This Court, by orders passed on July 29 and August 26, 2011, had imposed a ban on mining operations in all the mining leases (except two mining leases of M/s. NMDC Ltd.) in the districts of Bellary, Tumkur and Chitradurga in the State of Karnataka. Later on, the ban was lifted and permission was given for resumption of mining operations in some of the Category A mines, as enumerated in Annexure R-1 to the Central Empowered Committees (CEC) report dated August 29, 2012, subject to certain conditions, as stipulated in the order passed by the Court on September 03, 2012.

We now propose to deal with the Category B mines.The CEC has put 65 mining leases in Category B, besides 7 mining leases in Category B-1 (vide Annexure R-10, pages 112-114 of the CEC Report dated February 03, 2012). The 7 mining leases in Category B-1 will be dealt with later on, separately. Further, there are two mining leases [one in respect of M/s. S.B. Minerals (ML No. 2515) and the other in favour of Shanthalakshmi Jayaram (ML No. 2553) at Serial Nos. 1 and 2 of Annexure R-10 of the afore-mentioned Report] which the amicus suggests, for various reasons, should be dealt with along with the Category C mines. The amicuss suggestion is accepted and the aforesaid two mining leases will also be dealt with later on while dealing with the Category C mines. Resultantly, this order is in respect of the 63 Category B mining leases enumerated at Serial Nos. 3 to 65 of Annexure R-10 of the CEC Report dated February 03, 2012.

The amicus has submitted a Note, dated September 27, 2012, which actually gives a gist of the main features of the earlier CEC Reports on the subject. In this Note, the amicus suggests certain steps which are essential before the Court may consider granting permission for resumption of mining operations in the 63 Category B mining leases. The suggestions of the amicus are contained in paragraphs 6 to 9 and paragraph 10 (which has a number of sub- paragraphs) of the Note. The suggestions include, compensatory payments by the leaseholders for repairing the environmental depredation wrought by the leaseholders by unplanned, and to an extent, illegal mining done in their respective areas and the implementation of the Reclamation and Rehabilitation (R&R) plan by each of the lease holders. Another important suggestion is in regard to the constitution of a Special Purpose Vehicle (SPV) by the State of Karnataka to carry out the ambitious, but highly essential Comprehensive Environment Plans for the Mining Impact Zone (CEPMIZ) in order to restore the environmental damage caused in the area by illegal and reckless mining on a very large scale and to ensure that the environment in the area may not suffer from any such abuse and destruction in future.

On hearing Mr. Shyam Divan, the amicus, Mr. C.A. Sundaram, senior counsel appearing for Karnataka Iron and Steel Manufacturers Association, Mr. C.U. Singh, senior counsel appearing for the Association of Indian Mini Blast Furnaces, Mr. Altaf Ahmad, senior counsel appearing for FIMI, Mr. Krishnan Venugopal, senior counsel appearing for NSPL Ltd., Mr. Prashant Bhushan, and on a careful consideration of the amicuss Note and the earlier reports of the CEC on the subject, we pass the following directions as the absolute first step before we consider any resumption of mining operations in the 63 Category B mining leases:

I. Compensatory Payment

(a) Each of the leaseholders must pay compensation for the areas under illegal mining pits outside the sanctioned area, as found by the Joint Team (and as finally held by the CEC) at the rate of Rs.5 crores per hectare, and (b) for the areas under illegal overburden dumps, roads, offices, etc. outside the sanctioned lease area, as found by the Joint Team (as might have been finally held by the CEC) at the rate of Rs.1 crore per hectare.

It is made clear that the payment at the rates aforesaid is the minimum payment and each leaseholder may be liable to pay additional amounts on the basis of the final determination of the national loss caused by the illegal mining and the illegal use of the land for overburden dumps, roads, offices, etc. Each leaseholder, besides making payment as directed above, must also give an undertaking to the CEC for payment of the additional amounts, if held liable on the basis of the final determination.

At the same time, we direct for the constitution of a Committee to determine the amount of compensatory payment to be made by each of the leaseholders having regard to the value of the ore illegally extracted from forest/non-forest land falling within or outside the sanctioned lease area and the profit made from such illegal extraction and the resultant damage caused to the environment and the ecology of the area.

The Committee shall consist of experts/officers nominated each by the Ministry of Mines and the Ministry of Environment and Forests. The convener of the Committee will be the Member Secretary of the CEC. The two members nominated by the Ministry of Mines and the Ministry of Environment and Forests along with the Member Secretary, CEC shall co-opt two or three officers from the State Government. The Committee shall submit its report on the aforesaid issue through the CEC to this Court within three months from today.

The final determination so made, on being approved by the Court, shall be payable by each of the leaseholders.

II. Guarantee money for implementation of the R&R plan in the respective sanctioned lease areas

The CEC shall make an estimate of the expenses required for the full implementation of the R&R plan in each of the 63 Category B mines and each of the leaseholders must pay the estimated amount as guarantee for implementation of the R&R plans in their respective sanctioned lease areas and in the areas where they carried on illegal mining activities or which were used for illegal overburden dumps, roads, offices, etc. beyond the sanctioned lease area. In case, any leaseholder defaults in implementation of the R&R plan, it will be open to the CEC to carry out the R&R plan for that leasehold through some other proper agency from the guarantee money deposited by the leaseholder. However, on the full implementation of the R&R plan to the complete satisfaction of the CEC and subject to the approval by the Court, the guarantee money would be refundable to the leaseholder.

III. In addition to the above, each leaseholder must pay a sum equivalent to 15% of the sale proceeds of its iron ore sold through the Monitoring Committee as per the earlier orders of this Court. In this regard, it may be stated that though the amicus suggests the payment @ 10% of the sale proceeds, having regard to the overall facts and circumstances of the case, we have enhanced this payment to 15% of the sale proceeds.

Here it needs to be clarified that the CEC/Monitoring Committee is holding the sale proceeds of the iron ores of the leaseholders, including the 63 leaseholds being the subject of this order. In case, the money held by the CEC/Monitoring Committee on the account of any leaseholder is sufficient to cover the payments under the aforesaid three heads, the leaseholder may, in writing, authorize the CEC to deduct from the sale proceeds on its account the amounts under the aforesaid three heads and an undertaking to make payment of any additional amount as compensatory payment. On submission of such authorization and undertaking, the CEC shall retain the amounts covering the aforesaid three heads and pay to the concerned leaseholder the balance amount, if any. It is expected that the balance amount, after making the adjustments as indicated here, would be paid to the concerned leaseholder within one month from the date of submission of the authorization and the undertaking.

In the case of any leaseholder, if the money held on his account is not sufficient to cover the aforesaid three heads, he must pay the deficit within two months from today.

IV. The R&R plans for the aforesaid 63 Category B mines may be prepared as early as possible, as directed by orders of this Court dated April 13, April 20 and May 05, 2012, and in case where the R&R plan is already prepared and ready, the leaseholder may take steps for is comprehensive implementation, both within and outside the sanctioned lease area, without any delay.

Survey in District Anantpur, Andhra Pradesh:

The Joint Team constituted by the order of this Court dated May 06 and August 26, 2011 is directed to prepare survey sketches on the same terms for the 6 mining leases in the Bellary Reserve Forest falling in District Anantapur, Andhra Pradesh and which are identified in the tabulated statement at pages 27-29 of the CEC Report dated January 07, 2011. For the purpose of the survey and preparation of the survey sketches, the Joint Team is authorized to co-opt one or more officers of the Andhra Pradesh Forest Department and/or the Mining Department as special invitee(s). The mining operations, including transportation of minerals from those six mining leases, shall remain suspended till further orders by this Court.

Setting up of Special Purpose Vehicle (SPV)

In paragraph 10(vi) of the amicuss note, it is stated as under:

"(vi) the State of Karnataka be directed to set up Special Purpose Vehicle (SPV) for the purpose of ameliorative and mitigative measures as per the "Comprehensive Environment Plans for the Mining Impact Zone" (CPEMIZ) around mining leases in Bellary, Chitradurga and Tumkur. The SPV would be under the Chairmanship of the Chief Secretary, Government of Karnataka and would have senior officers of the concerned departments of the State Government as Members. The SPV would function in a transparent manner and the accounts of the SPV would be subject to an annual audit by the CAG. A detailed scheme containing the details of the works to be undertaken, process of selection of implementing agencies, accounting procedure and other details of CEPMIZ may be directed to be prepared and submitted to this Honble Court by the State of Karnataka, in consultation with the CEC within four weeks. The amounts received/retained by the Monitoring Committee towards (a) 10% of the sale proceeds, (b) compensation, (c) other receivable be directed to be transferred to the SPV (after its formation) for implementation of the provisions/ prescriptions of CEPMIZ."

The formation of the Special Purpose Vehicle and the drawing up and implementation of the Comprehensive Environment Plans for Mining Impact Zone is perhaps the most essential part in the process of reclamation and rehabilitation of the area devastated by illegal mining.

In order to pass suitable directions in that regard, we need further inputs. We, accordingly, direct the CEC to submit a detailed report in regard to the larger reclamation and rehabilitation programme to be undertaken by the SPV, the phased manner in which the programme is aimed to be implemented and the total period over which the programme would be fully implemented, its estimated cost, both on the phased and the overall basis, and the sources from which the money required for implementation of the programme should come.

The Report may be filed by October 10, 2012.

The CEC is at liberty to forward the representation dated January 15, 2012 received by it from M/s. Laxmi Narayan Mining Company to the Central Bureau of Investigation.