Supreme Court Clarifies Environmental Clearance Scope in Mining: Common Cause vs. Union of India (2018)

Date of the Judgment: 12 November 2018

Citation: Not Available in the Document

Judges: Madan B. Lokur, J. and Deepak Gupta, J.

Can a mining company extract any amount of raw iron ore if its environmental clearance specifies a limit for iron ore lumps? The Supreme Court of India recently addressed this question, clarifying the scope of environmental clearances in mining operations. This case revolves around Sarda Mines Private Limited (SMPL) and its mining activities in Odisha. The court examined whether SMPL’s environmental clearance for iron ore lumps allowed them to extract unlimited raw iron ore, and also if the environmental clearance could be applied retrospectively. The judgment was delivered by a two-judge bench comprising Justice Madan B. Lokur and Justice Deepak Gupta, with Justice Lokur authoring the opinion.

Case Background

The case involves a mining lease granted to Sarda Mines Private Limited (SMPL) for 947.046 hectares of land in Keonjhar, Odisha, for 20 years, from 14th August, 2001 to 13th August, 2021. The mining lease pertains to Thakurani Mines, Block B, Village Soyabali. SMPL was initially granted permission on 13th July, 1999, to extract 140,000 MT of iron ore per annum, based on the existing mine’s production in 1966. This permission was for the extraction of iron ore, not specifically iron ore (lump). SMPL did not begin mining operations until after the renewal of their mining lease on 13/14 August, 2001. Subsequently, on 22nd September, 2004, SMPL received environmental clearance for expanding production of iron ore (lump) from 1.5 lakh tonnes per annum (LTPA) to 4.0 million tonnes per annum (MTPA), with a phased increase over several years.

Timeline

Legal Framework

The case primarily involves the interpretation of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Environmental Impact Assessment (EIA) Notification of 1994. The MMDR Act permits the mining of mineral iron ore. The EIA Notification of 1994 requires environmental clearance for mining projects. The court also considered the Mineral Concession Rules of 1960. The court highlighted that the permission granted on 13th July, 1999, was for the extraction of ‘iron ore’ as per the MMDR Act and not specifically ‘iron ore (lump)’.

The relevant part of the permission granted on 13th July, 1999, states:

“Subject: Reopening of iron ore mines in Block -B in village Soyabali of Thakurani iron ore mines in District Keonjhar, Orissa – clarifications reg.

…You should confine excavation only to already broken up area of 94.024 acres as per mining plan approved and limit production to 1,40,000 MTPA [TPA ?]. … In case, you plan any expansion or modernisation then prior approval under the provisions of the EIA Notification of 1994 as amended subsequently should be obtained from the Ministry.”

Arguments

Arguments by SMPL:

• SMPL argued that the environmental clearance granted on 22nd September, 2004, should be given retrospective effect from the date the mining lease was renewed (13/14 August, 2001). This would allow them to extract a larger quantity of iron ore based on the phased increase in production outlined in the environmental clearance.
• SMPL contended that the environmental clearance was for the extraction of iron ore (lump), and they were entitled to extract iron ore (lump) up to the specified limit, without any restriction on the extraction of iron ore ROM (Run of Mine).
• SMPL claimed that the Central Empowered Committee (CEC) had incorrectly calculated excess or illegal mining by confusing iron ore ROM with iron ore (lump).

Arguments by the Respondents/CEC:

• The respondents argued that environmental clearances cannot have retrospective effect and are operational only from the date they are granted.
• The respondents contended that the environmental clearance granted to SMPL was for the expansion of production of iron ore, and not just iron ore (lump). They argued that iron ore (lump) is a by-product of iron ore ROM and that the extraction of iron ore ROM was also limited by the environmental clearance.
• The respondents stated that SMPL had engaged in excess and illegal mining, as the extraction of iron ore ROM was far more than what was permitted by the environmental clearance, even if the environmental clearance was for iron ore (lump).

Innovativeness of the argument: SMPL’s argument that the environmental clearance for iron ore (lump) allowed unlimited extraction of iron ore ROM was innovative, but ultimately rejected by the court.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

1. Whether the environmental clearance granted to SMPL on 22nd September, 2004, has retrospective effect.
2. Whether the environmental clearance granted to SMPL was only with reference to iron ore (lump) or with reference to the mineral iron ore (ROM).
3. Whether SMPL was involved in excess or illegal mining.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court followed the decision in Common Cause v. State of Orissa [(2017) 9 SCC 499]* , which established that environmental clearances do not have retrospective effect.
• The Supreme Court followed the decision in National Mineral Development Corporation Ltd. v. State of M.P. [(2004) 6 SCC 281]*, which clarified that iron ore lumps are a by-product of iron ore ROM.
• The Supreme Court followed the decision in Tata Steel Limited v. Union of India [(2015) 6 SCC 193]*, which observed that in the process of mining, iron ore is extracted (that is ROM) and separated into ore lumps, fines and waste material.
• The Supreme Court interpreted the Mines and Minerals (Development and Regulation) Act, 1957, noting that the Act refers to the mineral iron ore and not to iron ore (lump).

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with ensuring that environmental regulations are strictly followed and that mining companies do not exploit loopholes in environmental clearances to engage in illegal mining. The court emphasized that environmental clearances are not retrospective, and the terminology used in such clearances must be interpreted in a realistic manner that aligns with the intent of the law and the actual mining practices. The court also took into account the fact that SMPL was selling iron ore ROM to Jindal Steel and Power Ltd. and not just iron ore (lump).

The Court’s reasoning was based on the following points:

• The environmental clearance is not retrospective and is operational from the date of grant.
• The permission granted on 13th July, 1999, was for iron ore, not iron ore (lump).
• The MMDR Act refers to the mineral iron ore, not iron ore (lump).
• Iron ore (lump) is a by-product of iron ore ROM.
• SMPL was selling iron ore ROM, not just iron ore (lump).

The court rejected the argument that the environmental clearance for iron ore (lump) allowed unlimited extraction of iron ore ROM. The court stated that such an interpretation would render the environmental clearance meaningless and would be detrimental to the environment and SMPL. The court also found that SMPL had engaged in excess mining by extracting more iron ore ROM than permitted by the environmental clearance.

“We simply cannot accept this submission since it is plainly contrary to the decision of this Court in Common Cause.”

“That lumps are a by-product of the extraction of iron ore ROM is clear from the decision of this Court rendered in National Mineral Development Corporation Ltd. v. State of M.P.”

“On a realistic interpretation to the environmental clearance, for the purposes of calculating excess or illegal production of iron ore, the entire extraction of iron ore ROM is required to be taken into consideration.”

Key Takeaways

• Environmental clearances are not retrospective and are effective from the date of grant.
• Environmental clearances for mining must be interpreted realistically, considering the actual mining process.
• Iron ore (lump) is a by-product of iron ore ROM, and limitations on the production of iron ore (lump) also limit the extraction of iron ore ROM.
• Mining companies cannot exploit loopholes in environmental clearances to engage in illegal mining.
• The Central Empowered Committee (CEC) has the authority to quantify and impose penalties for illegal mining.

Directions

The Supreme Court directed the Central Empowered Committee (CEC) to re-quantify the amount of excessive or illegal mining carried out by SMPL and the consequent penalty within 6 weeks. SMPL and the concerned authorities were directed to provide all relevant records to the CEC for this purpose.

Development of Law

The ratio decidendi of this case is that environmental clearances for mining operations are not retrospective and must be interpreted in a manner that aligns with the actual mining process and the provisions of the MMDR Act. This judgment clarifies that a permission to extract a specific form of mineral (like iron ore lump) does not imply a carte blanche to extract the raw mineral (iron ore ROM) without any limitations. This case reinforces the principle that environmental regulations must be strictly followed, and mining companies cannot exploit loopholes in environmental clearances to engage in illegal mining. The court’s interpretation of the relationship between iron ore ROM and iron ore (lump) is a significant clarification for the mining industry.

Conclusion

In conclusion, the Supreme Court’s judgment in Common Cause vs. Union of India clarifies the scope of environmental clearances in mining operations. The court held that environmental clearances are not retrospective and that the term “iron ore (lump)” in the environmental clearance does not allow for unlimited extraction of iron ore ROM. The court directed the CEC to re-quantify the amount of excessive mining by SMPL and impose a penalty. This judgment reinforces the importance of environmental compliance and prevents mining companies from exploiting loopholes in environmental clearances.