Supreme Court allows Goa mining companies to transport minerals already extracted before March 15, 2018

The Supreme Court observed that a contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void

Case No.: Civil Appeal No. 839 of 2020 (Arising out of SLP(C) No. 12449 of 2018)

Case Name: Chowgule and Company Private Limited vs. Goa Foundation & Ors.

Coram: CJI SA Bobde, Justice Surya Kant and B.R. Gavai

Facts of the case

  • The Government of India has received information about the rampant exploitation of natural resources in Iron Ore mining sector in the State of Goa, Justice M.B. Shah, a former judge of this Court, is appointed as a Commission of Inquiry under Section 3 of the Commissions of Inquiry Act, 1952. Justice Shah   visited   Goa   and   after   calling   for   and receiving   information   from   various   authorities   as   well   as mining leaseholders, submitted reports to the Government of India on 15.3.2012 and 25.4.2012.
  • The reports were tabled in Parliament along with an Action Taken Report. Consequently, the Government of Goa passed an order restraining/suspending all   mining operations   in   the State with effect. The Ministry of Environment and Forest (MoEF) of the Government of India also kept in abeyance the environmental clearances granted to 139 mines (actually 137 mines – the figure of 139 on account of some duplication) in the State of Goa.
  • The writ petition, being in the nature of public interest litigation, prayed,   inter   alia,   for directions to the Union of India and the State of Goa to take steps to terminate the   mining   leases   where   mining   was carried out in violation of various statutes.
  • Various writ petitions came to be filed in the Bombay High Court by several mining leaseholders challenging the reports of Justice Shah and the consequent orders passed by the State of Goa and the Union of India. For a second renewal of the mining lease, it was held, that the State Government must apply its mind and record reasons for renewal being in   the   interest   of   mineral development and the necessity to renew the mining lease and the same should also be in conformity with the Constitutional provisions. 
  • It was also held, that the decision taken by the State of Goa could be examined by way of judicial review. Thereafter, quite independent of the cases pending in this Court,   writ   petitions   were   filed   by   several   mining leaseholders in the Bombay High Court praying either for  consideration of their applications for a second renewal of the mining lease or the grant of a mining lease on second renewal.  
  • The High Court heard those writ petitions and by its judgement directed the State of Goa to execute the lease deeds in favour of the leaseholders who had already paid   stamp   duty   pursuant   to   the   orders   of   the government under the Goa Mineral Policy 2013 and   to   consider   the   applications   of   other   leaseholders   in accordance with the conditions laid down by this Court in Goa Foundation I (supra).  This order of the High Court was made a subject matter of challenge in Goa Foundation vs. Sesa Sterlite Limited and Others (Goa Foundation ­II).

Conclusions and directions of the Supreme Court

  • As a result of the decision, declaration and directions of this Court in Goa Foundation [Goa Foundation v. Union of India, (2014) 6 SCC 590] , the State of Goa was obliged to grant fresh mining leases in   accordance   with   law   and   not to give second renewals to the mining leaseholders.
  • The State of Goa was not under any constitutional obligation to grant fresh mining leases through the process of competitive bidding or auction.
  • The second   renewal   of   the   mining   leases granted   by   the   State   of   Goa   was   unduly   hasty, without   taking   all   relevant   material   into consideration   and   ignoring   available relevant material   and   therefore   not   in   the   interests   of mineral development. The decision was taken only to   augment   the   revenues   of   the   State   which is outside the purview of Section 8(3) of the MMDR Act. The second renewal of the mining leases granted by the State of Goa is liable to be set aside and is quashed.
  • The mining leaseholders   who   have   been granted   the   second   renewal   in violation   of   the decision   and   directions   of   this   Court   in Goa Foundation [Goa   Foundation v. Union   of   India, (2014)   6   SCC   590]   are   given   time   to manage their   affairs   and   may   continue   their   mining operations   till 15­3­2018.   However, they are directed to stop all mining operations with effect from 16­3­2018 until   fresh   mining   leases   (not fresh   renewals   or   other   renewals) are granted and fresh environmental clearances are granted.
  • The State of Goa will take all necessary steps to expedite recovery of the amounts said to be due from the mining leaseholders according to the show-cause notices issued to them and under other reports available with the State of Goa including the report of Special Investigating Team and the Team of Chartered Accountants.”

Order of the court

It will not be out of place to mention here the specific stand of the State Government before the High Court that the State is monitoring to ensure that only such of the mineral is permitted to be   transported which is mined prior to 15.3.2018. Needless to state, that the transportation of the mineral would be only in respect of such minerals on which royalty is paid. The   appellants/mining   leaseholders would be permitted to transport the royalty paid ore/mineral from the jetties/stockyard or pitheads based on the valid transit permits issued to them by the competent authority of the State Government. All pending applications including the application for intervention shall stand disposed of.

Edited by Vartika Gajendra Singh

Approved & Published – Sakshi Raje

I am Soma Singh from Sharda University School of Law, my interest areas are Corporate law, jurisprudence and ADR. I describe myself as an ambivert. Enjoys reading mythological tales