Supreme Court Mandates Fresh Mining Leases in Goa, Quashing Second Renewals: Goa Foundation vs. Sesa Sterlite Ltd. (2018)

Date of the Judgment: 7 February 2018

Citation: (2018) INSC 123

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

Is the exploitation of natural resources for profit more important than environmental protection and the well-being of local communities? The Supreme Court of India recently addressed this critical question in a case concerning iron ore mining in Goa. The court examined whether the Goa state government acted correctly in granting second renewals of mining leases, or if it should have issued fresh leases as previously directed. This judgment is a significant step in balancing economic interests with environmental concerns.

The Supreme Court bench comprised Justices Madan B. Lokur and Deepak Gupta. The judgment was authored by Justice Madan B. Lokur.

Case Background

The case arose from widespread concerns about illegal mining of iron ore and manganese ore in Goa. The Government of India, acting on information about these illegal activities, appointed Justice M.B. Shah, a former judge of the Supreme Court, as a commission of inquiry on 22nd November, 2010. The commission’s mandate was to investigate the extent of illegal mining, identify those involved, and recommend remedial measures.

Justice Shah submitted his report on 15th March, 2012, and another on 25th April, 2012. Following these reports, the Government of Goa suspended all mining operations in the state on 10th September, 2012, effective from 11th September, 2012. The Ministry of Environment and Forests (MoEF) also suspended the environmental clearances of 137 mines in Goa on 14th September, 2012.

Subsequently, the Goa Foundation filed a Public Interest Litigation (PIL) in the Supreme Court seeking termination of mining leases that violated various statutes. Several mining lease holders also filed writ petitions in the Bombay High Court, challenging the suspension of mining operations and environmental clearances. These cases were then transferred to the Supreme Court.

Timeline:

Legal Framework

The judgment primarily revolves around the interpretation and application of the Mines and Minerals (Development and Regulation) Act, 1957 (the MMDR Act), particularly Section 8(3). This section deals with the renewal of mining leases and states:

“Notwithstanding anything contained in sub-section (2), if the State Government is of opinion that in the interests of mineral development it is necessary so to do, it may, for reasons to be recorded, authorise the renewal of a mining lease in respect of minerals not specified in Part A and Part B of the First Schedule for a further period or periods not exceeding twenty years in each case.”

The court also considered the implications of the Environment (Protection) Act, 1986, and the notifications issued under it, specifically the Environmental Impact Assessment (EIA) Notifications of 1994 and 2006. The judgment also touches upon Article 14 (right to equality) and Article 39(b) (equitable distribution of resources) of the Constitution of India.

Arguments

Goa Foundation’s Submissions:

• ✓ The Goa Foundation argued that the Supreme Court’s previous judgment in Goa Foundation v. Union of India mandated the grant of “fresh leases” and not second renewals.
• ✓ They contended that the State of Goa should have adopted a competitive bidding process for granting fresh leases to maximize revenue and ensure transparency.
• ✓ They argued that the environmental clearances should have been fresh and not merely a lifting of the abeyance.

Mining Lease Holders’ Submissions:

• ✓ The mining lease holders argued that the renewal of a mining lease is equivalent to the grant of a fresh lease. They cited several judgments to support this view.
• ✓ They contended that the State of Goa had already agreed to renew their leases and had collected stamp duty, creating a legitimate expectation of renewal.
• ✓ They relied on a previous order of the Supreme Court in Common Cause v. Union of India to support their contention that second renewals were permissible.

State of Goa’s Submissions:

• ✓ The State of Goa initially argued that the Supreme Court’s decision in Goa Foundation required the grant of fresh leases and not second renewals.
• ✓ However, after the Bombay High Court’s decision, the State contended that it was bound by the High Court’s order to execute second renewals.
• ✓ The State also argued that it had to balance the need for revenue with the need to protect the livelihoods of those dependent on mining.

Union of India’s Submissions:

• ✓ The Union of India supported the need for fresh leases and a transparent process for allocation of natural resources.
• ✓ The Union of India highlighted the need for environmental protection and compliance with the law.

Sub-Submissions Table:

Innovativeness of the argument: The Goa Foundation’s argument was innovative in that it emphasized the need to interpret the Supreme Court’s previous order strictly, pushing for a complete break from the past practices of mining lease renewals. The mining lease holders’ argument was innovative in that they sought to equate renewal with fresh grant, relying on previous rulings, to maintain their leases.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues for consideration:

1. Whether, in view of the decision in Goa Foundation, only fresh leases were to be granted by the State of Goa and not second renewals.
2. Whether, for granting fresh leases, the State of Goa should have introduced competitive bidding or the auction process.
3. Assuming the decision to grant a second renewal to the mining lease holders was valid, whether the second renewals were in accordance with law.
4. Whether, in view of the decision in Goa Foundation, fresh environmental clearances were required to be obtained by the mining lease holders.
5. Whether the impugned judgment and order passed by the High Court in Lithoferro on 13th August, 2014 was erroneous.

Treatment of the Issue by the Court

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

Authorities

The Supreme 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?

✓ Goa Foundation v. Union of India [(2014) 6 SCC 590]:* The Court interpreted its previous judgment to clarify that “fresh leases” meant a new grant, not a renewal of existing leases.

✓ State of M.P. v. Krishnadas Tikaram [1995 Supp (1) SCC 587]:* The Court distinguished this case, stating it was not applicable for the present case.

✓ Delhi Development Authority v. Durga Chand Kaushish [(1973) 2 SCC 825]:* The Court acknowledged the general principle that renewal is a fresh lease but distinguished it from the requirement for granting a fresh lease.

✓ Centre for Public Interest Litigation v. Union of India [(2012) 3 SCC 1]:* The Court discussed this case in the context of whether auction is the only method for allocating natural resources, clarifying it is not a constitutional mandate for all resources.

✓ Natural Resources Allocation, Special Reference No. 1 [(2012) 10 SCC 1]:* The Court extensively relied on this case to clarify that auction is not the only permissible method for disposal of all natural resources.

✓ Tata Iron & Steel Co. Ltd. v. Union of India [(1996) 9 SCC 709]:* The Court cited this case to discuss the concept of mineral development under Section 8(3) of the MMDR Act, emphasizing that it includes captive mining, equitable distribution, and assessment of industrial requirements.

✓ M.C. Mehta v. Union of India [(2004) 12 SCC 118] and Common Cause v. Union of India [(2017) 9 SCC 499]:* The Court relied on these cases to emphasize that renewal of a mining lease after 27-1-1994 requires fresh environmental clearance.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the following:

• ✓ The need to enforce the rule of law and prevent further illegal mining activities.
• ✓ The importance of environmental protection and the health of the local population.
• ✓ The fact that the mining operations were primarily for commercial purposes and did not serve the public good.
• ✓ The State of Goa’s hasty decision to grant second renewals, which appeared to be motivated by revenue concerns rather than the interests of mineral development.
• ✓ The multiple violations of environmental and mining regulations by the mining lease holders.
• ✓ The need for a transparent process for allocation of natural resources.

Sentiment Analysis Table:

Fact:Law Ratio Table:

The Court’s decision was significantly influenced by the factual context of widespread illegal mining, environmental damage, and the State’s hasty actions. While the legal framework was crucial, the factual matrix played a larger role in shaping the Court’s reasoning.

Logical Reasoning Flowchart:

Key Takeaways

• ✓ The Supreme Court has made it clear that the State of Goa was required to grant fresh mining leases and not second renewals.
• ✓ The court emphasized that the exploitation of natural resources must be balanced with environmental protection and the well-being of local communities.
• ✓ The judgment highlights the importance of transparency and fairness in the allocation of natural resources.
• ✓ The decision underscores that the rule of law must be followed, and that authorities cannot act hastily to circumvent legal requirements.
• ✓ Mining lease holders must obtain fresh environmental clearances for their mining projects.
• ✓ The State of Goa is directed to expedite the recovery of dues from mining lease holders.

Potential Future Impact:

• ✓ This judgment will likely lead to a more transparent and regulated mining sector in Goa.
• ✓ It will serve as a precedent for other states to follow in the allocation of natural resources.
• ✓ The decision will have a significant impact on the mining industry, emphasizing the need for sustainable and responsible mining practices.
• ✓ It will set a precedent for balancing economic interests with environmental and social considerations.

Directions

The Supreme Court issued the following directions:

• ✓ Mining lease holders were allowed to continue operations until 15th March, 2018, after which they must stop until fresh leases and environmental clearances are obtained.
• ✓ The State of Goa was directed to grant fresh mining leases in accordance with the MMDR Act.
• ✓ The Ministry of Environment and Forest was directed to grant fresh environmental clearances to those who obtain fresh mining leases.
• ✓ The State of Goa was directed to expedite the reports from the Special Investigation Team and the team of Chartered Accountants and implement them.
• ✓ The State of Goa was directed to expedite the recovery of dues from the mining lease holders.