Case: Samaj Parivartana Samudaya & Others Vs. State of Karnataka & Others

Ranjan Gogoi, J.1. Two related and connected issues have arisen for determination in the present interlocutory applications.2. The first is with regard to the objection of the mining lessees to continue to pay 10% of the sale proceeds of mining to the Monitoring Committee for eventual transfer to the Special Purpose Vehicle ("SPV" for short) that has since been constituted to implement the Comprehensive Environment Plan for the Mining Impact Zone ("CEPMIZ" for short and hereinafter referred to as `the scheme) in the Districts of Bellary, Chitradurga and Tumkur of the State of Karnataka. For the present, it will be sufficient to notice that this Court by its orders passed from time to time had directed the setting up of a Special Purpose Vehicle for the purpose of execution of ameliorative and mitigative works/measures to deal with the large scale degradation of the environment that had occurred due to the unprecedented illegal mining that had taken place in the mining leases operating in the aforesaid three districts at the relevant point of time. This Court had, from time to time, directed preparation of a scheme outlining all the details of the works required to be undertaken; the process of implementation of the same by implementing agencies; accounting procedures etc. and for submission of the same to this Court in consultation with the Central Empowered Committee ("CEC" for short). This Court was also of the view that the funds for the SPV to enable ameliorative and mitigative measures to be undertaken, as per the CEPMIZ to be prepared, would primarily come from (a) 10% of the sale proceeds of the minerals; (b) compensation for illegal mining etc.; and (c) other receivables by the Monitoring Committee to be directed to be transferred to the SPV from time to time.3. The various orders passed by this Court from time to time had received final approval of this Court in the judgment and order dated 18.4.2013 which finally terminated Writ Petition (C) No. 562 of 2009 titled "Samaj Parivartana Samudaya and Ors. v. State of Karnataka and Ors., 2013 (8) SCC 154 4. Pursuant to the aforesaid order(s), the Government of Karnataka has constituted a Special Purpose Vehicle known as Karnataka Mining Environment Restoration Corporation ("KMERC" for short) on 13.06.2014 with the Additional Chief Secretary to the Government of Karnataka as the Chairman. The CEPMIZ i.e. the Scheme has since been prepared and is presently awaiting the approval of the Court which is the next/connected aspect of the matter, for the present.5. Insofar as the first question is concerned, the prayer made by the applicant, Federation of Indian Mining Industry, Southern Region ("FIMI-Southern Region") and duly supported by another lessee M/s. Vedanta, in short, is that after the Mines and Minerals (Development and Regulation) Amendment Act 2015 had brought in Section 9B in the Act with effect from 12.1.2015 a District Mineral Foundation is required to be set up in every district affected by mining related operations. Under Section 9B(5) and (6) lessees are required to pay to the District Mineral Foundation ("DMF" for short) an amount equivalent to such percentage of royalty not exceeding one-third of such royalty, as may be prescribed by the Central Government.6. The Ministry of Mines, Government of India by a Notification dated 17.09.2015 has prescribed that in respect of leases granted prior to 12.01.2015 the amount payable to the DMF shall be 30% of the royalty i.e. 5.5% of the sale value (approx.) and in respect of leases granted after 12.01.2005 the contribution to the DMF shall be @ 10% of the royalty i.e. 1.5% of the sale value. Consequently, the leases in Category-A and Category-B mines, presently, in addition to 10% of the sale value payable to the Monitoring Committee/SPV are required to pay about 4.5% of such value to the District Mineral Foundation. It is contended by FIMI-(Southern Region) that by Notification dated 11.01.2016 the District Mineral Foundation Rules, 2016 have been notified by the Government of Karnataka. The objects of the District Mineral Foundation as prescribed in Rule 3 is as follows:"3. Objects of Foundation.- The objects of the District Mineral Foundation shall be to work for the interest and benefit of the persons and areas affected by mining related operations in the districts in such manner as may be prescribed by the State Government:-(1) to implement various developmental and welfare projects or programs in mining affected areas.(2) to minimize or mitigate the adverse impacts, during and after mining, on the environment, health and socio-economics of people in mining districts; and(3) to ensure long-term sustainable livelihood for the affected people in mining areas""Rule 18 of DMF, 2016 prescribes the purpose for which the funds shall be used and which include drinking water supply, education, welfare of women and children, aged and disabled persons, skill development, sanitation, physical infrastructure, irrigation and energy and watershed development."7. In the light of the aforesaid developments it is contended by the applicant in I.A. No. 247 that the object behind the ameliorative and mitigative measures, in terms of the CEPMIZ prepared under the Courts orders issued, from time to time, is one and the same as the object behind the creation of the District Mineral Foundation. Accordingly, the applicant-FIMI (Southern Region) has prayed for clarification of the earlier orders of this Court to the effect that the iron ore lessees in the State of Karnataka will no longer be required to contribute 10% of the sale proceeds to the Monitoring Committee or the SPV from the date of which said lessees have become liable to make payment to the District Mineral Foundation under Section 9B of the Mines and Minerals (Development and Regulation) Act 2015, as amended.8. In response, the Union of India and the State of Karnataka have opposed the grant of any relief/clarification, as prayed for by the FIMI-Southern Region. According to the Union of India, the SPV contemplated under the orders of the Court, for the purpose of taking various ameliorative and mitigative measures in the three Districts, which has since been established, is a sequel to the large scale plundering of the environment and consequential socio-economic damage caused to this region by illegal mining that had taken place on an unprecedented scale. The Union of India has stated that taking note of the extraordinary depredation of nature and environment that had occurred in the three mining districts of Karnataka, the SPV has been constituted by the Court to respond and to repair, reconstruct and restore nature and environment in its pristine form, as far as practicable. It was to answer a situation which was extraordinary and specifically confined to the mining regions of the districts of Bellary, Chitradurga and Tumkur that the SPV has been constituted. In Paragraph 10 of the affidavit filed on 5.9.2016 by the Union of India, it has been stated as follows:"It is submitted that the District Mineral Foundation (DMF) as contemplated by Section 9B of the MMDR Act, 1957 is a body that has been envisaged for the benefit of mining affected areas and populations in a situation where mining is carried out in a responsible manner, within the limits, and subject to the conditions, laid down by various approvals and clearances such as the forest clearances and the environment clearances. The DMF mechanism is applicable on a uniform basis across the country. It is not a mechanism designed to deal with any area specific extraordinary situation arising out of large scale, irresponsible and reckless mining carried out with total disregard to the consequences on the environment as was the case in Karnataka."9. Specifically, in paragraph 15 of the affidavit, the Union of India has stated that:"Considering all the above, it is clear that the DMF was never intended to be, and can never actually work as, a substitute for the CEPMIZ."10. The State of Karnataka has also filed its detailed objections to the grant of any relief, as sought for by FIMI-Southern Region. In addition to the stand taken by the Union of India in its affidavit, as noted above, the State of Karnataka has pointed out that the CEPMIZ prepared and submitted to the Court in consultation with the CEC proceeds on the recommendations of the CEC that henceforth the lessee should be directed to pay 5.5% of the sale proceeds to the Monitoring Committee/SPV (details in this regard would be noticed subsequently). The whole CEPMIZ Scheme, particularly, the financial projections for successful implementation thereof has been drawn up on that basis. Grant of the prayer made by the FIMI-Southern Region would result in upsetting the entire scheme as a whole and would jeopardize its contemplated/planned implementation. Furthermore, according to the State of Karnataka, any order of discontinuance of the contribution to the Monitoring Committee/SPV by the lessees of A and B categories would seriously prejudice other lessees who have obtained leases recently and who would be obtaining such leases in future, inasmuch as, a percentage of the sale proceeds for such leases is to be contributed by the State of Karnataka and made available to the SPV. The State contends that such a situation would result in a highly inequitable position inasmuch as the existing lessees responsible, in a way, for the environmental degradation would not be contributing anything further to the SPV in undertaking ameliorative and mitigative steps to restore the environment whereas new leases e.g. category C lessees, who may not be so responsible, would be so contributing.11. The CEC in its response dated 27.04.2016, however, has taken a slightly different view of the matter. In the comprehension of the CEC there is a fair amount of overlapping between the objects of the District Mineral Foundation and the purpose for which the Court had passed orders for creation of the SPV with the task outlined, as noticed above. According to the CEC, for existing leases, 30% of the royalty paid presently works out roughly about 4.5% of the sale proceeds. Accordingly, the CEC has suggested that the existing lessees may pay 5.5% of the sale proceeds to the Monitoring Committee/SPV (instead of 10%) and at the same time continue to discharge the statutory liability of payment to the District Mineral Foundation to the extent of 30% of the royalty, equivalent to about 4.5% of the sale proceeds.12. We have considered the matter. We have also taken note of the previous orders of this Court particularly the final order dated 18.04.2013 (Paragraph 37); the objects behind the amendment of the Mines and Minerals (Development and Regulation) Act by inclusion of the provisions of Section 9B; and also the notifications issued from time to time including the objects of the District Mineral Foundation as provided for by Rule 3 of the District Mineral Rules, 2016 notified by the Government of Karnataka on 11.01.2016. Though, at first blush, it may appear that there is some amount of overlapping between the objects of the District Mineral Foundation and the purpose contemplated by the Courts order in setting up the SPV, the observations of this Court in Paragraph 37 of the judgment dated 18.04.2013 (supra) would make the position amply clear. The statutory enactments and exercises carried out subsequent to the Courts order(s) will have to be understood to be the expression of the legislative opinion of the necessity to meet the challenges of mineral exploitation that are incidental to any mining operation. Every mining activity results in baneful effects which need to be corrected and destruction of environment that inevitably occurs in the process needs to be mitigated. This is the specific reiteration that has been made by the amendment of the provisions of the Act and the Rules framed thereunder. What had happened in Bellary, Chitradurga and Tumkur, has already been noticed by this Court in Paragraph 37 of the judgment dated 18.04.2013 i.e. systematic, extraordinary and unprecedented plunder of the natural wealth and environment. This Court has specifically observed in paragraph 37 that "the situation being extraordinary the remedy, indeed, must also be extraordinary". It is to deal with such an extraordinary situation that the necessity of CEPMIZ and implementation thereof by a Special Purpose Vehicle out of funds in credit with the Monitoring Committee was contemplated. The special funds in deposit with the Monitoring Committee being the proceeds of illegal mining were meant to be deployed for recreation of what have been lost due to such illegal activities. It is for the aforesaid purpose that CEPMIZ was required to be drawn up and thereafter implemented. The state of implementation of the Scheme has not yet commenced. Funds in huge proportions would be necessary. A full and clear picture is yet to emerge. In a situation lessees who may be even remotely connected with the degradation and destruction of nature must continue to pay their share in the process of restitution by contributing to the Managing Committee from their present sale proceeds. Even the new lessees who may not have been involved with such degradation are contributing to the process of reclamation and restoration. In such a situation, we do not see how we can vary or modify our earlier orders that require all existing lessees to pay 10% of the sale proceeds and/or to depart from the requirement of payment of what has been already ordered, namely, 10% of the sale proceeds to the Monitoring Committee/SPV.

Decision:
0[ds]12. We have considered the matter. We have also taken note of the previous orders of this Court particularly the final order dated 18.04.2013 (Paragraph 37); the objects behind the amendment of the Mines and Minerals (Development and Regulation) Act by inclusion of the provisions of Section 9B; and also the notifications issued from time to time including the objects of the District Mineral Foundation as provided for by Rule 3 of the District Mineral Rules, 2016 notified by the Government of Karnataka on 11.01.2016. Though, at first blush, it may appear that there is some amount of overlapping between the objects of the District Mineral Foundation and the purpose contemplated by the Courts order in setting up the SPV, the observations of this Court in Paragraph 37 of the judgment dated 18.04.2013 (supra) would make the position amply clear. The statutory enactments and exercises carried out subsequent to the Courts order(s) will have to be understood to be the expression of the legislative opinion of the necessity to meet the challenges of mineral exploitation that are incidental to any mining operation. Every mining activity results in baneful effects which need to be corrected and destruction of environment that inevitably occurs in the process needs to be mitigated. This is the specific reiteration that has been made by the amendment of the provisions of the Act and the Rules framed thereunder. What had happened in Bellary, Chitradurga and Tumkur, has already been noticed by this Court in Paragraph 37 of the judgment dated 18.04.2013 i.e. systematic, extraordinary and unprecedented plunder of the natural wealth and environment. This Court has specifically observed in paragraph 37 that "the situation being extraordinary the remedy, indeed, must also be extraordinary". It is to deal with such an extraordinary situation that the necessity of CEPMIZ and implementation thereof by a Special Purpose Vehicle out of funds in credit with the Monitoring Committee was contemplated. The special funds in deposit with the Monitoring Committee being the proceeds of illegal mining were meant to be deployed for recreation of what have been lost due to such illegal activities. It is for the aforesaid purpose that CEPMIZ was required to be drawn up and thereafter implemented. The state of implementation of the Scheme has not yet commenced. Funds in huge proportions would be necessary. A full and clear picture is yet to emerge. In a situation lessees who may be even remotely connected with the degradation and destruction of nature must continue to pay their share in the process of restitution by contributing to the Managing Committee from their present sale proceeds. Even the new lessees who may not have been involved with such degradation are contributing to the process of reclamation and restoration. In such a situation, we do not see how we can vary or modify our earlier orders that require all existing lessees to pay 10% of the sale proceeds and/or to depart from the requirement of payment of what has been already ordered, namely, 10% of the sale proceeds to the Monitoring Committee/SPV.We have perused the CEPMIZ which has been presented before us by the CEC by report dated 29.04.2016. Very broadly speaking, the works proposed under the Scheme can be divided into two broad categories, one pertaining to socio-economic development and the other for integrated mining and railway infrastructure, industrial infrastructure and medical infrastructure.22. We have considered the matter in depth. Beyond recording the view that the CEPMIZ, at this stage, is really in the nature of a vision document with all concrete measures, steps and proposals left to be worked out at a later stage i.e. the stage of preparation of the detailed project reports, we would not like to comment on the merits of the Scheme save and except to say that so far as the socio-economic measures are concerned, very broadly and roughly speaking, the different heads under which restoration and reclamation work is proposed to be done, subject to final details being worked out later, appears to be sufficiently comprehensive. Insofar as the integrated mining and railway infrastructure, industrial and medical infrastructure is concerned, we are of the view that except for the integrated mining infrastructure and part of the railway infrastructure so far as railway sidings and railway sub-lines mentioned in the Chart shown hereinabove, the rest of the infrastructural measures can wait for the present. Having considered the various dimensions of the matter, we are of the view that instead of approving the CEPMIZ as a whole on the basis of the inputs available at this stage, we should hold back our views in the matter until more comprehensive details are available in respect of each of the broad heads under which ameliorative and mitigative measures are proposed to be undertaken. However, at the same time, we must convey our approval to the integrated mining and part of the railway infrastructure that is proposed, namely, construction of the conveyor belt system; railway sidings and railway sub-lines. It is only once a decision is taken on raising the aforesaid infrastructure and noticeable headway in the matter of execution thereof is reached, that the other ameliorative and mitigative socio-economic measures can have any relevance. This is because it is the limited infrastructure that have been indicated above i.e. conveyor belt, railway sidings and railway sub-lines which would constitute the most significant steps towards controlling the environmental pollution that persists on account of open movement of iron ore by road. It is only after controlled and regulated movement of iron ore is achieved that the other socio-economic measures should be undertaken so as to produce meaningful results. So far as the industrial infrastructure is concerned, all measures already being undertaken by the KIADB in the Bellery, Chitradurga, Tumkur areas may continue. It will not be necessary to involve the SPV in such activities at this stage. Transfer of funds from the SPV for such projects already undertaken by the KIADB and other bodies can always be considered at a later stage. The medical infrastructure on which an outlay of Rs. 950 Crores is contemplated need not engage the attention of this Court for the present. In other words, the entire CEPMIZ Scheme need not be approved in one go and such approval may be considered and accorded in phases. The initial activity identified, namely, construction of conveyor belt system; railway sidings and railway sub-lines needs to be prioritized.23. Insofar as the transfer of funds is concerned, even without going into the issue of the exact quantum of funds available with the Monitoring Committee for transfer to the SPV, it would be suffice to say that the funds available with the Monitoring Committee as on date is more than adequate to meet the cost projected against the works which have been identified by the Court to be the priority works for the repair and restoration of the environment. Once further details with regard to the aforesaid three items of work are available indicating what exactly that is proposed to be done; the period of time that is likely to be taken if the work is to be carried out independently of the other measures included in the CEPMIZ, the issue with regard to the source of funds, namely, whether the sum should be exclusively from the funds to be transferred to the SPV or such cost is to be borne by the lessees can be decided by the Court.