notification cannot be notified [modified] by issue of E
circular. Further, if MOEF intended to apply this circular also to
mining activity commenced and continued in violation of this
notification, it would also show total non-sensitivity of MOEF to
the principles of sustainable development and the object behind
the issue of notification. The circular has no applicability to the F
mining activity.”
103. Adverting to the MMDR Act, this Court expressed the view
in paragraph 52 of the Report that the approval of a mining plan does not
imply that a mining lease holder can commence mining operations. The
mining lease holder is nevertheless obliged to comply with statutory G
provisions including the EPA and other laws. It was said:
“The grant of permission for mining and approving mining plans
and the scheme by the Ministry of Mines, Government of India
by itself does not mean that mining operation can commence. It
cannot be accepted that by approving mining plan and scheme
H
418 SUPREME COURT REPORTS [2017] 13 S.C.R.
A with the issuance of EIA 2006. Reference was made to a circular dated
13th October, 2006 which deals with interim operational guidelines till
13th September, 2007 in respect of applications made under EIA 1994.
We do not see the relevance of this circular (which really dealt with
transitional issues) not only for the reason given in M.C. Mehta that
circulars cannot override statutory notifications but also because it deals
B
with the procedure for considering applications made under EIA 1994.
110. Reference was also made to a circular dated 2nd July, 2007.
The passage relied upon reads as follows:-
“It is clarified that all such mining projects which did not require
C environmental clearance under the EIA Notification, 1994 would
continue to operate without obtaining environmental clearance
till the mining lease falls due for renewal, if there is no increase
in lease area and/or there is no enhancement of production. In
the event of any increase in lease area and or production, such
projects would need to obtain prior environmental clearance.
D Further, all such projects which have been operating without any
environmental clearance would obtain environmental clearance
at the time of their lease renewal even if there is no increase
either in terms of lease area or production.”
111. The aforesaid circular relates to three categories that is: (i)
E Mining leases, where no EC was required under EIA 1994 would continue
to operate without an EC; (ii) If there was an increase in the lease area
or enhancement of production, an EC was required by the mining lease
holder; (iii) All projects would require an EC at the time of renewal of
the mining lease even if there was no increase in the lease area or
F enhancement of production.
112. Reference was also made to an Office Memorandum dated
th
19 August, 2010. However a reading of this document brings out that it
basically relates to construction at site but makes it clear that no activity
relating to any project covered under EIA 2006 including civil construction
G could be undertaken without obtaining a prior EC except fencing of the
site to protect it from getting encroached and construction of temporary
sheds for the guards.
113. Reference was also made to Office Memorandums dated
16th November, 2010 and 12th December, 2012 but having gone through
them we find them of little relevance as they deal with procedural issues only.
H
COMMON CAUSE v. UNION OF INDIA AND ORS. 421
[MADAN B. LOKUR, J.]
A down in the mining plan and that the State Government had finally taken
steps to curb illegal mining in respect of over-production of minerals.
There was a reference to suggest (and we take it to be so) that 20%
deviation from the mining plan (in terms of over-production) would be
reasonable and permissible. However, it appears from a reading of the
communication that illegal mining was going on beyond the 20% deviation
B
limit and that appropriate steps were needed to curb these violations.
Learned counsel for the petitioners submitted that such egregious
violations must be firmly dealt with by cancellation or termination of the
mining lease and a soft approach is not called for.
119. In this context, it is worth noting that a High Level Committee
C (called the Hoda Committee) on the National Mineral Policy noted in its
Report dated 22nd December, 2006 in paragraph 3.47 as follows :
“3.47 An EMP [Environment Management Plan] has to be
prepared under the MCDR and got approved by IBM. However,
this EMP is not acceptable to the MoEF. The miner has to prepare
D two EMPs separately - one for IBM and another for MoEF.
The Committee suggests that IBM and MoEF should prepare
guidelines for a composite EMP so that IBM can approve the
same in consultation with MoEF’s field offices. This will eliminate
anomalous situations where increase of even a few tonnes in
production requires project authorities to get a fresh EMP
E approved from the MoEF although the IBM allows a grace of
+10% per cent, keeping in view the fluctuations in the market
situation and process complexities. If a single EMP is accepted
in principle such anomalies can be resolved in advance. The
Committee feels the MoEF should also have a cushion of +10%
F per cent in production while giving EIA clearance.”
120. The above passage indicates that the permissible variation in
production as per the Indian Bureau of Mines is +10% but according to
the letter dated 12th December, 2011 issued by the Ministry of Mines,
the reasonable variation limit could be +20%. It is not clear why there
was a shift in the variation, but as rightly pointed out by learned counsel
G
for the petitioners, the fact that in some cases the variation exceeded
20% was a cause for concern which necessitated strict and punitive
action.
121. A submission was made by learned counsel for the mining
lease holders to the effect that since many of them had been granted the
H
COMMON CAUSE v. UNION OF INDIA AND ORS. 423
[MADAN B. LOKUR, J.]
first deemed statutory renewal of the mining lease under Rule 24A of A
the MCR, the requirements of EIA 1994 would not be applicable. We
were shown various amendments made to Rule 24A of the MCR from
time to time particularly the amendments made on 10th February, 1987,
7th January 1993, 27th September, 1994, 17th January, 2000, 18th July,
2014 and 8th October, 2014. In our opinion, none of these are of any
B
consequence, the reason being that for the purposes of renewal of the
mining lease, an application is required to be made by the mining lease
holders and the deemed renewal clause under Rule 24A of the MCR
will come into operation only after an application for renewal is made in
Form J in Schedule I of the MCR. Under Rule 26 of the MCR, the State
Government may refuse to renew the mining lease. That apart, the position C
in environmental jurisprudence with regard to the renewal of a mining
lease has been made explicit by this Court in M.C. Mehta. Even
otherwise, in view of EIA 1994, it is quite clear that the renewal of a
mining lease would require a prior EC.
122. We may also draw attention in this regard to a circular dated D
28th October, 2004 issued by the MoEF wherein it was stated that in
view of the decision in M.C. Mehta all mining projects of major minerals
of more than 5 hectares lease area that had not yet obtained an EC
would have to do so at the time of renewal of the lease.
123. Finally, it was submitted that whenever an EC is granted, it
would have retrospective effect from the date of the application for E
grant of an EC. In this context, it was pointed out that there were
enormous delays in granting an EC and that the Hoda Committee had
noted with reference to EIA 2006 that if all goes well, the grant of an EC
takes about 232 days whereas the international norm is that an EC is
granted within six months or 180 days. According to the additional affidavit F
filed by some mining lease holders, the period of 232 days mentioned by
the Hoda Committee was actually a conservative estimate and that in
fact it takes anything upto 390 days for the grant of an EC. It was
submitted that the position was even worse under EIA 1994 since the
MoEF rarely showed any urgency in the grant of an EC. Examples
were cited before us to show that in some instances the grant of an EC G
took more than two years. Taking all this into consideration it was
submitted that it would be more appropriate that the EC is given
retrospective effect from the date of the application.
124. We are not in agreement with learned counsel for the mining
lease holders. There is no doubt that the grant of an EC cannot be taken H
424 SUPREME COURT REPORTS [2017] 13 S.C.R.
128. The simple reason for not accepting this interpretation is that A
Rule 2(ii a) of the MCR was inserted by a notification dated 26th July,
2012 while we are concerned with an earlier period. That apart, as
mentioned above, the holder of a mining lease is required to adhere to
the terms of the mining scheme, the mining plan and the mining lease as
well as the statutes such as the EPA, the FCA, the Water (Prevention
B
and Control of Pollution) Act, 1974 and the Air (Prevention and Control
of Pollution) Act, 1981. If any mining operation is conducted in violation
of any of these requirements, then that mining operation is illegal or
unlawful. Any extraction of a mineral through an illegal or unlawful
mining operation would become illegally or unlawfully extracted mineral.
129. It is not, as suggested by learned counsel, that illegal mining C
is confined only to mining operations outside a leased area. Such an
activity is obviously illegal or unlawful mining. Illegal mining takes within
its fold excess extraction of a mineral over the permissible limit even
within the mining lease area which is held under lawful authority, if that
excess extraction is contrary to the mining scheme, the mining plan, the D
mining lease or a statutory requirement. Even otherwise, it is not possible
for us to accept the narrow interpretation sought to be canvassed by
learned counsel for the mining lease holders particularly since we are
dealing with a natural resource which is intended for the benefit of
everyone and not only for the benefit of the mining lease holders.
E
Encroachments
130. Section 4(1) of the MMDR Act makes it clear that no person
can carry out any mining operations except under and in accordance
with the terms and conditions of a mining lease granted under the MMDR
Act and the rules made thereunder. Obviously therefore, any person F
carrying on mining operations without a mining lease, is indulging in illegal
or unlawful mining. This would also necessarily imply that if a mining
lease is granted to a person who carries out mining operations outside
the boundaries of the mining lease, the mineral extracted would be the
result of illegal or unlawful mining.
G
131. In its report, the CEC has dealt with illegal mining outside the
sanctioned mining areas. It is stated that 82 mining leases for iron ore
and manganese ore were identified by the Commission where there
were encroachments in the form of illegal mining pits, illegal over-burden
dumps etc.
H
426 SUPREME COURT REPORTS [2017] 13 S.C.R.
G 135. A side issue raised by learned counsel for the mining lease
holders in this regard was the necessity (if any) of adhering to the annual
plan or calendar plan of mining. It was contended that a mining lease
holder could mine in excess of the annual plan. While it is so, this
submission must be tempered and appreciated in the proper context. A
mining plan is valid for a period of five years but there could be a 20%
H variation in extraction over and above the mining plan. This is the
COMMON CAUSE v. UNION OF INDIA AND ORS. 427
[MADAN B. LOKUR, J.]
adherence to the law of the land, that person becomes liable for A
prosecution under Section 21(1) of the MMDR Act. In the event of a
conviction, he or she shall be punishable with imprisonment for a term
which may extend to five years and with fine which may extend to Rs.5
lakh per hectare of the area.
142. As far as Section 21(5) of the MMDR Act is concerned, B
according to the CEC the provision is applicable only if a person indulges
in illegal mining outside the mining lease area. Consequently, Section
21(5) of the MMDR Act is not attracted even if the mineral raised within
the mining lease area is without an EC or beyond the quantity prescribed
by the EC or beyond the quantity permitted in the mining plan. In such
a situation, the provisions of the EPA or the MCR come into play. This C
interpretation is supported by learned counsel for the mining lease holders
who affirm that Section 21(5) of the MMDR Act is mining lease area
centric. In other words, according to the CEC and the learned counsel,
for the purposes of Section 21(5) of the MMDR Act illegal mining is
mining outside the mining lease area and Section 21(5) of the MMDR D
Act has to be understood in that light.
143. Reference was also made to the Explanation to Rule 2(iia)
of the MCR where it is stated that for the purposes of this clause, the
violation of any rules, other than the rules made under section 23C of the
MMDR Act, within the mining lease area by a holder of a mining lease E
shall not include illegal mining. In other words, it was submitted that
Section 21(5) of the MMDR Act is required to be understood in the
context of Rule 2(iia) of the MCR.
144. It was submitted by Shri Ashok Desai learned senior counsel
for one of the intervenors, that the penalty postulated by Section 21(5) F
of the MMDR Act though an imposition of a pecuniary liability, is
punishment for the commission of an offence. By referring to Khemka
& Co. (Agencies) Pvt. Ltd. v. State of Maharashtra9 it was contended
that the liability sought to be imposed by Section 21(5) of the MMDR
Act is not a liability that is created by a clear, unambiguous and express
enactment. G
145. As far as the Union of India is concerned, in its affidavit
filed on 20th January, 2017 by Shri Sudhakar Shukla, Economic Advisor
in the Government of India, Ministry of Mines, it is submitted (and this
9
(1975) 2 SCC 22
H
430 SUPREME COURT REPORTS [2017] 13 S.C.R.
A 15. We are clearly of the opinion that the marginal note “penalties”
cannot be pressed into service for giving such colour to the
meaning of sub-section (5) as it cannot have in law. The recovery
of price of the mineral is intended to compensate the State for
the loss of the mineral owned by it and caused by a person who
has been held to be not entitled in law to raise the same. There is
B
no element of penalty involved and the recovery of price is not a
penal action. It is just compensatory.”
149. We are in agreement with the view expressed by the learned
Attorney General and Shri Dwivedi as also the view expressed in
Karnataka Rare Earth. The decision in Khemka & Co. is not at all
C apposite. There is no ambiguity in Section 21(5) of the MMDR Act or in
its application. We are also of opinion that though Section 21(1) of the
MMDR Act might be in the realm of criminal liability, Section 21(5) of
the MMDR Act is certainly not within that realm.
150. In our opinion, Section 21(5) of the MMDR Act is applicable
D when any person raises, without any lawful authority, any mineral from
any land. In that event, the State Government is entitled to recover from
such person the mineral so raised or where the mineral has already been
disposed of, the price thereof as compensation. The words ‘any land’
are not confined to the mining lease area. As far as the mining lease
E area is concerned, extraction of a mineral over and above what is
permissible under the mining plan or under the EC undoubtedly attracts
the provisions of Section 21(5) of the MMDR Act being extraction without
lawful authority. It would also attract Section 21(1) of the MMDR Act.
In any event, Section 21(5) of the Act is certainly attracted and is not
limited to a violation committed by a person only outside the mining lease
F area – it includes a violation committed even within the mining lease
area. This is also because the MMDR Act is intended, among other
things, to penalize illegal or unlawful mining on any land including mining
lease land and also preserve and protect the environment. Action under
the EPA or the MCR could be the primary action required to be taken
G with reference to the MCR and Rule 2(ii a) thereof read with the
Explanation but that cannot preclude compensation to the State under
Section 21(5) of the MMDR Act. The MCR cannot be read to govern
the MMDR Act.
151. What is the significance of this discussion? It was submitted
H that the CEC has taken the following view:
COMMON CAUSE v. UNION OF INDIA AND ORS. 433
[MADAN B. LOKUR, J.]
petitioners and the learned Amicus that the penalty should be levied from A
the date of EIA 1994. In our opinion, the cut-off from 2000-2001 (without
interest) is undoubtedly reasonable and there can be hardly be any
grievance in this regard. The mining lease holders cannot have their
cake and eat it too, along with the icing on top.
156. Since the recommendation made by the CEC in this regard B
is not totally unreasonable, we accept that the compensation should be
payable from 2000-2001 onwards at 100% of the price of the mineral,
as rationalized by the CEC.
Violation of the Forest (Conservation) Act, 1980
157. Before dealing with the violations of Section 2 of the Forest C
(Conservation) Act, 1980 (for short ‘the FCA’), it is necessary to give a
brief background.
158. The FCA came into operation initially through the Forest
(Conservation) Ordinance, 1980 with effect from 25th October, 1980.
The said Ordinance was repealed and subsequently the FCA came into D
effect on 25th December, 1980.
159. Section 2 of the FCA provides that no State Government or
other authority shall make, except with the prior approval of the Central
Government, any order directing, inter alia, that any forest land or any
portion thereof may be used for non-forest purposes. E
160. The interpretation of Section 2 of the FCA first came up for
consideration in State of Bihar v. Banshi Ram Modi.12 In that case,
Banshi Ram Modi was granted a mining lease for mining and winning
mica. During the course of mining operations, feldspar and quartz were
discovered. Modi then applied to the Central Government to include F
these minerals in the lease. The State Government agreed to do so but
did not obtain the previous approval of the Central Government for the
inclusion of the two minerals in the original lease.
161. The Central Government took the view that since its previous
approval had not been obtained for inclusion of feldspar and quartz in G
the mining lease, Modi could not be permitted to mine these two minerals.
This led Modi to approach the High Court with the contention that he
was not breaking up or clearing any forest land other than the land on
which mining operations were already being carried on. The High Court
12
(1985) 3 SCC 643 H
436 SUPREME COURT REPORTS [2017] 13 S.C.R.
A allowed the writ petition but feeling aggrieved, the State of Bihar preferred
an appeal in this Court.
162. The question before this Court was a narrow one, namely,
whether prior approval of the Central Government is necessary in respect
of a mining lease, granted for winning a certain mineral prior to the
B coming into force of the FCA, if the lessee applies to the State
Government after the FCA came into force for permission to win and
carry any new mineral from the broken up area?
163. While answering this question in the negative, it was held
that after the commencement of the FCA no fresh breaking up of forest
C land or no fresh clearing of the forest on any such land could be permitted
by the State Government or any authority without the approval of the
Central Government. However, in respect of broken up land, it was
held that if the State Government permits the lessee to remove any
discovered mineral, it cannot be said that there has been a violation of
Section 2 of the FCA particularly since there is no breaking up of any
D fresh forest land.
164. Subsequently in Ambica Quarry Works v. State of Gujarat
and Ors13 when the lease of the mining holder came up for renewal, the
FCA had already come into force. Since the forest department of the
State of Gujarat refused to give a no objection certificate, the application
E for renewal of the lease was rejected. The question that arose for
consideration was whether, after coming into force of the FCA, the
mining lease holder was entitled to renewal of the mining lease. While
answering the question in the negative this Court held that the renewal
of a lease cannot be claimed as a matter of right. The primary purpose
F of the FCA was to prevent deforestation and ecological imbalance as a
result of deforestation. Therefore, the primary duty under the FCA was
to the community and the obligation to society must predominate over
the obligation to the individuals. While distinguishing Banshi Ram Modi
this Court held that renewal of the lease would lead to further
deforestation or at least it would not help in reclaiming the area where
G deforestation had already taken place. The primary purpose of the FCA
is to prevent further deforestation and any interpretation must sub-serve
that purpose and implement the FCA. Under the circumstances, it was
held, considering the scheme of the FCA that refusal to renew the lease
without prior approval of the Central Government was not unjustified.
13
H (1987) 1 SCC 213
COMMON CAUSE v. UNION OF INDIA AND ORS. 437
[MADAN B. LOKUR, J.]
it did on 26th April, 2010. It was recommended by the CEC that given A
the peculiar circumstances prevailing in the State of Odisha, mining
operations in the entire DLC lands included in the mining leases, may be
allowed to continue on payment of the Net Present Value (NPV) subject
to the fulfillment of other statutory requirements and rules being complied
with.
B
174. By an order dated 7th May, 2010 this Court directed that the
recommendation of the CEC acceptable to the State Government could
be complied with. Consequently, the State of Odisha appears to have
implemented the recommendations regarding recovery of NPV and
realized an amount of about Rs. 1750 crores as additional NPV.
C
175. We have been informed that in addition to the above, the
mining lease holders have subsequently deposited an amount under the
heading of penal compensatory afforestation which was introduced
through guidelines issued by the MoEF on 3rd February, 1999. The
guidelines in this regard, were communicated by the Assistant Inspector
General of Forest to the Chief Secretary of all the State and Union D
Territories and the relevant portion thereof reads as follows:
“4.3.1 Cases have come to the notice of the Central Government
in which permission for diversion of forest land was accorded
by the concerned State Government in anticipation of approval
of the Central Government under the Act and/or where work E
has been carried out in forest area without proper authority. Such
anticipatory action is neither proper not permissible under the
Act which clearly provides for prior approval of the Central
Government in all cases. Proposals seeking ex-post-facto
approval of the Central Government under the Act are normally F
not entertained. The Central Government will not accord approval
under the Act unless exceptional circumstances justify
condonation. However, penal compensatory afforestation would
be insisted upon by the MoEF on all such cases of condonation.
4.3.2 The penal compensatory afforestation will be imposed G
over the area worked/used in violation. However, where the
entire area has been deforested due to anticipatory action of the
State Government, the penal compensatory afforestation will be
imposed over the total lease area.”
H
440 SUPREME COURT REPORTS [2017] 13 S.C.R.
A 176. It was submitted by learned counsel for the lessees that since
additional NPV as well as an amount towards penal compensatory
afforestation has been paid by the defaulting mining lease holders, the
violation of Section 2 of the FCA stands condoned or in any event the
illegal or unlawful mining in forest lands stands regularized.
B 177. The CEC did not accept this submission made on behalf of
the mining lease holders on the ground that no retrospective forest
clearance has been granted and even otherwise there is no provision to
condone or regularize the violation of Section 2 of the FCA.
178. We are of opinion that the view expressed by the CEC in
C this regard is partially correct. Given the fact that the defaulting mining
lease holders have been asked to pay and have paid additional NPV as
well as an amount towards penal compensatory afforestation, it must be
assumed the violation of the FCA has been condoned to a limited extent,
more particularly since in its order dated 7th May, 2010 this Court
permitted the State of Odisha to accept such recommendations of the
D CEC made in the report dated 26th April, 2010 as are acceptable to it.
The relevant recommendations made by the CEC read as follows:
“(c) No forest land can be leased/assigned without first obtaining
the approval under the FC Act. Therefore, the forest area
approved under the FC Act should not be lesser than the total
E forest area included in the mining leases approved under the
MMDR Act, 1957. Both necessarily have to be the same. In
view of the above, this Hon’ble Court while permitting grant of
Temporary Working Permission to the mines in Orissa and Goa
has made it one of the pre-conditions that the NPV will be paid
F for the entire forest area included in the mining leases. Similarly,
all the mining lease holders in Orissa should be directed to pay
the NPV for the entire forest area, included in the mining leases;
(d) In Orissa, substantial areas included in the mining leases as
non forest land have subsequently been identified as DLC forest
G (deemed forest/forest like areas) by the Expert Committee
constituted by the State Government pursuant to this Hon’ble
Court’s order dated 12.12.1996. While processing and/or
approving the proposals under the FC Act in many cases such
areas have been treated as non-forest land. It is recommended
that (i) the NPV for the entire DLC area included in the mining
H lease, after deducting the NPV already paid, should be deposited
COMMON CAUSE v. UNION OF INDIA AND ORS. 441
[MADAN B. LOKUR, J.]
A would hold good and clearly they are liable to compensate the State for
the entire price of the iron ore and manganese ore illegally mined with
effect from 7th January, 1998 until the forest clearance was obtained by
the concerned mining lease holder.
182. We have fixed 7th January, 1998 as the cut-off date despite
B the orders dated 12th December, 1996 and 4th March, 1997 only for the
reason that it is possible that some mining lease holders (we do not know
how many) were not aware that they were inadvertently conducting
mining operations on DLC lands which were identified by the State of
Odisha as forest lands on the directions of this Court. For the purposes
of Section 21(5) of the MMDR Act, they are entitled to the benefit of
C doubt and along with them, the other mining lease holders before us.
The CEC in this regard has observed as follows:
“It will be seen that in the above cases the mining operations
have been done in the forest land in violation of the Forest
D (Conservation) Act, 1980 and consequently also in violation of
this Hon’ble Court order dated 12.12.1996. The CEC
recommends that 70% of the notional value of the iron ore and
manganese produced by the lessees by undertaking mining
operations in the forest land in violation of the Forest
(Conservation) Act, 1980 may be directed to be recovered from
E the respective lessees. Wherever the mineral production is both
from the forest land as well as non-forest land then in such cases
the notional value of the production from the forest land may be
calculated on pro rata basis of the extent of the forest land and
non-forest land involved. The notional value of the mineral, time
F limit for payment of the compensation, use of the amount received
as compensation and other conditions as decided by this Hon’ble
Court in respect of the production without/in excess of the
environmental clearance may be directed to be followed on pari-
passu basis.”
A (2) The renewal of a mining lease after 27th January, 1994 will
require an EC even if there is no expansion or modernization
activity or any increase in the pollution load.
(3) For considering the pollution load the base year would be
1993-94, which is to say that if the annual production after
B 27th January, 1994 exceeds the annual production of 1993-
94, it would be treated as an expansion requiring an EC.
(4) There is no doubt that a new mining project after 27th
January, 1994 would require a prior EC.
(5) Any iron ore or manganese ore extracted contrary to EIA
C 1994 or EIA 2006 would constitute illegal or unlawful mining
(as understood and interpreted by us) and compensation at
100% of the price of the mineral should be recovered from
2000-2001 onwards in terms of Section 21(5) of the MMDR
Act, if the extracted mineral has been disposed of. In
D addition, any rent, royalty or tax for the period that such
mining activity was carried out outside the mining lease area
should be recovered.
(6) With effect from 14th September, 2006 all mining projects
having a lease area of 5 hectares or more are required to
E have an EC. The extraction of any mineral in such a case
without an EC would amount to illegal or unlawful mining
attracting the provisions of Section 21(5) of the MMDR
Act.
(7) For a mining lease of iron ore or manganese ore of less
F than 5 hectares area, the provisions of EIA 1994 will continue
to apply subject to EIA 2006.
(8) Any mining activity carried on after 7th January, 1998 without
an FC amounts to illegal or unlawful mining in terms of the
provisions of Section 21(5) of MMDR Act attracting 100%
recovery of the price of the extracted mineral that is disposed
G
of.
(9) In the event of any overlap, that is, illegal or unlawful mining
without an FC or without an EC or without both would
attract only 100% compensation and not 200%
H
COMMON CAUSE v. UNION OF INDIA AND ORS. 445
[MADAN B. LOKUR, J.]
187.We have examined the report of the CEC with regard to the
alleged violation of Section 6 of the MMDR Act and find that there have
been several amendments to Section 6 relating to the maximum area for
which a mining lease may be granted to a person. The following is the
result of the amendments: C
A and is not being enforced perhaps due to the involvement of very powerful
vested interests or a failure of nerve. We are of opinion that the National
Mineral Policy, 2008 is almost a decade old and a variety of changes
have taken place since then, including (unfortunately) the advent of
rapacious mining in several parts of the country. Therefore, it is high
time that the Union of India revisits the National Mineral Policy, 2008
B
and announces a fresh and more effective, meaningful and implementable
policy within the next few months and in any event before 31st December,
2017. We are constrained to pass this direction in view of the facts
disclosed in these petitions and in judgments delivered by this Court with
regard to mining in Goa and Karnataka.
C Inquiry by the Central Bureau of Investigation
210. It was emphasized by Shri Prashant Bhushan that because
of the rampant illegal or unlawful mining being carried out in Odisha,
there should be an enquiry by the Central Bureau of Investigation (for
short ‘the CBI’) to ascertain and determine the persons involved either
D in turning a Nelson’s eye to rampant illegal or unlawful mining or being
conspirators in the activity and the extent of the illegal or unlawful mining.
It was submitted that the Justice Shah Commission had very strongly
recommended an inquiry conducted by the CBI and criminal elements
being brought to book for the despoliation of the land.
E 211. For the present, we do not propose to direct an investigation
or inquiry by the CBI for the reason that what is of immediate concern
is to learn lessons from the past so that rapacious mining operations are
not repeated in any other part of the country. This can be achieved
through the identification of lapses and finding solutions to the problems
F that are faced. Undoubtedly, there have been very serious lapses that
have enabled large scale mining activities to be carried out without forest
clearance or environment clearance and eventually the persons
responsible for this will need to be booked but as mentioned above, the
violation of the laws and policy need to be prevented in other parts of the
country. The rule of law needs to be established. We are therefore of
G the view that it would be appropriate if an Expert Committee is set up
under the guidance of a retired judge of this Court to identify the lapses
that have occurred over the years enabling rampant illegal or unlawful
mining in Odisha and measures to prevent this from happening in other
parts of the country.
H
COMMON CAUSE v. UNION OF INDIA AND ORS. 451
[MADAN B. LOKUR, J.]
A there are huge amounts available with the Special Purpose Vehicle for
tribal welfare and area development works and we have absolutely no
idea about the utilization of the funds or whether they are in fact being
used for tribal welfare and area development works. We also expect
that as a result of the orders that we are passing today, very large amounts
will again be made available to the State of Odisha. These amounts
B
should also be kept with the Special Purpose Vehicle.
218. To ensure that the amounts are utilized for the benefit of
tribals in the affected districts and for area development works, we would
like the Chief Secretary of Odisha to file an affidavit stating the work
done as well as providing the audited accounts of the receipt and
C expenditure of the SPV from its inception.
Conclusion
219. In view of findings above, we dispose of the writ petitions to
the extent of the directions that we have already given.
D 220. I.A. Nos. 45 (filed by Zenith Mining) and 47 (filed by Kavita
Agrawal) are dismissed since their lease has not been extended or has
been determined and they do not have any environment clearance or
forest clearance.
221. I.A. No. 66 (filed by J.N. Pattnaik) is also dismissed since
E there is no forest clearance available.
222. We have been informed that S.A. Karim (I.A. No.9) actually
had a working lease and has wrongly been included as a non-operational
lease. Accordingly, I.A. No. 9 (filed by S.A. Karim) is also dismissed
but as being infructuous. However, it is made clear that the State
F Government should ensure that the lessee S.A. Karim in fact has valid
statutory clearances.
223. Pending show cause notices issued by the State Government
should be decided by 31st December, 2017 (if not already decided) after
hearing the concerned noticees.
G 224. We would like to hear Jindal Steel and Power Limited, Sarda
Mines Private Limited, Rungta Group of Companies and Essel Mining
and Industries Limited on the applications filed by them. For this purpose
list the matter again after two weeks so that a convenient date of hearing
can be fixed.
H
COMMON CAUSE v. UNION OF INDIA AND ORS. 455
[MADAN B. LOKUR, J.]
225. The amounts determined as due from all the mining lease A
holders should be deposited by them on or before 31st December, 2017.
Subject to and only after compliance with statutory requirements and
full payment of compensation and other dues, the mining lease holders
can re-start their mining operations.
226. We would also like to hear the eight concerned mining lease B
holders on the question of appointing an appropriate Committee in respect
of the applicability of Rule 37 of the Mineral Concession Rules to them.
227. We would also like to hear learned counsel for all the parties
with regard to setting up of an Expert Committee presided over by a
retired judge of this Court to identify the lapses that have occurred over C
the years that have enabled rampant illegal and unlawful mining in Odisha
and to recommend preventive measures not only to the State of Odisha
but generally to all other States where mining activities are proceeding
on a large scale. For the present, we pass no direction with regard to
any investigation by the CBI.
D
228. We direct the Union of India to have a fresh look at the
National Mineral Policy, 2008 which is almost a decade old, particularly
with regard to conservation and mineral development. The exercise
should be completed by 31st December, 2017.
229. The Chief Secretary of Odisha should file an affidavit as E
indicated by us within a period of six weeks and in any case on or before
30th September, 2017. The Registry will list these petitions along with
the affidavit immediately after its receipt for our consideration.
230. All other pending I.A.s are disposed of in terms of our orders.
F
Divya Pandey Directions issued.