A dispute over the allocation of the Saruabil chrome mine in Odisha is delaying the formal declaration of the winner of the recent auction for its mining rights.
TS Alloys, a subsidiary of Tata Steel, emerged the highest bidder for the mine, offering to pay 88.5% of the sale value of the mineral to the state for rights to the chrome deposit.
Misrilall Mine, which has been mining it for the past 65 years, had approached the Orissa High Court against denial of a licence extension to it. The court asked the state government to consider Misrilall Mine’s plea, as well as allow it to match the highest bid in the auction to be able to retain the mine.
The Odisha government may now have to explain why it did not extend Misrilall Mine’s licence, considering it as a captive mine when it extended Tata Steel’s Joda East iron ore lease until March 2030.
In response to ET’s queries over the matter, Tata Steel said: “With reference to your query on the allocation of Saruabil/Mishrilal chromite mines, we wish to state that Tata Steel as a responsible corporate has always complied with the government norms and respects the defined statutes. The matter being sub-judice currently, we would not like to make any further comments in the matter.”
Saruabil was among the first operating chrome mining leases to be auctioned, marking India’s transition to licences that can only be won through competitive bidding. Leases of more than 300 mines will lapse on next March 31 as per a 2015 amendment to the law that brought this change. While the amendment allowed extension of merchant leases until 2020, leases under the “captive” category were extended until 2030. The term “captive purpose” may have been inserted into the Act for the first time by way of this amendment, say legal experts.
Misrilall Mine’s contention is that as per a 1997 renewal of the licence, it was a captive mine and so the permit should have been extended until 2030, as was the case with Tata Steel’s Joda iron ore mine. Instead, it was extended only until next March in what, it alleged, was an “arbitrary and discriminatory” decision.
The company first moved the Revision Authority against denial of the licence extension, following which the state government dismissed its plea. The high court, finding this to be a “non-reasoned order”, put the government decision in abeyance and asked the state to give Misrilall Mine a hearing and dispose of the matter with a “reasoned” order.
“In the meantime, it will be open for the petitioner to apply for the tender pursuant to the notice dates 31 July 2019 and if he is prepared to match the highest tender amount, he may be given preference, since he is holding the mines and he has claimed extension of the mining lease under section 8A(5) of the MMDR Act, 1957,” said in the October 21 order.
Misrilall Jain, who owned the mining company, had been granted mining rights for 20 years to 610 acres in the chrome-rich Sukinda district of Odisha in May 1954. The lease was renewed for another 20 years in August 1974. In 1993, when the company applied for yet another renewal, the government demanded that it set up a chrome or ferroalloy industry in the state.
Misrilall Mine, in the petition that ET has seen, claimed that it has set up two plants with 15,000 tonnes and 7,500 tonnes capacity, employing more than 900 people. In 2015, when supplementary lease deeds were signed, the company applied to be considered as a captive player. The lease, however, was treated as a merchant one and extended only until 2020. Misrilall Mine’s petition claimed that it made several written submissions to the state government complaining of this, and agreed to the extension to 2020 only under protest.
Jain’s contention in the high court was that the government’s changed position attracted the doctrine of ‘promissory estoppel’ and doctrine of legitimate expectation, since the company had stood by its end of the bargain.
Legal and mining experts ET spoke to said captive purpose or captive consumption wasn’t defined in the Act. There was no mention of the same in Tata Steel’s lease of the 1,657 acres (671 ha) Joda iron ore mine, nor in the extension of lease signed April 18, 2015. ET has seen copies of both.
The Odisha government contends the entire text of the lease is to be read with terms and conditions of the lease. “There is no mention of ‘captive’ in the lease deed. But the lease had been treated as captive because the material has only been used at its plants and for its own consumption. The lease conditions have always been thus monitored and maintained,” said the state’s director of mines, Deepak Mohanty.
The original Joda East lease was signed in the 1950s, and there are no terms of lease term, or any other document available with the department that specifies captive use, said an official asking not to be named. Neither is there any provision in the Act prescribing that the entire mineral be only used for captive purposes.
Misrilall Mines contends that like the company, Tata Steel had also sold iron ore to third party players and even exported from the particular mine in the past.
Source: Economic Times