Karnataka Mining: Supreme Court To Appoint Former Judge Justice Sudarshan Reddy As Oversight Authority

Supreme Court on Thursday decided to appoint former Supreme Court Judge Justice B. Sudarshan Reddy as the oversight authority for implementation of the Comprehensive Environmental Plan for Mining Impact Zone (CEPMIZ) with regard to mining operations in the State of Karnataka.

The plan is for eco-restoration, socio economic development and railway backbone infrastructure for the mining impact zones Karnataka including the districts of Bellary, Chitradurga and Tumkur. As per the proposal, a total of approx. 24,000 crores is envisaged to be utilized for the said purpose.

A bench comprising the Chief Justice of India NV Ramana, Justice Krishna Murari and Justice Hima Kohli asked the State Counsel to prepare a draft order in this regard and place it before the court.

The bench issued the direction while considering applications filed by State of Karnataka seeking urgent implementation of CEPMIZ with an alternative prayer for release of funds from the Special Purpose Vehicle.

A similar order was passed by the Apex Court in October 2018 in relation to mining in Orissa when Justice A.K. Patnaik was appointed as an oversight authority to oversee the work and progress carried out by the Special Purpose Vehicle

During the hearing today,the State of Karnataka was represented through Solicitor General Tushar Mehta, Senior Advocate Anitha Shenoy, Advocate Shubhranshu Padhi and Advocate Rakshit Jain.

The Bench had posed a question to the State as to how the amount of 24000 crores would be sufficient to take care of all issues.

Senior Advocate Anitha Shenoy appearing for the State submitted that the CEC recommendations are very clear, and the amount has to be used for the three districts only and for three components including socio economic development, railway backbone and road infrastructure. She submitted that the State agrees with the Oversight authority giving the approval to the plan. 

Advocate Prashant Bhushan appearing for the petitioner submitted that the SPV funds are primarily meant for areas devastated and socio economic benefit of people affected because of the destruction. He added that the Oversight authority may have final authority to decide how the funds are to be spent. The State counsel agreed with Mr Bhushan's submissions.

Senior Advocate Shenoy on behalf of the Karnataka Government urged the court to also appoint a retired bureaucrat to assist the Judge.

The Bench however said that the request can be made before the appointed Judge who may decide if any assistance is required.

The CEPMIZ has been submitted by the State of Karnataka and implementation of the same was recommended by the CEC appointed by the Court for utilisation of the funds. The CEC had also recommended that an oversight authority may monitor the implementation as was done in case of Orissa mining

According to the State, as on 30th September 2021, the S.P.V. has accumulated Rs. 18,722 crores (including interest amount of Rs. 7,150 crores), which are available with the Monitoring Committee.

The Government of Karnataka had constituted a Special Purpose Vehicle (SPV) known as Karnataka Mining Environment Restoration Corporation (KMERC) in June 2014 pursuant to Supreme Court's orders for execution of ameliorative and mitigative measures to deal with the large-scale degradation of the environment that had occurred due to the unprecedented illegal mining in Karnataka.

The Court had earlier taken a view that the funds for the SPV to enable the mitigative measures would primarily come from sale proceeds of the minerals, compensation for illegal mining etc, and other receivables by the Monitoring Committee to be directed to be transferred to the SPV from time to time.

Supreme Court on 21st March 2018 had directed the KMERC to prepare and submit within six months the following:

(a) a revised comprehensive all inclusive proposal on socio-economic development and eco restoration incorporating suggestions of the Monitoring Committee.

(b) proposals relating to road infrastructure needed to support mining activities and socio-economic development of the region

(c) to institute a detailed study relating to the railway backbone required to support the mining activities for connecting all mineral bearing regions of the three districts

Thereafter, in pursuance of Supreme Court's orders, the CEPMEZ plan was submitted before the court by the State, envisaging a total of approx. 24,000 crores from SPV to be utilised.

The proposals were made for Socio-Economic Development plan, Road infrastructure plan, Railway Backbone plan, transfer of the funds by the Monitoring Committee to KMERC for plan's implementation, contribution to the SPV (KMERC) to implement the plan and approval for constitution of Empowered Committee as proposed.

The Supreme Court had then in 2019 asked Senior Advocate Shyam Divan, the Amicus Curiae, to examine the feasibility of approval of the said proposals submitted by the State of Karnataka and while considering the suggestions made by the CEC.

Further, the CEC has also filed a report on 16th April 2019 with regard to approval of the plan and recommended that an Oversight Authority may be constituted headed by a retired Judge of the Supreme Court with two members to assist him. Further, the Oversight Authority may be empowered to approve the proposals under CEPMIZ including all matters relating to mining infrastructure and monitor its implementation to achieve the objectives of creation of the SPV.

According to the CEC, the court may approve the CEPMIZ subject certain conditions including limiting the corpus size of the SPV to Rs. 24,000 crores and discontinuing contribution to SPV as soon as the total interest generated together attains the figure of Rs. 24,000 crores.

Further, Expenditure on Railway infrastructure be limited to a maximum of Rs. 5,000 crores and on road infrastructure be limited to a maximum of Rs. 2,500 crores, and on eco restoration activities will not be less than Rs. 2000 crores.

The CEC had also stated that the remaining amount with the SPV be used for socio-economic development of the mining affected region.

Background:

The Bench was considering State of Karnataka's pleas with regard to implementation of CEPMIZ plan in mining affected areas in Karnataka.

The IA's were filed in a 2009 writ petition by Samaj Parivartan arguing that illegal mining and transportation of illegally mined minerals were being done in connivance with the officials, politicians and even Ministers of State.

The following IA's were filed by the State:

• Seeking approval of the proposal (as has been approved by the CEC) and immediate release of the funds by the monitoring committee.
  
• Direction that the funds available with the Monitoring Committee to be released to the State of Karnataka for the COVID-19 crisis, with adequate monitoring and as per a mechanism to be directed by the Court.
  
• Proposal that the funds be utilised under the supervision of an oversight authority headed by a retired Judge of the Supreme Court, as were suggested by the Amicus Curiae and CEC.
  

The Supreme Court had in 2011 banned mining of iron ore in Karnataka following allegations of illegal mining, export of iron ore and directions that sale of existing stocks of iron and manganese ore would be done only through e auction. In 2012, the Court had then partially allowed mining in category A districts in Karnataka

The Court had earlier observed that the enormity of the illegal mining and consequential damage to the ecology and environment had led to its intervention and had prompted exercise of its jurisdiction in the present matter.

Innovative measures and orders were felt necessary and consequently passed by the Court from time to time to comprehensively deal with the issue of illegal mining and depredation of nature and environment.

The constitution of the Monitoring Committee and the continuance of its role in the matter of sale of iron-ore by e-auction had been conceived and continued by the Court on the basis of the various orders passed from time to time.

The Monitoring Committee through whom iron-ore is currently being sold by e-auction was constituted by the order of Supreme Court dated 2nd September, 2011 accepting the recommendations of the CEC. After the sale of the illegally mined iron-ore was complete, the Court by order dated 23rd September, 2011 continued to entrust the duty and responsibility of sale of iron-ore to the Monitoring Committee.

Case Title: Samaj Parivartan Samuday vs State od Karnataka & Ors, WP(C) 562/2009