IA Nos.40 of 2015 etc. in W.P.  (C) No.114 of 2014                                                                Page 1 of 14    

REPORTABLE  

        IN THE SUPREME COURT OF INDIA  

CIVIL ORIGINAL JURISDICITON  

              I.A. No. 40 of 2015, I.A.No.42 of 2015,   

IA No.61 of 2015 in IA No.40 of 2015 and IA No.111989 of 2018  

IN  

                     WRIT PETITON (C) NO. 114 OF 2014  

Common Cause                         …Petitioner  

versus  

Union of India & Ors.                             …. Respondents  

(IN RE: SARDA MINES PVT. LTD.)  

J U D G M E N T   

Madan B. Lokur, J.   

1. In this batch of substantive applications, we are concerned with what is  

described as “Illegalities involved in the mining lease of Sarda Mines Private  

Limited” by the Central Empowered Committee in its report of 16th October,  

2014.  

2. It is not necessary to repeat all the facts leading up to these applications  

since the background has already been detailed by us in Common Cause v. State  

of Orissa.1  

                                                           1 (2017) 9 SCC 499

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3. While dealing with the mining lease of Sarda Mines Private Limited, the  

Central Empowered Committee or the CEC concerned itself with seven issues.  

They are:  

1. Regarding renewal of the mining lease.  

2. Regarding validity of the Environmental Clearance.  

3. Regarding sale of iron ore in the form of ROM by Sarda Mines   

              Private Limited.        

4. Regarding diversion of additional land for mining and allied     

    activities    

5. Regarding production of iron ore without/in excess of the  

   Environmental clearance.   

6.  Regarding enquiry done by the State Government for alleged   

    violation of Rule 37, MCR, 1960 [Mineral Concession Rules of   

    1960].    

7. Regarding alleged ownership of the mining lease actually being   

             with Jindal Steel and Power Ltd.  

4. For the present, we are concerned only with the validity of the  

environmental clearance granted to Sarda Mines Private Limited or SMPL and  

the production of iron ore without/in excess of the environmental clearance.  The  

concern relates to a mining lease granted to SMPL over 947.046 hectares of land  

for 20 years from 14th August, 2001 to 13th August, 2021. The mining lease is of  

Thakurani Mines, Block B, Village Soyabali, District Keonjhar in Odisha. We  

are not concerned with the validity or otherwise of the grant or renewal of the  

mining lease to SMPL.

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Grant of permission to mine  

5. It has been pointed out to us and this is not disputed, that SMPL was  

granted permission on 13th July, 1999 to extract 1,40,000 MT of iron ore per  

annum. The permission granted clearly indicates that it is in the context of  

reopening (to the extent of broken up area of 94.024 acres) the existing mine  

where the highest production was 1,39,802.00 MT during 1966 as certified by the  

Deputy Director (Mines). The said extraction or production was of iron ore and  

the permission granted in 1999 was also for extraction or production of iron ore.  

This was in accord with the provisions of the Mines and Minerals (Development  

and Regulation) Act, 1957 (MMDR Act) that permits mining of the mineral iron  

ore.  

The permission granted on 13th July, 1999 reads as follows:  

“Subject: Reopening of iron ore mines in Block-B in village Soyabali of  

Thakurani iron ore mines in District Keonjhar, Orissa -  

clarifications reg.  

Sir,  

This has reference to letter of 10th June, 1999 jointly from you and Shri  

M.L. Sarda seeking clarification on applicability of the provisions of the  

EIA Notification of 1994.  We have noted the following:  

(i) The Department of Steel and Mines, Government of Orissa has  agreed to renew mining lease in respect of Block-B covering an  

area of 2340.20 acres in village Soyabali of the Thakurani iron ore  

mines in favour of Shri S.L. Sarda and Shri M.L. Sarda.  

(ii) The entire lease area is in reserve forest for which de-reservation  proposal has been forwarded by the DFO, Keonjhar to the PCCF,  

Bhubaneswar.  

(iii) Already broken up area is 94.024 acres.

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(iv) Highest production from Block-B mines was 1,39,802.00 MT  during 1966 as certified by Dy. Director (Mines), Joda, Keonjhar  

in his letter No. 7892 dated 26.5.99.  

(v) Applications have been submitted to Orissa State Pollution   Control Board for obtaining “consent to operate” and IBM for  

approval of mining plan.  

Further, it has been noted that you are planning to reopen the mine  

sometimes by the end of 1999 without change in broken up area and  

production level.  Also there is no plan to modernise the mine.   It has also  

been noted that wet drilling will be adopted on working phases.  Besides  

management of surface run off, mine water discharge and plantation of  

OB dumps, water spraying on haul roads, transfer points and crushing  

plant will be done regularly.  

The provisions of EIA Notification of 1994 are not applicable to the  

renewal of mining lease proposals that do not involve expansion or  

modernisation.  However, you should confine excavation only to already  

broken up area of 94.024 acres as per mining plan approved and limit  

production to 1,40,000 MTPA [TPA?].  You are also advised to obtain  

other statutory approvals from the concerned authorities including the  

forestry clearance under the Forest (Conservation) Act, 1980 and ensure  

compliance with the general environmental conditions as indicated in  

Annexure-I.  In case, you plan any expansion or modernisation then prior  

approval under the provisions of the EIA Notification of 1994 as amended  

subsequently should be obtained from the Ministry.”  

6. Again, the admitted position is that SMPL did not act upon the permission  

granted on 13th July, 1999 till 13/14 August, 2001. The apparent reason is that the  

mining lease in favour of SMPL was renewed only on 13/14 August, 2001. It is  

only after the mining lease was renewed that SMPL started mining or extracting  

iron ore on the basis of the permission granted on 13th July, 1999.   

Grant of environmental clearance  

7. The next important date that we are concerned with is 22nd September,  

2004 that is the date on which SMPL was granted environmental clearance for  

the extraction of iron ore. The environmental clearance granted to SMPL was for

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expansion of production of iron ore (lump) from 1.5 lakh tonnes per annum  

(LTPA) to 4.0 million tonnes per annum (MTPA). There was a progressive  

gradation in the production capacity inasmuch as during the first year the increase  

in production was permitted from 1.5 LTPA to 0.5 MTPA; 3.0 MTPA by the third  

year and 3.750 MTPA from the fifth year to achieve the rated capacity in  

production of 4.0 MTPA during the 17th year.   

8. However, what is strange about the environmental clearance granted to  

SMPL on 22nd September, 2004 is that it referred to the “proposal for expansion  

of production of iron ore (lump)” from 1.5 LTPA to 4.0 MTPA. In fact, the  

permission granted on 13th July, 1999 was for production of iron ore and not for  

iron ore (lump).  It is not even the case of SMPL that it was granted the permission  

on 13th July, 1999 for the extraction or production of iron ore (lump), Moreover,  

the MMDR Act refers to the mineral iron ore and not to iron ore (lump). The  

concept of extraction or production of iron ore (lump) introduced in the  

environmental clearance was alien to the permission granted on 13th July, 1999  

and the MMDR Act.  Therefore, the environmental clearance granted on 22nd  

September, 2004 must be understood in the context of the permission granted on  

13th July, 1999 and the MMDR Act. If so appreciated, then it is clear that  

environmental clearance was granted to SMPL only related to the expansion of  

production of iron ore from 1.5 LTPA to 4.0 MTPA. As mentioned above, it is  

not even the case of SMPL that it was granted permission to extract iron ore  

(lump) to the extent of 1.4 LTPA in terms of the permission granted on 13th July,

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1999. Our understanding of the environmental clearance in this context and in  

this regard keeping these factors in mind is of considerable importance insofar as  

the decision in the applications is concerned, as will be apparent a little later.  

Retrospective effect of the environmental clearance  

9. Learned counsel for SMPL did not contest or dispute that an environmental  

clearance does not have any retrospective effect. It is operational from the date it  

is granted. In any event, this issue is no longer res integra having been settled in  

the decision rendered in Common Cause in paragraph 87 of the Report. The  

submission made, however, was that the benefit of retrospectivity of the  

environmental clearance should be given to SMPL from the date on which the  

mining lease was renewed, that is, with effect from 13/14 August, 2001. The  

reason for claiming this benefit is that the expanded permissible production would  

then commence from August 2001 and SMPL would be entitled to extract a larger  

quantity of iron ore with the progressive gradation given in the environmental  

clearance with the result that the 3rd year of production would be 2004 and the 5th  

year of production would be 2006 and not 2009. Similarly, the 17th year of  

production would be 2018 and not 2021.   

10. We simply cannot accept this submission since it is plainly contrary to the  

decision of this Court in Common Cause. Moreover and additionally, accepting  

the submission would mean that for the period from 13/14 August, 2001 till 22nd  

September, 2004 SMPL would have the benefit of the permission granted on 13th

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July, 1999 as well as the retrospective benefit of the environmental clearance  

dated 22nd September, 2004 meaning thereby that SMPL would have two mining  

permissions, which is obviously not possible.  However, we cannot deny to SMPL  

the benefit of the permission granted on 13th July, 1999 on the basis of which  

SMPL carried out mining activities from the date of renewal of the mining lease  

that is 13/14 August, 2001 till 22nd September, 2004. Even learned Amicus does  

not have any objection to granting the benefit of the permission to SMPL for this  

period, to the extent that SMPL extracted or produced 1.4 LTPA of iron ore  

during this period. Therefore, the mining activity carried out by SMPL from  

13/14 August, 2001 till the date of the environmental clearance, that is, 22nd  

September, 2004 is legal to the extent of 1.4 LTPA and SMPL cannot be penalised  

for this mining activity during this period.  

11. It was submitted by learned counsel for SMPL that if the environmental  

clearance is not given retrospective effect then it would mean that its validity  

would not be co-extensive with the term of the mining lease. Resultantly, the  

operation of the environmental clearance though granted for the life of the mining  

lease would necessarily be curtailed to the detriment of SMPL. This submission  

is noted only to be rejected. The submission made can hardly be a ground for  

giving retrospective effect to the environmental clearance. If the life of the  

environmental clearance is curtailed due to operation of the law, then so be it.  

12. Learned counsel for SMPL has shown us a Summary of the Project,

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Environmental Impact Assessment and Environmental Management Plan relating  

to the proposed expansion of the Thakurani iron ore mine, Block-B, District  

Keonjhar, Orissa. This document is of February 2002 and is to be found on page  

25 of volume 168 of the paper book. He has drawn our attention to page 28 thereof  

which relates to the mining proposed by open-cast method using drilling and  

blasting. The production build-up is given in the form of a chart but it takes 2001-

2002 as the first year of production. This is obviously on the assumption that the  

environmental clearance relates back to the date of renewal of the mining lease  

in 2001. However, since we have held that the environmental clearance does not  

and cannot have any retrospective effect, the first year of production should in  

fact be 2004-2005 (pro rata) based on the environmental clearance. On the basis  

of the chart pointed out by learned counsel for SMPL, it is quite clear that there  

has been excess mining of iron ore from the first year of production itself. This  

excess mining is clearly illegal and must be penalised in terms of our judgement  

in Common Cause.  

13. We leave it to the Central Empowered Committee (CEC) to quantify the  

penalty to be imposed on SMPL from 22nd September, 2004 and based on the  

terms of the environmental clearance.  The calculation should also take into  

consideration our conclusion that the environmental clearance is not retrospective  

and the first year of production, in view of the environmental clearance granted  

to SMPL would be 2004-2005. Any mining in excess of the environmental  

clearance by SMPL would be and is illegal.

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Extraction of iron ore (lump)  

14. The main rub of the controversy before us lies in the terminology employed  

in the environmental clearance granted to SMPL - whether it was entitled to  

extract iron ore (lump) or mineral iron ore, within the limits laid down in the  

environmental clearance.   

15. Before resolving this controversy, 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. The submission of learned counsel for SMPL is  

to the effect that SMPL was entitled to extract iron ore (lump) in terms of the  

environmental clearance. If this submission is to be taken literally, then SMPL  

was entitled to extract only iron ore (lump) without extracting iron ore ROM. This  

would be much like the argument put forth by Portia enabling Shylock to extract  

his pound of flesh without spilling a drop of blood. However, we need not take a  

decision in this regard merely on semantics.  

16. That lumps are a by-product of the extraction of iron ore ROM is clear  

from the decision of this Court rendered in National Mineral Development  

Corporation Ltd. v. State of M.P.2 wherein this Court noted the process of  

winning the mineral as described by the appellant therein in the following words:   

                                                           2 (2004) 6 SCC 281

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“Iron ore deposits occur mostly in the hill ranges and iron ore is  

found on the top of the hill i.e. on the surface. The process by  

which the mineral is won has been described by the appellant as  

under:  

“The ore is extracted by opencast method of mining for  

which mining benches are prepared. Firstly, holes are  

drilled on the benches covering the entire height of the  

bench at regular distance depending on ore types. After  

charging of the holes with explosives this portion of the  

bench is blasted. The blasted material known as ROM  

(run-of-mines) consists of large boulders, fragments and  

fines along with other contaminants. ROM is  

transported to crushing plant by dumpers and crushed  

to below 150 mm sizes. This crushed ROM contains  

lump, fines and also contaminants such as alumina and  

silica. The crushed ore is transported to screening plant  

through conveyor belts and is washed with water and  

screened in vibrating screens. Vibrating screens segregate  

ore into different sizes such as lump, calibrated ore and  

fines……” (Emphasis supplied by us).  

17. Similarly, in Tata Steel Limited v. Union of India3 it was observed that in  

the process of mining, iron ore is extracted (that is ROM) and separated into ore  

lumps, fines and waste material which is commonly known as slime.  

18. Looked at in this light, the context in which permission was granted to  

SMPL on 13th July, 1999 is important. Permission was granted to SMPL to extract  

the mineral iron ore. This had no reference at all to the sub-category or by-product  

called iron ore (lump) but must be understood as permission to extract mineral  

iron ore ROM. It was this permission that was sought to be proposed for  

expansion of production and if it is looked at in this contemporaneous or historical  

(whichever) background, then it is quite obvious that the environmental clearance  

                                                           3 (2015) 6 SCC 193

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granted on 22nd September, 2004 was only with reference to iron ore ROM. This  

must also be read in the context of the MMDR Act which refers to the mineral  

iron ore and does not refer to iron ore (lump). A combination of these two factors  

convinces us that the environmental clearance granted to SMPL was only with  

reference to iron ore ROM and not iron ore (lump), notwithstanding the  

terminology employed in the environmental clearance.  

19. Taking the view as canvassed by learned counsel for SMPL would lead to  

a rather anomalous situation wherein, for the purposes of extracting iron ore  

(lump) of a permissible quantity, SMPL could extract as much iron ore ROM as  

it desired. In other words, for the purposes of extracting iron ore (lump) of 4.0  

MTPA could it be said that SMPL was entitled to extract iron ore ROM to the  

extent of 6.0 MTPA or even 8.0 MTPA? The answer to this is certainly in the  

negative otherwise the environmental clearance granted to SMPL would be  

devoid of any rational meaning whatsoever. Also taking this into consideration,  

it does appear to us that though the environmental clearance granted to SMPL  

was unhappily worded, it must be given a realistic meaning so that it is not  

rendered ineffective on the ground of vagueness and to the detriment of the  

environment as also to the detriment of SMPL.  

20. In this context, it is necessary to refer to the Summary of the Project,  

Environmental Impact Assessment and Environmental Management Plan of  

February 2002 placed on record by SMPL in volume 168 of the paper book. The

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table or chart on page 28 thereof and which forms a part of the document indicates  

that for the production ore extraction of iron ore (lump) the total excavation of  

iron ore ROM proposed is almost double the quantity. The chart is as follows:  

Years Lump Ore  (+5- 180m  and 30 +  

18m) (MT)  

Total  Excavation  

(MT)  

ROM  (MT)  

Top  Soil  

(MT)  

Mineral  rejects  (MT)  

Subgrade  Ore (MT)  

Fines,  -5 mm  (MT)  

1st year  2001-2002  

0.500 1.151 0.770 0.000 0.349 0.032 0.270  

2nd year  2002-2003  

1.196      

2.159      

1.840      

0.000      

0.267      

0.052      

0.644      

3rd year  2003-2004  

1.976    

3.499    

3.040 0.000 0.121 0.338 1.064  

4th year  2004-2005  

2.990      

4.829 4.600 0.000 0.183 0.046 1.610  

5th year  2005-2006  

3.750 6.058 5.770 0.000 0.231 0.057 2.020  

Sub Total 10.412 17.696 16.020 0.000 1.151 0.525 5.606  

2007-2011 18.750 33.571 28.850 0.024 1.342 3.355 10.100  

2012-2016    

18.750    

33.547    

28.850 0.000 1.342 3.355 10.100  

2017-2021   20.00 35.779 30.770 0.000 1.431 3.578 10.770  

Grand Total 67.912 120.593 104.90 0.024 5.266 10.813 36.576    

21. It is quite clear to us even from the above chart that the interpretation  

sought to be given by learned counsel for SMPL to the environmental clearance  

was never intended and if it was, then the unfortunate consequence would be that  

the environmental clearance must be held to be invalid and quashed, resulting in  

greater damage to the interests of SMPL than envisaged. On a realistic  

interpretation to the environmental clearance, for the purposes of calculating  

excess or illegal production of iron ore, the entire extraction of iron ore ROM is

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required to be taken into consideration.  

22. We may note in this context that it has come on record that the entire iron  

ore ROM extracted by SMPL is actually sold to Jindal Steel and Power Ltd. or  

JSPL and it is not only iron ore (lump) that is sold to JSPL. In this factual  

background, the issue of the relationship between SMPL and JSPL arises but we  

are not concerned with this for the present. However, what is more important is  

that it is the sale of iron ore ROM that is made by SMPL to JSPL and not the sale  

of iron ore (lump). In other words, SMPL is desirous of taking full advantage of  

its extraction and production of iron ore ROM but at the same time shying away  

from the legal consequences that follow.  

23. It was submitted by learned counsel for SMPL that the CEC has confused  

itself between extraction or production of iron ore ROM and extraction or  

production of iron ore (lump) and as a consequence, it has arrived at an incorrect  

figure of excess or illegal mining by SMPL. In fact, the contention is that SMPL  

has neither been involved in any excess or illegal mining and the conclusions  

arrived at by the CEC are totally incorrect. We cannot accept this submission in  

view of the discussion above, including the conduct and activities of SMPL, the  

provisions of the MMDR Act and the context in which the permission and  

environmental clearance was granted to SMPL. Under the circumstances, we find  

no merit in the objections raised by SMPL to the report of the CEC with regard  

to the validity of the environmental clearance or the excess or illegal mining of

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iron ore by SMPL.   

24. However, in view of our conclusion, the CEC might have to rework the  

quantum of excessive or illegal mining carried out by SMPL and the consequent  

penalty. For this, we grant 6 weeks’ time to the CEC to do the needful. All records  

relevant for arriving at a decision should be made available by SMPL and the  

concerned authorities to the CEC.  

25. The substantive applications are disposed of to the above extent and in  

terms of the above directions.  

 ...……………………J  

       (Madan B. Lokur)     

                                                                     ...…………………....J     

New Delhi;                        (Deepak Gupta)   

November 12, 2018