Bhushan Power & Steel Ltd. & Ors vs State Of Orissa & Anr

2. With the intention of setting up an integrated steel plant in the State of Orissa, Bhushan Limited, entered into discussions with the State Government in 2001 in that regard. Pursuant to such discussions, Bhushan Limited applied to the Industrial Development Corporation of India (IDCO) for acquisition of land measuring 1250 acres, for setting up the proposed plant in the identified villages of Thelkoloi, Dhubenchhabrar and Khariapalli (Lapanga) in the District of Sambalpur. On 13th November, 2001, Bhushan Limited applied to the Industrial Promotion and Investment Corporation of Orissa Ltd. (IPICOL) for appraisal and recommendation for acquisition of land for the aforesaid purpose to IDCO. Bhushan Limited also addressed two letters to the Collector, Sundergarh and Collector, Keonjhar on 28th November, 2001, applying for grant of lease for mining of iron ore for use in the proposed plant. The applications were received in the Collector's office on 3rd December, 2001, 4th December, 2001 and 1st March, 2002. On the basis of such applications filed by Bhushan Limited, a meeting was held on 27th March, 2002, between the Chief Secretary, Government of Orissa and Bhushan Limited, in which the Government agreed to accord due priority to Bhushan Limited for grant of suitable iron ore areas and also agreed to recommend the proposal of Bhushan Limited to the Government of India for grant of a Coal Block.

3. Thereafter, meetings were held between Bhushan Limited and the representatives of the State Government and one such meeting was held on 24th April, 2002, under the Chairmanship of the Chief Minister, relating to the setting up of the steel plant at Lapanga. The said meeting was confirmed by IDCO and the Water Resources Department and it was decided to prepare a Memorandum of Understanding (MOU) to be signed by the parties for setting up of a 1.2 million tonnes steel plant under Phase-I and a 2.8 million tonnes steel plant in Phase-II in Lapanga, in the District of Sambalpur. The MOU contained the commitment of the State Government to recommend to the Central Government grant of iron ore mines to the Appellant for its use in the plant to be set up at Lapanga. As far as the grant of the iron ore mines is concerned, the State Government agreed to make the following recommendations to the Central Government:

The total requirement of 200 million tonnes was split up into two parts, i.e., 96 million tonnes and 128 million tonnes respectively, and the same were to be met from the Thakurani mines situated in the Joda Barbil sector and from the Keora area of Sundergarh District.

7. It is at this stage that trouble began to brew. A decision had been taken to merge Bhushan Ltd. with Bhushan Steel and Strips Limited (BSSL) which had an identity which was separate from that of Bhushan Limited, though treated to be a family concern under the Bhushan family umbrella. On 21st February, 2003, the Government of Orissa was informed by Shri Brij Bhushan Singhal, Chairman of the Bhushan Group, that Bhushan Limited, the Appellant herein, would not be merging with BSSL, but that the papers were being processed in the name of Bhushan Limited, as a group. Accordingly, the State Government was requested not to process the papers for 2-3 months. On 17th March, 2003, BSSL wrote to the Chief Minister, informing him of the developments which had taken place and that two companies had decided not to merge, with retrospective effect from 1st April, 2002, as had been decided earlier.

11. Subsequently, various other steps were taken for establishment of the power plant at Lapanga by Bhushan Power & Steel Ltd. On 10th February, 2004, the State Government wrote to Shri Sanjay Singhal, representing Bhushan Limited, that in view of the reorganization and restructuring of the Bhushan Group, the earlier MOU ceased to exist and had lost its force. Accordingly, a fresh MOU was required to be entered into between the Appellants and the State Government for speedy implementation of the project which was on the anvil. It is the case of the Appellants that this letter was never acted upon by either party, since, thereafter, the State allotted and granted possession of large tracts of land to the Appellants and other agreements, such as drawal of water were entered into, permission was given for connectivity with the Grid and other various other administrative sanctions, as also approval for acquisition of land, were made in favour of Bhushan Power & Steel Ltd., without any insistence for the execution of a fresh MOU.

13. Within a week thereafter, on 24th March, 2004, IDCO transferred the land for the project at Lapanga to Bhushan Limited and possession thereof was also made over on several dates. On 12th May, 2004, the Ministry of Environment and Forest, Government of India, gave clearance to the project at Rengali in the name of Bhushan Limited. The Chief Inspector of Factories and Boiler, gave approval to the Steam and Feed Water pipe line drawing for Bhushan Limited on 2nd July, 2004. On 3rd September, 2004, the Government of Orissa, in its Ministry of Environment and Forest, granted approval to Bhushan Limited for diversion of 59.16 hectares of forest land for establishment of the integrated steel plant and an agreement was also drawn up between the Government and Bhushan Limited on 17th September, 2004, for drawal of water from the Hirakud Reservoir for use in the proposed integrated steel plant at Lapanga. On 2nd February, 2005, the State Government wrote to Bhushan Limited, seeking the status report of the steel plant project and on 16th March, 2005, permission was granted for provisional energisation of 220 KV line issued by the Chief Electrical Inspector in favour of Bhushan Limited. Several other approvals were granted upto 9th August, 2005, and finally in March, 2005, Bhushan Limited (BPSL) commenced production at its steel plant. On 6th September, 2005, administrative approval was given for acquisition of additional private land for Lapanga plant, granted by the Steel and Mines Department to Bhushan Limited. Similar approval was given in respect of other lands on 28th September, 2005 and 6th February, 2006.

19. On 8th May, 2006, Bhushan Limited filed Writ Petition No.6646 of 2006 before the Orissa High Court. On the next day, the State Government issued a reminder to Bhushan Limited in regard to its letter dated 31st December, 2005, by which the State Government had asked for a separate MOU from Bhushan Limited, inspite of the MOU already existing between the parties, which had also been acted upon till as late as 26th April, 2006. On 15th May, 2006, the High Court passed an interim order granting status-quo with regard to the applications for mining lease. On 5th September, 2006, an intervention application was filed by BSSL, which was allowed on 6th December, 2006.

22. As indicated hereinbefore, on 21st April, 2008, this Court passed an interim order in the Special Leave Petition filed by Bhushan Limited directing the parties to maintain status-quo with regard to the lands indicated in the application filed by the Appellants for grant of mining lease. However, one of the most significant developments that subsequently took place was that on 15th November, 2011, Shri B.B. Singhal and Shri Neeraj Singhal, Vice-Chairman and Managing Director of Bhushan Steel and Strips Ltd. filed affidavits withdrawing all their claims and rights in the MOU dated 15th May, 2002, executed between the State Government and Bhushan Limited and declaring that the said MOU was and had always been in favour of Bhushan Power & Steel Ltd. The above-named persons also prayed for deletion of their names from the array of parties.

21. Such affidavit was duly filed on 10th July, 2007, and the order impugned in the present appeal came to be passed by the High Court on 14th December, 2007, dismissing the aforesaid Writ Petition No.6646 of 2006. The substance of the order of the High Court while dismissing the Writ Petition is :-

was the sole beneficiary under the MOU dated 15th May, 2002, and withdrew all its claims under the MOU dated 15th May, 2002.

Whatever may have been the arrangement subsequently arrived at between the State Government and BSSL, the original MOU dated 15th May, 2002, continued to be in existence and remained operative.

34. Accordingly, we allow the appeal and set aside the judgment and order of the High Court of Orissa and also the decision of the State Government dated 9th February, 2006, rejecting the Appellant's claim for grant of mining lease.

During the course of hearing, we have been informed that Thakurani Block A has large reserves of iron ore, in which the Appellants can also be accommodated. We, accordingly, direct the State of Orissa to take appropriate steps to act in terms of the MOU dated 15th May, 2002, as also its earlier commitments to recommend the case of the Appellants to the Central Government for grant of adequate iron ore reserves to meet the requirements of the Appellants in their steel plant at Lapanga.

35. There will be no order as to costs.