State Of Odisha vs M/S. Jindal Steel And Power Ltd. . on 30 January, 2020


Supreme Court of India

State Of Odisha vs M/S. Jindal Steel And Power Ltd. . on 30 January, 2020

Author: Hon’Ble The Justice

Bench: Hon’Ble The Justice, B.R. Gavai, Surya Kant

                                                                                 REPORTABLE


                                      IN THE SUPREME COURT OF INDIA
                                       CIVIL APPELLATE JURISDICTION


                                  CIVIL APPEAL NO. 850 OF 2020
                  [Arising out of Special Leave Petition (Civil) No. 23644 of 2016]
                                                WITH
                I.A. Nos. 85780 of 2016, 79477 of 2016, 54052 of 2018, 4 of 2017,
                            187580 of 2019, 8734 of 2020, 8725 of 2020


      State of Odisha & Ors.                                                ... Appellants


                                                   VERSUS


      M/s. Jindal Steel and Power Ltd. & Ors.                            ...Respondents


                                                   JUDGMENT

With the consent of learned counsel for the parties, Special Leave to

Appeal is taken up for final hearing along with the captioned Interlocutory

Applications.

2. Leave Granted. Heard learned counsel for the parties.
Signature Not Verified

3.
Digitally signed by
CHARANJEET KAUR
Date: 2020.01.30
This Civil Appeal is directed against the order of a Division Bench of
17:13:57 IST
Reason:

the Orissa High Court which allowed the writ petition filed by Respondent

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No. 1, Jindal Steel and Power Ltd. (hereinafter “JSPL”) seeking a writ of

mandamus against the appellant, State of Odisha, for allowing lifting of

legally procured, processed, royalty and tax­paid stock of Iron Ore lying at

the dispatch point within the lease­area of M/s Sarda Mines Pvt. Ltd.

(hereinafter “SMPL”) in Thakurani B­Block Mines in Keonjar, Odisha and

transporting it to the railway siding at Deojhar for carrying to its

Pelletisation Plants and Steel Plants in Odisha and Chhattisgarh.

FACTS

4. JSPL is an industrial entity which runs Steel­production plants

across the country and regularly purchases numerous raw materials,

including Iron Ore as part of its commercial activities. It had entered into

an arrangement with SMPL to purchase certain Iron Ore, which was to be

processed into Lump Ores and Fines and transported to JSPL’s plants. The

mining activity was conducted by SMPL and possession of the stocks was

handed over to JSPL within SMPL’s premises. Within SMPL’s leasehold

area, JSPL would process these Ores and later store them at the dispatch

point, pending transportation by trains to the Pellitisation Plant of JSPL

located at Deojhar, Odisha as well as its Integrated Steel Plant located in

Raigarh, Chhattisgarh. The appellant (State of Odisha) had earlier granted

approval to this arrangement for selling Iron Ore, subject to payment of

royalty at the “highest rate”.

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5. This continued uninterruptedly until 31.03.2014, when a letter was

issued by the Deputy Director of Mines, Joda (in Keonjhar, Odisha)

(Appellant No. 3) which highlighted that SMPL’s Environmental Clearance

for enhanced production had expired and hence ‘transit permit’ for

transporting the procured and processed Iron Ore (CLO and Fines) from

the despatch point to JSPL’s plants could not be granted.

6. JSPL approached the State authorities contending that royalty had

duly been paid on the Iron Ore, and that the stocks lying at the despatch

point were owned by JSPL and not SMPL. Numerous representations were

made requesting permission to transport the processed minerals. Appellant

No. 3, therefore, recommended to the Director of Mines (Appellant No. 2)

that JSPL be granted requisite transport clearances. However, Appellant

No. 2 in his communication with the Commissioner­cum­Secretary, Steel &

Mines Department drew attention to the fact that the material lay within

the leasehold area of SMPL and its transportation would form part of

mining operations which could not proceed without appropriate statutory

clearances. Accordingly, the appellants through letters dated 23.05.2014

and 26.06.2014 rejected JSPL’s prayers.

7. The aggrieved JSPL approached the High Court and sought quashing

of appellants’ letters refusing transport permits and a writ of mandamus

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directing the State of Odisha to grant permission for transportation of

entire processed ore from dispatch point within SMPL’s lease area to

JSPL’s units in Odisha and Chhattisgarh.

8. JSPL claimed that through a letter dated 15.01.2015, SMPL had

obtained clarification from the Ministry of Environment and Forests,

Government of India (hereinafter “MOEF”) that SMPL could operate its

mine and produce up to 4 million tons of Iron Ore (Lumps) for a period of

20 years from 22.09.2004. Given that SMPL had valid environmental

clearance, no objection could be raised by appellants against

transportation of iron ore by JSPL. This was vehemently contested by the

appellants who contended that owing to the Supreme Court’s interim

directions on 16.05.2014, no “mining activities/operations” could take

place which would also include a prohibition on transportation of mined

ore.

9. JSPL contended that the afore­stated direction only prohibited SMPL

from resuming mining operations, and not JSPL from transporting the

mineral already mined, purchased, processed and royalty paid upon. It

placed reliance upon the expression “mining operation” as defined under

Section 3(d) of the Mines and Minerals (Development & Regulation) Act,

1957 (“MMRDA”), which did not include transportation of minerals. As

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soon as the ore was mined and sold by the mining leaseholder, it was

contended that the OMPTS Rules would come into force. JSPL being a

buyer who possessed necessary license to transport under OMPTS Rules

and who also had paid all necessary royalties, could not be stopped from

transporting its ore merely because it lay in the leasehold premises of

SMPL on the ground that the latter did not have a valid environmental

clearance.

10. The High Court noted that this Court’s interim directions prohibited

“mining operations”, which as per Section 3(d) of MMDRA meant “winning”

of minerals. Relying upon the Constitutional Bench decision in The Bihar

Mines Ltd. v. Union of India1, interpreting “mining operations” to include

only processes necessary to raise/extract minerals from mines, the High

Court held that the transportation of minerals already raised would not be

estopped through this Court’s interim directions. Having noticed the fact

that SMPL had environmental clearance, it had obtained due permission

for selling Iron Ore to JSPL, and that requisite royalties had already been

paid, the High Court found no valid reason for the State of Odisha to stop

transportation of the iron ore by JSPL. Accordingly, the impugned letters

which directed stoppage of transportation were quashed, and instead the

State­authorities were directed to grant transport permission to JSPL.

1     AIR 1967 SC 887.


                                                                 Page | 5
CONTENTIONS    OF   PARTIES

11. The aggrieved State­authorities initially sought leave to appeal

contending that mere sale of the mined ore by SMPL would not mean that

MMDRA would cease to operate, and grant of approval under OMPTS

Rules, 2007 to JSPL would not obviate the necessity for obtaining

clearance/approvals under other statutes. JSPL’s title over the goods could

not be better than the title owned by SMPL; and mere completion of sale

per the Sales of Goods Act would not regularise illegalities or dispense with

the necessity of complying with the law. The HC statedly misinterpreted the

MOEF’s clarificatory letter regarding Environmental Clearance, which was

granted only for 4 MPTA, whereas SMPL had extracted minerals far in

excess. At least some part of the Ore sold to JSPL came from this

unauthorised excess production, and hence JSPL could not be said to have

“validly procured” the materials and thus had no right to transport the

same. The appellants further claimed that “mining operation” would in fact

cover transportation of materials within the leasehold area, and Section

3(d) of MMDRA ought not to be construed restrictively in light of this

Court’s observations in Samaj Parivartana Samudaya v. State of

Karnataka2, and hence JSPL’s prayer was barred by this Court’s interim

directions dated 16.05.2014.

2     (2013) 8 SCC 154.


                                                                  Page | 6

12. Appellants also underscored the larger implications of upholding the

High Court’s finding that sale of minerals would cease application of the

MMDRA and instead only the OMPTS Rules would apply, for it would

create a loophole to evade application of environmental legislations.

13. JSPL, on the other hand, highlighted how it was not seeking any

permission for crushing or processing of the iron ore, but only

transportation of the Ore already legally procured, processed and stored at

the dispatch point prior to expiry of the environmental clearance of SMPL.

Transportation was claimed, per se, not to be a part of mining operations

for which environmental clearances were required. It placed reliance on the

appellant’s failure to raise objections to transportation of minerals in other

similar cases. Even otherwise, per Clause 5 of Part­IX of Form K (Model

Form of Mining Lease under Rule 31(1) of MC Rules, 1960) lifting and

transportation of minerals was claimed as being permissible upto six

months after the expiry of the lease, which demonstrated the clear

intention of the legislation to protect the right of the lessee who has

excavated minerals during the validity of the lease period.

14. During the pendency of this appeal, SMPL filed an application for

intervention (I.A. No. 8725 of 2020) and at the time of hearing referred to

the order dated 15.01.2020 passed in I.A. No. 186810 of 2019 in WP(C)

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No. 114 of 2014 (Common Cause v. Union of India) whereby this Court

noticing irregularities committed by several mining companies, directed

SMPL to deposit dues as assessed by the Central Environment Committee

in its report dated 08.05.2019 and asked it to file an undertaking to

comply with all rules, regulations and mandatory provisions; post which

SMPL could resume its mining operations in the leased­area. SMPL has

filed another application (I.A. No. 8734 of 2020) undertaking to comply

with this Court’s directions dated 15.01.2020 with an oral prayer to extend

the time limit till the end of February, for doing the needful.

15. Additionally, ICICI Bank and the State Bank of India have also filed

intervention applications (I.A. No. 54052 of 2018 and I.A. No. 4 of 2017),

claiming that they (as part of a consortium of seven banks) had granted

sums totalling Rs 8400 Crores to JSPL as working capital. Part of these

loan amounts had been used by JSPL to buy Iron Ore from SMPL and

these stocks were in turn hypothecated with the consortium. The banks

hence had exposure of about Rs 434 Crores in the present case, which

would adversely be affected in case JSPL was not allowed to transport the

said Iron Ore to its plants expeditiously. In addition, they sought that JSPL

be directed to undertake that the amount realised by it in pursuance of

transporting the Ore, should be credited only to the working capital limit

account.

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16. JSPL has also filed an application (I.A. No. 187580 of 2019) seeking

interim directions to allow it to transport the Iron Ore stock (totalling

29977.818 metric tons of Iron Ore lumps and about 12.2 million tons of

Iron Ore fines) and directions to the State of Odisha to grant necessary

transit permits. Insisting that the appellants’ concerns of recovering

compensation dues had been satisfied consequent to SMPL’s undertaking,

JSPL drew attention to the distress being faced by the Steel sector in India,

and that its own working facility account had been restructured pursuant

to RBI directions and how a Trust & Retention Account had been opened

under the supervision of the State Bank of India into which the entire

proceeds of JSPL were being deposited.

17. It was urged on behalf of JSPL that in light of this Court’s directions

dated 15.01.2020 in I.A. No. 186810 of 2019, and the consequent

undertaking filed by the lessee (SMPL) on 16.01.2020 to comply with the

same, no dispute indeed survived between the consequent buyer (JSPL)

and the lessor (State of Odisha). Learned Counsel representing the State of

Odisha and SMPL also did not controvert this fact­situation.

ANALYSIS

18. As noticed above, although the appellant­State had raised several

disputes and questions of law in its written submissions, but at the time of

oral hearing both parties have confined themselves to the solitary issue

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regarding conditional entitlement of JSPL to lift and transport the iron ore

from SMPL’s lease­area to its plants in Odisha and Chhattisgarh. Thus, no

occasion arises for venturing into the numerous legal disputes raised in

the main appeal.

19. Counsel for the appellants have expressed no objection to disposing

of this petition in light of the subsequent developments which have taken

place post the filing of appeal, subject to SMPL filing the aforementioned

undertaking.

CONCLUSION

20. In light of parties having restricted their contentions and our

consequent analysis to the framework of I.A. No. 187580 of 2019 (moved

for directions by JSPL), we dispose of all the I.As. as well as the Civil

Appeal with the following directions:

(i) SMPL’s prayer for modification of our order dated

15.01.2020 passed in I.A. No. 186810 of 2019 in WP(C) 114 of

2014, wherein one­month time was granted for payment of dues

as assessed by the CEC, is accepted. SMPL must pay its dues and

give the requisite undertaking by 29 February, 2020 post which

alone it shall be at liberty to resume its mining operations as per

our order dated 15.01.2020.

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(ii) Once SMPL complies with direction no. (i) above, JSPL can

lift the already mined, processed and royalty paid Iron Ore lying at

the dispatch point within SMPL’s premises and transport these

stocks to its plants across the country. The proceeds thereof must

be deposited with the Trust & Retention Account under the

custody of the State Bank of India.

(iii) Failure to comply with these directions shall result in any

such sale being deemed legally void.

……………………….. CJI.

(S. A. BOBDE)

………………………… J.

(B.R. GAVAI)

…………………………. J.

(SURYA KANT)
NEW DELHI
DATED : 30.01.2020

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