Supreme Court Refuses To Accept CEC Recommendation To Completely Remove Ceiling Limits On Iron Ore Production In Karnataka; Allows Certain Relaxations

A Bench comprising CJI, N.V. Ramana and Justices Hima Kohli and C.T. Ravikumar enhanced the limit from 28 MMT to 35 MMT for iron ore production in Bellary District and from 7 MMT to 15 MMT for Chitradurga and Tumkur Districts collectively. While increasing the ceiling limit, it observed that in order to achieve sustainable development, the environmental concerns have to be balanced against the goals of economic development.

"The concerns raised by the original petitioner, of possible over excavation and its adverse impact on intergenerational equity, must be balanced against the concerns of the other parties, as the principles of sustainable development also comes into play….Conservation of the ecology and the environment must go hand in hand with the spirit of economic development and the fine balance between the two goals is what is sought to be achieved even now."

Previously, the Apex Court had lifted the curbs on iron ore sale in three districts of Karnataka (Bellary, Chitradurga and Tumkur) and allowed its export subject to the terms and conditions imposed by the Government of India. The Court allowed the mine operators to sell the already excavated iron ore by entering into direct contracts without resorting to e-auction. However, it had left open the question regarding lifting of the ceiling limit for production of iron ore and sought the opinion of the Court appointed Oversight Authority in this regard.

Pertinently, the order dated 26.08.2022 notes that the Oversight Authority in its report dated 29.07.2022 has expressed its inability to express firm opinion qua the ceiling limit, in view of the conflicting reports submitted by the CEC and the Monitoring Committee. While the CEC has opined in its report dated 10.04.2022, that orders of fixing direct level caps on production of iron ore by Category A and Category B mines be vacated from the financial year 2022-2023, the Monitoring has taken a divergent view, alluding to the infrastructural capacity to transport the iron ore excavated once the ceiling is lifted.

Advocate, Mr. Prashant Bhushan appearing on behalf of the petitioner submitted that the ceiling limits were imposed as per the earlier CEC recommendations and report of the Lokayukta. It was highlighted that the said reports indicate that if the unsustainable mining of iron ore was allowed to be continued, iron ore deposits in Karnataka would be exhausted within a span of 30 years, adversely affecting the goals of the inter-generational equity. He expressed concern that lifting of the ceiling would set the clock back entirely making the judicial intervention futile. Thus, he beseeched the Bench to refrain from passing an order lifting the ceiling at this stage when the Oversight Committee is yet to express their views. Per contra, Senior Advocate, Mr. Dushyant Dave, representing the Federation of Mineral Industries, South, submitted that the ceiling was first imposed considering the rampant illegal mining in the area, which was adversely impacting the environment and ecology of the region. Arguing that the situation has substantially improved since, he urged the Bench to lift the ceiling. It was also averred that the ceiling is discriminating between the mining lease holders in Karnataka and those in the other States.

Background to the imposition of Ceiling limits on production of iron ore in the three districts of Karnataka

By order dated 29.07.2011 and 26.08.2011, the Apex Court had banned mining in the districts of Bellary, Chitradurga and Tumkur, based on the report of the CEC. On 13.04.2012, relaxation was granted, but the Court imposed a ceiling of 25 Million Metric Tonnes (MMT) for total production of iron ore in Bellary and 5 MMT for that in Chitradurga and Tumkur collectively. In 2017, while considering applications seeking lifting of the ceiling, the Court had agreed to enhance the ceiling from 25MMT to 28 MMT for Bellary and 5MMT to 7MMT for the other two districts collectively, based on the CEC reports.

[Case Title: Samaj Parivartana Samudaya And Ors. v. State of Karnataka And Ors. 2022 LiveLaw (SC) 509]

Click here to read/download the order