JSW Steel mining case: Karnataka HC raps 'lenient' govt

The Karnataka High Court dismissed a petition by JSW Steel seeking exemption from paying crores of rupees in royalty fee, observing that the state government showed leniency with the company’s violations in illegal extraction of minor minerals.

The JSW Steel of the Jindal Group excavated 630 acres of land to build an impounding reservoir for its steel plant at Toranagallu of Ballari district. The high court observed that the company took up mining of murram (‘red clay’) without obtaining quarrying lease and licence under Rule 3 of Karnataka Minor Minerals Concession Rule, 1994.

The court slammed the state government for showing leniency towards this illegality. “Though there is illegal excavation of minor minerals without licence, the state government showed leniency,” it said.

The court noted that by demanding royalty, the government legalised the illegalities. The government treated the company as if it carried out excavation lawfully with a licence or a lease.

The state government had allotted 630 acres of additional land through the Karnataka Industrial Area Development Board (KIADB) in 2011. In 2015, the KIADB granted the land on lease for 99 years.

Thereafter, the construction of a tank was carried out in 630 acres of land. During this work, following a request by JSW Steel, the state government granted permission for use of mines and minerals excavated in the land for
construction of earthen dyke but sought royalty for the same.

At first, the company paid a sum of Rs 4 crore to the Department of Mines and Geology in May 2017 as “advance payment” of royalty charges.

However, in 2018, the company challenged the government’s demand for royalty in the high court and sought exemption under concession rules introduced in 1994.

During the hearing, the advocate for JSW Steel contended that a concession is applicable as the minor mineral is being used for laying the foundation of the water reservoir.

Dismissing this contention, a division bench of Chief Justice Abhay S Oka and S R Krishna Kumar observed that the petitioner company was under an obligation to obtain a licence to excavate minor minerals. We find no illegality in the demand for royalty made by the state government.

Additional Government Advocate V G Bhanu Prakash argued on behalf of the department.

A source in the department said the company used hundreds of tonnes of clay soil and had to pay an estimated Rs 20 crore royalty to the government. “The company is yet to pay Rs 13 crore,” he said.