India: Sarda Mine petition for 10 more years to be heard by the HC

Sarda Mines petition in the High Court of Orissa seeking an additional ten year extension to the lease comes up for hearing on Tuesday, 21 September 2021.

Under the lease, which Sarda Mines Private held rights to until August 2021, the company produced about 6.7 mn t iron ore in FY'21. This mine was a crucial source of raw material for Jindal Steel and Power which has close ties with the mining company.

The HC will decide whether a promise made to the original lessee can be still invoked by the company SMPL to which this lease was transferred in late 90s. The state's initial affidavit prompted criticism from activists leading it to submit a stronger defence in a second affidavit. This one contends, that past court orders directing the state to grant a 20 year renewal to be extended by ten years was to the Sarda family, which between the 35 years it took for the state to grant a renewal, had operated it for 11 years and 2 months - albeit with working permission from the state government.

This long gap of more than three decades was flagged as a "serious violation" by the Central Empowered Committee in 2014. The Odisha government now claims the original renewal should have been granted for 1 August 1964 to 31July 1984 and not prospective from 14 August 2001. It takes recourse to the 2015 MMDR amendment that extended leases to 50year terms to defend its decision to allow the mine to operate until August 2021.

Nonetheless the state government, according to officials who asked not to be named, is confident of an order in their favour. The mine which has a very rich deposit of iron ore will then be put up for auction which may take between 6months to a year.

Background

In 1934, mining rights to Block-A (2590.4 acres) and Block-B (2340.2 acres) of Thakurani deposit were granted in favour of late Babu Hira Lal Sarda by the then king of Keonjhar for a period of 30 years, 1 August 1934 to 31 July 1964.

After his death in 1947 his son Baij Nath Sarda applied for their renewals. The state did not act on these, and as per the law then after 90 days on 30 Nov 1962 the renewal application was deemed to have been rejected. He moved the Revision Authority under the Central Government which in Jan of 1963 directed Odisha to decide the renewal application.

The state recommended the renewals to the Centre, which then sat on it prompting BN Sarda to file another Revision Application. Two year later, on 12 Jan 1965, the Centre moved to reserve the area in favour of a public sector undertaking, rejecting Sarda's application. The High Court of Orissa stayed these decisions on 22 Dec 1967, directing the renewal applications to be decided afresh.

A year later, the Revisional Authority again directed the State Govt to renew 2340.20 acres or Block B for 30 years. In December of 1984, the State moved to reserve the area, prompting Sarda to move court.

The HC on 28 June 1991 directed the State Government to carry out its previous order. The law by now allowed only 20 year renewals, so the HC modified its order to a 20 year renewal to be extended thereafter by another 10 years. It took seven years, and a settlement between Sarda's legal heirs, Sunder Lal Sarda and Mohan Lal Sarda and the state before this could be acted upon. They agreed to surrender their claim to Block A, for a renewal of Block B which the state promised to renew for 30 years.

After the Keonjhar collector reminded them of the 20 years limit under Section 8(2) of the MMDR Act, 1957, the state limited its lease deed to the period from 14 August 2001 to 13 August 2021. The lease was soon after transferred to a company registered as Sarda Mines Private Ltd wherein the majority shareholding was held by non-Sarda family members.

The state now contends that with the change to mining laws in 2015, and after the SC's Goa mining orders, it can no longer extend this lease term.

It also points out that the old lessee mined between 30 April 1963 - 28 July 1974 on the strength of working permissions (granted by the state government itself). "It is humbly submitted that this period of 11 years and 2 months ought to have been adjusted and accounted for when a direction was given by this Hon'ble Court for a renewal in favour of the Petitioner for a period of 30 years," claims the affidavit.