Supreme Court directs CEC to rework penalty against Sarda Mines

The Supreme Court has directed the Central Empowered Committee (CEC) which was probing into illegal mining in Odisha to rework the quantum of excessive mining carried out by Sarda Mines Pvt. Ltd. (SMPL) and the consequent penalty imposed on it amounting to about Rs 19.38 billion.

The CEC has been granted six weeks’ time to rework its earlier calculations. This brings a relief to the miner which had been issued demand notices by the Odisha government for collection the penalty.

In a case filed by the non-government organisation ‘Common Cause’, the Supreme Court in August last year had directed the miners, who indulged in illegal mining or mined ore in excessive of Environmental Clearance (EC) granted to them, to deposit compensations amounting to Rs 175 billion by 31st December 2017. The compensation was calculated on the basis of a report of the CEC, a panel appointed by the apex court to probe illegal mining in Odisha.

SMPL had challenged the CEC report in the Apex court. While disposing off the case, the court commented on the terminology of the EC granted to SMPL, 14 years back on 22nd September 2004. The EC ought to have been for whole mining product, run of the mine (ROM) and not for only iron ore lumps as mentioned in the permission.

The Apex Court also distinguished the terms ‘ROM’ and ‘Lumps’ and remarked: “… it must be clearly understood that extraction of the mineral iron ore is the extraction of iron ore Run of Mine or ROM. Lumps of iron ore are, in a sense, a by-product of ROM as are topsoil, mineral rejects, sub-grade ore and fines and the distinctions made are for the purposes of payment of royalty.”

Counsel for SMPL, Pranav Sood said, “The clear distinction between the term(s) ROM and Lump as explained in the judgment will help bring in clarity to not only the regulatory bodies but also help in resolving pending cases across various courts in India where royalties have been differentially charged due to lack of clarity on such technical terms essential to the mining laws”.

The Apex Court further re-affirmed that EC granted by the Ministry of Environment, Forest and Climate Change does not have retrospective effect and it is operational from the date it is granted.

The Court observed that, “We leave it to the CEC to quantify the penalty to be imposed on SMPL from 22nd September, 2004 and based on the terms of the environmental clearance…”

Arjun Saraswat, Director, SMPL, remarked that, “We welcome the decision of the Supreme Court and will extend full support to the CEC in order to re-work the quantum of compensation to payable by SMPL. We are hopeful to resume mining soon.”

Jindal Steel and Power (JSPL) was a major beneficiary of the mine, which has been closed since 2014 on charges of illegal mining, as it operated a grinding unit there and also sourced iron ore from it for its Raigad plant in Chhattisgarh.