Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 850 OF 2020
[Arising out of Special Leave Petition (Civil) No. 23644 of 2016]
WITH
I.A. Nos. 85780 of 2016, 79477 of 2016, 54052 of 2018, 4 of 2017,
187580 of 2019, 8734 of 2020, 8725 of 2020
| State of Odisha & Ors. | ... Appellants |
|---|---|
| VERSUS | |
| M/s. Jindal Steel and Power Ltd. & Ors. | ...Respondents |
JUDGMENT
With the consent of learned counsel for the parties, Special Leave to
Appeal is taken up for final hearing along with the captioned Interlocutory
Applications.
2. Leave Granted. Heard learned counsel for the parties.
Signature Not Verified
3. This Civil Appeal is directed against the order of a Division Bench of
Digitally signed by
CHARANJEET KAUR
Date: 2020.01.30
17:13:57 IST
Reason:
the Orissa High Court which allowed the writ petition filed by Respondent
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No. 1, Jindal Steel and Power Ltd. (hereinafter “JSPL”) seeking a writ of
mandamus against the appellant, State of Odisha, for allowing lifting of
legally procured, processed, royalty and taxpaid stock of Iron Ore lying at
the dispatch point within the leasearea of M/s Sarda Mines Pvt. Ltd.
(hereinafter “SMPL”) in Thakurani BBlock Mines in Keonjar, Odisha and
transporting it to the railway siding at Deojhar for carrying to its
Pelletisation Plants and Steel Plants in Odisha and Chhattisgarh.
ACTS
F
4. JSPL is an industrial entity which runs Steelproduction plants
across the country and regularly purchases numerous raw materials,
including Iron Ore as part of its commercial activities. It had entered into
an arrangement with SMPL to purchase certain Iron Ore, which was to be
processed into Lump Ores and Fines and transported to JSPL’s plants. The
mining activity was conducted by SMPL and possession of the stocks was
handed over to JSPL within SMPL’s premises. Within SMPL’s leasehold
area, JSPL would process these Ores and later store them at the dispatch
point, pending transportation by trains to the Pellitisation Plant of JSPL
located at Deojhar, Odisha as well as its Integrated Steel Plant located in
Raigarh, Chhattisgarh. The appellant (State of Odisha) had earlier granted
approval to this arrangement for selling Iron Ore, subject to payment of
royalty at the “highest rate”.
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5. This continued uninterruptedly until 31.03.2014, when a letter was
issued by the Deputy Director of Mines, Joda (in Keonjhar, Odisha)
(Appellant No. 3) which highlighted that SMPL’s Environmental Clearance
for enhanced production had expired and hence ‘transit permit’ for
transporting the procured and processed Iron Ore (CLO and Fines) from
the despatch point to JSPL’s plants could not be granted.
6. JSPL approached the State authorities contending that royalty had
duly been paid on the Iron Ore, and that the stocks lying at the despatch
point were owned by JSPL and not SMPL. Numerous representations were
made requesting permission to transport the processed minerals. Appellant
No. 3, therefore, recommended to the Director of Mines (Appellant No. 2)
that JSPL be granted requisite transport clearances. However, Appellant
No. 2 in his communication with the CommissionercumSecretary, Steel &
Mines Department drew attention to the fact that the material lay within
the leasehold area of SMPL and its transportation would form part of
mining operations which could not proceed without appropriate statutory
clearances. Accordingly, the appellants through letters dated 23.05.2014
and 26.06.2014 rejected JSPL’s prayers.
7. The aggrieved JSPL approached the High Court and sought quashing
of appellants’ letters refusing transport permits and a writ of mandamus
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directing the State of Odisha to grant permission for transportation of
entire processed ore from dispatch point within SMPL’s lease area to
JSPL’s units in Odisha and Chhattisgarh.
8. JSPL claimed that through a letter dated 15.01.2015, SMPL had
obtained clarification from the Ministry of Environment and Forests,
Government of India (hereinafter “MOEF”) that SMPL could operate its
mine and produce up to 4 million tons of Iron Ore (Lumps) for a period of
20 years from 22.09.2004. Given that SMPL had valid environmental
clearance, no objection could be raised by appellants against
transportation of iron ore by JSPL. This was vehemently contested by the
appellants who contended that owing to the Supreme Court’s interim
directions on 16.05.2014, no “mining activities/operations” could take
place which would also include a prohibition on transportation of mined
ore.
9. JSPL contended that the aforestated direction only prohibited SMPL
from resuming mining operations, and not JSPL from transporting the
mineral already mined, purchased, processed and royalty paid upon. It
placed reliance upon the expression “mining operation” as defined under
Section 3(d) of the Mines and Minerals (Development & Regulation) Act,
1957 (“MMRDA”), which did not include transportation of minerals. As
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soon as the ore was mined and sold by the mining leaseholder, it was
contended that the OMPTS Rules would come into force. JSPL being a
buyer who possessed necessary license to transport under OMPTS Rules
and who also had paid all necessary royalties, could not be stopped from
transporting its ore merely because it lay in the leasehold premises of
SMPL on the ground that the latter did not have a valid environmental
clearance.
10. The High Court noted that this Court’s interim directions prohibited
“mining operations”, which as per Section 3(d) of MMDRA meant “winning”
of minerals. Relying upon the Constitutional Bench decision in The Bihar
1
interpreting “mining operations” to include
Mines Ltd. v. Union of India ,
only processes necessary to raise/extract minerals from mines, the High
Court held that the transportation of minerals already raised would not be
estopped through this Court’s interim directions. Having noticed the fact
that SMPL had environmental clearance, it had obtained due permission
for selling Iron Ore to JSPL, and that requisite royalties had already been
paid, the High Court found no valid reason for the State of Odisha to stop
transportation of the iron ore by JSPL. Accordingly, the impugned letters
which directed stoppage of transportation were quashed, and instead the
Stateauthorities were directed to grant transport permission to JSPL.
1 AIR 1967 SC 887.
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C ONTENTIONS OF P ARTIES
11. The aggrieved Stateauthorities initially sought leave to appeal
contending that mere sale of the mined ore by SMPL would not mean that
MMDRA would cease to operate, and grant of approval under OMPTS
Rules, 2007 to JSPL would not obviate the necessity for obtaining
clearance/approvals under other statutes. JSPL’s title over the goods could
not be better than the title owned by SMPL; and mere completion of sale
per the Sales of Goods Act would not regularise illegalities or dispense with
the necessity of complying with the law. The HC statedly misinterpreted the
MOEF’s clarificatory letter regarding Environmental Clearance, which was
granted only for 4 MPTA, whereas SMPL had extracted minerals far in
excess. At least some part of the Ore sold to JSPL came from this
unauthorised excess production, and hence JSPL could not be said to have
“validly procured” the materials and thus had no right to transport the
same. The appellants further claimed that “mining operation” would in fact
cover transportation of materials within the leasehold area, and Section
3(d) of MMDRA ought not to be construed restrictively in light of this
Court’s observations in Samaj Parivartana Samudaya v. State of
2
Karnataka , and hence JSPL’s prayer was barred by this Court’s interim
directions dated 16.05.2014.
2 (2013) 8 SCC 154.
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12. Appellants also underscored the larger implications of upholding the
High Court’s finding that sale of minerals would cease application of the
MMDRA and instead only the OMPTS Rules would apply, for it would
create a loophole to evade application of environmental legislations.
13. JSPL, on the other hand, highlighted how it was not seeking any
permission for crushing or processing of the iron ore, but only
transportation of the Ore already legally procured, processed and stored at
the dispatch point prior to expiry of the environmental clearance of SMPL.
Transportation was claimed, , not to be a part of mining operations
per se
for which environmental clearances were required. It placed reliance on the
appellant’s failure to raise objections to transportation of minerals in other
similar cases. Even otherwise, per Clause 5 of PartIX of Form K (Model
Form of Mining Lease under Rule 31(1) of MC Rules, 1960) lifting and
transportation of minerals was claimed as being permissible upto six
months after the expiry of the lease, which demonstrated the clear
intention of the legislation to protect the right of the lessee who has
excavated minerals during the validity of the lease period.
14. During the pendency of this appeal, SMPL filed an application for
intervention (I.A. No. 8725 of 2020) and at the time of hearing referred to
the order dated 15.01.2020 passed in I.A. No. 186810 of 2019 in WP(C)
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whereby this Court
No. 114 of 2014 (Common Cause v. Union of India)
noticing irregularities committed by several mining companies, directed
SMPL to deposit dues as assessed by the Central Environment Committee
in its report dated 08.05.2019 and asked it to file an undertaking to
comply with all rules, regulations and mandatory provisions; post which
SMPL could resume its mining operations in the leasedarea. SMPL has
filed another application (I.A. No. 8734 of 2020) undertaking to comply
with this Court’s directions dated 15.01.2020 with an oral prayer to extend
the time limit till the end of February, for doing the needful.
15. Additionally, ICICI Bank and the State Bank of India have also filed
intervention applications (I.A. No. 54052 of 2018 and I.A. No. 4 of 2017),
claiming that they (as part of a consortium of seven banks) had granted
sums totalling Rs 8400 Crores to JSPL as working capital. Part of these
loan amounts had been used by JSPL to buy Iron Ore from SMPL and
these stocks were in turn hypothecated with the consortium. The banks
hence had exposure of about Rs 434 Crores in the present case, which
would adversely be affected in case JSPL was not allowed to transport the
said Iron Ore to its plants expeditiously. In addition, they sought that JSPL
be directed to undertake that the amount realised by it in pursuance of
transporting the Ore, should be credited only to the working capital limit
account.
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16. JSPL has also filed an application (I.A. No. 187580 of 2019) seeking
interim directions to allow it to transport the Iron Ore stock (totalling
29977.818 metric tons of Iron Ore lumps and about 12.2 million tons of
Iron Ore fines) and directions to the State of Odisha to grant necessary
transit permits. Insisting that the appellants’ concerns of recovering
compensation dues had been satisfied consequent to SMPL’s undertaking,
JSPL drew attention to the distress being faced by the Steel sector in India,
and that its own working facility account had been restructured pursuant
to RBI directions and how a Trust & Retention Account had been opened
under the supervision of the State Bank of India into which the entire
proceeds of JSPL were being deposited.
17. It was urged on behalf of JSPL that in light of this Court’s directions
dated 15.01.2020 in I.A. No. 186810 of 2019, and the consequent
undertaking filed by the lessee (SMPL) on 16.01.2020 to comply with the
same, no dispute indeed survived between the consequent buyer (JSPL)
and the lessor (State of Odisha). Learned Counsel representing the State of
Odisha and SMPL also did not controvert this factsituation.
A NALYSIS
18. As noticed above, although the appellantState had raised several
disputes and questions of law in its written submissions, but at the time of
oral hearing both parties have confined themselves to the solitary issue
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regarding conditional entitlement of JSPL to lift and transport the iron ore
from SMPL’s leasearea to its plants in Odisha and Chhattisgarh. Thus, no
occasion arises for venturing into the numerous legal disputes raised in
the main appeal.
19. Counsel for the appellants have expressed no objection to disposing
of this petition in light of the subsequent developments which have taken
place post the filing of appeal, subject to SMPL filing the aforementioned
undertaking.
CONCLUSION
20. In light of parties having restricted their contentions and our
consequent analysis to the framework of I.A. No. 187580 of 2019 (moved
for directions by JSPL), we dispose of all the I.As. as well as the Civil
Appeal with the following directions:
(i) SMPL’s prayer for modification of our order dated
15.01.2020 passed in I.A. No. 186810 of 2019 in WP(C) 114 of
2014, wherein onemonth time was granted for payment of dues
as assessed by the CEC, is accepted. SMPL must pay its dues and
give the requisite undertaking by 29 February, 2020 post which
alone it shall be at liberty to resume its mining operations as per
our order dated 15.01.2020.
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(ii) Once SMPL complies with direction no. (i) above, JSPL can
lift the already mined, processed and royalty paid Iron Ore lying at
the dispatch point within SMPL’s premises and transport these
stocks to its plants across the country. The proceeds thereof must
be deposited with the Trust & Retention Account under the
custody of the State Bank of India.
(iii) Failure to comply with these directions shall result in any
such sale being deemed legally void.
……………………….. CJI.
(S. A. BOBDE)
………………………… J.
(B.R. GAVAI)
…………………………. J.
(SURYA KANT)
NEW DELHI
DATED : 30.01.2020
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