Delhi HC bars Odisha govt from conducting e-auctions of two iron ore blocks

Court's restraint arises from ineligibility of one of the bidders

The Delhi High Court has restrained the Odisha government from proceeding on e-auctions of two more iron ore blocks- Chandiposhi and Purheibahal in Sundargarh district.

The e-auctions scheduled for May 5 and 8, have elicited bidding interest from 17 companies. The court’s restraining order on May 4, alludes to one of the clauses under Section 6 (1) (b) of the Mines and Minerals- Development & Regulation Act of 1957 which form the premise for Mineral Auction Rules, 2015. The prevailing auction Rules bar a company to bid for electronic auctions of a mineral block if it already possesses more than 10 sq km of mineral lease area.

One of the bidders for the e-auctions is clearly ineligible as its mining lease is beyond the permissible limit or area, the court observed without naming any company.

An official at the state directorate of mines refused to name the bidders as the auction process was ongoing. R K Sharma, principal secretary (steel & mines), Odisha could not be immediately contacted for his comments.

Recently, the Odisha government appealed to the Centre to raise this permissible limit from 10 sq km to 75 sq km. Purportedly, Tata Steel was to benefit if the state’s recommendations falls in place. The steel maker currently has six iron ore & manganese mines in its leasehold in the state with the combined area straddling about 50 sq km.

According to Section 6 (1) (b) of the Act, "The State Government may not be able to issue the letter of intent (LoI) without prior approval from the Central Government in case the bidder holds or may hold (including the area covered under the mining lease being auctioned under this tender document) one or more mining leases covering a total area of more than 10 square kilometres in respect of any mineral or prescribed group of associated minerals in the State of Odisha".

Notwithstanding this restrictive clause, Tata Steel has earlier contested unsuccessfully at previous e-auctions by the Odisha government.

In its order, the Delhi High Court observed that the tender documents for the two new iron ore blocks were ambiguous and lack clarity on whether a bidder who is per se ineligible under the provisions of the  1957 Act can nevertheless proceed to participate in the final e-auctions.

“Also, it is unclear as to whether indeed the State of Odisha’s request for extension of the mining area made through application dated March 13, 2018 would be accepted”, the order read.

Further, the court noted amid the given circumstances, proceeding on e-auctions can lead to confusion on the eligibility of some bidders with respect to the provisions in Section 6 (1) (b) of the 1957 Act. Accordingly, the court temporarily stayed the auction process and has directed the Central government to decide within 15 days of its order, the fate of the Odisha government’s pending application in consultation with the latter.