TaxTMI 
TaxTMI 
2018 (2) TMI 1848
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....j Agrawal, Advs. for Parekh & Co., Nikhil Vaze, Sujata Kurdukar, Rudresh Desai, Jayant Mohan and P. Chaitanyashil, Advs. For the Respondent : None JUDGMENT Madan B. Lokur, J. 1. Rapacious and rampant exploitation of our natural resources is the hallmark of our iron ore mining sector-coupled with a total lack of concern for the environment and the health and well-being of the denizens in the vicinity of the mines. The sole motive of mining lease holders seems to be to make profits (no matter how) and the attitude seems to be that if the Rule of law is required to be put on the backburner, so be it. Unfortunately, the State is unable to firmly stop violations of the law and other illegalities, perhaps with a view to maximize revenue, but without appreciating the long term impact of this indifference. Another excuse generally put forth by the State is that of development, conveniently forgetting that development must be sustainable and equitable development and not otherwise. 2. Effective implementation and in some instances circumvention of the mining and environment related laws is a tragedy in itself. Laxity and sheer apathy to the Rule of law gives mining lease hold....
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....rt, done illegally or without lawful authority, in terms of destruction of forest wealth, damage to the environment, prejudice to the livelihood and other rights of tribal people, forest dwellers and other persons in the mined areas, and the financial losses caused to the Central and State Governments. 3. The Commission shall also recommend remedial measures to prevent such mining, trade, transportation and export done illegally or without lawful authority. 5. Justice Shah visited Goa and after calling for and receiving information from the concerned authorities as well as the mining lease holders, he submitted a report on 15th March, 2012 and Anr. on 25th April, 2012 to the Ministry of Mines in the Government of India. The reports were tabled in Parliament on 7th September, 2012 along with an Action Taken Report and as a result, the Government of Goa passed an order dated 10th September, 2012 suspending all mining operations in the State with effect from 11th September, 2012. The Ministry of Environment and Forests (MoEF) of the Government of India acted similarly and kept in abeyance the environmental clearances granted to 139 mines (actually 137 mines-there is some d....
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....neral Policy on 21st August, 2012. After suggestions etc. were received, the Mineral Policy was finalized and gazetted on 28th September, 2013. 10. A few salient features of the Mineral Policy may be mentioned. It is stated in the Preamble to the Mineral Policy: "The Goan economy is heavily dependent on the iron ore industry insofar as the major share of the regional income from the mineral industry and its allied activities like transport and trade is concerned." However, during the period from 2006-07 to 2011-12, due to huge spurt in demand of low grade ore in international market followed by illegalities and irregularities in the previous regulatory regime, the State has witnessed the peak of chaotic and unregulated mining without any concern for fragile ecology and environment of the State or for the general well being of an average Goan. It has resulted in massive export of unaccounted ore from unidentified sources like dumps and tailings. The reckless exploitation without any concern for sustainability that the State has witnessed in last five years has serious implications. Minerals are a finite and non-renewable natural resource and must be exploited wisely in t....
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....Steel Industry due to its low Fe content. 1.4.5. Low Grade v. High Grade: Goan iron ore has always been of low grade Fe content in comparison with that of Odisha, Jharkhand and Karnataka. The low grade of ore has been competitive in global markets, because of the non reliance on railways and close distances of mines to ports thereby reducing the overall cost. The high silica presence in Goan ore also is a favourable factor for preference for Goan ore over Australian and Brazilian low grade ore. 13. It appears from the above that the extraction of iron ore in Goa is geared only towards export and not for domestic purposes because of the low Fe content and high silica presence. Vishwanath Anand Expert Appraisal Committee 14. During the pendency of the writ petition in the Court, the MoEF constituted an Expert Appraisal Committee (EAC) on 21st March, 2013 with Shri Vishwanath Anand, former Secretary in the MoEF as the Chairman to specifically look into issues related to illegal mining in the State of Goa. The terms of reference of the EAC were as follows: (a) To examine the information/documents submitted by each of the 139 project proponents in response to ....
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....overnment of India). 19. The Expert Committee submitted an Interim Report dated 14th March, 2014 to the Court after considering reports prepared by the Tata Energy Research Institute (TERI), New Delhi (1997); TERI and International Development Research Centre, Ottawa, Canada (2006); MoEF (2014); research papers prepared by the Goa University and the National Institute of Oceanography; Indian Institute of Technology (Indian School of Mines), Dhanbad (2013); Pollution Control Board, Goa (Annual Report) and other literature. It noted large-scale degradation of the environment in Goa due to mining operations. A Final Report was also submitted by the Expert Committee to the Court on or about 12th April, 2015-it was obviously not available to the Court. Other proceedings in the High Court 20. Quite independent of the cases pending in this Court, writ petitions were filed by several mining lease holders in the Bombay High Court praying either for consideration of their application for a second renewal of the mining lease or for the grant of a mining lease on second renewal. The High Court heard those writ petitions and delivered its judgment on 13th August, 2014.3 In the course o....
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.... of the mining leases. The mining plans for the second renewal, thereafter, came to be approved by the IBM. The IBM also recorded its subjective satisfaction that the same is in the interest of mineral development. Thus, there is enough material on record to show that the Government agreed to grant the second renewal of mining leases Under Section 8(3) of the MMDR Act and thereafter amended the Stamp Act and directed some of the Petitioners to pay the stamp duty and even accepted the same. Thus, the Government gave promise that the mining leases would be executed Under Section 8(3) and pursuant to the promise, the Petitioners altered their position by depositing the huge stamp duty. Therefore, it is now not open for the Government to resile from the promise as it is estopped by the doctrine of promissory estoppel from doing so. The Petitioners legitimately expected that after payment of the stamp duty, the Government would execute the second leases Under Section 8(3) of the MMDR Act. In our considered opinion, the principle of promissory estoppel is squarely applicable to the facts of the present case. The Government is reluctant to execute the lease deeds Under Section 8(3) only o....
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....ister on the floor of the Goa State Legislative Assembly. While the Grant of Mining Leases Policy is a large document, it is necessary to read relevant extracts from it since it indicates the factors that went into taking the policy decision and also to appreciate if there was any violation of Article 14 of the Constitution. The relevant extracts read as under: Background.--In accordance with the Directions contained in the judgment and order of the Hon'ble Supreme Court dated 21st April, 2014 in Writ Petition (Civil) No. 435 of 2012, the Hon'ble Supreme Court has declared that all the Mining Leases in the State of Goa have expired on 22nd November, 2007..... It has further been directed by the Hon'ble Supreme Court that it is for the State Government to decide as a matter of Policy, in what manner Mining Leases are to be granted in the future..... The Hon'ble Supreme Court has in its judgment and Order dated 21st April, 2014 clearly held that the action of allowing the mines to be run on Deemed Extension Basis from the years 2007 to 2012 was completely illegal and has further declared that the so-called deemed mining leases in the State o....
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....mpetitive bidding. The State Government is considering actively, within its Constitutional powers and functions, to come out with regulatory and controlling measures and levy and collect appropriate returns having regard to the fact that the soil comprising the land belongs to the State.... The State Government has also commenced the inquiry and investigation into the violations of matters under Rule 37 and 38 of the Mineral Concession Rules, 1960 as directed by the Hon'ble Supreme Court.... As is seen from the aforesaid, the judgment and order of the Hon'ble High Court is an intervening circumstance inasmuch as it directs the execution of Lease Deeds in 28 cases and consideration of the Application Under Section 8(3) by the State Government in the other cases.... In the considered Opinion of the State Government, it would be futile to challenge the judgment of the Hon'ble High Court before the Hon'ble Apex Court as that would once again delay the commencement of the Mining Operations. As a matter of fact, a substantial portion of the State's Revenue comes from the Mining Sector. The State has been virtually starved of funds for undertaking man....
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....ided to follow the route of the renewal of Lease Under Section 8(3) of the MMRD Act, it shall be subject to the following: Unless and until the Inquiry initiated pursuant to the judgment and Order of the Honourable Supreme Court of India against those Mine Lease Holders found to be violating either Rule 37 or Rule 38 of the Mineral Concession Rules 1960, or otherwise indicted in the Report of the Justice Shah Commission/PAC report or found to be engaged in, any kind of illegality of whatsoever nature such as illegal Sale of Ore, Sale of Royalty Challan without Ore, Encroachment of adjoining areas outside the lease over production in excess of the limit specified in the Environmental Clearance; those which have undertaken unscientific mining operations; those who have violated or have not paid the Royalty amount; those who have re-used old Royalty Challans for defrauding; and those involved in Illegal Mining Activities shall not be considered for renewal of the Mining Leases. For this purpose, presently the inquiries are in progress at various levels and foras including the investigation by the SIT Team, by the Team of Chartered Accountants which have been set up b....
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....e Ministry has drafted the Mines and Minerals (Development and Regulation) (MMDR) (Amendment) Bill, 2014, which has been uploaded on the website of the Ministry on 17.11.2014, calling for comments/suggestions on the draft Bill. The last date for receipt of the comments/suggestions is 10th December 2014. Based on the comments/suggestions received the draft Bill will be finalized and taken forward for introduction in the Parliament. The Bill is designed to put in place mechanisms for: (i) Improved transparency in the allocation of mineral resources; (ii) Obtaining for the government its fair share of the value of such resources; (iii) Attracting private investment and the latest technology; and (iv) Eliminating delay in administration, so as to enable expeditious and optimum development of the mineral resources of the country. 27. What was the nature of the proposed amendments? As far as we are concerned, the introduction of Section 10B in the MMDR Act (relating to competitive bidding) is significant and this reads: Mining leases for notified minerals B. (1) Notwithstanding anything contained elsewhere in this Act, but subject to the provisions of Sectio....
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....uary, 2015 to lift the abeyance order of 14th September, 2012 on the environmental clearances. Consequently, the MoEF passed three orders on 20th March, 2015 (the actual sequence of the orders is not very clear). 31. The first order of 20th March, 2015 was in the form of a letter addressed to the Principal Secretary, Environment, Government of Goa and it recorded that MoEF had considered all the 139 cases in which the abeyance order has been passed and had taken into account the request of the State Government, the recommendation of the EAC and the directions of this Court. It was noted that the EAC had observed that there were violations of the following nature: (i) No clearance from the National Board of Wildlife and non-compliance of orders of this Court on the subject; (ii) Excess production; (iii) Dump mining; (iv) Intersecting ground water table and drawal of ground water without permission of the Central Ground Water Board; (v) No forest clearance obtained where required; (vi) Encroachment and false information/concealment of fact. It was stated that the MoEF had decided to refer the cases to the appropriate authorities (including the State Government) for taking action o....
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.... be cancelled as per rules. 8. State Government will take action in cases of violation Under Section 15/19 of Environment (Protection) Act, 1986 as noted and recommended in EAC report. 9. Project Proponent will file six monthly compliance to Regional Officer, MoEFCC and State Pollution Control Board. Questions for consideration 35. Broadly speaking, on the basis of the submissions and documents placed before us, the questions raised by the Goa Foundation, the State of Goa, the Union of India and the mining lease holders are three-fold: (a) Relatable to the second renewal of the mining leases: (i) In view of the decision in Goa Foundation only fresh leases were to be granted by the State of Goa and not second renewals. (ii) For granting fresh leases, the State of Goa should have introduced competitive bidding or the auction process. (iii) Assuming the decision to grant a second renewal to the mining lease holders was valid, the second renewals were not in accordance with law and should be set aside. (b) Relatable to the grant of environmental clearances: In view of the decision in Goa Foundation fresh environmental clearances were required t....
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....ose leases identified by the Justice Shah Commission.7 Thereafter on 11th November, 2013 it was directed that an inventory be made of the excavated mineral ores and the inventoried mineral ores be sold by e-auction under the supervision of a Monitoring Committee.8 40. Further, it was held by the Court on 21st April, 2014 that from the e-auction sale of the mineral ores, the mining lease holders would be entitled to the average cost (not the actual cost) of extraction, the workers would be entitled to 50% wages and allowances on the principle of laid-off compensation and the Marmagao Port Trust would be entitled to 50% of the storage charges. Out of the balance amount, 10% would be appropriated to the Goan Iron Ore Permanent Fund for the purpose of sustainable development and intergenerational equity and the remaining amount would be appropriated by the State who is the owner of the mineral ores illegally excavated by the mining lease holders and sold by e-auction. With this in mind, the Court declared in paragraph 87.5 of the Report: It is for the State Government to decide as a matter of policy in what manner mining leases are to be granted in future but the constit....
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..... 86 of 2014 filed by M/s. Bandekar Brothers Private Ltd. The applicant prayed for a direction to restrain the authorities from e-auctioning the iron ore mined by it prior to 22nd November, 2007 and that the mined ore should be released to the applicant with the right to dispose of the same. A Bench of three learned judges (other than those that decided Goa Foundation) noted that: "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 emphasized, stressed and persistently reiterated to make the stand absolutely crystal clear." The learned judges considered the submissions and held by an order dated 14th October, 2014 that the direction in Goa Foundation was clear and categorical that the iron ore vested in the State Government and therefore the application deserved dismissal. In other words, the mining lease holders deserved no latitude for the illegal mining and all issues needed to be dealt with strictly. ....
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....the learned Advocate General and learned Counsel, the High Court noted that this Court was alive to the fact that the State of Goa had granted in-principle second renewal to 28 mining leases and had collected renewal fees or stamp duty from 27 mining leases (presumably out of the 28 mining leases) as stated in the brief resume filed by the State of Goa in this Court. The High Court noted: (II) In the brief resume presented by the State of Goa and placed on record of the Supreme Court, in Writ Petition (C) 435/2012, it is inter alia, mentioned thus: ...Presently in the State of Goa, it is found that the Applications for Renewal were filed well within time as contemplated by Rule 24A of the Mineral Concession Rules, 1960. Presently, the State has ordered renewal of 28 mining leases, granted in principle approvals and has collected Renewal Fees/Stamp Duty from 27 Mining Leases.. 48. In other words, notwithstanding the in-principle grant of second renewal of 28 mining leases and collection of renewal fees or stamp duty, this Court in Goa Foundation consciously required the State of Goa to grant fresh leases. What is equally significant is that the State of Goa also....
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....ate took into consideration that a substantial portion of its revenue comes from the mining sector and that the State had been virtually starved of funds on account of stoppage of mining operations. Therefore, the State decided to grant a second renewal to the mining leases and not grant fresh leases. This is quite apparent from the contents of the Grant of Mining Leases Policy wherein the above facts and conclusions have been stated in greater detail. Was this decision correct? 52. Learned Counsel for the mining lease holders submitted that the renewal of a mining lease is equivalent to or amounts to the grant of a fresh lease and therefore when the mining leases were renewed, it amounted to the grant of a fresh lease in compliance with the directions of this Court. Reliance was placed upon Delhi Development Authority v. Durga Chand Kaushish (1973) 2 SCC 825 wherein this Court held: A renewal of a lease is really the grant of a fresh lease. It is called a "renewal" simply because it postulates the existence of a prior lease which generally provides for renewals as of right. In all other respects, it is really a fresh lease. 53. Reference was also made to Provash Cha....
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....r similar to what was directed in Common Cause. We are unable to accept this contention. The direction given in Common Cause was an interim direction and not a final direction as in Goa Foundation. Moreover, the facts in both cases are not at all similar so as to warrant a similar order being passed or understood. Finally, the fact that the same set of learned judges thought it fit to direct the grant of 'fresh leases' in one set of cases and thought it fit to direct consideration of a 'second renewal' in another set of cases indicates that the learned judges were aware of the difference in directions. Therefore when the leaned judges directed the grant of 'fresh leases' in Goa Foundation it was a deliberate and conscious decision distinct and different from granting a second renewal of expired mining leases. 58. In our opinion, the direction in Goa Foundation is quite clear and instead of considering the grant of a second renewal of the mining leases, the State of Goa was required to consider the grant of fresh mining leases. Therefore the decision of the State of Goa to grant a second renewal of the mining leases is erroneous, contrary to the decision i....
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....ld be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like spectrum, etc. it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest. In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty-bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process. 61. In Manohar Lal Sharma v. Principal Secretary (2014) 9 SCC 516 a Bench of 3 judges of this Court paraphrased the above passages and observed that the view expressed in CPIL necessitated a reference by the President of India to this Court Under A....
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....policies--Article 14 does not predefine any economic policy as a constitutional mandate. Even the mandate of Article 39(b) imposes no restrictions on the means adopted to subserve the public good and uses the broad term "distribution", suggesting that the methodology of distribution is not fixed. Economic logic establishes that alienation/allocation of natural resources to the highest bidder may not necessarily be the only way to subserve the common good, and at times, may run counter to public good. Hence, it needs little emphasis that disposal of all natural resources through auctions is clearly not a constitutional mandate. 66. The issue was then considered from the standpoint of legitimate deviations from an auction. After adverting to several decisions of this Court where auctions were not the favoured method of allocation of natural resources, it was held between paragraphs 129 and 131 of the Report as follows: Hence, it is manifest that there is no constitutional mandate in favour of auction Under Article 14. The Government has repeatedly deviated from the course of auction and this Court has repeatedly upheld such actions. The judiciary tests such deviations on ....
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....stic and unexecutable price just to surpass the competition; or where a bidder, in case of multiple auctions, bids for all the resources and ends up winning licences for exploitation of more resources than he can pragmatically execute), etc. However, all the same, auction cannot be called ultra vires for the said reasons and continues to be an attractive and preferred means of disposal of natural resources especially when revenue maximisation is a priority. Therefore, neither auction, nor any other method of disposal can be held ultra vires the Constitution, merely because of a potential abuse. 68. The conclusion arrived at by the Constitution Bench was then recorded between paragraphs 148 and 150 of the Report in the following words: In our opinion, auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources and therefore, every method other than auction cannot be struck down as ultra vires the constitutional mandate. Regard being had to the aforesaid precepts, we have opined that auction as a mode cannot be conferred the sta....
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.... found to be arbitrary, it would be struck down. Therefore, when it comes to natural resource allocation, the executive has a somewhat limited elbow room. 70. In his concurring opinion, Justice Khehar took the view (in paragraph 186 of the Report) that: "...when natural resources are made available by the State to private persons for commercial exploitation exclusively for their individual gains, the State's endeavour must be towards maximisation of revenue returns." The learned judge concluded his opinion by agreeing that an auction is one of the price recovery mechanisms, but not the only one for allocation of natural resources. "That should not be understood to mean that it can never be a valid method for disposal of natural resources." It was further held that natural resources cannot be alienated by way of largesse-there must be a reciprocal consideration either in the form of earning revenue or sub-serving the common good or both. The learned judge had this to say: The policy of allocation of natural resources for public good can be defined by the legislature, as has been discussed in the foregoing paragraphs. Likewise, policy for allocation of natural resourc....
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....ts power of judicial review. Similarly, in Manohar Lal Sharma this Court adverted to the issue and noted the following in paragraph 98 of the Report: The Constitution Bench [Natural Resources Allocation] clarified that the statement of law in 2G case [CPIL] that while transferring or alienating the natural resources, the State is duty-bound to adopt the method of auction was confined to the specific case of spectrum and not for dispensation of all natural resources. The Constitution Bench said that findings of this Court in 2G case were limited to the case of spectrum and not beyond that and that it did not deal with the modes of allocation for natural resources other than spectrum. The Court also referred to the views expressed by Justice Khehar and held, in paragraph 104 of the Report: In light of the above legal position, the argument that auction is the best way to select private parties as per Article 39(b) does not merit acceptance. 72. This Court then exercised its power of judicial review and considered the merits of the explanation given by the Central Government for not adopting the competitive bidding route for the allocation of coal blocks. Th....
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....Limited v. Satyanarayan Somani 2017 (10) SCALE 346 this Court once again examined the issue of distribution of natural resources and held: Undoubtedly, disposal of natural resources by auction is not a mandatory principle for, as the Constitution Bench held,10 individual statutes may provide for modalities of transfer by alternate modes which subserve public interest. ..... The choice of methods is not left to the unbridled discretion of a public authority. Where a public authority exercises an executive prerogative, it must nonetheless act in a manner which would subserve public interest and facilitate the distribution of scarce natural resources in a manner that would achieve public good. Where a public authority implements a policy, which is backed by a constitutionally recognised social purpose intended to achieve the welfare of the community, the considerations which would govern would be different from those when it alienates natural resources for commercial exploitation. When a public body is actuated by a constitutional purpose embodied in the Directive Principles, the considerations which weigh with it in determining the mode of alienation should be such ....
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....of or alienated or allocated only through an auction or through competitive bidding; (ii) Where the distribution, allocation, alienation or disposal of a natural resource is to a private party for a commercial pursuit of maximizing profits, then an auction is a more preferable method of such allotment; (iii) A decision to not auction a natural resource is liable to challenge and subject to restricted and limited judicial review Under Article 14 of the Constitution; (iv) A decision to not auction a natural resource and sacrifice maximization of revenues might be justifiable if the decision is taken, inter alia, for the social good or the public good or the common good; (v) Unless the alienation or disposal of a natural resource is for the common good or a social or welfare purpose, it cannot be dissipated in favour of a private entrepreneur virtually free of cost or for a consideration not commensurate with its worth without attracting Article 14 and Article 39(b) of the Constitution. Whether the decision of the State of Goa forsaking the auction route is arbitrary? 77. Keeping in mind the broad principles identified above, the question that arises for our consideration is whe....
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....ivate entrepreneurs and not necessarily the State of Goa. The natural resource was exploited by some mining lease holders for making profits and nothing else. There were some collateral beneficiaries as well, and they too were commercially driven entities such as barge owners, truck owners etc. Under these circumstances, the question that arises is whether the mining lease holders should have been given a second renewal of the mining lease virtually for a song, that is, payment only of royalty, when they were driven only by a profit motive or whether the mining leases ought to have been auctioned? Unfortunately, the Mineral Policy did not advert to or even consider any solution that would break from the past. 81. As far as the environment, the fragile ecology of Goa and the well-being of the average Goan and the Rule of law is concerned, the Mineral Policy categorically states that the State had witnessed, from 2006-07 till 2011-12 the peak of chaotic and unregulated mining without any concern for the fragile ecology and environment of the State or for the general well-being of an average Goan. Surely, all this cannot be ignored or brushed aside particularly since the exploitati....
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....an environment clearance was issued has either violated its conditions or has furnished information in the application which has been distant from the truth. There are basically two types of violations; one that cannot be legally condoned and those that can be rectified with remedial measures. This is the reason why the committee has recommended that all ECs for mines located within one km from PAs should be revoked and in cases where untruthful information was furnished in the application for EC, such mines should not be allowed to reopen. In the case of those mines which have been closed for more than five years, their reopening has not been recommended without their applying de novo for a fresh environmental clearance as micro environmental conditions on the ground would have changed during the period they remained closed. However, when one looks at the manner in which the directives dated 04.08.2006 and 04.12.2006 of the Supreme Court have been implemented one cannot help but feel that there is the absence of a bridge mechanism within the Ministry to ensure and oversee that directives of the Courts are complied with due diligence and seriousness. There are two factors ....
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....ining that has taken place there. It is recommended that a carrying capacity study should be commissioned for the area, or if another study by a nationally recognised institution is coming to fruition the result of that should be acted upon. Such a study should also take into account the impact of mining on the hydrology of the region and the extent of pollution caused to surface and ground water. This study should be compared to the earlier 10 years baseline data to determine the impact of mining on the biodiversity and hydrology of the area in the last decade. Based on the finding of this, a specific policy for mining of iron ore in the region may be developed. Such a policy along with a proper control and monitoring mechanism is necessary in order to avoid a situation such as the one under question. It would hopefully also ensure that mining in this region is carried out in accordance with best sectoral practices using appropriately clean technologies. 83. The report of the EAC reveals that there is not a single environment related or mining related law or legal requirement that was not violated by one or the other mining lease holder. Quite clearly, the Rule of environmental....
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....ion 8(3) of the MMDR Act (and the requirement to pay the stamp duty). 88. The decision of the High Court does not at all discuss the options available to the State of Goa, namely, second renewal of the mining leases v. auction of a natural resource. In fact it appears that the High Court was not at all alive to the possibility of an auction of the mining leases, notwithstanding the view canvassed by the learned Advocate General of the State of Goa. (iv) Goa Grant of Mining Leases Policy 2014 89. The Grant of Mining Leases Policy announced and issued on 4th November, 2014 is perhaps the most important document in the entire scheme of things and that is the reason it was read out extensively by the learned Additional Solicitor General and that is why we have chosen to quote it extensively. 90. A consideration of the contemporaneous facts beginning with the Budget Speech given by the Hon'ble Minister of Finance of the Government of India on 10th July, 2014 makes it clear that an amendment to the MMDR Act was to be effected sooner than later. The Grant of Mining Leases Policy overlooks that and proceeds on the basis that the judgment of the High Court delivered on 13th ....
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....ns for defrauding, illegal mining activities etc. etc. None of these are 'minimal' violations. However, and this is important, the Grant of Mining Leases Policy made it clear that the following shall not be considered for renewal of mining leases: (i) Those facing an inquiry initiated pursuant to the orders of this Court in paragraph 88.2 of Goa Foundation for the violation of Rules 37 and 38 of the Mineral Concession Rules, 1960; (ii) Those indicted by the Justice M.B. Shah Commission; and (iii) Those indicted by the Public Accounts Committee. The Grant of Mining Leases Policy stated that inquiries are already in progress "at various levels and foras" including a Special Investigation Team and a team of Chartered Accountants. We dare say that violations pointed out by the EAC ought also to have been taken into consideration. 93. Be that as it may, there is no doubt that iron ore mining in Goa was solely for commercial purposes-it was extracted primarily for export to China and Japan without any value addition to the domestic industry. True this brought in considerable foreign exchange-nevertheless iron ore extraction gave insignificant value addition (if at all) to Indi....
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....e having any power to frame a policy dehors the MMDR Act and the Rules. In State of Assam v. Om Prakash Mehta (1973) 1 SCC 584 this Court in SCC para 12 held that the MMDR Act, 1957 and the MC Rules, 1960 contain a complete code in respect of the grant and renewal of prospecting licences as well as mining leases in lands belonging to the Government as well as lands belonging to private persons. Again this Court in Quarry Owners' Assn. v. State of Bihar (2000) 8 SCC 655 held that both the Central and the State Government act as mere delegates of Parliament while exercising powers under the MMDR Act and the MC Rules. It is not open to the State Government to justify grant based on criteria that are dehors the MMDR Act and the MC Rules. The exercise has to be done strictly in accordance with the statutory provisions and if there is any deviation, the same cannot be sustained. It is the normal Rule of construction that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. This principle has been reiterated in CIT v. Anjum M.H. ....
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....eases and we are only called upon to decide (i) Whether the policy decision not to auction the grant of mining leases was arbitrary (we have already held that we are not required to express a final opinion on this). We may, however, recall en passant that the Goa Grant of Mining Leases Policy proceeded on the basis that the auction of mining leases was permissible and that had the sanction of the Court in Goa Foundation. It may be added that the MMDR Act did not prohibit the auction of mining leases. (ii) Whether the second renewals were in accordance with law and the constitutional principles. 99. We may also note that the Constitution Bench in Natural Resources Allocation referred to the submission that if auction were the only method of allocating natural resources (as it appears from CPIL) then the mandate would create a conflict with some statutes including the MMDR Act. The Constitution Bench dealt with this submission in paragraph 83 of the Report by observing: Moreover, if the judgment in 2G case (2012) 3 SCC 1 is to be read as holding auction as the only permissible means of disposal of all natural resources, it would lead to the quashing of a large number of l....
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....rtant and significant factors giving the impression that the renewals were not quite fair or reasonable. 105. For one, the State ignored the fact that every single mining lease holder had committed some illegality or the other in varying degrees. To identify these illegalities (although they had already been identified by the Justice Shah Commission and by the EAC), a Special Investigation Team had been set up as also a team of Chartered Accountants. Instead of waiting for a report from any one of these teams, the State acted in violation of the Grant of Mining Leases Policy and renewed the mining leases. Why was the report from the Special Investigation Team not awaited or called for and examined? In the Grant of Mining Leases Policy it was clearly and explicitly stated (as mentioned above) as follows: Unless and until the Inquiry initiated pursuant to the judgment and Order of the Hon'ble Supreme Court of India against those Mine Lease Holders found to be violating either Rule 37 or Rule 38 of the Mineral Concession Rules, 1960, or otherwise indicated in the Report of the Justice Shah Commission/PAC report or found to be engaged in, any kind of illegality of whats....
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....ublic domain on that date and suggestions invited. It is on 17th November, 2014 that the draft Mines and Minerals (Development and Regulation) Act, 2014 was published on the website of the Ministry of Mines of the Government of India. The policy of the Government of India proposed to introduce Section 10B by way of an amendment to the MMDR Act and the proposed amendment made it very clear that if it were to be accepted, auction of mining leases in respect of notified minerals (including iron ore) would become a reality if not an obligation. It appears that to circumvent this rather uncomfortable policy, the State pressed the accelerator on the renewal of mining leases from December 2014 onward to benefit mining lease holders. So much so that in respect of 5 mining leases, the State overstepped the law and granted a second renewal in early January 2015 to some entities without even waiting for any approval or deemed approval of the mining plan from the Indian Bureau of Mines or any other authority. 109. This sequence of events acquires further significance when it is recalled that an Ordinance to amend the MMDR Act was made known to the general public on 5th January, 2015 and pro....
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....of mineral development' has to be considered holistically and not in an isolationist manner. 112. In this context, it is also necessary to point out that the National Mineral Policy 2008 provided that: "To maximise gains from the comparative advantage which the country enjoys intra se mineral development will be prioritised in terms of import substitution, value addition and export, in that order." Admittedly, iron ore is not extracted in Goa for import substitution, or value addition for domestic industry, but only for the last option, that is, export. Can it reasonably be said that the export of iron ore is in the interest of mineral development? We were informed that only one of the mining lease holders captively consumes the extracted iron ore and it is evident from the Mineral Policy that despite mining operations having closed down for some period in other States, iron ore from Goa was not used in the domestic steel industry. Therefore, it is not at all clear who, other than the mining lease holders making exports, was benefited by resumption of mining operations in Goa through a second renewal. 113. The Mineral Policy clearly suggests that for a period of five year....
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....ait for any of the reports. There is no explanation for this. 116. In this background, there is little to suggest that the State considered the requirements of Section 8(3) of the MMDR Act in that the interests of mineral development was secondary while granting the second renewal of mining leases. The entire exercise undertaken by the State was a hasty charade, regardless of violations of the law by the mining lease holders, without any benefit to the Indian industry and without any concern for the health of the average Goan. 117. The undue haste with which the State granted the second renewal of mining leases particularly after the amendments proposed to the MMDR Act were placed in the public domain by the Government of India (relating to the auction of mining leases) is a clear indication that the decision of the State was not based on relevant material and not necessarily triggered by the interests of mineral development. The very large number of renewals granted over a comparatively brief period is a clear indication that the State did not have 'mineral development' in mind but had some other non-statutory interests while taking its decision to grant a second ren....
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....3) of the Mineral Concession Rules, 1960. In other words, without even receipt of any report from the Indian Bureau of Mines and even before the expiry of the statutory waiting period, the State of Goa renewed some mining leases. This is patently illegal. 121. We were informed by the learned Additional Solicitor General that of the 88 mining leases that were renewed, 38 of them are not working for a variety of reasons-making their renewal an empty exercise. 122. These facts are mentioned in the context of the undue haste shown by the State of Goa in granting a second renewal to the mining leases keeping the following dates in mind: 17th November, 2014-The draft Mines and Minerals (Development and Regulation) Act, 2014 was uploaded on the website of the Ministry of Mines of the Government of India. 5th January, 2015-Approval of the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015 by the Cabinet of the Government of India became public knowledge. 12th January, 2015-President of India promulgated the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015. 123. It is possible that the State did have some se....
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....fore the Court while deciding Goa Foundation included the report of the Justice Shah Commission, the report of the EAC and the report of the Expert Committee constituted by the Court by orders dated 11th November, 2013 and 18th November, 2013. On a combined reading of the material before it, the Court took a broad view that large-scale mining of iron ore led to several adverse impacts including those related to the environment, ecology and health of the people of Goa and that these illegalities and irregularities were committed by almost all (if not all) mining lease holders as reported by the EAC. The Court also accepted the view of the Expert Committee that the ecology of Goa was being degraded through indiscriminate mining and placed a cap on the annual excavation of iron ore. It was noted that mining by the lessees in Goa after 22nd November, 2007 was illegal and that mining operations were suspended by the State of Goa on 10th September, 2012 and environmental clearances granted to the mines were kept in abeyance by the MoEF on 14th September, 2012. Considering all this, as well as the law laid down in Goa Foundation to the effect that there is no automatic second renewal of a....
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...., particularly RSPM and SPM, sedimentation of materials from dumps and iron ore in rivers, estuaries and shallow depth (20 m) of sea water, agricultural fields, high concentration of Fe and Mn in surface waters and their bioaccumulation. 128. Faced with this material evidence before it, the Court took the view in Goa Foundation that fresh environmental clearances must be obtained. Unfortunately however, the State of Goa was more concerned with earning revenue rather than the health of the people of Goa or enforcing the Rule of law and therefore gave a complete go-bye to the directions of this Court and to the concerns of the citizens of Goa and requested the MoEF to lift the abeyance on the environmental clearances. 129. Acting on the request made by the State of Goa by letters dated 7th January, 2015 and 5th February, 2015, the MoEF passed three orders on 20th March, 2015. We have already adverted to the contents of the orders passed on 20th March, 2015. 130. The first order of 20th March, 2015 is essentially a communication documenting the variety of illegalities and irregularities committed by the mining lease holders and that the Government of India would be referring ....
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....d Common Cause, the renewal of a lease after 27th January, 1994 would require an environmental clearance. Therefore, a mining lease holder having a valid environmental clearance obtained under EIA 1994 would still require a fresh environmental clearance for renewal of the mining lease in 2014-2015 as the case may be. That being so there is no doubt at all that the 35 cases referred to in the third order of 20th March, 2015 who had an environmental clearance under EIA 1994 did require a fresh environmental clearance at the time of renewal of the mining lease. Since they did not have such a fresh environmental clearance the renewal of these 35 mining leases is clearly bad in law. Moreover, as held in M.C. Mehta and Common Cause the validity of an environmental clearance granted under EIA 1994 is only for five years. Therefore all environmental clearances granted under EIA 1994 had lost their validity before 2015, EIA 1994 having been replaced by EIA 2006. 135. As regards the 37 mining leases that had obtained environmental clearance under EIA 2006, since the validity of the environmental clearance is for the estimated project life or a maximum of 30 years in terms of paragraph 9 o....
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....yance order in respect of the environment clearances. The inferences that can be drawn are quite obvious. 138. We must emphasise that issues impacting society are required to be looked at holistically and not in a disaggregated manner. An overall perspective is necessary on such issues including issues that impact on the environment and the people of a community or a region or the State. It is for this reason that it is necessary to look at them broadly otherwise if that broader perspective is lost everyone will be a loser and no one will be a real beneficiary. One or two violations here and there may be wished away as inconsequential, but multiple violations by several persons can result in serious problems. As the novelist and philosopher Ayn Rand had said: We can evade reality, but we cannot evade the consequences of evading reality. Therefore, there is no doubt that the Mineral Policy, the Grant of Mining Leases Policy, the amendment to the MMDR Act, the report of the EAC and the report of the Expert Committee must be considered in the larger context of constitutionalism, the Rule of law, environmental jurisprudence as well as the fundamental right of the people of Goa to ha....
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....mmencing the operation or mining. Paragraphs 2. III(a) and 2. III(c) of the notification deal with the procedure for obtaining environmental clearance, but do not provide for the validity period of the environmental clearance. 142. A notification of 4th May, 1994 refers to the notification of 27th January, 1994 and substitutes paragraph 2. III(c) therein and provides that the environmental clearance "shall be valid for a period of five years from commencement of the construction or operation." What this provides, therefore, is that if environmental clearance is granted on a particular date and the mining operation starts on a later date, then the validity of the environmental clearance commences from the later date and is valid for five years from that date. This was reiterated in the notification of 10th April, 1997. 143. The validity of an environmental clearance is specifically provided for in EIA 2006 in paragraph 9 thereof. As far as we are concerned, it provides that in respect of mining operations, the environmental clearance would be valid for the "project life as estimated by Expert Appraisal Committee or State Level Expert Appraisal Committee subject to a maximum of....
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....to contend that notwithstanding a notification issued by MoEF on 4th April, 2011 it was not obligatory for a mining lease holder to obtain a fresh environmental clearance at the time of renewal of a lease, if the environmental clearance was subsisting. In that case, the Petitioner had an environmental clearance obtained under EIA 2006 on 15th January, 2007 and the first renewal of the mining lease was due on 2nd April, 2012. In that context, it was submitted that it was not necessary for the Petitioner to obtain environmental clearance for renewal of the mining lease. The Delhi High Court took the view that: "... if a person has a valid and subsisting EC [environmental clearance] at the point of time he seeks a renewal of the mining lease, he would still be required to obtain another EC prior to the grant of renewal by the Respondents. That, in our view, is not the intent and purport of the Supreme Court directions in M.C. Mehta." This question does not arise in the context of EIA 1994. 147. One final submission before us was that these cases be referred to a Bench of 9 learned judges since the constitutional validity of the Goa, Daman & Diu Mining Concessions (Abolition & Decla....
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.... batch) giving directions different from those given by this Court in Goa Foundation is set aside. 6. The mining lease holders who have been granted the second renewal in violation of the decision and directions of this Court in Goa Foundation are given time to manage their affairs and may continue their mining operations till 15th March, 2018. However, they are directed to stop all mining operations with effect from 16th March, 2018 until fresh mining leases (not fresh renewals or other renewals) are granted and fresh environmental clearances are granted. 7. The State of Goa should take all necessary steps to grant fresh mining leases in accordance with the provisions of the Mines and Minerals (Development and Regulation) Act, 1957. The Ministry of Environment and Forest should also take all necessary steps to grant fresh environmental clearances to those who are successful in obtaining fresh mining leases. The exercise should be completed by the State of Goa and the Ministry of Environment and Forest as early as reasonably practicable. 8. The State of Goa will take all necessary steps to ensure that the Special Investigation Team and the team of Charter....