Supreme Court permits transportation of already mined iron ore: Chowgule and Company Private Limited vs. Goa Foundation & Ors. (2020) INSC 47

Date of the Judgment: January 30, 2020
Citation: (2020) INSC 47
Judges: S.A. Bobde, CJI, B.R. Gavai, and Surya Kant, JJ.
Can mining leaseholders transport iron ore that was mined before a court-ordered deadline, or does the deadline apply to both mining and transportation? The Supreme Court of India addressed this question in a set of appeals concerning mining operations in Goa. The core issue was whether a previous Supreme Court order, which allowed mining operations to continue until March 15, 2018, also implicitly restricted the transportation of already mined ore after that date. This judgment clarifies the extent of the restrictions imposed on mining activities and the subsequent transportation of mined minerals. The bench was composed of Chief Justice S.A. Bobde and Justices B.R. Gavai and Surya Kant.

Case Background

The case has a complex history stemming from concerns about the exploitation of natural resources in Goa’s iron ore mining sector. In 2010, the Government of India appointed Justice M.B. Shah to investigate these issues. Justice Shah submitted reports in 2012, which led to the Goa government suspending all mining operations from September 11, 2012. The Ministry of Environment and Forest (MoEF) also put environmental clearances for 137 mines in abeyance from September 14, 2012. Following this, the Goa Foundation filed a Public Interest Litigation (PIL) in the Supreme Court, seeking the termination of mining leases that were violating statutes. Simultaneously, several mining leaseholders challenged the reports and orders in the Bombay High Court, which were later transferred to the Supreme Court.

In a previous judgment, Goa Foundation vs. Union of India & Others (Goa Foundation-I), the Supreme Court held that all iron ore and manganese ore leases had expired on November 22, 2007, and any mining operations after that date were illegal. The Court also ruled that a second renewal of mining leases required an express order from the State Government, based on the interest of mineral development and in conformity with constitutional provisions. Subsequently, the Bombay High Court directed the State of Goa to execute lease deeds for leaseholders who had paid stamp duty and to consider other applications in line with the Supreme Court’s directions in Goa Foundation-I. This order was challenged in Goa Foundation v. Sesa Sterlite Limited and Others (Goa Foundation-II), where the Supreme Court set aside the second renewals of mining leases granted by the State of Goa, allowing mining operations to continue only until March 15, 2018.

Timeline

Course of Proceedings

Following the Supreme Court’s decision in Goa Foundation-II, which allowed mining operations to continue until March 15, 2018, the State of Goa decided on March 21, 2018, to permit the transportation of iron ore that had been mined before the deadline, provided that the royalty was paid. The Goa Foundation challenged this decision in the Bombay High Court, which issued an interim order on March 28, 2018, suspending all transportation of minerals. This interim order was challenged in the Supreme Court. The Supreme Court, on April 4, 2018, allowed the transportation of royalty-paid ore that was already on the jetties before March 15, 2018. A similar order was passed on May 11, 2018, in the present lead appeal. However, the Bombay High Court, on May 4, 2018, quashed the State of Goa’s decision, stating that the Supreme Court’s order in Goa Foundation-II meant that both mining and transportation had to cease by March 15, 2018. This led to the present appeals before the Supreme Court.

Legal Framework

The judgment refers to the following legal provisions:

• Section 3 of the Commissions of Inquiry Act, 1952: This section empowers the government to appoint a Commission of Inquiry to investigate any matter of public importance.
• Section 8(3) of the Mines and Minerals (Development and Regulation) Act, 1957: This section deals with the renewal of mining leases and requires the State Government to record reasons for renewal, ensuring it is in the interest of mineral development.
• Rule 12(1)(gg) of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016: This rule allows a lessee, upon the expiry or termination of a lease, to remove any excavated ore within six months, provided they have paid all dues.

Arguments

Appellant’s Arguments:

• The appellants argued that the Supreme Court’s order in Goa Foundation-II only prohibited mining activities after March 15, 2018, but did not restrict the transportation of ore mined before that date. They contended that the phrase “manage their affairs” in the order should not be interpreted to include a restriction on transportation.
• They relied on the Supreme Court’s orders dated April 4, 2018, and May 11, 2018, which permitted the transportation of royalty-paid ore lying on jetties before March 15, 2018, to support their argument that the intent was to allow transportation of already mined ore.
• The appellants cited Rule 12(1)(gg) of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016, which allows six months to remove excavated minerals after the lease term expires. They argued that this legislative policy supports allowing the transportation of already mined ore.

Respondent’s Arguments (Goa Foundation):

• The Goa Foundation argued that the mining leases had expired in 2007, and the mining operations were illegal. They contended that the Supreme Court’s order in Goa Foundation-II was meant to stop all mining-related activities, including transportation, after March 15, 2018.
• They submitted that the High Court had correctly interpreted the phrase “manage their affairs” to include all mining and transportation activities.
• They argued that allowing the transportation of 2.2 MT of iron ore mined between February 7, 2018, and March 15, 2018, would reward illegal mining activities.

Issues Framed by the Supreme Court

The core issue before the Supreme Court was:

1. Whether the directions in paragraph 154.6 of the judgment in Goa Foundation-II, which allowed mining operations to continue until March 15, 2018, also restricted the transportation of already mined minerals after that date.

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:

• Goa Foundation vs. Union of India & Others [(2014) 6 SCC 590] (Goa Foundation-I) – Supreme Court of India: This case established that all mining leases in Goa had expired on November 22, 2007, and that any mining operations after that date were illegal. It also outlined the requirements for a second renewal of mining leases.
• Goa Foundation v. Sesa Sterlite Limited and Others [(2018) 4 SCC 218] (Goa Foundation-II) – Supreme Court of India: This case set aside the second renewals of mining leases granted by the State of Goa and allowed mining operations to continue only until March 15, 2018.
• Rule 12(1)(gg) of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016: This rule allows a lessee six months to remove excavated minerals after the lease term expires, provided they have paid all dues.

Judgment

How each authority was viewed by the Court?

• Goa Foundation vs. Union of India & Others [(2014) 6 SCC 590] (Goa Foundation-I) – Supreme Court of India: The Court acknowledged that the mining leases had expired in 2007 and the mining operations were illegal after that date. However, the court focused on the issue of transportation of already mined minerals.
• Goa Foundation v. Sesa Sterlite Limited and Others [(2018) 4 SCC 218] (Goa Foundation-II) – Supreme Court of India: The Court analyzed the directions given in this case, particularly paragraph 154.6, and clarified that the restriction was only on mining operations after 15.03.2018 and not on transportation.
• Rule 12(1)(gg) of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016: The Court relied on this rule to support the argument that legislative policy allows for a period to remove excavated minerals after lease expiry.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the literal interpretation of its previous order in Goa Foundation-II, the subsequent orders passed by the same bench, and the legislative policy regarding the removal of minerals after lease expiry. The Court emphasized that the previous order specifically prohibited mining operations after March 15, 2018, but did not explicitly restrict the transportation of already mined ore. The Court also considered the fact that the same bench had, in subsequent orders, permitted the transportation of royalty-paid ore lying on the jetties before March 15, 2018. Additionally, the Court noted that Rule 12(1)(gg) of the Minerals Concession Rules, 2016, provides a six-month period for lessees to remove excavated minerals, which supported the argument for allowing transportation.

The Court’s reasoning was primarily based on a plain and literal interpretation of the directions given in paragraph 154.6 of the judgment in Goa Foundation-II. The Court noted that the direction was two-fold: firstly, to allow mining operations till 15.03.2018 and secondly, to stop all mining operations from 16.03.2018. The Court observed that the order only prohibited mining operations after 15.03.2018 and did not restrict transportation of the already mined ore. The Court also considered the subsequent orders passed by the same bench on 04.04.2018 and 11.05.2018, which permitted transportation of royalty-paid ore lying on the jetties before 15.03.2018. The Court also relied on Rule 12(1)(gg) of the Minerals Concession Rules, 2016, which provides a six-month period for removing excavated minerals, to support its conclusion.

The Court rejected the interpretation of the High Court that the phrase “manage their affairs” included a restriction on transportation. The Court also did not find any rationale in differentiating between iron ore lying at the jetties, stockyards, or pitheads, if the same was mined prior to 15.03.2018. The Court also noted that the ownership of the ore was with the party that had raised the ore, and they should not be prevented from transporting their own ore, subject to payment of royalty.

“Applying the principle of plain and literal interpretation, the direction would stop all mining activities from 16.3.2018. However, from the date of the order i.e. 7.2.2018 till 15.3.2018, the lessees were permitted to continue with the mining activities and manage their affairs.”

“It could thus be seen, that the Division Bench which had delivered the judgment in Goa Foundation-II (supra) by subsequent orders dated 4.4.2018 and 11.5.2018 has permitted the iron ore which was royalty paid and which was lying on the jetties on or before 15.3.2018 to be loaded on the barges and on the vessels so that it can be transported to their destinations.”

“We do not find, that there is any rationale in differentiating between the iron ore which is either at the jetties or at the stockyards or pitheads, if the same is mined prior to the date of the prohibition i.e. 15.3.2018.”

There were no minority opinions in this judgment. The bench was unanimous in its decision.

Key Takeaways

• Mining leaseholders are permitted to transport iron ore that was mined before March 15, 2018, provided that the royalty has been paid.
• The Supreme Court’s order in Goa Foundation-II only restricted mining operations after March 15, 2018, and did not restrict the transportation of already mined ore.
• The legislative policy, as reflected in Rule 12(1)(gg) of the Minerals Concession Rules, 2016, supports allowing a period for the removal of excavated minerals after lease expiry.
• This judgment clarifies the scope of restrictions imposed on mining activities and the subsequent transportation of mined minerals, providing clarity to mining leaseholders in similar situations.

Directions

The Supreme Court directed that the transportation of the mineral would be only in respect of such minerals on which royalty is paid. The appellants/mining leaseholders were permitted to transport the royalty-paid ore/mineral from the jetties/stockyard or pitheads on the basis of the valid transit permits issued to them by the competent authority of the State Government. The Court also directed that all such transportation should be completed within a period of six months from the date of the judgment.

Development of Law

The ratio decidendi of this case is that a restriction on mining operations does not automatically imply a restriction on the transportation of already mined minerals. The Supreme Court clarified that its previous order in Goa Foundation-II only prohibited mining operations after March 15, 2018, and did not restrict the transportation of minerals mined before that date. This interpretation is consistent with the legislative policy of allowing a period for the removal of excavated minerals after lease expiry. This judgment clarifies the scope of restrictions imposed on mining activities and the subsequent transportation of mined minerals, providing clarity to mining leaseholders in similar situations.

Conclusion

In conclusion, the Supreme Court allowed the appeals, setting aside the Bombay High Court’s judgment. The Court upheld the State of Goa’s decision to permit the transportation of iron ore mined before March 15, 2018, provided that royalty was paid. The judgment clarifies that a restriction on mining does not automatically imply a restriction on the transportation of already mined minerals. The Court also directed that all transportation should be completed within six months from the date of the judgment, and all other directions in Goa Foundation-II should be strictly complied with by the State of Goa.