The total lease area of Thakurani Iron ore Mine,
Block B, is 947.06 ha out of which 941.49 ha is reserve forest. Of the 249.276
ha of forest land approved for mining and allied activities, 166.320 ha was
permitted to be used for mining (for excavation of mineral from the mining
pits), 20.351 ha was to store sub-grade mineral, 32.104 ha was for dumping over
burden, 0.150 ha was for magazines, 11.650 ha was for infrastructure and 18.521
ha for construction of roads/ ropeway/ railway lines.
According to the CEC report, the State Government
while recommending the above referred proposal highlighted detail of the
non-forestry uses in violation of the Forest (Conservation) Act, 1980,
undertaken in the lease area. The report also pointed out the construction of
one huge washing plant.
As the recommendation made by the State Government
for diversion of additional 367.832 hector of forest land was under
consideration of the MoEF, the environmental clearance dated 29.10.2008 was not
valid, CEC held the view.
However, Sarda Mines had produced 15 MMT based on
the EC which could only come into effect if Forest Clearance was obtained.
According to the CEC any production beyond the annual limit of 4.0 MMT
prescribed in the earlier environmental clearance, dated 22nd
September, 2004, was in excess of the valid clearance.
The state forest and environment officials were
aware that the enhanced production of 15 MTPA would come into force only if
forest clearance was obtained to work in virgin forest land. Yet they did not
stop the over-production thereby indicating their connivance and culpability.
The State Vigilance didn’t book such officers. Therefore CBI enquiry is
required, CEC report reiterated.
JSPL crushed and screened the iron ore from the
particular mine, after renewal of the lease on 14.8.2001, on job contract and
then purchased the same from the lessee. However, since 27.3.2004, DDM Joda
approved the sale of the mineral in ROM (Run of the Mines) form by the lessee to
JSPL inter alia subject to the condition that the lessee had to pay the highest
rate of royalty prescribed for lump iron ore containing 65 % Fe and above for
the entire quantity of ROM supplied to JSPL. Since then the lessee has been
selling its entire production of mineral in ROM form to JSPL.
The CEC team found that two crusher units of 3000
tonnes per hour and another crusher unit of 1000 tonnes capacity have been
installed by JSPL within the mining lease area. Ironically, the consent to
operate for both crusher units were granted to SMPL by the State Pollution
Control Board. This was highly illegally but thanks to the enormous influence of
JSPL on the state government that no action was even initiated by the Pollution
Control Board against the company.
The sale prices of iron ore in ROM form, supplied
to JSPL, ranged from Rs.239 per MT during 2007-08 to Rs.2113 per MT during
2012-13, which was much less than the market price. In 2007-08, Essel Mining had
sold iron ore lumps @ Rs.4351 per MT while Rungta Mines had realized a price of
Thus the sale of iron ore in the form of ROM was
permitted by state officials who knew it was illegal. The state lost a
considerable amount of royalty/VAT due to valuation of the output by ROM form
instead of lumpy ore.
The CEC observed that “JSPL is the only purchaser,
in the entire State, who has been permitted by the State Government to undertake
crushing and screening of iron ore mineral within the mining lease area of
another entity. The applicable Rules do not permit establishment/ operations of
crushing units by a third party within the mining lease itself (the State of
Odisha has stated that in none of the other cases the permissions for
establishment/ operation of crushing plants have been granted within a distance
of up to 25 kms of the mining leases).”
The CEC also held that “The permission granted by
the State Government, (a) to the lessee for sale of the mineral in the ROM form
and (b) for the use of the crushing and screening plant located within the lease
area by third party, is the root cause of all the subsequent illegalities and
The CEC has made valuable observations regarding
the need to re-calculate the royalty/VAT and recover the same from the lessee in
this case. But, the state government is yet to act on this suggestion that would
fetch the state thousands of crores of rupees of revenue.
In the first inquiry Report dated 9th
November, 2011, of the Committee to inquire into the rule 37 violations, it was
stated that the major benefit of the mining is flowing to JSPL. There were other
adverse observations also made in the Report in regard to installation of
crusher units by JSPL, lower VAT collection by the State Government and
permission sought by SMPL to install pipe conveyor for transportation of iron
ore when the entire production in the ROM form was sold to JSPL.
Since the govt. was not happy with the first
inquiry report, it appointed a second committee that, in its report dated 30th
July, 2012, certified that the mineral was sold by the lessee in ROM form after
obtaining approval from the Director of Mines and all other arrangements were as
per law. The Second inquiry Report also stated that there was no loss of royalty
to the State Government. However, the second inquiry report concluded saying
that overall prima facie violation of Rule 37 (1) could not be ruled out as no
record on account of JSPL had been produced before the Committee.
The CEC grossly disagreed with the findings of the
inquiry report since it did not consider the main issue - the sale of mineral at
a fraction of the market price by the lessee and thereby the transfer of the
interest in the mining lease in favour of a third party in violation of Rule 37,
It’s however clear from the formation of a second
committee after a scathing report by the first one on the illegalities and
violations committed by the lessee regarding Rule 37 of MCR, 1960, that the
state government attempted to cover up the issue of violation of Rule 37 and
allow the lessee to escape.
The whole issue of violation of Rule 37 can only
be brought to a logical end after the ownership of the shareholders and
beneficial owners of the Sarda Mines Pvt. Ltd. is thoroughly investigated and
the real identities and their share values are properly ascertained. This aspect
has not been carried out by the CEC because of the legal bar imposed by the
Supreme Court, on 13.1.2014, asking the CEC to limit its scope of investigation
to forest/ environment laws. Hence, this matter needs to be investigated to
uncover the veil and find out the real owners of Sarda Mines Pvt. Ltd.
The CEC made a serious observation on basis of a
note made by the Chief Secretary of Odisha. In his noting dated 13.4.2002, Chief
Secretary, Odisha, while sensing its larger implications had recorded, “It is
well known that the mine is being operated by the Jindals. Would this not amount
to a fraud?”
In spite of legitimate objection voiced, in 2002,
by none other than the Chief Secretary of the state, things were overruled and
the illegal transfer of the lease was carried out in the name of SMPL just to
Such violations were noted to attract serious
consideration but, ironically, ignored during the time when Chief Minister
Naveen Patnaik himself held the cabinet portfolio for forest and environment.
Outright violations of environmental and mining laws in connivance with the
government led by Naveen Patnaik, which almost sincerely played its role to
cover up all wrongs, not only caused huge loss of revenue for the state of
Odisha but it converted the loss of the state into profit of JSPL that was the
primary player in the loot but nowhere in records. And the government that
claims itself to be the most effective, efficient and transparent just played
like a puppet to benefit JSPL and, of course, to Navin Jindal - the face of the
In view of the hugeness of the whole mining scam
in the state, this particular case may just be a tip of the iceberg but it
certainly narrates how the government sacrificed the interests of the state and
its people in all unlawful manners.
Now, as the CEC report is submitted, all eyes are
set on the Supreme Court which is expected to pass final orders based on the
[Author is Senior
Associate Editor of