THE STATE OF KARNATAKA & ORS. versus M/S. VEDANTA LIMITED (FORMERLY KNOWN AS SESA STERLITE LIMITED) & ORS.
[2018] 3 S.C.R. 1, Supreme Court of India, 2018
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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THE STATE OF KARNATAKA & ORS.
v.
M/S. VEDANTA LIMITED (FORMERLY KNOWN
AS SESA STERLITE LIMITED) & ORS.
(Criminal Appeal Nos. 348-356 of 2018)
MARCH 06, 2018
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
Code of Criminal Procedure, 1973 – ss.451 and 457 –
Disposal of seized property pending trial – Seizure of illegally
stocked iron ore – State filed application u/ss.451/457 CrPC seeking
permission to dispose off the seized iron ore by e-tender – Special
CBI Judge allowed the application vide order dated 08.05.2015 –
Against the order, writ petitions filed by respondents – High Court
allowed the writ petitions and directed release of the iron ore in
favour of the respondents – Propriety – Held: High Court while
allowing the writ petition had only relied on acceptance of the final
report by CBI Judge dated 15.12.2015 which was not relevant with
regard to order dated 08.05.2015 – Seizure of the iron ore was not
in case Crime No. 2/2014 in which final report has been accepted
by CBI Judge on 15.12.2015, rather seizure of the iron ore was in a
different proceeding in which   Order dated 08.05.2015 was passed
– When release of iron ore on an application filed by the State under
ss.451/457 CrPC was in a different proceeding, there was no effect
or consequence of acceptance of the final report vide Order dated
15.12.2015 in case Crime No. 2/2014 – High Court erred in allowing
the Writ Petition on the strength of the final report accepted on
15.12.2015 – However, it shall be
open for the respondent to file
appropriate application before the Special CBI Judge for release
of seized iron ore – Karnataka Forest Act, 1963 – ss. 2(7)(b)(iv),
24(e), 62, 80 – Karnataka Forests Rules, 1969 – rr. 143, 162.
Allowing the appeal, the Court
HELD : 1. It is clear that the final Report which was
accepted on 15.12.2015, was final report in case Crime No. 2/2014
which was registered after the investigation by SIT in pursuance
of order of this Court passed in Writ Petition No. 562 of 2009 and
  [2018]  3 S.C.R. 1
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[2018] 3 S.C.R.
in the above case, no offence was found against the respondent.
Order dated 08.05.2015, on the other hand, was passed in different
proceedings which proceedings commenced by registration of
FIR dated 15.03.2010, Ankola Police Station Crime No. 189/2010.
[Paras 16, 18] [8-D-E; 9-G-H]
2.  Clearly seizure of the iron ore was not in case Crime
No. 2/2014 in which final report has been accepted on 15.12.2015
rather seizure of the iron ore was in different proceeding in which
proceeding Order dated 08.05.2015 was passed. When release
of iron ore on an application filed by the State under Section
451/457 Cr.P.C. was in different proceeding, there was no effect
or consequence of acceptance of the final report vide Order dated
15.12.2015 in case Crime No. 2/2014 and the High Court
committed error in allowing the Writ Petition on the strength of
the final report accepted on 15.12.2015.  High Court while allowing
the Writ Petition had only relied on acceptance of the final report
by CBI Judge dated 15.12.2015 which, was not relevant with
regard to Order dated 08.05.2015 passed by the trial court.  [Para
19] [10-F-H]
3. The order and judgment of the High Court is wholly
unsustainable and is hereby set aside. However, it shall be open
for the respondent to file an appropriate application before the
XXXII Additional City Civil and Sessions Judge and Special Judge
for CBI Cases, Bangalore (CCH-34), for release of seized iron
ore by
establishing its existence and its ownership right over the
same, which may be considered by Jurisdictional Criminal Court
in accordance with law. [Para 21] [11-C-D]
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
Nos. 348-356 of 2018.
From the Judgment and Order dated 04.07.2017 of the High Court
of Karnataka at Bengaluru in Writ Petition No. 18941 of 2016
(GM-MM-S).
Basava Prabhu S. Patil, Sr. Adv, V. N. Raghupathy, Chinmay
Deshpande, Pariksith Angadi, Advs for the Appellants.
Dhruv Mehta, Ninad Laud, Jayant Mohan, Anjuman Tripathy, Ivo
D’Costa, Aditya Swain, Advs for the Respondent.
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The Judgment of the Court was delivered by
ASHOK BHUSHAN, J. 1. Delay condoned. Leave granted.
2. This appeal has been filed against the impugned judgment and
order of Karnataka High Court dated 04.07.2017 in Writ Petition No.
18941/2016 and Writ Petition Nos. 19328-19335/2016(GM-MM-S). High
Court vide its judgment dated 04.07.2017 has allowed the Writ Petitions
directing for release of the iron ore in favour of writ petitioners
(respondent herein).
3. The brief facts necessary to be noted for deciding this appeal
are:
A First Information Report No. 17/2009-10 dated 15.03.2010 was
registered for illegal storage of iron ore by violating Sections 2(7)(b)(iv),
62, 80 of the Karnataka Forest Act, 1963 and Rules 143, 162 of the
Karnataka Forests Rules, 1969. Judicial Magistrate First Class, Ankola
permitted for further inquiry by including Section 24(e) of Karnataka
Forest Act, 1963. On 20.03.2010 about 5 Lakhs Metric Tonnes of illegally
stocked iron ore has been seized on “as-is-where-is-basis” and seizure
report has been submitted to the Judicial Magistrate First Class, Ankola
who permitted to retain the same until further orders.
4. Another case registered was CBI Crime No. RC 17(A)/2012.
Chargesheets were filed after investigation in Special C.C. No. 268/2013,
Special C.C. No. 11/2014, Special C.C. No. 14/2014, Special C.C. No.
15/2014, Special C.C. No. 36/2014, Special C.C. No. 37/2014, Special
C.C. No. 38/2014, Special C.C. No. 53/2014, Special C.C. No.
54/2014.
The State filed an application under Section 451/457 Cr.P.C. in the
aforesaid cases before the XXXII Additional City Civil and Sessions
Judge and Special Judge for CBI Cases, Bangalore (CCH-34), seeking
permission to dispose off 56 heaps of iron ore lying at the Belekeri Port
approximately weighing 2,72,713.347 Metric Tonnes by e-tender.
5. Notices were published in the newspapers inviting the filing of
application for the interim disposal of seized 56 heaps of iron ore at
Belekeri Port by Dy. Conservator of Forests, Karwar on 29.03.2015.
The XXXII Additional City Civil and Sessions Judge and Special Judge
for CBI Cases, Bangalore (CCH-34) after considering the application
passed an order on 08.05.2015 allowing the application under Section
451/457 Cr.P.C. permitting the applicant/State to dispose off the seized
iron ore through e-tender on certain terms and conditions as enumerated
in the order.
THE STATE OF KARNATAKA & ORS. v. M/S. VEDANTA
LIMITED & ORS.
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6. Against Order passed on 08.05.2015, Writ Petition No. 18941/
2016 and Writ Petition Nos. 19328-19335/2016(GM-MM-S) were filed
by the respondents in the High Court of Karnataka at Bangalore. In the
Writ Petition following prayers were made:
“
PRAYER
Wherefore, for the reasons and circumstances stated to
hereinabove, it is most humbly prayed that this Hon’ble Court may be
pleased to:
(i) Issue a Writ of Certiorari or any other appropriate Writ or
Order or direction setting aside the Order dated 08.05.2015 passed
by the Court XXXII Additional City Civil & Sessions Judge &
Special Judge for CBI Cases in Bangalore (CCH 34) in Spl. C.C.
Nos. 268/2013, 11, 14, 15, 36, 37, 38, 53 & 54 of 2014 vide Annexure
– A & all further consequential proceedings thereto, only in so far
as the petitioner is concerned, in the interest of justice and equity.
 (ii) Issue a Writ of Mandamus or any other appropriate Writ or
Order or Direction, directing the 2nd,3rd, 4th & 5th Respondents
to consider the representation dated 04.02.2016, 08.02.2016 &
24.02.2016 submitted by the petitioner vide Annexure –‘P’,’P1’
& ‘P2’ and permit the petitioner to remove and transport the entire
quantity of approximately 34.544 Metric Tonnes of iron ore from
Belekere Port premises to the Pig Iron Plant of the petitioner at
Amona in State of Goa by endorsing the Mineral Dispatch Permits
& Forest Transit Passes & without insisting on any further payment
of
Royalty, in the interest of justice and equity.
(iii) Issue such other appropriate Writ or Order or Direction as
deemed fit under the facts and circumstances of the case, in the
interest of justice and equity.”
7. The State filed an objection in the Writ Petitions opposing the
prayers made in the Writ Petitions. The High Court vide its judgment
and order dated 04.07.2017 allowed the Writ Petitions. The State aggrieved
by the judgment of the High Court has come up in this appeal.
8. We have heard Shri B.P.S. Patil learned Senior Advocate for
the appellant and Shri Dhruv Mehta, Advocate for the respondent.
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9. Learned counsel for the appellant in support of the appeal
contends that the High court committed error in allowing the Writ Petitions
and directing release of the iron ore in favour of the writ petitioner. It is
contended that the basis of the judgment of the High Court is the final
report accepted by learned CBI Judge vide Order dated 15.12.2015
which has nothing to do with the proceeding in which, an Order was
passed by Special Judge CBI on 08.05.2015. It is contended that the
High Court on wrong premise has allowed the Writ Petitions.  It is
submitted that the writ petitioners themselves have filed an application
in the Special C.C. Nos. 268/2013, 11, 14, 15, 36, 37, 38, 53 & 54 of 2014
under Section 451/457 Cr.P.C. dated 08.03.2016, praying for directing
the release in favour of the applicant company herein entire quantity of
about 34544 Metric Tonnes of iron ore, belonging to the applicant company
seized on 20.03.2010, which application was subsequently, withdrawn.
10. Learned Senior Counsel for the appellant submits that Crime
No. 2/2014 dated 11.07.2014 in which final report was submitted and
accepted by XXXII Additional City Civil and Sessions Judge and Special
Judge for Prevention of Corruption Act at Bangalore City was a case
which was registered by Special Investigation Team of Karnataka
Lokayukta, was altogether a different case, unconcerned with proceeding
under which an application under Section 451/457 Cr.P.C. has been
allowed.
11.
Learned Counsel appearing for the respondent refuting the
submission of the Senior Counsel for the appellant contends that the
investigations were carried out by the CBI in pursuance of the directions
passed by this Court in Writ Petition (C) No. 562/2009 and under the
orders of this Court Special Investigation Team, Karnataka Lokayukta,
Bangalore carried on investigations and registered a case with Karnataka
Lokayukta SIT Police Station, being Crime No. 2/2014 in which
proceeding after thorough investigation, a final report dated 08.10.2015
was submitted by SIT, which was accepted by the Court on 15.12.2015.
No offence having been found proved against the respondent, High Court
has rightly directed for release of iron ore seized in favour of the
respondent. Respondent’s claim for release of iron ore is confined to the
quantity of about 34544 Metric Tonnes of iron ore belonging to the
respondent company that has been seized on 20.03.2010 and lying at the
plot allotted to applicant-company by Shree Mallikarjun Shipping Pvt.
Ltd in Belekeri Port Area. He submitted that the claim of above iron ore
is different from that seized and pending in case No. 189/2010.
THE STATE OF KARNATAKA & ORS. v. M/S. VEDANTA
LIMITED & ORS. [ASHOK BHUSHAN, J.]
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12. We have considered the submissions of the learned counsel
for the parties and have perused the record.
13. High Court in the impugned judgment has based its decision
of allowing the Writ Petition and directing the release of the iron ore in
favour of the respondent on the final report being accepted by the learned
CBI Judge by Order dated 15.12.2015. High court has further noticed
that this Court directed on 07.09.2012 to CBI to investigate into illegally
stocked iron ore in pursuance of which direction, SIT was constituted
and final report was submitted. Paragraphs 10 and 15 of the judgment of
the High court are the entire consideration of the High Court for allowing
the Writ Petition. It is useful to extract the Paragraphs 8 to 15 of the
judgment which is to the following effect:
“8. Accordingly, a Special Investigation Team (SIT, for short) was
appointed by the State. They submitted a final report, which is in
favour of the writ petitioner. The final report has been accepted
by the learned CBI Judge by an order dated December 15, 2015.
9.  Mr. K. N. Phanindra, learned advocate, seeks a direction for
release of the materials in favour of his client.
10.Mr. V. G. Bhanuprakash, learned additional government
advocate, submits that a case of theft is pending and, therefore,
the seized materials could not be released in favour of the petitioner.
11. In the wake of the final report being submitted by the SIT, we
do not
find any impediment to release the iron ore in favour of the
petitioner. An inventory has to be prepared and, thereafter, the
iron ore shall be released in favour of the writ petitioner,
immediately.  The entire process must be completed by four weeks.
12. The writ petitions are, therefore, allowed.
13. Mr. Phanindra, at this stage, expresses an apprehension that
the authorities may claim royalty.
14. When the material is in the port area, it is presumed that royalty
has, already, been paid, otherwise transport permit would not have
been granted. Therefore, his apprehension is unfounded.
15. We make no order as to costs.
Sd/-
 CHIEF JUSTICE
Sd/-
         JUDGE”
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14. The investigation which was carried out by SIT was registered
as Crime No. 2/2014. The respondent in his compilation has filed a notice
issued under Section 91 Cr.P.C. to the Managing Director/Director of
M/s SESA Goa Limited, presently, M/s Vedanta Limited (respondent).
Notice dated 21.08.2014 refers to the Order of this Court and registration
of Crime No. and it is useful to extract the opening paragraph of the
notice issued to the respondent dated 21.08.2014:
“
    KARNATAKA LOKAYUKTA
     Special Investigation Team
No. SP2/CR/02/2014/SIT/KLA/03         DATE:
   21.08.2014
  POLICE NOTICE
    (U/S 91 Cr.P.C.)
Special Investigation Team, Karnataka, Lokayukta, Bangalore, is
investigating the cases of illegal mining of Iron ore in Karnataka
State on the orders of the Hon’ble Supreme Court (Writ Application
No. 562/2009 IA 189 dated 16.09.2013) and that of the Govt. of
Karnataka. In this regard a case is registered against your company
in KLA SIT Police Station Cr. No. 02/2014 u/s 379, 420 r/w
120(b)IPC & 13(2), r/w 13(1)(d) PC Act & 21, 23 r/w 4(1)(a)
MMRD Act 1957.
In this connection, you are requested to direct a competent official
conversant with the activities/transactions of your company (M/
s. Mineral Enterprises Limited No. 49,3rd Floor Khanija Bhavana,
Race Course Road,) to appear before the undersigned at 10.30
hrs on 30.8.2014 at the office of Special Investigation Team, ATIC
Building, University of Veterinary Science, Hebbal, Bangalore along
with the following original documents/data. The said official may
also carry soft copy of the data/tables/charts of the information
as mentioned below.
 ..............
“
15. It was in the aforesaid proceeding that final report was
submitted on 08.10.2015. The respondent has filed a copy of the order
sheet of XXXII Additional City Civil and Sessions Judge and Special
Judge for Prevention of Corruption Act at Bangalore City in Crime No.
2/2014 where filing of the final report is noticed and Court also directed
for issue notice to the complainant returnable by 15.12.2015. On
15.12.2015, the Court in Crime No. 2/2014 passed the following order:
THE STATE OF KARNATAKA & ORS. v. M/S. VEDANTA
LIMITED & ORS. [ASHOK BHUSHAN, J.]
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“Complainant by name Sri Manjunatha Annigeri, Superintendent
of police attached Special Investigation Team, Karnataka Lokayuktha,
Bengaluru is present and submits that he has gone through the records
which disclosed that no case is made out against all the accused at the
conclusion of investigation. He submits that he has no objection to accept
the ‘B’ report.
I have gone through the records. It is seen that according to the
Investigating Officer, there is no convincing evidence to arrive at
conclusion that allegations against all the accused are made out. After
having gone through the ‘B’ report I find that there are no grounds to
proceed further against all the accused and accordingly ‘B’ report is
accepted.
(V. G. BOPAIAH)
      XXIII ACC and Spl. Judge,
  Bangalore City.”
16.  From the above, it is clear that the final Report which was
accepted on 15.12.2015, was final report in case Crime No. 2/2014 which
was registered after the investigation by SIT in pursuance of order of
this Court passed in Writ Petition No. 562 of 2009 and in the above case,
no offence was found against the respondent.
17. The Order dated 08.05.2015 was passed allowing the
application under Section 451/457 Cr.P.C. of the State in Special C.C.
No. 268/2013 and C.C. No. 11, 14, 15, 36, 37, 38, 53 & 54 of 2014 which
is mentioned in the operative portion of the order itself.  It is useful to
extract the operative portion of the Order dated
08.05.2015 which is to
the following effect:
 “
ORDER
The Application filed by the State Government U/ss. 451/457 of
Cr.P.C., are allowed permitting the Applicant/State to dispose off
the seized iron ore through e-tender with the following terms and
conditions:
1. The auction of the property shall be through e-tender under the
supervision of the ‘Monitoring committee’ constituted by the
Hon’ble Supreme Court.
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2. The e-tender auction shall be conducted by involving the CBI
Authorities and under intimation to the Lokayukta Department.
3.  The e-tender auction shall be conducted only after measurement
of the quality and quantity of each of the 56 iron ore heaps
separately through mines and Geology Department.
4. The e-auction shall be conducted after taking samples of each
of the 56 iron ore heaps separately for which Panchanama shall
be drawn.
5. The e-auction process is over the disposal off the iron ore be
covered by videography.
6. The auction amount shall be deposited immediately with the
Court in Spl. CC. No. 268/2013 and a copy of the document for
having deposited the amount be kept in connected cases.
7. The DMG shall keep records of the exact quantity of iron ore
transported by the successful bidder of the property.
The Original of the Order be kept in Spl. CC. No. 268/13 and a
copy thereof be kept in Spl. CC. Nos. 11/14, 14/14, 15/14, 36/14,
37/14, 38/14, 53/14 & 54/14.
(Directed to the Judgment Writer, transcribed by the corrected
and then signed and pronounced by me in the open court on this
8th day of May 2015),
  Sd/-08/05
      (Pradeep S. Balikal)
       XXXII Addl. City
      Civil   and   Sessions
      Judge and Spl. Judge
       for   CBI   Cases,
       Bangalore”
18. From the above, it is clear that Order dated 08.05.2015 was
passed in different proceedings which proceedings commenced by
registration of FIR dated 15.03.2010, Ankola Police
Station Crime No.
189/2010. After investigation by CID/CBI chargesheets were filed, which
were the cases as referred above. Iron ore which was directed to be
released by Order dated 08.05.2015 was iron ore seized on 20.03.2010.
THE STATE OF KARNATAKA & ORS. v. M/S. VEDANTA
LIMITED & ORS. [ASHOK BHUSHAN, J.]
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In the additional documents filed by the appellant, IA filed on behalf of
the respondent under Section 451/457 Cr.P.C. dated 08.03.2016 has been
brought on record. It is useful to extract the prayer made in the application
of the respondent, which is to the following effect:
“
PRAYER
Wherefore, it is prayed that this Hon’ble Court be pleased to allow
the above application and direct the release in favour of the
applicant company herein, of about 34,544 MT of Iron Ore
belonging to the applicant company that has been seized on
20.03.2010 and is lying at the plot allotted to applicant company
by Shree Mallikarjun Shipping Private Limited in Belekeri Port
area, in the interest of justice & equity.
Place: Bangalore
Date 08.03.2016
Applicant
[Anand Prakash Dubey,                   Advocate for Applicant
Head-Finance,
       (K.N. Phanindra)”
Iron Ore Karnataka]
19. It is, thus, clear that seizure of the iron ore was not in case
Crime No. 2/2014 in which final report has been accepted on 15.12.2015
rather seizure of the iron ore was in different proceeding in which
proceeding Order dated 08.05.2015 was passed. When release of iron
ore on an application filed by the State under Section 451/457 Cr.P.C.
was in different proceeding, there was no effect or consequence of
acceptance of the final report vide Order dated 15.12.2015 in case Crime
No. 2/2014 and the High Court committed error in allowing the Writ
Petition on the
strength of the final report accepted on 15.12.2015. We
have already extracted the entire consideration of the High Court while
allowing the Writ Petition from paragraphs 8 to 15 of the judgment.
High Court while allowing the Writ Petition had only relied on acceptance
of the final report by CBI Judge dated 15.12.2015 which as has been
noted above, was not relevant with regard to Order dated 08.05.2015
passed by the trial court.
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20. Learned Senior Counsel for the appellant has also brought on
record subsequent judgment of the High Court where High Court in
Writ Petition filed against the same Order dated 08.05.2015 by another
writ petitioner has disposed off the Writ Petition granting liberty to that
Writ Petitioner to approach Jurisdictional Criminal Court for release of
the seized iron ore by establishing its existence and ownership rights.
Reference has been made to the Order of the Karnataka High Court
dated 20.11.2017 in Writ Petition Nos. 29527-29531 of 2017 and Writ
Petition Nos. 29881-29884 of 2017 filed as Annexure P-11.
21. In result of foregoing discussion, we are of the view that order
and judgment of the High Court is wholly unsustainable and is hereby
set aside. We, however, observe that it shall be open for the respondent
to file an appropriate application before the XXXII Additional City Civil
and Sessions Judge and Special Judge for CBI Cases, Bangalore (CCH-
34), for release of seized iron ore by establishing its existence and its
ownership right over the same, which may be considered by Jurisdictional
Criminal Court in accordance with law. The Criminal Appeal is allowed.
Bibhuti Bhushan Bose
                                                               Appeal allowed.
THE STATE OF KARNATAKA & ORS. v. M/S. VEDANTA
LIMITED & ORS. [ASHOK BHUSHAN, J.]