The Supreme Court today cancelled mining leases renewed in favour of 88 leaseholders by the State Government of Goa, after finding that the licences had been renewed in contravention of Supreme Court directions passed in 2014.
A bench comprising of Justices Madan B Lokur and Deepak Gupta rendered the judgment in a PIL initiated by NGO, Goa Foundation.
Goa Foundation had approached the Supreme Court in 2012, following reports made by a Commission headed by former Supreme Court judge, Justice MB Shah on the illegal mining in different States, including Goa. The Commission had been constituted to investigate reports of mining activities being conducted in violation of the Mines and Minerals (Development and Regulation) Act (‘MMDR Act’), 1957, and the rules made thereunder.
After reports by the MB Shah Commission were tabled in the Parliament, mining operations were suspended by the Goa government and environmental clearances granted in respect of the same were kept in abeyance by the Union Ministry of Environment and Forests (MoEF), from September 2012 onwards.
The Goa Foundation had prayed, inter alia, for directions to the Union of India and the State of Goa to take steps to terminate the mining leases where mining was carried out in violation of various statutes.
In 2014, the Court found that all iron ore and manganese ore leases had expired on November 22, 2007. Consequently, any mining operations carried after the said date in Goa were held to be illegal. The Court also directed that the orders made to suspend mining operations and keep environmental clearances at abeyance would continue until decisions are taken to grant fresh leases and fresh environmental clearances for mining projects.
The verdict was delivered after taking into consideration the Goa Mineral Policy of 2013, as well as the report of the Vishwanath Anand Expert Appraisal Committee (EAC). The EAC, which was appointed in 2013 by the Supreme Court, had concluded that,
“…without exception, every proponent to whom an environment clearance was issued has either violated its conditions or has furnished information in the application which has been distant from the truth.”
Meanwhile, the Bombay High Court, in Lithoferro v State of Goa, held that the Supreme Court verdict of 2014 would not prevent the Goa government from granting second lease renewal in certain cases. The same was directed to be granted in terms of Section 8(3) of the MMDR Act, to mining leaseholders who had applied for the same before the prescribed expiry period and paid the prescribed stamp duty pursuant to Government orders and the 2013 mining policy (i.e. those who had been given in-principle renewal).
Following the Bombay High Court verdict, the Goa government introduced another Mining Lease Policy in 2014 i.e. the Goa Grant of Mining Leases Policy. This policy ruled out competitive bidding for grant of mining licenses and informed that leases would be renewed in terms of the High Court Judgment. Subsequently, the Government proceeded to grant second renewals for 88 mining leaseholders.
These renewals were in turn challenged before the Supreme Court by the Goa Foundation, as having been made in violation of the Court’s judgment of 2014.
In the judgement rendered today, the Court found that second round of renewal of leases were in contravention of the law laid down in its 2014 judgment and therefore, liable to be quashed.
The 2014 Supreme Court verdict directed the grant of fresh leases not second renewals
The Bench accepted the petitioner’s contention that in its 2014 Goa Foundation verdict, the Court had directed the Government of Goa to grant fresh leases for mining activity, in an effort to end the sordid chapter of illegal mining.
“The Court was quite obviously aware that it was concerned, inter alia, with the second renewal of mining leases and yet it chose to recount the factual situation, make a declaration and pass a direction without adverting to the possibility of a second renewal of a mining lease.”
This was particularly so, given the rampant illegal mining that was allowed to continue for about five years, between 2007 and 2012, as also evident from the report in the 2013 Mining Policy of Goa. Given these findings, it was held that,
“… we have no doubt that the Court really did intend the State of Goa to consider the grant of fresh leases in accordance with law.”
The contrary interpretation of the Bombay High Court, by virtue of which it had directed the Goan Government to grant second renewals to certain leaseholders, was also held to be totally incorrect.
The use of the Bombay High court judgement as a shield to grant second renewals in terms of its 2014 Mining Police was also therefore liable to be quashed. The Court observed,
“The State of Goa appears to have taken the view that challenging the decision of the High Court (and therefore abiding by the decision of this Court) would delay the commencement of mining operations. The State 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…
…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 in Goa Foundation and must be and is quashed.”
Impugned renewals were meant to benefit private entities alone
“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.”
These words set the tone of the judgement as the Court went on to pull up the government of Goa as well as the Union Government for disregarding the interests of the environment as well as citizens while doling out mining leases.
The Court also made scathing remarks regarding the cost at which the mining companies benefited from the irregularities in granting leases. It observed that between 2006 and 2012, the extraction of iron ore in Goa was nothing but a free-for-all situation. The Court remarked,
“The thought of protecting and preserving the environment, concern for the fragile ecology of Goa was far from the thoughts of the stakeholders – even the well-being of the average Goan was not taken into consideration by the stakeholders. A reading of the initial paragraphs of the Mineral Policy suggests that nothing short of rapacious mining was going on in Goa. Who were the beneficiaries of all this rapaciousness? Could all this be ignored?
…The primary beneficiary of this was, of course, the mining lease holder, a private entity, and the price was paid by the average Goan who had to suffer a polluted environment and witness the damage to the State’s ecology.”.
On the other hand, the value addition to the Indian economy was insignificant given that the iron ore in Goa had minimal Iron content. The Court observed,
“…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 Indian industry. The only advantage that iron ore extraction gave to the State was in terms of royalty, but the larger benefit accrued to the private mining lease holder who could obtain a mining lease on renewal virtually free and without any social or welfare purpose. In other words, the State sacrificed maximizing revenue for no apparent positive reason, virtually surrendering itself to the commercial and profit-making motives of private entrepreneurs and ignoring the interests of Goan society in general.”
It was noted that the renewals were made even before the final policy statement of the 2014 Mining Leases Policy was published on January 20, 2015. The renewals were granted, ignoring several relevant factors, including 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?”
The Court reasoned that some light may be thrown on the motive behind such hasty decisions if the timeline leading up to the impugned events were scrutinised.
The Court noted that the Goa government commenced the granting of second renewals on November 5, 2014, which was immediately after the 2014 Mining Lease Policy was uploaded on the Goan Government’s website on November 4. The process was completed on January 12, 2015, by which time the Government granted the second renewal of 88 mining leases.
These dates assume significance in light of the fact that the Union Government was due to implement a policy change with respect to the mining industry around the same time.
The implementation of a 2014 proposal for amendment to the MMDR Act would have made it mandatory for the Goan government to follow a competitive bidding process to grant mining leases. On November 17, 2014, the draft policy was published online by the Government of India.
On January 12, 2015, the President promulgated the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015, intended to carry forward this proposed amendment. As per the new provisions, the grant of mining leases for notified minerals would be through competitive bidding or the auction process.
However, between the approval of the Ordinance by the Government on January 5 and its promulgation by the President a week later, the Goa government had granted as many as 56 renewals. Throughout the course of the judgment, this timeline has served to support the conclusion that the impugned renewals were hastily made to evade the consequences following the amendment. The Court observed,
“It is important to mention here that the approval of the Ordinance by the Cabinet of the Government of India became public knowledge on 5th January, 2015 and it is within a week from that date that the Government of Goa granted a second renewal to 25 mining leases and to make matters worse, a second renewal was granted to 31 mining leases on 12th January, 2015 the day the Ordinance came into force making a total of 56 renewals of mining leases…
… In fact in the period from 5th January, 2015 to 12th January, 2015 the Government of Goa granted a second renewal to as many as 56 mining leases and from 17th November, 2014 the State of Goa granted a second renewal to as many as 75 mining leases. The sudden spurt of renewal of mining leases is beyond comprehension. The judgment and order of the High Court in Lithoferro cannot be used as a shield for explaining the haste.”
The Court observed that,
“The haste with which the State took its decision also needs to be understood in the background of the fact that mining had been suspended by the State in September 2012 that is more than two years prior to the grant of second renewals. The urgency suddenly exhibited by the State therefore seems to be make-believe and motivated rather than genuine.”
This conclusion was also supported by information on record revealing that except for 13 mining leases, all the others were renewed after publication of the draft Mines and Minerals (Development and Regulation) Act, 2014 on 17th November, 2014.
Therefore, the Court held,
“…on an overall consideration of all aspects of the case, we are of opinion that the decision of the State of Goa to quickly renew the mining leases while ostensibly complying with the requirements of Section 8(3) of the MMDR Act and thereby jettisoning the rule of law was unjustified.”
The MoEF had also lifted of abeyance orders on environmental clearances with respect to 72 mining companies, on request by the Goan government in 2015. The Court found the same appeared to have been done without any application of mind and at the behest of the State of Goa. The Court found fault in such mechanical actions having been taken, without considering the multiple illegalities and irregularities committed by the mining lease holders and without considering relevant material. Therefore, the same was also held to be void.
On the grounds stated above, the Court arrived at the following, among other, conclusions:
The State of Goa was obliged to grant fresh mining leases in accordance with law and not second renewals to the mining lease holders.The second renewal of the mining leases granted by the State of Goa is liable to be set aside and is quashed.The decision of the Bombay High Court in Lithoferro v State of Goa (and batch) giving directions different from those given by this Court in Goa Foundation is set aside.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.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.The State of Goa will take all necessary steps to ensure that the Special Investigation Team and the team of Chartered Accountants constituted pursuant to the Goa Grant of Mining Leases Policy 2014 give their report at the earliest and the State of Goa should implement the reports at the earliest, unless there are very good reasons for rejecting them.The State of Goa will take all necessary steps to expedite recovery of the amounts said to be due from the mining lease holders pursuant to the show cause notices issued to them and pursuant to other reports available with the State of Goa including the report of Special Investigation Team and the team of Chartered Accountants.