P.D. Dinakaran, C.J.
1. The petitioner is a partnership firm engaged in the business of mining iron ore.
The petitioner is a partnership firm engaged in the business of mining iron ore.
2. The incontroverted facts of the case are:
(i) that on 17th July, 1987, they applied for grant of mining lease in an extent of an area of 204.6 hectares of land situated in Subbarayanahalli village, Kumaraswamy Block Forest, Sandur Range Forest, Bellary District, pursuant to which on 11th February, 1988, the Forest Department recommended 50 acres of forest area for grant of mining lease in favour of the petitioner;
(ii) that the recommendation was rejected by the Conservator of Forests vide letter dated 3rd October, 1988;
(iii) that aggrieved by the said rejection, the petitioner preferred a revision before the Principal Conservator of Forests, who in turn by order dated 20th July, 1992 directed the Deputy Chief Conservator of Forests to inspect the area and reconsider the application;
(iv) that on 26th August, 1992, the Secretary to Government of Karnataka Informed the petitioner that his application has been rejected;
(v) that the said rejection order dated 26th August, 1992 was challenged before the Central Government in Revision Application No. 2/Kar-66/92/MV/-RC.II/RCI before the Central Government;
(vi) that by order dated 20th January, 2000 the decision of the State Government rejecting the application of the petitioner was set aside and the case was remanded to the State Government to consider the application on merits, after the applicant obtains forest clearance from forest authorities;
(vii) that pursuant to the said order dated 20th January, 2000 passed in revision application, the second respondent-Director of Mines and Geology, by his letter dated 7th March, 2000 directed the petitioner to obtain the forest clearance;
(viii) that the Forest Department, by proceedings dated 13th March, 2001, informed the petitioner that the Forest Department will not consider the application till the impact assessment study is conducted by the National Environmental Engineering Research Institute (NEERI);
(ix) that, however, notification dated 15th March, 2003, came to be issued under Rule 59(1) of the Mineral Concession Rules, 1960 CMC Rules' for short) notifying the impugned area as available for grant of mining lease;
(x) that concededly, in spite of having knowledge about the notification dated 15th March, 2003, the petitioner had not chosen to apply for grant of lease pursuant to the said notification;
(xi) that after providing personal hearing to all the applicants as contemplated under Rule 26(1) of the MC Rules and pursuant to evaluation of the merits of the applicants as per the criteria prescribed under Section 11(3) of the MMDR Act and Rule 35 of the MC Rules, the State Government by proceedings dated 31st January, 2004, recommended an area of 200.73 hectares in favour of M/s. Jindal Vijayanagar Steel Limited-fourth respondent herein and an area of 179.70 hectares in favour of M/s. Kalyani Steels Limited-fifth respondent herein for mining iron ore and manganese in Kumaraswamy Range of Sandur Taluk, Bellary District;
(xii) that the petitioner, having applied for grant of mining lease as early as on 17th July, 1987 which is much prior to the notification dated 15th March, 2003, it is claimed that his application is entitled to be considered for grant of mining lease in preference over other applications applied pursuant to the notification dated 15th March, 2003;
(xiii) that the State Government has not complied with Rule 26(1) of the MC Rules for not having passed independent rejection order; and
(xiv) that in any event it is contended by the petitioner that the proceedings dated 6th December, 2004 of the State Government recommending the names of fourth and fifth respondents to the Central Government for grant of mining lease, are illegal, arbitrary, unreasonable and violative of principles of natural justice.
3. Hence, aggrieved by the said recommendation of the fourth and fifth respondents to the Central Government for grant of mining lease in their favour, the petitioner approached this Court seeking the following reliefs:
(i) to issue a writ of certiorari to quash recommendation dated 31.1.2004 bearing No. DMG/995/AML/2003;
(ii) to issue a writ of certiorari quash recommendation dated 6.12.2004 bearing CI/III/MMM/2004;
(iii) direct the respondents 1 and 2 to consider application of petitioner dated 17.7.1987 pending before the 2nd respondent; and
(iv) direct respondents 1 to 3 not to take any action pursuant to recommendations dated 31.1.2004 bearing Nos. DMG/995/AML/2003 and 6.12.2004 bearing No. CI/111/MMM/2004.
4. When the matter came up for admission, Notice was ordered and respondents No. 4 and 5, in whose favour the Government has recommended grant of mining lease. The said respondents appeared and filed their statement of objections.
5. On behalf of the fourth respondent-M/s. Jindal Vijayanagar Steels Limited and fifth respondent-M/s. Kalyani Steels Limited, it is contended:
(i) that the petitioner has an alternate and efficacious remedy under Section 30 of MMDR Act and 54 of MC Rules by way of revision;
(ii) that the petitioner cannot claim any priority inasmuch as the petitioner has also filed an application dated 16th April 2003 pursuant to the notification dated 15th March, 2003, as in the case of fourth and fifth Respondents;
(iii) that the evaluation proceedings dated 31.1.2004 apparently would disclose that the procedure contemplated under Rule 26(1) of the MC Rules have been duly followed;
(iii) that the said respondents have established an integrated steel plant investing huge sums of money and employed skilled labourers and are entirely dependent on Iron ore, and therefore the State Government has rightly recommended grant of mining lease in favour of fourth and fifth Respondents, applying the procedure prescribed under Section 11(3) of the MMDR Act and Rule 35 of the MC Rules; and
(iv) that the writ petition is not maintainable and the same has also to be dismissed on the ground of delay and laches on the part of the petitioner in approaching this Court.
6. The learned Government Advocate submits that the State Government, after evaluation and consideration of all the applications made for grant of mining lease as per the provisions under Rule 26(1) of the MC Rules and following the procedure prescribed under Section 11(3) of the MMDR Act and Rule 35 of the MC Rules, by proceedings dated 31st January 2004, recommended the applications of the fourth and fifth respondent to the Central Government for grant of mining lease.
7. We have given our careful consideration for the submissions made by the learned Counsel appearing for the parties.
8. In the facts and circumstances of the case, the following issues arise for our consideration:
(I) Whether the procedure contemplated under Rule 26(1) of the MC Rules has been duly followed while evaluating the inter se merits of the petitioner and the contesting respondents?
(II) Whether the petitioner, based on his application made on 17th July, 1987 much less the application dated 16th April, 2003, applied pursuant to the notification dated 15th March, 2003 issued under Rule 59(1) of the MC Rules notifying area available for grant of mining lease, is entitled for preference?
(III) Whether the evaluation proceedings dated 31st January, 2004 and the recommendation dated 6th December, 2004 made for grant of mining lease in favour of fourth and fifth respondents suffer from:
(i) irregularity;
(ii) illegality;
(iii) discrimination;
(iv) arbitrary and unreasonable exercise of power; and
(v) violates the principles of natural justice?
9.1. ISSUE I:
Whether the procedure contemplated under Rule 26(1) of the MC Rules has been duly followed while evaluating the inter se merits of the petitioner and the contesting respondents?
9.2. The validity of issuance of Notification dated 15th March, 2003 under Rule 59(1) of the MC Rules and evaluation and consideration of the applications, received prior to the notification and pursuant to the Notification, as well as the alleged;
(i) irregularity;
(ii) illegality;
(iii) discrimination;
(iv) arbitrary and unreasonable; and
(v) violative of principles of natural justice,
in the light of criteria prescribed under Section 11(3) of the MMDR Act and Rule 35 of the MC Rules, came up for consideration before the Division Bench of this Court in Writ Appeal No. 5026 of 2009 which was disposed of by order dated 5th June, 2009. In the said decision, this Court upheld the procedure followed by the State Government under Rule 26(1) of the MC Rules in evaluating the inter se merits of the parties.
9.3. In the instant case, concededly, the Government heard all the applicants and also evaluated the inter se merits of the applicants for grant of mining lease of the impugned area as per the procedure prescribed under Section 11(3) of the MMDR Act and Rule 35 of the MC Rules before arriving at a decision, by evaluation proceedings dated 31st January, 2004 to recommend the names of fourth and fifth respondents.
9.4. In this connection, it is apt to refer to the relevant extract of the evaluation proceedings dated 31st January, 2004:. 4. 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.
5. 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 16.10.2004, 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.
6. 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 (D & R) 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 investment 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.
7. xxx xxx xxx
8. xxx xxx xxx
9. A total number of 55 companies/firms have applied for mining lease. The particulars/details of the company/firms:
_________________________________________________________________________Name of theSl.No. individuals/ DetailsCompanies/Firms__________________________________________________________________________31 to43 xxx xxx xxx xxx xxx xxx__________________________________________________________________________44 They do not have a mining leaseM/s. Lohadri Mineral in Karnataka. They propose toEnterprises invest Rs. 1 crore, They desire toexport the ore/for local supply.__________________________________________________________________________45 to69 xxx xxx xxx xxx xxx xxx__________________________________________________________________________70 M/s. Jindal They do not hold any miningVijayanagar Steel leases in Karnataka. They haveLimited: established a steel plant inSister Concerns: Toranagallu and have invested1. M/s. South west about Rs. 7000 crores already. mining Limited The Company has requested mining2. M/s. Euro Ikons lease for its captive consumption. Iron and Steels The JVSL has filed in all four (P) Ltd. applications for this area. Three of3. M/s. Vijaya- the applications were filed prior to nagar Minerals the issue of notification and onePvt. Ltd. application after the issue of thenotification. A separate application in the name of M/s. Euro Ikons Iron and Steels (P) Ltd. has been filed for this area. M/s. Vijayanagar Minerals Pvt. Ltd. is a joint venture company with M/s. JVSL and M/s. MML. The MML holds a lease over an extent of 87.50 hectares. The joint sector company is mining thisarea._____________________________________________________________________________71. xxx xxx xxx xxx xxx xxx_____________________________________________________________________________72. M/s. Kalyani This Company do not have aFerrous Industries mining lease in Karnataka. Ltd. They propose to invest Rs. 575crores. The application submitted for grant of mining lease is in thename of M/s. Kalyani Ferrous Industries Ltd. The company hassubsequently merged with M/s.Kalyani Steels Limited. The company is already having a steelplant in Ginigera, Koppal Taluk andDistrict. The Company hasalready invested about Rs. 600crores and put up a 3.5 lakhtones steel plant at Ginigera.The company proposes to commission and MW power plant atGinigera with investment of Rs. 35crores. The company proposes tocommission a Coke Oven Plant which is under construction atDharwad with an investment of Rs. 45 crores. The company proposes to increase the steelcapacity to 4.5 lakh TPA from the existing 3.5 lakhs TPA by an additional investment of Rs. 100crores. Immediately on completion of 4.5 lakh TPA the company proposes to expand the plant toincrease the capacity to 8 lakhs TPAwith investment of Rs. 350 crores. Therefore the company requests for sanction of mining lease over an area of 530 hectares in Kumaraswamy range for its captive consumption. At the time of putting up the plant, the Government have extended theincentives and concessions to M/s. Kalyani Steels Ltd. One of the incentives offered vide G.O. No. CI.12.SPC.95 dated 25.1.95 was that the company will apply for granting lease to the Department of Mines and Geology for an area bearing 40million MT iron ore reserves.________________________________________________________________________________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 beneficiation 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 Pvt. Ltd:-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 invested 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 (D & R) 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 Ltd.
(2) Part B of Sketch measuring an extent of 179.70 hectares in favour of
Kalyani Ferrous Industries Ltd.
Sd/-
N. Dharam Singh)
Chief Minister
9.5. While upholding the said evaluation proceedings dated 31st January, 2004, this Court in Writ Appeal No. 5026/2009 referred to above, held as hereunder:.30.2. The Government, taking into consideration Rule 26(1) of the MC Rules, has given opportunity to first respondent herein (writ petitioner). But the Rule does not say that opportunity should be given comprehensively to ail the applicants, which, in our considered opinion, is impermissible, impossible and impracticable, when more than hundred applications were received pursuant to the impugned notification dated 15th March, 2003. Where more than one applications are made by the same party and the sister concern for the same area, and where more than one application are made for the same area by individuals, what is requiredis, whether each of the applicants were given opportunity of being heard before refusing grant or renew of mining lease over the whole or the part of the area applied for. Therefore, we are satisfied that there is no procedural irregularity. The learned Single Judge, in our considered opinion, erred in rendering a finding that the State Government had not acted legally and bonafide while considering the various applications.
9.6. Therefore, we are satisfied that the Government has strictly followed the procedure contemplated under Rule 26(1) of the MC Rules.
9.7. Issue I is answered accordingly.
10.1. ISSUE II:
Whether the petitioner, based on his application made on 17th July, 1987 much less the application dated 16th April, 2003, applied pursuant to the notification dated 15th March, 2003 issued under Rule 59(1) of the MC Rules notifying area available for grant of mining lease, is entitled for preference?
10.2. In identical facts and circumstances, this Court, in Writ Appeal No. 5026 of 2008 and connected cases disposed of on 5th June, 2009 held as hereunder:
26.18. Once a notification is published notifying the area available and inviting applications for grant, all the applications, whether applied prior to the publication of such notification notifying the area available and inviting applications for grant of reconnaissance permit, prospecting licence or mining lease and had not been disposed of, as well as the applications received during the period specified in the notification shall be deemed to have been received on the same day for the purpose of assigning priority under Section 11(3) of the MMDR Act.
10.3. Therefore, the petitioner is not entitled for any preferential right. Accordingly, Issue II is answered in negative.
11.1. ISSUE III:
Whether the evaluation proceedings dated 31st January, 2004 and the recommendation dated 6th December, 2004 made for grant of mining lease in favour of fourth and fifth respondents suffer from:
(i) irregularity;
(ii) illegality;
(iii) discrimination;
(iv) arbitrary and unreasonable exercise of power; and
(v) violates the principles of natural justice?
11.2. We have already held that the petitioner has no right to claim preference based on the date of his application while deciding Issue II.
11.3. The consequential issue that arises for our consideration now, is whether the evaluation proceedings dated 31st January, 2004 and the recommendation dated 6th December, 2004 made for grant of mining tease in favour of fourth and fifth respondents, suffers from irregularity or illegality or discrimination or arbitrary or violative of principles of natural justice.
11.4. In this connection, it is apt to extract relevant portion of Section 11(3) of the MMDR Act and Rule 35 of the MC Rules, which reads as hereunder:
11. Preferential right of certain persons.-
11(1) xxx xxx xxx
11(2) xxx xxx xxx
11(3) The matters referred to in Sub-section (2) are the following;-
(a) any special knowledge, of, or experience in, reconnaissance operations, prospecting operations or 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 investment which the applicant proposes to make in the mines and in the industry based on the mineral;
(e) such other matters as may be prescribed.
Rule 35. Preferential rights of certain persons- where two ore more persons have applied for reconnaissance permit, prospecting licence or mining lease in respect of the same land, the State Government shall for the purpose of Sub-section (2) of Section 11 consider besides the matters mentioned in Clauses (a) to (d) or Sub-section (3) of Section 11, the end use of the mineral by the applicant.
11.5. To decide the inter se merits of the petitioner and that of the fourth and fifth respondents, it is apt to refer to the relevant portion of the application filed by the petitioner in Form-I, which is as follows:
FORM-I
Application for ML
TO BE SUBMITTED IN TRIPLICATE
Government of Karnataka
Application for Mining Lease
[See Rule 22(1) of the Mineral Coneession Rules, 1960]
Dated the 17 day of July 1987
To:
The Director,
Dept. of Mines & Geology
Bangalore, Kar.
Sir,
I/We request that a mining lease under the Mineral Concession
Rules, 1960 may he granted to me/us.
2. xx xx xx
3. The required particulars are given below:
i) Name of the applicant with :M/s Lohadri Mineral
complete address Enterprises. 3 7/2,
Kappagal Road
Bellory 583 103.
Karnataka Ph. 4421
XX XX XX
XX XX XX
XX XX XX
xiv) Manner in which the mineral : The iron ores produced from
raised is to be utilized the mine shall he sold to Ms
Minerals, Metals Trading
Corporation of India, the sole buyer
from this section.
a) XX XX XX
b) i) Name of the countries to which : All the ores are exported
it is likely to be exported where the through NMTC of India Ltd.,
mine is being set up on 100% export a public sector undertaking to
orientated or tied-up basis Japan, South Korea. Romania
China etc.
xx xxx xx
c) If it is to be used within the country, indicate
i) The industry/industries in which it : Small quantify used by
would be used foundry industry
d) In case of coal. or other high bulk : Ores are supplied by lorries from
minerallores details of existing railway mine lead to the Thorangallu rail
transport facility available and station from where MMTC sends
additional transport facility, if any, ore to Madras port for onward
required shipper to foreign buyers.
e) xx xx xx
xx xxx xx
Yours faithfully.
For Lohadri Mineral Enterprises.
Sd/-
Signature
Partner
Bangalore
Date: 17.7.1987'
11.6. At the risk of repetition, we propose to extract paragraphs 9 to 15 of the Evaluation Proceedings, wherein the Government has considered the inter se merits of the parties including the petitioner, for grant of mining lease in favour of fourth and fifth respondents applying the criteria prescribed under Section 11(3) of the MMDR Act and Rule 35 of the MC Rules:
9. A total number of 55 companies/firms have applied for mining lease. The particulars/details of the company/firms:
_______________________________________________________________________________________________Name of theSl. No individuals/ DetailsCompanies/Firms_______________________________________________________________________________________________31 to XXX XXX XXX XXX XXX XXX43_______________________________________________________________________________________________44 M/S. Lohadri Mineral They do not have a mining iease inEnterprises Karnataka. They propose to investRs. 1 crore. They desire to export theore/ for local supply_______________________________________________________________________________________________45 to69 XXX XXX XXX XXX XXX XXX_______________________________________________________________________________________________70 M/s. Jindal They do not hold any mining leasesVijayanagar Steel in Karnataka. They haveLimited: established a steel plant inSister Concerns: Toranagallu and have invested4. M/s. South-west about Rs.7000 crores already. Themining Limited Company has requested mining lease5. M/s. Euro Ikons for its captive consumption. The JVSLIron and Steels has filed in all four applications for this(P) Ltd. area. Three of the applications were6. M/s. Vijaya-nagar filed prior to the issue of notificationMinerals Pvt. Ltd. and one application after the issue ofthe notification. A separate applicationin the name of M/s. Euro Ikons Ironand Steels (P) Ltd. has been filed forthis area. M/s. Vijayanagar MineralsPvt. Ltd. is a joint venture companywith M/s. JVSL and M/s. MML. TheMML holds a lease over an extent of87.50 hectares. The joint sectorcompany is mining this area._______________________________________________________________________________________________71 xxx xxx xxx xxx xxx xxx_______________________________________________________________________________________________72. M/s. Kalyani Ferrous This Company do not have a miningIndustries Ltd. lease in Karnataka. They proposeto invest Rs.575 crores. Theapplication submitted for grant ofmining lease is in the name of M/s.Kalyani Ferrous Industries Ltd. Thecompany has subsequently mergedwith M/s. Kalyani Steels Limited. Thecompany is already having a steel plantin Ginigera, Koppal Taluk and District.The Company has already investedabout Rs.600 crores and put up a3.5 lakh tones steel plant atGinigera. The company proposes tocommission and MW power plant atGinigera with investment of Rs.35crores, The company proposes tocommission a Coke Oven Plant which isunder construction at Dharwad with aninvestment of Rs.45 crores. Thecompany proposes to increase thesteel capacity to 4.5 lakh TPA fromthe existing 3.S lakhs TPA by anadditional investment of Rs.100crores. Immediately on complation of4.5 lakh TPA (he company proposes toexpand the plant to increase thecapacity to 8 lakhs TPA with investmentof Rs. 350 crores. Therefore thecompany requests for sanction ofmining lease over an area of 530hectares in Kumaraswamy range for itscaptive consumption. At the time ofputting up the plant, the Governmenthave extended the incentives andconcessions to M/s. Kalyani Steels Ltd.One of the incentives offered vide G.O.No. CI.12.SPC.95 dated 25.1.95 wasthat the company will apply forgranting lease to the Department ofMines and Geology for an area bearing40 million MT iron ore reserves._______________________________________________________________________________________________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:
(4) xxx xxx xxx
(5) 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.
(6) 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 Pvt. Ltd:-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 invested 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 applicant14. 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 (D & R) 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:
Jjpdal Vjidyanagar Steel Ltd.
(2) Part B of Sketch measuring an extent of 179.70 hectares in favour of:
Kalyani Ferrous Industries Ltd.
Sd/-
(N. Dharam Singh)
Chief Minister
11.7. Legality of applying the criteria prescribed under. Section 11(3) of the MMDR Act and Rule 35 of the MC Rules was also approved by a Division Bench of this Court in Writ Petition No. 5022/2009 disposed of on 11th June, 2009. Relevant portion of the same reads as hereunder:
11.1. It is clear from the report of the High Level Committee of the Government of India that it is necessary to distinguish between the concepts of value addition and captive mining in the context of issues raised before the Committee. Value Addition requirement is imposed by the State Governments when they want the concession holder to ensure that the industrial unit that uses the mineral from the allocated mine is set up within the boundaries of the state in which the mine is located; there is no such location specificity in captive mining and only a supply linkage between the mine and the unit is required and this has implications for mining concessions claimed by value adders from adjoining states.
11.2. The Committee has observed that : a thriving Steel industry does not need to rely on captive mining; however, captive mines are a reality in India and many of them are run efficiently; at the same time, there are benefits that large-scale stand-alone mining can bring huge foreign exchange, which the country cannot afford to ignore, such as, induction of advanced technology in exploration as well as optimum mining operations; and it would be in the country's interest to have a mining regime in which space exists for both captive and stand alone mines.
11.3, The said High Level Committee, after considering the arguments in favour of and against captive mining, has made the following recommendations:
1. Stand alone mining and captive mining should continue to co-exist in the country. The position should be reviewed in 2016-17 in light of the emerging situation of establishment of steel capacity in the country, on the one hand, and accretions to the level of iron ore resources in the country, on the other. A view can be taken at that time on whether the balance of advantage in the grant of LAPL/PL/M1, should be changed in favour of Steel mines.
2. Through appropriate changes in Section 11(3)(d) it should be clarified that in a situation of multiple applications for grant of iron ore LAPL/PL/ML, the existing investment in Steel plants that have exhausted their current captive mines should also be a consideration. However, the applicant must independently qualify under other criteria, including Section 11(3)(a) relating to prior experience. This is necessary to ensure efficient mining.
3. Existing Captive mines should be renewed if they have complied with the conditions of the lease and the life of the steel plant so warrants taking into account existing and planned capacities. In the case of new capacities, the recommendations of Chapter 5 will apply.
4. Steel making capacities already in existence on 1st July 2006 that do not have captive mines may also be given preferential allocation of adequate iron ore reserves within the State without the need to go through the process of tender/auction, as a one-time measure to provide a level playing field. These existing steel companies would have to enter into tie-ups with experienced mining companies so that they become eligible in terms of Section 11(3)(a) of the MMDR Act. Due regard should be given to the size of the steel making capacity when considering allocation of a specific ore body.
5. Scientific and vigorous prospecting in the country should be encouraged. LAPLs and PLs for magnetite may be freely given to both stand alone and captive miners, whether Indian or foreign. LAPLs for haematite may be given only after strictly ensuring that GSI or another state agency has not already done the requisite exploration.
6. Captive Iron ore mines allotted to Steel makers should use the ore from these mines for their own steel and should not sell the same either in India or abroad.
12. In view of the National Mineral Policy, 2008 as also the Karnataka Mineral Policy, 2008, it is dear that captive mining is sought to be encouraged in the said policies and recommendations are being made for grant of mining lease in favour of Steel Industries. Priority is also given for value addition. It is clear from the provisions of Section 11(3)(d) of the Act that the investment which the applicant proposes to make in the mines and in the industry based on the minerals is also one of the factors to be considered for granting mining lease. Similarly, Rule 35 of the Rules provides that where two or more persons have applied for a reconnaissance permit or a prospecting licence or a mining lease in respect of the same land, the State Government shall, for the purpose 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. Further, the development of mining as a stand alone industry has also not been ignored.
13.1. Both the learned Advocate General appearing for respondents 4 to 8 as also the Assistant Solicitor General appearing for respondents 1 to 3 fairly concede that in view of the National Mineral Policy, 2008 and Karnataka Mineral Policy, 2008, captive mining by giving preference to the applications filed by Steel manufacturers is recognized for encouragement and in view of the time limit fixed for processing the applications by the State Government under Rule 63-A of the Rules, it is clear that the Government of Karnataka is interested in implementing the State Mineral Policy by giving priority to captive mining and to dispose of the applications for grant of mining lease by the Steel manufacturers within time prescribed under Rule 63-A of the Rules.
13.2. The learned Assistant Solicitor General fairly agrees that the National Mineral Policy also contemplates encouragement to be given to Captive Mining by considering the applications filed by Steel manufacturers for grant of mining lease for captive mining and for value additions. Though no time limit is prescribed by the Central Government to dispose of the applications for grant of prior approval, as recommended by the State Government, the same should be done within reasonable time. Steps are also being taken for fixing time limit under the Rules, by amending the Rules.
14.1. Interpreting the above provisions of the MMDR Act and MC Rules, particularly Section 18 and Rule 26, which speak about the systematic development of minerals and procedure to be followed in the matter while refusing to grant or renew the lease, this Court, in the case of Jindal Vijayanagar Steels Ltd. v. M.S.P.L. Limited Writ Appeal No. 5026 of 2009 and connected matters disposed of on 5th June, 2009 observed that:
17.27.5 In view of the crystal clear declaration under Section 2 of the MMDR Act and the intention for the development of minerals as provided under Section 18 of the MMDR Act, an obligation is cast on the Central Government to take steps for the systematic development of minerals in India and, for such purpose, to make rules. There is no obligation cast upon the Central Government to exploit minerals but the obligation is to ensure that such exploitation takes place in a systematic manner (vide Kartar Singh Bhadana v. Hari Singh Natwa : AIR 2001 SC 1556. It is to achieve this obligation, MMDR Act and the MC Rules provide wide opportunity to the applicants, so that, no application for grant or renewal of mining lease shall be refused on the ground of incomplete details or want of material particulars and such applicant should be required to comply with such omissions and material particulars and the State Government has to give an opportunity of being heard and record the reasons In writing and communicate the same to the applicant, if it proposes to refuse to grant or renew the mining lease as per Rule 26 of the MC Rules. Accordingly, a systematic method is provided for considering, evaluating and dealing with the applications for grant or renewal of mining lease for mineral development.14.2. While interpreting Section 11(3) of the MMDR Act and Rule 35 of the MC Rules, this Court in Jindal Vijayanagar Steels Ltd. v. MSPL Limited Writ Appeal No. 5026 of 2009 and connected matters disposed of on 5th June, 2009, held that:
28.4. The words employed by the Parliament under Section 11(3)(e) viz., 'such other matters as may be prescribed' include the matters prescribed under Rule 35 of MC Rules also specifically refers to Section 11(3) of the MMDR Act. It is, therefore, mandatory for the State Government to consider the end-use of minerals by the applicants while evaluating their relative merits. In the instant case, the appellants herein (respondents 4 and 5 in the writ petition) who have already established iron-ore based industry viz., iron and steel plant, weighed the State Government to prefer the appellants herein (respondents 4 and 5 in the writ petition) as against the first respondent herein (writ petitioner). When the appellants herein (respondents 4 and 5 in the writ petition) proposed to use the iron-ore mined as captive consumption for the existing industry which in turn generate more employment and span ancillary industries, the consideration and evaluation of relative merits of the appellants herein (respondents 4 and 5 in the writ petition) and the first respondent herein (writ petitioner) in terms of Rule 35 of MC Rules, would certainly fall within the matters specified under Section 11(3) of MMDR Act.14.3. Thus Section 11(3)(d) of the MMDR Act specifically contemplates to take into consideration the investment which the applicants propose to make in the mines and the industries based on minerals; and Rule 35 of the MC Rules provides for preferential rights of certain persons, considering the end use of the mineral by them.
15.1. Industrialization, which is intended for mass production of goods, changes the way of business and the very lifestyle. While globalization takes over, the local and traditional economy slowly disappears.
15.2. Iron ore comprises naturally occurring iron bearing minerals which can be economically extracted for production of iron and steel. Almost all the iron and steel in this planet have been derived initially from iron ore excepting a few small occurrences of meteorites containing from coming from Space. Iron ore is a major raw material for steel industry. In 21st century, around 85% of iron and steel came from iron ore directly, the rest from recycled steel scrap, which in turn came from iron ores over the last four centuries.
15.3. Iron and steel is the backbone of modern societies and economies. Per capita consumption of steel is a direct index of degree of development of a nation. As per the available statistics, the present per capita steel consumption is 50 kg per annum in India. Time has come to compare India's per capita steel consumption with that of 400 kg in developed countries, a world average of 180 kg and Chinese current consumption of 340 kgs. Our country, from a mere domestic per capita steel consumption of 35 kg in 2000, is projected to grow to 150 kg by 2020. This corresponds to the production targeted steel consumption of 200 million tons per annum, after factoring in imports/exports. 60% of the production is expected to come through blast furnace route, 33% through sponge iron - electric arc furnaces and 7% through other routes. This would require an availability of 290 million tones per annum of medium/high grade iron ore, after discounting scrap and re-cycling. Blast furnaces have the flexibility to use medium grades (62-64% Fe) and fines (through sinter and pellets) without loss of productivity and efficiency.
15.4. Iron constitutes 4-5% of earth's crust, but is not evenly distributed. Iron ore reserves are largely distributed in Australia, Brazil, India, Russia and Ukraine. Indian Iron ore is rich in Fe and has moderate silica, alumina and phosphorus. India ranks fifth in terms of iron ore reserves and is a leading producer and exporter of iron ore in the world after Australia, Brazil and CIS Countries and contributes to around 7.6% of world iron ore production. Some iron ores in India are the best naturally occurring grades in the world. With 207 million tones of iron ore production in 2008, iron ore tops the metallic mineral production in the country.
15.5. In the meantime, countries like Japan and China have been importing iron ore from India and value adding/converting it to high end-high priced steel products and also exporting to all other countries, to the benefit of their society. Generally, countries have adopted to the idea of conserving raw materials and other inputs for the purpose of domestic industry and only value added item have been exported, ensuring economic growth right from grass root level. All the economically developed countries have become developed by pursuing this route, excepting Australia who have very large mineral resources and retain very small population. China has adopted a different strategy now, of importing iron (+60% Fe) contributed to 60 MT per year of additional steel inventory there, which is more than India's annual production. This, in turn correspondingly improves the competitiveness of Chinese steel industry for eventual export possibly back to India and this will work against the overall interest of Indian economic growth in the long term.
15.6. The Steel industry is the engine that drives manufacturers in industries such as automobile, machinery, white goods, appliances and constructions. Steel Industry is the back bone of 'Economic Development of the Nation' and wherefore, it is imperative that special concern should be taken to develop the indigenous Steel industry by making special concessions and placing the industry in a preferential position vis-a-vis procurement of iron ore.
15.7. Undoubtedly, the Steel industry generates more income to the State exchequer besides generating far more employment than the mining industry. As rightly pointed out, the Steel industry contributes around Rupees 200 Crore annually to the State and Central exchequer for every million tonne of iron ore converted into Steel, as compared to Rs. 1.5 Crore in the case of iron ore exported, besides providing permanent employment and livelihood to millions of citizens. Even though the Government of India has formulated a national mineral policy with the objective of granting preferential mining leases to steel industries, no concrete steps have been taken in that regard. Nothing concrete has been done by the State of Karnataka to control the growing money power of the mining industry and Steel industries have not been granted any iron ore mining lease in the State.
15.8.1. Karnataka has total iron ore resources of 9.03 billion tons out of total 23.59 billion tons, which is 38.28% of total Indian iron ore resources. In spite of higher resources in the State, the total iron and steel making capacity in the State is only a dismal 6.5 million tons, which is only 11,8% of the total Indian iron and steel production capacity of India.
15.8.2. The biggest fall back of very low steel production is that all these producers who have set up industry in the state do not have any iron ore mines, in spite of the assurance by the State Government and provisions of MMDR Act and National Mineral Policy and the Karnataka State Mineral Policy. These companies have already made an investment of over Rs. 25,000/- crore in the state and have generated direct and indirect employment to atleast 25000 people.
15.8.3. All other mineral-rich states viz., Orissa, Jharkhand and Chattisgarh which signed maximum number of MOUs, have clear policy to give iron ore mining lease only to the existing iron and steel producers or the proposed steel plants, who make substantial investment in the state in Iron and steel plant before the recommendation.
15.8.4. Although mineral wealth vests with State Governments, yet the subject of regulation of mines and mineral development is covered by entry 54 of the Union List under Seventh Schedule of the Constitution of India. By virtue of this, the Parliament has exclusive power to make laws with respect to regulation of mines and mineral development. But still greater role by State Governments is the need of the hour.
15.9. While ratifying the value addition criteria adopted by certain mineral-rich Indian States, utmost priority for granting of mining lease shall be given to those companies who have set up steel plants to the benefit of the society at large.
15.10. Prudent pre-qualifications followed by allocation of mining leases, within a reasonable time, to those steel companies who have invested and operating, could be the appropriate route to trigger higher growth rate in steel sector, thereby ensuring value addition, employment generation, infrastructure development - a pre-requisite to become a developed and balanced society.
16. The main object of economic development is to improve the level of living. The living standards are measured by the availability of food, shelter, education, health, sanitation and social services, etc.
17. Approving the decision of the State Government and Central Government giving preference to captive consumption of iron ore for the existing industry and captive consumption for the proposed industry or mining as a stand-alone industry, this Court by order dated 5th June, 2009 in WA No. 5026 of 2009 and connected matters held as hereunder:30.4. ... the first respondent herein (writ petitioner) in its representations dated 16th August, 2003, 31st May 2004 and 12th October 2004 has specifically claimed that it intends to use the impugned iron ore as captive consumption for the proposed steel industry. On the other hand, the appellants herein (respondents 4 and 5 in the writ petition) require the impugned iron ore as captive consumption for their existing industry. It is, under such circumstances, the Government rightly, taking into consideration all the relative merits of the respective parties, preferred the appellants herein (respondents 4 and 5 in the writ petition) and recommended them to the Central Government for the grant of mining lease.
11.8. Testing the validity of the evaluation proceedings dated 31st January, 2004 and also the recommendation of the State Government dated 6th December, 2004 made in favour of fourth and fifth respondents for grant of mining lease from any angle, we are satisfied that both the evaluation proceedings and the recommendations made for grant of mining lease has been done in the light of the criteria prescribed under Section 11(3) of the MMDR Act and Rule 35 of the MC Rules, and therefore, we do not see any irregularity, illegality, discrimination, arbitrariness or violation of principles of natural justice by the State Government.
11.9. Accordingly, Issue III is also answered in negative.
12. Writ petition is accordingly dismissed. However, there shall be no order as to costs.