Supreme Court allows transportation of iron ore mined in Goa before March 2018, overrules Bombay HC order

The Supreme Court this week allowed mining firms to transport iron ore mined from Goa prior to March 15, 2018, provided that it has paid royalty to the government authorities for the same.

A three-judge Bench of Chief Justice of India SA Bobde, Justice BR Gavai and Justice Surya Kant overruled a decision of the Bombay High Court and allowed a bunch of applications that sought for permission to transport mineral/iron ore that was mined prior to March 15. The Bench held,

Factual Background

By way of background, after the Government of India received information about rampant exploitation of natural resources in the iron ore mining sector in Goa, it appointed former Supreme Court judge, Justice MB Shah to conduct an inquiry into the same.

Based on the Justice Shah report, the Government of Goa passed an order dated September 10, 2012 suspending all mining operations in the State with effect from September 11, 2012.

Shortly after, a writ petition was filed by Goa Foundation before the Supreme Court, praying for directions to the Centre and the State of Goa to take steps to terminate the mining leases that were illegal.

In its decision (termed as Goa Foundation I), the Apex Court held that all iron ore and manganese ore leases had expired on November 11, 2007, and that any mining operation carried out by the mining leaseholders after that date was illegal.

It also held that all the mining leaseholders had enjoyed a first deemed renewal of the mining lease and for a second renewal, an express order would be required to be passed in view of the provisions of the Mines and Minerals (Development and Regulation) Act, 1957.

Subsequently, various writ petitions were filed before the Bombay High Court by several mining leaseholders. The mining companies prayed either for consideration of their applications for a second renewal of their mining lease, or for the grant of a mining lease on second renewal.

The High Court had directed the State of Goa to execute the lease deeds in favour of the leaseholders who had already paid stamp duty pursuant to the orders of the government.

This decision was again challenged before the Supreme Court, which by an order passed in February 2018, granted mining leaseholders permission to continue their mining operations till March 15, 2018. However, they were directed to stop all mining operations with effect from March 16, 2018. This came to be known as the Goa Foundation II judgment.

Meanwhile, the Government of Goa, vide its decision dated March 21, 2018, permitted the iron ore for which royalty was paid, to be transported out of the state.

This decision of the government was challenged before Bombay High Court.

In an order passed in May 2018, a Division Bench of the High Court set aside the government decision permitting transportation of royalty paid iron ore.

The Division Bench also held that the state government should take a decision regarding its ownership rights, as a custodian of the mineral resources. It was also directed to sell and dispose of iron ore in question and utilise the proceeds for public purpose.

The mining leaseholders approached the Supreme Court in appeal against this verdict, forming the basis of the present case before the Court.

Arguments raised and what the Supreme Court held

Senior Advocate Mukul Rohatgi, appearing on behalf of the appellants, submitted that there is a specific prohibition in the said paragraph that after March 15, 2018, no mining activity could be carried on. However, the order did not impose a restriction on transport of the iron ore which was already mined in the period of five weeks i.e. from February 7, 2018 till March 15, 2018.

On the other hand, Advocate Prashant Bhushan, appearing on behalf of Goa Foundation, contended that the Division Bench of the Bombay High Court has rightly construed the words “to manage their affairs” to include all activities relating to mining and transportation.

After considering the arguments of both the parties, the Supreme Court held that from date of the order till March 15, 2018, the lessees were permitted to continue with the mining activities.

“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.”

The Court noted that as per Rule 12(1)(gg) of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016, on the expiry of the lease term, six months period is granted to the lessees to remove for its own benefit, all or any ore mineral excavated during the currency of the lease, engines, machinery, plant, buildings, structures, tramways, railways and other works.

Finding that the High Court order was incorrect, the Bench held,

"The only prohibition contained in the said order after 15.3.2018 is for carrying out mining operations. Not only this but the same Bench which has decided the Goa Foundation­ II (supra) itself on two occasions has permitted the mineral to be transported from the jetties.

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."

The Court further added that,

“It will not be out of place to mention here the specific stand of the State Government before the High Court that the State is monitoring to ensure that only such of the mineral is permitted to be transported which is mined prior to 15.3.2018…

Therefore, the Bench set aside the judgment of the Bombay High Court and upheld the decision of the state government permitting the transport of iron or mined before March 15, 2018.

The Bench further directed the mining firms to transport the iron ore within a period of six months from the date of judgment, provided it has paid royalty to the Goa government.

[Read Supreme Court order here]