Holding

The Court held that lessees must continue to pay the 10% levy to the Monitoring Committee/SPV and that only the integrated mining and railway infrastructure components of the CEPMIZ may be approved at this stage, with other measures to be considered later.

Summary

The Supreme Court considered two interlocutory applications arising from its earlier orders directing the State of Karnataka to set up a Special Purpose Vehicle (SPV) and a Comprehensive Environment Plan for the Mining Impact Zone (CEPMIZ) to remediate the massive environmental damage caused by illegal iron‑ore mining in Bellary, Chitradurga and Tumkur. The first issue was whether mining lessees could be exempted from the 10% levy on sale proceeds payable to the Monitoring Committee/SPV after the enactment of Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957, which created a District Mineral Foundation (DMF). The Court held that the earlier levy must continue, as the extraordinary plunder required an equally extraordinary remedy and the SPV’s purpose remains distinct from the DMF. The second issue concerned the approval of the CEPMIZ scheme; the Court declined to approve the entire scheme at once, directing that only the integrated mining and railway infrastructure components (conveyor belt, railway sidings and sub‑lines) be approved now, with the remaining socio‑economic measures to be considered later. The applications were dismissed.

Issues considered

The lessees' liability to continue paying 10% of sale proceeds to the Monitoring Committee/SPV despite the creation of the District Mineral Foundation under Section 9B of the MMDR Act, 2015.
Whether the CEPMIZ scheme can be approved in its entirety or should be phased, and which components merit immediate approval.

Legislation cited

Subjects

illegal miningenvironmental remediationspecial purpose vehicledistrict mineral foundationcomprehensive environment planmining impact zonelevy on sale proceedsmonitoring committeephased approval

Judgment

[2017] 6 S.C.R. 577

SAMAJ PARNARTANA SAMUDAYA & ORS. A
v.
STATE OF KARNATAKA & ORS.
(I.A. No. 247, I.A. No. 250 in I.A. No. 247
and I.A. No. 252 in I.A. No. 247) B
Ill

(Writ Petition (C) No. 562 of2009)
MARCH 21, 2017
[RANJAN GOGOi, PRAFULLA C. PANT AND c
A. M. KHANWILKAR, JJ.]
Environment:
Pollution - Illegal mining - Large scale degradation of
environment due to unprecedented illegal mining - Ameliorative and
mitigative socio-economic measures taken by Supreme Court - Vide D
order dtd. 18.4.2013 passed by Supreme Court, lessees in three
districts of respondent-State directed to contribute 10% of sale
proceeds of mining to Monitoring Committee for eventual transfer
to a Special Purpose Vehicle (SPV), constituted for execution of
such ameliorative and mitigative measures - Respondent-State E
uls.9(B) of 2015 Act set up a District Mineral Foundation (DMF) in
every district affected by mining, directing lessees to make payment
to DMF as well - Plea of lessees that in view of overlapping objects
of DMF and the purpose for which Court had passed orders for
creation ofSPV, the lessees should no longer be required to contribute
10% of sale proceeds to Monitoring Committee/SPV from the date F
from which they became liable to make payment to DMF - Held:
Not tenable - There has been systematic, extraordinary and
unprecedented plunder of natural wealth and environment in the
three districts of respondent-State - It was to deal with such an
extraordinary situation that the necessity of SPV was contemplated G
- Special funds in deposit with Monitoring Committee being the
proceeds of illegal mining were meant to be deployed for recreation
of what has been lost due to such illegal activities - Funds in huge
proportions would be necessary - In such a situation lessees who
.may be even remotely connected with degradation and destruction
of nature must continue to pay their share in the process of restitution H
577
578 SUPREME COURT REPORTS [2017] 6 S.C.R.

A by contributing to Monitoring Committee from their present sale
proceeds - Even the new lessees who may not have been involved
with such degradation are contributing to the process of reclamation
and restoration - Mines and Minerals (Development and Regulation)
Amendment Act, 2015 - s.9B - District Mineral Foundation Rules,
2016 - r.3.
B
Pollution - Illegal iron-ore mining - Ameliorative .and
mitigative socio-economic measures - Comprehensive Environment
Plan for the Mining Impact Zone ("CEPMIZ") prepared by State
Government in consultation with Central Empowered Committee
(CEC) as per various orders passed by Supreme Court -
C Implementation of - Held: The entire CEPMIZ Scheme need not be
approved in one go and such approval may be considered and
accorded in phases -The initial activities identified, namely, (i)
construction of conveyor belt system; (ii) railway sidings and iii)
railway sub-lines, need to be prioritized as the same being most
D significant steps towards controlling environmental pollution that
persists on account of open movement of iron ore by road - It is
only after controlled and regulated movement of iron ore is achieved
that the other socio-economic measures should be undertaken so
as to produce meaningful results.
Dismissing the I.As, the Court
E
HELD: 1.1 At first blush, it may appear that there is some
amount of overlapping between the objects of the District Mineral
Foundation and the purpose contemplated by the Court's order
in setting up the Special Purpose Vehicle (SPV). However, the
statutory enactments and exercises carried out subsequent to
F the Court's order(s) will have to be understood to be the
expression of the legislative opinion of the necessity to meet the
challenges of mineral exploitation that are incidental to any mining
operation. Every mining activity results in baneful effects which
need to be corrected and destruction of environment that
G inevitably occurs in the process needs to be mitigated. This is
the specific reiteration that has been made by the amendment of
the provisions of the Mines and Minerals (Development and
Regulation) Act by inclusion of Section 9B; and District Mineral
Rules, 2016 framed thereunder. What had happened in Bellary,
Chitradurga and Tumkur, has been noticed by this Court in
H Paragraph 37 of the judgment dated 18.04.2013 i.e. systematic,
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 579
KARNATAKA & ORS.

extraordinary and unprecedented plunder of the natural wealth A
and environment. This Court has specifically 'observed in
paragraph 37 that "the situation being extraordinary the remedy.
indeed, must also be extraordinary". It is to deal with such an
extraordinary situation that the necessity of Comprehensive
Environment Plan for the Mining Impact Zone ("CEPMIZ") and B
implementation thereof by a SPV out of funds in credit with the
Monitoring Committee was contemplated. The special funds in
deposit with the Monitoring Committee being the proceeds of
illegal mining were meant to be deployed for recreation of what
has been lost due to such illegal activities. It is for the aforesaid
purpose that CEPMIZ was required to be drawn up and thereafter C
implemented. The state of implementation of the Scheme has
not yet commenced. Funds in huge proportions would be
necessary. A full and clear picture is yet to emerge. In such a
situation lessees who may be even remotely connected with the
degradation and destruction of nature must continue to pay their
share in the process of restitution by contributing to the Managing D
Committee from their present sale proceeds. Even the new
lessees who may not have been involved with such degradation
are contributing to the process of reclamation and restoration.
In such a situation, it cannot be seen as to how earlier orders
requiring all existing lessees to pay 10% of the sale proceeds to E
the Monitoring Committee/SPY, can be varied/modified or
departed from. [Para 12) [586-A-H)
2.1 The second issue relates to grant of approval to the
CEPMIZ prepared by the State Government in consultation with
the Central Empowered Committee (CEC) in terms of the various F
orders passed by this Court from time to time. The aforesaid
Scheme, if approved, is to be implemented through the SPV i.e.
Karnataka Mining Environment Restoration Corporation
("KMERC") which has since been constituted. [Para 14)(589-B)
2.2 The works proposed under the Scheme can be divided
into two broad categories, one pertaining to socio-economic G
development and the other for integrated mining and railway
infrastructure, industrial infrastructure and medical infrastructure.
[Para 15) [587-C]
2.3 The CEPMIZ, at this stage, is really in the nature of a
vision document with all concrete measures, steps and proposals H
580 SUPREME COURT REPORTS [2017] 6 S.C.R.

A left to be worked out at a later stage i.e. the stage of preparation
of the detailed project reports, and no comment on the merits of
the Scheme are being made, save and except to say that so far as
the socio-economic measures are concerned, very broadly and
roughly, the different heads under which restoration and
reclamation work is proposed to be done, subject to final details
B
being worked out later, appears to be sufficiently comprehensive.
[Para-22) [595-D-E]
2.4 Instead of approving the CEPMIZ as a whole on the
basis of the inputs available at this stage, views are being held
C back in the matter until more comprehensive details are available
in respect of each of the broad heads under which ameliorative
and mitigative measures are proposed to be undertaken.
However, at the same time, approval is conveyed to the integrated
mining and part of the railway infrastructure that is proposed,
namely, construction of the conveyor belt system; railway sidings
D and railway sub-lines. It is only once a decision is taken on raising
the aforesaid infrastructure and noticeable headway in the matter
of execution thereof is reached, that the other ameliorative and
mitigative socio-economic measures can have any relevance. This
is because conveyor belt, railway sidings and railway sub-lines
would constitute the most significant steps towards controlling
E the environmental pollution that persists on account of open
movement of iron ore by road. It is only after controlled and
regulated movement of iron ore is achieved that the other socio-
economic measures should be undertaken so as to produce
meaningful results. [Para 22) [595-G-H; 596-A-B]
F 2.5 In other words, the entire CEPMIZ Scheme need not
be approved in one go and such approval may be considered and
accorded in phases. The initial activity identified, namely,
construction of conveyor belt system; railway sidings and railway
sub-lines needs to be prioritized. [Para 22) [596-D)
G Sama} Parivartana Samudaya and Ors. v. State of
Kamataka and Ors. (2013) 8 SCC 154 : [2013] 6 SCR
810 - relied on.
Case Law Reference
[2013) 6 SCR 810 relied on Para3
H
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 581
KARNATAKA & ORS.

I.A. No. 247, I.A. No. 250 in I.A. No. 247 and I.A. No: 252 in A
I.A. No. 247 in Writ Petition (C) No. 562 of2009
Under Article 32 of the Constitution of India.
N.K. Kaul, Maninder Singh, ASGs., Shyam Diwan (AC), Raju
Ramachandran, C. A. Sundram, Chander Uday Singh, Gopal Jain, Huzefa
Ahmadi, Krishnan V~nugopal, Sr. Advs. A. D. N. Rao, Siddhartha B
Chowdhury, A. C.s, Bhuvan· Mishra, Ms. Asha G. Nair, Kabir Hathi,
Samar Kachwaha, G. S. Makkar, Ms. Vimla Sinha, S. A. Haseeb,
Ms. Anil Katiyar, P. K. Dey, Ajay Sharma, R. Balasubramanian,
R. R. Rajesh, Raj Bahadur, M. K. Maroria, Govind Jee, Prashant
Bhushan, Ms. Anitha Shinoy, Ms. Dharini S., K. Raghavacharyulu; c
Kailash Pandey, Ranjeeet Singh, Ms. Joolie, K. V. Sreekumar, Aakash
Bajaj, Sanjeev K. Kapoor, (For Mis. Khaitai:t & Co.), Rohit Sharma,
Aditya Narayan, Rounak Nayak, 0. P. Bhadani, Vijendra Kasana, Chand
Qlireshi, M. P. Siddiqui, K. N. Phanindra, Ninad Laud, Karan Mathur,
Anjuman Tripathi, Jayant Mohan, Advs. for the appearing parties.
D
The Judgment of the Court was delivered by
RANJAN GOGOi, J. 1. Two related and connected issues have
arisen for determination in the present interlocutory applications. ·
2. The first .is with regard to the objection of the mining lessees to
continue to pay 10% ofthe sale proceeds of mining to the Monitoring E
Committee for eventual transfer to the Special Purpose Vehicle ("SPV"
for short) that has since been constituted to implement the Comprehensive
Environment Plan for the Mining Impact Zone ("CEPMIZ" for short
and hereinafter referred to as 'the scheme') in the Districts ofBellary,
Chitradurga andT~mkiir of the State ofKarnataka. For the present, it
F
will be sufficient to notice that this Court by its orders passed from time
to time had directed the setting up of a Special Purpose Vehicle for the
purpose of execution of ameliorative and mitigative works/measures to
deal with the large scale degradation of the environment that had occurred
due to the unprecedented illegal mining that had taken place in the mining
leases operating in the aforesaid three districts at the relevant point of G
time. This Coµrt had, from time to time, directed preparation of a scheme
outlining all the details of the works required. to be undertaken; the
·process of implementation of the same by implementing agencies;
accounting procedures etc. and for submission of the same to this Court
in consultation with the Central Empowered Committee ("CEC" for
H
582 SUPREME COURT REPORTS [2011] 6 s.c.R.

A short). This Court was also of the view that the funds for the SPV to
enable ameliorative and mitigative measures to be undertaken, as per
the CEPMIZ to be prepared, would primarily come from (a) 10% of the
sale proceeds of the minerals; (b) compensation for illegal mining etc.;
and (c) other receivables by the Monitoring Committee to be directed to
B be transferred to the SPV from time to time.
3. The various orders passed by this Court from time to time had
received final approval of this Court in the judgment and order dated
18.4.2013 which finally terminated Writ Petition (C) No. 562 of2009
titled "Samaj Parivartana Samudaya and Ors. vs. State of Karnataka
and Ors. 1
c 4. Pursuant to the aforesaid order(s), the Government ofKarnataka
has constituted a Special Purpose Vehicle known as Karnataka Mining
Environment Restoration Corporation ("KMERC" for short) on
13.06.2014 with the Additional Chief Secretary to the Government of
Karnataka as the Chairman. The CEPMIZ i.e. the Scheme has since
D ·been prepared and is presently awaiting the approval of the Court which
is the next/connected aspect of the matter, for the present.
5. Insofar as the first question is concerned, the prayer made by
the applicant, Federation of Indian Mining Industry, Southern Region
("FIMI-Southern Region") and duly supported by anothe~ lessee Mis.
E Vedanta, in short, is that after the Mines and Minerals (Development
and Regulation) Amendment Act 2015 had brought in Section 9B in the
Act with effect from 12. l .2015 a District Mineral Foundation is required
to be set up in every district affected by mining related operations. Under
Section 9B(5) and (6) lessees are required to pay to the District Mineral
Foundation ("DMF" for short) an amount equivalent to such percentage
F of royalty not exceeding one-third of such royalty, as may be prescribed
by the Central Government.
6. The Ministry of Mines, Government of India by a Notification
dated 17.09.2015 has prescribed that in respect of!eases granted prior
to 12.01.2015 the amount payable to the DMF shall be 30% of the royalty
G i.e. 5.5% of the sale value (approx.) and in respect of leases granted
after 12.01.2005 the contribution to the DMF shall be @ 10% of the
royalty i.e. 1.5% of the sale value. Consequently, the leases in Category-
A and Category-B mines, presently, i.n addition to 10% of the sale value
payable to the Monitoring Committee/SPY are required to pay about
H • [2013 (8) sec 154]
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 583
KARNATAKA & ORS. [RANJAN GOGOI, J.]

4.5% of such value to the District Mineral Foundation. It is contended A
by FIMI-(Southern Region) that by Notification dated 11.01.2016 the
District Mineral Foundation Rules, 2016 have been notified by the
Government ofKarnataka. The objects ofthe District Mineral Foundation
as prescribed in Rule 3 is as follows:
"3. Objects of Foundation.- The objects of the District Mineral B
Foundation shall be to work for the interest and benefit of the
persons and areas affected by mining related operations in the
districts in such manner as may be prescribed by the State
Government:-
(!) to implement various developmental and welfare projects or c
programs in mining affected areas.
(2) to minimize or mitigate the adverse impacts, during and after
mining, on the environment, health and socio-economics of people
in mining districts; and
(3) to ensure long-term sustainable livelihood forthe affected people D
in mining areas"
"Rule 18 of DMF, 2016 prescribes the purpose for which the
funds shall be used and which include drinking water supply,
education, welfare of women and children, aged and disabled
persons, skill development, sanitation, physical infrastrncture, E
irrigation and energy and watershed development."
7. In the light of the aforesaid developments it is contended by the
applicaµt in I.A. No. 247 that the object behind the ameliorative and
mitigative measures, in terms of the CEPMIZ prepared under the Court's
orders issued, from time to time, is one and the same as the object behind F
the creation of the District Mineral Foundation. Accordingly, the applicant-
FIMI (Southern Region) has prayed for clarification of the earlier orders
of this Court to the effect that the. iron ore lessees in the State of
Kamataka will no longer be required to contribute l 0% of the sale
proceeds to the Monitoring Committee or the SPY from the date of ff
which said lessees have become liable to make payment to the District
Mineral Foundation under Section 9B of the Mines and Minerals
(Development and Regulation) Act 2015, as amended.
8. In response, the Union of India and the State of Karnataka
have opposed the grant of any relief/clarification, as prayed for by the
H
584 SUPREME COURT REPORTS [2017] 6 S.C.R.

A FIMI-Southern Region. According to the Union of India, the SPY
contemplated under the orders of the Court, for the purpose of taking
various ameliorative and mitigative measures in the three Districts, which
has since been established, is a sequel to the large scale plundering of
the environment and consequential socio-economic damage caused to
this region by illegal mining that had taken place on an unprecedented
B
scale. The Union of India has stated that taking note of the extraordinary
depredation of nature and environment that had occurred in the three
mining districts ofKamataka, the SPY has been constituted by the Court
to respond and to repair, reconstruct and restore nature and environment
in its pristine form, as far as practicable. It was to answer a situation
C which was extraordinary and specifically confined to the mining regions
of the districts of Bellary, Chitradurga and Tumkur that the SPY has
been constituted. In Paragraph 10 of the affidavit filed on 5.9.2016 by
the Union oflndia, it has been stated as follows:
"It is submitted that the District Mineral Foundation (DMF) as
D contemplated by Section 9B of the MMDR Act, 1957 is a body
that has been envisaged for the benefit of mining affected areas
and populations in a situation where mining is carried out in a
responsible manner, within the limits, and subject to the conditions,
laid down by various approvals and clearances such as the forest
clearances and the environment clearances. The DMF mechanism
E is applicable on a uniform basis across the country. It is not a
mechanism designed to deal with any area specific extraordinary
situation arising out oflarge scale, irresponsible and reckless mining
carried out with total disregard to the conseguences on the
environment as was the case in Karnataka."
F 9. Specifically, inparagraph 15 of the affidavit, the Union of India
has stated that: ·
"Considering all the above, it is clear that the DMF was never
intended to be, and can never actually work as, a substitute for
the CEPMIZ."
G
10. The State ofKarnatakahas also filed its detailed objections to
the grant of any relief, as sought for by fIMl-Southem Region. In addition
to the stand taken by the Union of India in its affidavit, as noted above,
the State of Karnataka has pointed out that the CEPMIZ prepared and
submitted to the Court in consultation with the CEC proceeds on the
H recommendations of the CEC that henceforth the lessee should be
SAMAJ PARIYARTANA SAMUDAYA & ORS. v. STATE OF 585
KARNATAKA & ORS. [RANJAN GOGOI, J.]

directed to pay 5.5% of the sale proceeds to the Monitoring Committee/ A
SPY (details in this regard would be noticed subsequently). The ~hole
CEPMIZ Scheme, particularly, the financial projections for successful
implementation thereof has been drawn up on that basis. Grant pf the
prayer made by the FIMI-Southem Region woul~ result in upsetting the
entire scheme as a whole and would jeopardize its contemplated/planned B
implementation. Furthermore, according to the State ofKamataka, any
order of discontinuance of the contribution to the Monitoring Committee/
SPY by the lessees of A and B categories would seriously prejudice
other lessees who have obtained leases recently and who would be
obtaining such leases in future, inasmuch as, a percentage of the sale
proceeds for such leases is to be contributed by the State ofKarnataka C
and made available to the SPY. The State contends that such a situation
would result in a highly inequitable position inasmuch as the existing
lessees responsible, in a way, for the environmental degradation would
not be contributing anything further to the SPY iri undertaking ameliorative
and mitigative steps to restore the environment whereas new leases e.g. D
category C lessees, who may not be so responsible, would be so
contributing.
11. The CEC in its response dated27.04.2V6, however, has taken
a slightly different view of the matter. In the comprehension of the CEC
there is a fair amount of overlapping between the objects of the District
Mineral Foundation and the purpose for which the Court had passed E
orders for creation of the SPY with the task outlined, as noticed above.
According to the CEC, for existing leases, 30% of the royalty paid
presently works out roughly about 4.5% of the sale proceeds. Accordingly,
the CEC has suggested that the existing lessees may pay 5.5% of the
sale proceeds to the Monitoring Committee/SPY (instead of 10%) and
F
at the same time continue to discharge the statutory liability of payment
to the District Mineral Foundation to the extent of30% of the royalty,
equivalent to about 4.5% of the sale proceeds.
12. We have considered the matter. We have aiso taken note of
the previous orders of this Court particularly the final order dated G
18.04.2013 (Paragraph 37); the objects behind the amendment of the
Mines and Minerals (Development and Regulation) Act by inclusion of
the provisions of Section 9B; and also the notifications issued from time
to time including the objects of the District Mineral Foundation as
provided for by Rule 3 of the District Mineral Rules, 2016 notified by the
Government ofKamataka on 11.01.2016. Though, at first blush, it may H
586 SUPREME COURT REPORTS [2017) 6 S.C.R.

A appear that there is some amount of overlapping between the objects of
the District Mineral Foundation and the purpose contemplated by the
Court's order in setting up the SPV, the observations of this Court in
Paragraph 37 of the judgment dated 18.04.2013 (supra) would make the
position amply clear. The statutory enactments and exercises carried
out subsequent to the Court's order(s) will have to be understood to be
B the expression of the legislative opinion of the necessity to meet the
challenges of mineral exploitation that are incidental to any mining
operation. Every mining activity results in baneful effects which need to
be corrected and destruction of environment that inevitably occurs in
the process needs to be mitigated. This is the specific reiteration that
C has been made by the amendment of the provisions of the Act and the
Rules framed thereunder. What had happened in Bellary, Chitradurga
and Tumkur, has already been noticed by this Court in Paragraph 37 of
the judgment dated 18.04.2013 i.e. systematic, extraordinary and
unprecedented plunder of the natural wealth and environment. This Court
D has specifically observed in paragraph 37 that "the situation being
extraordinary the remedy. indeed. must also be extraordinary''. It is to
deal with such an extraordinary situation that the necessity of CEPMIZ
and implementation thereof by a Special Purpose Vehicle out offunds in
credit with the Monitoring Committee was contemplated. The special
funds in deposit with the Monitoring Committee being the proceeds of
E illegal mining were meant to be deployed for recreation of what have
been lost due to such illegal activities. It is for the aforesaid purpose that
CEPMIZ wa$ required to be drawn up and thereafter implemented.
The state of implementation of the Scheme has not yet commenced.
Funds in huge proportions would be necessary. A full and clear picture is
F ·yet to emerge. In a situation lessees who may be even remotely connected
with the degradation and destruction of nature must continue to pay
their share in the process of restitution by contributing to the Managing
Committee from their present sale proceeds. Even the new lessees who
may not have been involved with such degradation are contributing to
the process of reclamation and restoration. In such a situation, we do
G not see how we can vary or modify our earlier orders that require all
existing lessees to pay 10% of the sale proceeds and/or to depart from
the requirement of payment of what has been already ordered, namely,
10% of the sale proceeds to the Monitoring Committee/SPY.
13. In view of the aforegoing, Interlocutory Application No. 247
H and the connected Interlocutory applications are dismissed. ·
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 587
KARNATAKA & ORS. [RANJAN GOGOI, J.)

14. The second issue that has to be dealt with is with regard to A
grant of approval to the CEPMIZ which has been prepared by the State
Government in consultation with the CEC in terms of the various orders
passed by this Court from time to time. The aforesaid Scheme, if approved,
is to be implemented through the Special Purpose Vehicle i.e. Karnataka
Mining Environment Restoration Corporation ("KMERC" for short)
B
which has since been constituted.
15. We have perused the CEPMIZ which has been presented
before us by the CEC by report dated 29.04.2016. Very broadly speaking,
the works proposed under the Scheme can be divided into two broad
categories, one pertaining to socio-economic development and the other
for integrated mining and railway infrastructure, industrial infrastructure
c
and medical infrastructure. The Chart extracted below would indicate
what is comprehended in the Scheme, the total cost projected and the
source of funds.
EXPENDITURE INCURRED IN REFERENCE TO THE IMPLEMENTATION
OF THE CEPMIZ SCHEME (OVER A PERIOD OF TEN YEARS) D

i[~ (.\fl (oi)l{Y m 0~JiHI'\J I !!~~! 1~_2 !A\_ I ON
l/\L IXl'l"IDIJl;Rr J'-:(l'J(J(JIJ J<J(Of([)
!JUSJU!_!:,'
IJ!JlIT'J
I. Public Health 410.94 e entire SU The amount
II. Education 442.27 f 7,142 cror represented across E
lll. Water Supply 1,320.91 upees IS born the individual
and ualit y the Specia category of utility.
IV. Transport and 2,252.66 urpose Vehicle infrastructure is
Communication he sum i further divided by
V. Agriculture and 573.14 pread acros the SPY across the
allied activities en years an three districts of
VI. Drainage and 375 he SPY submit Bellary, Tumkur F
Sanitation hat this sum i and Chitradurga
VII. Woman and 403.59 ufficient t after appropriately
Child Welfare mplement th ascertaining the
Vlll. Forest, 809.05 tility requirements on
Ecology and ·nfrastructure ground.
Environment equirements 0
IX. Strengthening heCEPMIZ.
70.97 G
the Forest Check-
Posts
X. Skill 336.23
Devclo ment
XI. Tourism · 147.59

H
588 SUPREME COURT REPORTS [2017] 6 S.C.R.

A
2 I. Ox!vtl)« Belt~ 2,900 This anrunt is Tu: SP\! sWnits tlm it is
am Rail\\ay Sidings WllJletely advantagroJs am
bcme by 1:00 eccrorrical fur th: lessees
lea;eeshJlding to IllJVe . th: ircn<:re
nining-oce . tlrough th: cmvey:r rel!
licenses. S)lltem Tu: SP\! tlu;
B seeks a oomibo.iicn of
2,900 crore ~ fiun
th: lea;ees as th:ir share
en !Xll1 of IIll1ual
cim<h11ticn.
II. Rail\\llY Sidings 500 This ;inru;rt is Tu: SPV is ccntribuliilg a
.___ _ _ _ ___,__ ____, coiipletely
=of 1,500 aure ~
c ill: Railv.ay&ib-lim; l,<XXl bcme by th: a<;'th:ir share kMllni; th:
SPY. revelopmn of Mning
am Rail Infrastnuure
mthin ire CFPMrZ
Sch=.
2,500 Tu: Inlian Tu: lnlian Rail\\QYS is
Rail\\QYS is e.xa:Wng this iroject
D investing a inlqJmbttly in order to
Slllll of l,<XXl strengtlm th: Bengpiwii-
crore rupxs Mnrtx!i F.ccmnic
mthin this Cmid:r. Tu: SPV is
in!iect am ire contnbuting a sum of
SPV is 1,500 aure nµ:e; mthin
E ccntriruting a this ptject, siire th:
Slllll of 1,500 oonpeticn of th: saire
crore~. \\Ollld greatly benefit th:
effective irrplenmaticn
ofth: CFPM!Z Sch=.
This anrunt is An irWlrial puject,
conpetely ro;ting to th: tune of
F bcme by th: 1537 crore rupees, is
SPY. already mk.ruay ocroos
th: Bellaty-Tunirur-
Chitralurga area This
JJ11!iect is =ted by th:
Kamataka IOOustrial Area
U:velopmn Bwrd
G ('KIAOO'). Sin:e this
prqject is situata! mthin
th: nining-affected area,
th: SPV is cootributing a
= of 7:JJ aure ~
as th:ir share of th:
consireration
H
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 589
KARNATAKA & ORS. [RANJAN GOGOi, J.]

4 Medical 950 This rurount is The SPY is investing a A
Infrastructure COIIlJle!ely collective sum of 700 crore
borne by the rupees to open two new
SPY. medical colleges within the
districts of Tumkur and
Chitradurga. The SPY also
intends to upgrade the B
Vijaynagar Institute of
Medical Sciences at Bellary.
A sum of 250 crore rupees
has bee11 earmarked for the
maintenance of medical
infrastructure.
2 GRA\:D 1574235 ~ c
TOTAL ~
Zone.

16. Out of the Rs. 15,742.35 crores which is envisaged as the
total cost of implementation of the CEPMIZ over a period of 10 years,
the funds presently available and that would be forthcoming in the future D
so far as the SPV is concerned, as indicated in the report of the CEC, is
as follow.
fil:Jill1. SOURCE A\IOUNT
(111cror~1up~~s)

Funds transferred from the 7,000 E
Monitoring Committee;
amounting from I 0% to 20% of
the annual sale proceeds of the
iron-ore facilitated through the e-
A uction Committee of the CEC
2 Funds received from yearly 1,624
receipt of 5.5% of total iron-ore F
sale tffected by mining-ore
lessees holding license in
Category 'A' and 'B ', after the
commencement of mining
operation (payments spanning
across a oeriod of ten vears)
3 Funds received from the State 1,712 G
Government of Karnataka, at a
premium rate of 25% of sale-
value, effected after the
renewal/sale/auction of mining-
ore licenses within Category 'A',
~s' and ~c'

H
590 SUPREME COURT REPORTS [2017] 6 S.C.R.

A 17. The above would indicate that while a total of Rs. 11,842
Crores is the cost that is proposed to be incurred by the SPV, keeping in
view the amount available, as mentioned above, i.e. Rs. l 0,336 Crores,
there is a shortfall of Rs. 1,560 Crores. The same is contemplated to be
made up by cost savings and reduction in project cost; interest accruing
B on different amounts from time to time and on a possible expectation of
an over-estimate of the costs calculated under different heads.
18. The CEC in its report and the. learned Amicus Curiae in his
written note submitted jointly with the CEC has suggested that the
scheme may be approved in the following terms:
c "(i) the CEPMIZ prepared by the State of Karnataka may be
approved for implementation through the KMERC. The KMERC
may be granted liberty to approach this Hon'ble Court seeking
addition/ modification ofany of the Schemes/ Projects envisaged
in the CEPMIZ;
D (ii) Monitoring Committee may be permitted to transfer Rs. 7 ,000
Crores upto 31.03.2017 out of the funds lying with it including the
interest received by it;
(iii) "The Implementation and Monitoring and Supervision
Framework for the CEPMIZ" (Annexure A-3 at Page 1O1 of
E CEC Report dated 29.04.2016) may be made binding on the
KMERC and the State Government;
(iv) the accounts of the KMERC will be annually audited by the
CAG;
(v) a ceiling of 5% of the annual expenditure on works on the
F administrative expenses ofKMERC may be prescribed;
(vi) the commitment made by the State Government that 25% of
the annual premium amount receivable from alt the auctioned leases
(new leases/ Dalmia lease/ Category•A/ Category-B leases) may
be recorded in the order;
G (vii) it may be clarified that the 'Guidelines for Preparation of
R&R Plans' as approved by this Hon'ble Court are equally
applicable to all the new leases granted through auction/ under
Section 10A(2){a) and 10A(2)(c) of the MMDRAct;

H
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 591
KARNATAKA & ORS. [RANJAN GOGOI, J.]

(viii) Hon'ble Court may consider clarifying that any amount A
required for constructi<m.s>f railway sidings and/ or alternate road
in Districts Chitradurga will be incurred by the KMERC only on
the capital cost recovery basis;
(ix) regular quarterly progress report regarding the implementation
of the CEPMIZ will be filed before this Hon'ble Court by the B
Chairman, KMERC;
(x) the closed pipe downhill conveyer systems will be installed at
their cost by:
(a) each one of the Category-A/Category-B leases with MPAP
of 1 MMT and above and balance lease period of 8 years C
and above (six leases in District Bellary and one in Distric;t
Chitradurga identified);
(b) each one of the auctioned Category-C leases and Dalmia
Lease (ML No. 2010) with MPAP of0.75 MMT and above
(ten leases provisionally identified); D
(c) all nine new leases proposed to be auctioned, Category-A/
Category-B leases that may be auctioned after expiry of
their lease periods and leases that may be granted under
Section 10A(2)(c) and lOA (2)(a) of the MMDR Act
(presently 10 leases identified); and E
(d) JSW Steel Ltd., the largest buyer of iron ore (buyer ofabout
70% of the iron ore produced in these Districts) between
Nandllhalli to its plant at Turanagallu and linked conveyer
system with a capacity for annual transportation of at least
15 MMT or iron ore. F
The respective lessees/ successful bidders of auctioned lease
will be required to finalise the alignment within a maximum
period of three months.
The area for the Right of Way (ROW) and/ or the approvals
under the Forest (Conservation) Act, will be acquired/ G
obtained by the State Government at the cost of the
respective lessees/ Steel Plant. Such acquisition of ROWI
approvals under the Forest (Conservation) Act will not be
treated as mining or related activities but for the purpose of
H
592 SUPREME COURT REPORTS [2017] 6 S.C.R.

A the implementation of the CEPMIZ. The State Government
and the MoEFCC will expedite the necessary clearances/
approvals.
The lessees/Steel Plant will be required to install the
conveyer system within a maximum period of 18 months
B after the area under the ROW is made available failing which
the mining operations in the concerned lease(s) will be
suspended and permitted to recommence only after the
conveyer system is installed.
(xi) the identified lessees dealt with above will also be required to
c individually/collectively construct or up-grade railway sidings so
that the bulk of the mineral produced in such mining leases is
transported through closed pipe conveyer systems/ railways and
not by road. Wherever, due to technical reasons/ practical
difficulties the individual lessees are not in a position to undertake
construction/ up-gradation of railway sidings, KMERC may
D undertake such construction on capital cost recovery basis;
(xii) total production of 30 MMT from operating Category-A/
Category-B leases and those granted -under Section IOA(2)(a)
and IOA(2)(c) of the MMDR Act will be permissible i.e., the
present cap will not apply to the auctioned leases.
E
Under the directions of this Hon'ble Court NMDC Ltd. has
been permitted to produce 12 MMT annually from its two mining
leases. The MPAP as per the approved R&R Plans for its ML
No. 1111 is 6.07 MMT and for ML No. 2396 is 3.38 MMT i.e.
presently permitted production, under the directions of this Hon 'ble
F Court, is 2.55 MMT more than the total ofMPAP permissible in
the approved R&R Plans. In addition, the MML has been permitted
under the directions of this Hon'ble Court to produce 3 MMT or
iron ore beyond the MPAP as per the approved R & R Plans of
its two mining leases. As and when the sum total of production
G
from the operating Category-A/ Category-B leases and Section
10A(2)(a) and !OA(2)(c) leases is likely to exceed 30MMT the
production of additional 2.55 MMT from two Mines of NMDC
Ltd. and additional 3 MMT from the two Mines ofMML will be
permissible to be reduced on pro-rata basis and to such an extent
that the total production from all the Mining Leases does not exceed
H the cap;
SAMAJ PARNARTANA SAMUDAYA & ORS. v. STATE OF 593 '
KARNATAKA & ORS. [RANJAN GOGOI, J.]

(xiii) additional production of I OMMT will be permissible from A
the auctioned Category-C and auctioned Dalmia mining leases
and subject to the compliance of the prescriptions of the R & R
Plans, lease wise permissible MPAP and condition regarding
installation of conveyer belt systems and railway sidings dealt with
earlier.
B
(xiv) this Hon'ble Court may consider any further enhancement
of production only after the proposed construction of conveyer
belt systems for downhill transportation, conveyer belt system'by
JSW Steel Ltd. and the construction/ up-gradation of railway
sidings are completed and the objective of ensuring transportation
of most of the mineral by railways/ conveyer system is achieved C
i.e. a situation is reached on the ground where .even if any further
enhancement of procjuction is permitted, the presentleveJ of
transportation ofmineral by road would not exceed."
19. The various suggestions made by the CEC and the learned
Amicus Curiae and the conditions subject to which the approval of the D
Scheme has been sought can be better understood by taking into account
the objections to the CEPMIZ as raised by the FIMI-Southern Zone .in
its written objections filed and also the report of the State ofKarnataka
insofar as the Scheme presented to the Court is concerned.
20. Briefly and broadly, the objections of the FIMI-Southern Region E
relate to the very broad, sketchy and vague nature of the Scheme
formulated and presented to the Court, which, according to the said
body, is a superficial exercise prepared after. a long periocl .ofslumber.
According to the FIMI"Southern Region, the preparation ofthe Scheme
should have been started in the rightearnest:way back in the year 2012 F
. after the Court in its Order dated 28,9.2012 had.expressed that, "the
foi:mation Of the Special Purpose Vehicle and the drawing up of the
.Comprehensive Environmental Plan for Mining Impact Zone is perhaps
the most essential part in the process of reclamation and rehabilitation of
the area devastated by illegal mining". The FIMI-Southern Region also
·contends that some of the measures included in the CEPMIZ travel G
beyond the contours of this Court's order constituting the SPV and the
purpose behind it. The outlay offunds, it is contended, goes beyond the
scope of the earlier orders of this Court which clearly contemplate that
no part of the special fund would stand transferred to the. Consolidated
H
594 SUPREME COURT REPORTS [2017] 6 S.C.R.

A Fund of India but would be used exclusively for purposes connected
with the SPV. Several socio-economic projects like tourism' and
infrastructural measures; laying of railway lines; setting up of industrial
and medical infrastructure involve deployment of SPY funds for purposes
which are to be executed in the course of normal/ordinary governmental
functions. Expenses in connection with such activities are required to be
B
met out of the Consolidated Fund and not from the special fund. The
FIMI-Southern Region has also disputed the extent of availability of
funds that the Monitoring Committee has indicated in the CEPMIZ
prepared by the State Government in consultation with the CEC.
According to the FIMI-Southern Region, the total funds available with
C the Monitoring Committee as on 31.03.2016 is Rs. 8,l24 Crores and not
Rs. 7,000 Crores, as claimed. As there is a surplus of about Rs. 1,800
Crores (as on 31.03.2016) overand above what is shown in the CEPMIZ,
the core projects of the scheme envisaged, namely, construction of
conveyor belt system and railway lines and railway sidings can be met
D from the available funds instead of again burdening the lessees to the
tune of Rs. 2,900 Crores. It further contends that from final report of the
CEC dated 3 .02.2012, investment in facility of transportation of iron ore
such as conveyor belt, railway sidings was to be met from SPY funds.
In its objections, FIMI-Southern Region has further contended that the
Tumkur, Chitradurga, Davanagere railway line is a normal venture
E undertaken by the Indian Railways and it is not understood how the
same can be beneficial to the restoration of environment in the three
districts devastated by large scale illegal mining. Though, a sum of Rs.
500 Crores to be spent on railway sidings was initially to be borne by
SPY, in the joint report of the CEC and the learnedAmicus Curiae it is
mentioned that DPR for construction of the railway sidings will be on
F capital cost recovery basis. Similarly, the investment of Rs. 750 Crores
in industrial infrastructure, namely, in projects undertaken by Karnataka
Industrial Area Development Board and such other bodies is beyond the
scope of the ameliorative and mitigative measures for which incurring
of expenditure and investment from the special fund was permitted by
G the Court. Projects undertaken by the KIADB and other such bodies
pertain to the normal activities of such State bodies. Besides objecting to
further continuance of any levy on the sale proceeds of iron ore (either
by existing lessees or future lessees) after the establishment of the District
Mineral Foundation, FIMI-Southern Region also contends that the funds
that would be available with the District Mineral Foundation for the next
H
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 595
KARNATAKA & ORS. [RANJAN GOGOI, J.]

10 years have not been taken into account in preparing the financial A
estimates mentioned in the CEPMIZ.
21. The State of Karnataka being virtually the author of the
CEPMIZ had submitted to the Court that the same should have the
Government's approval subject to certain conditions. Of particular
significance are the suggestions of the State of Karnataka for raising B
the cap on production from 30 MMT to 40 MMT and, thereafter, to 50
MMT with a margin of additional 20% and .the insistence on payment
for the conveyor belt system and railway sidings by the lessees
themselves. There are certain other incidental features/ aspects covered
by the suggestions of the State ofKarnataka which pertain to the rate of
contribution out of the sale proceeds so far as the NMDC mines are C
concerned as well as the mines that would eventually be leased out
under Section 10A(2)(b) and (c) of the MMDRAct.
22. We have considered the matter in depth. Beyond recording
the view that the CEPMIZ, at this stage, is really in the nature of a vision
document with all concrete measures, steps and proposals left to be D
worked out at a later stage i.e. the stage of preparation of the detaile.d
project reports, we would not like to corriment on the merits ofthe Scheme
save and except to say that so far as the socio-economic measures are
concerned, very broadly and roughly speaking, the different heads under
which restoration and reclamation work is proposed to be done, subject E
to final details being worked out later, appears to be sufficiently
comprehensive. Insofar as the integrated mining and railway
infrastructure, industrial and medical infrastructure is concerned, we are
of the view that except for the integrated mining infrastructure and part
of the railway infrastructure so far as railway sidings and railway sub-
lines mentioned in the Chart shown hereinabove, the rest of the F
infrastructural measures can wait for the present. Having considered
the various dimensions of the matter, we are of the view that instead of
approving the CEPMIZ as a whole on the basis of the inputs available at
this stage, we should hold back our views in the matter until more
comprehensive details are available in respect of each of the broad heads G
under which ameliorative and mitigative measures are proposed to be
undertaken. However, at the same time, we must convey our approval
to the integrated mining and part of the railway infrastructure that is
proposed, namely, construction of the conveyor belt system; railway
sidings and railway sub-lines. It is only once a decision is taken on raising
H
596 SUPREME COURT REPORTS [2017] 6 S.C.R.

.A the aforesaid infrastructure and noticeable headway in the· matter of
execution thereof is reached, that the other ameliorative and mitigative
socio-economic measures can have any relevance. This is because it is
the limited infrastructure that have been indicated above i.e. conveyor
belt, railway sidings and railway sub-lines which would constitute the
B most significant steps towards controlling the environmental pollution
that persists on account of open movement of iron ore by road. It is only
after controlled and regulated movement of iron ore is achieved that the
other socio-economic measures should be undertaken so as to produce
meaningful results. So far as the industrial infrastructure is concerned,
all measures already being undertaken by the KIADB in the Bellery,
C Chitradurga, Tumkur areas may continue. It will not be necessary to
involve the SPV in such activities at this stage. Transfer offunds from
the SPV for such projects already undertaken by the KIADB and other
bodies· can always be considered at a later stage. The medical
infrastructure on which an outlay of Rs. 950 Crores is contemplated
need not engage the attention of this Court for the present. In other
·D words, the entire CEPMIZ Scheme need not be approved in one go and
such approval may be considered and accorded in phases. The initial
activity identified, namely, construction of conveyor belt system; railway
sidings and railway sub-lines needs to be prioritized. ·
23. Insofar as the transfer of funds is concerned, even without
E going into the issue of the exact quantlim of funds available with the
Monitoring Committee for transfer to the SPV, it would be suffice to say
that the funds available with the Monitoring Committee as on date ls
more than adequate to meet the cost projected against the works which
have been identified by the Court to be the priority works for the repair
F and restoration of the environment. Once further details. with regard to
the aforesaid three items.ofwork are available indicating what exactly
that is proposed to be done; the period of time that is likely to be taken if .
the work is to be carried out independently of the other measures included
in the CEPMIZ,.the issue with regard to the source of funds, namely,
whether the sum should be exclusively from the funds to be transferred
·G to the SPY or such cost is to be borne by the lessees can be decided by
the Court.
24. Accordingly, for the present, we close the matter by reserving
our views with regard to phasing out of the scheme in different parts;
the precise point of time at which the works in each ofsuch phases can
H . . .
SAMAJ PARIVARTANA SAMUDAYA & ORS. v. STATE OF 597
KARNATAKA & ORS. [RANJAN GOGOI, J.]

and should be made operative; the sources of funds to be deployed for A
each of such phases and such other connected issues. All that we deem
fit for the present is to call upon State of Kamataka and the CEC to
submit a detailed proposal with regard to implementation of the Scheme
of construction of conveyor belt system in respect of existing leases and
the details of the project relating to the construction ofrailway sidings
B
and railway sub-lines. No sooner the said proposal/report is filed before
this Court, further orders will follow.
Divya Pandey LA.s dismissed.