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IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION

INTERLOCUTORY APPLICATION NO.86 OF 2014 IN

WRIT PETITION(C) NO. 435 OF 2012

Goa Foundation ….Petitioner

versus

Union of India and others ….Respondents

And in the matter of:

M/s Bandekar Brothers Private Limited ….Applicant

O R D E R

1. Through  the  instant  interlocutory  application,  the  applicant-M/s  Bandekar  

Brothers Private Limited has prayed for a direction to the concerned authorities for  

restraining them from auctioning the mined mineral ore produced by the applicant  

prior to 22.11.2007, through e-auction. This prayer is premised on the foundation,  

that the applicant's above stated mined mineral ore cannot be sold, under the orders  

passed by this Court. In this behalf, it was the contention of the learned counsel for  

the applicant, that the applicant had mined 67,285 metric tons of iron ore (Grade  

63.19% Fe approximately) prior to 22.11.2007, and therefore, the applicant should  

be released the aforesaid iron ore, with the right to dispose of the same.  A similar  

submission was made by the applicant for the disposal of 1,00,000 metric tons of old  

dump (grade 46.15% Fe approximately).

2. According to the learned counsel for the applicant, the mineral ore mined prior  

to 22.11.2007, cannot be treated as having been illegitimately mined, and as such,  

the  applicant  as  also  all  other  similarly  placed  mining  lease  holders,  should  be

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released the same  with liberty to sell the same.

3. Mr. A.D.N. Rao, Advocate, learned amicus, vehemently opposes the prayer  

made on behalf of the applicant. While doing so, he placed reliance on the decision  

rendered by this Court in Goa Foundation versus Union of India (2014) 5 SCALE  

364.   Our  pointed  attention  was  invited  to  the  following  observations  recorded  

therein:

“67. As we have held that the deemed mining leases of the  lessees in Goa expired on 22.11.1987 and the maximum period  (20 years) of renewal of the deemed mining leases in Goa has  also expired on 22.11.2007, mining by the lessees in Goa after  22.11.2007 was illegal.  Hence, the order dated 10.09.2012 of  the Government of  Goa suspending mining operations in the  State  of  Goa  and  the  order  dated  14.09.2012  of  the  MoEF,  Government of India, suspending the environmental clearance  granted to  the  mines  in  the  State  of  Goa,  which  have been  impugned in the writ petitions in the Bombay High Court, Goa  Bench (transferred to this Court and registered as transferred  cases)  cannot  be  quashed  by  this  Court.   The  order  dated  10.09.2012  of  the  Government  of  Goa  and  the  order  dated  14.09.2012 of the MoEF will have to continue till decisions are  taken  by  the  State  Government  to  grant  fresh  leases  and  decisions are taken by the MoEF to grant fresh environmental  clearances for mining projects.

68. On 05.10.2012, this Court while issuing notice in Writ  Petition (C) No.435 of 2012 (Goa Foundation vs. Union of India   & Others) also passed orders that all mining operations in the  leases identified in the report of the Justice Shah Commission  and transportation of iron ore and manganese ore from those  leases,  whether  lying  at  the  mine-head  or  stockyards,  shall  remain  suspended.   Thereafter  on  11.11.2013,  this  Court  passed an order  that  the inventory  of  the excavated mineral  ores lying in different mines stockyards/jetties/ports in the State  of Goa made by the Department of Mines and Geology of the  Government of Goa be verified and thereafter the whole of the  inventorised  mineral  ores  be  sold  by  e-auction  and the  sale  proceeds (less taxes and royalty) be retained in separate fixed  deposits (lease-wise) by the State of Goa till this Court delivers  judgment  in  these matters  on the legality  of  the leases from  which the mineral ores were extracted.  In our order passed on  11.11.2013,  we  had  also  directed  that  this  entire  process  of  verification  of  the  inventory  e-auction  and  deposit  of  sale

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proceeds be monitored by a Monitoring Committee appointed  by the Court.   The Monitoring Committee comprising Dr. U.V.  Singh  (Additional  Principal  Chief  Conservator  of  Forests,  Karnataka), Shri Shaikh Naimuddin (former Member of Central  Board of Direct Taxes) and Parimal Rai (Nominee of Govt. of  Goa)  have  in  the  meanwhile  monitored  the  e-auction.  We  extract  hereinbelow the  relevant  portion  of  the  interim report  dated 12.03.2014 of the Monitoring Committee :

“After  the  two  e-auctions,  the  total  ore  auctioned  is  about  1.62  million  MT and  the  total  value  realized  is  260.68  crores  approximately.   As  directed  by  this  Hon'ble  Court,  the  State  Government  has  been  requested  to  maintain  separate  accounts,  lease  wise  and  keep  the  sale  proceeds  as  fixed  deposits  in  Nationalzed Banks.

The process of transportation of ore for export has not  yet been initiated because of the storage charges being  demanded from the successful bidder by the Marmagoa  Port Trust (MPT).  As a result, the process of e-auction  is likely to slow down.  The extent of storage charges  demanded is as per Annexure MC III.”

69. As we have held that renewal of all the deemed mining  leases in the State of Goa had expired on 22.11.2007, the  mining lessees will  not  be entitled to the sale value of  the  ores  sold  in  caution  but  they  will  be  entitled  to  the  approximate  cost  (not  actual  cost)  of  the  extraction of  the  ores.....”

(emphasis is ours)

Based on the aforesaid observations, it was the vehement assertion of the learned  

amicus,  that  an  inventory  of  all  the  mined  mineral  ores  lying  in  different  

mines/stockyards/jetties/ports in the State of Goa was ordered to be prepared by the  

Monitoring Committee (appointed by this Court).  It  was further directed, that the  

entire mined mineral ores (of which the inventory was prepared) was to be sold by  

way of e-auction.  It was pointed out, that this Court had clearly expressed, that the  

holders of the mining leases were not to be entitled to the proceeds thereof.  In other

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words, the mining lease holders could not claim the sale value of the mined mineral  

ores sold by way of e-auction.  This Court in its directions had explicitly held that  

they would be entitled only to the approximate cost (not actual cost) incurred by  

them during the extraction of the mined mineral ores. In view of the above directions  

of this Court, learned amicus submitted, that the prayers made in the application  

were clearly unacceptable.

4. In  addition  to  the  aforesaid  submission,  it  was  also  the  contention  of  the  

learned amicus, that the prayer made by the applicant was wholly unjustified in view  

of the provisions of the Mineral Concession Rules, 1960 (hereinafter referred to as  

the  'Mineral  Rules').   Insofar  as  the  instant  aspect  of  the  matter  is  concerned,  

reliance  was  first  placed on  Rule  27(2)(la)  of  the  Mineral  Rules.   The same is  

extracted hereunder:

“27. Conditions – (1) Every mining lease shall be subject to the  following conditions:

(a) to (u)xxx xxx xxx

(2) A mining lease may contain such other conditions as  the State Government may deem necessary in regard to the  following, namely, :-

(a) to (l) xxx xxx xxx

(la) the time limit for removal of mineral, ore, plant, machinery  and other properties from the leasehold area after expiration, or  sooner  determination  or  surrender  or  abandonment  of  the  mining lease.”

(m) to (o) xxx xxx xxx”  

A perusal of the above Rule leaves no room for any doubt, that the State, while  

granting a mining lease, had the discretion to fix the time limit for removal of the  

mined mineral ore etc. from the lease hold area.  In order to demonstrate that such

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a period was provided for, our attention was drawn to Rule 31 of the Mineral Rules.  

Rule 31 is being extracted hereunder:

“31. Lease to be executed within six months.- (1) Where, on  an application for the grant of a mining lease, an order has been  made for the grant of such lease, a lease deed in Form K or in a  form  as  near  thereto  as  circumstances  of  each  case  may  require,  shall  be  executed  within  six  months  of  the  order  or  within such further period as the State Government may allow in  this behalf,  and if no such lease deed is executed within the  said period due to any default on the part of the applicant, the  State Government may revoke the order granting the lease and  in that event the application fee shall be forfeited to the State  Government.

(2) The date of the commencement of the period for which  a mining lease is granted shall  be the date on which a duly  executed deed under sub-rule (1) is registered.”

A perusal of the aforesaid Rule reveals, that a lease deed in Form K is mandatorily  

required to be  executed within six months of the order of grant of such lease (or  

within such further period as the State Government may allow).  Our attention was  

then invited to Form K (mining lease deed), and more particularly, to paragraphs 5  

and 6 of Part IX thereof.  The aforesaid paragraphs are being extracted hereunder:

5.   the lessee/lessees having first paid discharged rents, rates,    and royalties payable by virtue of  these presents may at  the  expiration or sooner determination of the said term or within six  calendar  months  thereafter (unless  the  lease  shall  be  determined under clauses 1 and 2 of this part and in that case  at any time not less than three calender months nor ore than six  calendar  months  after  such  determination)  take  down  and  remove  for  his/their  own  benefits  all  or  any  ore  mineral  excavated  during  the  currency  of  lease  engines,  machinery,  plant, buildings, structures, tramways, railways and other works,  erections and conveniences which may have been erected, set  up or placed by the lessee/lessees in or upon the said lands  and which the lessee/lessees is/are not bound to deliver to the  State Government under clause 20 of Part VII of the Schedule  and which the State Government shall not desire to purchase.

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6. If  at the end of six calendar months after the expiration or  sooner  determination  of  the  said  terms  under  the  provisions  contained  in  clause  4  of  Part  VIII  of  this  Schedule  become  effective there shall remain in or upon the said land any ore or  engines,  machinery,  plant,  buildings,  structures,  tramways,  railways and other works, erections and conveniences or other  property  which  are  not  required  by  the  lessee/lessees  in  connection with operations in any other lands held by him by  them under prospecting licence or mining lease, the same shall  if  not  be removed by the lessee/lessees within one calender  month after notice in writing requiring their removal has been  given to lessee/lessees by the State Government be deemed to  become the property of the State Government and may be sold  or disposed of in such manner as the State Government shall  deem fit without liability to pay any compensation or to account  to the lessee/lessees in the respect thereof.”

(emphasis is ours)

A perusal  of  the  terms  and  conditions  expressed  in  the  lease  required  to  be  

executed by a mining lease holders, leaves no room for any doubt, that the mineral  

ore extracted by the lessee, has to be removed within six calendar months from the  

date of expiration of the mining lease.  And further more, if at the end of the above  

six calendar months, the excavated mineral  ore is not removed, then within one  

calender month after a notice in writing is issued to the lessee/lessees, the extracted  

mineral  ore  is  deemed  to  become  the  property  of  the  State  Government.  

Accordingly, relying on the afore-stated statutory provisions, it was the submission of  

the learned amicus, that the ore which had remained unremoved after the expiration  

of the above period of six months, would be deemed to have vested in the State  

Government.   

5. In support of the above submission, learned amicus again invited our attention  

to Goa Foundation's case (supra), wherein this Court had permitted, that the entire  

stock of extracted mineral ores would vest in the State Government. In this behalf,  

our attention was drawn to the following observations:

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“70. The entire sale value of the stock of mineral ores sold  by e-auction less the average cost of excavation, 50% of the  wages and allowances and 50% of the storage charges to be  paid  to  MPT is  thus  due  to  State  Government  which  is  the  owner of the mineral ores which have been sold by e-auction.  The  State  Government  will  set-aside  10%  of  this  balance  amount for the Goan Iron Ore Permanent Fund for the purpose  of sustainable development and inter-generational equity.  This  entire exercise of calculating the average cost of extraction of  ores to be paid to the mining lessees, 50% of the basic wages  and dearness allowance to be paid to the workers, 10% of the  balance amount towards the Goan Iron Ore Permanent Fund  and  the  balance  amount  to  be  appropriated  by  the  State  Government will be done by the Director of Mines and Geology,  Government  of  Goa,  under  the supervision of  the Monitoring  Committee.   Till  this  exercise  is  over  and  the  report  of  the  Monitoring Committee will continue and their members will be  paid  their  remuneration  allowances  as  directed  in  the  order  dated 11.11.2013.”

(emphasis is ours)

6. Learned  counsel  for  the  applicant,  could  not  invite  our  attention  to  any  

favourable observations made by this Court in Goa Foundation's case (supra), nor  

could  learned  counsel  for  the  applicant  invite  our  attention  to  any  statutory  

provisions from the Mineral Rules, which would counter the submissions advanced  

at the hands of the learned amicus. The submissions advanced on behalf of the  

applicant were premised merely on the assertion, that the mineral ore which the  

applicant was claiming a right over, had been legitimately mined before 22.11.2007,  

and therefore,  the applicant  had an absolute  and legitimate ownership  over  the  

same.  We  may  note,  that  the  above  position  was  emphasised,  stressed  and  

persistently reiterated to make the stand absolutely crystal clear.

7. Based  on  the  directions  issued  by  this  Court  in  Goa  Foundation's  case  

(supra),  as also,  the provisions of the Mineral  Rules,  it  is not possible for us to  

accept the prayers made by the learned counsel for the applicant.  We are of the

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firm view, that this Court  clearly and categorically directed the preparation of  an  

inventory  of  all  the  existing  extracted  mineral  ore  available  as  on  11.11.2013.  

Accordingly, the Monitoring Committee prepared an inventory of all  the extracted  

mineral  ore.   The inventory included the ore,  whether lying at  the mine-head or  

stockyards or jetties or ports in the State of Goa. This Court further directed the sale  

of the entire  extracted ore included in the above inventory was to be made by way  

of  e-auction.  It  was further directed, that the mining lease holders would not  be  

entitled to the proceeds of the e-auction, but only to an approximate cost (not actual  

cost) of extraction of the mined mineral ores, and nothing more.  As such, the prayer  

made  in  the  instant  application,  that  the  State  Government  be  restrained  from  

selling the extracted mineral  ore,  and further  that,  the applicant  be permitted to  

dispose of the same by itself, cannot be accepted.

8. Additionally, the provisions of the Mineral Rules mandate that the excavated  

mineral ore is liable to be removed by the lessee within a period of six months,  

failing which, after the issuance of a notice, the same would stand forfeited to the  

State Government.  On the issue of forfeiture, this Court clearly directed in Goa  

Foundation's  case  (supra),  that  all  the  extracted  mineral  ore  contained  in  the  

inventory  prepared  by  the  Monitoring  Committee,  would  vest  in  the  State  

Government.    The directions  of  this  Court,  satisfy  the vesting of  the extracted  

mineral  ore  with  the  State  Government,  thus  negating  the  requirement  of  the  

issuance of any formal notice to the mining lease holders. It is, therefore, difficult for  

us  to  accept,  the  prayers  made  by  the  applicant,  either  for  the  release  of  the  

extracted mineral ore to the applicant, or the liberty to sell the same at its own.

9. In recording our above conclusion, we have also taken note of consideration

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of an unequivocal determination by this Court, that without renewal of the mining  

leases, all the leases would be deemed to have expired on 22.11.2007.  The State  

of  Goa passed an order dated 10.09.2012 suspending mining operations in the  

State of Goa.  By another order dated 14.09.2012, the Ministry of Environment and  

Forests, Government of India, suspended the environmental clearances granted to  

mines in the State of Goa.  It is, therefore, apparent that no mining activity was  

being carried out in the State of Goa after 10/14.09.2012. In the above view of the  

matter,  the  instant  application  filed  on  12.08.2014  is  wholly  misconceived,  and  

merits outright rejection.

10. For the reasons recorded hereinabove, we find no merit in the prayers made  

in interlocutory application No. 86 of 2014 in Writ Petition(C) No. 435 of 2012. The  

same is accordingly dismissed.

….......................J. [JAGDISH SINGH KHEHAR]

…........................J. [J. CHELAMESWAR]

NEW DELHI; …........................J. OCTOBER 14, 2014. [A.K. SIKRI]