Orissa High Court
Afr vs Indian Bureau Of Mines on 16 March, 2022
ORISSA HIGH COURT: CUTTACK
W.P(C) NO. 1363 OF 2022
In the matter of an application under Article 226 of the
Constitution of India.
---------------
AFR
M/s. JSW Steel Ltd. & Anr. ..... Petitioners
-Versus-
Indian Bureau of Mines,
Bhubaneswar & Ors. ..... Opp. Parties
For Petitioners : Dr. A.M. Singhvi & Mr. Gopal
Jain, Sr. Advocates along with
M/s. S.S. Mohanty, S. Rout,
N. Agrawal & J. Nirupam,
Advocates
For Opp. Parties : Mr. P.K. Parhi, ASGI along
with Mr. Jateswar Naik, CGC
(O.Ps.1 & 3)
Mr. Ashok Kumar Parija,
Advocate General, Odisha
along with Mr. P.P. Mohanty,
Addl. Govt. Advocate
(O.P.2)
P R E S E N T:
THE HONOURABLE DR. JUSTICE B.R.SARANGI
AND
THE HONOURABLE MISS JUSTICE SAVITRI RATHO
Date of hearing: 07.03.2022 : Date of Judgment: 16.03.2022
// 2 //
DR. B.R. SARANGI, J. The petitioner no.1, a company
registered under the Indian Companies Act, 1956,
having its registered Office at JSW Centre, Bandra Kurla
Complex, Bandra (East), Mumbai and one of its offices at
Barbil in the district of Keonjhar, Odisha, has filed this
writ petition through its authorized signatory- petitioner
no.2 seeking following reliefs:
a) Issue a writ of Certiorari of any other appropriate writ,
order or direction setting aside and quashing the
impugned decision dated 12.01.2022 issued by the
Opposite party No. 1 revising the Average Sale Price for
the month of September and October, 2021 for the State
of Odisha;
b) Issue an appropriate writ directing the Opposite Parties
to not take any decision to revise or determine or publish
the Average Selling Price (ASP) excluding the ex-mine
prices at domestic sale transactions of the
lessee(Petitioner herein);
c) Issue a writ of Mandamus or any other appropriate writ
directing the Opposite Party No 3 to issue an office
memorandum of guidelines on interpretation of Rule
45(8) (III) and Rule 45(8) (IV) of the MCDR, 2017;
d) Issue a writ of Certiorari or any other appropriate writ
directing the Opposite Parties to furnish the record of the
file pertaining to revision or the determination of the
Average Selling Price (ASP) for the State of Odisha; and
e) As a consequential relief; issue a writ of Certiorari or any
other appropriate writ, order or direction setting aside
and quashing the Notices dated 16.12.2021 issued by
the Opposite Party No. 1 to the Petitioner in respect of its
Jajang Iron Ore mine and the Nuagaon Iron Ore mine in
the State of Odisha;
Pass any other or further orders as this Hon'ble Court
may deem fit and proper in the facts and circumstances
of the present case to meet the ends of justice."
// 3 //
2. The factual matrix of the case, in brief, is that
opposite party no.1-the Indian Bureau of Mines, which
was established in the year 1948, as a multidisciplinary
governmental organization under the Department of
Mines, Ministry of Mines, Government of India, is
engaged in the promotion of conservation, scientific
development of mineral resources and protection of
environment in mines other than coal, petroleum and
natural gas, atomic minerals and minor minerals.
Opposite party no.1 is also tasked with maintaining the
National Mineral Inventory, and approving mining plans,
closure of operations and the conservation of mineral
material, as the national regulator for State
Governments.
2.1 Opposite party no.2-State of Odisha
represented through the Directorate of Mines, is
functioning under the administrative control of Steel &
Mines Department of Odisha. The major functions of the
Directorate are- administration of mines & minerals,
processing of mineral concession applications, collection
// 4 //
of mineral revenue, prevention & control of illegal mining
& smuggling of minerals, enforcement of statutory
provisions for exploration of minerals, peripheral
development of mining areas, chemical analysis of ores
& minerals etc. As such, opposite party no.2 is
responsible for implementation of the ASP (Average Sale
Price) published by opposite party no.1 and collection of
royalties and other contributions from mining
companies based on the same.
2.2 Opposite party no.3 is the Ministry of Mines,
Government of India, which is the principal organ of the
Union of India for legislation, policy formulation and
administration of mines and minerals in the country. It
has also the duty to issue clarifications and guidelines
on the interpretation of and manner of implementation
of various mining laws, including rules and regulations,
which will have bearing on mining operations and
transactions across the country.
2.3 Pursuant to reforms initiated by the
Government of India in July, 1991 in the fiscal,
// 5 //
industrial and trade regimes in force in the country, the
National Mineral Policy was announced in March, 1993.
The National Mineral Policy recognized the need for
encouraging private investment and for attracting state
of the art technology in the mineral sector paving the
wave of private sector in the exploration and mining
activities in India. It was in furtherance of the objectives
of the said National Mineral Policy, the Mines and
Minerals (Development and Regulation) Act, 1997 (for
short "MMDR Act, 1957"), the Mineral Concession Rules,
1960 (for short "MCR, 1960") and the Mineral
Conservation and Development Rules, 1988 (for short
"MCDR, 1988"), having been framed under the MMDR
Act, 1957, have been modified from time to time to
deliver a fair concession regime for mining development
in India and to invite private sector investment in the
country. With the aforementioned objectives of ensuring
grater private sector participation in the mining sector,
opposite party no.3 introduced (1) Minerals (Other than
Atomic and Hydro Carbons Energy Minerals) Concession
Rules, 2016 (for short "MCR, 2016"), which, unlike the
// 6 //
earlier MCR, provides for mechanisms for grant of
concessions through auction, transfer of concessions as
well as saving clauses to protect the rights of mineral
concession licensees under the old regime, (2) The
Mineral Conservation and Development Rules, 2017
(MCDR, 2017) which deals with the rights of the
reconnaissance or prospecting licensees or mining
leaseholders and (3) Mineral Auction (Amendment)
Rules, 2017, which provides for greater flexibility in the
auction process to enhance participation in auctions
and ensuring that such auctions are successful.
2.4 In this backdrop of the development of law,
the Government of Odisha, in exercise of power
conferred under Section 10B of the MMDR Act, 1957
read with Mineral (Auction) Rules, 2015, issued a Notice
Inviting Tender ("NIT") for auction of mining lease for
iron ore and manganese minerals, the lease period of
which was to expire on 31.03.2020 in terms of Section
8A(6) of the MMDR Act, 1957. The NIT invited bids for
12 mineral blocks of iron ore, two mineral blocks of
// 7 //
manganese and 6 mineral blocks for iron ore and
manganese. These blocks included Jajang Iron Ore
block, Nuagaon Iron Ore block, Narayanposhi Iron Ore
and Manganese block and the Gonua Iron Ore block.
The State Government issued detailed tender documents
for each individual mining block and also published
information regarding Mine Block Summary, which
contains the extracts from the Geological Study Report
for each mining block on the e-auction platform, and the
same was accessible to all bidders. The e-auction of the
said blocks was conducted by the Government in
accordance with the aforesaid NIT on various dates. In
the said e-auction, JSW Steel Ltd., the petitioner no.1
herein, submitted the highest final offer for Jajang Iron
Ore block, Nuagaon Iron Ore block, Narayanposhi Iron
Ore and Manganese block and the Gonua Iron Ore block
and was declared as the 'Preferred Bidder' for grant of
the aforementioned mining blocks by the Director of
Mines, Odisha. Out of the said four blocks, Jajang and
Nuagaon are non-captive mines and Narayanposhi and
Gonua are captive mines. In March, 2020, in pursuance
// 8 //
of the deposit of the first installment of 10% upfront
payment, the Government of Odisha issued Letters of
Intent to the petitioner-company in respect of the
aforementioned mining blocks in terms of Rule 10 of the
Mineral (Auction) Rules, 2015.
2.5 The MCR, 2016 was amended on 20.03.2020
by inserting a new Rule 12-A, which provided for
imposition of additional conditions for commencement
and continuation for production as per Section 4B of the
MMDR Act, 1957. The newly inserted Rule 12A further
provided that during the first two years, from the date of
the execution of a new lease deed, the holder of a mining
lease, to whom the order of vesting of the rights,
approvals, clearances, licenses and the like have been
issued under Section 8B of the MMDR Act, 1957, shall
maintain such level of production so as to ensure
minimum dispatch of eighty percent of the average of the
annual production of two immediately preceding years
on pro rata basis, failing which appropriate actions in
accordance with the Mine Development and Production
// 9 //
Agreement ("MDPA") shall be initiated. In May, 2020, the
vesting orders were issued by the State Government in
favour of the petitioner-company in respect of the mining
blocks, for which it was the preferred bidder, in terms of
Rule 9(A)(1) of the MCR, 2016.
2.6. On 24.06.2020, after payment of the second
instalment of the upfront payment and furnishing of the
Performance Bank Guarantee, the petitioner-company
was declared as the 'Successful Bidder'. As a
consequence thereof, MDPA was executed between the
State Government and the petitioner-company on
25.06.2020. In terms of the MDPA, after payment of
third instalment of the upfront payment, the State of
Odisha executed the mining lease deeds with the
petitioner-company in respect of Jajang Iron Ore block
and Nuagaon Iron Ore block on 27.06.2020. Mining
Operations in the said mines were commenced on
01.07.2020. Thereby, in view of provisions contained in
Rule 12A(1) of MCR, 2016, the petitioner-company was
to comply with the production and dispatch level in
// 10 //
respect of Jajang and Nuagaon Mines. At the end of the
first year of mining operations, the petitioner-company
was imposed a penalty of Rs.696 crores on 07.09.2021
towards shortfall in meeting the minimum dispatch
targets from Jajang mines. The same was challenged
before this Court in W.P.(C) No. 28232 of 2021, wherein
the demand notice was directed to be kept in abeyance
till the disposal of the writ petition, vide order dated
27.09.2021. In view of the plummeting demand of iron
ore in the international market from July, 2021, there
was consequent fall in international prices of iron ore
and thereby, there was a consequent decline in the
exports of iron ore from the State of Odisha leading to an
insignificant demand, particularly of low grade ore.
2.7. In view of dwindling demand of iron ore in
the international market and the consequent fall in
international prices, the petitioner-company was
compelled to undertake sale of its production at the
price discovered at the e-auction so as to achieve the
minimum dispatch as mandated under Rule 12A of the
// 11 //
MCR, 2016 and to avoid hefty penalties under the
MDPA. In order to ensure that the prices at which the
iron ore of various grades is sold in a transparent
manner, the petitioner-company started conducting e-
auctions through the MSTC e-commerce platform of the
Government of India. As such, the petitioner-company
conducted the said auctions on eleven occasions
between 24.08.2021 and 12.12.2021 for iron ore from
Jajang Mines. The price so discovered in the e-auction
for the iron ore sold from Jajang Mines was also used for
the sale of comparable grades of iron ore sold from
Nuagaon Mines. As per requirements of Rule-45(7) of the
MCDR, 2017 read with Form F-1, the petitioner-
company has been duly submitting its monthly returns
to opposite party no.1 and providing rectification and
explanation as and when required in accordance with
guidelines formulated by Indian Bureau of Mines,
Nagpur (central body) and published by opposite party
no.3.
// 12 //
2.8. On 16.12.2021, opposite party no.1 issued a
violation-cum-show cause notice to the petitioner-
company in respect of its Jajang Iron Ore Mines and
Nuagaon Iron Ore Mines in the State of Odisha for
alleged violations of Rule 45(7) and Rule 45(8)(III) of the
MCDR, 2017 directing to give reasons within 30 days
from the date of issue of the notice as to (a) why all
mining operations and dispatches of the Mines should
be not stopped; (b) why the petitioner should not be
prosecuted under the rules; and (c) recommend
termination of the mining lease for suppression or
misrepresentation of information indicates abetment or
connivance of illegal mining.
2.9 When the matter thus stood, opposite party
no.1 on the very same day, vide letter dated 16.12.2021
addressed to the Director (Statistics) and In-charge MMS
Division of the Indian Bureau of Mines, referring to the
sale of various grades of iron ore by the petitioner-
company from its iron ore mines at Jajang and Nuagaon,
had recommended that the ASP of the State of Odisha
// 13 //
may be calculated excluding the ex-mine price of the
above mines as the same were allegedly not on "arm's
length basis". In response to the violation-cum-show
cause notice dated 16.12.2021, the petitioner-company
submitted its reply on 18.12.2021 in terms of Rule
45(7A) of the MCDR, 2017 addressing to CCOM (MDRD)
of the Indian Bureau of Mines, Nagpur, with a request
that unless and until the said reply is considered, no
decision may be taken to revise the ASP already
published excluding the domestic sale transactions of
the lessee (petitioner-company herein) under the pretext
that the same were not qualifying sale transactions
under Rule 45(8)(III) of the MCDR, 2017. In addition to
the same, the petitioner-company furnished further
reply on 27.12.2021 stating, inter alia, that the notices
do not fulfil the statutory conditions for issuance thereof
and ex-facie do not show any violation or other cause of
action, for which action is contemplated therein.
Opposite party no.1 published the ASP for September,
2021 and October, 2021 on 30.11.2021 and 29.12.2021
respectively and marked ASP for Iron Ore for the State of
// 14 //
Odisha as "P" or "Provisional" for few grades, for which
the published ASP was lower by more than 20% from the
published ASP of August, 2021. Instead of taking any
decision on the reply of the petitioner-company to the
notice of show-cause, opposite party no.1 proceeded to
exclude the ex-mines price of the petitioner-company for
the period in question and calculated and published the
ASP for the State.
2.10 At that point of time, the petitioner-company
approached Delhi High Court by filing W.P. No.845 of
2022 on 12.01.2021 challenging the notice and seeking
relief against issuance and implementation of final ASP
for September, 2021, October, 2021 and November,
2021 excluding the ex-mine price of the petitioner-
company's mines, but subsequently the said writ
petition was withdrawn on 17.01.2021 with a liberty to
proceed before this Court.
2.11 While deciding the replies dated 18.12.2021
and 27.12.2021 given by the petitioner-company to the
notice of show-cause, opposite party no.1 proceeded to
// 15 //
declare and publish the ASP for the months of
September, 2021 and October, 2021 excluding the ex
mine price of the petitioner-company at 9 PM on
12.01.2022. Hence this writ petition.
3. Dr. A.M. Singhvi and Mr. G. Jain, learned
Senior Counsel appearing along with Mr. S.S. Mohanty,
learned counsel for the petitioners urged before this
Court that the impugned decision dated 12.01.2022,
whereby the opposite party no.1 has proceeded to
publish the revised/final ASP for September, 2021 and
October, 2021 excluding the ex-mine prices of the
petitioner-company, suffers from illegality, failure to
follow due process of law, principle of natural justice,
jurisdictional error and predetermined mindset, and
thereby violates Articles 14 and 19 (i) (g) of the
Constitution of India. He emphatically contended that
the impugned decision and publication of ASP was
issued without considering the replies dated 18.12.2021
and 27.12.2021 submitted by the petitioner-company,
pursuant to show-cause notice dated 16.10.2021, and
// 16 //
without passing any specific order thereon. It is further
contended that the said fact has not been disputed by
opposite party no.1-IBM in its counter affidavit.
Interestingly, the decision to exclude ex-mine prices was
made on the very same day, when the show cause notice
was issued by opposite party no.1-IBM, i.e., on
16.10.2021. On the date of issuance of show cause
notice, the opposite party no.1-IBM wrote a letter to the
Director (Statistics) and in-charge MMS Division of the
IBM, recommending that ASP of the State of Odisha may
be calculated excluding the ex-mine price of the mines,
namely, Jajang Iron Ore and Nuagaon Iron Ore, which
itself shows predetermined mindset of IBM and renders
the entire exercise an empty formality.
It is further contended that the petitioner-
company's sales with related parties have been executed
at prices discovered through transparent, fair and
competitive e-auction and applied uniformly for both
related and unrelated parties and are therefore at arm's
length. It is further contended that the petitioner-
// 17 //
company conducted 11 auctions through MSTC between
August, 2021 and December, 2021 for carrying out price
discovery, pursuant to which 50 players participated, of
which only three are related parties, who were
successful bidders also only on three occasions and
three related parties got only a small quantity of 667550
MT, out of the total sold quantity of 2654400 MT, which
is approximately 25%. Traders were allowed to
participate only in one auction and even in the same,
they were permitted to participate for end-use (not for
resale). Direct sales with traders who in turn have sold
to related parties are at comparable auction discovered
price and therefore at arm's length. Hence all sales of
the petitioner-company in September, October and
November, 2021 with both related parties and traders
were at prices equal to or more than the price
determined at e-auction and applied for transactions
with unrelated parties.
It is further urged that Rule 45(8)(b)(III) of
MCDR, 2017 permits sales to related parties, if done on
// 18 //
arm's length basis, and the said rule lays down a twin-
test and prescribes that while computing the ASP, the
opposite party no.1-IBM should not recognize a
transaction, where the sale has occurred between
related parties and where the same is not on arm's
length basis. It is contended that Section 188(1) 4th
proviso to the Companies Act, 2013 defines the
expression "arm's length transaction" as "a transaction
between two related parties that is conducted as if they
were unrelated, so that there is no conflict of interest". If
the petitioner-company's transactions are to be taken
up, the sale-purchase transactions for iron ore between
the petitioner-company and the related party end users
having steel manufacturing plant are transactions
necessarily in the 'ordinary course of business'. It is
further contended that Rule 45(8) of the MCDR, 2017
framed later in time i.e. notified on 27.01.2017 and thus
necessarily and mandatorily informs the exercise of
computation of ASP under Rule 42 of MCR, 2016
notified on 04.03.2016. Thereby, rule of construction is
well settled that the later enactment prevails over an
// 19 //
earlier one. Therefore, Rule 42(2)(c) of MCR, 2016
includes the phrase "arm's length basis", the said words
must be given meaning to, failing which they would be
rendered otiose. Therefore, any possible ambiguity in the
reading of the clause, gets resolved when read
harmoniously with Rule 45(8)(b)(III) of the MCDR, 2017
and a harmonious construction of the two provisions
would indicate that related party sales cannot per se or
ipso facto be excluded by opposite party no.1-IBM in
computation of ASP without examining whether such
related party sales satisfy the arm's length test or not.
It is further contended that Rule 45(8)(b) of
MCDR, 2017 replaced the earlier Rule 45(8)(b) of MCDR,
1988 which provided that sales with related parties
would not be recognized as a sale at all, whereas the
present Rule 45(8)(b) of MCDR, 2017 introduces the
nuance of arms length, thereby necessitating an
application of mind as to whether these sales with
related parties are at arm's length or not. It is further
contended that the impugned ASPs published by the
// 20 //
opposite party no.1-IBM do not reflect the true market
price, particularly for low grade fines (below 60% FE
grade) where the international market slashing so far as
iron ore is concerned. Thereby, the ASP fixed by the IBM
is not sensitive to the drastic reduction in market price.
As a consequence thereof, the volume of mineral
intended to be sold affects the price of the mineral and
higher volume corresponds to low price and as such,
does not correctly indicate the true market price and
auction floor price has to correspond to the market price
to get bidders/buyers.
It is further contended that exclusion of
petitioner's ex-mines prices would have a significant
impact on the overall ASP, when the petitioner had
dispatched 71% of the total low grade iron ore from the
merchant mines in the entire State of Odisha during
that period. It is further contended that the IBM has
created an illusion of higher prices resulting in putting
the petitioner-company to sustain loss and cause grater
hardship for its survival.
// 21 //
To substantiate his contentions, he has relied
upon Oryx Fisheries Private Limited v. Union of
India, (2010) 13 SCC 427; K.I. Shephard v. Union of
India, (1987) 4 SCC 431; DIT (International Taxation,
Mumbai) v. Morgan Stanley & Co., (2007) 7 SSC 1;
Commissioner of Customs, Mumbai v. Clariant
(India) Ltd., Worli, (2007) 12 SCC 166; Solidaire India
Ltd. V. Fairgrowth Financial Services, (2001) 3 SCC
71; Union of India v. Popular Construction Co.,
(2001) 8 SCC 470 and State of Rajasthan v. Gopi
Kishan Sen, 1993 Supp(I) SCC 522.
4. Per contra, Mr. A.K. Parija, learned Advocate
General of Odisha appearing along with Mr. P.P.
Mohanty, learned Additional Government Advocate for
opposite party no.2 vehemently refuted the contentions
raised by the learned Sr. Advocates appearing for the
petitioner-company and contended that the price slash
given by the petitioner-company, with reference to the
document annexed as Annexure-A/2, the ex-mine price
of iron ore reported by different bidders from July, 2021
// 22 //
to December, 2021 in monthly returns filed by opposite
party no.1, is not a realistic price slash in comparison to
other similarly situated leaseholders, and further the
document under Annexure-A/1 filed by opposite party
no.1-IBM i.e. mine-wise, grade-wise domestic sale
reported in monthly return for the month of September,
2021 clearly indicates that the sale had been made to
self, though the initial sale, may be at some stages,
indicates to be made to the traders, but ultimately the
dispatch was made to the traders "end users" and the
"end users" are none else but the petitioner-company.
Though they are named as different companies, but said
companies are acquired by the petitioner-company. As
such, it is not applicable to the petitioner, rather it is a
camouflaged manner of sale made by the petitioner-
company to self by the traders and, as such, it shows
trader transaction and effectively the purpose of the Act
and Rules have not been adhered to in letter and spirit.
It is further contended that the petitioner-
company has tried to club two issues, namely, fixation of
// 23 //
price by opposite party no.1-IBM, and secondly with
regard to non-compliance of the principle of natural
justice, pursuant to show cause notice issued for non-
compliance of the statutory provisions contained in the
Rules itself. It is also contended that the argument
advanced by learned Senior Counsel appearing for the
petitioner-company, that there is non-compliance of the
principle of natural justice, pursuant to show-cause
notice dated 16.12.2021, to which the petitioner-
company replied on 18.12.2021 and 27.12.2021, has
nothing to do with the fixation of price and both run
separately. As such, there is no provision under the Act
and Rules to give any hearing for fixation of price. It is
emphatically argued before this Court that if the price,
which has been fixed, will be taken into consideration,
then State will lose highest revenue which could have
been collected from the mining resources of the State. As
a consequence thereof, it affects the State revenue and,
more so, if the petitioner-company is aggrieved by the
fixation of such price, an alternative statutory remedy is
available under Rule-161 of MCDR, 2017. Thereby, the
// 24 //
writ petition is not maintainable and liable to be
dismissed at the threshold.
It is also contended that the prayer, as made
in the writ petition, on the face of it, is purely confusing.
As such, the petitioner seeks to set aside and quash the
impugned decision dated 12.01.2022 issued by opposite
party no.1 revising the ASP for the month of September
and October, 2021 for the State of Odisha, but no such
document is available on record in any manner.
Therefore, the claim made by the petitioner to quash the
said decision cannot sustain. It is further contended
that seeking direction not to take any decision to revise
and determine the average different price, excluding
ASP, is a domestic transaction of the lessee. As such,
the petitioner-company cannot claim such relief before
this Court. It is further contended that fixation of price
is within complete domain of opposite party no.1-IBM, to
which the petitioner, by way of filing writ petition,
cannot regulate in any manner, as similarly situated
many other leaseholders have not challenged such
// 25 //
action knowing fully well the jurisdiction of this Court in
such issues. It is also further contended that the relief
sought before this Court, for direction to issue office
memorandum on interpretation or implementation of
Rule 45 (8)(III) and Rule 45 (8)(IV) of the MCDR, 2017,
cannot be granted, as the Statute itself is very clear in
that regard. So far as production of records is
concerned, it is the petitioner, who has to furnish all
documents before the Court and, thereby, the
production of records pertaining to ASP for the State of
Odisha is an absolutely misconceived relief sought
before this Court. It is further contended that in one
hand the argument has been advanced that pursuant to
show-cause notice dated 16.12.2021 issued by opposite
party no.1-IBM in respect of Jajang Iron Ore Mines and
Nuagaon Iron Ore Mines in the State of Odisha, the
petitioner-company has filed replies on 18.12.2021 and
27.12.2021 seeking compliance of the principle of
natural justice, and on the other hand, claims for
quashing of such notice, which is an absolutely
// 26 //
misconceived one. Thereby, he seeks for dismissal of the
writ petition.
5. Mr. P.K. Parhi, learned Assistant Solicitor
General of India appearing along with Mr. J. Naik,
learned Central Government Counsel for opposite parties
no.1 & 3, referring to counter affidavit, contended that
the replies dated 18.12.2021 and 27.12.2021 submitted
by the petitioner-company, pursuant to notice of show-
cause issued on 16.12.2021, are under consideration
and, as such, publication of ASP is all together a
different process itself as per laid down procedure. It is
also contended that the publication of final ASP is
without consideration of reply to show-cause, is not
correct, as the action of opposite party no.1-IBM is still
under consideration. Thereby, the relief sought by the
petitioner cannot be granted. He has supported the
argument advanced by learned Advocate General,
Odisha appearing for opposite party no.2 and also laid
emphasis on the fact that the claim of the petitioner-
company for compliance of the principle of natural
// 27 //
justice is all together a different issue than that of
fixation of ASP, and both are proceeded in different
procedure of law. It is further contended that since there
is alternative remedy available under the Statute,
instead of availing the same, the petitioner could not
have approached this Court by filing this writ petition.
As a consequence thereof, the writ petition has to be
dismissed at its threshold.
6. This Court heard Dr. A.M. Singhvi and Mr. G.
Jain, learned Senior Advocates appearing along with Mr.
S.S. Mohanty, learned counsel for the petitioners; Mr.
P.K. Parhi, learned Assistant Solicitor General of India
appearing along with Mr. Jateswar Naik, learned Central
Government Counsel for opposite parties no.1 & 3-
Indian Bureau of Mines; and Mr. A.K. Parija, learned
Advocate General of Odisha along with Mr. P.P.
Mohanty, learned Additional Government Advocate for
the opposite party-State, by hybrid mode. Pleadings have
been exchanged between the parties and with the
consent of learned counsel for the parties, the writ
// 28 //
petition is being disposed of finally at the stage of
admission.
7. On the basis of the undisputed factual matrix,
as delineated above, the following issues emerge for
consideration:-
(i) Whether the reliefs sought as per the
prayer made by the petitioners can be
granted?
(ii) Whether the principles of natural justice
are required to be complied with or not for
alleged violation of Rule 45(7) and Rule
45(8)(III) of the MCDR, 2017?
(iii) Whether the fixation of price and issuance
of ASP is legally tenable or not?
8. Issue no.(i)
Whether the reliefs sought as per the
prayer made by the petitioners can be
granted?
At the outset, Mr. A.K. Parija, learned
Advocate General of Odisha raised preliminary objection
with regard to the prayer made in the writ petition and
contended that the relief sought cannot be granted to
the petitioners and the writ petition should be dismissed
in absence of any specific relief sought. He lays
emphasis on the prayer no.(a) of the writ petition
wherein the petitioners have prayed for direction to set
// 29 //
aside or quash the impugned decision dated 12.01.2022
issued by opposite party no.1 revising the ASP for the
months of September and October, 2021 for the State of
Odisha. As such, on perusal of the records, no such
document has been annexed to the writ petition,
therefore, the prayer made for quashing of such
document, is absolutely misconceived one. But fact
remains in paragraph-xxiii of the writ petition, the
petitioners have pleaded as follows:
"In Complete disregard of and without considering
and /or disposing of the reply furnished by the
petitioner to the Notices and the letter dated letter
dated 18.12.2021 addressed by the petitioner to the
CCOM (MDRD) OF THE Indian Bureau of Mines,
Nagpur and with the sole purpose to circumvent the
due to process of law, the Opposite party no. 1
proceed to declare and publish the ASP for the
months of September, 2021and October,2021
excluding the ex-mine price of the Petitioner at
9.00PM on 12.01.2022, i.e. after the filling and
service of advance copy of the Writ Petition (C) No.845
of 2022, solely with the intention to circumvent the
due process of law."
In view of such pleadings made available on record, the
claim has been made, that as per the decision taken on
12.01.2022, opposite party no.1-IBM proceeded to
decide and publish the ASP for the month of September,
2021 and October, 2021, excluding ex-mine price of the
petitioner, at 9 PM on 12.01.2022. Therefore, fixation of
// 30 //
such ASP has been made, pursuant to the decision
taken on 12.01.2022, which is the subject matter of the
dispute in the case itself. In prayer (b), it has been
sought to direct the opposite parties not to take any
decision to revise or determine or publish the ASP,
excluding the ex-mine price, at domestic sale
transactions of the lessee. It is contended that since
such decision has not been placed on record, merely
averring the same in paragraph-xxiii of the writ petition,
the relief cannot be granted to the petitioners.
9. In Charanjitlal v. Union of India, AIR 1951
SC 41 : 1950 SCR 869, the apex Court held that a word
about prayer for a particular writ in the petition. Courts
have very wide discretion in the matter of framing their
writs to suit the exigencies of particular cases, and an
application cannot be thrown out simply on the ground
that the proper writ or direction has not been prayed for.
10. In Satyanarain v. District Engineer,
P.W.D., AIR 1962 SC 1161 : (1962) Supp.3 SCR 105,
wherein the apex Court held that appropriate relief may
// 31 //
be granted due to changed circumstances and because
of the prayer for grant of any other relief in the petition.
But that has got restriction to the extent that the same
principle would not apply in case where the cause of
action which had brought the petitioner to the court no
longer subsisted.
11. In Life Insurance Corporation v. Sunil Balo
Kumar, AIR 1964 SC 847 : (1964) 5 SCR 528, the apex
Court held that a party is not disentitled to claim the
same relief on a basis alternative to one pleaded in his
petition.
12. In Chandigarh Admn. v. Laxman Roller
Flour Mills (P) Ltd., (1988) 8 SCC 326, the apex Court
held that unless the allegations are made in the writ
petition and a relief to that effect is also prayed for in the
writ petition, the High Court is not justified in issuing
any order in excess of the relief prayed for in the writ
petition. In the absence of pleading and prayer in the
writ petition, the High Court fell in error in issuing
directions to the appellant to issue completion certificate
// 32 //
to the writ petitioner, when the challenge in the writ
petition was for quashing cancellation of lease deed and
dispossession from the plot by the Chandigarh
administration.
13. In the present case, even though the
petitioners pleaded in paragraph-Xiii of the writ petition
and made prayer in Clause-(a) (b) with regard to
quashing of the decision taken on 12.01.2022, but
nothing has been placed on record about such decision.
Therefore, even if prayer has not been specifically made,
but in view of the pleadings available on record, the
petitioners cannot be disentitled to seek relief in the
High Court in exercise of power under Article 226 of the
Constitution of India and, as such, the High Court can
mould the relief sought by the petitioners.
14. "Moulding of relief" principle was recognized
by the Supreme Court in Pasupuleti Venkateswarlu v.
The Motor & General Traders, AIR 1975 SC 1709. It
was observed therein that though the right to relief must
be judged to exist as on the date a suitor institutes the
// 33 //
legal proceeding, the principle that procedure is the
handmaid and not the mistress of the judicial process is
also to be noted. Justice VR Krishna Iyer observed:
"If a fact, arising after the lis has come to court and
has a fundamental impact on the right to relief for the
manner of moulding it, is brought diligently to the
notice of the tribunal, it cannot blink at it or be blind to
events which stultify or render inept the decrotal
remedy. Equity justifies bending the rules of
procedure, where no specific provision or fair play is
violated, with a view to promote substantial justice--
subject, of course, to the absence of other disentitling
(factors or just circumstances. Nor can we contemplate
any limitation on this power to take note of updated
facts to confine it to the trial Court. If the litigation
pends, the power exists, absent other special
circumstances repelling resort to that course in law or
justice. Rulings on this point are legion, even as
situations for applications of this equitable rule are
myriad. We affirm the proposition that for making the
right or remedy claimed by the party just and
meaningful as also legally and factually in accord with
the current realities, the court can, and in many cases
must, take cautious cognizance of events and
developments subsequent to the institution of the
proceeding provided the rules of fairness to both sides
are scrupulously obeyed.
15. In Ramesh Kumar v. Kesho Ram, AIR 1992
SC 700, the Supreme Court again following this
principle, i.e. "moulding of relief", observed as follows:
"6. The normal rule is that in any litigation the rights
and obligations of the parties are adjudicated upon as
they obtain at the commencement of the lis. But this is
subject to an exception. Wherever subsequent events of
fact or law which have a material bearing on the
entitlement of the parties to relief or on aspects which
bear on the moulding of the relief occur, the court is not
precluded from taking a 'cautious cognizance' of the
subsequent changes of fact and law to mould the
relief."
// 34 //
16. In Sheshambal (dead) through LRs v.
Chelur Corporation Chelur Building, (2010) 3 SCC
470, the apex Court laid down the conditions in which
the relief can be moulded:
"(i) that the relief, as claimed originally has, by reason
of subsequent events, become inappropriate or cannot
be granted;
(ii) that taking note of such subsequent event or
changed circumstances would shorten litigation and
enable complete justice being done to the parties; and
(iii) that such subsequent event is brought to the notice
of the court promptly and in accordance with the rules
of procedural law so that the opposite party is not
taken by surprise."
17. In Samir Narain Bhojwani v. Aurora
Properties and Investments, (2018) 17 SCC 203 the
apex Court observed that principle of moulding of relief
could at best be resorted to at the time of consideration
of final relief in the main suit and not at an interlocutory
stage.
18. In Premalata Panda v. State of Odisha,
2015 (II) OLR 214, relying upon State of Rajasthan v.
M/s. Hindustan Sugar Mills Ltd., AIR 1988 SC 1621 :
(1988) 3 SCC 449 where the apex Court held that the
High Court which was exercising high prerogative
// 35 //
jurisdiction under Article 226 could have moulded the
relief in a just and fair manner as required by the
demands of the situation, this Court, in exercise of such
power under Article 226 of the Constitution of India even
though no specific prayer was made in the writ petition,
taking into consideration the facts and circumstances of
the case, was inclined to mould the relief and passed
order/direction as deemed fit and proper as prayed for
by the learned counsel for the petitioner in the writ
petition.
19. In view of the law laid down by the apex
Court, so far as "moulding of relief" is concerned, this
Court is of the considered view that even if there is no
such specific prayer made in the writ application, this
Court can grant such relief, as has been advanced
before this Court in course of hearing of the matter, at
the final stage by "moulding the relief".
Accordingly, the preliminary objection raised
by learned Advocate General, Odisha is answered in
favour of the petitioners.
// 36 //
20. Issue no.(ii)
Whether the principles of natural justice
are required to be complied with or not
for alleged violation of Rule 45(7) and
Rule 45(8)(III) of the MCDR, 2017?
Before delving into this issue, the relevant
provisions of the Acts and the Rules are required to be
referred to:-
(a) Mines and Minerals (Development and
Regulation) Act, 1957 ("MMDR Act, 1957" in
short)
"9. Royalties in respect of mining leases.―(1)
The holder of a mining lease granted before the
commencement of this Act shall, notwithstanding
anything contained in the instrument of lease` or in
any law in force at such commencement, pay royalty
in respect of any mineral removed or consumed by
him or by his agent, manager, employee, contractor
or sub-lessee from the leased area after such
commencement, at the rate for the time being
specified in the Second Schedule in respect of that
mineral.
(2) The holder of a mining lease granted on or
after the commencement of this Act shall pay royalty
in respect of any mineral removed or consumed by
him or by his agent, manager, employee, contractor
or sub-lessee from the leased area at the rate for the
time being specified in the Second Schedule in
respect of that mineral.
(2A) The holder of a mining lease, whether
granted before or after the commencement of the
Mines and Minerals (Regulation and Development)
Amendment Act, 1972 (56 of 1972) shall not be
liable to pay any royalty in respect of any coal
consumed by a workman engaged in a colliery
provided that such consumption by the workman
does not exceed one-third of a tonne per month.
(3) The Central Government may, by notification
in the Official Gazette, amend the Second Schedule
so as to enhance or reduce the rate at which royalty
shall be payable in respect of any mineral with
// 37 //
effect from such date as may be specified in the
notification:
Provided that the Central Government shall not
enhance the rate of royalty in respect of any mineral
more than once during any period of three years."
(b). Minerals (Other Than Atomic and Hydrocarbon
Energy Minerals) Concession Rules 2016, ("MCR
2016" in short)
CHAPTER XII
MINERALS VALUATION
38. Sale Value. - Sale value is the gross amount
payable by the purchaser as indicated in the sale
invoice where the sale transaction is on an arms'
length basis and the price is the sole consideration
for the sale, excluding taxes, if any.
Explanation - For the purpose of computing
sale value no deduction from the gross amount will
be made in respect of royalty, payments to the
District Mineral Foundation and payments to the
National Mineral Exploration Trust.
39. Payment of royalty. - (1) in case
processing of run-of-mine is carried out within the
leased area, then royalty shall be chargeable on the
processed mineral removed from the leased area.
(2) In case run-of-mine is removed from the
leased area to a processing plant which is located
outside the leased area, then royalty shall be
chargeable on the unprocessed run-of-mine and not
on the processed product.
(3) Wherever the Act specifies that the royalty in
respect of any mineral is to be paid on an Ad
valorem basis, the royalty shall be calculated at the
specified percentage of the average sale price of
such mineral grade/ concentrate, for the month of
removal / consumption, as published by the Indian
Bureau of Mines.
(4) Wherever the Act specifies that the royalty in
respect of any mineral is to be paid based on London
Metal Exchange or London Bullion Market
Association price, the royalty shall be calculated at
the specified percentage of the average sale price of
the metal for the month as published by the Indian
Bureau of Mines, for the metal contained in the ore
removed or the total by-product metal actually
// 38 //
produced, as the case may be, of such mineral for
the month.
(5) Wherever the Act specifies that the royalty of
any mineral is to be paid on tonnage basis, the
royalty shall be calculated as product of mineral
removed or consumed from the lease area and the
specified rate of royalty.
40. Provisional Assessment and Adjustment. -
(1) At the time of removal or consumption of mineral
from the mining lease area, the lessee shall calculate
the amount of Royalty, payment to the District
Mineral Foundation, payment to the National Mineral
Exploration Trust, based on the latest available
average sale price of the said mineral grade and pay
the same to the Government as provisional payment
for the same.
(2) After the publication of the Average Sale Price
of the Minerals for the month by the Indian Bureau
of Mines, due adjustment of the actual amounts
payable against the provisional payment may be
made:
Provided that if for a particular mineral grade /
concentrate, the average sale price for a State for a
particular month is not published by the Indian
Bureau of Mines, the last available information
published for that mineral grade / concentrate for
that particular State by the Indian Bureau of Mines
in the last six months previous to the month for
which assessment is done shall be used, failing
which the latest information for All India for the
mineral grade / concentrate, shall be used.
41. XXX XXX XXX
42. Computation of average sale price. - (1) The
ex-mine price shall be used to compute average sale
price of mineral grade/ concentrate.
(2) The ex-mine price of mineral grade or
concentrate shall be: -
(a) where export has occurred, the free-on-board
(F.O.B) price of the mineral less the actual
expenditure incurred beyond the mining lease area
towards transportation charges by road, loading
and unloading charges, railway freight (if
applicable), port handling charges/export duty,
charges for sampling and analysis, rent for the plot
at the stocking yard, handling charges in port,
// 39 //
charges for stevedoring and trimming, any other
incidental charges incurred outside the mining lease
area as notified by the Indian Bureau of Mines from
time-to-time, divided by the total quantity exported.
(b) where domestic sale has occurred, sale value
of the mineral less the actual expenditure incurred
towards transportation, loading, unloading, rent for
the plot at the stocking yard, charges for sampling
and analysis and any other charges beyond mining
lease area as notified by the Indian Bureau of Mines
from time-to-time, divided by the total quantity sold.
(c) where sale has occurred, between related
parties and/or where the sale is not on arms' length
basis, then such sale shall not be recognized as a
sale for the purpose of this rule and in such case,
sub-clause (d) shall be applicable.
(d) where sale has not occurred, the average sale
price published monthly by the Indian Bureau of
Mines for that mineral grade / concentrate for a
particular State:
Provided that if for a particular mineral grade /
concentrate, the information for a State for a
particular month is not published by the Indian
Bureau of Mines, the last available information
published for that mineral grade / concentrate for
that particular State by the Indian Bureau of Mines
in the last six months previous to the reporting
month shall be used, failing which the latest
information for All India for the mineral grade /
concentrate, shall be used.
(3) The average sale price of any mineral
grade/concentrate in respect of a month shall be the
weighted average of the ex-mine prices of the non-
captive mines, computed in accordance with the
above provisions, the weight being the quantity
dispatched from the mining lease area of mineral
grade / concentrate relevant to each ex-mine price.
43. Publication of average sale price. - The
Indian Bureau of Mines shall publish the average
sale price of each mineral grade/concentrate
removed from the mining leases in a month in a
State within 45 days from the due date for filing the
monthly returns as required under the Mineral
Concession Development Rules, 1988.
44. XXX XXX XXX
// 40 //
45. Formula for calculating average sale price
for metallurgical grade Bauxite to be used in
alumina and aluminium extraction, Limestone,
Tungsten. - (1) The State Government shall arrive
at the average sale price of metallurgical Bauxite in
the following manner:
Average sale Price = 52.9/100 x Percentage of
Al2O3 in bauxite on dry basis x Average aluminium
price in Indian rupee for the month as published by
IBM x Conservation factor as notified by the Central
Government.
(2) The following procedure shall be used by IBM
for publishing the average sale price of Limestone:
(a) Weighted average of non-captive prices
computed for all India for the month; or
(b) 115% of the weighted average captive prices
for the State for the month, whichever is higher.
(3) The following procedure be used by IBM for
publishing the average sale price of Tungsten
concentrate:
Average = Lowest price of WO3 per X Average of RBI reference rates
Sale Price metric tonne for the month for the month
+
Highest price of WO3 per
metric tonne for the month
The monthly prices available in Mineral
Industry Surveys of USGS shall be taken by the
IBM for compiling the average sale price of
tungsten concentrate.
(c) Mineral Conservation and Development
Rules, 2017 ("MCDR 2017" in short).
CHAPTER VI
NOTICES AND RETURNS
45. Monthly and annual returns. - (1) The holder of a
mining lease, or any person or company engaged in trading or
storage or end-use or export of minerals mined in the country,
shall cause himself to be registered online with the Indian
Bureau of Mines as per application specified in Form K of the
Schedule and the registration number so allotted by the Indian
// 41 //
Bureau of Mines shall be used for all purposes of online
reporting and correspondence connected therewith.
(2) For the purpose of registration under sub-rule (1), the
holder of a mining lease, or any person or company engaged
in trading or storage or end-use or export of minerals, shall
apply for registration in electronic form, within one month
from the date of registration of the lease deed or before the
commencement of trading operation or storage or end-use or
export of minerals, as the case may be.
(3) The Indian Bureau of Mines shall allot and record the
registration number in the register referred to in sub-rule (4).
(4) The Indian Bureau of Mines shall maintain an online
register giving details of the holder of a mining lease, or any
person or company engaged in trading or storage or end-use
or export of minerals, as the case may be, as registered under
the provisions of these rules, which shall be made available to
the general public for inspection on demand, and also posted
on the website of the Indian Bureau of Mines.
(5) The holder of a mining lease shall submit online
returns in respect of each mine to the Regional Controller or
any other authorised official of the Indian Bureau of Mines in
the following manner, namely:-
(a) a daily return which shall be submitted through in
electronic form through the application developed by the
Indian Bureau of Mines, by 1800 hours of the third day
following the day of reporting, which may be edited before the
time deadline provided in this regard;
(b) a monthly return which shall be submitted before the
tenth day of every month in respect of the preceding month in
electronic form along with a signed print copy of the same if it
is not digitally signed, in the respective form as indicated
below:-
(i) for all minerals except copper, gold, lead, pyrite, tin,
tungsten, zinc, precious and semi-precious stones, in Form F1
of the Schedule;
(ii) for copper, gold, lead, pyrite, tin, tungsten and zinc, in
Form F2 of the Schedule; and
(iii) for precious and semi-precious stones, in Form F3 of
the Schedule;
(c) an annual return which shall be submitted before
the 1st day of July each year for the preceding financial year
in electronic form, along with a signed print copy of the same
if it is not digitally signed, in the respective Form as indicated
below:-
(i) for all minerals except copper, gold, lead, pyrite, tin,
tungsten, zinc, precious and semi-precious stones, in Form
G1of the Schedule;
(ii) for copper, gold, lead, pyrite, tin, tungsten and zinc, in
Form G2 of the Schedule;
// 42 //
(iii) for precious and semi-precious stones, in Form G3 of
the Schedule:
Provided thatin the case of abandonment of a mine, the
annual return shall be submitted within one hundred and fifty
days from the date of abandonment.
(6) Any person or company engaged in trading or storage
or end-use or export of minerals, shall submit online to the
Indian Bureau of Mines and concerned State Government,
where the said person or company is sourcing the minerals,
the returns in electronic form, along with a print copy of the
same if it is not digitally signed, in the following manner,
namely:-
(a) a monthly return which shall be submitted before the
tenth day of every month in respect of the preceding month in
Form L of the Schedule;
(b) an annual return which shall be submitted before the
first day of July of each year for the preceding financial year
in Form M of the Schedule.
(7) If it is found that the holder of a mining lease or the
person or company engaged in trading or storage or end-use
or export of minerals, as the case may be, has submitted
incomplete or wrong or false information in daily or monthly
or annual returns or fails to submit a return within the date
specified; then,-
(a) in the case of mining of minerals by the holder of a
mining lease, the Regional Controller of Mines may advise the
State Government to,-
(i) order suspension of all mining operations in the mine
and to revoke the order of suspension only after ensuring
proper compliance;
(ii) take action to initiate prosecution under these rules;
(iii) recommend termination of the mining lease, in case
such suppression or misrepresentation of information indicates
abetment or connivance of illegal mining;
(b) in the case of trading or storage or end-use of
minerals, the State Government, where the person or company
engaged in trading or storage or end-use of minerals is
sourcing the minerals, shall order suspension of-
(i) trading licence (by whatever name it is called);
(ii) all transportation permits issued to such person or
company for mineral transportation (by whatever name it is
called);
(iii) storage licence for stocking minerals (by whatever
name it is called); (iv) permits for end-use industry of minerals
(by whatever name it is called);
as the case may be, of such person or company engaged
in trading or storage or end-use of minerals, and may revoke
the order of suspension only after ensuring proper compliance;
// 43 //
(c) in the case of export of minerals, the Directorate
General of Foreign Trade shall order suspension of permits
for carrying out such exports of minerals of such person or
company engaged in export of minerals, and may revoke the
order of suspension only after ensuring proper compliance:
Provided that the holder of a mining lease or the person of
company engaged in trading of storage or end user or export
of minerals, as the case may be, referred to in clause (a), (b)
and (c) above, shall be informed in writing about the violation
and if the violation is not rectified within a period of forty-five
days, a show cause notice shall be given asking reasons why
the mining operations should not be suspended and, further, if
no satisfactory reply is received within a period of thirty days,
the mining operations may be suspended.
(8) In case of mining of minerals by the holder of a mining
lease, the-
(a) sale value is the gross amount payable by the
purchaser as indicated in the sale invoice, where the sale
transaction is on an arms' length basis and the price is the sole
consideration for the sale, excluding taxes, if any.
Explanation.- For the purpose of computing sale value,
no deduction from the gross amount shall be made in respect
of royalty, payments to the District Mineral Foundation and
payments to the National Mineral Exploration Trust;
(b) ex-mine price of mineral grade or concentrate shall
be,-
(I) where export has occurred, the total of, sale value on
free-on-board (F.O.B) basis, less the actual expenditure
incurred beyond the mining lease area towards -
(i) transportation charges by road;
(ii) loading and unloading charges;
(iii) railway freight (if applicable);
(iv) port handling charges or export duty;
(v) charges for sampling and analysis;
(vi) rent for the plot at the stocking yard;
(vii) handling charges in port;
(viii) charges for stevedoring and trimming;
(ix) any other incidental charges incurred outside the
mining lease area as notified by the Indian Bureau of Mines
from time-to-time, divided by the total quantity exported;
(II) where domestic sale of mineral has occurred, the
total of sale value of the mineral, less the actual expenditure
incurred towards loading, unloading, transportation, rent for
the plot at the stocking yard, charges for sampling and
analysis and any other charges beyond mining lease area as
notified by the Indian Bureau of Mines from time-to-time,
divided by the total quantity sold;
// 44 //
(III) where sale has occurred, between related parties
and is not on arms' length basis, then such sale shall not be
recognised as a sale for the purposes of this rule and in such
case, sub-clause (IV) shall be applicable;
(IV) where the sale has not occurred, the average sale
price published monthly by the Indian Bureau of Mines for that
mineral grade or concentrate for a particular State:
Provided that if for a particular mineral grade or
concentrate, the information for a State for a particular month
is not published by the Indian Bureau of Mines, the last
available information published for that mineral grade or
concentrate for that particular State by the Indian Bureau of
Mines in the last six months previous to the reporting month
shall be referred, failing which the latest information for all
India for the mineral grade or concentrate, shall be referred;
(V) the per unit cost of production in case of captive
mines.
(9) In case of trading or storage or end-use or export of
minerals, for purpose of filing of returns, the value of the
mineral grade or concentrate shall be,-
(a) where sale of the mineral grade or concentrate has
occurred and the sale transaction is on an arms' length basis
and the price is the sole consideration for the sale, the sale
value of the mineral grade or concentrate recorded in the
invoice;
(b) where sale has not occurred, the product of
average sale price published monthly by the Indian Bureau of
Mines for a particular mineral grade or concentrate for a
particular State and the quantity dispatched or procured:
Provided that if for a particular mineral grade or
concentrate, the information for a State for a particular month
is not published by the Indian Bureau of Mines, the last
available information published for that mineral grade or
concentrate for that particular State by the Indian Bureau of
Mines in the last six months previous to the reporting month
shall be referred, failing which the latest information for all
India for the mineral grade or concentrate, shall be referred.
(10) If more than one mineral is produced from the
same mine, return shall be submitted along with the relevant
parts of the specified forms for each mineral separately.
(11) In case of temporary discontinuance of mining or
suspension of mining, or temporary discontinuance or
suspension of trading or storage or end-use or export of
minerals, the holder of a mining lease, or the person or
company engaged in trading or storage or end-use or export of
minerals, as the case may be, shall submit return in the
specified form for the mineral for which return had been
submitted earlier and furnish relevant particulars, inclusive of
"Nil" information, if any.
// 45 //
(12) In case ownership of the mine or the trading or
storage or end-use or export company changes during the
reference period, separate returns shall be filed by each owner
for the respective periods of ownership.
(13)For the purpose of regulation of transportation of
minerals, all persons and companies owning trucks or any
other motorised vehicle used for transportation of mineral
byroad or through water way shall be required to be registered
with the Directorate of Mining and Geology or the Department
handling mining matters in the State Government, and the
lessee shall maintain trip-sheets (either in the form of written
record or on computers) of the vehicles, the nature and weight
of mineral and the approximate time of the trip and its
destination.
CHAPETER IX
REVISION AND PENALTY
61. Revision.- (1) Any person aggrieved by any order made or
direction issued under these rules by any authorised officer
excepting the State Government, as the case may be, may
within thirty days of the communication of such order or
direction, apply to the Controller General or the Director,
Atomic Minerals Directorate for Exploration and Research, as
the case may be, for a revision of the order or direction:
Provided that any such application may be entertained
after the said period of thirty days if the applicant satisfies the
Controller General or the Director, Atomic Minerals
Directorate for Exploration and Research, as the case may be,
that he had sufficient cause for not making the application
within time: Provided further that if any order made or
direction issued by an officer subordinate to the Chief
Controller of Mines, the application shall be made to the Chief
Controller of Mines who shall deal with the application in the
manner provided hereunder.
(2) Every order against which a revision application is
preferred under sub-rule (1) shall be complied with pending
receipt of the decision of the Controller General or the
Director, Atomic Minerals Directorate for Exploration and
Research or the Chief Controller of Mines, as the case may be:
Provided that the Controller General or the Director,
Atomic Minerals Directorate for Exploration and Research or
the Chief Controller of Mines, as the case may be, may
suspend the operation of the order against which the revision
has been preferred, pending disposal of the revision
application.
(3) On receipt of an application for revision under
sub-rule (1), the Controller General or the Director, Atomic
Minerals Directorate for Exploration and Research or the
// 46 //
Chief Controller of Mines, as the case may be, after giving a
reasonable opportunity of being heard to the aggrieved
person, may confirm, modify or set aside the impugned order.
(4) Any person aggrieved by any order made or
direction issued by the Chief Controller of Mines may within
thirty days of the communication of such order or direction,
prefer an appeal to the Controller General as against the said
order or direction:
Provided that any such appeal may be entertained
after the said period of thirty days, if the applicant satisfies the
Controller General that he had sufficient cause for not making
the application within time.
(5) On receipt of any such appeal under sub-rule (4),
the Controller General may confirm, modify or set aside the
order or direction made or issued by the Chief Controller of
Mines or may pass such orders in relation to the applicant, as
it may deem fit and such decision shall be final.
(6) Every order against which appeal is preferred
under sub-rule (4), shall be complied with pending receipt of
the decision of the Controller General: Provided that the
Controller General may, on an application made by the
applicant, suspend operation of the order or direction
appealed against pending disposal of the appeal.
(7) Every application submitted under the provisions of
this rule shall be accompanied by a bank draft for ten
thousand rupees as application fee drawn on a scheduled bank
in the name of 'Pay and Accounts Officer, Indian Bureau of
Mines' payable at Nagpur or by way of a bank transfer to the
designated bank account of the Indian Bureau of Mines:
Provided that in case the application under sub-rule (1)
is made to the Director, Atomic Minerals Directorate for
Exploration and Research, the amount of ten thousand rupees
shall be remitted as per the details specified by the Director,
Atomic Minerals Directorate for Exploration and Research in
this regard.
62. Penalty.- Whoever contravenes any of the provisions of
these rules shall be punishable with imprisonment for a term
which may extend to two years or with fine which may extend
to five lakh rupees, or with both, and in the case of a
continuing contravention, with additional fine which may
extend to fifty thousand rupees for every day during which
such contravention continues after conviction for the first such
contravention:
Provided that any offence punishable under these rules
may either before or after the institution of the prosecution, be
compounded by the person authorised under section 22 of the
Act to make a complaint to the court with respect to that
offence, on payment to that person, for credit to the
// 47 //
Government, of such sum specified in this regard by the
Controller General or the Director, Atomic Minerals
Directorate for Exploration and Research, in respect of
minerals specified in Part B of the First Schedule to the Act
where the grade of such atomic minerals is equal to or above
the threshold value limits declared under Schedule-A of the
Atomic Minerals Concession Rules, 2016, as the case may be:
Provided further that in case of an offence punishable
with fine only, such sum shall not exceed the maximum amount
of fine which may be imposed for that offence:
Provided also that where an offence is compounded under
these rules, no proceeding or further proceeding, as the case
may be, shall be taken against the offender in respect of the
offence so compounded, and the offender, if in custody, shall
be released forthwith.
FORM F1
[See rule 45(5) (b) (i)]
For the month of 20
MONTHLY RETURN
[To be used for minerals other than Copper, Gold, Lead, Pyrites, Tin,
Tungsten, Zinc and preciousand semi-precious stones]
To
(i) The Regional Controller of Mines
Indian Bureau of Mines
................... Region,
PIN:
(Please address to Regional Controller of Mines in whose territorial
jurisdiction the mines falls as notified from time to time by the Controller
General, Indian Bureau of Mines under rule 62 of the Mineral Conservation
and Development Rules, 1988)
(ii) The State Government
PART - I
(General and Labour)
1. Details of the Mine:
(a) Registration number allotted by
Indian Bureau ofMines
(to give registration number of the
Lessee/ Owner)
(b) Mine Code (allotted by Indian Bureau
of Mines )
(c) Name of the Mineral
(d) Name of Mine
// 48 //
(e) Name(s) of other mineral(s),
if any, produced from the same mine
(f) Location of the Mine :
Village
Post Office
Tahsil/Taluk
District
State
PIN Code
Fax no: E-mail:
Phone no: Mobile:
2. Name and address of Lessee/Owner (along with fax no. and e-mail):
Name of Lessee/Owner
Address
District
State
PIN Code
Fax no: E-mail:
Phone No: Mobile:
3. Details of Rent/ Royalty / Dead Rent/ DMF /NMET amount paid in the
month
(i) Rent paid (₹)
(ii) Royalty paid (₹)
(iii) Dead Rent paid ( ₹)
(iv) Payment made to the DMF ( ₹)
(v) Payment made to the NMET ( ₹)
4. Details on working of mine:
(i) Number of days the mine worked:
(ii) Reasons for work stoppage in the Reasons No of days
mine during the month (due to
strike, lockout, heavy rain, non-
availability of labour, transport
bottleneck, lack ofdemand,
uneconomic operations, etc.) and
the number of days of work
stoppage for each reason
// 49 //
separately
5. Average Daily Employment and Total Salary/Wages paid #:
Work place Direct Contract Total Salary/Wages (₹)
Male Femal Male Female Direct Contract
e
Below
ground
Opencast
Above
ground
Total
# To include all employees exclusive to the mine and attached
factory, workshop or mineral dressingplant at the mine site
PART-II
(PRODUCTION, DESPATCHES AND STOCKS)
(To be submitted separately for each mineral)
(Unit of Quantity in Tonnes)
1. Type of ore produced:
(Applicable for Iron ore only; tick mark whichever is applicable)
(a) Hematite
(b) Magnetite
2. Production and Stocks of ROM ore at Mine-head
Category Opening Production Closing
stock stock
(a) Open Cast
workings
(b) Underground
Workings
(c) Dump workings
// 50 //
3(i) Grade-wise ROM ore despatches from mine head ($):
Grade of [email protected] Despatches from mine-head Ex-mine Price (₹)
($): Applicable for iron ore and chromite only. For other minerals
data of
dispatches to be
reportedin 3(ii)
3(ii) Grade-wise Production, Dispatches, Stocks and Ex-mine prices:
Grades** Opening Production Despatches Closing Ex-mine
stock at from stock at price
mine- mine-head mine- (₹/Tonne
head head )
3(iii) In case the mineral is being pulverized in own factory,
please give the following particulars(*):
Grade** Total Total quantity of Total Quantity of pulverized mineral
quantity of pulverized mineral sold during the month
mineral produced
Pulverized (for each mesh size)
(in tonnes) Mesh size Quan Mesh size Quantity Ex-factory
tity Sale value
(tonn (tonne) (₹)
e)
3(iv) Average cost of pulverization (*) : ₹ per tonne.
(*): Not applicable for Iron ore, Manganese ore, Bauxite and Chromite
4. Details of deductions made from sale value for computation of Ex-
mine price (₹/ Tonne)
Deduction claimed # Amount
( in ₹/ Tonne) Remarks
// 51 //
a) Cost of transportation
(indicate loading station and
distance frommine in remarks)
b) Loading and unloading charges
c) Railway freight, if
applicable (indicate
destination and
distance)
d) Port handling charges/
export duty(indicate name
of port)
e) Charges for sampling and analysis
f) Rent for the plot at Stocking yard
g) Other charges
(specify clearly)
Total (a) to (g)
# Not applicable for captive dispatches and ex-mine sales
5. Sales/ Dispatches effected for Domestic Purposes and for
Exports:
Nature of For Domestic Purposes For export
Grade Despatch
(^) (indicate Registration Consig Quant Sal Country Quantity F.O.B
whether number as nee ity e Value(
Domestic allotted by name valu ₹)
Sale or the Indian ## e(₹)
Domestic Bureau of
Transfer or Mines to the
Captive buyer ##
consumption
or Export)
(^): To indicate the grades of ores
as mentioned below (see @ and
**) ## To indicate separately if
more than one buyer.
NOTE:- Mine owners are required to substantiate domestic
sale value/ FOB value for each grade of ore quoted above with copy
of invoices (not to be submitted with the return; to be produced
whenever required).
6. Give reasons for increase/decrease in production/nil
production, if any, during the month compared to the previous
month.
a)
b)
c)
7. Give reasons for increase/decrease in grade wise ex-
// 52 //
mine price, if any, during the monthcompared to the previous
month.
a)
b)
c)
I certify that the information furnished above is correct and complete in
all respects.
Place: Signature
Date:
Name in full:
Designation: Owner/Agent/Mining Engineer/Manage"
21. In view of the provisions contained in Section
9 of the MMDR Act, 1957, the holder of a mining lease
granted on or after the commencement of the Act shall
pay royalty in respect of any mineral removed or
consumed by him or by his agent, manager, employee,
contractor or sub-lessee from the leased area at the rate
for the time being specified in the Second Schedule in
respect of that mineral.
22. To give effect to the Rules, the MCR, 2016 in
Chapter XII deals with Mineral Valuation. Rule-38 states
about the sale value; Rule 39 deals with payment of
royalty; Rule 40 deals with provisional assessment and
adjustment; Rule 42 deals with computation of average
// 53 //
sale price; Rule 43 deals with publication of average sale
price, whereas formula to that has been provided at Rule
45 as mentioned above. The MCR, 2016, which has been
framed in exercise of the powers conferred under Section
13 of the MMDR Act, 1957, has come into force on its
publication in the gazette of India on 04.03.2016.
23. Similarly, in exercise of power concerned
under Section 18 of the MMDR Act, 1957 and in
supersession of the Mineral Conservation &
Development Rules 1988, except as respects things done
or omitted to be done before such supersession, the
Central Government has framed MCDR, 2017, which
has come into force with effect from 27.02.2017 on its
publication in the gazette of India. Chapter-VI thereof
deals with Notices and Returns. Rule 45 deals with
monthly and annual returns. As such, Form F1 has
been provided for furnishing the monthly return, and
Part-II thereof deals with Production, Despatches and
Stocks. Clause 4 of Part-II deals with details of
deductions made from sale value for computation of Ex-
// 54 //
mine price. Therefore, the purpose of providing such
Form F1 under Rule 45 (5) (b)(i) is to keep track of the
mineral used by the leaseholder for the purpose of
determination of its royalty and dead rents and other
statutory dues to be payable to the authority concerned.
24. Explanation (b) to Section 188 (1) of
Companies Act, 2013 provides the meaning of "arm's
length transaction" to the following effect:-
"the expression ―arm's length transaction
means a transaction between two related parties
that is conducted as if they were unrelated, so
that there is no conflict of interest."
Fourth proviso to Section 188 (1) of the Companies Act,
2013 provides that "nothing in this sub-section shall
apply to any transactions entered into by the company in
its ordinary course of business other than transactions
which are not on an arm's length basis".
25. The transaction of the petitioner-company is
in the ordinary course of business. In Black's Law
Dictionary, "ordinary course of business" means "normal
routine in managing trade or business". Therefore, the
sale purchase transactions of iron ore between the
// 55 //
petitioner-company and the related party and users
having steel manufacturing plants are transactions
necessarily in the ordinary course of business.
26. The petitioner-company, as per the
requirement of Rule 45 (7) of the MCDR, 2017, read with
Form F1 has to submit the monthly returns to the
opposite party no.1-IBM and providing rectification and
explanation as required in accordance with the
guidelines formulated by the Indian Bureau of Mines
and published by the opposite party no.3. Even though
the petitioner-company complies such provisions
scrupulously, on 16.12.2021, the opposite party no.1-
IBM issued a violation-cum- show cause notice to the
petitioner-company in respect of Jajang Iron Ore Mines
and Nuagaon Iron Ore Mines in the State of Orissa,
alleging violation of Rule 45 (7) and Rule 45 (8)(III) of the
MCDR, 2017 and directed the petitioner-company to give
reasons within 30 days from the date of issue of the
notice as to why not-
"(a) All mining operations and dispatches of the mine
should be stopped.
(b) You should be prosecution under these rules.
// 56 //
(c) Recommended termination of the mining lease
for suppression or misrepresentation of
information indicates abatment or connivance of
illegal mining."
27. In response to the said notice, the petitioner-
company submitted its reply on 18.12.2021 to the
CCOM (MDRD) of Indian Bureau of Mines, Nagpur,
requesting that unless and until the above stated reply
is considered, no decision may be taken to revise the
ASP already published excluding the domestic sale
transactions of the lessee, the petitioner-company,
herein, under the pretext that the same were not
qualifying sale transactions under Rule 45 (7) and Rule
45 (8)(III) of the MCDR, 2017. When such reply to show
cause was pending for consideration, on 27.12.2021, the
petitioner-company furnished another reply stating that
the notices do not fulfill the statutory conditions for
issuance thereof and ex-facie does not show any
violation of other cause of action for which action is
contemplated therein. But surprisingly, on the date of
issuance of show cause notice, i.e. 16.12.2021, an
internal correspondence was made by opposite party
no.1-IBM to the Director, (Statistics) and In-Charge
// 57 //
MMS Division of the Indian Bureau of Mines, whereby,
referring to the sale of various grades of iron ore by the
petitioner-company from its iron ore mines in Jajang
and Nuagaon, it was recommended that ASP of the State
of Odisha may be calculated excluding the ex-mine price
of the above mines, as the same were allegedly not on
arm's length basis.
28. Dr. Singhvi, learned Senior Advocate
appearing for the petitioners emphatically submitted
that when such a letter has been addressed, may be an
internal communication, and the petitioner-company
has filed its show cause replies on 18.12.2021 and
27.12.2021, i.e. in relation to allegation of violation of
certain conditions of the provisions of law, i.e. Rule 45
(7) and Rule 45 (8)(III) of the MCDR 2017, the authorities
have proceeded with determination of ASP, that itself
amounts to violation of principle of natural justice. It is
further contended that the opposite party no.1 has
published ASP for September, 2021 and October, 2021
on 30.11.2021 and 29.12.2021 respectively and marked
// 58 //
ASP for Iron Ore for the State of Orissa as "P" or
"Provisional" for few grades for which the published ASP
was lower by more than 20% from published ASP of
August, 2021. Thereby, contended that till the
grievances of the petitioner-company are meted out,
pursuant to reply given by it to the notice of show cause
dated 16.12.2021, the petitioner-company should be
permitted to sell on the provisional price fixed for month
of September, 2021, instead of insisting upon to go for
higher price, which would prejudice the interest of the
petitioner-company.
29. In Oryx Fisheries Private Limited (supra),
the apex Court at paragraphs-31, 32 and 33 of the
judgment observed as follows:-
"31. It is of course true that the show cause notice cannot be
read hyper-technically and it is well settled that it is to be read
reasonably. But one thing is clear that while reading a show-
cause notice the person who is subject to it must get an
impression that he will get an effective opportunity to rebut the
allegations contained in the show cause notice and prove his
innocence. If on a reasonable reading of a show-cause notice a
person of ordinary prudence gets the feeling that his reply to
the show cause notice will be an empty ceremony and he will
merely knock his head against the impenetrable wall of
prejudged opinion, such a show cause notice does not
commence a fair procedure especially when it is issued in a
quasi- judicial proceeding under a statutory regulation which
// 59 //
promises to give the person proceeded against a reasonable
opportunity of defence.
32. Therefore, while issuing a show-cause notice, the
authorities must take care to manifestly keep an open mind as
they are to act fairly in adjudging the guilt or otherwise of the
person proceeded against and specially when he has the power
to take a punitive step against the person after giving him a
show cause notice.
33. The principle that justice must not only be done but it
must eminently appear to be done as well is equally applicable
to quasi judicial proceeding if such a proceeding has to inspire
confidence in the mind of those who are subject to it."
30. Similarly, in K.I. Shephard (supra), the apex
Court at paragraph-16 of the judgment observed as
follows:-
"We may now point out that the learned Single Judge of the
Kerala High Court had proposed a post-amalgamation hearing
to meet the situation but that has been vacated by the Division
Bench. For the reasons we have indicated, there is no
justification to think of a post-decisional heading. On the other
hand the normal rule should apply. It was also contended on
behalf of the respondents that the excluded employees could
now represent and their cases could be examined. We do not
think that would meet the ends of justice. They have already
been thrown out of employment and having been deprived of
livelihood they must be facing serious difficulties. There is no
justification to throw them out of employment and then given
them an opportunity of representation when the requirement is
that they should have the opportunity referred to above as a
condition precedent to action. It is common experience that
once a decision has been taken, there is a tendency to uphold it
and a representation may not really yield any fruitful
purpose."
31. In view of the law laid down by the apex
Court, as discussed above, it is made clear that the
// 60 //
show cause notice cannot be read hyper-technically and
it should be read reasonably and, as such, it must give
an effective opportunity to rebut such allegations
contained in the show cause notice and prove his
innocence. Merely asking for show cause reply and the
reply is submitted thereto and non-consideration of the
same amounts to empty formality, thereby such show
cause notice does not commence as a fair procedure
especially when it is issued in a quasi- judicial
proceeding under a statutory regulation which promises
to give the person proceeded against a reasonable
opportunity of defence. As such, while issuing the show
cause notice the authorities must take care to manifestly
keep an open mind as they are to act fairly in adjudging
the guilt or otherwise of the person proceeded against
and especially when he has the power to take a punitive
step against the person after giving him a show cause
notice. The subsequent judgment of the apex Court,
which has been mentioned above, also reveals the same
view where the apex Court held that there is no
justification to throw the employees out of employment
// 61 //
and then give them an opportunity of representation
when the requirement is that they should have the
opportunity as a condition precedent to action.
32. Therefore, if the above principles are applied
in letter and spirit to the present context, certainly
alleging violation of Rule 45 (7) and Rule 45 (8)(III) of the
MCDR, 2017, a notice of show cause was given on
16.12.2021, to which the petitioner-company submitted
its reply on 18.12.2021 and subsequently on
27.12.2021, and the same are pending before the
authority for consideration. However, on the date of
issuance of show cause notice, the internal
commutation dated 16.12.2021 was issued
recommending that ASP of Odisha may be calculated
excluding ex-mine price of Jajang and Nuagaon mines,
as the same are allegedly not on "arm's length basis".
Therefore, it can be safely construed that opposite
parties have not yet complied the principle of natural
justice for having not taken a decision on the show
cause replies submitted by the petitioner-company. As a
// 62 //
matter of fact, the authorities should take a decision on
the show cause replies submitted by the petitioner-
company, in response to the notice of show cause issued
on 16.12.2021, in consonance with the principle of
natural justice. Thereby, Issue No.(ii) is answered in
affirmative in favour of the petitioner-company.
33. Issue No. (iii).
Whether the fixation of price and
issuance of ASP is legally tenable or not?
In view of the pleadings available on record,
the notice of show cause issued on 16.12.2021 for
violation of certain procedures envisages under Rule 45
(7) read with Rule 45 (8)(III) of the MCDR, 2017, stands
on a completely different footing than that of fixation of
price of royalty by the opposite parties.
34. In view of the provisions of Section 9 of the
MMDR Act, 1957, the holder of a mining lease granted
on or after the commencement of the Act shall pay
royalty in respect of any mineral removed or consumed
by him or by his agent, manager, employee, contractor
or sub-lessee from the leased area at the rate for the
// 63 //
time being specified in the Second Schedule in respect of
that mineral.
35. To give effect to such provisions, MCR, 2016
came to effect. Chapter XII thereof deals with Mineral
Valuation. Rule-38 states that 'sale value' is the gross
amount payable by the purchaser as indicated in the
sale invoice where the sale transaction is on an "arms'
length" basis and the price is the sole consideration for
the sale, excluding taxes, if any. Rule 39 deals with
payment of royalty, meaning thereby the determination
to pay the amount has to be made under sub-rule (3) of
Rule 39, which specifies that wherever the Act specifies
that the royalty in respect of any mineral is to be paid on
an ad valorem basis, the royalty shall be calculated at
the specified percentage of the average sale price of such
mineral grade/ concentrate, for the month of removal /
consumption, as published by the Indian Bureau of
Mines. Sub-rule (5) of Rule 39 made it clear that
wherever the Act specifies that the royalty of any mineral
is to be paid on tonnage basis, the royalty shall be
// 64 //
calculated as product of mineral removed or consumed
from the lease area and the specified rate of royalty.
Rule 40 deals with provisional assessment and
adjustment; Rule 42 deals with computation of average
sale price. Sub-rule (1) of Rule 42 states, that the ex-
mine price shall be used to compute average sale price
of mineral grade/ concentrate. The ex-mine price of
mineral grade or concentrate has been provided in Sub-
rule (2) of Rule 42. Rule 43 deals with publication of
average sale price fixing 45 days limit from the due date
for filing the monthly returns, as required under the
Mineral Concession Development Rules, 1988.
36. The MCDR, 2017 has nothing to do with the
MCR, 2016 and both the rules stand on separate footing
altogether, as per the nomenclature given to the Rules
itself. Chapter VI of the MCDR, 2017 deals with notices
and returns, which compels the holder of a mining lease,
or any person or company engaged in trading or storage
or end-use or export of minerals mined in the country,
shall cause himself to be registered online with the
// 65 //
Indian Bureau of Mines as per application specified in
Form-K of the Schedule and the registration number so
allotted by the Indian Bureau of Mines shall be used for
all purposes of online reporting and correspondence
connected therewith.
37. As per sub-rule (5)(b)(i) of Rule 45, a monthly
return shall be submitted for all minerals except copper,
gold, lead, pyrite, tin, tungsten, zinc, precious and semi-
precious stones, in Form F1 of the Schedule. Form F1,
as mentioned above, requires a monthly return to be
used for minerals other than the minerals specified
therein. Thereby, it casts an obligation on the part of the
holder of a mining lease, or any person or company
engaged in trading or storage or end-use or export of
minerals mined in the country to furnish such details,
which provides elaborate utilization of the minerals unit
of quantities in tones. The purpose of furnishing such
returns is to indicate that the holder of mining lease
cannot make any misutilization of minerals rather he
// 66 //
shall adhere to such monthly/annual returns
scrupulously.
38. Under sub-rule (7) of Rule 45, it has been
indicated that, if it is found that the holder of a mining
lease or the person or company engaged in trading or
storage or end-use or export of minerals, as the case
may be, has submitted incomplete or wrong or false
information in daily or monthly or annual returns or
fails to submit a return within the date specified; then,
he is liable for penal action as specified therein under
clauses-(a) to (c). Even the opportunity also been given
to the parties, if any violation is pointed out, to rectify
the same within a period of 45 days, otherwise the
action should be taken. Thereby, the rule is very
sacrosanct for furnishing notice and returns.
39. Rule 45(8)(III) of MCDR, 2017 also specifies
that where sale has occurred, between related parties
and is not on arm's length basis, then such sale shall
not be recognized as a sale for the purposes of this rule
and in such case, sub-clause (IV) shall be applicable.
// 67 //
Thereby, for alleged violation of Rule 45 (7) read with
Rule 45 (8)(III) of the MCDR, 2017, the show cause
notice was issued on 16.12.2021, to which the
petitioner-company had given replies on 18.12.2021 and
27.12.2021. That has got nothing to do with the fixation
of payment of royalty in terms of Rules 38, 39, 40 and
42 of MCR, 2016. Even though MCDR, 2017 has come
into force on 27.02.2017, it will apply in the context the
Rule has been framed, which has no bearing with the
MCR, 2016, which came into force with effect from
04.03.2016 and framed in a different context altogether.
Thus, two separate rules have been framed for two
separate purposes to achieve the ultimate goal under the
MMDR Act, 1957. Hence, the steps taken against the
petitioner-company by issuing a notice of show cause on
16.12.2021 on the allegation of violation of Rule 45 (7)
read with Rule 45 (8)(III) of the MCDR, 2017 is totally
different than that of the fixation of price to be made
under MCR, 2016.
// 68 //
40. In the counter affidavit filed on behalf of the
opposite parties no.1 and 3, in paragraphs-II and LL, it
has been stated as follows:-
II. Allegation of petitioner that the publication of Final
ASP is without considering reply of show cause notice
is not correct, as action on the show cause notices on
the part of respondent no.1 is still under consideration
and computation and publication of ASP is altogether is
different process and it is as per laid down procedure.
xxx xxx xxx
LL. Allegation of petitioner that the publication of Final
ASP is without considering reply of show cause notice
is not correct, as action on the part of respondent no.1
is still under consideration and computation and
publication of ASP is altogether is different process and
it is as per laid down procedure.
Thereby, there is no dispute that pursuant to the show
cause notice issued, the opposite party no.1 has received
the reply, which is still under consideration. Therefore,
this Court already held that the same should be
considered in compliance to the principle of natural
justice, while answering Issue No.(ii). But, so far as the
determination of ASP is concerned, that being dealt with
under MCR, 2016, reliance has also been placed on the
documents annexed to the counter affidavit filed on
behalf of opposite parties no.1 and 3 as Annexures-A/1
// 69 //
and A/2. Annexure-A/1 prescribes Mine wise, grade
wise domestic sale reported in monthly return for the
month of September, 2021 so far as the petitioner-
company is concerned. From the entry available, it is
found that quantity has been dispatched to a trader and
trader to user which is none else but the company
acquired by the petitioner-company. For example, so far
Sl. No.1 is concerned, the trader is M/s Seven Hills
Minerals Private, to whom the quantity has been
dispatched, who in turn sold it to the user, i.e., M/s
Bhushan Power & Steel Ltd (company acquired by M/s.
JSW Steel Ltd, the petitioner-company herein). As such,
the sale price in which the lessee sold to the trader has
been shown as 1336.70, whereas the sale price at which
the trader sold to the user has been shown as 1354.18.
As such, in the remark column, it has been clearly
indicated that the JSW Steel Ltd. routed iron ore
through M/s. Seven Hills Mineral Private Ltd. to M/s.
Bhushan Power & Steel Ltd, which JSW Steel owns. It is
further revealed that under the heading "Fe Grade 55 to
below 58% Fine", the transaction has been made
// 70 //
between the petitioner-company and petitioner-company
in the guise of the trader's name M/s Seven Hills
Minerals Private Ltd. Similarly, under the heading "Fe
Grade 58 to below 60% Fines", the Trader name is M/s.
Brahmani River Pellets Limited and it has sold to JSW
Steel Ltd., but reported as domestic sale, which is a
related party to JSW Steel Ltd., as confirmed by JSW
Steel itself. Likewise, if each transaction contained in
Annexure-A/1 is verified, it will be evident that the same
is nothing but a transaction of the leaseholder with that
of the very same person, but by intervening different
traders' name in between, and the amount, as has been
shown, is detrimental to the interest of the State, who is
the ultimate beneficiary of the revenue from the mining
operation
41. Similarly, if Annexure-A/2 will be taken into
consideration, the ex-mine price of iron ore reported by
various non-captive leaseholders from July, 2021 to
December, 2021 of monthly returns has been indicated.
The petitioner's name finds place at Sl. No. 8 and 9. So
far as Nuagaon Iron Ore Mines is concerned, in August,
// 71 //
2021, the ex-mine price has been shown at 4204, but for
the months of September, 2021 it has been shown as
1358.76, October, 2021- 575.3, November, 2021 -
767.38 and December, 2021 - 1590. So far as Jajanga
Iron Mines is concerned, which has been placed at Sl.
No. 9, in August 2021, the ex-mine price has been
shown at 4204, but for the months of September, 2021
it has been shown as 1485.01, October, 2021- 782.14,
November, 2021 - 675 and December, 2021 - 641.87. If
the same is compared with the other owners of the
mines, the figure provided by the petitioner-company,
appears to be not a realistic price slash, as such the sale
has been made to the petitioner-company itself. As a
consequence thereof, there is a gross loss to the State
revenue. More so, under the Rules of MCR, 2016, no
provision of hearing has been prescribed in compliance
to principle of natural justice.
42. By giving an unrealistic price slash, a huge
loss has been caused to the revenue of the Government,
which is against public interest. Needless to say, Rule 40
// 72 //
of MCR, 2016 deals with provisional assessment and
adjustment, whereas computation of average sale price
is to be made pursuant to Rule 42 of the said Rules. If
such computation is made by the authority in terms of
the said rules, it cannot be said there is arbitrary and
unreasonable exercise of power by the authority in
violation of Articles 14 and 19(1)(g) of the Constitution of
India. As such, Rule 43 of MCR, 2016 empowers the
publication of average sale price by the Indian Bureau of
Mines in respect of each mineral grade/concentrate
removed from the mining leases in a month in a State
within 45 days from the due date for filing the monthly
returns as required under the Mineral Concession
Development Rules, 1988. Adhering to Rule 43, if the
computation has been made fixing ASP basing on the
monthly returns, it cannot said that the authorities have
acted arbitrarily, unreasonably and contrary to the
provisions of law so as to cause interference by this
Court. Since MCR, 2016 and MCDR, 2017 operate
separately and distinctly in separate areas, irrespective
of their date of commencement, they have to govern in
// 73 //
their respective field. Therefore, the question of
construction of Rules that the later enactment prevails
over the earlier one, cannot have any justification.
43. Rule 42 (c) of MCR, 2016 prescribes the
phrase "arm's length basis" and that would be taken
into consideration in common parlance vis-à-vis the
provisions contained in Section 188 (1) of the Companies
Act, 2013, which also explains the expression "arms'
length transaction" as a transaction between two related
parties that is conducted as if they are unrelated, so
that there is no conflict of interest. Therefore, the
computation of ASP under Rule 42 of MCR, 2016 has
been made taking into consideration the sale was
occurred on "arm's length basis", as specified therein.
Even though there was price slash in international and
domestic market of the different grades of the iron ore
fines, the same can only be considered and adjudicated
in terms of MCR, 2016 on the basis of the monthly
returns filed by the respective mines owners/lessees as
per rule 42 of MCR 2016.
// 74 //
44. It is urged emphatically by the petitioner-
company that the exclusion of petitioner-company's ex-
mine price would have significant impact on the overall
ASP and, as such, the petitioner-company has
dispatched 71% of total low grade ore from the merchant
mines in the entire State of Orissa in that period. This
Court is not competent to make an assessment on the
dispatch or production, rather it is within the complete
domain of the opposite party no.1-IBM, who used to
receive the monthly returns in terms of MCR, 2016 and
fixes ASP for respective parties. The allegations made
that opposite party no.1-IBM has artificially created
illusion of high price by replacing the ex-mine price of
several other lessees, apart from the petitioner-company,
that cannot also be taken into consideration, in view of
the documents available on record under Annexures-
A/1 and A/2, which is apparently clear how the
transaction has been taken place and how the price
slash has got an impact in respect of other similarly
situated lessees and, as such, none of the lessees, save
and except the petitioner-company, has challenged the
// 75 //
same by filing writ petition. Therefore, this Court is of
the considered view that the fixation of ASP in terms of
MCR, 2016 is to be answered in affirmative in favour of
the opposite parties and answered accordingly.
45. In view of the facts and law, as discussed
above, this Court is of the considered view that the
fixation of ASP in terms of MCR, 2016 cannot be held to
be illegal or arbitrary.
46. In terms of the observations/directions give in
the foregoing paragraphs, the writ petition stands
disposed. There shall be no order as to costs.
..................................
DR. B.R. SARANGI,
JUDGE
SAVITRI RATHO, J. I agree.
..................................
SAVITRI RATHO,
JUDGE
Orissa High Court, Cuttack
The 16th March, 2022, Alok/Arun/GDS
