JINDAL VIJAYANAGAR STEEL LIMITED Vs. MSPL LIMITED

JUDGEMENT

(1.) THE above batch of writ appeals are directed against the order dated 7th August, 2008 made in writ petition No. 21608 of 2005, raising the following core issues for our consideration: (i) Whether it is proper for this Court to exercise its power of judicial review under Article 226 of the Constitution of india to adjudicate on the policy decision with respect to substantial development of the State and quash the notification made under Rule 59 (1) of the Mineral concession Rules, 1960 (for short 'mc Rules') notifying the area available for mining iron ore? (ii) Whether the application, for grant of mining lease for an area, without a notification under Rule 59 (1) of the MC rules, 1960 notifying the said area as available for mining, can be considered for grant of mining lease under Section 11 (2) of the Mines and Minerals (Development and regulation) Act, 1957, (for short 'mmdr Act') as, such application is premature and shall not be entertained as per Rule 60 of the MC Rules, 1960 ? and (iii) Whether granting mining lease in consideration of Rule 35 of the MC Rules falls outside the purview of the matters specified under Section 11 (3) of the MMDR Act?

(2.) THE factual matrix of the case which led the first respondent herein (writ petitioner) to file Writ Petition No. 21608 of 2005, is as hereunder:

(3.) IN continuation of the said hearings and in compliance of Rule 26 (1) of the MC Rules, the Government, by proceedings dated 6th December, 2004, impugned herein, after examining the merits of all the applicants in accordance with Section 11 of the MMDR Act and Rule 35 of the MC Rules, found two applicants, viz, the appellants herein (respondents 4 and 5 in the writ petition) i. e. M/s. Jindal Vijayanagar Steels Limited (JSVL) and m/s, Kalyani Steels Limited, to be most appropriate for grant of mining lease over an area of 200. 73 hectares and 179. 70 hectares respectively for a period of twenty years and requested the approval of the Central government under Section 5 (1) of the MMDR Act. 3. 1. The order dated 6" December, 2004 reads hereunder: <FRM>JUDGEMENT_2566_KCCR4_2009Html1.htm</FRM> 3. 2. The details of consideration and evaluation of the inter se merits of the applications made by the first respondent herein (writ petitioner)and the appellants herein (respondents No. 4 and 5 in the writ petition), under Section 11 of the MMRD Act and Rule 35 of the MC Rules, as weighed in the proceedings dated 6th December, 2004 read hereunder: "no. CI. 111. MMM. 2004:-The Sandur Manganese and Iron Ore Limited, Sandur held a mining lease over an extent of 29. 20 Sq. Miles for Manganese and iron ore for a period of 20 years from 01. 01. 1954. At the time of renewal in the year 1974, the lease was renewed for only 18. 20 sq. miles. The balance of area being mostly iron ore was deleted for reservation for Public sector mining in terms of Government of India letter No. 7 (57): 73. M. VI dated 19. 9. 1973. Out of 18. 20 sq. Miles, an area of 770. 00 hectares was left with M/s. The sandur Manganese and Iron Ore Limited and the balance of area was taken over by the Government. Some individuals and companies were applying for grant of mining lease in the surrendered area. The State Government also sent recommendations to Government of India for grant of Mining lease by relaxation of Rule 59 (1) of MCR, 1960 as required under rule 59 (2) of MCR, 1960. The Government of India directed the state Government to notify such areas for information of Public as per Rule 59 (1) of MCR, 1960 vide its letter No. 4/28/2000. M. VI dated 04. 01. 2001 and returned the proposals sent by the State government Accordingly, the State Government vide Notification no. CI. 16:mmm. 2003 dated 15. 03. 2003, notified the areas. The area under consideration of grant of mining lease is SI. No. 1 of the Notification of 15. 3. 2003. The total area in SI. No. 1 (Kumaraswamy range) is 530. 00 hectares. One Mr. Zia Ulla Shariff filed a writ petition, stating that he had earlier applied for ML over an extent of 380. 00 hectares in kumaraswamy range and obtained a stay from the High Court in writ petition No. 35915/2001 dated. 29. 3. 2004. Therefore, the government examined the possibilities of granting mining lease in the remaining 150. 00 hectares, which was not covered by the stay orders, of the Court. The Government after considering the applications received in response to the notification decided to grant mining lease in favour of M/s. Kariganoor Iron Ore Steel limited over an extent of 149. 00 hectares in Kumaraswamy range and sought the concurrence of the Government of India vide Government letter No. CI. 17:mmm. 2004 dated. 11. 2. 2004. The writ petition filed by Mr. Zia Ulla Shariff was disposed of with a direction to consider his application in accordance of law along with other applications. According to the judgment it was necessary to consider the applications filed for grant of mining lease over the area in question before the issue of notification on 15. 3. 2003 along with the applications received in response to the notification dated. 15. 3. 2003. 21 applications were filed for grant of mining lease over the area in question before the notification was issued and 90 applications were received in response to the notification. In all, there were 111 applications to be considered for grant of mining lease. Notice under Rule 26 (1) of MCR, 1960 was issued to all the applicants to appear before the Hon'ble Chief Minister of Karnataka on 12th October, 2004 at 4. 00 p. m. to make presentation for sanction of mining lease in their favour. Due to unavoidable circumstances the hearing could not be held on that day and was adjourned to 16th October, 2004. Again on 16th, the proposed hearing could not be held due to unforeseen circumstances. The applicants were again issued notice to appear before the Hon'ble Chief Minister on 25th october, 2004 at 4. 00 p. m. Again a hearing notice was issued on 29,10. 2004 to such of those applicants who did not attend the hearing on 25th October, 2004 to attend the hearing on 4. 11. 2004 at 11. 30 a. m. The Hon'ble Chief Minister heard the applicants who attended the hearing in person. On 12. 10. 2004, the hearing was adjourned. Out of 111 applicants, 85 applicants attended the hearing and 75 applicants gave their written representations. On 16. 1 0. 2004, the hearing was again adjourned, 72 applicants attended, 9 applicants submitted their written representations. The hearing was held on 25. 10. 2004, 76 applicants attended and 27 applicants submitted their written representations. Out of 111 applications, 55 are companies/firms and 30 are individuals. Out of 111 applications, 11 have given more than one application in the name of their sister companies/partner firms etc. All applications were examined under Section 11 (5) of MM (Dandr) Act, 1957 with a view to provide an opportunity to all the applicants who have filed their applications on subsequent days, i. e. , after 16. 4. 2003. The specified in Section 11 (3) for grant of mining lease are: - (a) any special knowledge of, or experience in reconnaissance operations, prospecting operations, mining operations, as the case may be, possessed by the applicant; (b) The financial resources of the applicant; (c) the nature and quality of the technical staff employed or to be employed by the applicant. (d) the in vestment which the applicant proposed to make in the mines and in the industry based on the minerals. (e) such other matters as may be prescribed. The Particulars/details of the applicants is furnished below: <FRM>JUDGEMENT_2566_KCCR4_2009Html2.htm</FRM> 8. Out of the 30 individuals who have applied for mining lease only 3 applicants hold mining lease in the state. The remaining 27 applicants do not hold any mining lease. The details furnished by the applicants in their written submission and oral submissions have been considered. Some of the individuals are local people and have past experience in mining. Some of them are qualified engineers. They requested for consideration of their application for grant of mining lease. Most applicants have indicated that they would be exporting ore or would be supplying it to the local market. None of them have indicated any proposals for the value addition to the ore. Even applicants who are already holding lease have also indicated that they would be exporting the ore or would be supplying the ore to the local market. Therefore, these applicants do not merit consideration for grant of mining lease. 9. A total number of 55 companies/firms have applied for mining lease. The particulars/details of the company/firms: - <FRM>JUDGEMENT_2566_KCCR4_2009Html3.htm</FRM> 10. Out of the 55 Companies/firms who have applied for mining lease only 12 companies/firms hold mining leases in the state. Most of the companies/firms holding mining lease have indicated that they would be using the ore for export and for supplying it to the local market. Some of the firms/companies have indicated that they would establish sponge iron factories or steel units and have therefore requested for allotment of the mining lease. But these applicants have not yet established their units for value addition. Some of the companies have already established their units in the State and they have requested for sanction of mining lease for using the ore for captive purpose for value addition to the ore. The interest of such companies who have already established their units linked to these anchor units and are in need of raw material for their use, needs to be considered. It also helps the State Government to earn more revenue if there is value addition to the ore. The employment opportunities will be increased not only by direct employment offered by the companies, but also by way of indirect employment facilities caused by establishing production units. 11. Some of the firms who are willing to invest huge amount in mining industry have also indicated that they require the mines for export and for supplying it to the local market. Some of the companies have already established their units in Karnataka by investing huge amount. At present they are depending upon local market for their raw materials i. e. iron-ore. They have requested that since they have invested huge amount and established their units in the state, they be given preference over others for allotment of mining leases. Since the request of such of the companies is for captive consumption and for value addition, they deserve consideration over others. 12. In Karnataka, the following industries have established steel plants: - (1) xxx xxx xxx (2) M/s. Jindal Vijayanagar Steels Limited - They have established an integrated steel plant at Toranagallu at a cost of about Rs. 7000. 00 crores and a power and oxygen plant at a cost of Rs. 2000. 00 crores. It is a public limited company in which the Government of Karnataka holds rs. 50. 00 crores as equity. While approving the project of m/s. JVSL, Government have committed to allot iron ore mines within the reserves of about 100 million tones per annum. The plant is under production since the last four years. For the installed capacity of the plant, about 2. 8 to 3 million tones of iron ore per annum is required. They have also commissioned the benefication plant to treat low grade high alumina iron ore fines. In view of this the larger quantum of ore is required for the sustainable working of the plant for another 50 years. They are planning to invest around Rs. 100. 00 Crores for systematic and scientific mining. M/s. Jindal Vijayanagar Steel Limited has entered into a joint venture with Mysore Minerals Limited, a Government of Karnataka undertaking. The joint venture company m/s. Vijayanagar Minerals Limited is mining over an area of 87. 50 hectares. (3) M/s. Kalyani Ferrous Industries Limited - M/s. Kalyani ferrous Industries Limited has merged with M/s. Kalyani steels Limited. The company has established an integrated iron and special steel manufacturing unit at Ginigera, koppal Dist. They are manufacturing pig iron. The installed capacity of the plant is 0. 4 million tones per annum and have plans to enhance this to about 0. 5 million tones per annum. They have invested about Rs. 550. 00 crores for the plant and the annual turn over is about rs. 700,00 crores. The plant was commissioned during 1998 and at present, it is producing pig iron. For the captive consumption, they need about 1 million tonne of iron ore per annum. They have plans to invest about Rs. 10. 00 crores for systematic and scientific mining. At present, they do not have any mining lease in the State for iron ore. However, M/s. Kalyani Ferrous Industries limited has been given a raising contract by M/s Mysore minerals Limited (a Government of Karnataka undertaking) over an extent of 80 ha for a period of 20 years commencing from 1999 in Subbarayanahalli area for the mining of iron ore. (4) M/s. Euro Ikons and Iron and Steel Private Limited- This company is a sister-concern of M/s. Jindal Vijayanagar steel Limited. The company has already commissioned a blast furnace at Torangallu with a capacity of 9 lakh tones per annum. They have already in vested about Rs. 230 crores in the plant. At present, they do not have any mining lease in the State for iron ore. (5) xxx xxx xxx 13. Rule 35 of Mineral Concession Rules, 1960, provides for preferential rights for certain persons. The Rule states as follows: "where two or more persons have applied for reconnaissance permit or a prospecting licence or a mining lease in respect of same land, the State Government shall, for the purposes of sub section (2) of Section 11, consider, besides the matters mentioned in clauses (a) to (d) of sub-section 3 of Section 11, the end use of the mineral by the applicant. " 14. It is desirable to allot the mining areas to applicants who have already established their plants in the State by investing huge amounts. The Ore requirement for production of 1 ton steel is about 1. 6 tones of iron ore. 15. In view of the provisions of Rule 35 of the Mineral concession Rules, 1960, and taking into consideration all the documentary evidence submitted by the applicants, their representations during the oral hearing, their existing investments and their proposed investments, mining lease under Section 11 (5) of the MM (Dandr) Act, 1957, in favour of the following applicants is recommended: (1) Part A of Sketch measuring an extent of 200. 73 hectares in favour of jindal Vijayanagar Steel Limited (2) Part B of Sketch measuring an extent of 179. 70 hectares in favour of kalyani Ferrous industries Limited sd/ (N. DHARAM SINGH)Chief Minister (emphasis supplied)