Illegal Iron Ore Mining in Odisha: Supreme Court Imposes Penalty on Sarda Mines Pvt. Ltd.

The Supreme Court of India recently ruled on the illegal mining activities carried out by Sarda Mines Pvt. Ltd. (SMPL) in Odisha. The case, which stemmed from a writ petition filed by Common Cause, addressed issues related to mining lease violations, environmental clearances, and excessive iron ore extraction. The ruling reinforced the government’s regulatory authority over the mining industry and upheld the penalties for companies violating environmental and mining laws.

Background of the Case

The legal battle began when Common Cause, a public interest group, filed a writ petition in 2014 alleging that SMPL had engaged in large-scale illegal mining at the Thakurani Mines, Block B, in Keonjhar, Odisha. The Central Empowered Committee (CEC), which reviewed the case, highlighted seven key areas of concern:

• The renewal of the mining lease.
• The validity of the environmental clearance granted to SMPL.
• The sale of iron ore by SMPL without appropriate approvals.
• The diversion of additional land for mining without permission.
• The production of iron ore beyond permitted environmental clearance limits.
• Alleged violations of Rule 37 of the Mineral Concession Rules, 1960.
• The alleged ownership of the mining lease by Jindal Steel and Power Ltd. (JSPL) instead of SMPL.

Legal Issues Addressed

1. Environmental Clearance and Illegal Mining

One of the main issues in this case was whether SMPL had exceeded its permitted mining limits. The company was initially granted permission in 1999 to extract 1,40,000 metric tons per annum (MTPA) of iron ore. However, in 2004, the Ministry of Environment granted environmental clearance to expand production to 4 million metric tons per annum (MTPA).

The Supreme Court ruled that environmental clearance does not have retrospective effect, meaning SMPL could not justify its earlier excessive extraction by referring to the 2004 clearance. The Court observed:

“An environmental clearance is operational only from the date it is granted and cannot be applied retrospectively to validate past illegal mining activities.”

2. Sale of Iron Ore Without Clearance

The Court examined whether SMPL had sold iron ore beyond permitted levels. It was found that the company had engaged in the extraction and sale of Run of Mine (ROM) iron ore—a raw form of iron ore that includes lumps, fines, and waste material. The issue was whether the sale of ROM without proper approvals constituted an illegal act.

The Court concluded that SMPL’s sale of ROM was unlawful because its environmental clearance only permitted the extraction of processed iron ore (lumps). This finding significantly impacted the penalties imposed on SMPL.

3. Penalties and Liability for Excess Mining

The Supreme Court upheld the Central Empowered Committee’s findings that SMPL had engaged in illegal mining. The Court directed the CEC to recalculate the penalties imposed on SMPL based on its excessive iron ore extraction since 2004.

The judgment noted:

“The environmental clearance granted to SMPL was only for iron ore (lumps), and any extraction beyond the approved limit is illegal and liable for penalties.”

Final Judgment

• The Supreme Court directed the Central Empowered Committee (CEC) to reassess the penalties against SMPL for excessive mining.
• SMPL was ordered to submit all relevant mining records to the CEC for verification.
• The Court ruled that environmental clearances cannot be retrospectively applied to justify past illegalities.
• All future mining operations by SMPL must strictly adhere to environmental and mining laws.

Implications of the Judgment

• Strengthening Mining Regulations: This ruling reinforces the regulatory framework governing mining operations and ensures strict compliance with environmental norms.
• Precedent for Future Cases: The judgment sets a precedent for similar cases, ensuring that companies cannot justify illegal mining by citing retrospective environmental clearances.
• Increased Oversight on Mining Leases: The ruling highlights the need for stronger enforcement mechanisms to prevent illegal mining.

Conclusion

The Supreme Court’s decision in Common Cause v. Union of India reaffirms the importance of environmental compliance in the mining sector. The ruling ensures that companies engaging in mining activities adhere to the law and do not exploit regulatory loopholes. This judgment serves as a warning to other companies that environmental violations will not be tolerated and that retrospective justifications for illegal mining will be rejected.

Petitioner Name: Common Cause.
Respondent Name: Union of India & Others.
Judgment By: Justice Madan B. Lokur, Justice Deepak Gupta.
Place Of Incident: Keonjhar, Odisha.
Judgment Date: 12-11-2018.

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