SC rejects FIMI, Vedanta plea against e-auction of iron ore

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New Delhi | Published: August 29, 2017 5:05:18 AM

The plea was opposed by NGO Samaj Parivartan Samudaya which stated the e-auction was meant to provide best price and royalty to state government

FIMI, Vedanta, Central Empowered Committee, Karnataka ,  iron-ore, mining industry The restoration of ‘normalcy’ in the process of sale and purchase of iron-ore must wait for the future and at least till such time that significant headways are made in the other connected aspects…,” the bench said in its 12-page order.

Rejecting the pleas of the Federation of Indian Mineral Industries (FIMI) and Vedanta, the Supreme Court on Monday refused to scrap e-auction process for sale of iron and manganese ore in Karnataka. A bench led by Justice Ranjan Gogoi said that it “saw no reason to change the prevailing system,” even though Karnataka and the apex court-appointed Central Empowered Committee (CEC) had supported the FIMI’s plea.“Taking an overall view of the matter, we are of the opinion that time has not come to dispense with the existing policy of sale and purchase of iron-ore in Karnataka through the court appointed Monitoring Committee by e-auction. The restoration of ‘normalcy’ in the process of sale and purchase of iron-ore must wait for the future and at least till such time that significant headways are made in the other connected aspects…,” the bench said in its 12-page order.

The judges said that while any trading process has to be free and fair with liberty to the contracting parties to work out their own terms of sale and purchase, what cannot be ignored are the circumstances which had prompted it to conceive and continue e-auction to check, control and regulate mining and also to restore nature and environment to its earlier pristine purity. FIMI, a mining industry body, had submitted that instead of e-auction, there should be long-term agreement between producers and buyers as part of the new mechanism relying upon the suggestion made by the CEC in this regard by its report on April 28, 2016.

The CEC had supported the stand of the Federation of Indian Industries, Southern Region (FIMI South) that the basic objectives behind the sale of iron ore through the Monitoring Committee have been achieved and an alternative system needs to be put in place. Even Vedanta, an iron-ore lessee operating within Karnataka had also supported the stand taken by FIMI South. The FIMI has asked for an alternative mechanism for e-auction of iron ore extracted from Ballari, Tumakuru and Chitradurga mines, saying it was introduced as temporary system. It had said that the e-auction process for selling iron ore in the state should be stopped now as it was introduced by the Supreme Court’s order as a temporary measure to tackle the situation prevailing in 2013. After the amendment of the MMDR Act in 2015, the mining regime has significantly changed and thus the system of e-auction needs to end, as it acts as an impediment to long-term contracts and mineral resource development in the state, it added.

The plea was opposed by NGO Samaj Parivartan Samudaya which stated the e-auction was meant to provide the best price and royalty to the state government. The apex court had on April 18, 2013 allowed mining in Ballari, Tumakuru and Chitradurga districts, but with the cap of 30 million tonne per annum. In April 2013, the court had ordered that all sales of iron and manganese ores in Karnataka should be only through e-auctions that will be monitored and overseen by the CEC. It also ordered several measures to prevent environmental damage due to mining.

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