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Friday, January 2, 2015

INTERLOCUTORY APPLICATION NO.86 OF 2014 IN WRIT PETITION(C) NO. 435 OF 2012 Goa Foundation ….Petitioner versus Union of India and others ….Respondents-2014-OCT.MONTH. S.C.

                        IN THE SUPREME COURT OF INDIA
                         CIVIL ORIGINAL JURISDICTION

                   INTERLOCUTORY APPLICATION NO.86 OF 2014
                                     IN
                      WRIT PETITION(C) NO. 435 OF 2012

Goa Foundation                                          ….Petitioner

                                   versus

Union of India and others                               ….Respondents


And in the matter of:

M/s Bandekar Brothers Private Limited                   ….Applicant


                                  O R D E R

1.    Through  the  instant  interlocutory  application,  the  applicant-M/s
Bandekar Brothers  Private  Limited  has  prayed  for  a  direction  to  the
concerned  authorities  for  restraining  them  from  auctioning  the  mined
mineral ore produced by  the  applicant  prior  to  22.11.2007,  through  e-
auction. This prayer is premised on the  foundation,  that  the  applicant's
above stated mined mineral ore cannot be sold, under the  orders  passed  by
this Court. In this behalf, it was the contention  of  the  learned  counsel
for the applicant, that the applicant had mined 67,285 metric tons  of  iron
ore (Grade 63.19% Fe approximately) prior to 22.11.2007, and therefore,  the
applicant should be released the aforesaid  iron  ore,  with  the  right  to
dispose of the same.  A similar submission was made  by  the  applicant  for
the  disposal  of  1,00,000  metric  tons  of  old  dump  (grade  46.15%  Fe
approximately).
2.    According to the learned counsel for the applicant,  the  mineral  ore
mined prior to 22.11.2007, cannot be treated as having  been  illegitimately
mined, and as such, the applicant as also all other similarly placed  mining
lease holders, should be released the same  with liberty to sell the same.
3.    Mr. A.D.N. Rao,  Advocate,  learned  amicus,  vehemently  opposes  the
prayer made on behalf of the applicant. While doing so, he  placed  reliance
on the decision rendered by this Court in Goa  Foundation  versus  Union  of
India (2014) 5  SCALE  364.   Our  pointed  attention  was  invited  to  the
following observations recorded therein:
“67.  As we have held that the deemed mining leases of the  lessees  in  Goa
expired on 22.11.1987 and the maximum period (20 years) of  renewal  of  the
deemed mining leases in Goa has also expired on 22.11.2007,  mining  by  the
lessees in Goa  after  22.11.2007  was  illegal.   Hence,  the  order  dated
10.09.2012 of the Government of Goa  suspending  mining  operations  in  the
State of Goa and the order dated  14.09.2012  of  the  MoEF,  Government  of
India, suspending the environmental clearance granted to the  mines  in  the
State of Goa, which have been impugned in the writ petitions in  the  Bombay
High  Court,  Goa  Bench  (transferred  to  this  Court  and  registered  as
transferred cases) cannot  be  quashed  by  this  Court.   The  order  dated
10.09.2012 of the Government of Goa and the order dated  14.09.2012  of  the
MoEF will have to continue till decisions are taken by the State  Government
to grant fresh leases and decisions are taken by the  MoEF  to  grant  fresh
environmental clearances for mining projects.

68.   On 05.10.2012, this Court while issuing notice in  Writ  Petition  (C)
No.435 of 2012 (Goa Foundation vs. Union of  India  &  Others)  also  passed
orders that all mining operations in the leases identified in the report  of
the Justice Shah Commission and transportation of  iron  ore  and  manganese
ore from those leases, whether lying at the mine-head or  stockyards,  shall
remain suspended.  Thereafter on 11.11.2013,  this  Court  passed  an  order
that the inventory of the excavated mineral ores lying  in  different  mines
stockyards/jetties/ports in the State of  Goa  made  by  the  Department  of
Mines and Geology of the Government of Goa be verified  and  thereafter  the
whole of the inventorised mineral ores be sold by  e-auction  and  the  sale
proceeds (less taxes and royalty) be retained  in  separate  fixed  deposits
(lease-wise) by the State of Goa till this Court delivers judgment in  these
matters on the legality of the leases  from  which  the  mineral  ores  were
extracted.  In our order passed on 11.11.2013, we  had  also  directed  that
this entire process of verification of the inventory e-auction  and  deposit
of sale proceeds be monitored by a Monitoring  Committee  appointed  by  the
Court.  The Monitoring  Committee  comprising  Dr.  U.V.  Singh  (Additional
Principal Chief Conservator of Forests, Karnataka),  Shri  Shaikh  Naimuddin
(former Member of Central Board of Direct Taxes) and  Parimal  Rai  (Nominee
of Govt. of Goa) have in the meanwhile monitored the e-auction.  We  extract
hereinbelow the relevant portion of the interim report dated  12.03.2014  of
the Monitoring Committee :

“After the two e-auctions, the total ore auctioned is about 1.62 million  MT
and the total value realized is 260.68 crores  approximately.   As  directed
by this Hon'ble Court, the State Government has been requested  to  maintain
separate accounts, lease wise and keep the sale proceeds as  fixed  deposits
in Nationalzed Banks.

The process of transportation of ore for export has not yet  been  initiated
because of the storage charges being demanded from the successful bidder  by
the Marmagoa Port Trust (MPT).  As a result, the  process  of  e-auction  is
likely to slow down.  The extent of  storage  charges  demanded  is  as  per
Annexure MC III.”

69.   As we have held that renewal of all the deemed mining  leases  in  the
State of Goa had expired on 22.11.2007,  the  mining  lessees  will  not  be
entitled to the sale value of the ores sold in  caution  but  they  will  be
entitled to the approximate cost (not actual cost) of the extraction of  the
ores.....”

                                  (emphasis is ours)


Based on the aforesaid observations, it was the vehement  assertion  of  the
learned amicus, that an inventory of all the mined  mineral  ores  lying  in
different mines/stockyards/jetties/ports in the State of Goa was ordered  to
be prepared by the Monitoring Committee (appointed by this Court).   It  was
further  directed,  that  the  entire  mined  mineral  ores  (of  which  the
inventory was prepared) was to be sold by way of e-auction.  It was  pointed
out, that this Court had clearly expressed, that the holders of  the  mining
leases were not to be entitled to the proceeds  thereof.   In  other  words,
the mining lease holders could  not  claim  the  sale  value  of  the  mined
mineral ores sold by way of e-auction.  This Court  in  its  directions  had
explicitly held that they would be entitled only  to  the  approximate  cost
(not actual cost) incurred by  them  during  the  extraction  of  the  mined
mineral ores. In view of the above directions of this Court, learned  amicus
submitted,  that  the  prayers  made  in  the   application   were   clearly
unacceptable.
4.    In addition to the aforesaid submission, it was  also  the  contention
of the learned amicus, that the prayer made  by  the  applicant  was  wholly
unjustified in view of the provisions of the Mineral Concession Rules,  1960
(hereinafter referred to as the 'Mineral Rules').  Insofar  as  the  instant
aspect of the matter  is  concerned,  reliance  was  first  placed  on  Rule
27(2)(la) of the Mineral Rules.  The same is extracted hereunder:
“27. Conditions – (1) Every mining lease shall be subject to  the  following
conditions:

(a) to (u)  xxx        xxx        xxx

(2)   A mining  lease  may  contain  such  other  conditions  as  the  State
Government may deem necessary in regard to the following, namely, :-

(a) to (l)  xxx        xxx        xxx

(la) the time limit for removal of mineral, ore, plant, machinery and  other
properties  from  the   leasehold   area   after   expiration,   or   sooner
determination or surrender or abandonment of the mining lease.”

(m) to (o)       xxx        xxx        xxx”


A perusal of the above Rule leaves no room for any doubt,  that  the  State,
while granting a mining lease, had the discretion to fix the time limit  for
removal of the mined mineral ore etc. from the lease hold  area.   In  order
to demonstrate that such a period was provided for, our attention was  drawn
to Rule 31 of the Mineral Rules.  Rule 31 is being extracted hereunder:
“31.  Lease to be executed within six months.- (1) Where, on an  application
for the grant of a mining lease, an order has been made  for  the  grant  of
such lease, a lease deed in  Form  K  or  in  a  form  as  near  thereto  as
circumstances of each case may require, shall be executed within six  months
of the order or within such further  period  as  the  State  Government  may
allow in this behalf, and if no such lease deed is executed within the  said
period due  to  any  default  on  the  part  of  the  applicant,  the  State
Government may revoke the order granting the lease and  in  that  event  the
application fee shall be forfeited to the State Government.

(2)   The date of the commencement of the period for which  a  mining  lease
is granted shall be the date on which a duly executed  deed  under  sub-rule
(1) is registered.”


A perusal of the aforesaid Rule reveals, that a lease  deed  in  Form  K  is
mandatorily required to be  executed within  six  months  of  the  order  of
grant of such lease (or within such further period as the  State  Government
may allow).  Our attention was then invited to Form K (mining  lease  deed),
and more particularly, to paragraphs 5  and  6  of  Part  IX  thereof.   The
aforesaid paragraphs are being extracted hereunder:
5.    the lessee/lessees having first  paid  discharged  rents,  rates,  and
royalties payable by virtue of these  presents  may  at  the  expiration  or
sooner determination  of  the  said  term  or  within  six  calendar  months
thereafter (unless the lease shall be determined under clauses 1  and  2  of
this part and in that case at any time not less than three  calender  months
nor ore than six calendar months after such  determination)  take  down  and
remove for his/their own benefits all or any ore  mineral  excavated  during
the currency of lease  engines,  machinery,  plant,  buildings,  structures,
tramways, railways and other works, erections  and  conveniences  which  may
have been erected, set up or placed by the lessee/lessees  in  or  upon  the
said lands and which the lessee/lessees is/are not bound to deliver  to  the
State Government under clause 20 of Part VII of the Schedule and  which  the
State Government shall not desire to purchase.


6.    If at the end of six calendar months after the  expiration  or  sooner
determination of the said terms under the provisions contained in  clause  4
of Part VIII of this Schedule become effective  there  shall  remain  in  or
upon the  said  land  any  ore  or  engines,  machinery,  plant,  buildings,
structures, tramways, railways and other works, erections  and  conveniences
or  other  property  which  are  not  required  by  the  lessee/lessees   in
connection with operations in any other lands held  by  him  by  them  under
prospecting licence or mining lease, the same shall if  not  be  removed  by
the lessee/lessees  within  one  calender  month  after  notice  in  writing
requiring their removal has  been  given  to  lessee/lessees  by  the  State
Government be deemed to become the property of the State Government and  may
be sold or disposed of in such manner as the  State  Government  shall  deem
fit without  liability  to  pay  any  compensation  or  to  account  to  the
lessee/lessees in the respect thereof.”

                                                  (emphasis is ours)

A perusal of the terms and conditions expressed in the lease required to  be
executed by a mining lease holders, leaves no room for any doubt,  that  the
mineral ore extracted by the lessee, has to be removed within  six  calendar
months from the date of expiration of the mining lease.  And  further  more,
if at the end of the above six calendar months, the  excavated  mineral  ore
is not removed, then within one calender month after a notice in writing  is
issued to the lessee/lessees, the extracted mineral ore is deemed to  become
the property of the State Government.  Accordingly, relying  on  the  afore-
stated statutory provisions, it was the submission of  the  learned  amicus,
that the ore which had remained unremoved after the expiration of the  above
period of  six  months,  would  be  deemed  to  have  vested  in  the  State
Government.
5.    In support of the above submission, learned amicus again  invited  our
attention  to  Goa  Foundation's  case  (supra),  wherein  this  Court   had
permitted, that the entire stock of extracted mineral  ores  would  vest  in
the State Government. In  this  behalf,  our  attention  was  drawn  to  the
following observations:
“70.  The entire sale value of the stock of mineral ores sold  by  e-auction
less the average cost of excavation, 50% of the  wages  and  allowances  and
50% of the storage  charges  to  be  paid  to  MPT  is  thus  due  to  State
Government which is the owner of the mineral ores which have been sold by e-
auction.  The State Government will set-aside 10%  of  this  balance  amount
for the Goan  Iron  Ore  Permanent  Fund  for  the  purpose  of  sustainable
development  and  inter-generational  equity.   This  entire   exercise   of
calculating the average cost of extraction of ores to be paid to the  mining
lessees, 50% of the basic wages and dearness allowance to  be  paid  to  the
workers, 10% of the balance amount towards the Goan Iron Ore Permanent  Fund
and the balance amount to be appropriated by the State  Government  will  be
done by the Director of Mines and Geology,  Government  of  Goa,  under  the
supervision of the Monitoring Committee.  Till this  exercise  is  over  and
the report of the Monitoring Committee will continue and their members  will
be paid their  remuneration  allowances  as  directed  in  the  order  dated
11.11.2013.”

                                             (emphasis is ours)

6.    Learned counsel for the applicant, could not invite our  attention  to
any favourable observations made by this  Court  in  Goa  Foundation's  case
(supra), nor could learned counsel for the applicant  invite  our  attention
to any statutory provisions from the Mineral Rules, which would counter  the
submissions advanced at the hands of the  learned  amicus.  The  submissions
advanced on behalf of the applicant were premised merely on  the  assertion,
that the mineral ore which the applicant was  claiming  a  right  over,  had
been legitimately mined before 22.11.2007, and therefore, the applicant  had
an absolute and legitimate ownership over the same. We may  note,  that  the
above position was emphasised, stressed and persistently reiterated to  make
the stand absolutely crystal clear.
7.    Based on the directions issued by this Court in Goa Foundation's  case
(supra), as also, the provisions of the Mineral Rules, it  is  not  possible
for us to accept the prayers made by the learned counsel for the  applicant.
 We are of  the  firm  view,  that  this  Court  clearly  and  categorically
directed the preparation of an  inventory  of  all  the  existing  extracted
mineral  ore  available  as  on  11.11.2013.   Accordingly,  the  Monitoring
Committee prepared an inventory of  all  the  extracted  mineral  ore.   The
inventory included the ore, whether lying at the mine-head or stockyards  or
jetties or ports in the State of Goa. This Court further directed  the  sale
of the entire  extracted ore included in the above inventory was to be  made
by way of e-auction. It was further directed, that the mining lease  holders
would not be entitled to the proceeds of  the  e-auction,  but  only  to  an
approximate cost (not actual cost) of extraction of the mined mineral  ores,
and nothing more.  As such, the prayer  made  in  the  instant  application,
that the State Government be restrained from selling the  extracted  mineral
ore, and further that, the applicant be permitted to dispose of the same  by
itself, cannot be accepted.
8.    Additionally, the provisions of the Mineral  Rules  mandate  that  the
excavated mineral ore is liable to be removed by the lessee within a  period
of six months, failing which, after the  issuance  of  a  notice,  the  same
would stand forfeited to the State Government.  On the issue of  forfeiture,
this Court clearly directed in Goa Foundation's case (supra), that  all  the
extracted mineral ore contained in the inventory prepared by the  Monitoring
Committee, would vest in the State  Government.    The  directions  of  this
Court, satisfy the vesting of the  extracted  mineral  ore  with  the  State
Government, thus negating the requirement of  the  issuance  of  any  formal
notice to the mining lease holders. It is, therefore, difficult  for  us  to
accept, the prayers made by the applicant, either for  the  release  of  the
extracted mineral ore to the applicant, or the liberty to sell the  same  at
its own.
9.    In recording  our  above  conclusion,  we  have  also  taken  note  of
consideration of an unequivocal determination by this  Court,  that  without
renewal of the mining leases,  all  the  leases  would  be  deemed  to  have
expired on 22.11.2007.  The State of Goa passed an  order  dated  10.09.2012
suspending mining operations in the State of Goa.  By  another  order  dated
14.09.2012, the Ministry of Environment and Forests,  Government  of  India,
suspended the environmental clearances granted to  mines  in  the  State  of
Goa.  It is, therefore, apparent that no mining activity was  being  carried
out in the State of Goa after  10/14.09.2012.  In  the  above  view  of  the
matter, the instant application filed on 12.08.2014 is wholly  misconceived,
and merits outright rejection.
10.   For the reasons recorded hereinabove, we find no merit in the  prayers
made in interlocutory application No. 86 of 2014  in  Writ  Petition(C)  No.
435 of 2012. The same is accordingly dismissed.


                                             ….......................J.
                                             [JAGDISH SINGH KHEHAR]


                                             …........................J.
                                             [J. CHELAMESWAR]


NEW DELHI;                             …........................J.
OCTOBER 14, 2014.                            [A.K. SIKRI]

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