STATE OF ODISHA & ORS. versus M/S. JINDAL STEEL AND POWER LTD. & ORS.
[2020] 3 S.C.R. 525, Supreme Court of India, 2020
Outcome: Disposed off
Segment: Ratio
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STATE OF ODISHA & ORS.
v.
M/S. JINDAL STEEL AND POWER LTD. & ORS.
(Civil Appeal No. 850 of 2020)
JANUARY 30, 2020
[S. A. BOBDE, CJI, B. R. GAVAI AND SURYA KANT, JJ.]
Mining:
Arrangement between respondent-company (which runs steel
-production plants) and mining company – To purchase certain iron
ore which was to be processed into Lump Ores and Fines at the
leasehold area of the mining company by the respondent- company
and later to be stored at dispatch point, pending transporation –
Approval for such arrangement was granted by State, subject to
payment of royalty at the highest rate – After 31.3.2014, State refused
‘transit permit’ for transporting the procured and processed Iron
Ore from to despatch point to the plants of respondent-company on
the ground that environment clearance for enhanced production of
the mining company had expired – Writ petition by respondent-
company challenging refusal of transit permit – High Court allowed
the writ quashing the order whereby transit permit was refused –
Appeal to Supreme Court – Mining Comany’s application for
intervention and sought modification of order dated 15.1.2020 in
another case wherein the mining company was granted one month
time for payment of dues as assessed by Central Environment
Committee – HELD: Mining Company’s prayer for modification of
the order dated 15.01.2020 is accepted – Mining Company must
pay its dues and give the requisite undertaking by 29 February,
2020 post which alone, it shall
be at liberty to resume its mining
operations as per order dated 15.01.2020 – Once the mining
company complies with above direction, respondent -company can
lift the already mined, processed and royalty paid Iron Ore lying at
the dispatch point within mining company’s premises and transport
these stocks to its plants across the country – The proceeds thereof
must be deposited with the Trust & Retention Account under the
custody of the State Bank of India – Writ petition allowed.
[2020] 3 S.C.R. 525
525
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SUPREME COURT REPORTS
[2020] 3 S.C.R.
The Bihar Mines Ltd. v. Union of India AIR 1967 SC
887: [1967] SCR 707; Samaj Parivartana Samudaya
v. State of Karnataka (2013) 8 SCC 154 : [2013] 6
SCR 810 – referred to.
Case Law Reference
[1967] SCR 707
referred to
Para 10
[2013] 6 SCR 810
referred to
Para 11
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 850 of
2020.
From the Judgment and Order dated 08.04.2016 of the High Court
of Orissa in W.P. (C) No. 12119 of 2014.
with
I.A. Nos. 85780 of 2016, 79477 of 2016, 54052 of 2018, 4 of
2017, 187580 of 2019, 8734 of 2020, 8725 of 2020.
Shibashish Misra, Adv for the Appellants.
Tushar Mehta, Ld. S.G., Atmaram NS Nadkarni, ASG, Mukul
Rohtagi, Ajir Kr. Sinha, Parag Tripathi, Sr. Advs., Nandini Gore, Manish
Kharbanda, Ms. Natasha Saraswal, Pranav Sood, Jasvir Singh
Sabharwal, Ms. Nikita Mehta, Ms. Priya Singh, Anurag Abhishek, Pranav
Mehta, Prem Prakash, Ms. Suhasini Sen, S.S. Rebello, Arzu Paul,
Neeleshwar Pavani, Ms. Riya Soni, Ms. Aakansha Kaul, Ms. Suhasini
Sen, Manek Singh, Gurmeet Singh Makker, Kedar Nath Tripathy, Ms.
Sreeparna Basak, Ms. Malvika Bhanot for M/S. Parekh & Co., Sanjay
Kapur, Ms. Megha Karnwal, Harshal Narayan, V.M. Kannan, Ms.
Shubhra Kapur, Saurabh Ajay Gupta, Naveen Kumar, Vinit Kumar,
Prabhat Kumar Rai, Mr./Ms. Shreenu Verma, Nitesh Bhandari, Advs.
for the Respondents.
JUDGMENT
The following Judgment of the Court was delivered :
1. With the consent of learned counsel for the parties, Special
Leave
to Appeal is taken up for final hearing along with the captioned
Interlocutory Applications.
2. Leave Granted. Heard learned counsel for the parties.
3. This Civil Appeal is directed against the order of a Division
Bench of the Orissa High Court which allowed the writ petition filed by
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Respondent No. 1, Jindal Steel and Power Ltd. (hereinafter “JSPL”)
seeking a writ of mandamus against the appellant, State of Odisha, for
allowing lifting of legally procured, processed, royalty and tax-paid stock
of Iron Ore lying at the dispatch point within the lease-area of M/s Sarda
Mines Pvt. Ltd. (hereinafter “SMPL”) in Thakurani B-Block Mines in
Keonjar, Odisha and transporting it to the railway siding at Deojhar for
carrying to its Pelletisation Plants and Steel Plants in Odisha and
Chhattisgarh.
FACTS
4. JSPL is an industrial entity which runs Steel-production plants
across the country and regularly purchases numerous raw materials,
including Iron Ore as part of its commercial activities. It had entered
into an arrangement with SMPL to purchase certain Iron Ore, which
was to be processed into Lump Ores and Fines and transported to JSPL’s
plants. The mining activity was conducted by SMPL and possession of
the stocks was handed over to JSPL within SMPL’s premises. Within
SMPL’s leasehold area, JSPL would process these Ores and later store
them at the dispatch point, pending transportation by trains to the
Pellitisation Plant of JSPL located at Deojhar, Odisha as well as its
Integrated Steel Plant located in Raigarh, Chhattisgarh. The appellant
(State of Odisha) had earlier granted approval to this arrangement for
selling Iron Ore, subject to payment of royalty at the “highest rate”.
5. This continued uninterruptedly until 31.03.2014, when a letter
was issued by the Deputy Director of Mines, Joda (in Keonjhar, Odisha)
(Appellant No. 3) which highlighted that SMPL’s Environmental
Clearance for enhanced production had expired and hence ‘transit permit’
for transporting the procured and processed Iron Ore (CLO and Fines)
from the despatch point to JSPL’s plants could not be granted.
6. JSPL approached the State authorities contending that royalty
had duly been paid on the Iron Ore, and that the stocks lying at the
despatch point were owned by JSPL and not SMPL. Numerous
representations were made requesting permission to transport the
processed minerals. Appellant No. 3, therefore, recommended to the
Director of Mines (Appellant No. 2) that JSPL be granted requisite
transport clearances. However, Appellant No. 2 in his communication
with the Commissioner-cum-Secretary, Steel & Mines Department drew
attention to the fact that the material lay within the leasehold area of
SMPL and its transportation would form part of mining operations which
STATE OF ODISHA & ORS. v. M/S. JINDAL STEEL AND
POWER LTD. & ORS.
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SUPREME COURT REPORTS
[2020] 3 S.C.R.
could not proceed without appropriate statutory clearances. Accordingly,
the appellants through letters dated 23.05.2014 and 26.06.2014 rejected
JSPL’s prayers.
7. The aggrieved JSPL approached the High Court and sought
quashing of appellants’ letters refusing transport permits and a writ of
mandamus directing the State of Odisha to grant permission for
transportation of entire processed ore from dispatch point within SMPL’s
lease area to JSPL’s units in Odisha and Chhattisgarh.
8. JSPL claimed that through a letter dated 15.01.2015, SMPL
had obtained clarification from the Ministry of Environment and Forests,
Government of India (hereinafter “MOEF”) that SMPL could operate
its mine and produce up to 4 million tons of Iron Ore (Lumps) for a
period of 20 years from 22.09.2004. Given that SMPL had valid
environmental clearance, no objection could be raised by appellants
against transportation of iron ore by JSPL. This was vehemently contested
by the appellants who contended that owing to the Supreme Court’s
interim directions on 16.05.2014, no “mining activities/operations” could
take place which would also include a prohibition on transportation of
mined ore.
9. JSPL contended that the afore-stated direction only prohibited
SMPL from resuming mining operations, and not JSPL from transporting
the mineral already mined, purchased, processed and royalty paid upon.
It placed reliance upon the expression “mining operation”
as defined
under Section 3(d) of the Mines and Minerals (Development &
Regulation) Act, 1957 (“MMRDA”), which did not include transportation
of minerals. As soon as the ore was mined and sold by the mining
leaseholder, it was contended that the OMPTS Rules would come into
force. JSPL being a buyer who possessed necessary license to transport
under OMPTS Rules and who also had paid all necessary royalties,
could not be stopped from transporting its ore merely because it lay in
the leasehold premises of SMPL on the ground that the latter did not
have a valid environmental clearance.
10. The High Court noted that this Court’s interim directions
prohibited “mining operations”, which as per Section 3(d) of MMDRA
meant “winning” of minerals. Relying upon the Constitutional Bench
decision in The Bihar Mines Ltd. v. Union of India1, interpreting “mining
1 AIR 1967 SC 887.
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operations” to include only processes necessary to raise/extract minerals
from mines, the High Court held that the transportation of minerals already
raised would not be estopped through this Court’s interim directions.
Having noticed the fact that SMPL had environmental clearance, it had
obtained due permission for selling Iron Ore to JSPL, and that requisite
royalties had already been paid, the High Court found no valid reason
for the State of Odisha to stop transportation of the iron ore by JSPL.
Accordingly, the impugned letters which directed stoppage of
transportation were quashed, and instead the State-authorities were
directed to grant transport permission to JSPL.
CONTENTIONS OF PARTIES
11. The aggrieved State-authorities initially sought leave to appeal
contending that mere sale of the mined ore by SMPL would not mean
that MMDRA would cease to operate, and grant of approval under
OMPTS Rules, 2007 to JSPL would not obviate the necessity for
obtaining clearance/approvals under other statutes. JSPL’s title over the
goods could not be better than the title owned by SMPL; and mere
completion of sale per the Sales of Goods Act would not regularise
illegalities or dispense with the necessity of complying with the law. The
HC statedly misinterpreted the MOEF’s clarificatory letter regarding
Environmental Clearance, which was granted only for 4 MPTA, whereas
SMPL had extracted minerals far in excess. At least some part of the
Ore sold to JSPL came from
this unauthorised excess production, and
hence JSPL could not be said to have “validly procured” the materials
and thus had no right to transport the same. The appellants further claimed
that “mining operation” would in fact cover transportation of materials
within the leasehold area, and Section 3(d) of MMDRA ought not to be
construed restrictively in light of this Court’s observations in Samaj
Parivartana Samudaya v. State of Karnataka2, and hence JSPL’s
prayer was barred by this Court’s interim directions dated 16.05.2014.
12. Appellants also underscored the larger implications of upholding
the High Court’s finding that sale of minerals would cease application of
the MMDRA and instead only the OMPTS Rules would apply, for it
would create a loophole to evade application of environmental legislations.
13. JSPL, on the other hand, highlighted how it was not seeking
any permission for crushing or processing of the iron ore, but only
2 (2013) 8 SCC 154.
STATE OF ODISHA & ORS. v. M/S. JINDAL STEEL AND
POWER LTD. & ORS.
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transportation of the Ore already legally procured, processed and stored
at the dispatch point prior to expiry of the environmental clearance of
SMPL. Transportation was claimed, per se, not to be a part of mining
operations for which environmental clearances were required. It placed
reliance on the appellant’s failure to raise objections to transportation of
minerals in other similar cases. Even otherwise, per Clause 5 of Part-IX
of Form K (Model Form of Mining Lease under Rule 31(1) of MC
Rules, 1960) lifting and transportation of minerals was claimed as being
permissible upto six months after the expiry of the lease, which
demonstrated the clear intention of the legislation to protect the right of
the lessee who has excavated minerals during the validity of the lease
period.
14. During the pendency of this appeal, SMPL filed an application
for intervention (I.A. No. 8725 of 2020) and at the time of hearing
referred to the order dated 15.01.2020 passed in I.A. No. 186810 of
2019 in WP(C) No. 114 of 2014 (Common Cause v. Union of India)
whereby this Court noticing irregularities committed by several mining
companies, directed SMPL to deposit dues as assessed by the Central
Environment Committee in its report dated 08.05.2019 and asked it to
file an undertaking to comply with all rules, regulations and mandatory
provisions; post which SMPL could resume its mining operations in the
leased-area. SMPL has filed another
application (I.A. No. 8734 of 2020)
undertaking to comply with this Court’s directions dated 15.01.2020 with
an oral prayer to extend the time limit till the end of February, for doing
the needful.
15. Additionally, ICICI Bank and the State Bank of India have
also filed intervention applications (I.A. No. 54052 of 2018 and I.A. No.
4 of 2017), claiming that they (as part of a consortium of seven banks)
had granted sums totalling Rs 8400 Crores to JSPL as working capital.
Part of these loan amounts had been used by JSPL to buy Iron Ore from
SMPL and these stocks were in turn hypothecated with the consortium.
The banks hence had exposure of about Rs 434 Crores in the present
case, which would adversely be affected in case JSPL was not allowed
to transport the said Iron Ore to its plants expeditiously. In addition, they
sought that JSPL be directed to undertake that the amount realised by it
in pursuance of transporting the Ore, should be credited only to the
working capital limit account.
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16. JSPL has also filed an application (I.A. No. 187580 of 2019)
seeking interim directions to allow it to transport the Iron Ore stock
(totalling 29977.818 metric tons of Iron Ore lumps and about 12.2 million
tons of Iron Ore fines) and directions to the State of Odisha to grant
necessary transit permits. Insisting that the appellants’ concerns of
recovering compensation dues had been satisfied consequent to SMPL’s
undertaking, JSPL drew attention to the distress being faced by the Steel
sector in India, and that its own working facility account had been
restructured pursuant to RBI directions and how a Trust & Retention
Account had been opened under the supervision of the State Bank of
India into which the entire proceeds of JSPL were being deposited.
17. It was urged on behalf of JSPL that in light of this Court’s
directions dated 15.01.2020 in I.A. No. 186810 of 2019, and the
consequent undertaking filed by the lessee (SMPL) on 16.01.2020 to
comply with the same, no dispute indeed survived between the consequent
buyer (JSPL) and the lessor (State of Odisha). Learned Counsel
representing the State of Odisha and SMPL also did not controvert this
fact-situation.
ANALYSIS
18. As noticed above, although the appellant-State had raised
several disputes and questions of law in its written submissions, but at
the time of oral hearing both parties have confined themselves to the
solitary issue regarding conditional entitlement of JSPL to lift and transport
the
iron ore from SMPL’s lease-area to its plants in Odisha and
Chhattisgarh. Thus, no occasion arises for venturing into the numerous
legal disputes raised in the main appeal.
19. Counsel for the appellants have expressed no objection to
disposing of this petition in light of the subsequent developments which
have taken place post the filing of appeal, subject to SMPL filing the
aforementioned undertaking.
CONCLUSION
20. In light of parties having restricted their contentions and our
consequent analysis to the framework of I.A. No. 187580 of 2019 (moved
for directions by JSPL), we dispose of all the I.As. as well as the Civil
Appeal with the following directions:
STATE OF ODISHA & ORS. v. M/S. JINDAL STEEL AND
POWER LTD. & ORS.
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(i) SMPL’s prayer for modification of our order dated 15.01.2020
passed in I.A. No. 186810 of 2019 in WP(C) 114 of 2014, wherein
one-month time was granted for payment of dues as assessed by
the CEC, is accepted. SMPL must pay its dues and give the
requisite undertaking by 29 February, 2020 post which alone it
shall be at liberty to resume its mining operations as per our order
dated 15.01.2020.
(ii) Once SMPL complies with direction no. (i) above, JSPL can
lift the already mined, processed and royalty paid Iron Ore lying
at the dispatch point within SMPL’s premises and transport these
stocks to its plants across the country. The proceeds thereof must
be deposited with the Trust & Retention Account under the
custody of the State Bank of India.
(iii) Failure to comply with these directions shall result in any such
sale being deemed legally void.
Kalpana K. Tripathy
Matters disposed of.