Odisha HC Quashes ₹40-Crore Demand Against Iron Ore Miner, Orders Recalculation With 10% Buffer Above Annual EC Limit

The petitioner operated iron-ore beneficiation and held an Environmental Clearance (EC) initially allowing production of 0.72 MTPA. Following approvals, the mining plan was enhanced to 1.5 MTPA, and an EC for that enhanced capacity was granted. For 2019–20, the authorities alleged that production exceeded the EC limit and issued a demand exceeding Rs. 40 crore under Section 21(5) of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).

The petitioner challenged the demand before the Revisional Authority, which dismissed the revision. The petitioner then brought this writ petition.

Sections 4 and 5 of the MMDR Act require mining operations to be conducted under the authority of a valid lease and in accordance with an approved mining plan; Section 18 concerns conservation and environmental protection; and Section 21(5) permits recovery for minerals raised without lawful authority.

The applicable mining rules and the EIA framework require mining to conform to both the approved mining plan and the EC; the judgment treats these as complementary and mandatory requirements.

In Common Cause v. Union of India, the Supreme Court held that extraction beyond the permissible limits of the mining plan or EC may constitute unlawful mining, while addressing permissible variation in production.

The High Court concluded that a ±10% variation should be allowed in calculating annual production against the EC limit and that compensation, if warranted, should be calculated under the Common Cause framework.

The Court held that the demand could not be sustained without accounting for the permissible production variation.

It read Common Cause as accepting the IBM’s ±10% variation as reasonable in light of practical mining conditions, and distinguished the CEC compensation calculation from the question of whether any variation was permissible.

Accordingly, the authorities had to assess production annually against the EC limit, allow a ±10% buffer, and calculate compensation under Common Cause only if extraction exceeded that adjusted limit.

It directed the authorities to recalculate production by allowing a ±10% variation over the EC limit, and, if extraction exceeded that limit, to calculate compensation in accordance with Common Cause and provide reasonable time for payment.

The writ petition was disposed of.