SAMAJ PARIVARTANA SAMUDAYA AND ORS. VS STATE OF KARNATAKA AND ORS CASE

SAMAJ PARIVARTANA SAMUDAYA AND ORS. VS STATE OF KARNATAKA AND ORS CASE

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले



WRIT PETITION (CIVIL) No. 562 OF 2009
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
IA. No. 205/2014, IA No. 206/2014, IA No. 24335/2018,
IA No. 98216/2020, IA No. 98219/2020, , IA No.152631/2018,
IA No.64798/2019 in IA No.152631, IA No. 61304/2019, IA
No.97376/2019 in IA No. 24335/2018 and 152631/2018, IA
No.61452/2020, IA No.17007/2021, IA No. 37678/2022
IN
WRIT PETITION (CIVIL) NO. 562 OF 2009
SAMAJ PARIVARTANA SAMUDAYA
AND ORS. .....PETITIONERS
VERSUS
STATE OF KARNATAKA AND ORS. ..... RESPONDENTS
ORDER
1. The present writ petition was filed under Article 132 of the
Constitution of India over two decades ago, seeking directions to the
respondent No. 1/State of Karnataka, respondent No. 2/State of Andhra
Pradesh and respondent No.3/Union of India to stop all mining and
related activities in the forest areas of Karnataka and Andhra Pradesh
being carried out and in violation of the order dated 12.12.1996, passed
Page 1 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
by this Court in T.N. Godavarman Tirumulpad v. Union of India1 and
the Forest (Conservation) Act, 1980.
2. Directions were also sought to be issued to the respondents/States
and the Union of India to declare all mining contracts/sub-leases issued
in violation of the Mines and Minerals (Development and Regulation) Act,
1957 as illegal and take penal actions against the violators. The third
prayer made was for directing stoppage of all mining activities along side
the border and within the forest areas in the Bellary Reserve Forest.
Lastly, directions were sought to declare Notification dated 15.03.2003
and other related Notifications dereserving lands for mining operations,
as null and void.
3. The writ petitioner had approached this Court against the
indiscriminate and rampant mining activity that was being carried out
under the nose of the Authorities, in particular in the District of Bellary.
The reports submitted by the Central Empowered Committee2
 bore out
the submissions made by the petitioner regarding large scale illegal
mining in the area resulting in complete degradation of the environment.
As a result, vide order dated 29.07.2011, all mining activity was
prohibited in the District of Bellary, followed by the Districts of Tumkur
and Chitradurga. Taking note of the rampant encroachment in forest land
by lease-holders and illegal mining operations taking place in the same
1
(1997) 2 SCC 267
2
For short the “CEC”
Page 2 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
area, a joint team was constituted vide order dated 06.05.2011 to
conduct a survey of the area which revealed how illegal mining had
ravaged the forest area of the aforesaid districts.
4. The CEC submitted a report, termed as the “Final Report” dated
03.02.2012, making several recommendations one of which was to
categorise the mines into three categories based on the extent of
encroachment in respect of the mining pits and overburden dumps,
determined in terms of percentage qua the total lease area. Three
categories of the mines were suggested as ‘A’, ‘B’ and ‘C’. Another
recommendation made by the CEC was relating to the conditions
proposed for reopening of mining and resumption of the mining
operation for this Court to consider as part of the Reclamation and
Rehabilitation Plans.
5. The recommendation made by the CEC vide its report dated 13th
March, 2012, relating to the prescription of a ceiling limit for the total
production of iron ore for mining leases in the Districts of Bellary,
Chitradurga and Tumkur, prohibition of export of iron ore outside the
country using the mode of e-auction to be conducted by a Monitoring
Committee for the sale of iron ore, deposit of 10% of the sale price
received during the e-auction with the Monitoring Committee along with
the other charges and constitution of and assigning various
responsibilities to the Monitoring Committee, were duly considered and
Page 3 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
accepted by this Court in its order dated 13th April, 2012. On 3rd
September, 2012 permission was granted by this Court to re-open all
eighteen categories of ‘A’ and ‘B’ mines subject to certain conditions. A
similar recommendation was made by the CEC for reopening of the
remaining categories of ‘A’ and ‘B’ mines in its report dated 15th
February, 2013.
6. Coming to the directions issued by this Court regarding the sale of
existing stock of iron ore extracted through illegal mining, vide order
dated 23rd September, 2011, this Court had directed disposal of the
accumulated iron ore through the process of e-auction conducted by the
Monitoring Committee and had further constituted a ‘Special Purpose
Vehicle’3
 in terms of the order dated 29th October, 2012, for taking
ameliorating and mitigating measures as per the “Comprehensive
Environment Plans for the mining Impact Zone”4
 around the mining
leases in three Districts of the State of Karnataka with directions issued
to the Monitoring Committee to provide the payment received by it to the
SPV in that regard.
7. In the year 2015, an application was moved by the Federation of
Indian Mineral Industries, Southern Region, FIMI South (IA 248 of 2015)
for permission to sell the iron ore and manganese ore within the State of
Karnataka, without taking recourse to e-auction to be conducted by the
3 For short ‘SPV’
4 For short ‘CEPMIZ’
Page 4 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
Monitoring Committee, as set up by this Court. The said prayer was
opposed by the petitioner and the other stake holders. However, the
CEC vide its report dated 28th April, 2016, had agreed to the prayer
made by FIMI South on the ground that in view of the several orders
passed by this Court, the basic objective behind sale of iron ore through
the Monitoring Committee had been achieved and an alternate system
needed to be put in place. The State of Karnataka had also agreed to
the suggestions made by the CEC and submitted a model to the Court
for monitoring sale of iron ore through the e-platform on the basis of a
long-term agreement.
8. Highlighting the reason behind constituting the Monitoring
Committee and the role attributed to it for the sale of iron ore through eauction and further, observing that the connected aspect of lifting of the
cap or enhancing the cap on production and launching of the CEPMIZ
scheme, was still under consideration, this Court had rejected the
aforesaid application filed by FIMI South vide order dated 28th August,
20175
, opining that time had not yet come to dispense with the existing
policy of sale and purchase of iron ore in the State of Karnataka through
the Court appointed Monitoring Committee by e-auction and for grant of
permission to sell the iron ore on a direct sale basis through long term
contracts or through spot sale and that restoration of ‘Normalcy’ in the
sale and purchase of iron ore must be deferred till significant headway is
5 Reported as (2018) 11 SCC 433
Page 5 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
made in respect of the other connected aspects noticed in the Final
Order dated 18th April, 2013.
9. Another order that needs to be noted was one passed in the
present petition on 14th December, 20176
. The said order was passed on
applications moved by M/s. Karnataka Iron and Steel Manufacturers
Association (IA No. 273/2017), FIMI South (IA 56562/2017) and
Chitradurga Sustainable Mining Forum (IA No. 76163 and 76167/2017)
seeking removal of the annual cap of mining fixed by this Court and for
permission to extract iron ore as per the approved R & R Plans,
reclamation and rehabilitation plan. A similar request was made by the
Ministry of Mines, Union of India in IA No. 103342/2017, stating that the
annual mineral policy was under revision and the discretion of fixing a
cap upon extraction of mineral ought best to be left to the Ministry. On its
part, the State of Karnataka had highlighted the significant improvement
made in the infrastructure and suggested a gradual increase in the
annual cap based on iron ore extraction from 30 MMT that had been
fixed in respect of all the three Districts, to 50 MMT.
10. After examining the recommendations made by the CEC in its
report dated 14th July, 2017 and taking into account the submissions
made by Mr. M.K. Jiwragka, former Member Secretary of CEC as also
Mr. Prashant Bhushan, learned counsel for the petitioner, this Court had
6 Reported as (2018) 13 SCC 501
Page 6 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
passed an order on 14th December, 2017, accepting the
recommendations made by the CEC for enhancement of the cap for
category ‘A’ and ‘B’ mines subject to imposition of conditions relating to
category ‘C’ mines in the three Districts of Bellary, Tumkur and
Chitradurga.
11. We have taken the pains to extract the chronology of events before
proceeding to deal with the applications that have been moved by
several parties pressing for modification of the Court’s order dated 23rd
September, 2011 and seeking permission for discontinuation of
compulsory sale of iron ore through e-auction and for permission to
export the pellets manufacturers from the iron ore extracted from the
mines in the State of Karnataka.
12. The reliefs sought by various/interveners through independent
applications are as follows:
i. IA. No. 205/2014 and IA No. 206/2014 moved by KIOCL
Ltd., a government of India enterprise (for intervention and
modification of the order dated 23rd September, 2011.)
ii. IA No. 24335/2018, IA No. 61304/2019 and IA No.
17007/2021 filed by FIMI South (for permission to export
pellets manufactured from iron ore in State of Karnataka,
permission to export unsold iron ore despite being put on eauction for more than three occasion and freedom to enter
Page 7 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
into contract of iron ore from lessees in the State of
Karnataka.)
iii. IA No. 98216/2020 and IA No. 98219/2020 filed by M/s. SLR
Metaliks (for impleadment and for permission to enter into
contracts directly for purchase of iron ore from lessees in
Karnataka without resorting to e-auction.)
iv. IA No.152631/2018 moved by M/s. Vedanta Ltd. (for
permission to export/sell iron ore without recourse to eauction in the State of Karnataka.)
v. IA No. 64798/2019 in IA No. 152631/2018 filed by State of
Karnataka Gani Avalambhithara Vedike (for intervention and
permission to export/sell iron ore which steel plants and
other industries are unwilling to purchase in the e-auction
process, by selling it directly on or above the prevailing
market price.)
vi. IA No. 97376/2019 in IA No. 24335/2018 and 152631/2018
filed by Karnataka Sponge Iron Manufacturer Associations
(for intervention and permission to export pellets in the State
of Karnataka.)
Page 8 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
vii. IA No. 61452/2020 filed by Mineral Enterprises Limited (for
permission as one time measure to sell/export unsold iron
ore without resorting to the e-auction framework.)
viii. IA No. 37678/2022 filed by NMDC Limited, a Central PSU
(for permission to offer iron ore extracted by it on direct sale
basis without resorting to e-auction and for export purposes.)
13. A reply affidavit dated 1st April, 2022 has been filed by the
petitioner opposing the request of the mining companies and pellets
manufacturing companies for permission to export iron ore and pellets
and stating that if the production of iron ore is in excess of the demand
of the domestic steel industries as alleged, then the Court may consider
reducing the cap of iron ore extraction instead of permitting export
thereof. Mr. Prashant Bhushan, learned counsel appearing for the
petitioner contended that if it is claimed by the applicants that the
domestic steel industry has created a cartel due to which they are not
purchasing the iron ore, then the problem of cartelization needs to be
addressed. Similarly, permission for exporting pellets has also been
opposed by the petitioner and it has been submitted that the order dated
23rd September, 2011 passed by this Court does not deserve
modification.
14. The Monitoring Committee has filed a status report dated 30th
March, 2022, stating inter alia that as on 31st March, 2022, the closing
Page 9 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
balance of the iron ore is 8.29 MMT (approx.). During the year 2021,
33.156 MMT of iron ore was sold through e-auction. As on 01.04.2021,
the opening stock of iron ore in respect of running mines (Category ‘A’
and ‘B’) is 6.65 MMTs (approx.). The report also furnishes the list of iron
ore mining leases operating outside the Districts of Bellary, Chitradurga
and Tumkur, in a tabulated form prescribing the approved capacity and
the actual production achieved by them. Another tabulated statement
contains the list of iron ore mining leases in the aforesaid three districts
for category ‘A’ ‘B’ and ‘C’ auctioned mines in separate categories
showing approved Maximum Permissible Annual Production7
 and actual
production and despatches.
List of iron ore mining leases operating in Bellary, Chitradurga and Tumkur for A and B auctioned mines showing approved
MPAP, actual production and Closing Balance.
S.
No.
Name of Lessee and
Lease No.
Year Opening
Balance
in Mts
MPAP for
the year in
Mts
Production
against the
MPAP in Mts
Dispatch
during the
year in Mts
Closing
Balance
in Mts.
1 JSW Ltd. (Narayana) ML
No. 0012
2021-22 306478.0 1110000 1007885.0 966213.95 348149.1
2. JSW Ltd. (Dharma) ML
No. 0013
2021-22 6182.0 180000 179928.0 168700.8 17409.2
3. JSW Ltd. (Bhomman) ML
No. 0014
2021-22 781482.0 1000000 1598559.3 463400.168 1916641.1
4. MSPL (ANS) ML No. 0015 2021-22 70348.0 120000 50720.0 72000 49068.0
Total 1164490.0 2410000 2837092.3 1670314.918 2331267.3
15. The CEC has submitted Report No. 3 of 2022 dated 10th April,
2022 in response to the directions issued by this Court on 30th March,
2022. After referring to the earlier reports submitted by it from time to
time, it has been stated that only a temporary ban on exports was
imposed by this Court at a critical time when mining operations were
restricted in the State of Karnataka and that it was never the intention of
7 For short “MPAP”
Page 10 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
this Court to restrict the mining operations for all times to come; that sale
through e-auction conducted through the Monitoring Committee had
achieved its objective and it was no longer necessary to continue with
the same dispensation in view of the improvement in the situation. Citing
the information furnished by the Monitoring Committee relating to the
closing balance of stock available in category ‘A’ ‘B’ and ‘C’ as on 31st
March, 2022, that adds up to 1,19,47,839.3 MT, the CEC has
recommended vacation of the orders passed by this Court directing sale
of iron ore through e-auction to be conducted by the Monitoring
Committee with a rider that the said procedure continue to be adopted
for the sale of balance of old stock of iron ore including sub grade iron
ore available on the date of imposition of the ban. It has been suggested
that all the balance old stock be sold through e-auction before the end of
July, 2022 and if any stock is left unsold, only then should the lessee be
permitted to dispose it of without adopting the e-auction process.
16. The second suggestion made by the CEC is to discontinue
collection of 10% of the sale value from all the lessees except for NMDC
Limited and 20% of the sale value from NMDC Limited toward their
contribution to the SPV. Thirdly, it has been suggested that the total ban
imposed on export of iron ore and pellets from the districts of Bellary,
Chitradurga and Tumkur, be lifted. Lastly, CEC has sought vacation of
the orders fixing district level caps on production of iron ore in respect of
Page 11 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
category ‘A’ and ‘B’ mines from the Financial Year 2022-23 onwards. The
report concludes by requesting that the system of determination of
MPAP being fixed through the R & R Plans and Supplementary
Environment Plans, as approved by this Court by the orders dated
13.04.2012 and 18.04.2013, may be continued.
17. The Ministry of Steel, Union of India has filed an affidavit dated 16th
April, 2022, stating inter alia that keeping in mind the fact that against a
requirement of 192 MT of iron ore for producing 120 MT of steel
annually, this Court may consider vacating the order for district level
caps on iron ore mines imposed in the three districts of the State of
Karnataka, by treating the mines in the said State at par with the mines
in the rest of the country.
18. The Ministry of Mines, Union of India has filed a separate affidavit
dated 9th April, 2022, stating inter alia that over the years, the scenario
has changed which would be apparent from the reports submitted by the
CEC from time to time. Further, the Mines and Mineral (Development
and Regulation) (Amendment) Act, 2015 has been put into place and all
the said steps taken together, necessitate a relook at the restriction
imposed earlier and therefore operation of mines in the State of
Karnataka may be aligned with the rest of the country. The Ministry has
said that it has no objection to export of iron ore mined in the State of
Karnataka, just as it is being done in the rest of the country.
Page 12 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
19. KISMA has filed two affidavits dated 08.04.2022 and 18.04.2022,
opposing the applications mentioned above for permission to export iron
ore pellets as prayed for by FIMI South, KIOCL Limited, Vedanta Limited
and others and stated that the process of e-auction through the
Monitoring Committee should not be discarded as the said process is fair
and transparent. Opposing the request for permission to export iron ore,
it has been averred that any such permission may result in the miners
fixing the base price so high as to oust the domestic steel industries that
may result in manipulation by the miners.
20. A similar objection has been raised with respect to the request for
export of iron ore pellets. The stand of KISMA is that export of iron ore
ought not be permitted since it will result in starving the domestic steel
and allied industries and permitting the mining industries to earn quick
profits in the international markets due to the surge in the prices of iron
ore in the recent past. In its subsequent affidavit, KISMA had added that
if this Court is inclined to permit export of iron ore from the State of
Karnataka, the same may be permitted subject to additional safeguards
and guidelines as recommended by the CEC in its Report No. 19/2019,
reiterated later in Report No. 16/2020 and Report No. 20/2020.
21. The State of Karnataka had filed an affidavit dated 17th May, 2021
in reply to IA No. 152631/2018 that was moved by Vedanta Limited,
followed by an additional reply to the said application filed on 19th April,
Page 13 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
2022. In both the said affidavits State of Karnataka has submitted that no
export ought to be permitted of iron ore which was excavated from mines
situated within the State. Disagreeing with Report No. 3/2022 submitted
by the CEC recommending grant of permission for exporting iron ore
mined within the State, it has been averred that such a recommendation
is not backed by any cogent material.
22. We have considered the argument advanced by learned counsel
for the parties, perused the latest report of the CEC and the Monitoring
Committee, examined the stand of the Ministry of Steel and Ministry of
Mines, Union of India as also of the State of Karnataka. The data placed
before us by the respective parties in their applications under
consideration has also been scanned. For the present, we propose to
confine the scope of this order to examining the twin prayers made by
learned counsel for the applicants namely, permission to sell the unsold
stock of iron ore already excavated without resorting to the process of eauction conducted through the Monitoring Committee and for lifting the
ban on export of iron ore/pellets from the districts of Bellary, Chitradurga
and Tumkur situated in the State of Karnataka. Although certain
submissions were made by the parties regarding lifting of the ceiling limit
for total production of iron ore, at this juncture we are not inclined to
decide the said issue.
Page 14 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
23. Records reveals that repeated attempts to resort to the e-auction
process for the sale of already excavated iron ore mined in the three
districts of Bellary, Chitradurga and Tumkur in the State of Karnataka,
have not borne any fruitful results. As a consequence thereof, large
stock of iron ore, including sub-grade iron ore, is lying unused. As on
31.03.2022, the stocks available in category ‘A’ and ‘B’ mines is stated to
be 82,98,130.5 MT. The stocks available in the auctioned category ‘C’
mines as on the above date is 12,25,100.5 MTs. The stock in respect of
e-auction category ‘A’ and category ‘B’ expired leases is 2,33,126.73
MTs and in mining leases outside the districts of Bellary, Chitradurga and
Tumkur, is 93,181 MT. The closing balance of iron ore available in all the
mines across the State of Karnataka as on 31st March, 2022, adds up to
11,94,783.93 MT.
24. On glancing over the earlier orders passed by this Court, evidently
it was on account of the rampant illegal mining that had been taking
place in the State of Karnataka and had severely impacted the ecology
of the region that the Court was compelled to impose a blanket ban on
mining operations in three specific districts. Post imposition of the ban,
the Court was confronted with a situation where a huge stock-pile of iron
ore had accumulated in the mines and stock yards that needed to be
disposed of. Accordingly, a transparent process of e-auction was
adopted on the recommendations of the CEC with a further direction that
Page 15 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
the sale proceeds would be placed in a separate account pending
settlement of ownership rights over such stock of iron ore. This mode
has been consistently adopted for sale of the stock of excavated iron ore
under the aegis of the Monitoring Committee that was called upon to
deduct 10% of the sale value in respect of all the category ‘A’ and ‘B’
mines and 20% of the sale value in respect of two mines owned by
NMDC Limited, for being deposited in the SPV accounts towards
implementation of the CEPMIZ. Report 3 of 2022 submitted by the CEC
records that the collection in the SPV maintained by the Monitoring
Committee as on 31st March, 2022, has crossed 20,000 crores which ₹
amount would be adequate to meet the expenses connected with the
activities proposed to be undertaken under the CEPMIZ.
25. It is also pertinent to note that in the earlier orders dated 13th April,
2012 and 11th August, 2014 passed by this Court in IA No. 205 – 206 of
2014, it had been clarified that the “system of sale through the
Monitoring Committee may be reviewed after two years”. It is after the
passage of eight years that this Court is revisiting the system that was
put in place.
26. Report No. 19/2019 dated 18th July, 2019 filed by the CEC is also
relevant in the above context and is extracted below:
“21. It is seen that the State of Karnataka
during the year 2018-19 has produced about
30.33 MMT of iron ore. Out of this the unsold
Page 16 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
stock of iron ore is 15.86 MMT break up being
10.43 MMT of old stock and 5.43 MMT of
fresh stock of ore.
22. Since the steel manufacturers have
been importing iron ore from the other
States or from foreign countries, the
Monitoring Committee has in their Report
dated 3.5.2019 acknowledged that the
import of iron ore from outside the country
has impacted the demand for iron ore and
pricing in e-auction sale. This further
supported by the low off take in e-auction
sale as can be seen from the sale data for
the period 1.1.2018 to 30.6.2018 and
1.7.2018 to 31.3.2019. During the period
1.1.2018 to 31.3.2019 a total of 229 eauctions of iron ore have been conducted by
the Monitoring Committee. It will be seen that
on 72 days, out f 229 days, 50% or more than
50% of the quantity offered for sale has been
purchased by the end users in the e-auction
whereas on remaining 157 days less than
50% of the quantity offered for sale has been
purchased. On 8 days when e-auction was
conducted there has been zero bid while on
12 days 100% of the quantity offered for sale
has been bid.
xxxx
25. It is not in dispute that the “iron ore
lumps” are in demand and get sold at market
price. As such the issue before this Hon’ble
Court is with regard to the sale of “iron ore
fines” which is not taking place specially from
the mines located in Districts Tumkur and
Chitradurga. The mining lease of the Applicant
is also one such mine located in District
Chitradurga. The quality of the iron ore fines
from these two districts is also of concern as
they have higher manganese content and
other impurities. All this adversely affect the
demand for the iron ore fines so much so
that even at the reserve price at Rs. 450/
Page 17 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
per tonne the material is not getting sold in
consecutive auctions.
xxxx
28. This Hon’ble Court in its order dated
1.9.2016 in IA Nos. 259 and 263 IA Nos. 259
in WP (C) 562/2009 while considering the
application for permission for export of iron ore
has, amongst others, observed that :
 “Permission for export must be governed by
norms and parameters of general application
as distinguished from ad hoc decisions in
individual cases. Until such guidelines are
framed, the prayer of M/s. Vedanta Ltd. for
export of its iron ore cannot be granted. So
far as issue of framing of guidelines/norms
for export are concerned, the same will be
dealt with separately at an appropriate time
and state”,
Permission to export is only an enabling
provision to be made in respect of unsold
stock of iron ore subject to the extant
policy of Government of India in this
regard. The actual export of iron ore,
however, will depend on the price of iron
ore in the international market vis-à-vis
domestic market. Since the production of
iron ore has crossed 30MMT per annum, a
question that arises is whether it is time to
review that State specific restrictions in
Karnataka on sale of iron ore so that such
State specific restrictions do not work to
the disadvantage of either’ the producer or
the manufacturer or both. This is more so
in the changed situation, when the raw
material requirement of steel and allied
industries is not limited by the production
of iron ore. In these circumstances ideally
the demand/supply and the price of the ore
are best left to be determined by the
market forces.
Page 18 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
29. New mining leases are now sold
through e-auction to the end users and the
premium to be paid by the successful bidders
is limited to the State specific prices notified
by IBM based on the monthly average price
realized in respect of a given grade or iron ore
sold in the State. The eligibility to participate in
the sale of the new mines and to participate in
e-auction sale of iron ore in Karnataka State is
limited to the steel and allied industries, the
end users. It has been stated by the Applicant
that this situation gives scope to the end user
industry to manipulate the sale price of ore
which in turn will impact the premium amount
to be paid in respect of iron ore produced from
the captive mines purchased by them. The
sale price data form steel mint in respect of Fe
Fines and price at ex-mines furnished by FIMI
indicates that the IBM published iron ore
prices between January, 2018 and May, 2019
have gone down in Karnataka by (-) 18.7%
while during the same period the IBM
published prices in the States of Odisha and
Chhattisgarh have gone down by only (-) 2,
7% and (-) 7,7% respectively. A copy of the
statement showing the ex-mines price for 60%
Fe Fines for the period January, 2018 to May,
2019 is enclosed as ANNEXURE R-9 to this
Report. It has been that the difference in
sale price is the result of limiting the
participation in e-auction to the end users
who even resort to importing iron ore at
higher landed cost though the same is
available in the State. In these
circumstances the possibility of
manipulation of iron ore prices because of
exclusivity given to the steel industry in
purchase of iron ore from the mining
lessees needs to be addressed.”
27. In its Report No. 16/2020 dated 29.06.2020, CEC had made the
following pertinent observations:
Page 19 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
“10…..this Hon’ble Court had no intention of
imposing a permanent ban on export of iron
ore or pellets from the district of Bellary,
Chitradurga and Tumkur in Karnataka.
Further ban on export of iron ore and pellets
has been ordered by the Hon’ble Court
solely in the context of ban on mining
operations in the three districts and as an
interim measure. The re-opening of the
Category “A” and Category “B” mines has taken
place in a phased manner after fulfilment of
conditions relating to implementation of the
R&R Plans and compliance of annual
production limits fixed in respect of each mining
lease based on the scientific principles on
availability of reserve, availability of the dump
area and the transport infrastructure available
for evacuation of the iron ore from the mines.
11. Pursuant to the implementation of the
R&R Plans and the scientific fixation of the
production limits in respect of each of the
operating mining lease, there ha been
substantial improvement in the environmental
parameters in the three districts of Bellary,
Chitradurga and Tumkur. The opposition by
the Karnataka Iron and Steel Manufacturers
Association (KISMA) to export of iron ore
and pellets are based mainly on commercial
considerations and are not directly related
to environmental issued concerning mining.
The annual production levels have crossed 25
MMT which limit was earlier suggested by the
CEC in its Report dated 2.4.2014 in IA No. 205
and IA No. 206 of 2014 filed by KIOCL for lifting
ban on export of iron ore and pellets. Currently
there is no restriction on grant of new mining
lease in Karnataka.
12. The recommendation made by the
CEC in its Report No. 19 of 2020 dated
18.07.2019 and Report No. 20 of 2019 dated
18.07.2019 for lifting the ban imposed on
export of iron ore fines and pellets
Page 20 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
respectively have been made after
considering the availability of the iron ore
on a sustainable basis and the general
policy of the Government of India on the
subject. In the circumstances, CEC is of the
considered view that orders specific to the
three districts in the State of Karnataka
banning export of iron ore and pellets
issued by Hon’ble Court in the context of
the total ban on mining in the three districts
ordered by this Hon’ble Court now requires
to be reviewed. The method of sale and
price fixation of iron ore are best left to be
determined by the market forces as any
restriction on sale including export will only
benefit one party at the cost of the other.
Artificial suppression of the iron ore prices
will also adversely impact the revenues of
the State Government. The recommendation
of the CEC in its Report No. 19 dated
18.7.2019 on export of iron ore is restricted to
iron ore fines which remains unsold/not
purchased by the user industry and lays down
the guidelines/method of sale. There is in built
provision in the condition of sale suggested
by the CEC to overcome the scope of
manipulation of prices. It may be stated here
that this Hon’ble Court in its order dated
13.04.2012 and Judgment dated 18.04.2013
has stated that the exports outside the country
should be permissible only in respect of the
material which the steel plants and associated
industries are not willing to purchase on or
above the average price realized by the
Monitoring Committee for the corresponding
grades of fines/lumps.”
28. The Ministry of Steel, Union of India has supported the
applications moved by the interveners and submitted that the mining
scenario has improved considerably since the year 2018 and in that
Page 21 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
background, the Court may consider treating the mines situated in the
State of Karnataka equal to those situated in the rest of the country
since that would permit inter-state trade of iron ore mined in the State of
Karnataka, which is presently prohibited. The Ministry of Mines has also
given its no objection to export of iron ore to other countries in terms of
the prevalent policy of the Government of India.
29. We are in broad agreement with the stand taken by the Ministry of
Steel, Union of India and Ministry of Mines that it is necessary to create
a level playing field for the mines situated in the districts of Bellary,
Chitradurga and Tumkur with others situated in the rest of the country.
As the CEC has indicated, the demand/supply and price of iron ore are
best left to be determined by the market forces. This Court is of the
opinion that the time has come to review the system that was put in
place over a decade ago, on halting the unchecked excavation of iron
ore in the three prime Districts in the State of Karnataka. Ever since
then, e-auction has been the only mode available for disposal of the
excavated iron ore. The said arrangement has worked out satisfactorily
so far. The situation that was prevalent in the region prior to the year
2011, has now changed for the better. Having regard to the course
correction that has taken place, the regeneration post the ruinous
damage caused to the environment and the various steps taken by the
Government, we are of the opinion that the order passed on 23rd
Page 22 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
September, 2011 deserves to be relaxed. Additionally, it is a matter of
record that consecutive e-auctions conducted by the Monitoring
Committee have been receiving a poor response and sale of iron ore
even at the reserve price is dismally low. Looking at the overall change
in the outlook, the restrictions placed on the manner of conducting the
sale of iron ore and fixation of the sale price need to be removed.
30. Keeping in mind all the aforesaid factors, we are inclined to
favourably consider the prayer made by the applicants and grant them
permission to sell the already excavated iron ore stock-pile at various
mines and stock yards located in the Districts of Bellary, Tumkur and
Chitradurga in the State of Karnataka, without having to resort to the
process of e-auction. Permission is granted to the applicants to enter
into direct contracts to lift the excavated iron ore through inter State
sales. We also grant permission to the applicants to export the iron ore
and pellets manufactured from the iron ore produced from the mines
situated in the State of Karnataka, to countries abroad, as is being done
in the rest of the country, but strictly in terms of the extant policy of the
Government of India.
31. With the above order, all the applications listed in paragraph 12
stand allowed to the extent indicated above.
32. With respect to the submissions of the parties in relation to the
lifting of the ceiling limit for production of iron ore for mining leases in the
Page 23 of 24
WRIT PETITION (CIVIL) No. 562 OF 2009
Districts of Bellary, Chitradurga and Tumkur, we are of the considered
opinion that it would be expedient to obtain an opinion from the
Oversight Authority appointed by this Court vide order dated 21st April,
2022 about the same before deciding the said issue. We request the
Oversight Authority to take inputs from the stakeholders, including the
CEC and the Monitoring Committee, and to send his opinion to this
Court preferably within a period of 4 weeks.
33. List for hearing on the said issue in the second week of July 2022.

.................................CJI.
 [N. V. RAMANA]
 ...................................J.
 [KRISHNA MURARI]
 ...................................J.
 [HIMA KOHLI]
New Delhi,
May 20, 2022
Page 24 of 24

Comments

Popular posts from this blog

100 Questions on Indian Constitution for UPSC 2020 Pre Exam

संविधान की प्रमुख विशेषताओं का उल्लेख | Characteristics of the Constitution of India

भारतीय संविधान से संबंधित 100 महत्वपूर्ण प्रश्न उतर