A Critical Legal History of Mining in Goa

14th July 2015.  Krishnendu Mukherjee, Barrister and Advocate at Doughty Street Chambers, has been very involved in exposing the gross scale illegal mining carried out by Vedanta subsidiary Sesa Goa, and other iron ore miners in Goa. This article is a detailed analysis of the manipulations of legal procedures and previous judgements by mining companies and their government and judicial stooges, currently taking place in a desperate attempt to re-start mining in Goa.

Meanwhile in Goa, mining dumps which are the result of illegal mining are being auctioned off, and local residents in Caurem claim that companies are taking away twice the amount of reject ore-bearing material as they are buying.  Once a mine lease is terminated mined land should be reclaimed by the leasing company (as according to mine closure plans) and then returned to the state. However in a recent interview published in The Hindu’s Business Line,  Vedanta CEO Tom Albanese is quoted as saying: “We are waiting for clarification on some environmental issues. We have been dumping waste on the land we bought, but we have been permitted to dump waste outside lease areas. We want clarification on whether it will be a proper mining practice to do so.” This slip of the tongue by Albanese raises an important question: Do mining companies intend to enact Mine Closure Plans and give the leased land back to the state at all? If not will they attempt to develop the land or sell it on to another buyer? These are important questions to be asked in Goa, where 18% of the state is affected by mining.

 

A Critical Legal History of Mining in Goa

by Krishnendu Mukherjee

On the 12.8.11, the High Court of Bombay at Goa, delivered a landmark judgment in relation to environmental protection. In Shankar Raghunath Jog v Talaulicar and Sons Pvt Limited and Union of India PILWP 6/2011, the High Court interpreted the Environmental Impact Assessment Notification (EIA) 1994, Paragraph III (c) provides the following:

“The [environment] clearance granted shall be valid for a period of five years from the commencement of the construction or operation of the project.”

The High Court found that the validity of an environment clearance (EC) of the mining project in the state of Goa, was indeed five years from the date of commencement of the mining project, and that a further extension or renewal of environment clearance was required if the mine was to operate beyond that time period. The rationale for this finding was quite clear. At paragraph 15, the High Court stated:

“It is well settled principle of law that in cases when a statute is found to be obscure, the same must be interpreted having regard to the scheme of the Act. It is settled law that for the purpose of interpretation of the statute, the entire statute is to be read in its entirety. The purpose and the object of the Act must be given its full effect. Furthermore, in the case of the present nature involving environment issues, the principles of purposive construction must come into force. Considering the said aspects, Para III of the said EIA Notification 1994 would have to be construed with reference to the context vis a vis the other paras of the said Notification of 1994 so as to make it consistent with the purpose and objects of the said Act of 1986. In case there is no check on the environment hazard at the time of carrying out the mining activities, it can lead to degradation of the environment. Carrying out Impact Assessment within specific periods would assist in ascertaining the effects of the project activity which is sought to be pursued by the project proponent. Hence, the scheme as well as the objects of the Act of 1986, clearly stipulates that any activity carried out in respect of specific projects such as mining require Environment Clearance in order to see that such activities would not result in degradation of the environment affecting the lives of the residents in the locality.

Allowing the validity of the Environment Clearance for a extended period as contended by the learned Counsel for the Respondents, would be totally unjustified in the circumstances and defeat the purpose for the Act of 1986. We cannot be persuaded to accept the interpretation sought to be given by the learned Counsel appearing for the Respondents to the effect that there is no period of validity of Environment Clearance and the same subsists during the validity of the mining lease. It cannot be accepted that the period of validity of the environment clearance has to be ascertained on the basis of the Mining Concession Rules, which regulates the renewal of the mining lease. The only rational and correct interpretation to the EIA Notification of 1994 is that the validity of the Environment Clearance is for a period of five years from the date of the commencement of the project which includes expansion of the projects”.
The High Court are to be commended for their approach, which understood the importance of a time-bound consideration of the substantial prospective environmental impacts of, in this case, an open-caste iron-ore mining project, in an ecologically-sensitive area. This cannot be done simply by monitoring the conditions attached to an EC. The implications of this Judgment were, and are, extremely significant. The five-year validity on environment clearances came in with the amendment dated 4^th May 1994², and was superseded by the EIA Notification 2006, which came into force on the 14^th September 2006³. During that 12-year period, all large projects including mining, dams and thermal power stations will have required EC on commencement or expansion. According to the Ministry of Environment and Forests (MOEF) itself, the High Court “in construing the validity of Environmental Clearance merely five years from the date of commencement of the construction or operation and consequential repercussions on the validity of environment clearance issued to several thousand on-going projects under notification number S.O. 356 (E) dated 4^th May 1994”⁴.

 

The mining company, and then the MOEF appealed the Order to the Supreme Court of India, however notwithstanding the significant consequential repercussions of the Judgment, neither the mining company, nor the MOEF were able to get a stay on the Judgment, despite two attempts to do so⁵. The filing of the second appeal by the MOEF, one year after the appeal filed by the mining company on the same grounds, can only be seen as a second attempt to nullify the High Court Order by getting a stay.

The fact that the initial EC granted to the impugned mining project was actually faulty was recorded by an October 2013 study done by the Centre for Environment Education (CEE) commissioned by the Government of Goa⁶. The Report highlighted the fact that the mine was below the groundwater table, destruction of agricultural lands and its proximity to wildlife sanctuaries. The Report went onto highlight the fact that most of the EIA and Environment Management Plans (EMP) Reports of the mines in Goa were defective⁷.
The prohibition on the operation of the other 56 Goa mines which obtained EC under the EIA Notification 1994, was obtained on the 11^th January 2013 following the filing of Application No 22/2012 before the National Green Tribunal (NGT) in Delhi. The Tribunal stated the following:

“In our opinion, it is desirable to pass interim order, under the circumstances, directing the respondents to stop the mining activities in respect of the mines/units of which the initial period of five (5) years lease has expired and there is no further extension thereof. The respondents are therefore directed that no extension of such leases may be granted henceforth without approval of this Tribunal.

The above interim order is subject to final outcome of the lis before the Apex Court. The parties are at liberty to mention the matter as and when the Apex Court will finally adjudicate the lis, in order to pass further orders in the matter”.
The Shah Commission Report presented before Parliament on the 7.9.12, had also previously highlighted widespread violations of environmental law in ECs in the State of Goa⁸. The Commission noted⁹:

“Inaction, delayed action and mild actions have had created fearless atmosphere, abuse of law and regulations in the Goa State. This has paid ways for large scale irregularities, illegalities and corruption. Unwarranted “legal opinions”, seem to be intentional, have further aggravated the matter. In all, the legal opinions, it is observed, have gone in favour of lessees and not otherwise. The regulatory mechanism has been totally collapsed and irregularities due to maladministration have risen to its peak. In the process, the sole looser (sic) is environment, eco-system of the Western Ghats, general public and treasury of Goa State”.

 

On the basis of this Report, the State of Goa and then the MOEF suspended the ECs of 139 mines on the 14.9.12, in order to scrutinize the clearances obtained by the mining lease holders, stopping mining in the State¹⁰. Thereafter on the 5.10.12, the Supreme Court of India banned all mining in Goa following the filing of Goa Foundation v Union of India WP (Civil) No. 435/2012. In the final Judgment in the Goa Foundation case¹¹, the Supreme Court inter alia held the following:

“In our view, the deemed mining leases of the lessees in Goa expired on 22.11.1987 under sub-section (1) of Section 5 of the Abolition Act and the maximum of 20 years renewal period of thedeemed mining leases in Goa as provided in subsection (2) of Section 8 of the MMDR Act read with sub-rules (8) and (9) of Rule 24A of the MC Rules expired on 22.11.2007”.

In other words, just on the basis of the leases having expired in 2007, the Goa mines had been operating unlawfully for nearly 5 years when they were stopped from mining in September 2012. It has been calculated that this would be over Rs 35000 Crore loss due to illegal mining. The other illegalities highlighted in the Supreme Court decision, including mining outside the lease area, were calculated at Rs35000 Crore, making a minimum of Rs70000 Crore worth of loss to the State. However, there was no order for any compensation, nor punishment of the wrongdoers.

 

Ignoring the law

Having failed to obtain a stay, or to overturn the Judgment in the case of Shankar Jog, the MOEF took the unprecedented step of passing a Notification stating that the High Court Judgment was wrong and therefore should not be followed. The Notification¹³ states inter alia:

“8. And whereas the Central Government has decided to issue a clarification in order to remove the anamalous situation emerged due to the interpretation held by the aforementioned order of the High Court of Bombay in construing the validity of the Environmental Clearance merely five years from the date of commencement of its construction or operation and consequential repercussions on the validity of environment clearance to several thousand ongoing projects under notification number S.O. 356(E), dated the 4^th May 1994.

9.Now therefore, in exercise of powers conferred under sub-section (1) and clause (xiv) of sub-section (2) of Section 3 of the Environment Protection Act 1986, read with sub-section (4) of Rule 5 of the Environment (Protection) Rules, 1986, the Central Government hereby clarifies that in the Notification of the Government of India in the Ministry of Environment and Forests, vida number S.O. 356(E) dated the 4^th May 1994, the expression “for a period of five years”, shall mean “for a period of five years for commencement of the construction or operation and not five years from commencement of the construction or operation (my emphasis)”.

 

Clearly, such a Notification is an affront to the rule of law. The MOEF could not decide not to follow the High Court Judgment simply because it disagreed with it. Indeed, the NGT in the proceedings on the closure of the 56 mines affected by the Judgment said as much, when it stated:

“We make it clear that Prima Facie, Notification issued by MoEF, is an attempt to give go-by to the Judgment of the Hon’ble High Court of Bombay and, therefore, such clarificatory Notification dated 21^st August 2013 tantamounts to Civil Contempt as defined under Section 2(d) read with Section 12 (3) of the Contempt of Courts Act 1971, as well as inherent powers available to the High Court of Bombay, under Article 215 and such powers available to the Apex Court under Article 129. Because the Hon’ble High Court of Bombay and the Apex Court are Courts of Record. The Legal Consultant Mrishwar Singh seeks short time to explain the need felt by the MoEF for issuance of such clarificatory Notification. Though we are prima facie, not satisfied with the approach of the MoEF, we grant time till 9^th October 2013. On the schedule of hearing, this Tribunal will deal with the matter on the issue of the Contempt of Court, for making a suitable reference to the Apex Court in as much as admittedly till the date, there is no stay granted to the Judgment of the Hon’ble High Court of Bombay. Needless to say, till the date, the view taken by the Hon’ble High Court of Bombay holds the field”¹⁴.

The threat of action by the NGT led the mining company intervenor to file an application to transfer the case to the Supreme Court¹⁵. The Honourable Apex Court took the view that, there should be no action in relation to the alleged contempt of court, and issued a stay against the NGT proceedings¹⁶, however it did not stay the Order of the 11.1.13, suspending the operation of the 56 mines. Therefore, those mines cannot be re-opened without the permission of the NGT. This would include the 35 mines, granted EC under the EIA Notification 1994, which the MOEF has allowed to be reopened.

Legalizing the Illegalities

Following the victory of the Modi Government, there was significant pressure to restart the mining in Goa. On the 12.1.15, the Government took the unprecedented step of using extraordinary emergency powers under Article 123 of the Indian Constitution to issue a mining ordinance to amend the Mines and Minerals (Regulation and Development) Act 1957¹⁷.

 

The Ordinance amended the Act, so as to extend mining leases for 30 years, or 20 years for a renewal, to 50 years¹⁸. This was also applied retrospectively to all mining leases granted before the coming in of the Ordinance, except in situations where a renewal was determined, rejected or lapsed. This essentially nullified the decision of the Supreme Court in this regard. Thus, in the vast majority of the mines in Goa, including 88 mines in which the lease was then subsequently renewed by the State, the lease was retrospectively extended to 31.3.2020. This was a huge boon for the mining companies who were basically given the Rs35000 Crore loss to the State in one felled swoop, and who were allowed to continue mining despite having committed illegalities. The Ordinance also affects mining in other states such as Karnataka and Odisha, where the Shah Commission has also highlighted widespread illegality.

 

The extension of the mining leases by Central Government then paved the way for the MOEF to revoke the suspension on the ECs of the mines granted on the 14.9.12. An Expert Appraisal Committee (EAC) of the MOEF was constituted and considered the ECs of the 139 mines. Following submission of a report dated 30.10.13 to the Supreme Court, the MOEF subsequently made an Order dated 20.3.15¹⁹. The Order stated:

1. Out of the 139 which had their ECs suspended, 2 were repeated leaving 137.
2. Two ECs, including one belonging to a mine of Sesa Goa Limited, where they had been found to have concealed facts by the NGT.
3. 41 mines are with ecologically-protected areas and therefore the ECs cannot be allowed.
4. 22 mines would be allowed to operate after obtaining Forest Clearance.
5. Of the 72 mines remaining, 35 had been granted under the EIA Notification 1994 and 37 under the EIA Notification 2006, and would be allowed to operate if their ECs were valid and subsisting. This would include a significant number operated by Sesa Goa Limited, the largest mining company in Goa.

 

Notwithstanding, the issue of whether the ECs of the 35 mines granted EC under the EIA Notification 1994 are valid, pending the appeal under the Supreme Court, the MOEF then extended the EC of each mine for the renewed lease of 30 years, following the mining ordinance²⁰. However, this appears to fall foul of the Judgment in Shankar Jog v Union of India²¹. This states:

“Of course, there is merit in the argument that once the mining lease period is over and no application is filed for extension of the lease till the last date of expiry of the lease period, after the lapse of the mining lease, the void is created and therefore, later on when the Application for grant of lease is submitted then, it cannot be treated as extension of lease because the earlier lease is no more in existence. The earlier lease period when elapsed in toto, the further Application after the lapse of such period, if no renewal is sought within period of existence of such lease, then such an Application would be for a new lease and must be processed accordingly though it may not be treated as expansion or modernization of the project”.

 

Whilst, the terminology is rather confusing, the Judgment finds that a renewed lease, after the expiry of the old lease, requires a new EC. Therefore, on the basis that the Supreme Court found that mining leases of the Goa mines expired in 2007 which was the maximum period of time the leases could have been extended, the EC had expired (see above). The leases of 88 mines were then renewed by the State of Goa for 30 years following the Mining Ordinance. The fact that the leases had to be renewed rather than they were deemed to have been retrospectively extended, is confirmed by both the fact that the State of Goa had to actually renew 88 leases and the understanding of the MOEF in Memorandum dated 20.3.15. Consequently, the previous ECs would have expired when the old leases expired in 2007. Fresh ECs would be required for all the renewed leases. The previous ECs could not simply be extended in the manner done by the MOEF. In any event, this is a mockery of environmental protection and the EC procedure. How can an EC granted for a mining lease for 20 years, still be valid for a lease of 50 years? Clearly, the prospective impacts to the environment would be different and have to be considered separately.

The history of mining in Goa over the past few years shows that there has been widespread illegality committed by mining companies, included Sesa Goa Ltd, as highlighted by the Shah Commission Reports, the State of Goa’s own Audit Committee report, the Centre for Environmental Education (CEE) report, the Centrally Empowered Committee (CEC) Report and the Expert Appraisal Committee Report on the Goa mines. Despite, huge losses to public funds being highlighted not a single company, director or official, has been punished, nor a single Rupee recovered. Not only has the State failed to punish the wrong-doers, they have made every effort to regularise the mines, through the passing of ordinances, notifications, and circulars, ignoring Court judgments and the law. India’s growth rate has been predicted to be the highest in the world over the coming years. This is hardly surprising given such a supportive investment environment for industries such as mining. However one has to ask, if you allow public wealth to be taken, environment to be destroyed, corruption to breed and the rule of law to be flouted, what is the growth for?

 

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