Holding

The Court relaxed the e‑auction requirement and lifted the export ban, permitting direct sale of unsold iron‑ore stock and export of iron ore and pellets as per government policy.

Summary

The petitioners, environmental NGOs, filed a writ under Article 32 seeking a halt to mining in forest areas of Karnataka and Andhra Pradesh, declaration of illegal mining contracts, and removal of the ban on export of iron ore and pellets. The Supreme Court had earlier imposed a blanket ban on mining in Bellary, Chitradurga and Tumkur districts and directed that existing iron‑ore stock be sold only through e‑auctions conducted by a Monitoring Committee, with proceeds deposited in a Special Purpose Vehicle. Over the years, the e‑auction mechanism failed to dispose of large stockpiles, and the Committee’s reports, along with submissions from the Ministry of Steel, Ministry of Mines and the CEC, indicated that the mining situation had improved. The Court considered applications by mining companies and industry bodies seeking permission to sell the unsold stock without e‑auction and to lift the export ban. It held that the e‑auction requirement and export restrictions were no longer justified, granting permission to sell the stock directly and to export iron ore and pellets in accordance with the extant government policy, while deferring the decision on the production ceiling pending an opinion from the Oversight Authority.

Issues considered

The appropriateness of continuing the e‑auction mechanism and export ban on iron ore and pellets from Bellary, Chitradurga and Tumkur districts
The need to lift the ceiling limit on iron‑ore production for mining leases in the three districts

Legislation cited

Subjects

illegal mininge‑auctioniron oreenvironmental lawmining banexport banMines and Minerals (Development and Regulation) ActForest (Conservation) Actpublic interest litigation

Judgment

110 [2022]REPORTS
SUPREME COURT 4 S.C.R. 110 [2022] 4 S.C.R.

A SAMAJ PARIVARTANA SAMUDAYA AND ORS.
v.
STATE OF KARNATAKA AND ORS.
IA. No. 205/2014, IA No. 206/2014, IA No. 24335/2018, IA No.
B 98216/2020, IA No. 98219/2020, IA No.152631/2018, IA No.64798/
2019 in IA No.152631, IA No. 61304/2019, IA No.97376/2019 in IA
No. 24335/2018 and 152631/2018, IA No.61452/2020, IA No.17007/
2021, IA No. 37678/2022
In
C (Writ Petition (Civil) No. 562 of 2009)
MAY 20, 2022
[N. V. RAMANA, CJI, KRISHNA MURARI AND
HIMA KOHLI, JJ.]
D Environmental Laws:
Mines and Minerals – Iron Ore – Illegal Mining – Sale of
iron ore extracted illegally in the districts of Bellary, Chitradurga
and Tumkur of Karnatataka – Direction by this Court to sell the
existing stock of iron ore extracted through illegal mining, through
E the process of e-auction conducted by the monitoring committee –
Thereafter, numerous orders passed – Applicants then sought
permission to sell the unsold stock of iron ore already excavated
without resorting to process of e-auction and for the lifting the ban
on export of iron ore/pellets from the said districts – Held: Records
reveal that e-auction process have not borne any fruitful results
F and large stock of iron ore is lying unused – Earlier orders were
passed on account of the rampant illegal mining that took place
before the blanket ban was imposed – Accordingly, the sale of stock
of iron ore through e-auction under the aegis of the monitoring
committee was adopted as it was the transparent process – Ever
G since then, e-auction has been the only mode available – However,
the situation prevalent in the region prior to 2011, has now changed
– Additionally, the consecutive e-auctions conducted by the
Monitoring Committee have been receiving a poor response – In
view thereof, the restrictions placed on the manner of conducting
the sale of iron ore and fixation of the sale price need to be removed
H
110
SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 111
KARNATAKA AND ORS.

– Permission granted to the applicants to sell the already excavated A
iron ore stock-pile in the Districts, without having to resort to the
process of e-auction – Permission also granted to export the iron
ore and pellets manufactured from the iron ore produced from the
mines situated in the State of Karnataka, in terms of the extant policy
– As regards, the lifting of the ceiling limit for production of iron
B
ore for mining leases in the Districts, it would be expedient to obtain
an opinion from the Oversight Authority who would further take
inputs from the stakeholders, including the CEC and the Monitoring
Committee.
T. N. Godavarman Thirumulpad v. Union of India
(1997) 2 SCC 267 : [1996] 9 Suppl. SCR 982 – referred C
to.
Case Law Reference
[1996] 9 Suppl. SCR 982 referred to Para 1
CIVIL ORIGINAL JURISDICTION: IA. No. 205/2014, IA No. D
206/2014, IA No. 24335/2018, IA No. 98216/2020, IA No. 98219/2020,
IA No. 152631/2018, IA No. 64798/2019 in IA No. 152631, IA No.61304/
2019, IA No.97376/2019 in IA No.24335/2018 and 152631/2018, IA No.
61452/2020, IA No.17007/2021, IA No. 37678/2022 in Writ Petition (Civil)
No. 562 of 2009. E
Under Article 32 of The Constitution of India.
Prashant Bhushan, Ms. Aparna Bhat, Advs. for the Petitioners.
Tushar Mehta, SG K.M. Nataraj, ASG, Dushyant Dave, Mukul
Rohatgi, C. A. Sundaram, Krishnan Venugopal Sr. Advs., P. S. Sudheer,
Ms. Anne Mathew, Bharat Sood, Ms. Shruti Jose, Sarad Kumar Singhania, F
Rajat Nair, Rajesh K. Singh, R.R. Rajesh Pd., Shailesh Madiyal, T.S.
Sabarish, Amrish Kumar, Pranay Ranjan, Raj Bahadur Yadav, Gurmeet
Singh Makker, Jayant Mohan, Ms. Adya Shree Dutta, Ms. Uttara Babbar,
Mrs. Kirti Renu Mishra, Rajat Jariwal, Saniya Mirani for M/S. Khaitan
& Co., Snehasish Mukherjee, Yashraj Singh Deora, Sunil Dogra, Vivek G
Vishnoi, Abhishek Sharma, Vikas Mehta, M/S. Parekh & Co., Dinesh
Kumar Garg, Prakash Kumar Singh, G. N. Reddy, Dr. Sushil Balwada,
Chanchal Kumar Ganguli, Mrs. Vaijayanthi Girish, M/S. Lex Regis Law
Offices, Ms. Ranjeeta Rohatgi, Rajeev Maheshwaranand Roy, Arvind
Kumar Sharma, Kunal Verma, Rajesh Mahale, Sridhar Potaraju,
H
112 SUPREME COURT REPORTS [2022] 4 S.C.R.

A A. Raghunath, Anil Kumar Mishra-i, Ms. A. Sumathi, Chandra Prakash,
Sudhanshu Prakash, Ms. Neha Jain, Vaibhav Sabharwal, Rajan Parmar,
Prateek Samajpati, Samir Ali Khan, Mrs. Anil Katiyar, Mrs. Anjani
Aiyagari, Ms. Manjula Gupta, Balaji Srinivasan, Shubhranshu Padhi,
Senthil Jagadeesan, Adarsh Upadhyay, Merusagar Samantaray,
M/S. Karanjawala & Co., Mrs. Sudha Gupta, Bhargava V. Desai, Rohit
B
Sharma, Aditya Narayan, Rounak, Arju Chaudhary, Ms. A. Benegal,
Kumar Dushyant Singh, P. V. Dinesh, Munawwar Naseem, Ankur S.
Kulkarni, Neeraj Shekhar, Akhil Anand, Rakesh K. Sharma, M/S. Ap &
J Chambers, Mukesh Kumar Maroria, Prashant Kumar, Ms. Surbhi
Mehta, Mahesh Agarwal, Ankur Saigal, Ms. Mansi Taneja, Ms.
C Deepshikha Mishra, Kaustubh Singh, Aditya Pratap Swain, E. C.
Agrawala, S. S. Shroff, K. Raghavacharyulu, Kailash Pandey, Ranjeet
Singh, Shri. Gaichangpou Gangmei, V. N. Raghupathy, Hetu Arora Sethi,
Pulkit Tare, Rituraj Biswas, Ms. Rohini Musa, Mahfooz A. Nazki, Polanki
Gowtham, Shaik Mohamad Haneef, T. Vijaya Bhaskar Reddy, Ms.
Rajeswari Mukherjee, K.V. Girish Chowdary, Ninad Laud, Ms. Swati
D
Kamat Wagh, Aditya Pratap Swain, Ivo D’costa, Ms. Anshula Grover,
Hitesh Kumar Sharma, S.K. Rajora, Akhileshwar Jha, Amit Kumar
Chawla, S. Ashok Reddy, S. Sukumaran, Anand Sukumar, Bhupesh
Kumar Pathak, T.G. Narayanan Nair, Advs. for the Respondents.
The following Order of the Court was passed:
E
ORDER
1. The present writ petition was filed under Article 32 of the
Constitution of India over a decades ago, seeking directions to the
respondent No. 1/State of Karnataka, respondent No. 2/State of Andhra
Pradesh and respondent No.3/Union of India to stop all mining and related
F activities in the forest areas of Karnataka and Andhra Pradesh being
carried out and in violation of the order dated 12.12.1996, passed by this
Court in T.N. Godavarman Thirumulpad v. Union of India1 and the
Forest (Conservation) Act, 1980.
2. Directions were also sought to be issued to the respondents/
G States and the Union of India to declare all mining contracts/sub-leases
issued in violation of the Mines and Minerals (Development and
Regulation) Act, 1957 as illegal and take penal actions against the
violators. The third prayer made was for directing stoppage of all mining
activities along side the border and within the forest areas in the Bellary
1
H (1997) 2 SCC 267
SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 113
KARNATAKA AND ORS.

Reserve Forest. Lastly, directions were sought to declare Notification A
dated 15.03.2003 and other related Notifications dereserving lands for
mining operations, as null and void.
3. The writ petitioner had approached this Court against the
indiscriminate and rampant mining activity that was being carried out
under the nose of the Authorities, in particular in the District of Bellary. B
The reports submitted by the Central Empowered Committee2 bore out
the submissions made by the petitioner regarding large scale illegal mining
in the area resulting in complete degradation of the environment. As a
result, vide order dated 29.07.2011, all mining activity was prohibited in
the District of Bellary, followed by the Districts of Tumkur and
Chitradurga. Taking note of the rampant encroachment in forest land by C
lease-holders and illegal mining operations taking place in the same area,
a joint team was constituted vide order dated 06.05.2011 to conduct a
survey of the area which revealed how illegal mining had ravaged the
forest area of the aforesaid districts.
4. The CEC submitted a report, termed as the “Final Report” D
dated 03.02.2012, making several recommendations one of which was
to categorise the mines into three categories based on the extent of
encroachment in respect of the mining pits and overburden dumps,
determined in terms of percentage qua the total lease area. Three
categories of the mines were suggested as ‘A’, ‘B’ and ‘C’. Another E
recommendation made by the CEC was relating to the conditions
proposed for reopening of mining and resumption of the mining operation
for this Court to consider as part of the Reclamation and Rehabilitation
Plans.
5. The recommendation made by the CEC vide its report dated F
th
13 March, 2012, relating to the prescription of a ceiling limit for the
total production of iron ore for mining leases in the Districts of Bellary,
Chitradurga and Tumkur, prohibition of export of iron ore outside the
country using the mode of e-auction to be conducted by a Monitoring
Committee for the sale of iron ore, deposit of 10% of the sale price
received during the e-auction with the Monitoring Committee along with G
the other charges and constitution of and assigning various responsibilities
to the Monitoring Committee, were duly considered and accepted by
this Court in its order dated 13th April, 2012. On 3rd September, 2012
permission was granted by this Court to re-open all eighteen mines of
2
For short the “CEC” H
114 SUPREME COURT REPORTS [2022] 4 S.C.R.

A ‘A’ and ‘B’ category subject to certain conditions. A similar
recommendation was made by the CEC for reopening of the remaining
mines of ‘A’ and ‘B’ category in its report dated 15th February, 2013.
6. Coming to the directions issued by this Court regarding the sale
of existing stock of iron ore extracted through illegal mining, vide order
B dated 23rd September, 2011, this Court had directed disposal of the
accumulated iron ore through the process of e-auction conducted by the
Monitoring Committee and had further constituted a ‘Special Purpose
Vehicle’3 in terms of the order dated 29th October, 2012, for taking
ameliorating and mitigating measures as per the “Comprehensive
Environment Plans for the mining Impact Zone”4 around the mining leases
C in three Districts of the State of Karnataka with directions issued to the
Monitoring Committee to provide the payment received by it to the SPV
in that regard.
7. In the year 2015, an application was moved by the Federation
of Indian Mineral Industries, Southern Region, FIMI South (IA 248 of
D 2015) for permission to sell the iron ore and manganese ore within the
State of Karnataka, without taking recourse to e-auction to be conducted
by the Monitoring Committee, as set up by this Court. The said prayer
was opposed by the petitioner and the other stake holders. However, the
CEC vide its report dated 28th April, 2016, had agreed to the prayer
E made by FIMI South on the ground that in view of the several orders
passed by this Court, the basic objective behind sale of iron ore through
the Monitoring Committee had been achieved and an alternate system
needed to be put in place. The State of Karnataka had also agreed to the
suggestions made by the CEC and submitted a model to the Court for
monitoring sale of iron ore through the e-platform on the basis of a long-
F term agreement.
8. Highlighting the reason behind constituting the Monitoring
Committee and the role attributed to it for the sale of iron ore through
e-auction and further, observing that the connected aspect of lifting of
the cap or enhancing the cap on production and launching of the CEPMIZ
G scheme, was still under consideration, this Court had rejected the aforesaid
application filed by FIMI South vide order dated 28th August, 20175,
opining that time had not yet come to dispense with the existing policy of
3
For short ‘SPV’
4
For short ‘CEPMIZ’
H 5
Reported as (2018) 11 SCC 433
SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 115
KARNATAKA AND ORS.

sale and purchase of iron ore in the State of Karnataka through the A
Court appointed Monitoring Committee by e-auction and for grant of
permission to sell the iron ore on a direct sale basis through long term
contracts or through spot sale and that restoration of ‘Normalcy’ in the
sale and purchase of iron ore must be deferred till significant headway is
made in respect of the other connected aspects noticed in the Final
B
Order dated 18th April, 2013.
9. Another order that needs to be noted was one passed in the
present petition on 14th December, 20176. The said order was passed on
applications moved by M/s. Karnataka Iron and Steel Manufacturers
Association (IA No. 273/2017), FIMI South (IA 56562/2017) and
Chitradurga Sustainable Mining Forum (IA No. 76163 and 76167/2017) C
seeking removal of the annual cap of mining fixed by this Court and for
permission to extract iron ore as per the approved R & R Plans,
reclamation and rehabilitation plan. A similar request was made by the
Ministry of Mines, Union of India in IA No. 103342/2017, stating that
the annual mineral policy was under revision and the discretion of fixing D
a cap upon extraction of mineral ought best to be left to the Ministry. On
its part, the State of Karnataka had highlighted the significant improvement
made in the infrastructure and suggested a gradual increase in the annual
cap based on iron ore extraction from 30 MMT that had been fixed in
respect of all the three Districts, to 50 MMT.
E
10. After examining the recommendations made by the CEC in
its report dated 14th July, 2017 and taking into account the submissions
made by Mr. M.K. Jiwrajka, former Member Secretary of CEC as also
Mr. Prashant Bhushan, learned counsel for the petitioner, this Court had
passed an order on 14th December, 2017, accepting the recommendations
made by the CEC for enhancement of the cap for category ‘A’ and ‘B’ F
mines subject to imposition of conditions relating to category ‘C’ mines
in the three Districts of Bellary, Tumkur and Chitradurga.
11. We have taken the pains to extract the chronology of events
before proceeding to deal with the applications that have been moved by
several parties pressing for modification of the Court’s order dated 23rd G
September, 2011 and seeking permission for discontinuation of compulsory
sale of iron ore through e-auction and for permission to export the pellets
manufacturers from the iron ore extracted from the mines in the State
of Karnataka.
6
Reported as (2018) 13 SCC 501 H
116 SUPREME COURT REPORTS [2022] 4 S.C.R.

A 12. The reliefs sought by various/interveners through independent
applications are as follows:
i. IA. No. 205/2014 and IA No. 206/2014 moved by
KIOCL Ltd., a government of India enterprise (for
intervention and modification of the order dated 23 rd
B September, 2011.)
ii. IA No. 24335/2018, IA No. 61304/2019 and IA No.
17007/2021 filed by FIMI South (for permission to export
pellets manufactured from iron ore in State of Karnataka,
permission to export unsold iron ore despite being put on
C e-auction for more than three occasion and freedom to enter
into contract of iron ore from lessees in the State of
Karnataka.)
iii. IA No. 98216/2020 and IA No. 98219/2020 filed by
M/s. SLR Metaliks (for impleadment and for permission to
D enter into contracts directly for purchase of iron ore from
lessees in Karnataka without resorting to e-auction.)
iv. IA No.152631/2018 moved by M/s. Vedanta Ltd. (for
permission to export/sell iron ore without recourse to
e-auction in the State of Karnataka.)
E v. IA No. 64798/2019 in IA No. 152631/2018 filed by State
of Karnataka Gani Avalambhithara Vedike (for intervention
and permission to export/sell iron ore which steel plants
and other industries are unwilling to purchase in the e-auction
process, by selling it directly on or above the prevailing
F market price.)
vi. IA No. 97376/2019 in IA No. 24335/2018 and 152631/
2018 filed by Karnataka Sponge Iron Manufacturer
Associations (for intervention and permission to export
pellets in the State of Karnataka.)
G vii. IA No. 61452/2020 filed by Mineral Enterprises Limited
(for permission as one time measure to sell/export unsold
iron ore without resorting to the e-auction framework.)
viii. IA No. 37678/2022 filed by NMDC Limited, a Central
PSU (for permission to offer iron ore extracted by it on
H
SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 117
KARNATAKA AND ORS.

direct sale basis without resorting to e-auction and for export A
purposes.)
13. A reply affidavit dated 1st April, 2022 has been filed by the
petitioner opposing the request of the mining companies and pellets
manufacturing companies for permission to export iron ore and pellets
and stating that if the production of iron ore is in excess of the demand B
of the domestic steel industries as alleged, then the Court may consider
reducing the cap of iron ore extraction instead of permitting export thereof.
Mr. Prashant Bhushan, learned counsel appearing for the petitioner
contended that if it is claimed by the applicants that the domestic steel
industry has created a cartel due to which they are not purchasing the
iron ore, then the problem of cartelization needs to be addressed. Similarly, C
permission for exporting pellets has also been opposed by the petitioner
and it has been submitted that the order dated 23rd September, 2011
passed by this Court does not deserve modification.
14. The Monitoring Committee has filed a status report dated
09th April, 2022, stating inter alia that as on 31st March, 2022, the closing D
balance of the iron ore is 8.29 MMT (approx.). During the year 2021,
33.156 MMT of iron ore was sold through e-auction. As on 01.04.2021,
the opening stock of iron ore in respect of running mines (Category ‘A’
and ‘B’) is 6.65 MMTs (approx.). The report also furnishes the list of
iron ore mining leases operating outside the Districts of Bellary, E
Chitradurga and Tumkur, in a tabulated form prescribing the approved
capacity and the actual production achieved by them. Another tabulated
statement contains the list of iron ore mining leases in the aforesaid
three districts for category ‘A’ ‘B’ and ‘C’ auctioned mines in separate
categories showing approved Maximum Permissible Annual Production7
and actual production and despatches. F
List of iron ore mining leases operating in Bellary, Chitradurga and Tumkur for A and B auctioned mines showing
approved MPAP, actual production and Closing Balance.
S. Name of Lessee Year Opening MPAP for Production Dispatch during Closing
No. and Lease No. Balance the year against the the year in Mts Balance
in Mts in Mts MPAP in Mts in Mts.
1 JSW Ltd. 2021-22 306478.0 1110000 1007885.0 966213.95 348149.1
(Narayana) ML No.
0012
2. JSW Ltd. (Dharma) 2021-22
ML No. 0013
6182.0 180000 179928.0 168700.8 17409.2 G
3. JSW Ltd. 2021-22 781482.0 1000000 1598559.3 463400.168 1916641.
(Bhomman) ML No. 1
0014
4. MSPL (ANS) ML 2021-22 70348.0 120000 50720.0 72000 49068.0
No. 0015
Total 1164490.0 2410000 2837092.3 1670314.918 2331267.
3

7
For short “MPAP” H
118 SUPREME COURT REPORTS [2022] 4 S.C.R.

A 15. The CEC has submitted Report No. 3 of 2022 dated 10 th April,
2022 in response to the directions issued by this Court on 30th March,
2022. After referring to the earlier reports submitted by it from time to
time, it has been stated that only a temporary ban on exports was imposed
by this Court at a critical time when mining operations were restricted in
the State of Karnataka and that it was never the intention of this Court
B
to restrict the mining operations for all times to come; that sale through
e-auction conducted through the Monitoring Committee had achieved
its objective and it was no longer necessary to continue with the same
dispensation in view of the improvement in the situation. Citing the
information furnished by the Monitoring Committee relating to the closing
C balance of stock available in category ‘A’ ‘B’ and ‘C’ as on 31st March,
2022, that adds up to 1,19,47,839.3 MT, the CEC has recommended
vacation of the orders passed by this Court directing sale of iron ore
through e-auction to be conducted by the Monitoring Committee with a
rider that the said procedure continue to be adopted for the sale of balance
of old stock of iron ore including sub grade iron ore available on the date
D
of imposition of the ban. It has been suggested that all the balance old
stock be sold through e-auction before the end of July, 2022 and if any
stock is left unsold, only then should the lessee be permitted to dispose it
of without adopting the e-auction process.
16. The second suggestion made by the CEC is to discontinue
E collection of 10% of the sale value from all the lessees except for NMDC
Limited and 20% of the sale value from NMDC Limited toward their
contribution to the SPV. Thirdly, it has been suggested that the total ban
imposed on export of iron ore and pellets from the districts of Bellary,
Chitradurga and Tumkur, be lifted. Lastly, CEC has sought vacation of
F the orders fixing district level caps on production of iron ore in respect of
category ‘A’ and ‘B’ mines from the Financial Year 2022-23 onwards.
The report concludes by requesting that the system of determination of
MPAP being fixed through the R & R Plans and Supplementary
Environment Plans, as approved by this Court by the orders dated
13.04.2012 and 18.04.2013, may be continued.
G
17. The Ministry of Steel, Union of India has filed an affidavit
dated 16th April, 2022, stating inter alia that keeping in mind the fact that
against a requirement of 192 MT of iron ore for producing 120 MT of
steel annually, this Court may consider vacating the order for district
level caps on iron ore mines imposed in the three districts of the State of
H
SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 119
KARNATAKA AND ORS.

Karnataka, by treating the mines in the said State at par with the mines A
in the rest of the country.
18. The Ministry of Mines, Union of India has filed a separate
affidavit dated 9th April, 2022, stating inter alia that over the years, the
scenario has changed which would be apparent from the reports submitted
by the CEC from time to time. Further, the Mines and Mineral B
(Development and Regulation) (Amendment) Act, 2015 has been put
into place and all the said steps taken together, necessitate a relook at
the restriction imposed earlier and therefore operation of mines in the
State of Karnataka may be aligned with the rest of the country. The
Ministry has said that it has no objection to export of iron ore mined in
the State of Karnataka, just as it is being done in the rest of the country. C

19. KISMA has filed two affidavits dated 08.04.2022 and
18.04.2022, opposing the applications mentioned above for permission
to export iron ore pellets as prayed for by FIMI South, KIOCL Limited,
Vedanta Limited and others and stated that the process of e-auction
through the Monitoring Committee should not be discarded as the said D
process is fair and transparent. Opposing the request for permission to
export iron ore, it has been averred that any such permission may result
in the miners fixing the base price so high as to oust the domestic steel
industries that may result in manipulation by the miners.
20. A similar objection has been raised with respect to the request E
for export of iron ore pellets. The stand of KISMA is that export of iron
ore ought not be permitted since it will result in starving the domestic
steel and allied industries and permitting the mining industries to earn
quick profits in the international markets due to the surge in the prices of
iron ore in the recent past. In its subsequent affidavit, KISMA had added F
that if this Court is inclined to permit export of iron ore from the State of
Karnataka, the same may be permitted subject to additional safeguards
and guidelines as recommended by the CEC in its Report No. 19/2019,
reiterated later in Report No. 16/2020 and Report No. 20/2020.
21. The State of Karnataka had filed an affidavit dated 17th May, G
2021 in reply to IA No. 152631/2018 that was moved by Vedanta Limited,
followed by an additional reply to the said application filed on 19th April,
2022. In both the said affidavits State of Karnataka has submitted that
no export ought to be permitted of iron ore which was excavated from
mines situated within the State. Disagreeing with Report No. 3/2022
H
120 SUPREME COURT REPORTS [2022] 4 S.C.R.

A submitted by the CEC recommending grant of permission for exporting
iron ore mined within the State, it has been averred that such a
recommendation is not backed by any cogent material.
22. We have considered the argument advanced by learned counsel
for the parties, perused the latest report of the CEC and the Monitoring
B Committee, examined the stand of the Ministry of Steel and Ministry of
Mines, Union of India as also of the State of Karnataka. The data placed
before us by the respective parties in their applications under consideration
has also been scanned. For the present, we propose to confine the scope
of this order to examining the twin prayers made by learned counsel for
the applicants namely, permission to sell the unsold stock of iron ore
C already excavated without resorting to the process of e-auction conducted
through the Monitoring Committee and for lifting the ban on export of
iron ore/pellets from the districts of Bellary, Chitradurga and Tumkur
situated in the State of Karnataka. Although certain submissions were
made by the parties regarding lifting of the ceiling limit for total production
D of iron ore, at this juncture we are not inclined to decide the said issue.
23. Records reveals that repeated attempts to resort to the e-
auction process for the sale of already excavated iron ore mined in the
three districts of Bellary, Chitradurga and Tumkur in the State of
Karnataka, have not borne any fruitful results. As a consequence thereof,
E large stock of iron ore, including sub-grade iron ore, is lying unused. As
on 31.03.2022, the stocks available in category ‘A’ and ‘B’ mines is
stated to be 82,98,130.5 MT. The stocks available in the auctioned
category ‘C’ mines as on the above date is 12,25,100.5 MTs. The stock
in respect of e-auction category ‘A’ and category ‘B’ expired leases is
2,33,126.73 MTs and in mining leases outside the districts of Bellary,
F Chitradurga and Tumkur, is 93,181 MT. The closing balance of iron ore
available in all the mines across the State of Karnataka as on 31 st March,
2022, adds up to 11,94,783.93 MT.
24. On glancing over the earlier orders passed by this Court,
evidently it was on account of the rampant illegal mining that had been
G taking place in the State of Karnataka and had severely impacted the
ecology of the region that the Court was compelled to impose a blanket
ban on mining operations in three specific districts. Post imposition of
the ban, the Court was confronted with a situation where a huge stock-
pile of iron ore had accumulated in the mines and stock yards that needed
H
SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 121
KARNATAKA AND ORS.

to be disposed of. Accordingly, a transparent process of e-auction was A
adopted on the recommendations of the CEC with a further direction
that the sale proceeds would be placed in a separate account pending
settlement of ownership rights over such stock of iron ore. This mode
has been consistently adopted for sale of the stock of excavated iron ore
under the aegis of the Monitoring Committee that was called upon to
B
deduct 10% of the sale value in respect of all the category ‘A’ and ‘B’
mines and 20% of the sale value in respect of two mines owned by
NMDC Limited, for being deposited in the SPV accounts towards
implementation of the CEPMIZ. Report 3 of 2022 submitted by the CEC
records that the collection in the SPV maintained by the Monitoring
Committee as on 31st March, 2022, has crossed ` 20,000 crores which C
amount would be adequate to meet the expenses connected with the
activities proposed to be undertaken under the CEPMIZ.
25. It is also pertinent to note that in the earlier orders dated
13 April, 2012 and 11th August, 2014 passed by this Court in IA No. 205
th

– 206 of 2014, it had been clarified that the “system of sale through the D
Monitoring Committee may be reviewed after two years”. It is after
the passage of eight years that this Court is revisiting the system that
was put in place.
26. Report No. 19/2019 dated 18th July, 2019 filed by the CEC is
also relevant in the above context and is extracted below: E
“21. It is seen that the State of Karnataka during the year
2018-19 has produced about 30.33 MMT of iron ore. Out of
this the unsold stock of iron ore is 15.86 MMT break up being
10.43 MMT of old stock and 5.43 MMT of fresh stock of ore.
22. Since the steel manufacturers have been importing iron F
ore from the other States or from foreign countries, the
Monitoring Committee has in their Report dated 3.5.2019
acknowledged that the import of iron ore from outside the
country has impacted the demand for iron ore and pricing in
e-auction sale. This further supported by the low off take in G
e-auction sale as can be seen from the sale data for the period
1.1.2018 to 30.6.2018 and 1.7.2018 to 31.3.2019. During
the period 1.1.2018 to 31.3.2019 a total of 229 e-auctions of
iron ore have been conducted by the Monitoring Committee.
It will be seen that on 72 days, out f 229 days, 50% or more
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122 SUPREME COURT REPORTS [2022] 4 S.C.R.

A than 50% of the quantity offered for sale has been purchased
by the end users in the e-auction whereas on remaining 157
days less than 50% of the quantity offered for sale has been
purchased. On 8 days when e-auction was conducted there
has been zero bid while on 12 days 100% of the quantity
offered for sale has been bid.
B
xxxx
25. It is not in dispute that the “iron ore lumps” are in demand
and get sold at market price. As such the issue before this
Hon’ble Court is with regard to the sale of “iron ore fines”
C which is not taking place specially from the mines located in
Districts Tumkur and Chitradurga. The mining lease of the
Applicant is also one such mine located in District
Chitradurga. The quality of the iron ore fines from these two
districts is also of concern as they have higher manganese
content and other impurities. All this adversely affect the
D demand for the iron ore fines so much so that even at the
reserve price at Rs. 450/ per tonne the material is not getting
sold in consecutive auctions.
xxxx

E 28. This Hon’ble Court in its order dated 1.9.2016 in IA Nos.
259 and 263 IA Nos. 259 in WP (C) 562/2009 while
considering the application for permission for export of iron
ore has, amongst others, observed that :
“Permission for export must be governed by norms and
F parameters of general application as distinguished from ad
hoc decisions in individual cases. Until such guidelines are
framed, the prayer of M/s. Vedanta Ltd. for export of its iron
ore cannot be granted. So far as issue of framing of guidelines/
norms for export are concerned, the same will be dealt with
separately at an appropriate time and state”,
G
Permission to export is only an enabling provision to be made
in respect of unsold stock of iron ore subject to the extant
policy of Government of India in this regard. The actual export
of iron ore, however, will depend on the price of iron ore in
the international market vis-à-vis domestic market. Since the
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SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 123
KARNATAKA AND ORS.

production of iron ore has crossed 30MMT per annum, a A
question that arises is whether it is time to review that State
specific restrictions in Karnataka on sale of iron ore so that
such State specific restrictions do not work to the disadvantage
of either’ the producer or the manufacturer or both. This is
more so in the changed situation, when the raw material
B
requirement of steel and allied industries is not limited by the
production of iron ore. In these circumstances ideally the
demand/supply and the price of the ore are best left to be
determined by the market forces.
29. New mining leases are now sold through e-auction to the
end users and the premium to be paid by the successful bidders C
is limited to the State specific prices notified by IBM based on
the monthly average price realized in respect of a given grade
or iron ore sold in the State. The eligibility to participate in
the sale of the new mines and to participate in e-auction sale
of iron ore in Karnataka State is limited to the steel and allied D
industries, the end users. It has been stated by the Applicant
that this situation gives scope to the end user industry to
manipulate the sale price of ore which in turn will impact the
premium amount to be paid in respect of iron ore produced
from the captive mines purchased by them. The sale price data
form steel mint in respect of Fe Fines and price at ex-mines E
furnished by FIMI indicates that the IBM published iron ore
prices between January, 2018 and May, 2019 have gone
down in Karnataka by (-) 18.7% while during the same period
the IBM published prices in the States of Odisha and
Chhattisgarh have gone down by only (-) 2, 7% and (-) 7,7% F
respectively. A copy of the statement showing the ex-mines
price for 60% Fe Fines for the period January, 2018 to May,
2019 is enclosed as ANNEXURE R-9 to this Report. It has
been that the difference in sale price is the result of limiting
the participation in e-auction to the end users who even resort
to importing iron ore at higher landed cost though the same G
is available in the State. In these circumstances the possibility
of manipulation of iron ore prices because of exclusivity given
to the steel industry in purchase of iron ore from the mining
lessees needs to be addressed.”
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124 SUPREME COURT REPORTS [2022] 4 S.C.R.

A 27. In its Report No. 16/2020 dated 29.06.2020, CEC had made
the following pertinent observations:
“10…..this Hon’ble Court had no intention of imposing a
permanent ban on export of iron ore or pellets from the district
of Bellary, Chitradurga and Tumkur in Karnataka. Further
B ban on export of iron ore and pellets has been ordered by the
Hon’ble Court solely in the context of ban on mining operations
in the three districts and as an interim measure. The re-
opening of the Category “A” and Category “B” mines has
taken place in a phased manner after fulfilment of conditions
relating to implementation of the R&R Plans and compliance
C of annual production limits fixed in respect of each mining
lease based on the scientific principles on availability of
reserve, availability of the dump area and the transport
infrastructure available for evacuation of the iron ore from
the mines.
D 11. Pursuant to the implementation of the R&R Plans and the
scientific fixation of the production limits in respect of each
of the operating mining lease, there ha been substantial
improvement in the environmental parameters in the three
districts of Bellary, Chitradurga and Tumkur. The opposition
E by the Karnataka Iron and Steel Manufacturers Association
(KISMA) to export of iron ore and pellets are based mainly
on commercial considerations and are not directly related to
environmental issued concerning mining. The annual
production levels have crossed 25 MMT which limit was earlier
suggested by the CEC in its Report dated 2.4.2014 in IA No.
F 205 and IA No. 206 of 2014 filed by KIOCL for lifting ban
on export of iron ore and pellets. Currently there is no
restriction on grant of new mining lease in Karnataka.
12. The recommendation made by the CEC in its Report No.
19 of 2020 dated 18.07.2019 and Report No. 20 of 2019 dated
G 18.07.2019 for lifting the ban imposed on export of iron ore
fines and pellets respectively have been made after
considering the availability of the iron ore on a sustainable
basis and the general policy of the Government of India on
the subject. In the circumstances, CEC is of the considered
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SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 125
KARNATAKA AND ORS.

view that orders specific to the three districts in the State of A
Karnataka banning export of iron ore and pellets issued by
Hon’ble Court in the context of the total ban on mining in the
three districts ordered by this Hon’ble Court now requires to
be reviewed. The method of sale and price fixation of iron
ore are best left to be determined by the market forces as any
B
restriction on sale including export will only benefit one party
at the cost of the other. Artificial suppression of the iron ore
prices will also adversely impact the revenues of the State
Government. The recommendation of the CEC in its Report
No. 19 dated 18.7.2019 on export of iron ore is restricted to
iron ore fines which remains unsold/not purchased by the user C
industry and lays down the guidelines/method of sale. There
is in built provision in the condition of sale suggested by the
CEC to overcome the scope of manipulation of prices. It may
be stated here that this Hon’ble Court in its order dated
13.04.2012 and Judgment dated 18.04.2013 has stated that
D
the exports outside the country should be permissible only in
respect of the material which the steel plants and associated
industries are not willing to purchase on or above the average
price realized by the Monitoring Committee for the
corresponding grades of fines/lumps.”
28. The Ministry of Steel, Union of India has supported the E
applications moved by the interveners and submitted that the mining
scenario has improved considerably since the year 2018 and in that
background, the Court may consider treating the mines situated in the
State of Karnataka equal to those situated in the rest of the country
since that would permit inter-state trade of iron ore mined in the State of F
Karnataka, which is presently prohibited. The Ministry of Mines has
also given its no objection to export of iron ore to other countries in
terms of the prevalent policy of the Government of India.
29. We are in broad agreement with the stand taken by the Ministry
of Steel, Union of India and Ministry of Mines that it is necessary to G
create a level playing field for the mines situated in the districts of Bellary,
Chitradurga and Tumkur with others situated in the rest of the country.
As the CEC has indicated, the demand/supply and price of iron ore are
best left to be determined by the market forces. This Court is of the

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126 SUPREME COURT REPORTS [2022] 4 S.C.R.

A opinion that the time has come to review the system that was put in
place over a decade ago, on halting the unchecked excavation of iron
ore in the three prime Districts in the State of Karnataka. Ever since
then, e-auction has been the only mode available for disposal of the
excavated iron ore. The said arrangement has worked out satisfactorily
so far. The situation that was prevalent in the region prior to the year
B
2011, has now changed for the better. Having regard to the course
correction that has taken place, the regeneration post the ruinous damage
caused to the environment and the various steps taken by the Government,
we are of the opinion that the order passed on 23rd September, 2011
deserves to be relaxed. Additionally, it is a matter of record that
C consecutive e-auctions conducted by the Monitoring Committee have
been receiving a poor response and sale of iron ore even at the reserve
price is dismally low. Looking at the overall change in the outlook, the
restrictions placed on the manner of conducting the sale of iron ore and
fixation of the sale price need to be removed.
D 30. Keeping in mind all the aforesaid factors, we are inclined to
favourably consider the prayer made by the applicants and grant them
permission to sell the already excavated iron ore stock-pile at various
mines and stock yards located in the Districts of Bellary, Tumkur and
Chitradurga in the State of Karnataka, without having to resort to the
process of e-auction. Permission is granted to the applicants to enter
E into direct contracts to lift the excavated iron ore through inter State
sales. We also grant permission to the applicants to export the iron ore
and pellets manufactured from the iron ore produced from the mines
situated in the State of Karnataka, to countries abroad, as is being done
in the rest of the country, but strictly in terms of the extant policy of the
F Government of India.
31. With the above order, all the applications listed in paragraph
12 stand allowed to the extent indicated above.
32. With respect to the submissions of the parties in relation to the
lifting of the ceiling limit for production of iron ore for mining leases in
G the Districts of Bellary, Chitradurga and Tumkur, we are of the considered
opinion that it would be expedient to obtain an opinion from the Oversight
Authority appointed by this Court vide order dated 21st April, 2022 about
the same before deciding the said issue. We request the Oversight
Authority to take inputs from the stakeholders, including the CEC and
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SAMAJ PARIVARTANA SAMUDAYA AND ORS. v. STATE OF 127
KARNATAKA AND ORS.

the Monitoring Committee, and to send his opinion to this Court preferably A
within a period of 4 weeks.
33. List for hearing on the said issue in the second week of July
2022.

Nidhi Jain Applications disposed of.
B
(Assisted by : Shashwat Jain, LCRA)

C

D

E

F

G

H