Searchlight on Odisha mining scam

In the context of a public outcry over massive mining scandals in various parts of the country, the Government of India had set up the Justice M. B. Shah Commission of Inquiry for Illegal Mining of Iron Ore and Manganese in November 2010. The Commission was asked to inquire into the illegal mining, trade and transportation of iron ore and manganese ore, identify the deficiencies in the systems of management and regulation, and assess their overall impact in terms of environmental damage, prejudice to livelihoods and other rights of the local populations, and the financial losses caused to the Central and State Governments. The Commission was given a term of 18 months to complete its task. The Government subsequently extended its term by one year ending July 2013.

The Commission's reports on mining in Goa, which were submitted during March-April 2012, brought to light massive illegalities in the extraction of iron and manganese ores. The revelations had a huge impact and led to a ban on mining in the state and a slew of other punitive measures. The Commission next submitted a 5 volume report on the mining sector in Orissa in July 2013 and sought a further extension of one year to complete its inquiry in other major mining areas. The Government, however, refused to extend its term beyond October 2013.

Before it was wound up, the Commission submitted its report on mining in the state of Jharkhand, along with the second report on Orissa (3 volumes) and the third report on Goa. For want of time, it could not investigate the illegalities in other important mining areas, such as Chhattisgarh, Andhra Pradesh and Karnataka.

The Commission's first report on Orissa, two volumes of which was accessed by the media, documents the reckless plunder of the nation's mineral wealth and the flagrant violation of the laws relating to mining and environment protection and the fundamental rights of the local populations. 

The Government had resisted the demands for placing the Orissa report in the public domain. It also failed to take any action on the findings of the report, or to lay it in Parliament along with an Action Taken Report within six months of its submission as per the prescribed procedure.

On an application moved by Shri Prashant Bhushan on behalf of Goa Foundation and Others, the Green Bench of the Supreme Court issued directions to the Union of India on January 13, 2014 to file the Shah Commission's reports on Orissa and Jharkhand in the Court. The UOI contested the order on the ground that under the Constitutional scheme, the reports have to be laid in Parliament along with the ATRs.

In order to force the hands of the UOI, Common Cause filed a public interest petition before the Supreme Court, seeking a detailed enquiry into illegal mining n Odisha and termination of the leases of the mining companies involved in the scam. The petition also stressed the need for a macro-environmental impact assessment. The Ministry of Mines finally tabled the interim reports in the Parliament on February 10, 2014.

Our petition was taken up by the Supreme Court on April 21, 2014. The Court issued notice to the UOI, the State of Orissa and others, and directed the Central Empowered Committee (CEC) to submit a report in the matter and identify the mines engaged in illegal mining. After considering the report submitted by the CEC and hearing the interested parties, the Court issued a significant interim order on May 16, 2014. The Court directed that the 26 mines which had applied for renewal of the second or subsequent leases and had been operating without the express approval of the State government shall cease their operations forthwith. The Court also directed the State government to dispose of the pending renewal applications within six months, giving priority to applications for renewal of mining leases for captive consumption.

There are no further orders of listing.

We have also mounted an advocacy initiative to persuade the custodians of the rich natural resource endowments of Odisha to adopt a system of allocation that is consistent with the Constitutional principles of equity and transparency. As per the law laid down by the Apex Court in the 2G Spectrum Case and the subsequent Presidential Reference, the attribution of a national resource to any commercial entity must be made in a transparent and equitable manner. As such, even for the first renewal of a mining lease, the consideration should be determined through open auction. The Society urged the Chief Minister of Odisha, in a letter dated June 13, 2014 to adopt the system of competitive bidding for the grant/renewal of mining leases in compliance of the interim directions issued by the Supreme Court in our PIL on May 16, 2014. 

This was followed by a generic proposal to the Union Minister for Mines for extending the system of competitive bidding for grant/renewal of mining leases in favour of private commercial entities across the country. Subsequently, a meeting was held with the Secretary, Ministry of Mines. The engagement with the Ministry is ongoing.

The writ petition, the interim order and the correspondence with the Ministry are extracted below

-Editor

IN THE SUPREME COURT OF INDIA

WRIT PETITION (CIVIL) No. 114 OF 2014

IN THE MATTER OF:

Common Cause: A registered society

Through its Director

Shri Kamal Kant Jaswal

Versus

1) Union of India

Through its Secretary,

Ministry of Environment and Forests .......Respondent no. 1

2) State Of Odisha

Through Its Chief Secretary

Govt. Of Odisha .......Respondent no. 2

3) Union of India

Through its secretary

Ministry of Mines .......Respondent no. 3

4) Odisha Mining Corporation

Through its Managing Director .......Respondent no. 4

5) Odisha Pollution Control Board

Through its Chairperson .......Respondent no. 5

6) Central Empowered Committee

(Expert body appointed by this Hon'ble Court)

Through its Chairperson … .......Respondent No. 6

To,

THE HON'BLE CHIEF JUSTICE OF INDIA AND HIS COMPANION JUSTICES OF THE HON'BLE SUPREME COURT OF INDIA.

1. That the Petitioner Society is filing the instant writ petition in public interest under Article 32 of the Constitution regarding the ongoing loot and plunder of valuable natural resources in the State of Odisha in complete disregard of the environmental norms and the rights of the vulnerable tribal & rural communities, and by allowing few private individuals and companies to make windfall gains, while contributing almost nothing to the state exchequer or to the development of the region. The Justice M B Shah Commission of Inquiry has given scathing reports on the unfortunate state of affairs in Odisha that call for immediate compliance of its recommendations. Justice Shah Commission has observed that "all modes of illegal mining are being committed in the State of Odisha".

The Petitioner, Common Cause, is a registered society (No. S/11017) Shri Kamal Kant Jaswal, Director of Common Cause and a former Secretary to the Government of India, is authorized to file this PIL.

The Petitioner Society has not made any representation to the respondent authorities since Justice M B Shah Commission of Inquiry has already submitted detailed reports to the respondents, and the Central Empowered Committee (CEC) has also submitted a report to this Hon'ble Court and the respondents. Moreover, similar petitions and applications are pending (I.A. 3706-3707 of 2013 and I.A. 2746-2748 of 2009 in WPC 202 of 1995, and WPC 435 of 2012) before this Hon'ble Court.

The Case in Brief

2. More than two thirds of the State of Odisha is made up of hilly forests and is extremely rich in bio-diversity. It also has a 480 km coastline and holds 11 per cent of India's surface water resources. Odisha has rich reserves of iron ore, manganese, coal, bauxite and chromite and is therefore the focus & target of the mining industry. Odisha is also one of the poorest states in the country, with a huge population of tribal & rural communities who live an impoverished existence. Far from providing any benefit to the local communities, the huge mining industry has only further impoverished them. The mining industry has also devastated the ecology of the region and poisoned its water sources.

3. According to the Indian Bureau of Mines statistics of 2010-2011, 102,565,000 tonnes of coal, 4,856,808 tonnes of bauxite, 76,128,000 tonnes of iron ore, 655,984 tonnes of manganese ore and 4,317,159 tonnes of chromite were officially extracted in Odisha during that year. The vast quantities of ores being extracted year after year are mostly for export. The extractive industry in Odisha enriches only a few private individuals and companies at a huge cost to the environment and the local communities. Today, Odisha boasts of the presence of big industrial houses like Tata, SAIL, Nalco, Hindalco, and foreign companies, such as Posco, Arcelor Mittal, Rio Tinto, Alcan etc. The Odisha Mining Corporation, a giant mining PSU, also operates in the state along with scores of other mining companies.

4. The State of Odisha performs very poorly in terms of human development indicators, with an extremely poor HDI index of 0.404, which is much lower than other mineral rich states. Having regard to food availability and access, Odisha has been put in the category of `severely food insecure' regions. According to the state's Human Development Report, the relative per capita income has declines vis-à-vis of all other low-income states during the second half of the 1990s, which precisely is the period during which the state went into an industrial and mining overdrive. According to the state Human Development Report, Odisha's per capita income was three-fourths that of the all-India average, and declined further to half by the end of the 1990s.

5. Most of the heavily mined regions of Odisha are home to millions of vulnerable and poor indigenous and tribal communities. In the mining districts of Sundergarh, Koraput and Mayurbhanj, the tribals accounts for more than 50% of the population, while in Keonjhar district they are more than 44% of the population. The continuing influx of outsiders due to large-scale mining in Angul and Jajpur districts has made the tribals a minority in their own land. According to the state Human Development Report, the poverty ratio has actually increased in the southern and northern regions of the state (which comprise the mining districts) from 1993 to 2000. This is so despite an overall decrease in the poverty ratio for the whole of Odisha. An estimated 75% of the state's poor live in these northern and southern regions which are badly ravaged by the mining industry.

6. A study on impact of mining in Odisha was carried out by the Centre for Science & Environment (CSE), a reputed and highly credible non-governmental organization whose reports are often relied upon by this Hon'ble Court on environmental issues. CSE's State of India's Environment Report (2008) titled "Rich Lands, Poor People" notes, "massive environmental loss and contamination…forests have been ravaged, and landscapes altered. Water sources are drying up or are severely polluted, and air pollution is rising. Large-scale displacement and losses in traditional livelihoods have inevitably accompanied the environmental set-backs. And as a result of all this, conflicts and tension across the state are on the boil. Local communities are up in arms over the state cosying up to industrial interests in blatant disregard of their rights and welfare."

7. The Comptroller & Auditor General of India (CAG) in its report for the year 31.03.2008 had also raised objections regarding the mining going on in forest areas in Odisha without statutory approvals and also the excess quantity of mineral extracted/transported without making any payment of royalty. Based on this and other material regarding large scale illegal mining in Odisha, an application was filed by one Rabi Das, Editor of newspaper Ama Rajdhani (being I.A. no. 2746-2748 of 2009 in WPC 202/1995) seeking a direction to the State and Central Government to take effective and appropriate action to ensure closure/stoppage of all the illegal mining and prosecution of those found in illegal mining. The said IA is pending before this Hon'ble Court where some orders have been passed. This IA was referred to the Central Empowered Committee (CEC) which after an inquiry submitted its report on 26.04.2010.

8. This was for the first time the mining sector in an entire state was analyzed and reported by the CEC. After Odisha, CEC has studied and reported on the illegal mining and impact of mining in the states of Karnataka and Goa. In both these states huge illegalities and environmental devastation were found forcing an intervention by this Hon'ble Court. In its 2010 report on Odisha, CEC found:

"a) mining activities are going on in a large number of the mines in Orissa without the requisite approvals under the Forest (Conservation) Act 1980, Environmental Clearances, and the Air & Water Acts. The mining activities also exceeded the production limit as approved under the mining plans.

b) a large number of mines have remained operational for long periods of time after the expiry of the lease period because of the delays in taking decisions on the renewal applications filed by the respective mining lease holders and consequently the mines becoming eligible for `deemed extension' as provided under Rule 24A(6), MCR, 1960.

c) in a large number of cases the forest areas approved under the FC Act are lesser than the total forest area included in the approved mining leases, and

d) there was lack of effective coordination and common understanding between the officials of the Mines Department and the Forest Department resulting in the ineffective enforcement of the statutory provisions."

The CEC recommended various steps for remedying the situation of large-scale illegal mining in the said report, but the same have not been implemented and illegalities have only increased as is clear from the recent facts and findings that have come to light.

9. In the context of a public outcry over reports of large-scale illegal mining, especially of iron ore, in various parts of the country, the Central Government by a notification dated 22.11.2010 appointed a Commission of Inquiry headed by Justice M B Shah. The mandate of the Commission was to inquire and report about illegal mining of iron ore and manganese ore in contravention of the provisions of the Mines and Minerals (Development and Regulation) Act, 1957, the Forest (Conservation) Act, 1980, the Environment (Protection) Act, 1986 or other rules or guidelines issued thereunder. The notification states that there are reports that mining of iron and manganese ore is being done illegally in the following manners: mining without a licence, mining outside lease area, not paying royalty, mining in contravention of mining plan, tampering of records and permits etc. The notification also asked the Commission "to inquire into the overall impact of such mining in terms of destruction of forest wealth, damage to environment, prejudice to the livelihood and other rights of tribal people, and the financial losses caused to the Central and State Governments".

10. The Justice Shah Commission had appointed his eminent team of investigators including Shri U V Singh, who was the lead investigator of the former Karnataka Lokayukta Justice Santosh Hegde for the reports on illegal mining in Karnataka. The Justice Shah Commission has submitted various interim reports. Its detailed report on led to State of Goa, Central Government and this Hon'ble Court (in WPC 435 of 2012) passing orders banning mining in the entire Goa. All the three orders are in force today. Justice Shah Commission commenced its inquiry into illegal mining in the State of Odisha, and the state governments and mining companies made detailed submissions to the Commission. The Commission also conducted several public hearings and field visits.

11. After its detailed study, the Justice Shah Commission submitted 5 volumes report on the illegal mining of iron ore and manganese ore in the State of Odisha on 01.07.2013 and submitted 3 volumes of the second report on State of Odisha on 14.10.2013. Hence the Commission has submitted in total 8 volumes of report on illegal mining in Odisha.

12. Though the Government has kept the report top secret and has not tabled it in Parliament, in violation of the 6 month limit prescribed under the Commission of Inquiry Act, the first 2 volumes of the 8 volumes submitted by the Commission have been leaked and are available in public domain (http://gulail.com/volume-1.pdf&embedded=true and http://gulail.com/volume-2.pdf&embedded=true). The first volume also contains an executive summary of the report that shows a very bleak state of affairs and total lawlessness.

13. The Justice Shah Commission in its report states the following:

"1. From the inquiry conducted by this Commission, it is apparent that all modes of illegal mining…are being committed in the State of Odisha.

2. Based on the facts gathered and analysis to them highlight a complete disregard and contempt for law and lawful authorities on the part of many among the emerging breed of entrepreneurs, taking undue advantage of country's natural non-renewable assets/resources for export earnings…

3. Secondly, it appears that law has been made helpless because of its systematic non-implementation."

14. The Commission has found the following grim state of affairs that show total lawlessness, as is clear from the executive summary enclosed with volume 1 of the report:

a) In 147 cases, mining lease renewal applications are not decided in time (many pending for more than 15 years) and thereby allowing lessees to continue in possession of the lease-hold property without execution of lease deeds. The Commission states that the sufferer is the government and such long delay breeds corruption at all levels.

b) In 98 of the 176 mines which are in forest areas, there is no forest clearance from the MoEF and yet are operating.

c) 55 mines are located immediate next to water resources or rivers, where communities are dependent on such water for drinking. There is large-scale water pollution

d) 10 leases fall within 10kms from the Simlipal National Park.

e) 31 mines are adjacent to the projected elephant corridor.

f) Widespread air pollution with huge dust in villages

g) In 94 of the 192 mining leases, there is no Environment Clearance, and yet in 53 out of these 94 leases, iron ore is extracted and in 25 manganese ore is extracted.

h) In 130 mining leases, there is excess production of iron or manganese ore.

i) Permission granted so far for extraction of 154.263 million tonnes by IBM and MoEF would mean that the total reserves would last only for 30 years.

j) In 82 mining leases, there is encroachment of lease area.

15. The Justice Shah Commission after analyzing the situation on the ground in detail, and after studying the various judgments of this Hon'ble Court has categorically said that the only proper method for grant of mining leases (and their renewals), which would maximize state revenue and also be competitive, is a duly publicized public auction or competitive bidding. This stand is also supported by the Government of Odisha whose Chief Minister has repeatedly written to the Centre to allow grant of mining leases by competitive bidding and increasing the state's revenue in the process. However the Central Government has ignored these recommendations and demands.

16. After the Justice Shah Commission submitted its report on the illegal mining in Goa and started its inquiry in Odisha, the Government of Odisha started proceedings for recovery of amounts involved in illegal mining. As many as 146 notices have been issued by the State Government to various leaseholders for recovery of mineral value as per Section 21(5) of MM(DR) Act 1957 for mining in violation of various laws during the period 2000-01 to 2009-10. Value of the unlawful extraction of iron and manganese ore as quantified by the State Government itself comes to be a whopping Rs 59,203 crores. The Commission has noted this and stated: "Let the State Government recover the said amount, by finalizing the proceedings on the basis of the notices, as early as possible and use the said amount for the development of the two Districts, namely, Keonjhar and Sundargarh which are badly affected by illegal excess mining. This at least can remove the poverty of the tribals who are affected or whose lands are used for mining purpose." However, till date no proper recovery has been made and lessees have reportedly approached courts and have obtained interim orders.

17. The Justice Shah Commission has recommended the capping of the production of iron ore in the interest of environmental sustainability and inter-generational equity. The Commission has also recommended an immediate prohibition on export of iron ore. Both of these suggestions have been accepted and supported by the Government of Odisha, but the Central Government has ignored these demands. The Senior Counsel for the State of Odisha produced before the court several letters written by the State Government to the Central Government recommending:

a) prohibition on export of iron ore

b) imposition of mineral resources rent tax on iron ore

c) competitive bidding of mineral resources

d) reservation of mineralized areas for Odisha Mining Corporation

e) captive use and equitable distribution

f) capping of production of iron ore

g) correction of under-estimation of sale value

h) increase in royalty on iron ore

However, each of these demands of the State Government was ignored and not acted upon by the Central Government despite the fact that under our Constitution, State is the owner of minerals and as a lessor, it has a right and duty to impose conditions on the mining lessees in public interest. Justice Shah Commission in its report has agreed with these suggestions particularly the ones on competitive bidding, reservation of mineralized areas for the State PSU, captive use and capping the production of iron ore.

18. The Commission in its field visits also observed large scale air and water pollution, and observed its deleterious impact on the quality of life, livelihood and agriculture of villagers and tribals. The Commission in its report observes: "…there are widespread setting of dust on natural vegetation in general and tress in specific camouflaged with the colour of minerals. From this situation, imagine the fate of the villagers in habitat in these areas who did not have any option but to breathe polluted air and chunked their lungs with dust. This results in many airborne diseases… Large scale mining operations have resulted to deplete and pollute the ground and surface water in the neighbourhood. It is villagers' unfortunate fate of life."

19. The Commission has found that out of 192 mining leases of iron ore/manganese ore in Odisha, as many as 94 mining leases do not have any environmental clearance. The Commission has also found that 109 leases are/were working under the deemed extension and doing production in violation of EIA Notifications of 1994 and 2006. Also, in 98 of the 176 mines that are in forest areas of Odisha, there is no forest clearance from the MoEF and yet they are operating. The Central Government has refused to make the reports submitted by Justice Shah Commission public despite the order passed by this Hon'ble Court on 13.01.2014 in I.A. 3706-3707 of 2013 filed in WPC 202 of 1995 directing the Centre to file the Commission's report on Odisha and Jharkhand before this Hon'ble Court by 27.01.2014. This Hon'ble Court has on 27.01.2014 in I.A. No. 2746-2748 of 2009 filed in WPC 202 of 1995 directed the State of Odisha to constitute an SPV for the development of the tribals from the NPV received from the mining lessees.

20. Therefore, it is clear from the reports of the Centre for Science & Environment, Central Empowered Committee and Justice M B Shah Commission of Inquiry (all referred above), that there is large scale illegal mining in the State of Odisha leading to massive loss of revenue for the exchequer, huge environmental devastation, suffering of villagers and tribals, political & social instability and erosion of rule of law. Therefore, certain immediate directions are required from this Hon'ble Court, and also a credible thorough investigation and recovery of the loss suffered.

21. The petitioner has not filed any other writ, complaint, suit or claim in any manner regarding the matter of dispute. The petitioner has no other better remedy available. Similar petitions and applications are pending (I.A. 3706-3707 of 2013 and I.A. 2746-2748 of 2009 in WPC 202 of 1995, and WPC 435 of 2012) before this Hon'ble Court.

22. Since this is a public interest matter, and there is an asymmetry of availability of information, the petitioner seeks liberty from this Hon'ble Court to produce other documents and records as and when required in the course of the proceedings, and as and when they become available to the petitioner.

Grounds

A. That the ongoing loot and plunder of valuable natural resources in the State of Odisha in complete disregard of the environmental norms and the rights of the vulnerable tribal & rural communities, and by allowing few private individuals and companies to make windfall gains, while contributing almost nothing to the state exchequer or to the development of the region, is in violation of right of the people guaranteed under Article 14 and 21 of the Constitution of India. The reports of the Centre for Science & Environment, Central Empowered Committee and Justice M B Shah Commission of Inquiry (all referred above), have all found that there is large scale illegal mining in the State of Odisha leading to massive loss of revenue for the exchequer, huge environmental devastation, suffering of villagers and tribals, political & social instability and erosion of rule of law.

B. That Centre for Science & Environment (CSE) in its study on Odisha mining (2008), published in its State of India's Environment report "Rich Lands, Poor People", found "massive environmental loss and contamination..forests have been ravaged, and landscapes altered. Water sources are drying up or are severely polluted, and air pollution is rising. Large-scale displacement and losses in traditional livelihoods have-inevitably-accompanied the environmental set-backs. And as a result of all this, conflicts and tension across the state are on the boil. Local communities are up in arms over the state cosying up to industrial interests in blatant disregard of their rights and welfare."

C. That in its 2010 report on Odisha, Central Empowered Committee (CEC, expert body appointed by this Hon'ble Court) in its report submitted in I.A. 2746-2748 of 2009 in WPC 202 of 1995 stated "mining activities are going on in a large number of the mines in Orissa without the requisite approvals under the Forest (Conservation) Act 1980, Environmental Clearances, and the Air & Water Acts. The mining activities also exceeded the production limit as approved under the mining plans… a large number of mines have remained operational for long periods of time after the expiry of the lease period because of the delays in taking decisions on the renewal applications filed by the respective mining lease holders and consequently the mines becoming eligible for `deemed extension' as provided under Rule 24A(6), MCR, 1960… in a large number of cases the forest areas approved under the FC Act are lesser than the total forest area included in the approved mining leases".

D. That Justice M B Shah Commission of Inquiry in its report submitted on 01.07.2013 has found "From the inquiry conducted by this Commission, it is apparent that all modes of illegal mining…are being committed in the State of Odisha… Based on the facts gathered and analysis to them highlight a complete disregard and contempt for law and lawful authorities on the part of many among the emerging breed of entrepreneurs, taking undue advantage of country's natural non-renewable assets/resources for export earnings… it appears that law has been made helpless because of its systematic non-implementation".

E. That the Justice Shah Commission report has reported that out of 192 mining leases of iron ore/manganese ore in Odisha, as many as 94 mining leases do not have any environmental clearance. The Commission has also found that 109 leases are/were working under the deemed extension and doing production in violation of EIA Notifications of 1994 and 2006. Also, in 98 of the 176 mines that are in forest areas of Odisha, there is no forest clearance from the MoEF and yet they are operating. That the Comptroller & Auditor General of India (CAG) in its report for the year 31.03.2008 had also raised objections regarding the mining going on in forest areas in Odisha without statutory approvals and also the excess quantity of mineral extracted/transported without making any payment of royalty.

F. That as per the law propounded in the 2G case ((2012) 3 SCC 1), the State, is a trustee of natural resources. This Court held: "Natural resources belong to the people but the State legally owns them on behalf of its people… The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest. Like any other State action, constitutionalism must be reflected at every stage of the distribution of natural resources." The same has been confirmed in the opinion dated 27.09.2012 in Presidential Reference (Spl Ref 1 of 2012) by stating that natural resources cannot be allocated to private profiteers without a corresponding gain to the public, and windfall gains are clearly impermissible. It states that when "precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution."

G. That this Hon'ble Court has also held that the collusion between the extractive industry ("the mining mafia") and some agents of the State, leads to failure of the State and violates Articles 14 & 21 of the Constitution. This Court in Nandini Sunder's case (2011) 7 SCC 547 has held: "…A development paradigm depending largely on the plunder and loot of the natural resources more often than not leads to failure of the State; and that on its way to such a fate, countless millions would have been condemned to lives of great misery and hopelessness. Policies of rapid exploitation of resources by the private sector, without credible commitments to equitable distribution of benefits and costs, and environmental sustainability, are necessarily violative of principles that are "fundamental to governance", and when such a violation occurs on a large scale, they necessarily also eviscerate the promise of equality before law, and equal protection of the laws, promised by Article 14, and the dignity of life assured by Article 21. Additionally, the collusion of the extractive industry, and in some places it is also called the mining mafia, and some agents of the State, necessarily leads to evisceration of the moral authority of the State, which further undermines both Article 14 and Article 21."

H. That the Justice Shah Commission has also found that present rate of extraction of ore is unsustainable, environmentally destructive and violates the principles of inter-generational equity. This Hon'ble Court in several judgments has held that "inter-generational equity" is part of the principle of "sustainable development" which is an important facet of Right to Environment and Right to Life guaranteed under Article 21 of the Constitution. In Glanrock case (2010) 10 SCC 96, a 3 judge bench of this Hon'ble Court held: "Forests in India are an important part of environment. They constitute national asset. In various judgments of this Court delivered by the Forest Bench of this Court in the case of T.N. Godavarman v. Union of India [Writ Petition No. 202 of 1995], it has been held that "inter-generational equity" is part of Article 21 of the Constitution. What is inter-generational equity? The present generation is answerable to the next generation by giving to the next generation a good environment. We are answerable to the next generation and if deforestation takes place rampantly then inter-generational equity would stand violated. The doctrine of sustainable development also forms part of Article 21 of the Constitution."

I. That the prevailing corruption in the country in high places seriously impairs the right of the people of this country to live in a corruption free society governed by rule of law. This is a violation of Article 21 of the Constitution. The right to life guaranteed to the people of this country also includes in its fold the right to live in a society, which is free from crime and corruption.

Prayers

In view of the facts & circumstances stated above, it is most respectfully prayed that this Hon'ble Court in public interest may be pleased to: -

a. Issue a writ of mandamus or any other appropriate writ directing the Union of India and Government of Odisha to immediately stop forthwith all illegal mining in the State of Odisha and to terminate all leases that are found to be involved in illegal mining and mining in violation of the provisions of the Forest Conservation Act 1980, the environment laws and other laws.

b. Issue a writ of mandamus or any other appropriate writ directing the Union of India and Government of Odisha to take action against all the violators involved either directly or indirectly in illegal mining including those named in the report of Justice Shah Commission.

c. Issue a writ of mandamus or any other appropriate writ directing a thorough investigation by an SIT or CBI under the supervision of this Hon'ble Court, as is recommended by the Justice Shah Commission, into illegal mining in Odisha and collusion between private companies/individuals and public officials of the State/Central Governments.

d. Issue a writ of mandamus or any other appropriate writ directing an appropriate agency to conduct a macro environmental impact assessment (macro EIA) that would include identification of ecologically sensitive areas where no mining would be allowed and would include capping of production of ores of iron, manganese, bauxite etc. keeping in view the principles of environmental sustainability and inter-generational equity.

e. Issue a writ of mandamus or any other appropriate writ directing the respondents to recover the illegally accumulated wealth through illegal mining and related activity, as per Section 21(5) of the MMDR Act, 1957 and launch prosecutions under 21(1) of the MMDR Act 1957, and direct that the money recovered would be used for the welfare of local communities, tribals and villagers.

f. Issue a writ of mandamus or any other appropriate writ directing the Respondents to repair, restore and re-vegetate the area in accordance with established forestry practices in terms of the National Forest Policy, 1988 and to require all mining lessees / occupants operating in forest land and in land covered by trees to pay a fine and compensate for such repairs, restoration and re-vegetation.

g. Issue a writ of mandamus or any other appropriate writ directing that all fresh mining leases and renewal of leases shall be granted only by public auction or competitive bidding in order to ensure transparency and revenue for the State, as has been recommended by the Justice Shah Commission and the Government of Odisha.

h. Issue a writ of mandamus or any other appropriate writ constituting a joint team for a time-bound survey and demarcation of all the leases, and immediate termination and prosecution of the leaseholders found to have encroached outside their lease area or extracted ore in violation of the mining plan/lease agreement.

i. Issue a writ of mandamus or any other appropriate writ directing an immediate prohibition of export of iron ore from Odisha as is recommended by the Justice Shah Commission and the Government of Odisha, and also directing that all sale of iron ore would be through e-auction only as is being followed in Karnataka and has been recommended by the Justice Shah Commission.

j. Issue a writ of mandamus or any other appropriate writ directing the Central Empowered Committee (CEC) to submit a detailed report on the facts stated in the instant petition, the reports submitted by Justice Shah Commission and other documents on the illegal mining and impact of mining in State of Odisha, and further direct all authorities to cooperate and provide all information to the CEC.

k. Issue or pass any writ, direction or order, which this Hon'ble court may deem fit and proper under the facts and circumstances of the case.

Petitioner Through PRASHANT BHUSHAN

Drawn by: Pranav Sachdeva Counsel for the Petitioner

nterim Order of May 16, 2014:

A. K. PATNAIK, J. 1. This writ petition relates to mining in the State of Odisha. When the writ petition was heard on the preliminary point on 21.04.2014, we found from the averments in paragraph 14 of the writ petition that several lessees were operating without clearances under the Environment (Protection) Act, 1986 and the Forest (Conservation) Act, 1980, and without renewal by the Government and we were of the opinion that an interim order needs to be passed in respect of the lessees who are operating the leases in violation of the law. On 21.04.2014, therefore, while issuing notice in the writ petition, we directed that the matter be listed on 28.04.2014 for consideration of the interim order that should be passed in the writ petition. On 21.04.2014, we also directed that the CEC, in the meanwhile, will make out a list of such lessees who are operating the leases in violation of the law and granted liberty to the parties to produce their papers before the CEC and directed that the State of Odisha and the Union of India will cooperate with the CEC to prepare the list.

2. Pursuant to the order passed on 21.04.2014, the CEC examined the matter during a meeting held on 24.04.2014 with the Chief Secretary, the Commissioner cum-Secretary (Mines), the Principal Secretary (Forest), the Principal Chief Conservator of Forests and other senior officers of the Government of Odisha as well as Dr. V.P. Upadhyay, Director IA (Non-Coal Mining) and Mrs. Bharati, Director (AOHQ), of the Ministry of Environment and Forests and the Secretary General, Federation of Indian Mining Industries (FIMI) and also examined the representations received by the CEC on behalf of the lease holders, and has submitted a report dated 25.4.2014.

3. We have considered the report dated 25.4.2014 of the CEC, and the submissions made by learned counsel appearing for different parties, and we find that 102 mining leases do not have requisite environmental clearances, approvals under the Forest (Conservation) Act, 1980, approved Mining Plan and/or Consent to Operate.

A list of these 102 mining leases is annexed to the report of the CEC as Annexure R-2. The CEC has, however, stated in the report that mining operations in these 102 mining leases have been suspended and these 102 mining leases have been classified as non-working leases. We direct that mining operations in these 102 mining leases listed in Annexure R-2 of the report of the CEC shall remain suspended, but it will be open to such lessees to move the concerned authorities for environmental clearances, approval under the Forest (Conservation) Act, 1980, approval of Mining Plan or Consent to Operate and as and when the mining lessees are able to obtain all the clearances/approval /consent, they may move this Court for modification of this interim order in relation to their cases.

4. We further find that 29 mining leases listed in Annexure R-3 to the report of the CEC have been determined or have been rejected or have lapsed. We direct that mining operations in these 29 mining leases will also remain suspended, but it will be open for the lessees of these 29 mining leases to move the concerned authorities or the Court or the Tribunal for necessary relief and as and when they get appropriate relief from the concerned authorities or the Court or the Tribunal, they may move this Court for modification of this interim order in relation to their cases.

5. We also find that 53 iron ore/manganese mining leases listed in Annexure R-4 to the report of the CEC are operating and all of them are having approvals under the Forest (Conservation) Act, 1980, Consent to Operate granted by the Odisha State Pollution Control Board and approved Mining Plans and 3 more mining leases listed in Annexure R-5 are located in forest as well as in non- forest land and those located in non- forest area do not have approval under the Forest (Conservation) Act, 1980. Hence, a total of 56 iron ore/manganese mining leases are presently operating in the State of Odisha, but out of these 56 operating mining leases, lease deeds in respect of 16 mining leases listed in Annexure R-6 to the report of the CEC have been executed and the balance 40 mining leases are operating under the deemed renewal provision in Rule 24A(6) of the Mineral Concession Rules, 1960. Out of these 40 mining leases, 14 leases are operating as first renewal and 26 leases are operating as second and subsequent renewals and the renewal applications are at various stages of examination and in some cases `in principle' decision to grant the renewals have been taken and the follow up actions are under process.

6. The 16 mining leases listed in Annexure R-6 to the report of the CEC in respect of which the lease deeds for grant or the renewal of mining leases have been executed may be allowed to be operated for the time being as they have valid lease deeds in their favour. Out of the remaining 40 mining leases, 14 leases are under the first renewal. As the lessees have a right of first renewal for a period not exceeding 20 years under Section 8(2) of the Mines and Minerals (Development and Regulation) Act, 1957 and as under Rule 24A(6) of the Mineral Concession Rules, 1960, the leases are deemed to have been extended by a further period till the State Government passes orders thereon, these 14 leases under the first renewal may be allowed to be operated. The remaining 26 leases are being operated as second and subsequent deemed renewals under Rule 24A(6) of the Mineral Concession Rules, 1960 without any express orders of renewal passed by the State Government. We have already taken a view in our judgment dated 21.4.2014 in Writ Petition (C) No. 435 of 2012 (Goa Foundation Vs. Union of India ) that the provision of deemed renewal in Rule 24A(6) of the Mineral Concession Rule, 1960 is not available for the second and subsequent renewals of a mining lease considering the language of Section 8 (3) of the Mining and Minerals (Development and Regulation) Act, 1957. Hence, these 26 leases cannot be allowed to be operated until the State Government passes express orders in terms of Section 8(3) of the Mines and Minerals (Development and Regulation) Act, 1957 after it forms an opinion that in the interests of mineral development it is necessary to renew the leases and after it records reasons for renewal of the leases in respect of the minerals.

7. Learned counsel for the lessees, however, submitted that the lessees are not at fault inasmuch as they have submitted their applications for renewal in time and it was for the State Government to consider their applications and pass orders in terms of Section 8(3) of the Mines and Minerals (Development and Regulation) Act, 1957 and, therefore, the lessees should not be allowed to suffer closure of their mines for the fault of the State Government. We cannot accept this submission of learned counsel for the lessees because under Section 8(2) of the Mines and Minerals (Development and Regulation) Act, 1957 the lessees have a statutory right of a first renewal for a maximum period of 20 years, but after the expiry of the first renewal they have right only to apply for further renewal of the leases under Section 8(3) of the Mines and Minerals (Development and Regulation) Act, 1957 and the State Government has the power to renew for a further period only if it is of the opinion that in the interest of mineral development it is necessary so to do and only if reasons are recorded by the State Government for such renewal of the leases and in the case of the 26 lessees who are operating under the second and subsequent renewals, this opinion has not been formed and the reasons have not been recorded by the State Government in terms of Section 8(3) of the Mines and Minerals (Development and Regulation) Act, 1957. 8. Mr. K.V. Viswanathan, learned Additional Solicitor General, referred to the application for intervention filed on behalf of Ministry of Steel, Government of India, supported by the affidavit of Shri K.B. Nair, Under Secretary, Ministry of Steel, Government of India, and submitted that more than 50% of the requirement of iron ore of the country is met from the State of Odisha and a large number of iron ore leases in the State are granted for captive mining and the ore from the mines is being utilized for the manufa

cturing of the steel in the plants of the lessees. He further submitted that commercial miners are also providing raw material to iron and steel industries not only in the State but also in the whole country. He submitted that while there is a need to impose time limits by various authorities, closure of mining operations due to delay in decisions by the State Government on mining lease renewal applications, may adversely affect the availability of critical raw materials like iron ore for domestic value addition industry, including the steel sector and, therefore, where the application for renewals have been made within the time prescribed under the statute, the State Government which has to take the decision should be directed to decide the applications in a time bound manner so that the industry is not penalized.

9. We find from the report of the CEC that the Chief Secretary, Odisha, has stated before the CEC that a special drive has been undertaken to complete the process of renewal of the mining leases and for this purpose a High Level Committee under the Chairmanship of the Additional Chief Secretary has been constituted and this Committee has met five times and in a number of cases `in principle' decisions have been taken and efforts are on to ensure that the process of renewal of leases is completed within the next six months.

10. After considering the report of the CEC as well as the submissions on behalf of the parties, we direct as an interim measure that these 26 leases operating as second and subsequent renewals without any express orders of renewal passed by the State Government will not be allowed to operate by the State Government until express orders are passed in terms of Section 8(3) of the Mines and Minerals (Development and Regulation) Act, 1957 and we also direct that all renewal applications under Section 8(3) of the Mines and Minerals (Development and Regulation) Act, 1957 will be considered and disposed of by the State Government within six months from today. We further direct that the State Government will consider first the renewal applications in respect of leases which were granted for captive mining for providing iron or manganese ore as raw material for industries and only thereafter consider the renewal applications in respect of the other leases. In any case, the State Government will ensure that the entire process of consideration and disposal of renewal applications under Section 8(3) of the Act is completed within six months from today. With the aforesaid interim directions, the interim matter stand disposed of".

J. (A. K. Patnaik) , J. (Surinder Singh Nijjar) J. (Fakkir Mohamed Ibrahim Kalifulla) New Delhi, May 16, 2014.

Correspondence with Ministry of Mines

Shri Narendra Singh Tomar, June 16, 2014

Union Minister for Mines, Steel, Labour & Employment,

Subject: Adoption of Competitive Bidding for Grant/Renewal of Mining Leases

Reference: WP (C) 114/2014 Common Cause vs. Union of India & Ors.

Dear Shri Tomar,

I am addressing this letter on behalf of Common Cause, a public interest organization of long standing, in the context of a slew of authoritative reports of windfall gains being made by a privileged group of mining companies in Odisha, Karnataka, Goa, and other mineral-rich regions of the country.

This undue enrichment of the mine owners has been enabled by the failure of the State to realize a fair value for the precious and finite natural resources extracted by them.

It may be recalled here that in the face of a public outcry over massive mining scandals in various parts of the country, the Government of India had set up the Justice M. B. Shah Commission of Inquiry for Illegal Mining of Iron Ore and Manganese in November 2010. The Commission was, inter alia, asked to inquire into the illegal mining, trade and transportation of iron ore and manganese ore, identify the deficiencies in the systems of management and regulation, and assess the financial losses caused to the Central and State Governments. The Commission submitted a series of exhaustive reports on the state of affairs in Goa, Odisha and Jharkhand to your Ministry.

The reports of the Commission have documented the plunder of the nation's natural resources in flagrant violation of the laws relating to mining and environment protection and the fundamental rights of the local populations. The reports of the Commission also establish that the reckless extraction of mineral wealth was resulting in windfall gains to a select group of entities without commensurate benefits to the exchequer.

In its depositions before the Shah Commission, the Government of Odisha had pressed for systemic reforms in the regulatory framework for the exploitation of the mineral wealth. One of the key reforms suggested by the state government was that competitive bidding should be the general methodology for the grant of finite natural resources, since it was a transparent mechanism that will not only result in the selection of meritorious applicants, but will also ensure maximum gains to the state and the community. The Senior Counsel appearing on behalf of the State government had drawn the attention of the Commission to the letters addressed by you in this regard to Shri Pranab Mukherjee, the then Minister for Finance and Chairman of the Group of Ministers on New MMDR Bill on 06.01.2011 and to Shri Dinsha Patel, the then Minister of State for Mines (Independent Charge) on 23.02.2011. The State government's suggestion for adoption of the system of competitive bidding for alienating finite natural resources is in conformity with the Constitutional and legal principles expounded by the Supreme Court. Recent judgments of the Apex Court leave no room for doubt that the only Constitutional method of allocation of mining leases of iron ore and other scarce and valuable natural resources would be by competitive auction/bidding.

Such a method would be fair inter se the applicants and would give all the eligible applicants a fair chance of success. Moreover, it would be fair qua the ordinary people and the interests of the revenue, and will ensure that the state and its people are adequately compensated for the alienation of precious natural resources in favour of private entities.

The Supreme Court has repeatedly held that natural resources are owned by the people and that the Government only acts as a trustee. As a trustee, it is the duty of the Government to recover the full value of the resource for the people. In the Meerut Development Authority case [(2009) 6 SCC 171], the Court held:

"It is well said that the struggle to get for the State the full value of its resources is particularly pronounced in the sale of State owned natural assets to the private sector. Whenever the Government or the authorities get less than the full value of the asset, the country is being cheated; there is a simple transfer of wealth from the citizens as a whole to whoever gets the assets `at a discount'."

In the 2G case (CPIL & Ors vs UoI & Ors, (2012) 3 SCC 1), the Supreme Court has held:

"Natural resources belong to the people but the State legally owns them on behalf of its people… The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest. Like any other State action, constitutionalism must be reflected at every stage of the distribution of natural resources."

The Supreme Court has further held:

"As natural resources are public goods, the doctrine of equality, which emerges from the concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources. In this regard, the doctrine of equality has two aspects: first, it regulates the rights and obligations of the State vis-a-vis its people and demands that the people be granted equitable access to natural resources and/or its products and that they are adequately compensated for the transfer of the resource to the private domain; and second, it regulates the rights and obligations of the State vis-a-vis private parties seeking to acquire/use the resource and demands that the procedure adopted for distribution is just, non-arbitrary and transparent and that it does not discriminate between similarly placed private parties."

In the Presidential Reference on the issue of Alienation of Natural Resources (2012) 10 SCC 1, the Supreme Court has held that when:

" … precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution."

Thus, the only legally sustainable method for grant or renewal of leases is competitive auction/bidding for allocation or renewals of iron ore leases. The MMDR Act leaves the discretion of selection on the State Government, and nothing prevents the State from adopting the method of auction, if it so desires. If there is a better process for maximizing revenue to the State, it can certainly be followed. But the grant or renewal of leases on the old terms would be a travesty of justice.

Support for the above direction which policies on mining of natural resources should take is to be found in the 2014 Lok Sabha Election Manifesto of the Bharatiya Janata Party. The manifesto explicitly states:

"We will implement auction of precious resources through efficient mechanisms, including e-auction."

The statement is made in the backdrop of undesirable mining activity which is summed up in the manifesto as follows:

"In recent years, it has been noticed that country's tangible and intangible resources have been looted with impunity. The adverse result is being felt on two sides: Firstly, the proceeds of the resources have not gone to the public exchequer. Secondly, because of this culture of usurping, the same resources are not available for public purposes. The management of natural resources is marred with either is appropriation or misallocation. This has to be set right."

The unequivocal stand of the Government of Odisha for the adoption of competitive bidding was fully endorsed by the Shah Commission. The Commission had specifically recommended that considering the present interpretation of law, and factors such as increase in mining activity, rising demand for minerals and increase in the number of entrepreneurs entering the Mining business, it is necessary that lease hold rights for mining should be granted by public auction. This would increase the income of the State government and would lead to total transparency and reduce corruption. Regrettably, the Action Taken Report submitted by the previous government disingenuously linked the implementation of this recommendation to the passage of the Draft MMDR Bill, 2011, which provided for allocation of mining lease and prospecting licence on the basis of competitive bidding in areas where mineralization was known to the State Government. The Bill was referred to the Standing Committee on Coal and Steel and lapsed with the dissolution of the 15th Lok Sabha.

The fact of the matter is that the adoption of competitive bidding does not call for any amendment in the Mines and Minerals (Development and Regulation) Act, 1957. In the context of allocation of coal blocks for captive mining, the Law Ministry had categorically opined that the system of auctions can be introduced by way of administrative instructions without amending the said Act. In fact, the Government of Karnataka is at this moment preparing to auction 51 C-category iron ore mines to end users. This action is being taken pursuant to the directions given by the Supreme Court in the Samaj Parivartan Samudaya Case to re-allot the cancelled mining leases through a transparent mechanism.

The writ petition under reference was filed by Common Cause in the Supreme Court of India in February 2014 against the backdrop of rampant illegal mining in the State of Odisha as highlighted in the reports of the Court-appointed Central Empowered Committee and the Justice J. B. Shah Commission of Inquiry. The petition inter alia sought a direction that all fresh mining leases and renewal of leases shall be granted only by public auction or competitive bidding in order to ensure transparency and revenue for the State, as has been recommended by the Justice Shah Commission and the Government of Odisha.

The Supreme Court has been pleased to issue comprehensive interim directions in regard to the regulation of the mining operations in the state of Odisha on 16.05.2014. We are advised by our counsel, Shri Prashant Bhushan, that the interim directions only prescribe a time frame for the disposal of the pending renewal applications; the terms on which the renewal is to be granted are to be set by the State government in accordance with the Constitutional principles expounded by the Supreme Court. In all cases, the consideration to be paid by the lessee needs to be determined objectively through a process of competitive bidding. Even in the case of first renewal, where the lessee has a right of renewal for a period not exceeding 20 years under Section 8(2) of the MMDR Act, there is no requirement that the renewal should be made on the old terms. The consideration to be charged needs to be discovered by the auction route and the incumbent given the preferential right to match it.

In view of the foregoing, I would urge you to advise all the state governments concerned to adopt the system of competitive bidding/auctions for determination of the consideration to be charged for grant/renewal of mining leases. I would also request that your Ministry may extend full support to the Government of Odisha in executing the Apex Court's interim directions in the said petition in accordance with Constitutional principles through a process that guarantees maximum revenue to the State.

I shall be grateful for a line in confirmation.

With best regards,

Kamal Kant Jaswal

Cc:

Shri Naveen Patnaik,

Chief Minister, Government of Odisha.

Shri Anup K. Pujari,

Secretary to the Govt. of India,

Ministry of Mines.

Extract from BJP Manifesto : Lok Sabha Elections, 2014

Natural & National Resources - Use When Required, Protect Where Necessary

Indian belief has been best encapsulated in Gandhiji's words that "there is enough for everyone's need - but not for everyone's greed." Need is not the issue. Greed is.

A country's progress depends upon its resources and how they are harnessed and protected. Those in power have to realize they are just trustees of the resources of the nation. The resources are neither meant for them nor for their masters. If we bring this basic shift in thinking of the Government, which Mahatma Gandhi also advocated, all problems will be resolved.

In recent years, it has been noticed that country's tangible and intangible resources have been looted with impunity. The adverse result is being felt on two sides: Firstly, the proceeds of the resources have not gone to the public exchequer. Secondly, because of this culture of usurping, the same resources are not available for public purposes. The management of natural resources is marred with either misappropriation or misallocation. This has to be set right.

- We will set in place national policies on critical natural resources like coal, minerals, spectrum, etc. - spelling out in black and white how much should be utilized at what time and pace; how this should be strategically phased out to ensure sustainability; who should be allotted what responsibility of extraction and at what cost.

- State Governments will be taken into confidence for harnessing of these resources.

- We will implement auction of precious resources through efficient mechanisms including e-auction.

A copy of this proposal was marked to Shri Anup Pujari, Secretary, Ministry of Mines. In response, Shri Pujari sought an early meeting with the Director to discuss the important policy issues raised in the said letter. In the meeting held on June 18, Shri Pujari and his colleagues took great pains to elaborate the constraints w