SC dismisses Vedanta plea to export iron ore from Karnataka [Read Judgment]

The Supreme Court on Thursday dismissed Vedanta Group’s plea to export iron ore mined from Karnataka. It stated that Vedanta’s inability to sell the ore due to higher pricing cannot be made the ground for its export.

However, the apex court allowed the National Mineral Development Corporation (NMDC) to continue with its dual pricing mechanism.

The Karnataka Iron and Steel Manufacturers’ Association had petitioned that floor prices of iron ore be fixed by the monitoring committee (CEC) and that the NMDC be restrained from differential pricing in Karnataka in order to restrict any form of cartelization. But the court dismissed the petition and held that the NDMC can continue with differential pricing in Karnataka and rest of the country.

It stated: “While it is correct that the special dispensation granted to NMDC by this Court cannot continue in perpetuity and the regulatory measures prescribed by this Court for other leaseholders must also apply to NMDC, the working of its leases by NMDC under the special dispensation, by itself, cannot be a legitimate ground for not resorting to a dual price mechanism if the same is dictated by market forces. There is nothing in the report of the C.E.C. to indicate otherwise.”

The Vedanta Group had filed an application challenging the CEC decision to not allow it to export iron ore. Declining the plea, a three-member bench headed by Justice Ranjan Gogoi held that ‘inability to sell on account of higher prices cannot be a ground for export of the mineral, at least at this stage of development. Permission for export must be governed by norms and parameters of general application as distinguished from ad hoc decisions in individual cases. Until such guidelines are framed, the prayer of M/s. Vedanta Limited for export of its iron ore cannot be granted’.

However, the court said issues of fixing guidelines for exports would be dealt with separately.

The Central Empowered Committee (CEC), in its report, had stated that the NMDC’s iron ore was of cheap quality and their mine is located at a considerable distance from the user agencies. Therefore, floor prices of the NMDC cannot be the basis for Vedanta to fix higher floor prices.

Iron ore mining was banned in Karnataka by a Supreme Court order post allegations of illegal activities resulting in environmental abuse. In April 2013, the court ordered recommencement of mining in the state with a cap of 30 million metric tonnes per annum.

Read the Judgment here.