Supreme Court permits sale of already mined ore to pay compensation: Common Cause vs. Union of India (06 January 2021)

LEGAL ISSUE: Whether mining leaseholders can be permitted to sell already mined ore to pay compensation for excess production.

CASE TYPE: Mining Law

Case Name: Common Cause vs. Union of India & Ors.

Judgment Date: 06 January 2021

Date of the Judgment: 06 January 2021

Citation: Not Available

Judges: S.A. Bobde, CJI, A.S. Bopanna, J., and V. Ramasubramanian, J.

Can mining leaseholders sell already mined minerals to pay compensation for excess production? The Supreme Court addressed this question while considering applications from various mining leaseholders seeking permission to sell their existing stock of minerals to pay compensation demanded by the government. The Court allowed the sale of already mined ore under the supervision of a committee to ensure no further mining operations were conducted.

Case Background

Several interlocutory applications were filed in a writ petition concerning mining operations in Odisha. The applicants were mining leaseholders seeking permission to sell already mined ore to pay compensation for excess production, as demanded by the government. The State of Odisha had raised objections regarding the validity of the leases and the lack of necessary clearances. The Supreme Court had previously directed the leaseholders to pay compensation for excess production.

Timeline

Course of Proceedings

The applications were filed in a writ petition (Writ Petition (C) No. 114 of 2014) before the Supreme Court. The applicants were seeking permission to sell the already mined ore to pay the compensation amount. The State of Odisha raised objections regarding the validity of the mining leases and the requisite clearances. The Supreme Court considered the submissions of all parties and the amicus curiae before passing the order.

Legal Framework

The Court considered the provisions of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), specifically:

• Section 8A(6) of the MMDR Act, 1957: This provision, as amended, deals with the extension of mining leases. The applicant in I.A. Nos. 131281 and 131288 of 2019 claimed that their lease was extended till 31.03.2020 under this provision.
• Section 21(5) of the MMDR Act, 1957: This provision deals with the recovery of compensation for illegal mining. The applicant in I.A. No. 150858 of 2019 was directed to pay compensation under this provision.

Arguments

Arguments of the Applicants

• The applicants, who were mining leaseholders, argued that they had already mined the ore and were willing to sell it to pay the compensation demanded by the government.
• They contended that they had deposited part of the compensation amount and sought permission to sell the remaining stock to clear their dues.
• Some applicants argued that their leases were valid and should be extended under Section 8A(6) of the MMDR Act, 1957.

Arguments of the State of Odisha

• The State of Odisha contended that some of the mining leases had expired and were not operational.
• They argued that some applicants lacked the necessary statutory clearances for mining operations.
• The State also stated that they had no objection to the sale of the already mined ore to pay the compensation amount.

Arguments of the Writ Petitioner

• The writ petitioner, represented by Mr. Prashant Bhushan, argued that while there was no objection to the sale of already mined material, there was a risk of misuse if the sale was not supervised.
• They suggested that an independent committee should oversee the sale to ensure no further mining operations were conducted.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in this order. However, the core issue was:

• Whether the applicants should be permitted to sell the already mined ore to pay the compensation amount demanded by the government, and under what conditions.

Treatment of the Issue by the Court

Authorities

The Court did not explicitly cite any cases or books in this order. However, it did refer to:

• Section 8A(6) of the Mines and Minerals (Development and Regulation) Act, 1957: Regarding the extension of mining leases.
• Section 21(5) of the Mines and Minerals (Development and Regulation) Act, 1957: Regarding compensation for illegal mining.
• Order dated 15.01.2020 of the Supreme Court in I.A. No.30915 of 2019: The State Government referred to this order, which allowed the sale of raised and disposed stock to pay compensation.

Authorities Table

Judgment

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

How each authority was viewed by the Court?

• Section 8A(6) of the MMDR Act, 1957: The Court did not make a specific finding on the validity of the lease extensions claimed under this provision but allowed the sale of already mined ore.
• Section 21(5) of the MMDR Act, 1957: The Court acknowledged that compensation was due under this provision and directed the sale proceeds to be used to pay the dues.
• Order dated 15.01.2020 of the Supreme Court in I.A. No.30915 of 2019: The Court followed the precedent of allowing the sale of already mined ore to pay compensation.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to balance the interests of the mining leaseholders, the State, and the environment. The Court aimed to ensure that the compensation for excess production was paid to the government while preventing further illegal mining activities. The appointment of an independent committee shows the Court’s concern about the potential for misuse of the permission to sell already mined ore.

Sentiment Analysis

Fact:Law Ratio

Logical Reasoning

The Court considered the submissions of all parties and aimed to facilitate the recovery of compensation while preventing further illegal mining. The decision to appoint a committee reflects the Court’s concern about potential misuse of the permission to sell the existing stock. The Court allowed the sale of already mined ore, emphasizing that no new mining operations should be carried out under the guise of this order. The Court stated:

“Subject to the supervision of the said Committee, adequately and ably assisted by the concerned authorities of the State of Odisha, the applicant is permitted to sell and remove the material already mined.”

The Court also made it clear that the sale proceeds should go directly to the treasury of the State Government:

“The sale proceeds should go directly to the treasury of the State Government to be adjusted towards compensation.”

The Court also emphasized that no new mining operations should be conducted under the cover of this order:

“The Committee shall ensure that no mining operation is undertaken under the cover of this Order.”

Key Takeaways

• Mining leaseholders can be permitted to sell already mined ore to pay compensation for excess production.
• Such sales must be conducted under the supervision of an independent committee to prevent misuse and illegal mining.
• The sale proceeds should go directly to the State treasury to be adjusted towards the compensation amount.
• No new mining operations are allowed under the guise of selling existing stock.

Directions

The Supreme Court directed the following:

• The applicants were permitted to sell and remove the already mined ore under the supervision of a committee consisting of Hon’ble Mr. Justice Bijoy Krishna Patel and Hon’ble Mr. Justice S.C. Parija.
• The committee was to be assisted by the concerned authorities of the State of Odisha.
• The sale proceeds were to go directly to the treasury of the State Government to be adjusted towards compensation.
• The committee was to ensure that no mining operation was undertaken under the cover of this order.
• The State Government was permitted to process the applications for mining operations subject to all statutory clearances being obtained.

Development of Law

The ratio decidendi of this case is that mining leaseholders can be allowed to sell already mined ore to pay compensation, provided that the sale is conducted under the supervision of an independent committee to prevent misuse and ensure no further illegal mining activities are carried out. This order clarifies the conditions under which such sales can be permitted, balancing the need for compensation recovery with environmental protection. This order does not change the previous position of law, but rather provides a procedural mechanism for implementation of the existing laws.

Conclusion

The Supreme Court’s order in Common Cause vs. Union of India allows mining leaseholders to sell their existing stock of minerals to pay compensation for excess production. This permission is granted under the supervision of an independent committee to prevent misuse and ensure no further mining operations are conducted. The decision balances the need for compensation recovery with the prevention of illegal mining activities.