M/S LAL TRADES AND AGENCIES PVT.LTD, MAYURBHANJ vs UNION OF INDIA
- Court
- Odisha High Court
WP(C)/30325/2025
ODHC010749892025
2026:OHC:285-DB
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.30325 of 2025
CNR No. ODHC010749892025
M/s. Lal Trades and Agencies Pvt.
Ltd., Mayurbhanj
…. Petitioner
-Versus-
Union of India and others …. Opposite Parties
Advocates appeared in this case:
For Petitioner : Mr. Durga Prasad Nanda,
Senior Advocate assisted by
Mr. Subhankar Rout, Advocate
For Opposite Parties : Mr. P.K. Parhi, Deputy Solicitor
General of India along with
Mr. S.S. Kashyap,
Central Government Counsel
Mr. D. Tripathy,
Addl. Government Advocate
CORAM:
HON’ BLE THE CHIEF JUSTICE
AND
MR. JUSTICE CHITTARANJAN DASH
HON’BLE
J U D G M E N T
----------------------------------------------------------------------------------
th
Date of Hearing : 18 August, 2026
th
Date of Judgment : 11 November, 2026
----------------------------------------------------------------------------------
HARISH TANDON, CJ.
st
1. The present writ petition is filed assailing the order dated 1
October, 2025 passed by the Revisional Authority in R.A. No.
W.P.(C) No.30325 of 2025 Page 1 of 16
22/(22)/2024-RC-1, whereby and whereunder the challenge was made
th
to a demand notice dated 26 July, 2024 for excessive extraction of ore
during the period 2019-20.
2. An interesting point is raised in the instant writ petition, which
was also taken before the Revisional Authority, but the order of the
Revisional Authority was restricted to one aspect without touching the
other, and the counsel appearing for the respective parties were invited
to advert to the said issue and arguments were advanced thereupon.
3. In order to appreciate the contention raised herein, the narration
of the facts emanating from the pleadings is required to be recapitulated
and/or adumbrated hereinafter. The petitioner is a beneficiation of the
iron ore since last 15 to 20 years in the district of Mayurbhanj by
processing low grade iron ore to high grade iron ore. The Environmental
Clearance (EC) was issued to the petitioner by the Ministry of
th
Environment and Forest, Government of India on 9 April, 2010 in
accordance with Environmental Impact Assessment (EIA) Notification
2006 for an annual production capacity of 0.72 MT per annum. The
mining scheme was also approved by the Indian Bureau of Mines (IBM)
th
vide letter dated 27 March, 2015 enhancing the production of iron ore
from 0.72 Million Tonnes Per annum (MTPA) to 1.5 MTPA. A
W.P.(C) No.30325 of 2025 Page 2 of 16
th
supplementary lease deed was executed on 20 December, 2016 having
th th
validity until 26 May, 2020. An application was made online on 9
March, 2018 to establish the Terms of Reference for conducting a
detailed Environmental Impact Assessment study to obtain
environmental clearance for the increased production capacity from 0.72
MTPA to 1.5 MTPA. The Ministry of Environment and Forest approved
the recommendation of the Expert Appraisal Committee to enhance the
production as prayed for. However, in the interregnum the Mining Plan
for Badampahar Iron Ore Mines was modified and approved by IBM on
th
26 July, 2018 and a proposal for the enhancement of the production
capacity as aforesaid was recommended by the Expert Appraisal
rd
Committee on 22/23 January, 2019 and the Ministry of Environment
and Forest granted EC for enhanced production capacity of 1.5 MTPA.
The Production capacity between April, 2019 to March, 2020 having
enhanced and accepted by the office of the Deputy Director of Mines,
Baripada Circle as there was no irregularity found in respect of the
production achieved. The statutory payments including the royalty for
the year 2019-20 was also paid.
4. There being no whisper on the part of the authority in raising any
discrepancy in the production of the iron ore and having accepted the
W.P.(C) No.30325 of 2025 Page 3 of 16
statutory payments required under the Mines and Minerals
(Development and Regulation) Act (MMDR Act in short) until a show
st
cause notice dated 31 May, 2023 was issued by the Deputy Director of
Mines, Baripada Mining Circle, Baripada touching upon the production
achieved during the financial year 2019-20, and raising a demand of
more than Rs.50.00 crores and odd as it exceeds the limit setforth in the
EC. The said show cause was duly responded by the petitioner and
specific stand was taken that the target of the production is always fixed
on annual basis and not on monthly basis, and once the annual target is
modified in the EC, the production so made is well within the purview
thereof. After receiving the reply to the said show cause notice, a fresh
th
show cause notice was issued on 07 May, 2024 by the said authority
wherein the demand was reduced from Rs.50.00 crores and odd to Rs.
40.00 crores and odd for the same year, which was also responded by
the petitioner taking a plea that IBM has already approved the variation
up to 20% of the tentative annual production, and therefore, any
variation that has been perceived by the authorities are within the
purview of the same, and it cannot be said to be unlawful extraction of
the ore. Despite the specific stand having taken in the reply that the
W.P.(C) No.30325 of 2025 Page 4 of 16
variation up to 20% is accepted and approved by the IBM, the demand
th
notice was issued on 26 July, 2024 for Rs.40.00 crores and odd.
5.
The said order was assailed before the Revisional Authority,
wherein the parties filed their respective pleadings. However, in the
interregnum, the authorities issued trading license in Form-D from time
to time upon compliance of all the requisites provided in the statute,
st
which was valid until 21 May, 2025. On expiration of the same, the
petitioner made an application for issuance of the said trading license to
be issued, but the same was withheld as there has been outstanding
dues.
6. The said decision was challenged by the petitioner in W.P.(C) No.
th
14602 of 2025, which was disposed of on 20 May, 2025 directing the
authorities to take a decision on the said application within the time
stipulated therein with specific observation that until the decision is
taken on the renewal application, he shall be permitted to continue the
trade on the basis of the trading license granted earlier. Subsequently,
the payments were made under the statutory heads. Yet, the renewal of
the trading license was rejected on the ground that the petitioner did not
submit the Mining Dues Clearance Certificate (MDCC). Be that as it
may, ultimately the Revision Application pending before the Revisional
W.P.(C) No.30325 of 2025 Page 5 of 16
st
Authority was dismissed on 1 October, 2025, which is assailed in the
instant writ petition.
7.
The principal issue involved in the instant writ petition is whether
the variation of ± 20% can be read harmoniously with the judgment
rendered by the apex Court in Common Cause v. Union of India and
others , reported in (2017) 9 SCC 499 in relation to excess production
beyond the legally permissible production framework. Even the State in
the counter affidavit have clearly averred that the petitioner extracted
the ore within the limit provided in the Mining Plan, but beyond the
limit set for in the EC provided for the year 2019-20, and in view of the
judgment rendered by the apex Court in Common Cause (supra), it
would be regarded as an unlawful extraction of the ore inviting the
penalty under Section 21 (5) of the MMDR Act.
8. Before we proceed to decide the same, the object and purpose, and
the scheme of the MMDR Act is required to be succinctly narrated and
understood. Section 4(1) of the said Act creates an embargo on a person
to undertake any mining operation except in accordance with the terms
and conditions of the mining lease granted under the said Act and the
Rules made thereunder. The mining operation is defined in Section
“ ”
3(d) of the Act to mean any operation undertaken for the purpose of
W.P.(C) No.30325 of 2025 Page 6 of 16
winning any mineral. Such prohibition can also be seen under Section
4(2) of the said Act, whereas Section 5 postulates certain restrictions on
the grant of a mining lease upon the State Government unless the
mining plan is duly approved by the Central Government or the State
Government in respect of a specific mine. Section 18 of the Act is
repository of the duties and responsibilities of the Central Government
to take all steps for conservation and systematic development of
minerals in India, and also for protection of the environment by
preventing or controlling any pollution, which may be caused by mining
operation. Two Rules i.e. Mineral Conservation and Development
Rules, 1988 (MCDR) and Mineral Concession Rules, 1960 (MCR) are
framed in exercise of the rule making power where the MCR is focusing
on the grant of a mining lease; on the other hand, the MCDR contains an
exhaustive provisions relating to commencement of the mining
operations and protection of the environment. Section 21(5) of the
MMDR Act, which is central to the core issue, contains a penal
provision — where any person raises without any lawful authority, any
mineral from any land, the State Government may recover from such
person the minerals so raised or where such mineral has been disposed
of, the price thereof. In addition to the same, the State Government may
W.P.(C) No.30325 of 2025 Page 7 of 16
also recover rent, royalty or tax as the case may be for the period during
which the land was occupied without any lawful authority.
9. The MCR contains a provision relating to the mining plan, which
will incorporate a tentative scheme of mining and annual programme
and plan for excavation for year-to-year for a specified period. It further
mandates the mining operation to be undertaken only in accordance
with the duly approved mining plan, and therefore, it assumes the
character of an essential document without which no mining operations
can be commenced and/or undertaken. Even a mining scheme is to be
framed and it would not be incongruous to suggest that both the mining
scheme and mining plan are essential for grant of the mining lease. The
prescribed form therein also obligated the lessee of the mining lease to
maintain a record of quantity and quality of the mineral released from
the leased land, the prices and other particulars of the sales of the
mineral and many other facts as the Central Government or a State
Government may require. One of the clauses contained in the prescribed
form further imposed an obligation on the part of the lessee to take all
possible measures to protect the environment by using various devices
and restoring the same at their expenses. So far as the MCDR is
concerned, it contains an exhaustive provision not only in relation to the
W.P.(C) No.30325 of 2025 Page 8 of 16
commencement of the mining operation in accordance with the
approved mining plan, but a right conferred upon the lessee to modify
the same as and when the circumstances so warrant, and also to ensure
all possible steps to protect the environment and control the pollution
while conducting such mining operation. The Central Government
th
issued an Environment Impact Assessment (EIA) Notification dated 27
January, 1994 signifying that the mining activity should be undertaken
in accordance with the EC and the procedure provided therein, and from
time to time have issued further Notifications. The said EIA
Notifications were considered by the Apex Court in Common Cause
(supra) and held to be a prohibitory in nature, and mining activities in
departure from a mining plan or an EC was considered to be unlawful.
10.
The scheme and object as discussed hereinabove leaves no
ambiguity that the winning of the minerals should be in conformity with
the mining plan as well as the EC, and the apex Court in Common
Cause (supra) has held that the mining plan is „ subordinate ‟ to EC. The
comprehensive provisions contained in both the substantive Act as well
as the Rules framed thereunder engulf within its folds both the necessity
of a mining plan as well as the EC. The issue was raised in this regard,
th
which was clarified in the letter dated 12 December, 2011 issued by
W.P.(C) No.30325 of 2025 Page 9 of 16
the Central Government that if there is any violation of the actual
production limit laid down in the mining plan, the State Government
should take steps to curb such illegal mining in respect of
overproduction. It was also suggested that 20% deviation from the
mining plan (in terms of the overproduction) would be reasonable and
permissible. The Apex Court noticed the said letter but was focusing on
the issue that there have been several mining leaseholders, who were
making overproduction beyond 20% of the deviation limit. The Apex
Court also noticed the noting of the High Level Committee (Hoda
nd
Committee) on the National Mineral Policy in its report date 22
December, 2006 and quoted such observations contained in paragraph
3.47 in the following:
120. xxx
“
EMP [Environment Management Plan]
“3.47 An
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
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 approved from the
MoEF although the IBM allows a grace of ±10%,
W.P.(C) No.30325 of 2025 Page 10 of 16
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% in production
while giving EIA clearance.”
11. In Paragraph 121 of the said judgment, the Apex Court held that
though the permissible variation in production as per the IBM is ±10%,
but in the said letter, the Ministry of Mines accepted the variation upto
±20%, and a categorical observation was made that no clarity can be
seen why there has been a shift from ±10% to 20% in the following:
“ 121. 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 12-12-2011 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 the learned counsel for the
petitioners, the fact that in some cases the variation
exceeded 20% was a cause for concern which
necessitated strict and punitive action. ”
12. The Bench proceeded to hold that although the extraction of the
minerals beyond the leased area is unlawful but even if the extraction is
beyond the permissible limit within the leased area is also unlawful. The
Bench in Common Cause (supra) extensively dealt the permissible
W.P.(C) No.30325 of 2025 Page 11 of 16
variation upto ±20% and held that at best there could be a variation in
extraction of 20% in each year but it would be subject to the overall
mining plan limit of a variation of 20% over the five years, and observed
that it would be preposterous that in one year the leaseholder would
extract 20% in excess of the mining plan for one year and for rest of the
years, it would extract the minerals, which brings within the said limit of
20% in the following:
Adherence to the mining plan
“
136. A side issue raised by the learned counsel for
the mining leaseholders 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 leaseholder
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% variation in
extraction over and above the mining 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 programme 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 to the overall
mining plan limit of a variation of 20% over five years.
What this means is that a mining leaseholder 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. If
any other interpretation is given, it would lead to an
W.P.(C) No.30325 of 2025 Page 12 of 16
absurd situation where a mining leaseholder could
extract the entire permissible quantity under the mining
plan plus 20% in one year and extract miniscule
amounts over the remaining four years, and this could be
done without any reference to the EC. The submission
of the learned counsel in this regard simply cannot be
accepted.
137. In the Letter dated 12-12-2011 sent by the
Secretary in the Ministry of Mines of the Government of
India to the Chief Secretary of the Government of
Odisha (adverted to above) concerning violation of
annual production limit laid down in the approved
mining plan, it was stated, inter alia, that an analysis of
production and violations in 104 mining leases for bulk
minerals in the last ten years was undertaken by the
Indian Bureau of Mines. It was noted that in 71 cases
there was excess ore produced beyond the reasonable
variation limit of 20%. It was noted that this was partly
due to the failure of the State machinery to restrict the
movement of minerals.
”
13. In paragraph 140 of the said judgment, it is ultimately held that
while mining in excess of permissible limits under the mining plan or
the EC or FC on leased area would amount to illegal or unlawful mining
or mining without authority of law. It is, thus, apparent from the
aforesaid observations that the Apex Court also took into consideration
the variation in the production limit up to ±10% as the decision to
permit the variation up to ±20% was held to be without any clarity
having brought in this regard. It is to be remembered that both the
W.P.(C) No.30325 of 2025 Page 13 of 16
mining plan as well as EC are complementary to each other, and the
IBM, being the statutory authority under the MMDR Act, is not only
undertaking a subjective satisfaction in relation to an extraction of the
mineral on an yearly basis but also taking into account the
environmental impact that may be caused, and therefore, if the variation
of ±10% is considered to be permissible because of the working
procedures for the simple reason that while extracting the minerals, the
practical aspect has also to be taken into consideration as the winning of
the minerals manually or in a merchandised way may not bring the strict
precision of the limit.
14. The Apex Court also took into consideration the calculation
suggested by Central Empowered Committee (CEC) when there is a
variation in extraction of the minerals in accordance with the EC limit.
The reliance on Paragraph 151 of the said judgment by the State has to
be understood in the perspective of calculating the compensation from
the leaseholder, and has no bearing on the issue that if the variation up
to ±10% is permitted, it would invite any such compensation or penalty
under Section 21(5) of the Act.
15. It is thus apparent from the meaningful reading of the judgment
rendered in Common Cause (supra) that both the mining plan as well as
W.P.(C) No.30325 of 2025 Page 14 of 16
the EC are mandatory and complements each other, but it would further
be evident from the observation that the Supreme Court accepted the
variation in terms of the said report up to ±10%. Taking into account
the practical aspect of operating the mines, we find no reason as to why
the State Government would not consider the said aspect, and once the
Apex Court has accepted that the variation as suggested by the IBM is
reasonable and justified, the authorities ought to have taken into
consideration the aforesaid aspect in calculating the compensation as
suggested by CEC and reflected in paragraph-155 of the said judgment.
16. We find no reason that such variation is not applicable in this
regard, and therefore, held that the authorities ought to have given the
buffer of ±10% variation while calculating the compensation as per the
formula given by the CEC and reflected in paragraph 155 of the said
judgment while calculating the permissible annual production and not
on monthly production. The order of Revisional Authority is, thus,
quashed and set aside. Consequently the demand raised is also quashed
and set aside. The authorities are directed to recalculate taking into
account ±10% variation over and above the EC limit, and in the event it
is found that the extraction of the ore exceeds the said variation limit,
would calculate the compensation in terms of the judgment rendered in
W.P.(C) No.30325 of 2025 Page 15 of 16
Common Cause (supra) by giving a reasonable time to meet such
requirement.
17.
The writ petition is, thus, disposed of.
I agree.
(Chittaranjan Dash)
Judge
(Harish Tandon)
Chief Justice
Arun Mishra/
M. Panda
Signature Not Verified
Digitally Signed
Signed by: MRUTYUNJAYA PANDA
Reason: Authentication
Location: High Court of Orissa, Cuttack
Date: 11-Nov-2026 14:16:30
W.P.(C) No.30325 of 2025 Page 16 of 16